A-Z Intern. v. Phillips

• Citation: 323 F.3d 1141
• Decision Date: 21 March 2003
• Docket Number: No. 01-56689.,01-56689.
• Parties: A-Z INTERNATIONAL; Great American Insurance Company, Plaintiffs-Appellants, v. Michael James PHILLIPS, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

323 F.3d 1141

A-Z INTERNATIONAL; Great American Insurance Company, Plaintiffs-Appellants, v. Michael James PHILLIPS, Defendant-Appellee.

No. 01-56689.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 14, 2003.

Filed March 21, 2003.

As Amended May 1, 2003.

COPYRIGHT MATERIAL OMITTED

Lisa M. Conner, Aleccia & Conner, Long Beach, CA, for the plaintiffs-appellants.

No brief filed or appearance for the defendant-appellee.

Appeal from the United States District Court for the Central District of California; Stephen V. Wilson, District Judge, Presiding. D.C. No. CV-99-09101-SVW.

Before B. FLETCHER, ALARCÓN, and HAWKINS, Circuit Judges.

OPINION

ALARCÓN, Circuit Judge:

A-Z International and its insurer, Great American Insurance Company, (collectively "A-Z") appeal from the decision of the district court dismissing A-Z's action with prejudice. A-Z filed a complaint in the district court, seeking, inter alia, enforcement of an administrative law judge's ("ALJ") order certifying facts and recommending sanctions, pursuant to § 927(b) of the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. § 927(b) (2003), for Michael James Phillips's conduct before the ALJ.

We must decide whether § 927(b) authorizes a district court to sanction a claimant for contempt for filing a false claim for benefits under the LHWCA. We affirm the dismissal of this action because we conclude that a district court lacks subject-matter jurisdiction to sanction a party for contempt under such circumstances.

I

In September 1998, Phillips filed a claim for benefits against his employer, A-Z, alleging injury on an offshore oil rig, the Hermosa, and seeking benefits under the LHWCA, 33 U.S.C. §§ 901-950, as extended by the Outer Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. §§ 1331-1356 (2000). On March 26, 1993, the ALJ denied Phillips's claim. The ALJ concluded that Phillips did not meet OCSLA's jurisdictional "situs" requirement because he was not injured on the Hermosa. Phillips did not file an appeal from the March 26, 1993, order denying OCSLA benefits.

On April 11, 1995, the ALJ issued a Supplemental Decision Certifying Facts and Recommending Sanctions ("Supplemental Decision") based on his finding that Phillips filed a fraudulent claim in an effort to have his injury covered by the LHWCA and determined that such fraudulent conduct amounted to "disobedience to lawful process" under 33 U.S.C. § 927(b). Section 927(b) provides, in relevant part:

If any person in proceedings before a deputy commissioner or Board disobeys or resists any lawful order or process, or misbehaves during a hearing or so near the place thereof as to obstruct the same, or neglects to produce, after having been ordered to do so, any pertinent book, paper, or document or refuses to appear after having been subpoenaed, or upon appearing refuses to take the oath as a witness, or after having taken the oath refuses to be examined according to law, the deputy commissioner or Board shall certify the facts to the district court having jurisdiction ... which shall thereupon in a summary manner hear the evidence as to the act complained of, and, if the evidence so warrants, punish such person in the same manner and to the same extent as for contempt committed before the court....

33 U.S.C. § 927(b) (emphasis added). The ALJ recommended that Phillips reimburse A-Z for the amount of the total disability compensation benefits he had received while pursuing the fraudulent claim.

On December 4, 1995, the ALJ filed an order styled as an "Amended Supplemental Decision Certifying Facts and Recommending Sanctions" ("Amended Supplemental Decision"). The Amended Supplemental Decision included a recommendation of reimbursement of medical benefits provided by A-Z and reasonable attorneys' fees and costs.

Phillips appealed from the Supplemental Decision and the Amended Supplemental Decision to the U.S. Department of Labor Benefits Review Board (the "Board"). The Board reversed the ALJ's finding that § 927(b) applied to the underlying facts and vacated the certification of facts and recommendation to the district court. A-Z appealed from the Board's decision to this court. We reversed the Board's decision. We held that "where the ALJ `certifies the facts to the district court,' it is the district court, and not the Board, which has exclusive jurisdiction over the matter." A-Z Int'l v. Phillips, 179 F.3d 1187, 1192 (9th Cir.1999) (quoting 33 U.S.C. § 927(b)).

On September 8, 1999, A-Z filed a complaint in the United States District Court for the Central District of California, seeking, inter alia, enforcement of the ALJ's order certifying facts and recommending sanctions. Phillips did not respond to the complaint or otherwise appear before the district court. Accordingly, A-Z moved to have a default judgment entered against Phillips.

On August 22, 2001, the district court dismissed A-Z's complaint with prejudice. A-Z Int'l v. Phillips, No. 99-09101, slip op. at 8 (C.D.Cal. Aug. 22, 2001). The district court noted that "neither the ALJ nor [A-Z has] cited to any legal authority that remotely suggests this novel method of recovery under the LHWCA is an appropriate use of the court's contempt power." Id. at 5. In addition, the district court stated that even assuming that contempt proceedings could be used to award damages, in this case it would be particularly inappropriate to use this mechanism because the purpose of civil contempt is remedial and awarding A-Z damages would not serve that goal. See id. at 5-7. The district court also noted that it had the discretion to grant or deny the ALJ's recommendation that sanctions be imposed for the filing of a false claim for LWHCA benefits. Id. at 8. The district court further concluded that "[i]n addition to its substantial doubt regarding the propriety of the proposed relief, the Court also declines, in its discretion, to utilize its contempt power to award the requested relief." Id.

A-Z filed a notice of appeal on September 17, 2001. A-Z contends that the district court abused its discretion (1) by not entering a default judgment against Phillips, and (2) by not using its statutory or inherent powers or both to enforce the ALJ's certification of facts and recommendation for sanctions, in light of Phillips's contumacious conduct.¹

II

A-Z's contentions on appeal presuppose that the district court had jurisdiction to decide this case.² The district court did not expressly state that it did not have subject-matter jurisdiction.³ We must determine sua sponte the threshold question whether the district court had subject-matter jurisdiction to hear A-Z's claim. See Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) (stating "every federal appellate court has a special obligation to `satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review.'" (quoting Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 79 L.Ed. 338 (1934))). "The existence of subject matter jurisdiction is a question of law reviewed de novo." E.g., Stevedoring Servs. of Am., Inc. v. Eggert, 953 F.2d 552, 554 (9th Cir.1992).

"It is fundamental to our system of government that a court of the United States may not grant relief absent a constitutional or valid statutory grant of jurisdiction." United States v. Bravo-Diaz, 312 F.3d 995, 997 (9th Cir.2002). "A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." Eggert, 953 F.2d at 554 (quoting Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.1989)).

We recognized in Eggert that Congress has provided three bases for a district court to exercise its jurisdiction to enforce orders issued by an ALJ pursuant to LHWCA. Id. at 554-55. First, under § 918(a),⁴ district courts have jurisdiction to enter judgment on an administrative supplementary order that declares the amount of default by an employer in a compensation award. Id. at 555; 33 U.S.C. § 918(a). Second, under § 921(d),⁵ district courts have jurisdiction to enforce any order awarding workers' compensation. 33 U.S.C. § 921(d); Eggert, 953 F.2d at 554. Third, under § 927(b), "district courts may punish as contempt of court any disobedience or resistance to a lawful order or process issued in the course of administrative procedures under [LHWCA]." Eggert, 953 F.2d at 555. In Eggert, we explained that "[i]mportantly, this provision relates to all persons in proceedings under the[LHWCA]. A direct order of an ALJ to a claimant can be compelled by the district court using the means available for punishing contempt." Id. We also held that "[i]n conjunction with these grants of jurisdiction, the Act also requires that proceedings for suspending, setting aside, or enforcing a compensation order, whether rejecting a claim or making an award, shall not be instituted otherwise than as provided by 33 U.S.C. §§ 918 and 921." Id. (citing 33 U.S.C. § 921(e)). We concluded in Eggert that we lacked subject-matter jurisdiction because the ALJ had not issued a direct order that was disobeyed by the claimant. Id.

A-Z does not contend that the district court had jurisdiction pursuant to § 918 or § 921. We agree that neither of these sections would support jurisdiction in this case. A-Z alleges solely that the district court had jurisdiction under § 927. At issue in this appeal is whether, in enacting § 927(b), Congress authorized a district court to hold a claimant in contempt for filing a fraudulent claim for benefits. In order for a district court to have jurisdiction to sanction a claimant pursuant to § 927(b), an ALJ must certify facts describing how a person

disobey[ed] or resist[ed] any lawful order or process, or misbehave[d] during a hearing or so near the place thereof as to obstruct the same, or neglect[ed] to produce, after having been ordered to do so, any...