Court of the United States
SHIPPING CO., LTD., ET AL.
451 U.S. 596
CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.
Argued January 12, 1981
- Decided May 18, 1981.*
(b) of the Longshoremen's and Harbor Workers' Compensation Act provides
that a longshoreman's acceptance, pursuant to an award in a compensation
order, of compensation from his employer for injuries incurred in the course
of employment "shall operate as an assignment to the employer of all right
of the person entitled to compensation to recover damages against [a person
other than the employer] unless [the longshoreman] shall commence an action
against such third person within six months after such award." Petitioner
longshoremen, who had been injured aboard ship in the course of their employment,
accepted compensation under such an award from their respective stevedore
employers. More than six months after the awards, each petitioner commenced
an action in Federal District Court against the shipowner involved, alleging
that the shipowner had negligently caused his injury. The District Courts
granted summary judgments for the shipowners (respondents) on the ground
that, because petitioners failed to bring suit within six months of the
compensation awards, their causes of action had been assigned to their
employers who thereafter had the exclusive right to pursue the third-party
claims. The Court of Appeals affirmed.
(b) precludes petitioners from pursuing their third-party claims against
respondent shipowners. Pp. 602-618.
(a) The language
of 33 (b) is both mandatory and unequivocal. The only conditions precedent
to the statutory assignment are the acceptance of compensation pursuant
to an award in a compensation order and the passage of the required 6-month
period, both of which conditions were satisfied in these cases. When such
assignment occurs, it transfers to the employer the employee's entire right
to commence a third-party action, the words "all right" in 33 (b) precluding
the possibility of only a partial assignment or concurrent rights in the
employee and employer to sue in the postassignment period. Although [451
U.S. 596, 597] petitioners' employers failed to pursue the assigned claims,
the statute does not expressly require that they do so nor does it provide
for relief to employees should the assigned claims lie dormant. Pp. 602-604.
in the legislative history shows any intent by Congress to preserve the
employee's right to commence a third-party suit after the 6-month period
expires. To the contrary, the history indicates that once that period expires,
the employer possesses complete control of third-party claims. Moreover,
the history forecloses the argument that Congress did not intend an assignment
of a third-party claim to be effective unless there was an absence of any
potential conflict of interest between the assignee and the longshoreman.
The simple standard set forth in 33 (b) - exclusive control of the cause
of action in the employee for six months and in the employer thereafter
- protects the interests of both employees and employers and is consistent
with the Act's general policy of encouraging the prompt and efficient administration
of compensation claims. Pp. 604-612.
is no evidence that Congress gave the employee the right or procedural
mechanism, after assignment, to compel the assignee either to bring a third-party
suit or to reassign the cause of action to the employee in response to
a formal request to do so. And Congress' failure to amend 33 (b) in 1972,
when the Act was thoroughly reexamined, does not evidence congressional
approval of a Court of Appeals' decision holding that, notwithstanding
33 (b), a longshoreman who has accepted compensation under an award may
maintain a third-party action whenever it becomes evident that his employer
has no intention to file suit on the assigned claim. Such legislative inaction
does not modify the plain terms of 33 (b). Pp. 612-617.
617 F.2d 955 and 622 F.2d 572
and 575, affirmed.
STEVENS, J., delivered the
opinion for a unanimous Court.
] Together with Perez v. Arya National Shipping Line, Ltd., and Barulec
v. Ove Skou, R. A., also on certiorari to the same court (see this Court's
Martin Lassoff argued the
cause for petitioners. On the brief was Morris Cizner.
Joseph T. Stearns argued
the cause and filed a brief for respondents Compass Shipping Co., Ltd.,
et al. Francis X. Byrn argued the cause and filed a brief for respondent
Ove Skou, R. A.Fn
U.S. 596, 597] Harry M. Philo, Arthur Roth, C. Arthur Rutter, Jr., and
John H. Klein filed a brief for the Association of Trial Lawyers of America
as amicus curiae urging reversal. [451 U.S. 596,
JUSTICE STEVENS delivered
the opinion of the Court.
The question presented in
these three cases1
whether a longshoreman may prosecute a personal injury action against a
negligent shipowner after his right to recover damages has been assigned
to his employer by operation of 33 (b) of the Longshoremen's and Harbor
Workers' Compensation Act (Act), 33 U.S.C. 901 et seq.2
Each petitioner is a longshoreman
who was injured aboard ship in the regular course of his employment. Each
asserted a claim for compensation against the stevedore by whom he was
employed. Each accepted compensation from his employer pursuant to an award
in a compensation order.3
U.S. 596, 599] than six months later,4
commenced an action against the shipowner alleging that the defendant had
negligently caused his injury.5
District Courts granted motions for summary [451
U.S. 596, 600] judgment filed by the respondent shipowners on the ground
that, by reason of the longshoremen's failure to bring suit within six
months, their causes of action had been assigned to the stevedores who
thereafter had the exclusive right to pursue the third-party claims.6
Court of Appeals for the Second Circuit affirmed, 617 F.2d 955 (1980);
622 F.2d 572 and 575 (1980),7
we granted certiorari to resolve the conflict with the contrary holding
of the Court of Appeals for the Fourth Circuit in Caldwell v. Ogden Sea
Transport, Inc., 618 F.2d 1037 (1980). 449 U.S. 818 .8
There is no dispute about
the parties' respective interests in either (a) a claim asserted by a longshoreman
against a shipowner within the 6-month period following acceptance of a
compensation award, or (b) a claim asserted by the stevedore against the
shipowner after the 6-month period has elapsed. In the former situation,
the longshoreman has exclusive control of the action; any recovery in excess
of the amount required to pay the cost of litigation and to reimburse the
employer for the statutory compensation paid pursuant [451
U.S. 596, 601] to the award belongs entirely to the longshoreman.9
the latter situation, the stevedore has exclusive control of the litigation;
any net recovery - after the compensation award and the litigation costs
have been recouped - must be shared 80% by the longshoreman and 20% by
question presented by these cases is what right, if any, the longshoreman
has against the third-party shipowner if he does not sue within the 6-month
period and the employer [451 U.S. 596, 602] fails
to do so thereafter. Both the plain language of the statute and the history
of its amendments dictate the same answer.
Even though the language of
33 (b) is simple and direct, it is appropriate to begin by quoting our
description last Term of the context in which it appears:
"The Act provides a comprehensive
scheme governing an injured longshoreman's rights against the stevedore
and shipowner. The longshoreman is not required to make an election between
the receipt of compensation and a damages action against a third person,
33 U.S.C. 933 (a). After receiving a compensation award from the stevedore,
the longshoreman is given six months within which to bring suit against
the third party. 33 U.S.C. 933 (b). If he fails to seek relief within that
period, the acceptance of the compensation award operates as an assignment
to the stevedore of the longshoreman's rights against the third party."
Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 77 -78.
As is apparent, 33 (b) plays
a central role in this comprehensive legislative scheme.
The language of 33 (b) is
both mandatory and unequivocal. It provides that the acceptance of compensation
under an award "shall operate as an assignment to the employer of all right
of the person entitled to compensation to recover damages against such
third person unless such person shall commence an action against such third
person within six months after such award." 33 U.S.C. 933 (b) (emphasis
U.S. 596, 603]
The only conditions precedent
to the statutory assignment are the acceptance of compensation pursuant
to an award in a compensation order and the passage of the required period
of six months. These conditions are admittedly satisfied in these cases.12
statutory assignment encompasses "all right" of the employee to recover
damages from a third party. These words preclude the possibility that the
assignment is only a partial one that does not entirely divest the employee
of his right to sue, or that the employee and the employer possess concurrent
rights to sue in the postassignment period. When the 33 (b) assignment
occurs, it transfers the employee's entire right to commence a third-party
action to the employer.
Application of this plain
statutory language to the undisputed facts in these cases leads to the
conclusion that petitioners may not pursue their claims for damages against
the respondent shipowners. Petitioners filed these actions well beyond
the 6-month period following acceptance of compensation, and offered no
excuse for their delay. Although their employers failed to pursue the assigned
claims, the statute does not expressly require that employers pursue third-party
claims, nor does it provide for relief to employees should the assigned
claims lie dormant. Therefore, petitioners appear to be without a cause
of action under the statute.
In an attempt to avoid the
conclusion mandated by its plain language, petitioners contend that the
Act should be construed either to include an unexpressed condition precedent
to any effective assignment - namely, the absence of any possible conflict
of interest between the employer-stevedore and the employee - or to grant
the employee an implicit right to have the third-party claim reassigned
if the employer fails to sue. Normally, these contentions would be foreclosed
by the lack of any ambiguity in the statutory language. But the statutory
language was also unambiguous in [451 U.S. 596,
604] 1956 when this Court held in Czaplicki v. The Hoegh Silvercloud, 351
U.S. 525 , that 33 (b) contained a limited exception. It therefore is appropriate
to evaluate petitioners' contentions in the light of the relevant legislative
history. In making this evaluation, however, we adhere to the rule that,
"[a]bsent a clearly expressed legislative intention to the contrary, [the
statutory] language must ordinarily be regarded as conclusive." Consumer
Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108 .
As originally enacted in 1927,
the Act gave an injured longshoreman the right to elect between the certain
recovery of compensation from his employer without any proof of fault,
or the less certain, but probably more generous, remedy of an action for
damages against a negligent third party.13
employee's election to accept compensation under the Act effected an immediate
assignment to his employer of his cause of action for negligence.14
the original Act, the longshoreman could pursue either remedy but not both,
and nothing more than the acceptance of compensation was required to evidence
the employee's election. See, e. g., Toomey v. Waterman S.S. Corp., 123
F.2d 718, 721 (CA2 1941).
In 1938, Congress amended
the Act to provide that the [451 U.S. 596, 605]
acceptance of compensation would operate as an assignment only if the payment
was "under an award in a compensation order filed by the deputy commissioner."15
procedural change was designed to protect the employee from the harsh consequences
of an improvident election.16
Congress thereby reduced the danger that an employee would make an election
without being advised about its consequences, the 1938 amendment did nothing
to mitigate those consequences once the election was made.
In 1956, this Court held
that an injured longshoreman could enforce his right of action against
a third party, notwithstanding his acceptance of compensation from his
employer. Czaplicki v. The Hoegh Silvercloud, supra.17
U.S. 596, 606] that case, both the employer and the third party allegedly
responsible for the unseaworthy condition that had caused the employee's
injury were insured by the Travelers Insurance Co. Because the stevedore
had no interest in recovering the compensation payments that had been made
by its insurance carrier,18
because that carrier would be responsible for both prosecuting and defending
any third-party claim, no one other than the injured longshoreman had a
sufficient interest in the claim to bring suit. Because of the conflict
between the assignee's interest and the interest of the employee, the Court
construed the Act to allow the longshoreman to enforce the third-party
claim in his own name.19
Court [451 U.S. 596, 607] did not hold that no assignment
had occurred; rather, it held that under "the peculiar facts" of the case,
the election and consequent assignment did not bar the employee's action.20
Two years after Czaplicki,
in Johnson v. Sword Line, Inc., 257 F.2d 541 (1958), the Court of Appeals
for the Third Circuit held that a different sort of conflict of interest
would also preserve the longshoreman's right to sue a third party after
accepting compensation from his employer. This Court had previously held,
in Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124 , that
a shipowner who was liable to a longshoreman could assert a claim for indemnity
against the employer-stevedore. That holding inevitably created a [451
U.S. 596, 608] conflict between the stevedore's interest in recouping the
compensation awarded to the longshoreman and its interest in avoiding the
risk of a substantially larger liability as an indemnitor. The Court of
Appeals reasoned that the stevedore's potential liability under the indemnity
claim authorized by Ryan Stevedoring had the practical effect of enlarging
the conflict-of-interest rationale of Czaplicki, which had narrowly rested
on the peculiar facts of that case, to encompass substantially every case
in which a stevedore failed to bring a third-party action.21
the court concluded that a conflict of interest could be presumed to exist
whenever the statutory assignee failed to pursue or to reassign the assigned
claim, unless that claim was obviously lacking in merit. See 257 F.2d,
U.S. 596, 609]
The impact of Ryan Stevedoring
upon third-party claims assigned to employers by operation of 33 (b) was
brought to the attention of Congress as well. In 1956, a House Sub-committee
conducted hearings on proposed legislation that ultimately evolved into
the 1959 amendments to the Act.23
of the bills considered by the Subcommittee was H. R. 5357, which provided,
among other things, that an employee could commence a third-party suit
within six months after accepting compensation, and that an employer who
successfully pursued an assigned third-party claim was entitled to keep
one-third of any net recovery. As explained by Congressman Zelenko, the
bill's author, these provisions were designed to mitigate the problems
identified in Justice Black's dissenting opinion in Ryan Stevedoring.24
witnesses [451 U.S. 596, 610] appearing before the
Subcommittee also expressed concern about the conflict-of-interest problem
created by Ryan Stevedoring and endorsed H. R. 5357 as an effective solution
to that problem.25
In 1959, Congress acted
to remedy the problems created by the potential conflict between the interests
of the employer and the employee in prosecuting third-party claims.26
solution was not to create or to define an exception to the assignment
by operation of law. Rather, Congress substantially adopted the central
provisions of the Zelenko bill by amending 33 (b) to postpone the assignment
by operation of law until six months after the acceptance of compensation
under an award, and by amending 33 (e) to allow an employer to retain one-fifth
of the net proceeds of its successful [451 U.S.
596, 611] third-party action.27
effect of the 6-month provision, of course, was to give the longshoreman
an unqualified right to bring a third-party action during the 6-month period.
If his financial circumstances made it imperative that he accept a prompt
settlement of his compensation claim, he could do so without forfeiting
his right to seek a more liberal recovery from a responsible third party.
Moreover, by bringing his own action, the longshoreman could avoid the
risk that his employer's potential conflict of interest - or possibly erroneous
evaluation of the merits of the claim - might result in its abandonment.28
amendment to 33 (e) provided an additional incentive to the employer to
sue after assignment of the claim by giving him a share in any excess recovery.
Nothing in the 1959 amendments
purports to preserve the employee's right to commence a third-party suit
after the 6-month period expires. Although the amendments encourage employers
to pursue assigned claims, they do not qualify the assignee's control of
the cause of action after the assignment takes place. To the contrary,
the legislative history indicates [451 U.S. 596,
612] that once the 6-month period expires, the employer possesses complete
control of third-party claims.29
This history forecloses
the argument that Congress did not intend an assignment of a third-party
claim to be effective unless there was an absence of any potential conflict
of interest between the assignee and the longshoreman. The statutory language
provides a different and clearly defined solution to the conflict-of-interest
problem that had been created by Ryan Stevedoring.30
unequivocally made the choice in favor of first giving the employee exclusive
control of the cause of action for a 6-month period and then giving the
employer exclusive control thereafter, instead of opting for any form of
simultaneous joint or partial control. The simple standard set forth in
33 (b) protects the interests of both employees and employers, and is consistent
with the general policy of the Act to encourage the prompt and efficient
administration of compensation claims. See Potomac Electric Power Co. v.
Director, Office of Workers' Compensation Programs, 449 U.S. 268, 282 .
Although the assignment at
the end of the 6-month period occurs automatically, the Court of Appeals
for the Fourth Circuit has held that the employee retains a right after
assignment to compel the assignee either to bring a third-party suit or
to reassign the cause of action to the employee in response to a formal
request to do so. See Caldwell v. Ogden Sea Transport, Inc., 618 F.2d 1037
(1980). The court "readily found" the procedural mechanism for implementing
this nonstatutory right to a reassignment, id., at 1046, but we [451
U.S. 596, 613] find no evidence that Congress created either the substantive
right itself or the procedural rights that the court discerned.
The predicate for the Fourth
Circuit's analysis was an assumption that Congress did not intend to allow
the longshoreman to lose his rights against a third party simply because
(a) he failed to take any action within six months and (b) his employer
decided not to sue the third party thereafter.31
avoid the "practical problem" presented in such a situation, the court
fashioned a "solution" that the Act "does not specifically provide." Id.,
at 1045. We are persuaded that the reason Congress did not specifically
provide the solution which the court readily found is that Congress did
indeed intend to require the employee either to act promptly or to accept
the consequences of an assignment of [451 U.S. 596,
614] his claim to the employer.32
of the consequences of such an assignment is the risk that the employer
will choose not to sue. The comprehensive character of the procedures outlined
in the Act precludes the fashioning of an entirely new set of remedies
to deal with an aspect of a problem that Congress expressly addressed.33
fact that parties sometimes fail to assert meritorious claims within the
period authorized by law is not a sufficient reason for refusing to enforce
an unequivocal statutory bar.
Finally, relying upon Edmonds
v. Compagnie Generale Transatlantique, 443 U.S. 256 , petitioners argue
that Congress' failure to amend 33 (b) in 1972, when the Act was thoroughly
re-examined, evidences implicit congressional approval of the decision
of the Court of Appeals for the District of Columbia Circuit in Potomac
Electric Power Co. v. Wynn, 120 U.S. App. D.C. 13, 343 F.2d 295 (1965)
(per curiam). In that case, the court held that a longshoreman who has
accepted compensation under an award may maintain a third-party action
whenever it becomes evident that his employer has no intention to file
suit on the assigned claim. Id., at 16, 343 F.2d, at 298. See also Joyner
v. F & B Enterprises, Inc., 145 U.S. App. D.C. 262, 264, 448 F.2d 1185, [451
U.S. 596, 615] 1187 (1971). The court construed the 1959 amendments as
enlarging the employee's protection, and considered the rationale of Czaplicki
to apply whenever a potential conflict of interest is present. In its judgment,
the employer's failure to sue was sufficient evidence of a conflict to
justify an independent action by the employee, notwithstanding the assignment
provisions in the Act.34
U.S. App. D.C., at 16, 343 F.2d, at 298.
For reasons already stated,
we are satisfied that that opinion did not correctly construe the 1959
is true that Congress did not expressly disclaim that case in 1972, but
that legislative inaction does not modify the plain terms of the 1959 amendments.
Nor did Congress expressly endorse the Wynn decision. More importantly,
the statutory [451 U.S. 596, 616] interpretation
announced in Wynn can hardly be compared to the well-established rule of
maritime law at issue in Edmonds. There is no reason to believe that "Congress
has relied upon conditions" that Wynn created. Edmonds, supra, at 273.36
fact, the statutory changes adopted in 1972 are entirely consistent with
our interpretation of 33 (b). Moreover, those changes remind us that one
of the purposes of the Act is to minimize the need for litigation as a
means of providing compensation for injured workmen. See Bloomer, 445 U.S.,
at 86 .
Three of the 1972 Amendments
are pertinent. First, the level of benefits was substantially increased,
thereby increasing the likelihood that the statutory compensation recoverable
without proof of fault would be adequate.37
the shipowner's right to seek indemnity from the stevedore under Ryan Stevedoring
was eliminated, thereby removing a category of litigation from the courts,
placing more definite limits on the stevedore's insurance costs, and removing
a potential source of conflict between the interests of employers and employees.38
the shipowner's nearly absolute liability for unseaworthiness was eliminated,
thereby further narrowing the area of potential litigation and increasing
the relative importance of statutory awards as the favored method of compensation.39
generally Scindia Steam Navigation Co. [451 U.S.
596, 617] v. De Los Santos, ante, at 164-165. In making these changes,
Congress necessarily balanced the conflicting interests of the vessel owner,
the stevedore, and the longshoreman. As with other problems of interpreting
the intent of Congress in fashioning various details of this legislative
compromise, the wisest course is to adhere closely to what Congress has
meaning of 33 (b) is plain and should be respected.
In sum, we conclude that the
Court of Appeals in these cases correctly held that 33 (b) precludes petitioners
from pursuing their third-party claims. Whatever the continued validity
of our decision in Czaplicki, a question we need not and do not decide
cases do not involve "the [451 U.S. 596, 618] peculiar
facts" on which Czaplicki was based. Rather, petitioners essentially have
relied upon conflicts inherent in the statutory scheme and in the relationships
among longshoremen, stevedores, and shipowners. The notion adopted in some
post-Czaplicki decisions that a conflict of interest may be presumed whenever
an employer does not sue on an assigned claim is simply untenable in light
of the plain statutory language and the history of the 1959 and 1972 Amendments.
We leave for another day the question whether an assignment under 33 (b)
will bar a longshoreman's third-party action if there is specific evidence
of a serious conflict of interest Congress could not have foreseen when
it enacted and amended 33.
The judgments of the Court
of Appeals are
Although a single petition for certiorari was filed on behalf of the three
petitioners, their lawsuits proceeded independently of one another at earlier
stages of the litigation. Three separate District Court opinions were issued.
See Rodriguez v. Compass Shipping Co., 456 F. Supp. 1014 (SDNY 1978); Perez
v. Arya National Shipping Line, Ltd., 468 F. Supp. 799 (SDNY 1979); Barulec
v. Ove Skou, R. A., 471 F. Supp. 358 (SDNY 1979). The Court of Appeals
affirmed the decision in Rodriguez in a published opinion, 617 F.2d 955
(1980), and on the same day affirmed the Perez and Barulec decisions in
unpublished orders citing its opinion in Rodriguez. See Barulec v. Ove
Skou, R. A., 622 F.2d 572 (1980); Perez v. Arya National Shipping Line,
Ltd., 622 F.2d 575 (1980).
Section 33 (b) of the Act provides:
"Acceptance of such compensation
under an award in a compensation order filed by the deputy commissioner
or [Benefits Review] Board shall operate as an assignment to the employer
of all right of the person entitled to compensation to recover damages
against such third person unless such person shall commence an action against
such third person within six months after such award." 44 Stat. (part 2)
1440, as amended, 33 U.S.C. 933 (b).
In the Rodriguez and Barulec cases, the plaintiffs and their employers
agreed to settlements in informal conferences convened by the Office of
Workers' Compensation Programs. Although a since-amended regulation required
that such settlements be embodied in formal compensation orders, see 20
CFR 702.315 (a) (1976), no formal orders were entered in these cases. Accordingly,
the plaintiffs argued in the lower courts that the assignment provision
of 33 (b) had not been activated because they had not accepted "compensation
under an award in a compensation order [451 U.S.
596, 599] filed by the deputy commissioner or Board," as required by the
statute. The District Courts rejected petitioners' argument, concluding
that settlement agreements reached after official informal conferences
were equivalent to formal orders for purposes of 33 (b). See Rodriguez,
supra, at 1018-1020; Barulec, 471 F. Supp., at 360-362. The Court of Appeals
agreed. See 617 F.2d, at 958-960. Although petitioners challenged this
ruling in their petition for certiorari, our order granting the petition
did not extend to this question. 449 U.S. 818
. Accordingly, for purposes
of our decision, we assume that their acceptance of compensation operated
as an assignment under 33 (b). Petitioner Perez apparently did not contend
below that he had not accepted "compensation under an award" within the
meaning of 33 (b). See 468 F. Supp. 799 (SDNY 1979).
Rodriguez filed suit approximately 32 months, Perez filed suit approximately
15 months, and Barulec filed suit approximately 1 year after accepting
compensation. See 617 F.2d, at 957; Perez, 468 F. Supp., at 800; Barulec,
471 F. Supp., at 359.
The Act expressly provides that the employee is not required to elect between
his right to compensation from his employer and his claim for damages against
a third party. Section 33 (a), as set forth in 33 U.S.C. 933 (a), provides:
"If on account of a disability
or death for which compensation is payable under this chapter the person
entitled to such compensation determines that some person other than the
employer or a person or persons in his employ is liable in damages, he
need not elect whether to receive such compensation or to recover damages
against such third person."
Section 5 (b) of the Act, as
set forth in 33 U.S.C. 905 (b), provides:
"In the event of injury
to a person covered under this chapter caused by the negligence of a vessel,
then such person, or anyone otherwise entitled to recover damages by reason
thereof, may bring an action against such vessel as a third party in accordance
with the provisions of section 933 of this title, and the employer shall
not be liable to the vessel for such damages directly or indirectly and
any agreements or warranties to the contrary shall be void. If such person
was employed by the vessel to provide stevedoring services, no such action
shall be permitted if the injury was caused by the negligence of persons
engaged in providing stevedoring services to the vessel. If such person
was employed by the vessel to provide ship building or repair services,
no such action shall be permitted if the injury was caused by the negligence
of persons engaged [451 U.S. 596, 600] in providing
ship building or repair services to the vessel. The liability of the vessel
under this subsection shall not be based upon the warranty of seaworthiness
or a breach thereof at the time the injury occurred. The remedy provided
in this subsection shall be exclusive of all other remedies against the
vessel except remedies available under this chapter."
In all three cases, although the District Courts rejected the contention
that a stevedore's failure to pursue an assigned claim, without more, establishes
a conflict of interest resulting in reassignment of the claim to the longshoreman,
the plaintiffs were given an opportunity to present evidence establishing
a specific conflict of interest, such as that found in Czaplicki v. The
Hoegh Silvercloud, 351 U.S. 525
. See Rodriguez, supra, at 1023; Perez,
468 F. Supp., at 801; Barulec, 471 F. Supp., at 362. Despite the opportunity
to pursue further discovery, none of the plaintiffs was able to present
evidence supporting his conflict-of-interest allegation, and the District
Courts accordingly entered summary judgment in favor of the shipowners.
See n. 1, supra.
The Fourth Circuit issued its opinion in Caldwell eight days after the
Rodriguez opinion was issued by the Second Circuit.
Section 33 (f) of the Act, as set forth in 33 U.S.C. 933 (f), provides:
"If the person entitled
to compensation institutes proceedings within the period prescribed in
subdivision (b) of this section the employer shall be required to pay as
compensation under this chapter a sum equal to the excess of the amount
which the Secretary determines is payable on account of such injury or
death over the amount recovered against such third person."
Section 33 (e) of the Act, as set forth in 33 U.S.C. 933 (e), provides:
"Any amount recovered by
such employer on account of such assignment, whether or not as the result
of a compromise, shall be distributed as follows:
(1) The employer shall
retain an amount equal to -
"(A) the expenses incurred
by him in respect to such proceedings or compromise (including a reasonable
attorney's fee as determined by the deputy commissioner or Board);
"(B) the cost of all benefits
actually furnished by him to the employee under section 907 of this title;
"(C) all amounts paid as
"(D) the present value
of all amounts thereafter payable as compensation, such present value to
be computed in accordance with a schedule prepared by the Secretary, and
the present value of the cost of all benefits thereafter to be furnished
under section 907 of this title, to be estimated by the deputy commissioner,
and the amounts so computed and estimated to be retained by the employer
as a trust fund to pay such compensation and the cost of such benefits
as they become due, and to pay any sum finally remaining in excess thereof
to the person entitled to compensation or to the representative; and
"(2) The employer shall
pay any excess to the person entitled to compensation or to the representative,
less one-fifth of such excess which shall belong to the employer."
In Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 269
described 33 (b):
"Under 933 (b), an administrative
order for benefits operates as an assignment to the stevedore-employer
of the longshoreman's rights against the third party unless the longshoreman
sues within six months."
See nn. 3, 4, supra.
As originally enacted, and until 1959, 33 (a) read:
"If on account of a disability
or death for which compensation is payable under this Act the person entitled
to such compensation determines that some person other than the employer
is liable in damages, he may elect, by giving notice to the deputy commissioner
in such manner as the commission may provide, to receive such compensation
or to recover damages against such third person." 44 Stat. (part 2) 1440.
The original 33 (b) provided:
"Acceptance of such compensation
shall operate as an assignment to the employer of all right of the person
entitled to compensation to recover damages against such third person,
whether or not the person entitled to compensation has notified the deputy
commissioner of his election." 44 Stat. (part 2) 1440.
From 1938 until 1959, 33 (b) provided:
"Acceptance of such compensation
under an award in a compensation order filed by the deputy commissioner
shall operate as an assignment to the employer of all right of the person
entitled to compensation to recover damages against such third person."
52 Stat. 1168.
The amendment's purpose was explained in the House Report:
"The purpose of this amendment
is to remove possible cause of complaint regarding the operation of the
provision in subdivision (b) of section 33 in making the mere acceptance
of compensation work automatically an assignment to the employer of all
rights of action against the third party tort feasor. Acceptance of compensation
without knowledge of the effect upon such rights may work grave injustice.
The assignment of this right of action against the third party might properly
be contingent upon the acceptance of compensation under an award in a compensation
order issued by the deputy commissioner, thus giving opportunity to the
injured person . . . to consider the acceptance of compensation from the
employer with the resulting loss of right to bring suit in damages against
the third party, or a refusal of compensation so as to pursue the remedy
against the third party alleged to be liable for the injury." H. R. Rep.
No. 1945, 75th Cong., 3d Sess., 9 (1938).
See also Hernandez v. Costa
Armatori, S. p. A., 467 F. Supp. 1064, 1066 (EDNY 1979), affirmance order,
622 F.2d 573 (CA2 1980).
In the interim between the 1938 amendment and the decision in Czaplicki,
this Court issued two decisions of some significance to the present case.
In 1946, in Seas Shipping Co. v. Sieracki, 328 U.S. 85
, the Court concluded
that an injured longshoreman could pursue a third-party [451
U.S. 596, 605] claim against a shipowner for unseaworthiness, as well as
for negligence. In 1956, in Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp.,
350 U.S. 124
, the Court held that a shipowner found liable to a longshoreman
for damages in a third-party action could seek indemnification from the
stevedore based upon the stevedore's contractual duty to provide workmanlike
service. Congress in 1972 overruled both Sieracki and Ryan Stevedoring.
See Edmonds v. Compagnie Generale Transatlantique, 443 U.S., at 262
Section 33 (i) of the Act as it read in 1956 provided that a stevedore's
compensation insurer was subrogated to the stevedore's rights in the assigned
claim. "Travelers, therefore, was the proper party to sue on those rights
of action." 351 U.S., at 529
. The subrogation provision is now 33 (h),
33 U.S.C. 933 (h).
The Court explained its reasoning in detail:
"[T]he injured employee
has an interest in his right of action even after it has been assigned.
Normally, this interest will not be inconsistent with that of the assignee,
for presumably the assignee will want to recoup the payments made to the
employee. Since the assignee's right to recoup comes before the employee's
interest, and because the assignee is likely to be in a better position
to prosecute any claims against a third party, control over the right of
action is given to the assignee, who can either institute proceedings for
the recovery of damages against a third person, `or may compromise with
such third person either without or after instituting such proceeding.'
33 (d), 33 U.S.C. 933 (d). In giving the assignee exclusive control over
the right of action, however, we think that the statute presupposes that
the assignee's interests will not be in conflict with those of the employee,
and that through action of the assignee the [451
U.S. 596, 607] employee will obtain his share of the proceeds of the right
of action, if there is a recovery. Here, where there is such a conflict
of interests, the inaction of the assignee operates to defeat the employee's
interest in any possible recovery. Since an action by Travelers would,
in effect, be an action against itself, Czaplicki is the only person with
sufficient adverse interest to bring suit. In this circumstance, we think
the statute should be construed to allow Czaplicki to enforce, in his own
name, the rights of action that were his originally." 351 U.S., at 531
At several points in the Czaplicki opinion, the Court emphasized the limited
nature of its holding:
"Czaplicki's rights of
action were held by the party most likely to suffer were the rights of
action to be successfully enforced. In these circumstances, we cannot agree
that Czaplicki is precluded by the assignment of his rights of action from
enforcing those rights in an action brought by himself." Id., at 530.
"Respondents contend that
since Czaplicki did not, under 33 (a), 33 U.S.C. 933 (a), elect to proceed
against third parties, but rather chose to accept compensation, he can
in no event revoke this election and maintain this suit. But, as this Court
has already pointed out, `election not to sue a third party and assignment
of the cause of action are two sides of the same coin.' American Stevedores,
Inc. v. Porello, 330 U.S. 446, 455
. Czaplicki can bring suit not because
there has been no assignment, but because in the peculiar facts here there
is no other procedure by which he can secure his statutory share in the
proceeds, if any, of his right of action. For the same reason, we hold
that the election to accept compensation, as a step toward the compensation
award, does not bar this suit." Id., at 532-533.
The Court of Appeals explained the conflict created by Ryan Stevedoring:
"Since any recovery by
the injured employee against the shipowner could be recouped in an action
by the shipowner against the stevedoring company, the practical effect
of the Ryan case is to cause the employer-stevedoring companies, who may
anticipate a shipowner's claim to indemnity to resist the making of any
payment to the injured stevedore until an award is made, at which time
assignment of the cause of action by reason of the provisions of the statute
takes place. When the statutory assignment has taken place the employer-stevedoring
company will then refuse to bring an action against the shipowner, and
by the same token would also refuse to reassign the cause of action to
the injured stevedore, for to do so might result in an eventual high award
by way of indemnification against the stevedoring company and hence against
the insurance carrier." 257 F.2d., at 545.
The Court of Appeals essentially
articulated in greater detail a concern expressed by Justice Black in his
dissenting opinion in Ryan Stevedoring:
"The employer as an assignee
of an employee's claim will know that if he wins a lawsuit, he loses a
U.S., at 145
Cf. Di Somma v. N. V. Koninklyke Nederlandsche Stoomboot, 188 F. Supp.
292 (SDNY 1960). This expansion of Czaplicki was not, however, uniformly
accepted by all federal courts. Other courts rejected a broad reading of
Czaplicki and limited the conflict-of-interest exception [451
U.S. 596, 609] to the peculiar situation presented in that case. See, e.
g., Sabol v. Merritt Chapman & Scott Corp., 241 F.2d 765 (CA2 1957).
See Hearings before a Special Subcommittee of the House Committee on Education
and Labor on Bills Relating to the Longshoremen's and Harbor Worker's Compensation
Act, 84th Cong., 2d Sess. (May 23, 24, and June 11, 1956) (House Hearings).
Congressman Zelenko opened his testimony by inserting into the record a
copy of the Ryan Stevedoring decision, which he asserted "endangered or
seriously weakened" the right of longshoremen to recover from third parties.
See House Hearings, at 1. Congressman Zelenko indicated that Justice Black's
dissent accurately summarized the damaging effects of that decision. Id.,
at 12. He went on to explain:
"H. R. 5357 avoids and
eliminates the circumstances indicated by Judge Black where to the detriment
of the employee, the employer under the present section and by reason of
the Ryan decision may decide not to proceed with the third-party action."
Later, in response to questioning
by members of the Subcommittee, Congressman Zelenko explained the connection
between H. R. 5357 and Ryan Stevedoring in more detail:
"I hope I have answered
your question by trying to show what the situation in the Ryan case would
be. That is the factual and the legal situation, and assuming we had the
Ryan case pending at this time, the employer would lose any interest in
proceeding with it, and the longshoreman would suffer. That is what Judge
Black was talking about. Under [451 U.S. 596, 610]
H. R. 5357 both parties go in there and if the longshoreman chooses to
go ahead, he does so; and if he does not go ahead, the employer starts
a lawsuit in his own behalf only after the longshoreman has had the opportunity
to do so, and he does not want to avail himself of it, then they give the
employer this right of assignment automatically, so he gets the same measure
of protection." House Hearings, at 15.
The Zelenko bill also provided
an added incentive for employers to sue by giving them one-third of any
excess recovery. See, e. g., id., at 12-13, 19, 43-44, 102.
See, e. g., id., at 28, 44-45, 61-62, 72, 103-105, 106-107, 110, 115, 124-125.
Cf. id., at 83-84, 92-93. It should be noted that at the time of these
hearings Czaplicki was pending before this Court. Czaplicki's attorneys
participated in the hearings, and described to the Subcommittee the facts
of Czaplicki and the Court of Appeals' decision in that case. They also
informed the Subcommittee that this Court had granted Czaplicki's petition
for certiorari, and that the case had been argued. See House Hearings,
at 59, 62.
The House Report on a predecessor of the bill that amended 33 (b) in 1959
"Developments under the
act which concerned the Subcommittee on Safety and Compensation have been
. . . the automatic assignment of a third-party cause of action to the
employer and the refusal by the employer to pursue the third-party claim
because of a conflict of interest . . . ." H. R. Rep. No. 229, 86th Cong.,
1st Sess., 3 (1959).
At the same time, Congress amended 33 (a) to provide expressly that the
employee need not elect between his statutory right to compensation from
his employer and his claim against a third party. See n. 5, supra.
The Senate Report contained the following evaluation of the bill amending
"The bill as amended by
the committee would revise section 33 of the act so as to permit an employee
to bring a third-party liability suit without forfeiting his right to compensation
under the act. . . . The committee believe that in theory and practice
this is [a] sound approach to what has been a difficult problem. As embodied
in the committee amendment, the principle would be applied with due recognition
of the equities and rights of all who are involved.
". . . In the event that
an employee does not elect to sue for damages within 6 months of the compensation
award the employer is assigned the cause of action." S. Rep. No. 428, 86th
Cong., 1st Sess., 2 (1959).
See id., at 2-3; H. R. Rep. No. 229, supra, at 3-4. See also House Hearings,
at 15, 19-20, 44-45.
Whether the statutory language provides the exclusive solution for unusual
conflict-of-interest problems, such as that identified in Czaplicki, is
a question that is not presented on the facts of these cases. We accordingly
do not decide whether, or to what extent, Czaplicki survived the 1959 amendments.
] "Ordinarily, therefore, it is likely that the interests of both
longshoreman and assignee in having their substantive rights pursued and
of the third person in facing a single action will be achieved under LHWCA.
"But LHWCA does not yet
deal directly with certain practical problems that may interrupt or wrench
these expectations. These can arise whenever by design or inadvertence
the longshoreman fails during the statutory period to prosecute the claim
while the right of action is exclusively his. Following this failure, the
assignee may, for a variety of reasons, not then itself prosecute the claim.
It may not consider a claim thought meritorious by the longshoreman to
be sufficiently so to warrant the expense of litigation. It may have a
specific conflict of interest that militates against prosecuting the claim.
It may simply be dilatory to the point that the claim is threatened by
a limitations bar. Under all of these, and to precisely the same degree
under all, the longshoreman faces a practical problem for which LHWCA provides
no direct solution: forcing action by the assignee, or somehow retrieving
the right of action. While LHWCA does not specifically provide the solution,
it certainly cannot be thought to have been intended by Congress that the
longshoreman's substantive right might be lost simply through inaction
of the assignee until the claim is barred from prosecution by anyone. What
is needed is a solution that adequately protects the assignee's first right
of exclusive action but that also protects the longshoreman's substantive
right against loss through inaction of the assignee for whatever reason."
618 F.2d, at 1045.
The District Court in the Perez case aptly evaluated the so-called "problem"
created by an employer's failure to sue after statutory assignment of the
employee's cause of action:
"[W]hatever the consequences
of a failure to sue, an employee who fails to sue within six months of
accepting compensation under an award . . . is as responsible for that
failure as an employer who neglects, for whatever reason, to pursue an
assigned claim." 468 F. Supp., at 802.
"Consequently, as we have done before, we must reject a `theory that nowhere
appears in the Act, that was never mentioned by Congress during the legislative
process, that does not comport with Congress' intent, and that restricts
. . . a remedial Act . . . .' Northeast Marine Terminal Co. v. Caputo,
U.S., at 278
-279." Edmonds v. Compagnie Generale Transatlantique,
U.S., at 271
Petitioners suggest that such an automatic rule is justified because of
a stevedore's normal reluctance to file suit against a customer. However,
in rejecting a similar conflict-of-interest argument, the District Court
in Hernandez v. Costa Armatori, S. p. A., 467 F. Supp., at 1067-1068, identified
the flaw in this reasoning:
"[T]his is not the kind
of matter that Congress could have viewed as sufficient to invalidate the
assignment. Such a conflict has always been inherent in the statutory scheme.
Presumably every stevedore would prefer not to give offense to its customer.
"Plaintiff has thus referred
only to `conflicts of interest' of which Congress was aware in enacting
the statute. To allow them as exceptions to the statutory assignment would
be to read Section 933 (b) out of the Act."
In addition, where, as is often
the case, the stevedore's insurer is subrogated to the stevedore's interest
in an assigned claim, see 33 U.S.C. 933 (h), this potential conflict probably
will not be of much significance. The insurer is unlikely to sacrifice
a meritorious claim for fear of antagonizing a customer of the stevedore.
Nor did it correctly construe Czaplicki. As discussed supra, at 605-607,
that decision was narrowly drawn to redress certain inequities that arose
from "the peculiar facts" of that case. Czaplicki did not hold that the
33 (b) assignment could be avoided whenever an employer failed to pursue
an assigned claim.
Indeed, shortly after Wynn was decided, the Fifth Circuit concluded that,
while Czaplicki was still good law, it should be narrowly applied to specific
conflicts of interest identified on a case-by-case basis. See McClendon
v. Charente Steamship Co., 348 F.2d 298, 301-303 (1965). The court expressly
declined to adopt the automatic rule applied in Wynn. See 348 F.2d, at
See Director, Office of Workers' Compensation Programs v. Rasmussen, 440
U.S. 29, 32
See Edmonds v. Compagnie Generale Transatlantique, supra, at 262.
In its explanation of the reasons for eliminating the unseaworthiness remedy,
the House Report accompanying the 1972 Amendments stated:
"The Committee heard testimony
that the number of third-party actions brought under the Sieracki and Ryan
line of decisions has increased [451 U.S. 596, 617]
substantially in recent years and that much of the financial resources
which could be better utilized to pay improved compensation benefits were
now being spent to defray litigation costs. Industry witnesses testified
that despite the fact that since 1961 injury frequency rates have decreased
in the industry, and maximum benefits payable under the Act have remained
constant, the cost of compensation insurance for longshoremen has increased
substantially because of the increased number of third party cases and
legal expenses and higher recoveries in such cases. The Committee also
heard testimony that in some cases workers were being encouraged not to
file claims for compensation or to delay their return to work in the hope
of increasing their possible recovery in a third party action." H. R. Rep.
No. 92-1441, p. 5 (1972).
"Congress has put down its pen, and we can neither rewrite Congress' words
nor call it back `to cancel half a Line.' Our task is to interpret what
Congress has said . . . ." Director, Office of Workers' Compensation Programs
v. Rasmussen, supra, at 47.
As our analysis indicates, the 1959 and 1972 Amendments have substantially
undercut the basis for the Czaplicki exception to 33 (b). The Court was
troubled in Czaplicki because under the Act in 1956 there was "no other
procedure" by which a longshoreman could enforce his rights against a third
party where the employer failed to sue due to a conflict of interest. 351
U.S., at 532 -533. After the 1959 amendments, there is such a procedure:
the employee may simply file his own third-party suit within six months
after accepting compensation.
Similarly, to the extent
that Czaplicki and its progeny sought to [451 U.S.
596, 618] mitigate the conflict of interest created by Ryan Stevedoring,
the 1972 Amendments eliminate the need for a judicially created exception
to 33 (b):
"[B]efore the 1972. Amendments,
the longshoreman and the stevedore had adverse interests in the third-party
action: if the longshoreman were successful in that suit, the shipowner
frequently would attempt to require the stevedore to make payment of amounts
due the longshoreman. With the abolition of the shipowner's cause of action,
the stevedore and the longshoreman had a common interest in the longshoreman's
recovery against the shipowner." Bloomer v. Liberty Mutual Ins. Co., 445
U.S. 74, 84 -85.
See also Valentino v. Rickners
Rhederei, G. M. B. H., 552 F.2d 466, 470 (CA2 1977). [451
U.S. 596, 619]