A New Arrow in the Jones Act Employer's Quiver
February 2006
In December 2005, the U.S. Court of Appeals
for the Fifth Circuit decided Withhart v. Otto Candies,
LLC, 431 F.3d 840, a case of first impression in the federal circuit
courts. The issue was whether a shipowner Jones Act employer, Sea Mar, would
be allowed to assert a negligence and indemnity counterclaim against its Jones
Act employee, Withhart, for property damage allegedly caused by Withhart for
a vessel collision.
by Michael
A. Orlando
Meyer Orlando,
LLC
The district court had dismissed Sea Mar's counterclaim, but the Fifth Circuit
Court of Appeals reversed that decision through an interlocutory appeal.
The Facts
The facts of the case are that Withhart was a mate aboard, and in command
of, Sea Mar's M/V Cape Hatteras, which collided
with the M/V Kelly Candies, a vessel owned
by Otto Candies. Withhart claimed that he was injured as a result of the collision.
Through various amendments of the pleadings, Withhart ultimately sued Sea Mar
and Otto Candies, as well as other parties. Otto Candies sought defense, indemnification,
contribution, and/or recovery for its damages against Sea Mar. Pursuant to a
demand for such, Sea Mar paid Otto Candies approximately $26,000 for property
damage to the M/V Kelly Candies. Sea Mar
then filed a negligence counterclaim against Withhart for property damage to
both vessels. Sea Mar alleged that Withhart's negligence in his capacity as
officer in command of the vessel at the time of the incident caused the collision
between the vessels.
The Appeal
The Fifth Circuit reviewed the dismissal of the counterclaim on a de novo basis. It first examined whether
general maritime law recognized a suit by a vessel owner for property damage
caused by a negligent seaman and determined that such a cause of action is cognizable
under general maritime law. Noting that the elements of a maritime negligence
cause of action are essentially the same as common law, land-based negligence,
the court breezed to the conclusion that such a cause of action was encompassed
within the general maritime tort of negligence.
The more difficult issue was whether the Jones Act precluded such a counterclaim.
As part of its brief review of the history of the Jones Act, the court of appeals
noted that Congress did not specifically enumerate the rights of seamen, but
extended to them the same rights granted to railway employees under the Federal
Employers' Liability Act (FELA), 45 USC §§ 51, et. seq.
Since this was a case of first impression, the court relied heavily on FELA
decisions as to whether railway workers could be sued for property damage. The
court noted that a majority of the courts, including every federal circuit court
to address that issue, had concluded that FELA allowed an employer a common
law right to sue its employees for property damage. The court cited decisions
from the First, Fourth, and Eighth Circuits, granting railway companies such
a common law right. The court considered and agreed that the reasoning in those
FELA cases was correct that neither § 5 nor § 10 of the FELA precluded the employer's
right of action against its employee for property damage. Section 5 of the FELA
provides:
- Any contract, rule, regulation, or device whatsoever, the purpose or
intent of which shall be to enable any common carrier to exempt itself from
liability created by this Chapter, shall to that extent be void....
45 USC § 55.
Section 10 of the FELA provides:
- Any contract, rule, regulation, or device whatsoever, the purpose, intent
or effect of which shall be to prevent employees of any common carrier from
furnishing voluntary information to a person in interest as to the facts
incident to the injury or death of any employee, shall be void....
45 USC § 60.
The court's logic was that since the FELA contained no prohibition against
a railway company's suit against its employee for property damage caused by
the employee, and that state common law allowed such cause of action, then there
was nothing to preclude the employer's counterclaim against a Jones Act personal
injury claimant for property damage caused by the claimant.
The court also addressed two Ninth Circuit decisions which held that the
Jones Act prohibits an employer from seeking indemnity and contribution from
another of its employees whose negligence allegedly caused the injury to the
coemployee. The Withhart court ruled that those
decisions were clearly distinguishable on the basis that the injured seaman
does not have a cause of action against fellow negligent employees and therefore
it would be illogical to allow the shipowner employer to have such a cause of
action.
Finally, the court addressed the equitable argument that allowing such a
counterclaim would contravene the purposes of the Jones Act. The court summarily
disposed of that argument by ruling that allowing such a cause of action would
not narrow the remedies available to an injured seaman.
The Effect
In the author's view, the Withhart v. Otto Candies decision could have significant impact in all Jones Act personal injury cases
involving collisions and allisions. It would appear that in all instances in
which the Jones Act employer can make a good faith pleading that the plaintiff
caused property damage in whole or in part to the Jones Act employer, this will
give the employer an arrow in its quiver that has not heretofore been explicitly
sanctioned by any federal circuit court of appeals in a Jones Act case. Depending
on the amount of property damages involved, this decision should have some practical
effect on settlement negotiations in Jones Act personal injury cases in which
such a counterclaim could be asserted. If the arguments on the defendant's part
are strong with regard to the potential for the plaintiff being comparatively
at fault for the plaintiff's own injury, then concomitantly, the arguments will
be good for a set off for the property damages. Logically, the reverse should
hold true, as well.
Since this was a case of first impression, it will be interesting to follow
whether other circuits around the United States follow this decision or conflict
with it. For now, it is the law in the Fifth Circuit. Beware that a great deal
of strategy will come into play on whether to use this new found arrow.
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