-
USCA1 Opinion
January 14, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1473
THEODORE M. ELLENWOOD, ET AL.,
Plaintiffs, Appellees,
v.
EXXON SHIPPING CO.,
Defendant, Appellant.
____________________
STATE OF MAINE,
Intervenor.
_____________________
No. 92-1474
THEODORE M. ELLENWOOD, ET AL.,
Plaintiffs, Appellants,
v.
EXXON SHIPPING CO.,
Defendant, Appellee.
____________________
STATE OF MAINE,
Intervenor.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Horny, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Coffin, Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________
____________________
Peter Bennett with whom Daniel W. Bates was on brief for the
______________ ________________
Ellenwoods.
Thomas D. Warren, Deputy Attorney General, with whom Michael E.
_________________ __________
Carpenter, Attorney General, was on brief for the State of Maine.
_________
Robert M. Hayes with whom Charles G. Bakaly, Jr., Richard G.
________________ ________________________ __________
Moon, and Linda D. McGill were on brief for Exxon Shipping Company.
____ _______________
____________________
____________________
COFFIN, Senior Circuit Judge. Shortly after the Exxon
_____________________ _____
Valdez struck a reef off the Alaskan coast in 1989, defendant
______
Exxon Shipping Company adopted a new policy barring any employee
who had ever participated in an alcohol rehabilitation program
from holding designated jobs within the company. Pursuant to
this policy, plaintiff Theodore Ellenwood, who had no connection
to the Valdez incident, was removed from his position as chief
______
engineer of another Exxon oil tanker, the Exxon Wilmington.
_________________
Ellenwood voluntarily had entered, and successfully had
completed, a month-long alcohol rehabilitation program a year
before the Valdez accident. Despite his concerns about his
______
drinking, Ellenwood never had had an on-the-job problem with
alcohol. A psychiatrist who examined Ellenwood in connection
with this case concluded, in fact, that he had never been an
alcoholic. See Tr. Vol. V, at 133.
___
Relying primarily on the company's previous written policy
that "[n]o employees with alcoholism will have their job security
or future opportunities jeopardized due to a request for help or
involvement in a rehabilitation effort," Ellenwood and his wife
brought suit against Exxon alleging tort and contract claims as
well as violations of state statutes prohibiting discrimination
against the handicapped.1 Ellenwood ultimately received a
____________________
1 The complaint set forth the following causes of action:
breach of contract (Count I); breach of a duty of good faith
arising out of Exxon's use of confidential information concerning
Ellenwood's alcohol treatment as a basis for removing him (Count
II); estoppel arising out of Exxon's representations and promises
(Count III); wrongful discharge in violation of the public policy
promoting responsible treatment of alcoholism (Count IV);
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judgment for $677,648 on his contract and promissory estoppel
causes of action.
In these appeals, both sides contend, inter alia, that the
_____ ____
district court committed legal error in defining the actionable
counts. Ellenwood claims the judge eliminated too many claims on
various legal grounds, depriving him of additional relief, while
Exxon claims that the court allowed too many counts to be
tried.2 We affirm most of the court's rulings. We conclude,
however, that the district court overestimated the preemptive
effects of admiralty law and the Rehabilitation Act of 1973, 29
U.S.C. 701-796, and, accordingly, we must remand for trial on
Ellenwood's state statutory claims of handicap discrimination.3
____________________
discrimination against the handicapped contrary to various state
laws (Count V); misrepresentation over the career consequences of
seeking alcohol treatment (Count VI); intentional and negligent
infliction of emotional distress on both Ellenwoods in ending
Ellenwood's career and disseminating confidential information
concerning his condition (Counts VII and VIII); defamation in
removing Ellenwood from his position as chief engineer (Count
IX); invasion of privacy in the manner in which Exxon obtained
the information about Ellenwood's treatment and disclosed it
(Count X); invasion of privacy in placing Ellenwood in a false
light (Count XI); invasion of privacy in publicizing confidential
information (Count XII); Mrs. Ellenwood's loss of consortium
(Count XIII); and punitive damages (Count XIV).
2 This court granted the State of Maine provisional
permission to intervene on the issue of whether Ellenwood's claim
based on the Maine Human Rights Act, 2A Me. Rev. Stat. Ann. tit.
5, 4571-72 (Supp. 1992), is preempted by federal law.
3 The complaint referred to statutes in Maine, New Jersey
and Texas, and we offer no view as to the applicable law. We
note, however, that the district court applied Texas law to Count
XII of the complaint, which alleged an invasion of privacy. See
___
Memorandum of Decision, Oct. 28, 1991.
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I. Preemption and the Rehabilitation Act4
_____________________________________
A. Background
__________
Section 503 of the Rehabilitation Act of 1973, 29 U.S.C.
793, requires any contract with the federal government in excess
of $2,500 to include a provision obligating the federal
contractor to "take affirmative action to employ and advance in
employment qualified individuals with handicaps." 29 U.S.C.
793(a). Any handicapped individual who believes a contractor has
failed to comply with this provision may file a complaint with
the Department of Labor, which must conduct an investigation and
take appropriate action. 29 U.S.C. 793(b). Regulations
promulgated pursuant to 503 specify a detailed administrative
enforcement mechanism for its breach. See 41 C.F.R. 60-741.1-
___
741.32 (1991). The Department's Office of Federal Contract
Compliance Programs (OFCCP) is empowered, for example, to seek
injunctive relief in court, terminate or cancel a contract, or
bar a contractor from receiving future contracts. 41 C.F.R.
60-741.28(b)-(e) (1991). It also may seek such remedies as back
pay and reinstatement for affected employees. See Dep't of Labor
___ ______________
v. Texas Indus., Inc., 47 Fair Empl. Prac. Cas. (BNA) 18, 28
___________________
(Dep't Labor 1988). See Howard v. Uniroyal, Inc., 719 F.2d 1552,
___ ______ ______________
1559 (11th Cir. 1983) (detailing enforcement procedures).
In a motion for summary judgment, Exxon, which is a federal
contractor, argued that 503 preempts virtually all of
____________________
4 Our review of the district court's preemption decisions,
which were rulings of law, is plenary.
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Ellenwood's state law claims,5 and that Ellenwood's only
recourse on matters related to his alcohol treatment is the claim
he has filed with the OFCCP. The district court rejected this
contention, finding no evidence that Congress intended the
provision to eliminate conventional state law claims such as
breach of contract, misrepresentation, defamation or infliction
of emotional distress, because these claims "are in no way
related to the federal Rehabilitation Act, any affirmative action
clause in a government contract, or handicap discrimination."
See Memorandum of Decision, Oct. 15, 1991, at 3. The court also
___
ruled, however, that 503 did preempt Count V's direct claim of
discrimination on the basis of handicap in violation of various
state statutes, and Count IV's common law claim that Ellenwood's
discharge violated a public policy promoting responsible
treatment of alcoholism.
Neither party is satisfied with this Solomonic division of
the claims. Accordingly, on appeal, we are asked to consider
both Ellenwood's claim that the district court erred in ruling
that 503 preempts Counts IV and V and Exxon's contrary
assertion that the district court erred in finding that the
federal statute does not preempt the contract and promissory
estoppel claims on which Ellenwood received a jury verdict. The
State of Maine joins Ellenwood in arguing that 503 does not
preempt a claim of handicap discrimination brought under its
____________________
5 According to Exxon, only Counts X and XII of the
complaint, charging the company with obtaining and disclosing
private information, survived preemption.
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Human Rights Act, 2A Me. Rev. Stat. Ann. tit. 5, 4571-72 (Supp.
1992). We take up each plea for reversal in turn, following a
brief review of the well established contours of preemption law.
B. Preemption Principles
_____________________
The preemption doctrine is rooted in the Supremacy Clause,
which invalidates state laws that "interfere with, or are
contrary to, the laws of congress." Gibbons v. Ogden, 22 U.S. (9
_______ _____
Wheat.) 1, 211 (1824). See also Cipollone v. Liggett Group,
___ ____ _________ ______________
Inc., 112 S. Ct. 2608, 2617 (1992). A court's sole task in
____
determining whether a state statute is preempted is to ascertain
whether Congress intended the federal law to have such effect.
California Federal Savings & Loan Ass'n v. Guerra, 479 U.S. 272,
________________________________________ ______
280 (1987); Massachusetts Medical Society v. Dukakis, 815 F.2d
______________________________ _______
790, 791 (1st Cir. 1987). Although Congress may articulate its
intent explicitly, see, e.g., Jones v. Rath Packing Co., 430 U.S.
___ ____ _____ ________________
519, 532 (1977), it does not always do so, and the challenge of
preemption law is to identify occurrences of implied preemption.
Preemption by implication may take place in different ways.
First, congressional intent to preempt state law may be
inferred when the scheme of federal regulation in a particular
area is sufficiently pervasive and complex "to make reasonable
the inference that Congress ``left no room' for supplementary
state regulation," California Federal Savings & Loan Ass'n, 479
________________________________________
U.S. at 281 (quoting Rice v. Santa Fe Elevator Corp., 331 U.S.
____ ________________________
218, 230 (1947)); see also Dukakis, 815 F.2d at 791. Second, in
___ ____ _______
areas where Congress has not entirely displaced state regulation,
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state law will be deemed preempted to the extent it actually
conflicts with federal law. Such a conflict occurs either
because "``compliance with both federal and state regulations is a
physical impossibility,'. . . , or because the state law stands
``as an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.'" California Federal Savings
__________________________
& Loan Ass'n, 479 U.S. at 281 (quoting Florida Lime & Avocado
_____________ _______________________
Growers, Inc. v. Paul, 373 U.S. 132, 142-143 (1963) and Hines v.
_____________ ____ _____
Davidowitz, 312 U.S. 52, 67 (1941)). See also O'Brien v.
__________ ___ ____ _______
Consolidated Rail Corp., 972 F.2d 1, 3 (1st Cir. 1992).
_______________________
These alternative avenues to preemption do not mean that
either route is to be chosen lightly. The Supreme Court recently
reiterated the longstanding principle that "``the historic police
powers of the States [are] not to be superseded by . . . Federal
Act unless that [course is] the clear and manifest purpose of
Congress.'" Cipollone, 112 S. Ct. at 2617 (quoting Rice, 331
_________ ____
U.S. at 230). Thus, the presumption is against preemption. Id.
__
at 2618.
C. Applying the Principles
_______________________
1. State handicap discrimination statutes.
______________________________________
Section 503 contains no express language regarding
preemption. Our task, therefore, is to determine whether there
are other indicia of Congressional intent to render state
discrimination laws ineffectual against federal contractors.
Exxon essentially makes a two-pronged argument. First, it cites
legislative history suggesting that Congress sought a uniform
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federal remedy for violations of 503, which would be frustrated
if contractors additionally were subject to varying state laws.
Thus, according to Exxon, Congress must have intended to preempt
state provisions.
Second, Exxon suggests that the detailed nature of the
administrative scheme promulgated under 503 demonstrates
Congress's intent to foreclose other types of remedies against
federal contractors. Exxon maintains that, while Congress has
not fully occupied the field of handicap discrimination, with
respect to federal contractors, it has "``left no room' for
supplementary state regulation," California Federal Savings &
______________________________
Loan Ass'n, 479 U.S. at 281.
__________
In our view, what Exxon offers as proof of an intent to
preempt falls short of the mark. The legislative history on
which the company relies is a single passage in a Senate
Committee Report relating to amendments to the Rehabilitation Act
that were enacted a year after the Act itself. The amendments
made no change in either sections 503 or 504 of the Act,6 but
the Senate Report commented:
It is intended that sections 503 and 504 be
administered in such a manner that a consistent,
uniform, and effective Federal approach to
discrimination against handicapped persons would
result. Thus, Federal agencies and departments should
cooperate in developing standards and policies so that
there is a uniform, consistent Federal approach to
these sections.
____________________
6 Section 504, 29 U.S.C. 794, prohibits discrimination
against the handicapped in federally funded programs, the United
States Postal Service, and in Executive agencies.
-9-
S. Rep. No. 1297, 93d Cong., 2d Sess., reprinted in 1974
_____________
U.S.C.C.A.N. 6373, 6391.
Exxon claims this passage demonstrates that Congress was
seeking an exclusive approach to handicap discrimination by
federal contractors, and that, consequently, it must have
intended 503 to displace parallel state laws governing the same
conduct. Even without regard for the lesser weight accorded this
subsequent history than would be accorded contemporaneous
legislative comments, see Heckler v. Turner, 470 U.S. 184, 209
___ _______ ______
(1985), we believe Exxon has read far too much into the quoted
remarks.
We are persuaded that the passage in no way implicates state
law but instead reflects Congress's concern about the lack of
coordination on the federal level between the two agencies
_______________________
responsible for implementing sections 503 and 504. The Senate
Report continues from the portion quoted above to elaborate on
the agencies' relationship:
The Secretary of the Department of Health, Education,
and Welfare, because of that Department's experience in
dealing with handicapped persons and with the
elimination of discrimination in other areas, should
assume responsibility for coordinating the section 504
enforcement effort and for establishing a coordinating
mechanism with the Secretary of the Department of Labor
to ensure a consistent approach to the implementation
of sections 503 and 504.
S. Rep. No. 1297, 93rd Cong., 2d Sess., reprinted in 1974
____________
U.S.C.C.A.N. 6373, 6391. In our view, Congress was calling for a
more uniform and consistent "Federal approach to discrimination
_______
against handicapped persons," id. (emphasis added); nothing in
__
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the passage indicates that it was seeking to eliminate any role
for state law. See D'Amato v. Wisconsin Gas Co., 760 F.2d 1474,
___ _______ _________________
1482 (7th Cir. 1985) (by insisting on coordination, Congress was
directing "that the two responsible agencies were not to work at
cross purposes or to duplicate each other's efforts") (citation
omitted).
Exxon's second basis for inferring an intent to preempt --
the comprehensive and detailed regulations promulgated under
503 -- is equally unavailing. The fact that Congress has
implemented an extensive regulatory scheme in a particular area
does not lead necessarily to the conclusion that it intended to
displace parallel state remedies. As the Supreme Court stated in
Hillsborough County v. Automated Medical Laboratories, Inc., 471
____________________ ____________________________________
U.S. 707, 716-18 (1985):
To infer pre-emption whenever [a federal agency] deals
with a problem comprehensively is virtually tantamount
to saying that whenever a federal agency decides to
step into a field, its regulations will be exclusive.
Such a rule . . . would be inconsistent with the
federal-state balance embodied in our Supremacy Clause
jurisprudence.
See also R.J. Reynolds Tobacco Co. v. Durham County, 479 U.S.
___ ____ ___________________________ ______________
130, 149 (1986) (preemption should not be inferred simply because
federal agency's regulations are comprehensive). Exxon cites
nothing in the state provisions that would make compliance with
both state law and the detailed 503 scheme a "physical
impossibility," Florida Avocado & Lime Growers, 373 U.S. at 143,
_______________________________
and, in the absence of other evidence of preemptive intent, there
is no basis for displacing the state law.
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In accepting Exxon's argument that Congress intended to
preempt state anti-discrimination remedies against federal
contractors, the district court relied entirely on the analysis
of the Eleventh Circuit in Howard v. Uniroyal, Inc., 719 F.2d
______ _______________
1552 (1983). In Howard, the plaintiff had alleged a claim under
______
Alabama law as a third party beneficiary of the 503 affirmative
action clause contained in contracts between his employer and the
federal government.
The Eleventh Circuit rejected this claim. It held that
state contract remedies could not be used to enforce 503
essentially for the reasons Exxon has offered to us in support of
its preemption argument. Emphasizing the Senate Report's
reference to federal uniformity and the comprehensiveness of the
503 administrative scheme, the Howard court found it
______
"reasonable to infer that Congress left no room in section 503(b)
for state contract actions to supplement it," id. at 1559. The
__
court concluded that allowing the plaintiff to broaden
enforcement of the affirmative action clause by means of state
law could frustrate directly the specific scheme designed by
Congress, allowing a private claim through the back door that
couldn't come through the front door.
An inference of preemption was further warranted, the court
held, because Congress's substantial interest in enforcing the
affirmative action clause -- determining appropriate terms,
conditions and remedies -- was "more substantial" than the
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state's interest in providing a remedy for third party
beneficiaries seeking to enforce the same clause. Id. at 1561.
__
We believe Exxon and the district court have relied unwisely
on Howard, which differs from this case in a crucial respect.
______
There, the plaintiff sought to use state law to enforce 503
itself; the court ruled that Congress intended the federal
administrative remedy to be the plaintiff's sole means of
enforcing the affirmative action clause. Here, however,
Ellenwood is seeking to enforce not 503, but independent
obligations created by state anti-discrimination statutes.
The claim in this case does not threaten the uniformity of
__________
the 503 system. Rather, the issue here is one of
compatibility, specifically, whether there is any basis for
_____________
inferring that Congress believed an independent state remedy
could not co-exist with the 503 system. Howard is not helpful
______
in this context. In the employment discrimination field,
Congressional enactments "have long evinced a general intent to
accord parallel or overlapping remedies against discrimination."
Alexander v. Gardner-Denver Co., 415 U.S. 36, 47 (1974). See
_________ ___________________ ___
also California Federal Savings & Loan, 479 U.S. at 282-83;
____ ___________________________________
Kremer v. Chemical Construction Corp., 456 U.S. 461, 468-69
______ ____________________________
(1982); Muncy v. Norfolk and Western Railway Co., 650 F. Supp.
_____ ________________________________
641, 644 (S.D.W. Va. 1986) (ruling that 503 does not preempt
state human rights act). Nothing in 503, which is focused
narrowly on the contractual requirement for an affirmative action
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clause, provides a basis to infer a departure from that
traditional approach.
In addition, several references in 503's legislative
history suggest that, rather than seeking to preempt state law
through comprehensive legislation, Congressional leaders
recognized that the federal statute was a modest one:
"We are just beginning to do too little as the
dimension of the problem grows in geometric
proportion." Congressman Vanik, Congressional Record -
- House 18137 (June 5, 1973); "[W]e have only begun to
scratch the surface in meeting the needs of our
disabled fellow citizens." Congressman Brademus [sic],
Congressional Record -- House 30149 (September 18,
1973); "I do not consider [this bill] to be a perfect
bill, or in all honesty, even an adequate bill."
Senator Randolph, Congressional Record -- Senate 34586
(July 18, 1973).7
Raytheon Co. v. Fair Employment and Hous. Comm'n, 46 Fair Empl.
____________ _________________________________
Prac. Cas. (BNA) 1089, 1099 (Cal. Sup. Ct. 1988), aff'd, 212 Cal.
_____
App. 3d 1242, 261 Cal. Rptr. 197 (2d Dist. 1989).
A year later, in the Rehabilitation Act Amendments of 1974,
Congress added a provision requiring state agencies that
administer programs funded under the Act to take affirmative
action to employ and advance qualified handicapped individuals
who are covered under 503. See Senate Report No. 1297,
___
reprinted in 1974 U.S.C.C.A.N., at 6391-92. The Senate Committee
____________
Report noted that these agencies "are expected to adopt strong
affirmative action programs which are at least equivalent to
_________
those now being developed for Federal agencies." Id. at 6392
__
____________________
7 Both Congressman Brademas and Senator Randolph were among
the managers of the legislation. See Conf. Rep. No. 500, 93rd
___
Cong., 1st Sess., reprinted in 1973 U.S.C.C.A.N. 2143, 2154.
____________
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(emphasis added). These comments, although referring to
administering agencies rather than federal contractors,
nevertheless suggest that Congress both acknowledged the role
played by states in the area of handicap discrimination and
assumed that states might choose to provide different -- greater
-- protection than that afforded by the federal government. See
___
Raytheon, 46 Fair Empl. Prac. Cas., at 1099.8
________
Finally, we note that, in the recent Americans with
Disabilities Act of 1990, 42 U.S.C. 12101-12213, which amended
the Rehabilitation Act and extended remedies for handicap
discrimination against many more private employers, Congress
stated explicitly that the legislation did not "limit the
remedies, rights, and procedures of any . . . law of any State .
. . or jurisdiction that provides greater or equal protection for
the rights of individuals with disabilities than are afforded by
this chapter." 42 U.S.C. 12201(b). While this provision
obviously can have no effect on our view of Congressional intent
in 1973, it is a particularly pertinent example of Congress's
historical practice of allowing overlapping remedies for
employment discrimination.9
____________________
8 We ackowledge that this post-enactment legislative history
is of less weight than contemporary commentary, but it is
nevertheless of some significance. See, e.g., Heckler, 470 U.S.
___ ____ _______
at 209; Cannon v. University of Chicago, 441 U.S. 677, 686-687,
______ _____________________
n.7 (1979).
9 The absence of a provision disclaiming preemption from the
Rehabilitation Act of 1973 does not demonstrate, in the absence
of other evidence, an intent to foreclose state remedies.
Because of its far more comprehensive reach, the ADA is likely to
have appeared more preemptive than the earlier legisation.
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Exxon attempts to distance this case from the tradition of
overlapping remedies in two ways. First, it asserts that
Congress has a unique interest in regulating federal contractors
and, second, it claims that the area of handicap discrimination
requires an extraordinary balancing of competing interests that
distinguishes it from other types of employment discrimination,
such as those involving race, gender or age. In the handicap
discrimination field, Exxon maintains, the possibility of
conflicting judgments is much greater because courts in different
jurisdictions could reach widely disparate conclusions on such
basic questions as what constitutes a "handicap" and which
handicapped persons are "qualified" to hold particular positions.
Restricting individuals to their 503 remedy would ensure that a
federal contractor doing business in more than one state would
face uniform obligations nationwide.
We think it unlikely that Congress has a special interest in
immunizing federal contractors from obligations otherwise
applicable to them under state handicap discrimination statutes.
These companies may do only $2,500 in business with the federal
government, with the bulk of their enterprise devoted to commerce
within a single state. This division gives the state a
substantial interest in protecting the employment interests of
its handicapped citizens. The developing nature of the issues
raised in the field of handicap discrimination strikes us as
____________________
Congress evidently made the sensible decision to avoid confusion
by including an express provision.
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insufficient justification for excusing these employers from
obligations imposed on others who differ only in that the federal
government is not one of their customers.
Moreover, Exxon's obligation is not simply to identify
reasons why Congress might have departed from its usual practice,
but to demonstrate a reasonable basis for inferring that Congress
did, in fact, intend to make the federal remedy exclusive in this
single area of employment discrimination law. Exxon has offered
nothing from which we can discern such an intent.
In sum, we find no "clear and manifest" intent on the part
of Congress to preempt state handicap discrimination claims
against federal contractors. Indeed, we find no signals of such
an intent.10
2. Contract and promissory estoppel.
________________________________
In its appeal, Exxon contends that the district court should
have extended its 503 preemption ruling to Ellenwood's contract
and promissory estoppel claims as well. Exxon points out that
these claims allege that the company breached an agreement or
promise not to discriminate on the basis of Ellenwood's
"handicap" of alcohol abuse. Again relying solely on the
uniformity rationale, Exxon argues that all state claims based on
the same assertedly discriminatory conduct are foreclosed by
503.
____________________
10 Our preemption analysis applies as well to Ellenwood's
claim for wrongful discharge based on public policy. We offer no
view, however, as to whether such a claim exists under the
applicable state law.
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Our ruling on the statutory claims also is dispositive here.
We note, however, one instance in which a contract claim based on
statements in a company policy manual may be preempted by 503.
Regulations promulgated under the statute require employers to
post notices of their Rehabilitation Act obligations and of
employee rights under 503 in "conspicuous places." See 41
___
C.F.R. 60-741.4(d). If an employer included such a notice in
its policy manual solely to comply with this regulation, a state
contract claim based on a breach of the manual provision arguably
would be preempted by the federal law. See Arellano v. Amax Coal
___ ________ _________
Co., 56 Fair Empl. Prac. Cas. (BNA) 1519, 1524-25 (D. Wy. 1991).
___
Such a claim, though in the guise of a contract claim based on
the manual, would seem no different from one directly asserting a
breach of 503. A direct claim under 503 unquestionably would
be preempted for the reasons set out in Howard.
______
Exxon does not contend that the statements at issue here
were required by 503. Indeed, such a contention would be
patently unsupportable. Ellenwood's contract and estoppel claims
are not premised on a general notice of Exxon's affirmative
action obligations toward handicapped individuals, but on a very
specific written assurance from the company that it would not
disadvantage employees for seeking treatment for alcoholism.
We therefore hold that the district court correctly
determined that Ellenwood's contract and estoppel claims were not
preempted by 503.
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II. The Role of Admiralty Law
_________________________
Our conclusion that 503 does not preempt Ellenwood's state
statutory and common law claims does not end our inquiry into
whether those claims are foreclosed by federal law. Exxon also
contends that, even if 503 does not preempt them, maritime law
does. We consider this contention first as to the state statutes
and second as to the contract and estoppel claims.
A. State handicap discrimination statutes.
______________________________________
In a brief footnote, the district court observed that, even
if it had erred in its judgment about 503 preemption, the state
handicap discrimination claims nevertheless would be foreclosed
because maritime law, rather than state law, governs all issues
surrounding Ellenwood's employment as a chief engineer on board
ship. The court stated that, "I am not aware of any basis under
maritime law for such a recovery." Memorandum of Decision, Oct.
15, 1991, at 4 n.3.
The district court underestimated the role state law plays
in maritime cases. Supreme Court cases make it clear that courts
in admiralty cases may reach beyond maritime precedents and apply
state laws "absent a clear conflict with the federal [maritime]
law," Askew v. American Waterways Operators, Inc., 411 U.S. 325,
_____ __________________________________
341 (1973). See also Romero v. International Terminal Co., 358
___ ____ ______ ___________________________
U.S. 354, 373-75, 378, n.42 (1959); Just v. Chambers, 312 U.S.
____ ________
383, 391 (1941); Lyon v. Ranger III, 858 F.2d 22, 27 (1st Cir.
____ ___________
1988); 1 S. Friedell, Benedict on Admiralty 112, at 7-36 (7th
______________________
ed. 1991); 14 C. Wright, A. Miller & E. Cooper, Federal Practice
________________
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and Procedure (hereafter Wright & Miller) 3672, at 441-444
_____________ _________________
(1985).
Exxon contends that this is a case of conflict. It asserts
that applying state non-discrimination statutes in an admiralty
case will contravene federal maritime law by undermining that
"most fundamental and long established characteristic of maritime
law: the need for ``harmony and uniformity' of that law." Exxon
Brief at 21 (quoting Southern Pacific Co. v. Jensen, 244 U.S.
_____________________ ______
205, 216 (1917)). See also Miles v. Apex Marine Corp., 111 S.
___ ____ _____ __________________
Ct. 317, 322-23 (1990) (noting "``the constitutionally based
principle that federal admiralty law should be "a system of law
coextensive with, and operating uniformly in, the whole
country"'") (quoting Moragne v. States Marine Lines, Inc., 398
_______ __________________________
U.S. 375, 398 (1970) (quoting The Lottawanna, 21 Wall. 558, 575
______________
(1875))); Carey v. Bahama Cruise Lines, 864 F.2d 201, 207 (1st
_____ ____________________
Cir. 1988).
Once again, however, Exxon heralds the need for uniformity
without an appreciation for the boundaries of its relevance. All
state laws, if given effect in admiralty cases, will interfere to
a degree with the uniformity of admiralty law. See 1 Benedict on
___ ___________
Admiralty 112, at 7-36. But when Congress established a
_________
separate admiralty jurisdiction and empowered the judiciary to
develop substantive maritime principles for use nationwide, 14
Wright & Miller 3671, it simultaneously assured that state law
________________
would continue to play some role in maritime affairs through the
-20-
"saving to suitors" clause.11 This provision allows plaintiffs
to pursue, in addition to maritime relief, ordinary civil
remedies provided by state law, so long as they do not conflict
with the national substantive maritime law. See 14 Wright &
___
Miller 3672, at 440-444.
Through the years, the Supreme Court has confirmed that
"[t]he State and Federal Governments jointly exert regulatory
powers" in maritime matters, Romero, 358 U.S. at 374, and it is
______
by now well established that state law is displaced only when it
materially prejudices "the characteristic features of maritime
law," 1 Benedict on Admiralty 112, at 7-36. As we observed in
_____________________
Carey, "the Supreme Court . . . no longer construes the Admiralty
_____
Clause as requiring ``rigid national uniformity in maritime
legislation.'" 864 F.2d at 207 (citation omitted). See also Lyon
___ ____ ____
v. Ranger III, 858 F.2d at 27; G. Gilmore & C. Black, The Law of
__________ ___________
Admiralty, at 49-50 (2d ed. 1975). In other words, a state law
_________
claim should not be dismissed simply because it would result in
differing remedies for plaintiffs in different parts of the
country; such a claim is foreclosed only if the state law in
question frustrates a fundamental tenet of admiralty law. See
___
____________________
11 The Judiciary Act of 1789 granted the federal trial
courts "exclusive original cognizance of all civil causes of
admiralty and maritime jurisdiction," but also reserved to
"suitors, in all cases, the right of a common law remedy, where
the common law is competent to give it." See Southern Pacific
___ ________________
Co., 244 U.S. at 215-216. In its present form, see 28 U.S.C.
___ ___
1333(1), the clause gives the district courts original
jurisdiction, "exclusive of the courts of the States," of: "Any
civil case of admiralty or maritime jurisdiction, saving to
suitors in all cases all other remedies to which they are
otherwise entitled."
-21-
Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d 1485, 1488 (11th
_______________ ___________________
Cir. 1986).
For example, in Carey, 864 F.2d at 207, we held that a
_____
Massachusetts rule barring tort recovery when a plaintiff is more
than 50 percent negligent could not be applied in a maritime case
because "[o]ne of the essential and longstanding features of
substantive admiralty law is that contributory negligence can be
considered only in mitigation of damages." The rule wholly
foreclosing recovery is "``completely incompatible' with modern
admiralty practice." Id. (quoting Pope & Talbot, Inc. v. Hawn,
__ ___________________ ____
346 U.S. 406, 409 (1953)).
Although the rule barring state claims only if they directly
conflict with basic maritime principles often requires "a
delicate accommodation of federal and state interests," Carey,
_____
864 F.2d at 207, we have been shown nothing in substantive
maritime law that is even potentially at odds with state human
rights statutes such as those underlying Count IV of Ellenwood's
complaint. Congress's only legislation in the area of
handicapped rights has not been directed at maritime cases and,
as discussed supra, its legislation did not preempt state
_____
remedies. We find no indications that the absence of substantive
maritime law governing issues concerning individuals with
handicaps reflects a federal interest in protecting maritime
employers from such obligations. See 1 Benedict on Admiralty
___ ______________________
112, at 7-37. To the contrary, the Rehabilitation Act's
-22-
applicability to maritime employers demonstrates federal approval
of such obligations.
Thus, the district court's observation that maritime law has
not addressed handicap discrimination specifically is not a
reason to dismiss the state claim but a basis upon which to give
effect to the state provisions. Maritime law historically has
appreciated the leading role of state statutes in creating
additional bases of recovery. In maritime wrongful death cases,
for example, remedies first were provided solely under state law.
See Miles, 111 S. Ct. at 320-23; Moragne v. States Marine Lines,
___ _____ _______ ____________________
Inc., 398 U.S. 375, 397 (1970). When Congress enacted maritime
____
wrongful death legislation in 1920, it provided remedies only
where state law did not. Miles, 111 S. Ct. at 321; Moragne, 398
_____ _______
U.S. at 397-98. State statutes continued to play a primary role
for another fifty years, until the Supreme Court created a
general maritime cause of action for wrongful death. See Miles,
___ _____
111 S. Ct. at 321-323; Moragne, 398 U.S. at 398-402.12
_______
In its reply brief, the State of Maine notes a possible
concern that strict state standards regarding employment of the
handicapped would conflict with the maritime doctrine of
seaworthiness. The State emphasizes, however, that under its
law, any legitimate physical requirements for crew members under
____________________
12 Even today, plaintiffs may invoke state wrongful death
statutes under the saving clause insofar as they involve
accidents in territorial waters and do not conflict with the
substantive principles developed under the maritime wrongful
death doctrine. See Offshore Logistics, Inc. v. Tallentire, 477
___ ________________________ __________
U.S. 207, 227 (1986).
-23-
the seaworthiness doctrine would constitute bona fide
occupational requirements that would provide a defense to claims
brought under the statute. See 2A Me. Rev. Stat. Ann. tit. 5,
___
4572(1) (Supp. 1992). Of course, whether or not a state's
statute specifically included such a defensive provision, vessel
owners obviously could not be held liable for damages under state
anti-discrimination laws when federal maritime principles
required the employer to make the contested employment decision.
In that narrow way, maritime law would be preemptive.
As a general matter, however, we conclude that state human
rights statutes may be applied in maritime cases. Indeed, it
would be anomalous for maritime law, which has always shown "a
special solicitude for the welfare of seamen and their families,"
Miles, 111 S. Ct. at 327, to reject such an employee-sensitive
_____
provision. See also Smith v. Atlas Off-Shore Boat Serv., Inc.,
___ ____ _____ _________________________________
653 F.2d 1057, 1063 (5th Cir. Unit A 1981) (noting "the admiralty
court's protective attitude towards the seaman). "``[C]ertainly
it better becomes the humane and liberal character of proceedings
in admiralty to give than to withhold the remedy.'" Miles, 111
_____
S. Ct. at 327 (quoting Moragne, 398 U.S. at 387 (quoting Chief
_______
Justice Chase in The Sea Gull, 21 F. Cas. 909, 910 (No. 12,578)
____________
(CC Md. 1865))). See also Austin v. Unarco Industries, Inc., 705
___ ____ ______ _______________________
F.2d 1, 6 n.1 (1st Cir. 1983) (state law "is generally referred
to only when it affords greater protection to maritime employees
than that afforded by admiralty law").
B. Contract and promissory estoppel.
________________________________
-24-
Exxon contends that, in allowing the jury to consider
Ellenwood's contract and estoppel claims, the district court
improperly created an exception to the well-established rule that
maritime employment is terminable at will by either party in the
absence of a contract setting a specific term. According to
Exxon, maritime law has "clung tenaciously" to the at-will
principle, and only one narrow exception previously has been
carved from it. In Atlas Off-Shore Boat Serv., 653 F.2d at 1062-
__________________________
63, the court permitted a claim for wrongful discharge when a
seaman was fired for filing a personal injury claim that he was
entitled to file by statute. No additional exceptions should be
allowed to erode the strength of the at-will doctrine, Exxon
argues, since the seaman's rights as an employee already are well
protected by federal statute. See generally, e.g., 46 U.S.C.
___ _________ ____
10302, 10303, 10313, 10502, 10504, 10505, 10506 (prescribing
procedures governing meals, hours and wages for seamen).
Exxon misperceives the district court's ruling. The court
did not devise a new "wrongful discharge" cause of action on
behalf of Ellenwood. It simply recognized the obvious fact that
-- notwithstanding the general rule that a seaman's employment is
at-will -- a maritime employer may make a contractual agreement
with, or an enforceable promise to, its employees.
In this case, Ellenwood claimed that Exxon had promised that
his job security and future opportunities would not be
jeopardized if he sought treatment for alcoholism. The jury
found that the requirements for establishing a binding obligation
-25-
were met. We see no reason why maritime law would invalidate
this self-imposed obligation.13
Accordingly, we affirm the district court's judgment on the
breach of contract and estoppel claims. See infra Section V.
___ _____
III. Negligent Infliction of Emotional Distress
__________________________________________
The jury awarded Theodore Ellenwood $50,000 and his wife
$25,000 on their claims for negligent infliction of emotional
distress. The district court overturned these verdicts on the
ground that maritime plaintiffs may not recover for negligently
caused emotional damages unless they demonstrate accompanying
physical injury or impact.14 The Ellenwoods presented no
evidence of physical harm.
In granting judgment for defendants, the district court
noted that the Supreme Court in Atchison, Topeka and Santa Fe Ry.
_________________________________
____________________
13 Exxon does not argue that the district court improperly
instructed the jury on the elements necessary to establish a
contract or promissory estoppel claim in these circumstances, and
we therefore do not delve into this issue. See, e.g., Pearson v.
___ ____ _______
John Hancock Mutual Life Ins. Co., No. 92-1684, slip op. (1st
___________________________________
Cir. Nov. 10, 1992) (discussing factors necessary to establish
contract based on employee manual).
We do note that, as Exxon recognizes in its reply brief, a
contract must be "reasonably certain" to be enforceable. See
___
Restatement (Second) of Contracts 33 (1981). An estoppel claim
_________________________________
similarly must be supported by a sufficiently definite promise.
See Santoni v. Federal Deposit Ins. Corp., 677 F.2d 174, 178-79
___ _______ ___________________________
(1st Cir. 1982). Exxon does not -- and, in our view, cannot
reasonably -- argue that its policy statement assuring no adverse
consequences based on alcoholism treatment is insufficiently
definite to support a contract or estoppel claim.
14 The court very prudently allowed the claims to go to the
jury, thus foreclosing the possibility of a later heavy
investment of time and expense in the event that it should render
a judgment notwithstanding the verdict and that we would
disagree.
-26-
Co. v. Buell, 480 U.S. 557, 568 (1987), had raised the
___ _____
possibility of recovery for purely emotional injury in cases such
as this one.15 The court recognized, however, that our circuit
has had no opportunity since Buell to consider the issue. See
_____ ___
Moody v. Maine Cent. Ry. Co., 823 F.2d 693, 694 (1st Cir. 1987)
_____ ____________________
(declining to consider physical injury requirement because
plaintiff failed to show causation). It therefore relied on our
decision in Bullard v. Central Vermont Ry., 565 F.2d 193, 197
_______ ____________________
(1st Cir. 1977), to hold that a physical injury is a prerequisite
for recovery of emotional distress damages.16
In the aftermath of Buell, recovery for wholly emotional
_____
injury under the Jones Act and FELA has become an "important and
recurring issue" of federal law. Ray v. Consolidated Rail Corp.,
___ _______________________
112 S. Ct. 914 (1992) (White, J., dissenting from denial of
certiorari).17 The circuits vary in their treatment of such
claims. See, e.g., Ray v. Consolidated Rail Corp., 938 F.2d 704,
___ ____ ___ _______________________
705 (7th Cir. 1991) (no recovery under FELA unless injury results
____________________
15 Buell involved a claim brought under the Federal
_____
Employers Liability Act (FELA), 45 U.S.C. 51-60, which creates
a negligence cause of action for railroad workers against their
employers. The Jones Act, 46 U.S.C. App. 688, creates the same
cause of action for seamen, and incorporates by reference the
FELA. Caselaw developed under both statutes guides subsequent
interpretation of either of them. See Mitchell v. Trawler Racer,
___ ________ ______________
Inc., 362 U.S. 539, 547 (1960); Gaston v. Flowers Transp., 866
____ ______ _______________
F.2d 816, 817 (5th Cir. 1989).
16 Recovery for wholly emotional injuries was not at issue
in Bullard because the plaintiff also had injured his foot. See
_______ ___
565 F.2d at 197 & n.3.
17 Ray was, in fact, an FELA case, but, as noted earlier,
___
see supra note 15, FELA jurisprudence applies to Jones Act cases.
___ _____
-27-
from physical contact or threat of physical contact); Taylor v.
______
Burlington Northern R.R. Co., 787 F.2d 1309, 1313 (9th Cir. 1986)
____________________________
(claims for wholly mental injury are cognizable); Holliday v.
________
Consolidated Rail Corp., 914 F.2d 421, 426-27 (3d Cir. 1990)
________________________
(rejecting specific claim, but suggesting that, under the right
circumstances, emotional distress damages may be recoverable);
Gaston v. Flowers Transp., 866 F.2d 816, 821 (5th Cir. 1989)
______ ________________
(same).18
On appeal, plaintiffs urge us to hold explicitly that a
seaman may recover emotional distress damages without showing a
physical injury. Resolving this issue requires not only careful
analysis of the specific facts of the case at hand, but also a
review of common law jurisprudence and policy considerations.
Buell, 480 U.S. at 568-70. As the Supreme Court noted in Buell,
_____ _____
state court decisions reveal a number of "doctrinal divergences"
concerning intentional and negligent infliction of emotional
distress. Id. at 569-70. The Court therefore theorized that
__
recovery for emotional injury "might rest on a variety of subtle
and intricate distinctions related to the nature of the injury
and the character of the tortious activity." Id. at 568. It
__
____________________
18 In Plaisance v. Texaco, Inc., 937 F.2d 1004, 1009 (5th
_________ _____________
Cir. 1991), a divided panel of the Fifth Circuit announced a
broad rule permitting recovery for negligently caused emotional
injury, but denied recovery in the instant case because the
accident was so unexceptional that the significant emotional
injury sustained by a tugboat captain was not reasonably
foreseeable. Subsequently, in an en banc ruling, the circuit
__ ____
affirmed the denial of recovery but withdrew the broad ruling of
law. 966 F.2d 166 (1992). The Supreme Court denied certiorari.
See 61 U.S.L.W. 3400 (U.S. Nov. 30, 1992).
___
-28-
concluded its discussion by cautioning that, in this area of law,
"broad pronouncements . . . may have to bow to the precise
application of developing legal principles to the particular
facts at hand." Id. at 570.
__
Because the Ellenwoods have failed to present their claims
of negligence with particularity, this is not an appropriate case
in which to undertake such a substantial inquiry. Counts VII and
VIII of the complaint, in the words of the district court,
alleged "intentional and negligent infliction of emotional
distress on both Mr. and Mrs. Ellenwood in ending Ellenwood's
career and disseminating confidential information concerning his
condition." Memorandum of Decision, Oct. 15, 1991, at 2.
Neither the complaint nor the Ellenwoods' briefs, however,
specifically identifies the negligent acts of commission or
omission.19 In closing argument, plaintiffs' counsel referred
in one sentence, in conclusory terms, to the negligent infliction
claim.20
____________________
19 For example, was the alleged breach of contract the
asserted negligent action? Or was it the manner in which the new
policy was devised? or communicated? or applied? Was the
disclosure of Ted Ellenwood's alcohol treatment negligent? If
so, how? Instead of specifically identifying the allegedly
unreasonable conduct that constituted a breach of duty,
plaintiffs apparently assumed that we could, and would, discern
from the underlying facts one or more bases for their negligence
claims. This approach dates back to plaintiffs' complaint, where
they simply incorporated by reference the factual background
underlying the other causes of action to support the negligence
claims. See Complaint at 88-90.
___
20 Following lengthy discussions of the contract, promissory
estoppel and intentional infliction of emotional distress claims,
counsel stated:
-29-
The lack of attention devoted to this claim is further
illustrated by plaintiffs' assertion that Ted Ellenwood's
negligence cause of action was brought under general maritime
law, not the Jones Act. See, e.g., Tr. Vol. XII, at 7. In fact,
___ ____
the Jones Act provides the exclusive recovery in negligence for
claims by seamen against their employers. See Miles v. Apex
___ _____ ____
Marine, 111 S. Ct. 317, 324 (1990) (Jones Act was a response to
______
The Osceola, 189 U.S. 158 (1903), which established that seamen
___________
could recover under general maritime law for injuries resulting
from unseaworthiness but not negligence); Beltia v. Sidney Torres
______ _____________
Marine Transport, Inc., 701 F.2d 491, 493 (5th Cir. 1983) (Jones
_______________________
Act is "the sole basis upon which a seaman or his beneficiaries
may sue his employer for negligence") (citation omitted).
____________________
I suggest to you that even if you don't find
outrageousness [an element of the intentional
infliction tort], you should still return a verdict of
negligent infliction of mental distress. I feel,
however, very strongly that intentional infliction of
emotional distress has been shown because of this
policy itself and the actions Exxon Shipping Company
took against him deliberately after this policy came
into effect.
Tr. Vol. XI, at 98.
The court's instructions on the negligence count also were
framed broadly. The court told the jury that the plaintiff must
prove that (1) Exxon acted or failed to act as "a reasonably
prudent corporation would act in the management of its affairs;"
(2) that "severe emotional distress" to plaintiffs was
foreseeable; and (3) that plaintiffs suffered such distress as a
result of negligence. See Tr. Vol. XI, at 47.
___
-30-
Ellenwood's general maritime cause of action could be dismissed
for that reason alone.21
The Supreme Court in Buell only speculated that some claims
_____
for purely emotional injury may be brought under the FELA. See
___
Moody, 823 F.2d at 694 (door to recovery only "somewhat ajar").
_____
Conducting the particularized review needed to evaluate such a
claim here would require a detailed examination of Exxon's
assertedly negligent conduct, its context, and its impact on the
Ellenwoods. Arguably, even in a routine case, it would be
inappropriate for us to construct a theory of negligence so that
we could analyze a claim of apparently little importance to the
plaintiffs. A fortiori, we would be ill-advised to do so here,
___________
where we are asked to take a precedential step with a highly
circumscribed license from the Supreme Court.22
____________________
21 Although Mrs. Ellenwood's claim arises under general
maritime law, the limitations on recovery contained in the Jones
Act nonetheless are relevant because her claim is based on
assertedly negligent conduct governed by the statute. See
___
generally Miles v. Apex Marine, 111 S. Ct. at 327 ("We sail in
_________ _____ ___________
occupied waters. Maritime tort law is now dominated by federal
statute . . . .").
22 We note that the viability of emotional distress claims
based on management policy decisions and other day-to-day
interactions between employees and employers is a particularly
sensitive matter. See, e.g., Holliday v. Consolidated Rail
___ ____ ________ __________________
Corp., 914 F.2d 421, 425, 427 (3d Cir. 1990); Lancaster v.
_____ _________
Norfolk and Western Ry. Co., 773 F.2d 807, 813 (7th Cir. 1985);
___________________________
Puthe v. Exxon Shipping Co., No. 89-CV-1619, 1992 U.S. Dist.
_____ ___________________
LEXIS 14950, at *33-34 (E.D.N.Y. Sept. 26, 1992). Additionally,
we question whether a case such as this, whose dominant claim is
that the defendant intentionally reneged on a promise, presents
the sort of tortious conduct properly compensable under the Jones
Act.
-31-
We decline to explore the frontiers of the negligent
infliction tort in these circumstances. Accordingly, the
district court's judgment vacating the Ellenwoods' damage awards
is affirmed.23
IV. Punitive Damages
________________
The Ellenwoods contend that the district court erred in
refusing to submit their punitive damages claim to the jury.
This argument faces a threshold barrier because the Ellenwoods
have prevailed so far only on contractual claims, which
ordinarily do not support an award of punitive damages. See
___
Restatement (Second) of Contracts 355 (1981)24; Thyssen, Inc.
__________________________________ _____________
v. S.S. Fortune Star, 777 F.2d 57, 62-63 (2d Cir. 1985). See
__________________ ___
generally Molzof v. United States, 112 S. Ct. 711, 715 (1992)
_________ ______ _____________
(noting common law understanding that punitive damages were
awarded "to punish defendants for torts committed with fraud,
_____
actual malice, violence, or oppression") (emphasis added).
____________________
23 We find no merit in plaintiffs' assertions of error
concerning their claims for intentional infliction of emotional
distress. The instructions accurately reflected prevailing law,
see Restatement (Second) of Torts 46 cmt. d, and the court's
___ ______________________________
evidentiary decisions fell well within its broad discretion, see
___
Harrison v. Sears, Roebuck and Co., No. 92-1055, slip op. at 6-7
________ ______________________
(1st Cir. Dec. 9, 1992) (expert testimony); Elgabri v. Lekas, 964
_______ _____
F.2d 1255, 1261 (1st Cir. 1992) (Rule 403).
24 This provision states:
Punitive damages are not recoverable for a breach of
contract unless the conduct constituting the breach is
also a tort for which punitive damages are recoverable.
-32-
Despite the general principle, the Ellenwoods contend that
an award of punitive damages is permissible here because their
claim involved breach of a non-contractual legal duty not to
discriminate on the basis of a perceived handicap and,
consequently, contractual limitations on damages are
inapplicable. See Reply Brief at 22. They seek support from our
___
decision upholding punitive damages for a shipowner's willful and
callous withholding of a seaman's maintenance and cure in
Robinson v. Pocahontas, Inc., 477 F.2d 1048, 1051-52 (1st Cir.
________ ________________
1973). There, we emphasized the Supreme Court's statement in
Vaughan v. Atkinson, 369 U.S. 527, 532 (1962), that
_______ ________
"[m]aintenance and cure differs from rights normally classified
as contractual" because "the duty to provide maintenance and cure
``is imposed by the law itself as one annexed to the employment.'"
Robinson, 477 F.2d at 1052 (citation in Vaughan omitted).
________ _______
This argument assumes that the Ellenwoods proved more than a
breach of contract. They have not. In Robinson, punitive
________
damages were permissible because the "``[t]he duty to provide
maintenance and cure is in no real sense contractual, and a suit
for failure to provide maintenance or cure can hardly be equated,
therefore, with an action for breach of contract,'" 477 F.2d at
1052 n.3 (quoting Vaughan, 369 U.S. at 534 (Stewart, J.,
_______
dissenting)). Ellenwood's proven breach of contract and
promissory estoppel claims did not arise from a duty "imposed by
the law itself," Robinson, 477 F.2d at 1052, but from Exxon's
________
self-imposed obligation not to jeopardize the job security or
-33-
future opportunities of employees who sought treatment for
alcoholism. The Ellenwoods have cited no maritime decision
awarding punitive damages for breach of this type of contractual
obligation. See Thyssen, Inc., 777 F.2d at 62 (no case found in
___ _____________
which admiralty court awarded punitive damages for breach of
contract).
We are aware of a recent trend to permit punitive damages in
the contract setting in a narrow range of circumstances. See 5
___
A. Corbin, Corbin on Contracts 1077 (1964 and Supp. 1992).
____________________
This practice has been deemed appropriate when the breaching
party acted with "[t]he state of mind which accompanies an
intentional tort." id. (Supp.) at 179. In this case, the jury
__
found against the Ellenwoods on their intentional tort claims.
Plaintiffs, however, maintain that this finding should not
foreclose punitive damages because they claim that the standard
for punitive damages under maritime law is less demanding than
the standard for intentional infliction of emotional distress.
See Restatement (Second) of Torts 46; Muratore v. M/S Scotia
___ _____________________________ ________ __________
Prince, 845 F.2d 347, 354 (1st Cir. 1988) (maritime standard).
______
And so, plaintiffs contend that the rejection of their
intentional tort claims is not fatal to an award of punitive
damages.
Assuming that maritime law would permit a limited role for
punitive damages in the contract setting -- an issue we do not
reach -- we think it inconceivable that such damages would be
available when the jury specifically has rejected plaintiffs'
-34-
accompanying intentional tort claims. Thus, even if punitive
damages may be awarded under maritime tort law based on conduct
____
that would not satisfy the standard for intentional infliction of
emotional distress, we decline to hold that they may be awarded
for breach of contract in these circumstances.
________
Whether punitive damages may be available should Ellenwood
prevail upon remand on the handicap discrimination claims is an
issue not before us today. At the moment this is solely a
contract case, and we adhere to the settled rule of law
prohibiting such an award.
V. Burden of Proof
_______________
Exxon attempted to prove at trial that, even if Ellenwood
had not been removed from his chief engineer's post in April
1989, he would have lost his job later in the year when Exxon
downsized its fleet. Consequently, because Exxon continued to
pay Ellenwood's full salary and benefits through January 1991,
the company argued that Ellenwood was not entitled to any damages
for breach of contract or promise.
On appeal, Exxon claims that the district court incorrectly
instructed the jury that the company bore the burden of proving
that Ellenwood would have been terminated for bona fide reasons
____ ____
unrelated to the new alcohol rehabilitation policy. The burden
should have been placed on the plaintiff, Exxon asserts, and this
error entitles the company, at a minimum, to a new trial on the
contract and estoppel claims.
-35-
We find it unnecessary to consider this issue on the merits
because we conclude that Exxon failed to preserve it. At two
separate times, once before the jury charge and once after it,
the court and counsel discussed the instruction on this defense.
On the first occasion, during the precharge conference, the court
announced its decision to impose the burden on the defendant to
prove that Ellenwood would have lost his job for independent
reasons, and twice repeated its intention to give such an
instruction. See Tr. Vol. XI, at 24, 28, 29.
___
At that time, Exxon responded by asking the court to
include, within the "independent reasons" portion of the jury
charge, a sentence about "business judgment." This addition
would have emphasized to the jury that, in considering whether
Ellenwood would have been terminated as a result of the fleet's
downsizing, it was not permitted to second-guess Exxon's business
judgment in devising and applying its ranking system. See Tr.
___
Vol. XI, at 26. The ensuing discussion focused on how to
communicate to the jury that its task was limited to determining
whether the ranking system was a pretext. The instruction
ultimately adopted by the court included language suggested by
Exxon's counsel. Id. at 29. At no time during this discussion
__
did counsel object to the court's imposing the burden on Exxon.
Subsequently, the district court instructed the jury that
"Exxon Shipping has the burden of proof to show you that Mr.
Ellenwood would have lost his job for independent, nonpretextual
reasons," see Tr. Vol. XI, at 51. Following the full charge on
___
-36-
all claims, the district court held a sidebar conference in which
it heard and responded to both sides' objections. At that time,
Exxon's counsel requested an "additional instruction" on damages
for breach of contract or promise.
The proposed addition consumes 43 lines in the trial
transcript. See Tr. Vol. XI, at 64-66.25 The first four
___
paragraphs contained essentially the instruction on business
judgment that Exxon had requested earlier. See Tr. Vol. XI, at
___
65 ("You may not consider whether in your opinion the evaluations
or the rankings are appropriate or were done in a manner you
agree with.). The next section opens with the assertion that
"[t]he sole question you are to consider is whether Exxon
Shipping maintained its employee ranking list in good faith,"
id., and then states that, in deciding the question, "plaintiffs
__
have the burden of proof." Id. The proposal goes on to
__
elaborate on the plaintiff's burden, i.e., to show "by a
preponderance of the evidence that Exxon Shipping manipulated or
otherwise misused its ranking procedure in bad faith to cause Mr.
Ellenwood to be ranked lower on the ranking list of chief
engineers than he otherwise would have been." Id. at 65-66.
__
The district court gave the following response to Exxon's
proposal:
So far as the requested lengthy instruction . . .
by the defendant involving rank, proximate cause, good
faith, management practices and so on, I am satisfied
that would involve me in too great a commentary on the
____________________
25 The requested instruction is reproduced in its entirety
in an appendix to this opinion.
-37-
evidence. Instead, I've given a general charge
concerning the issue of whether Exxon would otherwise
have terminated him, required only that its reasons be
independent and not pretextual. I believe that that
adequately meets the standards in this area.
Tr. Vol. XI, at 72. It appears that the district court focused
primarily, if not exclusively, on the first portion of Exxon's
lengthy request and concluded that its own pretext instruction
adequately met Exxon's concern that the jury not consider how
good the ranking system was but only whether it was used in good
faith. Exxon made no further response and did not inform the
court that it also was concerned about who had the burden on this
issue.
What Exxon did here was not enough to entitle it to assert
this issue on appeal as a basis for a new trial. Counsel did not
object to the court's burden instruction, but proposed only an
addition. The proposal was long and, in its latter portion,
contradicted the court's earlier instruction on burden. When the
court reacted with comments apparently directed only to the first
part of the proposal, counsel made no effort to highlight its
concern regarding the burden. This omission is particularly
significant in light of the earlier discussion, which focused
solely on the business judgment rule.
Similarly, in its post-trial memorandum seeking a new trial
on the contract and estoppel claims, under the heading "Employee
Rankings," Exxon argued only that the court erred "in declining
to instruct the jury that it could not second guess the business
judgment of Exxon Shipping with respect to its performance
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evaluations and employee ranking system." See Memorandum, at 9.
___
Again, no reference was made to the burden of proof.
Not until its reply brief on appeal did Exxon articulate
clearly and concisely its burden of proof objection. It is well
established, the company now contends, that the burden of proving
bad faith must be on the party seeking to show it because
"[d]isproving bad faith is almost always close to impossible."
Reply Brief, at 17. Because the issue here was not the quality
of Exxon's ranking system, but whether the system was maintained
in good faith, the company claims the burden should have been on
Ellenwood to prove that Exxon manipulated its rankings in bad
faith.
We do not reach this argument because it is too late. To
consider disassembling the court and jury's substantial work
without clearer notice than Exxon gave to the district court
would be to snub the requirement in Fed. R. Civ. P. 51 that a
party must "stat[e] distinctly the matter objected to and the
grounds of objection." Accordingly, we leave undisturbed the
district court's judgment on the contract and estoppel claims.
VI. Benefits Offset
_______________
Exxon has claimed error in the district court's instruction
to the jury not to offset the damages award by the amount of
special retirement benefits the company has paid or will pay to
Ellenwood. Under a "special sea service plan," Exxon contributed
to an annuity that distributed monthly payments to retired
-39-
employees in amounts based on life expectancy. Ellenwood began
receiving annuity payments of nearly $20,000 a year following his
retirement in 1991 at age 45. It is these payments that Exxon
seeks to have offset.
Exxon's argument is based on the general principle that an
award of lost earnings makes the wrongfully discharged employee
whole and that to add pension benefits would give the employee a
windfall. Ellenwood counters with his own windfall argument:
subtracting the expected benefits from the damages award treats
the employer who breaches an employment contract more charitably
than one who has observed one faithfully. Both parties cite
caselaw to support their claims.
In fact, however, we conclude that the record made in this
case, rather than general principles, dictates the result. The
relevant facts are contained in a letter from an Exxon official
in response to a request from Ellenwood's counsel to provide
"[t]he 1990 percentages of payroll for the various benefits
provided to employees." Brief of Plaintiffs-Appellees at
Addendum 18. The letter, which is not mentioned in Exxon's
brief, itemized the percentages of payroll attributable to life
insurance, medical and dental insurance, Medicare, a thrift plan,
long term disability insurance, workers' compensation, and "all
other." These items totalled 20.8% But included in the listing,
indeed heading the list, was "Annuity" and its percentage,
"(2.7%)". In other words, this percentage was deducted from the
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total of the above listed items, making the bottom line total
percentage for fringe benefits 18.1%.
The effect of this listing was to indicate to Ellenwood's
economic expert on damages that he should add to his computation
of lost earnings 18.1% of those earnings to reflect compensation
in the form of fringe benefits. Exxon did not add into the
benefits total the 2.7% annuity item, which would amount to an
annual payment of approximately $2,300. Indeed, the letter
subtracted the 2.7% from the remaining total of benefits, thereby
reducing by a substantial amount the present discounted value of
Ellenwood's fringe benefits.
Had there been no breach of the employment contract, the
$2,300 yearly contribution apparently would have bought an
annuity that, upon Ellenwood's retirement at age 65, would have
yielded annual payments in an amount much larger than the present
$20,000 amount. We look upon this amount as having been bought
by prior Exxon contributions and earned by Ellenwood as part of
Exxon's compensation package. To allow Exxon a further deduction
for the income stream purchased by the annual $2,300 payment
would seem to be, as Ellenwood argues, to allow a double credit.
This, at least, is how we read the testimony of plaintiff's
economist, Dr. McCausland, who had asked for the percentages
applicable to fringe benefits. He testified that
the fringe benefit [sic] had to be put into present
value terms . . . , it's how many dollars do we have to
give him today so he'll have that amount of money
available to him in each year to pay for the same
fringe benefits.
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And I based it on their fringe benefit package . .
. . And what I did, I took 18.1 percent of the present
value of lost earnings, and that works out to be
$294,528.79.
Tr. Vol. V, at 111. On cross examination Exxon's counsel asked,
"Now you were also aware that Mr. Ellenwood is receiving almost
$20,000 a year in pension benefits currently from Exxon Shipping
Company?" To this, Ellenwood's counsel objected, saying, "that's
his money, and it is not properly considered to be mitigation."
Whereupon Exxon's counsel withdrew the question. Id. at 121-122.
__
On this record the district court ruled that it was "the
burden of proof of the defendant to come forward and show that
these are benefits being received that should be subtracted from
the amounts that plaintiff would otherwise . . . receive" and
that "the state of the record doesn't permit that determination."
Tr. Vol. XI, at 35. We agree. Indeed, it seems to us that the
record is not merely insufficient to support a basis for offset,
but points affirmatively to an already accomplished deduction.
VII. Conclusion
__________
The following is a brief summary of our major holdings:
(1) we reverse the district court's ruling that state
statutes prohibiting discrimination against the handicapped are
preempted by the Rehabilitation Act of 1973 and maritime law, as
well as its ruling that plaintiff's claim of violation of state
public policy is similarly preempted, and the case therefore is
remanded for further proceedings on such claims;
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(2) we affirm the district court's ruling that Ellenwood's
state contract and promissory estoppel claims are not preempted
by either the Rehabilitation Act or maritime law;
(3) we decline to address the Ellenwoods' claim that the
district court improperly granted Exxon's request for judgment as
a matter of law on their claims for negligent infliction of
emotional distress, concluding that these claims were not
adequately developed;
(4) we affirm the district court's refusal to submit the
issue of punitive damages to the jury;
(5) we find that Exxon failed to preserve its challenge to
the district court's instruction imposing upon it the burden of
demonstrating that Ellenwood would have been removed from his
chief engineer's position in late 1989 for bona fide reasons
____ ____
independent of his participation in an alcohol rehabilitation
program;
(6) and we affirm the district court's decision to exclude
from the jury's damages calculation Ellenwood's sea service
retirement benefits.26
The judgment of the district court is therefore affirmed in
____________________________________________________________
part, reversed in part, and remanded for further proceedings
_________________________________________________________________
consistent with this opinion. No costs.
____________________________ ________
____________________
26 We have reviewed the district court's rulings on
Ellenwood's privacy claims, and find no error.
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APPENDIX
The following is the full text of Exxon's proposed additional
instruction on damages for breach of contract or promise, as
discussed supra at page 36.
_____
As you know, Mr. Ellenwood ceased receiving a salary
from Exxon Shipping on January 15, 1991. If you find
as Exxon Shipping claims that Mr. Ellenwood would have
been terminated prior to that time in the fall of 1989
because of his low performance ranking compared to
other chief engineers when Exxon Shipping's oceangoing
fleet was downsized, then no damages should be awarded
even if you find that Exxon Shipping breached a
contract with Mr. Ellenwood.
Under such circumstances, the conduct of Exxon
Shipping complained of here was not the proximate cause
of any loss Mr. Ellenwood suffered. If on the other
hand you find that Mr. Ellenwood would not have been
terminated when the fleet was downsized, you may
continue to consider damages.
During this case a number of witnesses have
testified regarding Exxon Shipping's performance
evaluation and ranking system. This case is not about
whether you agree with or like Exxon Shipping's
performance evaluation or ranking procedures, or
whether you agree with or like Exxon Shipping's
employment practices. As I previously instructed you,
you may not substitute your judgment for the company's.
I therefore instruct you that your views
concerning whether Exxon Shipping's ranking system was
well administered cannot be considered by you in
rendering your decision in this case. You may not
consider whether in your opinion the evaluations or the
rankings are appropriate or were done in a manner you
agree with.
The sole question you are to consider is whether
Exxon Shipping maintained its employee ranking list in
good faith. In deciding the question, plaintiffs have
the burden of proof. By that I mean you must decide
whether the plaintiffs have proven by a preponderance
of the evidence that Exxon Shipping manipulated or
-44-
otherwise misused its ranking procedure in bad faith to
cause Mr. Ellenwood to be ranked lower on the ranking
list of chief engineers than he otherwise would have
been.
In essence, did Exxon Shipping make its
evaluations of Mr. Ellenwood in bad faith with an
intent to injure him in order to improve Exxon
Shipping's defense in this case.
If you conclude that plaintiffs have not proven by
a preponderance of the evidence that Exxon Shipping
acted in bad faith in establishing its ranking list in
1989, then you must find that Mr. Ellenwood has
suffered no damages under either of his contract
claims.
-45-
Document Info
Docket Number： 92-1473
Filed Date： 1/14/1993
Precedential Status： Precedential
Modified Date： 3/3/2016