-
USCA1 Opinion
December 3, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1054
JAMES D. WILLIAMS,
Plaintiff, Appellee,
v.
JOHN JONES d/b/a NICOLE ENTERPRISES,
Defendant, Appellant.
____________________
ERRATA SHEET
The opinion of this Court issued on December 3, 1993, is
amended as follows:
On page 24, the last sentence in the second paragraph "Costs
_____
are awarded to plaintiff-appellee" should be corrected to read
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"Costs are awarded to defendant-appellant."
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UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1054
JAMES D. WILLIAMS,
Plaintiff, Appellee,
v.
JOHN JONES d/b/a NICOLE ENTERPRISES,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
___________________
____________________
Before
Torruella, Selya and Cyr,
Circuit Judges.
______________
____________________
Marshall J. Tinkle, with whom Thompson, McNaboe, Ashley &
___________________ ____________________________
Bull was on brief for appellant.
____
Douglas C. Baston, with whom Howard & Bowie Law Offices was
_________________ __________________________
on brief for appellee.
____________________
December 3, 1993
____________________
CYR, Circuit Judge. In 1978, plaintiff-appellee James
CYR, Circuit Judge
______________
Williams was injured as a result of a fall from the boom of a
fishing vessel owned by his employer, defendant-appellant John
Jones, d/b/a Nicole Enterprises (Jones). After Williams was
diagnosed with a herniated disc, he filed a claim against Jones
for compensation benefits under the Longshore and Harbor Workers'
Compensation Act (LHWCA), 33 U.S.C. 901-50.1 In March 1981,
a Department of Labor (DOL) administrative law judge (ALJ) found
that Williams had a "temporary total disability," see id. 908-
___ ___
(b), and ordered Jones to commence immediate payments to Williams
in an amount equal to two-thirds of Williams's average weekly
____________________
1The LHWCA is a comprehensive statutory scheme governing
compensation for covered employees (e.g., longshoremen) due to
____
loss of earning capacity caused by injuries sustained while
engaged in "maritime employment" upon the navigable waters of the
United States, or upon designated lands adjoining those waters.
See 33 U.S.C. 902, 903. Like state workers' compensation
___
statutes, the LHWCA contemplates a relinquishment of substantive
rights by both parties; employers are liable for compensation to
the disabled employee "irrespective of [the employers'] fault,"
id. 904, while employees' LHWCA administrative and judicial
___
remedies against their employer are exclusive, see id. 905; see
_________ ___ ___ ___
also Potomac Elec. Power Co. v. Director, Office of Workers
____ _________________________ _____________________________
Compensation Programs, 449 U.S. 268, 281-82 (1980); Ceres Gulf v.
_____________________ __________
Cooper, 957 F.2d 1199, 1205 (5th Cir. 1992).
______
After sustaining a work-related injury, a covered employee
must provide written notice to his employer within 30 days from
the date upon which he should have discovered his disability, in
the exercise of reasonable diligence. See 33 U.S.C. 912.
___
Within 14 days of such notice, or after obtaining actual or
constructive knowledge of the employee's disability, the employer
must either (1) commence payments to the employee in an amount
equal to two-thirds of the employee's "average weekly wages," see
___
id. 906, 908, 910, or (2) notify the United States Department
___
of Labor (DOL) that the employee's right to compensation will be
contested, specifying the grounds. See id. 914(d). If the
___ ___
employer contests, the employee has one year from the date of his
injury, or one year from the employer's last voluntary payment,
to file a written claim with the DOL. See id. 913; see also 20
___ ___ ___ ____
C.F.R. 702.201-702.286 (1993).
3
wage of $250, effective from October 1978.2 See id. 906,
___ ___
910. Notwithstanding two successful appeals to the Benefits
Review Board (BRB) by Jones, see id. 921(b),3 ultimately the
___ ___
BRB affirmed a compensation award in favor of Williams. We
denied Jones's petition for judicial review in 1990. See id.
___ ___
921(c). Notwithstanding the finality of the compensation award
____________________
2Within ten days after the employee files an administrative
claim, see supra note 1, the DOL must cause notice to be served
___ _____
on all interested parties, including the employer, see id.
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919(b), and conduct all necessary investigations of the
employee's claim, see id. 919(c); see also 20 C.F.R. 702.331-
___ ___ ___ ____
702.351 (1993). At least ten days' notice of the 919 eviden-
tiary hearing must be provided to all interested parties, by
personal service or registered mail. Id. Section 919 evidentia-
___
ry hearings are conducted pursuant to the Administrative Proce-
dures Act, 5 U.S.C. 554, by an ALJ. Within 20 days after the
hearing, the ALJ must either reject the employee's claim, or
issue a compensation order designating the extent of the em-
ployee's "disability" (e.g., permanent total, temporary total,
____
permanent partial) and setting the amount of biweekly compensa-
tion. The ALJ's compensation order becomes "effective" as soon
as it is duly filed in the appropriate DOL office and notice of
the filing is mailed to the employee and the employer. Id.
___
919(e), 921(a). The employer's obligation to pay compensation
to the employee commences on the date the ALJ's compensation
order becomes "effective."
3See Williams v. Nicole Enters., Inc., 15 Ben. Rev. Bd.
___ ________ _____________________
Serv. 453 (1983); Williams v. Nicole Enters., Inc., 19 Ben. Rev.
________ ____________________
Bd. Serv. 66 (1986). "Effective" compensation orders remain non-
"final" pending appeal. Once an ALJ's compensation order becomes
"effective," the nonprevailing party has 30 days to appeal the
order (or the ALJ's rejection of the claim) to the BRB, a three-
member appellate panel within the DOL. See 33 U.S.C. 921(b).
___
The BRB must accept all ALJ factual findings supported by "sub-
stantial evidence." Id. If the BRB affirms, the nonprevailing
___
party may petition for judicial review by the appropriate court
of appeals, which will apply the same "substantial evidence"
standard of review to the ALJ's factual findings, but otherwise
has jurisdiction to affirm, modify, set aside, or enforce the
__ _______
ALJ's compensation order. Id. 921(c). If no party appeals the
___
ALJ's order to the BRB, it becomes "final" 30 days after the
parties are notified that it has been filed in the appropriate
DOL office pursuant to 919(e). Id. 921(a).
___
4
for LHWCA purposes, see supra note 3, Williams alleges that he
___ _____
has received only $450 in benefit payments from Jones to date.
On August 7, 1992, Williams brought the present en-
forcement action in federal district court, pursuant to LHWCA
subsections 921(d) and (e):
(d) If any employer or his officers or agents
fails to comply with a compensation order
making an award, that has become final, any
beneficiary of such award or the deputy com-
missioner making the order, may apply for the
enforcement of the order to the Federal dis-
trict court for the judicial district in
which the injury occurred . . . . If the
__ ___
court determines that the order was made and
_____ __________
served in accordance with law, and that such
___
employer or his officers or agents have
failed to comply therewith, the court shall
_____ _____
enforce obedience to the order by writ of
_______ __ ____ __
injunction or by other proper process, manda-
__________ __
tory or otherwise, to enjoin upon such person
and his officers and agents compliance with
the order.
(e) Proceedings for suspending, setting
aside, or enforcing a compensation order,
whether rejecting a claim or making an award,
shall not be instituted otherwise than as
_____ ___ __ __________ _________ ____ __
provided in this section . . . .
________
33 U.S.C. 921(d), (e) (emphasis added).
Jones opposed the petition for enforcement on the
grounds that "newly discovered" evidence revealed that Williams
secured the award through perjury and fraud, and that the en-
forcement petition was not served on Jones in compliance with
Fed. R. Civ. P. 4. A magistrate judge recommended that the
petition for enforcement be granted because Jones was precluded,
as a matter of law, from pleading these defenses in an enforce-
ment action brought pursuant to LHWCA section 921(d). Jones's
5
appeal from the district court order adopting the magistrate
judge's recommended decision presents two important issues of
first impression relating to the LHWCA's enforcement provisions.
I. Insufficient Process and Service of Process.
I. Insufficient Process and Service of Process.
___________________________________________
Jones concedes actual notice of the filing of the
section 921(d) enforcement petition with the district court, but
pleads insufficient process and insufficient service of process,
see Fed. R. Civ. P. 12(b)(4), (5), based on Williams's admitted
___
failure to serve Jones pursuant to Fed. R. Civ. P. 4. See Durbin
___ ______
Paper Stock Co. v. Hossain, 97 F.R.D. 639, 639 (S.D. Fla. 1982)
_______________ _______
("Service of process is not effectual on an attorney solely by
reason of his capacity as an attorney, [but] [t]he party must
have appointed his attorney as his agent for service of pro-
cess.") (collecting cases); cf. Fed. R. Civ. P. 5(b).4
___
The Federal Rules of Civil Procedure apply in section
921(d) enforcement proceedings "except to the extent that matters
of procedure are provided for in [the LHWCA]." Fed. R. Civ. P.
81(a)(6). As section 921(d) is silent on the procedures for
filing, serving, and answering an enforcement petition in the
____________________
4Rule 12(b)(4) and (5) defenses may be waived if not timely
asserted. Marcial Ucin, S.A. v. SS Galicia, 723 F.2d 994, 996
__________________ __________
(1st Cir. 1983). Jones's first "response" to Williams's peti-
tion, filed on August 21, 1992, did not contest service of
process pursuant to Fed. R. Civ. P. 12(h)(1)(A). Five days
later, however, Jones filed his answer and counterclaim, raising
the insufficient process and service of process defenses in
timely fashion. See Fed. R. Civ. P. 12(h)(1)(B) (defense not
___
waived if raised in "matter of course" Rule 15(a) amendment to
responsive pleading within 20 days of initial answer). See
___
Glater v. Eli Lilley & Co., 712 F.2d 735, 738 (1st Cir. 1983).
______ ________________
6
district court, Jones reasons that service of process was re-
quired in accordance with Fed. R. Civ. P. 4 and 81(a)(6); without
it, he argues, the district court did not obtain personal juris-
diction over him.
The magistrate judge rejected Jones's argument, citing
Jourdan v. Equitable Equip. Co., 889 F.2d 637 (5th Cir. 1989), a
_______ ____________________
case involving companion LHWCA section 918(a). Section 918(a)
enforcement proceedings normally are used to enforce compensation
awards which have become "effective" but are not yet "final";
that is, during the pendency of an appeal to the BRB from the
ALJ's initial award, or from the BRB to the court of appeals.
See supra notes 2 and 3. Within one year after an employer's
___ _____
default, the employee may apply to an ALJ for a "supplementary
order" declaring the amount in default. The ALJ may not issue
the supplementary order except "[a]fter investigation, [and]
notice, and hearing." Even then, however, the supplementary
order is not self-executing. Rather, the claimant, or the ALJ,
must file a certified copy of the supplementary order with the
appropriate federal district court, which "shall upon filing of
_____ ____ ______
the copy enter judgment for the amount declared in default . . .
if such supplementary order is in accordance with law."5
____________________
5LHWCA 918(a) provides, in pertinent part:
(a) In case of default by the employer in the payment
of compensation due under any award of compensation for
a period of thirty days after the compensation is due
and payable, the person to whom such compensation is
payable may, within one year after such default, make
application to the [ALJ] making the compensation order
for a supplementary order declaring the amount of the
7
The Jourdan court held that the obligatory language of
_______
section 918(a) evinced a clear congressional intent to dispense
with the "service of process" requirements of Fed. R. Civ. P. 4
in a section 918(a) enforcement proceeding brought in the dis-
trict court. The magistrate judge in the present case, analo-
gizing from Jourdan, reasoned that,
_______
[l]ike Section 918(a), Section 921(d) utiliz-
es imperative language; upon certain findings
the court "shall enforce." The only differ-
ence is the lack of specificity regarding the
____ __ ___________
method for filing the "application." In
either case, the court must make preliminary
findings that amount to nothing more than a
procedural review of the underlying process.
__________ _______
Assuming there were no procedural errors at
__ __________ ______ __
the administrative level, the court has no
___ ______________ _____ __
choice but to enforce the order. Again, the
______
court has no jurisdiction over the merits of
the action. The aggrieved party would have
___ _________ _____ _____ ____
no additional opportunity to be heard even if
__ __________ ___________ __ __ _____ ____ __
notice were provided according to the strict
______ ____ ________ _________ __ ___ ______
requirements of Rule 4. The logical conclu-
____________ __ ____ _
sion is that Section 921(d) is a summary
____________________
default. After investigation, notice, and hearing, as
provided in section [919], the [ALJ] shall make a
supplementary order, declaring the amount of the de-
fault, which shall be filed in the same manner as the
compensation order. In case the payment in default is
an installment of the award, the [ALJ] may, in his
discretion, declare the whole of the award as the
amount in default. The applicant may file a certified
copy of such supplementary order with the clerk of the
Federal district court for the judicial district in
which the employer has his principal place of business
or maintains an office, or for the judicial district in
which the injury occurred. ... Such supplementary
order shall be final, and the court shall upon the
filing of the copy enter judgment for the amount de-
clared in default by the supplementary order if such
supplementary order is in accordance with law. Review
of the judgment so entered may be had as in civil suits
for damages at common law.
33 U.S.C. 918(a).
8
proceeding, and that upon filing of appropri-
ate documentation showing that the order is
final, that it was properly served, and that
the employer has failed to comply, the court
should issue the order.
Williams v. Jones, No. 92-0156-B, slip op. at 6 (D. Me. Oct. 27,
________ _____
1992) (recommended decision) (emphasis added).
Assuming, arguendo, that Jourdan is correctly decided,
________ _______
section 921(d) is insufficiently analogous to section 918(a) to
bear the weight given it in the recommended decision below.
Section 918(a)'s bifurcated enforcement mechanism requires
________
administrative notice to the employer, as well as an opportunity
______________ ______
to be heard, prior to the entry of any supplementary enforcement
_____
order by the ALJ. See supra notes 2 and 5. Long before the
___ _____
employee ever files the ALJ's certified supplementary order with
the district court, therefore, the procedural requirements of
section 918(a) itself have assured that the employer was placed
on notice of the impending judicial enforcement proceeding. The
district court is expressly charged with determining whether
"such supplementary order [was] in accordance with law." 33
U.S.C. 918(a). Thus, section 918(a) envisions an ancillary
district court mechanism for enforcing supplementary enforcement
orders entered by the ALJ. Arguably, at least, this is the sort
of administrative alternative to service of process which would
preempt the Rule 4 service of process requirement under Fed. Rule
Civ. P. 81(a)(6).6 In contrast, however, no notice to the
____________________
6Analogous Rule 81(a)(5), governing the applicability of the
Civil Rules to NLRB proceedings, likewise illuminates the present
inquiry. See Fed. R. Civ. P. 81(a)(5) ("in respects not covered
___
9
employer is required prior to the commencement of a section
921(d) enforcement action in the district court. See supra p. 4.
___ _____
In addition, we detect no intimation, either in the
statutory language or legislative history, that Congress con-
templated a section 921(d) proceeding quite so summary as indi-
cated in the recommended decision. Even assuming that a full
panoply of equitable defenses is not available to an employer in
a section 921(d) enforcement action, see infra pt. II, it is
___ _____
nonetheless clear that the employer may contest factual allega-
tions upon which the section 921(d) enforcement petition neces-
sarily depends,7 including the main issue whether the employer
_______ ___ ________
____________________
by [29 U.S.C. 159, 160] the practice in the district courts
shall conform to these rules as far as applicable"). In contrast
to LHWCA 921(d), however, the NLRB sections referenced in Rule
81(a)(5) contain detailed provisions relating to the filing of a
petition to enforce an NLRB order. See 29 U.S.C. 160(e) ("Upon
___
filing of such a petition, the court shall cause notice thereof
_____
to be served upon such person, and thereupon shall have jurisdic-
_________ _____ ____ _________
tion of the proceeding and of the question determined therein,
____ __ ___ __________
and shall have power to grant such temporary relief or restrain-
ing order as it deems just and proper . . . .") (emphasis added).
7Although clearly treated by the parties and the district
court as a 921(d) action, Williams's petition for enforcement
is an odd hybrid. Initially, Williams presented his petition for
enforcement to the DOL. In a June 30, 1992 letter to Williams,
the District Director of the DOL determined that the compensation
order was "final," that it was made and administratively served
"in accordance with law," and that Jones was in default on
payments. Under 921(d), these administrative determinations
were supererogatory. Unlike 918(a), 921(d) expressly re-
serves such matters for resolution by the district court. See 33
___
U.S.C. 921(d) ("If the court determines that the order was made
__ ___ _____ __________
and served in accordance with law . . . .") (emphasis added).
______
Although the district court correctly noted that Jones did not
contest these matters (e.g., the giving of notice as required in
____
the administrative proceedings under 919), the applicability of
______________
the Rule 4 service of process requirement is not made to depend,
see Fed. R. Civ. P. 81(a)(6), upon whether the defendant-employer
___
received notice in the administrative proceeding, but whether
________
10
is in default. Moreover, arguably at least, the employer might
__ __ _______
be entitled to raise factual challenges relating to (1) the
amount in default,8 (2) whether new evidence indicates that the
initial compensation order was procedurally defective, or other-
wise not "in accordance with law," or (3) employee conduct that
might tilt the fundamental balance of equities in favor of
judicial restraint. See infra note 18. Moreover, unlike the
___ _____
bifurcated process involved in a section 918(a) enforcement
__________
proceeding, which presumes prior notice and hearing at the
administrative level, section 921(d) constitutes the district
court the employer's first and only forum for a full hearing of
_____ ____
such factual disputes prior to the issuance of an injunctive
____________________
"matters of procedure are provided for in" the LHWCA, id. (empha-
________ ___ __ ___
sis added). Since there is no LHWCA provision governing service
of process upon the defendant employer in a 921(d) judicial
enforcement proceeding, the district court erred in determining
that service of process in accordance with Fed. R. Civ. P. 4 and
81(a)(6) was not necessary.
Moreover, although the DOL letter of June 1992 contained
findings analogous to those required under LHWCA 918(a), see
___
supra note 5, it could not qualify as a 918 "supplementary
_____
order," since (1) there is no record evidence that Jones contem-
poraneously received the letter, or any notice of it, (2) the DOL
did not conduct a 919 hearing prior to issuance of the letter,
(3) the copy of the DOL letter filed with the district court
enforcement petition was not "certified," and (4) Williams's
district court petition specifically invokes subject matter
jurisdiction under section 921(d) only.
8Williams conceded that Jones was making payments at the
time of the district court order, but insisted that the enforce-
ment petition sought to compel payment of the "arrearages" dating
__________
from October 1978. The magistrate judge concluded that 921(d)
differed from 918(a), in that it permits the enforcement of
prospective compensation orders only, compelling future payments
to be made as they come due but not recoveries of past due
payments. Williams, slip op. at 3 (citing Henry v. Gentry
________ _____ ______
Plumbing & Heating Co., 704 F.2d 863 (5th Cir. 1983)). Since
_______________________
Williams has not cross-appealed, we do not address this question.
11
enforcement order, with its attendant exposure to coercive
contempt proceedings.
The recommended decision observes that even without a
formal Rule 4 service of process requirement the district court
could notify an employer informally in those cases where the
__________
court believed that an employee's petition for enforcement
involved controverted factual matters. But of course such an
approach could afford adequate safeguards only if the factual
conflicts were apparent on the face of the employee's petition
__ ___ ____ __ ___ __________ ________
for enforcement. Otherwise, there could be no assurance that the
respondent-employer would have either notice or opportunity to
assert a challenge. Thus, to construe Rule 81(a)(6) as excepting
section 921(d) enforcement actions from the service of process
requirements of Rule 4, merely because the employer did not
interpose opposition to the enforcement petition, could expose
employers to ex parte enforcement orders.
__ _____
Finally, Williams suggests that requiring service of
process in a section 921(d) enforcement proceeding could subvert
the LHWCA goal of ensuring prompt compliance with compensation
orders. Granting the premise of Williams's LHWCA policy argument
in principle, whatever slight delay might be occasioned by
requiring proper service of process in order to enable the court
to obtain in personam jurisdiction over employers hardly seems
12
inappropriate, especially in light of the simplicity of the
procedure.9
Sections 918(a) and 921(d) serve distinct roles in the
LHWCA remedial scheme. Section 918(a) designedly affords injured
employees a convenient, inexpensive, and expeditious mechanism
for facilitating enforcement of "effective" compensation awards
even before they have become "final". Congress anticipated the
_____
severe financial hardships that could beset injured employees as
a result of lengthy appeals. It therefore settled on the section
918(a) enforcement action as a simple means to compel prompt
employer compliance with an enforcement award even though it
might later be set aside on review. See, e.g., Tidelands Marine
___ ____ ________________
Serv. v. Patterson, 719 F.2d 126, 129 (5th Cir. 1983) ( 918(a)
_____ _________
implements "a theme central to the spirit, intent, and purposes
of the LHWCA"); Henry, 704 F.2d at 865.10 For some reason not
_____
disclosed in the appellate record, however, Williams failed to
____________________
9Other types of minor procedural delays have not foreclosed
agency recognition of the applicability of the Civil Rules to the
LHWCA by virtue of the gap-filling mandate in Fed. R. Civ. P.
81(a)(6). For instance, Civil Rule 6(e), which permits addi-
tional time (3 days) for compliance after service by mail, has
been held applicable in LHWCA enforcement proceedings. See,
___
e.g., Johnson v. Diamond M Co., 14 Ben. Rev. Bd. Serv. 694, 696
____ _______ ______________
(1982) ("There is no provision in the Act excepting the applica-
_________
tion of [Civil] Rule 6(e) . . . .") (emphasis added); see also
___ ____
Great Am. Indem. Co. v Belair, 160 F. Supp. 784, 785 (D. Conn.
_____________________ ______
1957) (same).
10Under the LHWCA, employers may recoup overpayments only as
credits against compensation payments due the employee in the
_______
future. See 33 U.S.C. 908(j), 914(j), 922; see also Ceres
___ ___ ____ _____
Gulf, 957 F.2d at 1201. Thus, if a compensation order is vacated
____
in its entirety, payments previously made are essentially un-
recoverable. Id.
___
13
invoke the convenient, prompt, and inexpensive enforcement
mechanism established under section 918(a) throughout the ten-
year period spanned by Jones's numerous appeals. Cf., e.g.,
___ ____
Cassell v. Taylor, 243 F.2d 259, 260 (D.C. Cir. 1957) (one-year
_______ ______
statute of limitations under 918(a) bars recovery on supplemen-
tal order filed sixteen years after default on compensation award
payments); supra note 5. Moreover, Williams chose not to cross-
_____
appeal from the district court's ruling that section 921(d) could
not be used to recover past-due payments. See supra note 8. The
________ ___ _____
avoidable and unexplained delay in Williams's efforts to recover
these past-due compensation payments from Jones, however ill
advised or unfortunate, does not permit disregard of the service
of process requirements applicable to section 921(d) enforcement
proceedings, particularly since compliance will entail no sig-
nificant further delay.11 But cf. infra pt. II.B.
___ ___ _____
Furthermore, proper service of process is no empty
procedural exercise where an employee seeks to obtain a district
court enforcement order under section 921(d) which may lead to
contempt proceedings against the employer for noncompliance. See
___
Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 103
_________________________ __________________
(1987) ("Before a court may exercise personal jurisdiction over a
defendant, the procedural requirement of service of summons must
____
____________________
11LHWCA 914(f) already provides a substantial disincentive
to frivolous employer challenges to compensation awards designed
to postpone payments to an injured employee. Before a compensa-
tion order enters, payments more than 14 days overdue trigger 10%
interest assessments. See 33 U.S.C. 914(e). Defaults in
___
payments following entry of a compensation order trigger 20%
interest assessments. See id. 914(f).
___ ___
14
be satisfied. '[S]ervice of summons is the procedure by which a
__ _________
court having venue and jurisdiction of the subject matter of the
suit asserts jurisdiction over the person of the party served.'")
(citing Mississippi Publishing Co. v. Murphree, 326 U.S. 438,
___________________________ ________
444-45 (1946)) (emphasis added); Precision Etchings & Findings,
______________________________
Inc. v. LGP Gem, Ltd., 953 F.2d 21, 23-24 (1st Cir. 1992) (hold-
____ _____________
ing that actual notice of lawsuit is no substitute for substan-
tial compliance with FRCP 4(d)(1) [requiring service on person of
defendant, on suitable resident at defendant's dwelling, or on
defendant's "agent"]; "a [] judgment entered by a court which
lacks jurisdiction over the person of the defendant is void, and
____
may be set aside at any time pursuant to Fed. R. Civ. P. 60(b)-
__ ___ ____
(4). Personal jurisdiction is established either by proper
service of process or by the defendant's waiver of any defect in
the service of process.") (emphasis added); Jardines Bacata, Ltd.
_____________________
v. Diaz-Marquez, 878 F.2d 1555, 1559 (1st Cir. 1989) ("[I]n the
____________
ordinary course, the district court acquires jurisdiction over a
defendant only by service of process . . . .") (emphasis added).
____ __ _______ __ _______
Accordingly, as we cannot find that Jones waived service of
process, see supra note 4, we vacate the district court enforce-
___ _____
ment order, and remand for service of process pursuant to Fed. R.
Civ. P. 4.
II. Equitable Defenses and the State-law Counterclaim.
II. Equitable Defenses and the State-law Counterclaim.
_________________________________________________
Jones asserted two affirmative defenses and a state-law
counterclaim based on allegations that Williams committed perjury
before the ALJ in March 1980, and that, as a direct consequence,
15
the ALJ found, incorrectly, that "no laborious work" had been
performed by Williams after October 1978. At the October 23,
1992 hearing before the magistrate judge, Jones proffered three
affidavits from individuals who had accompanied Williams on
numerous clamming and lobstering expeditions between October 1978
and March 1981. These affidavits attest that Williams engaged in
the very types of heavy labor and lifting explicitly disclaimed
in his testimony before the ALJ in 1980. Jones contends that the
identity of the affiants could not have been discovered earlier
in the exercise of reasonable diligence, since Jones only learned
of their existence through a "chance conversation" in August or
September of 1992.
With respect to the affirmative defenses, Jones re-
quested alternative forms of equitable relief: (1) denial of the
enforcement order on the ground that a party who obtains a
compensation award through fraud is not entitled to its enforce-
ment by injunction, or (2) a temporary stay of the section 921(d)
enforcement action pending administrative relief from the DOL.
With respect to the state-law counterclaim, see Me. Rev. Stat.
___
Ann. tit. 14, 870 (1992) (damages action for perjury), Jones
requested compensatory and punitive damages.
The district court held that it had no "jurisdiction"
hence no discretion under LHWCA section 921(d) to refuse
to enforce the compensation order, except on the two grounds
enumerated in the LHWCA, neither of which was contested by Jones;
namely, that Jones was not in default or that the compensation
16
order was not made and served "in accordance with law."12 On
related grounds, the district court refused to exercise pendent
jurisdiction over Jones's state-law counterclaim. See United
___ ______
Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966). The recommended
____________ _____
decision did not address the request for a temporary stay of the
section 921(d) enforcement proceedings.
On appeal, Jones contends that the district court
viewed its equitable powers under section 921(d) too narrowly.
See Restatement (Second) of Judgments 70, cmt. a (1982) (a
___
court of equity will not enforce a judgment obtained by fraud).
Although the district court may have painted with too broad a
brush, see, e.g., infra notes 14 and 18, we think its core
___ ____ _____
conclusions were nonetheless sound.
____________________
12The magistrate judge principally relied on Thompson v.
________
Potashnick Constr. Co., 812 F.2d 574 (9th Cir. 1987), and Mar-
_______________________ ____
shall v. Barnes & Tucker Co., 432 F. Supp. 935 (W.D. Pa. 1977).
_____ ____________________
In Thompson, the Ninth Circuit broadly stated that a district
________
court's role in a 921(d) proceeding is limited to screening for
procedural defects in the DOL proceedings and that "the district
court has no jurisdiction over the merits of the litigation."
______
Thompson, 812 F.2d at 576 (emphasis added). The Thompson court
________ ________
was not asked to consider the sufficiency of service of process
in the district court proceeding.
In support of its position, the Ninth Circuit cited Mar-
____
shall, which looked to recent legislative history for guidance.
_____
Prior to 1972, the district court had served both as an appellate
court, reviewing the ALJ's compensation orders, and as the forum
___
in which the employee could seek enforcement of a final compensa-
tion order. In 1972, Congress established the BRB, which assumed
the appellate role previously performed by the district court.
See H.R. Rep. 1441, 92d Cong., 2d Sess. 12 (1972), reprinted in
___ _________ __
1972 U.S.C.C.A.N. 4709. The Marshall court concluded that
________
Congress intended, by its LHWCA amendments in 1972, to withdraw
district court jurisdiction to consider any issue relating to the
underlying merits of compensation orders. Marshall, 432 F. Supp.
______ ________
at 937.
17
A. Equitable Power to Refuse Injunctive Enforcement.
A. Equitable Power to Refuse Injunctive Enforcement.
________________________________________________
An enforcement order under LHWCA section 921(d) may
take the form of a writ of injunction, a traditional equitable
remedy which may expose the enjoined party to the district
court's coercive contempt powers. Accordingly, fraud and "un-
clean hands" historically have been regarded as valid equitable
defenses to injunctive relief, Loglan Inst., Inc. v. Logical
____________________ _______
Language Group, Inc., 962 F.2d 1038, 1042 (Fed. Cir. 1992), and
____________________
absent a controlling statute a federal court is presumed to
possess the broad discretion and equitable power to configure its
remedy to suit the needs of the case. Even in the context of
congressionally created injunctive remedies, the Supreme Court
has said that "[u]nless a statute in so many words, or by a
__ __ _
necessary and inescapable inference, restricts the court's
_________ ___ ___________ _________
jurisdiction in equity, the full scope of that jurisdiction is to
____ _____
be recognized and applied." Porter v. Warner Holding Co., 328
______ ___________________
U.S. 395, 398 (1946) (emphasis added). See Weinberger v. Romero-
___ __________ _______
Barcelo, 456 U.S. 305, 313 (1982) ("[W]e do not lightly assume
_______
that Congress has intended to depart from established [equity]
principles.").13
____________________
13See also Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944)
___ ____ _________ ______
("The essence of equity jurisdiction has been the power of the
Chancellor to do equity and to mould each decree to the necessi-
ties of the particular case. Flexibility rather than rigidity
has distinguished it."); NLRB v. P*I*E Nationwide, Inc., 894 F.2d
____ ______________________
887, 892 (7th Cir. 1990) (contrasting FTC orders, which are self-
executing, with NLRB orders as to which Congress has interposed
the district court as an independent enforcement arbiter, recog-
nizing that the "potential severities of contempt" counsel "a
complementary power of equitable restraint and forbearance"); cf.
___
Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402 (9th
_______________ __________________
18
Under this rubric, the first question we confront is
whether the LHWCA deprives the district court of its traditional
discretionary powers to withhold equitable relief for the en-
forcement of a compensation award obtained through an employee's
fraud.14 Since section 921(d) contains no explicit delimita-
____________________
Cir.) (noting that owner of incontestable mark under Lanham Act
"generally entitled to injunctive relief," but if equitable
defenses are interposed, "the grant of injunctive relief is not a
ministerial act flowing as a matter of course"), cert. denied,
_____ ______
488 U.S. 968 (1988).
14Marshall, 432 F. Supp. 935, relied on below, as well as by
________
the Ninth Circuit in Thompson, see supra note 12, offers only
________ ___ _____
limited guidance. In Marshall, the employer attempted to liti-
________
gate core factual issues (e.g., LHWCA coverage and statute of
____
limitations) for the first time in a 921(d) proceeding, having
___ ___ _____ ____
failed to raise them before the ALJ, or to appeal the compensa-
tion order to the BRB. Id. at 937. The Marshall court correctly
___ ________
relied on the fact that, by its amendments to the LHWCA in 1972,
Congress unequivocally divested the district court of all appel-
late functions relating to ALJ compensation orders. But Marshall
________
did not involve the more difficult problems posed by newly
discovered evidence of fraud. Arguably, at least, successful
invocation of an equitable defense to enforcement would not work
__ ___________
an appellate affirmance, modification, or vacation of the under-
_________
lying compensation order, but merely a refusal to deploy the
equitable powers of the court in aid of a judgment fraudulently
obtained. Thus, Marshall's admonition that the district court's
________
function is reduced to "screening compensation orders for proce-
dural defects" does not purport to preclude exercise of the
court's traditional discretionary power to grant or withhold
equitable relief. See infra note 18.
___ _____
19
tion of the district court's equitable powers,15 we must look
to the LHWCA's remedial framework as a whole.
The LHWCA affords Jones an adequate remedy for redress-
ing any fraud alleged in the affirmative defense. Eschewing
conventional res judicata principles, section 922 allows an
___ ________
employer to request the ALJ to reconsider the case where there
has been a "change of conditions" or "mistake of fact" warranting
modification or suspension in compensation payments. See 33
___
U.S.C. 922; see also 20 C.F.R. 702.373; Hudson v. Southwest-
___ ____ ______ __________
ern Barge Fleet Servs., Inc., 16 Ben. Rev. Bd. Serv. 367, 369
_____________________________
(1984) (holding that 922 was "intended by Congress to displace
traditional notions of res judicata") (citing Banks v. Chicago
___ ________ _____ _______
Grain Trimmers Ass'n, 390 U.S. 459 (1968)).16 "[F]acts relat-
_____________________
ing to the nature and extent of a claimant's disability typically
____________________
15The magistrate judge's reliance on the "imperative lan-
guage" of 921(d) could not fully resolve the issue. See supra
___ _____
pp. 7-8. Section 921(d)'s language "shall enforce" does
not call for a blanket preemption of the district court's tradi-
tional equitable powers. See, e.g., Hecht, 321 U.S. at 329
___ ____ _____
(holding that the phrase "'shall be granted' [in the injunctive
enforcement provision of the Emergency Price Control Act of 1942]
is less mandatory than a literal reading might suggest"; "[w]e
cannot but think that if Congress had intended to make such a
drastic departure from the traditions of equity practice, an
unequivocal statement of its purpose would have been made").
16Section 922 may be invoked before or after a compensation
award is entered. See, e.g., Craig v. United Church of Christ,
___ ____ _____ _______________________
13 Ben. Rev. Bd. Serv. 567, 568-69 (1981). Although 922 is
subject to a one-year limitations period, a defaulting employer
may restart the tolling period at any time by making a single
compensation payment. See 33 U.S.C. 922 (modification award
___
can be filed "at any time prior to one year after date of last
payment of compensation"). Thus, recourse to 922 would appear
to afford more flexibility for setting aside a fraudulent award
than is provided under Fed. R. Civ. P. 60(b)(3).
20
are the subject of modification proceedings." Williams v.
________
Geosource, Inc., 13 Ben. Rev. Bd. Serv. 643, 645 (1981). "The
_______________
factfinder [ALJ] has broad discretion to correct mistakes of
fact, whether they be demonstrated by new evidence, cumulative
___ ________
evidence, or further reflection upon the evidence initially
submitted." Id. (emphasis added). The overarching criterion for
___
reopening a compensation award under the LHWCA is whether reexam-
ination would serve the "interests of justice." O'Keeffe v.
________
Aerojet-General Shipyards, Inc., 404 U.S. 254, 255-56 (1971).
________________________________
Perjured testimony resulting in an erroneous finding of fact
concerning the nature or extent of an employee's disability would
seem to come squarely within the realm of a "mistake of fact."
On October 14, 1992, days before the recommended
decision issued in this case, Jones filed a petition for modifi-
cation pursuant to LHWCA section 922.17 In these circumstanc-
es, and against this legislative framework, we think there are at
least two sound reasons for not inferring a congressional inten-
tion to dedicate two forums to the task of assessing alleged
"mistakes of fact" relating to an employee's testimony before the
ALJ. First, where newly discovered evidence of fraud implicates
the evidentiary basis for an employee's compensation claim, the
____________________
17Section 922 is not the only antidote for fraud under the
LHWCA, which likewise authorizes the imposition of criminal
penalties (fine and imprisonment) against "[a]ny person who
willfully makes any false or misleading statement or representa-
tion for the purpose of obtaining any benefit or payment under
this Act." 33 U.S.C. 931. In addition, costs may be awarded
to the opposing party in proceedings brought on claims or orders
"without reasonable ground." Id. 926.
___
21
LHWCA discloses a decided preference for utilizing the DOL's in-
house expertise in resolving the dispute. See, e.g., Crowell v.
___ ____ _______
Benson, 285 U.S. 22, 46 (1932) (the LHWCA provides "a prompt,
______
continuous, expert and inexpensive method for dealing with a
class of questions of fact which are peculiarly suited to exami-
__________ ______
nation and determination by an administrative agency specially
assigned to that task") (emphasis added); cf. Youghiogheny & Ohio
___ ___________________
Coal Co. v. Vahalik, 970 F.2d 161, 162 (6th Cir. 1992) ("the
_________ _______
benefits of agency expertise become irrelevant" under the LHWCA
only after "claim determination" is complete).18
____ _____
Under either section 921(d) or 922, the factfinder
would be required to decide: (1) whether Jones could have
discovered the putative fraud earlier, in the exercise of due
diligence; (2) whether the affidavits proffered by Jones, togeth-
er with the record evidence in the case before the DOL, credibly
suggest that Williams misrepresented his physical capacities and
activities during the relevant period; and (3) whether the
putative perjury was sufficiently material to undermine the ALJ's
finding of temporary total disability. See General Dynamics
___ _________________
Corp. v. Director, Office of Workers' Compensation Programs, 673
_____ __________________________________________________
F.2d 23, 25 (1st Cir. 1982) (in reopening case, ALJ "must balance
the need to render justice against the need for finality in
____________________
18On the other hand, while we have no occasion to take a
position in this case, some equitable defenses (e.g., laches,
____
estoppel), to the extent premised on employee conduct postdating
__________
the compensation order, might require resolution of factual
issues not peculiarly suited to agency expertise. Cf. supra note
___ _____
14.
22
decisionmaking," and justice is not necessarily served where the
employer "could have presented his side of the case at the first
hearing . . . ."); see also McCord v. Cephas, 4 Ben. Rev. Bd.
___ ____ ______ ______
Serv. 224, 225 (1976) (employer not entitled to modification if
it exhibits a bad faith effort to relitigate issues ad nauseam).
__ _______
We think the DOL is better positioned to address such issues in
these circumstances.
Second, section 922 modification rulings are appealable
to the BRB and to the court of appeals. See 33 U.S.C. 921(b),
___
(c); O'Loughlin v. Parker, 163 F.2d 1011, 1013 (4th Cir. 1947)
__________ ______
(ALJ's decision to reopen under section 922 is reviewed for abuse
of discretion). Similarly, an employer would be allowed an
appeal from a district court decision which discounted the
employer's equitable defenses and directed enforcement of a
compensation award. To allow the section 922 and the section
921(d) proceedings to go forward simultaneously would open up
the possibility of inconsistent rulings on the fraud claim, which
ultimately would have to be resolved by the court of appeals in
either event.
As we can discern no good purpose for such a needless
duplication of administrative and judicial effort, we conclude
that LHWCA section 921(d), viewed in broad context, gives rise to
the "inescapable inference," see Porter, 328 U.S. at 398, that
___ ______
Congress did not intend the type of fraud defense here presented
by Jones to be adjudicated by the district court but by the DOL.
23
B. Stay of Enforcement.
B. Stay of Enforcement.
___________________
The remaining question is somewhat narrower: may the
district court in a section 921(d) proceeding temporarily enjoin
enforcement of a compensation order pending administrative
resolution of an employer's petition for modification under
section 922?19 Jones contends that he will be harmed irreparably
absent a stay of the section 921(d) enforcement proceeding,
because the compensation payments he is compelled to make prior
to any section 922 modification order would not be recoverable.
See supra note 10.
___ _____
Only two LHWCA provisions explicitly allow stays of
"effective" compensation orders. See 33 U.S.C. 921(b) (stay
___
pending appeal to BRB), 921(c) (stay pending appeal from BRB to
court of appeals), thus underscoring the strong LHWCA policy
favoring prompt compensation payments even though the employee's
entitlement to disability benefits remains in genuine dispute.
Stays pending administrative and judicial review are available
only on a showing of "irreparable injury." See Henry, 704 F.2d
___ _____
at 865. It is not enough that the employer demonstrate that
interim payments would be unrecoverable absent a stay, nor that
the employer is experiencing financial difficulty in making
payments. Edwards v. Director, Office of Workers' Compensation,
_______ _________________________________________
____________________
19We address this issue in the interests of judicial econo-
my. It is possible, even likely, that Jones's 922 petition
will have been acted upon by the DOL before Jones has been served
with process pursuant to Civil Rule 4 following remand to the
district court. If not, it seems quite likely that Jones would
renew his request for a stay of the 921(d) enforcement proceed-
ing.
24
932 F.2d 1325, 1329 (9th Cir. 1991). "Irreparable injury" will be
found only in extraordinary circumstances. Id.
_____________ ___
Unlike the minimal time delays required to effect
proper service of process, see supra pt. I, a stay of section
___ _____
921(d) enforcement proceedings while an employer pursues a
modification ruling from the DOL (and, perhaps, pending appellate
review) threatens a lengthy delay in the previously ordered
compensation payments to the employee. Therefore, under the
"inescapable inference" standard established in Porter, 328 U.S.
______
at 398, we must conclude that the LHWCA divests the district
court of the equitable power to defer its entry of a section
921(d) enforcement order pending the outcome of a section 922
modification proceeding unless the employer first establishes
"irreparable injury." As we have noted, Jones's answer did not
allege facts sufficient to establish irreparable injury, nor does
the record suggest a basis for such a showing. Thus, the magis-
trate judge did not err in failing to act on the request for a
temporary stay.
III. Conclusion.
III. Conclusion.
__________
The district court order directing enforcement of the
compensation order pursuant to LHWCA section 921(d) must be
vacated due to lack of compliance with the service of process
requirements imposed by Fed. R. Civ. P. 4 and 81(a)(6). The case
must be remanded to permit Williams to effect service of process
upon Jones. At such time as service of process is effected,
Jones should be permitted to submit for district court consider-
25
ation any order obtained in the LHWCA section 922 modification
proceeding, failing which the district court may reinstate the
section 921(d) enforcement order previously entered.
The enforcement order is vacated and the case is
The enforcement order is vacated and the case is
_______________________________________________________
remanded to permit service of process and for further proceedings
remanded to permit service of process and for further proceedings
_________________________________________________________________
in accordance herewith. Costs are awarded to defendant-appel-
in accordance herewith. Costs are awarded to defendant-appel-
_______________________ ______________________________________
lant.
lant.
_____
26
Document Info
Docket Number： 93-1054
Filed Date： 12/3/1993
Precedential Status： Precedential
Modified Date： 9/21/2015