Wallace Boudreaux v. Transocean Deepwater, Inc. , 711 F.3d 501 ( 2013 )

Case: 12-30041 Document: 00512174971 Page: 1 Date Filed: 03/14/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 14, 2013
No. 12-30041 Lyle W. Cayce
Clerk
WALLACE BOUDREAUX,
Plaintiff - Appellant
v.
TRANSOCEAN DEEPWATER, INC.
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
Before HIGGINBOTHAM, CLEMENT, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Wallace Boudreaux sued Transocean Deepwater, Inc. to recover
maintenance and cure for a back injury allegedly sustained on the job.
Transocean successfully established a defense to liability under McCorpen v.
Central Gulf Steamship Corp. and counterclaimed to recover benefits it had
already paid to Boudreaux. The district court awarded summary judgment to
Transocean on its counterclaim, concluding that Transocean’s successful
McCorpen defense automatically established its right to restitution — a right of
action never before recognized in maritime law. We reverse and render.
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I.
Boudreaux began working for Transocean in January 2005. He failed to
disclose serious back problems in Transocean’s pre-employment medical
questionnaire, affirmatively answering “no” to several inquiries regarding any
history of back trouble. Less than five months after his hire, Boudreaux claimed
that he had injured his back while servicing equipment. As a consequence,
Transocean paid the seaman maintenance and cure for nearly five years.
In April 2008, Boudreaux filed suit against Transocean alleging a right to
further maintenance and cure and seeking punitive damages for Transocean’s
alleged mishandling of past benefits. During discovery, Transocean obtained
evidence of Boudreaux’s pre-employment history of back problems. Transocean
filed an unopposed motion for partial summary judgment on Boudreaux’s claim
for further benefits, invoking McCorpen as a defense to maintenance and cure
liability. Under McCorpen, a maritime employer does not owe maintenance and
cure if it can establish that a seaman intentionally misrepresented or concealed
a pre-existing medical condition that is material to the employment and is
causally connected to the injury allegedly sustained.1
The district court granted Transocean’s unopposed motion. Thereafter,
Transocean filed a counterclaim to recover the maintenance and cure payments
it had already made to Boudreaux. Transocean moved for summary judgment
on the counterclaim, contending that its successful McCorpen defense
automatically established its right to restitution under general maritime law.
Prior to the district court’s ruling on the motion, Transocean and Boudreaux
reached a bracketed settlement that resolved all issues pending before the court,
with the exception of Transocean’s counterclaim. Under the settlement,
1
McCorpen v. Central Gulf S. S. Corp., 396 F.2d 547, 549 (5th Cir. 1968); see also
Johnson v. Cenac Towing Inc., 544 F.3d 296, 301 (5th Cir. 2008).
2
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Boudreaux is entitled to a lesser sum of money if Transocean succeeds on its
counterclaim.
Though Transocean acknowledged that its restitution-via-McCorpen
theory was novel, it urged the district court to fashion a new maritime right of
action based on state law principles of fraud and unjust enrichment. In a
thoughtful opinion, the district court agreed and awarded summary judgment
to Transocean on its counterclaim, albeit without accepting Transocean’s state-
law theories. Boudreaux appeals.
II.
Transocean asks this Court to recognize a novel maritime cause of action,
urging that an employer who establishes a McCorpen defense to maintenance
and cure liability should thereby automatically gain an affirmative right to
restitution for benefits previously paid. We decline the invitation.
A maritime employer’s obligation to pay an injured seaman maintenance
and cure is an essential part of the employment relationship, whether
characterized as contractual or otherwise.2 In Still v. Norfolk & Western
Railway Co., Justice Black’s opinion for the Court clarified that a worker’s fraud
in procuring his employment does not vitiate the employment relationship,
allowing him to maintain a suit for damages under the Federal Employers’
Liability Act.3 Courts including ours have since recognized that Still’s logic and
2
E.g., Cortes v. Baltimore Insular Lines, 287 U.S. 367, 371 (1932) (Cardozo, J.) (“The
duty to make [maintenance and cure payments] is imposed by the law itself as one annexed
to the employment.”); McCorpen, 396 F.2d at 548 (“The shipowner’s obligation [to pay
maintenance and cure] is deep-rooted in maritime law and is an incident or implied term of
a contract for maritime employment.”); Terrebonne v. K-Sea Transp. Corp., 477 F.3d 271, 279
(5th Cir. 2007) (“[M]aintenance and cure is an intrinsic part of the employment relationship,
separate from the actual employment contract. . . . [it] cannot be contracted away.”).
3
See 368 U.S. 35, 45 (1961) (“[T]he status of employees who become such through other
kinds of fraud . . . must be recognized for purposes of suits under the Act. And this conclusion
3
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congressionally rooted paternal policy applies with equal force to seamen.4 The
McCorpen defense rests, if somewhat uneasily, alongside Still and progeny,
permitting an employer to extricate itself from its maintenance obligation by
demonstrating that the seaman “intentionally concealed” a material medical
condition in obtaining his employment.5 Though most courts have accepted
McCorpen, Transocean’s novel attempt to invoke the case as an affirmative right
of recovery finds virtually no support,6 and we are not inclined to accede.
The district court’s concern with the egregious facts here is
understandable, but the sweeping counterclaim it endorses would mark a
is not affected by the fact that an employee’s misrepresentation may have, as is urged here,
contributed to the injury or even to the accident upon which his action is based.”).
4
See, e.g., Johnson, 544 F.3d at 301–02 (“The Supreme Court’s decision in Still makes
clear that a seaman . . . is not barred from suit under the Jones Act because he conceals a
material fact in applying for employment.” (citations omitted) (internal quotation marks
omitted)); Brown v. Parker Drilling Offshore Corp., 410 F.3d 166, 178 (5th Cir. 2005) (“The
Supreme Court has effectively foreclosed any argument that misrepresentations in an
application for employment might void the necessary employment relation.”) (quoting Reed v.
Iowa Marine & Repair Corp., 143 F.R.D. 648, 651 (E.D. La. 1992)); Omar v. Sea-Land Service,
Inc., 813 F.2d 986, 989–90 (9th Cir. 1987) (“Maintenance and cure . . . derives from a seaman’s
employment on a vessel . . . The remedial nature of the Jones act and maritime law requires
a less technical, contractual definition of ‘employee’ than Sealand asks us to use.”) (citing Still,
368 U.S.at 45).
5
McCorpen, 396 F.2d at 549; see, e.g., Johnson, 544 F.3d at 301–02 (“Cenac continues
to urge that the McCorpen defense should extend to ‘any damages sought by a seaman for only
the aggravation of his prior and intentionally concealed medical condition.’ This legal
argument, which we review de novo on appeal, is foreclosed by [Still].”).
6
In Vitcovich v. Ocean Rover O.N., the Ninth Circuit implicitly sanctioned a restitution-
via-McCorpen counterclaim; however, this decision was unpublished and devoid of analysis.
See No. 94-35047, 1997 WL 21205 (9th Cir. Jan. 14, 1997). Courts that have meaningfully
engaged with the maritime implications of a restitution-via-McCorpen right of action have
rejected Vitcovich. See, e.g., Am. River Transp. Co. v. Benson, 2012 WL 5936535 at *5 (N.D.
Ill. 2012); Hardison v. Abdon Callais Offshore, LLC, 2012 WL 2878636 at *7 (E.D. La. 2012);
Dolmo v. Galliano Tugs, Inc., 2011 WL 6817824 at *2 (E.D. La. Dec. 28, 2011), aff’d without
opinion 479 F. App’x 656 (5th Cir. 2012); see also Kirk v. Allegheny Towing Inc., 620 F.Supp
458, 461 (W.D. Pa. 1985).
4
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significant retreat from our hoary charge to safeguard the well-being of seamen.7
Already, even without fraud, an employer may offset any Jones Act damages
recovered by the seaman to the extent they duplicate maintenance and cure
previously paid.8 This, if the employer “show[s] that the damages assessed
against it have in fact and in actuality been previously covered.”9 Yet we are
urged to strike a new balance and allow an employer who establishes a
McCorpen defense to automatically recover prior maintenance, without requiring
the employer to prove duplication and regardless of the outcome of the primary
suit.10 In cases where no damages are recovered, or the award is insufficient to
offset the seaman’s restitution liability, the employer would gain an affirmative
judgment against the seaman. Although most likely uncollectible, the judgment
would stand as a serious impediment to the seaman’s economic recovery, and its
threat would have a powerful in terrorem effect in settlement negotiations.
Our concern with the district court’s approach is heightened by the fact
that McCorpen does not, as suggested, require the employer to establish that the
seaman acted with a level of culpability akin to that required for common law
fraud. Whereas fraud hinges on the subjective state of mind of the alleged
wrongdoer,11 thus generally falling “within the realm of the trier of fact because
7
See Karim v. Finch Shipping Co. Ltd., 374 F.3d 302, 310 (5th Cir. 2004) (“[T]he
protection of seamen was one of the principal reasons for the development of admiralty as a
distinct branch of law.” (citation omitted)).
8
See Wood v. Diamond M Drilling Co., 691 F.2d 1165, 1171 (5th Cir. 1982).
9
Wood, 691 F.2d at 1171 (internal quotation marks omitted) (holding that employer
failed to carry its burden to demonstrate that its past payment of maintenance and cure
entitled it to an offset against Jones Act damages award for lost wages).
10
An employer’s successful McCorpen defense does not prevent the seaman from suing
for Jones Act negligence. Brown, 410 F.3d at 178.
11
Southland Secs. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 366 (5th Cir.
2004) (“[T]he requisite rule 10(b) scienter . . . is consistent with the general common law rule
5
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it so depends on the credibility of witnesses,”12 this Court held in Brown v.
Parker Drilling Offshore Corp. that McCorpen “does not require a finding of
subjective intent [to conceal]” and is satisfied as a matter of law if the seaman
“fails to disclose medical information in an interview or questionnaire that is
obviously designed to elicit such information.”13 Applying this “objective”
McCorpen test, the Brown panel overturned a jury verdict that the seaman had
not intentionally concealed his medical history.14 In light of Brown, a
restitution-via-McCorpen counterclaim would, in practice, threaten injured
seamen with the specter of crushing liability for misstatements found material.15
With respect, such a result is inimical to the existing fabric of maritime law.
Transocean asks us to weigh again conflicting values — of protecting
seamen from the dangers of the sea, and employers from dishonesty. While in
this calculus, there is a stronger case for the employer if, under ordinary rules
that where, as in fraud, an essentially subjective state of mind is an element of a cause of
action also involving some sort of conduct, such as a misrepresentation, the required state of
mind must actually exist in the individual making . . . the misrepresentation . . . .”).
12
D & J Tire, Inc. v. Hercules Tire & Rubber Co., 598 F.3d 200, 205 (5th Cir. 2010)
(quoting Rimade Ltd. v. Hubbard Enters., Inc., 388 F.3d 138, 144 (5th Cir. 2004) (quoting
Beijing Metals & Minerals v. Am. Bus. Ctr., 993 F.2d 1178, 1185 (5th Cir. 1993)).
13
Brown v. Parker Drilling Offshore, Corp., 410 F.3d 166, 174 (5th Cir. 2005) (quoting
Vitcovich, 1997 WL 21205 at *3).
14
See id.; see also id. at 181 (Stewart, J. dissenting) (“The initial majority opinion . . .
completely substituted its credibility determinations for those of the jury in this case in an
effort to rescue the shipowner from what the majority considered to be a legally deficient jury
verdict. On rehearing, the majority strains to characterize this case as one which principally
turns on the resolution of an objective issue of law and not on credibility, a traditional jury
province, as the trial judge saw it and as I saw it after reading the trial record.”).
15
True enough, evidence that a seaman “failed to disclose medical information in an
interview or questionnaire that is obviously designed to elicit such information” provides
objective evidence of a subjective intent to deceive, evidence that, even under a traditional
definition of scienter, would generally suffice to create a fact issue for trial. However, such
evidence is not sufficient to sustain a finding of fraud as a matter of law.
6
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of scienter, a trier of fact determines that the seaman acted with subjective
intent to defraud, we need not assess whether the district court made such
findings in this case. We adhere to the balance that Justice Black struck
fifty-one years ago in Still, a balance that has obtained to date. A seaman’s
fraudulent misrepresentation of his health history does not terminate the
employment relationship, nor does it relieve the employer of its duties to the
seaman should he suffer injury in its employ. As the seaman retains his
damages remedy, his right to retain maintenance and cure already paid ought
be an a fortiori case — after all, the obligation is unqualified and definite, and
the employer’s right to an offset against damages only weds the two.16 Both flow
from injury suffered by the seaman during the course of his employment,17 and
neither are lost by the seaman’s fraud in securing his employ.
We are offered no reason to depart from precedent. There is only the
change of advocates and judges, by definition irrelevant to the settling force of
past jurisprudence — always prized but a treasure in matters maritime. All
this against the cold reality that the sea has become no less dangerous, and the
seaman no less essential to maritime commerce.
III.
We REVERSE the district court’s order awarding summary judgment to
Transocean on its counterclaim and RENDER judgement for Boudreaux.
16
See Brister v. A.W.I., Inc., 946 F.2d 350, 360–61 (5th Cir. 1991).
17
Fitzgerald v. U.S. Lines Co., 374 U.S. 16, 18 (1963) (“[R]emedies for negligence,
unseaworthiness, and maintenance and cure . . . serve the same purpose of indemnifying a
seaman for damages caused by injury, depend in large part upon the same evidence, and
involve some identical elements of recovery.”).
7
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EDITH BROWN CLEMENT, Circuit Judge, dissenting.
This court is called upon to determine whether restitution is available
upon a successful establishment of a McCorpen defense. Because I believe the
requirements of restitution are satisfied in all cases in which a McCorpen
defense is successfully established, I would answer that question in the
affirmative.
Every employer who successfully establishes a McCorpen defense must
demonstrate that a seaman made an intentional and willful misrepresentation
and relied on that misrepresentation to seek benefits to which he was not
entitled. Johnson, 544 F.3d at 301; Brown, 410 F.3d at 171, 174. In my view,
this is sufficient to entitle an employer to restitution under the fundamental
equitable principle that a person who has received something to which he is not
entitled through willful concealment or misrepresentation must restore it to the
person from whom he received it. See LA. CIV. CODE ART. 2299; RESTATEMENT
(THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 1 (“A person who is unjustly
enriched at the expense of another is subject to liability in restitution.”). The
district court eloquently stated, and I agree, that:
It is a rare rule of law, maritime in nature or otherwise, that denies
relief to an aggrieved party in the face of willful misconduct. Even
wards of the court must be forthright and truthful. The
entitlements seamen enjoy are created with the contract of
employment. . . . [Boudreaux] has deprived himself of protection
through his own wilful and deliberate misconduct and consequences
should be considered. An opposite result would lead to a travesty of
justice, encouraging mockery of the judicial process and denigration
of the founding principles of admiralty based schemes that seek to
promote the “combined objective of encouraging marine commerce
and assuring the well-being of seamen.”
Boudreaux v. Transocean Deepwater, Inc., No. 08-1686, 2011 WL 5025268, at *6
(E.D. La. Oct. 20, 2011) (quoting Aguilar v. Standard Oil Co., 318 U.S. 724, 727-
8
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28 (1943)). Boudreaux presents no reason to depart from this general principle
or the district court’s well-reasoned opinion adopting it, and I can find none.
The only circuit court to consider this issue has adopted the position that
restitution is available upon a successful establishment of a McCorpen defense.
See Vitcovich v. Ocean Rover O.N., No. 94-35047, 106 F.3d 411, at *4 (9th Cir.
Jan. 14, 1997) (unpublished). And although some district courts in this circuit
have declined to award restitution under McCorpen in the absence of guidance
from this court, that position does not find widespread support across all circuits.
See, e.g., Souviney v. John E. Graham & Sons, No. 93-0479, 1994 WL 416643, at
*5 (S.D. Ala. 1994) (unpublished) (“Because plaintiff intentionally concealed
material facts about the very back injury for which he now seeks recovery
against the defendant . . . as a matter of law, plaintiff is not entitled to receive
maintenance and cure benefits. To the extent that such benefits have been paid
by the defendant, the defendant is entitled to recover the amount of those
benefits by way of judgment against the plaintiff.”); Quiming v. Int’l Pac. Enters.,
Ltd., 773 F. Supp. 230, 235-37 (D. Haw. 1990) (granting a counterclaim for
$30,000 of maintenance and cure after defendants established that the plaintiff
was never legally entitled to receive the benefits); see also Bergeria v. Marine
Carriers, Inc., 341 F. Supp. 1153, 1154-56 (E.D. Pa. 1972) (“In addition to our
finding that [a] counterclaim [for improperly paid maintenance and cure] is
cognizable within the maritime jurisdiction, it must also be allowed as a
contractual set-off.”).
The majority expresses concern that adopting this position will visit the
hardship of restitution on a seaman absent a finding that the seaman
subjectively intended to deceive. But that concern is based on an incorrect
reading of our case law. It is undisputed that McCorpen requires a finding of
intentional or willful concealment. Johnson, 544 F.3d at 301 (“[T]he McCorpen
9
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defense applies [only] when an injured seaman has ‘willfully concealed from his
employer a preexisting medical condition.’” (quoting Brown, 410 F.3d at 171)).
Although we have held that such intentionality can be demonstrated as a matter
of law, this does not lessen the burden on the defendant to show that the seaman
“intentionally misrepresented or concealed” medical information when he was
called upon to reveal it. Brown, 410 F.3d at 171; see id. at 174-75.1
The majority also indicates that we should shy away from creating an
automatic cause of action under McCorpen because “an employer may offset any
Jones Act damages recovered by the seaman to the extent they duplicate
maintenance and cure previously paid.” I disagree that this consideration is
relevant to our analysis. The question of how much Transocean will recover is
not before us in this appeal. And as recovery under McCorpen is essentially an
equitable remedy, courts retain the power to apportion an award so as not to
doubly-tax a seaman. It follows that so long as an employer satisfies its burden
of showing “duplication” by successfully asserting a McCorpen defense, it should
be entitled to restitution in whatever form is sufficient to render it whole under
all the circumstances.
Eight years ago this court adopted a similar position under the rubric of
Jones Act claims. In Withhart v. Otto Candies, L.L.C., the court began by
acknowledging that “the purpose of the Jones Act,” like maintenance and cure,
“was to benefit and protect seamen by enlarging, not narrowing, the remedies
1
Our precedent on this issue is consistent with our sister circuits’ treatment of
McCorpen and McCorpen-like defenses. See, e.g., Evans v. Blidberg Rothchild Co., 382 F.2d
637, 639-40 (4th Cir. 1967); Burkert v. Weyerhaeuser S. S. Co., 350 F.2d 826, 830-31 (9th Cir.
1965). This holding also follows directly from McCorpen, in which this court concluded that
a seaman acted intentionally when he was “intelligent enough to know” that he had “a serious
medical problem that should be revealed” and failed to reveal that condition “[i]n completing
a form that was obviously designed to elicit information about past illnesses of importance.”
McCorpen, 396 F.2d at 549-50.
10
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available to them.” 431 F.3d 840, 845 (5th Cir. 2005). Nevertheless, this court
held that shipowner-employers could assert negligence and indemnity claims
against seamen for property damage caused by a seaman’s negligence. Id. In
the court’s opinion, this cause of action would not narrow the remedies
traditionally available to seaman under the Jones Act, and “the fact that seamen
work under difficult conditions [was] not a reason to shield them from liability
from negligence.” Id.The same is true here. Just because honest seamen are entitled to avoid
the hassles of complex workers’ compensation schemes does not mean that
seamen who intentionally or willfully conceal prior medical conditions are
entitled to the same benefits. This court recognized as much in McCorpen, and
has consistently applied that principle for over fifty years. This case is therefore
distinguishable from Still, in which the Supreme Court held that an employee
could recover under the Federal Employers’ Liability Act even if the individual
obtained his job by false representations. 368 U.S. at 44-45. Here, there is no
question as to whether Boudreaux is entitled to the benefits of maintenance and
cure as a result of his misrepresentations. He is not and was not, and I would
therefore hold that Transocean is entitled to restitution. There is no reason to
reject this general equitable principle in the face of willful and intentional
misconduct engaged in on land by a non-maritime employee, simply because, by
virtue of that very misconduct, the individual later obtained maritime
employment and became unjustly enriched at the expense of his maritime
employer.
I respectfully dissent.
11