Gaffney, Michael P. v. Riverboat Serv IN

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 04-3829, 04-3900
MICHAEL P. GAFFNEY, THOMAS BELL,
EDWARD ANDERSON, et al.,
Plaintiffs-Appellees,
Cross-Appellants,
v.
RIVERBOAT SERVICES OF INDIANA,
INCORPORATED, RIVERBOAT SERVICES,
INCORPORATED, ROBERT HEITMEIER, et al.,
Defendants-Appellants,
Cross-Appellees,
v.
SHOWBOAT MARINA CASINO
PARTNERSHIP, SHOWBOAT,
INCORPORATED, SHOWBOAT
INDIANA, INCORPORATED, et al.,
Defendants-Appellees.
____________
Appeals from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 98 C 10—Andrew P. Rodovich, Magistrate Judge.
____________
ARGUED SEPTEMBER 19, 2005—DECIDED JUNE 16, 2006
____________
2 Nos. 04-3829, 04-3900
Before RIPPLE, WOOD and WILLIAMS, Circuit Judges.
RIPPLE, Circuit Judge. The plaintiffs, who are licensed
merchant marine officers,1 brought this whistleblower
action under 46 U.S.C. § 2114 against Showboat Marina
Casino Partnership, Showboat, Inc., Showboat Indiana, Inc.,
Showboat Mardi Gras Casino and M/V Showboat (collec-
tively “Showboat”), Riverboat Services, Inc. and Riverboat
Services of Indiana, Inc. (collectively “Riverboat”), and
Robert Heitmeier and Thomas Gourguechon in their
individual capacities. See Pub.L. No. 98-557, § 13(a), 98 Stat.
2863 (1984) (current version at 46 U.S.C. § 2114 (2002)).2 The
plaintiffs claim that they were discharged in retaliation for
engaging in statutorily protected correspondence with the
United States Coast Guard (“Coast Guard”) about a change
in hiring guidelines on the vessel on which they were
employed, the M/V Showboat. After a bench trial on the
plaintiffs’ claims against Riverboat and the individual
defendants, the United States District Court for the North-
ern District of Indiana entered judgment in favor of all but
two plaintiffs and awarded back pay, expenses and punitive
damages. Those defendants now appeal, contending that
the district court erred in holding that the plaintiffs estab-
lished the requisite causation between their correspondence
with the Coast Guard and their subsequent terminations.
1
The individual plaintiffs are merchant marine officers Michael
Gaffney, Thomas Bell, Edward Anderson, Robert Beardon,
Thomas Trundy, Thomas Goodridge, Dean Horton, Adam
Doncet, Robert Palmer and Neil Reilly.
2
Since the events in this case, 46 U.S.C. § 2114 has been
amended. Neither party argues that these amendments—which
were enacted after this litigation began—apply to the present
case. See footnote 19, infra.
Nos. 04-3829, 04-3900 3
These defendants also submit that the plaintiffs did not
prove that they are entitled to whistleblower protection
under § 2114: according to the defendants, the plaintiffs did
not act in “good faith,” did not make a “report[]” to the
Coast Guard, and did not have a reasonable belief that a
violation of safety laws and regulations had occurred at the
time of the correspondence. Id. Further, the individual
defendants contend that they are not subject to § 2114
liability because they do not qualify as “individual[s] in
charge of a vessel.” Id. The two plaintiffs who did not obtain
relief3 cross-appeal the district court’s ruling denying them
relief. All ten plaintiffs appeal the denial of attorneys’ fees.
Finally, Riverboat appeals the district court’s judgment
granting partial summary judgment to Showboat. Riverboat
contends that Showboat was required to obtain insurance
for the plaintiffs’ claims and, thus, it is entitled to indemnifi-
cation from Showboat. For the reasons set forth in the
following opinion, we affirm in part and reverse in part the
judgment of the district court.
I
BACKGROUND
A. Facts
This appeal involves the claims of ten4 licensed merchant
marine officers, formerly employed as captains, chief
engineers, assistant engineers or deck officers on the M/V
Showboat, a large gaming vessel that carried passengers on
3
These two plaintiffs are Mr. Horton and Mr. Doncet.
4
The eleventh plaintiff, Robert B. “Barry” Wood, was dismissed
with prejudice by the district court on July 16, 1999.
4 Nos. 04-3829, 04-3900
excursions on Lake Michigan.5 They allege that they were
terminated in retaliation for reporting the violation of safety
regulations to the United States Coast Guard and that their
terminations violate 46 U.S.C. § 2114(a).6 See § 13(a), 98 Stat.
at 2863. The plaintiffs filed suit in 1998 against Showboat,
the registered owner of the M/V Showboat, and Riverboat,
the operator and manager of the vessel. The plaintiffs also
named two individual defendants: Robert Heitmeier, the
President, member of the Board of Directors and sole
shareholder of both Riverboat Services, Inc. and Riverboat
Services of Indiana, Inc.; and Thomas Gourguechon, who
during the events in this case was both the Director of
5
Specifically, during the events in this case, Mr. Gaffney and Mr.
Reilly were Chief Engineers; Mr. Bell was a Captain; Mr. Ander-
son, Mr. Beardon and Mr. Horton were Deck Officers; and Mr.
Trundy, Mr. Goodridge, Mr. Doncet and Mr. Palmer were
Assistant Engineers. All held unlimited licenses for their respec-
tive positions.
6
The plaintiffs’ second amended complaint contained four
counts: Count I alleged that the defendants violated 46 U.S.C.
§ 2114. Count II alleged that the defendants violated general
maritime law. Count III alleged an in rem action against the M/V
Showboat. Count IV alleged that the defendants violated Indiana
state law by wrongfully terminating the plaintiffs. Count I is
the only count at issue on appeal; the other counts previously
were dismissed by the district court. See R.192 at 19 n.4 (holding
that the plaintiffs’ state law claims are preempted by federal law);
id. at 18 (dismissing the plaintiffs’ claim based on maritime law
as irrelevant and cumulative, given that maritime law recognizes
the tort of wrongful discharge only when a seaman is terminated
in contravention of an “important public policy,” which, in
substance, is the same right recognized by federal statute). These
findings have not been challenged on appeal.
Nos. 04-3829, 04-3900 5
Marine Operations for Riverboat and the Director of Project
Management for Showboat.
1. The M/V Showboat
The M/V Showboat, the ship on which the plaintiffs were
employed, is one of the largest casino vessels currently
operating in the United States; it weighs 2,803 gross tons, is
332-feet long and can carry up to 4,250 passengers and crew
at a time. During the period at issue in this litigation, the
M/V Showboat operated on a daily basis gambling excursions
on Lake Michigan that departed from, and returned to, East
Chicago, Indiana.
The vessel’s operation is governed by a Marine Manage-
ment Services Agreement (the “Agreement”) between
Riverboat and Showboat. See R.37, Ex.A. This Agreement
gives Riverboat the “exclusive right and obligation to man-
age and operate the marine aspects of the [M/V Showboat].”
Id. § 3.01. Specifically, Riverboat is responsible for ensuring
that the vessel’s operation complies with applicable state
and federal laws, including United States Coast Guard
regulations, see id.; employing and training the vessel’s crew
in a manner consistent with generally accepted standards of
the riverboat gaming industry, see id. §§ 3.01, 3.02(I);
monitoring the qualifications of the vessel’s staff, as well as
assuring that the maritime staff is properly licensed, see id.
§ 3.02(iv); and the hiring, firing, promotion and supervision
of all executive and service employees, see id. § 3.04.1. In
turn, the Agreement obligates Showboat to obtain insurance
and to name Riverboat as the insured party. Section 5.01.1
specifies that Showboat should obtain insurance covering all
“acts, omissions and injuries to persons or property” caused
by Riverboat or its agents, in the amount of not less than
6 Nos. 04-3829, 04-3900
five million dollars. See id. § 5.01.1. Section 5.01.01.1 then
lists five types of insurance coverage required: worker’s
compensation insurance; comprehensive general liability
insurance for accidents and property damage; full form
protection and liability insurance on all vessels and floating
equipment; hull and machinery insurance; and collision
liability insurance for damage to vessels and floating
objects. In addition, the Agreement mandates that Showboat
obtain coverage for liabilities arising under the Jones Act.
See id.
The operation of the M/V Showboat also is required to
abide by federal statutes and regulations. In pertinent part,
applicable Coast Guard regulations provide that a limited
engineer license permits a chief or assistant engineer to
“serve within any horsepower limitations on vessels of any
gross tons on inland waters,” but not on vessels of “more
than 1600 gross tons in . . . Great Lakes service.” 46 C.F.R.
§ 10.501(b); see also id. § 15.915(b)-(d). At 2,803 gross tons,
the M/V Showboat falls into the latter category. Fearing that
the Coast Guard under these regulations would require the
M/V Showboat to hire exclusively engineers with unlimited
licenses, on August 27, 1996, Mr. Heitmeier wrote to
Lieutenant Commander Rich Brundrett at the Regional
Examination Center of the United States Coast Guard in
Toledo, Ohio. See R.81, Ex.6. He requested that the Coast
Guard amend M/V Showboat’s Certificate of Inspection
(“COI”)7 to permit the employment of engineers with
7
A COI is a document issued by the Coast Guard, which certifies
that the vessel complies with applicable regulations. It also
delineates other necessary conditions for safe operation of the
vessel, including the requisite number of officers and their
(continued...)
Nos. 04-3829, 04-3900 7
limited engineer licenses. In support of his request, Mr.
Heitmeier submitted that the M/V Showboat was similar in
terms of installed machinery, route and length of voyage
to vessels operated by Riverboat on rivers and inland
waters; in short, he contended that, because of its limited
use as a sailing vessel, the M/V Showboat should not be
characterized as a vessel in Great Lakes service and should
be permitted to employ engineers with limited licenses.
Riverboat’s request was granted. The Coast Guard issued
the M/V Showboat’s first COI in April 1997; it provided that
“[a]n individual holding a license as chief engineer limited
or assistant engineer limited may serve as chief engineer
or assistant engineer respectively.” R.34, Ex.1. Shortly
thereafter, the COI was posted and the vessel was opened to
the public.
2. The Communications with the Coast Guard
Shortly after the amended COI was posted, the plaintiffs
initiated contact with the Coast Guard. On August 11, 1997,
a group of twelve officers, including six plaintiffs—Messrs.
Gaffney, Goodridge, Palmer, Reilly, Horton and Doncet—
sent a letter to the Commandant of the Coast Guard,
Admiral Robert E. Kramek. Mr. Gaffney authored this letter
and obtained the signatures of the other officers. In the
letter, the officers expressed concern that “the relaxation of
licensing requirements for the engineers on the M/V
Showboat . . . substantially reduces passenger safety by not
(...continued)
qualifications. See 46 U.S.C. § 3307 (requiring “inspection for
certification before [a vessel is] put into service”); id. § 3309
(setting forth the requisite procedures for issuing a COI).
8 Nos. 04-3829, 04-3900
requiring experienced personnel to crew the vessel.” R.34,
Ex.2. The plaintiffs concluded the letter by request-
ing information from the Coast Guard about the amended
COI. Mr. Gaffney testified that this letter was sent to obtain
clarification about licensing requirements because the COI
did not specify “what [the change] actually meant.” Tr.I at
113. The Coast Guard responded with two separate letters
that, according to Mr. Gaffney, did not answer the plaintiffs’
questions about the nature of the licensing relaxation but
did provide necessary information about proper appeals
procedures. Gaffney Dep., R.81, Ex.7 at 42.
A second letter was sent to the Coast Guard on October 3,
1997, this time signed only by Mr. Gaffney and addressed to
Lieutenant Neil Shoemaker. R.34, Ex.3. In this letter, Mr.
Gaffney expressed concern that two employees8 had been
fired because of their correspondence with the Coast Guard
about the relaxation of licensing requirements. In addition,
Mr. Gaffney reiterated his concern that the licensing changes
risked “a serious disaster,” given the “shear [sic] number of
people onboard” and the relationship between licensing and
experience. Id. Mr. Gaffney also inquired about the “specific
qualifications for limited engineers,” including the number
of years’ experience required to obtain the license in ques-
tion. Id.
On October 5, 1997, Mr. Gaffney sent follow-up corre-
spondence to Lieutenant Shoemaker. See R.34, Ex.4. He
reported that one of the assistant engineers with an unlim-
ited license recently had been approved to sit for his limited
license for a chief engineer position. Mr. Gaffney expressed
concern that allowing “a person with so limited experience”
8
These two individuals are not parties to the present litigation,
but were signatories to the August 11th letter.
Nos. 04-3829, 04-3900 9
to “sign[] on as Chief Engineer of this vessel is the reason
why myself and my fellow officers wrote the initial letter to
[Coast Guard] Commandant.” Id.
The last letter to the Coast Guard, which is the focus of
this appeal, is dated October 10, 1997. All of the plaintiffs
except Mr. Horton and Mr. Doncet signed this letter, as did
eight other individuals not parties to this suit. See R.34,
Ex.5.9 In this letter, the plaintiffs requested a thirty-day
extension of time to file an appeal challenging the relaxation
of licensing requirements granted to the M/V Showboat. “Our
request,” the plaintiffs explained, “is based on the following
reasons”:
The lowering of licensing standards for engineering
officers aboard the M/V Showboat occurred April 11th,
1997 . . . . It was not publicized until mid June, 1997 . . . .
After some preliminary research into the lowered
licensing requirements, we wrote the USCG Comman-
dant in an effort to understand the exact reason for
relaxing these standards. . . . As a group directly ef-
fected [sic] by this decision, we feel that we should have
been extended the opportunity to have our thoughts,
opinions and concerns heard . . . .
It is our contention that the change in licensing
requirement for the engineers on the M/V Showboat
Mardi Gras from Unlimited to Limited has served
to potentially and substantially compromise safety
standards aboard the vessel.
9
Copies of these letters, as well as individual pleas for assistance
in resolving labor disputes with the owners and operators of the
M/V Showboat, also were sent to various members of Congress.
See R.64, Ex.Q.
10 Nos. 04-3829, 04-3900
The safety requirements set by the United States Coast
Guard are minimum requirements for safe operation of
vessels, and the operative word here is minimum.
Typically, vessel owners and managers conform only to
the bare minimum requirements while viewing addi-
tional safety items as an inconvenience or extra cost. The
request from Riverboat Services Incorporated (RSI) to
lower the license requirement for the engineers is a
prime example of this tenet as evidenced by their letter
of request. . . . Approval of their request has effectively
lowered required experience for engineers to a substan-
dard level.
Id. at 1. The letter also described the training discrepancies
between an engineer with a limited license and an engineer
with an unlimited license. Further, it set forth the reasons
why extensive experience on board a large vessel is an
essential qualification of engineers navigating the M/V
Showboat—the difficulty of maneuvering in shallow waters
and around obstacles, the passenger capacity of the vessel
and the dangers of wind gusting. Finally, the letter rebutted
the claim that engineers with limited licenses generally have
sufficient experience to serve on inland vessels such as the
M/V Showboat.
In a letter dated October 31, 1997, Captain M. W. Brown,
the Officer in Charge of Marine Inspection, denied the
plaintiffs’ appeal. See R.34, Ex.8. Captain Brown acknowl-
edged receipt of the October 10th letter, which—although
phrased as a request for an extension of time—he classified
as an “appeal[]” of the “decision to permit the use of
engineers with ‘limited’ licenses aboard Great Lakes vessels
Nos. 04-3829, 04-3900 11
not more than 4,000 gross tons.”10 Id. After researching the
issue raised in the “appeal,” he disagreed that
the use of limited licensed engineers threatens the safety
of M/V SHOWBOAT.
While the service requirements between unlimited
and limited engineers are different, limited engineers
are still required to have appropriate and relevant
experience. The regulations currently permit the use of
limited engineers for vessels of any gross tons on inland
waters. The SHOWBOAT, due to its extremely short
“close in” route, combined with its fairweather operat-
ing criteria, is analogous to operation on inland
waters. . . .
Accordingly, your appeal is denied, and the SHOW-
BOAT’s existing Certificate of Inspection remains valid.
Id. The signatories to the October 10th letter appealed
Captain Brown’s decision to the Commander of the Ninth
Coast Guard District. See R.34, Ex.9. In the appeal, the
plaintiffs expressed frustration with Captain Brown’s failure
to “differentiate between passenger vessels and cargo
vessels.” Id. “We feel,” they wrote, “that the highest stan-
dards should be required, not wavered, on high capacity
passenger vessels such as the M/V Showboat, which carries
4,250 passengers and crew.” Id. This letter also expressed
concern that the relaxation of licensing requirements was a
10
Captain Brown misquoted the applicable regulation. 46 C.F.R.
§ 15.915(b)-(d) prohibits vessels of more than 1,600 gross tons, not
4,000 gross tons, in Great Lakes service from employing either
chief or assistant engineers with limited licenses. The provision
permitting vessels of not more than 4,000 horsepower to employ
engineers with limited licenses applies only to designated duty
engineers. See 46 C.F.R. § 15.915(a)(1).
12 Nos. 04-3829, 04-3900
growing trend. In that regard, it noted that the Coast Guard
recently had issued an amended COI, endorsing the em-
ployment of engineers with limited engineering licenses for
a vessel similar in size and function to the M/V Showboat.
Captain G. S. Cope, acting at the direction of the Ninth
District Commander, granted the plaintiffs’ appeal on
December 19, 1997. See R.34, Ex.10. Captain Cope wrote:
In reviewing the record of this appeal, I found that the
endorsement of the M/V SHOWBOAT’s certification of
inspection to allow limited engineers, did not comply
with 46 CFR 15.915. That regulation authorizes individ-
uals licensed as Chief Engineer (limited) or Assistant
Engineer (limited) to serve as Chief or Assistant Engi-
neer on vessels up to 1,600 Gross Tons upon the Great
Lakes. Since the M/V SHOWBOAT is greater than 1,600
Gross Tons, an individual holding only a “limited”
engineer license could not legally serve as the vessel’s
Chief or Assistant Engineer.
Id. The Captain directed the Officer in Charge of Marine
Inspection at the Coast Guard to remove the endorsement
allowing for employment of limited license engineers from
the M/V Showboat’s COI. An amended COI was sent to
Riverboat on December 31, 1997. It was posted on the vessel
on January 5, 1998.
It is undisputed that, by January 5, Mr. Gourguechon had
become aware of the plaintiffs’ correspondence with the
Coast Guard. Mr. Gourguechon testified that, in late
October, he found the plaintiffs’ October 10th letter to the
Coast Guard, which he characterized as merely a “job
security letter,” in the pilot house. Tr.IV at 47-48. Further, at
the end of 1997, Mr. Gaffney had approached Mr.
Gourguechon with his concerns about the relaxation of
licensing requirements, as well as discussed with him
Nos. 04-3829, 04-3900 13
developments in the plaintiffs’ October 10th “appeal.”11 Tr.I
at 154-57. There is no evidence, however, that—before the
complaint was filed on January 13, 1998, to which was
attached the relevant Coast Guard correspondence—Mr.
Gourguechon had read any of the previous letters or that
Mr. Heitmeier had read any of the four letters at all. See
Gourguechon Test., Tr.IV at 47; Heitmeier Dep., R.81, Ex.2
at 59-60.
3. The Plaintiffs’ Terminations
On January 6, 1998, Mr. Gaffney received a letter from Mr.
Gourguechon, notifying him that his employment as Chief
Engineer on the M/V Showboat had been terminated, effec-
tive immediately. The letter identified the reasons for
termination as:
Unauthorized communication and correspondence with
regulatory bodies having jurisdiction over the operation
of the vessel. Unauthorized correspondence and the
regulators [sic] response has had a material adverse
effect on the company’s ability to efficiently run it’s [sic]
business.
11
The parties dispute the scope and substance of these conversa-
tions. For example, Mr. Gaffney testified that, on January 5,
before the amended COI was posted, he informed Mr.
Gourguechon that the plaintiffs’ appeal to the Coast Guard
concerning licensing requirements had been granted. According
to Mr. Gaffney, Mr. Gourguechon told him that Mr. Heitmeier
and Mr. Wallace, the President and CEO of Showboat’s East
Chicago operation, “were upset” and that Mr. Gaffney would
“tak[e] the heat for [the appeal].” Tr.I at 181. Mr. Gourguechon
denies having made these statements, although he admits
knowing of the plaintiffs’ October 10th letter to the Coast Guard
prior to the plaintiffs’ terminations. See Tr.IV at 47-48.
14 Nos. 04-3829, 04-3900
R.81, Ex.15. Mr. Gaffney was offered no other explanation,
either in writing or verbally, for his termination. According
to Mr. Gaffney, upon receiving this letter, he told Mr.
Gourguechon, “You can’t fire me for that.” Id., Ex.7 at 84.
The other nine plaintiffs were fired over the course of the
next two-and-a-half weeks.12 Unlike Mr. Gaffney’s termina-
tion letter, the letters received by these individuals did not
contain reference to Coast Guard correspondence but,
instead, gave no reason for their discharges. When con-
fronted by these plaintiffs, Mr. Gourguechon denied that
their discharges were in any way related to the Coast Guard
correspondence.13
12
Messrs. Bell and Beardon both received their termination letters
from Mr. Gourguechon on January 6, 1998. See R.81, Ex.16-17. Mr.
Anderson received his termination letter on January 7, 1998. See
id., Ex.18. Mr. Trundy received his termination letter on January
8, 1998. See id., Ex.19. Mr. Goodridge received his termination
letter on January 14, see id., Ex.20, and Mr. Horton received his on
January 15, see id., Ex.21. Mr. Reilly was notified of his discharge
on or about January 21, 1998, although he did not receive a
written termination notice. On January 22, Mr. Doncet was
terminated. See id., Ex.22. Mr. Palmer was discharged the next
day. See id., Ex.23.
During this time, approximately forty other individuals, who
had not signed any of the letters to the Coast Guard, also had
their employment terminated. Additionally, the jobs of a number
of other signatories to the October 10th appeal, including Eric
James, Steve Habermehl, Duane Hunt and Derek Melanson, were
not affected.
13
For example, Mr. Doncet stated that, after he was told of his
termination, he asked Mr. Gourguechon whether it was related to
the plaintiffs’ correspondence with the Coast Guard.
(continued...)
Nos. 04-3829, 04-3900 15
Mr. Gourguechon testified that, although he drafted and
hand-delivered all but one of the plaintiffs’ termination
notices, he was acting at the direction of Mr. Heitmeier. See
Tr.IV at 76-78. Specifically, according to both Mr.
Gourguechon and Mr. Heitmeier, in late 1997, Mr.
Gourguechon approached Mr. Heitmeier about problems he
was having with the plaintiffs’ employment on the M/V
Showboat. Id. at 36-38. This conversation focused on the
plaintiffs’ potential connections to the Marine Engineers’
Beneficial Association (“MEBA”), the union responsible for
picketing near the vessel that was sometimes violent and
often disruptive. They also discussed the plaintiffs’ involve-
ment in defective rewiring of the M/V Showboat. A number
of the plaintiffs had been assigned to assist in repositioning
the gaming machines on the vessel; improper wiring later
caused a circuit breaker to blow and was responsible for
expensive damage to the vessel. Various Riverboat execu-
tives, including Mr. Gourguechon and Mr. Heitmeier,
believed that the plaintiffs—in cooperation with
MEBA—had sabotaged the ship, and they cite this incident
as the cause of the plaintiffs’ terminations. See Gourguechon
Test., Tr.IV at 38-43; Heitmeier Dep., R.81, Ex.2 at 61-63.
According to the defense, after this conversation, Mr.
Heitmeier approached Mr. Wallace, the President and CEO
of Showboat’s East Chicago, Indiana, operations. At this
meeting, Mr. Heitmeier informed Mr. Wallace of the
plaintiffs’ connections to MEBA and the suspected acts of
(...continued)
Mr. Gourguechon “did not say anything in response.” R.81, Ex.25
at 2. Mr. Trundy testified that Mr. Reilly asked Mr. Gourguechon
about his termination in Mr. Trundy’s presence, and Mr.
Gourguechon responded that “[t]here [was] no reason” for it.
Tr.III at 112.
16 Nos. 04-3829, 04-3900
sabotage. Mr. Wallace directed Mr. Heitmeier to terminate
the individuals involved. As Mr. Wallace later explained,
“[i]f they had anything to do with the union, I wasn’t . . .
interested in the continued aggravation they were causing.”
R.81, Ex.3 at 25, 28; see also Heitmeier Dep., id., Ex.2 at 62-63.
Mr. Heitmeier in turn conveyed these instructions to Mr.
Gourguechon, who drafted the termination notices.
B. Procedural History
On January 13, 1998, Messrs. Gaffney, Bell, Beardon,
Anderson and Trundy filed suit against Riverboat, Show-
boat, and Mr. Heitmeier and Mr. Gourguechon in their
individual capacities.14 The First Amended Complaint
added Messrs. Goodridge, Horton and Doncet as plaintiffs;
the Second Amended Complaint added Messrs. Palmer and
Reilly. The plaintiffs asserted that their terminations
violated 46 U.S.C. § 2114, the anti-retaliation statute protect-
ing seamen who report the violation of safety regulations on
board a vessel to the Coast Guard. They sought reinstate-
ment with back pay, injunctive relief, compensatory and
punitive damages and attorneys’ fees.
14
Plaintiffs Bell, Beardon, Anderson and Trundy also filed a
complaint with the National Labor Relations Board (“NLRB”),
alleging a violation of § 8(a)(1) of the National Labor Relations
Act (“NRLA”). The matter was heard by an Administrative Law
Judge (“ALJ”) on July 26 and 27, 1999. The ALJ found that the
defendants had violated the NLRA and ordered back pay and
reinstatement. The district court held that these proceedings
barred these plaintiffs from pursuing their state law claims in
federal court. See R.95 at 16 (dismissing Bell, Beardon, Anderson
and Trundy’s state law claims as “preempted by the September
23, 1999 NLRB adjudication”).
Nos. 04-3829, 04-3900 17
1. The Counterclaim and Cross-Claim
On December 10, 1998, Showboat filed a cross-claim
against the Riverboat defendants, contending that Riverboat
was solely responsible for all employment matters on the
M/V Showboat, including termination of the plaintiffs;
therefore, Showboat claimed, Riverboat was required to
indemnify Showboat for all litigation expenses and for the
cost of settlement. See R.37. In turn, on March 1, 1999,
Riverboat filed a counterclaim against Showboat, claiming
that Showboat was obligated under the terms of their
Agreement to insure or indemnify Riverboat for all “acts
and omissions” causing injury, including violation of § 2114.
See R.46. On June 30, 2000, Showboat moved for summary
judgment against Riverboat on its cross-claim, as well as on
Riverboat’s counterclaim. See R.68. The district court
granted this motion in part and denied it in part. See R.99.
First, the court found that the Agreement did not obligate
Showboat to insure against retaliatory discharge claims. See
id. at 5-9. Specifically, it held that, although § 5.01.1 of the
Agreement speaks broadly of insurance policies for
Riverboat’s “acts, omissions, and injuries,” see R.37, Ex.A,
this provision is modified by § 5.01.01, which specifies, and
thereby limits, the requisite scope of coverage. Under
§ 5.01.01, Showboat was obligated to obtain insurance
policies that included within their scope the following:
worker’s compensation insurance, comprehensive general
liability insurance, full form protection and indemnity
insurance on all vessels and floating equipment, hull and
machinery insurance and collision liability insurance for
damage to vessels. See R.99 at 9. However, it was not
required to obtain “an additional, general ‘acts and omis-
sions’ policy which would have covered intentional acts,”
such as violation of § 2114. See id. (emphasis in original).
Riverboat now appeals this decision.
18 Nos. 04-3829, 04-3900
The district court, however, denied Showboat’s motion for
summary judgment on its cross-claim against Riverboat.
The court held that, although the Agreement provides that
Riverboat is solely responsible—as between Riverboat
and Showboat—for discharging plaintiffs, this does not
absolve Showboat as “owner . . . of a vessel” of liability
to plaintiffs since plaintiffs have also brought a direct
§ 2114 claim against Showboat for discrimination, and,
construing the evidence in the light most favorable to
the non-moving plaintiffs, a directive that plaintiffs be
fired could certainly arguably constitute a “manner” of
discrimination. Because the court is not prepared on the
briefs before it to enter judgment in favor of Showboat
on plaintiffs’ discrimination claim, Showboat’s motion
for summary judgment against plaintiffs is DENIED.
Id. at 9-10 (internal citation omitted) (alteration in original).
Showboat has not appealed the district court’s denial of
summary judgment. Because the parties never sought
resolution of the factual issues implicating the disposition of
this cross-claim, Showboat’s cross-claim against Riverboat
is still pending in the district court.
2. The Plaintiffs’ Claims Against Showboat
In August 2001, the plaintiffs reached a settlement with
Showboat in the form of a loan receipt agreement.15 Also
15
In pertinent part, the loan receipt agreement provides that
Showboat shall advance to the plaintiffs an undisclosed sum of
money; the plaintiffs are obligated to repay this sum, with
interest, from the proceeds of any amount received from a
(continued...)
Nos. 04-3829, 04-3900 19
in August, the district court, pursuant to Federal Rule of
Civil Procedure 21, severed the plaintiffs’ claims against
Showboat from the plaintiffs’ claims against the other
defendants, in part because Showboat had not consented to
the jurisdiction of the magistrate judge. See R.168. On
December 13, 2004, the district court dismissed the plain-
tiffs’ claims against Showboat with prejudice. See R.209.
3. The Plaintiffs’ Claims against Riverboat
After the district court denied Riverboat’s motion for
summary judgment, the plaintiffs’ claims against Riverboat
were scheduled for a bench trial before a magistrate judge.
The trial was held from August 19 to August 22, 2002. All
ten plaintiffs testified, as did Mr. Gourguechon. In addition,
the defense offered into evidence the deposition testimony
of Mr. Heitmeier.
At trial, the defense argued that the plaintiffs were
terminated not because of their correspondence with the
Coast Guard, but because of their involvement in disruptive
union activity on and near the vessel. According to the
defense, although Mr. Gourguechon knew of the plaintiffs’
letters to the Coast Guard prior to the initiation of the
lawsuit, he viewed the letters as a benign job preservation
effort, which did not threaten Riverboat’s operations.
In addition, the defense submitted that the plaintiffs were
not entitled to § 2114’s whistleblower protections. It viewed
this statutory protection as narrowly tailored to protect
15
(...continued)
settlement with or final judgment against the other defendants in
the case.
20 Nos. 04-3829, 04-3900
seamen who make a formal complaint to the Coast Guard
by reporting an actual violation of safety regulations caused
by the captain or master of the vessel and who believe that
this violation poses a significant safety hazard. According to
the defense, the plaintiffs did not fulfill these requirements
because: (a) they subjectively did not believe that the
employment of limited license engineers would impair the
safety of the vessel; (b) the plaintiffs’ belief that Riverboat
had committed a violation of safety regulations was unrea-
sonable, given that Riverboat had yet to employ an engineer
with a limited license; (c) the plaintiffs did not file a formal
complaint with the Coast Guard; and (d) they were not
discriminated against by a “master[] or individual in charge
of a vessel.” § 13(a), 98 Stat. at 2863.
At the conclusion of the bench trial, each party submit-
ted post-trial briefs. Subsequently, the district court entered
an order finding for all but two of the plaintiffs, Mr. Doncet
and Mr. Horton. The district court first concluded that eight
of the ten plaintiffs, those who had signed the October 10th
letter, had established a causal link between their correspon-
dence with the Coast Guard and their subsequent termina-
tions. Although the court recognized that Riverboat also
was concerned with disruptive union activity on and near
the vessel, it held that the activity protected by § 2114 need
not be the “sole cause of the discharge.” R.191 at 24, 27.
Instead, relying on both Jones Act and civil rights case law,
see, e.g., Smith v. Atlas Off-Shore Boat Serv., Inc., 653 F.2d
1057, 1063 (5th Cir. 1981), the court held that the seamen
only must “affirmatively establish that the employer’s
decision was motivated in substantial part” by the plaintiffs’
protected activities. R.191 at 24 (internal quotation marks
omitted).
Nos. 04-3829, 04-3900 21
The district court concluded that Riverboat’s decision to
terminate the plaintiffs was motivated in substantial part by
their correspondence with the Coast Guard. In support, the
court cited four pieces of evidence: (1) that Mr. Gaffney’s
termination letter explicitly cited the communication with
the Coast Guard as the cause of termination; (2) that the
other plaintiffs were “fired in rapid succession and only
days after the Coast Guard informed [Riverboat] that it was
rescinding the COI limited endorsement”; (3) that the
defendants’ justifications for the terminations changed “at
each stage of the proceedings”; and (4) that disruptive union
activity or sabotage was not cited when the terminations
occurred or at the NLRB proceedings as a reason for the
plaintiffs’ discharges. Id. at 27-29. In light of these findings,
the district court concluded that there existed both direct
and circumstantial evidence that the plaintiffs were termi-
nated because of their report to the Coast Guard.
The court also concluded that the eight prevailing plain-
tiffs had fulfilled the legal requirements of § 2114.
The October 10th letter was a “report,” rather than merely
a request for information, and thus was entitled to protec-
tion under § 2114. Id. at 20. The plaintiffs acted in “good
faith” in reporting the violation, which the district court
defined as the absence of “an improper purpose.” Id. at 22.
This requirement was satisfied because each plaintiff
“generally believed that the lowering of the requirements
created a safety hazard onboard the vessel.” Id. at 2. Mr.
Heitmeier and Mr. Gourguechon were both “individuals in
charge of a vessel,” defined by the district court as a person
with responsibility for “hir[ing] and fir[ing] personnel” and
for “day-to-day operations of the vessel.” Id. at 29. Conse-
quently, both defendants could be held liable in their
individual capacities for the illegal discharges. And, al-
though Riverboat had not yet hired an engineer with a
22 Nos. 04-3829, 04-3900
limited license at the time that the plaintiffs’ letters were
written, and therefore had not yet committed a violation
of safety laws or regulations, the “statute does not specifi-
cally state that the alleged safety violation must have been
committed by the vessel owner rather than a third party.”
Id. at 16. In fact, according to the court, “it would be unrea-
sonable to hold that the reporting of a perceived violation
committed by a third party, like the Coast Guard itself, does
not fall within the ambit of the statute,” given that its
purpose is “to promote safety and to remedy unsafe condi-
tions on a vessel.” Id. Thus, the Coast Guard, in authorizing
the employment of engineers with limited licenses in
violation of 46 C.F.R. §§ 10.501 and 15.915, committed a
regulatory violation cognizable under § 2114. Id. at 22-23.
Nevertheless, because Mr. Horton and Mr. Doncet were
not signatories to the October 10th letter and because there
was no evidence that the August letter they signed was
a “report,” the court determined that they had not met their
burden of proving causation between activity protected by
§ 2114 and their subsequent terminations. Id. at 21.
The district court awarded the eight prevailing plaintiffs
back pay, expenses and punitive damages.16 It concluded
that all three remedies were authorized both by § 2114,
which makes available any “appropriate relief,” id. at 33-34,
16
Specifically, the district court awarded damages in the follow-
ing amounts: Mr. Gaffney: $35,632; Mr. Goodridge: $126,505; Mr.
Anderson: $77,060; Mr. Bell: $55,564; Mr. Beardon: $122,046; Mr.
Palmer: $127,767; Mr. Trundy: $113,564; and Mr. Reilly: $25,100.
See R.192. Included in these sums are $25,000 in punitive damages
per plaintiff. Id.; see also R.191 at 40 (finding that punitive relief is
appropriate, given that Riverboat “acted willfully and wantonly
in its dismissal of each of the plaintiffs”).
Nos. 04-3829, 04-3900 23
and by general maritime law, see id. at 37-39. The court,
however, rejected the plaintiffs’ request for attorneys’ fees,
concluding that, as a general matter, fees are available only
when explicitly authorized by statute. See id. at 42-43.
After the district court denied Riverboat’s post-trial
motion to set aside the judgment, Riverboat timely ap-
pealed. The plaintiffs subsequently filed a timely notice
of cross-appeal, challenging the district court’s judgment as
it relates to Mr. Horton and Mr. Doncet, as well as the denial
of the plaintiffs’ request for attorneys’ fees.
II
APPELLATE JURISDICTION
We first must resolve the question of whether the dis-
trict court’s decision constituted a final judgment—a pre-
requisite to exercising jurisdiction over this appeal. See 28
U.S.C. § 1291. Showboat contends that, as of October 21,
2004, the date that Riverboat filed its notice of appeal, there
were two issues still pending in the district court that
deprived its judgment of finality. First, the plaintiffs’ claims
against Showboat had been settled and severed from the
proceedings between the plaintiffs and Riverboat, but not
yet dismissed. Second, Showboat’s cross-claim against
Riverboat, alleging that Riverboat was exclusively responsi-
ble for all employment matters on the M/V Showboat and
seeking reimbursement for the costs of settlement with the
plaintiffs, also severed from the case now before us, has not
yet been dismissed by the district court.
Upon careful examination of the record, we are confi-
dent that the pendency of these two matters does not
deprive us of jurisdiction to review the judgment of the
24 Nos. 04-3829, 04-3900
district court with respect to the plaintiffs’ claims against
Riverboat and Riverboat’s counterclaim against Show-
boat for indemnification.
On August 13, 2002, the district court severed the plain-
tiffs’ claims against Showboat from the plaintiffs’ claims
against Riverboat under Federal Rule of Civil Procedure 21.
See R.168. At the same time, the district court also severed
Showboat’s cross-claim against Riverboat from the plain-
tiffs’ claims against Riverboat. Id.As a general matter, Rule 21 severance creates two
discrete, independent actions, which then proceed as
separate suits for the purpose of finality and appealability.
We first adopted this rule in Hebel v. Ebersole, 543 F.2d 14(7th Cir. 1976), when we held that, because the claims
resolved by the district court and those remaining in that
court had been severed pursuant to Rule 21, that court’s
judgment was “final and properly appealable.” Id. at 17.
This rule enjoys continued vitality. See Rice v. Sunrise
Express, Inc., 209 F.3d 1008, 1014 n.8 (7th Cir. 2000) (“If the
district court severed [the claims against the successor
corporation] under Rule 21, then it created two separate
actions, each capable of reaching final judgment and be-
ing appealed.”).17
17
Almost all of the circuits have adopted this same approach to
Rule 21 severance. See, e.g., Acevedo-Garcia v. Monroig, 351 F.3d
547, 560 (1st Cir. 2003) (holding that the Rule 21 severance
rendered the district court verdict a “final and appealable
judgment under 28 U.S.C. § 1291”); United States ex rel. LaCorte v.
SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 231 n.3 (3d
Cir. 1998) (“A severed claim [under Rule 21] proceeds as a
discrete suit and results in its own final judgment from which an
(continued...)
Nos. 04-3829, 04-3900 25
The district court clearly and unambiguously classified its
severance order as one “pursuant to Federal Rule of Civil
Procedure 21.” R.168 at 1, 7 (holding that, because they are
“distinct and separate,” it had “broad discretion . . . under
Rule 21” to sever the plaintiffs’ claims against Riverboat
from what remained of the plaintiffs’ claims against Show-
boat). Nevertheless, because “the district court cannot by
this characterization of its order create a severance under
Rule 21 where one did not exist before,” United States v.
O’Neil, 709 F.2d 361, 368 (5th Cir. 1983), we necessarily must
examine whether the district court erred in classifying its
severance order as a Rule 21 order rather than a severance
under Federal Rule of Civil Procedure 42(b).
17
(...continued)
appeal may be taken.”); Chrysler Credit Corp. v. Country Chrysler,
Inc., 928 F.2d 1509, 1519 (10th Cir. 1991) (“[W]here certain
claims in an action are properly severed under Fed. R. Civ. P. 21,
two separate actions result; a district court may transfer one
action while retaining jurisdiction over the other.”); United States
v. O’Neil, 709 F.2d 361, 368 (5th Cir. 1983) (“Severance under Rule
21 creates two separate actions or suits where previously there
was but one. Where a single claim is severed out of a suit, it
proceeds as a discrete, independent action . . . . The presence of
unresolved claims in the other action does not of itself implicate
Fed.R.Civ.P. 54(b), because that Rule applies only where the
unresolved claims are in the same action or suit.”); Spencer, White
& Prentis, Inc. v. Pfizer, Inc., 498 F.2d 358, 361 (2d Cir. 1974)
(“[A]ppeal from a judgment on a validly severed single claim
may be timely taken as of right notwithstanding the pendency of
the remaining claims or counterclaims . . . .”); see also 7 Wright &
Miller, Federal Practice & Procedure § 1689 (2001) (“Once a claim
has been severed [under Rule 21] . . . it proceeds as a discrete unit
with its own final judgment, from which an appeal may be
taken.”).
26 Nos. 04-3829, 04-3900
The distinction between the two rules is jurisdictionally
significant: “A separate trial order under Rule 42(b) is
interlocutory and non-appealable.” Reinholdson v. Minnesota,
346 F.3d 847, 850 (8th Cir. 2003). By contrast, “[s]everance
under Rule 21 creates two separate actions or suits where
previously there was but one. Where a single claim is
severed out of a suit, it proceeds as a discrete, independent
action, and a court may render a final, appealable judgment
in either one of the resulting two actions notwithstanding
the continued existence of unresolved claims in the other.”
O’Neil, 709 F.2d at 368.18 We review the district court’s
decision to sever the plaintiffs’ claims against Showboat
from their claims against Riverboat under Rule 21, rather
18
Moore’s Federal Practice explains the difference between Rule
21 and Rule 42(b) severance as follows:
Severance under Rule 21 results in separate actions. A single
claim that is severed from a multiclaim action “may be . . .
proceeded with separately.” In other words, the severed
claim proceeds as a discrete, independent suit. It and the
original case result in their own separate final judgments
from which appeals may be taken. If a severed claim is one
of multiple claims asserted by a single plaintiff against a
single defendant (or vice versa), neither party is severed from
the original action. Rather, both parties are involved in two
separate actions. In contrast, an order of separate trials does
not result in the filing of separate cases. Instead, it simply
leads to two or more separate factual inquiries in the context
of a single, properly joined case. No matter how many
separate trials the court may order, they remain part of a
single case. While judgment on a severed claim is final for
purposes of appeal, judgment on a claim tried separately is
not an appealable final judgment, unless certified for imme-
diate appeal under Rule 54.
4 Moore’s Fed. Practice § 21.06 (2005).
Nos. 04-3829, 04-3900 27
than under Rule 42(b), for abuse of discretion. See Rice, 209
F.3d at 1016 (“It is within the district court’s broad discre-
tion whether to sever a claim under Rule 21.”); Hebel, 543
F.2d at 17.
The district court did not abuse its discretion in sever-
ing the plaintiffs’ claims under Rule 21 rather than under
Rule 42(b). We have held previously that a district court
may sever claims under Rule 21, creating two separate
proceedings, so long as the two claims are “discrete and
separate.” Rice, 209 F.3d at 1016. In other words, one claim
must be capable of resolution despite the outcome of the
other claim. Id. By contrast, bifurcation under Rule 42(b) is
appropriate where claims are factually interlinked, such that
a separate trial may be appropriate, but final resolution of
one claim affects the resolution of the other. See, e.g.,
Reinholdson, 346 F.3d at 850 (holding that, because the “trials
of [the] individual claims may expose issues of systemic
violation that would cause the district court to reconsider its
decision to dismiss plaintiffs’ claims against the State
defendants in their entirety,” severance under Rule 21 was
inappropriate; instead construing the district court’s order
as an order for separate trials under Rule 42(b), such that the
individual claims may not be appealed until “a final
judgment has been rendered in the entire action”).
In Rice v. Sunrise Express, 209 F.3d at 1016, we addressed
when Rule 21 severance constitutes an abuse of discretion.
There, the plaintiff sued Sunrise Express, Inc. for viola-
tion of the Family and Medical Leave Act. At a pre-trial
conference, the district court raised the concern that Gainey
Corporation might be liable as a successor corporation to or
as a joint employee of Sunrise. The parties stipulated that
Gainey was not the successor corporation and the case
proceeded to trial before a magistrate judge. On appeal,
28 Nos. 04-3829, 04-3900
Sunrise contended that the order below was not final
because Gainey had not consented to the jurisdiction of the
magistrate judge. We held that the district court, as indi-
cated by a nunc pro tunc order and acting pursuant to Rule
21, previously had severed Gainey from the proceedings.
We further found that severing Gainey under Rule 21, as
opposed to under the bifurcation procedures set forth in
Rule 42(b), did not constitute an abuse of discretion:
As long as there is a discrete and separate claim, the
district court may exercise its discretion and sever it.
Here, the district court effectively took Gainey, and the
separately pled claim for successor liability against
Gainey, out of the suit. . . . Because Gainey did not face
primary liability, and, in all likelihood, no liability at all,
its presence was not necessary, and, in the view of the
district court, its removal significantly simplified the
case.
Id.The same is true here as well. At the time that the dis-
trict court issued its severance order, the “Showboat defen-
dants [had] indicated to the court that all of the plaintiffs’
claims against them ha[d] been settled.” R.168 at 2. Show-
boat’s only remaining claim was its indemnification claim
against Riverboat. This claim rests on section 3 of Show-
boat’s agreement with Riverboat and claims that Riverboat
had the “sole authority” to terminate the plaintiffs. R.37 at
6. If so, Showboat contends, it had no responsibility for the
plaintiffs’ discharges. By contrast, after severance, the
present case involved only the plaintiffs’ claims against
Riverboat and Riverboat’s claim for indemnification against
Showboat. Notably, Riverboat’s indemnification claim rests
on the insurance clause in section 5 of the Agreement and is
Nos. 04-3829, 04-3900 29
completely independent, both theoretically and practically,
of Showboat’s claim against Riverboat.
The issues raised by Showboat’s severed cross-claim are
also “discrete and separate,” Rice, 209 F.3d at 1016, of the
claims raised by the plaintiffs against Riverboat. The
plaintiffs’ claims require an analysis of the legal require-
ments of § 2114, including whether Riverboat officials who
were “individual[s] in charge of [the] vessel,” § 13(a), 98
Stat. at 2863, were motivated by a retaliatory animus in
terminating the plaintiffs. Showboat’s claim, by contrast,
mandates an analysis of the contractual relationship be-
tween Showboat and Riverboat and of whether the actions
of Showboat, as an “owner” of the vessel, id., constitute a
“manner of discrimination,” rendering indemnification
improper, R.99 at 9. While the facts underlying these claims
overlap, the claims are independent of one another.
Riverboat’s liability is unaffected by whether Showboat also
was involved in the decision to discharge the plaintiffs; even
if Mr. Wallace of Showboat gave a directive to terminate the
plaintiffs or otherwise affected the termination decision, Mr.
Gourguechon of Riverboat also is alleged to have played
(and did play) a key role in that decision, making Riverboat
liable for retaliatory discharge. Similarly, Showboat could be
held liable as an “owner” of the vessel absent a finding that
the “individual[s] in charge of [the] vessel” retaliated
against the plaintiffs. § 13(a), 98 Stat. at 2863. Because the
issues raised by Showboat’s claim against Riverboat and
those raised by the plaintiffs’ claims against Riverboat are
easily separable for analysis, the district court did not abuse
its discretion in finding that the severance would simplify
the proceedings.
In short, while the overall financial exposure of Riverboat
or Showboat will be affected by the final outcome of both
30 Nos. 04-3829, 04-3900
actions, the claims in each action are clearly independent of
each other. See Rice, 209 F.3d at 1016 (holding the indemnifi-
cation claims to be severable under Rule 21 from the
primary liability inquiry). The validity of the claims before
us does not depend, as a matter of law, on the outcome of
the severed claims.
Therefore, by virtue of its Rule 21 order, the district court,
in the exercise of its sound discretion, initiated two separate
proceedings: (1) the plaintiffs’ suit against Riverboat, from
which Riverboat’s counterclaim against Showboat flows;
and (2) the plaintiffs’ suit against Showboat, from which
Showboat’s cross-claim against Riverboat arises. Post-
severance, these suits are independent for purposes
of appellate jurisdiction. As a result, the plaintiffs’ severed
claims against Riverboat reached “final decision[],” 28
U.S.C. § 1291, vesting jurisdiction in this court without
regard to the disposition of the plaintiffs’ claims against
Showboat. The same is true of the relationship between the
current appeal and Showboat’s cross-claim against
Riverboat. While the cross-claim is still pending in the
district court, it has no impact on our jurisdiction under
§ 1291: Because the cross-claim logically stems from the
plaintiffs’ claims against Showboat, rather than from the
plaintiffs’ claims against Riverboat, and because these two
sets of claims previously were severed, Riverboat’s present
appeal and the resolution of Showboat’s cross-claim can be
“proceeded with separately.” Fed. R. Civ. P. 21.
III
ANALYSIS
A. Statutory Protection Under 46 U.S.C. § 2114At the time of the events in this case, 46 U.S.C. § 2114(a)
provided that:
Nos. 04-3829, 04-3900 31
An owner, charterer, managing operator, agent, master,
or individual in charge of a vessel may not discharge
or in any manner discriminate against a seaman because
the seaman in good faith has reported or is about to
report to the Coast Guard that the seaman believes that
a violation of this subtitle, or a regulation issued under
this subtitle, has occurred.
§ 13(a), 98 Stat. at 2863.19 The statute authorizes a seaman to
bring an action in an “appropriate [United States] District
Court” and to seek reinstatement with back pay, as well as
“any other appropriate relief.” § 13(b), 98 Stat. at 2864.
Section 2114 is intended to facilitate Coast Guard enforce-
ment of maritime regulations by ensuring that the Coast
Guard is aware of potential safety violations that could
endanger vessels, their passengers and their crew. The
statute accomplishes this goal by guaranteeing that, when
seamen provide information of dangerous situations to the
Coast Guard, they will be free from the “debilitating threat
of employment reprisals for publicly asserting company
violations” of maritime statutes or regulations. Passaic Valley
Sewerage Comm’rs v. United States Dep’t of Labor, 992 F.2d 474,
478 (3d Cir. 1993) (discussing a similar retaliatory discharge
provision in the Clean Water Act).
19
This provision was amended by the Maritime Transportation
Security Act of 2002, see Pub.L. 107-295, § 428(a), 116 Stat. 2064(2002), which expanded the protections available to seamen and
made available an award of attorneys’ fees. These amendments
became effective after the events in this case took place, and
Congress expressed no clear intent to make the amendments
retroactive; neither party asks that these amendments be applied
here.
32 Nos. 04-3829, 04-3900
We must decide whether the plaintiffs’ correspondence
with the Coast Guard qualifies for protection under § 2114
and, if so, whether the plaintiffs were terminated in retalia-
tion for this protected activity. Riverboat submits that the
district court erred in concluding that the plaintiffs’ corre-
spondence constituted a “report” of a safety violation and
in holding that the plaintiffs established that they acted in
“good faith” in corresponding with the Coast Guard. We
shall address each of these contentions.
1. Whether the Plaintiffs’ Correspondence is Protected
by the Statute
Riverboat contends that the plaintiffs’ correspondence
with the Coast Guard is not entitled to statutory protection
under § 2114 because it did not constitute a “report.” In
support of this contention, Riverboat relies upon Garrie v.
James L. Gray, Inc., 912 F.2d 808 (5th Cir. 1990). In its view,
Garrie stands for the proposition that § 2114 requires a formal
complaint be made to the Coast Guard. The district court
did not accept this argument. First, it noted that, although
the plaintiffs’ October 10th letter did not “use[] the catch-
word ‘report,’ ” “it is hard to imagine that Congress would
have intended for such specificity,” given that “the statute
itself does not prescribe the manner in which such a report
must be made.” R.191 at 21. The district court concluded
that the October 10th letter to the Coast Guard satisfied this
requirement. In that letter, the plaintiffs did not merely seek
information. Rather, they made a specific complaint “about
the limited endorsement on the COI and sought its removal:
they reported what they believed was a violation of a safety
law.” Id.
Nos. 04-3829, 04-3900 33
Whether a particular form of communication qualifies as
a “report” under § 2114 is a question of law that we review
de novo. See Olson v. Risk Mgmt. Alternatives, Inc., 366 F.3d
509, 511 (7th Cir. 2004) (holding that we review issues of
statutory interpretation de novo). As always, when ap-
proaching a question of statutory interpretation, “we begin
with the plain wording of the relevant statutory provi-
sion[].” United States v. Vitrano, 405 F.3d 506, 509 (7th Cir.
2005).
When read in isolation, the term “report” arguably could
have more than one meaning.20 However, we do not read a
word or words of a statute in isolation; rather, we read them
in the context in which they appear in the provision. When
read in its entirety, the purpose of § 2114 is quite clear. Its
import is to ensure that the United States Coast Guard
receives accurate and timely information about the violation
of safety regulations so that it in turn may fulfill its statutory
obligations to keep vessels and those who voyage in them
safe and to keep the lanes of maritime transportation free
from hazards and impediments. From the Coast Guard’s
perspective, being “always prepared”21 requires timely and
20
One legal dictionary defines the term “report” as an “official or
formal statement.” Black’s Law Dictionary 1464 (4th ed. 1968).
Other sources, however, indicate that the definition of “report”
is more broad, including a detailed account not limited by its
purpose, content or form. American Heritage Dictionary of the
English Language (4th ed. 2000).
21
The motto of the United States Coast Guard is “Semper
Paratus”—“Always Prepared.” The Coast Guard’s mission
includes: “(A) Marine safety[;] (B) Search and rescue[;] (C) Aids
to navigation[;] (D) Living marine resources (fisheries law
(continued...)
34 Nos. 04-3829, 04-3900
accurate information. In this context, we cannot attribute to
Congress the intent to give the term “report” a narrow or
formal meaning. Seamen are not professional report writers;
they staff ships and have the skills necessary to their
appointed role on the crew and to ensure the vessel’s safe
and efficient passage. The obvious point of the term
“report” in § 2114, plainly and fairly read, is to require that
the crew member’s message to the Coast Guard addresses
a safety violation and contains sufficient detail to apprise
the Coast Guard of the nature of the alleged violation. To
require any further formality would narrow the statute in a
manner that Congress clearly avoided, and, in the process,
would frustrate the clear purpose of the provision.
We note that our interpretation of the statutory language
comports with the legislative history of the provision.
Section 2114 was intended as a response to the Fifth Cir-
cuit’s decision in Donovan v. Texaco, Inc., 720 F.2d 825 (5th
Cir. 1983). See S. Rep. No. 98-454, at 12 (1984), as reprinted in
1984 U.S.C.C.A.N. 4831, 4842. Donovan, which was decided
before seamen were covered by a specific retaliatory
discharge provision, involved an engineering officer who
corresponded with the Coast Guard in a manner similar to
the plaintiffs in this case. He placed a phone call to the
Coast Guard to complain about the condition of certain
generating equipment on the vessel; after he was demoted,
and later terminated, he filed suit under the Occupational
(...continued)
enforcement)[;] (E) Marine environmental protection[;] [and] (F)
Ice operations.” 6 U.S.C. § 468(a)(1). The Coast Guard also is
responsible for assisting in “homeland security missions,” which
encompasses: “(A) Ports, waterways and coastal security[;] (B)
Drug interdiction[;] (C) Migrant interdiction[;] (D) Defense
readiness[;] [and] (E) Other law enforcement.” Id. § 468(a)(2).
Nos. 04-3829, 04-3900 35
Safety and Health Act (“OSHA”), claiming that his dis-
charge was motivated by retaliatory animus. The Fifth
Circuit held that OSHA’s prohibition against retaliatory
discharge of a complaining employee does not apply to
seamen. Donovan, 720 F.2d at 828-29. Congress signaled its
disagreement with the result in Donovan by enacting § 2114.
It made clear that, although OSHA does not forbid retalia-
tion against seamen, termination for corresponding with the
Coast Guard also should be protected by statute. Notably,
Congress took this action even though the Donovan plaintiff
never memorialized his complaint in a formal written
statement. This history— coupled with Congress’ decision
not to define “report” in the statute or in the course of
discussing Donovan in the relevant legislative
history—supports the conclusion that § 2114 does not
require a formal complaint, or even a written statement, as
a prerequisite to statutory whistleblower protection.22
This conclusion is bolstered by the holding of the only
other federal appellate case to address the requirements of
§ 2114. In Garrie, 912 F.2d 808, the plaintiff had placed a
phone call to the Coast Guard to discuss his employer’s
violation of a regulation setting maximum working hours
for officers on the vessel. The plaintiff identified himself, but
not his employer; he never indicated to the Coast Guard that
he wished to file a complaint; and he testified that his main
purpose in calling was to “get information about running
22
Moreover, both at the time of the events in this case and in its
current form, § 2114 protects a seaman who “has reported or is
about to report” the violation of safety regulations to the Coast
Guard. Compare 46 U.S.C. § 2114 (emphasis added), with Pub.L.
No. 98-557, § 13(a), 98 Stat. 2863 (1984) (current version at 46
U.S.C. § 2114 (2002)). This statutory language suggests that
Congress is focused less on the nature, or even the existence, of
the report than on the fact that communication was made.
36 Nos. 04-3829, 04-3900
times” and to “verify his understanding of the applicable
rules,” rather than to request that the Coast Guard take any
particular action. Id. at 812 (internal quotation marks
omitted). The Fifth Circuit concluded that, because the
plaintiff “did [not] reveal the name of his employer or the
vessel upon which he was employed— information without
which the Coast Guard could not investigate or prosecute a
violation”—the communication could not be considered a
“report.” Id. Although Riverboat relies on this case as
establishing that § 2114 requires a formal complaint be
made by the seaman, we instead believe that Garrie held
simply that, had sufficient information been conveyed to the
Coast Guard, such as the name of the seaman’s vessel, his
employer and the nature of the safety violation, the commu-
nication would have been within the ambit of the statute’s
protection despite the absence of a formal complaint. So
long as the correspondence makes clear that the seaman is
reporting a specific regulatory violation with respect to a
vessel, the statute protects the reporting crew member.
Therefore, the plaintiffs’ October 10th letter clearly
qualifies as a “report”: It identified the company responsible
for the alleged regulatory violation, the vessel in question,
the plaintiffs’ employer, as well as the Coast Guard depart-
ment that had granted the amended COI. In sum, the letter
put the Coast Guard on notice that, in the view of the crew
members, the ship was being operated in derogation of
applicable regulations. This communication was, in both
purpose and effect, just the sort of communication protected
by the statute.23
23
Riverboat also contends that the October 10th letter was not a
“report” because, at the time the letter was received, the Coast
(continued...)
Nos. 04-3829, 04-3900 37
2. “Good Faith” Belief
Riverboat further contends that the plaintiffs did not have
a “good faith” belief that a violation of safety regulations
had occurred when they contacted the Coast Guard, but
instead were acting in their own self-interest, primarily
motivated by job and wage preservation. The district
court rejected this contention; it made factual findings that
the plaintiffs genuinely believed that the relaxation of
licensing requirements on board the M/V Showboat threat-
ened the safety of the vessel and its passengers. “Each of the
plaintiffs,” the district court explained, “testified that his
main concern regarding the COI was that the vessel would
be unsafe if limited license engineers were allowed to do the
work of unlimited license engineers.” R.191 at 8. And,
although some of the plaintiffs admitted that they “never
23
(...continued)
Guard already was aware of the licensing changes in M/V
Showboat’s COI. This contention, despite having a superfi-
cial appeal, cannot be squared with our obligation to interpret
§ 2114 in a manner consistent with its evident purpose of
promoting compliance with maritime statutes and regulations.
The plaintiffs’ correspondence with the Coast Guard plainly
furthered that goal; there is no evidence that the Ninth District
Coast Guard Commander, who ultimately was responsible for
revoking the limited endorsement, knew before the plaintiffs
informed him that subordinates had granted a waiver of licensing
requirements for the M/V Showboat. Indeed, so far as this record
suggests, it is because of the plaintiffs’ October 10th appeal that the
Coast Guard revoked the endorsement, aligning the employment
practices of the M/V Showboat with the maritime regulations
governing officer licensing. See 46 C.F.R. §§ 10.501, 15.915.
Therefore, the plaintiffs’ October 10th letter properly qualifies as
a “report.”
38 Nos. 04-3829, 04-3900
told the Captain of the vessel not to take the ship out
because it was unsafe,” id., the district court concluded that
these witnesses were credible with respect to their good
faith belief, id. at 22.
A district court’s findings of fact made after a full bench
trial are entitled to great deference and shall not be set aside
unless they are clearly erroneous. See Fed. R. Civ. P. 52(a);
see also Levenstein v. Salafsky, 414 F.3d 767, 773 (7th Cir. 2005)
(noting that this is a “highly deferential standard”). “A
finding of fact is clearly erroneous only when the reviewing
court is left with the definite and firm conviction that a
mistake has been committed.” Carnes Co. v. Stone Creek
Mech., Inc., 412 F.3d 845, 847 (7th Cir. 2005). “If there are two
permissible views of the evidence, the trial court’s choice
between them cannot be clearly erroneous.” Id. This rule
holds special force in the context of a district court’s assess-
ment of a witness’ credibility; “we have stated that a trial
court’s credibility determination can virtually never amount
to clear error.” Id. at 848 (internal quotation marks omitted).
The record does not justify a conclusion that the district
court’s factual findings about the plaintiffs’ good faith belief
are clearly erroneous. The district court heard first-hand the
plaintiffs’ testimony and assessed the demeanor of those
witnesses. After carefully examining the other evidence in
the case, the court concluded that, when making their report
to the Coast Guard, the plaintiffs did not have an ulterior
motive but instead believed that the relaxation of licensing
requirements threatened the safety of the vessel and its
passengers. The record contains testimony that supports the
conclusion of the district court.24 We therefore cannot hold
24
See, e.g., Horton Test., Tr.II at 65-66 (“[The report to the Coast
(continued...)
Nos. 04-3829, 04-3900 39
that the district court clearly erred in finding that the
plaintiffs honestly believed that the change in licensing
requirements for the staff of the M/V Showboat was in
violation of governing safety regulations.
Riverboat responds that the plaintiffs could not have
“reasonabl[y]” believed that the employment of engineers
with limited licenses posed a “safety issue.” Appellants’ Br.
at 29. However, § 2114 does not require that a seaman
believe that there is a “safety hazard” on board a vessel;
rather, it requires that the “seamen believe[] that a violation
24
(...continued)
Guard] was based on our concern for passenger safety. . . . [I]n
this case, [the Coast Guard] w[as] actually reducing the minimum
requirements, and we were concerned.”); Gaffney Test., Tr.I at
119 (“[W]hat they did was they lowered the minimum safety
requirements, and we felt that they were in error by reducing the
requirements at all. . . . We already thought it was understaffed
. . . [i]n the number of officers onboard, and now they’re reducing
the requirements of what the minimum requirements were to
have onboard.”); Goodridge Test., Tr.I at 25 (“[W]e were worried
about . . . having people there that did not have as much experi-
ence as either myself or Bob Gates or the chief engineers there
were there [sic] sailing in a chief engineer position.”); Anderson
Test., Tr.II at 134-35 (“[I signed the October letter because I was
worried that] a limited engineer would be allowed on the vessel.
. . . [I]t scared me that with two years of sailing experience, I
could be a limited chief engineer. And I definitely would not be
able to handle a boat like the Showboat.”); Bell Test., Tr.II at 194
(“I agreed with the contents of the letter. And basically what the
letter was asking for . . . .”); Beardon Test., Tr.II at 273 (“There
was a concern for the safety of the passengers, that if engineers
with limited experience were able to serve on this vessel, that we
may not be able to guarantee the same level of passenger safety
as we could with unlimited engineers in the same positions.”).
40 Nos. 04-3829, 04-3900
of [U.S. Code Title 46, subtitle II or Coast Guard regulations
issued under that subtitle] has occurred.” § 13(a), 98 Stat. at
2863. In this case, the plaintiffs reasonably and in good faith
believed that the Coast Guard’s approval of the M/V
Showboat’s future employment of unlicensed chief and
assistant engineers constituted a “violation of . . . a [Coast
Guard] regulation . . . .” § 13(a), 98 Stat. at 2863. Coast
Guard regulations provide that a chief or assistant engineer
with a limited license is permitted to “serve within any
horsepower limitations on vessels of any gross tons on
inland waters,” but not on a vessel of “more than 1600 gross
tons in ocean, near coastal or Great Lakes service.” 46 C.F.R.
§ 10.501(b); see also 46 C.F.R. § 15.915. Although, as a general
matter, the Coast Guard has discretion to “vary the applica-
tion of inspection standards based on the intended opera-
tion of the vessel,” Smith v. United States Coast Guard, 220 F.
Supp. 2d 275, 282 (S.D.N.Y. 2002) (discussing 46 C.F.R.
§ 176.800(b)), the Coast Guard is bound by a regulation that
specifically restricts the exercise of this discretion. See
Frizelle v. Slater, 111 F.3d 172, 177 (D.C. Cir. 1997) (“The
Coast Guard, like the military departments and agencies in
general, is bound to follow its own regulations.”). In this
case, 46 C.F.R. §§ 10.501 and 15.915 clearly set forth the
conditions under which a chief or assistant engineer with a
limited license may serve on a vessel, and by contrast, the
conditions under which a limited licensed engineer may not
serve. In permitting the employment of chief and assistant
engineers with limited licenses on board the M/V Show-
boat—a vessel over 1,600 gross tons and in Great Lakes
service—the Coast Guard failed to follow these regulations,
and acted beyond the scope of its authority. Even if this was
not true, the plaintiffs were reasonable in believing that, in
issuing the M/V Showboat’s COI, the Coast Guard acted
Nos. 04-3829, 04-3900 41
contrary to the applicable regulations.25 Therefore, the
plaintiffs reporting this violation are entitled to whistle-
blower protection under § 2114.26
Riverboat, however, responds that the reported violation
of a safety regulation must be committed by the employer,
25
The legislative history of § 2114 indicates that Congress
intended that the statute provide protection to a plaintiff who
honestly believed that there was a regulatory violation, but
who turned out to be incorrect. For example, in Donovan v. Texaco,
Inc., 720 F.2d 825 (5th Cir. 1983)—the factual scenario that § 2114
was enacted to address—the plaintiff had reported to the Coast
Guard an alleged defect in generating equipment on the vessel.
After inspection, the Coast Guard determined that the equipment
was not defective and that the plaintiffs’ belief that there was a
safety violation on board was incorrect as a factual matter.
Nevertheless, according to the legislative history, because the
Donovan plaintiff honestly believed when making the report that
there was a violation of governing safety regulations, he was
entitled to whistleblower protection. See S. Rep. No. 98-454, at 12
(1984), as reprinted in 1984 U.S.C.C.A.N. 4831, 4842.
26
Riverboat also submits that, by issuing the April 1997 amended
COI, the Coast Guard “directly informed the plaintiffs . . . that
employing limited licensed engineers was not a safety concern.”
Appellants’ Br. at 30. Therefore, according to Riverboat, the
plaintiffs could not have believed reasonably that employment of
engineers with limited engineering licenses posed a safety
hazard. Id. However, as discussed in the text, that the plaintiffs
believed that the employment of unlicensed engineers was a
“safety concern” is not a prerequisite to statutory protection.
Instead, the plaintiffs are entitled to whistleblower protection
because they reasonably and in good faith believed that the Coast
Guard, by granting Riverboat’s petition for variance from the
licensing requirements set forth in 46 C.F.R. §§ 10.501 and 15.915,
committed a violation of those regulations.
42 Nos. 04-3829, 04-3900
rather than by the Coast Guard. Moreover, Riverboat
submits that, at the time the plaintiffs’ letters were sent to
the Coast Guard, neither Showboat nor Riverboat had yet
hired an engineer with a limited license, and therefore, they
were technically in compliance with their COI, as well as
with Coast Guard regulations. See 46 C.F.R. §§ 10.501,
15.915. Consequently, according to Riverboat, the plaintiffs
“as a matter of law” could not have believed in good faith
that a violation of statute or regulation had occurred.
Appellants’ Br. at 28. By contrast, the plaintiffs submit
that § 2114 does not limit its protection to a report of a
safety violation committed by their employer; instead, the
statute encompasses the report of a violation of safety
regulations committed by less senior officers of the Coast
Guard. The district court resolved this dispute in favor of
the plaintiffs. According to the court, less senior Coast
Guard authorities committed a “violation” cognizable under
§ 2114 when they issued the amended COI under circum-
stances in which departure from governing regulations was
not compatible with the safety of the vessel. Therefore, in
reporting this violation, the plaintiffs fell within the ambit
of § 2114’s protections.
Here, we must ask whether § 2114 protects a seaman
who reports a violation committed by a third party such as
the Coast Guard upon application of the employer. This is
a question of statutory interpretation that we review de
novo. See Schmude v. Sheahan, 420 F.3d 645, 650 (7th Cir.
2005). As we have noted earlier, when interpreting a statute,
we must begin with the plain wording of the provision.
We hold that the language of the statute makes clear that
the reporting of such a violation is covered. Section 2114
provides that a seaman is entitled to protection if he reports
that he “believes that a violation of this subtitle, or a
regulation issued under this subtitle, has occurred.” § 13(a),
Nos. 04-3829, 04-3900 43
98 Stat. at 2863. By employing passive language and by not
specifying whose safety violation must have occurred for a
seaman to receive protection under the statute, the statutory
language evinces a deliberate choice on Congress’ part to
protect a seaman who reports a violation by either an
employer or a non-employer.27
The purpose of § 2114 further supports reading its plain
language to protect a seaman who reports a regulatory
violation that has the approval of less senior authorities
in the Coast Guard. As we have noted earlier, whistleblower
protections, such as § 2114, are designed to encourage
employees to aid in the enforcement of maritime laws and
Coast Guard regulations by making claims through pro-
27
Riverboat relies upon Seymore v. Lake Tahoe Cruises, Inc., 888
F. Supp. 1029 (E.D. Cal. 1995), for the proposition that § 2114 is
not designed to “turn seamen into private enforcers of Coast
Guard regulatory decisions.” Id. at 1033 (quoted in Appellants’
Br. at 35). Seymore, however, is inapposite. It addressed a nar-
row factual scenario not at issue in this case. There, the plain-
tiff had refused a management directive to take the vessel out to
sea because of a safety violation; he never made a report to the
Coast Guard. The Seymore court denied whistleblower protection
to the plaintiff. It contrasted § 2114 with § 11(c) of OSHA, see 29
U.S.C. § 660(c), which “proscribes retaliatory discrimination . . .
because of the exercise by [an] employee on behalf of himself or
others of any right afforded by [OSHA],” 888 F. Supp. 2d at 1033
(alteration in original). The court then held that § 2114 does not
protect the exercise of rights afforded by law or regulation;
instead, it concluded, it “provides only a narrow protection for
reporting violations to the Coast Guard.” Id. at 1034. Seymore
simply does not discuss the question we now face: whose safety
violation the complaint to the Coast Guard must report.
44 Nos. 04-3829, 04-3900
tected channels.28 This purpose certainly is served by a
report of an employer’s imminent violation, even when the
violation already has the approval of Coast Guard person-
nel, given that those individuals do not have the last word
on enforcement matters.
B. Causation
Now that we have determined that the plaintiffs’ corre-
spondence with the Coast Guard is protected under § 2114,
we must decide whether the district court correctly de-
termined that the plaintiffs were terminated in retaliation
for having sent this correspondence to the Coast Guard.29
28
Cf. Passaic Valley Sewerage Comm’rs v. United States Dep’t of
Labor, 992 F.2d 474, 479 (3d Cir. 1993) (noting, in the context of
interpreting retaliatory discharge provisions of the Clean Water
Act, that broad whistleblower “protection is necessary to prevent
the Board’s channels of information from being dried up by
employer intimidation of prospective complainants and wit-
nesses” (internal quotation marks omitted)).
29
We pause here to address Riverboat’s contention that the
district court erred in not entering judgment in its favor at the
close of the plaintiffs’ case-in-chief. According to Riverboat, the
plaintiffs failed to present a prima facie case of retaliatory
discharge, requiring the district court to “direct a verdict” in its
favor. Appellants’ Br. at 19.
As a preliminary matter, because this is a bench trial, we
construe Riverboat’s motion as a Rule 52(c) motion for judg-
ment on partial findings, rather than as a motion for a directed
verdict. See Fed. R. Civ. P. 52(c) (“If during a trial without a jury a
party has been fully heard on an issue and the court finds against
the party on that issue, the court may enter judgment as a matter
(continued...)
Nos. 04-3829, 04-3900 45
At the bench trial, the parties presented very different
factual scenarios. In the plaintiffs’ view, their discharges
were the direct result of their communication with the Coast
Guard about the staffing of the vessel. The defendants
contended, however, that the discharges were due to the
(...continued)
of law against that party with respect to a claim or defense that
cannot under the controlling law be maintained or defeated
without a favorable finding on that issue . . . .”). A district court
is not required to make findings of fact on a Rule 52(c) motion; the
Rule merely “authorizes the court to enter judgment at any time
that it can appropriately make a dispositive finding of fact on the
evidence.” Fed. R. Civ. P. 52(c) advisory committee’s notes (1991
amendments). “As under the former Rule 41(b), the court retains
discretion to enter no judgment prior to the close of the evi-
dence.” Id. In light of the substantial evidence supporting the
court’s finding of causation, see infra, we cannot conclude that the
district court’s decision not to rule on the Rule 52(c) motion was
an abuse of discretion.
Riverboat also asserts that, in reviewing the district court’s
decision, we should evaluate the record at the close of the
plaintiffs’ case—the time at which the motion was made—rather
than the record as a whole. Riverboat’s position is not supported
by our case law nor by Rule 52(c). The defendants can point us to
no rule of law that prohibits us, in reviewing the district court’s
Rule 52(c) order, from evaluating the record as a whole. See Duval
v. Midwest Auto City, Inc., 578 F.2d 721, 723-24 (8th Cir. 1978)
(holding that, once a defendant introduces evidence on its own
behalf, it waives the right to dismissal under Rule 41(b) [now
Rule 52(c)] and stating that “[i]n such situations the sufficiency of
the evidence is tested on appeal by viewing the entire record,”
even when “the trial judge reserved ruling on the motion when
made” (emphasis added)).
46 Nos. 04-3829, 04-3900
plaintiffs’ union activities and concomitant actions that
compromised Riverboat’s business success.
The district court resolved this dispute definitively. Sitting
as the trier of fact, the court decided that Riverboat’s case
was simply not worthy of belief. In its order following the
submission of post-trial briefs, the court characterized as
based on “speculation and conjecture” the testimony of Mr.
Gourguechon and of Mr. Heitmeier that the plaintiffs were
fired because of their refusal to join a union other than
MEBA and because they may have been involved in sabo-
taging wiring aboard the vessel and causing expensive
transformers to blow. R.191 at 27. The court found no
specific evidence of sabotage and no evidence that the
plaintiffs were involved in the rewiring problems that led to
the blown circuit breakers. Id. Indeed, the court noted that
there was evidence that the wiring had to be done under
time constraints—evidence that was quite compatible with
the plaintiffs’ testimony that the wiring was first replaced
temporarily and later brought up to code specifications.29 Id.The district court also found the defendants’ testimony on
the reasons for the plaintiffs’ discharges to be unworthy of
belief because, at each stage of the proceedings, the defen-
29
See, e.g., Gaffney Test., Tr.I at 260-62 (explaining that the wires,
as temporarily replaced, were not dangerous); Doncet Test., Tr.III
at 67 (testifying that the crew was told by Mr. Gourguechon to
leave the wires as they were, to be “taken care of later on as
things progressed”); Reilly Test., Tr.III at 162 (stating that wiring
was not in compliance with governing regulations, but “[i]n the
short term, absolutely, it was very safe”; also testifying that the
crew’s long-term intention was to bring the wiring “up to code”).
Nos. 04-3829, 04-3900 47
dants offered a different justification for the firings.30 The
district court believed that this pattern supported the
conclusion that the defendants first fired the plaintiffs and
then came up with post hoc rationalizations for having done
so. Management’s letter of discharge to Mr. Gaffney, which
was drafted the day that the amended COI was posted,
specifically stated that the reason for his discharge was his
contact with the Coast Guard; there was no reference to
union activities or to sabotage. The other plaintiffs were
terminated in rapid succession—all within two weeks of the
Coast Guard’s revocation of the limited endorsement.
Although their termination letters did not include the reason
for termination set out in Mr. Gaffney’s letter, the district
court thought the difference was quite explainable because,
upon receipt of his letter, Mr. Gaffney had told Mr.
Gourguechon that he legally could not be discharged
because he had contacted the Coast Guard. Id. at 28-29.
30
For example, at trial, the defendants posited that the plaintiffs
were terminated because of “a pattern of disruptive activity.”
Gourguechon Test., Tr.IV at 19. The defense also claimed that all
the plaintiffs were involved in some form or another in the
rewiring incident. See id. at 38-41 (testifying that each of the
plaintiffs were part of, or had “more or less direct responsibility”
over, the work crews involved in the incident). However, these
rationales directly conflict with those previously relied upon. At
the NLRB proceedings, for instance, Mr. Gourguechon explained
that Mr. Bell was fired because of his “rough” “bedside manner,”
R.70 at 64; that Mr. Gaffney was fired for not following the “chain
of command,” id. at 35; that Mr. Trundy and Mr. Doncet were
fired to get a “different group of people, different skills” in the
engine room, id. at 44, 46; and that Mr. Goodridge was fired
because it was “time to make a change in the crew,” id. at 53.
48 Nos. 04-3829, 04-3900
Returning to this issue once again in the course of ruling
on the Rule 52 and Rule 59(b) motions, the district court
repeated its earlier analysis and then pointedly said that the
“defendants’ motivation for firing the plaintiffs was because
the plaintiffs reported to the Coast Guard that the COI
violated safety regulations. This was the sole reason that the
defendants fired the plaintiffs, not based on later asserted
allegations of sabotage or union activity.” R.199 at 8.
When a district court makes findings of fact regarding
causation, as it did in this instance, those findings are
conclusive and binding upon this court unless they are
clearly erroneous. Jutzi-Johnson v. United States, 263 F.3d 753,
763 (7th Cir. 2001) (discussing factual findings as to the
existence of proximate cause). Although the record does
contain evidence that if believed by the trier of fact might
have led to a different conclusion, the record also contains
the evidence relied upon by the district court to reach the
conclusions that it did. See id. (“[A] district court’s choice
between two permissible inferences from the evidence
cannot be clearly erroneous.” (internal quotation marks
omitted)). Accordingly, we must accept those findings.
Riverboat urges us to reverse the district court’s findings
because, even if the Coast Guard correspondence played
a marginal role in the termination decisions, the “motivating
cause” for terminating the plaintiffs was their
union activities. Appellants’ Br. at 40. As is made clear by
the legislative history, the private right of action made
available under § 2114 was modeled after OSHA’s retalia-
tory discharge provision, 29 U.S.C. § 660(c). See S. Rep. No.
98-454, at 12 (1984), as reprinted in 1984 U.S.C.C.A.N. 4831,
4842. Under OSHA, in order for a plaintiff to establish that
he was terminated in retaliation for filing a health or safety
complaint, he must show that the “protected activity was a
Nos. 04-3829, 04-3900 49
substantial reason for the action,” although it “need not be
the sole consideration behind discharge.” 29 C.F.R.
§ 1977.6(b). In such circumstances, as under § 2114, the
ultimate question is whether the discharge or other ad-
verse action would have “taken place ‘but for’ engagement
in protected activity.” Id.; see also Dole v. H.M.S. Direct Mail
Serv., Inc., 752 F. Supp. 573, 580 (W.D.N.Y. 1990) (holding
that, although the plaintiff was a “problem employee” and
eventually may have been terminated for that reason, the
immediate cause of his termination was the OSHA report);
Donovan v. Commercial Sewing, Inc., 562 F. Supp. 548, 552-53
(D. Conn. 1982) (concluding that the OSHA complaint was
the but-for cause of the plaintiff’s termination, given the
temporal connection between that complaint and the
subsequent termination). In this case, however, a mixed-
motive or “but for” analysis is not necessary. The district
court specifically found that the defendants did not act from
a mixed motive but from a sole motive—the plaintiffs’
correspondence with the Coast Guard.
The defendants also contend that the district court erred
in failing to engage in McDonnell Douglas’ burden-shifting
analysis. As in the case of the OSHA statute, we have no
doubt that a defendant can defend against an allegation that
he discharged a seaman in retaliation for reporting a matter
to the Coast Guard by introducing evidence that
the discharge was non-pretextually based on another,
legally permissible ground. Indeed, the defendants in
this case attempted to avail themselves of just such a
defense. However, the findings of the district court that the
evidence proffered by the defendants was not worthy of
belief simply precludes this defense.
Moreover, the availability of the defense of a non-
pretextual reason for discharge does not necessarily make
50 Nos. 04-3829, 04-3900
the McDonnell Douglas paradigm the appropriate analytical
tool for the evaluation of this defense. We have held repeat-
edly that the McDonnell Douglas burden-shifting method of
proof is relevant only before trial, both to determine
whether the plaintiff has met her burden of creating a triable
issue of material fact and to determine the sequence of
presenting evidence at trial. See Mattenson v. Baxter
Healthcare Corp., 438 F.3d 763, 767 (7th Cir. 2006) (“The judge
on his own initiative gave a McDonnell Douglas instruction
despite tireless repetition by appellate courts that the
burden-shifting formula of that case is not intended for the
guidance of jurors; it is intended for the guidance of the
judge when asked to resolve a case on summary judg-
ment.”).
C. Mr. Doncet and Mr. Horton
The district court entered judgment in favor of all but two
plaintiffs—Mr. Doncet and Mr. Horton. It held that there
was no evidence that Riverboat executives were aware that
these individuals were involved in a report of a violation of
safety regulations prior to their terminations. See R.191 at 21.
The plaintiffs signed only the August letter, not the October
10th letter; according to the district court, there is no
evidence that Mr. Gourguechon read the August letter or
that the August letter qualified for statutory protection
under § 2114 as a “report.” Therefore, according to the
district court, Mr. Doncet and Mr. Horton did not meet their
burden of proving that they were terminated in retaliation
for protected correspondence with the Coast Guard. We
review this finding of fact for clear error.
Although Mr. Doncet and Mr. Horton did not sign the
October 10th “report,” the facts of the case compel a finding
Nos. 04-3829, 04-3900 51
that the defendants believed them to be involved in pro-
tected communications with the Coast Guard. On January
13, 1998, five of the ten plaintiffs filed a complaint in the
district court. This complaint, to which were attached the
four letters sent to the Coast Guard during August, Septem-
ber and October of 1997, was served on the M/V Showboat on
January 14, 1998. The defendants admit having seen and
read these attached letters at this time. See R.69, Ex.B at 110;
Tr.IV at 47. Mr. Doncet and Mr. Horton were terminated
shortly thereafter, on January 22 and January 15, 1998,
respectively.
As we have noted earlier, the district court found that,
although the termination letters delivered to seven of
the prevailing plaintiffs did not contain explanations for
their discharges, like Mr. Gaffney’s letter, the timing and
circumstances prove that these plaintiffs also were fired
because of correspondence with the Coast Guard. Specifi-
cally, these plaintiffs were “fired in rapid succession and
only days after the Coast Guard informed [Riverboat] that
it was rescinding the COI limited endorsement.” R.191 at 28.
The “smoking gun”—Mr. Gaffney’s termination letter—also
demonstrated retaliation against all eight plaintiffs, given
that Mr. Gaffney had “testified that he told the defendants,
upon receiving his termination letter, that they could not
fire him for the reason stated. The[] rapid firings are at least
circumstantial evidence that [all of] the plaintiffs were
terminated because of their report to the Coast Guard.” Id.
at 28-29.
We cannot see why these findings do not apply with equal
force to the terminations of Mr. Doncet and Mr. Horton. As
in the case of the other eight plaintiffs, the defendants were
aware of Mr. Doncet and Mr. Horton’s involvement in the
petition to remove the limited endorsement from the M/V
52 Nos. 04-3829, 04-3900
Showboat’s COI. Moreover, the terminations of all ten
plaintiffs occurred in “rapid succession,” id. at 28; the
terminations of Mr. Doncet and Mr. Horton occurred within
eight days after the defendants learned that they had signed
the August letter to the Coast Guard. Given this sequence of
events, we conclude that there is sufficient evidence linking
the report to the Coast Guard to the terminations of Mr.
Doncet and Mr. Horton. The district court’s contrary
conclusion is unsupported by the evidence and, therefore,
clearly erroneous.
Riverboat maintains that, unlike the eight prevailing
plaintiffs, Mr. Doncet and Mr. Horton did not sign the
October 10th letter and therefore never submitted a “report”
to the Coast Guard. § 13(a), 98 Stat. at 2863. However, given
that the letters were served on the M/V Showboat simulta-
neously and Mr. Doncet and Mr. Horton were terminated
shortly thereafter, nearly concurrently with the terminations
of the other eight plaintiffs, the logical inference is that the
defendants believed that Mr. Doncet and Mr. Horton were
involved in a broader effort to obtain the revocation of the
licensing waiver. Although timing is not dispositive, see
Culver v. Gorman & Co., 416 F.3d 540, 546 (7th Cir. 2005)
(“We have never said that [temporal proximity] is
dispositive in providing or disproving a causal link.”
(internal quotation marks omitted)), it is a significant factor
to be considered, particularly when there is “other evidence
that supports the inference of a causal link,” id. Here, the
terminations of Mr. Doncet and Mr. Horton followed closely
on the heels of the terminations of the other plaintiffs, which
we have held were in retaliation for their protected commu-
nication with the Coast Guard. As in justifying the termina-
tions of the other plaintiffs, the defendants offered shifting
rationales for terminating Mr. Doncet and Mr. Horton.
Compare Gourguechon Test., R.70 at 46 (testifying at NLRB
Nos. 04-3829, 04-3900 53
proceedings that Mr. Doncet was fired to get a “different
group of people, different skills” in the engine room), with
Gourguechon Test., Tr.IV at 19, 38-41 (testifying at the bench
trial that all of the plaintiffs were fired because of their
union involvement and concurrent activities). It is also
undisputed that the defendants knew that Mr. Doncet and
Mr. Horton were involved in the first inquiry to the Coast
Guard, a letter which, although classified as a Freedom of
Information Act request, also expressed safety concerns
with the relaxation of licensing requirements. See R.34, Ex.2
(noting that “the relaxation of licensing requirements for the
engineers on the M/V Showboat . . . substantially reduces
passenger safety by not requiring experienced personnel
to crew the vessel”). This document— while not formally
a “report”—put the defendants on notice that Mr. Doncet
and Mr. Horton were concerned about, and motivated by,
the safety implications of hiring engineers with limited
licenses. Moreover, the defendants knew that Mr. Gaffney
spearheaded the drafting of all four letters attached to the
complaint, making reasonable the conclusion that the
signatories to these letters were involved in a general, larger
effort to petition the Coast Guard for an amended COI. We
conclude, on the basis of these pieces of circumstantial
evidence, that Mr. Doncet and Mr. Horton’s communication
with the Coast Guard and their implicit connection to the
October “report” was a motiving factor in their discharges,
entitling them to whistleblower protection under § 2114. We
therefore reverse the judgment of the district court as it
relates to Mr. Doncet and Mr. Horton and remand for
further proceedings consistent with this opinion, including
the calculation of proper damages with respect to these two
plaintiffs.
54 Nos. 04-3829, 04-3900
D. Mr. Heitmeier and Mr. Gourguechon’s Liability
1. “Individuals in Charge of a Vessel”
Section 2114, at the time of the events in this case, limited
its scope to “owner[s], charterer[s], managing operator[s],
agent[s], master[s], [and] individual[s] in charge of a
vessel.” § 13(a), 98 Stat. at 2863. Riverboat’s contention that
this language does not encompass either Mr. Heitmeier or
Mr. Gourguechon is without merit. The plain meaning of
the phrase “individual in charge of a vessel” refers to
persons who have “control over or responsibility for” the
vessel’s operation. American Heritage Dictionary (4th ed.
2000) (defining the phrase “in charge of”); see also Black’s
Law Dictionary 685 (5th ed. 1979) (defining “in charge of” as
“in the care or custody of, or intrusted to the management
or direction of”). Mr. Heitmeier, as the President, sole
shareholder and member of the Board of Directors of both
Riverboat Services, Inc. and Riverboat Services of Indiana,
Inc., certainly exercises substantial control over the M/V
Showboat and its operations; it would be preposterous to
suggest otherwise. Similarly, Mr. Gourguechon, as the
Director of Marine Operations for Riverboat during the
events in this case, was in a position of significant responsi-
bility; among other things, he was in charge of managing
the vessel’s crew, including making promotion and termina-
tion decisions. Indeed, Mr. Gourguechon played a large, if
not dispositive, role in the termination decisions in question
in this case. Were § 2114 construed so as to not permit the
plaintiffs to sue the director of personnel matters—the
person actually responsible for the discharges—the statute
indeed would be enfeebled. We therefore hold that both Mr.
Heitmeier and Mr. Gourguechon qualify as “individual[s]
in charge of a vessel” and may be sued in their individual
capacities under the terms of § 2114.
Nos. 04-3829, 04-3900 55
2. Mr. Heitmeier’s Liability
Riverboat also submits that the district court erred in
holding Mr. Heitmeier liable, given that, until after this
litigation began, he did not know about the plaintiffs’ letters
to the Coast Guard. Instead, according to the defendants,
Mr. Heitmeier believed that the plaintiffs were involved in
the disruption and miswiring of the vessel and directed Mr.
Gourguechon to fire them for this reason. Specifically, the
defendants submit that, at the time of the plaintiffs’ dis-
charges, Mr. Wallace
had at least three “run-ins” with the MEBA, and in one
instance, members of the union barged into [Mr.]
Wallace’s East Chicago office and were escorted out by
security. [Mr.] Wallace . . . directed [Mr.] Heitmeier to
get rid of any employee involved in the union activity
because he did not want to deal with the aggravation of
the union activity.
R.191 at 9 (summarizing trial testimony). Mr. Heitmeier, in
turn, conveyed this request to Mr. Gourguechon, who was
solely responsible for drafting the termination letters and
delivering these letters to the plaintiffs.
The district court made factual findings that the defen-
dants’ proffered reason for terminating the plaintiffs—
primarily their union involvement and related activi-
ties—was “unconvincing” and “based on speculation and
conjecture.” Id. at 27. As a general rule, we shall defer to
such findings unless they are shown to be clearly erroneous;
moreover, these findings are compatible with the district
court’s conclusion that Riverboat fired the plaintiffs in
retaliation for their protected communication with the Coast
Guard. See supra.
Nevertheless, in Mr. Heitmeier’s case, the district court’s
findings, while affording a factual basis for discrediting Mr.
56 Nos. 04-3829, 04-3900
Heitmeier’s given reasons for terminating the plaintiffs, do
not provide a basis for establishing the requisite causation
between Mr. Heitmeier’s direction that Mr. Gourguechon
fire the plaintiffs and the retaliation for their report of a
violation of safety regulations to the Coast Guard. In finding
a causal link between the plaintiffs’ communications with
the Coast Guard and their subsequent terminations, the
district court relied heavily upon the “smoking gun” in the
case—Mr. Gaffney’s termination letter which cited the Coast
Guard correspondence. Although the plaintiffs suggest that
Mr. Heitmeier retained supervisory responsibility for the
drafting of this letter, the record contains no affirmative
evidence to support this contention; there is no evidence
that Mr. Heitmeier even knew of the letter’s contents before
it was delivered to Mr. Gaffney. Instead, Mr. Gourguechon
testified that he typed that letter and chose its words,
including reference to the phrase “unauthorized communi-
cation and correspondence with regulatory bodies having
jurisdiction over the operation of the vessel.” Tr.IV at 113.
Moreover, Mr. Gourguechon admitted at trial that he made
the ultimate decision to terminate the plaintiffs:
Q: You made the decision to terminate Mike Gaffney,
and only after you made that decision you went to
Captain Heitmeier and told him that and he just
said okay, go ahead.
A: Yes, that could be correct.
Q: So you did make the decision to terminate Mike
Gaffney?
A: Yes.
Id. at 76-77.
Additionally, there is no evidence that Mr. Heitmeier
knew of the plaintiffs’ letters to the Coast Guard until the
Nos. 04-3829, 04-3900 57
complaint was served on the M/V Showboat on January 14,
1998; by that date, Mr. Gaffney, as well as four other
plaintiffs, had been fired in retaliation for their protected
communications with the Coast Guard. Absent proof that
Mr. Heitmeier knew of the plaintiffs’ reports of a safety
violation on board the M/V Showboat prior to the drafting of
Mr. Gaffney’s termination letter, and, indeed, prior to the
termination of five of the ten plaintiffs, there is no support,
direct or circumstantial, for the conclusion that Mr.
Heitmeier was motivated by this communication in order-
ing the plaintiffs’ terminations.
E. Damages
1. Availability of Compensatory and Punitive Dam-
ages
The parties dispute whether the district court erred in
awarding the plaintiffs punitive damages, as well as in
awarding the plaintiffs expenses incurred in the course of
obtaining new employment. Before we address the merits of
these issues, we pause to consider whether Riverboat
waived the argument that § 2114 permits only equitable
relief—limited to reinstatement with back pay—by failing
to raise it in a timely fashion. Specifically, Riverboat ne-
glected to make this argument in its post-trial brief; it
instead responded for the first time to the plaintiffs’ request
for compensatory and punitive damages in its Rule 52
Motion for Judgment or, in the Alternative, for Amendment
of Judgment Pursuant to Rule 59.
Ordinarily, a challenge to damages not raised until post-
judgment motions is deemed waived. See NutraSweet Co. v.
X-L Eng’g Co., 227 F.3d 776, 791 (7th Cir. 2000); see also
Ameritech Info. Sys., Inc. v. Bar Code Res., Inc., 331 F.3d 571,
58 Nos. 04-3829, 04-3900
574 (7th Cir. 2003).31 However, this general waiver principle
does not resolve, by itself, the situation before us. Given the
very unique procedural history of this case, we must
examine and evaluate the record as a totality to determine
whether the defendants waived this issue. The plaintiffs first
contend that Riverboat should have objected to their request
for punitive damages in their proposed jury instructions and
that the failure to do so constitutes waiver. However,
Riverboat did file objections to the plaintiffs’ jury instruc-
tions, including to the plaintiffs’ request for an instruction
on punitive damages. See R.160 at 6 (objecting to the pro-
posed instruction on damages as “placing undue emphasis
on an award of damages, and incorrectly allowing punitive
damages and other compensatory damages for violations of
general maritime law and statutory violations. Defendants
suggest that no instruction be given”). That Riverboat did
not further develop this objection is, in all likelihood,
attributable to the procedural development of the case. The
trial was not sent to a jury but instead was heard by the
magistrate judge. Notably, the district court was given a full
opportunity to address the merits of Riverboat’s position on
the availability of compensatory and punitive damages
during post-trial proceedings, and the district court, who
31
Cf. Los Angeles News Serv. v. Reuters Television Int’l, Ltd., 149
F.3d 987, 996 (9th Cir. 1998) (holding that the defendants waived
their objection to the imposition of statutory penalties on the
basis of contributory infringement by (a) not raising the objection
in their proposed findings of fact and conclusions of law post-
trial; and (b) “calculat[ing] statutory damages on the basis of
[contributory] infringement[]” in this same filing). Unlike the
party in Los Angeles News, however, there is no indication that
Riverboat assumed the availability of punitive damages in the
course of calculating its proposed damages.
Nos. 04-3829, 04-3900 59
obviously was far more knowledgeable about the course of
proceedings than the cold record allows us to be, considered
the possibility of waiver but nevertheless decided to
proceed to the merits of the issue. The plaintiffs certainly
were given a “meaningful opportunity to respond” to the
defendants’ challenges in their responses to the defendants’
post-trial motions. Jones-El v. Berge, 374 F.3d 541, 545 (7th
Cir. 2004). Similarly, the district court was given ample
opportunity to address the issue. In light of these circum-
stances, we cannot say that the district court erred in
determining that the availability of damages had been
preserved adequately.
Therefore, we turn to the merits of Riverboat’s challenge
to the availability of compensatory and punitive damages.
The district court examined the text of 46 U.S.C. § 2114, as
well as general maritime law and analogous retaliatory
discharge case law, and concluded from these sources that
compensatory and punitive damages were available in this
case. See R.191 at 36-40 (also noting that punitive damages
would further the purpose of § 2114 in light of the potential
chilling effect that flows from workplace retaliation). As a
question of law, we review this conclusion de novo. Kramer
v. Banc of America Sec., LLC, 355 F.3d 961, 964 (7th Cir. 2004)
(reviewing the district court’s conclusion that punitive
damages were permissible under the governing statute
de novo).
At the time of the events in this case, 46 U.S.C. § 2114provided that, if a seaman is terminated in retaliation for
protected correspondence with the Coast Guard, he is
entitled to “any appropriate relief, including—(1) restrain-
ing violations of this section; and (2) reinstatement to the
seaman’s former position with back pay.” § 13(b), 98 Stat. at
2864. Riverboat contends that the statute does not make
60 Nos. 04-3829, 04-3900
available either compensatory or punitive damages, but
rather “limits the plaintiff’s [sic] relief to equitable remedies
such as reinstatement and back pay.” Appellants’ Br. at 43.
The plain text of the statute, however, makes clear that the
plaintiffs’ relief is not so limited. The statute authorizes a
federal court to award any and all relief that the court
deems appropriate. Equitable remedies, including an in-
junction and reinstatement, are listed in a demonstrative
fashion; such remedies may be awarded, but do not repre-
sent the exclusive options available to the court.32 This
conclusion is bolstered by § 2114’s legislative history. First,
the legislative history describes § 2114 as making available
a “legal remedy,” see S. Rep. No. 98-454, at 12 (1984), as
reprinted in 1984 U.S.C.C.A.N. 4831, 4842, a term of art
that—as a historical matter—encompasses and is defined by
monetary relief. See Int’l Fin. Servs. Corp. v. Chromas Techs.
Canada, Inc., 356 F.3d 731, 736 (7th Cir. 2004) (“Legal
remedies traditionally involve money damages.”). Second,
Congress noted in the legislative history that § 2114 is
intended to create a “private right of action similar . . . to
that in OSH Act section 11(c).” S. Rep. No. 98-454. Indeed,
Congress employed precisely the same statutory language
in § 2114 as it did in OSHA, in both cases making available
all “appropriate relief.” Compare § 13(b), 98 Stat. at 2864,
with 29 U.S.C. § 660(c)(2). This provision in the OSHA
statute has been held to authorize both compensatory and
punitive damages. See Reich v. Cambridgeport Air Sys., Inc., 26
32
See also Brown v. Sea-Land Serv., Inc., 1992 WL 161045, at *2 (9th
Cir. 1992) (holding that it is within the court’s discretion to award
both reinstatement and punitive damages for violation of § 2114,
although finding that the district court’s decision not to award
such remedies did not constitute an abuse of discretion).
Nos. 04-3829, 04-3900 61
F.3d 1187, 1191-92 (1st Cir. 1994). Specifically, the First
Circuit in Reich deemed Congress’ choice of words, in light
of governing Supreme Court precedent, significant. It
pointed out that, in Franklin v. Gwinnett County Public
Schools, 503 U.S. 60 (1992), the Supreme Court held that, as
a general matter and “absent clear direction to the contrary
by Congress, the federal courts have the power to award any
appropriate relief in a cognizable cause of action brought
pursuant to a federal statute,” including compensatory and
punitive damages. Id. at 70-71 (emphasis added). In turn,
when a statute explicitly makes available “any appropriate
relief,” referencing the broad power of the federal courts to
award both compensatory and punitive damages, we
can infer that Congress intended prevailing plaintiffs to
recover compensatory and punitive remedies. This is true of
§ 2114, as it is of OSHA § 11(c).33
Riverboat, however, submits that by detailing available
forms of relief that are equitable in nature—an injunction,
reinstatement and back pay—Congress thereby limited the
available remedies to those listed in the statute. We cannot
accept this argument. Use of the term “including,” followed
by a list of equitable remedies, “indicates the availability of
the named remedies, but does not purport to limit ‘all
appropriate relief’ to those remedies only.” Reich, 26 F.3d at
1191; see also Black’s Law Dictionary 687 (5th ed. 1979)
(“ ’Including’ within a statute is interpreted as a word of . .
. illustrative application”). By choosing to begin with the
33
See Reich v. Cambridgeport Air Sys., Inc., 26 F.3d 1187, 1191 (1st
Cir. 1994) (“[A]ll appropriate relief as written in [OSHA] § 11(c)
embraces monetary damages as well as other relevant forms of
relief normally available, Congress having provided no clear
direction to the contrary.” (internal quotation marks omitted)).
62 Nos. 04-3829, 04-3900
phrase “any appropriate relief”—rather than merely
providing that a seaman is entitled to an award “restraining
violations of this section; [and] reinstatement to the sea-
man’s former position with backpay,” § 13(b), 98 Stat. at
2864—Congress made it clear that it was not presenting an
exhaustive list of available remedies.34 Thus, we read “any
34
Riverboat relies upon two cases for the proposition that
“including” serves a limiting function in § 2114, both of which are
inapposite. In Kramer v. Banc of America Securities, LLC, 355 F.3d
961 (7th Cir. 2004), we addressed a claim of retaliation under the
Americans with Disabilities Act (“ADA”). The remedies available
under the ADA are those provided by the 1964 Civil Rights Act;
that statute makes available “such affirmative action as may be
appropriate,” including an injunction, reinstatement, back pay or
“any other equitable relief as the court deems appropriate.” 42
U.S.C. § 2000e-5(g)(1) (emphasis added). Unlike § 2114, which
authorizes “any” appropriate relief, see § 13(b), 98 Stat. at 2864,
the ADA explicitly restricts the relief available to a prevailing
party. Not only does the statute suggest that “affirmative action”
consists only of “equitable relief,” 42 U.S.C. § 2000e-5(g)(1)
(emphasis added), but “affirmative action” is an equitable term
of art. See Black’s Law Dictionary 55 (5th ed. 1979) (defining
“affirmative action” as action to “make effective the redress of
rights”).
Riverboat also finds support in Espinueva v. Garrett, 895 F.2d
1164 (7th Cir. 1990). There, the plaintiff sought compensatory and
punitive damages under both Title VII and the Age Discrimina-
tion in Employment Act (“ADEA”). The court held that neither
statute authorizes an award of compensatory or punitive
damages. Id. at 1165. Espinueva is also inapposite. First, the
remedy for violation of Title VII, like for violation of the ADA, is
provided by the 1964 Civil Rights Act. That Act, unlike
§ 2114, limits available relief to “affirmative action” and other
(continued...)
Nos. 04-3829, 04-3900 63
appropriate relief” as an umbrella label; in turn, the phrase
“including restraining violations . . . and reinstatement”
indicates that the umbrella of available remedies encom-
passes both legal and equitable relief.
2. Calculation of Back Pay Awards
Riverboat also submits that, although the statute explicitly
authorizes the district court to award the plaintiffs back pay
for lost income, the district court erred in its calculations.
Specifically, Riverboat contends that the plaintiffs did not
mitigate their damages by immediately seeking re-employ-
ment, but instead spent significant amounts of time walking
the picket line, taking various classes and traveling after
being terminated by Riverboat. Riverboat also submits that
the district court failed to calculate carefully the income
earned by each plaintiff post-termination.
a. mitigation
The plaintiffs were required to mitigate their damages by
using reasonable diligence in seeking employment after
their terminations. However, because the lack of mitigation
is an affirmative defense, the burden of proof for this issue
falls on the employer. See Hutchison v. Amateur Elec. Supply,
Inc., 42 F.3d 1037, 1044 (7th Cir. 1994) (discussing mitigation
34
(...continued)
“equitable relief.” 42 U.S.C. § 2000e-5(g)(1). Moreover, since the
ADEA “adopts the enforcement scheme used in Title VII cases
brought by federal employees,” Smith v. Office of Personnel Mgmt.,
778 F.2d 258, 262 (5th Cir. 1985), the same analysis limits the
remedies available for violation of the ADEA.
64 Nos. 04-3829, 04-3900
rules applicable to the calculation of damages under Title
VII). The district court found that Riverboat had failed to
meet this burden. After four days of testimony at trial
detailing with particularity the plaintiffs’ post-termination
activities, including the specifics of their job search efforts,
the district court decided that the plaintiffs had made
reasonable efforts to find new employment. The court
recognized that various plaintiffs walked the picket line in
front of the M/V Showboat, R.191 at 30-33, and that some
plaintiffs took time off after being terminated to attend
various classes, id. at 31-32. However, it concluded that the
defendants had not proven that the plaintiffs failed to
mitigate their damages; instead, the evidence showed that
“the plaintiffs walked the picket line for negligible amounts
of time,” and were “actively seeking employment during
that time.” Id. at 35. We are bound by these findings unless
they are clearly erroneous. See Wichmann v. Bd. of Trs. of
S. Illinois Univ., 180 F.3d 791, 805 (7th Cir. 1999).
The defendants have provided us very little reason to
question the district court’s findings. For example, Riverboat
offers no evidence refuting the testimony that the union was
actively looking for employment on behalf of some of the
plaintiffs during the weeks and months after their termina-
tions.35 Nor does Riverboat challenge the district court’s
finding that the plaintiffs were able to “actively seek[]
employment” while also walking the picket line, a finding
that is aptly supported by the plaintiffs’ testimony.36 R.191
35
See, e.g., Goodridge Test., Tr.II at 22. But see Anderson Test.,
Tr.II at 162 (explaining that the MEBA was unable to find him
a job).
36
See, e.g., Gaffney Test., Tr.I at 186 (“I updated my resume and
(continued...)
Nos. 04-3829, 04-3900 65
at 35. From this evidence, we conclude that the plaintiffs
“demonstrat[ed] a continuing commitment to be a member
of the work force” after being discharged by Riverboat.
Donnelly v. Yellow Freight Sys., Inc., 874 F.2d 402, 411 (7th
Cir. 1989) (discussing Title VII mitigation requirements).
The same is true of the classes taken by three of the
plaintiffs post-termination. Riverboat does not contest the
district court’s conclusion that compensation for the time
spent engaging in alternative activities is appropriate, given
that, had the plaintiffs not been discharged, they would
have no need to engage in such activities. Id. at 34-35.
Further, this conclusion is consistent with our case law. See
David v. Caterpillar, Inc., 324 F.3d 851, 866 (7th Cir. 2003)
(rejecting the argument that the plaintiff’s back pay award
should be reduced to take into account a term of voluntary
educational leave and holding that, had the plaintiff been
properly promoted, “she would not have taken the educa-
tional leave”).
Additionally, even if the defendants’ view of the evidence
was a legitimate interpretation of the underlying events, we
cannot conclude that the district court’s finding—that the
plaintiffs’ efforts to find alternative work were reason-
able—is clearly erroneous. Cf. Kasper v. St. Mary of Nazareth
Hosp., 135 F.3d 1170, 1176 (7th Cir. 1998) (holding that
testimony concerning whether employee failed to mitigate
(...continued)
grabbed my phone book and starting sending out resumes and
started looking for new work.”); Anderson Test., Tr.II at 178
(explaining that, even on days when he walked the picket line, he
also was actively searching for a job); Palmer Test., Tr.III at
90 (explaining that, after being terminated, he “made some phone
calls” and “got a job”).
66 Nos. 04-3829, 04-3900
damages is a question of credibility and deferring to jury’s
assessment of whether or not to believe him).
b. calculation of lost wages
Riverboat also challenges the district court’s calculation of
the plaintiffs’ lost earnings. As in other retaliatory discharge
contexts, salary earned after a plaintiff is terminated should
be deducted from the back pay otherwise allowable. Cf.
Donnelly, 874 F.2d at 411 (discussing calculation of damages
under Title VII). In this case, the district court detailed with
precision the salaries earned by the plaintiffs after being
discharged by Riverboat; the number of work days missed
between their terminations and finding new employment;
and the income earned, and hours worked, in their new
positions in relation to their salaries and hours while
employed by Riverboat. See R.191 at 30-36. “In reviewing
the claim for ‘loss of wages,’ we note that we are bound by
the district court’s determination as to the appropriate
amount of damages unless that determination is clearly
erroneous.” Fleming v. County of Kane, 898 F.2d 553, 560 (7th
Cir. 1990).
To be sure, the testimony of some of the plaintiffs on this
issue is slightly vague. For example, Mr. Palmer responded
to a question about his income in 1998 with, “Maybe
$30,000. I don’t know.” Tr.III at 91. He then estimated that
his income for the next few years was “[p]robably some-
where in the same ball park.” Id. Nevertheless, Riverboat
has failed to offer any evidence that Mr. Palmer’s estimate
that he earned $30,000 per annum does not reflect accurately
his actual income. In calculating lost income, the district
court is free to credit the plaintiffs’ testimony regarding
their sources and level of income. In this respect, the record
Nos. 04-3829, 04-3900 67
supports the district court’s conclusion that Mr. Palmer
earned $30,000 a year in his new position, $20,020 less than
his annual salary while employed by Riverboat.
c. reductions to back pay awards
The parties also dispute whether the district court erred in
calculating the back pay to which Messrs. Goodridge,
Gaffney and Beardon were entitled. Specifically, Riverboat
submits that, because these plaintiffs held positions after
being terminated that paid a higher salary than did their
positions on board the M/V Showboat, their back pay
entitlements should have been adjusted downward accord-
ingly.
Riverboat’s contention as it relates to Mr. Beardon is
without merit. Although Mr. Beardon’s annual salary in
various positions post-termination was greater than his
annual salary at Riverboat, the court properly discounted
these earnings to take into account the number of hours
worked. Mr. Beardon worked an eight-hour workday at
Riverboat, but he worked a twelve-hour workday in both of
his new, higher-paying positions. Had he only worked eight
hours a day, he would have earned less than he did while
employed by Riverboat, warranting back pay.
We next turn to Riverboat’s claim concerning the calcula-
tion of Mr. Goodridge and Mr. Gaffney’s earnings. In all but
one of his positions after being terminated by Riverboat, Mr.
Goodridge earned less than he would have earned had he
remained on the M/V Showboat; the only exception is 34 days
in 2002, during which he worked for MTL Lines on board a
tanker. He was paid $325 per day for this 34-day period,
which is $36 per day more than he made while employed by
68 Nos. 04-3829, 04-3900
Riverboat. Riverboat contends that the district court erred in
failing to subtract this amount, which totals $1,224, from his
back pay award. Similarly, Mr. Gaffney lost 14 days of
wages looking for work, as well as suffered miscellaneous
expenses related to his termination; but, after he obtained
new employment, he earned more than he did while
employed by Riverboat. Riverboat submits that Mr.
Gaffney’s higher salary should offset any losses he suffered
while unemployed.
In the context of a retaliatory discharge claim under
OSHA § 11(c)—a statute which we have already explained
is analogous to § 2114, see S. Rep. No. 98-454, at 12 (1984), as
reprinted in 1984 U.S.C.C.A.N. 4831, 4842—the court will
award back pay to the plaintiffs “as compensation for
income that would have accrued to them had they not been
wrongfully dismissed.” Donovan v. Freeway Const. Co., 551 F.
Supp. 869, 880 (D. R.I. 1982) (holding that the plaintiffs were
entitled to the differential between their new and old
wages); see also Martin v. H.M.S. Direct Mail Serv., Inc., 936
F.2d 108, 109 (2d Cir. 1991) (holding that the plaintiff was
entitled to back pay for the differential between unemploy-
ment compensation received and the salary he would have
earned if not terminated). In other words, under OSHA,
“[t]he award of back pay must be reduced by the amount of
any income from employment earned by complainants
during the period covered by the back pay award.” Dono-
van, 551 F. Supp. at 880; see also Martin, 936 F.2d at 109(subtracting from the back pay award unemployment
compensation received). This same rule applies in the
analogous context of Title VII. See, e.g., Chesser v. Illinois, 895
F.2d 330, 338 (7th Cir. 1990).
Nos. 04-3829, 04-3900 69
The district court, in calculating back pay entitlements,
implicitly37 made a factual determination that the period
during which Mr. Goodridge was eligible for back pay—and
thus the period in which his earnings should be subtracted
from his back pay award—terminated when his employ-
ment with MTL Lines began; it therefore awarded back pay
for losses suffered up until mid-2002, when Mr. Goodridge
took this position. As for Mr. Gaffney, the district court held
that the 14-day period between termination and obtaining
new employment was the period in which he was entitled
to back pay and calculated equitable relief accordingly.
These factual conclusions shall be reversed only if clearly
erroneous. See Matthews v. A-1, Inc., 748 F.2d 975, 978-79 (5th
Cir. 1984) (reviewing the district court’s “refus[al] to deduct
[the plaintiff’s] earnings at a higher paying position from
her damage award” for clear error).
The district court’s conclusions are not clearly erroneous,
but rather are consistent with the calculation of the period
in which a plaintiff is entitled to back pay in a variety of
analogous contexts. For example, in the context of Title VII,
a plaintiff is eligible for back pay from the date of her injury
to the date that she acquires a higher-paying job. See id. at
978. The same is true in the context of both OSHA § 11(c),
see Donovan v. George Lai Contracting, Ltd., 629 F. Supp. 121,
122-23 (W.D. Mo. 1985) (awarding back pay for the period
between termination and obtaining new employment), and
37
The district court did not set forth specifically the period of
back pay applicable to each plaintiff. Instead, the court merely
agreed with the plaintiffs’ back pay calculations and noted that
these calculations “have not been challenged by the defendants.”
R.191 at 36. The final calculations, however, reflect the con-
clusions discussed in the text.
70 Nos. 04-3829, 04-3900
the ADEA, see Stephens v. C.I.T. Group/Equip. Fin., Inc., 955
F.2d 1023, 1029 (5th Cir. 1992); Kolb v. Goldring, Inc., 694 F.2d
869, 874 (1st Cir. 1982).
Therefore, although Mr. Goodridge and Mr. Gaffney are
not entitled to back pay for any period in which they earned
the same or more than they would have earned at Riverboat,
their “ ’excess’ earnings are not to be subtracted from the
back-pay award for the period of unemployment.” Skalka v.
Fernald Envtl. Restoration Mgmt. Corp., 178 F.3d 414, 426 (6th
Cir. 1999) (discussing back pay for violation of the ADEA).
Indeed, Riverboat has referred us to no case in which the
plaintiffs’ excess income—earned after the period of time
covered by the back pay award—was subtracted from losses
suffered during the applicable period of either unemploy-
ment or underemployment. In this light, we conclude that
the district court did not err in refusing to subtract from
their back pay awards Mr. Goodridge’s earnings for the 34
days in which he was employed by MTL Lines and Mr.
Gaffney’s earnings after he obtained new employment.
3. Calculation of Punitive Damages
The district court, after concluding that the defendants
acted willfully and wantonly in discharging the plaintiffs,
see R.191 at 40, awarded each of the eight prevailing plain-
tiffs $25,000 in punitive damages. Riverboat submits that the
district court erred in two respects. First, Riverboat chal-
lenges the district court’s factual finding that the defendants
acted willfully and wantonly in discharging the plaintiffs.
According to Riverboat, Mr. Heitmeier did not know about
the letters to the Coast Guard and thus did not willfully
violate § 2114. Similarly, Mr. Gourguechon viewed the
report as a job preservation effort, and instead terminated
Nos. 04-3829, 04-3900 71
the plaintiffs because of their pro-union activity. We review
the district court’s conclusions, which present questions of
fact regarding the defendants’ state of mind, for clear error.
NRC Corp. v. Amoco Oil Co., 205 F.3d 1007, 1014 (7th Cir.
2000).
As discussed above, Mr. Heitmeier is not liable in his
individual capacity for violation of § 2114, and, thus,
punitive damages with respect to his conduct are inappro-
priate. The district court, however, did make specific factual
findings that Mr. Gourguechon’s conduct warranted
punitive relief and those findings are entitled to deference
in this court. For example, the court found that, after being
told by Mr. Gaffney that he could not fire someone for
corresponding with the Coast Guard, Mr. Gourguechon did
not “reconsider[] his decision or tak[e] the time to obtain
legal advice,” but instead “quickly fired the remaining
plaintiffs.” R.191 at 40. It also found that the fact that Mr.
Gourguechon “remove[d] the offending language from the
subsequent termination notices” supports the conclusion
that he “believed that there was something seriously wrong
in terminating [Mr.] Gaffney and the other plaintiffs.” Id.
The district court’s award of punitive damages is not
against the weight of the evidence. While there is some
contrary evidence in the record—for example, Mr.
Gourguechon’s willingness to provide various plaintiffs
with a letter of recommendation after their termina-
tions—the district court’s rationale for awarding punitive
damages is aptly supported by the facts of the case. Mr.
Gourguechon was aware, as of January 6, 1998, that termi-
nating the plaintiffs in retaliation for communicating with
the Coast Guard was unlawful; nevertheless, within the next
two weeks, he made the decision to terminate seven other
signatories to the October 10th report. In light of this
72 Nos. 04-3829, 04-3900
conduct, and in light of other, related justifications for
awarding punitive relief in this case, such as the possibility
that the “defendants’ actions . . . may have a chilling effect
on the willingness of other seamen to report a violation,” id.,
we find that the district court did not err in awarding the
plaintiffs punitive damages.
Riverboat also submits that, even if the statute authorizes
punitive damages, they were not appropriately calculated
in this case. Specifically, it contends that the $25,000 awards
are excessive, given that the plaintiffs “suffered no long
lasting effects of the termination.” Appellants’ Br. at 48
(internal quotation marks omitted).
A district court’s calculation of punitive damage awards
is reviewed for abuse of discretion if no constitutional
violation is alleged.38 Cooper Indus., Inc. v. Leatherman Tool
Group, Inc., 532 U.S. 424, 433 (2001). We shall “set aside such
an award only if it exceeds an amount necessary to serve the
objective of deterrence and punishment.” Merriweather v.
Family Dollar Stores of Indiana, Inc., 103 F.3d 576, 581 (7th Cir.
1996) (internal quotation marks omitted).
38
While Riverboat cites State Farm Mutual Automobile Insurance
Co. v. Campbell, 538 U.S. 408 (2003), and BMW of North America,
Inc. v. Gore, 517 U.S. 559 (1996), for the proposition that the
punitive damages awarded were excessive, both cases are
inapplicable. Gore and Campbell addressed the claim that the
punitive damages awarded by a jury were unconstitutionally
excessive, in violation of the Due Process Clause of the Four-
teenth Amendment. Riverboat has not asserted that the puni-
tive damages calculations in this case were so arbitrary as to
violate the Constitution of the United States. Therefore, we
review the award only for abuse of discretion.
Nos. 04-3829, 04-3900 73
We cannot conclude on the basis of this record that the
district court abused its discretion in awarding each prevail-
ing plaintiff $25,000 in punitive damages. The district court
carefully considered and balanced the competing factors:
On the one hand, it noted that the plaintiffs’ request for
treble damages was “disproportionate to the type of harm
suffered here and would result in a windfall for the plain-
tiffs.” R.191 at 40-41. Nevertheless, the court held, the need
to “vindicate [the plaintiffs’] rights” made some measure of
punitive relief appropriate. Id. at 41. As required by our case
law, the court also carefully considered the amount “neces-
sary to serve the objective of deterrence and punishment.”
Merriweather, 103 F.3d at 581. The purpose of punitive relief
in the case, the court found, would be to punish the defen-
dants’ willful and wanton conduct and to deter others from
engaging in similar illegal conduct. This goal is particularly
significant in the context of a retaliatory discharge claim, as
here, given that the outcome of the case “may have a
chilling effect on the willingness of other seamen to report
a violation.” R.191 at 40. On this basis, the court deemed
$25,000 per plaintiff in punitive damages appropriate.
In light of these considerations, the punitive damages
awards are within the bounds of reason.39 See Merriweather,
103 F.3d at 582 (upholding the district court’s award of
punitive damages in similar circumstances). Indeed, this
39
In light of the broader goals served by the awards of punitive
damages in this case, we also cannot accept Riverboat’s argument
that the district court abused its discretion in awarding the
plaintiffs equal sums. Although certain plaintiffs suffered little to
no actual harm from their terminations, “each plaintiff suffered
the same deprivation of a statutory right,” rendering appropriate
“[a]n equal amount for each plaintiff.” R.191 at 41.
74 Nos. 04-3829, 04-3900
sum is less than the actual damages suffered by most of the
plaintiffs, which in all but two circumstances exceed
$25,000. We therefore uphold the plaintiffs’ award as
calculated by the district court.
4. Set-Off
Riverboat submits that the district court also erred in
refusing to set-off the total damage award with the amount
received by the plaintiffs in settlement with the Showboat
defendants. The plaintiffs respond that, pursuant to the
district court’s denial of the plaintiffs’ motion in limine,
Riverboat was permitted to introduce this evidence at trial,
but failed to do so; therefore, they have waived the opportu-
nity to object to the calculation of damages on this basis.
In certain contexts, when multiple defendants cause a
single injury to the plaintiff, a defendant held liable at trial
may be entitled to have the damages assessed reduced by
the amount paid in settlement to the plaintiff by a joint
tortfeasor. We need not reach the applicability of this rule
today. The plaintiffs filed a pre-trial motion in limine,
requesting that the district court preclude the introduction
of the plaintiffs’ loan receipt agreement with Showboat,
which they feared would be used to offset their damages.
See R.150. At the beginning of the trial, the district court
ruled on all pre-trial evidentiary motions. It held, however,
that it was unnecessary to decide at that stage of the pro-
ceedings whether to grant or deny the motion in limine to
preclude admission of evidence on the existence of a loan
agreement with Showboat:
The motion in limine to preclude evidence of the loan
agreement, those types of matters go to the measure of
damages. Had this been a jury trial, that is something
Nos. 04-3829, 04-3900 75
that would have been discussed in any post trial pro-
ceedings if the jury had returned a verdict in favor of
the plaintiffs. As the trial proceeds, since this is a bench
trial, we can worry about that, since that is an issue of
damages and the measure of damages, assuming that
the plaintiffs prevail.
Tr.I at 5.
As evidenced by this passage, the district court invited
Riverboat to renew its arguments at a later time—presum-
ably in the course of seeking admission of evidence substan-
tiating the terms of the plaintiffs’ settlement agreement with
Showboat. Riverboat failed to take advantage of this
opportunity; it neither moved for admission of documents
evidencing the settlement agreement nor discussed the
settlement as a mitigating factor at trial. As a result, the
record contains no evidence upon which we can conclude
that the district court erred in failing to take into account the
plaintiffs’ settlement with Showboat.
F. Attorneys’ Fees
In the plaintiffs’ cross-appeal, they submit that the district
court erred in refusing to award them reasonable attorneys’
fees. They contend that the remedial language of the
statute—which makes available “any appropriate relief”—is
sufficiently broad as to authorize a federal court to award
attorneys’ fees under appropriate circumstances. § 13(b), 98
Stat. at 2864. The district court, however, held that absent
express statutory authorization to the contrary, a party
generally is responsible for their own cost of representation.
See R.191 at 42. The court explained that, at the time of the
events in this case, 46 U.S.C. § 2114 did not contain such
authorization and that “[a]llowing the plaintiffs to recover
76 Nos. 04-3829, 04-3900
attorney [sic] fees would be similar to allowing them to
recover double the punitive damages amount.” Id. at 42-43.
We follow the “American Rule” with respect to attorneys’
fees, which requires “express” statutory authorization of
such fees. Zeigler Coal Co. v. Dir., Office of Workers’ Comp.
Programs, 326 F.3d 894, 899 (7th Cir. 2003). “A federal court
normally will not order one party in a case to pay another
party’s attorneys’ fees unless Congress has authorized such
fee awards by statute.” King v. Illinois State Bd. of Elections,
410 F.3d 404, 412 (7th Cir. 2005). At the time of the events in
this case, Congress had not yet provided for fee-shifting in
§ 2114.40 The plaintiffs, however, respond that the statute
makes available all “appropriate relief,” which includes in
its scope attorneys’ fees. This interpretation is inconsistent
with our case law, as well as the general American Rule.
The plaintiffs also submit that Hall v. Cole, 412 U.S. 1, 5
(1973), and Kinslow v. American Postal Workers Union, Chicago
Local, 222 F.3d 269, 279-80 (7th Cir. 2000), provide additional
justification for reversing the district court’s denial of
attorneys’ fees. First, they contend that they are entitled to
attorneys’ fees under the “common benefit” doctrine. This
doctrine is an equitable, judicially created exception to the
American Rule, which flows from the “common fund”
exception.41 It provides that, although in the absence of a
40
Section 2114 subsequently was amended to make available “an
award of costs and reasonable attorney’s fees to a prevailing
plaintiff not exceeding $1,000.” 46 U.S.C. § 2114(b)(3). Neither
party argues that the amended provision, which was passed after
the litigation in the district court commenced, directly affects the
calculation of fees in this case.
41
Hall v. Cole, 412 U.S. 1, 4-5 (1973) (“[F]ederal courts, in the
(continued...)
Nos. 04-3829, 04-3900 77
fee-shifting statute plaintiffs are generally not entitled to
fees, when a plaintiff’s “successful litigation confers a
substantial benefit on the members of an ascertainable
class,” the court may award attorneys’ fees. Hall, 412 U.S. at
5 (internal quotation marks omitted). This benefit need not
be pecuniary; however, the court’s jurisdiction over the
subject matter must “make[] possible an award that will
operate to spread the costs proportionately among [the
persons benefitting from the court’s ruling].” Id. The
underlying theory is that to “allow [these individuals] to
obtain full benefit from the plaintiff’s efforts with-
out contributing equally to the litigation expenses would be
to enrich [them] unjustly at the plaintiff’s expense.” Id. at 6.
The common benefit exception is inapplicable to this case.
The plaintiffs ask this court to shift their fees to the defen-
dants; the common benefit doctrine, however, serves to shift
fees and expenses from the plaintiffs individually to the
benefitting class as a whole. To award attorneys’ fees under
this theory “is not to saddle the unsuccessful party with the
expenses but to impose them on the class that has benefitted
from them.” Mills v. Elec. Auto-Lite Co., 396 U.S. 375, 396-97
(1970); see also id. at 397 (reimbursing the plaintiffs for
attorneys’ fees from the corporate treasury, thus spreading
the costs across the benefitting shareholders); Hall, 412 U.S.
at 8-9 (holding that the plaintiffs acted on behalf of all union
members, and reimbursing the attorneys’ fees from the
union treasury, such that all union members in effect
equally contributed to the costs of litigation). Moreover, the
41
(...continued)
exercise of their equitable powers, may award attorneys’ fees
when the interests of justice so require.”); see also id. at 5 n.7
(tracing the doctrine’s origins to the “common fund” theory).
78 Nos. 04-3829, 04-3900
plaintiffs have not met their burden of proof on this issue:
Not only have they failed to identify a readily ascertainable
group of persons benefitting from their successful litigation,
but they also have failed to suggest a workable strategy for
distributing the costs of representation among such persons.
See Brzonkala v. Morrison, 272 F.3d 688, 692 (4th Cir. 2001)
(rejecting the applicability of the common benefit doctrine,
given that the plaintiffs did not identify a strategy for
“shift[ing] costs with some exactitude to those benefitting”
(internal quotation marks omitted)).
Second, the plaintiffs urge us to find attorneys’ fees
appropriate because the defendants “acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.” Hall,
412 U.S. at 5 (internal quotation marks omitted). However,
the “bad faith” requirement has been interpreted strictly
by this court. See Satoskar v. Indiana Real Estate Comm’n,
517 F.2d 696, 698 (7th Cir. 1975) (“The standards for bad
faith are necessarily stringent.”); see also Singer Co. v. Skil
Corp., 803 F.2d 336, 341 (7th Cir. 1986) (holding the bad faith
rationale inapplicable, given that the defendants acted in
good faith in appealing the case and in raising defenses to
the plaintiffs’ claims). We find no need to liberalize the rule
in this case. The district court made conclusive factual
findings that the defendants did not “behave[] vexatiously
during the course of litigation.” R.191 at 43. These findings
are binding upon us in the absence of clear error. Given the
absence of any evidence that Riverboat did not raise its
defenses to the plaintiffs’ claims in good faith, and given the
plaintiffs’ failure to point us to any particularly egregious
conduct on Riverboat’s part in the course of this litigation,
we uphold these findings and, consequently, affirm the
district court’s denial of attorneys’ fees.
Nos. 04-3829, 04-3900 79
G. Riverboat’s Counterclaim
On November 16, 2000, the district court granted sum-
mary judgment in favor of Showboat on Riverboat’s coun-
terclaim. See R.99. It held that the Agreement between
Showboat and Riverboat does not obligate Showboat to
obtain a general “acts and omissions” policy.42 Id. at 7.
“[W]hereas section 5.01.1 spells out Showboat’s duty
to obtain insurance policies for ‘acts, omissions and injuries,’
”
the court explained, “subsection 5.01.01 (a subsection of
5.01.1) articulates the types of coverages to be included
within those policies.” Id. at 6. Therefore, according to the
district court, Showboat is not required to insure against
Riverboat’s violation of federal employment laws, including
46 U.S.C. § 2114, and accordingly, is not required to indem-
42
The indemnification provisions of the Agreement provide:
5.01.1 Owner shall obtain insurance, including Jones Act
coverage, the minimum amount of not less than Five Million
Dollars ($5,000,000), for the acts, omissions and injuries to
persons or property caused in whole or in part by the
Maritime Staff and/or Manager, its agents or employees. . . .
5.01.01.1 Owner shall procure at its own cost and expense,
including the cost of all deductibles, and continuously
maintain in force the following insurance coverages:
(a) Worker’s Compensation Insurance . . . ;
(b) Comprehensive General Liability Insurance . . . ;
(c) Full form Protection and Indemnity Insurance on all
vessels and floating equipment . . . ;
(d) Hull and Machinery Insurance . . . ;
(e) Collision and Liability Insurance for damage to
vessels . . . .
R.37, Ex.A §§ 5.01.1; 5.01.01.1.
80 Nos. 04-3829, 04-3900
nify Riverboat against losses stemming from Showboat’s
failure to provide this insurance coverage.
Riverboat appeals this decision. It argues that the dis-
trict court erred in finding that the Agreement unambigu-
ously requires Riverboat to bear its own expenses in this
context, given various inconsistencies among the Agree-
ment’s provisions. For example, insurance for liabilities
arising under the Jones Act—which the district court held
was one of the six required areas of coverage—is listed in
the general, introductory paragraph in section 5.01.1, rather
than in section 5.01.01.1, the subsection that allegedly
enumerates and thereby limits Showboat’s obligations. See
R.37, Ex.A. Second, section 5.01.1 requires a policy with a
$5,000,000 minimum; however, the minimum policy limits
for the five types of coverages listed in section 5.01.01.1
range from $2,000,000 to $5,000,000 and total $14,000,000.43
Third, section 5.01.1, in mandating that Riverboat be named
as the insured party, uses the phrase “the foregoing poli-
cies.” Id. § 5.01.1. In so doing, the Agreement’s language
clearly indicates that the immediately proceeding provision
requiring insurance for “acts, omissions and injuries” is
intended as a free-standing insurance and indemnification
clause. Id. In light of these inconsistences, according to
Riverboat, the only logical interpretation of section 5 of the
Agreement is that the parties intended Showboat to obtain
43
The Agreement requires the purchase of $2,000,000 in Compre-
hensive General Liability Insurance (accident); $2,000,000 in
Comprehensive General Liability Insurance (property damage);
$5,000,000 in Full Form Protection and Indemnity Insurance on
all vessels and floating equipment; and $5,000,000 Collision
Liability Insurance. The other coverages listed in sections 5.01.1
and 5.01.01.1 do not specify their minimum limits.
Nos. 04-3829, 04-3900 81
a separate, independent insurance policy for general acts
and omissions, with a minimum policy coverage of
$5,000,000.
Showboat responds that the Agreement unambiguously
limits its insurance obligation to the six types of coverage
enumerated in sections 5.01.1 and 5.01.01.1. While section
5.01.1 does mention insurance for Riverboat’s “acts, omis-
sions and injuries,” it also qualifies this broad language by
limiting Showboat’s employment-related liabilities to
violation of the Jones Act. By contrast, all policies listed in
section 5.01.01.1 pertain to property damage and third party
liabilities, and logically cannot be read to include insurance
for violation of 46 U.S.C. § 2114. Moreover, Showboat
maintains that requiring it to insure Riverboat against a
retaliatory discharge claim would contravene the underly-
ing purpose of the Agreement: The Agreement obligates
Riverboat to operate the vessel, including the hiring, firing
and management of its crew, in compliance with applicable
federal law and Coast Guard regulations. To indemnify
Riverboat for flouting its obligations under the Agreement
by firing the plaintiffs in violation of 46 U.S.C. § 2114 would
thwart the Agreement’s fundamental goal.
“Indemnity agreements are contracts subject to the rules
and principles of contract construction.” TLB Plastics Corp.
v. Procter & Gamble Paper Prods. Co., 542 N.E.2d 1373, 1377
(Ind. App. 1989). Therefore, whether Showboat is required
to insure against, and now must indemnify, retaliatory
discharge claims under 46 U.S.C. § 2114 is governed by state
law principles of contract formation and interpretation. The
parties appear to agree that Indiana law applies in this case.
Our review of the district court’s interpretation of this law
is plenary. See Salve Regina Coll. v. Russell, 499 U.S. 225, 239
82 Nos. 04-3829, 04-3900
(1991) (“[C]ourts of appeals review the state-law determina-
tions of district courts de novo.”).
As a general matter, parties are free under Indiana law
to enter into an indemnification clause and may obligate one
party to insure against and/or to indemnify certain acts or
omissions of the other party. Moore Heating & Plumbing, Inc.
v. Huber, Hunt & Nichols, 583 N.E.2d 142, 145 (Ind. App.
1991). However, it must be clear from the contract or
surrounding circumstances that the burdened party agreed
“knowingly and willingly” to insure against or indemnify
the acts or omissions in question. Id.; see also Weaver v.
American Oil Co., 276 N.E.2d 144, 148 (Ind. 1971) (“We do
not mean to say or infer that parties may not make contracts
. . . providing for indemnification, but it must be done
knowingly and willingly as in insurance contracts made for
that very purpose.”). To ensure that a party is not saddled
with an unintended burden to insure or indemnify, such
provisions are “strictly construed . . . and will not be held to
provide indemnity unless so expressed in clear and un-
equivocal terms.” Moore Heating, 583 N.E.2d at 145 (“Courts
disfavor such indemnification clauses because to obligate
one party to pay for the negligence of the other party is a
harsh burden which a party would not lightly accept.”); see
also Exide Corp. v. Millwright Riggers, Inc., 727 N.E.2d 473,
480 (Ind. App. 2000) (holding that, because the indemnifica-
tion clause “contain[ed] no clear statement that would give
the contractors notice of the harsh burden that complete
indemnification imposes,” indemnification was inappropri-
ate); Ogilvie v. Steele by Steele, 452 N.E.2d 167, 170 (Ind. App.
1983) (holding that “[an indemnification] clause must
expressly state, in clear and unequivocal terms, that the
indemnitor agrees to indemnify the indemnitee against the
indemnitee’s own negligence” (internal quotation marks
omitted)).
Nos. 04-3829, 04-3900 83
The Agreement in this case does not “clear[ly] and
unequivocal[ly],” Ogilvie, 452 N.E.2d at 170, require Show-
boat to obtain an insurance policy that covers the intentional
violation of retaliatory discharge laws. To be sure, section
5.01.1 does speak generally of insurance coverage for “acts,
omissions and injuries to persons or property” caused by
Riverboat. R.37, Ex.A § 5.01.1. However, in light of the strict
construction given indemnification agreements under
Indiana law, we cannot conclude that the Agreement
mandates insurance coverage or indemnification in this
case. The Agreement does not require, much less mention,
insurance for retaliatory discharge claims, or even the
general violation of state or federal employment laws. It is
true that the term “including” in section 5.01.1 may suggest
a broad reading of Showboat’s insurance obligations—one
that may encompass, but is not limited to, Jones Act cover-
age. But that interpretation is by no means compelled by the
contractual language.44 Another reasonable interpretation is
44
For this reason, this case is easily differentiated from the
Indiana state law cases cited above. See, e.g., Ogilvie v. Steele by
Steele, 452 N.E.2d 167, 170-71 (Ind. App. 1983) (holding that the
indemnification contract between an owner of train tracks and an
owner and operator of a train “clearly and unequivocally”
required indemnification for the track owner’s negligence, given
that the contract explicitly stated that the indemnification
provisions “shall apply regardless of considerations of fault or
negligence”); see also Avant v. Cmty. Hosp., 826 N.E.2d 7, 11 (Ind.
App. 2005) (holding that an indemnification clause that covers
“all claims, demands, rights and causes of action of any kind,
whether arising from [Avant’s] own acts or those of Fitness
Pointe,” encompassed indemnification for negligent implementa-
tion of a fitness program). Unlike these contracts, the Agreement
between Showboat and Riverboat does not specifically require
(continued...)
84 Nos. 04-3829, 04-3900
the one adopted by the district court: that section 5.01.1
serves as an introductory paragraph, which sets forth
Showboat’s general obligation to obtain insurance coverage,
and that its subsection, section 5.01.01.1, limits this obliga-
tion by specifying the scope of the requisite coverage. In
light of these two conflicting but equally plausible interpre-
tations, we cannot say that the Agreement, in “clear and
unequivocal terms,” Moore Heating, 583 N.E.2d at 145,
provided Showboat “notice of the harsh burden that
complete indemnification imposes,” Exide, 727 N.E.2d at
480.
Two other reasons compel us to uphold the district court’s
grant of summary judgment in favor of Showboat. First,
under Riverboat’s interpretation, Showboat would
be saddled with a practically limitless obligation to insure
Riverboat against liability for all conceivable legal wrongs,
up to a $5,000,000 policy limit. Yet, Riverboat has offered no
evidence that the parties intended this result when contract-
ing for insurance coverage. Second, even if the Agreement
were unambiguously to mandate that Showboat obtain
insurance coverage above and beyond the six categories of
insurance enumerated in sections 5.01.1 and 5.01.01.1, the
Agreement nevertheless cannot be read to require insurance
coverage or indemnification in this case. The Riverboat
defendants acted willfully and wantonly in terminating the
plaintiffs, in violation of the plaintiffs’ rights under § 2114.
Indiana courts “have clearly and repeatedly affirmed the
general proposition that public policy prohibits the use of
insurance to provide indemnification for civil tort liability
that results from an insured’s intentional wrongdoing.” Sans
(...continued)
Showboat to insure against the general violation of federal law,
including violation of retaliatory discharge statutes.
Nos. 04-3829, 04-3900 85
v. Monticello Ins. Co., 676 N.E.2d 1099, 1102 (Ind. App. 1997)
(quoting R.E. Keeton & A.I. Widiss, Insurance Law 518-19
(1988)). Indeed, to require Showboat to indemnify Riverboat
in these circumstances would be contrary to the purpose of
the Agreement’s other provisions, which place on Riverboat
an obligation to ensure the vessel’s compliance with state
and federal law and regulations. See also Riffle v. Knecht
Excavating, Inc., 647 N.E.2d 334, 339 (Ind. App. 1995) (noting
the obligation to read the contract as a whole, so as to give
meaning to all of its provisions). Therefore, we affirm the
district court’s order granting summary judgment to
Showboat on Riverboat’s counterclaim.
Conclusion
For the foregoing reasons, we affirm the district court’s
judgment that the plaintiffs were discharged in retaliation
for correspondence protected under 46 U.S.C. § 2114 and its
calculation of the plaintiffs’ remedies. We also affirm
the district court’s judgment that Showboat is not con-
tractually obligated to indemnify Riverboat for its losses.
We reverse the judgment of the district court as it relates to
the finding of liability against Mr. Heitmeier, holding that
there is no evidence substantiating his role in terminating
the plaintiffs in retaliation for their correspondence with the
Coast Guard. Additionally, we hold that the district court
erred in finding that Mr. Doncet and Mr. Horton are not
entitled to whistleblower protection under § 2114 and
remand for further proceedings consistent with this opinion.
AFFIRMED in part and REVERSED and
REMANDED in part
86 Nos. 04-3829, 04-3900
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-16-06