Appeal of Defense Base Act Claims to the Courts: The Disagreement Over Forum Continues

Appeal of Defense Base Act Claims to the Courts: The Disagreement Over Forum Continues

The proper court to review a Defense Base Act decision on appeal from the Benefits Review Board has been a source of confusion for decades. Because the Defense Base Act (DBA, 42 U.S.C.S. § 1651 et seq.) is an extension of the Longshore and Harbor Workers' Compensation Act (LHWCA, 33 U.S.C.S. § 901 et seq.), the appeal in DBA claims from the Benefits Review Board is governed by the interplay of these two acts. Under Section 21(c) of the LHWCA, any person "adversely affected or aggrieved by a final order of the Board may obtain a review of that order in the United States court of appeals for the circuit in which the injury occurred . . . ." 33 U.S.C.S. § 921(c) (2006). However, under Section 3(b) of the DBA, "[j]udicial proceedings provided under sections 18 and 21 of the Longshore and Harbor Workers' Compensation Act in respect to a compensation order made pursuant to this Act . . . shall be instituted in the United States district court of the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved if his office is located in a judicial district, and if not so located, such judicial proceedings shall be instituted in the judicial district nearest the base at which the injury or death occurs."[fn.1] 42 U.S.C.S. § 1653(b) (2006). Section 3(b) of the DBA was necessary because injuries under the DBA seldom occurred within the jurisdiction of any United States district court. The last relevant statutory provision is Section 1 of the DBA. Section 1 of the DBA states that "[e]xcept as herein modified, the provisions of the Longshore and Harbor Workers' Compensation Act, approved March 4, 1927 (44 Stat. 1424), as amended, shall apply . . . ." 42 U.S.C.S. § 1651(a) (2006). The interpretation of these two statutes has created disagreement among the circuits and has been the source of much litigation.

At the heart of the problems lie the 1972 amendments to the LHWCA. Prior to the amendments, the review of compensation orders from the deputy commissioner under both the LHWCA and the DBA went to the United States district court. 33 U.S.C.S. § 921(b) (1970). After the 1972 amendments to the LHWCA, the review of compensation orders from the Deputy Commissioner under both the LHWCA and the DBA went first to the newly created Benefits Review Board. 33 U.S.C.S. § 921(b) (2006). Then, compensation orders could be appealed to the United States court of appeals for the circuit in which the injury occurred according to the newly created section 21(c). 33 U.S.C.S. § 921(c). However, Congress did not change Section 3(b) of the DBA. Section 3(b) of the DBA still provided that judicial proceedings "shall be instituted in the United States district court of the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved . . . ." 42 U.S.C.S. § 1653(b) (2006). This difference is the basis of disagreement among the circuits as to whether a DBA claim appealed from the Benefits Review Board goes to the Court of Appeals or the United States district court.

Most of the circuits now have issued an opinion on the issue. The Sixth Circuit was the first court to render a decision on this matter. In Home Indemnity Co. v. Stillwell, 597 F.2d 87 (6th Cir. 1979), cert. denied 444 U.S. 869, 62 L. Ed. 2d 94, 100 S. Ct. 145 (1979), the court considered the issue of jurisdiction of a DBA appeal from a decision by the Benefits Review Board. The court examined the interrelationship of the LHWCA and the DBA and decided that jurisdiction lay with the United States district court wherein is located the office of the Deputy Commissioner whose compensation order is involved. Id. at 90. The very next day the First Circuit decided a case that was appealed from a DBA decision by the Benefits Review Board. Air America, Inc. v. Director, OWCP, 597 F.2d 773, 10 BRBS 505(CRT) (1st Cir. 1979). The court stated that the Board's order could be appealed to a Court of Appeals under Section 21(c) of the LHWCA. Id. at 776. However, the court did not provide any analysis or discuss the jurisdictional provisions in Section 3(b) of the DBA. Id. Later in the year, the Ninth Circuit issued an opinion. In Pearce v. Director, OWCP, 603 F.2d 763, 10 BRBS 867(CRT) (9th Cir. 1979) [hereinafter Pearce I], the court decided that Congress intended for the 1972 amendments to apply to the DBA and that jurisdiction of DBA appeals was in the United States court of appeals for the circuit wherein is located the office of Commissioner whose compensation order is involved. Id. at 766-770. Moreover, the court stated in dicta that when a compensation order by an administrative law judge is involved, then the location of the office of the administrative law judge controls.[fn.2] Id. at 770-771. Based on its interpretation of the statutes, the Ninth Circuit transferred the case to the Seventh Circuit because the office of the Deputy Commissioner whose compensation order was involved was located in Chicago, Illinois. Id. at 771. The Seventh Circuit approved the holding of the Ninth Circuit and then decided the case.[fn.3] Pearce v. Director, OWCP, 647 F.2d 716, 721, 13 BRBS 241(CRT) (7th Cir. 1981) [hereinafter Pearce II].

Ten years later the battle sprung afresh in the Fifth Circuit. In AFIA/CIGNA Worldwide v. Felkner, 930 F.2d 1111, 24 BRBS 154(CRT) (5th Cir. 1991), cert. denied, 502 U.S. 906, 116 L. Ed. 2d 241, 112 S. Ct. 297 (1991), the Fifth Circuit considered the interrelationship between the jurisdiction provisions of the LHWCA and the DBA. Id. at 1112-1114. The Fifth Circuit arrived at the same conclusions as the Sixth Circuit. Id. at 1115-1116. Then, a district court in the Seventh Circuit failed to follow Pearce II. In Schmit v. Federal Electric International, 780 F. Supp. 1213 (N.D. Ill. 1991), the court determined that Section 3(b) of the DBA gave subject matter jurisdiction to the United States district court of the judicial district wherein is located the office of the Deputy Commissioner whose compensation order is involved. Id. at 1215-1216. In Schmit, the District Director whose compensation order is involved was located in Chicago, Illinois. Id. at 1216. Although the decision was appealed to the Seventh Circuit, the issue of jurisdiction was not raised on appeal. Schmit v. ITT Federal Electric Int'l, 986 F.2d 1103, 26 BRBS 166(CRT) (7th Cir. 1993). Between 1991 and 2009, every circuit court that considered the issue, other than the Ninth Circuit, determined that jurisdiction for a DBA appeal fromtheBenefits Review Board lies with "the United States district court of the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved . . . ." Hice v. Director, OWCP, 156 F.3d 214, 217, 32 BRBS 164(CRT) (D.C. Cir. 1998); ITT Base Servs. v. Hickson, 155 F.3d 1272, 1274, 32 BRBS 157(CRT) (11th Cir. 1998); Lee v. Boeing Co., 123 F.3d 801, 804, 31 BRBS 101(CRT) (4th Cir. 1997).[fn.4] Hice also rejected expressly the Ninth Circuit's view that when a compensation order by an administrative law judge is involved, then the location of the office of the administrative law judge controls. Hice, 156 F.3d at 217-218.

Every circuit court that considered the issue, other than the Ninth Circuit, determined that jurisdiction for a DBA appeal from the Benefits Review Board resided with "the United States district court of the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved . . ." until February 2010. In February 2010, the Second Circuit published a 2-1 opinion on jurisdiction in Service Employees International, Inc. v. Director, OWCP (Barrios), 595 F.3d 447, 44 BRBS 1(CRT) (2d Cir. 2010). In the majority opinion, the court opined that the language of the statute was ambiguous because Section 3(b) of the DBA's mandate that appeals were to be conducted in the United States district court was not consistent with Section 21(c) of the LHWCA that required reviews to occur in the United States court of appeals. Id. at 453. The court found further evidence of ambiguity in the disagreement between the circuits on the interpretation of these provisions. Id. After finding ambiguity in the statute, the court proceeded to resolve the ambiguity by examining the purpose of the DBA—"to extend the benefits of the . . . [LHWCA] to those employed at military bases outside the United States." Id. at 453-454. From this statement of purpose, the court inferred a legislative intent to create a uniform method for handling DBA claims like LHWCA claims in every way except in cases where the unique characteristics of DBA claims require a different process. Id. at 454. The court found that the DBA does not require a different appeals process and reasoned that an appeal for a DBA claim therefore should follow the same path as an appeal for a LHWCA claim. Id. at 454.

In the dissent, Judge Cabranes followed the reasoning of the Fourth, Fifth, Sixth, Eleventh and D.C circuits. Judge Cabranes determined that the language of the DBA contained no ambiguity and all inquiry stopped after reading the unambiguous language of a statute. Id. at 457. Judge Cabranes conceded that although Congress may not have intended to create a divergence in the appeals process between LHWCA claims and DBA claims when the LHWCA was amended in 1972, the court could not change the law to fix an oversight that did not lead to impossible or absurd results. Id. at 458. Therefore, Judge Cabranes reasoned that judicial review of a DBA claim begins in the United States district court of the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved. Id.

Although the circuits disagree on the issue of the proper court for a DBA appeal from the Benefits Review Board, parties should not confuse jurisdiction with venue. All of the circuits that have spoken on the issue agree that the provisions of both Section 21(c) of the LHWCA and Section 3(b) of the DBA control jurisdiction. Serv. Employees Int'l, Inc. v. Director, OWCP (Barrios), supra, at 452 (finding that the 1972 amendments to Section 21(c) of the LHWCA control jurisdiction); Hice, 156 F.3d at 218 (determining that under Section 3(b) the United States district court of the judicial district wherein is located the office of the District Director whose compensation order is involved has jurisdiction); ITT Base Servs., 155 F.3d at 1276 (deciding that under Section 3(b) the court does not have jurisdiction and transferring the case to the United States district court of the judicial district wherein is located the office of the District Director whose compensation order is involved); Lee, 123 F.3d at 806 (concluding that under Section 3(b) the court does not have jurisdiction and transferring the case to the United States district court of the judicial district wherein is located the office of the District Director whose compensation order is involved); AFIA/CIGNA Worldwide, 930 F.2d at 1114 (determining that under Section 3(b) the appropriate district court has jurisdiction of a DBA appeal from the Benefits Review Board); Pearce II, 647 F.2d at 721 (stating that under Section 21(c) the court has jurisdiction); Pearce I, 603 F.2d at 770-71 (placing jurisdiction in the United States court of appeals for the circuit wherein is located the office of the Deputy Commissioner whose compensation order is involved under a combined reading of Section 21(c) and Section 3(b)); Air America, Inc., 597 F.2d at 776 (granting jurisdiction to the courts of appeals under Section 21(c)); Home Indem. Co., 597 F.2d at 88 (determining that the court does not have jurisdiction). These provisions are not venue provisions. 33 U.S.C.S. § 921(c) (captioned "Court of appeals; jurisdiction; . . ."); Pearce I, 603 F.2d at 771 (holding that a combined reading of Section 21(c) and Section 3(b) governs both jurisdiction and venue); cf. Dantes v. Western Foundation Corp. Ass'n, 614 F.2d 299, 300-301, 11 BRBS 753(CRT) (1st Cir. 1980) (interpreting § 921(c) as relating to jurisdiction and not venue in a LHWCA case).

The jurisdiction rules for DBA claims also have an unusual feature that permits forum shopping. Initially, jurisdiction for a DBA claim is determined by the compensation district where the DBA claim is filed because all District Directors have offices that are located in a judicial district.[fn.5] Agency regulations for the DBA assign the compensation district that administers the claim based upon the location where the injury occurred.[fn.6] 20 C.F.R. § 704.101 (2008). However, the District Director may transfer a claim to another compensation district for the purpose of making investigation, taking testimony, making physical examination or taking such other necessary action. 33 U.S.C.S. § 919(g) (2006); 20 C.F.R. § 702.104 (2008). In fact, the Division of Longshore and Harbor Workers' Compensation's current policy is to transfer DBA claims from the New York District Office for Longshore to the compensation district where the claimant resides.[fn.7] Div. of Longshore and Harbor Workers' Comp., U.S. Dep't of Labor, Employment Standards Admin., Office of Workers' Comp. Programs, Longshore Industry Notice No. 122, Transfer of Defense Base Act Cases from the New York Longshore District Office to Other Longshore District Offices (2007), available at http://www.dol.gov/owcp/dlhwc/lsindustrynotices/industrynotice122.pdf. Therefore, a claimant, through his choice of residence, has some control over which court will hear the appeal from the Benefits Review Board.[fn.8]

Conflict exists between the circuits for review of an order from Benefits Review Board in Defense Base Act cases. The First Circuit, Second Circuit, Seventh Circuit and Ninth Circuit interpret the statutes as requiring the appeal to be heard in the Courts of Appeals. The Fourth Circuit, Fifth Circuit, Sixth Circuit, Eleventh Circuit and D.C. Circuit interpret the statutes as requiring the appeal to be heard in the District Court. The issue is ripe for review by the Supreme Court to resolve the conflict.

Table 1. Cases Providing Guidance for the Review of a Benefits Review Board Decision in Each Compensation District.

District No.

Location of the District Director

1st Level Judicial Proceeding

Case

1

Boston, MA

1st Cir.

See Air America, Inc. v. Director, OWCP, 597 F.2d 773, 10 BRBS 505(CRT) (1st Cir. 1979).

2

New York, NY

2d Cir.

Serv. Employees Int'l, Inc. v. Director, OWCP (Barrios), 595 F.3d 447, 44 BRBS 1(CRT) (2d Cir. 2010).

4

Baltimore, MD

D. Md.

Lee v. Boeing Co., 123 F.3d 801, 31 BRBS 101(CRT) (4th Cir. 1997).

5

Norfolk, VA

E.D. Va.

Lee v. Boeing Co., 123 F.3d 801, 31 BRBS 101(CRT) (4th Cir. 1997).

6

Jacksonville, FL

M.D. Fla.

ITT Base Servs. v. Hickson, 155 F.3d 1272, 32 BRBS 157(CRT) (11th Cir. 1998).

7

New Orleans, LA

E.D. La.

AFIA/CIGNA Worldwide v. Felkner, 930 F.2d 1111, 24 BRBS 154(CRT) (5th Cir. 1991).

8

Houston, TX

S.D. Tex.

AFIA/CIGNA Worldwide v. Felkner, 930 F.2d 1111, 24 BRBS 154(CRT) (5th Cir. 1991).

13

San Francisco, CA

9th Cir.

Pearce v. Director, OWCP, 603 F.2d 763, 10 BRBS 867(CRT) (9th Cir. 1979).

14

Seattle, WA

9th Cir.

Pearce v. Director, OWCP, 603 F.2d 763, 10 BRBS 867(CRT) (9th Cir. 1979).

15

Honolulu, HI

9th Cir.

Pearce v. Director, OWCP, 603 F.2d 763, 10 BRBS 867(CRT) (9th Cir. 1979).

18

Long Beach, CA

9th Cir.

Pearce v. Director, OWCP, 603 F.2d 763, 10 BRBS 867(CRT) (9th Cir. 1979).

 

Footnotes:

1. The term District Director is substituted for the term Deputy Commissioner used in the statute. 20 C.F.R. § 701.301(a)(7) (2008).

2. But see Kalama Services, Inc. v. Director, OWCP, 354 F.3d 1085, 37 BRBS 122(CRT) (9th Cir. 2004), cert. denied, 543 U.S. 809, 160 L. Ed. 2d 12, 125 S. Ct. 36 (2004), where a compensation order issued by an administrative law judge, whose office was in Camden, New Jersey, holding a hearing in Honolulu, Hawaii, on a claim before the District Director whose office was in Honolulu, Hawaii, was appealed through the Benefits Review Board to the Ninth Circuit, not the Third Circuit. Ilaszczat v. Kalama Servs., 35 BRBS 627(ALJ) (June 13, 2001). Also in a non-precedent opinion, a compensation order issued by an administrative law judge, whose office was in Cincinnati, Ohio, holding a hearing in Honolulu, Hawaii, on a claim before the District Director whose office was in Honolulu, Hawaii, was appealed through the Benefits Review Board to the Ninth Circuit, not the Sixth Circuit. Kaneshiro v. Holmes & Narver, Inc., 60 F. App'x 79, 2003 U.S. App. LEXIS 3814 (9th Cir. 2003) (not precedent). Agency regulations also would seem to prohibit this interpretation by the Ninth Circuit. The agency allows for "district director" to be substituted for "deputy commissioner." 20 C.F.R. § 701.301(a)(7) (2008). No similar regulation allows for "administrative law judge" to be substituted for "deputy commissioner." See 20 C.F.R. § 701.301(a)(8) (2008).

3. The District Director's office in Chicago, Illinois, was closed on April 1, 2004. All claims were transferred to the District Director in Houston, Texas. Div. of Longshore and Harbor Workers' Comp., U.S. Dep't of Labor, Employment Standards Admin., Office of Workers' Comp. Programs, Longshore Industry Notice No. 115, Consolidation of the Longshore Program in the Chicago Region of the Office of Workers' Compensation Programs (OWCP) (2004), available at http://www.dol.gov/owcp/dlhwc/lsindustrynotices/industrynotice115.pdf.

4. The Third Circuit, Eighth Circuit and Tenth Circuit would not be expected to ever address this issue because no District Director's office is located within their circuit. The Second Circuit has the District Director's office located in New York, New York, within its boundaries. In Overseas African Construction Corp. v. McMullen, 367 F. Supp. 202 (S.D.N.Y. 1973), a DBA case was appealed from the Benefits Review Board to the U.S. District Court for the Southern District of New York. However, the injury occurred in 1968 and the case was filed in July 1972. Id. at 203-204. Both dates were before November 26, 1972, when the Longshoremen's and Harbor Workers' Compensation Act Amendments of 1972 were effective. Longshoremen's and Harbor Workers' Compensation Act Amendments of 1972, Pub. L. 92-576, § 22, 86 Stat. 1251, 1264.

5. The offices of the District Directors are located in Boston, MA; New York, NY; Baltimore, MD; Norfolk, VA; Jacksonville, FL; New Orleans, LA; Houston, TX; San Francisco, CA; Seattle, WA; Honolulu, HI; and Long Beach, CA. http://www.dol.gov/owcp/dlhwc/lscontac.htm.

6. Injuries occurring in Iraq, Kuwait, Iran and the Middle East are assigned to District No. 2 in New York. 20 C.F.R. § 704.101(e) (2008). By regulation, injuries occurring in Afghanistan should be assigned to District No. 15 in Honolulu. 20 C.F.R. § 704.101(d) (2008). However, this area was reassigned to District No. 2 in New York. http://www.dol.gov/owcp/dlhwc/contacts/ny/distof-1.htm.

7. Of course claimants living outside the United States do not reside in any compensation district. These claims remain with the New York District Office.

8. The law to apply in a Defense Base Act claim appealed from the Benefits Review Board is determined by the court that has jurisdiction. See Quinones v. H.B. Zachery, Inc., 32 BRBS 6, 10 (1998) (declining to extend a Ninth Circuit holding to a case within another circuit's jurisdiction); cf. Roberts v. Custom Ship Interiors, 35 BRBS 65, 67 (2001) (per curiam) (applying the law of the circuit having jurisdiction over the appeal in a LHWCA case); Farquhanson v. Tidewater Constr. Corp., 37 BRBS 5(ALJ), 9(ALJ) (2002) (stating that the law of the circuit that has jurisdiction over the appeal is applicable in a LHWCA case). As a result, the jurisdiction issue also decides the choice of law question. Therefore, a claimant also can choose which circuit's law will be applied to his claim by choosing his state of residence.

  

© Copyright 2010 LexisNexis. All rights reserved. This article, which was written by Monica F. Markovich and James W. Parker, Brown Sims, P.C., Houston, Texas, will appear in an upcoming release of the Benefits Review Board Service—Longshore Reporter (LexisNexis).