UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 96-2055
MICHAEL D. WOOD,
Petitioner,
v.
UNITED STATES DEPARTMENT OF LABOR,
BATH IRON WORKS CORPORATION,
Respondents.
ON PETITION FOR REVIEW OF AN ORDER OF
THE BENEFITS REVIEW BOARD
Before
Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stahl, Circuit Judge.
Gary A. Gabree with whom Stinson, Lupton, Weiss & Gabree, P.A.
was on brief for petitioner.
Richard F. van Antwerp with whom Thomas R. Kelly and Robinson,
Kriger & McCallum were on brief for respondents.
May 8, 1997
BOUDIN, Circuit Judge. The dispute in this case
concerns Michael Wood's claim for partial disability payments
from his former employer, Bath Iron Works, Inc. ("Bath").
His benefits were terminated on the ground that Wood had been
offered his pre-injury wages and more by Bath in a new
capacity at Bath's shipyard in Bath, Maine, but had declined
the job offer because he had relocated to another state. The
problem posed is obvious; the solution is not.
The underlying facts are largely undisputed. Starting
in January 1988, Wood worked as an insulator at the Bath,
Maine shipyard, installing fiberglass and polyamide foam
materials. In October 1988, he developed breathing and sinus
problems, and a skin rash, apparently as a result of exposure
to dusts and fumes in his job at Bath. Bath kept him on in a
position that did not involve contact with these materials
until December 1988, when Wood was terminated.
In May 1989, Wood filed a claim with the Department of
Labor's Office of Workers' Compensation Programs ("OWCP")
seeking disability benefits under the Longshore and Harbor
Workers' Compensation Act ("the Act"), 33 U.S.C. 901-950.
That statute creates a familiar statutory scheme for no-fault
compensation, financed by the employer, where the employee
suffers a job related disability. In February 1990, before
the claim was resolved, Wood returned to Bath as a delivery
truck driver.
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In March 1991, an Administrative Law Judge in the Labor
Department awarded Wood total disability payments for two
days in December 1988, immediately following his dismissal
from Bath, 33 U.S.C. 908(a), and partial disability
payments for about two months thereafter based on the
difference between the $356 weekly pay Woods had earned as an
insulator at Bath and his actual wages earned thereafter
(working for other employers). 33 U.S.C. 908(c)(21).
Because the new job Wood took with Bath as a delivery driver
in February 1990 paid more than his old insulator wages, he
was awarded no disability benefits after his reemployment
date.
In August 1991, Wood was again laid off by Bath, due in
part to his lack of seniority. In October 1991, having been
advised by Bath's personnel office that his layoff was
"permanent," and having found no other suitable job in Bath,
Wood moved to Shortsville, New York, the town in the western
part of that state where he had grown up and where his
immediate family still lived. With his brothers' help, Wood
landed a series of auto mechanic jobs, making $300-315 weekly
on a fairly steady basis from November 1991 through at least
April 1993.
During this period in Shortsville, Wood was twice
offered reemployment by Bath. In March 1992, Bath contacted
Wood to offer him a position similar to the delivery driver
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job he had held earlier. But when Wood went to Maine for a
physical examination, he discovered that the recall was a
mistake, caused by a Bath hiring employee's mistaken reliance
on job type seniority rather than overall union seniority.
In February 1993, Bath recalled Wood a second time, but
he failed to report to Bath for a scheduled physical.
Although Bath repeated the offer several times, Wood
declined, apparently for several reasons: an inability to
relocate soon enough to report for work in March, as Bath
required; the fact that the job was only "guaranteed" for 30
days; and Wood's increasing ties to Shortsville, including
care of his then-hospitalized mother. As a result, Bath
terminated Wood's seniority-based rights to future employment
pursuant to the union contract.
In the meantime, Wood had renewed his claim for
disability benefits. In August 1991, Wood sought new
benefits for partial disability under 33 U.S.C. 908(c)(21);
the Act defines disability as "incapacity because of injury
to earn the wages which the employee was receiving at the
time of injury." Id. 902(10). Wood claimed that his
Shortsville earnings accurately reflected his present earning
capacity, see id. 908(h), and asked that his earlier
disability award be modified, as provided by 33 U.S.C. 922,
based on the gap between his pre-injury Bath insulator wages
and his lower Shortsville earnings.
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In October 1993, a different Administrative Law Judge
rendered the decision that is now before us on appeal. As to
the period between August 1991 and March 1993, the ALJ held
that Bath had failed to show that Wood's actual earnings in
Shortsville underrepresented his earning capacity. He ruled
that Wood was therefore entitled to disability payments for
that period based on the difference between the wages he had
earned as a Bath insulator in 1988 and his lesser actual
wages in Shortsville.
However, the ALJ also found that in February and March
1993 Bath had made Wood a bona fide reemployment job offer
that would have paid more than Wood's pre-injury wage, and
that Wood declined the offer for his own personal and family
reasons. The ALJ held that the offer established that, from
this time forward, Wood's earning capacity was not impaired
as a result of his disability. Wood's testimony had made
clear, said the ALJ, that Wood would not have accepted the
Bath job even if it had been offered as a permanent one.
Accordingly, Wood's partial disability benefits were cut off
after that date.
In December 1993, Wood appealed the portion of the
decision denying benefits after March 1993 to the Labor
Department's Benefits Review Board, as allowed by 33 U.S.C.
921(b). On September 12, 1996, the Review Board sent Wood a
notice pursuant to Pub. L. 104-134, 101(d), 110 Stat. 1321-
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219 (1996), stating that the decision was to be considered
affirmed for purposes of appeal to this court. Wood filed a
motion for reconsideration which the Review Board denied. He
then filed a notice of appeal to this court pursuant to 33
U.S.C. 921(c).
In reviewing such compensation decisions, this court
normally accepts the ALJ's findings of fact where they are
supported by substantial evidence, and reviews legal
questions de novo. CNA Ins. Co. v. Legrow, 935 F.2d 430, 433
(1st Cir. 1991). The central issue in our case, however,
does not neatly fit within these polar categories. Our main
task here is to discern standards--an amalgam of law and
policy--to cope with a recurring problem with many
variations: how earning capacity should be calculated when
the employee, after the injury, moves to a new community.
We begin with the Act. For some partial disabilities
(e.g., the loss of a finger), the Act schedules a payment, 33
U.S.C. 908(c)(1)-(20), but for unscheduled injuries such
as Wood's, the Act requires that the employee's reduced
earning capacity be determined; the employer is then required
to pay regularly two thirds of the difference between the
employee's pre-injury wages and his post-injury reduced
earning capacity. Id. 908(c)(21), 908(e). Actual post-
injury earnings are evidence of capacity but are not
conclusive. Id. 908(h).
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Wood's earnings in Shortsville were less than his pre-
injury wages as a insulator at Bath. The employer has the
burden of proving that the claimant's earning capacity is
greater than his actual earnings. Avondale Shipyards, Inc.
v. Guidry, 967 F.2d 1039, 1042-43 (5th Cir. 1992). Here,
Bath does not claim that Wood could have earned more in
Shortsville; but it says that its own offer shows that he
could have exceeded his own pre-injury wages in Bath. The
ALJ so found, at least implicitly, and Wood does not directly
dispute the finding.
But the statute itself does not tell us where earning
capacity is to be measured. The closest it comes to
addressing the issue at all--and it is not very close--is as
follows:
The wage-earning capacity of an injured
employee in cases of partial disability under
subsection (c)(21) of this section or under
subsection (e) of this section shall be determined
by his actual earnings if such actual earnings
fairly and reasonably represent his wage-earning
capacity: Provided, however, That if the employee
has no actual earnings or his actual earnings do
not fairly and reasonably represent his wage-
earning capacity, the deputy commissioner may, in
the interest of justice, fix such wage-earning
capacity as shall be reasonable, having due regard
to the nature of his injury, the degree of physical
impairment, his usual employment, and any other
factors or circumstances in the case which may
affect his capacity to earn wages in his disabled
condition, including the effect of disability as it
may naturally extend into the future.
33 U.S.C. 908(h) (emphasis added).
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This is a typical problem presented in an age of
statutes; the Act's language does not squarely answer the
question posed, and often enough Congress never gave a
thought to the issue. Sometimes the responsible agency fills
in such lacunae through regulation, but not so here. Even
so, in the normal case, the agency's individual case
decisions tend to mark out a pattern that deserves
substantial deference, see SEC v. Chenery Corp., 332 U.S.
194, 202-03 (1947), and the agency's application of general
standards to specific facts is usually upheld if "reasonably
defensible." Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 891
(1984).
The problem of deference in our case is more complicated
than it is under the ordinary regulatory statute.
Administrative authority under the Act has been assumed by
the Secretary of Labor, 33 U.S.C. 939, delegated to an
assistant secretary, and redelegated in turn to the director
of the OWCP. 20 C.F.R