Guevara v. Maritime Overseas Corp.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________

No. 92-4711
__________________

DOMINGO GUEVARA,

Plaintiff-Appellee,

versus

MARITIME OVERSEAS CORPORATION,

Defendant-Appellant.

______________________________________________

Appeal from the United States District Court for the
Eastern District of Texas
______________________________________________

(September 30, 1994)

Before GOLDBERG, GARWOOD and WIENER, Circuit Judges.

PER CURIAM:
In this case we uphold an injured seaman's recovery of damages

under the Jones Act. Fifth Circuit precedent also compels us to

uphold an award of punitive damages for the shipowner's failure to

timely pay maintenance and cure.

I.

Facts and Proceedings Below

Plaintiff-appellee Domingo Guevara (Guevara) was injured on

May 29, 1990, while serving as a member of the crew on the vessel

OVERSEAS PHILADELPHIA, owned and operated by Guevara's employer,

defendant-appellant Maritime Overseas Corporation (Maritime). The
crew was preparing the ship to sail from Freeport, Texas, and

Guevara was helping to secure the gangway, the size of which

required that it be lifted by the ship's crane. The task was being

performed in the midst of considerable wind and rain. Guevara was

standing on a catwalk on the vessel pursuant to the orders of the

vessel's bosun, Guevara's superior, who was operating the crane.

As the gangway was lifted, it swayed in Guevara's direction and the

bosun ordered him to move away from where he was standing. But

when Guevara tried to move, he momentarily caught the tread of his

boot in the catwalk grating. Freeing himself, Guevara jumped from

the catwalk to the deck below to avoid being hit by the gangway.

Guevara injured his knee in the fall. He promptly reported

his injury to the third mate and was given assistance. Despite his

injury, Guevara continued to work on the vessel (apparently to

qualify for union benefits) for a period of four months. Upon the

vessel's return to port, Guevara saw a doctor who diagnosed him as

having a torn medial meniscus and a torn anterior cruciate

ligament. Although initially Guevara was reluctant to undergo

surgery, his knee was operated on in February 1991.

Guevara, through his attorney, made a number of formal demands

on Maritime for maintenance and cure beginning on February 5,

1991.1 Maritime, however, made no payment until at least June 24,

1991. Despite subsequent demands, Guevara did not receive his

second and final payment until December 29, 1991.

1
"Maintenance and cure" refers to a shipowner's ancient
obligation to provide compensation (now often at the rate of
$8.00 a day) and medical care to an ill or injured seamen until
he has reached the point of "maximum recovery."

2
 Guevara brought a negligence claim under the Jones Act, 46

U.S.C. App. § 688, and an unseaworthiness claim under general

maritime law, against Maritime. He also sought punitive damages

for Maritime's failure to pay maintenance and cure on a timely

basis. The jury returned a verdict in Guevara's favor, finding

Maritime negligent, the OVERSEAS PHILADELPHIA unseaworthy, and

Guevara not negligent. The jury awarded Guevara $131,000 in

compensatory damages for his May 29, 1990, injury, and $60,000 in

punitive damages for Maritime's arbitrary and capricious failure to

pay maintenance and cure. Maritime now appeals.

II.

Discussion

A.

Maritime argues that the district court erred in denying its

motions for judgment notwithstanding the verdict on Guevara's

negligence and unseaworthiness claims. Maritime also challenges

the jury's award of punitive damages for Maritime's failure to pay

maintenance and cure. We first consider whether there is

sufficient evidence to support the jury's finding that Maritime was

negligent. In this regard, Maritime is obliged to swim upstream

against a fast current because the standard of review to be applied

to a jury verdict in a Jones Act case is highly deferential. The

jury's verdict must stand unless there is a complete absence of

probative facts to support it. See, e.g., Wilson v. Zapata Off-

Shore Co., 939 F.2d 260, 266 n.9 (5th Cir. 1991).

There is enough evidence in the record to meet this lenient

standard. Guevara's theory of liability is that he had been

3
standing on the catwalk at the direction of the bosun, who then

lifted the gangway without first making sure that he (Guevara) was

in a safe position. The captain of the vessel testified that the

bosun is to blame if he performs such an operation without first

ascertaining that none of his men are in harm's way.2 The jury

could have concluded from this testimony that the bosun, and hence

Maritime as his employer, was negligent. Because we uphold the

jury's finding that Maritime was negligent and therefore liable

under the Jones Act, we need not decide whether the jury correctly

found Maritime's vessel to be unseaworthy under the general

maritime law.3

B.

We now turn to Maritime's challenge to the jury's award of

punitive damages to Guevara. Maritime argues, first, that Miles v.

Apex Marine Corp., 111 S.Ct. 317 (1990), bars the recovery of

2
"Q. And the bosun should make sure that his men are
properly positioned before he allows the crane to lift
up, correct, so nobody gets hurt?

A. Yes.

Q. And if someone is in harm's way, the bosun should
stop the operation, correct?

A. Yes.

Q. And if the bosun doesn't stop the operation, it's
the bosun's fault that the man gets hurt, correct?

A. Yes."
3
The single finding of compensatory damages was not allocated
or divided as between damages due to negligence and those due to
unseaworthiness, nor was there any objection to the form of the
charge or verdict in this respect; and, indeed, the evidence does
not suggest any basis for such a division.

4
punitive damages for failure to pay maintenance and cure, and,

second, that even if punitive damages are available in such

circumstances, a reasonable jury could not have concluded that

Maritime acted in an arbitrary and capricious manner. We will

discuss the second issue first.

Under the law of this Circuit, a shipowner who refuses to pay

maintenance and cure is subject to

"an escalating scale of liability: a shipowner who is in
fact liable for maintenance and cure, but who has been
reasonable in denying liability, may be held liable only
for the amount of maintenance and cure. If the shipowner
has refused to pay without a reasonable defense, he
becomes liable in addition for compensatory damages. If
the owner not only lacks a reasonable defense but has
exhibited callousness and indifference to the seaman's
plight, he becomes liable for punitive damages and
attorney's fees." Morales v. Garijak, Inc., 829 F.2d
1355, 1358 (5th Cir. 1987).

A shipowner becomes liable for punitive damages when its refusal to

pay maintenance can be described as callous and recalcitrant,

arbitrary and capricious, or willful, callous, and persistent. See

id. In this case, the jury answered yes to the question whether

Maritime "arbitrarily and capriciously failed to provide

maintenance to the plaintiff, Domingo Guevara on a timely basis?"

and awarded $60,000 in punitive damages.4 A reasonable jury could

have so concluded.

The parties stipulated that Guevara's attorney made formal

demands for maintenance by letter on six occasions: February 5,

1991; February 26, 1991; April 4, 1991; June 7, 1991; August 21,

4
The jury was not asked to award attorneys' fees or
compensatory damages on account of Maritime's failure to pay
maintenance and cure.

5
1991; and January 31, 1992. Maritime's first payment, for $448,

was not received by Guevara until sometime after June 24, 1991.5

Maritime's second payment, for $1,344, was not received by Guevara

until December 29, 1991. Guevara argues that, because nearly five

months passed between his initial demand and Maritime's first

payment, there is adequate support for the jury's verdict.

Maritime correctly argues that it was entitled to a reasonable

period of time in which to investigate the legitimacy of Guevara's

claim. See McWilliams v. Texaco, Inc., 781 F.2d 514, 519 (5th Cir.

1986) ("Where doubt exists . . . a vessel owner may request

reasonable documentation from a seaman before it commences payment

of maintenance that may prove both lengthy and expensive").

However, that excuse is unavailable where a shipowner is guilty of

"laxness in investigating a claim that would have been found to be

meritorious." Breese v. AWI, Inc., 823 F.2d 100, 104 (5th Cir.

1987). In McWilliams, the shipowner withheld maintenance payments

until it received medical documentation of the seaman's claim;

after receiving such documentation, the shipowner commenced

payments "shortly thereafter." 781 F.2d at 519. Here, the medical

records compiled by the physician treating Guevara's injury were

forwarded to Maritime along with Guevara's February 5, 1991, and

March 4, 1991, demands for maintenance, yet Maritime made no

payment until several months later. In any event, even if the

delay between Guevara's first demand and Maritime's first payment

could be explained as a reasonable investigatory period, the jury

5
The record is unclear as to when Guevara actually received
this payment; the date on the check was June 24, 1991.

6
was entitled to conclude that the six-month delay between

Maritime's first payment and its second payment, received by

Guevara practically on the eve of trial, could not. Under the

facts here, since Maritime had commenced payment, the jury could

properly find that the second delay could not be explained as time

needed to investigate Guevara's claim.6 Thus, the record supports

the jury's award of punitive damages under the prevailing law of

this Circuit.

C.

Maritime also argues that Guevara's recovery of punitive

damages is barred by the Supreme Court's decision in Miles. There,

the parents of a seaman killed by a fellow crew member sought to

recover damages for loss of society under general maritime law in

a cause of action for unseaworthiness. A unanimous Court held

that, although the wrongful death of a seaman is actionable under

general maritime law, damages recoverable in such actions do not

include loss of society. The second of these two holdings is of

principal concern here, although the Court's analytical methodology

was the same for each. Following the course first set by Moragne

v. States Marine Lines, Inc., 90 S.Ct. 1772 (1970), the Miles Court

tackled the question of the availability of remedies for wrongful

death under general maritime law by seeking guidance from

comparable federal statutes.

"We no longer live in an era when seamen and their loved
ones must look primarily to the courts as a source of
substantive legal protection from injury and death;

6
The evidence was not such as to compellingly show any
legitimate reason for the long delay after June 24.

7
 Congress and the States have legislated extensively in
these areas. In this era, an admiralty court should look
primarily to these legislative enactments for policy
guidance. We may supplement these statutory remedies
where doing so would achieve the uniform vindication of
such policies consistent with our constitutional mandate,
but we must also keep strictly within the limits imposed
by Congress." Miles, 111 S.Ct. at 323.

Then observing that neither the Jones Act nor the Death on the High

Seas Act (DOHSA), 46 U.S.C.App. § 761, permits the recovery of

nonpecuniary losses, such as loss of society, the Miles Court

stated:

"It would be inconsistent with our place in the
constitutional scheme were we to sanction more expansive
remedies in a judicially-created cause of action in which
liability is without fault than Congress has allowed in
cases of death resulting from negligence." Id. at 326.

The Court stressed the value of establishing a uniform rule of

damages applicable to the Jones Act, DOHSA, and general maritime

law. See id.

Maritime's argument that Miles abrogates this Circuit's rule

permitting the recovery of punitive damages in maintenance and cure

cases obviously cannot rest upon the specific holding in MilesSQ

that damages for loss of society are not recoverable in a general

maritime cause of action for wrongful death. Miles did not involve

maintenance and cure or punitive damages.7 Of course, it could be

7
That Miles involved a claim for wrongful death whereas
Guevara's injury was nonfatal is not a relevant distinction. We
have already held that Miles bars recovery of nonpecuniary losses
in general maritime actions alleging personal injury. See Murray
v. Anthony J. Bertucci Constr. Co., 958 F.2d 127, 129-30 (5th
Cir.), cert. denied, 113 S.Ct. 190 (1992) (injured seaman; loss
of society); Michel v. Total Transp., Inc., 957 F.2d 186, 191
(5th Cir. 1992) (injured seaman; loss of consortium); Nichols v.
Petroleum Helicopters, Inc., 17 F.3d 119, 122 (5th Cir. 1994)
(longshoreman injured on high seas; loss of consortium); accord
Smith v. Trinidad Corp., 992 F.2d 996, 996 (9th Cir. 1993) (per

8
that the logic if not the holding of Miles supports Maritime's

argument. In the wake of Miles, in fact, four appellate courts

have held that punitive damages now are unavailable under general

maritime law. See Horsley v. Mobil Oil Co., 15 F.3d 200 (1st Cir.

1994); Miller v. American President Lines, Ltd., 989 F.2d 1450,

1454-59 (6th Cir. 1993); Penrod Drilling Corp. v. Williams, 868

S.W.2d 294 (Tex. 1993) (per curiam); Sky Cruises, Ltd. v. Andersen,

592 So.2d 756 (Fla. App.) (per curiam), rev. denied, 610 So.2d 551

(Fla.), cert. denied, 113 S.Ct. 466 (1992).8 However, in each of

these cases, plaintiff's claim for punitive damages was not based

upon a cause of action for maintenance and cure. In another line

of cases, several federal district courts have held that Miles does

not preclude recovery of punitive damages for failure to pay

maintenance and cure.9 In contrast, we have found only one court

curiam) (agreeing with Murray); Horsley v. Mobil Oil Co., 15 F.3d
200 (1st Cir. 1994) (injured seaman; loss of society).
8
A number of federal district courts have reached the same
conclusion. See, e.g., Ellison v. Messerschmitt-Bolkow-Blohm,
807 F.Supp. 39, 41 (E.D.Tex.1992); La Voie v. Kualoa Ranch &
Activity Club, Inc., 797 F.Supp. 827, 829-31 (D.Hawaii 1992); In
re Waterman Steamship Corp., 780 F.Supp. 1093, 1095-96
(E.D.La.1992); In re Cleveland Tankers, Inc., 791 F.Supp. 679,
682 (E.D.Mich.1992); In re Aleutian Enter. Ltd., 777 F.Supp. 793,
796 (W.D.Wash.1991); Haltom v. Lykes Bros. Steamship Co., 771
F.Supp. 179, 181 (E.D.Tex.1991); In re Mardoc Asbestos Case
Clusters, 768 F.Supp. 595, 599-600 (E.D.Mich.1991); Rollins v.
Peterson Builders, Inc., 761 F.Supp. 943, 949-50 (D.R.I.1991).
9
See, e.g., Ridenour v. Holland America Line Westours, Inc.,
806 F.Supp. 910 (W.D.Wash.1992); Anderson v. Texaco, Inc., 797
F.Supp. 531, 536 (E.D.La.1992); Ortega v. Oceantrawl, Inc., 1992
U.S.Dist.Lexis 21374, at *6-7 (D.Alaska Oct. 8, 1992); Howard v.
Atlantic Pacific Marine Corp., 1992 U.S.Dist.Lexis 2474, at *4-5
(E.D.La. Feb. 28, 1992); Bachu v. Int'l Marine Terminals, 1991
U.S.Dist.Lexis 14485, at *3 (E.D.La. Sept. 26, 1991); Rowan
Companies, Inc. v. Badeaux, 1991 U.S.Dist.Lexis 12355, at *4
(E.D.La. Aug. 28, 1991); Collinsworth v. Oceanic Fleet, Inc.,

9
which has held that Miles bars recovery of punitive damages in

maintenance and cure cases. See Gray v. Texaco, Inc., 610 So.2d

1090, 1096 (La. App.), cert. denied, 616 So.2d 686 (La. 1993).

The courts which have held that punitive damages are

unavailable in a cause of action for unseaworthiness have reasoned

that, because punitive damages are unavailable under either the

Jones Act or DOHSA,10 it would run counter to Miles to allow

punitive damages under general maritime law. While there is great

force to this argument, it is arguably not controlling in the

context of maintenance and cure. Essentially a form of workers'

compensation-like employee benefit, maintenance and cure has no

counterpart in either the Jones Act or DOHSA.

A panel of this Court may overrule the existing law in the

circuit if an intervening Supreme Court decision so requires. The

implications of Miles, however, are not so direct as to allow this

panel to depart from the Court's previous decisions that punitive

damages are available in maintenance and cure cases.

Conclusion

The jury's verdict is adequately supported by the evidence,

1991 U.S.Dist.Lexis 11759, at *9-10 (E.D.La. Aug. 19, 1991);
Odeco, Inc. v. Cornish, 1991 U.S.Dist.Lexis 10827, at *4 (E.D.La.
July 22, 1991).
10
Only pecuniary damages are available under the Jones Act and
DOHSA. See Miles, 111 S.Ct. at 325 (Jones Act); Mobil Oil Corp.
v. Higginbotham, 98 S.Ct. 2010, 2013 (1978) (DOHSA). Punitive
damages are nonpecuniary and are therefore unavailable under
either Act. See Bergen v. F/V St. Patrick, 816 F.2d 1345, 1347
(9th Cir. 1987); Kopczynski v. The Jacqueline, 742 F.2d 555, 560-
61 (9th Cir. 1984), cert. denied, 105 S.Ct. 2677 (1985). See
also Horsley v. Mobil Oil Co., 15 F.3d 200, 203 (1st Cir. 1994);
Miller v. American President Lines, Ltd., 989 F.2d 1450, 1457
(6th Cir. 1993).

10
and the judgment thereon is supported by applicable precedent in

this Circuit. Accordingly, the district court's judgment is

AFFIRMED.

11
GARWOOD, Circuit Judge, concurring:

I fully join the Court's opinion, and append this separate

writing merely to urge that the en banc court reexamine the

availability of general punitive damages in maintenance and cure

cases, particularly in light of the Supreme Court's opinion in

Miles v. Apex Marine Corp., 111 S.Ct. 317 (1990). That issue is

squarely presented in this case.

In my view, Miles seriously calls into question the

availability of punitive damages for nonpayment of maintenance and

cure. If the First and Sixth Circuits, the Texas Supreme Court,

and all the rest of the courts that have considered the matter, are

correct that Miles bars recovery of punitive damages in a cause of

action for unseaworthiness,1 as I believe they are, then this Court

en banc should seriously rethink its previous panel decisions

allowing punitive damages in maintenance and cure cases. See Gray

v. Texaco, Inc., 610 So.2d 1090, 1096 (La. App.), cert. denied, 616

So.2d 686 (La. 1983).

Both unseaworthiness and maintenance and cure are doctrines of

general maritime law, and in the past we have looked to the

availability of punitive damages under the one when deciding

whether they are available under the other. In In re Merry

Shipping, Inc., 650 F.2d 622, 625 (5th Cir. 1981), we cited a First

Circuit case allowing punitive damages in maintenance and cure

actions in support of our holding that punitive damages are

1
See our per curiam herein, note 8 and accompanying citations
in text. See also, id. note 7 and note 10 and accompanying text.

12
recoverable in unseaworthiness actions. Thus, it would be highly

anomalous to allow punitive damages in the context of the contract-

like maintenance and cure claims if such damages are unavailable in

the context of the tort-like unseaworthiness claims.2

Furthermore, even though the Jones Act and DOHSA may not be

closely analogous reference points in the Miles analysis with

respect to maintenance and cure, the Longshore and Harbor Worker's

Compensation Act (LHWCA), 33 U.S.C. §§ 901-950, may be. It has

been said that maintenance and cure "is to the seaman almost what

workmen's compensation is to the land worker." 2 M. Norris, The

Law of Seamen § 26:1, at 3 (4th ed. 1985). The LHWCA, meanwhile,

2
Punitive damages are generally unavailable for breach of
contract. See RESTATEMENT (SECOND) OF CONTRACTS § 355 (1979); 11
Williston on Contracts § 1340, at 209-11 (W. Jaeger 3d ed. 1968);
5 Corbin on Contracts § 1077, at 438-39 (1964). That the duty to
pay maintenance and cure derives from contract was first stated
by Justice Story in Harden v. Gordon, 11 Fed. Cas. 480, 482
(C.C.D. Me. 1823) (No. 6,047). Accord Brister v. AWI, Inc., 946
F.2d 350, 360 (5th Cir. 1991) (Maintenance and cure "is implied
in the employment contract between seaman and shipowner."); 2 M.
Norris, The Law of Seamen § 26:2, at 3 (4th ed. 1985)
("Maintenance and cure is a contractual form of compensation
given by the general maritime law."). To be sure, the contract
analogy has its limits. In Vaughan v. Atkinson, 82 S.Ct. 997
(1962), Justice Douglas stated that "[m]aintenance and cure
differs from rights normally classified as contractual," id. at
1000, and then quoted Justice Cardozo: "Contractual it is in the
sense that it has its source in a relation which is contractual
in origin, but, given the relation, no agreement is competent to
abrogate the incident." Cortes v. Baltimore Insular Line, 53
S.Ct. 173, 174 (1932). Yet just because a shipowner's obligation
to pay maintenance and cure cannot "be abrogated by a contractual
provision," Dowdle v. Offshore Express, Inc., 809 F.2d 259, 262
(5th Cir. 1987), does not mean that none of the rules of contract
law pertain to maintenance and cure. It has been held, for
example, that the rate of maintenance and cure may be set in a
collective bargaining agreement. See Gardiner v. Sea-Land Serv.,
Inc., 786 F.2d 943, 948 (9th Cir.), cert. denied, 107 S.Ct. 331
(1986). In sum, to the extent that the obligation to pay
maintenance and cure is contractual in nature, allowing punitive
damages for a breach thereof is anomalous.

13
"creates a worker's compensation scheme for certain maritime

workers which is exclusive of other remedies and does not provide

for punitive damages." Miller, 989 F.2d at 1457; see 33 U.S.C. §

905 (exclusiveness of LHWCA remedies). Generally workers'

compensation schemes, whether state or federal, for seamen or land

lubbers, do not permit injured workers to recover punitive damages.

See 2A A. Larson, The Law of Workmen's Compensation § 65.37, at 12-

36 (1987) ("punitive damages are of course not recoverable under a

workers' compensation act"). See also Atkinson v. Gates, McDonald

& Co., 838 F.2d 808, 813-14 (5th Cir. 1988).

Before examining the genesis of this Court's relevant

jurisprudence, it will be helpful to provide an overview of the law

in this area among the other circuits. In addition to the Fifth,

the First, Second, and Eleventh Circuits have held (prior to Miles)

that punitive damages are recoverable for nonpayment of maintenance

and cure. See Robinson v. Pocahontas, Inc., 477 F.2d 1048 (1st

Cir. 1973); Kraljic v. Berman Enterprises, Inc., 575 F.2d 412 (2d

Cir. 1978); Hines v. J.A. La Porte, Inc., 820 F.2d 1187 (11th Cir.

1987) (per curiam). In the Second Circuit, however, recovery is

limited to the amount of attorneys' fees. Kraljic. The law in the

Sixth3 and Ninth4 Circuits is unclear. The other circuits have no

3
Relying on dicta in Al-Zawkari v. American Steamship Co.,
871 F.2d 585, 590 n.8 (6th Cir. 1989), one district court in the
Sixth Circuit has held that "a claim for punitive damages under
the doctrine of maintenance and cure is recognizable in this
circuit." Hoeffling v. United States Steel, 792 F.Supp. 1029,
1030 (E.D.Mich. 1991). Another district court in that Circuit
has said that a seaman may recover "an award of punitive damages
limited to attorney's fees." Owens v. Conticarriers & Terminals,
Inc., 591 F.Supp. 777, 792 (W.D.Tenn.1984) (original emphasis).
Still another has suggested that they are not recoverable at all.

14
law.

Although the right to maintenance and cure "stems from the

ancient sea codes of the Middle Ages," 2 Norris, supra § 26:2, at

4-5, this Court had never upheld an award of punitive damages for

nonpayment of maintenance and cure until 1984. See Holmes v. J.

Ray McDermott & Co., 734 F.2d 1110 (5th Cir. 1984). See also

McWilliams v. Texaco, 781 F.2d 514, 519 & n.11 (5th Cir. 1986).

Holmes deals with the issue in only an abbreviated fashion, the

extent of Holmes' analysis being as follows:

"In Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997,
8 L.Ed.2d 88 (1962), the Supreme Court held that an
employer's willful and arbitrary refusal to pay
maintenance and cure gives rise to a claim for damages in
the form of attorneys' fees in addition to the claim for
general damages. Subsequent decisions have established
that, in addition to such attorneys' fees, punitive
damages for such refusal are available under the general
maritime law. See Complaint of Merry Shipping, Inc., 650
F.2d 622, 625 (5th Cir. 1981) (collecting cases); see
also Robinson v. Pocahontas, Inc., 477 F.2d 1048 (1st
Cir. 1973)." Holmes, 734 F.2d at 1118.

Thus, Holmes relied exclusively upon three cases: the Supreme

See Mardoc Asbestos Case Clusters, supra, 768 F.Supp. at 600 n.1.
As noted, the Sixth Circuit held recently that general maritime
law does not allow recovery of punitive damages in a cause of
action for unseaworthiness. See Miller, supra. Miller, however,
did not specifically discuss maintenance and cure claims.
4
In Sample v. Johnson, 771 F.2d 1335, 1347 n.12 (9th Cir.
1985), cert. denied, 106 S.Ct. 1206 (1986), the Ninth Circuit
stated in dicta that "[p]unitive damages are awardable, in some
circumstances to a seaman where payment for maintenance and cure
is wrongfully denied." Relying in part on Sample, two district
courts in the Ninth Circuit have held that punitive damages are
available. See Ridenour, supra, 806 F.Supp. at 911-13; Nelsen v.
Research Corp., 805 F.Supp. 837, 854 (D.Hawaii 1992) (dicta).
Another district court, however, reached the opposite conclusion.
See La Voie, supra, 797 F.Supp. at 831-32. Ridenour and La Voie,
while reaching different conclusions, agreed that there is no
Ninth Circuit case dispositive of the issue.

15
Court's Vaughan, this Court's Merry Shipping, and the First

Circuit's Pocahontas. None of these cases, however, provides

significant support for the rule announced in Holmes.

In Vaughan, the Supreme Court upheld an award of attorneys'

fees where the shipowner had deliberately withheld maintenance and

cure. The rationale underlying Vaughan's holding is subject to

considerable debate and we will discuss it at greater length later

on. For now, it is enough to know this: Vaughan upheld an award

of attorneys' fees, not punitive damages, and therefore does not

directly support the holding of Holmes. See Reinschreiber,

Punitive Damages in Admiralty for Bad Faith Refusal to Provide

Maintenance and Cure, 15 San Diego L. Rev. 309, 313 (1978) ("the

Vaughan decision affords no new basis for recovery of punitive

damages"). Nor did Holmes dispute this fact; it said that, after

Vaughan, subsequent decisions made punitive damages available.

The second case cited by Holmes, and the one upon which it

seems to rely most heavily, is Merry Shipping. Like Vaughan,

however, Merry Shipping does not squarely support the Holmes rule.

Merry Shipping upheld an award of punitive damages for the wrongful

death of a seaman in a cause of action for unseaworthiness. In

support of its holding, Merry Shipping approvingly cited the First

Circuit's Pocahontas decision, which, in the words of Merry

Shipping, "upheld an award of punitive damages for a shipowner's

willful and callous withholding of a seaman's maintenance and

cure." 650 F.2d at 625. Yet this endorsement of the holding in

Pocahontas is clearly dictum since Merry Shipping did not involve

maintenance and cure. As one commentator has noted, "The Holmes

16
Court's authority for allowing an award of punitive damages is not

readily apparent, because maintenance and cure was not at issue in

Merry Shipping." Davis, Punitive Damages for Maintenance and Cure,

10 Mar. Law. 103, 108 (1985).

Furthermore, when one looks back on Merry Shipping with the

benefit of Miles, it becomes clear that Merry Shipping is doubtful

authority at best. The holding of Merry ShippingSQthat punitive

damages are available under general maritime lawSQrested upon two

assumptions, both of which were capsized by Miles. First, Merry

Shipping stated that nonpecuniary losses are recoverable under

general maritime law. See 650 F.2d at 626. That proposition, of

course, was squarely rejected in Miles. See 111 S.Ct. at 325.

Second, Merry Shipping argued that the unavailability of punitive

damages under the Jones Act does not compel their unavailability

under general maritime law. See 650 F.2d at 626. That reasoning,

however, is flatly inconsistent with Miles' insistence upon

uniformity in the availability of damages under general maritime

law and statutes such as the Jones Act. See 111 S.Ct. at 323, 325.

Thus, because of Miles, it would appear that Merry Shipping is no

longer good law.

The last case cited by Holmes is the First Circuit's

Pocahontas decision. To be sure, that case did squarely hold that

punitive damages are available in maintenance and cure cases, and

it was favorably cited in Merry Shipping. Pocahontas, however,

suffers from the fact that it relied upon the dissent in Vaughan.

See Pocahontas, 477 F.2d at 1051. As the Second Circuit pointed

out in its Kraljic opinion:

17
 "The [Pocahontas] court justified the punitive damage
award primarily by relying on Mr. Justice Stewart's
dissenting opinion in [Vaughan v.] Atkinson which, as we
have indicated, would have awarded exemplary damages
under traditional concepts not necessarily limited to the
amount of counsel fees. The obvious difficulty with this
approach is that the court followed the views of the
dissenters in Atkinson and not the majority." Kraljic,
575 F.2d at 415.

Holmes made no mention of Kraljic, even though it was decided six

years earlier. In Kraljic, the Second Circuit held that willful

nonpayment of maintenance and cure entitles a seaman to recover

punitive damages limited to the amount of attorneys' fees. The

Kraljic court stated:

"The [Pocahontas] court, we believe, correctly perceived
that both majority and minority opinions in Atkinson in
essence found that punitive damages were awardable in
maintenance and cure cases. The inescapable fact is,
however, that the majority opinion in Atkinson limited
that recovery to counsel fees despite the explicit view
of the dissenters that no such curb be imposed." Id. at
415-16.

Finally, a brief word is in order about the Eleventh Circuit's

Hines case, which was decided three years after Holmes.

Recognizing that on the question of the availability of punitive

damages, "Vaughan is not dispositive because in that case only a

claim for attorney's fees was asserted," Hines, 820 F.2d at 1189,

the Hines court choose to "[f]ollow[ ] the guidance of Merry

Shipping", id., and allow punitive damages in maintenance and cure

cases. Again, however, Merry Shipping is questionable authority at

best.5

To sum up, the cases that Holmes relied upon cannot now

5
Two of the judges on the Hines panel were on the pre-split
Fifth Circuit panel in Merry Shipping, which was authored by one
of them. Hines was a per curiam.

18
support the result in Holmes. Vaughan awarded attorneys' fees, not

punitive damages; Merry Shipping did not involve maintenance and

cure and has probably been overruled by Miles; and Pocahontas was

based upon the Vaughan dissent. Of the cases that Holmes did not

cite, Kraljic limits punitive damages to the amount of attorneys'

fees and Hines relied upon the now-dubious Merry Shipping. In

arguable support of Holmes, there is one remaining possibility that

should be considered, namely, that Vaughan, while only upholding an

award of attorneys' fees, announced a principle broader than its

result. Vaughan is unquestionably the root of this entire area of

law; hence, we now attempt to determine how broad Vaughan is.

Vaughan, a brief opinion by Justice Douglas, has been

described as "ambiguous"6 and "cryptic"7SQand rightly so. What is

clear is that Justice Douglas upheld an award of attorneys' fees to

a seaman where his employer had deliberately withheld payment of

maintenance and cure. The confusion surrounds the theory under

which Justice Douglas awarded the attorneys' fees. On the one

hand, the adjectives that Justice Douglas used to describe the

employer's behaviorSQ"callous," "recalcitran[t]," "willful and

persistent," Vaughan, 82 S.Ct. at 999SQimply that the award was

meant to be a punitive sanction. On the other hand, his statements

that a seaman is entitled to recover "necessary expenses" and that

the seaman "was forced to hire a lawyer and go to court to get what

6
1B E. Flynn, D. Cooper & G. Raduazzo, Benedict on Admiralty
§ 51, at 4-80 (7th rev. ed. 1991).
7
Robertson, Judge Rubin's Maritime Tort Decisions, 52 La. L.
Rev. 1527, 1572 (1992).

19
was plainly owed him," id., suggest that the fees were meant to be

a compensatory award for out-of-pocket expenses. As one

commentator put it:

"Yet Vaughan did not clearly articulate if such an award
was compensatory or punitive. Initially, the Court cited
Cortes for the proposition that an employer's failure to
make timely payments of maintenance and cure may entitle
the seaman to the recovery of necessary expenses,
intimating that the award was compensatory. The Court
went on to stress, however, that the defendant's failure
to make the payments was willful and callous, language
that lends itself to the view that the award was
punitive." Maslanka, Punitive Damages in the Admiralty,
5 Mar. Law. 223, 228 (1980); accord Davis, supra, at 106.

The commentators are divided as to whether the Vaughan award was

intended to be compensatory8 or punitive9 in nature.

Fortunately, in deciphering Vaughan, we are not confined to

the text of that enigmatic opinion or the unexpressed intent of its

author. Since Vaughan was decided in 1962, the Supreme Court has

8
See 6 J. Moore, Moore's Federal Practice ¶ 54.78[3], at 54-
503 n.29 (2d ed. 1986) ("The [Vaughan] court found that . . . the
expenses of the suit could rightly be treated as part of the
compensatory damage."); id. at 54-504 n.30; 2 Norris, supra §
26:41, at 111 ("The allowance of counsel fees was justified by
virtue of the inclusion of 'necessary expenses' as items of
damage arising out of the suffering and physical handicap which
follows the failure to give maintenance and cure.");
Reinschreiber, supra, at 312 ("the [Vaughan] majority award[ed]
attorney's fees as an item of compensatory damages").
9
See G. Gilmore & C. Black, The Law of Admiralty 313 (2d ed.
1975) (Vaughan "awarded what were essentially punitive damages
under the name of counsel fees."); Mallor, Punitive Attorney's
Fees for Abuse of the Judicial System, 61 N.C. L. Rev. 613, 632
(1983) ("Although the Supreme Court awarded the seaman attorneys'
fees under the rubric of compensatory damages, it emphasized the
role that defendant's bad faith had played in causing those
damages."). That the award was punitive was also the view of
Judge Rubin. See Sanchez v. Rowe, 870 F.2d 291, 293 (5th Cir.
1989) ("Fees were awarded [in Vaughan] on the basis of the
shipowners' bad-faith response to the seaman's underlying
claim."). Judge Rubin has been described as "an acknowledged
master of the maritime field." Robertson, supra, at 1527.

20
cited it in seven cases. Each of these cases concerns the shifting

of attorneys' fees; none of them concerns maritime law. In all

seven cases, the Court has treated Vaughan as supporting an

exception to the so-called "American Rule" that litigants generally

must bear their own costs. In the first such case, Chief Justice

Warren read Vaughan as establishing a compensatory basis for fee-

shifting:

"Limited exceptions to the American rule . . . have been
sanctioned by this Court when overriding considerations
of justice seemed to compel such a result. In
appropriate circumstances, we have held, an admiralty
plaintiff may be awarded counsel fees as an item of
compensatory damages (not as a separate cost to be
taxed)." Fleischmann Distilling Corp. v. Maier Brewing
Co., 87 S.Ct. 1404, 1407 (1967) (emphasis added).

Since Maier Brewing, however, Vaughan has now come to stand for the

proposition that attorneys' fees may sometimes be awarded to a

prevailing party when his opponent has acted in bad faith in the

conduct of litigation.10 As one commentator has said, Vaughan now

"is uniformly cited as a foundational case to the so-called 'bad

faith' exception to the American rule." Reinschreiber, supra, at

312.11 The purely compensatory description of Vaughan has not been

10
See Summit Valley Indus., Inc. v. Local 112, 102 S.Ct. 2112,
2114 (1982); Roadway Express, Inc. v. Piper, 100 S.Ct. 2455, 2464
(1980); Runyon v. McCrary, 96 S.Ct. 2586, 2601 (1976); Alyeska
Pipeline Serv. Co. v. Wilderness Society, 95 S.Ct. 1612, 1622
(1975); F.D. Rich Co. v. United States, 94 S.Ct. 2157, 2165
(1974); Hall v. Cole, 93 S.Ct. 1943, 1946 (1973).
11
Accord Lear Siegler, Inc. v. Lehman, 842 F.2d 1102, 1118
(9th Cir. 1988) ("Although Vaughan sounded in admiralty, the
Supreme Court subsequently construed the case as an example of
bad faith conduct justifying an award of attorneys' fees in civil
litigation generally."); Green, From Here to Attorney's Fees, 69
Cornell L. Rev. 207, 232 n.148 (1984) ("Both the Court and
commentators have, in retrospect, characterized the Vaughan
decision as involving the 'bad faith' exception to the American

21
aired in a majority opinion since Maier Brewing.12 In short, the

Court's current view is that the fee award in Vaughan should be

understood as a sanction for bad-faith conduct in litigation.

However, our knowledge that Vaughan involved a bad-faith fee-

shift does not immediately tell us whether awards of that type are

compensatory or punitive. Although some have asserted that an

award of attorneys' fees under the bad-faith exception to the

American rule is compensatory,13 the Supreme Court's view now may

be otherwise. In Hall v. Cole, 93 S.Ct. 1943 (1973), Justice

Brennan stated:

"Thus, it is unquestioned that a federal court may award
counsel fees to a successful party when his opponent has
acted in bad faith, vexatiously, wantonly, or for
oppressive reasons. In this class of cases, the
underlying rationale of 'fee shifting' is, of course,
punitive, and the essential element in triggering the
award of fees is therefore the existence of 'bad faith'
on the part of the unsuccessful litigant." Id. at 1946
(emphasis added; internal quotation marks omitted).

Hall's reasoning was reaffirmed in the recent case of Chambers v.

NASCO, Inc., 111 S.Ct. 2123 (1991). Quoting Hall, the Chambers

Court said: "in the case of the bad-faith exception to the American

rule."). Professor Moore calls the bad-faith interpretation of
Vaughan "a revisionist view." Moore, supra, at 54-506. Be that
as it may, the Supreme Court is obviously the final arbiter of
the meaning of its precedents.
12
Justice Marshall, in a dissenting opinion, once revived the
compensatory interpretation of Vaughan. See Alyeska, 95 S.Ct. at
1633 ("the attorney's fee award [in Vaughan] was legitimately
included as a part of the primary relief to which the plaintiff
was entitled, rather than an ancillary adjustment of litigation
expenses"). However, in a previous opinion written for the
Court, Justice Marshall had endorsed the bad-faith view of
Vaughan. See F.D. Rich Co., 94 S.Ct. at 2165.
13
See Reinschreiber, supra, at 313.

22
Rule, 'the underlying rationale of "fee-shifting" is, of course,

punitive.'" Id. at 2137. Even three dissenters in Chambers cited

Hall for the proposition that "the rationale for the bad faith

exception is punishment." Id. at 2148 (Kennedy, J., dissenting).

The Chambers Court specifically rejected the argument made by the

petitioner that fee-shifting is compensatory in character. This

argument, the Court said, "fails utterly," id. at 2137 n.15,

because even though the fees may have a compensatory effect, their

primary purpose is punitive. The Court analogized to fines for

civil contempt, which may be compensatory in consequence but are

punitive in design.

Based upon the above, it might seem that the Second Circuit in

Kraljic got it right: the Vaughan award was a form of punitive

damage, but one limited to the recovery of attorneys' fees. A

careful reading of Chambers, however, belies the view that awards

made under the bad-faith exception to the American rule are

essentially punitive damages. The Chambers Court drew a

distinction between fees awarded pursuant to the bad-faith

exception, which are based upon a federal court's inherent power to

sanction parties for their litigation behavior, and other "fee-

shifting rules that embody a substantive policy, such as a statute

which permits a prevailing party in certain classes of litigation

to recover fees." Id. at 2136. In other words, bad-faith fee-

shifting is not based on the outcome or merits of a suit, but

rather "on how the parties conduct themselves during the

litigation." Id. at 2137. While the Chambers majority opinion

equivocated on the question whether a federal court has the

23
inherent power to impose sanctions for conduct relating to the

merits of the case, rather than the conduct of the litigation, see

id. at 2138 n.16, four justices were firmly of the view that bad-

faith fee-shifting may not be used to sanction prelitigation

conduct. Justice Scalia argued that the American rule is deeply

rooted in our history and "prevents a court (without statutory

authorization) from engaging in what might be termed substantive

fee-shifting, that is, fee-shifting as part of the merits award.

It does not in principle bar fee-shifting as a sanction for

procedural abuse." Id. at 2140 (dissenting opinion; original

emphasis). Likewise, Justice Kennedy, writing for himself and two

others, argued that "[w]hen a federal court, through invocation of

its inherent powers, sanctions a party for bad-faith prelitigation

conduct, it goes well beyond the exception to the American Rule."

Id. at 2148 (dissenting opinion).

The upshot of all this is the following: the bad-faith

exception to the American rule, of which the Vaughan award was an

example, is not in a true sense punitive damages. Punitive damages

are awarded on the basis of the merits of a case, whereas bad-faith

fee-shifting sanctions abuses of the litigation process. As the

Chambers Court said, quoting from the Fifth Circuit decision below,

"'[f]ee-shifting here is not a matter of substantive remedy, but of

vindicating judicial authority.'" Id. at 2138 (quoting 894 F.2d at

705). This interpretation comports with the facts in Vaughan.

Because the shipowner's liability for maintenance and cure was

perfectly clear, it was an abuse of the litigation process to

require him to "go to court to get what was plainly owed him under

24
laws that are centuries old." Vaughan, 82 S.Ct. at 999.

At the end of the day, one need not definitely resolve whether

Vaughan awarded compensatory damages or established an exception to

the American rule. Either way, its award clearly was not a

punitive damages award and therefore Vaughn provides no support for

the Holmes rule. Vaughan entitles injured seamen to recover

attorneys' fees, or perhaps compensatory damages, when their

employer unreasonably fails to pay maintenance on a timely basis.

But in light of Miles, this Court should reconsider en banc whether

punitive damages should be similarly available.

25