Wood v. United States Department of Labor

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.

-2-
-2-

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

-3-
-3-

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.

-4-
-4-

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-

-5-
-5-

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).

-6-
-6-

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).

-7-
-7-

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