Williams v. Jones

December 3, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-1054

JAMES D. WILLIAMS,

Plaintiff, Appellee,

v.

JOHN JONES d/b/a NICOLE ENTERPRISES,

Defendant, Appellant.

ERRATA SHEET

The opinion of this Court issued on December 3, 1993, is
amended as follows:

On page 24, the last sentence in the second paragraph "Costs

are awarded to plaintiff-appellee" should be corrected to read

"Costs are awarded to defendant-appellant."

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-1054

JAMES D. WILLIAMS,

Plaintiff, Appellee,

v.

JOHN JONES d/b/a NICOLE ENTERPRISES,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before

Torruella, Selya and Cyr,

Circuit Judges.

Marshall J. Tinkle, with whom Thompson, McNaboe, Ashley &

Bull was on brief for appellant.

Douglas C. Baston, with whom Howard & Bowie Law Offices was

on brief for appellee.

December 3, 1993

CYR, Circuit Judge. In 1978, plaintiff-appellee James
CYR, Circuit Judge

Williams was injured as a result of a fall from the boom of a

fishing vessel owned by his employer, defendant-appellant John

Jones, d/b/a Nicole Enterprises (Jones). After Williams was

diagnosed with a herniated disc, he filed a claim against Jones

for compensation benefits under the Longshore and Harbor Workers'

Compensation Act (LHWCA), 33 U.S.C. 901-50.1 In March 1981,

a Department of Labor (DOL) administrative law judge (ALJ) found

that Williams had a "temporary total disability," see id. 908-

(b), and ordered Jones to commence immediate payments to Williams

in an amount equal to two-thirds of Williams's average weekly

1The LHWCA is a comprehensive statutory scheme governing
compensation for covered employees (e.g., longshoremen) due to

loss of earning capacity caused by injuries sustained while
engaged in "maritime employment" upon the navigable waters of the
United States, or upon designated lands adjoining those waters.
See 33 U.S.C. 902, 903. Like state workers' compensation

statutes, the LHWCA contemplates a relinquishment of substantive
rights by both parties; employers are liable for compensation to
the disabled employee "irrespective of [the employers'] fault,"
id. 904, while employees' LHWCA administrative and judicial

remedies against their employer are exclusive, see id. 905; see

also Potomac Elec. Power Co. v. Director, Office of Workers

Compensation Programs, 449 U.S. 268, 281-82 (1980); Ceres Gulf v.

Cooper, 957 F.2d 1199, 1205 (5th Cir. 1992).

After sustaining a work-related injury, a covered employee
must provide written notice to his employer within 30 days from
the date upon which he should have discovered his disability, in
the exercise of reasonable diligence. See 33 U.S.C. 912.

Within 14 days of such notice, or after obtaining actual or
constructive knowledge of the employee's disability, the employer
must either (1) commence payments to the employee in an amount
equal to two-thirds of the employee's "average weekly wages," see

id. 906, 908, 910, or (2) notify the United States Department

of Labor (DOL) that the employee's right to compensation will be
contested, specifying the grounds. See id. 914(d). If the

employer contests, the employee has one year from the date of his
injury, or one year from the employer's last voluntary payment,
to file a written claim with the DOL. See id. 913; see also 20

C.F.R. 702.201-702.286 (1993).

3

wage of $250, effective from October 1978.2 See id. 906,

910. Notwithstanding two successful appeals to the Benefits

Review Board (BRB) by Jones, see id. 921(b),3 ultimately the

BRB affirmed a compensation award in favor of Williams. We

denied Jones's petition for judicial review in 1990. See id.

921(c). Notwithstanding the finality of the compensation award

2Within ten days after the employee files an administrative
claim, see supra note 1, the DOL must cause notice to be served

on all interested parties, including the employer, see id.

919(b), and conduct all necessary investigations of the
employee's claim, see id. 919(c); see also 20 C.F.R. 702.331-

702.351 (1993). At least ten days' notice of the 919 eviden-
tiary hearing must be provided to all interested parties, by
personal service or registered mail. Id. Section 919 evidentia-

ry hearings are conducted pursuant to the Administrative Proce-
dures Act, 5 U.S.C. 554, by an ALJ. Within 20 days after the
hearing, the ALJ must either reject the employee's claim, or
issue a compensation order designating the extent of the em-
ployee's "disability" (e.g., permanent total, temporary total,

permanent partial) and setting the amount of biweekly compensa-
tion. The ALJ's compensation order becomes "effective" as soon
as it is duly filed in the appropriate DOL office and notice of
the filing is mailed to the employee and the employer. Id.

919(e), 921(a). The employer's obligation to pay compensation
to the employee commences on the date the ALJ's compensation
order becomes "effective."

3See Williams v. Nicole Enters., Inc., 15 Ben. Rev. Bd.

Serv. 453 (1983); Williams v. Nicole Enters., Inc., 19 Ben. Rev.

Bd. Serv. 66 (1986). "Effective" compensation orders remain non-
"final" pending appeal. Once an ALJ's compensation order becomes
"effective," the nonprevailing party has 30 days to appeal the
order (or the ALJ's rejection of the claim) to the BRB, a three-
member appellate panel within the DOL. See 33 U.S.C. 921(b).

The BRB must accept all ALJ factual findings supported by "sub-
stantial evidence." Id. If the BRB affirms, the nonprevailing

party may petition for judicial review by the appropriate court
of appeals, which will apply the same "substantial evidence"
standard of review to the ALJ's factual findings, but otherwise
has jurisdiction to affirm, modify, set aside, or enforce the

ALJ's compensation order. Id. 921(c). If no party appeals the

ALJ's order to the BRB, it becomes "final" 30 days after the
parties are notified that it has been filed in the appropriate
DOL office pursuant to 919(e). Id. 921(a).

4

for LHWCA purposes, see supra note 3, Williams alleges that he

has received only $450 in benefit payments from Jones to date.

On August 7, 1992, Williams brought the present en-

forcement action in federal district court, pursuant to LHWCA

subsections 921(d) and (e):

(d) If any employer or his officers or agents
fails to comply with a compensation order
making an award, that has become final, any
beneficiary of such award or the deputy com-
missioner making the order, may apply for the
enforcement of the order to the Federal dis-
trict court for the judicial district in
which the injury occurred . . . . If the

court determines that the order was made and

served in accordance with law, and that such

employer or his officers or agents have
failed to comply therewith, the court shall

enforce obedience to the order by writ of

injunction or by other proper process, manda-

tory or otherwise, to enjoin upon such person
and his officers and agents compliance with
the order.

(e) Proceedings for suspending, setting
aside, or enforcing a compensation order,
whether rejecting a claim or making an award,
shall not be instituted otherwise than as

provided in this section . . . .

33 U.S.C. 921(d), (e) (emphasis added).

Jones opposed the petition for enforcement on the

grounds that "newly discovered" evidence revealed that Williams

secured the award through perjury and fraud, and that the en-

forcement petition was not served on Jones in compliance with

Fed. R. Civ. P. 4. A magistrate judge recommended that the

petition for enforcement be granted because Jones was precluded,

as a matter of law, from pleading these defenses in an enforce-

ment action brought pursuant to LHWCA section 921(d). Jones's

5

appeal from the district court order adopting the magistrate

judge's recommended decision presents two important issues of

first impression relating to the LHWCA's enforcement provisions.

I. Insufficient Process and Service of Process.

Jones concedes actual notice of the filing of the

section 921(d) enforcement petition with the district court, but

pleads insufficient process and insufficient service of process,

see Fed. R. Civ. P. 12(b)(4), (5), based on Williams's admitted

failure to serve Jones pursuant to Fed. R. Civ. P. 4. See Durbin

Paper Stock Co. v. Hossain, 97 F.R.D. 639, 639 (S.D. Fla. 1982)

("Service of process is not effectual on an attorney solely by

reason of his capacity as an attorney, [but] [t]he party must

have appointed his attorney as his agent for service of pro-

cess.") (collecting cases); cf. Fed. R. Civ. P. 5(b).4

The Federal Rules of Civil Procedure apply in section

921(d) enforcement proceedings "except to the extent that matters

of procedure are provided for in [the LHWCA]." Fed. R. Civ. P.

81(a)(6). As section 921(d) is silent on the procedures for

filing, serving, and answering an enforcement petition in the

4Rule 12(b)(4) and (5) defenses may be waived if not timely
asserted. Marcial Ucin, S.A. v. SS Galicia, 723 F.2d 994, 996

(1st Cir. 1983). Jones's first "response" to Williams's peti-
tion, filed on August 21, 1992, did not contest service of
process pursuant to Fed. R. Civ. P. 12(h)(1)(A). Five days
later, however, Jones filed his answer and counterclaim, raising
the insufficient process and service of process defenses in
timely fashion. See Fed. R. Civ. P. 12(h)(1)(B) (defense not

waived if raised in "matter of course" Rule 15(a) amendment to
responsive pleading within 20 days of initial answer). See

Glater v. Eli Lilley & Co., 712 F.2d 735, 738 (1st Cir. 1983).

6

district court, Jones reasons that service of process was re-

quired in accordance with Fed. R. Civ. P. 4 and 81(a)(6); without

it, he argues, the district court did not obtain personal juris-

diction over him.

The magistrate judge rejected Jones's argument, citing

Jourdan v. Equitable Equip. Co., 889 F.2d 637 (5th Cir. 1989), a

case involving companion LHWCA section 918(a). Section 918(a)

enforcement proceedings normally are used to enforce compensation

awards which have become "effective" but are not yet "final";

that is, during the pendency of an appeal to the BRB from the

ALJ's initial award, or from the BRB to the court of appeals.

See supra notes 2 and 3. Within one year after an employer's

default, the employee may apply to an ALJ for a "supplementary

order" declaring the amount in default. The ALJ may not issue

the supplementary order except "[a]fter investigation, [and]

notice, and hearing." Even then, however, the supplementary

order is not self-executing. Rather, the claimant, or the ALJ,

must file a certified copy of the supplementary order with the

appropriate federal district court, which "shall upon filing of

the copy enter judgment for the amount declared in default . . .

if such supplementary order is in accordance with law."5

5LHWCA 918(a) provides, in pertinent part:

(a) In case of default by the employer in the payment
of compensation due under any award of compensation for
a period of thirty days after the compensation is due
and payable, the person to whom such compensation is
payable may, within one year after such default, make
application to the [ALJ] making the compensation order
for a supplementary order declaring the amount of the

7

The Jourdan court held that the obligatory language of

section 918(a) evinced a clear congressional intent to dispense

with the "service of process" requirements of Fed. R. Civ. P. 4

in a section 918(a) enforcement proceeding brought in the dis-

trict court. The magistrate judge in the present case, analo-

gizing from Jourdan, reasoned that,

[l]ike Section 918(a), Section 921(d) utiliz-
es imperative language; upon certain findings
the court "shall enforce." The only differ-
ence is the lack of specificity regarding the

method for filing the "application." In
either case, the court must make preliminary
findings that amount to nothing more than a
procedural review of the underlying process.

Assuming there were no procedural errors at

the administrative level, the court has no

choice but to enforce the order. Again, the

court has no jurisdiction over the merits of
the action. The aggrieved party would have

no additional opportunity to be heard even if

notice were provided according to the strict

requirements of Rule 4. The logical conclu-

sion is that Section 921(d) is a summary

default. After investigation, notice, and hearing, as
provided in section [919], the [ALJ] shall make a
supplementary order, declaring the amount of the de-
fault, which shall be filed in the same manner as the
compensation order. In case the payment in default is
an installment of the award, the [ALJ] may, in his
discretion, declare the whole of the award as the
amount in default. The applicant may file a certified
copy of such supplementary order with the clerk of the
Federal district court for the judicial district in
which the employer has his principal place of business
or maintains an office, or for the judicial district in
which the injury occurred. ... Such supplementary
order shall be final, and the court shall upon the
filing of the copy enter judgment for the amount de-
clared in default by the supplementary order if such
supplementary order is in accordance with law. Review
of the judgment so entered may be had as in civil suits
for damages at common law.

33 U.S.C. 918(a).

8

proceeding, and that upon filing of appropri-
ate documentation showing that the order is
final, that it was properly served, and that
the employer has failed to comply, the court
should issue the order.

Williams v. Jones, No. 92-0156-B, slip op. at 6 (D. Me. Oct. 27,

1992) (recommended decision) (emphasis added).

Assuming, arguendo, that Jourdan is correctly decided,

section 921(d) is insufficiently analogous to section 918(a) to

bear the weight given it in the recommended decision below.

Section 918(a)'s bifurcated enforcement mechanism requires

administrative notice to the employer, as well as an opportunity

to be heard, prior to the entry of any supplementary enforcement

order by the ALJ. See supra notes 2 and 5. Long before the

employee ever files the ALJ's certified supplementary order with

the district court, therefore, the procedural requirements of

section 918(a) itself have assured that the employer was placed

on notice of the impending judicial enforcement proceeding. The

district court is expressly charged with determining whether

"such supplementary order [was] in accordance with law." 33

U.S.C. 918(a). Thus, section 918(a) envisions an ancillary

district court mechanism for enforcing supplementary enforcement

orders entered by the ALJ. Arguably, at least, this is the sort

of administrative alternative to service of process which would

preempt the Rule 4 service of process requirement under Fed. Rule

Civ. P. 81(a)(6).6 In contrast, however, no notice to the

6Analogous Rule 81(a)(5), governing the applicability of the
Civil Rules to NLRB proceedings, likewise illuminates the present
inquiry. See Fed. R. Civ. P. 81(a)(5) ("in respects not covered

9

employer is required prior to the commencement of a section

921(d) enforcement action in the district court. See supra p. 4.

In addition, we detect no intimation, either in the

statutory language or legislative history, that Congress con-

templated a section 921(d) proceeding quite so summary as indi-

cated in the recommended decision. Even assuming that a full

panoply of equitable defenses is not available to an employer in

a section 921(d) enforcement action, see infra pt. II, it is

nonetheless clear that the employer may contest factual allega-

tions upon which the section 921(d) enforcement petition neces-

sarily depends,7 including the main issue whether the employer

by [29 U.S.C. 159, 160] the practice in the district courts
shall conform to these rules as far as applicable"). In contrast
to LHWCA 921(d), however, the NLRB sections referenced in Rule
81(a)(5) contain detailed provisions relating to the filing of a
petition to enforce an NLRB order. See 29 U.S.C. 160(e) ("Upon

filing of such a petition, the court shall cause notice thereof

to be served upon such person, and thereupon shall have jurisdic-

tion of the proceeding and of the question determined therein,

and shall have power to grant such temporary relief or restrain-
ing order as it deems just and proper . . . .") (emphasis added).

7Although clearly treated by the parties and the district
court as a 921(d) action, Williams's petition for enforcement
is an odd hybrid. Initially, Williams presented his petition for
enforcement to the DOL. In a June 30, 1992 letter to Williams,
the District Director of the DOL determined that the compensation
order was "final," that it was made and administratively served
"in accordance with law," and that Jones was in default on
payments. Under 921(d), these administrative determinations
were supererogatory. Unlike 918(a), 921(d) expressly re-
serves such matters for resolution by the district court. See 33

U.S.C. 921(d) ("If the court determines that the order was made

and served in accordance with law . . . .") (emphasis added).

Although the district court correctly noted that Jones did not
contest these matters (e.g., the giving of notice as required in

the administrative proceedings under 919), the applicability of

the Rule 4 service of process requirement is not made to depend,
see Fed. R. Civ. P. 81(a)(6), upon whether the defendant-employer

received notice in the administrative proceeding, but whether

10

is in default. Moreover, arguably at least, the employer might

be entitled to raise factual challenges relating to (1) the

amount in default,8 (2) whether new evidence indicates that the

initial compensation order was procedurally defective, or other-

wise not "in accordance with law," or (3) employee conduct that

might tilt the fundamental balance of equities in favor of

judicial restraint. See infra note 18. Moreover, unlike the

bifurcated process involved in a section 918(a) enforcement

proceeding, which presumes prior notice and hearing at the

administrative level, section 921(d) constitutes the district

court the employer's first and only forum for a full hearing of

such factual disputes prior to the issuance of an injunctive

"matters of procedure are provided for in" the LHWCA, id. (empha-

sis added). Since there is no LHWCA provision governing service
of process upon the defendant employer in a 921(d) judicial
enforcement proceeding, the district court erred in determining
that service of process in accordance with Fed. R. Civ. P. 4 and
81(a)(6) was not necessary.
Moreover, although the DOL letter of June 1992 contained
findings analogous to those required under LHWCA 918(a), see

supra note 5, it could not qualify as a 918 "supplementary

order," since (1) there is no record evidence that Jones contem-
poraneously received the letter, or any notice of it, (2) the DOL
did not conduct a 919 hearing prior to issuance of the letter,
(3) the copy of the DOL letter filed with the district court
enforcement petition was not "certified," and (4) Williams's
district court petition specifically invokes subject matter
jurisdiction under section 921(d) only.

8Williams conceded that Jones was making payments at the
time of the district court order, but insisted that the enforce-
ment petition sought to compel payment of the "arrearages" dating

from October 1978. The magistrate judge concluded that 921(d)
differed from 918(a), in that it permits the enforcement of
prospective compensation orders only, compelling future payments
to be made as they come due but not recoveries of past due
payments. Williams, slip op. at 3 (citing Henry v. Gentry

Plumbing & Heating Co., 704 F.2d 863 (5th Cir. 1983)). Since

Williams has not cross-appealed, we do not address this question.

11

enforcement order, with its attendant exposure to coercive

contempt proceedings.

The recommended decision observes that even without a

formal Rule 4 service of process requirement the district court

could notify an employer informally in those cases where the

court believed that an employee's petition for enforcement

involved controverted factual matters. But of course such an

approach could afford adequate safeguards only if the factual

conflicts were apparent on the face of the employee's petition

for enforcement. Otherwise, there could be no assurance that the

respondent-employer would have either notice or opportunity to

assert a challenge. Thus, to construe Rule 81(a)(6) as excepting

section 921(d) enforcement actions from the service of process

requirements of Rule 4, merely because the employer did not

interpose opposition to the enforcement petition, could expose

employers to ex parte enforcement orders.

Finally, Williams suggests that requiring service of

process in a section 921(d) enforcement proceeding could subvert

the LHWCA goal of ensuring prompt compliance with compensation

orders. Granting the premise of Williams's LHWCA policy argument

in principle, whatever slight delay might be occasioned by

requiring proper service of process in order to enable the court

to obtain in personam jurisdiction over employers hardly seems

12

inappropriate, especially in light of the simplicity of the

procedure.9

Sections 918(a) and 921(d) serve distinct roles in the

LHWCA remedial scheme. Section 918(a) designedly affords injured

employees a convenient, inexpensive, and expeditious mechanism

for facilitating enforcement of "effective" compensation awards

even before they have become "final". Congress anticipated the

severe financial hardships that could beset injured employees as

a result of lengthy appeals. It therefore settled on the section

918(a) enforcement action as a simple means to compel prompt

employer compliance with an enforcement award even though it

might later be set aside on review. See, e.g., Tidelands Marine

Serv. v. Patterson, 719 F.2d 126, 129 (5th Cir. 1983) ( 918(a)

implements "a theme central to the spirit, intent, and purposes

of the LHWCA"); Henry, 704 F.2d at 865.10 For some reason not

disclosed in the appellate record, however, Williams failed to

9Other types of minor procedural delays have not foreclosed
agency recognition of the applicability of the Civil Rules to the
LHWCA by virtue of the gap-filling mandate in Fed. R. Civ. P.
81(a)(6). For instance, Civil Rule 6(e), which permits addi-
tional time (3 days) for compliance after service by mail, has
been held applicable in LHWCA enforcement proceedings. See,

e.g., Johnson v. Diamond M Co., 14 Ben. Rev. Bd. Serv. 694, 696

(1982) ("There is no provision in the Act excepting the applica-

tion of [Civil] Rule 6(e) . . . .") (emphasis added); see also

Great Am. Indem. Co. v Belair, 160 F. Supp. 784, 785 (D. Conn.

1957) (same).

10Under the LHWCA, employers may recoup overpayments only as
credits against compensation payments due the employee in the

future. See 33 U.S.C. 908(j), 914(j), 922; see also Ceres

Gulf, 957 F.2d at 1201. Thus, if a compensation order is vacated

in its entirety, payments previously made are essentially un-
recoverable. Id.

13

invoke the convenient, prompt, and inexpensive enforcement

mechanism established under section 918(a) throughout the ten-

year period spanned by Jones's numerous appeals. Cf., e.g.,

Cassell v. Taylor, 243 F.2d 259, 260 (D.C. Cir. 1957) (one-year

statute of limitations under 918(a) bars recovery on supplemen-

tal order filed sixteen years after default on compensation award

payments); supra note 5. Moreover, Williams chose not to cross-

appeal from the district court's ruling that section 921(d) could

not be used to recover past-due payments. See supra note 8. The

avoidable and unexplained delay in Williams's efforts to recover

these past-due compensation payments from Jones, however ill

advised or unfortunate, does not permit disregard of the service

of process requirements applicable to section 921(d) enforcement

proceedings, particularly since compliance will entail no sig-

nificant further delay.11 But cf. infra pt. II.B.

Furthermore, proper service of process is no empty

procedural exercise where an employee seeks to obtain a district

court enforcement order under section 921(d) which may lead to

contempt proceedings against the employer for noncompliance. See

Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 103

(1987) ("Before a court may exercise personal jurisdiction over a

defendant, the procedural requirement of service of summons must

11LHWCA 914(f) already provides a substantial disincentive
to frivolous employer challenges to compensation awards designed
to postpone payments to an injured employee. Before a compensa-
tion order enters, payments more than 14 days overdue trigger 10%
interest assessments. See 33 U.S.C. 914(e). Defaults in

payments following entry of a compensation order trigger 20%
interest assessments. See id. 914(f).

14

be satisfied. '[S]ervice of summons is the procedure by which a

court having venue and jurisdiction of the subject matter of the

suit asserts jurisdiction over the person of the party served.'")

(citing Mississippi Publishing Co. v. Murphree, 326 U.S. 438,

444-45 (1946)) (emphasis added); Precision Etchings & Findings,

Inc. v. LGP Gem, Ltd., 953 F.2d 21, 23-24 (1st Cir. 1992) (hold-

ing that actual notice of lawsuit is no substitute for substan-

tial compliance with FRCP 4(d)(1) [requiring service on person of

defendant, on suitable resident at defendant's dwelling, or on

defendant's "agent"]; "a [] judgment entered by a court which

lacks jurisdiction over the person of the defendant is void, and

may be set aside at any time pursuant to Fed. R. Civ. P. 60(b)-

(4). Personal jurisdiction is established either by proper

service of process or by the defendant's waiver of any defect in

the service of process.") (emphasis added); Jardines Bacata, Ltd.

v. Diaz-Marquez, 878 F.2d 1555, 1559 (1st Cir. 1989) ("[I]n the

ordinary course, the district court acquires jurisdiction over a

defendant only by service of process . . . .") (emphasis added).

Accordingly, as we cannot find that Jones waived service of

process, see supra note 4, we vacate the district court enforce-

ment order, and remand for service of process pursuant to Fed. R.

Civ. P. 4.

II. Equitable Defenses and the State-law Counterclaim.

Jones asserted two affirmative defenses and a state-law

counterclaim based on allegations that Williams committed perjury

before the ALJ in March 1980, and that, as a direct consequence,

15

the ALJ found, incorrectly, that "no laborious work" had been

performed by Williams after October 1978. At the October 23,

1992 hearing before the magistrate judge, Jones proffered three

affidavits from individuals who had accompanied Williams on

numerous clamming and lobstering expeditions between October 1978

and March 1981. These affidavits attest that Williams engaged in

the very types of heavy labor and lifting explicitly disclaimed

in his testimony before the ALJ in 1980. Jones contends that the

identity of the affiants could not have been discovered earlier

in the exercise of reasonable diligence, since Jones only learned

of their existence through a "chance conversation" in August or

September of 1992.

With respect to the affirmative defenses, Jones re-

quested alternative forms of equitable relief: (1) denial of the

enforcement order on the ground that a party who obtains a

compensation award through fraud is not entitled to its enforce-

ment by injunction, or (2) a temporary stay of the section 921(d)

enforcement action pending administrative relief from the DOL.

With respect to the state-law counterclaim, see Me. Rev. Stat.

Ann. tit. 14, 870 (1992) (damages action for perjury), Jones

requested compensatory and punitive damages.

The district court held that it had no "jurisdiction"

hence no discretion under LHWCA section 921(d) to refuse

to enforce the compensation order, except on the two grounds

enumerated in the LHWCA, neither of which was contested by Jones;

namely, that Jones was not in default or that the compensation

16

order was not made and served "in accordance with law."12 On

related grounds, the district court refused to exercise pendent

jurisdiction over Jones's state-law counterclaim. See United

Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966). The recommended

decision did not address the request for a temporary stay of the

section 921(d) enforcement proceedings.

On appeal, Jones contends that the district court

viewed its equitable powers under section 921(d) too narrowly.

See Restatement (Second) of Judgments 70, cmt. a (1982) (a

court of equity will not enforce a judgment obtained by fraud).

Although the district court may have painted with too broad a

brush, see, e.g., infra notes 14 and 18, we think its core

conclusions were nonetheless sound.

12The magistrate judge principally relied on Thompson v.

Potashnick Constr. Co., 812 F.2d 574 (9th Cir. 1987), and Mar-

shall v. Barnes & Tucker Co., 432 F. Supp. 935 (W.D. Pa. 1977).

In Thompson, the Ninth Circuit broadly stated that a district

court's role in a 921(d) proceeding is limited to screening for
procedural defects in the DOL proceedings and that "the district
court has no jurisdiction over the merits of the litigation."

Thompson, 812 F.2d at 576 (emphasis added). The Thompson court

was not asked to consider the sufficiency of service of process
in the district court proceeding.
In support of its position, the Ninth Circuit cited Mar-

shall, which looked to recent legislative history for guidance.

Prior to 1972, the district court had served both as an appellate
court, reviewing the ALJ's compensation orders, and as the forum

in which the employee could seek enforcement of a final compensa-
tion order. In 1972, Congress established the BRB, which assumed
the appellate role previously performed by the district court.
See H.R. Rep. 1441, 92d Cong., 2d Sess. 12 (1972), reprinted in

1972 U.S.C.C.A.N. 4709. The Marshall court concluded that

Congress intended, by its LHWCA amendments in 1972, to withdraw
district court jurisdiction to consider any issue relating to the
underlying merits of compensation orders. Marshall, 432 F. Supp.

at 937.

17

A. Equitable Power to Refuse Injunctive Enforcement.

An enforcement order under LHWCA section 921(d) may

take the form of a writ of injunction, a traditional equitable

remedy which may expose the enjoined party to the district

court's coercive contempt powers. Accordingly, fraud and "un-

clean hands" historically have been regarded as valid equitable

defenses to injunctive relief, Loglan Inst., Inc. v. Logical

Language Group, Inc., 962 F.2d 1038, 1042 (Fed. Cir. 1992), and

absent a controlling statute a federal court is presumed to

possess the broad discretion and equitable power to configure its

remedy to suit the needs of the case. Even in the context of

congressionally created injunctive remedies, the Supreme Court

has said that "[u]nless a statute in so many words, or by a

necessary and inescapable inference, restricts the court's

jurisdiction in equity, the full scope of that jurisdiction is to

be recognized and applied." Porter v. Warner Holding Co., 328

U.S. 395, 398 (1946) (emphasis added). See Weinberger v. Romero-

Barcelo, 456 U.S. 305, 313 (1982) ("[W]e do not lightly assume

that Congress has intended to depart from established [equity]

principles.").13

13See also Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944)

("The essence of equity jurisdiction has been the power of the
Chancellor to do equity and to mould each decree to the necessi-
ties of the particular case. Flexibility rather than rigidity
has distinguished it."); NLRB v. P*I*E Nationwide, Inc., 894 F.2d

887, 892 (7th Cir. 1990) (contrasting FTC orders, which are self-
executing, with NLRB orders as to which Congress has interposed
the district court as an independent enforcement arbiter, recog-
nizing that the "potential severities of contempt" counsel "a
complementary power of equitable restraint and forbearance"); cf.

Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402 (9th

18

Under this rubric, the first question we confront is

whether the LHWCA deprives the district court of its traditional

discretionary powers to withhold equitable relief for the en-

forcement of a compensation award obtained through an employee's

fraud.14 Since section 921(d) contains no explicit delimita-

Cir.) (noting that owner of incontestable mark under Lanham Act
"generally entitled to injunctive relief," but if equitable
defenses are interposed, "the grant of injunctive relief is not a
ministerial act flowing as a matter of course"), cert. denied,

488 U.S. 968 (1988).

14Marshall, 432 F. Supp. 935, relied on below, as well as by

the Ninth Circuit in Thompson, see supra note 12, offers only

limited guidance. In Marshall, the employer attempted to liti-

gate core factual issues (e.g., LHWCA coverage and statute of

limitations) for the first time in a 921(d) proceeding, having

failed to raise them before the ALJ, or to appeal the compensa-
tion order to the BRB. Id. at 937. The Marshall court correctly

relied on the fact that, by its amendments to the LHWCA in 1972,
Congress unequivocally divested the district court of all appel-
late functions relating to ALJ compensation orders. But Marshall

did not involve the more difficult problems posed by newly
discovered evidence of fraud. Arguably, at least, successful
invocation of an equitable defense to enforcement would not work

an appellate affirmance, modification, or vacation of the under-

lying compensation order, but merely a refusal to deploy the
equitable powers of the court in aid of a judgment fraudulently
obtained. Thus, Marshall's admonition that the district court's

function is reduced to "screening compensation orders for proce-
dural defects" does not purport to preclude exercise of the
court's traditional discretionary power to grant or withhold
equitable relief. See infra note 18.

19

tion of the district court's equitable powers,15 we must look

to the LHWCA's remedial framework as a whole.

The LHWCA affords Jones an adequate remedy for redress-

ing any fraud alleged in the affirmative defense. Eschewing

conventional res judicata principles, section 922 allows an

employer to request the ALJ to reconsider the case where there

has been a "change of conditions" or "mistake of fact" warranting

modification or suspension in compensation payments. See 33

U.S.C. 922; see also 20 C.F.R. 702.373; Hudson v. Southwest-

ern Barge Fleet Servs., Inc., 16 Ben. Rev. Bd. Serv. 367, 369

(1984) (holding that 922 was "intended by Congress to displace

traditional notions of res judicata") (citing Banks v. Chicago

Grain Trimmers Ass'n, 390 U.S. 459 (1968)).16 "[F]acts relat-

ing to the nature and extent of a claimant's disability typically

15The magistrate judge's reliance on the "imperative lan-
guage" of 921(d) could not fully resolve the issue. See supra

pp. 7-8. Section 921(d)'s language "shall enforce" does
not call for a blanket preemption of the district court's tradi-
tional equitable powers. See, e.g., Hecht, 321 U.S. at 329

(holding that the phrase "'shall be granted' [in the injunctive
enforcement provision of the Emergency Price Control Act of 1942]
is less mandatory than a literal reading might suggest"; "[w]e
cannot but think that if Congress had intended to make such a
drastic departure from the traditions of equity practice, an
unequivocal statement of its purpose would have been made").

16Section 922 may be invoked before or after a compensation
award is entered. See, e.g., Craig v. United Church of Christ,

13 Ben. Rev. Bd. Serv. 567, 568-69 (1981). Although 922 is
subject to a one-year limitations period, a defaulting employer
may restart the tolling period at any time by making a single
compensation payment. See 33 U.S.C. 922 (modification award

can be filed "at any time prior to one year after date of last
payment of compensation"). Thus, recourse to 922 would appear
to afford more flexibility for setting aside a fraudulent award
than is provided under Fed. R. Civ. P. 60(b)(3).

20

are the subject of modification proceedings." Williams v.

Geosource, Inc., 13 Ben. Rev. Bd. Serv. 643, 645 (1981). "The

factfinder [ALJ] has broad discretion to correct mistakes of

fact, whether they be demonstrated by new evidence, cumulative

evidence, or further reflection upon the evidence initially

submitted." Id. (emphasis added). The overarching criterion for

reopening a compensation award under the LHWCA is whether reexam-

ination would serve the "interests of justice." O'Keeffe v.

Aerojet-General Shipyards, Inc., 404 U.S. 254, 255-56 (1971).

Perjured testimony resulting in an erroneous finding of fact

concerning the nature or extent of an employee's disability would

seem to come squarely within the realm of a "mistake of fact."

On October 14, 1992, days before the recommended

decision issued in this case, Jones filed a petition for modifi-

cation pursuant to LHWCA section 922.17 In these circumstanc-

es, and against this legislative framework, we think there are at

least two sound reasons for not inferring a congressional inten-

tion to dedicate two forums to the task of assessing alleged

"mistakes of fact" relating to an employee's testimony before the

ALJ. First, where newly discovered evidence of fraud implicates

the evidentiary basis for an employee's compensation claim, the

17Section 922 is not the only antidote for fraud under the
LHWCA, which likewise authorizes the imposition of criminal
penalties (fine and imprisonment) against "[a]ny person who
willfully makes any false or misleading statement or representa-
tion for the purpose of obtaining any benefit or payment under
this Act." 33 U.S.C. 931. In addition, costs may be awarded
to the opposing party in proceedings brought on claims or orders
"without reasonable ground." Id. 926.

21

LHWCA discloses a decided preference for utilizing the DOL's in-

house expertise in resolving the dispute. See, e.g., Crowell v.

Benson, 285 U.S. 22, 46 (1932) (the LHWCA provides "a prompt,

continuous, expert and inexpensive method for dealing with a

class of questions of fact which are peculiarly suited to exami-

nation and determination by an administrative agency specially

assigned to that task") (emphasis added); cf. Youghiogheny & Ohio

Coal Co. v. Vahalik, 970 F.2d 161, 162 (6th Cir. 1992) ("the

benefits of agency expertise become irrelevant" under the LHWCA

only after "claim determination" is complete).18

Under either section 921(d) or 922, the factfinder

would be required to decide: (1) whether Jones could have

discovered the putative fraud earlier, in the exercise of due

diligence; (2) whether the affidavits proffered by Jones, togeth-

er with the record evidence in the case before the DOL, credibly

suggest that Williams misrepresented his physical capacities and

activities during the relevant period; and (3) whether the

putative perjury was sufficiently material to undermine the ALJ's

finding of temporary total disability. See General Dynamics

Corp. v. Director, Office of Workers' Compensation Programs, 673

F.2d 23, 25 (1st Cir. 1982) (in reopening case, ALJ "must balance

the need to render justice against the need for finality in

18On the other hand, while we have no occasion to take a
position in this case, some equitable defenses (e.g., laches,

estoppel), to the extent premised on employee conduct postdating

the compensation order, might require resolution of factual
issues not peculiarly suited to agency expertise. Cf. supra note

14.

22

decisionmaking," and justice is not necessarily served where the

employer "could have presented his side of the case at the first

hearing . . . ."); see also McCord v. Cephas, 4 Ben. Rev. Bd.

Serv. 224, 225 (1976) (employer not entitled to modification if

it exhibits a bad faith effort to relitigate issues ad nauseam).

We think the DOL is better positioned to address such issues in

these circumstances.

Second, section 922 modification rulings are appealable

to the BRB and to the court of appeals. See 33 U.S.C. 921(b),

(c); O'Loughlin v. Parker, 163 F.2d 1011, 1013 (4th Cir. 1947)

(ALJ's decision to reopen under section 922 is reviewed for abuse

of discretion). Similarly, an employer would be allowed an

appeal from a district court decision which discounted the

employer's equitable defenses and directed enforcement of a

compensation award. To allow the section 922 and the section

921(d) proceedings to go forward simultaneously would open up

the possibility of inconsistent rulings on the fraud claim, which

ultimately would have to be resolved by the court of appeals in

either event.

As we can discern no good purpose for such a needless

duplication of administrative and judicial effort, we conclude

that LHWCA section 921(d), viewed in broad context, gives rise to

the "inescapable inference," see Porter, 328 U.S. at 398, that

Congress did not intend the type of fraud defense here presented

by Jones to be adjudicated by the district court but by the DOL.

23

B. Stay of Enforcement.

The remaining question is somewhat narrower: may the

district court in a section 921(d) proceeding temporarily enjoin

enforcement of a compensation order pending administrative

resolution of an employer's petition for modification under

section 922?19 Jones contends that he will be harmed irreparably

absent a stay of the section 921(d) enforcement proceeding,

because the compensation payments he is compelled to make prior

to any section 922 modification order would not be recoverable.

See supra note 10.

Only two LHWCA provisions explicitly allow stays of

"effective" compensation orders. See 33 U.S.C. 921(b) (stay

pending appeal to BRB), 921(c) (stay pending appeal from BRB to

court of appeals), thus underscoring the strong LHWCA policy

favoring prompt compensation payments even though the employee's

entitlement to disability benefits remains in genuine dispute.

Stays pending administrative and judicial review are available

only on a showing of "irreparable injury." See Henry, 704 F.2d

at 865. It is not enough that the employer demonstrate that

interim payments would be unrecoverable absent a stay, nor that

the employer is experiencing financial difficulty in making

payments. Edwards v. Director, Office of Workers' Compensation,

19We address this issue in the interests of judicial econo-
my. It is possible, even likely, that Jones's 922 petition
will have been acted upon by the DOL before Jones has been served
with process pursuant to Civil Rule 4 following remand to the
district court. If not, it seems quite likely that Jones would
renew his request for a stay of the 921(d) enforcement proceed-
ing.

24

932 F.2d 1325, 1329 (9th Cir. 1991). "Irreparable injury" will be

found only in extraordinary circumstances. Id.

Unlike the minimal time delays required to effect

proper service of process, see supra pt. I, a stay of section

921(d) enforcement proceedings while an employer pursues a

modification ruling from the DOL (and, perhaps, pending appellate

review) threatens a lengthy delay in the previously ordered

compensation payments to the employee. Therefore, under the

"inescapable inference" standard established in Porter, 328 U.S.

at 398, we must conclude that the LHWCA divests the district

court of the equitable power to defer its entry of a section

921(d) enforcement order pending the outcome of a section 922

modification proceeding unless the employer first establishes

"irreparable injury." As we have noted, Jones's answer did not

allege facts sufficient to establish irreparable injury, nor does

the record suggest a basis for such a showing. Thus, the magis-

trate judge did not err in failing to act on the request for a

temporary stay.

III. Conclusion.

The district court order directing enforcement of the

compensation order pursuant to LHWCA section 921(d) must be

vacated due to lack of compliance with the service of process

requirements imposed by Fed. R. Civ. P. 4 and 81(a)(6). The case

must be remanded to permit Williams to effect service of process

upon Jones. At such time as service of process is effected,

Jones should be permitted to submit for district court consider-

25

ation any order obtained in the LHWCA section 922 modification

proceeding, failing which the district court may reinstate the

section 921(d) enforcement order previously entered.

The enforcement order is vacated and the case is

remanded to permit service of process and for further proceedings

in accordance herewith. Costs are awarded to defendant-appel-

lant.

26