United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT June 16, 2004
Charles R. Fulbruge III
Clerk
No. 03-30069
NOOR BEGUM KARIM, Etc.; ET AL.,
Plaintiffs,
FAZAL KARIM,
Plaintiff-Appellee,
versus
FINCH SHIPPING COMPANY LTD.; ET AL.,
Defendants,
and
THE LAW OFFICE OF PAUL C. MINICLIER,
Appellant.
In Re: In the Matter of FINCH SHIPPING COMPANY LTD.,
Owner and Operator of the M/V Loussio
for Exoneration from or Limitation of Liability
NOOR BEGUM KARIM, Etc.; ET AL.,
Claimants,
FAZAL KARIM,
Claimant-Appellee,
versus
THE LAW OFFICE OF PAUL C. MINICLIER,
Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before JOLLY, JONES, and BARKSDALE, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
This appeal is by Paul C. Miniclier; under a contingent fee
contract, he represented Fazal Karim, a Bangladeshi national, for
injuries received while a seaman. Karim was brought to New Orleans
upon being injured but was deported to Bangladesh prior to the
judgment in his favor being paid into the district court’s
registry. At issue is whether, after receiving that deposit, the
district court erred by: denying a motion by Miniclier to disburse
those funds; appointing counsel for Karim and otherwise
investigating Miniclier’s planned allocation pursuant to the
contingent fee contract (Karim would receive nothing); and ordering
disbursement in a fashion more favorable to Karim. AFFIRMED.
I.
The underlying litigation involving Karim and Finch Shipping
Company is addressed in Karim v. Finch Shipping Co., Ltd., 265 F.3d
258 (5th Cir. 2001). For this appeal, only some of the facts in
that extensive litigation are relevant. In 1995, while a seaman
aboard a vessel owned by Finch, Karim (a Bangladeshi national) was
injured on the vessel while it was off the coast of Bermuda. After
nine days of “excruciating pain”, which presented “a window into
Hell”, Karim v. Finch Shipping Co., Ltd., 94 F. Supp. 2d 727, 732
(E.D. La. 2000), he was debarked in New Orleans.
2
Karim’s claims were presented by Miniclier in the limitation
of liability proceeding filed by Finch in 1996. Later that year,
Karim and Miniclier entered into the contingent fee contract at
issue: Miniclier would receive 33-1/3 percent of the recovery if
the case settled; 40 percent, “or as allowed by law”, if tried.
Miniclier’s percentage was to be calculated based on the gross
recovery — that is, before expenses were deducted. Karim was to be
responsible for court costs and other expenses, but Miniclier was
permitted to advance them. As he would later represent to the
district court, Miniclier advanced: $91,901.73 for advances and
personal expenses (“advances to Mr. Karim for living expenses in
the [United States, prior to his being deported in 1997] and his
family in Bangladesh, travel, food, telephone, clothes, utilities,
and rent in the [United States] and other expenses”); $62,209.79
for medical expenses; $104,252.94 for litigation expenses (“filing
fees, depositions, photocopies, witness/expert fees, travel
expenses for overseas depositions, service fees, translator fees,
trial, transcript costs and other related litigation expenses”);
and $34,129.01 for miscellaneous expenses (“primarily ... interest
and other banking charges” (emphasis added)).
Applying Bangladeshi law of damages, the district court
entered judgment in 2000 in favor of Karim for approximately
$407,000, which included damages, prejudgment interest, and $70,000
for litigation costs, including attorney’s fees. The damages were:
3
$13,081.28 for past earnings; $26,451.70 for future earnings;
$63,668.16 for outstanding medical expenses; $20,000 for future
medical expenses; and $160,000 for general damages. Our court
affirmed in September 2001. Karim had been deported to Bangladesh
in 1997, long before his judgment was affirmed.
After our mandate issued, Karim, through Miniclier, moved for
leave to tax costs out of time; the district court denied the
motion. In January 2002, in satisfaction of judgment, and pursuant
to the district court’s instructions, Finch deposited the judgment
amount in the district court’s registry, rather than pay the
judgment to Karim, through his counsel (counsel’s trust account).
Upon Karim, through Miniclier, moving to withdraw those funds,
the district court denied the motion, citing its duty to ensure
that the rights of seamen, as wards of admiralty, are protected,
and ordering Miniclier “to submit an accounting ... detailing the
expenses, costs, and fees, including attorneys fees, that will be
charged against [Karim’s] judgment, as well as the net amount that
will be conveyed to [Karim] after all costs, expenses, and fees
have been deducted”. (Emphasis added.)
Miniclier filed the accounting at the end of January 2002,
again moving to withdraw the funds. The accounting listed the
litigation expenses advanced by Miniclier on Karim’s behalf as more
than $290,000 (again, including more than $60,000 in medical
expenses, more than $34,000 in interest/banking charges, and more
4
than $90,000 in advances/personal expenses for Karim). Were this
amount reimbursed to Miniclier (per the contingent fee contract),
the amount remaining from the judgment would be less than the 40
percent due Miniclier based upon the gross amount, pursuant to the
contingent fee contract; as a result, Miniclier would receive all
the funds. In short, Karim would receive nothing.
Based on the accounting, the district court ordered a hearing
on the motion to withdraw funds, stating:
According to this accounting, after deducting
attorney’s fees, advances, medical expenses,
litigation expenses, and miscellaneous
expenses, the net recovery to Karim is zero.
At first blush this result seems harsh. The
medical providers, the attorneys, the banks,
and others, received some form of recompense.
Karim, who fractured his lumbar vertebra and
hip, pelvis, leg, ankle, heel and wrist on the
left side, sustained several herniated discs
in his back and neck, as well as a detached
retina in his right eye, who is permanently
disabled from returning to maritime work, and
who is likely to require future medical care,
takes home nothing.
Karim v. Finch Shipping Co., 195 F. Supp. 2d 809, 810 (E.D. La.
2002). The district court determined that legal and factual issues
had to be resolved before the motion to withdraw could be decided.
The first issue was whether Bangladeshi or Louisiana law
governed Miniclier’s fees. If Bangladeshi law applied, Miniclier
would be limited to the $70,000 for costs and fees included in the
judgment; if Louisiana law applied, there was a further question of
whether the fees were reasonable. In order to assist with the
5
resolution, the district court appointed the Tulane Law School Law
Clinic to represent Karim for the district court’s examination of
the funds’ proposed disposition.
Miniclier sought mandamus relief from this court. It was
denied. In re Karim, No. 02-30267 (5th Cir. 19 Mar. 2002).
After briefing, the district court determined that Louisiana
law applied to the contingent fee contract. After further briefing
and two hearings, including testimony by two experts, the district
court ruled in November 2002 on the fee’s reasonableness. Karim v.
Finch Shipping Co., 233 F. Supp. 2d 807 (E.D. La. 2002). The court
cited authority that seamen are wards of admiralty courts, and that
those courts have the same equitable powers as those not sitting in
admiralty; it further cited ample Louisiana and federal precedent
that a court’s equitable powers include the power to reform
contingent fee agreements. The court concluded: “Clearly, under
both state and federal law a court has the power as well as the
responsibility, particularly where seamen are concerned, to examine
and modify contingent fee agreements”. Id. at 810 (emphasis
added).
The district court found: a 40 percent share of the gross
recovery was “not totally out of line with community standards for
this type of case”; and Miniclier’s “work product was certainly
more than adequate”. Id. at 811. But, the court concluded it was
appropriate to modify the funds’ distribution: Miniclier would be
6
reimbursed the litigation expenses (approximately $300,000); the
remaining $112,928.51 would be divided equally between Karim and
Miniclier ($56,464.25 each).
Several days later, the distribution to Miniclier (expenses-
reimbursement and adjusted fee) was ordered (because of accrued
interest, he received $57,386.44 for his fee). Karim’s share, the
amount now at issue, was to remain in the district court registry
pending further order.
II.
Miniclier presents two contentions: after Finch satisfied the
judgment by paying it into the court registry, the district court
was deprived of jurisdiction to do anything other than order the
funds’ disbursement; and the district court erred in finding the
contingent fee agreement unreasonable under Louisiana law. (As
discussed infra, the ultimate issue is whether the district court
abused its discretion, as an admiralty court, in its treatment of
its ward, Karim.)
We have jurisdiction under 28 U.S.C. § 1291 (appeal from final
decision), because, as for the order at issue, the requisite “final
decision is one that ‘ends the litigation on the merits and leaves
nothing more for the court to do but execute the judgment’”.
Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 309
(2003) (quoting Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S.
79, 86 (2000)), cert. denied, 124 S. Ct. 311 (2003). And, it goes
7
without saying that Miniclier has sufficient interest to vest him
with standing to take this appeal. See Castillo v. Cameron County,
Tex., 238 F.3d 339, 349 (5th Cir. 2001).
A.
It also goes without saying that federal courts have
jurisdiction only over “cases” and “controversies”. U.S. CONST.
art. III, § 2; e.g., McConnell v. FEC, 124 S. Ct. 619, 707 (2003).
In this regard, Miniclier contends: after the registry-deposit, no
case or controversy remained; the district court was limited to
simply disbursing the funds.
Miniclier relies heavily on Brown v. Watkins Motor Lines,
Inc., 596 F.2d 129 (5th Cir. 1979). Brown concerned a district
court’s decision “to adopt as the court’s ward a minor represented
by a duly qualified guardian, fix the compensation of the
guardian’s attorney, and direct his payment out of a tort judgment
previously rendered by the court”. Id. at 130. In reversing, a
split-panel of our court held: “The case or controversy in the
federal forum ended with payment of the judgment into the registry
of the court”. Id. at 132. This decision was based on there
having been no request for relief by plaintiff concerning the fee
amount. Id. at 131 & n.1. As discussed infra, that is not the
situation here. Karim, represented by the legal clinic appointed
by the district court, contested the disbursement sought by
Miniclier. As stated in Brown: “It cannot be seriously doubted
8
that prior to distributing a judgment award a court has the power
to decide a contest between the judgment creditor and his attorney
over the appropriate amount of the attorney’s fee lien on the
judgment”. Id. at 131 (emphasis added).
Moreover, Miniclier acknowledges Brown’s being distinguished
in Hoffert v. General Motors Corp., 656 F.2d 161 (5th Cir. Unit A
1981), cert. denied sub nom. Cochrane & Bresnahan v. Smith, 456
U.S. 961 (1982). Hoffert affirmed a district court’s sua sponte
decision to limit plaintiff’s counsel’s recovery because counsel
had invoked the court’s power by asking it to approve a settlement
agreement. Id. at 164-65. For example, in ruling, the district
court had felt it necessary to appoint a guardian ad litem for the
minor injured party because of a possible conflict of interest with
his father, the other injured party. Id.
The order at issue here resolved a controversy over which the
district court had jurisdiction. Pursuant to the district court’s
instructions, Finch paid the judgment into the district court. Not
all of the background details prompting that registry-deposit,
instead of payment directly to Karim, through counsel, are
reflected in the record. Nevertheless, this background illuminates
the unusual situation resulting from, among other things, Karim’s
not being in the United States when judgment was satisfied. As
noted, in the immediate aftermath of the first appeal, Karim sought
permission from the district court to tax costs against Finch (the
9
judgment-debtor) out of time. Permission was denied in November
2001. In early January 2002, after the time for seeking Supreme
Court review had run, Miniclier demanded payment of the judgment by
Finch into Miniclier’s trust account. Upon Finch not doing so,
Karim moved to execute against Finch’s surety bond. Following a
status conference, Finch moved to pay the judgment into the court’s
registry, “pursuant to the verbal instructions given by the Court”
at that conference.
Accordingly, Miniclier was required to move the court to
disburse the funds, a motion that could be contested. The motion
was contested, by the law clinic appointed to represent Karim.
Miniclier waited until his reply brief to contend the clinic was
improperly appointed under the in forma pauperis statute, 28 U.S.C.
§ 1915. He has waived the factual issue of whether the clinic
represented Karim. And, in appointing the clinic, the district
court relied in part on its inherent powers. Miniclier does not
contend that those powers do not extend to that appointment.
The clinic represented Karim’s interests and contested the
proposed distribution. Its contesting that distribution is even
more clearly a case or controversy (an actual dispute between
adverse parties, see Richardson v. Ramirez, 418 U.S. 24, 36
(1974)), than had been created by the request in Hoffert for
approval of a settlement agreement. The district court had
jurisdiction.
10
B.
Miniclier claims the district court erred when, after having
determined that Louisiana law governed the contingent fee contract,
it subjected it to equitable revision. Miniclier bases error on
three reasons: first, because the district court’s ruling is self-
contradictory; second, because Louisiana law does not permit an
unambiguous contract for reasonable attorney’s fees to be subject
to equitable revision; and third, because an admiralty court’s
power to protect seamen does not include the revision of the
contingent fee contract at issue.
1.
Miniclier asserts: “[T]he district court’s determination that
the Contract would be governed by the substantive laws of
Louisiana, and that the only remaining issue was ‘reasonableness,’
pretermits the analysis of any other contractual issues which may
have had an equity component”. Basically, Miniclier contends that
the district court contradicted itself by choosing Louisiana law
but then applying admiralty principles.
Because Karim’s claim against Finch was presented in a
limitation of liability action, it is undisputed that the district
court was sitting in admiralty for Karim’s claim. To the degree
Miniclier contends the district court ceased to do so when it
received the judgment amount in its registry, the contention is
11
rejected because there was a continued case or controversy. See
supra.
Actions to limit liability are classic maritime claims.
Congress enacted the Limitation of Liability Act in 1851. 46
U.S.C. App. § 181 et seq. The Supreme Court summarized its cases
construing the Act as follows:
These decisions establish, first, that the
great object of the statute was to encourage
shipbuilding and to induce the investment of
money in this branch of industry by limiting
the venture of those who build the ships to
the loss of the ship itself or her freight
then pending, in cases of damage or wrong
happening, without the privity, or knowledge
of the shipowner, and by the fault or neglect
of the master or other persons on board; that
the origin of this proceeding for limitation
of liability is to be found in the general
maritime law differing from the English
maritime law; and that such a proceeding is
entirely within the constitutional grant of
power to Congress to establish courts of
admiralty and maritime jurisdiction....
Hartford Accident & Indemnity Co. of Hartford v. Southern Pacific
Co., 273 U.S. 207, 214 (1923) (citation omitted).
Because of the mobility of their subject, admiralty courts
(perhaps more than others) face choice of law issues. See Coats v.
Penrod Drilling Corp., 61 F.3d 1113, 1119-21 (5th Cir. 1995) (en
banc). This is particularly true for limitation actions. Numerous
cases discuss the method of choosing the applicable law in a
federal court limitation action brought, as here, by a foreign
owner of a foreign vessel. See, e.g., Oceanic Steam Navigation
12
Company, Limited v. Mellor (The Titanic), 233 U.S. 718 (1914)
(American limitation law limited remedy created by foreign law);
Black Diamond S.S. Corp. v. Robert Stewart & Sons, 336 U.S. 386,
395-96 (1949) (foreign law creating and limiting a substantive
right would be applied in American limitation action); see also
Karim, 265 F.3d at 270 (quoting Korea Shipping Corp. v. Tokio
Marine & Fire Ins. Co., 919 F.2d 601 (9th Cir. 1990)). Moreover,
courts applying admiralty law “may adopt state law by express or
implied reference or by virtue of the interstitial nature of
federal law”. Palestina v. Fernandez, 701 F.2d 438, 439 (5th Cir.
1983) (quoting Baggett v. Richardson, 473 F.2d 863, 864 (5th Cir.
1973)).
The district court’s ruling that “the attorney-client contract
in this case is governed by the substantive law of Louisiana”, 233
F. Supp. 2d at 809, did not mean that the court was not sitting in
admiralty, any more than its previous choice of Bangladeshi law to
measure damages meant it was not sitting in admiralty. Miniclier
has not identified any reason why the court’s application of
Louisiana law meant it would be unable to exercise its ongoing
powers as an admiralty court. As discussed in greater detail,
infra, the responsibility admiralty courts have for seamen is an
old and important one, not to be defeated by the fact that the
contingent fee contract was formed in Louisiana.
13
2.
Because Miniclier claims the district court acted
inconsistently, he contends that this appeal presents the following
question: Under Louisiana contract law, can an unambiguous
contract for reasonable attorney’s fees be amended on the basis of
admiralty equitable principles? Because the district court did not
contradict itself, this appeal does not present an issue of
Louisiana contract law. (For that reason, we reject Miniclier’s
alternative request that we certify the question to the Louisiana
Supreme Court.) In that regard, this appeal does not present the
issue of a federal court’s well-recognized power, in general, to
reform contingent fee contracts. Indeed, this power is reflected
in the contingent fee contract’s providing a fixed percentage for
counsel, “or as allowed by law”.
Instead, a much more narrow, fact-specific issue is at hand:
the scope of the power of district courts, sitting in admiralty, to
protect an absent seaman by adjusting his contingent fee contract
(Miniclier’s third basis for reversing on the merits). Therefore,
although Miniclier maintains there is a legal question to be
reviewed de novo, we are faced instead with whether the district
court abused its discretion in its treatment of its ward. See,
e.g., Wilkins v. P.M.B. Systems Engineering, Inc., 741 F.2d 795,
798 n.2 (5th Cir. 1984) (“Where ... the settling plaintiff is a
seaman, and thus a traditional ward of admiralty, that discretion
14
of the court to scrutinize and determine the validity of Mary
Carter agreements is magnified.”); Isbrandtsen Marine Services,
Inc. v. M/V Inagua Tania, 93 F.3d 728, 733 (11th Cir. 1996)
(district court “abused its discretion by failing to aid the crew,
wards of admiralty whose rights federal courts are duty-bound to
jealously protect”; quotation marks omitted).
3.
In maintaining the district court exceeded the permissible
scope of its concern for seamen, Miniclier relies upon Bass v.
Phoenix Seadrill/78, Ltd., 749 F.2d 1154 (5th Cir. 1985), where
the district court voided a portion of a settlement agreement
between an injured seaman and his employer (obviously, not his
attorney, as discussed infra). We reversed, holding:
Our ultimate concern in these cases is not
whether the seaman has received what the court
considers to be adequate consideration for the
rights he has relinquished; rather, we inquire
whether the seaman relinquished those rights
with an informed understanding of his rights
and a full appreciation of the consequences
when he executed the release.
Id. at 1161 (quotation marks omitted). We reversed because the
only finding supporting the district court’s decision was
inadequacy of consideration.
We simply hold that adequacy of consideration
is not the touchstone of a valid seaman's
release; absent a finding that the settlement
was not executed with a full understanding of
the seaman's rights and the effect of the
agreement thereon, the district court lacks
15
authority, especially where the seaman
testifies to complete satisfaction, to void
the agreement because the court thinks the
seaman could have negotiated a better deal.
Id. at 1162 (emphasis added). Accordingly, at issue is the
district court’s permissible scope in acting on behalf of an absent
seaman with respect to his contingent fee contract.
As stated in Bass: “Seamen, of course, are wards of admiralty
whose rights federal courts are duty-bound to jealously protect”.
Id. at 1160-61. In fact, “[t]he protection of seamen was one of
the principal reasons for the development of admiralty as a
distinct branch of law”. 1 THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME
LAW 239 (2d ed. 1994). In accord with that goal, special
legislation particular to, and particularly solicitous of, seamen
has long been enacted. See, e.g., 46 U.S.C. § 10313(g) (when
seamen’s wages not provided within time set by statute, “the master
or owner shall pay to the seaman 2 days' wages for each day payment
is delayed”); see also The Osceola, 189 U.S. 158 (1903) (surveying
foreign maritime statutes on maintenance and cure); Chandris, Inc.
v. Latsis, 515 U.S. 347, 354 (1995) (“Congress enacted the Jones
Act in 1920 to remove the bar to suit for negligence articulated in
The Osceola, thereby completing the trilogy of heightened legal
protections (unavailable to other maritime workers) that seamen
receive because of their exposure to the perils of the sea.”;
quotation marks omitted).
16
In addition to statutory protection, seamen have also long
received particular care under rules created and adopted by the
judiciary. See Romero v. Int’l Terminal Operating Co., 358 U.S.
354, 360-61 (1959) (Article III grant of admiralty jurisdiction
“empowered the federal courts ... to draw on the substantive law
inherent in the admiralty and maritime jurisdiction, and to
continue the development of this law within constitutional limits”;
quotation marks and citation omitted).
Here, the district court was motivated by the doctrine that
seamen are wards of admiralty. E.g., U.S. Bulk Carriers, Inc. v.
Arguelles, 400 U.S. 351, 355 (1971) (“Seamen from the start were
wards of admiralty.”). In American admiralty, the doctrine is at
least as old as 1823; that year, Justice Story wrote, as circuit
justice, oft-cited language in support of this doctrine.
Every court should watch with jealousy an
encroachment upon the rights of seamen,
because they are unprotected and need counsel;
because they are thoughtless and require
indulgence; because they are credulous and
complying; and are easily overreached. But
courts of maritime law have been in the
constant habit of extending towards them a
peculiar, protecting favor and guardianship.
They are emphatically the wards of the
admiralty; and though not technically
incapable of entering into a valid contract,
they are treated in the same manner, as courts
of equity are accustomed to treat young heirs,
dealing with their expectancies, wards with
their guardians, and cestuis que trust with
their trustees.
17
Harden v. Gordon, 11 F. Cas. 480, 485 (D. Me. 1823) (No. 6,047)
(emphasis added). See also Richards v. Relentless, Inc., 341 F.3d
35, 41 (1st Cir. 2003) (“Seamen are wards of admiralty, and their
relationship with their employers is similar to the relationship
between a beneficiary and fiduciary.”; quotation marks omitted).
As reflected in Bass, 749 F.2d at 1161, this solicitude for
seamen’s well-being is often associated with the burdens placed on
an employer to prove the validity of a seaman’s release or a
settlement agreement. See also Garrett v. Moore-McCormack Co.,
Inc., 317 U.S. 239, 248 (1942) (“We hold, therefore, that the
burden is upon one who sets up a seaman’s release to show that it
was executed freely, without deception or coercion, and that it was
made by the seaman with full understanding of his rights.”); Noble
Drilling, Inc. v. Davis, 64 F.3d 191, 195 (5th Cir. 1995) (vacating
district court’s enforcement of settlement agreement and remanding
for a hearing); Orsini v. O/S SEABROOKE O.N., 247 F.3d 953 (9th
Cir. 2001) (fact issues of enforceability of release required
reversing grant of summary judgment on seaman’s claim).
The principle is also applied in other areas. For example, it
is applied in statutory construction, by which statutes are
construed in favor of seamen. See Isbrandtsen Co. v. Johnson, 343
U.S. 779, 782-83, 787 (1952) (construing statute to bar employer
from setting-off against seaman’s wages any costs except those
explicitly in statute); see also Governor and Company of the Bank
18
of Scotland v. Sabay, 211 F.3d 261, 265-70 (5th Cir.), cert.
denied, 531 U.S. 959 (2000) (acknowledging the principle while
concluding that, under statute, penalty wage lien did not have same
priority as lien for earned wages). As another example, it is also
a principle used in evaluating whether a district court has abused
its discretion in procedural rulings. See Isbrandtsen Marine
Services, Inc., 93 F.3d at 733-34 (district court abused its
discretion by not permitting crew’s untimely intervention to
enforce wages lien).
Karim cites one case in which the ward of admiralty doctrine
was used to alter an attorney’s contingent fee. In Schlesinger v.
Teitelbaum, 475 F.2d 137 (3d Cir.), cert. denied, 414 U.S. 1111
(1973), a seaman and his attorney had entered into a contingent fee
agreement; instead, the district court ordered the fee to be in
accord with a schedule set by local rules. In denying mandamus
relief sought by the seaman and his attorney, the Third Circuit
noted that the attorney had not presented evidence, either in
district court or with his mandamus request, that the contractual
fee was fair. Id. at 142. “On the facts presented by this record,
we hold that petitioners cannot rely simply on an allegation of the
existence of a contingent fee agreement, which may have been dated
after the establishment of the [district court’s fee schedule], to
nullify such guidelines as ‘discriminatory, ultra vires and
violative of due process’ as a denial of petitioners’ contract
19
rights.” Id. Although the situation in Schlesinger is readily
distinguishable from that at hand, it is yet another example of
courts’ flexible application of the ward of admiralty doctrine.
A seaman’s entering into a contingent fee contract for legal
services to recover for personal injury may have the
characteristics that have historically prompted the solicitude of
admiralty courts. First, one of the justifications of the doctrine
was judicial recognition of the hard lot of seamen. “The paternal
regard of the Courts and Congress for seamen has, for the most
part, grown out of the peculiar conditions of their employment.
These conditions, by their very nature rigorous and subjecting the
seaman to unusually severe discipline for extended periods of time,
are quite unlike the conditions which attend land labor, and have
resulted in extraordinary remedies being made available to those
who accept this calling.” Perkins v. American Elec. Power Fuel
Supply, Inc., 246 F.3d 593, 597-98 (6th Cir.) (quoting Paul v.
United States, 205 F.2d 38, 42 (3d Cir. 1953)), cert. denied, 534
U.S. 994 (2001). The risks associated with going to sea contribute
to the likelihood that a seaman will need legal counsel. For that
reason, it is appropriate for courts to concern themselves with the
risks seamen face in obtaining such counsel.
Second, perhaps more importantly, it will doubtless usually be
the case (and is the case here) that seamen are uncounseled in
their pursuit of legal counsel. This factual scenario indicates
20
two things: it is appropriate for courts to concern themselves
with the contract for legal services; and, in that regard, the
strictures placed on district courts by our decision in Bass are
inapplicable. As noted, Bass concerned a release between a
counseled seaman and his employer. As quoted earlier, our court
stated: “[A]bsent a finding that the settlement was not executed
with a full understanding of the seaman's rights and the effect of
the agreement thereon, the district court lacks authority,
especially where the seaman testifies to complete satisfaction, to
void the agreement because the court thinks the seaman could have
negotiated a better deal”. 749 F.2d at 1162 (emphasis added).
Such a standard is appropriate for a counseled seaman. But
when he is uncounseled and in pursuit of legal counsel, they do not
serve the same purpose. Rather, in the words of Justice Story,
courts are solicitous of seamen because “they are unprotected and
need counsel”. Harden, 11 F. Cas. at 485. This is especially true
in this instance; Karim was deported to Bangladesh in 1997, long
before the attempted allocation of his judgment by his attorney,
pursuant to which Karim would have received nothing.
We hold: it may be proper for a district court, sitting in
admiralty, to use its admiralty powers to alter a contingent fee
contract for legal services entered into by an uncounseled seaman
when he is absent at the time of the attempted disbursement of his
21
judgment, as in this instance. Moreover, on these facts, the
district court did not abuse its discretion in doing so.
In the light of Miniclier’s attempt to have the judgment
disbursed, the district court required Miniclier to provide an
accounting. It therefore became aware that Miniclier did not
intend to disburse any of the funds to Karim. In response, the
court determined that further investigation was required.
The court appointed counsel for Karim and held two hearings,
including hearing testimony by two experts. As stated in its
order, even Miniclier’s expert testified that he would have altered
the fee arrangement to ensure Karim had some recovery from the
judgment.
In response, the district court ordered a distribution that
reimbursed Miniclier for all of his expenses, including the
interest accrued on loans used to finance the litigation, and gave
him half of the remainder. Miniclier places great weight on
Karim’s receiving advances from Miniclier, including for living and
medical expenses; he urges that was recovery by Karim. Those
amounts have been reimbursed to Miniclier. On this record, the
district court viewed those advances as a form of economic risk-
sharing for the litigation. It did not view them as a recovery
from the judgment.
Miniclier contends that the district court could not alter the
contingent fee contract. He does not, however, offer any basis for
holding that, if the district court could alter the contract, its
22
alteration was an abuse of discretion. Having concluded that the
district court could alter the contract, we have not discerned any
abuse of discretion — far from it.
Along this line, Miniclier has contended repeatedly that the
40 percent fee against the gross recovery (as opposed to being
against the net recovery remaining after expenses are deducted from
the gross amount) is reasonable because it is common. If so, this
is further evidence why seamen may need protection from such a
practice. If an attorney applies his fee percentage against the
net recovery (after expenses deducted), then the plaintiff will at
least receive something (providing the judgment exceeds expenses).
When the contract is as this one was (percentage taken against
gross amount of judgment), it may produce the results seen here.
The use of such contingent fee contracts is one reason why
admiralty courts may be required to intervene to protect a seaman’s
recovery from a judgment in his favor when his attorney does not do
so.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
23