On the Ides of March, the Washington State Supreme Court delivered the latest pronouncement on the issue of punitive damages under the archaic system of maintenance, cure, and unearned wages for maritime workers who go to sea. Clausen v. Icicle Seafoods, Inc., 2012 WL 862192 (Wash. No. 85200-6, Mar. 15, 2012), refused to overturn a punitive damage and attorney's fee award, following what both levels of court determined to be "egregious" handling of the injured worker's claim by his employer, the fishing company.
Punitive Damages and the Maintenance and Cure Obligation
Clausen provides one of the first appellate court interpretations of Atlantic Sounding Co. v. Townsend, 557 U.S. 404, 129 S.Ct. 2561, 174 L.Ed.2d 382 (2009), the U.S. Supreme Court's pronouncement that punitive damages are available under general maritime law for the willful and wanton disregard of the maintenance and cure obligation. Prior to Atlantic Sounding Co. v. Townsend, most courts allowed only an attorney fee award for "callous" and "willful and persistent" refusal to pay maintenance and cure benefits, in accord with Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962).
"Maintenance and cure" is the system that continues to exist today under which seamen are provided benefits if they become unfit for duty while engaged in the service of the vessel. If a seaman becomes unfit for duty because of injury or illness, he/she receives a daily stipend for each day of unfitness (maintenance) and unfitness (maintenance) and medical bills for treatment (cure). Maintenance and cure was the first system of workers' compensation in the world; it began in the Mediterranean countries, perhaps during the 12th Century, was adopted by British admiralty law, and thereafter by common law in the United States. Today, seamen are some of the very few workers in the United States who are not subject to modern workers' compensation systems, which exist by statute instead of common law. For compensation beyond maintenance, cure, and unearned wages, the seaman must establish that the vessel was unseaworthy (also a common law right) or that the vessel employer was negligent (a right bestowed by statute, the Jones Act, in 1920); if unseaworthiness and/or negligence are established, the plaintiff can recover pain and suffering, long-term economic damages, and the usual elements of damage in a personal injury lawsuit.
Traditionally, the vessel's obligation of maintenance and cure meant that if a seaman was physically unable to continue with the voyage, the vessel master would pay the innkeeper to put up the seaman until the vessel returned to collect him. In modern times, courts began to allow an award for "unearned wages" which pays the seaman for wages that would have been earned during the period for which the seaman had been hired.
An employer's only defense to a maintenance and cure claim is to demonstrate that the employee intentionally (not negligently) injured him/herself.
Mr. Clausen's Case
Mr. Clausen suffered injuries to his lower back, neck, and hand while lifting a heavy piece of steel on the Icicle vessel on which he was employed. He was sent home to Louisiana to recuperate. He was paid maintenance at the rate of $20 per day for every day he was unfit. The rate of maintenance is designed to compensate for the room and board the seaman would have enjoyed on the vessel; while the amount can be agreed by contract, if it is not so agreed the amount is to be determined on a case-to-case basis. With his $20 per day, Mr. Clausen "resorted to living in a recreational vehicle with a leaking roof and no heat, air conditioning, running water, or toilet facilities." Meanwhile, Icicle had hired a doctor who had determined that Mr. Clausen's injuries were likely to be permanent. Without sharing this medical information
Addressing whether the judge or the jury should determine the amount of attorney fees awarded, the court noted that "[a]lthough fee-shifting in this context may have a punitive feel, it serves to compensate the seaman for being forced to bring an action to recover what he was clearly entitled to all along." The court, therefore, held that "under general maritime law, a trial judge, and not the jury, calculates an attorney's fee award related to the employer's willful withholding of maintenance and cure." On a related issue, Clausen addressed whether the award of attorney fees under the applicable "callous and willful" standard was compensatory or punitive. Ultimately, Clausen held that that the attorney fees were compensatory, as they constituted damages Mr. Clausen incurred because of Icicle's conduct.
Clausen ultimately affirmed the $1.3 million punitive damages award, which is 35 times the $37,420 compensatory damages awarded by the jury, but "less than three times the size of the compensatory award and within due process limits" after the trial court's attorney fees are included as part of the compensatory award.
Clausen is significant for all defendants with punitive damages exposure, as it raises issues about the nexus, if any, between compensatory damages and the amount of punitive damages that can be imposed. This case also serves as a reminder of how harshly juries and judges may view any breach of the duty to provide a daily stipend for each day of unfitness (maintenance) and medical bills for treatment (cure). Fishing companies and other maritime employers can now expect a spike in punitive damages claims. Although it is a state court decision, it may have broader influence as it is an early interpretation of Atlantic Sounding Co. v. Townsend, the U.S. Supreme Court's decision allowing punitive damages for the willful and wanton disregard of the maintenance and cure obligation.
Footnotes
1 Mr. Clausen sought and the jury awarded damages for negligence under the Jones Act, 46, U.S.C. § 30104, as well.
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