Barbera v. Director Office of Worker's Compensation ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
3-27-2001
Barbera v. Director Office of Worker's
Compensation
Precedential or Non-Precedential:
Docket 00-3212
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Filed March 27, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-3212
JAMES BARBERA,
Petitioner
v.
DIRECTOR, OFFICE OF WORKERS' COMPENSATION
PROGRAMS, United States Department of Labor;
GLOBAL TERMINAL AND CONTAINER SERVICES, INC.
On Petition for Review of a Decision and Order
of the Benefits Review Board
(BRB Docket No. 99-0460)
Submitted Under Third Circuit LAR 34.1(a)
March 12, 2001
Before: MANSMANN, BARRY and COWEN, Circuit Judges.
(Filed March 27, 2001)
Richard P. Stanton, Jr., Esquir e
Suite 314
17 Battery Place
New York, NY 10004
William M. Broderick
Seven Dey Street
Suite 700
New York, NY 10007
Counsel for Petitioner
Keith L. Flicker, Esquire
Flicker, Garelick & Associates
318 East 53rd Street
New York, NY 10022
Counsel for Respondent -- Global
Terminal and Container Services,
Inc.
OPINION OF THE COURT
MANSMANN, Circuit Judge.
James Barbera ("Barbera") petitions for r eview of final
orders of the United States Department of Labor Benefits
Review Board (the "Board") affir ming in part and reversing
in part Orders of Administrative Law Judge Edith Barnett
("ALJ Barnett") and affirming Or ders of Administrative Law
Judge Linda Chapman ("ALJ Chapman").1 Petitioner makes
two claims. First, he claims that the Board err ed in
affirming ALJ Barnett's denial of a de minimis award under
the Longshore and Harbor Workers' Compensation Act (the
"LHWCA"), 33 U.S.C. SS 901 et seq. , where ALJ Barnett
found proof of Petitioner's present medical disability and a
reasonable expectation of future loss of wage-earning
capacity. Second, he claims that, (a) absent a finding of
abuse of discretion, the Board err ed in reversing ALJ
Barnett's award of attorney's fees to Petitioner's counsel,
and (b) the Board further erred in subsequently affirming
ALJ Chapman's significant reduction in counsel's hourly
rates. Petitioner specifically alleges that the Board
erroneously departed from its proper standard of
administrative review.
Because we conclude that, on the findings made by ALJ
Barnett and supported by substantial evidence, and on the
law as pronounced by the Supreme Court in Metropolitan
Stevedore Co. v. Rambo, 521 U.S. 121 (1997), Petitioner
was clearly entitled to a de minimis awar d, we will reverse
the Board and remand for determination of that award.
_________________________________________________________________
1. Our jurisdiction over these matters is pursuant to 33 U.S.C. S 921(c).
2
Further, because we conclude that ALJ Bar nett's award of
attorney's fees was supported by substantial evidence and
in accordance with the law, and that the Boar d was
therefore without authority to disturb that award, we will
reverse the Board and reinstate ALJ Barnett's award of
attorney's fees.
I.
The basic facts are not in dispute. Petitioner's
employment as a maintenance manager for Global T erminal
& Container Services, Inc. ("Global") r equired him to inspect
and estimate damage on shipping containers by climbing
stacked containers and securing access through heavy
container doors sometimes corroded by rust. On April 16,
1991, while attempting to force open the doors to a stacked
container, Petitioner suffered an accident at Global's pier in
Jersey City, New Jersey. As a result of this accident, he
sustained a disabling herniation to his lower back. Because
he was unable to continue his previous employment due to
his disability, Petitioner sought and found employment as
a surveyor with China Ocean Shipping Company in
Charleston, South Carolina. Petitioner's orthopedic surgeon
concluded that Petitioner's injury requir ed a marked
restriction of activities and that further spinal degeneration
and progression of symptomology wer e inevitable.2
Petitioner sued for workers' compensation pursuant to
the LHWCA3 and his employer , Global, challenged
jurisdiction and Petitioner's right to compensation. On
February 27, 1996, following a three-day hearing and a
complete review of Petitioner's medical r ecord, ALJ Barnett
found that (a) Petitioner met the status and situs
requirements for jurisdiction under the LHWCA, and (b)
Petitioner had been temporarily totally disabled for a period
of several months and had sustained a permanent partial
_________________________________________________________________
2. Indeed, Petitioner's back condition did continue to degenerate, and he
underwent back surgery. Petitioner alleges he has been unable to work
in any capacity since January 1999. Reply Brief for Petitioner at 2.
3. The LHWCA, 33 U.S.C. SS 901-50 (1994), is a workers' compensation
statute that fixes disability benefits for maritime workers who are
injured
on the job.
3
disability. Accordingly, she awarded Petitioner medical
benefits under the LHWCA. ALJ Barnett did not, however,
award any compensation for lost wage ear ning capacity
because Petitioner was then employed in another position
for wages comparable to his pre-injury ear nings. As more
fully explained in her Supplemental Decision and Or der of
April 26, 1996, despite her finding that Petitioner's "serious
back condition" was "likely to deteriorate and m[ight] cause
loss of wage earning capacity in the futur e" and despite her
awareness that "[s]ubstantial authority does exist for de
minimis awards where, as here, there is proof of a present
medical disability and a reasonable expectation of future
loss of wage-earning capacity",4 because this circuit had
not considered the issue, ALJ Barnett felt compelled to
follow the Board's policy of disfavoring any de minimis award.5
On the issue of Petitioner's attorney's fees, ALJ Barnett
directed counsel to submit a fully documented fee
_________________________________________________________________
4. Supplemental Decision and Order of ALJ Barnett, April 26, 1996 (33a-
34a) (citing La Faille v. Benefits Review Boar d, 884 F.2d 54 (2d Cir.
1989); Randall v. Comfort Control, 725 F.2d 791 (D.C. Cir. 1984); Hole v.
Miami Shipyards Corp., 640 F.2d 769 (5th Cir. 1981)). These circuits
each held that when a claimant has suffer ed a medical disability and
there is a significant possibility that he will suffer future economic
harm,
the purposes of the LHWCA are served by a nominal award expressly
fashioned to preserve the claimant's right to future compensation. See
also Rambo v. Director, OWCP, 81 F.3d 840, 843 (9th Cir. 1996), aff 'd,
521 U.S. 121 (1997) (agreeing with 2d, 5th and D.C. Circuits that
"nominal awards may be used to preserve a possible future award where
there is a significant physical impair ment without a present loss of
earnings").
5. ALJ Barnett stated:
This case, however, arises in the Thir d Circuit, which has
evidently
not considered the issue. The court is ther efore bound by the
rulings of the Benefits Review Board, which disfavors de minimis
awards (citations omitted).
The Board had repeatedly "expressed its dissatisfaction with de minimis
awards of benefits," viewing them as "judicially-created" extensions on
the time for modification, which "infring[e] upon the province of the
legislature". Rambo v. Director, OWCP, 81 F.3d 840, 844 (9th Cir. 1996),
aff 'd, 521 U.S. 121 (1997); see also LaFaille v. Benefits Review Board,
884 F.2d 54, 58 (2d Cir. 1989).
4
application. In her Supplemental Decision and Or der she
admonished the employer's counsel for requiring Petitioner
to litigate every issue -- including jurisdiction, which
should not have been contested -- and for tur ning the
motions for fee awards into "a second major litigation."6
After a complete review of the attorney's fee application,
ALJ Barnett found that Petitioner prevailed on jurisdiction,
disability, and the award of medical benefits;7 she also
observed that "[a] party cannot . . . litigate tenaciously and
then be heard to complain about the time necessarily spent
by opposing counsel in response."8 In a Second
Supplemental Decision and Order issued on May 14, 1996,
ALJ Barnett ordered the employer to pay directly to
Petitioner's counsel the sum of $71,247.89 in fees and
costs for his successful representation of Petitioner and
$1,060 in fees and costs for defending his fee application.
Both the denial of a de minimis awar d and the award of
attorney's fees were timely appealed and considered
together. On February 26, 1997, the Boar d issued a
Decision and Order in which it acknowledged that de
minimis awards are appropriate where a claimant has
established a "significant possibility of futur e economic
harm as a result of the injury" but r easoned that "[a]s [ALJ
Barnett]'s determination that claimant did not establish a
significant possibility of future economic harm is supported
by substantial evidence", it would "affir m the denial of a de
minimis award."9 On the issue of attorney's fees, the Board
held that ALJ Barnett erred in failing to apply the Supreme
Court's holding in Hensley v. Eckerhart , 461 U.S. 424(1983), requiring that an attorney's fee award be
commensurate with the degree of success obtained in the
case. The Board concluded that although ALJ Bar nett cited
_________________________________________________________________
6. Supplemental Decision and Order of ALJ Barnett, April 26, 1996 (32a-
33a).
7. As ALJ Barnett noted, the award of future medical benefits constitutes
successful prosecution under Jackson v. Ingalls Shipbuilding Division,
Litton Systems, Inc., 15 BRBS 299 (1983).
8. Supplemental Decision and Order of ALJ Barnett, April 26, 1996
(33a).
9. Decision and Order of February 26, 1997 (13a-14a).
5
Hensley, she "did not apply its holding in awarding an
attorney's fee in excess of $71,000." The Board therefore
vacated that award and remanded and r eassigned the case
to ALJ Chapman10 with dir ections to adjust the fee award
"after taking into account the limited results obtained in
this case, specifically that only medical benefits, but no
disability benefits, were awarded." 11
Twenty months later, in October, 1998, ALJ Chapman
found that the number of hours reflected in the fee petition
was reasonable, but reduced the hourly rates by one-third
for lack of evidentiary justification that they were the
prevailing rates for similar legal work in the area. She
further reduced the lodestar figure by two-thirds in
accordance with her conclusion that the awar d of future
medical benefits represented "no mor e than one-third of the
relief requested."12 Upon Motion for Reconsideration
submitting evidence that the rates awarded by ALJ Barnett
were the prevailing rates for attor neys with comparable
experience, and challenging the reduction in the degree of
success to one-third, ALJ Chapman denied that Motion but
changed the rationale for her reduction in the rates. She
concluded that (a) the rates were nonetheless unreasonable
because the amount of time charged by counsel to this
matter strongly suggested to ALJ Chapman that counsel
lacked expertise and (b) because ALJ Barnett's"refusal to
grant a de minimis award indicate[d] that she did not view
the possibility of future economic harm .. . to be significant
enough to overcome the Board's disfavor of such awards",
counsel had achieved a relatively small portion of the relief
requested.13
On January 28, 2000 the Board affirmed ALJ Chapman's
fee reductions, holding that Petitioner failed to show any
abuse of discretion and that Petitioner's "primary claim for
_________________________________________________________________
10. The case was reassigned to the r ecently-appointed ALJ Chapman due
to the death of ALJ Barnett.
11. Id. (14a).
12. Decision and Order of ALJ Chapman, October 23, 1998 (44a).
13. Decision and Order of ALJ Chapman on Motion for Reconsideration,
January 11, 1999 (47a).
6
compensation" had been denied.14 At this time, the Board
was also asked to revisit its denial of a de minimis award in
light of the Supreme Court's decision in Metropolitan
Stevedore Co. v. Rambo, 521 U.S. 121 (1997).15 In a
footnote, the Board replied that:
Even though the Board did not rely on the Supreme
Court's Rambo decision, which had not yet been
issued, the Board used the "significant possibility of
future economic harm" standard of the [underlying
Ninth Circuit decision] . . . which is consistent with the
standard used by the Supreme Court in its decision.
While Judge Barnett's denial of a de minimis award
may have been based on a determination that the . . .
Third Circuit did not speak on the issue and the Board
did not favor such awards, the Board, in affirming,
relied on correct law.
Decision and Order of the Board, January 28, 2000 (7a).
II.
We exercise plenary review over the Board's interpretation
of law and we also exercise plenary review to satisfy
ourselves that the Board adhered to the statutory scope of
review. Pennsylvania Tidewater Dock Co. v. Director, OWCP,
202 F.2d 656, 660 (3d Cir. 2000). 16 The Board must accept
the ALJ's findings unless they are contrary to law,
irrational or unsupported by substantial evidence in the
record as a whole. See id.; see also O'Keeffe v. Smith
Associates, 380 U.S. 359 (1965).17 It exceeds its authority
_________________________________________________________________
14. Decision and Order of the Board, January 28, 2000 (6a-7a).
15. In Rambo, the Supreme Court held that an award of nominal
compensation is proper where a worker has not suffered a current loss
of earnings but "there is a significant possibility that the worker's
wage-
earning capacity will fall below the level of his preinjury wages sometime
in the future." 521 U.S. at 123.
16. See also Director, OWCP v.Barnes and Tucker Co., 969 F.2d 1524,
1526-27 (3d Cir. 1992); Bethenergy Mines, Inc. v. Director, OWCP, 39 F.3d
458, 463 (3d Cir. 1994).
17. See also Rambo v. Director, OWCP, 81 F.3d 840, 842 (9th Cir. 1996),
aff 'd, 521 U.S. 121 (1997) (noting that Board decisions "are reviewed by
the appellate courts for `errors of law and adherence to the substantial
evidence standard' ") (quoting Metropolitan Stevedore Co. v. Brickner, 11
F.3d 887, 889 (9th Cir. 1993)).
7
when it makes independent factual determinations. See
Director, OWCP v. U.S. Steel Corp. , 606 F.2d 53, 55 (3d Cir.
1979).18
In Rambo, the Supreme Court confir med that de minimis
awards are appropriate where a claimant's "work related
injury has not diminished his present wage ear ning
capacity under current circumstances, but there is a
significant potential that the injury will cause diminished
capacity under future conditions." 521 U.S. at 138. The
Court addressed the potential tension in such cases
between the LHWCA's statutory mandate to account for
future effects of disability in deter mining a claimant's wage-
earning capacity (and thus entitlement to compensation)
under 33 U.S.C. S 908(h) and its statutory pr ohibition
against issuing any new order to pay benefits more than
one year after compensation ends or an order is entered
denying an award, see 33 U.S.C. S 922.19 It approved the
reconciliation of these provisions pr eviously adopted by four
of our sister courts of appeals, reading the LHWCA to
authorize a present nominal award subject to later
modification; and in so holding it rejected the Board's
historic antipathy toward such awards. 20 Moreover, the
Supreme Court approved the courts of appeals' standard of
proof necessary to justify a nominal awar d, i.e., such
compensation "should not be limited to instances where a
decline in capacity can be shown to a high degr ee of
statistical likelihood" but should be awar ded where "there
is a significant possibility that a worker's wage earning
_________________________________________________________________
18. See also Rambo, 521 U.S. at 139 (noting that "the ALJ is the
factfinder under the Act") (citations omitted).
19. See 521 U.S. at 134 (noting that denying any compensation to a
claimant who has no present earnings loss"would run afoul of the Act's
mandate to account for the future effects of disability in fashioning an
award, since . . . the 1-year statute of limitations for modification
after
denial of compensation would foreclose r esponding to such effects on a
wait-and-see basis as they might arise").
20. See 521 U.S. at 131-32 (concluding that "[t]o implement the mandate
of S 8(h) . . . "disability" must be r ead broadly enough to cover loss of
capacity . . . as a potential product of injury and market opportunities
in the future").
8
capacity will at some future point fall below his preinjury
wages." 521 U.S. at 137.
It is clear from ALJ Barnett's decisions that she found
proof of a present medical disability and a reasonable
expectation of future loss of wage-earning capacity and that
her sole reason for denying a de minimis award was her
belief that the Board's prior decisions constrained her from
doing so. It is, therefore, equally clear that the Board erred
in recharacterizing ALJ Barnett's decision as a
"determination that claimant did not establish a significant
possibility of future economic harm" and was therefore not
entitled to a de minimis award. The ALJ made no such
determination; to the contrary, she reached precisely the
opposite conclusion. See April 26, 1996 Supplemental
Decision and Order (33a-34a) ("[H]er e, there is proof of a
present medical disability and a reasonable expectation of
future loss of wage-earning capacity".). Under the guise of
interpreting ALJ Barnett's decision, the Board has in effect
substituted its own contrary factual determination, in
contravention of our holding in U.S. Steel. 21
Because the Board misread ALJ Barnett's decision, it
never considered whether her actual finding -that the
standard for an award of de minimis benefits had been met
- was supported by substantial evidence. Wefind that ALJ
Barnett's original determination was supported by
substantial evidence in the record, including the testimony
of Petitioner's orthopedic surgeon to the ef fect that
Petitioner's condition would inevitably deteriorate. ALJ
Barnett reasonably inferred fr om the medical evidence that
there was at least a "significant possibility" that Petitioner
would at some future time suffer economic harm as a
result of his injury.
We are troubled by the Boar d's continued unwillingness
to uphold properly-supported nominal awar ds, in the face
_________________________________________________________________
21. Cf. Hole v. Miami Shipyards Corp. , 640 F.2d 769, 773 (5th Cir. 1981)
(reinstating de minimis award and observing that "it is the duty of the
ALJ, not of the Board or of this court, to weigh the evidence and draw
reasonable inferences therefr om").
9
of clear direction from four courts of appeals and even the
Supreme Court.22
Accordingly, we hold that, pursuant to thefindings made
by ALJ Barnett and the direction of the Supreme Court in
Rambo, Petitioner is entitled to a nominal award retroactive
to September 1, 1991, the date he stopped receiving his
regular salary from Global.23
III.
This appeal also requires us to review the Board's
determination that, contrary to the decision of ALJ Barnett,
Petitioner's counsel is entitled to only a significantly-
reduced fee for legal services render ed.
The ALJ is given the responsibility of deter mining an
appropriate attorney's fee award. On appeal, the Board's
scope of review is limited; it "must uphold the ALJ's
findings unless the ALJ applied the wrong legal standard or
the ALJ's factual conclusions were not `supported by
substantial evidence in the record considered as a whole.' "
Pennsylvania Tidewater Dock Co. v. Dir ector, OWCP, 202
F.3d 656, 659 (3d Cir. 2000) (quoting 33 U.S.C. S 921(b)(3)).
Substantial evidence " `means such r elevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.' " Id. at 661 (quoting Richardson v. Perales, 402
U.S. 389, 401 (1971)). The Board may not r everse an ALJ's
_________________________________________________________________
22. See Hole v. Miami Shipyards Corp. , 640 F.2d 769 (5th Cir. 1981)
(reversing Board, which "exceeded its statutory authority in substituting
its judgment" for ALJ's in vacating award based on ALJ's conclusion of
significant probability that worker would suf fer some future economic
harm as result of injury); LaFaille v. Benefits Review Board, 884 F.2d 54,
62 (2d Cir. 1989) (reversing ALJ and Board in concluding that where ALJ
found a "progressive, obstructive lung disorder" which restricted
claimant's ability to perform his for mer work, there was "substantial
evidence that [claimant was] likely to suf fer a future loss of earnings
as
his condition deteriorate[d] or when his envir onment change[d]",
entitling
claimant to a de minimis periodic payment).
23. See Rambo v. Director, OWCP, 81 F.3d 840, (9th Cir. 1996),aff 'd, 521
U.S. 121 (1997) (reversing denial of benefits and remanding for entry of
a nominal award).
10
award merely because it would have r eached a contrary
conclusion. See, e.g., id. at 659.
ALJ Barnett presided over this entir e case and was in the
best position to observe firsthand the factors af fecting her
analysis of counsel's fee award. She was familiar with
prevailing rates for successful claimant's attorneys in her
District and was best able to assess the repr esentation and
services rendered. Indeed, ALJ Bar nett expressly noted
counsel's decades-long experience in maritime litigation,
high standing, and "success in this matter despite the
employer's tenacious defense by experienced counsel."24 As
these and other factors recited by ALJ Bar nett constitute
substantial evidence supporting her determination as to the
appropriateness of counsel's rates, that deter mination may
not be disturbed on appeal.
ALJ Barnett's decision to award counsel's full fee - with
no "limited success" reduction - was also supported by
substantial evidence and, moreover, was in accordance with
the Supreme Court's holding in Hensley v. Eckerhart, 461
U.S. 424 (1983). Under Hensley, the question is whether
"the relief obtained justified that expenditure of attorney
time." 461 U.S. at 435 & n. 11.25 Petitioner here prevailed
against his employer's strong contestation of jurisdiction,
the extent of disability, and entitlement to futur e medical
benefits. Indeed, by securing future medical benefits,
counsel obtained a substantial benefit for Petitioner.
Moreover, as discussed in Part II, Petitioner also prevailed
as to the factual criteria for a de minimis award and he has
now prevailed as to his legal entitlement on that score as
well.
In determining the degree of success as compared to the
overall purpose of the litigation,26 ALJ Barnett felt that
_________________________________________________________________
24. Supplemental Decision and Order of ALJ Barnett, April 26, 1996
(32a).
25. The Court specifically directs that the focus be "on the significance
of the overall relief obtained by the plaintif f in relation to the hours
reasonably expended on the litigation" and notes that it is not
"necessarily significant that a prevailing plaintiff did not receive all
the
relief requested."
26. See Hensley, 461 U.S. at 440 (directing that "[a] reduced fee award
is appropriate if the relief . . . is limited in comparison to the scope
of
the litigation as a whole").
11
Petitioner's counsel was entitled to the full awar d of fees.
Although Petitioner did not succeed on every theory
proffered, he did gain substantial benefit. ALJ Barnett
noted that this was a complex case and requir ed careful
preparation; she reviewed each of 36 entries as to which
specific objections were made and concluded that there was
no basis for reduction. Because ALJ Bar nett's decision was
supported by substantial evidence and applied the correct
legal standards, it should not have been disturbed. Neither
the Board nor ALJ Chapman had a basis for substituting a
different opinion from that of ALJ Barnett; to the contrary,
the Board was required as a matter of law to uphold ALJ
Barnett. Accordingly, the initial awar d of attorney's fees
must be reinstated.27 Mor eover, to avoid further
unnecessary litigation as to fees, we observe that Petitioner
will be entitled to recover a reasonable attorney's fee for the
present appeal as well.28
_________________________________________________________________
27. Because we find that the Board err ed in remanding ALJ Barnett's fee
award for recalculation in the first place, it is unnecessary for us to
address the propriety of ALJ Chapman's shifting rationales for reducing
the rate of Petitioner's counsel's fee or of her acr oss-the-board
reduction
of the fee award. We note, however , the apparent injustice of applying a
two-thirds reduction (against an alr eady reduced rate) with respect to
hours necessarily spent to establish jurisdiction, or on other issues that
contributed to Petitioner's successful outcome. Penalizing a litigant for
unsuccessful claims by reducing fees ear ned on successful claims could
have a chilling effect on the willingness of counsel to advocate even
meritorious positions in unsettled areas of the law. If the reduction in
the present case were to stand, it might well be seen by the bar as a
warning that counsel should not insist on rights secured under the law
as interpreted by the Courts, when the Boar d has announced a contrary
interpretation.
28. See Hole v. Miami Shipyards Corp. , 640 F.2d 769, 774 (5th Cir. 1981)
(observing that where employer contests its liability for compensation in
whole or in part and claimant is ultimately successful, employer must
pay claimant's attorney's fees for services necessary to that success,
including fees for legal services render ed before tribunals deciding
against him, as well as for claimant's successful pr osecution of appeal
to
Court of Appeals).
12
IV.
For the reasons set forth above, we will vacate the
decisions and orders of the Board and r einstate ALJ
Barnett's initial award of attorney's fees to Petitioner's
counsel; we further remand this case for entry of a nominal
disability award and for determination of an appropriate fee
for this appeal.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
13