Fanos v. Maersk Line, Ltd. , 363 F.3d 358 ( 2004 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 10, 2004
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
________________________
No. 03-40418
________________________
Stavros E. Fanos, on behalf of himself
and those similarly situated,
Plaintiff-Appellant
-vs-
Maersk Line, Ltd., Maersk Sealand,
A. P. Moller Group, Maersk, Inc., Wilmington
Trust, Expander Transport Corporation,
Expediter Transport Corporation, Expresser
Transport Corporation, Exporter Transport
Corporation, and Extender Transport Corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Texas
Before DAVIS and EMILIO M. GARZA, Circuit Judges, and LITTLE*, District Judge.
LITTLE, District Judge:
Stavros E. Fanos, a former radio electronics officer and member of the American Maritime
Officers Union (“the union”), appeals an adverse summary judgment in his action seeking wages and
penalty wages. The district court made three holdings in the alternative: (1) the vacation pay at issue
is not a seaman’s wage within the meaning of 46 U.S.C. § 10313, (2) even if the vacation pay were
*
District Judge of the Western District of Louisiana, sitting by designation.
a wage, the wage penalty claim would fail because the pay was not wrongfully withheld, and (3) this
claim is barred by laches. The district court, therefore, granted defendants’ motion for summary
judgment, which resulted in a dismissal with prejudice. The district court concluded correctly that
pay was not wrongfully withheld. The judgment of the district court is AFFIRMED.
I. Factual & Procedural Background
In 1982, the United States Department of Navy, Military Sealift Command (“MSC”) awarded
defendant Maersk Line, Ltd. (“Maersk Line”) a contract for the construction and operation of five
Maritime Preposition Ships (“MPS”). Following the award of the contract, Maersk Line created five
so-called E companies1 to be designated contractors for purposes of performing the MPS contract.
Under financing arrangements for the vessels, defendant Wilmington Trust Company (“WTC”) was
and remains the owner trustee of each vessel. WTC bareboat chartered each vessel to one of the E
companies. Each E company, in turn, time chartered each vessel to the MSC. The ships were placed
in operation in 1984 and 1985.
In 1982, Maersk Line and each of the E companies entered preliminary collective bargaining
agreements with the union for the employment of licensed deck and engine room officers on the MPS
vessels. In 1984, prior to the vessels being placed in service, each E company entered an amended
collective bargaining agreement with the union. The vacation pay section of the collective bargaining
agreement provided the following: “For all days of covered employment, officers shall receive fifteen
(15) days of paid vacation for each thirty (30) days of such employment.” This provision has changed
several times and now entitles officers to nineteen (19) days of paid vacation for each thirty (30) days
1
The five E companies are the following defendants: Expander Transport Corporation, Expediter
Transport Corporation, Expresser Transport Corporation, Exporter Transport Corporation and Extender
Transport Corporation.
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worked. The collective bargaining agreements require employers of union members to join the
various union benefit plans and to contribute to the plans. These plans are independent entities
governed by trustees.
In 1985, the E companies and the unio n signed a memorandum of understanding which
eliminated the employers’ duplicate benefits contributions. Duplicate benefits contributions
previously occurred on “overlaps days,” days when two officers are aboard a ship to perform one job.
Paragraphs II(A) and II(B) of the 1985 memorandum of understanding eliminates duplicate benefits
contributions with the following language:
(A) There shall not be any duplication of contributions to the various [union] plans,
Committees or Services. (B) When processing a vacation benefit application the
[union] Vacation Plan shall deduct one day of covered employment before calculating
the benefit payable. Such deduction shall be for employment commencing on or after
March 1, 1985 and per non-continuous pay periods.
The union agreed to this amendment in order to prevent the loss of jobs.
The defendants are not required to pay the vacation benefit directly to the employees.
Defendants are merely required to make contributions to the American Maritime Officers Union
Vacation Plan (“the Plan”). The Plan, in turn, manages and distributes these funds. Fanos does not
allege that defendants did not make proper contributions to the Plan. Fanos argues that the
withholdings pursuant to the 1985 memorandum of understanding were improper.
Fanos bottoms his suit on two main arguments: (1) that the vacation benefit is a seaman’s
wage under 46 U.S.C. § 10313, and (2) that the 1985 memorandum of understanding, which reduced
the benefit, was an illegal agreement under 46 U.S.C. § 10317. Fanos also alleges that the
memorandum of understanding is unenforceable because he was never informed of its existence.
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Plaintiff, therefore, seeks the amount allegedly wrongfully withheld as well as the statutory penalty.2
Both appellant and appellees provide extensive arguments for and against a finding that the
vacation benefits at issue are “wages” within the meaning of 46 U.S.C. § 10313. For purposes of this
opinion, it is unnecessary to make such a determination. Without deciding, this court herein assumes
that the vacation benefits at issue are “wages” within the meaning of 46 U.S.C. § 10313. Also due
to the analysis that follows, it is unnecessary to determine the applicability of the equitable doctrine
of laches.
II. Standard of Review
This is an appeal from the district court’s grant of summary judgment. “A summary judgment
is reviewed de novo, using the standard applied by the district court.” Governor and Co. of Bank of
Scotland vs. Sabay, 211 F.3d 261, 265 (5th Cir. 2000). The record is viewed in the light most
favorable to the non-movant and summary judgment is proper only when the summary judgment
record reveals that there is no genuine issue as to any material fact and the moving party is entitled
to judgment as a matter of law. Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir. 1994), cert. denied,
513 U.S. 871, 115 S. Ct. 195 (1994).
III. Analysis
Given the assumption that the vacation benefits are wages, this court must determine whether
defendants’ actions were proper. The pertinent part of the wage penalty statute, 46 U.S.C. § 10313,
states the following:
2
It is uncontested that plaintiff’s claim, which includes actual lost wages and the double penalty
mandated by 46 U.S.C. § 10313(g), exceeds $4 million. Plaintiff brought the suit as a class action. Although
the case was not certified as a class action, it is further uncontested that the class claim, including the statutory
penalty, would exceed $2 billion.
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(f) At the end of a voyage, the master shall pay each seaman the balance of wages due
the seaman within 24 hours after the cargo has been discharged or within 4 days after
the seaman is discharged, whichever is earlier. When a seaman is discharged and final
payment of wages is delayed for the period permitted by this subsection, the seaman
is entitled at the time of discharge to one-third of the wages due the seaman.
(g) When payment is not made as provided under subsection (f) of this section
without sufficient cause, the master or owner shall pay to the seaman 2 days’ wages
for each day payment is delayed.
The United States Supreme Court in Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102
S. Ct. 3245, 3249 (1982), explained the two prongs used to determine the application of the wage
penalty statute: (1) whether the master or owner refused to pay wages within the specified period,
and (2) whether this failure to pay was without sufficient cause. See also 46 U.S.C. § 10313. The
wage penalty statute is inapplicable to the instant scenario under both prongs.
The first prong asks whether the withholding was conducted by the “master or owner,” not
merely whether the withholding occurred. The defendants acknowledge that the one-day deduction
occurred. The defendants, however, argue that the Plan, not the defendants, was responsible for the
withholding. Furthermore, Fanos does not allege that defendants did not make proper contributions
to the Plan. Pursuant to the collective bargaining agreements, the defendants are required to make
contributions to the Plan, but the distribution of the vacation pay is an obligation of the Plan, not the
employer. Any alleged withholding or non-payment of vacation pay, therefore, cannot form the basis
of a claim against defendants. The first prong of the Griffin case is not satisfied and, therefore, the
wage penalty statute is inapplicable.
Even if the first prong were satisfied, the second prong is not satisfied. The second prong
asks whether the failure to pay was without sufficient cause. Whereas the plaintiff argues that the
failure to pay was without sufficient cause, the defendants argue that the 1985 memorandum of
understanding signed by the union and the E companies provides sufficient cause.
In Collie v. Ferguson, 281 U.S. 52, 55, 50 S. Ct. 189, 191 (1930), the United States Supreme
Court characterized “without sufficient cause” as “either conduct which is in some sense arbitrary or
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willful, or at least a failure not attributable to impossibility of payment.” A union is its members’
exclusive bargaining agent in the negotiation and administration of a collective bargaining agreement.
See Humphrey v. Moore, 375 U.S. 335, 342, 84 S. Ct. 363, 368 (1964); cf. Cactus Pipe & supply
Co. v. M/V Montmartre, 756 F.2d 1103, 1111 (5th Cir. 1985) (stating that “[m]aritime law embraces
the principles o f agency”). Although an employer cannot rely on a bargaining agent’s apparent
authority when the employer has knowledge to the contrary, see Goclowski v. Penn Cent. Transp.
Co., 571 F.2d 747, 759 (3d Cir. 1978), plaintiff has shown no evidence indicating that the union was
not authorized to negotiate the terms of its members’ employment. The 1985 memorandum of
understanding, therefore, provides sufficient cause for the withholding of the vacation benefits.
Because sufficient cause exists, the wage penalty statute is certainly inapplicable.
On a final note, Fanos further argues that 46 U.S.C. § 10317 makes the 1985 amendments
to the collective bargaining agreement void. 46 U.S.C. § 10317 states as follows:
A master or seaman by any agreement other than one provided for in this chapter may
not forfeit the master’s or seaman’s lien on the vessel or be deprived of a remedy to
which the master or seaman otherwise would be entitled for the recovery of wages.
A stipulation in an agreement inconsistent with this chapter, or a stipulation by which
a seaman consents to abandon a right to wages if the vessel is lost, or to abandon a
right the seaman may have or obtain in the nature of salvage, is void.
As indicated by the district court below, this statute is inapplicable to the instant situation. The 1985
memorandum of understanding did not deprive Fanos of any “remedy.” The memorandum of
understanding between the union and the employers modified the payment of vacation benefits. The
modification of a benefit is not a modification of a remedy.
IV. Conclusion
The district court concluded correctly that pay was not wrongfully withheld. The plaintiff
received all compensation to which he was entitled. The judgment of the district court, therefore, is
AFFIRMED.
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