Etienne v. Shell Oil Company ( 2003 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 02-40323
ERNEST ETIENNE,
Plaintiff,
EAGLE PACIFIC INSURANCE COMPANY,
Intervenor Plaintiff-Appellant,
versus
SHELL OIL COMPANY, ET AL.,
Defendants,
SCHECHTER, MCELWEE & SHAFFER, L.L.P.,
Intervenor-Appellee.
--------------------
Appeal from the United States District Court
for the Southern District of Texas
(G-00-CV-196)
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March 17, 2003
Before WIENER, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
Intervenor-Appellant Eagle Pacific Insurance Co. (“Eagle”)
appeals from the district court’s order enforcing its previous
order requiring Eagle to pay the proceeds of a Longshore and Harbor
Worker’s Compensation Act (“LHWCA”) settlement to the claimant’s
attorney’s law firm, Intervenor-Appellee Schechter, McElwee &
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
Shaffer (“Shaffer”). After the district court’s original order was
entered and the Department of Labor approved the LHWCA settlement,
Eagle paid the funds directly to the injured worker, Plaintiff
Ernest Etienne, rather than to Shaffer. Returning to the district
court, Shaffer obtained an order directing Eagle to pay counsel
irrespective of the payment to Etienne. Eagle now claims that the
district court lacked subject matter jurisdiction to order the
payment to Shaffer. Agreeing with Eagle, we vacate the order of
the district court.
I
Facts and Proceedings
Etienne was injured while working as a galleyhand aboard an
offshore oil rig owned by Shell Oil Co. and staffed by Philip/Seco
Industries Inc. He sued Shell and Philip/Seco under § 5(b) of the
LHWCA.1 Eagle, as worker’s compensation carrier for Etienne’s
employer, intervened to assert a lien for compensation payments
that it had made to Etienne. The tort suit settled for a total of
$140,000: Philip/Seco agreed to contribute $125,000 to settle the
tort claim; Eagle agreed to contribute $15,000 to settle the
longshore claim in exchange for a waiver of its lien; and Defendant
Shell Oil Co. was dismissed from the suit with prejudice.
After the parties agreed to be bound by the settlement,
Etienne had second thoughts and refused to sign the settlement
papers. Philip/Seco filed a motion to enforce the settlement, and
1
See 33 U.S.C. § 905(b)(allowing suits in negligence against
third parties by workers covered by the LHWCA).
2
Shaffer intervened to assert an attorney’s fees claim. At the
hearing, the court enforced the settlement agreement by ordering
Etienne to sign all the necessary documents. To expedite Etienne’s
receipt of settlement funds, the court ordered Shaffer to pay
Etienne his total recovery for both the tort and longshore claims
from the tort settlement. And, to ensure that Shaffer would
receive the attorney’s fees, the court ordered Eagle to pay the
longshore settlement directly to Shaffer.
After the Department of Labor approved the LHWCA settlement,
which prohibited payment of attorney’s fees from the proceeds of
the settlement, Eagle paid the funds directly to Etienne. That
prompted Shaffer to file a motion to enforce the court’s order for
Eagle to pay Shaffer, and the court granted this motion. Eagle
responded with a motion to reconsider, which the court denied. The
district court then certified its order pursuant to Rule 54(b) of
the Federal Rules of Civil Procedure, thereby conferring appellate
jurisdiction.2
II
Analysis
A district court’s exercise of subject-matter jurisdiction is
subject to plenary review at any time.3 Parties cannot confer
subject-matter jurisdiction on a federal court by agreement or by
2
See 28 U.S.C. §1291.
3
See Local 1351 Int’l Longshoremen’s Ass’n v. Sea-Land Serv.
Inc., 214 F.3d 566, 569 (5th Cir. 2000), cert. denied sub nom., SL
Serv., Inc. v. Office & Prof’l Employees Int’l Union, 531 U.S. 1076(2001)(“We exercise plenary, de novo review of a district court’s
assumption of subject matter jurisdiction.”).
3
failure to object to continued proceedings.4 There must be a
statutory basis for a district court’s exercise of subject-matter
jurisdiction; the parties’ willingness or desire to come before the
court will not suffice.
The LHWCA was designed to minimize the need for litigation as
a means of providing compensation for injured workers.5 In pursuit
of this aim, Congress granted the Department of Labor exclusive
jurisdiction to adjudicate claims under the LHWCA.6 The 1972
amendments to the LHWCA reduced the role of the district courts to
two functions: (1) determining whether a compensation order was
made and served in accordance with law; and (2) determining whether
an employer has failed to comply with a compensation order.7
Under this statutory scheme, federal district courts have
jurisdiction over the enforcement of LHWCA awards, but do not have
jurisdiction to grant or deny awards (including attorney’s fees) or
to modify such awards in any way.8 Here, the district court
ordered Etienne to sign the tort settlement release and the 8(i)
4
“[T]he subject-matter jurisdiction of a federal court can
be challenged at any stage of the litigation (including for the
first time on appeal), even by a party who first invoked it.” In
re Canion, 196 F.3d 579, 585 (5th Cir. 1999).
5
See Rodriguez v. Compass Shipping Co., Ltd., 451 U.S.596
(1981), rehearing denied, 453 U.S. 923.
6
See 33 U.S.C. § 905(a)(providing that LHWCA employer
liability is exclusive); 33 U.S.C. § 919(a)(“[T]he deputy
commissioner shall have full power and authority to hear and
determine all question in respect of [a LHWCA] claim.”).
7
See 33 U.S.C. §§ 918(a), 921(d).
8
Thompson v. Potashnick Const. Co., 812 F.2d 574, 576 (9th
Cir. 1987); see 33 U.S.C. § 921(e).
4
application, and ordered Eagle to make the LHWCA check payable to
Shaffer. Requiring the LHWCA check be made payable to a particular
payee might have enforced the contingency fee agreement between
Etienne and Shaffer, but it could not enforce the LHWCA settlement:
The district court’s order was filed before the settlement was
approved by the Department of Labor. Until a settlement is
approved, the employer (through its insurer) is not obligated to
pay the claimant.9 A court cannot enforce an obligation that does
not exist.
Given the limited role of federal district courts in the LHWCA
statutory scheme, the court here exceeded its subject-matter
jurisdiction when it ordered the particular distribution of
Etienne’s award. As a district court has no ability to shape or
structure a LHWCA settlement, the court here was without
jurisdiction to order Eagle to pay Shaffer in satisfaction of the
debt owed by Etienne.
The district court’s order was intended to expedite payment to
Etienne and thus further the LHWCA’s purpose of providing prompt
compensation to injured workers. Despite this laudable purpose,
the court lacked jurisdiction to order Eagle to pay Etienne’s
counsel. That this apparently resulted in double recovery for
Etienne is regrettable; but, even though the court had jurisdiction
to order Shaffer to pay Etienne, it did not have jurisdiction to
order Eagle to pay Shaffer. We have no choice, therefore, but to
9
33 U.S.C. § 908(h).
5
vacate the latter order for lack of subject matter jurisdiction,
which only Congress can confer.
III
Conclusion
The district court’s order for Eagle to pay Shaffer is vacated
for lack of subject-matter jurisdiction.
ORDER VACATED.
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