January 9, 2018

Maritime Alert: Should Washington State reconsider its rejection of contractual rate of maintenance?

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Has the tide turned on Washington State Supreme Court’s Lundborg v. Keystone Shipping Co. decision on the enforceability of the rate of maintenance in a union contract?

A recent Third Circuit ruling regarding the enforceability of maintenance rates in collective bargaining agreements has put all seven of the federal Circuit Courts of Appeals that have considered the issue at odds with the Washington State Supreme Court’s ruling in Lundborg v. Keystone Shipping Co., 138 Wn.2d 658 (1999).

In Joyce v. Maersk Line Ltd., _ F.3d _, 2017 U.S. App. LEXIS 24433 (Dec. 4, 2017), an en banc panel of the Third Circuit Court of Appeals overturned a prior divided panel decision that held that it was “inconsistent…with the traditional doctrine of maintenance” to enforce the maintenance rate in a union contract for “a seaman who can show higher daily expenses.”  Barnes v. Andover Co., L.P., 900 F.2d 630, 640 (3d Cir. 1990).  The Washington Supreme Court relied on Barnes when it pronounced its own ruling on the subject, holding that anything less than “the going local rate for maintenance” is an abrogation of a seaman’s right to maintenance.  Lundborg, 138 Wn.2d at 666.

Now that the Third Circuit has overruled Barnes, may it be time for the Washington Supreme Court to revisit Lundborg?  There appears to be little hope that the Washington Supreme Court will overrule itself and again follow the Third Circuit since Joyce offers no new principles to consider, the local non-union maritime industry has little incentive to take up the issue, and union agreements increasingly provide for a more substantial maintenance rate.

Facts and holding in Lundborg:

In Lundborg, a seaman sued his employer after tripping over a hose on the ship’s deck and injuring his ankle.  Lundborg, 138 Wn.2d at 661.  The seaman was a member of a union that had a collective bargaining agreement with the employer providing that injured seamen would receive maintenance at the rate of $8 a day, which the employer paid daily until the seaman reached maximum medical improvement.  Id. at 662.

One of the main issues before the Washington Supreme Court was whether the seaman was entitled to maintenance in an amount sufficient to pay for room and board equivalent to that which he received on board the ship.  Id. at 660-662.  The Court noted that the majority position—followed by the First, Fifth, Sixth, and Ninth Federal Circuit Courts of Appeals—was that the maintenance rate in a collective bargaining agreement was enforceable so long as the collective bargaining process was fair and the rate had been subject to negotiation.  Id. at 665.  In other words, it did not matter whether the maintenance rate was enough to pay for room and board like that aboard the ship because a court would not review that rate unless there was evidence of unfairness in the collective bargaining process.

Instead of following the majority position, the Washington Supreme Court sided with a line of cases that followed the Third Circuit’s approach in Barnes, which considered it an abrogation of the seaman’s right to maintenance when the rate in the union contract was inadequate to pay the local market rate for room and board.   Id. at 666.  The Court gave little weight to arguments underpinning the majority position; mainly, that the policies which undergird federal labor law are meant to encourage the use and reliability of collective bargaining and thus require adherence to the terms of a freely bargained-for agreement.   Id. at 668.  The Court also noted that the historic right to maintenance cannot be abrogated by contract, citing various federal and state laws that offer similar protections from collective bargaining agreements that seek to abrogate workers’ rights.  Id. at 668-70.  The Court ultimately determined that it was an issue for the trier of fact to decide whether $8 per day is so inadequate as to vitiate a seaman’s right to maintenance.  Id. at 671.  The Court’s ruling is binding precedent on all the state courts in Washington.

Facts and holding in Joyce:

Recently, the Third Circuit in Joyce considered the issue of whether unearned wages owed to an injured seaman should include overtime pay when the collective bargaining agreement between the ship owner and the seaman’s union excludes overtime from the definition of unearned wages.  The seaman urged the Third Circuit to extend its holding in Barnes and permit review of the unearned wages rate set by a collective bargaining agreement.  The seaman reasoned (1) the right to unearned wages dates back almost a thousand years and should be treated like maintenance, (2) overtime is often awarded as part of the common law right to unearned wages, and (3) if the maintenance rate in a union contract can be set aside, so can an unearned wages rate.  Joyce, 2017 U.S. App. LEXIS 24433, at *9-11.  Because the Third Circuit agreed with the seaman’s first two points, it was faced with a dilemma: either extend Barnes so that it also applies to unearned wages or reconsider the decision altogether.  Id. at *11.

The Third Circuit acknowledged that in the twenty-seven years since Barnes, every other circuit court to consider the question of whether to enforce a maintenance rate in a collective bargaining agreement has rejected Barnes and adopted the majority position.  Id. at *13.  Accordingly, the Third Circuit overruled Barnes and held that the rates for maintenance and unearned wages set forth in a collective bargaining agreement will be enforced unless there is evidence of unfairness in the collective bargaining process or the agreement completely abrogates the employer’s duty to pay maintenance.  Id. at *18-19.

Will the Washington Supreme Court revisit Lundborg next?

When Barnes and Lundborg were decided, four U.S. Circuit Courts of Appeals (the First, Fifth, Sixth, and Ninth Circuits) had held that maintenance rates in collective bargaining agreements are enforceable so long as the collective bargaining process was fair and the rate had been subject to negotiation.  Over the ensuing years, two more circuit courts (Second and Eleventh Circuits) followed suit.  With the Third Circuit now overruling Barnes, all seven U.S. Circuit Courts of Appeals to have considered the issue have reached the same conclusion and for good reasons.

There are strong policy arguments in favor of protecting freedom of contract and the parties’ bargained-for expectations, including the policies behind national labor laws that aim to encourage collective bargaining.  As the Third Circuit said in Joyce, “this country’s national labor policy is built on the premise that employees can bargain most effectively for improvements in wages, hours, and working conditions by pooling their economic strength and acting through freely chosen labor organizations.”  Joyce, 2017 U.S. App. LEXIS 24433, at *14.  Piecemeal judicial review of the terms in a collective bargaining agreement discourages that process.

Even though the tide has turned in the federal courts, it is unlikely that the Washington Supreme Court will overrule itself since neither Joyce nor the arguments advanced by the other circuit courts offer anything new for its consideration.  Specifically, the Court in Lundborg considered the same policy arguments in favor of collective bargaining agreements and found the seaman’s right to reasonable maintenance outweighed them.  The Court concluded that striking down a collective bargaining provision that abrogates the right to maintenance was not an assault on federal policy.  Moreover, most mariners who live and work in Washington are non-union seaman who work aboard fishing vessels, tug boats, local excursion vessels, or are employed in the marine construction industry.  Those who are union members increasingly find that their contracts have much higher daily maintenance rates than the modest amounts found in a shrinking number of collective bargaining agreements.  Thus, the issue of the maintenance rate recoverable in Washington’s state courts may not justify the effort and expense entailed in asking the Washington Supreme Court to reconsider its ruling in Lundborg, and if it declines, asking the United States Supreme Court to overturn the decision in the interest of uniformity.

For more information on this issue, please contact one of the attorneys in Keesal, Young & Logan’s Seattle office.

Keesal, Young & Logan Maritime Law Group

This information has been prepared by Keesal, Young & Logan for informational purposes only and is not legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between you and Keesal, Young & Logan. You should not act upon this information without seeking professional counsel.