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SESSION v. I.T.O. CORP.

September 20, 1985

MILLER SESSION and ROSE SESSION, his wife, Plaintiffs,
v.
I.T.O. CORPORATION OF AMERIPORT, Defendant



The opinion of the court was delivered by: COHEN

 This maritime tort action, in which the plaintiffs seek only equitable relief, is presently before the Court on plaintiffs' motion for summary judgment. The primary plaintiff, Miller Session, is an injured longshoreman who is currently receiving workers' compensation benefits from his employer, the defendant herein, the I.T.O. Corporation of Ameriport (ITO). His wife alleges derivative damages and sues per quod. Essentially, Mr. Session, who shall hereinafter simply be referred to as plaintiff, seeks a declaration that ITO is not entitled to be reimbursed for the statutorily mandated payments it made to plaintiff pursuant to the Longshoremen and Harbor Workers' Compensation Act (the Act or LHWCA), 33 U.S.C § 901 et seq., because these benefits do not duplicate the compensation for noneconomic losses which he has been offered by the South Jersey Port Corporation (SJPC) in settlement of a third party negligence action. Plaintiff's claim arises, therefore, under the LHWCA and vests this Court with subject matter jurisdiction pursuant to 28 U.S.C. § 1331.

 Because of the preliminary status of this case, its factual background has not been fully developed. Nevertheless, the facts are undisputed and, ultimately, are almost incidental to our disposition of the present motion. All that need be known about the accident in question, which took place on August 17, 1981, is that the plaintiff was seriously injured when a stack of lumber, which had been unloaded from a vessel, fell on him. The plaintiff claims that his injuries were proximately caused by unsafe pier conditions and the negligence of its operators, the SJPC. Mr. Session has already received extensive medical treatment and compensation benefits of more than $100,000.00. He is not entirely ambulatory and may well be permanently disabled.

 Pursuant to its obligations under the LHWCA, ITO began paying workers' compensation benefits to the plaintiff shortly after Session's accident. In order to achieve a complete tort recovery, the plaintiff brought suit against the allegedly negligent third party, the SJPC. In its answer, the marine terminal operator raised the uncontroverted defense that it is a "public entity" of the State of New Jersey within the meaning of the New Jersey Tort Claims Act, N.J.S.A. § 59:1-1 et seq. As such, the SJPC is only liable to the plaintiff for those injuries which are not compensable from any other source. *fn1" See The Travelers Insurance Company v. Collella, 169 N.J. Super. 412, 404 A.2d 1250 (App. Div. 1979) (workers' compensation insurer was not entitled to reimbursement from a public entity for benefits paid to injured employee). More specifically, the SJPC is not liable to the plaintiff for the costs of his medical, disability or rehabilitation expenses because these are recoverable under the LHWCA. See 33 U.S.C. §§ 906, 907 & 908.

 On April 16, 1984, the Court convened a settlement conference between representatives of Mr. Session and the SJPC. At that time, Mr. Session agreed to accept a $40,000 settlement offer from the SJPC on the condition that, pursuant to N.J.S.A. § 59:9-2(e), there would be no subrogation claim for reimbursement asserted by ITO and that plaintiff's right to collect his workers' compensation payments would not be otherwise affected by the SJPC settlement. Upon learning of this proposed agreement, ITO indicated that it would not be willing to abide by these terms. Instead, the defendant herein claims that it is entitled to credit any amount Mr. Session receives from SJPC against its workers' compensation liability.

 Although ITO has continued to pay compensation benefits to the plaintiff, its unwillingness to approve of plaintiff's proposed settlement with the SJPC and its stated intention to terminate the plaintiff's benefits if he consummates the settlement without its consent, see 33 U.S.C. § 933(g)(2), demonstrate the existence of a "definitive and concrete" dispute between parties with "adverse interests" thereby confirming this Court's ability to respond to plaintiff's request for declaratory relief. See ACandS, Inc. v. Aetna Cas. & Sur. Co., 666 F.2d 819, 822-23 (3d Cir. 1981). Thus, we proceed to explain our resolution of the novel issue presented by this case: Does a stevedore's lien, acquired by payment of statutory workers' compensation benefits, apply to any recovery (minus the costs of litigation) an injured longshoreman may obtain from a culpable third party even if the longshoreman clearly will not realize any double compensation by retaining both the statutory benefits and the third party damages? We hold that it does.

 DISCUSSION

 Like other workers' compensation statutes, the LHWCA employs a fundamental quid pro quo in that it mandates a reciprocal relinquishment of important legal rights. "Employees are assured hospital and medical care and subsistence during convalescence. Employers are assured that regardless of fault their liability to an injured workman is limited under the act." S. Rep. No. 428, 86th Cong., 1st Sess. 1, reprinted in 1959 U.S. Code Cong. & Ad. News 2134 [hereinafter cited as S. Rep. No. 86-428]. See also Morauer & Hartzell, Inc. v. Woodworth, 142 U.S. App. D.C. 40, 439 F.2d 550, 552-53 (D.C. Cir. 1970). What seems somewhat atypical about the Act, or more particularly about its evolution, is the frequency with which Congress has responded to Supreme Court interpretations of the Act by enacting subsequent amendments. Most of this interaction between the judiciary and legislature has taken place in regard to actions, like the one at bar, in which longshoremen (or employers subrogated to their rights) sue allegedly negligent third parties. Usually, these third parties are shipowners. In this case, no vessel contributed to plaintiff's injuries, however.

 "In the typical tripartite situation, the longshoreman is not only guaranteed the statutory compensation from his employer; he may also recover tort damages if he can prove negligence by the vessel." Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 530, 76 L. Ed. 2d 768, 103 S. Ct. 2541 (1980). Prior to the 1972 LHWCA amendments and by virtue of three Supreme Court decisions, *fn2" a longshoreman could obtain tort recovery from a vessel merely by proving that his injury was caused by an "unseaworthy" condition. The vessel could then recover from the longshoreman's employer by proving negligence.

 
The net result, in many cases, was to make the stevedore absolutely liable for statutory compensation in all cases and to deny him protection from additional liability in the cases in which his negligence could be established. The 1972 Amendments protect the stevedore from a claim by the vessel and limit the longshoreman's recovery to statutory compensation unless he can prove negligence on the part of the vessel.

 Id. at 531 n.7.

 Congress has also expressed its support of Supreme Court opinions which have construed the LHWCA. In Pallas Shipping Agency, Ltd. v. Duris, 461 U.S. 529, 103 S. Ct. 1991, 76 L. Ed. 2d 120 (1983), for example, the Court held that a longshoreman's acceptance of voluntary compensation payments did not constitute an acceptance of compensation "under an award in a compensation order." Id. at 532-39. Thus, an employee's voluntary acceptance of benefits did not trigger an assignment of his third party cause of action, which has only recently been made revocable, to his employer. See 33 U.S.C. § 933(b). In its 1984 LHWCA amendments, most of which became effective immediately, Congress adopted the Pallas Shipping holding. See H. Conf. R. No. 1027, 98th Cong., 2nd Sess. 36, reprinted in 1984 U.S. Code Cong. & Ad. News 2734, 2786 [hereinafter cited as H.C.R. No. 98-1027].

 The 1984 amendment that we find to be dispositive of this case was enacted in reaction to Bloomer v. Liberty Mutual Insurance Co., 445 U.S. 74, 100 S. Ct. 925, 63 L. Ed. 2d 215 (1980). There, the Court held that the judicially established stevedore's lien, which is at issue in this case, is not to be reduced by an amount representing an employer's proportionate share of the legal expenses a longshoreman encountered in obtaining a recovery from a third party. Id. at 85-88. Essentially, the Court applied the allocation scheme which Congress had specified for third party recoveries obtained by subrogated employers, see 33 U.S.C. § 933(e), to a longshoreman's own action. A "review of the Act and its legislative history persuade[d] [the Court] that Congress intended the stevedore to recover the full amount of its lien, regardless of who brings the action." Bloomer, 445 U.S. at 87 n.14, 100 S. Ct. at 932 n. 14. In its 1984 Amendments, Congress rejected this conclusion.

 The new § 33(f) of the LHWCA, which became effective on September 28, 1984 to all pending cases, *fn3" provides that, in ...


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