A Day At The Beach: Fifth Circuit Rejects Expansive Situs Definition For LHWCA Comp In BP Beach Cleaning Case

The Fifth Circuit recently reversed, per curiam, a district court decision finding that a contract worker cleaning oiled beaches near Grand Isle, Louisiana, in the wake of the 2010 Macondo oil spill qualified as a longshoreman for purposes of receiving compensation payments under the Longshore Harbor Workers Compensation Act (LHWCA). Global Mgmt. Enters., LLC v. Commerce & Indus. Ins. Co., 13-31249 (5th Cir. June 23, 2014). The Global decision is the second important decision in as many years from the Fifth Circuit (see also New Orleans Depot Servs. Inc. v. Director, Office of Worker’s Compensation Programs, 718 F.3d 384 (5th Cir. 2013)to address the often problematic nuances of the “situs” requirement for LHWCA compensation claims.

Global involved claims by a temporary contract worker employed by Global who was injured on a Grand Isle beach while lifting a bag of oiled sand that was later to be transferred via truck to a vessel. The worker spent up to two hours actively loading and unloading the vessel at the pier, and six or seven hours cleaning the beaches, and at the specific time the incident was working on a beach located a few feet from Gulf waters and around a half-mile from the pier at which the vessel was docked. Global’s insurer initially paid state-law based worker’s compensation benefits, but later – after realizing that the worker had filed for LHWCA compensation (which was later withrdrawn) – ceased those payments based on an LHWCA exclusion in the policy. Global ultimately settled the worker’s claim and then sued its insurer for breach of contract and bad faith, on the basis that the LHWCA exclusion did not apply. The sole issue in dispute was whether the area where the worker was injured satisfied the “situs” requirement of the LHWCA.

The court held that for “a worksite to be [qualify as a situs under] the LHWCA, it must (1) adjoin navigable waters; and (2) customarily be used by an employer to facilitate one of the listed maritime activities.” On this basis, the court held that the beach where the incident occurred – a remote island off the coast of Grand Isle, with no structures – was not an area “customarily used” for longshoring work. Moreover, the court rejected the insurers argument that not only the beach, but also the pier facility where the oiled sand bags were loaded onto a barge for removal, should be considered together as a single LHWCA situs. While recognizing its prior jurisprudence confirming that a single LHWCA facility may be comprised of separate and distinct areas, the court found as follows:

[T]he beach and dock are not interconnected parts of a larger area used to facilitate longshore activity. First, the beach and dock did not compose a single contiguous entity. Undisputed testimony indicates that the pier and beach were around half a mile apart, and were rendered visually and functionally discrete by the island’s geography. The workers used vehicles to travel from the pier to each day’s worksite . . . Moreover, to whatever extent we might conceive of the beach and the dock as a single locus, that broad area was not dedicated to longshore work. Instead, the overarching objective of the enterprise was the restoration of the island. The workmen would clean a different beachfront area each day. Any tangential relationship between the recovery effort and the transport vessel is insufficient to convert the entire island (or its discrete parts) into a single longshore facility of some kind.

The Global opinion – which is eminently reasonable and practical, perhaps to the chagrin of part-time high school lifeguards who might otherwise have qualified as longshoremen during their summer jobs – is another important ruling, in the wake of the en banc court’s decision last year in New Orleans Depot, in which the Fifth Circuit has reined in what have been otherwise unbridled expansions of the geographic reach of the LHWCA by district courts.