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Maritime Update: Towboat Cook Awarded $300,000 In Punitive Damages, Plus Attorneys' Fees, For Employer's Arbitrary Conduct

On June 4, 2014, the Louisiana Third Circuit Court of Appeal, in the case Stermer v. Archer-Daniels-Midland Company and American River Transportation Company, affirmed a $300,000 punitive damage award against a Jones Act employer for arbitrarily failing to pay a seaman maintenance and cure ("M&C").  This ruling illustrates the importance of exercising great care when evaluating a seaman's claim for M&C.

Background

Plaintiff Adrienne Stermer was a cook on the M/V COOPERATIVE ENTERPRISE, a vessel operated by American River Transportation Company ("ARTCO") on the Mississippi River to transport barges between New Orleans and St. Louis, Missouri.

Ms. Stermer was squatting in front of an open refrigerator in the galley when she felt the vessel bump, causing her to lose her balance and fall forward into the refrigerator.  Stermer didn't report the accident immediately, but was transported to shore for treatment once it was reported.  Plaintiff was diagnosed with wrist and ankle sprains and later underwent surgery to her wrist.

The claim was disputed by other ARTCO employees present in the galley when the bump occurred, as the vessel was facing up to its tow.  ARTCO notified Stermer that it would not voluntarily pay M&C and terminated her for lying. 

Plaintiff filed suit against ARTCO as a seaman and sought damages for retaliatory discharge, lost wages, medical expenses, pain and suffering, negligent infliction of emotional distress, punitive damages, and attorneys' fees.

The trial court awarded Stermer $636,947 in damages, $300,000 in punitive damages, and $150,000 in attorneys' fees.  ARTCO appealed the award of punitive damages and attorneys' fees. 

Discussion

If an employer fails to properly investigate a claim for M&C or unreasonably rejects a claim after investigating it, the employer may be liable for compensatory damages for its failure to pay M&C.  The employer may also be liable for punitive damages and attorneys' fees if it is arbitrary and capricious in denying a claim for M&C.  An employer's failure to consider medical evidence submitted by a seaman in support of his/her claim is arbitrary conduct.

On appeal, ARTCO maintained that no accident occurred and that plaintiff was not injured as alleged.  ARTCO also took the position that the district court erred in awarding attorneys' fees without any evidence of the work expended by plaintiff's counsel.

Conclusion

Plaintiff's $300,000 punitive damage award was affirmed.  The Third Circuit instructed that when doubt exists as to the validity of a seaman's claim, the law requires that the claim be resolved in favor of the seaman.  ARTCO's investigation of the claim was arbitrary because ARTCO didn't consider evidence corroborating plaintiff's claim.

Plaintiff's award of attorneys' fees was also affirmed.  However, the Third Circuit reversed the amount of the attorneys' fees awarded and remanded the matter to the district court for evidence of plaintiff's attorneys' fees.

Why Is This Important?

  1. It is important for Jones Act employers to consider corroborating evidence of a maintenance and cure claim regardless of evidence that an incident did not occur to avoid being hit with punitive damages.

  2. Punitive damages may not be covered by insurance.  If you have questions about the scope and/or limits of your insurance coverage, reaching out to your insurance broker for clarification is probably a good idea.

  3.  It is important for Jones Act employers to consider corroborating evidence of a maintenance and cure claim regardless of evidence that an incident did not occur to avoid being hit with plaintiff's attorney's fees.

  4.  If there are questions about the need for recommended surgery, having plaintiff examined by an independent medical examiner as soon as possible could help defuse a claim for punitive damages based on alleged arbitrary and capricious conduct.

Attorneys

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