The 11th Circuit Weighs in on Punitive Damages for Failure to Pay Maintenance and Cure  

In an important decision for companies facing maintenance and cure obligations, the Eleventh Circuit Court of Appeals in Atlantic Sounding Co. v. Townsend concluded that punitive damages are recoverable under general maritime law upon showing of willful and arbitrary refusal to pay maintenance and cure. See Atlantic Sounding Co. v. Townsend, ___ F.3d ___, 2007 WL 2385928, at *3 (11th Cir. Aug. 23, 2007). In Townsend, the lower court denied a request to strike the punitive damages request finding that it was bound by the earlier Eleventh Circuit decision in Hines v. J.A. LaPorte, Inc., 820 F.2d 1187 (11th Cir. 1987), which permitted a seaman to recover punitive damages under general maritime law. At issue in Townsend was whether the Eleventh Circuit’s earlier decision in Hines had been abrogated by an intervening decision of the United States Supreme Court. See Townsend, 2007 WL 2385928, at *1. The Eleventh Circuit found that its earlier opinion had not been abrogated and held that punitive damages were recoverable.

Other courts, including the Fifth Circuit, had previously found that the Supreme Court’s 1990 decision in Miles v. Apex Marine Corp., 498 U.S. 19 (1990)), barred recovery of punitive damages in maintenance and cure actions. See, e.g., Guevara v. Mar. Overseas Corp., 59 F.3d 1496 (5th Cir. 1995) (holding that punitive damages are not available in any action for maintenance and cure); In re J.A.R. Barge Lines, L.P., 307 F. Supp. 2d 668, 673 (W.D. Pa. 2004) (same). The Eleventh Circuit in its recent decision, however, disagreed and distinguished the Supreme Court’s earlier decision because it did not specifically address maintenance and cure, but instead was limited to the express holding that there was no recovery for loss of society in a general maritime action for wrongful death of a Jones Act seaman. See Townsend, at **2-3. Interestingly, the Eleventh Circuit appears to agree that the Supreme Court’s reasoning implies that punitive damages should be not be available in maintenance and cure actions, but the court said that it was bound by its earlier decision in Hines until that decision was expressly overruled by a holding of the Supreme Court.
Id. at *4 (stating that “we must follow our holding in Hines instead of any inferences we may draw from the Supreme Court’s reasoning”).

This recent decision by the Eleventh Circuit is a very narrow interpretation of Supreme Court authority. However, given the apparent disagreement among courts, i.e., the Fifth Circuit vs. the Eleventh Circuit, this punitive damage issue is one that the Supreme Court will ultimately resolve. Until then, companies evaluating their maintenance and cure obligations should take note of the differences that exist among the various forums and how these differences impact the decisions in individual cases.

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Published in the Maritime Executive Magazine
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