*1 brief), tin, for de- City, on the New York fendant-appellee. INCORVAIA, Salvatore Plaintiff-Appellant, KEARSE, Circuit NEWMAN and Before EGINTON,* Judge. District Judges, and “Grigorios-C LINES, LTD., HELLENIC NEWMAN, Judge: Circuit - Defendant-Appellee. IV”, among long- relationship The trilateral 32, Docket 81-7099. No. stevedore, gener- shoreman, array limitless apparently an Appeals, ates Court United States Rhederei, v. Rickners In Valentino issues. Circuit. Second (2d Etha, Cir. G.M.B.H., 552 F.2d 466 SS Sept. Argued 1977), 5, 1982. Decided Jan. owner, we considered a vessel against longshoreman’s at- Banc lien of the Rehearing In whether the Rehearing and over torney for his fee Denied March compen- its workmen’s stevedore’s lien for payments when sation satisfy action is insufficient issue Having liens. resolved both lien, we now find favor of slight recurring with the same issue case the variation that this stevedoring services. The provides its own District of Eastern District Court Neaher, Judge) (Edward R. New York requires ac- variation concluded compensation cording priority there- disagree and F.Supp. 280. We fore reverse. longshoreman, was

Plaintiff-appellant, a vessel injured working while aboard Hellenic defendant-appellee owned provides Lines Lines. Hellenic Since services, Hellenic, as steve- stevedoring own $13,554.91 dore-employer, paid plaintiff Thereafter, injury. for his capacity as Hellenic in its plaintiff sued $17,- recovered a verdict shipowner and asserted its against which Hellenic $13,- lien in the amount of Va- relying on attorney, 554.91. Plaintiff’s lentino, fee of applied to receive his $7,109.36 against judg- charge as a first gave priority to The District Court ment. Y., Bushlow, Irving Brooklyn, N. B. awarded lien and Hellenic’s plaintiff-appellant. $3,595.09 remain- attorney plaintiff’s —the deducting the after Hulten, City judgment Alexander New York der Robert lien. Reid, Zock, Petrie, stevedore’s (Edwin Reid & Cur- K. * necticut, by designation. sitting Eginton of the Unit- The Honorable Warren W. for the District of Con- ed States District Court *2 pointed agree We Neaher out that Valentino had with the District Court that the provides common fund rationale priority partial- support based of the lien no doctrine, priority of the attorney’s lien when the ly equita- on the common fund shipowner and the stevedore are the same principle ble that one who creates a fund However, entity. light of the Supreme for the benefit of others is entitled to be opinion Court’s in Bloomer v. Liberty Mutu- fund, paid Sprague see v. Ticonic from Co., 74, 925, Insurance al 445 U.S. 100 S.Ct. Bank, 777, 59 National 307 U.S. S.Ct. (1980), 63 L.Ed.2d 215 we conclude that (1939). principle, Judge That 83 L.Ed. 1184 priority lien, for the attorney’s in both the concluded, inapplicable Neaher is to this us, Valentino situation and the case before case, where the and the steve- supported directly is by statutory entity, dore are the same because the attor- scheme of the legislative LHWCA and its ney’s any efforts will never create benefit history. for the stevedore: whatever dollars it re- coups being for its lien are concerning Unlike issue we face here paid by it negligence as defendant in the priority the compensation action. Supreme issue before the Court in Bloomer was the Specifically, amount of the lien. pointed Neaher also prior out that whether, the issue was typical in the three- to the 1972 Longshore Amendments to the situation, party the amount of the compen men’s and Harbor Compensation Workers’ sation lien by propor should be reduced (LHWCA), seq. Act 33 901 et U.S.C. § longshoreman’s tionate share of the legal (1976), longshoreman’s negligence suit expenses. Bloomer, fee and In both the usually conferred no benefit on the steve longshoreman agreed and the dore, exposed but instead it to substantial expenses, fees, including legal were third-party liability indemnity in an action charges against first negligence recov brought by the Ryan vessel owner. See n.2, ery, 445 at 76 U.S. 100 S.Ct. at 927 n.2. Stevedoring Corp., Co. Pan-Atlantic S.S. longshoreman’s claim was that his net 350 76 U.S. S.Ct. 100 L.Ed. 133 recovery (negligence judgment less attor (1956). The existence Ryan of the indemni ney’s expenses) fees and should be increased ty action created a conflict of interest be proportionate share of the longshoreman tween and stevedore that led expenses, supplied and with the increase some courts to rule that the stevedore’s by corresponding decrease in the compensation lien was to be in full satisfied Though sation lien.1 the issue before us longshoreman’s before the lien of the attor Bloomer, from the differs issue in we think ney. Spano Maatschap v. N.V. Stoomvaart ” Supreme approach Court’s prob to the “Nederland, pij (S.D.N.Y. F.Supp. 340 1194 lem, particularly and analysis its 1971); Russo v. Flota Mercante Grancolom legislative LHWCA, history of the leads to biana, (S.D.N.Y.1969). 1404 In a conclusion that the ap Valentino we concluded that abolition of plies only longshoreman’s pro net Ryan indemnity required disap negligence ceeds from the after deduc proval Spano and Russo. 552 F.2d at litigation expenses tion of and a reasonable case, however, Judge In this Neaher attorney’s fee. thought identity between the ves First, sel owner and the pointed pur- stevedore created a con the Court out that the pose judicially recognized subroga- flict of interest between recoup stevedore similar to the situation that exist tion claim of the stevedore to prior compensation payment longshore- ed to the 1972 Amendments and simi from the larly negligence judgment compensa prevent called for man’s was to recovery by longshoreman. tion lien. Id. double reduction, proportionate 1. The share the ratio that fee and judgment. longshoreman, expenses claimed was calculated bore to the total by reducing the amount of the version, Cong. passed the House this purpose would 79, 100 at That at S.Ct. longshore (1959), accepted if the Sen undermined Rec. 5561-62 partially be by re version, (1959), ap increase his net Cong.Rec. man could ate proportionate the stevedore a ceiving from version ade satisfied that parently incurred expenses share judicial practice, quately existing continued negligence suit. The in the n.6, at 929-30 445 U.S. at 100 S.Ct. concluded, must recovery, the Court practice recognition n.6. That included *3 the stevedore’s fully to remain available securing the expense that of the fact “[t]he lien, of diminution compensation without is, be, a first recovery equity as in it should lien, recognizes that reasoning that Fontana v. charge against the fund itself.” only upon operates compensation lien the R.R., 461, 464 F.Supp. Pennsylvania 106 recovery. longshoreman’s net the (Weinfeld, J.), sub (S.D.N.Y.1952) aif’d gress, in gence pensation the election between shoreman’s action. “[A]n out third the 1959 amendment the reasonable and that eliminate U.S. (emphasis Code S.Rep.No. Second, any compensation paid to the Court of the the stevedore’s at Cong. & person came “after the deduction remedies, 81, amending all lien pointed 428, added), the Court observed 100 net net aspects employer must be Ad.News operated only 86th S.Ct. recovery proceeds understood compensation and out, reprinted the LHWCA Cong., necessary lien of at 929.2 the House the explicitly 2134, on in the of 1st Sess. recovery longshoreman’s upon the that 2135; expenditures, Moreover, reimbursed ^[1959] negligence that Con in 1959 recovery.” version of employee the the com provided 2 see from (1959) negli long U.S. 445 to as of a thus to nom. action, shoreman’s simply because dent stevedore also recognized that S.Ct. 151 same “that all arm same and With reach the (2d that all the stevedore. The of the 137, Fontana v. Grace understood to reach whether whether we see Cir.), the longshoremen 98 net stevedores stevedore’s L.Ed. gross cert. no their employer they in this Congress, recovery or a reason to denied, 390 amount of the are case shipowner itself.” Edmonds are to be treated are to be (1953).3 Line, Supreme independent compensation in the 346 U.S. enlarge the action, intended only authorizing the is an Inc., shipowner treated the negligence the Court stevedore 205 F.2d recovery indepen its 886, or an scope long lien has the 74 is 443 Transatlantique, Generale Compagnie attorney’s fees, in effect including incurred 256, 266,99 2753, 2759, 61 L.Ed.2d 229, S.Ct. recovery,” 86th U.S. ing H.R.Rep.No. such omitted); (1979). pointed out (italics In Valentino we Cong., (1959) 1st 6 521 Sess. denied, 3012, 949, Cir.), “Congress did not 412 93 S.Ct. also cert. U.S. Court noted allowing (1973). Subsequent re alter the the stevedore cases intend to rule 37 L.Ed.2d 1002 only pro lien from the to recover the full amount of its not rata lied on Fontana to disallow recovery.” third-party compensation 445 the lien when deci'ease very the large enough at 100 at 929. Since negligence U.S. S.Ct. cover award to was opinion quotes the attorney’s from compensation next sentence the the both the Report’s employer’s re- Co., Senate reference to an v. United Lines 253 F.2d Davis States proceeds the recov- from “net” of 1958); (3d Sheffield Tankers 262 Cir. In re imbursement ery recovering seems the “full it evident F.Supp. (N.D.Cal.1963); Corp., 222 Oleszc 441 compensation use of lien means amount” Corp., 370 S.S. 163 zuk v. Calmar sufficient, proceeds, they to net are the when (D.Md.1958), give priority to the but also to full, pay compensation the lien in undiminished compensation negligence lien award when the pro portion rata fee of and the too small to cover both the lien was sought that Bloomer for himself. Aladdin, Haynes attorney’s fee. v. Rederi A/S 345, 1966) (noting (5th Cir. 362 F.2d issue, ultimately only Fontana concerned attorneys employment to its own stevedore’s Bloomer, resolved in whether lien), denied, protect 87 cert. 385 U.S. pro should be rata share reduced (1967); Spano v. N.V. 17 L.Ed.2d 557 S.Ct. fee; accepted it “Nederland," supra; Maatschappij Stoomvaart charge upon the as a first Grancolombiana, su Russo v. Flota Mercante negligence P award. v. A & Boat See Chouest pra. Inc., (5th Rentals, n.13 F.2d lien to permitting benefit stands to from the attorney’s come lien would negligence ahead of recovery. the net Now that Va pressing longshoremen’s deter counsel from lentino has limited the lien to contingent except claims on a fee basis recovery the longshoreman’s net since the substantially “where a in excess of (whether 1972 Amendments not it or was so the amount of the stevedore’s lien is vir- before, see Shipping limited Strachan Co. v. certainty.” tual 552 F.2d at 469. wereWe Melvin, (5th 1964)), F.2d we Cir. unwilling accept such deterrence Va- that, Edmonds, in keeping think with lentino, just and that concern as remains scope should not be varied valid and the when the happenstance of whether the stevedore and entity. are the same same, the vessel owner are the or whether we lien as Since view entity the combined separate reaching only proceeds carrier, from or sation other factors irrelevant to decisive, we do not find of the longshoreman’s incentive attor *4 cases, many pre-1972 did the whether ney bring to the action authoriz longshoreman’s attorney has a fund created Act. by enough litigable ed the There are the for the benefit of stevedore whether or this area opening up issues in without a a longshoreman conflict of interest between inquiry new in each case as to whether the the fund” precludes stevedore “common rule Valentino should be altered.4 approach. pursue If we were to in- that Hellenic, stevedore, Though as views it- quiry, agree Judge with Neaher would we self, Ryan indemnitors, being like as asked perform Hellenic’s decision to its own pay attorney to the stevedoring creates services a conflict of sued, privilege being of more it is realistic interest similar to what existed the before Hellenic, shipowner, paying to view to be Ryan action indemnity was abolished. attorney negligent the because it was to- However, the is not situation identical and Moreover, duty ward his client. of the care does not require approach revival of the to owed the is unaffected attorney’s Spano fees taken and Russo. the fact that Hellenic as shipowner elected existed, indemnity When the the to own be its stevedore. The mechanisms pay only compensation not had to securing compensation for for breach of attorney’s defending also its own fee in duty should also be unaffected Hel- against shipowner’s legal suit. fee That preference lenic’s not to contract for steve- explicitly upon had been relied as one rea- doring services. Those mechanisms include priori- son giving for pro- a lien limited to the net ty attorney’s over the fee longshore- ceeds of the re- Fredrika, man. Riddick Rederi v. A/B covery, after deduction at- of reasonable (E.D.Va.1967). How- torney’s expenses. ever, only Hellenic incurs fee to negli- defend itself as vessel owner in the judgment is reversed and remanded action; gence it incurs no extra fee to de- judgment entry of consistent with this Moreover, fend a Ryan indemnity suit. opinion. when the acts as its own steve- dore, self-insure, may it not to elect KEARSE, Judge (concurring): Circuit carrier, which event believe subrogation granting which has its While I of to right, own 933(h) (1976), produces inequitable U.S.C. is not to the adverse an § course, consequences 4. Of the reasonableness of the attor- undesirable illustrate the Fifth ney’s may challenged, pre-1972 fee lest be it encroach Circuit’s decision to limit the unduly proceeds subject premised on the com- to to the sation lien the net are on pensation approximately applied lien. The fee of one- to substantial 40% Melvin, Shipping third of a verdict has chal- Co. modest not been recoveries. Strachan n.11, lenged By n.9, supra, as unreasonable this case. con- 327 F.2d at 89 93 n.20 trast, J., (Brown, examples dissenting.) offered Brown to steve- is its own when result less than yields and the suit

dore already paid the defendant

amount fees plus the

longshoreman as I concur in attorney bring legislative the basis

judgment on Amendments

history the 1959 Com- Harbor Workers’

Longshoremen’s and Act, 73 Stat. Pub.L.No.

pensation 933), discussed (amending 33 U.S.C. § ante, sug- which opinion, majority Congress intended

gests priority. have

lien to PLUMMER, Raymond W. Ar-

Roderick Gwendolyn Caesar,

morer, F. Neville *5 situated,

Moore, similarly and all others

Plaintiffs-Appellants, BANK, Defendant-Appellant.

CHEMICAL Straker,

Miguel Oppenheimer, Louis A. Morrison, Clark, The- L.

Herman James Taitt, Ferguson and Herman I.

odore

Objectors-Appellees. 289, 298, Dockets 81-7546.

Nos. Appeals,

United States Court

Second Circuit.

Argued Sept. Jan.

Decided