327 F.2d 83 | 5th Cir. | 1964
Lead Opinion
Melvin was injured while performing services as a longshoreman on a ship. His employer Strachan, the appellant here, paid him $27,836.92 compensation and other benefits under the Longshoreman’s Compensation Act.
“It is hereby understood and agreed that I am to receive sixty (60%) per cent of all damages recovered by way of suit or settlement, and my attorney is to have for his fee the balance derived from said suit or settlement and disbursements and taxable costs.”
Suit was filed and the case was tried by a jury which returned a verdict for Melvin of $30,000.00. The third party against whom the judgment was rendered paid that amount into the registry of the court and Melvin’s attorney filed a petition asserting that he was entitled to 40% of the sum plus his expenses arising out of the suit, and claiming that his lien had priority over the subrogation lien claimed by appellant. The District Court held that Melvin “ * * * is entitled to reimbursement for his expenses of the litigation, including a reasonable attorney’s fee, as a first charge against the fund recovered from the third party.” The court thereafter conducted a hearing, took evidence, and determined that a reasonable attorney’s fee was 40% of the amount recovered plus expenses. Accordingly, out of the $30,000.00, Melvin’s attorney was awarded $12,000.00 as a fee plus $558.88 expenses. The remainder was ordered to be paid to appellant. It is well settled and not disputed on this appeal that both the employer and the attorney have a lien on the recovery. The sole question here is, which of the two liens take priority when the recovery is insufficient to pay both liens in full.
Appellant contends that since the payment of the attorney’s fee has reduced the amount recovered to less than its $27,836.92 subrogation lien, it in effect is being required to pay part of the fee of an attorney it did not employ. The Federal Courts have long recognized the following principle:
“That under certain circumstances attorneys, who are officers of the court, will be protected by the court in the collection of their fees is not to be doubted. This is ordinarily done on the theory that attorneys have a lien upon any fund in the hands of the court or being administered by the court or that has been brought into the court by their efforts, for the value of the services rendered.”
Wessinger v. Sturkie, 4 Cir.1935, 77 F.2d 751. See also Sprague v. Ticonic Nat.
In the order directing the payment of the attorney’s fees, the District Court considered all factors involved and concluded :
“ * * * Upon consideration of such petition, the affidavit of plaintiff’s chief counsel and testimony adduced with respect to the reasonableness of the attorneys’ fee claimed, the Court finds that a reasonable fee for the services performed by the plaintiff is 40% of the amount of the recovery or the sum of $12,000.00.”
Title 33 U.S.C.A. § 933 allows the employer to sue the third party tort feasor if the injured employee fails to do so within the prescribed period. Section 933(e) prescribes the method and priorities of the distribution of any recovery made by the employer to be:
“(1) The employer shall retain an amount equal to—
(A) the expenses incurred by him in respect to such proceedings or compromise (including a reasonable attorney’s fee as determined by the deputy commissioner);
(B) the cost of all benefits actually furnished by him to the employee under section 907 of this title;
(C) all amounts paid as compensation ;
(D) the present value of all amounts thereafter payable as compensation, such present value to be computed in accordance with a schedule prepared by the Secretary, and the present value of the cost of all benefits thereafter to be furnished under section '907 of this title, to be estimated by the deputy commissioner, and the •amounts so computed and estimated to be retained by the employer as •a trust fund to pay such compensation and the cost of such benefits as they become due, and to pay any sum finally remaining in excess thereof to the person entitled to compensation or to the representative; and
(2) The employer shall pay any excess to the person entitled to compensation or to the representative, less one-fifth of such excess which shall belong to the employer.”
The act makes no provision for the method and priorities of distribution where the employee brings the suit. This court in Voris v. Gulf-Tide Stevedores, 5 Cir. 1954, 211 F.2d 549, was faced with the difficulties presented by this void in the statute. There, the employee was drowned on the job and his children were awarded $16.62 per week under the Longshoreman’s Act, the payments to terminate upon their eighteenth birthdays. An action against a third party was instituted on behalf of the minor children and a judgment in the amount of $13,500.00 was recovered. The District Court, in the third party action, awarded to the children’s attorneys, fees of $3,900.00; to the employer $1,742.58 for compensation already paid; and the balance of $7,857.42 was directed to “be recovered by the minor libellants * * * ” The District Court then held that it was the total or gross recovery of $13,500.00 that should be credited to the employer against the future payments. On appeal, this court reversed stating the decisive question to be:
“* * * whether ‘the amount recovered’ referred to in Section 933 (f) means the amount actually received by the compensation beneficiaries in the third party action (that is less attorneys’ fees) or whether it means the total amount paid by the third party defendant.”
In answering the “decisive question”, we held:
“ * * * To hold that the minors recovered the aggregate amount paid by the defendant would be to disregard the realities of the situation, and to ignore the age-old equitable principle that one who accomplishes the creation of a fund for the benefit of another is entitled to reim*86 bursement therefrom for the reasonable costs thereby incurred.”
* * * *
u » « j. mi i • x “ * * * The issue here is as to , , „ , , j, ,, who shall bear the burden of the , n , . .,, necessary cost of that recovery with , , ,, ., « « respect to the item of attorneys fees. , The insurance carrier was the sole , ,, . » . . beneficiary of the legal services ren- , t j, ,, ,, ,, . , dered for the plaintiff m the third , ,. , ., , , party action, and it does not appear f, , , that it was in any way prejudiced , ,. . , , .i. by the judgment; on the contrary, it was greatly benefited by it. The subrogee has accepted the benefits of that recovery, and it should bear its reasonable burdens. 34 Cyc. 370, note 64.
in Voris, among other factors, our conclusion was based on two important considerations: (a) where the employer has brought the suit, the act expressly allows the deduction of attorney’s fees before requiring the employer to turn over to the injured employee (or his representatives) any excess over the compensation paid or to be paid; and (b) the act must be liberally construed in favor of the workman;
We have carefully examined the cases cited by the appellant and by Amicus Curiae, but find none of them controlling here. Under the particular facts of this case and the record before us, we are not able to say that the trial court committed error in granting the relief sought by the petition of the appellee to ñx a lien for attorney’s fees; or in the subsequent :. . ’ , , proceeding m which the court received .- ® , ,. evidence and fixed a reasonable attorney's „ ,, ... , ». fee to be paid out of the fund m question, ^. , . , « , Needless to say, District Courts will exer- . „ . . . . cise careful supervision over cases of ,, . , , . ., ,. this nature and give proper consideration , ,, ., ,, . . ,. . - „ „ to the equitable principles involved, fully . . , , , exercising such powers to prevent an un- . ^.. , ,, scrupulous attorney from profiting at the exT5£lse of m^ants
The judgment is affirmed.
. 33 U.S.C.A. 901 et seq.
. See the recent case of Reed v. Steamship YAKA, et al., (1963) 323 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448, reaffirming this principle:
“We have previously said that the Longshoremen’s Act ‘must be liberally construed in conformance with its purpose, and in a way which avoids harsh and incongruous results.’ ”
Dissenting Opinion
(dissenting).
rpQ a literal void in the stat-ut6j the Court’s solution produces inequitable, if not shocking, results. None of these consequences could have been intended by a Court speaking, as does this one> in the high and noble terms of equitable principles linked with a liberal application of the Longshoremen’s Act in favor of the injured maritime worker as the some-time ward of the Admiralty, jn g0 deciding, the Court rejects contrary holdings of at least two other Circuits an(j applies our prior Voris decision to a situation not even remotely contemplated by that case. Moreover, this meth-0(j 0f distribution might encourage questionable professional practices.
Decisions of Other Courts
Although it is true that neither of them precisely involve situations in which recovery from the third party was insufficient to (a) reimburse the employer for compensation payments paid or payable, (b) pay to the plaintiff’s counsel his agreed percentage attorney’s fees, and (c) leave a substantial amount for the injured plaintiff, this circumstance can hardly serve as a basis for distinguishing and then rejecting Fontana v. Pennsylvania Railroad Co., S.D.N.Y., 1952, 106 F.Supp. 461, 1952 A.M.C. 1535, affirmed 2 Cir., 1953, 205 F.2d 151, 1953 A.M.C. 1258, cert. denied, 346 U.S. 886, 74 S.Ct. 137, 98 L.Ed. 390, and Davis v. United States Lines Company, 3 Cir., 1958, 253 F.2d 262, 1958 A.M.C. 633. Each of these cases expressly prescribes this formula for distribution of a recovery in the worker’s suit for damages
Fontana-Davis
(1) Total recovery
(2) Less:
Employer’s Compensation payments • — -
(3) Net recovery
(4) Less:
Atty’s. fees & expenses based on % of (3) -
(5) Balance to worker
Melvin
(The instant case)
(1) Total recovery
(2) Less:
Atty’s. fees on
% of (1) -
(3) Net recovery
(4) Less:
Employer’s Compensation payments -
(5) Balance to worker
No case under the Longshoremen’s Act up to the present decision ever allowed the plaintiff’s lawyer to get his fee out of the employer’s prior portion of the recovery. As illustrated later on, the decision is a bonanza. It is a heads-I-win-tails-you-lose gamble: if there is any— I repeat any — recovery from the third party vessel owner, the lawyer is guaranteed a first claim to the full extent of his contingent percentage fee (plus expenses), and this even though the injured worker gets nothing.
The Voris decision is binding and there is neither request nor occasion for reconsidering it. Application of some of its broad statements to the instant situation demonstrates, however, that the result, and such expressions, should be confined to the problem there presented.
In Voris the question was not distribution of third party recoveries. The problem was the amount of the additional compensation benefits to be awarded to the injured worker by the Deputy Commissioner under § 933(f). As the statutory scheme works, an injured worker has a guaranty that he will get as a minimum the amount of compensation benefits due under the Act. The statute gives him, however, an added and frequently valuable, benefit. He can sue a third party, knowing that he runs no real risk because, no matter how the suit against the third party comes out,
The Voris case stands in substance for the proposition that where the employer seeks credit against further and added compensation benefits then due and owing only the net recovery from the third
_ , , mpac on e njure or er
If the rule now announced incidentally benefited the plaintiff’s counsel by benefiting the injured worker, there might be some justification for the implied supposition that judicial construction of the Longshoremen’s Act compels this result, The fact is, however, that the rule announced works against the injured worker and subordinates his interests to those of the lawyer with a contingent fee.
This is graphically illustrated by the inescapable arithmetical fact that with the employer’s prior compensation payments in this case totaling $27,836.92, in order for the injured worker to get a red cent the recovery would have to approach nearly $48,000.00.
It is a strange rule, if not shocking in its professional implication, which in this case requires that the recovery from the third party come close to $50,000 before the injured worker even benefits at all, and must approach $140,000 before judicial balm for his “pain and suffering” equals that of his lawyer. But even this is not right. For the bargain was not 50/50. It was 60/40%.
Irreconcilable Hostility Between Vicarious Attorney and Client
I suppose we could overlook allowance of extraordinary compensation to a lawyer despite the fact that the legal services conferred no benefit or even were a detriment to his only client, if somewhere in this vague picture one could find that the lawyer did perform valuable services for someone, whether his client or not. But it is going too far too fast to suppose that while the employer may recoup part or all of his compensation payments out of the recovery, the suit was in any sense instituted in his behalf, or for his benefit or, for that matter, he wanted it at all.
In this sometime weird Ryan-Yaka world,
The obligations imposed on the stevedore-employer under the Ryan doctrine are ominous and ever-expanding. For present purposes these may be quickly capsulated. In nearly every situation the question whether the stevedore has breached its warranty of workmanlike service is a fact issue exposing the stevedore to the peril of an adverse judge or jury finding. Negligent use by the stevedore of seaworthy equipment creating an unseaworthy condition may be a breach.
Any realistic appraisal of the currently developing law under the Ryan doctrine demonstrates that the worker’s counsel could not possibly be representing the stevedore-employer. Indeed, nearly everything required of counsel in the conscientious representation of the worker’s interest was against, not for, the stevedore-employer. In many ways, no good could come to the stevedore from the worker’s suit.
First, by filing the lawsuit against the vessel, the plaintiff’s counsel precipitated an impleader action for indemnity against the stevedore which was actually filed. The best the stevedore-employer could hope for was a complete victory, that is, a denial of the shipowner’s im-pleader. But such a victory would not be cheap. Obviously in such impleader suit, the stevedore could not turn its defense over to the worker’s counsel since the facts to sustain the plaintiff’s recovery against the vessel owner would very likely give rise to an automatic right of indemnity by shipowner against stevedore.
Second, if the injured worker recovered damages and the stevedore was held to have breached its warranty of workmanlike performance, the stevedore would have to indemnify the vessel owner for the full amount of the plaintiff’s judgment notwithstanding the exclusive liability provision of the Longshoremen’s Act. § 905.
Third, after paying the total judgment for the worker’s damages, the stevedore would also be liable under the indemnity for the attorney’s fees and expenses incurred by the vessel owner in defending the worker’s suit. At that point the stevedore will thus have paid (a) its own counsel’s fees and (b) those of the defendant-vessel owner. But it does not end there, for it is possible for the vessel owner to defeat the claim of the worker and still recover from the stevedore the legal expenses and fees incurred by the shipowner in the defense of the main suit.
Thus the best the stevedore can come out for is its own attorney’s fees, with a strong likelihood that it will have to pay those of the defendant shipowner, and may well end up paying those of the injured worker’s counsel as well.
Despite the fact that the institution of the worker’s suit against the steamship company locked him and his stevedore-employer in positions of irreconcilable conflict, the Court on some undisclosed notions of equity requires the stevedore to pay these lawyers for the privilege of being exposed at their hands to substantial liabilities which became greater, not less, as these lawyers did their job well. Again, we are not talking about theoretical, extreme, Socratie examples. On the argument counsel candidly stated that during the trial of the case a settlement for $80,000 was rejected. Considering the extent and nature of the injuries sustained, no criticism could, or is, directed at them for this strategic-tactical judgment. But if these lawyers are entitled to eompensation for a supposed benefit conferred upon one who never employed them, I would think they would have a serious professional responsibility to consider the interest of such hoped-to-be-client. Consideration of the stevedore’s interest for even a slight moment would have demonstrated that the settlement had to be accepted. But to ignore this positive demand out of like consideration for the interests of their real client Melvin put them in a position of irreconcilable conflict requiring them to withdraw for one or both of their “clients,” actual or vicarious. The result is that because of the activities of a lawyer whom they never hired, who instituted a suit they never wished, the failure of that lawyer to accept the settlement tendered cost the stevedore not less than $10,000
As I analyze it, the working of the Court’s rule benefits the worker’s lawyer only, works against the interest of the injured plaintiff, and subjects the stevedore-employer to the obligation of paying substantial fees to a person not hired by it to institute unwanted litigation having awesome and expensive perils which are necessarily ignored by the vicarious counsel as they faithfully discharge their duties to their real — and only — client.
Nothing in the Longshoremen’s Act remotely requires that. And apart from some supposed statutory policy, I cannot believe that the noble principles of equity can be invoked in its behalf.
I must therefore dissent.
. In none of my remarks do I mean to criticize the professional conduct of the distinguished members of the Bar of this Court who are plaintiff’s counsel. It is plain that I do not think the fee allowed is legally supported, but since three out of the four Judges passing on it conclude otherwise, it is certainly not professionally improper for them to accept it. My comments in terms of professional, ethical considerations are addressed to the legal conclusion reached by the Court, not to the counsel involved.
. Other cases applying these principles include The Etna, 3 Cir., 1943, 138 F.2d 37, 1943 A.M.C. 1126; Oleszczuk v. Calmar Steamship Corp., D.C.Md., 1958, 163 F.Supp. 370, 1958 A.M.C. 1914, 1915; Lundberg v. Prudential Steamship Corp., S.D.N.Y., 1951, 102 F.Supp. 115, 120, 1951 A.M.C. 1801; Richter v. United States, E.D.Pa., 1960, 190 F.Supp. 159.
.
Melvin
(1) Total recovex-y
(2) Loss:
Atty’s. fees on 40% of
(1) and expenses
(3) Net recovery
(4) Less:
Employer’s Compensation Payments
(5) Deficiency to Employer
(6) Balance to Worker
$30,000.00
12,552.88
$17,447.12
27,836.92
($10,389.80)
$ 0.00
. The employer’s obligation under § 933 (f) may, of course, be extinguished by a compromise settlement not made with the employer’s written consent. § 933 (g) -
. In resolving what we described as “ * * * the narrow issue before us” in Voris, we expressed this dominant principle in Voris in this way: “In Marlin v. Cardillo [1938, 68 App.D.C. 201, 95 F.2d 112], supra, we have observed that the purpose of the federal act was to give the injured employee the compensation therein provided or the amount recovered from a third party, lolvichever was greater. In Chapman v. Hoage [1936, 296 U.S. 526, 56 S.Ct. 333, 80 L.Ed. 370], supra, Mr. Justice Stone said that, while the employee may elect to pursue Ms remedy against a third party, such election does not deprive Mm of his right to compensation; that the employer or insurance carrier-remains liable for any amount by which the recovery against a third person falls short of the prescribed compensation * * 211 F.2d 549, 552. (emphasis supplied).
In Davis it was phrased in these, terms: “The injured employee, by reason of the Act is adequately provided: for and is placed in a better position, than the ordinary litigant prosecuting a civil action. An employee covered by the statute is guaranteed a minimum recovery despite any finding of fault on his part * * 253 F.2d 262, 265. (Emphasis supplied).
. In Voris the employer recouped his prior compensation payments (item (2)) with no deduction or charge for attorney’s fees:
(1) Gross amount recovery third party .$13,500.00
(2) Compensation payments by employer . 1,742.58
(3) Net recovery $11,757.42
(4) 33%% atty. fee on (3) $3,919.00
(5) Atty. fee (rounded off) 3,900.00
(6) Net after deducting (2) & (5) $ 7,857.42
The sole question was whether the employer’s credit as to further compensation benefits was item (3) $11,757.42 or item (6) $7,857.42.
. Fees for legal services for claimants under the Act are severely regulated, § 928; cf. § 916; see also § 933(e) (1), (f).
.
Melvin Rule
Recovery $47,316.32
Less:
40% Atty. fees 18,926.52
$28,389.80
Less:
Atty. expenses 552.88
$27,836.92
Less:
Employer’s payments 27,836.92
Worker receives 0.00
Fontana-Davis Rule
$47,316.32
Less:
Compensation Paid 27,836.92
$19,479.40
Less:
40% fee 7,791.36
$11,688.04
Less:
xltty. expenses 552.88
Worker receives $11,135.16
. The brief amici curiae refers to a specific identified case then pending in the Eastern District of Louisiana involving a jury verdict of $38,500 and an employer’s lien for compensation paid of $24,491.74. On a 1/3 contingent contract (plus estimated expenses $500), the injured worker receives $8,838.72 under Fontana-Davis, but only $674.93 under the Melvin rule. Duvernay v. Alcoa Steamship Co., Inc., et al., E.D. La., 217 F.Supp. 698. This case is now reported as to another phase, 1963, 217 F.Supp. 698, 1963 A.M.C. -. The reported aspect of Duvernay is discussed note 18, infra.
. Substantially all of these monetary ex-ampies have come from the brief of amici curiae.
.
Assumed recovery
Less: 40% atty. fee
Less: Employer’s Compensation
Worker receives
Melvin Rule
$140,000.00
56,000.00
$ 84,000.00
$ 27,836.92
$ 56,163.08
. Under his contract with his attorney Melvin was to receive “sixty (60%) per cent of all damages recovered by way of suit or settlement, and [his] attorney [was] to have for his fee the balance derived from said suit or settlement and disbursements and taxable costs.” But under the Melvin rule 60% turns out to be zero while 40% is 100%.
. Ryan Stevedoring Co. v. Pan-Atlantic SS Corp., 1056, 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, 1956 A.M.C. 9; Reed v. SS Yaka, 1963, 373 U.S. 410, 83 S.Ct. 1349, 10 L.Ed.2d 448, 1963 A.M.C. 1373.
. In this case the steamship company defendant impleaded the appellant, the stevedore-employer of the injured worker, Melvin. The impleader was the now classic one asserting that the stevedore breached its warranty of workmanlike performance so that any unseaworthiness or negligence of the vessel was finally attributable to the stevedore. This impleader was dismissed voluntarily on the eve of trial.
. See Vickery, Stevedore-Ship Owner Indemnity: The Ryan Doctrine, Tul.U. 7th Tidelands Inst. 167-76 (1963), discussing in detail the principles and developments in this explosive field. This article alone cites over 60 cases of this type decided in the brief span from 1956 to the present. The list never ends, see the following in the past few months: Delta Engineering Corp. v. Scott, 5 Cir., 1963, 322 F.2d 11, 1963 A.M.C. -; Caputo v. United States Lines, 2 Cir., 1963, 311 F.2d 413, 1903 A.M.C. 1921, reversing E.D.N.Y., 1962, 202 F.Supp. 600, 1963 A.M.C. 1926, cert. denied, 1963 ; Imparato Stevedoring Corp., v. United States Lines Co., 374 U.S. 833, 83 S.Ct. 1871, 10 L.Ed.2d 1055, 1963 A.M.C.-; Damanati v. The A/S Inger, 2 Cir., 1963, 314 F.2d 395, 1963 A.M.C. 852; Orlando v. Prudential Steamship Corp., 2 Cir., 1963, 313 F.2d 822, 1963 A.M.C. 570; Williams v. Pennsylvania R.R., 2 Cir., 1963, 313 F.2d 203, 1963 AM.C.-; American Export Lines, Inc. v. Atlantic & Gulf Stevedores, Inc., 4 Cir., 1963, 313 F.2d 414, 1963 A.M.C. 567, reversing E.D.Va., 1962, 205 F.Supp. 316, 1962 A.M.C. 1702, cert. denied, 373 U.S. 924, 83 S.Ct. 1525, 10 L.Ed.2d 422, 1963 A.M.C. 1648; Moore-McCormack Lines, Inc. v. Maryland Ship Ceiling Co., 4 Cir., 1962, 311 F.2d 663, 1963 A.M.C. 557; Bielawski v. American Export Lines, E.D. Va., 1963, 220 F.Supp. 265, 1963 A.M.C. -; Jeffers v. Alcoa Steamship Co., E.D. Pa., 1963, 219 F.Supp. 250, 1963 A.M.C. -; Griffin v. Scott Paper Co., E.D.Pa., 1963, 219 F.Supp. 41, 1963 A.M.C. —; Duvernay v. Alcoa Steamship Co., Inc., E. D.La., 1963, 217 F.Supp. 698, 1963 A.M.C. -; States Steamship Co. v. Portland Stevedoring Co., D.Ore., 1963, 216 F. Supp. 934, 1963 A.M.C. -; Isthmian Lines, Inc. v. Canadian Stevedoring Co., D.Ore., 1963, 216 F.Supp. 856, 1963 A.M.C.-; Misurella v. Isthmian Lines, Inc., S.D.N.Y., 1963, 215 F.Supp. 857, 1963 A.M.C. -; United States Lines Co. v. Nacirema Operating Co., D.Mass., 1963, 215 F.Supp. 627, 1963 A.M.C. 1423; Cassone v. Companie Venezolana De Navegacion, E.D.N.Y., 1962 A.M.C. 1347.
To this must be added our very recent cases Strachan Shipping Co. v. Koninklyke Nederlandsche Stoomboot Maalsehappy, N.V., 5 Cir., 1963, 324 F.2d 746, 1963 A.M.C. -; Grace Lines, Inc. v. Port Everglades Terminal Co., 5 Cir., 1963, 324 F.2d 699, 1963 A.M.C.-.
. The complaint alleged that the vessel was unseaworthy (or the vessel negligent) because the hatch-tender had to stand on a jury-rigged temporary platform of hatchboards resting on permanent deck pipes. The answer and im-pleader asserted that this “unseaworthy” condition was due to purposeful action of the supervisory personnel of the stevedore.
. In Strachan Shipping Company v. Kon-’ inklyke Nederlandsche Stoomboot Maals-chappy, N.V., 5 Cir., 1963, 324 F.2d 746, 1963 A.M.C.-, this Court in “a case of first impression” on the basis of a jury finding of nonworkmanlike performance holds the stevedore liable to indemnify the shipowner-defendant for the shipowner’s legal expense and fees even though the defense was successful and resulted in the denial of all relief to the injured worker.
. For specific results in an actual case, see Duvernay v. Alcoa Steamship Co., Inc., E.D.La., 1963, 217 F.Supp. 698, 1963 A.M.C. -, discussed note 10, supra. The District Court on a finding of nonworkmanlike performance held the stevedore liable to reimburse the shipowner $11,666.66 as legal fees and $1,576.10 as expenses incurred in the defense of the worker’s main suit. Now that the Melvin rule applies, the stevedore ends up paying substantially all three attorneys’ feesr
II
I Fontana-Davi3
Melvin Rule Rule
(1) Jury verdict $38,500.00 (D Jury verdict $38,500.00
(2) Less:
Worker’s (2) Less:
atty. fees Employer’s
(1/3) and Comp.
$500 exp. 13,333.33 Payments 24,491.74
(3) $25,166.67 (3) $14,008.26
(4) Less:
Employer’s (4) Less:
Comp. Worker’s atty.
Payments 24,491.74 fees (1/3)
& $500 exp. 5,169.42
(5) Worker’s
share $ 674.93 (5) Worker’s share $ 8,838.84
Under the Melvin rule the worker bears the full impact of reimbursing the employer’s compensation payments. At least to the extent of the difference between I(2) and-II(4) ($8,163.91) tho stevedore will or may bear this (see note 20, infra). Moreover, for the privilege of “recouping” its compensation payments of $24,491.74 (1(4) or H(2)), the stevedore must pay:
(a) Its own legal expense $ ?
(b) Its own legal fees ?
(c) Shipowner’s legal expense 1,576.10
(d) Shipowner’s legal fees 11,666.66
$ ?
.
Jury verdict
Less: Atty. expenses
Atty. fees
Amount received by stevedore for compensation paid
Total compensation paid
Less: Amount recovered
Immediate net loss
$30,000.00
$ 558.88
12,000.00 12,558.88
$17,441.12
$27,836.82
17,441.12
$10,395.SO
. Rounding off the figures, distribution of $80,000 settlement would have been:
Fontana-Davis
Melvin Rule Rule
Recovery $80,000 $80,000
Less: Less:
Atty’s. 40% Compensation
fee 32,000 payment 28,000
$48,000 $52,000
Less: Less:
Employer Atty’s. 40%
Compensation 28,000 fee 20,800
Worker $20,000 Worker $31,200
Considering the serious injuries sustained, the employer has a substantial liability for added compensation and medical expense in the future. § 933(f). Applying Voris the net received by the worker would have been $20,000 under Melvin, $31,200 under Fontana-Davis. In other words, rejecting the settlement cost the employer $20,000 or $31,500 in credits. To this must be added the $10,395.80, note 19, supra, actual loss which represents, in effect, payment of the worker’s counsel fees by the stevedore.
. I would refer briefly to a few peripheral matters in the Court’s opinion.
I do not think it is accurate to state that “both the employer and the attorney have a lien on the recovery. The sole question is, which of the two liens take priority * * The employer assuredly has a lien for compensation paid. But the lawyer’s lien is not under the Longshoremen’s Act. If one exists, it is under Florida law and then only for the services rendered to his only client Melvin.
Likewise, while it is true that the District Court heard evidence as to the reasonableness of a 40% fee, this was on the hypothesis that the counsel’s services were rendered to his client, not a stranger, or here, his adversary.