Price v. Atlantic Ro-Ro Carriers et al
MEMORANDUM. Signed by Chief Judge Catherine C. Blake on 7/7/2017. (dass, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
TROY D. PRICE, JR.
ATLANTIC RO-RO CARRIERS, INC., et al.
Civil No. CCB-11-1735
Third-party defendant The Rukert Terminals Corporation (“Rukert”) has filed a motion
for summary judgment in this long-running litigation, alleging that Mos Shipping Co., Ltd.,
(“Mos”) is barred by the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), 33
U.S.C. §§ 901 et seq., from pursuing a claim for indemnity or contribution against Rukert. No
oral argument is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons stated below,
the motion for summary judgment will be granted.
This action arises out of an injury suffered by plaintiff Troy D. Price, Jr. (“Price) while
helping to unload freight aboard a cargo vessel owned and/or operated by Mos. At the time of his
injury, Price was employed as a longshoreman by Beacon Stevedoring Corporation (“Beacon”)
and worked on a vessel moored at a pier in one of Rukert’s terminals.
Rukert is a privately owned Maryland corporation that operated a marine terminal on
South Clinton Street in Canton, Maryland. (John L. Coulter Aff. ¶ 2, ECF No. 140-2.) Beacon is
a privately owned Maryland corporation that provides stevedoring services exclusively for ships
loading and unloading at Rukert’s South Clinton Street Terminal. (Id. at ¶ 2.) Rukert and Beacon
are owned by the same two families and share a Board of Directors. (Id. at ¶¶ 9–10.) The CEO
and President of Rukert are the President and Executive Vice President, respectively, of Beacon.
(Id. at ¶¶ 7–8.) The Boards of Directors for the two companies meet on the same day in
immediate succession, (id. at ¶ 11), although there is a separate agenda for each company’s
business, (John L. Coulter Dep., pp. 54:13-20, ECF No. 173-1).
The two companies operate out of the same offices in Baltimore, Maryland, and share the
same post office box and fax number. (John L. Coulter Aff. at ¶¶ 4–6.) All management
positions at Beacon are on the payroll at Rukert. (John L. Coulter Dep., pp. 34.) Beacon pays
Rukert a monthly fee of $13,900 for administrative and management services it receives from
Rukert. (Id. at 35:9-19.) Rukert and Beacon are both insured for LHWCA and Maryland
Workers’ Compensation Act claims under the same policy, written in Rukert’s name, which is
currently making payments to Price for compensation and medical expenses. (John L. Coulter
Aff. at ¶ 13; Reply in Supp. of Mot. Summ. J. 5, ECF No. 182.) Beacon’s employees pay into
Rukert’s retirement plan and are covered under Rukert’s healthcare plan, although Beacon pays
for its employees’ shares in those plans. (John L. Coulter Dep., pp.8:13–9:2, pp. 50.)
The companies maintain separate bank accounts and separate financial statements.
(Mem. in Opp’n to Summ. J. Mot. 12, ECF No.173; Beacon Bank Statement, ECF No. 173-5;
Rukert Bank Statement, ECF No. 173-6.) At various times, Rukert will loan money to Beacon
and Beacon will loan money to Rukert. (John L. Coulter Dep., pp. 20–25.) The loans carry
interest and are paid off “usually pretty quickly.” (Id. at pp. 20.) While paid on a separate
payroll, Beacon’s employees work exclusively at Rukert’s terminal and work within the terminal
for Rukert when there are no loading or unloading tasks to complete. (John L. Coulter Aff. at ¶ 5,
ECF No. 182-1.)
Price seeks compensation under the LHWCA, which “establishes a comprehensive
federal workers’ compensation program” that provides longshoremen with medical benefits for
work-related injuries. Howlett v. Birkdale Shipping Co., S.A., 512 U.S. 92, 96 (1994). An injured
longshoreman’s employer must pay the statutory benefits regardless of fault, but the employer is
shielded from further liability. Id. Price filed a complaint against Mos under Section 905(b) of
the LHWCA, which permits a longshoreman to “seek damages in a third-party negligence action
against the owner of the vessel on which he was injured” even though he has received benefits
from his employer as mandated by the LHWCA. Id.
In October 2011, Mos filed a third-party complaint against Rukert, alleging negligence in
maintaining forklifts operated by Beacon employees and failure in properly training and
certifying Beacon employees in the operation of forklifts. (Third Party Compl. ¶¶ 13–16, ECF
No. 16.) In February 2017, Rukert filed a motion for summary judgment, claiming to operate as a
single enterprise with Beacon and therefore denying further liability under the LHWCA. (Mot.
for Summ. J., ECF No. 140). Mos responded, arguing Rukert was precluded from raising the
affirmative defense due to waiver or collateral estoppel, and that further discovery was necessary
to determine the level of integration between Rukert and Beacon. (Opp’n to Mot. for Summ. J.,
ECF No. 144). After limited additional discovery relating to the corporate and financial structure
of Rukert and Beacon, the parties submitted supplemental briefings. (See ECF Nos. 155, 173,
Mos argues that Rukert waived its statutory immunity defense by failing to raise it as an
affirmative defense in its answer to the complaint. As “it is well established that an affirmative
defense is not waived absent unfair surprise or prejudice,” Mos asserts that its inability to
conduct discovery into the financial relationship between Rukert and Beacon resulted in unfair
surprise and prejudice. Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc., 380 F.3d 200,
205 n. 3 (4th Cir. 2004). Courts have found, however, that “affirmative defenses raised for the
first time in summary judgment motions may provide the required notice.” Grunley Walsh U.S.,
LLC v. Raap, 386 F.App’x 455, 459 (4th Cir. 2010) 1 ; see, e.g., Brinkley v. Harbour Recreation
Club, 180 F.3d 598, 612–13 (4th Cir. 1999) (noting that plaintiff had “ample opportunity to
respond” to affirmative defense first raised in defendant’s summary judgment motion).
To be sure, Rukert allowed more than five years to lapse before raising the statutory
immunity issue in its motion for summary judgment. Mos, however, had ample opportunity to
respond to Rukert’s arguments. The parties were allowed to conduct additional limited discovery
related to the financial relationship between Rukert and Beacon and fully briefed the motion.
(See April 2017 Scheduling Ltr, ECF No. 157.) Mos therefore has shown no unfair surprise or
prejudice from consideration of the statutory immunity issue.
II. Collateral Estoppel
Mos also argues that Rukert is collaterally estopped from asserting single entity status by
the Fourth Circuit’s ruling in N.L.R.B. v. Int’l Longshoremen’s Ass’n, AFL-CIO, 764 F.2d 234,
237 (4th Cir. 1985).
The doctrine of collateral estoppel bars a party from relitigating an issue of fact or law
determined against that party in an earlier action, even if the second action differs from the first
one. Montana v. United States, 440 U.S. 147, 153 (1979) (“Under collateral estoppel, once an
issue is actually and necessarily determined by a court of competent jurisdiction, that
determination is conclusive in subsequent suits based on a different cause of action involving a
Unpublished cases are cited only for the soundness of their reasoning and not for any precedential value.
party to the prior litigation.”) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n. 5
(1979)); United States v. Wight, 839 F.2d 193, 196 (4th Cir.1987). Nonmutual offensive
collateral estoppel, the type of collateral estoppel raised here, allows a non-party to a previous
action to prevent a defendant in the current action from relitigating issues already decided against
him in that previous action. Parklane Hosiery, 439 U.S. at 331–32 (holding that nonmutual
offensive collateral estoppel is permissible).
The Fourth Circuit has held that, in order for collateral estoppel to apply, the party
asserting it must establish that:
(1) the issue sought to be precluded is identical to one previously litigated; (2) the issue
must have been actually determined in the prior proceeding; (3) determination of the
issue must have been a critical and necessary part of the decision in the prior proceeding;
(4) the prior judgment must be final and valid; and (5) the party against whom estoppel is
asserted must have had a full and fair opportunity to litigate the issue in the previous
Sedlack v. Braswell Servs. Grp., Inc., 134 F.3d 219, 224 (4th Cir. 1998). The Fourth Circuit has
also noted the “dynamic nature of the shipping industry, with its constantly changing economic
climate and regularly changing fleets, ports, and operations,” in refusing to apply collateral
estoppel to a situation where the earlier adjudication “reflected the status of the defendant only as
it existed several years prior to the accrual of the [present] cause of action.” Dracos v. Hellenic
Lines Ltd., 705 F.2d 1392, 1397 (4th Cir. 1983).
The Fourth Circuit’s affirmation of a National Labor Relation Board (“Board”) ruling
made in 1982 does not preclude this court from considering the issue, as the relationship between
Rukert and Beacon has significantly changed in the past thirty- five years.
N.L.R.B. v. Int’l Longshoremen’s Ass’n concerned the use of union workers in the
operation of a crane erected by Rukert. 764 F.2d at 236. The union contended that Rukert and
Beacon were a single employer and therefore Rukert was contractually bound to employ union
workers by virtue of Beacon’s collective bargaining agreement with the union. Id. at 238. The
Board determined that Rukert and Beacon were separate employers, and the Fourth Circuit
affirmed. Id. at 237. The Fourth Circuit focused on the companies’ separate ownership,
operations, and control of labor relations. Id. at 239. Separate control of labor operations was a
“strongly probative finding,” as Beacon’s labor relations were governed by the union’s grievance
procedures and Rukert’s were handled directly by management. Id.
The relationship between Rukert and Beacon has changed since the Board’s
determination. Most significantly, Beacon is no longer a member of the Steamship Trade
Association of Baltimore, and therefore no longer operates under collective bargaining
agreements with a maritime labor union. (John L. Coulter Aff., ¶ 2, ECF No. 155-2.) Instead,
Beacon employee matters are managed and administered by Rukert. (Id. at ¶ 5.) The Fourth
Circuit’s affirmation of the Board’s determination that Rukert and Beacon were separate entities
reflected the status of the two companies as they existed in 1982, not their present situations.
Collateral estoppel does not apply, and therefore this court may consider whether Rukert and
Beacon constitute a single entity under the LHWCA.
III. Single Entity Status
As an injured longshoreman’s exclusive remedy against an employer is the LHWCA, the
employer cannot be liable for indemnity or contribution to other defendants. 33 U.S.C. § 905(b).
Rukert asserts that it works in concert with Beacon as a single enterprise and therefore cannot be
liable to Mos. To operate as a single entity under the LHWCA, companies must have
“interrelation of operations, common management, centralized control of labor relations and
common ownership.” Claudio v. U.S., 907 F. Supp. 581, 588 (E.D.N.Y. 1995) (applying criteria
from the National Labor Relations Act (“NLRA”) to a single entity analysis under the LHWCA).
The single entity/single employer standard has been well developed under the NLRA. See
29 U.S.C. § 152. Under the NLRA, “the single employer doctrine is a creation of the [Board]
which allows it to treat two or more related enterprises as one employer within the meaning of
the [Act].” Grane Health Care v. N.L.R.B., 712 F.3d 145, 150 (3d Cir. 2013). In determining
single employer status, the Board considers four factors: “(1) functional integration of
operations; (2) central control of labor relations; (3) common management; and (4) common
ownership.” Id. (quoting N.L.R.B. v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1122
(3d Cir. 1982). Single employer status depends on a totality of the circumstances and is
characterized overall by “an absence of an arm’s length relationship found among unintegrated
companies.” Browning-Ferris, 691 F.2d at 1122. Courts also have found the “common usage of
office facilities and family relationships between persons involved in the purportedly discrete
companies” relevant. N.L.R.B. v. 675 West End Owners Corp., 304 Fed. App’x 911, 913 (2nd
Instead of the single entity standard developed under the NLRA and applied in LHWCA
cases, Mos relies on a standard under New York State Law for determining if two entities are
integrated. See Longshore v. Davis Sys. of Capital Dist., 304 A.D. 2d 964, 965 (2003), Buchner
v. Pines Hotel, Inc., 87 A.D.2d 691, 692 (1982), aff’d, 58 N.Y.2d 1019 (1983). Neither of the
two cases that Mos points to for authority, however, discuss the single entity standard.
Longshore found that two entities were not alter egos of each other. Longshore, 304 A.D.2d at
966. Alter ego status does not necessarily equate to single entity or single employer status. Under
the NLRA, for example, the test for determining alter ego status is different from the test for
determining single employer status. Compare Grane Health Care, 712 F.3d at 150 (describing
the four-factor test for single employer status), with N.L.R.B. v. Kodiak Elec. Co., 70 Fed. App’x
664, 667 (4th Cir. 2003) (setting forth the test for determining alter ego status). Similarly,
Buchner focuses on the existence of a joint venture, also a determination different from single
employer status. 87 A.D.2d at 692. The court finds these authorities unpersuasive.
Mos argues that Rukert and Beacon do not have functional integration of operations
because of their separate financial accounting practices. To be sure, the two companies maintain
separate accounting practices and bill clients separately for their work. Their financial
management, however, ultimately is under the control of the same employees and identical
Boards of Directors. While the companies maintain separate records of their transactions, they
often exchange capital and labor between the two corporations. Given the totality of their
operations, their separate financial practices do not overcome the functional integration of Rukert
Rukert and Beacon’s labor relations are centrally controlled by Rukert’s management.
The nonunion employees of both companies pay into Rukert’s retirement system, are reimbursed
under Rukert’s healthcare reimbursement plan, and are covered under Rukert’s workers’
compensation insurance. 2 Rukert and Beacon are under common management, with overlapping
officers and identical Boards of Directors, and common ownership, with private ownership by
the same two families.
The undisputed facts regarding Rukert and Beacon describe two integrated companies
under the centralized control of Rukert. Accordingly, the two corporations operate as a single
entity and, under the LHWCA, Mos is barred from pursuing any claims of indemnity or
contribution against Rukert.
The centralization of labor relations is such that Price, when filing his original complaint, described himself as
“employed as a harbor worker by Rukert Terminals Corporation, a stevedoring company.” (Compl. ¶ 5, ECF No. 2.)
Price did not name Rukert as a defendant.
For the reasons discussed above, the court will grant Rukert’s motion for summary
July 7, 2017
Catherine C. Blake
United States District Judge
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