           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                        November 19, 2008

                                     No. 07-60991                     Charles R. Fulbruge III
                                   Summary Calendar                           Clerk


BAY, LTD; ZURICH NORTH AMERICA INSURANCE CO

                                                  Petitioners
v.

DIRECTOR, OFFICE OF WORKER’S COMPENSATION PROGRAMS, US
DEPARTMENT OF LABOR; JOHN STILES

                                                  Respondents



              Appeal from the United States Benefits Review Board
                                  No. 07-0176


Before DAVIS, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
       John Stiles (“Stiles”) was injured while working as a scaffolding supervisor
for Plaintiff-Appellant Bay, Ltd. Stiles made a claim for benefits pursuant to the
Longshore and Harbor Workers’ Compensation Act (“LHWCA”), 33 U.S.C.
§§ 901-948. The Administrative Law Judge (“ALJ”) awarded benefits to Stiles
based on an average weekly wage of $1,329.63, and the Benefits Review Board
(“BRB”) affirmed the ALJ’s decision.            We must decide whether the BRB’s


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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decision was supported by substantial evidence on the record as a whole and is
in accordance with the law. We affirm.
           I. FACTUAL AND PROCEDURAL BACKGROUND
      Stiles was hired as a scaffolding supervisor and, after working
approximately two weeks for Bay, Ltd., suffered a work-related injury on May
22, 2003. During this time, Stiles earned a total of $1,636, at a rate of $18 per
hour. Stiles made a claim for benefits for his work-related injury pursuant to
the LHWCA. A formal hearing was held before an ALJ, and the sole issue
before the ALJ was Stiles’ average weekly wage. Stiles testified that during the
years preceding the accident he had worked “on and off.” Stiles submitted the
wages of several coworkers, including Troy Thibodeaux (“Thibodeaux”), Noel
Valderrama (“Valderrama”), and Gilbert Sarver (“Sarver”). Thibodeaux’s wage
was about $23/hour and he earned an average weekly income of approximately
$1,300.00, including overtime. Valderrama’s wage was about $18/hour and he
earned an average weekly income of approximately $1,330.00, including
overtime. Sarver’s wage was about $18/hour and he earned an average weekly
income of approximately $1,025.00, including overtime. The parties stipulated
that Stiles’ co-workers worked in the “same or similar” employment as Stiles.
      The ALJ awarded Stiles continuing temporary total disability benefits
from May 23, 2003, based on an average weekly wage of $1,329.63. Bay, Ltd.
appealed the ALJ’s decision to the BRB. The BRB held that the ALJ properly
determined Stiles’ average weekly wage and affirmed. Bay, Ltd. appeals the
BRB’s decision and claims that the ALJ and the BRB erred in holding that
Valderrama’s earnings reasonably reflected Stiles’ wage earning capacity under
§ 10(c) of the LHWCA.
           II. JURISDICTION AND STANDARD OF REVIEW
      We have jurisdiction over the BRB’s decision affirming the ALJ’s decision
pursuant to the LHWCA. 33 U.S.C. § 921(c). We review a decision of the BRB


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“under the same standard as it reviews the decision of the ALJ: Whether the
decision is supported by substantial evidence and is in accordance with the law.”
Empire United Stevedores v. Gatlin, 936 F.2d 819, 822 (5th Cir. 1991) (citations
omitted).
      When this court reviews decisions of the BRB, “our only function is to
correct errors of law and to determine if the BRB adhered to its proper scope of
review––i.e., has the Board deferred to the ALJ’s fact-finding or has it
undertaken de novo review and substituted its views for the ALJ’s.” Ceres
Marine Terminal v. Dir., Office of Worker’s Comp. Programs, 118 F.3d 387, 389
(5th Cir. 1997) (citing Avondale Shipyards, Inc. v. Vinson, 623 F.2d 1117, 1119
n.1 (5th Cir. 1980) (internal quotation marks omitted)). Therefore, we must
“conduct an independent review of the record to determine if the ALJ’s findings
are supported by substantial evidence.” Avondale, 623 F.2d at 1119 n.1. We
“may not substitute [our] judgment for that of the ALJ . . . nor may we reweigh
or reappraise the evidence, but may only inquire into the existence of evidence
to support the ALJ’s factual findings.” Empire, 936 F.2d at 822 (citations
omitted).

                              III. DISCUSSION

      Section 910 provides several alternate formulas for calculating an
employee’s average weekly wage based upon the employee’s average annual
earnings.   See 33 U.S.C. § 910(a)-(d); Empire, 936 F.2d at 821 (“The
determination of the average weekly wage is governed by section 10 of the Act,
which provides three alternative methods for calculating the employee’s average
annual earning capacity, 33 U.S.C. § 910(a)-(c), the amount of which is then
divided by 52 weeks to arrive at the average weekly wage, 33 U.S.C.
§ 910(d)(1).”). Both parties concede that § 910(a) is inapplicable in this case,
because Stiles had not “worked in the employment in which he was working at


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the time of the injury . . . during substantially the whole of the year immediately
preceding his injury.” 33 U.S.C. § 910(a).

      Section 910(b) is also not appropriate for calculating Stiles’ average annual
earnings, because there was no evidence of either Stiles’ average daily wage or
the daily wage of a similarly situated employee. Section 910(b) provides that

      [i]f the injured employee shall not have worked in such employment
      during substantially the whole of such year, his average annual
      earnings, if a six-day worker, shall consist of three hundred times
      the average daily wage or salary, and, if a five-day worker, two
      hundred and sixty times the average daily wage or salary, which an
      employee of the same class working substantially the whole of such
      immediately preceding year in the same or in similar employment
      in the same or a neighboring place shall have earned in such
      employment during the days when so employed.


33 U.S.C. § 910(b). The ALJ noted that there was no evidence of Stiles’ average
daily wage during the two weeks Stiles worked at Bay, Ltd. It then examined
the wage history of similarly situated employees. The parties stipulated that
Thibodeaux, Valderrama, and Sarver “work[ed] in the same or similar
employment as Claimant.” Sarver’s “earning history [did] not provide an
adequate basis to use Section 10(b),” and Thibodeaux’s wage of $23/hour was not
reasonably similar to Stiles’ wage of $18/hour. The ALJ concluded that “only Mr.
Valderrama would qualify as a fair and reasonable similar employee in the
application of Section 10(b).” However, because there was no record of the
number of hours Valderrama worked each day, the ALJ could not calculate
Valderrama’s average daily wage, as required by § 910(b). Section 910(b) is not
appropriate for calculating average annual earnings where there is no evidence
of either the employee’s average daily wage or the daily wage of similarly
situated employees.     See id.   Under such circumstances, § 910(b) cannot
reasonably and fairly be applied. See 33 U.S.C. § 910(c).


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      The ALJ properly determined that § 910(c) was the appropriate standard
for calculating Stiles’ average annual earnings. Section 910(c) provides that if
subsections (a) and (b)

      cannot reasonably and fairly be applied, [the employee’s] average
      annual earnings shall be such sum as, having regard to the previous
      earnings of the injured employee in the employment in which he
      was working at the time of the injury, and of other employees of the
      same or most similar class working in the same or most similar
      employment in the same or neighboring locality, or other
      employment of such employee, including the reasonable value of the
      services of the employee if engaged in self-employment, shall
      reasonably represent the annual earning capacity of the injured
      employee.


33 U.S.C. § 910(c). Thus, the statute allows the ALJ to calculate average annual
earnings based upon three factors: (1) past earnings of the employee in the
employment in which he was working at the time of the injury; (2) the earning
history of employees of the same or most similar class working in the same or
most similar employment; and (3) the employment history of the injured
employee. Bay, Ltd.argues that the first and third factors go against the ALJ’s
findings and require this court to overturn the ALJ’s holding. First, we consider
the second factor, which the ALJ found to reasonably represent Stiles’ annual
earning capacity. Then, we examine the first and third factors to determine if
either factor suggests that the ALJ’s reliance upon the second factor alone was
unreasonable.

      The ALJ concluded that the critical factor in this case was the second
factor: the earning history “of other employees of the same or most similar class
working in the same or most similar employment in the same or neighboring
locality.” Id. The ALJ reviewed the pay records for three similarly situated
employees. The pay records reflected each employee’s annual earnings and
included their average weekly income and the number of hours worked each

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week over a one-year period.      From the evidence in the record, the ALJ
determined that Valderrama was similarly situated to Stiles at the time of
Stiles’ injury. It also noted that Valderrama’s income included overtime, but
found that “one of the primary variables in [average weekly wage] calculations
is the number of hours of work and overtime an employee can expect to
accumulate.” The ALJ concluded that Valderrama’s annual earnings presented
substantial evidence that Stiles could have enjoyed similar opportunities for
overtime earnings. There was no evidence to show that Stiles would have less
opportunities for overtime earnings than similarly situated employees such as
Valderrama. Therefor, the ALJ used Valderamma’s earnings to estimate Stiles’
earning capacity at the time of the injury.

      Bay, Ltd. argues that the first factor, which inquires into the past earnings
of the employee in the employment in which he was working at the time of the
injury, demonstrates that the ALJ’s reliance upon Valderamma’s wage was
unreasonable. Bay, Ltd. urges this court to apply the framework from National
Steel & Shipbuilding Co. v. Bonner, 600 F.2d 1288 (9th Cir. 1979), and hold that
Stiles’ past earnings with Bay, Ltd. represent the upper limit of his earning
capacity. However, Bay, Ltd. misunderstands the critical finding in National
Steel. In National Steel, the court held that “[t]he earlier wages [or past
earnings] could be considered for what they were worth, but they are not binding
upon the ALJ.”     Id. at 1293.   The court emphasized that “[t]he trier can
reasonably draw an inference that but for the injury, the worker would have
continued to earn new, higher wages.” Id. Thus, in National Steel, the Ninth
Circuit found that an employee’s disability wages could exceed the amount the
employee had earned in his employment with the company in which he was
working at the time of the injury. The court implicitly recognized that an
employee might have more opportunity to earn wages at the time of his injury
than he had prior to his injury. This conclusion is supported by the case law in

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this circuit. See Empire, 396 F.2d at 823 (holding that earning capacity includes
the amount that the employee would have had the opportunity to earn). The
statute does not require the ALJ to limit the compensation award under § 910(c)
based upon the wages the employee had earned at his job prior to his injury.
The ALJ could reasonably consider the two other factors when determining the
upper limit of Stiles’ earning capacity.

      The third factor requires the ALJ to give consideration to the employment
history of the injured employee. Bay, Ltd. argues that Stiles’ past earnings
indicate that he would not have pursued the same overtime opportunities that
Valderrama did; and therefore, any calculation that is based upon Valderrama’s
overtime earnings was error. Though this court held, in Empire, that the ALJ
must take into account the employee’s earnings over several years, it did not find
that this was the critical factor. 936 F.2d at 822. All the statute requires is that
the ALJ give regard to the relevant factors when determining what “reasonably
represent[s] the annual earning capacity of the injured employee.” 33 U.S.C.
§ 910(c); see Empire, 936 F.2d at 822; see also Fireman’s Fund Ins. Co. v. Van
Steene, 120 F.2d 548, 549-50 (9th Cir. 1941) (holding that the court is required
to consider the factors but need not rely upon a factor if the factor does not
reasonably represent the annual earning capacity of the injured employee).

      The ALJ determined that a claimant’s annual earning capacity, at the
time of his injury, may be more than his average earnings over the previous one
to five years, even if this means including opportunities for overtime. For this
reason, the ALJ held that Stiles’ opportunities for overtime should be included
in the calculation of his earning capacity at the time of his injury. This court has
found that the “prime objective of section 10(c) is to arrive at a sum that
reasonably represents a claimant’s annual earning capacity at the time of the
injury.”   Empire, 936 F.2d at 822 (internal quotation marks and citations


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                                  No. 07-60991

omitted). In Empire, we found that an injured employee’s earning capacity can
be defined as: “the amount that the employee would have the potential and
opportunity of earning absent the injury.” Id. at 823 (citing Tri-State Terminals,
Inc. v. Jesse, 596 F.2d 752, 757 (7th Cir. 1979) (“[E]arning capacity of [an]
injured workman [can] mean the amount of earnings the claimant would have
the potential and opportunity to earn absent injury.”)); see also Palacios v.
Campbell Indus., 633 F.2d 840, 843 (9th Cir. 1980) (“[I]t is necessary to consider
[the employee’s] ‘ability, willingness and opportunity to work.’” (internal
quotation marks and citations omitted)). Thus, this court has found that
calculations of earning capacity allow for an inquiry into the opportunity to earn
wages.

      In sum, the ALJ considered all three factors in its determination of Stiles’
average annual earning capacity, that is the amount he could have earned
absent his injury. First, the ALJ considered Stiles’ actual earnings at the time
of injury. The ALJ reviewed Stiles’ pay records, which stated that he had been
working for Bay, Ltd. for about two weeks at the time of his injury, that his wage
was $18/hour, and that in those two weeks he had earned $1,636.00. Second, the
ALJ considered the earnings of other employees working in the same or similar
type of employment. The ALJ concluded that one employee, Valderrama, was
similarly situated to Stiles’ and that his earnings represented a fair and accurate
assessment of Stiles’ earning capacity. This estimate included Valderrama’s
overtime earnings, because the ALJ concluded that Stiles’ would have had the
same opportunities to acquire overtime had he not been injured. Third, the ALJ
considered Stiles’ earning capacity over a period of years prior to his injury. The
ALJ reviewed Stiles’ social security records and found that Stiles’ annual
earning capacity over the previous five years ranged from $11,872.00 to
$66,496.00.



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      After considering all of the factors, the ALJ concluded that Valderrama’s
annual earning capacity reasonably represented Stiles’ annual earning capacity.
The ALJ relied upon Valderrama’s past earnings because he was working in a
similar job at the same hourly wage and had similar opportunities as Stiles. The
ALJ’s decision to rely upon the past earnings of a similarly situated employee is
in accordance with the law and there was substantial evidence to support the
ALJ’s calculation of Stiles’ earning capacity.

                             IV. CONCLUSION

      There was substantial evidence to support the ALJ’s determination of
Stiles’ annual earning capacity and the decision was in accordance with the law.
Thus, the BRB properly affirmed the ALJ’s Decision and Order. We AFFIRM.

      AFFIRMED.




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