     Case: 09-60963 Document: 00511350104 Page: 1 Date Filed: 01/13/2011




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

                                                 FILED
                                                                          January 13, 2011

                                     No. 09-60963                           Lyle W. Cayce
                                   Summary Calendar                              Clerk



KENNETH CRAVEN,

                                                   Petitioner
v.

DIRECTOR, OFFICE OF WORKER’S COMPENSATION PROGRAMS, US
DEPARTMENT OF LABOR; NORTHROP GRUMMAN SHIP SYSTEMS INC,

                                                   Respondents




               Appeal from the United States Department of Labor
                             Benefits Review Board
                                BRB No. 08-0210


Before HIGGINBOTHAM, SMITH, and HAYNES, Circuit Judges.
PER CURIAM:*
       Before the court is Claimant Kenneth Craven’s appeal from the Benefits
Review Board’s (“Board” or “BRB”) reversal of the administrative law judge’s
(“ALJ”) award of employer-paid attorney’s fees for his Longshore and Harbor
Workers’ Compensation Act (“LHWCA”) claim. See 33 U.S.C. § 928(b). We
AFFIRM the decision of the Board.



       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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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                                       No. 09-60963

                                      I. Background
       Kenneth Craven sustained a work-related back injury on July 23, 2004.
His employer, Northrop Grumman Ship Systems, Inc. (“Northrop”), paid benefits
for temporary total disability (“TTD”) until March 14, 2005, at which point it
concluded that Craven was able to secure suitable alternative employment and
reduced Craven’s benefits to permanent partial disability payments (“PPD”).
Craven disputed this reduction in benefits and, through counsel, requested an
informal conference before the District Director.
       The parties held an informal telephone conference with a claims examiner
on August 25, 2005. The issues discussed at the informal conference included
“Indemnity-AWW/Medical-Causation/Nature and Extent/[and] Permanency.” 1
The claims examiner issued a                 Memorandum of Informal Conference
(“Memorandum”) the next day and advised the parties that she could not issue
a recommendation because she lacked the necessary wage and medical
information.2 However, the parties did not timely receive the Memorandum,
most likely due to the immediate intervention of Hurricane Katrina which rolled
ashore on August 29.
       On February 13, 2006, Craven requested a second informal conference,
noting that the Memorandum had not been received. The District Director
informed Craven that no further informal conference was needed, and Craven


       1
        “AWW” is an abbreviation for average weekly wage. Although the director’s
memorandum notes that nature and extent of Craven’s injury was discussed at the informal
conference, it was not listed as an issue to be discussed in the notice of informal conference.
       2
        The Memorandum states:
       Parties have attempted to settle this claim. Current medical information
       should be provided to this office. Wage information should be provided to this
       office and to Ms. Dulin prior to issuing recommendation with regard to AWW.
       The employer/carrier is required to submitted [sic] an 8(f) application to this
       office within 30 days from the date of maximum medical improvement. If
       maximum medical improvement has not been attained, then the issue of 8(f) is
       premature.

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                                 No. 09-60963

filed a request for a formal hearing on March 17, 2006. Northrop’s uncontested
claim is that it received the Memorandum on April 3, 2006. Two days later, on
April 5, before Northrop responded to the Memorandum, the case was referred
to the Office of Administrative Law Judges (“OALJ”) as requested by Craven.
A formal hearing was scheduled for October 20, 2006.
      In the days leading up to the hearing, Craven and Northrop were able to
agree on a number of disputed issues, and therefore the only issue formally
adjudicated before the ALJ was whether Craven was entitled to TTD payments
for the time period of March 15, 2005, to October 5, 2006. The ALJ found in
favor of Craven on that issue.
      Craven then filed a petition for attorney’s fees pursuant to § 928.
Northrop objected. The ALJ stated that the only issue as to attorney’s fees was
“whether the absence of a written recommendation from the District Director
bars Claimant’s counsel’s recovery of a fee under Section 928(b).” Although he
acknowledged that our precedents have said a written recommendation is
required, he determined that he could award attorney’s fees on equitable
grounds, concluding that “Employer’s refusal and failure to provide the
requested wage information had the same result as a denial of a
recommendation to pay a specific rate.” In addition to finding that Northrop
acted in bad faith, the ALJ reasoned that “when formalities [are] lacking
through no fault of the Claimant ‘the Employer should not secure a windfall’”
(emphasis added).
      Northrop then filed a motion for reconsideration in which it contested the
ALJ’s finding of bad faith, arguing that it did not receive the Memorandum until
April 3, 2006. The ALJ denied the motion for reconsideration without making
any additional findings as to Northrop’s bad faith and stating instead that “the
lack of a written recommendation in this instance should not benefit the
Employer and deprive Claimant’s counsel of Section 928(b) fees.”

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      The Board reversed the ALJ’s award of attorney’s fees, holding that
§ 928(b) “contains no equitable exclusion which would nullify the three
statutorily enumerated criteria for fee liability to be assessed under that
section.”     The Board remanded to the ALJ to determine whether Craven’s
counsel was entitled to an award against Craven under § 928(c). After remand
and appeal on the issue of § 928(c), Craven timely appealed the Board’s reversal
of the ALJ’s order granting employer-paid attorney’s fees to this court.
                                          II. Analysis
      “This Court conducts a de novo review of the BRB’s rulings of law, . . . .”
Andrepont v. Murphy Exploration & Prod. Co., 566 F.3d 415, 417 (5th Cir. 2009)
(quoting Pool Co. v. Cooper, 274 F.3d 173, 177 (5th Cir. 2001)). We will uphold
an ALJ’s findings of fact when they are supported by substantial evidence and
consistent with the law. Gulf Best Elec., Inc. v. Methe, 396 F.3d 601, 603 (5th
Cir. 2004).
      A. Section 928(b)
      1. Statutory Language
      The Section 928(b) issue is governed by our decision in Andrepont, 566
F.3d at 420. See also Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240,
260 (1975). The ALJ awarded attorney’s fees under § 928(b).3 Our circuit has


      3
          In relevant part, section 928(b) states:
      If the employer or carrier pays or tenders payment of compensation without an
      award pursuant to section 914(a) and (b) of this title, and thereafter a
      controversy develops over the amount of additional compensation, if any, to
      which the employee may be entitled, the deputy commissioner or Board shall
      set the matter for an informal conference and following such conference the
      deputy commissioner or Board shall recommend in writing a disposition of the
      controversy. If the employer or carrier refuses to accept such written
      recommendation, within fourteen days after its receipt by them, they shall pay
      or tender to the employee in writing the additional compensation, if any, to
      which they believe the employee is entitled. If the employee refuses to accept
      such payment or tender of compensation, and thereafter utilizes the services of
      an attorney at law, and if the compensation thereafter awarded is greater than

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consistently held that an award of attorney’s fees under § 928(b) is only available
if the statutory criteria have been met. See, e.g., Andrepont, 566 F.3d at 420;
Staftex Staffing v. Dir., Office of Workers’ Comp. Programs, 237 F.3d 404, 409
(5th Cir. 2000), opinion modified on reh’g on other grounds, 237 F.3d 409 (2001);
FMC Corp. v. Perez, 128 F.3d 908, 909-910 (5th Cir. 1997). Therefore, an award
of attorney’s fees under § 928(b) is appropriate only when the following
conditions are met: (1) an informal conference, (2) which leads to a written
recommendation from the deputy or Board, (3) the employer’s refusal to adopt
the written recommendation, and (4) the employee’s procurement of a lawyer’s
services to achieve a greater award than what the employer was willing to pay
after the written recommendation. Carey v. Ormet Primary Aluminum Corp.,
No. 10-60075, 2010 U.S. App. LEXIS 25029, at *8 (5th Cir. Dec. 8, 2010).4
Craven argues that our precedents are conflicting and have sometimes awarded
attorney’s fees under § 928(b) without addressing whether the statutory
requirements were met. See James J. Flanagan Stevedores, Inc. v. Gallagher,
219 F.3d 426 (5th Cir. 2000); Hole v. Miami Shipyards Corp., 640, F.2d 769, 774
(5th Cir. 1981). These cases are inapposite. They do not hold that § 928(b)’s
statutory criteria need not be met in order to award attorneys’ fees against the
employer. See Gallagher, 219 F.3d at 435 n.18 (expressly reserving the issue of
whether attorney’s fees can be awarded under § 928(b) if the statutory criteria



       the amount paid or tendered by the employer or carrier, a reasonable attorney’s
       fee based solely upon the difference between the amount awarded and the
       amount tendered or paid shall be awarded in addition to the amount of
       compensation . . . . In all other cases any claim for legal services shall not be
       assessed against the employer or carrier.

33 U.S.C. § 928(b).
       4
         The Fourth and Sixth Circuits also require these statutory criteria to be met. See
Pittsburgh & Conneaut Dock Co. v. Dir., Office of Workers’ Comp. Programs, 456 F.3d 616, 627
(6th Cir. 2006); Va. Int’l Terminals, Inc. v. Edwards, 398 F.3d 313, 318 (4th Cir. 2005).

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                                  No. 09-60963

are not met). Because the statute expressly requires a written recommendation,
which is not present here, Craven cannot recover from Northrop under this
section. See Andrepont, 566 F.3d at 420.
      2. Equitable Exception?
      The ALJ acknowledged that the claims examiner did not make a
recommendation, but determined that attorney’s fees could be awarded to
Craven because “when formalities [are] lacking through no fault of the Claimant
‘the Employer should not secure a windfall.’” The ALJ’s standard was erroneous
and inconsistent with our prior holding in Andrepont. See 566 F.3d at 421.
      To the extent that we have recognized non-statutory exceptions to the rule
that each side pays its own fees, we have required that the losing party have
acted in bad faith, such as “where a party has willfully violated a court order.”
See Boland Marine & Mfg. Co. v. Rihner, 41 F.3d 997, 1004 (5th Cir. 1995). We
have noted, but left unresolved, the potential tension “regarding the ability of a
court to exercise its equitable powers to assess attorney’s fees for bad faith
conduct in the face of a statute describing the circumstances in which fees may
be assessed.” Id. at 1005.
      We need not resolve any such tension here. Although the ALJ found that
Northrop “refus[ed] to cooperate . . . with the request for earnings records,” this
finding is not supported by substantial evidence. Substantial evidence is “such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” Pool Co., 274 F.3d at 178. The only evidence in the record
supporting a finding of bad faith is the mere fact of Northrop’s failure to respond
to the Memorandum. However, Northrop’s uncontested claim is that it could not
have timely responded to the Memorandum because it did not receive the
Memorandum until April 3, 2006, as a result of the chaos following Hurricane




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                                       No. 09-60963

Katrina.5 Though Northrop raised this point before the ALJ in its motion for
reconsideration, the ALJ made no further findings regarding Northrop’s bad
faith.
         Assuming arguendo that an equitable exception exists to § 928(b)’s
requirements, it is not available here. Viewing the record as a whole, the ALJ
could not reasonably conclude that a “fraud has been practiced upon [the court],
or that the very temple of justice has been defiled” as has been required in other
cases where statutory authorization is lacking. Boland Marine, 41 F.3d at 1005
(quoting Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991)). Because the facts
essential to finding that Northrop did not act in bad faith are undisputed, we
need not remand the case to the ALJ for further findings regarding Northrop’s
bad faith.
         Due to the lack of a written recommendation, the statutory requirements
of § 928(b) have not been met in this instance, and equitable relief for bad faith,
if ever available under § 928(b), is not available here. We therefore hold that
Craven is not entitled to attorney’s fees under § 928(b).6 We further note that
this result cannot properly be described as a “windfall” to Northrop. By holding
that § 928(b) does not effectuate a shift in attorney’s fees, we place the litigants
in their traditional role regarding attorney’s fees.




         5
         Because Craven had requested referral to the OALJ before Northrop received the
Memorandum, even if Northrop had acted immediately upon receipt of the Memorandum, it
is unlikely that the District Director could issue an informal recommendation. See 20 C.F.R.
§ 702.316 (“[I]f any party has requested a hearing, the district director shall prepare the case
for transfer to the Office of the Chief Administrative Law Judge.”); see also Devor v. Dep’t of
the Army, 41 BRBS 77, 84 (2007) (stating that no written recommendation was made where
the claimant requested referral concurrently with notifying director that claim would not
settle).
         6
        Because the lack of a recommendation is fatal to all of Craven’s issues, we need not
address whether the Craven can recover attorney’s fees for those claims for which Craven
received a favorable stipulation.

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                                 No. 09-60963

      B. Section 928(a)
      Craven also argues that he is entitled to attorney’s fees under § 928(a).
We have consistently held that § 928(a) is only available where the employer
fails to make any compensation for the injury. See, e.g., Andrepont, 566 F.3d at
418-19; see also Savannah Mach. & Shipyard Co. v. Dir., Office of Workers’
Comp. Programs, 642 F.2d 887, 889 (5th Cir. 1981) (“Since the Shipyard
tendered partial compensation, we agree that Section [928(a)] is inapplicable to
the situation at hand.”); cf. Weaver v. Dir., Office of Workers’ Comp. Programs,
282 F.3d 357, 359-60 (5th Cir. 2002) (requiring “employer controversion of the
claim,” not simply the amount of the claim, as Northrop does here) (emphasis
added). Here it is undisputed that Northrop made payments to Craven
throughout the dispute. Therefore, Craven is unable to recover attorney’s fees
under this section.
      C. Waived Claims
      For the first time on appeal, Craven argues that an interpretation of
§ 928(b) which makes an informal recommendation a prerequisite to an award
of attorney’s fees violates § 19(d) of the LHWCA, due process, and several
sections of the Administrative Procedures Act, 5 U.S.C. § 701 et seq. This
argument was raised for the first time in Craven’s petition for review to this
court and thus has been waived. See Aetna Cas. & Sur. Co. v. Dir., Office of
Workers’ Comp. Programs, 97 F.3d 815, 819 (5th Cir. 1996) (deeming argument
not raised before the BRB waived). Similarly, Craven also argues that fees can
be awarded under Federal Rules of Civil Procedure 26 and 37 for failure to
cooperate in discovery. This argument also has been waived for failure to raise
it to the BRB. See id.
                                III. Conclusion
      For the foregoing reasons, we AFFIRM the decision of the Board denying
employer-paid attorney’s fees to Craven.

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