Container Repair Facilities and Longshore Coverage

10/03/2012

Two recent U.S. Court of Appeals decisions analyze the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) coverage requirements with regards to shipping container repair facilities.
Under the LHWCA situs requirement, the place where an injury occurs must 1) have a geographic nexus with maritime activity; and 2) a functional nexus with maritime activity.  For the status requirement, a worker must be a maritime employee.
In Ramos v. Director (OWCP-O:11-0130 August 10, 2012), the 11th Circuit upheld the Benefit Review Board’s (the “BRB”) determination that a container repair and storage facility did not meet the geographic nexus prong of the situs requirement.  There, the facility was 3.2 miles away from the closest port.  The Ramos court noted LHWCA-covered workplaces do not necessarily have to adjoin navigable waters.  Still, the court considered the 3.2-mile distance from a port, the business considerations for the facility’s location, and the fact that surrounding businesses had no maritime connection.  Therefore, the court agreed the facility did not have geographic nexus to maritime activity.
In New Orleans Depot Services, Inc. v. Director (11-60057 July 25, 2012), the 5th Circuit upheld the BRB’s holding that a container repair facility met the functional nexus requirement. While the employer conceded geographic nexus because the facility was near navigable waters, the court took an expansive view in finding functional nexus.  It reasoned the containers were used for marine transportation and were, thus, a part of the ship loading process.  A strongly worded dissent asserted this connection was too attenuated.
The court similarly held the employee in question met the status requirement.  The court opined that container repair is an essential function of the ship loading and unloading process. Therefore, the claimant, who serviced marine shipping containers, was a covered employee under the LHWCA.
In analyzing these cases together, it would appear the LHWCA does not cover employees working at a container repair facility located sufficiently far away from a port or terminal. However, container repair employees at facilities adjoining navigable waters may meet the status requirement and the facilities themselves may meet the functional prong of the situs requirement.

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