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Settling With An Unrepresented Seaman
Making The Settlement Stick
Lawrence R. DeMarcay, III is a partner at Fowler Rodriguez Valdes-Fauli in the firm's New Orleans, Louisiana office. He can be reached at 504-595-5122 or ldemarcay@frvf-law.com
Unfortunately, personal injury claims brought by seamen against vessel owners are part of everyday life in running a boat company. As such, vessel owners have become very sophisticated in the management of these claims. As the cost of litigating these matters is very high, often, the claim's handler will attempt to settle a seaman's personal injury claim prior to his retention of counsel and filing suit. In most cases, this is a win-win for both the employee and the company. The company is able to settle the claim with its employee quickly without engaging counsel or incurring the costs associated with litigation. The employee wins because he is able to keep 100 percent of the settlement without having an attorney take 30 to 40 percent. Additionally, the employee does not have to wait a long time, possibly several years, before seeing any of this recovery. As companies have become more sophisticated in adjusting and managing these claims and reaching settlements with these unrepresented seamen, plaintiffs' attorneys have also become more sophisticated and, from our experience, have started to file suits against vessel owners attempting to invalidate these mutually agreed upon settlements. Although there is no way to guarantee that your settlement with an unrepresented seaman will be considered valid and enforceable by a court, following several simple steps and procedures will make the likelihood of the enforcement of the settlement agreement much more likely. Injuries that occur to vessel-based employees are governed by the Jones Act and the General Maritime Law. As such, federal law governs the validity of settlement agreements. The general rule in federal courts is that a settlement agreement once entered into cannot be repudiated
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by either party and will be enforced by the court. The Supreme Court has ruled that when parties, acting in good faith, settle a controversy, the courts will enforce the compromise without regard to what the result might, or would have been, had the parties chosen to litigate rather than settle. However, the courts have carved out an exception to this general rule for maritime workers that are designated as seamen. In fact, the courts have ruled that seamen are "wards of the court" and that the court has a duty to scrutinize an agreement when a seaman purports to release his rights to compensation for personal injuries. Under this duty, a settlement agreement is enforceable if the seaman relinquishes his rights with "an informed understanding of his rights with a full appreciation of the consequences" of executing the release and settling his claim. Under the rule that applies to seamen, a vessel owner should make sure that the unrepresented seaman has a full understanding of the rights that he may have as a seaman under admiralty law and that he has a full understanding as to the consequences of the agreement that he is entering into. As the scope of a seaman's understanding will be the primary issue in determining whether a settlement is valid, we recommend exchanging settlement documents and funds in the presence of a court reporter who transcribes the entire proceeding. As such, the record will clearly indicate that the seaman was informed of his rights and the scope of the settlement in a manner in which he clearly understood the consequences of the agreement. Thus, if a seaman chooses to attempt to invalidate the settlement, the vessel owner can provide sworn testimony showing that the vessel owner's attorney informed the seaman of his rights, provided him with an opportunity to seek counsel, had the seaman explain that he understood what he was agreeing to and that he had an opportunity to ask questions if he so desired. From our experience, we recommend that the seaman execute both a standard release document as well as a second document that outlines all of the rights of the seaman. Both of these documents can be reviewed and exeSeptember 2008