Shipyard Industry Watches S.D. Case Before High Court : Justice: The question of whether a worker was legally a seaman when he was injured has financial ramifications that have ailing U.S. shipbuilding companies quaking.

Byron Gizoni was working on the deck of a commercial barge that plied the waters of San Diego Bay four years ago when he fell through a hole, badly injuring his back and leg.

After accepting several thousand dollars in worker’s compensation payments from his employer, Southwest Marine, Gizoni, 35, sued the shipyard in federal court, charging negligence. His purpose for filing the lawsuit was to get more money from the company.

However, Southwest Marine’s attorneys convinced a judge that U.S. maritime laws prohibit Gizoni from suing, and the case was dismissed in U.S. District Court.

Now, the dispute has reached the U.S. Supreme Court, which will rule whether a federal jury should decide if Gizoni was a seaman or an ordinary shipyard worker when he was injured.

The distinction may seem arcane on the surface, but to the declining American shipbuilding industry, the outcome is critical.

If the court rules that it is up to a jury to decide if Gizoni was working as a seaman when he was injured, seaman status will allow him to sue for damages. Ordinary shipyard workers are not allowed to sue in similar situations.

If Gizoni wins, the industry fears it will open the door to other similar lawsuits, adding a financial burden that shipbuilders claim will threaten their very existence.

“If Gizoni prevails, it will add more fuel to the fire and increase the cost of doing business in the United States. Good Lord, that’s really scary,” said Dan Rogers, marketing director at Tacoma Boatbuilding Co. in Washington.

Gizoni’s attorney, however, views the case as a worker’s rights issue.

“This raises significant legal issues, as to whether someone assigned to a tug or barge in a shipyard is going to be allowed to sue his employer,” lawyer Preston Easley said. “ . . . it could open the door for shipyard workers across the nation to sue their employers when they are injured on vessels owned by a shipyard.”

Estimates of the number of workers who could be affected by the court’s decision range in the hundreds, because of the decline of U.S. shipyards. Workers affected would be limited mostly to shipyard employees who work on company-owned tugs and barges.

However, the potential financial stakes are such that the case has been propelled to the highest court in the land.

Attorney James J. McMullen Jr., who represents Southwest Marine, echoed industry arguments that insurance and litigation costs for shipyards would double if the court rules in Gizoni’s favor.

This would present a serious financial burden for the declining industry in this country, which is struggling to compete with foreign shipyards whose labor costs are lower and which are usually subsidized by their governments, McMullen said.

“This individual is trying to say he’s not a shipyard worker, that he’s a merchant marine,” said Fred Hallett, vice president at the San Diego-based National Steel & Shipbuilding Co. “The practical and financial effect if the court rules for him will be significant cost increases for the shipbuilding industry in the United States.”

“There’s confusion out there, and it has to be sorted out so everyone knows exactly what the rules are,” said Frank Losey, general counsel in Washington for the Shipbuilders Council of America. “Hopefully, the court will clarify the distinction between land-based shipyard workers as opposed to true seamen who are out on a ship.”

The Shipbuilders Council will file a friend-of-the-court brief on behalf of Southwest Marine, Losey said. For shipbuilders, the Gizoni case is another in a long line of threats to an already staggering business.

The private American ship building industry nearly disappeared in the last decade. On the West Coast, the San Diego-based National Steel & Shipbuilding Co. is the only remaining private yard capable of building large commercial and Navy ships.

In recent years, Lockheed shut down in Seattle, and Todd Shipbuilding in San Pedro is going through bankruptcy. On Friday, Tacoma Boatbuilding Co. officials announced they expect to lose $29 million in 1990 because of losses suffered by a subsidiary that specialized in building luxury yachts.

In February of last year, Nassco was awarded the first major commercial contract given a U.S. shipyard since 1984, when the company was given a $129-million contract to build a 713-foot-long container ship. Eight months later, Nassco launched the first ship built in the shipyard in more than three years, when the 754-foot-long USS Supply was delivered to the Navy.

Most private yards, like Southwest Marine, survive almost exclusively on Navy repair contracts.

Gizoni worked on Southwest Marine barges that were used to transport ship parts and ship repair equipment throughout San Diego harbor. On April 6, 1987, while transporting a rudder that was to be installed on a U.S. Navy ship, Gizoni fell through a hole on the barge’s deck, suffering disabling back and leg injuries.

According to documents filed in the case, Southwest Marine paid Gizoni more than $15,000 for medical treatment and disability payments under the federal Longshore and Harbor Workers Compensation Act. The measure, which is often described as no-fault compensation, covers shipyard and dockworkers and prohibits them from suing their employers.

Gizoni, however, sued the shipyard on Sept. 30, 1987, in U.S. District Court in San Diego. In the lawsuit, Gizoni claimed that, because he worked on company barges, he was actually a seaman and was injured as a result of Southwest Marine’s negligence.

His lawsuit was filed under the Jones Act, another federal law that covers crewmen working aboard vessels operating in navigable waters. The Jones Act permits seamen to sue employers for negligence and attempt to recover bigger damage awards in jury trials.

U.S. District Court Judge Gordon Thompson, Jr. dismissed Gizoni’s lawsuit on Sept. 14, 1988, ruling that he was not a seaman and, therefore, ineligible to sue his employer. Thompson ruled that the barges (Southwest Marine prefers to call them floating platforms) Gizoni worked on were not “vessels in navigation.”

Furthermore, Thompson also said that as a rigging foreman, Gizoni’s job was not an essential aid to navigation, but rather that of a ship repairman.

Easley, Gizoni’s attorney, appealed Thompson’s ruling to the 9th Circuit Court of Appeals, which overturned the decision. The circuit court noted that Gizoni occasionally served as a lookout on the barges and gave maneuvering signals to the tugboat operator that moved the barges.

The circuit court ruled that it is up to a jury to decide whether Gizoni’s job gave him seaman status--and coverage under the Jones Act--or if he was merely a harbor worker, covered by the Longshore Act.

Southwest Marine’s lawyers appealed the circuit court’s ruling to the U.S. Supreme Court. On Feb. 25, the Supreme Court agreed to hear arguments later this year on whether Gizoni and other workers like him who are covered under the Longshore Act are also entitled to a jury trial to determine their status as seamen under the Jones Act.

Easley said he was encouraged by another recent Supreme Court ruling that broadened the definition of a seaman. Judge Thompson found that Gizoni’s job was not essential to the navigation of the barge. But the Supreme Court ruled on Feb. 18 that a worker does not have to aid in the navigation or operation of a vessel in order to qualify as a seaman.

In the earlier case, the justices found that a painter and sandblaster, who worked on a “paint boat” chartered to his employer to work on offshore oil platforms, qualified as a seaman.

“I think the painter’s case bolsters our case,” Easley said. “Gizoni was routinely assigned to a company-owned barge that navigated San Diego Bay. His job assignment was on that barge, and in my mind that makes him a seaman. The (ship) yards just don’t want crews of tugs or barges to be eligible for Jones Act benefits.”

McMullen agrees that Gizoni’s case is a “fairly simple issue.” But, not surprisingly, he has a different opinion.

“Gizoni was a rigging foreman, in charge of all riggers, and involved in moving equipment on and off vessels. They (riggers) also repaired and refurbished the vessels. He’s as much a ship repairman as any employee,” said McMullen.

Although the Supreme Court broadened the definition of a seaman, Easley argued in his brief that Southwest Marine wants it narrowed to “those who aid the transportation function of the vessel.” In addition, the company is attempting to exclude barges as navigable vessels, he said.

He cited previous Supreme Court cases that defined barges as navigable vessels if they are routinely towed from one point to another in fulfillment of their duties.

As for Southwest Marine’s argument that Gizoni’s job was not essential to the operation or navigation of the barge, Easley argued that his client often acted as a lookout for the tug operator and helped to direct him around the bay.

“There was a 1986 case where the Supreme Court upheld seaman status for a woman who cleaned a pleasure boat three days a week. In 1957 it did the same for a handyman on a dredge that was anchored and never moved. In both of these cases, the court found that the people contributed to the operation of the vessel. I would argue that Gizoni’s job also contributed to the operation of the vessel,” said Easley.

Southwest Marine says that, if the Supreme Court upholds the 9th Circuit Court’s ruling, it could mean financial ruin for the U.S. shipbuilding industry by requiring companies to buy “dual insurance (Longshore and Jones Act insurance) for each employee.” In addition, giving Jones Act coverage to more workers will lead to more lawsuits and litigation costs, the company said.

“The shipping industry, already suffering financially, is in danger of collapsing under that burden,” said the company’s brief.

The Supreme Court is scheduled to hear arguments in the fall, and a ruling is expected next year.