## Facts

- Burnside Shipping Co., Ltd. owned the M/V *Otterburn*, which was being readied in Chicago to load grain.
- Federal Marine Terminals, Inc., a stevedoring/terminal operator, was engaged to perform services aboard the vessel.
- The ship’s crew opened several deep-tank lids on deck, leaving large unguarded openings without railings or other protections.
- Gordon McNeill, a Federal Marine stevedore supervisor, fell through an unprotected deep-tank opening and was killed.
- McNeill’s widow obtained an award under the Longshoremen’s and Harbor Workers’ Compensation Act (LHWCA) against Federal Marine, creating substantial potential compensation liability.
- The widow also brought a separate wrongful-death action against Burnside under an Illinois statute with a damages cap.
- Burnside sued Federal Marine for indemnity based on an alleged contractual warranty of workmanlike service.
- Federal Marine counterclaimed against Burnside, alleging Burnside’s negligence breached a maritime duty to provide a safe place to work and seeking reimbursement for compensation paid or payable under the LHWCA.

## Issues

1. Whether LHWCA § 33’s statutory subrogation remedy precludes an employer from bringing an independent action against a negligent shipowner to recover compensation paid or payable.
2. Whether federal maritime law imposes a duty of due care on a shipowner to the stevedoring contractor, supporting a direct tort action for reimbursement of compensation liability caused by the shipowner’s negligence.

## Decision

- The Supreme Court unanimously reversed the Seventh Circuit.
- The Court held that nothing in LHWCA § 33 or its legislative history makes subrogation the employer’s exclusive remedy against third-party tortfeasors.
- The Court held that federal maritime law imposes on the shipowner a duty of due care to the stevedoring contractor under the circumstances.
- The Court recognized a direct maritime tort action by the employer against the shipowner to recover compensation payments occasioned by the shipowner’s negligence.
- Federal Marine’s counterclaim was permitted to proceed.

## Legal Principles

- LHWCA § 33 creates a statutory subrogation right but does not eliminate independent employer causes of action against third parties under maritime law.
- Federal maritime law imposes on shipowners a duty to exercise reasonable care toward stevedoring contractors in connection with shipboard work conditions.
- When a shipowner’s breach of maritime due care causes injury to a contractor’s employee and results in the employer’s LHWCA compensation liability, the employer may sue the shipowner directly in tort for reimbursement of compensation paid or payable.
- The employer’s direct maritime claim is distinct from the employee representative’s wrongful-death claim and is not confined by limits applicable to that separate state-law remedy.

## Conclusion

The Court ruled that an employer who pays LHWCA compensation is not restricted to § 33 subrogation and may bring a direct maritime tort action against a negligent shipowner to recover compensation payments caused by the shipowner’s breach of its duty of reasonable care.


Federal Marine Terminals, Inc. v. Burnside Shipping Co., 394 U.S. 404 (1969)