19-2471-ag
G4S Int'l Emp't Servs (Jersey), et al. v. Newton-Sealey, et al.


                                      UNITED STATES COURT OF APPEALS
                                          FOR THE SECOND CIRCUIT

                                                   August Term 2019

                (Argued: June 26, 2020                             Decided: September 17,2020)

                                                Docket No. 19-2471-ag



 G4S INTERNATIONAL EMPLOYMENT SERVICES (JERSEY), LTD., A SUCCESSOR-IN-
INTEREST TO ARMORGROUP SERVICES (JERSEY), LTD., CONTINENTAL INSURANCE
COMPANY, SUCCESSOR-BY-MERGER TO FIDELITY & CASUALTY COMPANY OF NEW
                              YORK,

                                                                          Petitioners,

                                                                  v.

        DAVID G. NEWTON-SEALEY, UNITED STATES DEPARTMENT OF LABOR,
           DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS,

                                                                          Respondents.



                           ON PETITION FOR REVIEW FROM
           THE UNITED STATES DEPARTMENT OF LABOR BENEFITS REVIEW BOARD




Before:
                             WINTER, CALABRESI, and CHIN, Circuit Judges.
            Petition for review of a decision and order of the United States

Department of Labor Benefits Review Board affirming the decision and order of

an Administrative Law Judge awarding disability benefits to an employee of a

defense contractor under the Defense Base Act, 42 U.S.C. §§ 1651-54, which

extends workers' compensation benefits under the Longshore and Harbor

Workers' Compensation Act, 33 U.S.C. § 901 et seq., to certain employees of U.S.

government contractors working overseas. The employer and its insurance

carrier contend that the Benefits Review Board erred in upholding the award of

benefits.

            PETITION FOR REVIEW DENIED.



                         MICHAEL W. THOMAS, Thomas Quinn, LLP, San
                             Francisco, California, for Petitioners.

                         GARY B. PITTS, Pitts, Mills & Ratcliff, Houston,
                              Texas, for Respondents.




PER CURIAM:

            Petitioners G4S International Employment Services (Jersey), Ltd.

("G4S Jersey"), as successor-in-interest to ArmorGroup Services (Jersey), Ltd.

("AG Jersey"), and Continental Insurance Company, as successor-by-merger to

                                        2
Fidelity & Casualty Company of New York, seek review of a decision and order

of the Department of Labor Benefits Review Board (the "Board") issued June 28,

2019 affirming the decision and order on second remand of the Administrative

Law Judge (the "ALJ") awarding respondent David Newton-Sealey disability

benefits under the Defense Base Act, 42 U.S.C. §§ 1651-54 (the "DBA"), which

extends workers' compensation benefits under the Longshore and Harbor

Workers' Compensation Act, 33 U.S.C. § 901 et seq. (the "LHWCA"), to certain

employees of U.S. government contractors working overseas. On appeal,

petitioners argue that the Board erred in affirming the award of benefits to

Newton-Sealey. For the reasons set forth below, the petition for review is

denied.

                                BACKGROUND

            In 2003, Newton-Sealey, a British citizen, was hired by AG Jersey to

provide security in Iraq for engineers working for Bechtel, a U.S. engineering and

construction company. On March 23, 2004 Newton-Sealey was seriously injured

while on the job when the vehicle he was driving was struck by an apparently

hostile Iraqi vehicle. Following the incident, petitioners began providing

Newton-Sealey compensation and medical benefits. On May 3, 2007, Newton-



                                         3
Sealey timely filed a claim for benefits with the United States Department of

Labor, Office of Workers' Compensation Programs (the "OWCP").

              On April 30, 2007, Newton-Sealey filed suit in the United Kingdom

against AG Jersey, ArmorGroup Services Ltd. ("AG UK"), and ArmorGroup

International plc ("AG PLC").1 On December 16, 2009, Newton-Sealey entered

into a settlement with AG Jersey, AG UK, and AG PLC for an amount less than

he would be entitled to under the DBA. Newton-Sealey did not obtain the

written permission of "the employer and the employer's carrier" prior to entering

into the settlement. See 33 U.S.C. 933(g)(1) (providing that "[i]f the [employee]

enters into a settlement with a third person . . . the employer shall be liable for

compensation . . . only if written approval of the settlement is obtained from the

employer and the employer's carrier[] before the settlement is executed"). On

August 25, 2010, petitioners informed the OWCP that, as a result of the U.K.

settlement, § 933(g) of the LHWCA barred Newton-Sealey from receiving further

benefits. Newton-Sealey contested this assertion, and the matter was submitted

to the ALJ.




1
      In May 2008, because of a corporate acquisition, AG Jersey became G4S Jersey,
AG UK became G4S Risk Management ("G4S RM"), and AG PLC became G4S plc ("G4S
PLC"). To avoid confusion, we will use the parties' original names throughout.
                                          4
             On May 1, 2012, the ALJ found that while both AG UK and AG

Jersey were employers within the meaning of § 933(g), AG PLC was a third party

and thus Newton-Sealey was barred from receiving further benefits under the

Act. Newton-Sealey appealed to the Board, and on May 29, 2013 the Board

vacated the ALJ's decision "because . . . [the] analysis of the facts of this case in

terms of the employer-employee relationship tests is vague and, therefore,

unreviewable," and remanded for the ALJ to consider which employment

relationship test best applied and then to apply that test. S. App'x at 139-40. On

April 29, 2014, the ALJ again concluded that AG PLC was a third party and that

Newton-Sealey's claim was barred under § 933(g).

             Newton-Sealey once again appealed to the Board, and, on May 6,

2015 the Board determined that because § 933(g) is an affirmative defense, AG

Jersey bore the burden of proving that AG UK and AG PLC were third parties

and that it had failed to do so. The matter returned to the ALJ, who concluded

on October 23, 2018 that it had "no real alternative but to interpret the Board's

order as finding as a matter of law that Section [933(g)] does not apply to this

case," and entered an order in favor of Newton-Sealey. S. App'x at 35-36.

Petitioners moved for reconsideration, arguing that the Board did not intend to



                                           5
find as a matter of law that § 933(g) did not apply, and the ALJ denied the

motion on November 15, 2018. On June 28, 2019, on further review, the Board

concluded that it had resolved the applicability of § 933(g) in its May 6, 2015

decision and affirmed the ALJ's October 23, 2018 decision and order and the

award of benefits to Newton-Sealey.

             Petitioners petitioned this Court for review, with the principal issue

on review being whether, because Newton-Sealey reached a settlement with AG

Jersey, AG UK, and AG PLC in the U.K. proceeding, his claim under the DBA is

barred by § 933(g). 2

                                    DISCUSSION

             Our review of decisions of the Board is "limited to whether the

Board made any errors of law and whether the findings of fact of the ALJ are

supported by substantial evidence." Barscz v. Office of Workers' Comp. Programs,

, 749 (2d Cir. 2007). We review questions of law de novo

of the ALJ that is "supported by substantial evidence, is not irrational,




2
       The parties stipulated that Newton-Sealey is a person entitled to compensation
and that the settlement was for less than the amount he would be entitled to under
§ 933(g); accordingly, the only disputed element is whether he settled his claim with a
"third person." See 33 U.S.C. § 933(g).


                                            6
and is in accordance with the law . . . must be affirmed," Rainey v. Office of

Workers' Comp. Programs, 

, 634 (2d Cir. 2008). "Substantial evidence

is such evidence as a reasonable mind might accept as adequate to support a

conclusion." Serv. Emps. Int'l., Inc., v. Office of Workers' Comp. Programs, 

, 455 (2d Cir. 2010) (internal quotation marks omitted).

             The "basic purpose" of the LHWCA is to "provid[e] prompt relief for

employees, and limited and predictable liability for employers." Fisher v.

Halliburton, 

, 619 (5th Cir. 2012). 3 The DBA "extends workers'

compensation coverage under the [LHWCA] to employees of American

contractors engaged in construction related to military bases in foreign countries

. . . [and] establishes a uniform, federal compensation scheme for civilian

contractors and their employees for injuries sustained while providing functions




3
        Generally speaking, the LHWCA is an employer's exclusive liability such that if
an employee's injury is covered by the LHWCA, he is typically precluded from
pursuing a tort claim against his employer to recover for the same injury. See Fisher v.
Haliburton, 

, 610 (5th Cir. 2012). Here, however, Newton-Sealey is a British
citizen who sought recourse under U.K. law, rather than seeking enforcement of a
foreign law in a U.S. court. U.K. law, unlike U.S. law, permits claimants to pursue both
a workers' compensation claim and a tort remedy. See Richard Lewis, Employers'
Liability and Worker's Compensation: England and Wales (Oct. 20, 2010),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1695088.
                                           7
under contracts with the United States outside its borders."

609-10 (internal

quotation marks omitted).

             Employees injured under the LHWCA who may also have a cause of

action against a third party as a consequence of sustaining that injury are not

required to elect one remedy over another. See 33 U.S.C. § 933(a). If the

employee, however, seeks damages from a third party, the LHWCA protects the

derivative rights of the employer and the carrier. See

provides that:

             (1) If the person entitled to compensation . . . enters into
             a settlement with a third person . . . for an amount less
             than the compensation to which the person . . . would
             be entitled under this chapter, the employer shall be
             liable for compensation . . . only if written approval of
             the settlement is obtained from the employer and the
             employer's carrier, before the settlement is executed,
             and by the person entitled to compensation.

              (2) If no written approval of the settlement is obtained
             and filed as required by paragraph (1), or if the
             employee fails to notify the employer of any settlement
             obtained from or judgment rendered against a third
             person, all rights to compensation and medical benefits
             under this chapter shall be terminated, regardless of
             whether the employer or the employer's insurer has




                                          8
             made payments or acknowledged entitlement to
             benefits under this chapter.

of the LHWCA provides that "[i]n any proceeding

for the enforcement of a claim for compensation under this chapter it shall be

presumed, in the absence of substantial evidence to the contrary -- . . . [t]hat the

claim comes within the provisions of this chapter."

§ 920(a). A prima facie

claim for compensation requires that the employee allege an injury or death that

arose out of and in the course of his employment. See U.S. Indus./Fed. Sheet Metal,

Inc. v. Office of Workers' Comp. Programs, 

, 615-16 (1982).

             Finally, § 933(g) provides an affirmative defense. See Bundens v. J.E.

Brenneman Co., 

, 303 (3d Cir. 1995); Flanagan v. McAllister Bros., Inc., 33

Ben. Rev. Bd. Serv. 209, *3 (1999) ("[T]he applicability of Section 33(g) is an

affirmative defense."). "It is well-established that a defendant . . . bears the

burden of proving its affirmative defense." Leopold v. Baccarat, Inc., 

,

245 (2d Cir. 2001); see also Hardaway v. Hartford Pub. Works Dep't., 

,

490 (2d Cir. 2018). This burden has been interpreted as requiring the employer

to demonstrate that named defendants are not employers. See Fisher v.

Halliburton, 

, 664 (S.D. Texas 2010), vacated on other grounds,

                                           9


(5th Cir. 2010) ("[T]he court presumes that all named defendants are

employers under the [DBA]" as the DBA "must be liberally construed in

conformance with its purpose, and in a way which avoids harsh and

incongruous results. . . . [Accordingly,] the employer bears the burden to show

that it is not an employer under the [DBA], thereby avoiding paying

compensation.").

             Here, Newton-Sealey alleged that his injuries arose out of and in the

course of his employment, thereby establishing a prima facie case for benefits

under the Act. See 33 U.S.C. § 920(a); U.S. Indus./Fed. Sheet Metal, 

(1982). Because § 933(g) sets forth an affirmative defense, see 

, petitioners bore the burden of proving that the named defendants in

the U.K. proceedings were not employers for the purposes of the Act, see 

. Reviewing the record available to the ALJ, the Board

concluded that petitioners had not met this burden, see Serv. Emps. Int'l., 

, noting that although at the time of the settlement the AG companies

had been acquired by G4S, most of the testimony in the record predated the

acquisition and so "shed[] very little light on the structure of, and relationship




                                          10
among, the G4S companies after the acquisition." S. App'x at 32.4 The record

thus supports the Board's conclusion that petitioner failed to present sufficient

evidence to prove that the named defendants were not employers. See 

. Accordingly, we conclude that the Board did not err when it

affirmed the ALJ's finding that Newton-Sealey's claims were not barred under §

933(g).

                                      CONCLUSION

              For the foregoing reasons, the petition for review is DENIED.




4
       Petitioners' argument that several depositions conducted some two years after
the relevant Board decision provide "uncontroverted evidence" that the named
defendants were not employers is unpersuasive. Appellant's Br. at 58. As the Board
observed, its 2015 decision resolved "the issue of the application of § 33(g) . . . and is the
law of the case." S. App'x at 13. The ALJ was bound to follow this finding of the Board.
See FCC v. Pottsville Broad. Co., 

, 140 (1940) (noting the "familiar doctrine that
a lower court is bound to respect the mandate of an appellate tribunal and cannot
reconsider questions which the mandate has laid to rest").
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