SUPREME COURT OF THE UNITED STATES

No. 96–272

METROPOLITAN STEVEDORE COMPANY, PETITIONER v. JOHN RAMBO et al.

on writ of certiorari to the united states court of appeals for the ninth circuit

[June 19, 1997]

Justice O'Connor, with whom Justice Scalia and Justice Thomas join, dissenting.

The Court holds today that an administrative law judge can award nominal worker's compensation benefits to an injured longshoreman whose wage-earning capacity has not dropped, and probably will never drop, below his pre-injury capacity. Because I believe that §8(h) of the Longshore and Harbor Workers' Compensation Act (LHWCA or Act), 33 U. S. C. §908(h), requires that a worker be compensated if and only if a preponderance of the evidence demonstrates that he has a reduced wage-earning capacity—that is, a present or future loss of earning power—I respectfully dissent.

As an initial matter, I note my agreement with some of the starting points for the Court's analysis. It is common ground that "disability" under the LHWCA is an economic, rather than a medical, concept. Ante, at 4; Metropolitan Stevedore Co. v. Rambo, 515 U. S. 291, 297 (1995). Likewise, I agree that a worker's eligibility for compensation (i.e., his disability) under the LHWCA turns on his wage-earning capacity, which depends on his ability to earn wages now and in the future. That is, I agree that an injured worker who is currently receiving high wages, but who is likely to be paid less in the future due to his injury, is disabled under the LHWCA and is therefore eligible for compensation today. See ante, at 6–7.

I part company with the Court first because, in my view, §8(h) of the LHWCA, 33 U. S. C. §908(h), requires an administrative law judge (ALJ) to make an up-front finding that "fix[es]" the worker's wage-earning capacity (and hence his eligibility for compensation) by taking into account both the worker's present and future ability to earn wages. Second, a finding of future economic harm must be supported by a preponderance of the evidence pursuant to the Administrative Procedure Act (APA), 5 U. S. C. §551 et seq., in order to affect a claimant's wage-earning capacity. Finally, because I read the ALJ's decision as expressly finding that respondent Rambo will probably suffer no future loss of earning power, and because that finding is supported by substantial evidence, I would reverse the decision of the Court of Appeals and direct the entry of judgment for petitioner Metropolitan Stevedore Co.

My first point of disagreement with the Court is over how an ALJ should fix the wage-earning capacity of a worker like Rambo, whose current wages exceed his pre-injury wages, but who claims that his ability to earn money may drop in the future. Section 8(h) of the LHWCA provides:

"The wage-earning capacity of an injured employee in cases of partial disability . . . shall be determined by his actual earnings if such actual earnings fairly and reasonably represent his wage-earning capacity: Provided, however, That if the employee has no actual earnings or his actual earnings do not fairly and reasonably represent his wage-earning capacity, the deputy commissioner may, in the interest of justice, fix such wage-earning capacity as shall be reasonable, having due regard to the nature of his injury, the degree of physical impairment, his usual employment, and any other factors or circumstances in the case which may affect his capacity to earn wages in his disabled condition, including the effect of disability as it may naturally extend into the future."

The Court holds that §8(h) permits an adjudicator simply to postpone any determination of whether the worker will suffer a loss in earning power so long as there is a "significant possibility" that such a loss will someday come to pass. Ante, at 15. Until then, the Court rules, the ALJ can award nominal compensation, thereby propping open the agency's door for the worker to seek modification of the award in the future.

In my opinion, the LHWCA does not permit an ALJ to award purely nominal benefits in order to guard against the possibility of a future drop in earning power. Instead, the Act requires that a future reduction in a longshoreman's ability to earn money be immediately factored into a present determination of his wage-earning capacity. That an ALJ must make a concrete, immediate finding about a worker's wage-earning capacity is dictated by the language of §8(h), which calls for a determination whether a worker's actual earnings "fairly and reasonably represent his wage-earning capacity." A comparison between a worker's current wages and his earning potential is possible only if the ALJ assigns a dollar amount to the claimant's wage-earning capacity. Section 8(h) further instructs that, if the worker's current pay does not correspond to his true earning capacity, the adjudicator must "fix such wage-earning capacity as shall be reasonable." Again, "fix[ing]" the worker's wage-earning capacity requires the ALJ to make a definite assessment of whether the claimant's capacity has gone up, down, or remained the same; it leaves no room for the equivocal finding that a worker's capacity might have changed.

The "wage-earning capacity" that an ALJ must fix is a composite concept, measured partly by the claimant's present earning ability and partly by his future earning ability. Accordingly, the ALJ's finding must reflect predictable changes in the worker's ability to earn wages. Section 8(h) lists the main factors to be taken into account: the nature of his injury, the degree of physical impairment, his usual employment, and the effect of the disability as it may naturally extend into the future. Thus, if an ALJ credits a doctor's testimony that a claimant can work for only five years before his injury leaves him bedridden, that worker would presently have a reduced "wage-earning capacity" within the meaning of the LHWCA, regardless of whether his current wages were as high as his pre-injury wages. Just because market conditions and the claimant's physical condition may vary over time does not mean that an ALJ should not consider predicted variations when fixing the worker's wage-earning capacity. Quite to the contrary, the ALJ must consider them; otherwise, he would not be "fix[ing]" the worker's capacity at all, but simply putting off that determination for another day.

Because an ALJ must make a definite finding regarding a worker's wage-earning capacity, I disagree with the Court that a worker can ever, for purposes of the LHWCA, have a "nominal current disability." Ante, at 14. A worker either has a reduced wage-earning capacity (however slight it may be), or he does not. To say that a claimant has a "nominal current disability," as far as I can tell, means only that he is currently making as much as his pre-injury wages. But that answers only half the question, since the worker's future earning potential is also relevant to whether he has a reduced wage-earning capacity today and, hence, a compensable disability.

The Court conflates a worker's foreseeable future earning power, which must be considered when awarding benefits, with unforeseeable future developments, which justify reopening an award under §22 of the LHWCA, 33 U. S. C. §922. Section 22 acknowledges that a worker's wage-earning capacity can change over time, since it authorizes the Board to modify compensation orders in light of a "change in conditions." All that means is that when circumstances arise that were not predictable in the original benefits determination, and hence were not factored into a prior determination of a worker's wage-earning capacity, an ALJ can adjust an award. If, on the other hand, those circumstances were predicted in the original proceeding, they should have been included in the initial fixing of the claimant's wage-earning capacity. The catch is that §22 permits recognition of changed conditions only within one year of the denial of a claim or the last payment on an award.

The Court's mechanism for awarding nominal damages is designed solely to circumvent §22's 1-year limit for reopening terminated or denied claims. The Court effectively recognizes as much, since it candidly admits that under its approach, "finality is exchanged for accuracy." Ante, at 11–12. That is, the 1-year limitations period established by §22 is sacrificed in order to avoid the over- and under-compensation that may result from a straightforward application of the LHWCA. Ibid. Congress has already evaluated these policy concerns, however, and has come down on the side of finality by enacting §22. When a worker cannot demonstrate a reduction in his wage-earning capacity, in terms of his present or future ability to obtain gainful employment, §22 gives that employee only one year to show that conditions have changed. To hold open a case simply because a "change in conditions" may someday arise certainly violates the spirit, if not the letter, of §22.

The proper trade-off between finality and accuracy is open to reasoned debate. Indeed, some state legislatures have agreed with the Court that when a worker does not immediately suffer as a result of his work-related injury, it is better to postpone compensation until his disability manifests itself. Accordingly, they have amended their workers' compensation statutes to allow precisely the sort of nominal-benefits mechanism that the Court approves today. See, e.g., Cal. Labor Code Ann. §5802 (West. 1989) ("If, in any proceeding under this division, it is proved that an injury has been suffered . . ., but it is not proved that any disability has resulted, the appeals board may, instead of dismissing the application, award a nominal disability indemnity, if it appears that disability is likely to result at a future time"). But until Congress amends the LHWCA, I do not think that the Court's approach is open to us. I would therefore hold that an ALJ cannot circumvent §22's 1-year limitations period by awarding nominal compensation. He must instead make a present determination of the longshoreman's wage-earning capacity, taking into account both his present and future ability to earn money.

I further believe that the APA requires that a claimant's future economic injury be proved by a preponderance of the evidence before such an injury can provide a basis for awarding disability benefits under the LHWCA. This is true regardless of whether such a finding leads to an award of nominal benefits (as the Court holds) or whether such an injury should instead be factored into a claimant's wage-earning capacity immediately (as I believe). I therefore disagree with the Court's holding that merely a "significant possibility" of a future drop in a worker's wage-earning potential is relevant to a present benefits determination.

As explained in Part I, the ultimate fact to be determined in an LHWCA benefits proceeding is a worker's "wage-earning capacity," which has both a present and a future component. Thus, contrary to the Court, I think that "the fact of such a decline [in a worker's wage-earning capacity], rather than some degree of probability of its occurrence," ante, at 16, n. 9, must be shown in order to justify a finding of disability. The Court recognizes that the APA governs benefit determinations under the LHWCA, ibid., so that "the proponent of a rule or order has the burden of proof." 5 U. S. C. §556(d); see 33 U. S. C. §919(d) ("any hearing held under [the LHWCA] shall be conducted in accordance with the provisions of" the APA). And this proof must be by a preponderance of the evidence. Director, Office of Workers' Compensation Programs v. Greenwich Collieries, 512 U. S. 267, 270–271 (1994). It follows that whether a worker has a reduced wage-earning capacity is a fact to be determined by a preponderance of the evidence.

The Court's "significant possibility" standard falls far short of the APA's preponderance-of-the-evidence standard. Indeed, although the Court fails to define its standard with any specificity, it at least tells us that a "significant possibility" is certainly less than a "high degree of statistical likelihood." Ante, at 15. Thus, a longshoreman whose paycheck has not shrunk, and is unlikely ever to shrink, below pre-injury levels is apparently entitled to an award of nominal damages under the Court's holding today. Such a result, it seems to me, is exactly backwards.

Not only does the "significant possibility" standard conflict with the APA, but the Court plucks it out of thin air. The Court seems to rely purely on its perception of "symmetry" in the LHWCA: where an injury immediately depresses a worker's ability to earn wages, "the payment of actual compensation holds open the option of modification under §22 even for future changes in condition whose probability of occurrence may well be remote at the time of the original award. Consistent application of the Act's wait-and-see approach thus suggests that nominal compensation permitting future modification should not be limited to instances where a decline in capacity can be shown to a high degree of statistical likelihood." Ante, at 15. But if symmetry is the goal, then there should logically be no threshold showing (beyond the injury itself) required to award nominal benefits under the LHWCA. Because §22 permits modification of ongoing awards even for completely unforeseeable changes of conditions, "[c]onsistent application" of the Court's "wait-and-see" theory (derived from §22) would call for keeping open every case to guard against the possibility that new events might someday reduce a worker's wage-earning capacity. The Court apparently realizes that such a result would completely eviscerate §22's 1-year limitations period, and so it feels obliged to screen out at least the most attenuated claims that conditions may change in the future. As a stopgap, it invents the "significant possibility" test.

This supposed "asymmetry" in the LHWCA is not something to be circumvented, however, since it is attributable to Congress' decision to place a strict 1-year time limit on the reopening of denied or terminated claims. Under the proper interpretation of the LHWCA, a worker's wage-earning capacity is partly a function of his future ability to earn money, as proved by a preponderance of the evidence. This preponderance standard screens out claims where a worker cannot show a reduction in his future earning power. Accordingly, there is no need to engage in the sort of arbitrary line-drawing that brings us the "significant possibility" standard, in order to salvage some role for §22's 1-year limitations period.

As a final matter, I believe that the ALJ's conclusion that Rambo "no longer has a wage-earning capacity loss," App. 55, should be upheld regardless of whether the standard for fixing a worker's wage-earning capacity is the one set forth by the Court or the one described in this dissent.

I agree with the Court that Metropolitan, as the proponent of a modified compensation order, met its burden of demonstrating a "change in conditions" by proving that Rambo's actual earnings had risen significantly since he began steadily working as a crane operator. Ante, at 18. Upon that showing, §8(h) shifted to Rambo the burden of proving that his new earnings did not fairly and reasonably reflect his wage-earning capacity. Ibid. In other words, Rambo must show that his ability to earn wages in the future is more likely than not to dip below his pre-injury levels.

In his written ruling, the ALJ gave this issue his full consideration. As the ALJ observed, "higher post-injury gains/losses are not necessarily determinative of an employee's wage-earning capacity. One has to consider wage-earning capacity in an open labor market under normal employment conditions." App. 53 (citation omitted). The ALJ then specifically commented on Rambo's future job prospects: "Claimant no longer has a wage-earning capacity loss. Although Claimant testified that he might lose his job at some future time, the evidence shows that Claimant would not be at any greater risk of losing his job than anyone else. Moreover, no evidence has been offered to show that Claimant's age, education, and vocational training are such that he would be at greater risk of losing his present job or in seeking new employment in the event that he should be required to do so. Likewise, the evidence does not show that Claimant's employer is a beneficent one." Id., at 55. As I read this statement, the ALJ found that Rambo's current earnings adequately reflected his future job prospects—that is, he found that Rambo would not suffer any future economic loss due to his injury.

The ALJ's findings must be upheld if they are supported by substantial evidence. See 33 U. S. C. §921(b)(3) (setting standard of review that Benefits Review Board must apply to ALJ's findings). The substantial evidence standard is extremely deferential to the factfinder: "Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. NLRB, 305 U. S. 197, 229 (1938). Based on the evidence submitted by the parties, a "reasonable mind" could undoubtedly have found that Rambo's current earnings accurately reflected his wage-earning capacity, with regard to both his present and future job prospects. Rambo testified that he had learned to operate cranes and heavy lift trucks (tasks that he can perform despite his injury), App. 30–31; that he had worked steadily as a crane operator for one shipping line for the last 2½ years, id., at 37; and that his new job paid a much higher wage than he had received before his injury, id., at 38. The record clearly permitted a finding that, despite his injury, Rambo "no longer has a wage-earning capacity loss." Id., at 55.

Because the ALJ properly found that Rambo's current earnings reasonably reflected his wage-earning capacity, I see no need to remand this case for further proceedings simply to demand of the ALJ a finding that he has already made. The Board's denial of compensation should be upheld and the Court of Appeals' decision should be reversed.