McClanahan v. Morauer & Hartzell, Inc.

RESPONDENT: Morauer & Hartzell, Inc.
LOCATION: United States District Court for the Eastern District of Michigan

DOCKET NO.: 70-5097
DECIDED BY: Burger Court (1971-1972)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 404 US 16 (1971)
ARGUED: Oct 21, 1971
DECIDED: Nov 08, 1971

James C. Gregg - for respondents
John Louis Smith, Jr. - for petitioner

Facts of the case


Media for McClanahan v. Morauer & Hartzell, Inc.

Audio Transcription for Oral Argument - October 21, 1971 in McClanahan v. Morauer & Hartzell, Inc.

Warren E. Burger:

We’ll hear arguments now in Mcclanahan v. Morauer & Harzell, 5097.

Mr. Smith, you proceed.

John Louis Smith, Jr.:

Mr. Chief Justice and may I please the Court.

The chief issue in this case involves Sec. 933 (g) of the Workman’s Compensation Act of the District of Colombia which is a Longshoremen’s and Harbor Worker’s Compensation Act involves the use of the term “compromise” involving settlements in which the insurance carry it for the Workman’s Compensation Company hasn’t participated.

For a brief history in the case, Mr. Mcclanahan, the petitioner was injured on the job on October of 1962.

He seasonably filed an action in the Workman’s Compensation of the -- Bureau of Employee’s Compensation in the District of Colombia, and also a third party action was filed against a third party tortfeasor in the U.S. District Court in the District of Colombia.

The compensation claim was settled.

Award was made of $3780.00 in 1964.

The third party action came up at trial on February of 1967.

At that time a settlement was made in the chambers of a Judge Luther Youngdahl, which an award of $5000.00 was made, $3000.00 of which went to Mr. Mcclanahan’s wife as a consortium, and the balance of $2000.00 went to the claimant Mr. Mcclanahan.

A motion to modify the Workman’s Compensation award was then filed, which was now 1967, three years after the original claim has been filed before the Deputy Commissioner.

A hearing was held in December of 1967 and April of 1968, in which the Deputy Commissioner asked what issues were before, I mean he was advised that it was just the issue of the compromise of whether or not this was a judicial evaluation made by this consent judgment in the third party case.

The Deputy Commissioner having heard all these evidence made a finding that it was a judicial evaluation and made a temporary partial disability award of 25% which he stated entered in November of 1965 that the complainant’s condition reverted back to a state as that of that time.

Motions for summary judgment were filed in the U.S. District Court in which both sides argued that the findings did not -- were not sustained by sufficient evidence.

Judge Hart (ph) ruled in favor of the respondent in this case, and stated that it was not a judicial evaluation, that it was a compromise, and that therefore, the claimant could not reach assurance to the Compensation Board for further money.

This was appealed to the United States District Court, and they affirmed finding three distinctions between this case and Banks versus Chicago Grain Trimmers Association, 1968 decision of the United States Supreme Court.

They felt that it was distinguishable, and first of all on the grounds that it was not the result -- the compromise was not the result of a full hearing of all the evidence.

Secondly, that the Chicago Grain Trimmers did involve a remittitur, and because of this the party did not have to accept it, that this was a judicial evaluation by a judge presumably just finding that his evaluation, the claim, varied from that of the jury, and he had this right to offer the party, the remittitur if they wish to settle.

And third, that they were free to reject this and this freedom of reject resulted in prejudice to the employer and his carrier.

Now as I urge Your Honor that these decision in the Court below is not in accord with Banks v. Chicago Grain Trimmers, or the Bell versus O’hern case and this is the grounds on which the petitioner’s certiorari was filed.

I urge that this ruling is more in terms of the earlier decisions of the -- on the Section 33 (g) of the Longshoreman and Harbor Worker’s Act, and that the interpretations placed on it since then by the Banks case, and Bell, have shown a desire to encourage settlements Your Honor, and that this decision will completely discourage him because as a practical matter, it’s not very easy to get an insurance carrier to agree to a settlement of an award for an amount less than they’ve already paid.

The two claims are not of an equal footing.

One being of a nature of a non-fault insurance, this is really our first kind of non-fault insurance, and many times as the better case, especially if they have very poor liability to prove fault.

Warren E. Burger:

Well, isn’t the -- doesn’t this case turn on whether the enterprise that took place in the judge’s chambers that this is judicial determination or a compromised settlement, isn’t that the heart of the case?

John Louis Smith, Jr.:

Yes Your Honor.

Warren E. Burger:

It is the part of you thesis that if a judge suggests a figure of settlement, assuming that he did so here, that takes it out of the compromise area and makes it into a judicial evaluation, or judicial determination?

John Louis Smith, Jr.:

Well, yes in effect Your Honor.

What I’m saying is that the Banks case does state in this language that it differs from these earlier cases in the fact that it was evaluated by a trial judge.

Now what I’m stating is that in this particular instance, the trial judge had before him certain information, perhaps not the information that you’d have from a fully conducted trail, but he did have the pretrial statement, which was available on all those cases.

He had a deposition that had been given by the plaintiff.