Opinion
Case No. 02-10180 (CB), Jointly Administered, 02 CV 7106 (RPP), Consolidated with 02 CV 7107 (LBS), 02 CV 7108 (DC), 02 CV 7534 (KMW), 02 CV 7537 (HB).
July 9, 2003.
Jeffrey A. Cooper, Esq., Carella., Byrne, Bain, Gilfillan, Cecchi, Stewart Olson, Roseland, New Jersey, Attorney for the Maritime Transport Workers' Union of Russia.
Richard J. Dodson, Esq., Dodson, Hooks Casey, APLC, Baton Rouge, Louisiana, Attorney for the Maritime Transport Workers' Union of Russia.
Michael A. Colomb, Esq., Poynter, Manner Colomb, APLC, Baton Rouge, Louisiana, Attorney for the Maritime Transport Workers' Union of Russia.
James H. Hohenstein, Esq., Michael S. Frevola, Esq., Harland and Knight LLP, New York, NY, Attorneys for Allfirst Bank and Wayland Investment Fund.
OPINION AND ORDER
I. INTRODUCTION
Appellants-Adversary Plaintiffs, Maritime Transport Workers Union of Russia ("MTWU") and the individual Crew Members formerly employed by Millenium Seacarriers, Inc., ("Crew Members") (collectively "Wage Claimants" or "Appellants"), appeal pursuant to 28 U.S.C. § 158 from an order entered on August 1, 2002, by the Honorable Cornelius Blackshear, United States Bankruptcy Judge, granting the Motion for Partial Summary Judgment on behalf of the Appellees-Adversary Defendants, Allfirst Bank ("Allfirst") and Wayland Investment Funds, L.L.C. ("Wayland") (collectively "Foreign Mortgagees" or "Appellees") and holding that the Foreign Mortgagees were not liable to pay the Wage Claimants penalty wages pursuant to subsection (g) of 46 U.S.C. § 10313.
46 U.S.C. § 10313 provides in pertinent part:
(e) After the beginning of the voyage, a seaman is entitled to receive from the master, on demand, one-half of the balance of wages earned and unpaid at each port at which the vessel loads or delivers cargo during the voyage. . . . If a master does not comply with this subsection, the seaman is released from the agreement and is entitled to payment of all wages earned . . .
(f) At the end of a voyage, the master shall pay each seaman the balance of wages due the seaman within 24 hours after the cargo has been discharged or within 4 days after the seaman is discharged, whichever is earlier . . .
(g) When Payment is not made as provided under subsection (f) of this section without sufficient cause, the master or owner shall pay to the seaman 2 days' wages for each day payment is delayed.
(i) This section applies to a seaman of a foreign vessel when in a harbor of the United States. The courts are available to the seaman for the enforcement of this section.46 U.S.C. § 10313 (e)-(g), (i).
II. BACKGROUND
This matter arises from the Chapter 11 filing on January 15, 2002, of Millenium Seacarriers, Inc. ("Millenium") and its wholly-owned subsidiary companies (the "Subsidiaries") (collectively "the Debtors"), owners and operators of nineteen ocean-going merchant vessels. Each of the vessels was separately owned by one of the Subsidiaries and was subject to a foreign preferred ship mortgage in favor of the Foreign Mortgagees from whom Millenium had received financing. The Crew members, were employed by the Debtors, or its agents, to serve as members of the crew on the Debtors' vessels by virtue of collective bargaining agreements entered into between the MTWU and management companies or agencies contracted by the vessel owners. (Appellants' Record, Exhibit F, Declaration of Richard J. Dodson, ¶ 3.)
In order to raise capital in 1998, Millenium issued first priority ship mortgage notes having an aggregate principle amount at maturity of $100,000,000.00 (the "Initial Notes"). (Appellant's Modified Designation of Record on Appeal ("Appellants' Record"), Exhibit B, Debtors' Motion For an Order Authorizing Prepetition Claims Held By Critical Vendors and Foreign Creditors, ¶ 6.) Pursuant to an exchange offer, the Initial Notes were exchanged for certain first priority ship mortgage exchange notes issued by Millenium and having an aggregate principle amount at maturity of $100,000,000.00 (the "Notes"), as provided for in an Indenture, dated July 15, 1998 (the "Indenture"), in favor of Defendant Allfirst as Indenture Trustee. (Exhibit C, Debtors' Amended Motion For an Order Authorizing Prepetition Claims Held By Critical Vendors and Foreign Creditors, ¶ 6) The Notes were guaranteed by the subsidiaries and the guarantees were secured by First Priority Ship Mortgages on each of the vessels owned by the Millenium subsidiaries. The Notes were registered with the United States Securities and Exchange Commission (the "SEC") pursuant to the United States Securities Act of 1933, as amended. (Appellants' Record, Exhibit C, ¶ 6.) After the Notes were registered with the SEC, Defendant Wayland purchased a substantial portion of the Notes in the secondary market, between March 1999 and November 2001, (id. ¶ 7) and came to beneficially own a substantial portion of the Notes. (Id. ¶ 7.).
On February 28, 2002, the Debtors filed an amended motion pursuant to Section 363 of the Bankruptcy Code to: (a) sell substantially all of the assets of the Debtors (the vessels) free and clear of liens, claims and interests; and (b) assume and assign contracts and leases also in connection with such sale. ("Adversary Complaint," ¶ 9.) On February 28, 2002, the Bankruptcy Court granted the Debtors' motion to establish bidding, notice and objection procedures pursuant to which all objections to the Sale Motion were due by March 22, 2002. (id. at T 10.)
The Adversary Complaint can be found in the Appellees' Counter-Designations D.3, Complaint Seeking Determination of Validity and Priority of Maritime Liens on Debtors Assets and Amount of Cure Payments as Condition to Assumption and Assignment of Debtors' Charter Party Contracts dated 4/4/02 (listed as #1 on docket sheet for Adversary Proceeding.).
On March 21, 2002 Debtors filed, on behalf of the Crew Members, a maritime lien claim for wages. (Appellants' Record, Exhibit D, Assertion of Maritime Liens by the Debtors on Behalf of the Crew Members.) On March 22, 2002, the Wage Claimants filed an objection to the Sale Motion and asserted a maritime lien for unpaid wages and delay (penalty) wages pursuant to 46 U.S.C. § 10313. (Id.; Appellants' Record, Exhibit E, Objection to Sale and Notice of Preferred and Priority Claims.) On March 27, 2002, a hearing on the Sale Motion was held before the Bankruptcy Court. (See March 27, 2002 Bankruptcy Hearing Transcript "March 27 Hearing.") Allfirst was the successful (and only) bidder for eighteen of the vessels. (Adversary Complaint, ¶ 11.) At the conclusion of that hearing, the Bankruptcy Court granted the Sale Motion (Hearing Transcript at 257) and issued the Sale Order which, inter alia, ordered the sale of the Debtors' vessels to the purchasers free and clear of all mortgages, liens and encumbrances, arising prior to the closing, "provided, however, that the Assets shall be transferred subject to such Lien and related Claim, if any, held by any party listed on Schedule A attached hereto (each an "Objecting Lien party") that the Court finds, after due notice and a hearing, is superior in right to the Lien and related Claim of the Indenture Trustee . . ." (Appellees' Counter-Designations, D.1, Order Signed on 3/27/02 listed as Item #136 on the docket sheet for the original bankruptcy proceeding ("Sale Order") ¶ 7.)
An entity called Eastern Oversees Shipping Line was the successful bidder for one vessel and the superior liens and encumbrances are to attach to the proceeds of that sale. (Adversary Complaint ¶ 11.).
The Wage Claimants were listed on Schedule A.
On April 4, 2002, the Debtors filed an Adversary Complaint which named each of the Maritime Lien claimants as Plaintiffs and the Foreign Mortgagees as Defendants and sought a determination of the priority and validity of the liens and claims asserted by Plaintiffs and determining the amount of cure payments, if any, required in order for the Debtors' contracts to be assumed or assigned. (Adversary Complaint.)
On May 31, 2002, the Foreign Mortgagees filed a Motion for Summary Judgment seeking a determination by the court that, under the facts of this case and the law, the claims of the Wage Claimants for penalty wages under 46 U.S.C. § 10313, were not entitled to a superior lien to those of the Foreign Mortgagees. (See Appellants' Record, Exhibits I, J K, Defendant's Motion for Partial Summary Judgment against Maritime Transport Workers Union of Russia and Crew.)
In their Local Rule 56.1(a) statement, the Foreign Mortgagees stated that: (a) at all pertinent times the vessels involved in this adversary proceeding were all registered in jurisdictions other than the United States and were all subject to mortgages in favor of Allfirst (Appellants' Record, Exhibit J, ¶ 2); (b) on March 21, 2002, Millenium filed, on behalf of the union crews, a maritime lien claim for wages. "This filing establishes Millenium's inability to pay the basic wages owed the crews" (id. at ¶ 3); (c) the Wage Claimants have prospectively asserted a claim for penalty wages dated March 21, 2002 (id. at ¶ 4; see Appellants' Record Exhibit F, Declaration, ¶ 7.); (d) "[f]or the purposes of this motion only, it is assumed that certain of the vessels of the Millenium Fleet may have been within the United States harbors and thus certain of the Wage Claimants may assert a claim for penalty wages (Appellants' Record, Exhibit J, at ¶ 5) and; (e) at the time Wage Claimants penalty wages accrued, Defendants did not own or operate the vessels of the Millenium Fleet (id. at ¶ 6.)
In their Counter Statement of Facts pursuant to Local Rule 56.1 the Wage Claimants basically accepted the Foreign Mortgagees statement of material facts but, with respect to item (b) Millenium's insolvency on March 21, 2002, the date Millenium filed the Wage Claimants maritime lien claim, the wage claimants asserted, without citation to any documentation or affidavit meeting the requirements of Federal Rule of Civil Procedure 56(e), that "there exists genuine issues of material fact with regard to Millenium's inability to pay the basic wages owed the crews." (Appellants' Record, Exhibit M, ¶ 3.) The Appellants' "Counter Statement of Facts" included a "Statement of Contested Material Facts," in which Appellants asserted 1) that wage demands had been made in July and October, 2001, when several vessels were in U.S. ports without citation to the record and 2) that Millenium had paid expenses other than wages during July to October 2001 with citation to Debtors' schedules and statement of Financial Affairs. (Id.)
The Appellants also stated that issues of material fact remain with regard to those mortgages implicit in Wayland's papers again without citation to evidence. (Appellants' Record, Exhibit M.) For purposes of this appeal these issues are irrelevant.
On the return date for the motion, July 10, 2002, no argument was heard. Instead, the Bankruptcy Court issued an opinion granting judgment to the Foreign Mortgagees and dismissing the claims of the Wage Claimants under 46 U.S.C. § 10313. (Appellants' Record Exhibit P, Memorandum Decision on Motion For Summary Judgment Wayland Investment Fund and Allfirst Bank (movants) and Maritime Transport Workers' Union of Russia and Crew.) On August 1, 2002, the Bankruptcy Court entered an Order Dismissing the Claims of the Wage Claimants for penalty wages. (Appellants' Record, Exhibit R, Order Granting Partial Summary Judgment Against the Maritime Transport Worker's Union of Russia And In Favor of Wayland Investment Funds, L.L.C. and Allfirst Bank First National Bank of Maryland).
The Wage Claimants then filed a timely Notice of Appeal to the United States District Court for the Southern District of New York on August 8, 2002. (Appellants' Record, Exhibit S, Notice of Appeal or Order of the Court Entered August 1, 2002 And Docketed As No. 148.).
III. DECISION OF THE BANKRUPTCY COURT
The Bankruptcy Court, finding that there were no material facts in dispute, granted Allfirst's and Wayland's Motion for Partial Summary Judgment, based first, on the Wage Claimants' failure to provide evidence that the requisite elements for a maritime lien for penalty wages under 46 U.S.C. § 10313(g) had been established in the July to October 2001 period; and second, on the finding that under section 10313(g) only the vessels owner or master could be held liable for penalty wages. (Appellants' Record, Exhibit P, Memorandum Decision On Motion For Summary Judgment.)
Judge Blackshear stated the issue presented as "whether a seaman's maritime lien for `penalty wages' pursuant to 46 U.S.C. § 10313(g), which imposes liability only on the vessel's master or owner may be enforced against the proceeds from the sale of a vessel when those proceeds are less than the amount of indebtedness secured by a foreign preferred mortgage for the vessel, and when the owner of the vessel was insolvent." (Appellants' Record, Exhibit P ¶ 1.)
Judge Blackshear then found that there was no dispute that the Appellants had a claim for penalty wages and that 46 U.S.C. § 10313(g) governs the Appellants' claim for penalty wages. (Id at ¶ 3.) Judge Blackshear emphasized, citing Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998) and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), that the "non-moving party may not rely on conclusory allegations and unsubstantiated speculation to oppose a motion for summary judgment." Scotto, 143 F.3d at 114. (Id. at ¶ 2.)
Pointing out that the Foreign Mortgagees are relying on the filing of the underlying bankruptcy as evidence of the Debtors inability to pay wages, and to argue that therefore there was no lien for penalty wages, Judge Blackshear concluded, based on his knowledge of the bankrupt estate, that the Debtors were insolvent at the time of the filing. He then re-emphasized the Appellants' failure to comply with Rule 56 of the Federal Rule of Civil Procedure stating:
[t]he most salient point for the Motion currently under consideration however, is for the [Appellants] to present this Court with acts, evidence or law that would allow it to defeat the Defendants' summary judgment and the [Appellants] has failed to do so. The mere fact that other obligations were paid is not compelling and in the absence of the appropriate form of pleading, the Court is not going to question those payments.
(Id.)
Finally Judge Blackshear stated, "[f]or the foregoing reasons, the Court finds that as the Debtors are and were insolvent, the Debtors' delay in payment was due to sufficient cause and therefore the penalty should not be imposed." (Id. citing Collie v. Ferguson, 281 U.S. 52 (1930); The Governor and Company of the Bank of Scotland v. Sabay, 211 F.3d 261, 273 (5th Cir. 2002), cert denied 531 U.S. 959 (hereinafter "The Bank of Scotland"); Feldman v. American Palestine Line, Inc., 25 F.2d 1002, 1003 (S.D.N.Y. 1926.))
The Bankruptcy Judge also granted the Foreign Mortgagees' Motion on an alternate ground, namely that a seaman's maritime lien for "penalty wages" pursuant to 46 U.S.C. § 10313(g), imposes liability only on the vessel's "master or owner," and may not be enforced against the proceeds from the sale of a vessel in which the Debtors do not have an interest because the amount of indebtedness secured by a foreign preferred mortgage for the vessel far exceeds the proceeds. (Id. at ¶ 5.) Because the indebtedness of Millenium Seacarriers, Inc., secured by Allfirst's and Wayland's preferred ship mortgages, far exceeded each of the sales proceeds, the Bankruptcy Court concluded that the seamen were precluded from recovering penalty wages from the Foreign Mortgagees, because Millenium Seacarriers, Inc., the "owner" had no interest in the sale's proceeds. (Id.) In reaching this conclusion, Judge Blackshear relied on The Governor and Company of the Bank of Scotland v. Sabay, 211 F.3d 261 (5th Cir. 2002), cert denied, 531 U.S. 959 (hereinafter "The Bank of Scotland."). (Id.)
Finally, Judge Blackshear again expressed his frustration with the lack of evidence submitted by the Plaintiffs, which is relevant only to the first ground of his opinion, and stated that:
[i]t appears that counsel for MTWU, in focusing on those things that may come to pass at trial, overlooked the fact that to proceed to trial he must defeat the pending summary judgment motion . . . MTWU cannot rely on conclusory statements or speculation. It was imperative for MTWU to supply some sort of hook upon which the Court could hang its hat by providing documentation of its allegations, by providing rules of law that establish that the Defendants are not entitled to summary judgment as a matter of law, by raising genuine issues of material fact. This was not done . . .
(Id. at ¶ 5.)
IV. DISCUSSION
On February 11, 2003, Oral Argument was held on the Wage Claimants' appeal to this Court. At that time, this Court expressed its concern that counsel for the Appellants had failed to comply with Fed. Rule Civ. P. 56(e), by providing affidavits made on personal knowledge, stating where and when the Wage Claimants had made demand for wages. (Transcript of Oral Argument dated February 11, 2003 ("Tr.") at 4.) Counsel for the Wage Claimants took the position that it had not presented proper evidence of the demand for wages made by the Wage Claimants in July and October, 2001 because the Appellees motion only presented two issues: (1) Millenium's insolvency on March 21, 2002 and (2) whether the Appellants' lien claims could prevail against the Appellees in view of The Governor and Company of the Bank of Scotland v. Sabay, 211 F.3d 261 (5th Cir. 2002), cert denied, 531 U.S. 959. (Tr. at 7.)
Counsel for Appellants stated that it was only when it pointed out in answering the motion for Summary Judgment that the relevant date of insolvency was when the Appellants made wage claims in July and October 2001, and not when Millenium filed its Notice of Wage Claims in March 21, 2002, that the Appellees raised the issue of the Appellants' failure to comply with Rule 56(e). The Appellants contended that the Appellees' Reply brief was their first notice that a "demand for wages" was at issue since the Appellees' Rule 56.1 statement stated, "[f]or the purposes of this motion only, it is assumed that certain of the vessels of the Millenium Fleet may have been within the United States harbors and thus certain of the Wage Claimants may assert a claim for penalty wages." (Appellants' Record, Exhibit J ¶ 5.)
Because Appellants were raising an issue of equity and fairness of the proceeding below and equity is a consideration in bankruptcy, after Oral Argument this Court issued an Order dated February 24, 2003, by which the Court granted Appellants until March 14, 2003, to file Affidavits on behalf of the Crew Members complying with Rule 56(e) demonstrating that in compliance with 46 U.S.C. § 10313(g) wage claims had been made in July and October 2001 as claimed in Appellants Counter Statement of Facts.
This Order was also issued to avoid a possible remand, to establish whether wage demands had been made while vessels were in U.S. ports in July and October 2001 and possible ensuing delay in the ultimate resolution of the issues raised.
In response, the Appellants submitted the declarations of various Crew Members on the following vessels: Millenium Amethyst, Millenium Africa, Millenium Amanda, Millenium Majestic, Millenium Mexico, Millenium Falcon, Millenium Jaguar and the Millenium Raptor. (Notice of Filing: Crewmember Declarations Concerning Demand For Wages, dated March 13, 2003.)
The Court finds that these Declarations meet the requirements of Rule 56(e) as they provide documentation that demands were made by the Crew Members while the aforementioned ships were in a United States port, during July and October 2001, thus raising a genuine issue of material fact as to whether the demand requirements under 46 U.S.C. § 10313(e), triggering the Penalty Wage Statute under 46 U.S.C. § 10313(g), were met during the period before the Debtor filed in bankruptcy when the Debtor may not have been insolvent. Accordingly the court would reverse and remand on this issue if it were dispositive of the Motion for Summary Judgment.
The second ground, however, upon which Judge Blackshear based his decision, is dispositive of the issues raised by the Motion for Summary Judgment and on this ground Judge Blackshear's decision is affirmed. The issue is whether, in light of the plain language of the penalty wage statute, which imposes liability on only the vessel's "master or owner," a seaman's preferred maritime lien for 46 U.S.C. § 10313 (g) "penalty" wages can be enforced against the proceeds from the sale of the vessel on which he served, when those proceeds are less than the indebtedness secured by a preferred mortgage for the vessel. Under a similar factual scenario, this precise question was addressed by the Fifth Circuit in The Bank of Scotland. In that case, The Bank of Scotland was the holder of a preferred mortgage lien on the M/V Maria, and subsequently purchased the vessel at an auction conducted by the U.S. Marshal for $3.7 million, an amount less than the outstanding debt secured by the mortgage. The seamen formerly employed by the vessel sought to assert liens for back wages and for penalty wages pursuant to 46 U.S.C. § 10313 (g). The Court held that:
[b]ased on the facts at hand, and our exhaustive review of the statutes and related jurisprudence, the district court correctly held that the penalty wage statute's plain language precluded enforcement of the penalty wages liens at issue against the sale proceeds. The Statute imposes liability for such wages only on the vessel master or owner. Its purpose is to coerce them to promptly pay seaman's wages. When, as here, sale proceeds are insufficient to satisfy all of the liens against the vessel, the owner has no interest in those proceeds. Therefore, because it has no interest, it has no proceeds against which the lien can be enforced. Concomitantly, the purpose of the statute is not furthered by enforcing a penalty wages lien against such sale proceeds.
( Id. at 275-276.)
As this issue was one of first impression, before reaching its conclusion, the Court in The Bank of Scotland made a thorough review of the "language, history, and purposes of the penalty wages statute, 46 U.S.C. § 10313 (g), and the Ship Mortgage Act, 46 U.S.C. § 31301-31343, as well as the jurisprudence interpreting them." The Bank of Scotland, 211 F.3d at 265.
The Court in The Bank of Scotland acknowledged that: (1) legislation enacted for seamen's benefit should be liberally construed in their favor and that this applies to statutes concerning their wages, including penalty wages (id. at 266); (2) that seaman's maritime liens for penalty wages is a unique security device serving the dual purpose of keeping ships moving in commerce while not allowing them to escape their debts by sailing away (id. at 267); (3) under the Ship Mortgage act, the seaman's wage liens are Congressionally mandated "preferred maritime liens" having priority over preferred ship mortgages (id. at 268); (4) that the maritime lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds (id. at 267-268); (5) a seaman's penalty wages lien attached to the vessel when, without sufficient cause, the vessel owner failed to timely pay the wages (id. at 271); (6) a maritime lien created an interest in the vessel, and the vessel itself as an entity apart from the owner may be seized and held liable to enforce the lien (id.); and (7) a seaman had a maritime lien for penalty wages, which has the same priority as one for earned wages (id. at 269).
The internal citations are omitted for points 1 through 7 in this paragraph.
The Court in The Bank of Scotland then repeated that, "the penalty wages statute [ 46 U.S.C. § 10313 (g)] imposes liability only on the vessel's `master or owner,' the Court added, "[m]oreover, the purpose of the statute is to coerce the master or owner to promptly pay seamen's wages, unless there is sufficient cause for non-payment." Id. at 272. The Court relying on the dictum in Collie, and several other subsequent cases, including Nadle v. M/V Tequilla, 1973 A.M.C. 909 (S.D.N.Y. 1973), held that "because the sale proceeds were less than the preferred ship mortgage lien, the penalty wages statute was `presumptively not applicable, for the burden would fall `only upon the lienors who are neither within the letter nor the spirit of the statute." The Bank of Scotland, 211 F.3d at 274 (quoting Nadle, 1973 A.M.C. at 912 (quoting Collie, 281 U.S. at 56.)) The Court in The Bank of Scotland concluded, since the bank was " not a master or owner, but a mortgagee," and since it could find "no case in which liability for double wages has been applied to a mortgagee," that there was "no basis on which to hold [the bank], as holder of a first preferred mortgage on each of the vessels, liable for penalty wages." (Id. at 275 (internal citation omitted.)) At the end of its decision the Court stated:
[W]e also must assume that Congress knew what it was doing when it selected the objects for penalty wages liability. . . . Accordingly, we must presume that Congress was aware of that well-settled law when it made the policy decision to make only the owner and master liable for such wages. . . . Had Congress desired to allow enforcement of penalty wages liens against vessel sale proceeds, when neither the owner nor the master has an interest in those proceeds, it easily could have said so.
(Id. at 276 (internal citations omitted.)) Like the seamen in The Bank of Scotland, in the instant case, the Wage Claimants seek to enforce a wage penalty lien against the Foreign Mortgagees, and not the "master or owner." Also likeThe Bank of Scotland, there is no dispute that the mortgage liens on each vessel exceed the sale proceeds. Due to the constraints of the plain language of the Penalty Wage Statute, which by its terms extends liability no further than the "master or owner," the Wage Claimants here have failed to meet the requisite elements establishing a maritime lien for penalty wages under 46 U.S.C. § 10313(g).
The Court also cited, Griffen v. Oceanic Contractor. Inc., 458 U.S. 564, 570 (1982) ("our task is to give effect to the will of Congress, and where its will has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclusive" (citations omitted)); see also Keane Corp. v. United States, 508 U.S. 200, 212 (1993) (Congress is presumed to be aware of settled judicial interpretations); see e.g., Humana, Inc. v. Forsyth, 525 U.S. 299, 309 (1999)).
The inequities produced by The Bank of Scotland holding are discussed in the dissent by Judge Dennis. By mandating that the owner have an interest in the ship, the liability is limited to the vessel's master or owner and the enforcement of the penalty wages lien are effectively restricted to actions in personam. Whether Congress recognized this contradiction to the Ship Mortgage Act, which recognizes a preferred maritime lien for penalty wages, and provides for attachment in rem, is questionable.
The Seamen's Wage Statutes were intended to "protect this class of workers from the harsh consequences of arbitrary and unscrupulous action of their employers." (Collie, 281 U.S. at 55). Upon the sale of the vessels, the penalty wage statute, as limited by The Bank of Scotland decision, leaves the seaman without that protection. The Fifth Circuit's determination inThe Bank of Scotland is binding precedent for this Court. The Second Circuit has not addressed this specific issue, however, and may decide not to adopt that court's reasoning.
V CONCLUSION
The decision and order of Judge Blackshear entered August 1, 2002, granting the Foreign Mortgagees' motion for partial summary judgment is affirmed.
IT IS SO ORDERED.