Plaintiff’s Construction Defect Claims Against Offshore Spar Manufacturer Dismissed

In June 2011, an offshore worker was injured on a spar (a floating platform shaped like a giant buoy) on the outer continental shelf when he was struck in the face with the flange of a valve.  He filed a personal injury lawsuit against the manufacturer of the spar, McDermott, Inc., alleging his injury was caused by defective design and construction of the spar.

 

McDermott filed a motion for summary judgment, arguing that the plaintiff’s right of action was perempted under Louisiana law.  McDermott asserted that because plaintiff was covered by the Outer Continental Shelf Lands Act (OCSLA), the law of the adjacent state (Louisiana) applied as a surrogate to federal law.  McDermott then pointed to a Louisiana statute, La. R.S. 9:2772, which provides a five year peremptive period in which to bring an action arising out of deficiencies in the design or construction of immovable property.  Because McDermott delivered the finished spar to its customer (plaintiff’s employer) in 2004, plaintiff’s design defect claim filed in 2013, was time barred.  The District Court agreed with McDermott and dismissed plaintiff’s claims.  Plaintiff appealed to the U.S. Fifth Circuit Court of Appeals.

 

On appeal, plaintiff argued that La. R.S. 9:2772 did not apply to his claim because the spar was not an immovable, which was a matter of first impression for the Court.  The Fifth Circuit had previously determined that a spar is not a vessel for purposes of the Jones Act, but no court had ever addressed whether a spar is immovable property under Louisiana law.  The Court noted that fixed platforms are considered immovable property.  The Court further noted that the spar in question was permanently moored to the ocean floor, was intended to remain in its location for its twenty year life, and it would take months of planning to move the spar.  The Fifth Circuit concluded that enough similarities exist between a spar and fixed platform that a spar is immovable property under Louisiana law.  Thus, plaintiff’s design defect claims were dismissed as time barred by state law.

 

Hefren v. McDermott, Inc.

5th Circuit Finds Record Insufficient to Confirm OCSLA Situs in Indemnity Dispute

The U.S. Fifth Circuit Court of Appeals recently addressed the situs requirement of a personal injury claim arising under the Outer Continental Shelf Lands Act (OCSLA).  Tetra Technologies was performing a salvage operation on a decommissioned oil production platform in the Gulf of Mexico and retained Vertex Services to assist with the project.  A rigger employed by Vertex was injured when he fell approximately 80 feet into the water.  He sued Tetra for personal injury and Tetra sought indemnity from Vertex pursuant to a Master Service Agreement between the two companies.  The District Court determined Tetra was entitled to indemnity from Vertex and Vertex appealed to the 5th Circuit.

 

On appeal, Vertex raised several arguments including that under OCSLA, Louisiana law was applicable and the indemnity agreement was voided under the Louisiana Oilfield Indemnity Act (LOIA).  The first question for the Court was whether OCSLA applied to this case such that Louisiana law should be applied as a surrogate to federal law.  The adoption of state law as a surrogate to federal law requires 1) that the controversy arise on a situs covered by OCSLA (such as a fixed platform on the outer continental shelf); 2) that federal maritime law must not apply of its own force; and 3) state law must not be inconsistent with federal law.  For the controversy to arise on a situs covered by OCSLA in a contractual dispute, the majority of the work performed under the contract must occur on a stationary platform or other OCSLA situs.

 

After reviewing the plaintiff’s deposition testimony, the MSA, and the Salvage Plan, the Court was unable to conclude whether the majority of Vertex’s work was to be performed on an OCSLA situs.  The Court determined the record was inadequate and the case was remanded to the District Court for further evaluation of this dispositive question.

 

Tetra Technologies v. Continental Insurance Co.

Geographical Proximity is Not the Only Factor in Deciding OCSLA Jurisdiction

Robert Lewis, Jr. filed suit under the Outer Continental Shelf Lands Act (OCSLA), alleging injuries to his left elbow, cervical spine, and lumbar spine as the result of an accident that occurred while working on Ram-Powell, a tension-leg fixed platform, located in the Gulf of Mexico in Viosca Knoll Block 956.  The parties agreed that under OCSLA the substantive law for injuries occurring on fixed offshore platforms located on the outer continental shelf is the law of the adjacent state.  However, they disagreed as to which state’s law applied.  Plaintiff argued that Louisiana law should apply as it was the geographically closest to the platform in question.  Defendants, on the other hand, asserted that Alabama was the adjacent state and its law should apply, and filed a motion for summary judgment on the issue.

The court turned to the Fifth Circuit’s opinion in Snyder Oil Corp. v. Samedan Oil Corp. in resolving the issue.  Samedan set forth four factors in determining adjacency: (1) geographical proximity; (2) which coast federal agencies consider the subject platform to be “off of”; (3) prior court determinations; and (4) projected boundaries if the states’ borders were extended to the shelf.   Plaintiff argued that not only was Ram-Powell geographically closer to Louisiana, but that he also travelled to and from the platform via Louisiana and had no connections to Alabama.  Plaintiff further argued that there were no controlling decisions on Block 956, and that any evidence regarding the projected boundary is not as determinative as geographic proximity.

In finding for Defendants, the U.S. District Court for the Eastern District of Louisiana recognized that while Block 956 was geographically closer to Louisiana due to its peculiar boot shape, the other three factors, viewed together, indicated that Alabama was the adjacent state.  First, various federal and state agencies considered the platform to be off the coast of Alabama.  Next, there was indeed a prior decision ruling that the Ram-Powell was adjacent to Alabama; and the platform in question in Samedon was further to the west than Ram-Powell, and it too was considered adjacent to Alabama.  Furthermore, the projected boundaries as set forth by the Minerals Management Service (MMS), U.S. Commerce Department, and U.S. Bureau of Ocean Energy Management (BOEM) all indicate that Block 956 is within the portion of the outer continental shelf of Alabama.  Lastly, the court rejected Plaintiff’s state of transit argument, stating that the geographic proximity factor does not place import on the state of transit.  Thus, partial summary judgment was granted and Alabama law applied.

Lewis v. Helmerich & Payne International Drilling Co., et al.

New District Director for the Sixth Compensation District

Kristina Hall, a longtime Claims Examiner in the Jacksonville office of OWCP, has been named as the new District Director for the Sixth Compensation District, replacing Charles D. Lee, who retired in March, 2015. Ms. Hall has been the acting District Director for the past four months. The Sixth District covers claims arising in Alabama, Florida, Georgia, Kentucky, North Carolina, South Carolina, and Tennessee.