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New OCSLA/LHWCA Case from Ninth Circuit - Valladolid v. Pacific Operations Offshore

If a tree falls in the woods.....

Or, if a worker is killed on land but his injury is caused by an Outer Continental Shelf activity, can he recover under the Outer Continental Shelf Lands Act?

The Ninth Circuit just released this case which addresses the applicable standard for determining application of the Outer Continental Shelf Lands Act.  The opinion is in the case of Valladolid v. Pacific Operations Offshore and can be downloaded here.

As the Court begins:

In this case, we consider whether an employee must be injured on the outer continental shelf to be eligible for workers’ compensation benefits under the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. § 1331 et seq.

The two other circuits that have considered this question have reached conflicting conclusions.

Conflicts between the circuits.  Signal one for a good case to go to the Supreme Court.  Ninth Circuit decision.  Signal two.

Facts: Roustabout was killed onshore, while working on activities related to an offshore oil platform.  Widow files for state worker's compensation benefits, benefits under the Outer Continental Shelf Lands Act and the Longshore Harbor Workers Compensation Act.  The OCSLA and LHWCA benefits are denied.

Proceedings: As required by federal law, the claim was adjudicated by an Administrative Law Judge with an appeal to the Benefits Review Board.  This appeal followed.  The proceedings below:

The ALJ denied Petitioner’s OCSLA claim on the grounds that Valladolid’s injury had occurred outside the geographic situs of the outer continental shelf. The ALJ denied the LHWCA claim on two grounds: (1) Valladolid was not engaged in maritime employment, and (2) he was not injured on a maritime situs. The Benefits Review Board (“BRB”) upheld the ALJ’s denial of the OCSLA benefits under the “situs-of-injury” test, and affirmed the denial of LHWCA benefits on the maritime situs ground. The BRB did not reach the maritime employment issue.

The compensation scheme is as follows:

Under the OCSLA workers’ compensation provision, LHWCA benefits are extended to:

[the] disability or death of an employee resulting from any injury occurring as the result of operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing, or transporting by pipeline the natural resources, or involving rights to the natural resources, of the subsoil and seabed of the outer Continental Shelf.

43 U.S.C. § 1333(b). The outer continental shelf is comprised of “all submerged lands lying seaward and outside of the area of lands beneath navigable waters”—that is, submerged lands lying outside the territorial jurisdiction of the states. Id. § 1331(a); see id. § 1301(a)(2). State jurisdiction over offshore lands generally extends three miles from the coast line, though in certain cases not relevant here, it may extend further. See id. § 1301(a)(2).

Precedent:

In Curtis v. Schlumberger Offshore Service, Inc., 849 F.2d 805 (3d Cir. 1988), the Third Circuit rejected the situs-of-injury test and held that a claimant need only satisfy a “but for” test in establishing that the injury occurred “as the result of” operations on the outer continental shelf. Id. at 809-11. Accordingly, an employee injured in a car accident on his way to meet a helicopter that would take him to an offshore platform was eligible for OCSLA disability benefits. Id. at 806, 811.

However, in Mills v. Director, Office of Workers’ Compensation Programs, 877 F.2d 356 (5th Cir. 1989) (en banc), the Fifth Circuit adopted a situs-of-injury requirement for OCSLA claims. Under Mills, an OCSLA claimant must show that the injury occurred on an outer continental shelf platform or on the waters above the outer continental shelf, in addition to satisfying the “but for” test. Id. at 362; see also Becker v. Tidewater, Inc., 586 F.3d 358, 366-67 (5th Cir. 2009); Pickett v. Petroleum Helicopters, Inc., 266 F.3d 366, 368 (5th Cir. 2001); Sisson v. Davis & Sons, Inc., 131 F.3d 555, 558 (5th Cir. 1998). Thus, a welder injured during the onshore construction of a platform destined for the outer continental shelf was not eligible for OCSLA disability benefits. Mills, 877 F.3d at 357, 362.

Result:  I'll spare you the 10 pages of discussion of persuasive but not binding precedent, the legislative history (Shh, don't tell Justice Scalia - per his concurrence in Jerman v. Carlislehe doesn't like it), and the canons of statutory construction.  The Ninth Circuit rejected Mills and held that the OCSLA did not require the situs of the injury to be on the Outer Continental Shelf.

One to watch. 

New Case from Second Circuit - New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc.

Did an unsecured barge cause the New Orleans levee break during Hurricane Katrina?  The questions answered here are: who should pay to defend it?  And, does the terminal owner's insurance company cover it?

A new maritime insurance case from the Second Circuit Court of Appeals answers some of the above (the insurance stuff anyway). The case is New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., can be found here.

How is this intro?

Insured defendant-counter-plaintiff-appellant-cross-appellee Lafarge North America, Inc. (“Lafarge”), intervenor and primary-insurer plaintiff-counter-defendant-appellee-cross-appellant New York Marine and General Insurance Company (“NYMAGIC” or the “primary insurer”), and excess-insurers plaintiffs-counter-defendants-appellants-cross-appellees Northern Assurance Company of America (“NACA”) and American Home Assurance Company (“AHAC” or, collectively with NYMAGIC, in its additional capacity as excess insurer, and NACA, the “excess insurers”), appeal from an order entered on January 29, 2007, and summary judgments entered on October 27, 2008, and February 19, 2009, in the United States District Court for the Southern District of New York (Haight, J.).

Lafarge owns the terminal where the barge in question was moored.  The litigation spawned from this potential cause of the levee breach is massive:

No fewer than four separate class action complaints have been filed against Lafarge, some with putative classes as large as 40,000 members, seeking damages as high as $100 billion. No fewer than 900 docket entries were made in the Katrina Barge Litigation when it was pending before Chief Judge Berrigan, and no fewer than 16,000 docket entries have been made in the consolidated Katrina Litigation pending before Judge Duval. At least 28 other parties, including insurers as direct action defendants, are or have been co-defendants of Lafarge in the Katrina Barge Litigation. 

Lafarge notified its primary insurer NYMAGIC and hired a team of attorneys, experts and consultants. Lafarge's attorneys were not on NYMAGIC's preferred counsel list and a dispute arose.  NYMAGIC hired counsel to represent Lafarge.  As you might expect, the policy limits of $5 million were exhausted quickly. Lafarge has several excess insurers:  NYMAGIC, AHAC and NACA.  Lafarge incurred $10 million in legal fees and expenses that the insurers never paid. 

There was another potential insurer, the American Club, a non-profit mutual insurance association. It provided defense and indemnity for vessels that Lafarge owned, chartered, leased or otherwise obtained an insurable interest in.  Lafarge only owned the terminal where the barge was moored.  The opinion, at length, analyzed this provision and found it not applicable.

Should NYMAGIC, the primary insurer, be forced to be pay investigative and defense costs when it did not consent to the choice of the attorneys.  The appeals court parsed out in temporal fashion who did what and when.  It ordered NYMAGIC to pay for the investigative efforts (including attorney's fees) because it did not undertake an investigation itself.  The court denied, however, Lafarge's request for defense costs when Lafarge rejected NYMAGIC's authorized attorneys.  [Lesson: the insurance company gets to pick the attorneys, if an insured chooses not to use them, they must pay]. 

The excess insurers followed the form of the primary insurance policy, but Lafarge did argue that the unreimbursed attorney's fees were properly born by the excess insurers because they were "bumbleshoot" policies (providing coverage when the primary policies have gaps in coverage).  The court rejected this argument and found Lafarge's rejection of NYMAGIC's preferred attorneys to be unreasonable. 

I bet my colleague Tred over at www.insurancelawhawaii.com has some thoughts on this case.

SCOTUS Maritime Contract Case - Oral Argument Transcripts Available

On March 24, 2010, the Supreme Court heard oral argument in the case of Kawasaki Kisen Kaisha v. Regal Beloit Corporation and Union Pacific Railroad Company v. Regal-Beloit Corporation.  The oral argument transcript can be downloaded here.  My earlier post with briefs and decision below here.

This issue is which liability framework applies to cargo that is transported under a bill of lading but has some damage while on U.S. railways.  COGSA and the bill of lading is one framework.  The Carmack Amendment which governs rail carrier liability is another.

While the issue is a bit for the admiralty/interstate commerce wonks among us, the transcript yielded some gems:

Best "Canons of Statutory Interpretation in a Nutshell" Quote: 

MR. BALLENGER: Well, Your Honor, we don't think that it is necessary for this Court to read the statute in a countertextual way. You just have to do what this Court has always done and read the statute as a whole, including giving some weight to that provision which is in the text of the statute and reading the rest of the statute in light of it.

Best "Random Thoughts of the Chief Justice" Quote:

CHIEF JUSTICE ROBERTS: This may not have anything to do with anything. Is there a reason the STB doesn't appear on your brief?

Best "Those Darn Publishers of the U.S. Code" Quote:

JUSTICE SCALIA: Okay. Wait a minute now.

MR. YANG: I'm sorry -

JUSTICE SCALIA: The paragraphing you say is wrong?

MR. YANG: From 5a to 6a, you will see 5a is the 1978 version of Carmack that was enacted in the 1978 codification.

JUSTICE SCALIA: Right. MR. YANG: The current version is reflected on the facing page. There was no paragraph indentation in 1978. And in 1995 when Congress changed the text, it did include a paragraph indentation, but the committee report -- the conference report is very clear that Carmack was not changed. Also -

JUSTICE SCALIA: So all -- you are saying that -- I think what you are saying is that all we have to use the statutory statement that "nothing was meant to be changed or" is to say, well, that paragraphing in 3 is just wrong, right?

MR. YANG: Well, I don't know -- you mean the indentation?

JUSTICE SCALIA: The indentation.

MR. YANG: The indentation was inadvertent. And I would actually direct the Court to 73a, which is the other part of Carmack that now exists for motor transportation and freight forwarders. There is no indentation. The current version of the other half of Carmack does not provide the indentation. The indentation is inadvertent. And in '95 -- the '95, which -

JUSTICE SCALIA: I'm losing you. 73a?

Best "Foreign Law-Phobes Watch Out! I see a Cite to Europe Law Coming" Quote:

JUSTICE SOTOMAYOR: I think Justice Breyer asked you why it made sense that there would be two rules in effect for what happens on the ocean and what happens on land; and if we had it, wouldn't it create great difficulty. I think -- you may correct me.

JUSTICE BREYER: Your point was -

MR. FREDERICK: That's how the world -

JUSTICE BREYER: -- if it creates such difficulty, why were the railroads in favor of it before?

MR. FREDERICK: Correct. And that's how -that's how Europe operates. Europe has separate conventions for rail and road that apply to damage that occur on land and the European nations have acceded to the various versions of Hague rules -

JUSTICE BREYER: Anything here that says on land? Anything in Carmack that says on land?

Best "I hope Chief Justice Roberts Nodded at Justice Sotomayor" Quote:

CHIEF JUSTICE ROBERTS: And that's a different question with respect to liability and claims than with respect to venue.

MR. FREDERICK: Correct. And let me address that if I might.

JUSTICE SOTOMAYOR: Could I just -- just briefly before you answer the Justice -- the Chief.

MR. FREDERICK: Sure.

[The Chief Justice reminded counsel of his question later on.]

Best "Don't Show Me No Stinkin' Letter Briefs" Quote:

JUSTICE SCALIA: Wait. You say we have to defer to a letter brief in another case?

MR. FREDERICK: No -

JUSTICE SCALIA: I think most of my colleagues would not defer to a letter brief in this case. And you are saying that we owe deference to a letter brief in another case?

MR. FREDERICK: That is what this Court held -

JUSTICE SCALIA: Which I didn't agree with, it seems to me.

Best "What Does "In" Mean" or "How Do You Politely Read a Statute to a Justice" Quote:

JUSTICE BREYER: Can we go back one more second? Can you just give me the citation in Carmack -not COGSA, but Carmack -- that would get our intermodal shipment out of the board's jurisdiction? Because what I'm thinking about is the intermodal shipment and the boat sinks near Hawaii. Okay? Now, on your reading of Carmack, not COGSA, what gets that shipment sunk in Hawaii -- or Midway or Guam or someplace -- what gets them out of Carmack? Which words?

MR. FREDERICK: Well, the -- on 62A, the petition appendix defines the general jurisdiction.

JUSTICE BREYER: And it includes transport just as you defined it between the United States and another place -- United States and a place in a foreign country.

MR. FREDERICK: Yes.

JUSTICE BREYER: So that's what this is. This is a shipment between Shanghai and San Francisco.

MR. FREDERICK: And at (a)(2) -- will you look at (a)(2), please? (A)(2) says jurisdiction under paragraph 1 applies only to transportation in the United States.

JUSTICE BREYER: Oh, sorry, between a place in -- oh, transportation in the United States.

MR. FREDERICK: In the United States.

JUSTICE BREYER: Between a place in.

MR. FREDERICK: Exactly.

JUSTICE BREYER: Thank you.

MR. FREDERICK: Yes, thank you.

(Laughter. )