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Frustrated with the NLRB’s Scrutiny of Employer Work Rules?

Posted in Labor and Employment Law

nlrb

By Erin L. Kilgore

Employers are not the only ones frustrated with the National Labor Relations Board’s ever-growing scrutiny of common employer work rules and policies.  A member of the NLRB is, too.

As many employers are aware, the NLRB’s scrutiny of work rules has gone well beyond social media policies.  In recent years, the NLRB has taken issue with many seemingly routine work rules and policies and found those polices to be unlawful.  The policies found to be unlawful include policies regarding: confidentiality; conduct toward the employer and supervisors; conduct toward fellow employees; communications with third parties (including the media and government agencies); use of employer logos, copyrights, and trademarks; photographs, recordings, and personal electronic devices; leaving work; and conflicts of interest.

In particular, where the prohibitions and rules were not “properly” and/or “clearly” limited to unprotected activity, the NLRB has found otherwise facially-neutral rules unlawful if employees would reasonably understand them as prohibiting employees from engaging in protected activities or discussions regarding wages, benefits, or other terms and conditions of employment.

Recently, the NLRB issued yet another decision condemning an employer’s work rules.  Specifically, the NLRB majority found that a hospital violated the National Labor Relations Act by maintaining rules in its Code of Conduct that: (1) prohibit conduct that “impedes harmonious interactions and relationships,” and (2) prohibit “negative or disparaging comments about the . . . professional capability of an employee or physician to employees, physicians, patients, or visitors.”  The Board majority’s findings are consistent with the Board’s recent pattern of invalidating facially-neutral work rules on the premise that an employee would “reasonably construe” the rule to restrict the employee’s ability to engage in protected activities under the Act.

However, what is novel about the decision lies in the dissent.  Commentators are buzzing about the dissenting opinion authored by Board member Philip Miscimarra, which called for a change in the way the Board evaluates employer policies and work rules.

Miscimarra identified multiple “defects” in the NLRB’s current test and called for a “more even-handed evaluation of employment policies, work rules and handbooks.”  Rather than continue to apply the current test, he “believe[s] the Board must evaluate at least two things: (1) the potential adverse impact of the rule on NLRA-protected activity, and (ii) the legitimate justifications an employer may have for maintaining the rule,” and he called on his colleagues to “engage in a meaningful balancing of these competing interests.”

Of course, Miscimarra’s opinion is still the minority opinion.  Employers should remain vigilant when drafting and enforcing their work rules to ensure they cannot reasonably be understood to infringe upon employees’ rights to engage in protected concerted activity.   However, employers may take some comfort in knowing one member of the NLRB is sympathetic to their plight.

Update: Fights Continue Over the Availability of Punitive Damages in Maritime Cases

Posted in Admiralty and Maritime, Energy, Louisiana In General

Storm-And-Blue-Lightining-At-Sea

By Tod Everage

Last December, we posted an article addressing the recent conflicted decisions out of the Eastern District of Louisiana on the remaining availability of punitive damages against third parties under general maritime law. You can find that article here. In 2016, the conflict continues…

As we mentioned, Judge Fallon allowed a claim for punitive damages against a third party under general maritime law to proceed against a third party on the basis that the prohibition against such damages set forth in Scarborough v. Clemenco Indus., 391 F.3d 660 (5th Cir. 2004) was indirectly abrogated by Atlantic Sounding v. Townsend, 557 U.S. 407 (2009). See Collins v. A.B.C. Marine Towing, LLC, 2015 WL 5254710 (E.D. La. 9/9/2015). Therein, Judge Fallon held that a seaman can recover punitive damages under general maritime law if the Jones Act is not implicated. A few months later, Judge Morgan twice held the opposite view. See Howard v. Offshore Liftboats, LLC, 2015 WL 7428581 (E.D. La. 11/20/15); Lee v. Offshore Logistical and Transports, LLC, 2015 WL 7459734 (E.D. La. 11/24/15). In Judge Morgan’s opinion, Scarborough remains precedent in the Fifth Circuit.

Last month, Judge Zainey joined the fray in Hume v. Consolidated Grain & Barge, Inc., 2016 WL 1089349 (E.D. La. 3/21/16). That case involved personal injury claims of two workers, working for Consolidated Grain & Barge (“CGB”) aboard the M/V BAYOU SPECIAL. At the time of the incident, the M/V BAYOU SPECIAL was being pushed by the M/V MR. LEWIS, which was owned and operated by Quality Marine. Plaintiffs sued CGB and Quality Marine, asserting the usual array of claims under the Jones Act and general maritime law, including a demand for punitive damages. In response to a Motion to Dismiss filed by Quality Marine, Plaintiffs conceded that their punitive damages claims were unavailable against Quality Marine for Jones Act negligence and unseaworthiness; however, they contested Quality Marine’s argument that punitive damages were unavailable under the general maritime law.

Not surprisingly, Quality Marine relied upon McBride and Scarborough to argue that punitive damages are not available to the Plaintiffs. In Opposition, Plaintiffs relied on Judge Fallon’s decision in Collins. Judge Zainey found Judge Fallon’s reasoning in Collins persuasive and denied Quality Marine’s motion. Judge Zainey agreed that “there is no need for uniform treatment of an employer and a third party tortfeasor where there is no statutory remedy that is different than the general maritime law remedy.” Because the Jones Act is not implicated by Plaintiffs’ punitive damages claims against Quality Marine, the prohibition of such claims under the Jones Act has no bearing. Accordingly, Plaintiffs’ claims for punitive damages against Quality Marine were allowed to proceed.

The current score sits at 2-1 in favor of punitive damages against a third party under general maritime law. Until the U.S. 5th Circuit weighs in to settle this issue, the availability of such claims appears to be guided by the judicial lottery.

Louisiana’s Sales Tax Occasional Sale Rule Limitation Does Not Impact Just Yard Sales

Posted in Business and Corporate, Louisiana In General, State and Local Taxation

garage sale

By Chris Dicharry and Jason Brown

The Louisiana state and local sales tax laws have historically included an isolated or occasional sale rule. In general, the rule looks at the characteristics of a seller to determine if a sales taxable transaction has occurred. If the seller is not engaged in the business of selling the type of property being sold and does not hold itself out as being engaged in such business (La. R.S. 47:301(1)), the transaction is not subject to sales/use tax regardless of the nature of the buyer. La. R.S. 47:301(10)(c)(ii)(bb)(the “Occasional Sale Rule”). It was the Occasional Sale Rule that not only allowed yard and garage sales without state or local sales tax, but allowed a grocer to sell used computers, a retailer to sell used display cases, and a vessel operator to sell used vessels without sales tax.

In the most recent Special Session that ended in March, the Louisiana Legislature limited the Occasional Sale Rule. Under the revisions, sales qualifying as isolated or occasional sales will be subject to state sales tax at the following rates:

  • 4/1/2016 – 6/30/2016 – 4% state sales tax
  • 7/1/2016 – 6/30/2018 – 2% state sales tax
  • 7/1/2018 and after – 0% state sales tax

The new 5th penny of the state sales tax effective April 1, 2016, recognizes the Occasional Sale Rule. Thus, only a 4% state sales tax from April 1, 2016 through June 30, 2016 and the reduced rate of 2% from July 1, 2016 through June 30, 2018 will apply.

The loss of the Occasional Sale Rule affects transactions far beyond yard and garage sales. The Occasional Sale Rule has been used to avoid sales tax (and collection responsibility) in connection with transfers of industrial facilities, even among related parties, and to avoid sales tax in connection with capital contributions of tangible personal property on entity formation. Titled vehicles have not had the benefit of the Occasional Sale Rule and have always been subject to state and local sales tax on the registration of the vehicles, but under the new law transfers of all sorts of corporeal movable (tangible personal) property will be subject to state sales tax. Incorporeal (intangible) and immovable property continue to be excluded from both state and local sales/use tax; however, there will be occasional sales issues related to property identified as movable “other constructions” (tanks, towers, pipelines, etc.) on leased or right of way land. The sales tax provision protecting “other constructions” on leased or right of way land from being subject to sales/use tax, La. R.S. 47:301(l6)(l), has also been limited as follows:

  • 4/1/2016 – 6/30/2016 – 4% state sales tax
  • 7/1/2016 – 6/30/2018 – 2% state sales tax
  • 7/1/2018 and after – 0% state sales tax

The Louisiana Department of Revenue (the “LDR”) is reviewing whether “other constructions” should be treated as taxable.

Under the new law limiting the Occasional Sale Rule, sellers of property are required to register with the LDR, collect state sales tax and remit collected tax on a proper LDR sales tax return. Failure to collect and remit can lead to personal liability for the tax, interest and penalties for the seller. While the LDR may be lenient for lawn and garage sales, it may be less so in connection with facility transfers, capital contributions and when a large non-profit conducts a silent auction or similar event involving the transfer of property.

Louisiana Corporation Franchise Tax Extended to Non-Corporate Entities

Posted in Business and Corporate, Energy, Louisiana In General, State and Local Taxation

Kean Miller Industrial Strength Law

By Chris Dicharry and Jason Brown

The Louisiana Corporation Franchise Tax (“CFT”) has historically been imposed only on corporations. Thus, LLCs and partnerships have not been subject to the CFT. In the Special Session that ended last March, the Louisiana Legislature expanded the companies subject to the CFT to include non-corporate entities that elect to be taxed as corporations for federal income tax purposes. See, La. Acts 2016 (1st Ex. Sess.), No. 12 (“Act 12”).  The new law provides a safe harbor for LLC’s “qualified and eligible to make an election to be taxed” as an S-Corporation. Yet, while Act 12’s plain language does not appear to require that an LLC actually make the S-Corporation election to qualify for the safe harbor, the Louisiana Department of Revenue (“LDR”) has informed Kean Miller that LDR policy may require that an LLC actually make the election to avoid the CFT.

The expanded CFT law also legislatively overrules the taxpayer-favorable UTELCOM case. UTELCOM, Inc. v. Bridges, 2010-0654 (La. App. 1 Cir. 9/12/11), 77 So.3d 39. Under UTELCOM, a corporation was found not to be doing business in the state of Louisiana so as to be subject to the CFT, when its only activity in Louisiana was as a limited partner in a partnership doing business in Louisiana. The court found that the law did not extend to corporations that were not directly (and only passively, through ownership) engaged in business in Louisiana. The new law expands the activities that will subject an entity to the CFT by including the following as one of the taxable incidents in Louisiana:

“The owning or using any part or all of its capital, plant, or other property in this state whether owned directly or indirectly by or through a partnership, joint venture, or any other business organization of which the domestic or foreign corporation is a related party as defined in R.S. 47:605.1.”

Thus, owning an interest in an entity with operations in Louisiana may subject the owner to the CFT. Unfortunately, the CFT may end up being tiered under these circumstances. The entity operating directly in Louisiana may be subject to the CFT depending on how it is taxed for federal income tax purposes and its ability to elect S-Corporation treatment; and the interest owner may also be subject to CFT based on its investment in the entity with Louisiana operations.

For example: If Alligator Energy Corporation has no operations in Louisiana, but holds a 60% ownership interest in Alligator Pipeline, LLC, a Louisiana LLC that operates exclusively in Louisiana, Alligator Pipeline, LLC will be subject to the CFT if it is taxed as a corporation for federal tax purposes and is not eligible to be taxed as an S-Corporation. Alligator Energy Corporation will also pay CFT based on its investment in Alligator Pipeline, LLC. In essence, the activities of Alligator Pipeline, LLC will be taxed twice – once at the operating entity level and once at the parent level.

Act 12 does add a new holding company deduction; however, the deduction is only available if the parent has at least 80% of the voting and nonvoting power of all classes of stock, membership, partnership, or other ownership interests in the “subsidiary.”

Act 12 is applicable to tax periods beginning on or after January 1, 2017; however, this effective date could be misleading. Historically, a corporation subject to the CFT paid an initial CFT of $10 for its first year of operation. Under Act 12, an existing entity that becomes subject to the CFT because it is taxed as a corporation for federal income tax purposes (and cannot use the S-Corporation safe harbor) will be subject to full CFT liability based upon its books and records for the prior year.

EPA Poised to Begin Collecting Methane Data from Existing Oil & Gas Facilities

Posted in Climate Change / GHG, Energy, Environmental Litigation and Regulation

EPA

By Brittany Buckley Salup

The Environmental Protection Agency (EPA) announced in March that it is in the process of developing new regulations to curb methane emissions from existing oil and gas facilities.  The EPA will formally require companies operating existing oil and gas sources to provide information to assist in the development of comprehensive regulations to reduce methane emissions.  Methane is a potent greenhouse gas with a higher global warming potential than carbon dioxide.  As a preliminary step in the process of developing methane regulations for already-existing oil and gas facilities, EPA plans to present an Information Collection Request (ICR) for public comment (via notice in the Federal Register) by the end of April 2016.

An ICR is a formal records request that requires the recipient(s) to provide reporting, records, or other specified information directly to the EPA.  Such ICRs are authorized by Section 114(a) of the Clean Air Act (CAA), which provides EPA broad authority to request information, provided the requested information is for one of three approved purposes: (1) to assist the Agency in developing rules or regulations; (2) to determine whether “any person is in violation” of any CAA requirement; or (3) to carry out “any provision of this chapter[.]” The EPA is in the process of developing an ICR that will help it identify and target significant sources of methane emissions at existing facilities.  The ICR will likely call for mandatory record-sharing, equipment surveys, and/or emissions monitoring.  Recipients of the ICR will generally be required to provide the requested information to EPA and will be required to attest that their responses are accurate.  Members of the oil and gas industry can expect to receive this ICR later this year, after public comment and final administrative approval.

EPA’s recently-announced plan is the latest in a series of moves to limit methane emissions from oil and gas facilities; however, this is the first significant proposal to target already-installed wells and other existing oil and gas equipment.  In 2012, EPA adopted regulations that limit methane and other emissions from new hydraulically fractured and re-fractured natural gas wells. EPA proposed rules for reduction of methane and volatile organic carbon emissions from new oil and gas facilities on September 18, 2015.  80 Fed. Reg. 56593.  The proposed rules for new facilities imposed methane reduction measures on oil and natural gas well sites, natural gas gathering and boosting stations, gas processing plants and natural gas transmission compressor stations.  The March 2016 announcement for existing facilities indicates that the ICR will apply to these same types of sources “as well as additional sources.”  This latest announcement has fueled concerns that the forthcoming regulations could, as a practical matter, require the industry to retrofit or replace existing production and processing equipment to achieve compliance.

For more information, see EPA Administrator, Gina McCarthy’s blog post on this topic here.

Texas Law Propels U.S. 5th Circuit’s Admiralty Attachment Decision

Posted in Admiralty and Maritime, Louisiana In General

texas

By Stephen Hanemann

Providing much needed clarity to an ambiguous and precedent-sparse arena of federal admiralty law, the U.S. Fifth Circuit Court of Appeal relied on Texas common law when recently upholding a district court’s denial of a Motion to Vacate Attachment under Supplemental Admiralty Rule B. In Malin v. Int’l Ship Repair & Drydock, Inc. v. Oceanografia, 2016 WL 1161215 (5th Cir. March 23, 2016), the principal dispute involved a Texas-based shipyard, Malin, suing a Mexican corporation, Oceanografia, for the balance of unpaid work invoices. To obtain jurisdiction for its claim against Oceanografia under Supplemental Admiralty Rule B, Malin attached fuel bunkers aboard the M/V KESTREL, a vessel chartered by Oceanografia. Oceanografia took delivery of the vessel on October 15, 2012, under a Bareboat Charter Agreement with the vessel’s owner. Malin attached the vessel’s fuel bunkers only two weeks later on October 29, 2012.

Supplemental Admiralty Rule B permits attachment of a defendant’s “tangible or intangible personal property – up to the amount sued for – in the hands of garnishees named in the process.” The validity of a Rule B attachment depends entirely on the determination that the thing attached be the property of the named defendant at the moment it is attached. See Shipping Corp. of India, Ltd. v. Jaldhi Overseas Pte., Ltd., 585 F.3d 58, 69 (2d Cir. 2009). But neither Rule B, nor federal maritime jurisprudence provide guidance as to what specific type of property interest is attachable. And, federal admiralty jurisprudence is equivocal as to whether a mere possessory interest is attachable under Rule B.

The Fifth Circuit needed only to decide whether the fuel bunkers constituted Oceanografia’s tangible or intangible personal property at the time of the attachment. The Court entertained, but was not persuaded by, Oceanografia’s argument that the attachment of the bunkers was improper under Supplemental Rule B because the bunkers were not its property. Oceanografia claimed that it had neither paid nor received an invoice for the bunkers at the time of their attachment. Affirming the district court’s holding that Oceanografia’s possessory interests in the bunkers constituted an attachable interest under Rule B, the Fifth Circuit offered a logically-premised conclusion: title to property unquestionably serves as an attachable interest under Supplemental Rule B. The next issue then was whether title for the bunkers passed to Oceanografia by the time of the attachment.

Finding the legal precedent so thin, the Court exercised its option to consider state law more directly on point. The charter party between the vessel’s owner and Oceanografia specified that Texas law should apply when federal maritime law was silent. Thus, the Court looked to Texas law for guidance. The charter party further provided that Oceanografia “shall purchase the bunkers at the time of delivery.” But the charter party, which created Oceanografia’s obligation to purchase the vessel’s bunkers, did not specifically condition passage of title on payment. The agreement was actually silent as to when payment was due or when title to the bunkers would pass to Oceanografia.

Since the charter party evidenced that Oceanografia was not expected to pay for the bunkers at the time of delivery, Texas law classified the sale as a credit transaction and title passed to Oceanografia on delivery of the “goods.” Because delivery of the vessel occurred before Malin attached the bunkers, Oceanografia held title to the bunkers at the time of the attachment. Consequently, Malin’s attachment was legally valid.

This decision confirms a heightened responsibility of charterers, vessel operators, and owners pro hac vice to be mindful of the proposition that even a contemplated sale, or credit-sale transaction, may suffice to give rise to an attachable possessory interest under Supplemental Rule B, especially if a federal court decides that Texas common law governs the otherwise maritime action.

 

Non-Signatories To Master Service Agreement Can Benefit From Louisiana’s Statutory Employer Defense Says U.S. 5th Circuit

Posted in Admiralty and Maritime, Energy, Louisiana In General

fall

By Tod J. Everage

In December 2015, the U.S. 5th Circuit (in a 2-1 decision) was called to decide whether a non-operating partner in a joint venture qualified as a “statutory employer” under the Louisiana Workers’ Compensation Act (“LWCA”), La. R.S. § 23:1021, even though that party did not sign the contract and was not specifically mentioned in the contract at all. In Wright v. Excel Paralubes, 807 F.3d 730 (5th Cir. 2015), the Court concluded that it was.

The LWCA provides that a principal qualifies as the statutory employer of a contractor if: (1) the contractor subcontracts out a portion of the work (“two contract theory”) or (2) the principal and contractor have a contract recognizing the principal as the statutory employer of the contractor’s employees. In the second case, the contract creates a rebuttable presumption that may be overcome only if the employee can show that his work was not “an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.” La. R.S. § 23:1061.A(3). If the presumption cannot be overcome – and it rarely can – the principal is afforded the same statutory immunity under the LWCA as the contractor. Thus, the “statutory employer defense” has become a valuable litigation tool for operators facing exposure for injuries to employees of its contractors in Louisiana (both onshore and in state territorial waters).

In this case, Excel Paralubes and Conoco agreed to construct and jointly own a lubricating base oil plant in Westlake, Louisiana. The parties designated Conoco as the construction manager and operator of the plant. In that role, Conoco contracted with Wyatt Field Service Co. to perform work on a vacuum tower at the facility. In the Master Service Agreement between Conoco and Wyatt, Conoco included the talismanic statutory employer language addressing the essential nature of Wyatt’s work for Conoco. During Wyatt’s work at the facility, one of its boilermakers (Wright) was injured. Wright sued both Conoco and Excel. Both Conoco and Excel successfully argued to the Western District of Louisiana that they were the statutory employers of Wright, and thus, entitled to the statutory immunity under the LWCA. Wright appealed, arguing that because Excel did not sign the MSA, it could not benefit from the statutory employer defense.

Relevant to the 5th Circuit’s analysis, the MSA defined “Affiliate” as “a company … which is specifically identified to one party as an entity for which the other party has operating or management responsibilities.” Further, Paragraph 12 extended all “exclusions of liability and indemnities … above and elsewhere in this Agreement” to Conoco’s affiliates. Again, the MSA had the required statutory employer language benefiting Conoco contained in Exhibit G to the contract, but the issue was whether that extended to Excel, a non-operating joint venturer of the facility. The 5th Circuit noted that the Louisiana Supreme Court had yet to weigh in on this issue, thus, an Erie guess was necessary. Taking cue from intermediate Louisiana appellate courts, the 5th Circuit noted that “statutory employer status is liberally favored,” and that other courts have rejected “rigid application of La. R.S. 23:1061(A)(3),” finding that there is a “broad view of what constitutes a statutory employer.” However, in each case reviewed, the non-signing party was at least mentioned in the contract. Here, Excel’s name is nowhere to be found in the MSA.

Regardless, the 5th Circuit was persuaded by the reviewed state court opinions and found that the same “broad presumption of statutory employer status,” should apply to Excel in this case based upon the terms of the MSA. Importantly, Excel fell within the MSA’s definition of “Affiliate” to whom “all exclusions and liabilities” apply. And, since Conoco was deemed a statutory employer in Exhibit G, that same “exclusion of liability” extended to Excel, as Conoco’s affiliate. The Court further reasoned that “[n]ot only did Conoco, as operator, enter into a contract on Excel’s behalf as a co-owner, but Conoco is also a co-owner of the joint venture.” Thus, Conoco’s execution of the contract inured to the benefit of, and could have been enforced by the co-owner Excel.

Even more broadly though, the 5th Circuit stated: “we do not think the parties’ failure to name or require the signature of Excel in the MSA can overcome the broad presumption of statutory employer status approved by Louisiana courts …” Moreover, the “very purpose of Conoco and Excel in creating the joint venture was to give Conoco the exact operational authority it exercised on behalf of the joint venture when it signed the MSA with Wyatt.” Thus, the MSA should be read to recognize this relationship. “The liberal attribution of statutory employer status by Louisiana courts in cases like this reflects economic realities and efficiency.” Because Excel would certainly expect to be protected by and to benefit from the same contractual obligations Conoco negotiated for itself on behalf of the joint venture, courts should “promote efficiency by reaching the decision that aligns with the parties’ rational expectations.” Accordingly, the 5th Circuit affirmed the district court’s ruling.

While this case did rely upon the actual language of the MSA, the 5th Circuit was clearly persuaded that Louisiana believes the statutory employer relationship is broad and subject to a liberal interpretation. Operators with Louisiana assets, especially those who are non-operating owners of Louisiana assets, should routinely have their contracts reviewed to ensure that this very valuable defense is available to them through the MSA. Though being specifically named in the contract is the best way to avoid the confusion, this decision reveals the 5th Circuit’s understanding of the business structures and ventures that may exist and its intention to align the contracts with those parties’ expectations. And, once the Court has found that the requisite language is set forth in the contract, it is very difficult for the contractor to rebut the presumption that its work is not integral to the principal’s business. As the Eastern District of Louisiana once noted, the only contractor that has successfully rebutted the presumption so far was a luxury beautician service at a nursing home.

Helicopters Transporting Passengers to Offshore Platforms Can Be Property Subject To A Salvage Award If Recovered or Saved In Navigable Waters

Posted in Admiralty and Maritime, Energy, Louisiana In General

heli

By Michael J. O’Brien

In the Gulf of Mexico, helicopters have replaced seagoing vessels as the primary mode of transporting workers from shore to their jobs on offshore platforms and rigs. It is black letter law that a seagoing vessel in peril that is rescued is subject to an award for salvage. Since helicopters have replaced vessels in the Gulf, the follow up question is whether a helicopter can be subject to a salvage award. This very issue was recently examined by Judge Nanette Jolivette-Brown of the Eastern District of Louisiana in Sunglory Maritime LTD, et. al. v. PHI, Inc., et. al., No. 15-896, 2016 WL 852476 (E.D. La. 3/4/16).

It is important to note that helicopters take off, land, and refuel offshore on a daily basis. However, the incident involved in Sunglory is quite different from the norm. Specifically, in March 2013, a helicopter owned and operated by PHI was traveling to an offshore platform over the Gulf of Mexico carrying two crew members and seven passengers. When the helicopter was approximately ten (10) miles from shore, the pilot detected an unusual vibration coming from the aircraft. As the flight continued, the vibrations grew in duration and strength. Unsure of the vibration, the pilot turned the helicopter around and headed back to shore. Approximately six minutes from land, the pilot decided the safest course of action was to land on an anchored vessel in the Port of Corpus Christi. Without calling first to request permission to land, the helicopter landed on the AEOLIAN HERITAGE without incident.

PHI’s mechanics were dispatched to examine the helicopter aboard the AEOLIAN HERITAGE, and they were unable to find any obvious reason for the helicopter’s vibration. As such, the helicopter was returned to shore aboard the vessel and offloaded. It was later determined that the tail rotor drive shaft was in need of repair. The pilot recorded the landing as an “emergency,” and PHI later admitted that the incident in question was an “emergency landing.” Thereafter the vessel and its owners filed a claim for an award of maritime “salvage” under the general maritime law and the 1989 Salvage Convention. PHI disputed the vessel’s entitlement to a salvage award and moved for summary judgment.

In her lengthy opinion, Judge Brown noted that the law of marine salvage is of ancient vintage. In contrast to the common law, which does not grant a volunteer who preserves or saves the property of another any right to an award, a salvor of imperiled property on navigable waters gains a right of compensation from the owner. 2 Thomas J. Schoenbaum, Admiralty and Maritime Law 16-1 (5th ed. 2015). Because of the particular dangers of sea travel, public policy has long been held to favor a legally-enforced award in this limited setting to promote commerce and encourage the preservation of valuable resources for the good of society. Margate Shipping Co. v. M/V JA Orgeron, 143 F.3d 976, 984 (5th Cir. 1998). An award of salvage is generally appropriate when property is successfully and voluntarily rescued from marine peril. The Sabine, 101 U.S. 384 (1880).

To succeed on a salvage claim, a salvor must prove three elements: (1) that the property faced marine peril; (2) voluntarily service was rendered when not required as an existing duty or from a special contract; and (3) the salvage attempt succeeded in whole or in part, or contributed to the success of the operation. U.S. v. EX-USS CABOT/EDEALO, 297 F.3d 378, 381 (5th Cir. 2002).

Citing prior jurisprudence that the issue of whether an aircraft recovered in navigable waters is properly the subject of a salvage award remains unsettled, PHI moved for summary judgment. Simply stated, PHI argued that a helicopter is not the kind of property that may be subject to a salvage award. In response, the vessel cited the broad definition of “salvageable property” in the 1989 Salvage Convention which provides: “property means any property not permanently and intentionally attached to the shoreline and includes freight at risk.” Under this definition, it is clear that a helicopter, which is not permanently attached to the shoreline, would constitute salvable property.

When PHI disputed that the Salvage Convention was applicable to the exclusion of the general maritime law, the court quickly dismissed these claims. The District Judge noted the Salvage Convention was ratified by the U.S. Senate in 1991 and became part of U.S. law in 1996. Thus, the court found that PHI presented no reason or argument why the treaty should not be regarded as the supreme law of the land and the helicopter at issue was salvageable property.

Nevertheless, as there was a question as to the Salvage Convention’s applicability, the District Court conducted an in depth review as to whether the helicopter in question was also property subject to a salvage award under the general maritime law. Courts have held that to make a salvage award, there should be a nexus between the item salvaged and traditional maritime activities. PHI argued that its helicopter was not salvageable property under the general maritime law because it lacked a sufficient maritime nexus. To this end, PHI argued that the “bone dry, land based civilian helicopter” was the kind of non-vessel property that may not be the subject of a salvage claim.

The court disagreed citing prior jurisprudence that helicopters need not be a “vessel” to bear a sufficient maritime nexus to warrant a salvage award. Judge Brown also pointed out that the U.S. Supreme Court and the U.S. Fifth Circuit have each recognized that a helicopter that transports passengers to an offshore platform engages in a function traditionally performed by waterborne vessels; therefore, helicopters bear a sufficient nexus to traditional maritime activity such that admiralty jurisdiction may be invoked when accidents befall such helicopters. The court saw no reason (nor did PHI offer any evidence) why a helicopter that bears a significant relationship with traditional maritime activity would not “bear a strong maritime nexus.” Thus, the court could not agree with PHI that this helicopter could not be subject to a salvage award.

Ultimately, the Court denied PHI’s motion for summary judgment insofar as the issues of whether the helicopter actually faced a marine peril or whether the vessel’s salvaging service was “voluntary” were questions of fact that could not be resolved on summary judgment. However, it is critical to note that while the court ultimately deferred its final ruling, there can be no question that Judge Brown ruled that a helicopter is marine property subject to a salvage award.

 

U.S. 5th Circuit Clarifies Presentment Requirements Under OPA 90 and Bars Fishermen’s Claims for Failing to Comply with 90-Day Waiting Period

Posted in Admiralty and Maritime, Energy, Environmental Litigation and Regulation

Commercial shrimp fishing boat

By Lauren Barrera

In Nguyen v. American Commercial Lines, L.L.C., the U.S. Fifth Circuit clarified the presentment requirements set forth in the Oil Pollution Act of 1990 (“OPA 90”). Although the fishermen’s information submitted was sufficient to present a claim, the Court refused to allow some of the claimants from pursuing litigation because they failed to comply with both of the time limitations set forth in the Act.

OPA 90 contains two important time restrictions affecting potential claimants. First, under its “presentment requirement,” a claimant must first present their claim(s) to the designated “responsible party” and wait until liability is denied or until 90 days has passed since presentment of the claim to bring suit against the responsible party. Second, OPA 90 also provides a three (3) year statute of limitations that begins on the date the oil discharge incident occurred.

On July 23, 2008, a collision occurred causing oil to discharge from a barge owned by American Commercial Lines, L.L.C. (“ACL”). The Coast Guard designated ACL as the “responsible party” under OPA 90. In June 2009, certain commercial fishermen and others affected by the oil spill submitted claims to ACL’s attorney. On July 22, 2011- one day shy of the three-year statute of limitations – ACL received notice of new and amended claims involving additional claimants who were not part of the initial claim sent in 2009. Three days later all of the claimants filed suit.

Two issues were before the Fifth Circuit in this case: (i) whether the fishermen had presented enough information to ACL in order to comply with the OPA 90’s presentment requirement and (ii) whether the fishermen had to comply with both the 90-day waiting period after presentment before filing suit and the three (3) year statute of limitations.

The fishermen had submitted letters to ACL including their fishing licenses and dock receipts for seafood sold, a statement alleging losses from the oil spill and an evaluation of damages. ACL had responded by requesting a list of additional information it needed in order to process their claims. The fishermen refused to provide all of the information requested. ACL argued that the fishermen failed to comply with the presentment requirements because other sections in OPA 90 required the claimants to provide “evidence to support” their claims, specifically, those sections relating to filing a claim for damages to a federally-established fund. Therefore, ACL claimed it had the right to demand this additional information.

However, the Fifth Circuit found that federal-fund requirements did not apply to claims being brought against a “responsible party.” The Court focused on the language in OPA 90 providing that “all claims for removal costs or damages shall be presented first to the responsible party.” The Act defines “claim” as “a request, made in writing for a sum certain, for compensation for damages or removal costs resulting from an incident.” Also, “damages” are defined to include loss of subsistence use of natural resources, loss of revenues, loss of profits, etc. Thus, the Court held that ACL was improperly conflating the requirement of filing claims against the federal fund with those of presenting claims to a responsible party. The Fifth Circuit found the fishermen had submitted sufficient information with their claim letters to ACL, because nothing in the plain language of the statute suggested that they needed to provide any explanation or documentation beyond what they submitted.

Second, the Fifth Circuit evaluated OPA 90’s two separate time restrictions. The Court clarified that the two time requirements “operate[] independently” of one another. Meaning, the fishermen could not rely on compliance with the period of limitations as a way to circumvent the presentment requirements.

The fishermen pointed to at least one case in which the Court had allowed a claimant to commence an action without waiting the full 90 days. However, in that case, extenuating circumstances existed because the Coast Guard had not designated the responsible party until 55 days before the end of the three-year period. In this case, the claimants could not point to any similar extenuating circumstances as the Coast Guard identified ACL as the responsible party well outside the 90-day period.

The fishermen also argued that ACL tacitly denied their claims because it had not responded to any of the initial clams in 2009, and therefore, it was assumed it would not respond to the claims presented in July 2011. However, the Court found this unpersuasive and stated that “[w]ithout an actual denial of all liability for a claim by the responsible party or compliance with the 90-day waiting period, the presentment requirement has not been satisfied.” Tacit denial by a nonresponse would not satisfy compliance with the presentment requirement. The Court held that the claimants who failed to present their claims at least 90 days prior to commencing the action were found to be barred from pursuing a claim against ACL.

Thus, the Fifth Circuit clarified that as long as a claimant provides enough information or material in accordance with the plain language of OPA 90, a court will likely find compliance with the presentment requirements. Unfortunately, this means that in order for a responsible party to gain additional information it may need to evaluate the claims and be in a better negotiating position, it may have to wait for litigation to be instituted where more information may be obtained through the discovery process.

Also, the Fifth Circuit found the statutory language of OPA 90 required compliance with both the 90-day waiting period and the three-year statute of limitations. Thus, if a claimant does not submit a claim to the responsible party at least 90 days before the expiration of the three-year statute of limitations, the claim will be barred. This opinion is favorable for a responsible party as it further clarifies the onus put on claimants who may have a claim under OPA 90 to exhaust their presentment requirements within the relatively strict time limitations provided by the statute. However, it is important for a responsible party to ensure they do not take any actions that could be interpreted as a denial of liability and that they don’t hastily deny liability for a claim that would otherwise be barred.

“Responsible Party” Liability Under OPA 90 Not Unlimited

Posted in Admiralty and Maritime, Energy, Environmental Litigation and Regulation

By Daniel Stanton

In the most recent ruling of the BP DEEPWATER HORIZON/Macondo Well blowout and spill, Judge Barbier of the Eastern District of Louisiana recently dismissed certain claims made by the plaintiffs under the Oil Pollution Act of 1990, or “OPA 90.”

On April 20, 2010, the BP’s Macondo Well suffered a tragic blowout resulting in an explosion aboard and ultimately the sinking of the offshore drilling rig, the DEEPWATER HORIZON. Following the sinking, the Macondo Well released millions of barrels of oil into the Gulf of Mexico before it could be plugged, nearly three months later. In the weeks following the blowout, at the direction of President Obama, the U.S. Secretary of the Interior conducted an exhaustive review of precautions and technology that should be used to improve the safety of offshore oil and gas exploration and production. Based on his findings, the Secretary of the Interior concluded that a six-month moratorium on new offshore well permits and an immediate cessation of drilling activity at 33 permitted wells was warranted to implement proposed safety measures and consider the findings of ongoing investigations related to the DEEPWATER HORIZON incident (the “Moratorium”).

Following the DEEPWATER HORIZON incident, many thousands of plaintiffs filed suit against BP, and many of those plaintiffs who work in the offshore exploration and production environment included claims under OPA 90 for economic losses resulting from the Moratorium. In an effort to test the sufficiency of these claims, Judge Barbier considered the specific claims of a select group of six test plaintiffs, including an offshore diving company, platform drilling rig provider, an offshore equipment salvage company, an offshore oil and gas exploration and production company, a drilling services provider, and an offshore heavy machinery inspection and service company.

Under OPA 90, a plaintiff may recover economic damages “due to the injury, destruction, or loss of real property, personal property, or natural resources.” And unlike under general maritime law, as established by the historic case of Robins Dry Dock & Repair v. Flint, 275 U.S. 303 (1927), the plaintiff need not own or lease the property or resource damaged to state a cause of action under OPA 90. Based on these precepts, plaintiffs argued that their damages were “due to” injury to a natural resource (the Gulf of Mexico) by an oil spill caused by the “responsible party” (BP). But, the Court disagreed.

Judge Barbier found that while the DEEPWATER HORIZON blowout and oil spill was in fact an OPA 90 “incident,” plaintiffs’ damages did not result from the “discharge or substantial threat of discharge of oil from the Macondo well.” Instead, their damages “resulted from the perceived threat of discharge from other wells.” This “threat” prompted the Secretary of the Interior’s Moratorium, which was designed to address “the risk of possible future blowouts and oil spills from wells other than Macondo. These perceived threats from other wells are different OPA 90 “incidents” than the DEEPWATER HORIZON incident for which BP is a responsible party. Thus, BP could not be held liable to the plaintiffs under OPA 90 for their alleged economic damages incurred as a result of the US Government’s Moratorium on offshore drilling and production.

The Court found support for its decision in the U.S. 5th Circuit’s opinion in In re Taira Lynn Marine Ltd. No. 5, 444 F.3d 371 (5th Cir. 2006). The plaintiffs in Taira Lynn sought economic damages under OPA 90 when their businesses were shut down due to a mandatory evacuation. The evacuation was prompted by the allision of a barge with a bridge and the subsequent discharge of poisonous gas from the barge. The 5th Circuit found none of the plaintiffs’ claims in Taira Lynn compensable because their damages resulted not from the release of harmful gases, but instead by the mandatory evacuation. Comparing the present claims to those made by the plaintiffs in Taira Lynn, the Court found them to be “even more attenuated” because unlike the evacuation in Taira Lynn, the Moratorium was instituted to prevent future danger, not to deal with the present danger, like the evacuation. The Court also found compelling the existence of no previous case where economic damages had been awarded as a result of a drilling moratorium – even though a moratorium had been instituted every year from 1982 to 2008 for a variety of reasons.

With this latest decision it appears that the potential for a plaintiff to recover damages against the “responsible party” of an OPA 90 incident for the subsequent actions of governmental actors – even when the government’s actions are in response to an OPA 90 “incident” – is reaffirmed as being not unlimited.

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