The U.S. Supreme Court granted a writ of certiorari in Pacific Operators Offshore, LLP v. Valladolid, 131 S.Ct. 1472 (2011) to resolve a split among the U.S. Circuit Courts of Appeal regarding the issue of whether an outer continental shelf worker who is injured on land may be afforded coverage under the Longshore and Harbor Workers Compensation Act (“LHWCA”), as made applicable by the Outer Continental Shelf Lands Act (“OCSLA”).

Coverage under the LHWCA is limited primarily to two broad categories of workers. First, a worker may be covered “directly” under the provisions of the LHWCA. Such direct coverage is primarily limited to longshore and harbor workers, shipbuilders, and shipbreakers. Second, non-seaman oilfield workers who are engaged in the exploration or development of natural resources on the Outer Continental Shelf (“OCS”) may be entitled to LHWCA benefits by virtue of section 1333(b) of OCSLA. 43 U.S.C. § 1331(b). Valladolid deals with this second category of workers.
 

As illustrated by Valladolid, the Ninth Circuit has adopted the approach of the Third Circuit. Valladolid involved the death of Juan Valladolid, a general laborer who was employed by Pacific Operations, a company that operates two drilling platforms located on the outer continental shelf off the coast of California. While Valladolid was primarily stationed on one of these platforms, he was killed on the grounds of Pacific Operations when he was crushed by a forklift. He would not have been injured "but for" oil and gas operations on the OCS.

Citing opinions from the Third Circuit, Valladolid's widow argued that LHWCA benefits were recoverable under OCSLA. The Administrative Law Judge and Benefits Review Board applied the Fifth Circuit's situs requirement and held that benefits were not recoverable because Valladolid's accident did not occur on an OCS platform or on navigable waters over the OCS. The Ninth Circuit reversed. In doing so, the court held, as a matter of statutory construction, that section 1333(b) of OCSLA does not contain language indicative of a situs requirement.

The Supreme Court has granted a writ of certiorari to address the growing conflict between the federal circuit courts of appeal. If the Supreme Court agrees with the Third and Ninth Circuits, employers who conduct operations on the OCS can anticipate an increase in LHWCA claims by their land-based workers.
 

On October 15, 2010, the former Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) issued new regulations, incorporating in its entirety and making mandatory the implementation of the American Petroleum Institute’s Recommended Practice 75 (API RP 75).  The rule requires development of Safety and Environmental Management Systems (SEMS) plans by “a lessee, the owner or holder of operating rights, a designated operator or agent of the lessee(s), a pipeline right-of-way holder, or a state lessee granted a right-of-use and easement.” 30 C.F.R § 250.105. According to BOEMRE, “the purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents.” This final rule applies to all Outer Continental Shelf oil and gas and sulphur operations and the facilities under BOEMRE jurisdiction including drilling, production, construction, well workover, well completion, well servicing, and DOI pipeline activities.

Responsibility for developing and implementing a SEMS program lies with the lessee (or owner or holder of an operating right), unless it delegates the responsibility to another (likely the operator). Contractors are not responsible for developing the plan; however if compliant, contractor procedures may be incorporated into the lessee’s/operator’s SEMS plan.
 

• SEMS program must be complete and in effect, 40 C.F.R. 250.1900(a); and
• Initial hazard analysis, 40 C.F.R 250.1911(a).

On October 11, 2011, the Bureau of Safety and Environmental Enforcement (“BSEE”) issued guidance concerning the implementation of the rule. While repeating required elements of a SEMS plan, the guidance provides examples of adequate documentation and coordination between the operator and its contractors. As described below, operators must do more than rely on assurances made by the contractor. Under the SEMS program, the operator must:

• agree with and accept the contractor’s safety procedures and make them available during an inspection;
• document that each contractor is knowledgeable and experiences (by auditing / testing);
• perform periodic evaluations of contract employees;
• inform the contractor of any known hazards; and
• verify how contractors are trained.

While the SEMS rule was progressing to final promulgation, BOEMRE proposed amendments to the rule to add further requirements for SEMS programs. It is apparent from the proposal that BOEMRE believes employees need additional rights to affect the development of the SEMS plan and to stop and report unsafe acts to the government. Comments are due on the proposal by November 14, 2011. The proposed rules include the following additions to the SEMS program:

• procedures to allow any employee to stop work;
• clearly defined requirements as who has authority to make safety decisions;
• demonstrations that employees are involved in development of the SEMS plan;
• guidelines for employees to report unsafe conditions and request a BSEE inspection; and,
• requirements for third party audits.

By Brittany L. Buckley

Maritime attachment is a powerful procedure that allows an aggrieved party to garnish any of the defendant's property located within a particular federal judicial district.  Attachment is especially powerful because the garnished property can be used to ensure satisfaction of a claim, even if the property within the judicial district is not related to the claim that has been filed there.  This right can prove invaluable for securing payment of claims from a foreign defendant who cannot be easily traced down and sued.  This particular species of attachment is unique to admiralty law and is only available to satisfy "admiralty" or "maritime" claims, including contractual obligations that are separable from an non-maritime aspects of a contract. 

While AFL and Alphamate were arbitrating this contractual dispute in Europe, Alphamate also initiated maritime attachment proceedings in the United States District Court for the Eastern District of Louisiana. Through maritime attachment, Alphamate seized a shipment of corn in New Orleans while it was aboard a third party’s vessel en route to AFL. The Fifth Circuit found that Alphamate could not use maritime attachment to seize the corn because the underlying dispute between AFL and Alphamate did not involve a maritime claim. In particular, the court determined that the AFL-Alphamate contract primarily called for the sale of grain and that the obligation to ship the grain by sea did not convert the contract into a maritime claim. The Fifth Circuit further rejected Alphamate’s argument that the demurrage and detention claims were independent maritime obligations capable of sustaining maritime attachment proceedings. The court reasoned that these claims were too intertwined with the non-maritime breach of contract claims to provide a basis for maritime jurisdiction.

Notwithstanding the Fifth Circuit’s rejection of maritime attachment proceedings in Alphamate, the Court left open the possibility that a party can still use maritime attachment to secure payment of loss-of-use damages if the breached contract includes an independent obligation for demurrage. This ruling emphasizes the importance of including a contractual clause that expressly sets forth an obligation to pay demurrage fees in the event that a vessel is unjustly detained by the charterer. According to the Fifth Circuit, this clause is necessary to establish maritime jurisdiction over claims for demurrage and detention, thereby allowing an aggrieved party to utilize maritime attachment to secure payment of such fees from foreign defendants. Absent such an express demurrage provision, Alphamate illustrates that damages for loss of use can only be recovered through a breach of contract action – a more arduous process that, unlike maritime attachment, fails to provide security for the satisfaction of successful claims.
 

The spoliation of evidence doctrine concerns the intentional destruction of relevant evidence by a party. In the event that relevant evidence is spoiled (i.e., intentionally destroyed), the court may exercise its discretion to impose sanctions on the responsible party. The seriousness of the sanctions that a court may impose depends on the consideration of: (1) the degree of fault of the party who altered or destroyed the evidence; (2) the degree of prejudice suffered by the opposing party; and (3), whether there is a lesser sanction that will avoid substantial unfairness to the opposing party and, where the offending party is seriously at fault, will serve to deter such conduct by others in the future. Exclusion of spoiled evidence is a drastic sanction the courts generally try to avoid. However, the court may issue an instruction that will allow the jury to infer that the party spoiled the evidence because the evidence was unfavorable to the party’s case.

In Menges v. Cliffs Drilling Company, 2000 WL 765082 (E.D. La. 2000), Chief Judge Sarah Vance addressed this issue when she denied a request by an employer to invoke the Spoliation of Evidence Doctrine against an injured party that had elected to undergo surgery. Specifically, Cliffs sought to exclude evidence of Mr. Menges’ post-accident back surgery or obtain an adverse jury instruction because Mr. Menges had undergone a post-accident lumbar surgery prior to undergoing an IME. The surgery occurred before there was any litigation between the parties. However, when Mr. Menges agreed to undergo lumbar surgery, he arguably knew that the condition of his lower back would be pertinent to any future litigation. Moreover, Mr. Menges was represented by counsel when he underwent the surgery, and his counsel paid for the surgery. Yet, Judge Vance held that even if Mr. Menges had a duty to notify Cliffs of his surgery so that he could be examined by an independent medical examiner, breach of the duty to notify did not amount to spoliation of evidence. Additionally, Judge Vance held that Mr. Menges did not intentionally destroy evidence by undergoing surgery. She highlighted the fact that Mr. Menges provided Cliffs with full access to his medical records prior to the surgery. As such, she noted that Cliffs had ample opportunity to investigate Mr. Menges’ condition and to require an IME before he underwent surgery.

Based on Judge Vance’s ruling in Menges, it is highly unlikely that the Spoliation of Evidence Doctrine will apply to an injured party who proceeds with a surgery prior to an IME. However, it is important to note that there is jurisprudence holding a plaintiff and his attorney can be sanctioned for their failure to appear at scheduled IMEs. Therefore, if there is even the faintest possibility that that an injured party will undergo a future surgery, an employer should promptly investigate the party’s condition and probably schedule an IME as soon as possible.
 

In Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc, 617 F.3d 1296 (Fed. Cir. 2010), the Federal Circuit reversed a district court’s summary judgment decision that no patent infringement occurred when a US company made an offer to sell to another US company when the sale negotiations occurred outside of the US.

Transocean filed suit for infringement of patents related to an improved apparatus for conducting offshore drilling. In order to drill for oil and other offshore resources, drilling rigs must lower several components to the seabed including the drill bit, casings, BOB’s, and the drill string. A conventional offshore drilling rig utilizes a derrick with a single top drive and drawworks that can only lower one element at a time in a time consuming process. Transocean patented a specialized derrick to improve the efficiency of lowering the above components. The specialized derrick included “two stations – a main advancing station and an auxiliary advancing station that can each assemble drill strings and lower components to the seabed.” Id. at 1301. This duel-activity rig could significantly decrease the time required to complete a borehole. Id at 1302. Transocean sued Maersk rig for infringement of the specialized derrick patent.
 

Thus, one of the questions before the Federal Circuit was whether an offer to sell, made in Norway by a U.S. Company to another U.S. company, to sell a product within the U.S. for delivery and use within the U.S. constituted an offer to sell “within the U.S.” under the definition of Section 271(a). Ultimately, the Federal Circuit determined that the focus should not be the location of the offer; rather, the focus must be on the location of the future sale that would occur pursuant to the offer. There was no question that the patent infringing rig was to be delivered to the US and utilized in the Gulf of Mexico. As such, the Federal Circuit vacated the district courts summary judgment of non-infringment noting the real harm that would be created by such a decision because U.S. companies could simply travel and contract abroad to avoid patent infringement. Id at 1309-10.

On remand, a jury found on April 21, 2011 that Maersk infringed Transocean’s valid patent and awarded Transocean $15 million. 2011 WL 2604769 (S.D. Tex 2011). Transocean’s victory was short-lived as on June 30, 2011, Judge Hoyt found pursuant to Fed. R. Civ. P. 50(b) that Maersk did not infringe the patents because the evidence did not support the jury’s findings.

Also of interest is a potential conflict between the prior decisions of the Federal Circuit and Judge Hoyt. The Maersk contract contained a provision allowing for the design to change if needed to avoid patent infringement. The Federal Circuit stated that schematics attached to the contract could support a finding of an infringed sale and that subsequent alterations were irrelevant. 617 F.3d at 1311. Judge Hoyt found that the contract anticipated alteration and therefore “no rig was offered for sale, or sold in violation of 35 U.S.C § 271(a).” 2011 WL 2604769 at 5. Further, Judge Hoyt found that under such circumstance, awarding a reasonable royalty would be unconscionable if the delivered drilling rig was altered to avoid infringement as Transocean would suffer no harm.
 

On July 15, 2011, the House of Representative, Committee on Energy and Power, Subcommittee on Energy and Commerce held hearings on a draft of the “Pipeline Infrastructure and Community Protection Act of 2011.”  Chairman Fred Upton’s initial comments focused on recent pipeline incidents: the 20,000 barrel oil spill into Talmadge Creek, Michigan in the summer of 2010, the September 2010 gas pipeline explosion that killed 8 people in San Bruno, California and the most recent spill of 1,000 barrels of oil near Billings, Montana. (1)  Chairman Upton concluded that these incidents indicate that pipeline laws must be strengthened. Included within the draft legislation are the following provisions:

• one-hour time limit to report incidents;
• use of automatic or remote control shutoff-valves;
• better leak detection technology;
• substantial increase in civil penalties for releases from pipeline;
• enhanced inspection techniques; more miles of pipeline inspected; and
• increased number of pipeline inspectors.
   

Cynthia Quarterman, Administrator of the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), within the Department of Transportation, appeared and offered general support for the bill. However she offered specific recommendations to various provisions to strengthen the legislation. Among the recommendations were: (2)

• higher administrative penalties should apply in High Consequence Areas;
• eliminate statutory exemption for gathering lines; and
• clarity should be added that shut-off valve requirements apply to gas and hazardous pipelines.
   

Because changes in regulatory programs often occur quickly after incidents such as these recent three pipeline events, interested parties should be aware of the above issues and recommendations. Owners and operators of regulated pipelines should expect more inspection/detection requirements and the likelihood of enhanced PHSMA and state agency inspections and enforcement actions.
 

(1)   Opening Statement of Chairman Fred Upton (July 15, 2011), found at http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/071511/Upton%20.pdf (last visited July 18, 2011).

(2)  Written Statement of Cynthia Quarterman, Administrator, PHMSA (July 15, 2011) found at http://www.phmsa.dot.gov/staticfiles/PHMSA/DownloadableFiles/Testimony/House%20Energy%20and%20Commerce%20Written%20Testimony%20-%20July%2015%202011%20-%20For%20Web%20_2_.pdf (last visited July 18, 2011).

In response to the Gulf of Mexico Deepwater Horizon Incident, the Louisiana Department of Natural Resources (“DNR”), Office of Conservation (“Conservation”) issued a series of emergency rules with effective dates: July 15, 2010(1) , December 9, 2010(2), January 12, 2011(3) and most recently May 12, 2011(4).  . The initial emergency rule created:

“a new Chapter within Statewide Order No. 29-B (LAC 43:XIX.Ch. 2) to provide additional rules concerning the drilling and completion of oil and gas wells at water locations, specifically providing for the following: rig movements and reporting requirements, additional requirements for applications to drill, casing-header requirements, mandatory diverter systems and blowout preventer requirements, oil and gas workover operations, diesel engine safety requirements, and drilling fluid regulations.” See, 36 La. Reg. 1427.

The initial emergency rule also amended Statewide Order No. 29-B-a (LAC 43:XIX. Ch. 11) “to provide for and expand upon rules concerning the use of storm chokes in oil and gas wells at water locations.” Id.

In the emergency rules, Conservation has reviewed and incorporated “all provisions of the MMS [Minerals Management Service] regulations concerning well control issues at water locations” that were not repetitive, duplicative or otherwise inapplicable to the situations encountered in Louisiana waters. See, 37 La. Reg. 1548. In addition to providing Conservation more time promulgate final comprehensive rules, the most recent version of the emergency rules contains a few noteworthy changes from the January 2011 version of the rule. These are:

• The Oil and Gas Well-Workover Operations section, located at LAC 43:XIX.211, contains specific requirements for blow out preventer components and configuration. Conservation removed a provision (formally located at LAC 43:XIX.213.L) allowing the Commissioner to grant an exemption from specific equipment requirements mandated by that section. The January 2011 version of the rule allowed an exemption from specific equipment requirements where the operator could demonstrate the unavailability of the mandated equipment and that anticipated surface pressures minimize the opportunity for loss of well control.

• Conservation changed the mandatory industry standard for design and operation of subsurface safety valves (“SSSV”) from “API RP 14B” to “API RP 14H”. See, LAC 43:XIX.1104.E (making the emergency rule consistent with 30 C.F.R. §250.804(a)(5)). 

• All four versions of the emergency rule require that installed subsurface-controlled SSSV’s be removed and tested every twelve or six months, depending on whether they were installed on a landing nipple or not. However, the most recent emergency rule also included a requirement that all SSSVs be inspected for leakage every month to six weeks. See, LAC 43:XIX.1104.E.2.a.

*******************************

(1)  36 Louisiana Register 1427, July 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1007/1007.pdf
(last visited June 27, 2011).

(2)  36 Louisiana Register 2823, Dec. 20, 2010, available at: http://www.doa.louisiana.gov/osr/reg/1012/1012.pdf
(last visited June 27, 2011).

(3)  37 Louisiana Register 460, Feb. 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1102/1102.pdf
(last visited June 27, 2011). 

(4)  37 Louisiana Register 1547, June 20, 2011, available at: http://www.doa.louisiana.gov/osr/reg/1106/1106.pdf (last visited June 27, 2011).
 

Deepwater oil and gas production from the Gulf of Mexico has become a significant portion of the current production within the United States, equal to over 1.6 million barrels per day of oil equivalent; total U.S oil production is around 5.3 million barrels per day. (1)  Worldwide shallow water oil production peaked around the year 2000 whereas worldwide deep water production has risen to around 5 million barrels per day. On May 10, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) approved Royal Dutch Shell’s Exploration Plan S-0744 to better define discoveries announced in 2009 and 2010. (2) 

Several environmental groups filed suit in an attempt to block the approved plan. Gulf Restoration Network, Inc., Florida Wildlife Federation, and Sierra Club Inc. filed a petition on June 8, 2011, in the United States Court of Appeals, 11th Circuit, in an attempt to set aside BOEMRE’s approval of the plan. The allegations in the petition are relatively general, alleging violation of the National Environmental Policy Act (“NEPA”) (i.e., for BOEMRE’s alleged failure to appropriately conduct the required environmental assessments and/or impact statements) and further alleging elements required pursuant to 43 U.S.C §1349(c) necessary to maintain the suit under the Outer Continental Shelf Lands Act (“OCSLA”).
 

In response to the Deepwater Horizon Incident, on June 18, 2010, BOERMRE issued new regulations concerning exploration, production and development plans. In interpreting one of these, BOEMRE Notice to Lessees (NTL) No. 2010-N06, establishes that calculation of the worst case discharge (“WCD”) is “the daily rate of an uncontrolled flow from all producible reservoirs into the open wellbore.” (3)  In compliance with the regulation and notice, Shell calculated a theoretical worst case discharge (“WCD”) that exceeded estimates of the Deepwater Horizon incident. (4)  

The plan includes Shell’s evaluation of potential mitigating factors, effectiveness of intervention devices (including redundant blow out preventers “BOPs”) and containment methods (sub-sea containment assembly and other specialized connection devices). Earth Justice’s comments contend it is unreasonable for exploration plans to rely on use of BOPs in light of the failure of BOPs during the Deepwater Horizon incident and dismiss planned containment methods as “reliance on an unproven system of unknown reliability.”  (5)

The Shell Exploration Plan relies on new technology developed by Marine Well Container Co. (“MWCC”), a consortium of oil companies operating in the Gulf of Mexico. MWCC recently announced that the new system can operate at depths of up to 10,000 feet. (6)  According to a Dow Jones press release, “MWCC’s containment system improves on techniques that were gradually developed by BP after several failed attempts to cap the Deepwater Horizon spill. It consists of a capping stack that would stop the high-pressure flow of oil and gas from a runaway well, and ship the hydrocarbons to a surface vessel if needed.” (7)  BOEMRE previously approved an exploration plan that used the MWCC containment system for drilling a prospect in 6,941 feet of water. (8)

In its comments, Earth Justice further questioned BOEMRE methodology in determining that the likelihood of a spill. In an attempt to diminish the historical successful drilling of offshore wells without incident, Earth Justice argues that BOEMRE should reduce the set of comparable wells to only those in the Gulf of Mexico drilled in water of similar depths or complexity. Considering the single catastrophic failure in the Gulf (Deepwater Horizon), this approach, which lowers the number of comparable wells drilled in the Gulf, presumably would result in a greater risk of failure for future wells. (9)

Given the importance of oil and gas production from deep water Gulf of Mexico, this challenge will be an interesting test of the adequacy of industry efforts to comply with regulations developed by BOEMRE in response to the Deepwater Horizon incident and of BOEMRE’s adequacy in addressing NEPA requirements when approving drilling plans. 

(1)  Rafael Sandrea, Deepwater Crude Output: How Large Will it Be?, Oil & Gas Journal, 48-51 (Nov. 1, 2010).

(2) GoM: Shell Receives BOEMRE Approval for Appomattox Deep Water Exploration Plan in the Gulf of Mexico, http://www.energy-pedia.com/article.aspx?articleid=145375 (last visited June 15, 2011).

(3) NTL No. 2010-N06, Frequently Asked Questions, No. 14, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2010NTLs/10-n06-FAQs.pdf (last visited June 14, 2011),

(4) Supplemental Exploration Plan, Section 2(j) Blowout scenario, http://www.gomr.boemre.gov/PI/PDFImages/PLANS/30/31468.pdf (last visited June 14, 2011).

(5) Earth Justice Comments dated April 21, 2011, http://www.courthousenews.com/2011/06/14/ShellDoc.pdf (last visited June 14, 2011).

(6) Angel Gonzalez (Dow Jones Newswire), MWCC Oil Spill Containment System Approved for 10,000-Foot Depths, Oil & Gas Journal (June 14, 2011), http://online.wsj.com/article/BT-CO-20110614-713284.html?mod=WSJ_Energy_middleHeadlines (last visited June 15, 2011).
(7)  Id.

(8)  BOERMRE’s Fourth Permit with MWCC System, Oil & Gas Journal, p. 5 (March 28, 2011).

(9)  Ultra-deep Gulf of Mexico exploration started in 2005 resulting in a lower number of comparable events. Deepwater drilling also occurs worldwide.

On June 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) issued a notice to Gulf of Mexico Outer Continental Shelf Region (GOMR) lease and pipeline right-of-way (ROW) holders on reporting hurricane and tropical storm effects. Specifically, the recent notice, designated NTL No. 2011-G01(1), requires four reports, as appropriate:

• Evacuation and Production curtailment statistic report – partially evacuated platforms are not considered evacuated
• Facility shut-in reports – including facilities that are partially shut-in
• Facility damage reports – including platforms, rigs and pipelines
• Pollution reports - facility discharged or continues to discharge oil during or as a result of the event
   

The Evacuation and Production curtailment statistic report and the Facility shut-in report overlap in subject matter. They differ in that the first report is general and requires overall company statistics (number of facilities evacuated or not evacuated, overall production shut-in); the second report is specific, requiring statistics platform by platform. Facility damage reports are to be submitted as soon as the information becomes available. Other reports are to be submitted daily as long as the condition exists. Reports may be submitted by e-mail or through the BOEMRE GOMR internet-based Permitting and Reporting System (eWell). Although the notice outlines the specific information and instructions required when the transmission is by e-mail, BOEMRE GOMR strongly encourages use of eWell to transmit the required data.

The eWell system, described in NTL No. 2007-G15 (2), was developed to increase efficiency of well permitting and reporting transactions between OCS lessees and operators and the GOMR by both reducing the time (and cost) required to process data and to reduce input errors. The system is designed to simplify submittal of multiple reports and subsequent daily reports. Interested lessees and operators and pipeline ROW holders must apply to BOEMRE GOMR for access to the eWell system.
 

[1] BOEMRE, Hurricane and Tropical Storm Effects Reports, NTL No. 2011-G01, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2011NTLs/11-G01.pdf (last visited June 10, 2011).

[2] BOERME, eWell Permitting and Reporting System, NTL- No. 2007-G15, http://www.gomr.boemre.gov/homepg/regulate/regs/ntls/2007NTLs/07-g15.pdf (last visited June 10, 2011).

On April 28, 2011, Governor Bobby Jindal declared a State of Emergency as a result of growing concern over the predicted crest of the Mississippi River well above flood stage in many areas. Consistent with his authority, on May 13, 2011, James Welsh, Commissioner of Conservation, also issued an emergency and administrative order. It is expected that substantial flooding in the state will likely lead to adverse effects on many oilfield sites which could result in serious threats to public safety and the environment. The order specifically applies to following throughout the state:

• Oilfield sites – including injection wells
• Other facilities – including commercial E&P waste disposal and transfer stations
• Structures and Pipelines

Ordered actions are both general calls for alert monitoring of the situation and a more specific list of necessary steps (as appropriate). The Order contains a practical, common sense mandate, to keep track of forthcoming proclamations, orders, warnings, predictions, forecasts, directives or other communications from federal, state and local authorities and to monitor water levels and weather activity. Additionally, the order requires operators to take all necessary steps and perform all necessary actions to avoid damage to the environment or threats to life or safety, including the following, where appropriate:

• Empty petroleum tanks and re-fill with water
• Remove chemicals from sites
• Remove or secure loose items
• Ensure that storm chokes or downhole plugs are installed in wells
• Empty active pits of E&P waste
• Shut in and secure wells where necessary
• Protect sites from stray debris

The above list of actions is discretionary, tasking each operator with the duty to determine which actions are necessary as each operator is in the best position to assess the potential risks and dangers.

The Order also requires notification to the Office of Conservation within 12 hours should an operator shut down one of the covered facilities. The Order will extend for 120 days, unless modified or extended. The order may be found here. 

When drafting a settlement agreement, the parties almost always have competing interests. The Plaintiff will push for a vaguely-worded settlement in an attempt to take another “bite-at-the-apple” down the road; the Defendant will push for a broad, all-encompassing release of liability (i.e., “any and all claims”) in an attempt to “close-the-books” on the Plaintiff’s claims. Sometimes, the parties will compromise by executing a settlement agreement which falls somewhere in the middle. However, both parties should be aware that compromises made during the settlement negotiations can lead to unintended consequences down the road.

In Cooper v. Intern. Offshore Services, LLC, 2009 WL 5175216 (E.D. La. Dec. 17, 2009), aff’d, 2010 WL 3034497 (5th Cir. Aug. 3, 2010), the Plaintiff sustained injuries while working on a ramp connected to a vessel owned by his employer, International Marine. International Marine thereafter paid the Plaintiff benefits pursuant to the Longshore and Harbor Workers’ Compensation (“LHWCA”). After the Plaintiff recovered from his injuries, he agreed to settle his claim for “compensation” against International Marine. The text of the settlement agreement stated that the Plaintiff released International Marine from “any and all obligations […] for any benefits under the LHWCA” as a result of his accident. Id. at *2. Under § 908(i), all settlements of compensation benefits must be submitted to the District Director for approval.
 

Several months later, the Plaintiff filed a Complaint against International Marine pursuant to the Jones Act or, alternatively, § 905(b) of the LHWCA in the United States District Court for the Eastern District of Louisiana. Shortly thereafter, International Marine filed a Motion for Summary Judgment. In that pleading, International Marine argued that the Plaintiff’s claims were barred by res judicata due to the terms of the District Director’s Compensation Order. Id. at *1.

The Plaintiff opposed the Motion for Summary Judgment and argued that the District Director’s order was “erroneous” because the Plaintiff did not intend to settle his § 905(b) claim. Instead, the Plaintiff claimed that he only intended to settle his claim for “compensation benefits.” Id. at *2. In essence, the Plaintiff was attempting to appeal the District Director’s Compensation Order. However, International Marine averred that the District Court was without jurisdiction to review the District Director’s Order. Id. at *3 per § 921 of the LHWCA.

Applying the Compensation Order as written, the District Court held that the Plaintiff’s claims against International Marine were barred by the doctrine of res judicata. Id. at *4. The U.S. Fifth Circuit affirmed. 2010 WL 3034497 (5th Cir. Aug. 3, 2010). In doing so, the U.S. Fifth Circuit noted that the unambiguous language of the District Director’s compensation order required the application of the doctrine of res judicata. Id. at *7.

This case shows the importance of including a release of “any and all claims” in settlement agreements. Had such language been included in both the settlement agreement and the District Director’s findings of fact, Plaintiff may not have ever filed suit. In addition, this case also shows the importance of carefully reviewing the District Director’s Compensation Order following the execution of a § 908(i) settlement. If a party believes the language to be in error, there is a specific procedure which must be followed to appeal same – and failure to do so can render the decision non-reviewable.
 

The recent tragedy involving the Mobile Offshore Drilling Unit Deepwater Horizon has shed a very bright and very public light on a much and often litigated 159-year old law previously known to very few outside of the maritime industry—the Shipowner’s Limitation of Liability Act, (“the Limitation Act”), 46 U.S.C. § 30505 (formerly 46 U.S.C. § 183). What the Limitation Act does is entitle a vessel owner to limit its liability after a maritime incident or casualty to the post casualty value of the vessel and its pending freight, which may be zero if the vessel is a total loss, except when the loss occurred due to the vessel owner’s "privity or knowledge." Privity or knowledge is found to exist where the acts of negligence or unseaworthiness that caused the casualty were known or should have been known to the vessel owner.

In addition to limiting a vessel owner’s liability, the Limitation Act also has several procedural benefits in that it allows the vessel owner in some instances to force all claims involving a vessel casualty to be litigated in a single Federal forum, often of the vessel owner’s choosing. Additionally, claimants in a vessel casualty can also benefit to some extent in that they have some security for their claims in a limitation proceeding because the vessel owner must either deposit the claimed value of the post-casualty vessel at issue in the registry of the Court or post a bond for such amount with the Court.
 

The Deepwater Horizon is a floating drilling platform capable of navigation, similar to a vessel, and, thus, it has the legal status necessary for its owners to seek limitation of liability for the explosion in the Gulf of Mexico. Transocean filed a Limitation of Liability proceeding in Federal Court in Texas, submitting that the post-casualty value of the Deepwater Horizon, which sank in the Gulf of Mexico, is no more than $27 million, which is considerably less than its pre-casualty value of around $650 million. Transocean’s filing of that Limitation proceeding has sparked a new national, and perhaps worldwide, debate about the viability of the Limitation Act in modern times.

Many in the maritime and legal community have argued both for and against the Limitation Act over the years. The arguments against the Limitation Act being that the public policy behind the Limitation Act is antiquated and unnecessary because vessel owners today can readily procure liability insurance to protect themselves from damage claims caused by a vessel’s alleged unseaworthiness or negligence. While it appears often reported in today’s latest debate on the Limitation Act that U.S. Courts have already begun to disfavor the Limitation Act, it would not be accurate to state that the Limitation Act is not still being successfully invoked by vessel owners in serious marine casualties.

In fact, a review of recent case law in the U.S. Fifth Circuit reveals that the Court granted limitation of liability to vessel owners in at least two cases in the last two years. Indeed, the vessel owners in those two cases limited their liability to the value of the vessel, which was considerably less in both cases than the claimants’ alleged damages, because, generally, owners of a vessel may delegate non-managerial duties and discretion to experienced employees, like vessel captains, without subjecting the vessel owner to unlimited liability.

One of the two recent U.S Fifth Circuit cases involved a fishing vessel limiting its liability to $340,000 after it struck an offshore oil platform that had been in place for twenty years, allegedly causing $4 million dollars in damage to the platform and oil well and injuring three passengers on the fishing vessel. The other case involved two barges that broke free from their moorings, struck, and damaged a bridge on Interstate 10 during Hurricane Katrina. Further, relying on the foregoing trend in the U.S. Fifth Circuit, the U.S. Sixth Circuit also recently granted a vessel owner limitation of liability, similarly finding that the vessel owner had rightfully relied upon the navigational expertise of a competent ship’s master in an accident where the owner’s tugboat created a wake that swamped a recreational fishing boat, killing one of the fishing boat’s passengers. Thus, the Limitation Act has clearly not altogether fallen out of favor with the Courts or with vessel owners.

Nevertheless, despite what appears to have been a recent trend in favor of the application of the Limitation Act, the recent Deepwater Horizon disaster and the ensuing media blitz and worldwide attention as to how the injured parties will be compensated, may prove to be the event that finally sinks the Limitation Act. To that end, bills were recently introduced in both houses of Congress that would, if enacted into law, repeal most of the Limitation Act by lifting the liability limit and also allowing claimants to seek noneconomic damages such as pain, suffering, emotional distress and other types of damages not provided for in the Limitation Act. Perhaps if the pervasive media and instantaneous information exchange that exists now had existed in 1912 when the Titanic sank, the longstanding Limitation Act would have perished sooner. In the end, however, it remains to be seen what effect, if any, the repeal of the Limitation Act, would have on the American shipping and vessel industry and whether the repeal will be retroactive such that Transocean will no longer be able to seek Limitation for the Deepwater Horizon.
 

A spar is a nautical structure designed to float with the bulk of the hull below the waves-something akin to a giant buoy. Fields v. Pool Offshore, Inc., 182 F.3d 353(5th Cir. 1999). Spars are essential to the expansion of oil production in deep water and their use has led to the legal question of their status. Are they vessels? Consistent with the Fifth Circuit Court of Appeals’s three part test, several recent decisions in Texas District Courts have found that a SPAR is a work platform and not a vessel. The finding is important since jurisdiction of a Jones Act action requires the existence of a vessel.

In Fields, the Fifth Circuit laid out the three part test to distinguish “stationary” work platforms from vessels. These factors include the function of the structure, whether it is moored or secured at the time of the accident, and that it has greater than theoretical mobility. Fields distinguished spars from drilling rigs, as rig move from site to site; spars are committed to a particular location. Spars have elaborate methods of attaching to the sea floor which would be difficult and expensive to undue; drilling rigs do not. Subsequent to Fields, the United States Supreme Court clarified that the distinction was not time dependent; that is it did not flip back and forth dependent on when the accident occurred. Following is a summary of recent cases which have applied the above test.
 

In contrast, in Nottingham v. Murphy Oil USA, Inc., 2009 WL 50160 (E.D. La. 2009), the court found that “both the MEDUSA and the lifeboats possess some vessel characteristics” and denied the defendants motion for summary judgment considering the question of a vessel was a question of fact to be decided by a jury. Murphy Oil subsequently settled the case and was dismissed by order dated November 11, 2010.

In Moore v. Bis Salamis, Inc., 2010 WL 3745023 (E.D.Tex. 2010) and, Scroggs v. Bis Salamis, Inc., 2010 WL 3910563 (E.D.Tex. 2010), the court found the reasoning in Jordan persuasive, likewise dismissing the case under summary judgment, despite also finding that “Thunder Horse’s attachment to its current location less extensive than URSA’s”. The court further found that Thunder Horse’s capability of moving laterally within a 700 foot radius as “merely incidental to its function as a work platform and, thus does not render it practically capable of maritime transportation.” The court put the greatest weight on Thunder Horse’s “extensive attachment to the ocean floor and long term commitment to a single location.”

Most recently, in Mendez v. Anadarko Petroleum, Corp., 2010 WL 4644049 (S.D. Tex. 2010) the court found, as a matter of law, that the Red Hawk spar was not a vessel and denied the plaintiffs motion to remand to state court. The court was unmoved by the fact that Anadarko had performed a study and determine the cost ($42 million) to move the spar. A theoretical capability was insufficient. Further, the presence of safety equipment consistent with a vessel (life jackets, ring buoys, inflatable rafts) did not weigh in favor of finding the spar to be a vessel. It was the type of equipment one expected to see on a structure 120 miles from the coast.

Electronic Discovery, or “E-Discovery”, is not considered the “novel issue” it once was. However, E-Discovery still presents problems that litigants and courts struggle with. Below is a summary of recent Louisiana Federal Court opinions dealing with the issues surrounding E-Discovery.

In Frees, Inc. v. McMillian, 2007 WL 184889 (W.D. La. Jan. 22, 2007), the Western District of Louisiana granted the plaintiff’s motion to compel. In an unfair competition and trade secret theft action, the plaintiff claimed that the defendant, a former employee, had stolen various data files. Plaintiff had unsuccessfully requested production of defendant’s laptop and desktop. The Court granted the motion to compel the defendant to produce these two items because they were the most likely places that the data files would be located. The Court did institute protective measures so as to prevent the disclosure of any irrelevant or personal information.
 

In Green v. Fluor Corp., 2009 WL 1668376 (M.D. La. June 11, 2009), a case in the Middle District of Louisiana, the defendant sought access to the plaintiff’s phone and e-mail system to obtain the original version of a photograph the plaintiff had given to the defendant as part of discovery. The defendant claimed the produced photograph taken from a phone was of low quality and wanted access to the plaintiff’s phone and e-mail to obtain a clearer picture. The Court denied the motion because the defendant failed to ask for the particular form of the discovery in regards to the picture and therefore had to settle with what the plaintiff had produced.

In Marketfare Annunciation, LLC v. United Fire & Casualty Ins. Co., 2007 WL 3273440 (E.D. La. Nov. 5, 2007), the Eastern District of Louisiana dealt with a spoliation issue involving electronic evidence in a claim that arose due to Hurricane Katrina. The defendant failed to produce certain e-mails even after the plaintiff put the defendants on notice to preserve them. However, the plaintiff waited until the eve of the close of discovery to file sanctions and therefore the court denied the request.

In Thomas v. IEM, 2008 WL 695230 (M.D. La. Mar. 12, 2008), the Middle District of Louisiana dealt with a civil rights violation. The plaintiff served a Rule 45 subpoena on the defendant in order to obtain access to nine named individuals’ e-mail boxes. The Court held this was an attempt to circumvent discovery deadlines under Rules 26 and 34 and therefore did not grant the request.

In Canon USA, Inc. v. SAM, Inc., 2008 WL 2522087 (E.D. La. June 20, 2008), the Eastern District of Louisiana granted a motion to compel electronically stored data that the defendant had at his home in Florida. After Hurricane Katrina, defendant moved his computer to Florida but when discovery requests were made he did not search the computer to provide complete answers to interrogatories. The court held that this “lackadaisical” treatment of discovery was unacceptable and held that any undeleted information on the computer was discoverable. The Court ordered the defendant to obtain the services of a “forensic computer specialist” and fully respond to the discovery request.

In re Riverside Healthcare, Inc., 2008 WL 4183609 (M.D. La. Sept. 11, 2008), a case in the Middle District of Louisiana, a bankruptcy liquidating supervisor accused a creditor of destroying evidence and sought the adverse presumption that follows spoliation. The creditor had deleted e-mails that the liquidating supervisor considered necessary evidence. However, the court held that spoliation requires bad faith and here there was no bad faith due to the fact that the creditor destroyed e-mails automatically every sixty to ninety days.

In Johnson v. Big Lots Stores, Inc., 2008 WL 2191357 (E.D. La. May 7, 2008), the Eastern District of Louisiana ruled that a plaintiff could not take another deposition of the defendant’s representatives regarding how the defendants preserved and collected electronic data. The Court stated that since the plaintiffs failed to list “e-Discovery” as an issue at the original deposition and since they waited until two days before the close of discovery, the motion to compel the second deposition was denied. The Court also stated that “e-discovery” matters are no longer the novel issues that they once were with the advent of the Internet and wide expansion of computerized data collection and the plaintiffs had no legitimate excuse as to why they failed to make issue of “e-discovery” at the original deposition.

In Hoover v. Fla. Hydro, Inc., 2008 WL 4467661 (E.D. La. Oct. 1, 2008), the Eastern District of Louisiana allowed discovery of two non-parties’ computers. In this breach of contract claim, the defendant sought the electronic data from the plaintiff’s mother and a friend who helped him in his business. The Court held that this would not create an undue burden on the mother because the non-party was involved in the plaintiff’s business and would have relevant information stored on her computer. The subpoena was quashed as to the friend because he had adequately answered the discovery request.

In May v. Fedex Freight Southeast, Inc., et al., 2009 WL 1605211 (M.D. La. June 8, 2009), a Middle District of Louisiana case, the plaintiff brought suit for sexual harassment while she was employed by the defendant. Plaintiff sought “any and all e-mails referencing, as well as those sent to and from, plaintiff and [the accused sexual harasser].” The defendant claimed that this was not possible because the e-mail was inaccessibly archived and unsorted. The Court held that the plaintiff and defendant had to meet with the defendant’s IT department to discuss the “burden and expense of producing the e-mails requested by plaintiff.” If then there was still no agreement, the plaintiff was urged to reassert her motion to compel.
 

In Bollinger Shipyards, Inc. v. Director, Office of Worker’s Compensation Programs, U.S. Dept. of Labor, (5th Cir. 2010) the United States Fifth Circuit upheld the award of workers compensation benefits to an undocumented immigrant worker who was injured on the job as a pipefitter.

The Bollinger plaintiff, Jorge Rodriguez, fell and allegedly injured himself while welding for his employer, Bollinger Shipyards, Inc.  At the time of his alleged injury, Rodriguez had been working for Bollinger for approximately eight months, having initially obtained employment by falsely holding himself out as a United States citizen.  Rodriguez presented Bollinger with a false Social Security Card.  Bollinger initially paid Rodriguez temporary disability benefits and reimbursed him for a portion of his medical bills.
 

The primary question on appeal was whether an undocumented immigrant could be eligible for benefits under the LHWCA.  Bollinger argued that Rodriguez’s injury caused him no loss of wage earning capacity because he had no legal wage earning capacity at the time he was injured.  As such, Bollinger argued that Rodriguez was per se ineligible under the Act.  Bollinger further argued that the Benefit Review Board’s ruling undermined the Congressional policies embedded in the Immigration Reform and Control Act of 1986.  Bollinger relied on a line of Supreme Court cases, including Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), which made the distinction as to whether wages could be paid legally in declining to award some types of relief under the NLRA in order to avoid a conflict with the immigration laws, which prohibit the employment of aliens who enter or remain in the country illegally and which also criminalizes the use of false documentation to obtain work.

The Director, OWCP and several amici curiae filed briefs in support of Rodriguez’s eligibility for benefits under the LHWCA, arguing that failing to require workers’ compensation for immigrant workers encourages employers to hire undocumented workers.  The Fifth Circuit reviewed the statutory language of the LHWCA and concluded that the statute provides coverage to undocumented immigrants.  The Court found the precise language of §909(g) persuasive.  Section 909 (g) states that “[c]ompensation under the [the LHWCA] to aliens not residents (or about to become nonresidents) of the United States or Canada shall be the same in amount as provided for residents.”  The Fifth Circuit noted that other courts, have concluded that the unmodified term “alien” encompasses both documented and undocumented immigrants.  The court noted that compensation under the LHWCA is a non-discretionary statutory remedy.  Unlike the NLRA, the LHWCA is a substitute for tort law, abrogating fault of either the employer or the employee.  Further, the court held that awarding death or disability benefits post hoc to an undocumented immigrant under the LHWCA does not “unduly trench upon” the IRCA, because Congress chose to include a provision in the LHWCA expressly authorizing the award of benefits.

Finally, the court held that Fifth Circuit precedent has been that undocumented immigrants are eligible under the LHWCA, citing Hernandez v. M/V Rajaan, 841 F.2d 582, amended after rehearing, 848 F.2d 498 (5th Cir. 1988), the court held that Rodriguez was entitled to benefits because Bollinger failed to provide any evidence that Rodriguez was “about to be deported or would surely be deported.”  The court also found persuasive the D.C. Circuit’s opinion in Rivera v. United Masonry, Inc., 948 F.2d 774, 775 (D.C. Cir. 1991), in which the court declined to take into consideration an immigrants undocumented status when determining his eligibility for benefits.

Bollinger filed a petition for review which was denied in all respects. (5th Cir. April 22, 2010).  Although the Fifth Circuit seems to have made it clear that undocumented immigrant will remain eligible for benefits under the LHWCA, the court left open the possibility that an alien who was about to be deported or was sure to be deported might not be eligible for future lost wage benefits calculated as they would be earned in the U.S.
 

In Solana v. GSF Development Driller I, et al., 587 F.3d 266 (5th Cir. 2009), the United States Fifth Circuit reiterated the longstanding rule that generally, a seaman belonging to a vessel in peril cannot claim a salvage compensation for saving his vessel.

The facts in Solana are quite interesting.  As Hurricane Katrina approached the Gulf Coast, Global Santa Fe (GSF) evacuated its jack-up and anchored rigs in the Gulf of Mexico, which included the Development Driller I (DDI), a $350 million dollar semi-submersible drilling rig. The DDI’s power was shut off and its crew was evacuated.  Solana, a 20 year GSF employee and Offshore Installation Manager (OIM) of the DDI, and Lally, a ballast control operator and senior dynamic positioning operator, were among those employees who were evacuated from the rig.
 

Solana and Lally later filed suit seeking an award of pure salvage because they were part of the team that ultimately salvaged the vessel.  Solana and Lally likely envisioned an enormous “payday” as the DDI was worth more than 350 million dollars.  GSF moved for Summary Judgment asserting the longstanding rule that crew members are not entitled to a salvage award for assistance rendered to their own vessel.  Solana and Lally countered with the argument that in certain circumstances, crew members can be salvors.  Specifically, Plaintiffs cited existing jurisprudence holding that extraordinary events may occur in which a seaman’s connection may be dissolved de facto, or by operation of law, or they may exceed their proper duty, in which case they may be permitted to assert a claim as salvors.  The Fifth Circuit disagreed holding that the rule barring a crew member from a salvage award is longstanding and rooted in a crew member’s duty to save both ship and cargo.  Obviously, it is unwise to tempt a crew member to let their ship and cargo slip into a position of danger in order to claim a salvage award.

Ultimately, the Fifth Circuit held that Solana and Lally did not volunteer service to the DDI when it was in distress as volunteers within the parameters of the law of salvage.  Instead, Solana and Lally had been asked by GSF to board the DDI following Katrina, and they expressly agreed to do so.  Moreover, they expected to be compensated by GSF for their efforts to stabilize the DDI after it was damaged by Katrina regardless of whether those efforts were successful.  A binding agreement to pay for salvage services irrespective of the success of the enterprise will defeat a claim for pure salvage.  As such, Solana and Lally’s claims for pure salvage were dismissed.
 

It is a fairly common practice for individuals purchasing pleasure yachts to take calculated steps to minimize sales taxes on their purchases. In fact, a simple “Google” search on the subject reveals many websites offering free advice on this issue. One of the tactics suggested by several websites seems fairly simple: instead of the individual purchasing the yacht, the individual forms a corporation, and the corporation purchases the yacht.

In Kelly v. Porter, Inc., 687 F. Supp. 2d 632 (E.D. La. 2010), the Eastern District of Louisiana made it clear that individuals who purchase recreational vessels through corporate entities cannot recover for any emotional distress or loss of enjoyment that the individual LLC member sustains when the vessel is damaged. The Kelly plaintiff wished to purchase a yacht for his own personal use. In an attempt to minimize the sales tax on that purchase, the Kelly plaintiff formed a new limited liability company (LLC) and named himself the sole member. Although the yacht was titled in the name of the LLC, the Kelly plaintiff considered himself to be the “true” owner of the yacht.

Shortly after it was purchased, the yacht was extensively damaged when it took on water while docked in its slip. The Kelly plaintiff and the LLC filed suit against the defendants alleging that they sustained “emotional damages” and “loss of enjoyment” due to the yacht being damaged. In response, the defendants filed a motion for summary judgment seeking to have all of the claims of the individual plaintiff dismissed for lack of standing. The defendants cited La. R.S. 12:1329, which states that the members of a LLC do not have an ownership interest in property owned by the LLC. Although the Kelly plaintiff attempted to claim that he was the “equitable” owner of the yacht, the Court disagreed and dismissed all of his claims.

Additionally, the defendants sought to have the LLC’s claims for “emotional damages” and “loss of enjoyment” (i.e., “non-pecuniary damages”) dismissed as well. The Court dismissed those claims, citing a litany of cases holding that corporations “cannot recover non-pecuniary damages such as loss of enjoyment or emotional damages.”

This decision makes it clear the Courts will not allow would-be yacht purchasers to “have it both ways.” Therefore, the author suggests that individuals considering purchasing a yacht should carefully consider all of the consequences of purchasing a yacht through an LLC and make a well-informed decision.
 

The Limitation of Liability Act provides, inter alia, that a vessel owner may petition a district court of competent jurisdiction for limitation of liability within six months of receiving written notice of a claim.  See generally 46 U.S.C.A §§ 30501-30512 (West 2010).  If the vessel owner fails to petition the court and the six month period lapses, it is thereafter precluded from seeking the Act’s protection.  The Act, however, does not address the effect that one co-owner’s failure to file a petition for limitation has on another co-owner’s right to subsequently seek limitation of liability. In other words, if co-owner “X” of a vessel receives notice of a claim against it and fails to file for limitation of liability within the requisite six-month period, is co-owner “Y,” who did not receive notice, precluded from filing for limitation of liability?

The court addressed a scenario in which a vessel was owned by a corporation with a lone shareholder.  The shareholder received notice of a claim against her, but the corporation did not.  Six months passed without any filing for limitation of liability.  Thereafter, the corporation sought protection under the Limitation of Liability Act.  After determining that the shareholder and the corporation were both owners of the vessel, the court addressed whether notice to one owner (the shareholder) and her subsequent failure to file for limitation, precluded the other owner (the corporation) from filing same.  The court held that the corporation had never been on notice of any claim against it and as such, it could seek protection under the Act.  Thus, in the aforementioned scenario, if co-owner “X” fails to file for limitation of liability within six months of receiving written notice, and co-owner “Y” subsequently receives notice of a claim against it, co-owner “Y” is not prejudiced by the failures of co-owner “X.”

Notably, LADY JANE cites no authority to support its holding nor is LADY JANE cited in any other federal opinions.  It appears that, at this time, LADY JANE is the only authority on this matter.
 

It is well known that a seaman who is injured on the job can file suit against his employer in negligence due to the statutory provisions of the Jones Act. 45 U.S.C.A §§ 30104.  However, in a Jones Act suit, the injured seaman is prohibited from recovering “non-pecuniary” damages from his employer, a category which includes punitive damages and loss of consortium. (1).  This limitation on recoverable damages is due to the language of Jones Act itself. Miles v. Apex, 498 U.S. 19 (1990).

In addition to bringing claims against his employer pursuant to the Jones Act, a seaman injured on the job often also files claims against non-employers. These claims are not dependant on the Jones Act, but rather general maritime law. In this situation, plaintiffs often attempt to recover non-pecuniary damages from the non-employer. Plaintiffs suggest that since there is no specific prohibition against the recovery of non-pecuniary damages in general maritime law, then why should an injured seaman be denied recovering non-pecuniary damages from non-employers?
 

Although Scarborough was decided by the U.S. Fifth Circuit in 2004, Plaintiffs continually try to ignore it. For example, in Walker v. Rowan Companies, Inc., 2009 WL 2030605 (E.D. La. July 9, 2009), the plaintiff attempted to recover non-pecuniary damages from a non-employer under the general maritime law. In an attempt to avoid the rule of Scarborough, the plaintiff argued that a distinction should be made when the alleged negligence occurred on land, as opposed to at sea. In rejecting the plaintiff’s claim, Judge Engelhardt of the Eastern District of Louisiana noted that it was bound by Scarborough, and that the location of the alleged negligence bore “no significance.” Id. at *2.

Thus, it is highly recommended that non-employer defendants in such lawsuits should attempt to dismiss a plaintiff’s claims for non-pecuniary damages at an early stage by way of a motion for summary judgment. 

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 (1) “Non-pecuniary” references non-economic damages, such as loss of enjoyment, etc. Although pain and suffering is certainly non-pecuniary, the Courts have made an exception to the rule for such damages.
 

Due to the non-pecuniary nature of pain and suffering, Jones Act seamen will often use various methods to provide the trier of fact with a concrete basis for a damage award for pain and suffering.  One method that Plaintiffs may utilize is to introduce their medical bills for the sole purpose of highlighting the cost of their medical care.  Once the bills have been admitted, Plaintiffs will argue to the trier of fact that the high dollar amount of their medical bills corroborate their pain and suffering.  Alternatively, Defendants may introduce medical bills and point to the low cost of a Plaintiff’s medical care to prove the Plaintiff’s lack of pain and suffering.

In a recent ruling closer to home, United States District Judge Lance Africk agreed that the amount of expense associated with Plaintiff’s medical bill would not assist the Jury in arriving at a pain and suffering award.  Judge Africk held that “such evidence does not tend to prove a matter at issue in the case, or an inference of any consequential fact.”  As such, the medical bills were excluded.

It is important to note that the jurisprudence cited above is applicable only when a party attempts to introduce medical bills to prove/disprove a seaman’s pain and suffering.  Medical bill can be relevant and admissible if they are the subject of a dispute in the case.  If, for example, in a maintenance and cure action, the employer/vessel owner has denied Plaintiff cure, then the medical bills will be relevant and admissible.  Medical bills may also be relevant in the event that an employer/vessel owner argues that the cost of a Plaintiff’s medical treatment is not fair and reasonable pursuant to the cure doctrine.