Floating oil and gas production facilities, such as the Single Point Anchor Reservoir (“SPAR”), are designed to operate in deep water environments where construction of a traditional fixed platform is not feasible. Unlike a fixed platform, floating production facilities are constructed on a floating hull.  Fields v. Pool Offshore, Inc., 182 F.3d 353 (5th Cir. 1999).  The hull is typically moored to the seabed with wire or synthetic rope attached to suction piles and/or anchors.  The structures are typically capable of limited movement by manipulation of mooring lines.  Although it is typically a complicated, expensive, and time-consuming endeavor, floating production facilities are capable of being detached from the seabed and towed from one location to another.

The 2005 U.S. Supreme Court decision in Stewart v Dutra Construction Company, 543 U.S. 481 (2005) caused many to question whether floating production facilities (traditionally not considered a vessel) may qualify as a vessel under maritime law.  Due to certain language in the decision, Stewart provided what some consider a more expansive definition of which structures may qualify as a “vessel” for purposes of maritime law.   The Stewart Court analyzed the vessel status of the Super Scoop dredge, a floating platform with a bucket that removes silt from the ocean floor and dumps it onto adjacent scows. The Super Scoop is in some ways similar to a SPAR because it has limited means of self-propulsion, but can navigate short distances by manipulating its anchors and cables.  In Stewart, the Court concluded that the Super Scoop’s practical capability of transporting equipment and people over water rendered it a vessel. 

Continue Reading Vessel Status of Floating Production Facilities After Lozeman v. Riviera Beach

Recently the U.S. Fifth Circuit rendered an opinion in Barker v. Hercules Offshore, Inc., et al., 713 F.3d 208 (5th Cir. 2013), that touched on several areas of substantive and procedural aspects of marine litigation that all maritime lawyers should be aware of.  For example, the Court provided interesting commentary on the maritime nexus prong for cases involving injuries on MODUs and the availability of bystander claims under Maritime law.  However, this article focuses on the Fifth Circuit’s holding that “[m]aritime law, when it applies under OCSLA, displaces federal law only as to the substantive law of decision and has no effect on the removal of an OCSLA action,” and thus, OCSLA’s own federal question jurisdiction is sufficient to remove such cases without another independent basis for subject matter jurisdiction, regardless of the citizenship of the parties.  After twice declining to address this issue, leaving district courts to render conflicting decisions, see Hufnagel v. Omega Servs. Indus., Inc., 182 F.3d 340 (5th Cir. 1999); Tenn. Gas Pipeline v. Houston Cas. Ins. Co., 87 F.3d 150 (5th Cir. 1996), the Fifth Circuit finally decided to speak.

Traditionally, lawsuits filed in state court, to which maritime law provides the substantive rule of decision, were not removable due to the “saving-to-suitors” clause governing admiralty claims without another jurisdictional grant, such as diversity.  The issue on appeal was “whether maritime law, when it provides the substantive rule of decision under OCSLA, abrogates OCSLA’s grant of federal question jurisdiction and prohibits removal of an action filed in state court absent complete diversity.”  Barker, 713 F.3d at 219.  With an absence of guidance on the issue, district courts had “fallen on both sides of this issue.”  In reaching its conclusion, the Court chose to follow the line of cases that recognized that the determination of the substantive law of decision is a separate and distinct inquiry from subject matter jurisdiction and removal.  See, e.g., Broussard v. John E. Graham & Sons, 798 F.Supp. 370, 373 (M.D. La. 1992); Fallon v. Oxy USA, Inc., No. 2049, 2000 WL 1285397, at *3 (E.D. La. Sept. 12, 2000).

Continue Reading U.S. 5th Circuit Holds that OCSLA Removal is Proper in Maritime Cases

On May 10, 2013, the Federal Circuit, sitting en banc, handed down its opinion in CLS Bank Int’l v. Alice Corp., No. 2011-1301, slip op. (Fed. Cir. May 10, 2013). The majority of the Federal Circuit judges agreed on little other than that the method and computer-readable medium claims involved in the dispute were patent ineligible. Essentially, Alice Corporation owned patents that the Federal Circuit found to be nothing more than abstract ideas based on use of escrow accounts and record keeping associated with the settling of transactions. However, the Court failed to agree on the reasoning as to why such claims were ineligible subject matter with the judges evenly split regarding the eligibility of comparable computer systems claims.

Continue Reading CLS Bank: Software Patents at Risk?

All persons associated with non-public construction projects in Louisiana are affected by, and should be familiar with, the Louisiana Private Works Act. La. R.S. 9:4801, et. seq. (“PWA”).  The two fundamental policies behind the implementation of the PWA summarized are:

  1. To protect those who contribute to the improvement of immovable property by ensuring that the owner does not benefit from their labor without compensating them; and
  2. To incentivize the owner to take reasonable steps to ensure that contractors and suppliers are paid.

The PWA was first enacted in 1981 and was based upon the work and recommendations of the official advisory law revision commission and, the law reform agency and legal research agency of the State of Louisiana – The Louisiana Law Institute. Over the last thirty years, numerous amendments and revisions to the PWA have resulted in piece-meal changes to certain provisions that lead to confusion, ambiguity, and potential traps for the unwary.

Recognizing the undesirable effects of the many revisions, the 2012 Louisiana Legislature has once again turned to the Louisiana Law Institute for its recommendations to simplify and better organize the provisions of the PWA.

Continue Reading On the Horizon, Revisions to the Louisiana Private Works Act: “The More Things Change, the More they Stay the Same”

Those health care providers and suppliers who are contemplating accepting donations of electronic health records software and training services should be aware of proposed amendments to the regulations that might protect such arrangements under the anti-kickback statute and the Stark physician self-referral law. The Department of Health and Human Services, Office of Inspector General (“OIG”) is proposing to amend the anti-kickback safe harbor pertaining to electronic health records (“EHR”) items and services found at 42 CFR 1001.952(y).  The Centers for Medicare and Medicaid Services (“CMS”) is proposing the same amendments to the Stark physician self-referral exception pertaining to donations of certain EHR software and directly related training services found at 42 CFR 411.357(w).  The OIG safe harbor and physician self-referral exception were promulgated in 2006 to protect certain arrangements involving the donation by permitted donors of interoperable electronic health records software or information technology and training services.  Both proposed rules make the identical changes to the protections offered under the safe harbor and exception.

First, the proposed amendments would update the provision under which EHR software is deemed interoperable. Interoperable has been defined to mean “able to communicate and exchange data accurately, effectively, securely, and consistently with different information technology systems, software applications, and networks, in various settings, and exchange data such that the clinical or operational purpose and meaning of the data are preserved and unaltered.” Both CMS and the OIG consider interoperability to be an important concept to reduce the risk that parties might use the donated software and technology to capture referrals. Both considered that, if the donated technology is interoperable, the recipient would be able to use the technology to transmit EHR not only to the donor but to others, including competitors of the donor, and would not be “locked-in” to communications with the donor only.

Continue Reading Proposed Amendments to OIG Safe Harbor and Stark Physician Self-Referral Exception for Electronic Health Records

Background of Louisiana Revised Statute 9:4815

Louisiana has a unique statute in its Private Works Act which requires owners to deposit retainage funds in an interest bearing escrow account for construction contracts over $50,000. While a number of other states have statutory provisions as to how much retainage may be withheld under a construction contract, Louisiana’s statute, which does not regulate those substantive terms, instead dictates how those funds are handled during the course of the project.

The statute, found at Louisiana Revised Statute 9:4815, was added to the Private Works Act by Act 638 of 2010. While the bill as originally introduced applied to all funds withheld from periodic payments by an Owner, the final version of the Act applies only to “retainage.”
Continue Reading Louisiana’s Unique Retainage Escrow Requirements for Construction Contracts

The U.S. Citizenship and Immigration Services (“USCIS”) released a revised Employment Eligibility Verification form, Form I-9, on March 8, 2013. The revised form contains formatting changes, the inclusion of additional data fields for employee email addresses and telephone numbers, and improved instructions. Employers must begin using the new form by May 7, 2013, but should not complete a new Form I-9 for current employees if a properly completed Form I-9 is already on file. The new Form I-9 can be identified by the date 03/08/13 in the bottom left corner of the document. Failure to use the revised Form I-9 after May 7, 2013 is an administrative violation that may result in penalties. The fines for paperwork violations range from $110 to $1,100 per violation.

The number of Form I-9 audits has increased dramatically over the past decade, rising from only three audits in 2004, to 500 audits in 2008, and 3,004 audits in 2012. I-9 audits may result from unhappy former employees complaining to the U.S. Immigration and Customs Enforcement (“ICE”). ICE may also target employers connected to the U.S. infrastructure, such as power plants and food-service businesses.

Employers are required to complete a Form I-9 for each new employee hired in the United States in order to verify the identity and employment authorization of the individual. Form I-9 is not filed with USCIS or any other government agency. Rather, an employer must retain Form I-9 for three years after the employee’s date of hire or one year after the date the employment ends, whichever is later. An employer’s I-9 Forms are subject to inspection by the Department of Homeland Security, the Department of Labor, and the Office of Special Counsel for Immigration-Related Unfair Employment Practices.

Employers can download the new form and instructions here.

On April 11, Kean Miller’s Merger & Acquisition team will present a business briefing In Through the Out Door: Preparing for Your Business Exit Opportunity. The program will be held from 3:15 – 6:00 PM at the Baton Rouge office of Kean Miller (II City Plaza, 400 Convention Street, 7th Floor, 70802).

The program will provide an in-depth briefing on closely-held, private company mergers and acquisitions. Attendees will learn about business and legal challenges of an exit strategy, key issues to be aware of, and the risks and rewards in preparing for, marketing, structuring and executing an exit sale of a business.

Speakers include Kean Miller attorneys Dean Cazenave, Blane Clark, Linda Clark, Ed Hardin, Matthew Meiners, Mark Mese and Carey Messina.

Click here for the invitation.

If you are interested in attending, please RSVP to rsvp@keanmiller.com or 225.389.3753.

The U.S. Fifth Circuit Court of Appeals dealt a blow to secured creditors in a recent opinion affirming a successful “cramdown” reorganization plan in a commercial real estate (“CRE”) case. See In re Village at Camp Bowie I, L.P., — F.3d — (5th Cir. Feb. 26, 2013), 2013 WL 690497. The panel opinion in Bowie allowed a debtor in CRE bankruptcy case to intentionally delay paying trade debt that it had cash available to pay and to classify those trade creditors as “impaired” under Chapter 11 – thus giving a class of friendly creditors the ability to vote for the debtor’s plan of reorganization. The court expressly rejected the argument that “artificially impaired” creditors that a debtor could pay in full, like the trade creditors in Bowie, should not be allowed to vote on a Chapter 11 plan. The result in Bowie was a confirmed plan based on the vote of unsecured creditors owed $60,000 over the objection of the fully secured creditor owed $32 million.

In Bowie, the debtor financed the acquisition and development of land in Fort Worth (the “Property”) with equity capital and short-term promissory notes (the “Notes”). The Notes were secured by a first mortgage on the Property. The debtor’s development of offices and retail did not do as well as planned. After a series of modification agreements and forbearance agreements to extend the due dates for the Notes, the then-current holder of the Notes initiated foreclosure proceedings on the Property. The debtor filed its petition for relief under Chapter 11 of the Bankruptcy Code one day before the scheduled foreclosure sale, which stayed the foreclosure proceedings.
Continue Reading “Artificially Impaired” Creditors Can Vote on Chapter 11 Plans in the Fifth Circuit

“What is in a name? That which we call a rose. By any other name would smell as sweet . . .”

-William Shakespeare, Romeo and Juliet

Roses aside, classifying someone as an “employee” or an “independent contractor” (or rather misclassifying them) can have significant effects. The misclassification of employees as independent contractors is the focus of a U.S. Department of Labor Wage and Hour Division enforcement initiative. The DOL and the IRS have joined forces and signed a memorandum of understanding that will allow the sharing of information across the two agencies in an effort to improve compliance. More importantly, the Louisiana Workforce Commission has likewise entered into an agreement with the DOL to establish “a collaborative relationship to promote compliance…”  For more information on the enforcement initiative and other states who have signed similar agreements with the DOL click here.

The potential cost of misclassification of employees as independent contractors can be high. For example, the DOL recently obtained a $1.3 million consent judgment against a technology company that had misclassified employees as independent contractors. So, what is in a name (or classification) can be very important.