International Maritime OrganizationShipping regulators have concluded on a plan for reducing carbon dioxide emissions for ships. International Maritime Organization (IMO) regulators have agreed that the shipping industry should cut carbon emissions by a minimum of 50% by 2050 as part of the industry’s contribution to the Paris Agreement. There will also be a 40% improvement in ship efficiency by 2030 and a 50% to 70% improvement by 2050. In adopting this plan, the shipping industry will be able to phase out greenhouse gases and set a cap on emissions.

Current estimates show that shipping contributes approximately 3% of global carbon emissions. While the international shipping community has agreed to begin the transition to a low-emissions future, it still needs to address how and when the regulations will actually start being implemented. The IMO will now have to start exploring options such as a carbon tax on fuel to promote more fuel-efficient ships and the use of alternative fuels. The industry will require technological changes to help produce zero carbon fuels and propulsion systems. Vessels will be moving from fossil fuels to a combination of electricity, batteries, renewable fuels derived from hydrogen, and potentially bioenergy.

“If you were building a ship or planning to build a ship in the 2020s it will likely need to be able to switch to non-fossil fuels later in its life, a factor insurers and shipping financiers will need to consider in their business plans through the next decade,” the UCL Energy Institute said.

Stay tuned for further updates.

LHWCA Requirement of Notification Strictly EnforcedOn September 11, 2018, the U.S. Court of Appeals for the Fifth Circuit, in the matter of McGill C. Parfait v. Director, OWCP, Performance Energy Services LLC and Signal Mutual Indemnity Association Ltd., No. 16-60662, granted the respondents’ motion to dismiss Mr. McGill’s Petition for Review based upon the petitioner’s non-compliance with 33 USC § 933(g). In doing so, the Court noted that neither knowledge of a mediation taking place nor publication of a judgment satisfied the requirement to provide notice of a settlement and a judgment against joint tortfeasors that arose out of his work-related injury.

The petitioner, McGill C. Parfait, was an employee of Performance Energy Services LLC (“employer”) who sustained injuries to his chest and back in an accident that occurred on June 30, 2013, while working for his employer on a site covered by the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et. seq. (“LHWCA”). After a formal hearing on his claim under the LHWCA, the Administrative Law Judge (“ALJ”) awarded him $1,493.60 in temporary total and temporary partial disability benefits for his chest injury. The ALJ denied his claim for benefits related to his back injury. Mr. Parfait appealed the ALJ’s award to the Benefits Review Board (“BRB”), which affirmed. He then lodged his Petition for Review with the Fifth Circuit challenging the BRB’s ruling denying total permanent disability benefits for his back injury.

Mr. Parfait also filed a third-party action against Apache Corporation (“Apache”) and Wood Group PSN, Inc. (“Wood”) for the injuries for which he had sought compensation benefits under the LHWCA. While Mr. Parfait’s appeal to the BRB was under submission, the employer learned from counsel for Apache that petitioner had settled his claim against them. The employer also learned, after inquiring of Wood’s counsel, that after a jury trial a judgment had been entered in favor of Mr. Parfait against Wood. After the Petition for Review was lodged in the Fifth Circuit, the employer and its carrier moved to dismiss it, alleging that Mr. Parfait failed to obtain their approval of the third-party settlement or to notify them of it and the third-party judgment as required by § 33(g) of the LHWCA. In the absence of this notification all rights to benefits due an employee under the LHWCA are terminated and forever lost.

In an effort to address the motion to dismiss, the Fifth Circuit submitted questions to counsel for both parties. Based upon the response to these questions, the Fifth Circuit learned that:

  1. Parfait compromised his suit against Apache in the Southern District of Texas with petitioner receiving a net of $325,000.
  2. Following a jury trial, in April of 2017, Mr. Parfait received a favorable verdict against Wood and a judgment was entered under which Mr. Parfait enjoyed a net recovery of $41,542.17.
  3. Counsel for employer/carrier was specifically invited to attend a mediation session that was held on March 10, 2016, and was contacted during the mediation session by claimant’s counsel. (The content of that communication, however, was never divulged.)
  4. Parfait’s counsel asserted that the Judgment in the jury trial against Wood was published by the district court on June 2, 2017, and asserted that the employer/carrier would have been plainly aware of its existence.

Where an employee has sued third-party tortfeasors as a result of his employment-bred injury, he is required under § 33(g), at the risk of losing his benefits for failing to do so, to obtain the written approval of his employer for any settlement he enters into if it is in an amount less than what would be the total liability of the employer under the LHWCA. Additionally, where the employee either settles his case for any amount or obtains a judgment, the employee must provide notice to the employer of this fact. The seminal case applying § 933(g) of the LHWCA is Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992) in which the Supreme Court applied a strict interpretation of the language contained in § 933(g).  The court stated,

An employee is required to provide notification to his employer, but is not required to obtain written approval, in two instances: 1) where the employee obtains a judgment, rather than a settlement, against a third-party; and 2) where the employee settles for an amount greater than or equal to the employer’s total liability. Under our construction, the written approval requirement of 33(g)(1) is inapplicable in those instances, but the notification requirement of 33(g)(2) remains in force.  Id. at 475

In the instant case, the Fifth Circuit noted that whether the net result of the settlement with Apache satisfied the employer’s total liability or not, Mr. Parfait was still required to provide 933(g)(2) notice, which he did not give. Furthermore, Mr. Parfair failed to give his employer notice of the actual judgment against Wood. The fact that the employer/carrier were on notice of the mediation, were invited to attend it and that some alleged unknown discussion occurred between claimant’s counsel and employer’s counsel at the time of the mediation, was of no moment, as the actual results of the settlement were not made known by the claimant to his employer. The Fifth Circuit cited a number of unpublished decisions of the BRB, which had held to a strict interpretation to § 933(g)(2) describing the affirmative duty of the employee to notify the employer. The employer’s mere knowledge of settlements or the absence of prejudice to the employer was found not to suffice to prevent the absolute bar to compensation from being invoked in these instances.

In re Crescent Energy ServicesThis past January, the Fifth Circuit in In re: Larry Doiron, Inc., 879 F. 3d 568 (5th Cir. 2018), overruled the six-factor test it had distilled in Davis & Sons v. Gulf Oil Corp. to determine whether a contract is maritime or non-martime, and adopted a simplified two-part analysis, based on the United States Supreme Court’s ruling in Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 125 S. Ct. 385 (2004). Noting that the much-maligned Davis & Sons inquiry had led to a line of Fifth Circuit cases that were inconsistent, confusing, and difficult to apply, the Court replaced the Davis & Sons analysis with a new two-pronged test which simply asks the following:

First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?

Second, if the answer to the above question is “yes,” does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract? If so, the contract is maritime in nature.

In addition to providing greater clarity to the oil and gas industry on the question of whether any particular contract is maritime, it has also been anticipated that the new Doiron test would increase the number of contracts that would qualify as maritime. This analysis appears to be correct thus far, at least in the context of certain contracts for plug and abandonment (P&A) work.

In its first decision since Doiron, the Fifth Circuit, in In re: Crescent Energy Servs., LLC, 896 F.3d 350 (5th Cir. 2018), applied the new test to find that a contract to P&A three inland wells was maritime. In In re: Crescent, a contractor was hired to perform P&A work on the wells which were located on several small fixed platforms in coastal waters off Lafourche Parish. The work order bid submitted by the P&A contractor listed three vessels among the equipment to be used for the job. Importantly, one of these vessels was a spud barge specifically designed to P&A wells. Because of the small size of the fixed platforms, the barge served as a work platform outfitted with the equipment necessary to perform the P&A work, including a crane permanently attached to the barge. In re: Crescent Energy Servs., LLC, 2016 WL 6581285, at *3 (E.D. La. Nov. 7, 2016). Most of the P&A equipment was operated from the barge, including the wireline unit. The crew also lived and slept on the vessel during the project. Id. Applying the Davis & Sons test in effect at the time, the district court for the Eastern District of Louisiana held that the P&A was maritime. Id. at *5.  

The contractor’s insurers appealed the ruling to the Fifth Circuit. In asserting that the first part of the test – whether the P&A contract was to provide services to facilitate the drilling or production of oil and gas on navigable waters – was not satisfied, the insurers advanced two arguments. First, the insurers claimed that the contract did not facilitate the drilling or production of oil and gas because decommissioning oil wells was more analogous to the non-maritime activity of construction of offshore platforms. In re: Crescent Energy Servs., LLC, 896 F. 3d at 356. The Fifth Circuit rejected this argument, reasoning that the life-cycle of oil and gas drilling includes site restoration when production ends and the well is abandoned. Id. Thus, like the processes of exploration and production, the P&A stage is also part of the overall drilling cycle, and therefore, “involved the drilling and production of oil and gas.” Id. Second, the insurers argued that the P&A work did not occur on “navigable waters” because the underlying injury occurred on the platform, rather than on one of the vessels supplied by the contractor. The Fifth Circuit rejected this position because, while the location of the worker’s injury may be relevant to determining situs for purposes of maritime tort law, the issue was completely “immaterial in determining whether the worker’s employer entered into a maritime contract” under the new Doiron test. Id at 356-357. (quoting Doiron, 879 F.3d at 573–74). Given that all parties conceded that the wells were located within the territorial inland waters of Louisiana and that that the vessels involved in this contract were able to navigate to them, the Court held that the P&A contract was to facilitate the drilling or production of oil and gas on navigable waters. Id. at 357.

Turning to the second question – whether the contract provides or do the parties expect that a vessel will play a substantial role in the completion of the contract – the Court concluded that the parties expected that the vessels, primarily the spud barge, would play a substantial role in the P&A work. Specifically, the Court noted that the work order identified the vessels as equipment that would be used to perform in the P&A job. Id. at 360. In addition, the spud barge, the key vessel used in the operations, contained the only crane used in the work which moved materials to and from the barge and the platforms. Id. Moreover, the testimony at trial established that much of the equipment used in the operations was kept on the barge, which served as a work platform and crew quarters because of the small size of the platforms. Id. The Court took particular note of the fact that the equipment remaining on the vessel included the wireline unit. Because the wireline unit’s “purpose [was] central to plugging and abandoning the well,” the Court reasoned that the unit “was central to the entire P&A contract.” In light of the foregoing, the Court concluded that the spud barge and the other vessels “were expected to perform an important role, indeed, a substantial one” in the P&A work, and therefore, the contract was maritime. Id. at 361.

In sum, while In re: Crescent cannot be said to stand for the proposition that all contracts between oil companies and contractors for P&A work of inland and offshore wells will qualify as maritime, the decision certainly provides helpful guidance on the issue. Based on the Court’s rationale, P&A work that takes place at wells located at small platforms, which necessarily requires a vessel to store equipment, serve as a workplace, and house the work crew, will qualify as maritime. The case that the contract is maritime may be particularly strong where critical P&A equipment, such as a wireline unit, is operated from the vessel because of a lack of space for the equipment on the platform. Another critical factor in the Crescent holding was that the work order bid identified vessels among the equipment that was to be used in the P&A work. Therefore, parties contracting for P&A work and seeking to have the contract classified as maritime would be prudent to include in the relevant work order a description of the vessel(s) to be used in the project to clearly reflect their intent and understanding that a vessel is to play a substantial role in the P&A work. Conversely, in P&A jobs where a vessel is primarily used to transport personnel to the worksite and most of the equipment is moved to the offshore platform and operated from the platform, then the vessel will likely not have the requisite degree of significance for the contract to qualify as maritime. More decisions applying the new Doiron standard will provide greater clarity on these issues in the future.

As anticipated previously, the en banc Fifth Circuit in In re Larry Doiron, Inc., jettisoned the two-tier, six-factor test of Davis & Sons, Inc. v. Gulf Oil Corp. in favor of a new “simplified” test to determine whether “a contract for the performance of specialty services to facilitate the drilling or production of oil and gas on navigable waters is maritime,” and thereby adopted a conceptual approach. Doiron at 2.

The new tests are as follows: “Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?” Doiron at 12. If so, “does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract”? Id. If so, then the contract is maritime in nature.

Under circumstances in which it is unclear as to the scope of the contract or the parties’ expectations as to whether vessels will be involved, the en banc Court indicated that the following factors of Davis & Sons may provide clarity: (1) the work actually performed under the contract; (2) the extent of vessel involvement in the job required by the contract at issue; and (3) the extent to which the vessel’s crewmembers (i.e., seamen) perform work under the contract at issue.

In the wake of this decision, it appears that contracts to perform well casing services from drilling vessels will remain maritime contracts. I anticipate that wireline and coiled tubing activities on a well that required the use of a vessel should now be viewed as maritime contracts. Accordingly, this decision has expanded the number of energy service contracts that will qualify as maritime in nature, and thus, the contract provisions concerning choice of law, indemnity and insurance will be determined under the general maritime law (absent a choice of law provision adopting state law).

Retirement Under LHWCAOn January 3, 2018, the United States Court of Appeals for the Fourth Circuit in Russell Moody v. Huntington Ingalls Incorporated, No. 16-1773 (4th Cir., 01/03/2018), reversed a ruling of the Benefit Review Board that had earlier overturned the finding of an Administrative Law Judge that granted benefits to a retired employee. Russell Moody, a shipyard employee, suffered a workplace injury, but did not undergo surgery until after he retired. He sought disability benefits for a two month, post-surgery recuperation during which he was not medically cleared for work.

Mr. Moody had worked for Huntington for 45 years when due to a change in his assignment to a different shift, he decided to retire. On August 1, 2011, he gave his requisite 90-notice of retirement to be effective October 31, 2011. On September 19, 2011, Mr. Moody injured his right shoulder while working in the shipyard. Even though the injury was going to require surgery, Mr. Moody continued to work for Huntington. It was not until after he retired, as scheduled, that he underwent shoulder surgery. According to his physician, he needed to remain “out of work” until February 16, 2012, and then had limitations effective through March 28, 2012, after which he would have no restrictions.

Huntington paid the cost of surgery but refused to pay Mr. Moody temporary total benefits asserting that because Mr. Moody had retired, the temporary recovery from the surgery had not caused him to lose any wages. The Administrative Law Judge nevertheless ruled in Mr. Moody’s favor and awarded temporary benefits. The judge concluded that Mr. Moody was totally incapacitated during the recovery period, noting that had Mr. Moody undergone surgery immediately after the accident, Huntington would have had to pay disability benefits to him.

The Benefits Review Board disagreed and concluded that Mr. Moody was not entitled to any disability benefits because he voluntarily retired before the onset of his workplace injury’s debilitating effects. The Board reasoned that the voluntary retirement resulted in a total loss of ability to earn wages, such that no injury would cause any further loss of economic capacity.

The Fourth Circuit reversed the Benefits Review Board’s decision indicating that while Mr. Moody’s injury did not cause him to lose any income during his recuperation, it did deprive him of the ability to work during that period. The fact that Mr. Moody had retired did not undermine the fact that but for the recuperation from surgery, he would have been capable of performing active employment, if he had chosen to do so. The Fourth Circuit stated, “to decide otherwise would not only deprive Moody of his rightful benefits, but would also confer a windfall on Huntington:  it is undisputed that Moody would have received disability benefits had he undergone surgery immediately, rather than discharging his duties in good faith, and Huntington would have had to pay for another drive.”  (p. 7.) The Court distinguished whether there was an actual economic loss from there being an incapacity to earn wages. In so doing, it stated, “because the LHWCA compensates workers for their inability to earn wages due to injury, workers are entitled to disability benefits when an injury is sufficient to preclude the possibility of working.” It felt that the LHWCA compensates the deprivation of economic choice when it is caused by workplace injury. As such, voluntary retirement is not a form of total incapacity.

Due to their increasing size, specialization and technological sophistication, today’s vessels present attractive “big-ticket” financing opportunities. However, commercial vessels, regardless of type, will inevitably incur maritime liens, which are priority claims that arise by operation of law, and are enforceable against the vessel in rem. Lenders therefore must be cognizant of, and account for, the special attributes of maritime liens in evaluating and documenting these types of transactions, whether structured as loans or leases.

This article discusses the characteristics of maritime liens, the priority of these liens in relation to the desired first-priority secured position of a lender or lessor, and prudent practices for assessing and mitigating the risks posed by such liens. The focus of this article is on transactions involving commercial (as opposed to recreational or fishing) vessels documented under the laws of the United States.  Continue Reading Don’t Lien on Me: Identification and Mitigation of Maritime Lien Risks in Marine Lease/Loan Transactions

On September 27, 2017, the Fifth Circuit in U.S.A. v. Don Moss, Curtis Dantin, Grand Isle Shipyard, Incorporated, and Christopher Srubar, No. 16-30516 (5th Cir. September 27, 2017), issued a decision affirming the District Court’s dismissal of criminal charges against a number of oil field contractors resulting from a welding accident that occurred on an offshore oil platform located on the Outer Continental Shelf on November 16, 2012. The platform owner and leaseholder, Black Elk Energy Offshore Operations, LLC, in September of 2012, interrupted its oil and gas production on West Delta 32 to begin construction projects on its three-platform production facility. In pursuing these construction projects, it contracted with a number of different companies to provide workers connected with the project. On November 16, 2012, during welding operations, a fatal explosion occurred killing three men and injuring others.

Criminal indictments were issued three years later pursuant to Outer Continental Shelf Lands Act 43 USC §§ 1331, et. seq. (OCSLA) with the government contending that contractors were criminally liable because they failed to obtain proper authorization to weld, failed to conduct appropriate pre-work inspections and failed to ensure the construction area was safe for hot work as required by OCSLA safety regulations. The contractors moved for dismissal of the charges against them. The District Court Judge issued an Order dismissing the charges against the contractors based upon his analysis of each of the regulatory provisions cited in the indictments. He concluded that none of the OCSLA regulations applied to oilfield contractors. Central to this analysis, the Court pointed out that each of the three specific provisions of the OCSLA regulations underlying the charged criminal violations imposed regulations addressed to “You.” Under OCSLA regulations, “You” is a defined term:

You means 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 CFR § 250.105.

The District Court held this definition did not include contractors, subcontractors or service providers. The government timely appealed.

On appeal, the government relied on four main arguments. First, the government contended that a plain reading of OCSLA subjects any person, including contractors and their employees to criminal penalties for violating the regulations promulgated under the statute. 43 U.S.C. § 1350(c). Second, OCSLA regulations governed the appellees’ conduct because they were the “person[s] actually performing the activit[ies],” and are thus “jointly and severally responsible” under the 30 CFR § 250.146(e). Third, the Courts had upheld both civil and criminal penalties imposed under similar statutory and regulatory schemes. Fourth, OCSLA regulations supported civil and criminal penalties for any person “responsible for a violation” of the regulations. 30 CFR § 250.1402.

Under 43 U.S.C. § 1350(c), the government argued that the contractors were criminally liable as that provision stated that any person who knowingly or willfully violated a regulation that was designed to protect health, safety or the environment may be subject to criminal penalties under OCSLA. The government argued that under OCSLA’s definition of a “person” the contractors clearly fell within its ambit. In response, the contractors asserted that OCSLA precluded the government from criminally prosecuting them as they were not holders of OCSLA leases or permits. In citing 43 USC § 1348(b), the contractors argued that OCSLA identified those people who were required to comply with OCSLA regulations by stating “it shall be the duty of any holder of a lease or permit under this subchapter” to comply with regulations governing workplace safety and health for their own employees and those of any “contractor or subcontractor.” They argued that because Section 1348(b) specifically imposed the duty on lessees and permittees, and equally specifically referenced, but did not impose its regulatory duties on contractors and subcontractors, they were textually excluded from those duties. Ergo, if they were not parties given a duty to comply, criminal penalties should not be imposed.

The panel of the Fifth Circuit thought that the contractors’ arguments were well-stated, even more so given the government’s failure ever before to seek criminal penalties against a contractor in the 60 plus year history of the OCSLA. It was noted that the government’s past inactions spoke volumes about the scope of its regulatory authority. The court, however, stated that to resolve the appeal it did not need to decide whether OCSLA and its criminal liability provision could extend to contractors. Assuming arguendo that the provisions of OCSLA could apply to these contractors, it proceeded to determine whether the specific regulations would support the criminal indictments.

In addressing the specific regulations alleged to have been violated by the contractors, the Court indicated that the government ran up against the regulatory definition of “You.” It found that all of the welding regulations that formed the basis of the criminal indictment only referenced “You.” The government sought to circumvent the plain language of the definition of “You” by citing language in 30 CFR § 250.146(e) pertaining to joint and several responsibility for compliance with OCSLA regulations. The Fifth Circuit, however, indicated that “joint and several responsibility” was a term of art reserved for civil, rather than criminal liability, and noted that the government failed to cite any cases that demonstrated support for joint and several criminal liability.

The court further noted that the drafting history of the definition of “You” and the prior public statements of the regulating agencies responsible for OCSLA confirmed that the specific regulations did not apply to contractors. In addressing whether the regulations that were specifically directed at lessees could also extend penalties to contractors, the Court noted that the virtual non-existing past enforcement of OCSLA regulations against contractors confirmed that the regulations were never intended to apply to them, noting also that the government had not issued civil indictments for non-compliance against contractors prior to 2011.

In addressing the government’s more generalized argument that regulations may result in criminal liability for anyone who fails to comply with them, the Court indicated that the argument ignored the rule that a general provision of a comprehensive regulatory scheme must yield to more specific, conflicting provisions. It stated that “the appellees were indicted under three provisions of 30 CRF § 250.113, all of which are directed at “You,” not at just any person, and Section 250.146(c), which was previously addressed, does not impose criminal liability beyond the definition of “You.”  It stated that because the applicable regulatory definitions unambiguously excluded contractors, more general liability provisions did not control.

Finally, the Court addressed the government’s position with regard to its prior non-enforcement of regulations against contractors where the government indicated that subcontractors always had fair notice of their potential exposure to civil penalties and criminal liability as an interpretation of its regulatory directives. The Court chose not to apply the Auer v. Robins deference standard as it appeared that the government’s interpretation conflicted with its earlier and consistently held view. It felt that there had not been fair notice to contractors of this potential liability and because this involved a criminal liability, as opposed to civil exposure, the enforcement of the governmental agency’s interpretation of its regulations in this instance, would be a violation of the contractors’ due process rights.

Whether this last part of the Fifth Circuit’s decision leaves open the possibility of subsequent acceptance of the governmental agencies’ interpretation of these existing regulations as applying to contractors, in light of its previous statements, appears to be speculative.

Greek Shipowner TaxGreek shipowners have agreed to extend a voluntary tax contribution to the Greek government, which I previously blogged about, for an additional year due to the fact that Greece is still struggling with its debt crisis. Members of the Union of Greek Shipowners (UGS) approved the extension of the agreement for the voluntary tax payments, which was originally signed in 2013 and was set to expire at the end of 2017. The current measure will extend the agreement with the Greek state until the end of 2018.

In 2013 it was agreed that shipowners would make a total of $530 million in contributions, in addition to the tonnage tax which they are already required to pay along with other taxes, over a four year period. We will wait and see if this generous voluntary contribution will help the Greek government achieve its fiscal targets.

Joanne Mantis Attorney New Orleans

Guest blogger Joanne Mantis is a multilingual attorney in the New Orleans office of King, Krebs & Jurgens. She is admitted to both the Louisiana and Greek Bar, and represents a variety of clients both domestically and internationally. 

 

energy service contracts work bargeIn 1990, the U.S. Fifth Circuit rendered its decision in Davis & Sons, Inc. v. Gulf Oil Corp., through which the Court attempted to harmonize the existing state of the law to determine whether a contract to supply a work barge and crew to service various wells, tanks and flowlines within the Black Bay oilfield in Louisiana’s territorial waters was maritime or not. This gave rise to the following “decision tree” in analyzing whether other energy services contracts involving vessels were maritime: (1) had the jurisprudence already determined the issue and, (2) if not, did the analysis of six factors provide the solution as to whether the contract is maritime. Legal scholars and the Fifth Circuit decried the inconsistencies in the subsequent decisions as to whether various types of contracts were maritime or not. The outcome of the analyses often decided whether the contractual indemnity and insurance terms were enforceable under the general maritime law or void under anti-indemnity statutes. Contracting parties were dismayed by the unpredictability of the result absent litigation.

All that may soon change. In Larry Doiron, Inc. v. Specialty Rental Tools & Supply, L.L.P., No. 16-30217 (5th Cir. 2017), the Fifth Circuit undertook the Davis & Sons analysis and affirmed the district court’s summary judgment that a contract to perform flow–back services to improve performance of a natural gas well, which eventually required the use of a crane barge, was a maritime contract, and thus the indemnity terms were interpreted and enforced under the general maritime law. However, Judge Davis issued a special concurring opinion, in which he urged the en banc Fifth Circuit to throw the Davis & Sons test overboard and thereafter simplify the test for when a contract is maritime or not, as follows: whether the contract’s primary purpose is to provide services aboard a vessel located on navigable waters, which services promote or assist in oil or gas drilling or production. The petition for rehearing en banc remains pending as of this writing.

Last Employer Rule in Occupational DiseaseOn May 17, 2017, the United States Court of Appeals for the Fifth Circuit rendered a decision affirming an Administrative Law Judge’s decision in Bollinger Shipyards, Inc., et al. v. Director, OWCP, et al., No. 16-60370.  This matter arose as a claim filed under the Longshore and Harbor Workers’ Compensation Act, 33 USC § 901 et. seq.  The plaintiff, Kenneth Worthy, filed a claim against his past employer, Bollinger Shipyards, Inc., for an occupational illness as a result of exposures to hazardous substances, including welding fumes, sandblasting dust, industrial cleaning solvents and other fumes and chemicals resulting in a diagnosis of chronic, obstructive pulmonary disease (COPD).

After a number of years working as a welding supervisor occasioning his exposure to the above-noted fumes, Mr. Worthy was examined by a physician in 2008, who indicated that he could no longer wear a respirator, as required by his job, due to airway obstruction. Mr. Worthy had been out of work due to other injuries at that time, and upon his attempt to return to work after recovering from these injuries, Bollinger required him to be again examined with regard to his pulmonary condition. On March 22, 2010, the company physician, Dr. Bourgeois, diagnosed Mr. Worthy with COPD based upon the results of a pulmonary function test. At that time, Mr. Worthy was told by the physician that he could not return to work and was advised to see a pulmonologist. It was also recommended that he apply for Social Security Disability.  Instead of doing this, Mr. Worthy applied for work with a separate employer and worked as a welding supervisor from March 29 – May 18, 2010, when he was fired for sleeping on the job.

After Mr. Worthy filed his claims against Bollinger for his respiratory condition, he was seen by yet another physician that performed a further pulmonary function test which gave similar results as were obtained in March 2010. This doctor also indicated to Mr. Worthy that he could not return to any job that exposed him to fumes or dust.

At the trial of the matter before an Administrative Law Judge, Bollinger asserted that it was not liable for Mr. Worthy’s occupational disease due to the fact that Mr. Worthy was exposed to further lung irritants while in the employ, however short-lived, of a later maritime employer. The issue presented addressed the application of the “last employer rule” as defined by the Second Circuit’s widely-adopted rule in Travelers Insurance v. Cardillo, 225 F.2d 137 (2nd Cir. 1955).  Under this rule, the responsible employer in occupational disease cases is the last employer during whose employment the claimant was exposed to injurious stimuli, prior to becoming aware that he was suffering from an occupational disease.

The application of this rule usually arises in the situation where the individual has terminated his employment as a result of a diagnosis identifying a disability and limitations precluding the claimant’s continued work. In the instant, however, after Mr. Worthy was diagnosed with COPD, he sought and obtained further employment for several months performing similar duties as he had for Bollinger. Under these facts, Bollinger argued that the ALJ should have focused solely on the date of disability (last date of employment) to determine the last responsible employer, citing Liberty Mutual Insurance v. Commercial Union Insurance, 978 F.2d 750, 756 (1st Cir. 1992). The Fifth Circuit determined that it did not need to address the situation when diagnosis and disability dates were different because the Administrative Law Judge found that both of these events occurred on March 22, 2010, and this issue was not truly raised by Bollinger before the Benefits Review Board, and was therefore forfeited.

Bollinger also attempted to avoid liability by asserting that Mr. Worthy’s pulmonary condition was made worse after his brief stint of work with the subsequent employer based upon a post-employment pulmonary function test indicating a decline in pulmonary functioning. The Fifth Circuit, noting the standard discretion applied to fact finding of an ALJ, refused to accept this prong of Bollinger’s appeal and indicated that the ALJ was not convinced by the evidence submitted by Bollinger supporting this conclusion.