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The American Equity Underwriters, Inc. The American Equity Underwriters, Inc.
Longshore Insider
Recent Fifth Circuit Case Challenges OCSLA’s “Substantial Nexus” Test
Sep 7, 2020 - David Widener, The American Equity Underwriters, Inc.

On September 9, 2014, Furmanite American, Inc. sent their employee, James Mays, to the Lighthouse Point platform, in Louisiana state waters, to perform valve maintenance services. The natural gas platform was owned by Chevron and was part of Chevron’s Henry Gas Gathering System. Four days later, on September 13, 2014, while servicing a valve on the platform, Mays was killed in an explosion.

Mays’ decedents sued Chevron for wrongful death under Louisiana state law. Chevron moved for summary judgment, claiming immunity on the basis that they were Mays’ statutory employer. Because the accident occurred in Louisiana state waters, the Louisiana Workers’ Compensation Law (LWCL) would be Mays’ decedents’ remedy if Chevron were to be deemed the statutory employer. Plaintiffs argued that state-law immunity was not applicable because Mays was covered by the Longshore and Harbor Workers’ Compensation Act (Longshore Act) as extended by the Outer Continental Shelf Lands Act (OCSLA).

As explained in this Longshore Insider article from 2014, the OCSLA extends the provisions of the Longshore Act to workers injured as the result of operations “arising out of or in connection with any operations conducted on the outer Continental Shelf for the purpose of exploring for, developing, removing or transporting by pipeline the natural resources … of the subsoil and seabed of the outer continental shelf …”

The U.S. District Court granted summary judgment in Chevron’s favor. The Court’s ruling rested on two findings: 
  1. The Court found that Mays was not covered by the Longshore Act, as extended by the OCSLA, because Plaintiffs failed to show a "substantial nexus" between Mays's death and the Defendant's extractive operations on the outer Continental Shelf
  2. The Court found that the LWCL applied, and Chevron enjoyed immunity as Mays' statutory employer

Plaintiffs then sought a reconsideration of the summary judgment and the court changed its mind. It found a genuine dispute of material fact as to the substantial nexus requirement. The Ninth Circuit (and later, the Supreme Court) “determined that the OCSLA extends coverage to an employee who can establish a substantial nexus between his injury and his employer's extractive operations on the Outer Continental Shelf.” (Pacific Operators Offshore, LLP v. Valladolid, 565 U.S. 207, 210 (2012)

Ultimately, a jury decided that there was a substantial nexus between Mays’ death and Chevron’s OCS operations. Although Mays worked on the Lighthouse platform in Louisiana waters, the Lighthouse was part of Chevron’s larger Henry Gas Gathering System, which included other platforms on the OCS. After the accident, Chevron had to shut off the gas flow from two connected OCS platforms which flowed through the breached valve that killed Mays. In addition, Furmanite was contracted by Chevron to service several platforms in the Henry system, which furthered the substantial nexus argument. In their finding, the jury assigned 70% of the fault for Mays’ death to Chevron and 30% to Mays, and awarded damages of over $2.9 million, including $2 million to Mrs. Mays for loss of affection.

On appeal to the Fifth Circuit, Chevron claimed that the district court misapplied Valladolid by instructing the jury to determine whether there was a substantial nexus between Mays’s death and Chevron’s, as opposed to Furmanite’s, OCS operations. Chevron argued that the jury should have been instructed to consider the nexus between Mays’ death and Furmanite’s operations, rather than Chevron’s, as Furmanite’s operations had no direct connection to the OCS. The court rejected this argument, finding, among other things, that “OCSLA’s nexus requirement is separate from its ‘employer’ requirement.”

Additionally, Chevron argued that the link between the OCS operations and Mays’ death was so “indirect” and “tenuous” that it failed the substantial nexus test as a matter of law. Relying on comparisons to Herb’s Welding v. Gray, 766 F.2d 898 (5th Cir. 1985), and Baker, 834 F.3d 542, Chevron was unable to persuade the court to disturb the jury’s finding of a substantial nexus.

Finally, Chevron argued that the district court abused its discretion by refusing to reduce Mrs. Mays award because the facts were not “especially tragic” compared to other cases. The court found Mrs. Mays’ testimony compelling as she described their long marriage, the details surrounding the moment in which she received the news of his death and the condition of his post-accident body. The district courts’ refusal to reduce her award was affirmed in the August 3, 2020 ruling.

 

 


ABOUT THE AUTHOR

David Widener joined AEU in 2019 as Director of Claims Advisory Services. David began his longshore career in 2003 with F.A. Richard/American Equity Risk Services, where he was a claims supervisor for eight years. He joined the U.S. Department of Labor as a claims examiner in 2011, and was promoted to District Director six months later, overseeing operations for the Houston District Office. He is a frequent speaker at Loyola Law School’s Annual Longshore Conference, Longshore Claims Association meetings, and Defense Base Act seminars. He has developed and conducted continuing legal education seminars in conjunction with Loyola Law School and the U.S. Department of Labor. David has a B.S. in finance from Louisiana State University and is a credentialed mediator for the state of Texas.


The opinions and comments expressed in this article are those of the authors and do not reflect the opinion of ALMA, AEU or AmWINS. None of ALMA, AEU, AmWINS or the authors are responsible for any inaccuracy of content or for any loss or damages incurred by any party as a result of reliance on information contained in this article. Content may not be published or reproduced without the written consent of the authors. Prior articles may not be updated for accuracy as pertinent information changes over time. The Longshore Insider is intended to provide general information about the industry and should not be construed as legal advice under any circumstances. For legal advice, please consult a licensed attorney.
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