Fifth Circuit Rejects Chevron’s Interpretation of Valladolid and Herb’s Welding in Recent Case

In Mays v. Chevron Pipe Line Co., the U.S. Fifth Circuit upheld a $3 million verdict to the wife and estate of a deceased employee of a subcontractor working on a platform in Louisiana territorial waters. The jury found that the employee’s death was attributed to Chevron’s activities on the Outer Continental Shelf (OCS) and as a result, the Longshore and Harbor Workers’ Compensation Act (LHWCA) applied, thus removing Chevron’s immunity from state tort liability. Chevron argued that this finding violated the U.S. Supreme Court’s holding in Pacific Offshore Operators, LLC v. Valladolid, because Mays’ direct employer had no OCS activities, and so “the LHWCA could not have applied to supplant Chevron’s state immunity.”

In Valladolid, the U.S. Supreme Court resolved a circuit split over the issue of causation under OCSLA which extended the LHWCA to injuries caused by OCS activity. The Fifth Circuit interpreted 1333(b) of OCSLA as creating a narrow “situs-of-injury” test. The Third Circuit, meanwhile, read the statute as establishing a much broader test which covers all injuries that “would not have occurred ‘but for’ OCS operations.” Finally, the Ninth Circuit adopted a middle of the road test, which necessitated a “substantial nexus between the injury and the extractive operations on the shelf.” Ultimately, the U.S. Supreme Court adopted the Ninth Circuit test as being “more faithful to the text of section 1333(b).”

Chevron argued that under Valladolid, the court should have asked whether Mays’ direct employer’s OCS activities contributed to his death, and not Chevron’s. Chevron thus parsed Valladolid in such a way as to read it much more narrowly than intended. Chevron further argued that since Mays’ direct employer did not have any OCS activities, the LHWCA was inapplicable and Chevron was thereby entitled to state tort immunity.

The Fifth Circuit rejected Chevron’s argument. The Court stated that Valladolid “does not specify which employer’s OCS operation’s are relevant in a case.” Thus, in a case like Mays’, it did not matter if the subcontractor did not have extraction-operations on the OCS, as long as the contractor did.

Chevron argued in the alternative that even if Mays was killed as a result of Chevron’s OCS activity, that activity was too attenuated to satisfy the substantial nexus test. Chevron relied heavily on the Fifth Circuit’s decision in Herbs Welding v. Gray, which reversed a Benefits Review Board (BRB) decision to extend LHWCA benefits to a welder injured on a production platform located in territorial water. The Court distinguished Herb’s Welding from Mays’ case on the grounds that the platform on which Mays was working was connected via gas pipelines to the OCS, unlike the platform in Herb’s Welding. Moreover, Herb’s Welding involved review of a BRB holding, while in Mays, Chevron was arguing for remittitur of a jury verdict. On this note, the Fifth Circuit restated the well-settled rule that jury verdicts must be given substantially more deference than BRB decisions.

In arguing for remittitur, Chevron claimed that Mays’ death was “not especially tragic” as to warrant the multi-million dollar general damages award. The Court rejected the notion that death by a natural gas explosion is not more or less tragic than death by any other means, citing as evidence the fact that Mays’ body spent a significant amount of time in the gas polluted water, that he and his wife were married for 40 years, and that they had just completed construction of their retirement home. In light of such circumstances, the Fifth Circuit  found that the District Court did not abuse its discretion in refusing to reduce the jury’s award to Ms. Mays.

Ultimately, the Fifth Circuit held that because Mays was killed by natural gas which emanated from Chevron platforms located on the OCS, and because Chevron had to shut in several wells on the OCS to stop the gas flowing through the breached valve that killed Mays, there was a substantial nexus between Mays’ death and extractive operations on the OCS. Mays’ death was therefore covered by the LHWCA by way of 43 U.S.C. 1333(b).