U.S. Fifth Circuit Clarifies “Substantial Nexus” Test for LHWCA

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In Mays v. Chevron Pipe Line Co., 2020 WL 4432025, a three-judge panel of the United States Fifth Circuit Court of Appeal held on August 3, 2020, that the Longshore Harbor Workers’ Compensation Act may apply to an injury in state territorial waters if there is a substantial nexus between an employee’s injury and his employer’s, both direct and statutory, extractive operations on the Outer Continental Shelf.

On September 14, 2014, James Mays, a valve technician and an employee of Furmanite American (“Furmanite”) died while servicing valves on a platform that was part of Chevron’s gas gathering system and located in Louisiana’s territorial waters.  That platform, however, was part of a larger gas gathering system connected to others located on the Outer Continental Shelf (“OCS”).  After the incident, two of the offshore platforms connected by pipeline to the platform where the work was performed had to be shut down.

Mays’s family filed a wrongful death action in federal court against Chevron invoking Louisiana state law. Chevron subsequently moved for summary judgment, claiming tort immunity as Mays’s statutory employer under the structure of Louisiana’s Workers’ Compensation Act. The plaintiffs argued the state act did not apply because the federal Longshore and Harbor Workers’ Compensation Act (“LHWCA”) applied as extended by the Outer Continental Shelf Lands Act (“OCSLA”).[1] Under the OCSLA, 43 U.S.C. § 1333(b), the LHWCA applies where (1) an employee’s injury “result[s] from” OCS extractive operations, and (2) his employer is an “employer” under OCSLA. In Pacific Operators Offshore, LLP v. Valladolid, the United States Supreme Court held that an injury “result[s] from” OCS extractive operations if it has a “substantial nexus” to those operations. 565 U.S. 207, 222 (2012). The plaintiffs argued the LHWCA applied to Mays’s death because of the accident’s ties to the OCS.  Chevron argued the LHWCA could not apply because Mays’s death had no nexus to OCS operations because his direct employer had no such operations.

The district court initially agreed with Chevron and granted summary judgment, but later overturned its decision upon the plaintiffs’ motion to amend.  In revisiting the decision, the district court found a genuine dispute whether Mays’s death resulted from Chevron’s OCS operations. The case eventually proceeded to trial wherein the jury was instructed to determine whether there was a substantial nexus between Mays’s death and Chevron’s OCS operations. The jury found there was. Thus, Mays’s death was covered by the LHWCA and Chevron was not entitled to state-law tort immunity. As a result, the jury rendered a verdict in favor of the plaintiffs, determining that Chevron was 70% at fault and Mays was 30% at fault.  The plaintiffs were awarded over $2.9 million.

Chevron filed a motion for a judgment as a matter of law or new trial which the district judge denied.  Chevron also moved for remittitur, but the district judge sustained but $527.54 of the award.

On appeal, Chevron’s central argument concerned the district court’s jury instructions. Mays, 2020 WL 4432025, at *1. Chevron argued 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. See id. at *3. In its brief, Chevron focused on Valladolid’s statement that the substantial-nexus test requires “a significant causal link between the injury that [the employee] suffered and his employer’s on-OCS operations.” Id. at *4, citing Valladolid, 556 U.S. at 222 (emphasis in original). Citing this “plain language,” Chevron argued the only relevant employer in the substantial-nexus test was Mays’s “direct, payroll employer” – Furmanite. See id.

The Fifth Circuit rejected Chevron’s “his employer” argument stating Chevron extended Valladolid beyond its holding and overlooked where Valladolid phrased the substantial-nexus test elsewhere in the opinion without mentioning “his employer” whatsoever. See id. The Court also distinguished Valladolid and another case cited by Chevron, Baker v. Gulf Island Marine Fabricators, L.L.C., 834 F.3d 542 (5th Cir. 2016) (using “his employer”), as cases involving claims only against a direct employer, unlike the instant matter. See id.

Instead, the Fifth Circuit relied on the language found in the OCSLA itself. The Court found the pertinent OCSLA provision, 43 U.S.C. § 1333(b), “requires a link only between the employee’s ‘injury’” and extractive “operations conducted on the OCS.” Id. at *5. The Court noted the provision “does not restrict the relevant operations to those conducted by the employee’s ‘direct, payroll employer.’” Id. Furthermore, the Court presumed the lack of an express reference to “employer” in § 1333(b), a term commonly found in both OCSLA and the LHWCA, was purposed to not narrow the statute’s scope. Id. Accordingly, the Fifth Circuit affirmed the district court’s jury instructions.

Chevron also challenged the jury’s factual finding that there was a significant causal link between Mays’s death and Chevron’s OCS operations and claimed the district court erred by refusing to reduce the jury’s $2 million loss-of-affection award to Mrs. Mays. With regard to the first challenge, the Court ruled Chevron had failed to show that no reasonable jury could have ruled as this one did and refused to disturb the jury’s factual finding. As to the second challenge, the Court ruled the district court did not abuse its discretion, stating the court found Mrs. Mays “provided compelling testimony” about the loss of her husband’s affection. Accordingly, the Fifth Circuit affirmed the district court’s judgment against Chevron.

Now, in the Fifth Circuit, the LHWCA may apply if there is a substantial nexus between an employee’s injury and his employer’s, both direct and statutory, OCS extractive operations.[2]

The panel consisted of Circuit Judges Barksdale, Higginson, and Duncan, and the decision was authored by Judge Duncan.

[1] The state act does not apply where the LHWCA does.  See La. Rev. Stat. §23:1035.2.

[2] For the LHWCA to apply, the employee must also prove that his/her employer is an employer under OCSLA.  As the Fifth Circuit stated in Mays, “OCSLA’s nexus requirement is separate from its ‘employer’ requirement. An employee may satisfy the first but not the second.” Chevron failed to raise the argument about its status as an “employer” under the LHWCA in its appeal and, therefore, the Court did not address it.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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