Gulf Offshore Company v. Mobil Oil Corporation

• Decision Date: 01 July 1981
• Docket Number: No. 80-590,80-590
• Parties: GULF OFFSHORE COMPANY, a Division of the Pool Company, Petitioner, v. MOBIL OIL CORPORATION et al
• Court: U.S. Supreme Court

453 U.S. 473

101 S.Ct. 2870

69 L.Ed.2d 784

GULF OFFSHORE COMPANY, a Division of the Pool Company, Petitioner,

v MOBIL OIL CORPORATION et al.

No. 80-590.

Argued March 31, 1981.

Decided July 1, 1981.

Syllabus

Respondent Mobil Oil Corp. contracted with petitioner for the latter's performance of certain operations on offshore oil drilling platforms. Under the agreement, petitioner promised to indemnify Mobil for all claims resulting directly or indirectly from the work. One of petitioner's employees (also a respondent), working on an oil drilling platform above the seabed of the Outer Continental Shelf, was injured while, because of a storm, he was being evacuated from the platform aboard a boat chartered by Mobil. The employee brought suit for damages in a Texas state court, alleging negligence by Mobil and the boatowner. Mobil filed a third-party complaint for indemnification against petitioner. The trial court rejected petitioner's contention that the court lacked subject-matter jurisdiction over the third-party complaint because Mobil's cause of action arose under the Outer Continental Shelf Lands Act (OCSLA), which vested exclusive subject-matter jurisdiction in a federal district court. During the trial, the court denied petitioner's request to instruct the jury that personal injury damages awards are not subject to federal income taxation and that they should not increase or decrease an award in contemplation of tax consequences. The jury found Mobil negligent and awarded the employee $900,000 for his injuries. It also found that the employee sustained his injuries while performing work subject to the contract of indemnification. The court then entered judgment against petitioner in the amount of $900,000. The Texas Court of Civil Appeals affirmed, and the Texas Supreme Court denied review.

Held :

1. Federal courts do not have exclusive jurisdiction over personal injury and indemnity cases arising under OCSLA. Nothing in the language, structure, legislative history, or underlying policies of OCSLA suggests that Congress intended federal courts to exercise exclusive jurisdiction over such actions. Pp. 477-484.

(a) As a general principle, state courts may assume subject-matter jurisdiction over a federal cause of action absent provision by Congress to the contrary or disabling incompatibility between the federal claim and state-court adjudication. P. 477-478.

(b) Congress did not explicitly grant federal courts exclusive jurisdiction over cases arising under OCSLA. And the OCSLA plan—declaring the Outer Continental Shelf to be an area of "exclusive federal jurisdiction" and adopting "applicable and not inconsistent" laws of the adjacent States to fill the substantial "gaps" in the coverage of federal law—is not inimical to state-court jurisdiction over personal injury actions. Nothing inherent in exclusive federal sovereignty or political jurisdiction over a territory precludes a state court from entertaining a suit concerning events occurring in the territory and governed by federal law. Nor can OCSLA's legislative history be read to rebut the presumption of concurrent state-court jurisdiction, given Congress' silence on the subject in the statute itself. Pp. 478-483.

(c) The operation of OCSLA, which borrows state law to govern claims arising under it, will not be frustrated by state-court jurisdiction over personal injury actions. And allowing personal injury and contract actions in state courts will advance interests identified by Congress in enacting OCSLA concerning the special relationship between the men working on offshore platforms and the adjacent shore to which they commute to visit their families. Pp. 483-484.

2. Whether petitioner was entitled to an instruction cautioning the jury that personal injury damages awards are not subject to federal income taxation depends on matters that were not addressed by the court below and that should be initially considered by it on remand of the case. Subsequent to the Texas Court of Civil Appeals' determination that petitioner was not entitled to such an instruction under then current federal case law, this Court decided Norfolk & Western R. Co. v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689. In that case, an action under the Federal Employers' Liability Act, this Court, in the absence of any guidance in the statute, articulated a federal common-law rule that a defendant in a federal personal injury action is entitled to an instruction that damages awards are not subject to federal income taxation. However, OCSLA mandates that the law of the adjacent State (Louisiana here) applies as federal law "[t]o the extent [it is] not inconsistent" with federal law. The question whether this incorporation of state law precludes a court from finding that state law is "inconsistent" with the federal common-law rule announced in Liepelt need be answered here only if Louisiana law would not require that the damages instruction be given upon timely request. Thus, the case is remanded to the Court of Civil Appeals to determine whether Louisiana law requires the instruction and, if it does not, whether Liepelt displaces the state rule in an OCSLA case. Pp. 484-488.

594 S.W.2d 496, affirmed in part, vacated in part, and remanded.

Charles D. Kennedy, Houston, Tex., for petitioner.

Frank Caton, Houston, Tex., for respondent Mobil Oil Corp. and Joseph D. Jamail, Houston, Tex., for the respondent Gaedecke.

Justice POWELL delivered the opinion of the Court.

This case requires us to determine whether federal courts have exclusive jurisdiction over personal injury and indemnity cases arising under the Outer Continental Shelf Lands Act, 67 Stat. 462, as amended, 43 U.S.C. § 1331 et seq. (1976 ed. and Supp.III). We also consider whether the rule of Norfolk & Western R. Co. v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689 (1980), that the jury be instructed that personal injury damages awards are not subject to federal income taxation, is applicable to such a case.

I

Respondent Mobil Oil Corp., contracted with petitioner, Gulf Offshore Co., for the latter to perform certain completion operations on oil drilling platforms offshore of Louisiana. As part of the agreement, petitioner promised to indemnify Mobil for all claims resulting directly or indirectly from the work. While the work was in progress in September 1975, the advent of Hurricane Eloise required that workers be evacuated from oil platforms in the Gulf of Mexico.

Steven Gaedecke was an employee of petitioner working on an oil drilling platform above the seabed of the Outer Continental Shelf. As the storm approached, a boat char-

tered by Mobil took him safely aboard. Shortly thereafter, while assisting crewmen attempting to evacuate other workers from the platforms in turbulent sea, he was washed across the deck of the vessel by a wave. He suffered injuries primarily to his back.

Gaedecke brought this suit for damages in the District Court of Harris County, a Texas state court, alleging negligence by Mobil and the boatowner. Mobil filed a third-party complaint for indemnification against petitioner.¹ In its third-party answer, petitioner denied that the state court had subject-matter jurisdiction over the third-party complaint. Petitioner argued that Mobil's cause of action arose under the Outer Continental Shelf Lands Act (OCSLA), and that OCSLA vested exclusive subject-matter jurisdiction in a United States district court. The Texas trial court rejected this contention, and the case went to trial before a jury.

In submitting the case to the jury, the trial court denied a request by petitioner to instruct them that personal injury damages awards are not subject to federal income taxation and that they should not increase or decrease an award in contemplation of tax consequences. The jury found Mobil negligent and awarded Gaedecke $900,000 for his injuries. The jury also found, however, that Gaedecke sustained his injuries while performing work subject to the contract of indemnification. Based on the two verdicts, the trial judge entered judgment against petitioner in the amount of $900,000.

The Texas Court of Civil Appeals affirmed. 594 S.W.2d 496 (1979). It held that the Texas state courts had subject-

matter jurisdiction over the causes of action.² It acknowledged that OCSLA governed the case, but found no explicit command in the Act that federal-court jurisdiction be exclusive. The court also observed that exclusive federal-court jurisdiction was unnecessary because the Act incorporates as federal law in personal injury actions the laws of the State adjacent to the scene of the events, when not inconsistent with other federal laws. 43 U.S.C. § 1333(a)(2). Thus, the court reasoned, "[t]he end result would be an application of the same laws no matter where the forum was located, whether state or federal." 594 S.W.2d, at 502. The court also held that the trial court did not err in refusing to instruct the jury that damages awards are not subject to federal income taxation. The Texas Supreme Court denied review.

We granted certiorari to resolve a conflict over whether federal courts have exclusive subject-matter jurisdiction over suits arising under OCSLA ³ and to consider whether an instruction that damages are not taxable is appropriate in such a case. 449 U.S. 1033, 101 S.Ct. 607, 66 L.Ed.2d 494 (1980).

II

A.

The general principle of state-court jurisdiction over cases arising under federal laws is straightforward: state courts may assume subject-matter jurisdiction over a federal cause of action absent provision by Congress to the contrary or disabling incompatibility between the federal claim and state-

court adjudication. Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 507-508, 82 S.Ct. 519, 522-523, 7 L.Ed.2d 483 (1962); Claflin v. Houseman, 93 U.S. 130, 136, 23 L.Ed. 833 (1876). This rule is premised on the relation between the States and the National Government within our...