Union Oil Co. v. Oppen

• Citation: 501 F.2d 558
• Decision Date: 07 June 1974
• Docket Number: No. 72-2855,72-2855
• Parties: , 4 Envtl. L. Rep. 20,618 UNION OIL COMPANY et al., Appellants, v. James J. OPPEN and John J. Masterson et al., Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 558

501 F.2d 558

6 ERC 1748, 4 Envtl. L. Rep. 20,618

UNION OIL COMPANY et al., Appellants, v. James J. OPPEN and John J. Masterson et al., Appellees.

No. 72-2855.

United States Court of Appeals, Ninth Circuit.

June 7, 1974.

Max K. Jamison (argued), Robert K. Wrede, Alfred T. Smith, of McCutchen Black, Verleger & Shea, Allyn O. Kreps, Girard E. Boudreau, Jr., Frank G. Ker, Richard H. Zahm, Douglas C. Gregg, George C. Bond, Sam A. Snyder, of O'Melveny & Myers, Walter O. Schell, Richard B. Goethals, Thomas J. Kelley, Jr., Miles W. Newby, Jr., B. J. Roose, of Schell & Delamer, Los Angeles, Cal., for appellants.

James W. McCord (argued), Thomas M. Crehan, of Bodkin, Breslin & Luddy, Los Angeles, Cal., James J. Oppen (argued), Santa Barbara, Cal., Paul L. Tepper, of Moriarity & Tepper, North Hollywood, Cal., Ronald W. Cook, of Price, Postel & Parma, Santa Barbara, Cal., for appellees.

OPINION

Before ELY and SNEED, Circuit Judges, and SOLOMON, ^* District Judge.

SNEED, Circuit Judge:

This is another case growing out of the Santa Barbara oil spill of 1969. The plaintiffs are commercial fishermen. Each of their complaints alleges that the cause of action has been brought under the provisions of the Outer Continental Shelf Lands Act of 1953, 43 U.S.C. 1331 et seq.; that the defendants joined in an enterprise, the day-to-day operation of which was within the control and under the management of defendant Union Oil Company, to drill for oil in the waters of the Santa Barbara Channel; that during the period commencing on or about January 28, 1969, vast quantities of raw crude oil were released and subsequently carried by wind, wave and tidal currents over vast stretches of the coastal waters of Southern California; and that as a consequence the plaintiffs have suffered various injuries for which damages are sought. Jurisdiction rests on 28 U.S.C. 1333 and 43 U.S.C. 1333(b).

On May 1, 1970, counsel for all parties to this suit entered into a Stipulation which was approved by the district court. This Stipulation, inter alia, provided for the consolidation of certain cases, attorneys' fees, the use of special masters, the allocation of authority among counsel for the various plaintiffs with respect to control of any negotiations and the preservation of certain rights on behalf of both plaintiffs and defendants.

For the purposes of the present appeal, however, the most important provisions in this Stipulation are those which deal with the facts and with the extent to which the defendants have agreed to pay the plaintiffs for their damages. The relevant portion of the Stipulation relating to the facts reads as follows:

On or about January 28, 1969, oil began to escape under and near Union Oil Company of California's Platform 'A' located on the Outer Continental Shelf of the United States in the Santa Barbara Channel. The undersigned agree that the following is a fair statement of the facts with respect to the Santa Barbara Channel occurrence (hereinafter 'occurrence'): A. Certain operations conducted on Platform 'A' resulted in the release of unascertained amounts of crude oil from the ocean floor underneath and near Platform 'A'. B. Such crude oil release was carried by natural forces of winds and tides to various areas of the ocean's surface and towards and in some instances to the adjacent coast lines. C. An unascertained amount of damage has resulted from said occurrence.

Paragraph 3 of the Stipulation, which sets out the defendants' undertaking to pay damages, provides as follows:

In order to provide a basis for the disposition of the above referenced claims it is agreed by the undersigned defendants that they will pay to the above referenced persons and/or plaintiffs who are, or who by reason of subsequent joinder herein become, parties hereto, all legally compensable damages arising from a legally cognizable injury caused by the aforementioned occurrence as such damages are determined pursuant to the following provisions; provided however, that the payment assumed hereby will not exceed such amount and such claim as said defendants or their contractors would be responsiblue for in the case of negligence. Payment of said damages persuant hereto shall operate as an assignment of said claims to said defendants. No claim for punitive or exemplary damages shall be asserted and no such damages shall be awarded.

In May of 1972, the defendants moved for partial summary judgment before the special masters to strike from plaintiffs' prayers 'that item of damage usually denominated as 'ecological damage'.' More specifically, the defendants sought to eliminate from the prayers any element of damages consisting of profits lost as a result of the reduction in the commercial fishing potential of the Santa Barbara Channel which may have been caused by the occurrence. According to the defendants, such longterm ecological damage is not compensable under the law and thus is not within their undertaking as set forth in the Stipulation.

The motion was denied by the special masters in a brief order which recognized that injuries resulting from 'an interference by defendants with (plaintiffs') economic right to fish in public waters' were legally compensable. The defendants then went into district court to object to this order, and again moved for a partial summary judgment.

Once more the motion was denied. In his order the district judge first observed that paragraph 3 of the Stipulation, although carefully phrased, had the practical effect of a confession of liability for tort negligence. Continuing, the judge accepted the defendants' statement of the issue, viz:

Does the alleged diminution of the aquatic life of the Santa Barbara Channel claimed to have resulted from the occurrence constitute a legally compensable injury to the Commercial Fishermen claimants?

The district judge then went on to hold that such a question must be answered in the affirmative. This result, he pointed out, is in no way dependent on whether the plaintiffs have a proprietary interest in, or ownership of, the sea life in the Santa Barbara Channel. As the district judge saw it, 'the loss of a prospective economic advantage occasioned by the alleged diminishment of the quantities of available sea life formed a sufficient basis for the recovery under the law of negligence.'

The district judge certified the order as a proper subject for an interlocutory appeal, and the defendants petitioned this Court for leave to appeal under 28 U.S.C. 1292(b). The petition was granted, and the issue now before us is whether the district court properly denied the defendants' motion. We hold that the district court properly interpreted paragraph 3 of the Stipulation, and that its action in denying the defendants' motion was proper.

I. The Applicable Law

Determination of the proper law by which the defendants' motion for partial summary judgment is to be judged turns out to be analytically complex but less significant functionally than one would have imagined. As the plaintiffs assert in their complaints, these cases are brought under the Outer Continental Shelf Lands Act ('Lands Act'), 43 U.S.C. 1331 et seq. Pursuant to Section 1333(a)(1) of this Act, federal law is made applicable 'to the subsoil and seabed of the Outer Continental Shelf and to all artificial islands and fixed structures which may be erected thereon . ..' However, as the Supreme Court has pointed out in Rodrigue v. Aetna Casualty Company, 395 U.S. 352, 365, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969), state law is adopted as a surrogate for federal law under the Act to the extent that such state law is 'applicable and not inconsistent with . . . other Federal laws.' See 43 U.S.C. 1333(a)(2). Thus, when applied in the context of the Act, state law becomes federal law federally enforced. 395 U.S. at 365, 89 S.Ct. 1835.

It is apparent from the briefs of the parties that their analysis did not advance beyond the point of concluding that, since there appeared to be no inconsistent federal law, the law of California was controlling. However, this Court's opinion in Oppen v. Aetna Insurance Company, 485 F.2d 252 (9th Cir., 1973), makes clear that the parties' analysis is not necessarily determinative of the issue before us. There remains yet a third possibility-- i.e. that admiralty law is exclusively applicable to the present controversy. As was said in Aetna Insurance, the Lands Act does not eliminate this possibility.

The Supreme Court in Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972), has instructed us that the determination of whether the admiralty jurisdiction of the federal courts embraces a tortious act depends, not only on the place of the tort, but also on whether the wrong bears a significant relationship to a traditional maritime activity. Id. at 268, 93 S.Ct. 493. Acting on this instruction, this Court in Aetna Insurance held that an injury to maritime vessels and an interference with their right of navigation, resulting from the same oil spill which is involved here, constituted a maritime tort cognizable in admiralty. In so holding, it was recognized that the 'activity' whose relationship to traditional maritime activity was to be examined was that of the injured party, not that of the tortfeasor. For this reason, the fact that drilling for oil from fixed platforms located over the outer Continental Shelf is not in itself a traditional maritime activity was held not to constitute a basis for refusing to classify the wrong as a maritime tort.

It follows that in order to determine the applicability of admiralty law to the facts of this case, it is necessary to inquire whether a reduction in plaintiffs' anticipated profits, caused by what for present purposes we must assume to be the negligent conduct of the defendants, bears a significant relationship to traditional maritime activity. Were it necessary for this issue to be...