61 F.3d 1113 (5th Cir. 1995), 92-7378, Coats v. Penrod Drilling Corp.

Docket Nº:92-7378.
Citation:61 F.3d 1113
Party Name:Earl Wayne COATS, Plaintiff-Appellee, Cross-Appellant, v. PENROD DRILLING CORPORATION, et al., Defendants, Penrod Drilling Corporation, and Hytorc, M.E., Defendants-Appellants, Cross-Appellees.
Case Date:August 08, 1995
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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61 F.3d 1113 (5th Cir. 1995)

Earl Wayne COATS, Plaintiff-Appellee, Cross-Appellant,



Penrod Drilling Corporation, and Hytorc, M.E.,

Defendants-Appellants, Cross-Appellees.

No. 92-7378.

United States Court of Appeals, Fifth Circuit

August 8, 1995

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Bernard H. Ticer, James O.M. Womack, Burke & Mayer, New Orleans, LA, James O. Dukes, Bryant, Clark, Dukes, Blakeslee, Ramsay & Hammond, Gulfport, MS, for Penrod Drilling Corp.

William B. Gibbens, III, Gelpi Sullivan, Carroll & Gibbens, New Orleans, LA, for Hytorc, M.E.

William A. Abernethy, Meredith, Donnell & Abernethy, Corpus Christi, TX, for amicus curiae Intern. Ass'n of Drilling Contractors.

Maurice C. Hebert, Jr., David M. Flotte, Hebert, Mouledoux & Bland, New Orleans, LA, for appellees.

Yancey White, White, Huseman, Pletcher & Powers, Corpus Christi, TX, for amicus curiae Texas Residents, etc.

Harvey J. Lewis, Lawrence Kullman, Lewis & Kullman, New Orleans, LA, for amicus curiae La. Trial Lawyers Ass'n.

Appeals from the United States District Court for the Southern District of Mississippi.



For more than a century, general maritime law has held joint tortfeasors jointly and severally liable for all of the plaintiff's damages suffered at their hand. Under that rule, the risk of noncollection is borne by the defendants. The plaintiff can collect his entire judgment from a single defendant, leaving to the defendants allocation of fault among themselves. We reheard this case en banc to consider the contention that we should adopt a new rule of "modified joint liability." This proposal would limit each joint tortfeasor's maximum liability to the amount for which that tortfeasor would have been liable to the plaintiff if only the negligence of that tortfeasor and the negligence of the plaintiff were compared. The new rule would, for the first time in maritime history, shift the risk of noncollection to the plaintiff. It would allocate the risk of noncollection of an admiralty judgment among the contributorily-negligent plaintiff and the defendants in proportion to their respective faults. Because replacing joint and several liability in the general maritime law with modified joint liability would be neither authorized nor prudent, we affirm the judgment of the district court.


The facts and procedural history of this case were set forth in the panel opinion, Coats v. Penrod Drilling Corp., 5 F.3d 877 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1303, 127 L.Ed.2d 654, reh'g en banc granted, 20 F.3d 614 (5th Cir.1994), and only those portions necessary to the issues discussed herein are restated.

Maritime Industrial Services is a corporation organized under the laws of Ras Al-Khaimah, United Arab Emirates with branch offices in Dubai and Abu Dhabi. It performs repair and maintenance services for oilfield and marine vessels, and its employees are all expatriates, primarily from India, Pakistan, and the United States. MIS uses Lee's Materials Services, Inc. in Houston, Texas to perform various services in the United States. Through Lee's, MIS advertised its job openings in the Houston Chronicle (Texas), Lafayette Advertiser (Louisiana), and Mobile Register (Alabama).

In 1987, David Shelton, manager of the Hytorc Division of MIS, travelled from the United Arab Emirates to Mississippi on vacation and to interview prospective employees for MIS. During his trip, Shelton held a

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meeting in Laurel, Mississippi that was attended by several young men, including the plaintiff, Earl Wayne Coats. Shelton explained that he was soliciting employees to operate MIS equipment on certain offshore vessels. At the meeting, Shelton offered a job to Coats, and Coats accepted. Their agreement included thirty days per year of paid vacation with airfare back to Mississippi. MIS also promised to pay for Coats' return to Mississippi at the termination of his employment. The term of Coats' employment was indefinite. Coats obtained an updated passport as instructed by Shelton, and MIS, through Lee's, sent him a plane ticket to Dubai. Coats arrived in the United Arab Emirates and started work on December 1, 1987.

While working for MIS, Coats lived on shore and worked on various jack-up rigs owned by different customers of MIS. The majority of Coats' work consisted of operating a hydraulically powered torque wrench used to loosen and tighten large nuts and bolts. During Coats' employment with MIS, Penrod Drilling Corporation, a Delaware corporation with its principal place of business in Dallas, Texas, contracted for MIS to perform pressure testing on Penrod's Rig 69. The pressure testing was necessary to prepare the rig for its next drilling operation. At the time, Rig 69, a jack-up drilling rig, was located in the Port of Mina Saqr in the territorial waters of the United Arab Emirates. Although it was twenty feet from shore in forty feet of water and connected to land by a gangway, it was prepared to sail and did so three days after the accident. Rig 69 flies the United States flag, and its home port is New Orleans, Louisiana. Penrod maintained a local office in the United Arab Emirates to assist in the operation of Rig 69.

MIS assigned Coats to perform the pressure testing for Penrod. Coats was inexperienced at this task and had to ask for assistance from Penrod personnel. All safety procedures were prepared to meet standards of the United States. As Coats was working aboard Rig 69, Penrod's bullplug failed at a pressure less than it was rated to withstand, causing the fluid under pressure to erupt. The eruption knocked Coats down, resulting in a severe and disabling injury to his knee. After the accident, MIS flew Coats to Hattiesburg, Mississippi for treatment and started paying his medical expenses. Most of these payments were made through Lee's. Meanwhile, MIS filled Coats' job with Chris Stennett, another Mississippi resident who attended Shelton's meeting in Laurel.

On April 10, 1989, Coats sued Penrod, MIS, and Lee's 1 in the Southern District of Mississippi. The complaint asserted federal jurisdiction based on diversity of citizenship and admiralty and alleges, inter alia, negligence on the part of Penrod and MIS, the unseaworthiness of Rig 69, and entitlement to maintenance and cure from MIS under the Jones Act. Soon thereafter, MIS terminated its payment of benefits to Coats. Coats then amended his complaint against MIS to seek compensatory and punitive damages under the general maritime law for wrongful termination of maintenance and cure and to allege wrongful termination of health insurance benefits under ERISA. Penrod cross-claimed against MIS for indemnity and contribution under the general maritime law.

Before trial, the district court issued a number of orders in response to motions filed by the parties. The court ruled that MIS had sufficient contacts with Mississippi to justify the assertion of personal jurisdiction and that it would apply United States law, rather than the law of the United Arab Emirates, to Coats' personal injury claims. MIS was estimated to be doing over one million dollars a year of business in Texas at the time of the accident. Under American law, the court determined that Coats was not a Jones Act seaman and was not entitled to maintenance and cure (and associated damages), but the court found that Coats qualified as a Sieracki seaman with the attending right to sue under the warranty of seaworthiness. See Seas Shipping Co. v. Sieracki, 328

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U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099 (1946). 2 The court also declined to dismiss the case under the doctrine of forum non conveniens.

The case proceeded to trial on Coats' claims against Penrod for negligence and unseaworthiness and against MIS for negligence, wrongful termination of maintenance and cure, and wrongful termination of benefits under ERISA. After the court directed a verdict against Coats on his claim for punitive damages based on MIS' termination of maintenance and cure, the jury returned a verdict for Coats, assessing damages of $925,000 and assigning 20% fault to Coats, 20% to Penrod, and 60% to MIS. The court reduced the award by Coats' comparative fault to $740,000 and entered judgment against Penrod and MIS jointly and severally. The court also awarded costs to Coats in the amount of $7,889.04. In addition, the court awarded Coats $26,524.82 in penalties against MIS alone for its wrongful nonpayment of benefits as required by ERISA. MIS did not contest on appeal its liability under ERISA for benefits payable to Coats under his contract of employment. All parties appealed.

In this opinion we address only the choice of law issue and Penrod's proposal for modified joint liability. The portions of the panel opinion addressing personal jurisdiction over MIS (Part II), see Coats, 5 F.3d at 881-85; forum non conveniens (Part IV), see id. at 889; and Coats' cross-appeal (Part VI), see id. at 890-92, are reinstated.


  1. Subject Matter Jurisdiction in Admiralty

    Turning to the district court's application of United States law, MIS first argues that the choice of law is between the law of the United Arab Emirates and Mississippi law, rather than the general maritime law. This conclusion rests on the contention that the district court lacked subject matter jurisdiction in admiralty, and therefore, the only basis for federal jurisdiction is diversity. If so, the district court should have applied Mississippi's choice of law rules in deciding between foreign and state...

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