Olsen v. Shell Oil Co.

• Decision Date: 05 July 1983
• Docket Number: No. 82-3363,82-3363
• Parties: Mary OLSEN, Etc., Christine W. Carvin, Etc., Gordon Davis Wallace and Argonaut Insurance Company, Plaintiffs-Appellees, v. SHELL OIL COMPANY, Defendant-Appellant-Appellee, v. TELEDYNE MOVIBLE OFFSHORE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 976

708 F.2d 976

1984 A.M.C. 580

Mary OLSEN, Etc., Christine W. Carvin, Etc., Gordon Davis

Wallace and Argonaut Insurance Company, Plaintiffs-Appellees, v. SHELL OIL COMPANY, Defendant-Appellant-Appellee, v. TELEDYNE MOVIBLE OFFSHORE, Defendant-Appellant.

No. 82-3363.

United States Court of Appeals, Fifth Circuit.

July 5, 1983.

John O. Charrier, Jr., Robert T. Lemon, II, New Orleans, La., for defendant-appellant-appellee.

W.K. Christovich, New Orleans, La., for Teledyne, Pacific & Movible.

William P. Rutledge, Lafayette, La., for Olsen, Carvin & Wallace.

Joel L. Borrello, New Orleans, La., for Argonaut Ins.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before GEE, REAVLEY and HIGGINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

On May 6, 1970, a hot water heater exploded aboard a fixed drilling platform in the Gulf of Mexico, killing three workers and injuring six. There followed these cases, which are now appearing before us for the third time. See Olsen v. Shell Oil Co., 561 F.2d 1178 (5th Cir.1977) (Olsen I ); Olsen v. Shell Oil Co., 595 F.2d 1099 (5th Cir.1979) (Olsen II ). Following the remand in Olsen II, the district court entered a judgment adopting and modifying a special master's recommendations and awarding damages to plaintiffs Mary Olsen, Christine Carvin, Gordon Wallace, and Argonaut Insurance Co. Defendant Shell Oil Co. and third-party defendant Teledyne Movible Offshore now appeal. Concluding that none of their challenges to the district court's award of damages has merit, we affirm the carefully considered judgment below.

Facts and Procedural History

The facts are ably summarized in Judge Fay's earlier opinion. Olsen I, 561 F.2d at 1180-81. We repeat here only for the context of these appeals.

Shell Oil Co. owned the drilling platform fixed ninety miles off the coast of Louisiana. At the time of the accident a contractor, Teledyne Movible Offshore, was drilling from the platform. Movible Offshore had installed a movable drilling rig on the platform and modular living quarters for its employees. The living quarters, which included bathroom and galley facilities, were equipped with two electric hot water heaters.

The explosion, on May 6, 1970, of one of the hot water heaters caused the deaths and injuries to Movible Offshore's employees. It was later discovered that an unsuitable valve in the water heater had allowed pressure to build up, causing the explosion. An insurance company inspector had recommended one type of valve, but Movible Offshore had ordered and installed another.

Because the accident occurred on a fixed platform in the Gulf of Mexico, the provisions of the Outer Continental Shelf Lands Act, 43 U.S.C. Secs. 1331-1356, govern. The OCSLA provides that with respect to the disability or death of an employee engaged in natural resource mining or exploration activity on the outer Continental Shelf, compensation shall be payable under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. Secs. 901-950, 43 U.S.C. Sec. 1333(b). ¹ After the accident, Movible Offshore's insurer, Argonaut Insurance Co., paid benefits to the personal representatives and injured survivors under the LHWCA. Because the LHWCA limits the employer's liability to compensation or benefits under the Act, 33 U.S.C. Sec. 933(i), the search then began for a more accessible purse.

The first three suits were brought by Mary Olsen and Christine Carvin, two widows, and by Gordon Wallace, an injured employee. Defendants included Shell, manufacturers and sellers of the hot water heater and some of its components, and the builder of the living quarters. Argonaut Insurance Co. intervened in all three suits and also filed its own suit in an effort to recover amounts paid and to be paid in compensation to other employees or their representatives. In all four suits Shell filed a third-party complaint against Movible Offshore for indemnity.

After exhaustive proceedings, the trial judge entered his opinion with respect to liability in these consolidated cases. He acquitted all parties of negligence except Movible Offshore. He also rejected the two theories of strict liability asserted against Shell. A judgment in favor of all defendants followed.

On appeal, we affirmed the district court's ruling that plaintiffs had no right to recover from Shell for violations of certain regulations issued by the Secretary of the Interior pursuant to the authority granted to him by OCSLA, because the OCSLA provided neither an express nor an implied right of action. Olsen I, 561 F.2d at 1181-1190. Plaintiffs' second theory of strict liability was based on Article 2322 of the Louisiana Civil Code, which provides:

The owner of a building is answerable for the damage occasioned by its ruin, when this is caused by neglect to repair it, or when it is a result of a vice in its original construction.

In the absence of a controlling precedent of the Louisiana Supreme Court, we were unable to decide whether Shell could be held liable under Article 2322. We therefore certified the question to the Louisiana Supreme Court, Olsen I, 561 F.2d at 1194, which held that Shell was strictly liable. Olsen v. Shell Oil Co., 365 So.2d 1285 (La.1977).

After the cases had been returned to us, we resolved the remaining issues on appeal. Olsen II, 595 F.2d 1099. We upheld the trial judge's determination that Movible Offshore was contractually bound to indemnify Shell for any liability incurred through Movible's negligence. Id. at 1103-1104. We affirmed the finding that Movible had been negligent. Id. at 1104. And we affirmed the trial judge's exoneration of the manufacturer of the valve that was installed, the insurance company whose inspector had recommended the valve that was not installed, and the manufacturers of certain other components of the water heater. Id. at 1104-1105. Finally, we held that Argonaut Insurance Co. had a right to proceed against Shell although no formal compensation award had been entered. Id. at 1105-1106.

On remand the damage issues were tried to a magistrate acting as special master. See Fed.R.Civ.P. 53. He entered proposed findings and recommendations. The district court then filed an opinion adopting the findings and recommendations with certain modifications. It entered judgment as follows:

1. Shell was ordered to pay $771,487.67 to Carvin, $16,000 to Olsen, and $88,092.02 to Wallace, of which awards Argonaut was to receive $39,674.72, $16,000, and $8,750.91 respectively;

2. Shell was ordered to pay Argonaut a sum equal to the compensation benefits and medical expenses it had paid on account of the deaths and injuries of the other Movible Offshore employees;

3. Shell was ordered to assume payment of any compensation benefits and medical expenses that Argonaut would have to pay in the future;

4. Movible Offshore was ordered to indemnify Shell for all the above amounts, and for its attorneys' fees and costs of defense.

In addition, the district court ordered prejudgment interest to be paid on the awards to all plaintiffs. This appeal by Shell and Movible Offshore followed.

The OCSLA

We preface our review of error claimed by Shell and Movible with a reference to the underlying substantive law. The OCSLA provides:

To the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary ..., the civil and criminal laws of each adjacent State ... are declared to be the law of the United States for that portion of the subsoil and seabed of the outer Continental Shelf, and artificial islands and fixed structures erected thereon, which would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf ...

43 U.S.C. Sec. 1333(a)(2)(A).

The OCSLA, as the Supreme Court made clear in Rodrigue v. Aetna Casualty Co., 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969), "deliberately eschewed the application of admiralty principles to these novel structures" and instead applied "federal law, supplemented by state law of the adjacent State, ... to these artificial islands as though they were federal enclaves in an upland State." Id. at 355, 89 S.Ct. at 1837. The Court continued:

Since federal law, because of its limited function in a federal system, might be inadequate to cope with the full range of potential legal problems, the Act supplemented gaps in the federal law with state law through the 'adoption of State law as the law of the United States.' Under Sec. 4, the adjacent State's laws were made 'the law of the United States for [the relevant subsoil and seabed] and artificial islands and fixed structures erected thereon,' but only to 'the extent that they are applicable and not inconsistent with ... other federal laws.'

Id. at 357, 89 S.Ct. at 1838. In Rodrigue, the Court held that the Louisiana wrongful death statute, not the Death on the High Seas Act, furnished the remedy for two tortious deaths occurring on fixed offshore oil rigs.

In Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the Court developed the teaching of Rodrigue, holding that the Louisiana statute of limitations governed personal injury actions under the OCSLA that were based on Louisiana law: "Congress made clear provision for filling in the 'gaps' in federal law; it did not intend that federal courts fill in those 'gaps' themselves by creating new federal common law." Id. 404 U.S. at 104, 92 S.Ct. at 354. The Court added If Congress' goal was to provide a comprehensive and familiar body of law, it would defeat that goal to apply only certain aspects of a state personal injury remedy in federal court. A state time limitation is coordinated with the substance of the remedy and is no less applicable under the Lands Act.

Id. at 103, 89 S.Ct. at 353.

The implication of Rodrigue and Huson is that whenever an action is based on...