Shell Offshore, Inc. v. Tesla Offshore, L.L.C.

• Decision Date: 05 October 2018
• Docket Number: No. 16-30528,cons. w/ 17-30338,16-30528
• Citation: 905 F.3d 915
• Parties: SHELL OFFSHORE, INCORPORATED, Plaintiff v. TESLA OFFSHORE, L.L.C., Defendant - Appellee Cross-Appellant v. International Offshore Services, L.L.C. ; International Marine, L.L.C., Defendants - Appellants Cross-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

905 F.3d 915

SHELL OFFSHORE, INCORPORATED, Plaintiff

v.TESLA OFFSHORE, L.L.C., Defendant - Appellee Cross-Appellant

v.International Offshore Services, L.L.C. ; International Marine, L.L.C., Defendants - Appellants Cross-Appellees

No. 16-30528

cons. w/ 17-30338

United States Court of Appeals, Fifth Circuit.

FILED October 5, 2018

Miles Paul Clements, Joseph Edward Lee, III, Brandon Kyle Thibodeaux, Frilot, L.L.C., New Orleans, LA, for Defendants - Appellants Cross-Appellees.

Douglas C. Longman, Jr., Carmen Marie Rodriguez, Esq., Jones Walker, L.L.P., Lafayette, LA, Grady Schell Hurley, Jones Walker, L.L.P., New Orleans, LA, for Defendant - Appellee Cross-Appellant.

Before CLEMENT, HIGGINSON, and HO, Circuit Judges.

STEPHEN A. HIGGINSON, Circuit Judge:

On November 2, 2012, an underwater sonar device struck the mooring line of an offshore drilling rig in the Gulf of Mexico, causing substantial damage. Tesla Offshore, LLC was using the sonar device, known as a towfish, to survey the ocean floor. Tesla had chartered a vessel from International Offshore Services, LLC to pull the towfish.

Shell Offshore, Inc., the owner of the drilling rig, sued Tesla and International for damages arising out of the accident.¹ After a trial on the merits, the jury returned a verdict in favor of Shell and apportioned 75% of the liability to Tesla and 25% to International. International and Tesla each appealed (No. 16-30528). While the appeal was pending, Tesla and Shell entered into a settlement agreement, and Shell executed a full satisfaction of judgment. After a limited remand from this court, the district court found that Tesla was entitled to contribution from International toward the settlement amount. Another appeal followed (No. 17-30338).

Tesla and International are the sole remaining parties in this litigation, and we have consolidated their pending appeals. International disputes the district court's legal conclusion that its vessel was a towing vessel and subject to towing regulations. Tesla challenges the jury's allocation of fault and the district court's calculation of the contribution owed by International. We affirm on all issues.

I.

At the time of the accident, Tesla was undertaking a "high-resolution deeptow archaeological survey" of part of the Outer Continental Shelf in the Gulf of Mexico. Tesla hired two vessels to assist with the survey. International's vessel, the M/V INTERNATIONAL THUNDER, was the "mother ship" that pulled the sonar towfish. Another vessel served as the "chase vessel" and helped track the towfish. The captain of the THUNDER was employed by International. The charter agreement between International and Tesla stated that Tesla would provide "towing and anchor handling gear," and would procure insurance for "each tow to be towed under" the agreement.

A team of five Tesla employees worked aboard the THUNDER. Tesla installed surveying equipment on the vessel, including a survey shack, electronics to monitor the towfish and receive data, a winch with 25,000 feet of cable, and the towfish itself. The towfish was about seven and a half feet long and resembled a torpedo. It is undisputed that Tesla personnel controlled the survey, including when to place the towfish in the water and how much cable to let out. Tesla also told the captain of the THUNDER what course to take within the survey grid.

On November 2, 2012, the THUNDER was pulling the towfish at the end of 14,000 feet of cable. The THUNDER approached the DEEPWATER NAUTILUS, a mobile offshore drilling rig owned by Shell. The rig was anchored by multiple submerged mooring lines. In February 2012, Shell had shared information about the NAUTILUS's position and mooring pattern with Tesla. Tesla did not provide this information to the captain of the THUNDER. According to Tesla, Shell informed it that the NAUTILUS would be operating in the area only until August 2012 and Tesla did not believe the information was relevant in October and November of 2012.

It is undisputed that, on the day of the allision, the crew of the THUNDER was unaware of the layout of the rig's mooring lines. Neither the THUNDER nor the NAUTILUS made radio contact with each other. But the captain of the chase vessel, the LADY JOANNA, testified that his vessel contacted the captain of the THUNDER to warn him that he was getting too close to the rig. Shortly afterward, the towfish hit one of the NAUTILUS's mooring lines. According to Shell, the allision caused the mooring line to lose all tension and forced the NAUTILUS to temporarily suspend drilling operations.

The district court held a jury trial on Shell's claims against Tesla and International. The jury awarded Shell over $9 million in damages and determined that Tesla was 75% at fault and International was 25% at fault. The jury also found that the negligent acts or omissions of the THUNDER's crew were within the privity or knowledge of International. The district court entered final judgment holding Tesla and International jointly and severally liable for the full amount of judgment. Consistent with the jury verdict, the district court denied International's limitation of liability defense. The district court also denied Tesla's post-trial motion for judgment as a matter of law, a new trial, and to alter or amend judgment.

II.

International challenges the district court's determination that the THUNDER was a "towing vessel" under 46 U.S.C. § 2101. The master of a towing vessel of 26 feet or more in length is required to hold a towing license. See 46 U.S.C. § 8904(a) ; 46 CFR §§ 15.805(a)(5), 15.910. It is undisputed that the captain of the THUNDER did not hold the relevant towing credential. International argued pre-trial that this credential was not required because the THUNDER was not a towing vessel as a matter of law. The district court denied International's motion for partial summary judgment on this issue. At trial, the court instructed the jury that the THUNDER was a towing vessel and that its captain did not have the requisite towing certification.

International maintains that this instruction was erroneous and argues that the instruction led the jury to reject its limitation of liability defense. Under the Limitation of Liability Act, a vessel owner is entitled to limit its liability only if the owner lacked "privity or knowledge" of the negligent acts or other fault that caused the damage. 46 U.S.C. § 30505 ; see also In re OmegaProtein, Inc. , 548 F.3d 361, 371 (5th Cir. 2008). International contends that the finding of privity or knowledge was likely based on the jury's belief that the captain of the THUNDER was improperly licensed. Jury "[i]nstructions that hinge on a question of statutory construction are reviewed de novo." Janvey v. Dillon Gage, Inc. of Dall. , 856 F.3d 377, 388 (5th Cir. 2017). We will reverse a jury verdict if "the charge as a whole leaves us with substantial and ineradicable doubt whether the jury has been properly guided in its deliberations and the challenged instruction affected the outcome of the case." Jowers v. Lincoln Elec. Co. , 617 F.3d 346, 352 (5th Cir. 2010) (internal citation omitted).

We invited the views of the U.S. Solicitor General on whether applicable laws and regulations at the time of the allision required the master of the THUNDER to have a towing license. The Government filed an amicus brief supporting the district court's legal conclusion that the THUNDER was a towing vessel whose captain was required to hold a towing license.

The U.S. Code defines a "towing vessel" as "a commercial vessel engaged in or intending to engage in the service of pulling, pushing, or hauling along side, or any combination of pulling, pushing, or hauling along side." 46 U.S.C. § 2101(50).² International does not seriously dispute that the THUNDER qualifies as a towing vessel under the plain language of the statute.³ The THUNDER is a commercial vessel and it was hired by Tesla to pull the towfish. International contends, however, that the court must look beyond the statutory text to avoid absurd results. Specifically, International argues that a literal reading of the statute would transform any commercial vessel that pushes, pulls, or hauls anything into a towing vessel, including fishing boats as soon as someone hooks a fish.

But the statutory definition does not encompass any vessel that pushes, pulls, or hauls. Rather, it is limited to commercial vessels engaged "in the service of pulling, pushing, or hauling along side." 46 U.S.C. § 2101(50) (emphasis added). This provision defines a towing vessel in terms of the service it provides. We interpret this language to exclude vessels that engage in some incidental pulling, pushing, or hauling activities as part of a distinct commercial endeavor. A fishing vessel that pulls nets or cages in furtherance of its fishing activities would not qualify as a towing vessel because it is in the business of fishing, not "in the service of pulling." See Mount v. Keahole Point Fish, LLC , 147 F.Supp.3d 1116, 1120-21 (D. Haw. 2015).

This is consistent with our familiar approach to determining what floating objects qualify as vessels. Like a towing vessel, a "vessel" is defined by its function. It must be "used, or capable of being used, as a means of transportation on water." 1 U.S.C. § 3. But a vessel's transportation function must be more than incidental to its primary purpose. See Lozman v. City of Riviera Beach , 568 U.S. 115, 121, 133 S.Ct. 735, 184 L.Ed.2d 604 (2013) (distinguishing between a vessel "designed to a practical degree for carrying people or things over water" and a floating structure capable of "incidentally carrying" items while under tow); Manuel v. P.A.W. Drilling & Well Service, Inc. , 135 F.3d 344, 351 (5th Cir. 1998) (examining whether the transportation function of a craft was more than "merely incidental to its primary purpose of serving as a work platform"). By International's own account, the service provided by the THUNDER was to pull the...