Stone Energy Corp. v. Nippon Steel, CIVIL ACTION NO. 6:18-CV-00213
| Decision Date | 28 July 2020 |
| Docket Number | CIVIL ACTION NO. 6:18-CV-00213 |
| Citation | 475 F.Supp.3d 563 |
| Parties | STONE ENERGY CORP. et al. v. NIPPON STEEL & Sumitomo Metal Corp. |
| Court | U.S. District Court — Western District of Louisiana |
Paul M. Jones, Brittan Jackson Bush, Liskow & Lewis, Lafayette, LA, Alma F. Shields, Pro Hac Vice, Hilary C. Soileau, Pro Hac Vice, Michael A. Golemi, Liskow & Lewis, Houston, TX, for Stone Energy Corp., Stone Energy Offshore LLC, Talos Petroleum LLC, Talos Resources LLC.
Joseph A. Fischer, III, Jackson Walker, Houston, TX, Allison N. Cook, Pro Hac Vice, Christopher A. Thompson, Pro Hac Vice, Jackson Walker, Dallas, TX, for Pyramid Tubular Products LLC, Mitsui Sumitomo Insurance USA Inc., Mitsui Sumitomo Insurance Co. of America, Sumitomo Corp of Americas.
David R. Frohn, MG+M Law Firm, Lake Charles, LA, Meghan Brianne Senter, Vikram S. Bhatia, MG+M Law Firm, New Orleans, LA, for Nippon Steel Corp.
Keith W. McDaniel, Mary Wilderotter Dale, McCranie Sistrunk et al., Covington, LA, for Kansaikika Co. Ltd.
David R. Frohn, MG+M Law Firm, Lake Charles, LA, Meghan Brianne Senter, MG+M Law Firm, New Orleans, LA, for Mitsui Sumitomo Insurance Co., Ltd.
David R. Frohn, MGM Law Firm, Lake Charles, LA, Meghan Brianne Senter, MG+M Law Firm, New Orleans, LA, for Nippon Steel Precision Machining Co., Ltd.
MEMORANDUM RULING & JUDGMENT
Before the Court is a Motion for Partial Summary Judgment, Rec. Doc. [169], filed by Defendants, Pyramid Tubular Products LLC ("Pyramid") and Sumitomo Corporation of Americas (together the "SCOA Defendants" and referred to interchangeably as Pyramid or SCOA Defendants throughout). The Motion is opposed by Plaintiff, Stone Energy Corp ("Stone"). This Motion came for oral argument before the Court on July 16, 2020. At hearing, the Court took this matter under advisement. After review of the parties' submitted briefs, review of the relevant law, and consideration of oral argument, the Court DENIES the motion for the following reasons.
Stone purchased pipe from Nippon Steel ("Nippon") for construction of the Amethyst 1 well in the Gulf of Mexico. Stone's lawsuit alleges that the pipe was defective and caused a total loss of Stone's well. Pyramid was the seller and liaison between Stone, an American company, and Nippon, a Japanese company. Stone claims that Pyramid is liable under the Louisiana Products Liability Act ("LPLA") and for warranties under the sales articles of the Louisiana Civil Code. Pyramid seeks partial summary judgment on Stone's claims brought against Pyramid under the LPLA and also under the Civil Code warranties.
Regarding the LPLA, Pyramid argues that it does not meet the statutory definition of manufacturer. First, Defendants argue that Pyramid did not exercise control or influence over the construction, design, or quality of the pipe at issue in this case. Alternatively, Defendants contend that Pyramid is not the alter ego of Nippon under the LPLA's alter ego provision.
With respect to the Civil Code warranties, the SCOA Defendants argue that Chesapeake Louisiana, L.P. v. Innovative Wellsite Sys., Inc. , No. 12-cv-2963, 2014 WL 5796794, at *4 (W.D. La. Nov. 6, 2014) ; Southwest. La. Hosp. Ass'n v. BASF Const. Chemicals, LLC , 947 F. Supp. 2d 661, 699 (W.D. La. 2013), amended (Sept. 6, 2013); and Hollybrook Cotton Seed Processing, LLC v. Carver, Inc. , No. 09-cv-0750, 2010 WL 892869, at *8 (W.D. La. Mar. 11, 2010) apply in the present matter. The SCOA Defendants contend that this Court should follow this line of cases which they argue holds that redhibition subsumes the other warranties in the sales articles of the Civil Code and therefore limit Stone's warranty action against the Defendants to redhibition.
Stone claims that the Defendants are liable under the LPLA because Pyramid exercised control over the design or quality of the pipe and alternatively, that Pyramid was the alter ego of Nippon for purposes of the LPLA. Regarding the exercise of control, Stone contends that Pyramid influenced the design of the pipe because Pyramid took the required specifications for the pipe from Stone and relayed that information to Nippon Steel. Stone argues that Pyramid contracted to install the couplings onto the pipe (a process called "bucking on") and to inspect the tubing.
Alternatively, Stone argues that Pyramid is Nippon's alter ego because (1) Pyramid considered itself a "trusted partner" of Nippon—i.e., Pyramid helped Nippon sell its products in the United States;1 (2) Pyramid included in its terms and conditions that it would continue to be the "conduit" between Stone and Nippon as long as the pipe was in use (this included an arrangement where any warranty that Pyramid received from Nippon would be transferred to Stone); (3) Pyramid installed the couplings onto the pipe ("bucking on"); (4) Pyramid inspected the pipe; and (5) Pyramid relayed information between Nippon and Stone regarding the specifications of the pipe.
Stone also contends that Pyramid is liable under the Civil Code sales warranty articles. Stone argues that the holdings of the cases cited by the SCOA Defendants are narrow in scope and only hold that redhibition subsumes other warranties when the existence of a defect is undisputed. Stone claims that because the parties are still contesting defects, the SCOA Defendants' motion should be denied.
The issues before the Court include: (1) whether Pyramid is a "manufacturer" for purposes of the LPLA by exercising control or influence or as alter ego of Nippon;2 (2) whether the availability of redhibition precludes pursuance of the warranty of fitness; and (3) whether redhibition precludes pursuance of the warranty of kind or quality. The warranty issue includes a complex and unsettled question of Louisiana law.
Federal Rule of Civil Procedure 56 instructs that summary judgment is proper if the record discloses no genuine issue as to any material fact such that the moving party is entitled to judgment as a matter of law. No genuine issue of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine issue of fact exists only "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. See id. Therefore, "[i]f the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50, 106 S.Ct. 2505 (citations omitted).
Summary judgment is also proper if the party opposing the motion fails to establish an essential element of her case. See Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In this regard, the non-moving party must do more than simply deny the allegations raised by the moving party. See Donaghey v. Ocean Drilling & Exploration Co. , 974 F.2d 646, 649 (5th Cir. 1992). Rather, he must come forward with competent evidence, such as affidavits or depositions, to buttress his claims. Id. Martin v. John W. Stone Oil Distrib., Inc. , 819 F.2d 547, 549 (5th Cir. 1987). Finally, in evaluating the summary judgment motion, the Court must read the facts in the light most favorable to the non-moving party. Anderson , 477 U.S. at 255, 106 S.Ct. 2505.
Under the Erie doctrine, this Court must apply state substantive law when it sits in diversity. Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) ; Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The motion before the Court pertains to the LPLA and Louisiana Civil Code and thus requires this Court to apply Louisiana substantive law.
In re Katrina Canal Breaches Litig. , 495 F.3d 191, 206 (5th Cir. 2007) (internal citations omitted).
The Louisiana Products Liability Act is the exclusive remedy in Louisiana for tort claims arising from defective products. La. R.S. § 9:2800.52. The LPLA provides in pertinent part:
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