Petition — Shell Oil Co. v. Olsen

83-828 [irr

FILED

NOV 18 1983

iene dineonianataannntennis

CLERK

NO.

In the

Supreme Court of the United States

OCTOBER TERM, 1983

SHELL OIL COMPANY,

Petitioner,

V.

MARY OLSEN, ARGONAUT INSURANCE

COMPANY, CHRISTINE W. CARVIN, and

GORDON DAVIS WALLACE,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITES STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

JOHN O. CHARRIER, JR.

ROBERT T. LEMON, II

JONES, WALKER, WAECHTER,

POITEVENT, CARRERE &

DENEGRE

225 Baronne Street, 28th Floor

New Orleans, Louisiana 70112

Telephone: (504) 581-6641

Counsel for Petitioner

A B Letter Service, Inc., 327 Chartres St., New Orleans, La. (504) 581-5555

i

QUESTIONS PRESENTED FOR REVIEW

Petitioner applies for a writ of certiorari to the

United States Court of Appeals for the Fifth Circuit for

review of the following questions:

I. Whether the Court of Appeals erred as a matter of

law in granting the LHWCA compensation carrier an

award larger than that amount for which petitioner was

held liable in tort to certain of the claimants?

(a) In an action by the LHWCA compensation carrier

against a vicariously liable third-party tortfeasor for reim-

bursement for workmen’s compensation benefits paid,

whether the LHWCA compensation carrier is entitled to an

award in excess of the judgment in tort against the third-

party tortfeasor? or

(b) Whether the vicariously liable third party tort-

feasor’s liability to the LHWCA compensation carrier for

reimbursement of workmen’s compensation benefits paid

is limited to the amount of the tort award against the third

party tortfeasor?

II. Whether the Court of Appeals erred as a matter

of law in obligating petitioner to assume responsibility for

administration and distribution of all of the LHWCA com-

pensation carrier’s future workmen’s compensation liabili-

ty to claimants arising out of the casualty?

III. Whether the Court of Appeals erred as a matter

of law in awarding claimants prejudgment interest in an ac-

tion arising under the Outer Continental Shelf Lands Act?

ii

STATEMENT OF INTERESTED PARTIES

I, John O. Charrier, Jr., counsel of record for Peti-

tioner, Shell Oil Company, certify that the following listed

persons have or may have an interest in the outcome of this

case:

1. Shell Oil Company and Travelers Insurance

Company

2. Movible Offshore, Inc., Teledyne Movible Off-

shore, Teledyne Inc., and Pacific Indemnity Company

3. Argonaut Insurance Company

4. Mary Olsen

5. Christine Carvin

6. Gordon Davis Wallace

JOHN O. CHARRIER, JR.

ROBERT T. LEMON, II

TABLE OF CONTENTS

Page

Questions Presented for Review..................... i

Statement of Interested Parties.................... ii

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iv

TABLE OF AUTHORITIES

CASES: PAGE

Aldon Industries, Inc. v. Don Myers & Associates, Inc.,

yk es gf. ob ho: rs Meme: 19

Aymond v. Texaco, Inc.,

pee pe see ceeem CO. I0T7).... «2. ccs eke. 21

Berry v. Sladco, Inc.,

496 F.2d 623 (6th Cir. 1974) ................... 21

Brock v. Baroid Div., National Lead Co.,

339 F.Supp. 728 (W.D. La. 1972)............... 13

Calmar S.S. Corp. v. Taylor,

303 U.S. 525, 58 S.Ct. 651 (1938)............... 18

Caldwell v. Ogden Sea Transport, Inc.,

Gna Fae nee? ete Cir, 1000)... .. 2. we es. 13

Chevron Oil Co. v. Huson,

404 U.S. 97, 92 S.Ct. 349 (1971)................ 20

Compania Pelineon de Navegasion S.A. v. Texas

Petroleum Co., 540 F.2d 53 (2d Cir. 1976)...... .19

Evans v. Chevron Oil Co.,

438 F.Supp. 1097 (E.D. La. 1077), aff'd

per curiam 616 F.2d 565 (5th Cir. 1980)......... 21

Farrell v. United States,

336 U.S. 511, 69 S.Ct. 707 (1949)............... 18

Federal Marine Terminals Inc. v. Burnside Shipping Co.,

394 U.S. 404, 89 S.Ct. 1144 (1969)........ 14, 15, 16

Gulf Oil Co. v. Mobil Oil Corp.,

453 U.S. 473, 101 S.Ct. 2870 (1981)............. 20

Haynes v. Rederi A/S ALADDIN,

362 F.2d 345 (5th Cir. 1966).....%............. 13

Hinson v. S/S PAROS,

461 F.Supp. 219 (S.D. Tex. 1978)......... 13, 14, 19

Italia Societa per Azioni di Navigazione v.

Oregon Stevedoring Co., 376 U.S. 315,

EER Ce a erie Pe 14

Musial v. A&A Boat Rentals, Inc.,

696 F.2d 1149 (5th Cir. 1983)... =-=.=.-.«.............. 21

Vv

Rodrigue v. Aetna Casualty & Surety Co.,

395 U.S. 352, 89 S.Ct. 1835 (1969)........... 20, 21

Robins Dry Dock & Repair Co. v. Flint,

275 U.S. 303, 48 S.Ct. 134 (1927)............... 19

Story Parchment Co. v. Paterson Parchment Paper Co.,

262 U.S. 566, 61 S.Ct. 248 (1981). .............. 19

Travelers Indemnity Co. v. Peacock Construction Co.,

aap 7.20 1iGS Gta Cir. IGT)... ee eee es 19

STATUTES:

Longshoremen’s and Harbor Workers’ Compensation

Act, §33, 33 U.S.C. §933...... veo 5 oy Oy ae OM Bee

Outer Continental Shelf Lands Act,

Is a e, 2, 6, 16, 20

Federal Interest Statutes... ...... sie eaten 9, 20, 21

pee es 8 Ci OS es 9, 20, 21

La. Rev. Stat. §13:4203....... ase ae ee 20, 21

1

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1983

SHELL OIL COMPANY,

Petitioner

versus

MARY OLSEN, CHRISTINE W. CARVIN,

GORDON W. WALLACE, and ARGONAUT

INSURANCE COMPANY

Respondents

PETITION FOR WRIT OF CERTIORARI

DECISIONS BELOW

This matter has had a complex and tortured legal

history. The matter was first tried, and all appeals ex-

hausted, on liability. The damages issue was then tried,

and this application pertains to that issue.

LIABILITY

DISTRICT COURT—

1. The opinions of the United States District Court

for the Eastern District of Louisiana [Minute Entry (June

6, 1974) and Minute Entry (July 15, 1975) are not reported.

COURT OF APPEALS—

2. Olsen v. Shell Oil Co., 561 F.2d 1178 (5th Cir. 1977),

rehearing en banc denied, 565 F.2d 163 (5th Cir. 1977) [in-

itial decision on liability affirming negligence of Movible Off-

shore, Inc.]

3. Olsen v. Shell Oil Co., 574 F.2d 194 (5th Cir. 1978)

[certification to Louisiana Supreme Court of questions of

Louisiana strict liability and its effect on Shell Oil Co.]

4. Olsen v. Shell Oil Co., 365 So.2d 1285 (La. 1978) [cer-

tified questions answered finding Shell Oil C6. strictly

(vicariously) liable}

5. Olsen v. Shell Oil Co., 595 F.2d 1099 (5th Cir. 1979)

[final decision on liability]

QUANTUM (DAMAGES)

DISTRICT COURT—

6. The opinion of the United States District Court for

the Eastern District of Louisiana [minute entry (April 22,

1982)] is not reported.

COURT OF APPEALS—

7. Olsen v. Shell Oil Co., 708 F.2d 976 (5th Cir. 1983),

rehearing en banc denied (September 26, 1983)

JURISDICTION

This appeal raises questions of law under the United

States Longshoremen’s and Harbor Workers’ Compensation

3

Act, 33 U.S.C. §901 et seg., and the Outer Continental Shelf

Lands Act, 43 U.S.C. §1333 et seg.

The decision of the United States Court of Appeals

for the Fifth Circuit at issue was entered on July 5, 1983.

The Application for Rehearing En Banc was denied by the

Court of Appeals in an order entercd on September 26, 1983.

This Court has jurisdiction pursuant to 28 U.S.C.

§1254(1).

STATUTES INVOLVED

This Petition raises issues under the following provi-

sions of the United States Longshoremen’s and Harbor

Workers’ Compensation Act [LHWCA] and the Outer Con-

tinental Shelf Lands Act [OCSLA):

LHWCA 33 U.S.C. §933

§933. Compensation for injuries where third per-

sons are liable

(a) Election of remedies. If on account of a disability

or death for which compensation is payable under

this Act, the person entitled to such compensation

determines that some person other than the

employer or a person or persons in his employ is

liable in damages, he need not elect whether to

receive such compensation or to recover damages

against such third person.

(b) Acceptance of compensation acting as assign-

ment. Acceptance of such compensation under an

award in a compensation order filed by the depu-

ty commissioner of Board shall operate as an

assignment to the employer of all right of the

4

person entitled to compensation to recover dam-

ages against such third person unless such person

shall commence an action against such third per-

son within six months after such award.

(c) Payment into section 944 fund operating as

assignment. The payment of such compensation

into the fund established in section 44 [33

U.S.C.S. §944] shall operated as an assignment to

the employer of all right of the legal represen-

tative of the deceased (hereinafter referred to as

representative’) to recover damages against

such third person.

(d) Institution of proceedings or compromise by

assignee. Such employer on account of such

assignment may either institute proceedings for

the recovery of such damages or may compromise

with such third person either without or after in-

stituting such proceeding.

(e) Recoveries by assignee. Any amount recovered

by such employer on account of such assignment,

whether or not as the result of a compromise,

shall be distributed as follows:

(1) The employer shall retain an amount

equal to—

(A) the expenses incurred by him in respect

to such proceedings or compromise (in-

cluding a reasonable attorney’s fee as deter-

mined by the deputy commissioner or

Board);

(B) the cost of all benefits actually furnish-

ed by him to the employee under section 7

[33 U.S.C.S. §907];

(C) all amounts paid as compensation;

5

(D) the present value of all amounts there-

after payable as compensation, such present

value to be computed in accordance with a

schedule prepared by the Secretary, and the

present value of the cost of all benefits

thereafter to be furnished under section 7 [33

U.S.C.S. §907], to be estimated by the depu-

ty commissioner, and the amounts so com-

puted and estimated to be retained by the

employer as a trust fund to pay such compen-

sation and the cost of such benefits as they

become due, and to pay any sum finally re-

maining in excess thereof to the person entitl-

ed to compensation or to the representative;

and

(2) The employer shall pay any excess to the

person entitled to compensation or to the

representative, less one-fifth of such excess

which shall belong to the employer.

(f) Institution of proceedings by person entitled to

compensation. If the person entitled to compensa-

tion institutes proceedings within the period

prescribed in section 33(b) [subsec. (b) of this sec-

tion] the employer shall be required to pay as com-

pensation under this Act, a sum equal to the ex-

cess of the amount which the Secretary determines

is payable on account of such injury or death over

the amount recovered against such third person.

(g) Compromise obtained by person entitled to

compensation. If compromise with such third per-

son is made by the person entitled tc compensa-

tion or such representative of an amount less than

the compensation to which such person or

representative would be entitled to under this

Act, the employer shall be liable for compensation

as determined in subdivision (f) only if the written

approval of such compromise is obtained from the

6

employer and its insurance carrier by the person

entitled to compensation or such representative

at the time of or prior to such compromise on a

form provided by the Secretary and filed in the of-

fice of the deputy commissioner having jurisdic-

tion of such injury or death within thirty days

after such compromise is made.

(h) Subrogation. Where the employer is insured

and the insurance carrier has assumed the pay-

ment of the compensation, the insurance carrier

shail be surbrogated to all the rights of the

employer under this section.

(i) Right to compensation as exclusive remedy.

The right to compensation or benefits under this

Act shall be the exclusive remedy to an employee

when he is injured, or to his eligible survivors or

legal representatives if he is killed, by the

negligence or wrong of any other person or per-

sons in the same employ: Provided, That this pro-

vision shall not affect the liability of a person

other than an officer or employee of the employer.

(Mar. 4, 1927, ch 509, § 33, 44 Stat. 1440; June 25,

1938, ch 685, §§ 12, 13, 52 Stat. 1168; Aug. 18,

1959, P.L. 86-171, 73 Stat. 391; Oct. 27, 1972,

P.L. 92-576, § 15(f)-(h), 86 Stat. 1262).

OCSLA 43 U.S.C. §1333

(a) Constitution and United States laws; laws of

adjacent States; publication of projected State

lines; international boundary disputes; restriction

on State taxation and jurisdiction. (1) The Con-

stitution and laws and civil and political jurisdic-

tion of the United States are hereby extended to

the subsoil and seabed of the outer Continental

Shelf and to all artificial islands, and all in-

stallations and other devices permanently or

7

temporarily attached to the seabed, which may be

erected thereon for the purpose of exploring for,

developing, or producing resources therefrom, or

any such installation or other device (other than

a ship or vessel) for the purpose of transporting

such resources, to the same extent as if the outer

Continental Shelf were an area of exclusive

Federal jurisdiction located within a State: Pro-

vided, however, That mineral leases on the outer

Continental Shelf shall be maintained or issued

only under the provisions of this Act.

(2) (A) To the extent that they are applicable

and not inconsistent with this Act or with

other Federal laws and regulations of the

Secretary now in effect or hereafter adopted,

the civil and criminal laws of each adjacent

State now in effect or hereafter adopted,

amended, or repealed are hereby declared to

be the law of the United States for that por-

tion of the subsoil and seabed of the outer

Continental Shelf, and the President shall

determine and publish in the Federal

Register such projected lines extending

seaward and defining each such area. All of

such applicable laws shall be administered

and e. /orced by the appropriate officers and

courts of the United States. State taxation

laws shall not apply to the outer Continental

Shelf.

(B) Within one year after the date of enact-

ment of this subparagraph [enacted Sept. 18,

1978], the President shall establish pro-

cedures for setting [setting] any outstanding

international boundary dispute respecting

the outer Continental Shelf.

(3) The provisions of this section for adoption

of State law as the law of the United States

8

shall never be interpreted as a basis for

claiming any interest in or jurisdiction on

behalf of any State for any purpose over the

seabed and subsoil of the outer Continental

Shelf, or the property and natural resources

thereof or the revenues therefrom.

(b) Longshoremen’s and Harbor Workers’ Com-

pensation Act applicable; definitions. With

respect to disability or death of an employee

resulting from any injury occurring as the result

of operations, conducted on the outer Continental

Shelf for the purpose of exploring for, developing,

removing, or transporting by pipeline the natural

resources, or involving rights to the natural

resources, of the subsoil and seabed of the outer

Continental Shelf compensation shall be payable

under the provisions of the Longshoremen’s and

Harbor Workers’ Compensation Act [33 U.S.C.S.

§§901 et seq.] For the purposes of the extension of

the provisions of the Longshoremen’s and Harbor

Workers’ Compensation Act [33 U.S.C.S. §§901

et seq.] under this section—

(1) The term ‘‘employee’’ does not include a

master or member of a crew of any vessel, or

an officer or employee of the United States or

any agency thereof or of any State or foreign

government, or of any political subdivision

thereof;

(2) the term ‘“‘employer’’ means an employer

of whose employees are employed in such

operations; and

(3) the term ‘“‘United States’’ when used in a

geographical sense includes the outer Con-

tinental Shelf and artificial islands and fixed

structures thereon.

9

This Petition also raises issues under the Federal Interst

Statute:

Federal Interest Statute 28 U.S.C. §1961

§1961. Interest

(a) Interest shall be allowed on any money judg-

ment in a civil case recovered in a district court.

Execution therefor may be levied by the marshal,

in any case where, by the law of the State in which

such court is held, execution may be levied for in-

terest on judgments recovered in the courts of the

State. Such interest shall be calculated from the

date of the entry of the judgment, at a rate equal

to the coupon issue yield equivalent (as determin-

ed by the Secretary of the Treasury) of the

average accepted auction price for the last auc-

tion of fifty-two week United States Treasury

bills settled immediately prior to the date of the

judgment. The Director of the Administrative Of-

fice of the United States Courts shall distribute

notice of that rate and any changes in it to all

Federal judges.

STATEMENT OF THE CASE

On May 6, 1970, several persons were either killed or

severely injured when a water heater exploded in the living

quarters (offshore modular unit) of a fixed drilling plat-

form. Movible Offshore, Inc. (‘‘Movible’’) was the owner of

the water heater and the offshore modular living quarters.

Movible was also the employer of those injured or killed in

this explosion. The fixed drilling platform was owned by

Shell Oil Company (‘Shell’), and was located on the Loui-

siana Outer Continental Shelf.

10

Following this casualty, Argonaut Insurance Com-

pany, Movible LHWCA’s workmen’s compensation car-

rier, paid compensation benefits under the Longshoremen’s

and Harbor Workers’ Compensation Act, 33 U.S.C. §901 et

seq. These compensation benefits were paid without entry

of a formal award by the Deputy Commissioner, because

Movible did not contest the claimants’ right to compensa-

tion. Thereafter, Argonaut filed suit against Shell Oil Com-

pany and other defendants, seeking reimbursement for the

workmen compensation benefits paid to the claimants and

other Movible employees injured as a result of the explo-

sion. Several of those injured, as well as the representatives

of those killed, also filed separate suits against Shell Oil

Company and other defendants. !

On June 6, 1974, and again on July 15, 1975, Chief

Judge Frederick J. R. Heebe of the United States District

Court for the Eastern District of Louisiana, rendered judg-

ment in these consolidated actions on the issue of liability

in favor of Shell Oil Company. The District Court found

that the active negligence of Movible was the proximate

cause for the explosion and resulting injuries and deaths.

On appeal, Olsen v. Shell Oil Co., 561 F.2d 1178 (5th

Cir. 1977), reh. en banc den., 565 F.2d 164 (5th Cir. 1977),

the United States Court of Appeals for the Fifth Circuit

! The plaintiffs in these consolidated cases are: (a) Mrs. Mary

Olsen on behalf of the children of her marriage to the deceased Kenneth

Mahaney, suing for the wrongfu! death of Kenneth Mahaney; (b) Mrs.

Christine W. Carvin, on behalf of herself and the children of hor marriage

to the deceased Joseph P. Carvin, suing for the wrongful death of Joseph

R. Carvin; (c) Mr. Gordon D. Wallace, suing in his own right for personal

injuries; (d) Argonaut Insurance Company, Movible’s workmen's com-

pensation carrier, suing for reimbursement of workmen's compensation

benefits paid to several claimants injured or killed, noninclusive of

Mahaney, Carvin and Wallace. Argonaut intervened as a party plaintiff

in these three actions.

11

affirmed the District Court’s findings and conclusions that

the explosion was proximately caused by the active

negligence of Movible. However, the Court of Appeals then

certified to the Louisiana Supreme Court certain questions

of Louisiana law,” and its effect on Shell Oil Company as

owner of the platform. Olsen v. Shell Oil., 574 F.2d 194 (5th

Cir. 1978). The Louisiana Supreme Court, Olsen v. Shell Oil

Co., 365 So.2d 1285 (La. 1978), contrary to then-established

precedent, extended the doctrine of Louisiana strict liabili-

ty and resolved the certified questions against Shell Oil

Company, and concluded that Shell Oil Company was

strictly (vicariously) liable, as owner of the fixed drilling

platform, for the explosion and resulting injuries and

deaths, notwithstanding that the active negligence of

Movible was the proximate cause of the casualty.

Thereafter, the United States Court of Appeal, Olsen

v. Shell Oil Co., 595 F.2d 1099 (5th Cir. 1979), resolved the

remaining questions of liability, and remanded these con-

solidated cases to the District Court for trial on the issue

of quantum (damages).

The issue of quantum was tried by Special

Magistrate on December 18-21, 1979. On June 29, 1981, the

Special Magistrate entered its proposed findings and

recommendations. Thereafter, the United States District

Court for the Eastern District of Louisiana, Chief Judge

Frederick J. R. Heebe, affirmed and modified the Special

Magistrate’s proposed findings and recommendations by

minute entry dated April 22, 1982. The District Court

found Shell Oil Company liable in tort in an amount less

* Included among the questions was the Louisiana tort doctrine

of strict liability under the Louisiana Civil Code Art. 2322, and its ap-

plication to the owner of a fixed drilling platform located on the Loui-

siana Outer Continental Shelf.

12

than the total workmen’s compensation benefits paid by

Argonaut to the injured claimants and the decedents’

representatives.? Nevertheless, the District Court held

that Argonaut, as the LHWCA workmen’s compensation

carrier, was entitled to complete reimbursement from Shell

Oil Company for all workmen’s compensation benefits paid

in the past, as well as all workmen’s compensation benefits

to be paid in the future.

On appeal, Olsen v. Shell Oil Co., 708 F.2d 976 (5th

Cir. 1983), the United States Court of Appeals jor the Fifth

Circuit affirmed the District Court’s judgment and award

on the issue of quantum. Specifically, the Court of Appeals

affirmed the District Court’s holding (1) that Shell Oil Com-

pany was to completely reimburse Argonaut for all

workmen’s compensation benefits paid to the claimants,

notwithstanding that Shell Oil Company’s liability in tort

to these claimants was less than those amounts paid as

workman’s compensation benefits; and (2) that Shell Oil

Company was to assume the administrative responsibility

for payment of any and all workmen’s compensation

benefits and medical expenses which would have to be paid

to these claimants in the future. The United States Court

of Appeals for the Fifth Circuit thereafter denied rehearing

en banc on September 26, 1983.

Shell now petitions for a writ of certiorari from this

judgment and opinion of the United States Court of Ap-

peals for the Fifth Circuit.

° For example, the District Court awarded Mary Olsen only

$16,000. However, Argonaut’s compensation obligation to the Olsen

family was much greater than this amount.

13

ARGUMENT

I. THE COURT OF APPEALS DECISION IS

CONTRARY TO THE STATUTORY PROVI-

SIONS OF THE LHWCA AND THE DECI-

SIONS OF THIS COURT INTERPRETING

THAT STATUTE.

Petitioner, Shell Oil Company’s liability is encom-

passed by a single judgment in tort for damages in each of

the personal injury and death cases; accordingly, peti-

tioner’s liability to the LHWCA compensation carrier

(Argonaut) for reimbursement of workmen’s compensation

benefits paid to claimants is limited to the amount of the

tort judgment. The Court of Appeals’ decision to the con-

trary is in direct conflict with the provisions of the

Longshoremen’s and Harbor Workers’ Compensation Act,

33 U.S.C. §901 et seg.

It is an elementary principle of workr:en’s compensa-

tion law that the compensation lien comes out of the

judgment—the injured employee is permitted to retain the

compensation subject to reimbursement to the employer

out of the tort damages collected from the negligent third

party tortfeasor. LHWCA §33(b,e,h), 33 U.S.C. §933 (b,e,h).

Haynes v. Rederi and A/S ALADDIN, 362 F.2d 345 (5th

Cir. 1966); Brock v. Baroid Div., National Lead Co., 339

F.Supp. 728 (W.D. La. 1972). See also Caldwell v. Ogden

Sea Transport, Inc., 618 F.2d 1037 (4th Cir. 1980). A cor-

ollary to this principle is that the negligent third party

tortfeasor can never be held liable for reimbursement to the

compensation carrier for more than the amount of damage

for which it is held liable in tort. Hinson v. S/S PAROS, 461

F.Supp. 219, 223 (S.D. Tex. 1978). See LHWCA §33(b,e,h),

33 U.S.C. §933 (b,e,h). Thus, LHWCA compensation carrier

14

Argonaut’s compensation lien is limited to the amount of

the tort judgment against third party Shell Oil Company.

Hinson v. S/S PAROS, 461 F.Supp. 219, 222-23 (S.D. Tex.

1978).

LHWCA §33 (33 U.S.C. §933) governs the rights of

the employee, the employer, and the compensation carrier

against third persons whose negligence was the cause for

the employee’s injury. Section 33 of the Act grants the

employer (or the employer’s compensation carrier) the right

to bring an action for reimbursement against the third per-

son in those instances where the employee fails to bring

such an action on his own behalf. See LHWCA §33(e & f),

33 U.S.C. §933 (e & f). It is plain from the face of the statute

that the negligent third party tortfeasor’s liability is en-

compassed and limited by the tort damages due the

employee. Compare LHWCA §33 (b,e,f,h,i), 33 U.S.C. §933

(b,e,f,h,i) with LHWCA §85(a), 33 U.S.C. §905(a).

This Honorable Court has held that the objective of

the reimbursement provisions of the LHWCA [§33 (33

U.S.C. §933)] is that ‘‘of placing the burden ultimately on

the company whose fault caused the injury.” Italia Societa

per Azioni di Navigazione v. Oregon Stevedoring Co., 376

U.S. 315, 324 84 S.Ct. 748, 754 {1964). See Federal Marine

Terminals Inc. v. Burnside Shipping Co., 394 U.S. 404, 420

n.22, 89 S.Ct. 1144, 1153 n.22 (1969). Thus the intent of §33

is to force the actively negligent third party which causes

injury to reimburse the non-negligent employer (or the

employer’s compensation carrier) whose only responsibility

for the injury is the compensation liabilitly imposed by the

statute. See LHWCA §5, 33 U.S.C. §905.

The decision of the United States Court of Appeals

for the Fifth Circuit in this instance is completely contrary

15

to the objective of LHWCA §33. The Court of Appeals deci-

sion permits the employer (or the employer's compensation

carrier) to recover from the third party tortfeasor over and

above that to which the third party tortfeasor is held liable

in tort. Moreover, the Court of Appeals decision permits

the employer (or the employer’s compensation carrier) to

recover in excess of the tort judgment against a non-

negligent vicariously liable third party. The decision of the

Court of Appeals does not “‘place the burden ultimately on

the company whose default caused the injury’’, particular-

ly in this instance where the negligent party was the

claimants’ LHWCA employer, Movible. Therefore, peti-

tioner submits the Court of Appeals decision is completely

without statutory authority, nor is it in compliance with

the statutory objective of the LHWCA.

Nor is the Court of Appeals decision compatible with

the decision of this Honorable Court in Federal Marine Ter-

minals, Inc. v. Burnside Shipping Co., 394 U.S. 404, 89

S.Ct. 1144 (1969). There, the United States Supreme Court

held LHWCA §33 was not the exclusive source of the

employer’s remedies against negligent third parties for

reimbursement of workmen's compensation benefits. In

Burnside, this Honorable Court held that the employer (or

his compensation carrier) could proceed against the

negligent third party on the theory that the third party

breached some duty owed directly to the employer. The

Burnside remedy applies only to actively negligent third

party tortfeasors; the Burnside remedy does not apply to

the vicariously liable third party, particularly where the ac-

tively negligent party is the LHWCA employer. Moreover,

the Burnside remedy is limited to those situations where

state law limits recovery in tort (the applicable Louisiana

16

law in this instance imposes no such limitation).4

The Court of Appeals decision is contrary to Burn-

side. Unlike the situation in Burnside, Shell Oil Company

breached no independent duty owed LHWCA employer

Movible, or its compensation carrier, Argonaut. Instead,

this casualty was proximately caused by the active

negligence of the LHWCA employer, Movible. Petitioner,

Shell Oil Company, only was found strictly (vicariously)

liable under a strained interpretation of Louisiana law.>

Therefore, petitioner submits the Court of Appeals erred in

holding a non-negligent, vicariously liable third party liable

for workmen’s compensation benefits in excess of the tort

judgment against said third party. Therefore, petitioner

submits the Court of Appeals decision has no statutory or

jurisprudential basis, and that the Court of Appeals deci-

sion should be reversed.

II. THE LHWCA IMPOSES NO OBLIGATION

ON THE THIRD PARTY TORTFEASOR TO

ASSUME THE ADMINISTRATIVE RESPON-

SIBILITY FOR THE DISBURSEMENT OF

FUTURE WORKMEN’S COMPENSATION

BENEFITS. THE COURT OF APPEALS ER-

RED AS A MATTER OF LAW IN

OBLIGATING PETITIONER TO ASSUME

THE ADMINISTRATION OF FUTURE

WORKMEN’S COMPENSATION CLAIMS

AGAINST THE COMPENSATION CARRIER

ARGONAUT.

4 On its facts, Burnside applies only to those actions between the

vessel and the stevedore-employer, and is based exclusively on federal

maritime law. In the instant action, the injuries and deaths occurred on

a fixed drilling platform located on the Louisiana Outer Continental Shelf;

the applicable law is Louisiana law, adopted as surrogate federal law pur-

suant to the Outer Continental Shelf Lands Act, 43 U.S.C. §1333.

5 Louisiana Civil Code Art. 2322.

17

The District Court imposed upon petitioner the

obligation to undertake the payment and administration of

the existing claims against Argonaut for workmen's com-

pensation arising out of the casualty; the Court of Appeals

affirmed this decision. In effect, the judgment forces peti-

tioner, an oil company, to enter into the business of an

American casualty insurance company. Under the Court of

Appeals’ decision, petitioner will now have to assume the

burden of issuing weekly compensation checks, paying the

various medical bills which are submitted by the claimants,

and monitoring the continued viability of the compensa-

tion claims. Such judicial action on the part of the Court of

Appeals is without statutory authority, and imposes an

unreasonable financial and administrative burden upon

petitioner.

Moreover, the Court of Appeals decision imposes a

greater obligation than the straightforward award of a

money judgment to the compensation carrier; instead, the

Court of Appeals decision additionally (and improperly)

places the cost of administration of the compensation

claims on petitioner, rather than the compensation carrier.

Nowhere does the LHWCA authorize the employer/com-

pensation carrier to recover (in addition to the workmen's

compensation benefits) the cost of administration of the

compensation claims from the third party. The statutory

scheme behind LHWCA makes clear that the compensa-

tion carrier will continue to be liable to the workmen’s com-

pensation claimants for future benefits, even in the case of

the claimants’ successful suit against a third person for

money damages, and even in the case of the compensation

carrier’s successful suit for reimbursement against the

negligent third person. See LHWCA §33(f), 33 U.S.C.

§933(f). Thus, the statute places the on-going costs of ad-

ministration of the compensation claim squarely on the

18

compensation carrier, not on the third party tortfeasor.

The Court of Appeals’ decision affirming the District

Court’s judgment also works as an ‘open-ended judgment”

against petitioner in that (1) it imposes an infinite period

for which petitioner will be liable to pay damages, and (2)

the judgment, as written, is not for a sum certain, contrary

to well-established principles of tort law. In effect, the

Court of Appeals has given the LHWCA compensation car-

rier “carte blanche’’ recovery against petitioner with

respect to any future payments which Argonaut may

decide to incur. The potential for abuse is readily apparent.

This ‘‘carte blanche’’ recovery for the LHWCA com-

pensation carrier is completely contrary to the established

view of the courts. The law does not permit an infinite

period of liability for prospective damages; the law permits

only a finite period, the reason being that only then can

damages be calculated with any degree of reasonable preci-

sion. The ‘“‘maintenance and cure’’ cases best illustrate this

point. See Farrell v. United States, 336 U.S. 511, 519, 69

S.Ct. 707, 711 (1949); Calamar S.S. Corp. v. Taylor, 303

U.S. 525, 531,-58 S.Ct. 651, 655 (1938). In the

“maintenance and cure’’ cases, the courts impose a limita-

tion of ‘‘maximum cure’ on the extent of the seaman’s

ability to recover maintenance and cure: the seaman can

recover up until the point his condition reaches maximum

cure. The rationale for this limitation on the seaman’s

recovery is that any damages beyond this period of max-

imum care are not capable of precise measurement. |

The similarity of maintenance and cure to workmen's

compensation logically dictates that the same rationale

apply here—petitioner Shell should not be held liable

beyond that period of time in which damages can be

19

calculated with reasonable precision. The prohibition

against the award of speculative damages is well-settled.

See Story Parchment Co. v. Patterson Parchment Paper

Co., 282 U.S. 555, 562-63, 51 S.Ct. 248, 250 (1931); Robins

Drydock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134,

72 L.Ed. 290 (1927). See also Compania Pelineon De

Navegacion S.A. v. Texas Petroleum Co., 540 F.2d 53,

55-56 (2d Cir. 1976); Aldon Industries, Inc. v. Don Myers &

Associates, Inc. 517 F.2d 188, 191 (5th Cir. 1975);

Travelers Indemnity Co. v. Peacock Construction Co., 423

F.2d 1153, 1157 (5th Cir. 1970).

Moreover, the Court of Appeals decision is without

statutory basis; there is nothing in the LHWCA permitting

the court to obligate petitioner to pay any and all claims for

workmen’s compensation benefits which might arise in the

future. Nor is there anything in the statute permitting the

court to obligate petitioner to administer the future

workmen’s compensation claims of the claimants. Indeed,

there is contrary authority. See Hinson v. S/S PAROS, 461

F.Supp. 219, 223-24 (S.D. Tex. 1978) [compensation carrier

barred from recovery of total projected amount of

workmen's compensation benefits that would have to be

paid in future]. Accordingly, petitioner submits the Court

of Appeals decision obligating petitioner to assume the role

of the compensation carrier is in error, and should be

reversed.

III. THE COURT OF APPEALS DECISION AF-

FIRMING THE AWARD OF PREJUDGMENT

INTEREST IN AN OCSLA CASE IS A COM-

PLETE DEPARTURE FROM CONTROLLING

PRECEDENT ON THIS ISSUE, AND IS CON-

TRARY TO FEDERAL LAW AS APPLIED

UNDER OCSLA.

1%

20

Under the Outer Continental Shelf Lands Act,

(OCSLA), 43 U.S.C. $1333 et seq., federal law is the

substantive law to be applied on the Outer Continental

Shelf. The law of the adjoining state is to be applied only

in the absence of an inconsistent federal law; where state

law is found inconsistent, federal law, and not state law, is

the applicable law for personal injury and death actions

arising on the Outer Continental Shelf. Rodrigue v. Aetna

Casualty & Surety Co., 395 U.S. 352, 89 S.Ct. 1835 (1969).

See Gulf Oil Co. v. Mobil Oil Corp., 453 U.S. 473, 101 S.Ct.

28 70 (1981); Chevron Oil Co. v. Huson, 404 U.S. 97, 92

S.Ct. 349 (1971). The Rodrigue mandate is clear: the ex-

istence of Federal law on a substantive issue bars the ap-

plication of state law in resolving that issue; the federal law

still is pre-eminent over state law when substantive rights

on the Outer Continental Shelf are at issue. Rodrigue, 395

U.S. at 355-58, 89 S.Ct. at 1837-38.

There is controlling federal law on the subject of

legal interest, which precludes application of the state in-

terest statute (La. Rev. Stat. §13:4203). The federal in-

terest statute, 28 U.S.C. §1961, provides:

Interest shall be allowed on any money judgment

in a civil case recovered in a district court. Execu-

tion therefore may be levied by the marshall, in

any case where, by the law of the state in which

such court is held, execution may be levied for in-

terest on judgments rendered in the courts of this

state. Such interest shall be calculated from the

date from entry of the judgment, at the rate ...

(emphasis added).

The Court of Appeals interpreting the federal interest

statute in cases arising out of the Outer Continental Lands

Act, have consistently held that the federal interest statute

21

absolutely precludes an award of prejudgment interest.

Musial v. A&A Boats, Inc., 696 F.2d 1149, 1154 (5th Cir.

1983); Aymond v. Texaco, Inc., 554 F.2d 206, 211-12 (5th

Cir. 1977); Berry v. Sladco, Inc., 495 F.2d 523, 528 (5th Cir.

1974); Evans v. Chevron Oil Co., 435 F.Supp. 1097 (E.D.

La. 1977}. aff'd per curiam 616 F.2d 565 (5th Cir. 1980).

These courts of appeals holdings are clear and specific: pre-

judgment interest is not to be awarded in actions arising

under the OCSLA; the federal interest statute precludes as

a matter of federal law an award of prejudgment interest

for cases arising on the Outer Continental Shelf. Such

holdings are completely consistent with Rodrigue’s man-

date: federal law (28 U.S.C. §1961) is to control over state

law (La. Rev. Stat. §13:4203), where the federal law is in-

consistent with the state law.

Therefore, the Court of Appeals decision in the ins-

tant matter is simply inconsistent with previous precedent

on this issue, and is certainly contrary to this Honorable

Court's mandate in Rodrigue v. Aetna Casualty & Surety

Co. Accordingly, petitioner submits that the Court of Ap-

peals award of prejudgment interest in the instant matter

should be reversed.

22

CONCLUSION

For these reasons, a writ of certiorari should issue to

review the decision of the United States Court of Appeals

for the Fifth Circuit.

Respectfully submitted,

JOHN O. CHARRIER, JR.

ROBERT T. LEMON, II

Jones, Walker, Waechter, Poitevent,

Carrere & Denegre

225 Baronne Street, 28th Floor

New Orleans, Louisiana 70112

Counsel for Shell Oil Company

Petitioner

23

CERTIFICATE OF SERVICE

I do hereby certify on this 17 ane day of November,

1983, that three copies of this Petition for Writ of Cer-

tiorari were mailed, postage prepaid, to all counsel of

record in this matter.

JOHN O. CHARRIER, JR.