Amicus Curiae Brief — Dutra Grp. v. Batterton, 139 S. Ct. 627 (2018) (No. 18-266)

No. 18-266

—

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

JAMES T. BROWN

Counsel of Record

GLENN R. LEGGE

JEANIE TATE GOODWIN

Marc E. KUTNER

HOLMAN FENWICK WILLAN USA LLP

5151 San Felipe, Suite 400

Houston, Texas 77056

(713) 917-0888

Jim. Brown@hfw.com

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE................--.------ 1

SUMMARY OF THE ARGUMENT .................... ~

f ARES eh SE ee ee 9

I IADC ARE ALREADY DE-

I.

B.

D.

i

Contractual Obligations in the Offshore

Energy Industry Deter Unsafe Con-

GD cnintitienditeainamniathhinipratiudcnimiditiiniinanines

IS ennicccnsnncedannmnasencnneansonnsnempesmpemmantiemns

ss

TABLE OF AUTHORITIES

Page

CASES

Airline Stewards and Stewardesses Ass’n v.

American Airlines, Inc., 573 F.2d 960 (7th Cir.

RE a a 23

Aguilar v. Standard Oil Co., 318 U.S. 724 (1943)......... 19

American R.R. Co. of Porto Rico v. Didricksen,

Be ee IEE crceriitinenisheniceniinccisnnsinitneniitarinsomeenes 10

Atlantic Sounding Co. v. Townsend, 557 U.S. 404

RE Ee ce eee Sn see 22

Boudreaux v. U.S., 280 F.3d 461 (5th Cir. 2002) ........ 20

Calmar S.S. Corp. v. Taylor, 303 U.S. 525 (1938)....... 19

v. Star Fish & Oyster Co., 325 F.2d 397

ETE UIT ccichuchsssnierttpatinsieniiteniiniapnlitinnmeiniaititiiasinlacatenesi 20

Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008)........ 23

Fuszek v. Royal King Fisheries, Inc., 98 F.3d 514

ES ee Ce ee 25

Garrett v. Moore-McCormack Co., 317 U.S. 239

Sir hicccnisinsiesnibiariacinniiesteiionseegtimpenmeeetannmnieensaniies 20, 21

The Genesee Chief, 53 U.S. 433 (1851) ....................... 27

Gulf, Colo., & Santa Fe Ry. Co. v. McGinnis, 228

Se SUITE cintatsihiniicnnnctisenimansianiietntnbnapeitamemmnneensene 10

Harmon v. United States, 59 F.2d 372 (5th Cir.

RES RE PEE Vcore: One n NOnnS Tne 20

Island Operating Ca. v. Jewell, No. 6:16-cv-00145,

2016 WL 7436665 (W.D. La. 2016)........................... 14

iis

TABLE OF AUTHORITIES — Continued

Page

Johnson v. John F. Beasley Constr. Co., 742 F.2d

I 22

Lake Shore & M.S. Ry. Co. v. Prentice, 147 U.S.

EE 9

McBride v. Estis Well Service, L.L.C., 768 F.3d

IN TIT citisintsisiicennnpentionsbastnmnenenitanbiaemtbaeannens 27

MacDonald v. Kahikolu Ltd., 442 F.3d 1199 (9th

GE TD iniitusndiitindchnibitesnsicnitdieininianebinchinineniteaeniniieemeneesl 25

McDermott, Inc. v. AmClyde, 511 U.S. 202 (1994)......... 23

McDermott Int'l, Inc. v. Wilander, 498 U.S. 337

RTE oC CCE re ee Oe 22

Michigan Cent. R.R. Co. v. Vreeland, 227 U.S. 59

EE rN ev aa a? ND 10

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) ...19, 20

Miles v. Melrose, 882 F.2d 976 (5th Cir. 1989) .....19, 20

Mitchell v. Trawler Racer, Inc., 362 U.S. 539

Sirti nidendtinindiaininesbninntiiannncuignmnndiitinnieiinainesaageseens 19

Northwestern Nat. Cas. Co. v. McNulty, 307 F.2d

Ok 23

Pacific SS. Co. v. Peterson, 278 U.S. 130 (1928)......10, 24

Rogers v. Missouri Pac. R.R. Co., 352 U.S. 500

ISIE atsisehnticeanriniictbtaceanennieneeindiantiiniaidbbigephineipinenlanitasnitnatendase 19

Roy Crook & Sons, Inc. v. Allen, 778 F.2d 1037

SE EE GNI nthhtndncectnsiscctentatanecnnnidepetenniinseenintenmened 25

S. Pac. Co. v. Jensen, 244 U.S. 205 (1917)................... 27

Seas Shipping Co. v. Sieracki, 328 U.S. 85 (1946) ........ 24

iv

TABLE OF AUTHORITIES — Continued

Page

Smith v. Trans-World Drilling Co., 772 F.2d 157

EEE, CE tscsinenentcsnenemnnemsnnnennntiqnnenens 25

St. Louis, LM. & S.R. Co. v. Craft, 237 U.S. 648

Set bioncinatdeaenensucdentmmnnnnadmeriinatmenaninenneets 9

U.S. v. Moss, 872 F.3d 304 (5th Cir. 2017).................. 14

Warren v. United States, 340 U.S. 523 (1951) ............ 19

Wilburn Boat Co. v. Fireman’s Fund Insurance

i 26

STATUTES

ke 21

8 nee 10

I iitcientintininnsitinineniimnimnnnsemnnns 5

a 11

a EE i SEE ccternccrerratennmnrnminn 10

TTD innsnik iccicttnirientiidbisiiratiiansniaibemapereniiennimainttl 21

icin atin bniartn anita 11

I ininiiierinicinvnicermerntrintianaididiiienmeieniatneiialll 21

pS eee 19

Judiciary Act of 1789, 1 Stat. 76, s. 9 (1789).............. 20

RULES AND REGULATIONS

ee 11

30 C.F.R. §§ 250.1900 to 250.1933................cccceceseeees 12

Vv

TABLE OF AUTHORITIES — Continued

Page

eee 13

eee 13

LE ee ee nee 13

Ee 13

TT 0s enssnseninnatentnnmmennneeinnintinnnnnt 13

I a eeetatesehiremeeneinsietentitial 13

I cnet rea nnieetitsinateasiaie 14

I IID (sr nrierrinendicnemniatenmneeNentt 15

8 15

sian rtntaeanientetnmemtameciatiaiel 15

ST TIT tinct diainiecstalcninsidienietinenndienaabiahinneidl 11

OTHER AUTHORITIES

81 Fed. Reg. 25,888 (April 29, 2016) ......................... 14

83 Fed. Reg. 22,128 (May 11, 2018)....................0000000 14

Julia M. Adams & Karen K. Milhollin, Indem-

tical Primer, 27 Tul. Mar. L.J. 43 (2002)........... 16, 18

APPEL News Staff, Academy Case Study: The

Deepwater Horizon Accident Lessons for NASA,

4.3 Academy Case Study (May 10, 2011), avail-

able at https//appel._nasa.gow/2011/06/1 1/aa_44_

acs_deepwater_horizon_lessons-html ..................... 7

vi

TABLE OF AUTHORITIES — Continued

Baker Hughes’ North America Rig Count, Jan.

18, 2019, http-//phx.corporate-ir.net/phoenix.

zhtm!?c=79687 &p=irol-reportsother.................

Blade Energy Partners, Applied Advancements

in Technologies that Continue Increasing Wells’

Safety, Environmental Protection & Opera-

tions Across the Upstream Life Cycle (Aug. 29,

2018), https//www.blade-energy.com/applied-

advancements-in-technologieds/..........................

BSEE OCS Civil Penalty Program Policy and

Procedures Guidebook, Sept. 2013, https//www.

governmentattic. org/22docs/BSEE-OCScivil

PenPgmProcedGuidbk_2013.pdf ...................000+-

BSEE, Offshore Incident Statistics, https://www.

(last visited Jan. 26, 2019) ..............cccccceeeeeeseeeees

BSEE, Interagency Collaboration, https://www.

ps/interagency (last

gov/newsroom/partnershi

ST

George W. Bush, President, Remarks by the

President to Capital City Partnership (May

= 2001), available at https://georgewbush-

/news/releases/200 1/05/

20010517-2. BRIE wccceccscsensseonesonsuuncsnesecessencasesnecees

John M. Cushing, Jr., The Real Deal on Remote

Real-Time Monitoring, July 29, 2016, https://

www.bsee.gov/blog-post/the-real-deal-on-remote-

vii

TABLE OF AUTHORITIES — Continued

Department of Defense, 2016 Operational En-

ergy Strategy, https://www.acq.osd.mil/eie/OE/

a FD cceccccesescssccpccnsincscressoscnececesscescsees

Tom DiChristoper, US Spends $81 Billion a Year

to Protect Global Oil Supplies, Report Esti-

mates, CNBC, Sept. 21, 2018, https://www.cnbc.

com/20 18/09/2 1/us-spends-8 1 -billion-a-year-to-

protect-oil-supplies-report-estimates. htm! .......

Engerrand & Bale, Seaman Status Reconsid-

ered, 24 S. Tex. L.J. 431 (1983)...............cccceeeeeeee

Haynes & Boone, LLP Oil Patch Bankruptcy

Monitor, Jan. 7, 2019, http//www.haynesboone.

com/Publications/energy-bankruptcy-monitors-

CR IU GID ccccccccccccccccazecscsersensesersesssosssoussssoessece

Timothy Gardner, U.S. Military Marches For-

ward On Green Energy, Despite Trump, Reu-

ters (Mar. 1, 2017), https://www.reuters.com/

article/us-usa-military-green-energy-insight/u-s-

military-marches-forward-on-green-energy-

despite-trump-idUSKBN1683BL .................0-+-.

Michael A. Golemi & William W. Pugh, Hoping

for the Best, Preparing for the Best: “Don’t

Worry, We Have Indemnity,” The Advocate,

Spring 2017, available at https//www.liskow.com/

portalresource/H

I ileal liatienatbbaliie

Page

secnees 5

TABLE OF AUTHORITIES — Continued

William Joyce, Oil Dependency: a Subtle but Se-

rious Threat, American Security Project (June

4, 2013), https//www.americansecurityproject.

org/oil-dependency-a-subtle-but-serious-threat/

Clifford Krauss, Falling Oil Prices May Make

Trump Happy but They Pose Risks for U.S.,

N.Y. Times, Nov. 29, 2018, available at https://

William L. Leffler et al., Deepwater Petroleum

Exploration & Production: A Nontechnical

....... .. seenainineiesesnsoens

MARAD, About Us, Nov. 13, 2018, https//www.

maritime.dot.gov/about-us.....................000.s0000+.

Nat'l Comm’n on the BP Deepwater Horizon Oil

Spill and Offshore Drilling, Deep Water: The

Gulf Oil Disaster and the Future of Offshore

Drilling (Jan. 2011), https//www.govinfo.gov/

Barack Obama, President, Remarks by the

President in the State of the Union Address

(Jan. 24, 2012), available at https://obamawhite

house.archives.gov/the-press-office/20 1 2/0 1/24/

remarks-president-state-union-address...........

PWC, Impacts of the Oil and Natural Gas Industry

on the US Economy in 2015, July 2017, at E1,

https://www.api.org/news-policy-and-issues/

american-jobs/economic-im pacts-of-oil-and-

natural-gas (last visited Jan. 24, 2019)............

Page

ix

TABLE OF AUTHORIT F®© — Continued

Restatement (Second) of Torts § 908 (1979) ................. 9

David W. Robertson, Injuries to Marine Petro-

leum Workers: A Plea for Radical Simplifica-

tion, 55 Tex. L. Rev. 973 (1977) ................000000 1, 7, 22

Statement of Brian Salerno, Director of BSEE,

before the Committee on Natural Resources

Subcommittee on Energy and Mineral Resources,

U.S. House of Representatives, March 2, 2016,

https-//docs.house.gov/Committee/Calendar/By

Event.aspx?EventID=104578B .................cccccceeeeeeeeee 14

Thomas J. Schoenbaum, Admiralty and Mari-

time Law (5th ed. West 2012) ................cccccccceceeeeees 18

U.S. Department of the Interior, Budget Justifi-

cations and Performance Information, Fiscal!

Year 2018, Bureau of Safety and Environmen-

tal Enforcement 42, https://www.doi.gov/bpp/

budget-justifications (FY 2018 BSEE)................... 15

U.S. Department of the Interior, National Re-

sources Revenue Data, Gulf of Mexico, https://

revenuedata.doi.gov/explore/offshore-gulf/ (last

CE ey Sees SI cstiectanideeretccenssccnssiisienscuictzemneccecees 4

U.S. Energy Information Administration, Today

In Energy, United States Remains the World’s

Top Producer of Petroleum and Natural Gas

Hydrocarbons, May 21, 2018, https://www.eia.

gov/todayinenergy/detail.php?id=36292................... 2

TABLE OF AUTHORITIES — Continued

Page

U.S. Energy Information Administration, Gulf of

Mexico Fact Sheet, July 17, 2018, https-//eia.

gov/special/gulf_of_mexico/data.php ........................ 4

Wilson Elser, Punitive Damages Review, 2014

ed., https://www.wilsonelser.com/news_and_

EE Si icireccecnenntesnsssncsvastecsecciineensesece 26

1

INTEREST OF AMICUS CURIAE'

Production of oil in United States waters began in

1894 from piers in the Santa Barbara Channel with

the first offshore platform constructed in 1932 off the

coast of California. After World War II, offshore drilling

and production grew exponentially with tens of thou-

sands of wells drilled in the waters of over seventy

countries.”

Founded in 1940, the International Association of

Drilling Contractors (IADC) is a non-profit member

association dedicated to improving safety and advanc-

ing drilling technology in the upstream petroleum in-

dustry. At the core of [ADC’s mission is an imperative

to promote the highest standards of stewardship in in-

dustry safety standards, environmental integrity, and

operational efficiency. As part of that mission, the

IADC strives for reasonable regulation and legislation

governing the work of its members.

The oil and gas industry provides the fuel that

powers the world economy. Despite its name, the [ADC

includes more than just drilling contractors (compa-

nies who own and operate land or offshore drillings

' Pursuant to Sup. Ct. R. 37.6, amicus curiae and its counsel

state that none of the parties to this case nor their counsel au-

thored this brief in whole or in part, and that no person or entity

made a monetary contribution specifically for the preparation or

submission of this brief. Amicus curiae files this brief with the

written consent of all parties, copies of which are on file in the

Clerk’s Office.

® David W. Robertson, Injuries to Marine Petroleum Workers:

A Plea for Radical Simplification, 55 Tex. L. Rev. 973, 973 (1977).

2

rigs). Its members also include operators and produc-

ers (companies engaged in exploring for and producing

oil and natural gas) and other companies associated

with the production of oil and gas (including service

companies, equipment manufactures, and consult-

ants). The LADC is committed to promoting responsible

operations by fostering industry best practices that

mitigate negative impact and maximize the benefits of

drilling to the betterment of its workers, the economy,

and the country.

The U.S. is currently the world’s top producer of

oil and natural gas.’ This domestic oil and gas produc-

tion enables our energy independence by lessening our

reliance on foreign oil and gas, particularly during

periods of increased tensions in international trade.

The United States spends $81 billion a year to protect

global oil supplies and provide continuous fuel to

American gas stations.* In 2001, President George W.

Bush, while discussing the importance of diversifying

the country’s energy supplies for national security,

stated that an overdependence on any source of energy

from a foreign source, “leaves [the United States] vul-

nerable to price shocks, supply interruptions, and in

* U.S. Energy Information Administration, Today In Energy,

United States Remains the World’s Top Producer of Petroleum and

Natural Gas Hydrocarbons, May 21, 2018, https//www.eia.gov/today

inenergy/detail. php?id=36292.

* Tom DiChristoper, US Spends $81 Billion a Year to Protect

Global Oil Supplies, Report Estimates, CNBC, Sept. 21, 2018,

https://www.cnbe.com/20 18/09/2 1/us-spends-8 1 -billion-a-year-to-

protect-oil-supplies-report-estimates. html.

3

the worst case, blackmail.” More than a decade later,

in 2012, President Barack Obama stated that the De-

partment of Defense was the world’s largest consumer

of energy® for fueling military vehicles, ships, and

planes.’ The Department of Defense itself recognizes:

Energy is a fundamental enabler of military

capability, and the ability of the United States

to project and sustain the power necessary for

defense depends on the assured delivery of

this energy. It must be available at home and

abroad, over great distances, through adverse

weather, and across air, land, and sea, often

against determined adversaries.*

In 2017, Reuters reported that while the use of oil

for the U.S. military declined by 20% from 2007 to

2015, the decline was due to the decrease in combat

operations rather than a rising efficiency and use of

renewable energy.’ Although the effort of policymakers

* George W. Bush, President, Remarks by the President to

Capital City Partnership (May 17, 2001), available at https://

georgew bush-whitehouse. archives. gov/news/releases/200 1/05/

200105 17-2.html.

®° Barack Obama, President, Remarks by the President in the

State of the Union Address (Jan. 24, 2012), available at https://

obamawhitehouse_archives.gov/the-press-office/20 12/0 1/24/remarks-

president-state-union-address.

" William Joyce, Oil Dependency: a Subtle but Serious Threat,

American Security Project (June 4, 2013), https//www.american

securityproject.org/oil-dependency-a-subtle-but-serious-threat/.

* Department of Defense, 2016 Operational Energy Strategy,

https://www.acq.osd_mil/eie/OE/OE_library. html.

® Timothy Gardner, U.S. Military Marches Forward On Green

Energy, Despite Trump, Reuters (Mar. 1, 2017), https//www.reuters.

4

to move towards green energy is commendable, fuels

produced by the oil and gas industry continue to power

the national defense interests of the United States.

This record production of oil and gas also improves

our economy in a number of ways. Production at home

allows for export and sale of U.S. hydrocarbons abroad.

It provides millions of jobs for American workers." In

addition, federal and state governments receive sub-

stantial revenue from the leasing of offshore lands for

oil and gas development.

Offshore production in federal waters of the Gulf

of Mexico alone accounts for 18% of total U.S. crude oil

production." In 2017, over 600 million barrels of oil

and over one billion mcf of natural gas were produced

in the Gulf of Mexico.” The producing companies paid

the federal government more than $3.7 billion in roy-

alties, rents, bonuses, and other fees in order to pro-

duce this oil and gas.” In turn, the federal government

com/article/us-usa-military-green-energy-insight/u-s-military-marches-

forward-on-green-energy-despite-trump-idUSKBN 1683BL.

” PWC, Impacts of the Oil and Natural Gas Industry on the

US Economy in 2015, July 2017, at E1, https//www.api.org/news-

policy-and-issues/american-jobe/economic-impacts-of-cil-and-natura!-

gas (last visited Jan. 24, 2019) (finding that in 2015, over ten mil-

lion U.S. jobs were supported by natural gas and oil).

" US. Energy Information Administration, Gulf of Mexico

Fact Sheet, July 17, 2018, https//www.eia.gov/special/gulf of _

mexico/data._php.

“ U.S. Department of the Interior, National Resources Reve-

nue Data, Gulf of Mexico, https://revenuedata_doi.gov/explore/off-

shore-gulf? (last visited Jan. 21, 2019).

” Id.

5

paid a portion of these revenues to states adjacent to

the Gulf of Mexico.*

The importance of the offshore oil and gas indus-

try in the U.S. was further highlighted in 2014 when

oil prices collapsed. The downturn resulted in a loss of

more than 160,000 jobs and bankrupted a number of

offshore drilling companies.” Further, the active rig

count (another market indicator) plummeted as drill-

ers took their rigs out of service."*

Members of the LADC employ offshore oil and gas

workers who make up a specialized subset of Jones Act

seamen. Although some offshore workers in the energy

sector work on installations permanently affixed to the

ocean floor, many work on specialized floating struc-

semi-submersibles, jackup rigs, and drilling barges

(collectively referred to as mobile offshore drilling

™ 43 U.S.C. § 1337(gX2).

“ Clifford Krauss, Falling Oil Prices May Make Trump

|

:

.

producers who

have filed for bankruptcy since the beginning of 2015. Haynes &

Boone, LLP Oil Patch Bankruptcy Monitor, Jan. 7, 2019, http-//

www haynesboone.com/Publications/energy-bankruptcy-monitors-

and-surveys. The list has reached 167. Id. at pp. 7—11.

“© Baker Hughes’ North America Rig Count, Jan. 18, 2019,

http//phx.corporate-ir_net/phoenix.zhtm!?c=79687 &p=irol-reports

other (Excel spreadsheet entitled “North America Rotary Rig

Count (Jan 2000—Current),” tab entitled “Gulf of Mexico Split”).

6

units or MODUs). These vessels are generally con-

tracted by operators for multi-million to multi-billion

dollar offshore oil and gas projects. [ADC members are

involved in the ownership, operation, maintenance,

and regulatory compliance attendant to these MODUs.

Workers on these offshore drilling rigs are highly

trained, well-compensated specialists who regularly

deal with operational and environmental! hazards that

traditional seamen never encounter. Before a MODU

begins drilling, the vessel must “rig up” with extraor-

dinarily large and heavy equipment such as a lower

operations to proceed safely in compliance with regu-

latory and industry standards. Workers on the drill

floor must keep downhole pressures under control

through the use of complex equipment such as blow-

out preventers, hydraulic actuators, and chemically

weighted drilling fluids introduced into the wellbore

heavy drill pipe and casing that is lifted above the drill

floor and then lowered to drill wells up to 35,000 feet

into the earth."’ In addition to valuable hydrocarbons,

deepwater oil and gas wells may also contain toxic

gases such as hydrogen sulfide and carbon dioxide.

Further, these drilling, completion, and workover oper-

ations occur around the clock in all manner of weather

'’ Blade Energy Partners, Applied Advancements in Technol-

ogies that Continue Increasing Wells’ Safety, Environmental Protec-

tion & Operations Across the Upstream Life Cycle 15 (Aug. 29, 2018),

7

conditions and sea states."* Even NASA has studied

deepwater drilling for insight relative to safe opera-

tions in a hostile work environment.”

While a traditional seaman may face normal risks

arising from the operation of a traditional ship at sea

(operating the vessel equipment in a dynamic environ-

ment under adverse weather and sea conditions), off-

shore oil and gas workers working aboard MODUs face

those and many more non-traditional risks. As one

commentator put it: “The perils peculiar to the drilling

industry are compounded by all the dangers of the

sea.” These vessel-based oil and gas workers may face

the traditional perils of the sea, but they also contend

with hazards associated with drilling thousands of feet

into the earth from a MODU located thousands of feet

above the sea floor. They are extensively trained and

must comply with safety and environmental regula-

tions specific to the offshore oil and gas industry, in

addition to the traditional regulatory regimen encoun-

tered when conducting vessel operations at sea.

“ See generally William L. Leffler et al., Deepwater Petro-

leum Exploration & Production: A Nontechnical Guide (PennWell

2003).

* APPEL News Staff, Academy Case Study: The Deepwater

Horizon Accident Lessons for NASA, 4.3 Academy Case Study

(May 10, 2011), available at https-//appel._nasa.govw/201 1/05/1 l/aa_

44 acs deepwater horizon_lessons-htm//.

» David W. Robertson, Injuries to Marine Petroleum Workers:

A Plea for Radical Simplification, 55 Tex. L. Rev. 973, 973 (1977).

8

The LADC is deeply concerned about the effect the

decision below could have on the upstream petroleum

industry and its special subset of seamen.

*

SUMMARY OF THE ARGUMENT

Rigorous and protective compensation schemes

for seamen already exist. Congress occupies those wa-

not part of that arrangement. Nevertheless, as a prac-

tical matter, this rigorous compensation scheme does

have a deterrent effect in its present form that compels

safe operations—without punitive damages. Congress

has not ignored the need for deterrence and punish-

ment of unsafe actors in the offshore oilfield. It has set

a course that occupies those waters by virtue of its cre-

ation of numerous federal agencies, statutes, and rules

regulating the operations of [ADC members. Even if

the Court were to determine that the addition of puni-

tive damages to the existing seaman’s compensatory

scheme would provide additional deterrence or benefit

to seamen, it could take no such path. The course it

would seek to sail would lead it to waters already oc-

cupied by Congress in the areas of both compensation

and deterrence. Allowing punitive damages as contem-

plated by the Ninth Circuit would affect [ADC mem-

bers by having a detrimental impact on uniformity in

worker claims, settlement and trial of such claims,

contractual obligations and insurance coverage in the

9

offshore oilfield, as well as negatively impacting the

economy and consumers in general.

»

vv

ARGUMENT

lL IADC MEMBERS ARE ALREADY DE-

TERRED FROM RECKLESSLY DISRE-

GARDING SAFETY

A. Effective Deterrence by Multiple Regu-

lators

The purpose of punitive damages is not to compen-

sate one for loss, but to punish and deter bad conduct.

See, e.g., Restatement (Second) of Torts § 908 (1979)

(“Punitive damages are damages, other than compen-

satory or nominal damages, awarded against a person

to punish him for his outrageous conduct and to deter

him and others like him from similar conduct in the

future.”); Lake Shore & M.S. Ry. Co. v. Prentice, 147

U.S. 101, 107 (1893) (“Exemplary or punitive damages

[are] awarded, not by way of compensation to the suf-

ferer, but by way of punishment of the offender, and as

a warning to others. . . .”). Conversely, the purpose of

unseaworthiness and Jones Act remedies afforded sea-

men is not to punish or deter shipowners, but to com-

pensate seamen for injury or death. Congress’ purpose

in enacting FELA and incorporating it into the Jones

Act was to provide monetary compensation to seamen

who suffer injury or death. See, eg., St. Louis, 1M.

& S.R. Co. v. Craft, 237 US. 648, 657-58 (1915)

(recovery under FELA is “confined to ... loss and

10

suffering”).”’ Indeed, whether a seaman sues for Jones

Act negligence or unseaworthiness, “he is entitled to

but one indemnity by way of compensatory damages.”

Pacific S.S. Co. v. Peterson, 278 U.S. 130, 138 (1928).

Rather than promoting deterrence through its com-

pensation scheme, Congress has acted via its regula-

tory agencies. It created the U.S. Coast Guard (USCG)

and charged it with, among other things, promulgating

and enforcing regulations “for the promotion of safety

of life and property on and under the high seas and

waters subject to the jurisdiction of the United States.”

14 U.S.C. § 2 (setting out the primary duties of the

USCG). This includes the training and licensing of

merchant seamen, inspection and certification of ves-

sels, and promulgation and enforcement of the regula-

tions necessary to carry out the mandate assigned to it

by Congress. See generally 46 U.S.C. §§ 2101 to 14702

(“Vessels and Seamen”).

Congress likewise created the U.S. Maritime Ad-

ministration (MARAD) whose duties include regula-

tion of ships, shipping, ship building, vessel operations,

safety, and national security.“ MARAD’s mission is to

™ See also Michigan Cent. RR. Co. v. Vreeland, 227 U.S. 59,

65, 69-71 (1913) (FELA provides right to “recover| | such damages

as would . . . compensate| |” for loss); Gulf Colo., & Santa Fe Ry.

Co. vu. McGinnis, 228 U.S. 173, 175 (1913) (recovery under FELA

“must ... be limited to compensating those ... as are shown to

have sustained some pecuniary loss”); American R.R. Co. of Porto

Rico v. Didrickhsen, 227 U.S. 145, 149 (1913) (“The damage [under

FELA| is limited strictly to the financial! loss thus sustained.”).

™ MARAD, About Us, Nov. 13, 2018, https//www.maritime.

dot.gov/about-us.

11

“foster, promote, and develop the merchant marine in-

dustry of the United States.” 49 U.S.C. § 109(a) (setting

out the organization and mission of MARAD). It is

specifically charged with training vessel officers and

maintaining a strong and modern merchant marine.

49 C.F.R. § 1.92 (setting out the responsibilities of

MARAD).

Similarly, Congress has created agencies charged

with regulating the oil and gas industry with a similar

mandate to punish and deter unsafe conduct. In addi-

tion to the USCG and MARAD, offshore oil and gas

producers are also subject to the rules and regulations

of the Bureau of Safety and Environmental Enforce-

ment (BSEE).” Indeed, drilling contractors labor un-

der significantly greater regulatory requirements than

traditional vessel owners.

Following the 2010 Deepwater Horizon Disaster in

the Gulf of Mexico, the President assembled the Na-

tional Commission on the BP Deepwater Horizon Oil

Spill and Offshore Drilling, which released a compre-

hensive report in January 2011. The Commission con-

cluded:

Deepwater energy exploration and produc-

tion, particularly at the frontiers of experi-

ence, involve risks for which neither industry

™ In 1953, Congress enacted the Outer Continental Shelf

Lands Act (OCSLA), 43 U.S.C. §§ 1331-1356a, and authorized the

Secretary of the Interior to, among other things, regulate oil and

gas production on the Outer Continental Shelf (OCS). The Secre-

tary of the Interior delegated this regulation to BSEE. 30 C.F.R.

§ 250.101.

12

nor government has been adequately pre-

pared, but for which they can and must be

prepared in the future.

Fundamental reform will be needed in both

the structure of those in charge of regulatory

oversight and their internal decisionmaking

process to ensure their political autonomy,

technical expertise, and their full considera-

tion of environmental protection concerns.

Because regulatory oversight alone will not be

sufficient to ensure adequate safety, the oil

and gas industry will need to take its own,

unilateral steps to increase dramatically safety

throughout the industry, including self-policing

mechanisms that supplement governmental

enforcement.

After initial regulatory changes following the Deep-

water Horizon incident, the federal government ulti-

mately established BSEE. BSEE has created a series

of comprehensive regulatory programs focused on op-

erational safety and environmental protection relative

to offshore oil and gas activities.

For example, BSEE requires that all operators

have a Safety and Environmental Management Sys-

tems (SEMS) program subject to third-party audits. 30

C.F_R. §§ 250.1900 to 250.1933. This promotes safety

™ Nat’ Comm'n on the BP Deepwater Horizon Oil Spill and

ture of Offshore Drilling vii (Jan. 2011), https://www.govinfo.gov/

app/detaila/GPO-OILCOMMISSION/summary.

13

by ensuring that all personnel aboard an offshore ves-

sel are complying with the policies and procedures

identified in the operator's SEMS program. Id. at

§ 250.1901. Under the SEMS rule, operators must im-

plement a training program so that all of their employ-

ees and contractors are trained to work safely. Id. at

§ 250.1915. SEMS requires operators to evaluate their

drilling contractor's safety and environmental perfor-

mance and ensure that the contractors have their own

safe work practices. Jd. at § 250.1914. Further, opera-

tors and contractors must create a written agreement

on appropriate contractor safety and environmental

practices prior to the start of work on the operator’s

project. Id. at § 250.1914.

The SEMS program empowers all personnel aboard

the vessel who witness an imminent risk or dangerous

activity to stop work. Jd. at § 250.1930. The SEMS rule

also requires an “employee participation plan” that

promotes a participatory environment where all off-

shore industry employees may eliminate or mitigate

safety hazards. Id. at § 250.1932. It also established

guidelines for reporting unsafe conditions and viola-

tions of regulatory requirements. Jd. at § 250.1933.

Since the Deepwater Horizon tragedy, BSEE’s require-

ments for SEMS programs have evolved as it has iden-

tified additional ways to manage operational safety

hazards.

Another regulatory development under BSEE’s

watch is the blowout preventer and well-control

14

requirements. Jd. at § 250.724.” These rules address

highly complex offshore drilling operations and reduce

technical and operational failures that could have cat-

astrophic results.” BSEE recently revised these rules

to keep up with industry developments, including real-

time well-control monitoring using independent, auto-

matic, and continuous monitoring systems ¢apable of

recording and transmitting data from well control sys-

tems and blowout preventers.”’

BSEE also has a number of options when seeking

to ensure an operator’s compliance with its regulatory

programs, including the assessment of civil penalties,

as well as referrals for criminal penalties.” BSEE may

issue Incidents of Non Compliance (INCs) which “un-

derscore the importance of safe operations” and assist

BSEE in conducting annual performance reviews of

* See also 81 Fed. Reg. 25,888 (April 29, 2016) (codified at 30

C.F_R. § 250, subparts D, G); 83 Fed. Reg. 22,128 (May 11, 2018)

(to be codified at 30 C.F_R. § 250, subparts D, E, F, G, Q).

*® Statement of Brian Salerno, Director of BSEE, before the

Committee on Natural Resources Subcommittee on Energy and

more mtn deer or an ge Aa

104578.

7? John M. Cushing, Jr., The Real Deal on Remote Real-Time

Monitoring, July 29, 2016, https://www.bsee.gov/blog-post/the-real -

deal-on-remote-real-time-monitoring.

* Although many of BSEF’s regulations impact all personne!

working aboard MODUs on the OCS, BSEF’s authority to assess

civil penalties appears limited to operators. Island Operating Co.

vu. Jewell, No. 6:16-cv-00145, 2016 WL 7436665, at *8 (WD. La.

2016). Likewise, contractors are not subject to criminal liability

for their alleged violations of OCSLA. U.S. uv. Moss, 872 F.3d 304,

304 (5th Cir. 2017).

15

each operator to addresses safety concerns.” In 2019,

the maximum civil penalty increased to $43,576 per

violation. 30 C.F.R. § 250.1403. BSEE recognizes that

“(t]he adjustment of the maximum civil penalty

amount is intended to maintain the deterrent effect of

such penalties and promote compliance with the law.””

Although these fines are directed at the operator, the

fines also deter drillers and other service contractors

from lapses in safety standards by way of “top down”

enforcement. Since BSEE’s creation in 2011, offshore

injuries and fatalities have shown a general decline.”

The USCG also enforces regulations specific to

MODU owners and operators. 33 C.F.R. § 140.101 (in-

spections of MODUs); 46 C.F.R. § 15.520 (MODU crew-

ing requirements). Through formal memorandums of

understanding and agreement, BSEE and the USCG

have allocated the regulation of MODUs and offshore

energy activities.” For instance, both BSEE and the

USCG have the right to board MODUs for inspections.

The USCG inspections address issues related to safe

* U.S. Departinent of the Interior, Budget Justifications and

Performance Information, Fiscal Year 2018, Bureau of Safety and

Environmental! Enforcement 42, https://www.doi.gov/bpp/budget-

justifications (FY 2018 BSEE).

* BSEE OCS Civil Penalty Program Policy and Procedures

Guidebook, Sept. 2013, at p. 17, https//www.governmentattic.org/

22doca/BSEE-OCScivilPenPgmProcedGuidbk_2013.pdf (emphasis

added).

*! BSEE, Offshore Incident Statistics, https://www.bsee.gov/

stats-facta/offshore-incident-statistics (last visited Jan. 26, 2019).

™ BSEE, Interagency Collaboration, https://www.bsee.gov/

newsroom/partnerships/interagency (last visited Jan. 24, 2019).

16

operations of MODUs, credentials of offshore installa-

tion managers, and various navigation-related person-

nel. BSEE and the USCG have entered into various

Memoranda of Agreements related to pollution preven-

tion and response, civil penalties, SEMS, and MODUs.

In summary, the offshore seaman and the oil and

gas vessel owner are subject to comprehensive regula-

tions to promote safety at sea. Far from ignoring the

safety and health of seamen, Congress has acted to cre-

ate protective measures to deter and punish wrongdo-

ers in the interest of seamen’s safety. Allowing punitive

damages in a seaman’s personal injury suit is not only

contrary to Congressional intent and judicial interpre-

tation that the Jones Act and unseaworthiness reme-

dies are compensatory, but it intrudes on another area

already occupied by Congress through its creation of

federal agencies to constantly deter bad behavior and

punish wrongdoers.

B. Contractual Obligations in the Offshore

Energy Industry Deter Unsafe Conduct

Offshore drilling contractors and service compa-

nies frequently enter into reciprocal contractual de-

fense and indemnity obligations with their oil company

customers. These agreements obligate each party to as-

sume liability for injury claims made by the party’s

own employees.

In the context of offshore drilling operations, the

drilling contractor employs most offshore workers on a

MODU, whereas the customer, or operator, generally

17

has far fewer employees on location. When a drilling

contractor's employee is injured, it is not uncommon

for the employee to file suit against the drilling con-

tractor (maintenance and cure, Jones Act negligence,

and unseaworthiness) and the operator (negligence).

Even where the operator has allegedly contributed to

the employee’s injury, most contracts require the drill-

ing contractor to indemnify the operator.”

Thus, from a contractual risk allocation perspec-

tive, the drilling contractor generally bears greater le-

gal and financial responsibility for injury to its seamen

working offshore. These contractual obligations serve

to deter a MODU owner from engaging in unsafe con-

duct that could injure seamen.

In addition, the contractual risk allocation prac-

tices that support these vast and expensive drilling

projects which benefit society will be made more diffi-

cult to plan should the punitive damages allowed by

the Ninth Circuit be sanctioned by the Court. While a

drilling contract may address defense and indemnity

vide coverages for these critical obligations, may or

® Michael A. Golemi & William W. Pugh, Hoping for the Best,

Preparing for the Best: “Don't Worry, We Have Indemnity,” The Ad-

vocate, Spring 2017, at 47-49, available at https//www_liskow.com/

Julia M

Adams & Karen K. Milhollin, Indemnity on the Outer Continental

Shelf—A Practical Primer, 27 Tul. Mar. L.J. 43, 48 (2002).

18

may not insure the punitive damage obligations of the

indemnitee.™

. The Existing Compensatory Scheme

Provided to Seamen by the Jones Act

and Unseaworthiness Remedies Suffi-

ciently Deters Unsafe Conduct

The compensatory protection afforded seamen is

substantial and well-recognized. As Professor Schoen-

baum notes:

[A] seaman who suffers injury or death in the

service of a ship has three important remedies

against his employer: (1) maintenance and

cure; (2) a cause of action for unseaworthiness

of the vessel; and (3) a cause of action for neg-

ligence under the Jones Act. All three reme-

dies are unique to seamen; no other worker in

our society can invoke such powerful relief in

the event of an industrial accident.

Thomas J. Schoenbaum, Admiralty and Maritime Law

at 240 (5th ed. West 2012) (emphasis added). [ADC

members are subject to this variety of specialty sea-

men’s claims further discussed below.

™ Julia M. Adams & Karen K. Milhollin, Indemnity on the

Outer Continental Shelf—A Practical Primer, 27 Tul. Mar. L.J. 43,

101 (2002) (“Quite often, the marine insurance contract will be

controlled by law entirely different from the indemnity contract.

Therefore, even if the indemnity is valid and enforceable, it may

not be covered under the insurance, and therefore be of little prac-

tical use to the indemnitee.”). For further discussion of the effect

on insurance coverage, see section [I(C), infra.

19

A seaman is entitled to receive maintenance and

cure from his employer if he becomes ill or is injured

while in the service of the vessel. See Aguilar v. Stand-

ard Oil Co., 318 U.S. 724, 730 (1943); Calmar S_S. Corp.

v. Taylor, 303 U.S. 525, 527 (1938). Maintenance and

cure is a no fault remedy that provides medical care

and living expenses to ill or injured seamen. Warren v.

United States, 340 U.S. 523, 528 (1951).

A seaman is also entitled to assert Jones Act neg-

ligence against his employer. So while the workers’

compensation laws of many states bar negligence suits

for compensatory damages by an injured employee

against his or her employer (see, eg, Tex. Lab. Code

§ 408.001(a)), the seaman retains both his workers’

compensation-like no fault remedy of maintenance and

cure, as well as his right to sue his employer for negli-

gence. In addition, a seaman’s standard of causation on

this negligence claim is “featherweight.” Miles v. Mel-

rose, 882 F.2d 976, 984 (5th Cir. 1989), aff'd sub nom.

Miles v. Apex Marine Corp., 498 U.S. 19 (1990). A sea-

man need only show that his employer's negligence

“played any part, even the slightest, in producing the

injury or death for which damages are sought.” Rogers

v. Missouri Pac. R.R. Co., 352 U.S. 500, 506 (1957).

Lastly, a seaman may also maintain a cause of

action for breach of the warranty of seaworthiness

against the owner of the vessel. Mitchell v. Trawler

Racer, Inc., 362 U.S. 539, 549 (1960). The warranty of

seaworthiness imposes a nondelegable duty “to furnish

a vessel and appurtenances reasonably fit for their

intended use.” Jd. at 550. It is absolute, and failure to

20

supply a safe ship results in liability “irrespective of

fault and irrespective of the intervening negligence of

crew members.” Miles v. Apex Marine Corp., 498 U.S.

19, 25 (1990). No amount of due diligence may serve as

a defense to this absolute warranty. Clevenger v. Star

Fish & Oyster Co., 325 F.2d 397, 400 (5th Cir. 1963)

(“neither ignorance nor due diligence will serve as an

adequate defense”).

Not only does a seaman have these three distinct

causes of action, but he is entitled to pursue these

claims in state or federal court. The “saving to suitors”

clause in the Judiciary Act of 1789 allows most mari-

time suits to be filed in state court, even though they

are governed by substantive maritime law. Judiciary

Act of 1789, 1 Stat. 76, s. 9 (1789).

Courts treat seamen differently in other ways, as

well. For instance, a seaman’s own contributory negli-

gence will not bar his recovery. See Boudreaux v. U.S.,

280 F.3d 461, 466 (5th Cir. 2002); Miles v. Melrose, 882

F.2d 976, 984 (5th Cir. 1989), aff'd sub nom. Miles v.

Apex Marine Corp., 498 U.S. 19 (1990).

Additionally, seamen’s releases are subject to

careful scrutiny: “One who claims that a seaman has

signed away his rights to what in law is due him must

be prepared to take the burden of sustaining the re-

lease as fairly made with and fully comprehended by

the seaman.” Garrett v. Moore-McCormack Co., 317

U.S. 239, 247-48 (1942) (quoting Harmon v. United

States, 59 F.2d 372, 373 (5th Cir. 1932)). The shipowner

must show that the seaman’s release “was executed

21

freely, without deception or coercion, and that it was

made by the seaman with full understanding of his

rights.” Id. at 248.

The Federal Arbitration Act provides further pro-

tection to seamen by prohibiting arbitration clauses in

seamen’s employment contracts. 9 U.S.C. § 2.

Another safeguard afforded seamen is the Seaman’s

Protection Act. It prohibits employers from retaliating

against seamen for engaging in certain protected ac-

tivities related to compliance with maritime safety

laws and regulations. 46 U.S.C. § 2114. Examples in-

clude protection from retaliation for reporting the vio-

lation of a safety regulation to the USCG and refusing

to perform an ordered duty because of apprehension of

serious injury. Id. at § 2114(a)(1)A), (B). For such a vi-

olation, Congress has determined™ that a seaman may

recover compensatory damages, as well as punitive

damages not to exceed $250,000. Id. at § 2114(b); 49

U.S.C. § 31105(bX3).

These unique protections afforded to seamen suf-

ficiently deter vessel owners from allowing unsafe

practices on their vessels. When all of these exposures

are aggregated, it is apparent that no additional pro-

tections are needed by way of altering Congress’ com-

pensatory framework in order to deter bad behavior.

Judicial attempts at altering the compensatory frame-

work of Congress have sometimes been questioned by

* Tellingly, had it so desired, Congress could have afforded

seamen punitive damages in personal injury and death claims as

well.

22

commentators and the courts themselves. Professor

Robinson has noted: “Since the oil industry went off-

shore, the legal system has struggled to produce a body

of injury law that is rational, fair, internally consistent,

and acceptably productive of safety incentives. The re-

sult has been chaos.”

i. ALLOWING PUNITIVE DAMAGES IN UN-

SEAWORTHINESS CLAIMS WILL CREATE

INDUSTRY-ALTERING IMPACTS

Exposure to punitive damages arising from unsea-

worthiness claims would create an inordinate burden

on members of the L[ADC.

A. Allowing Punitive Damages Would Create

Abuses of the Process

Since this Court sanctioned punitive damages for

the arbitrary and capricious denial of maintenance

and cure in Atlantic Sounding Co. v. Townsend, sea-

men’s lawsuits routinely include such claims. 557 U.S.

“ David W. Robertson, Injuries to Marine Petroleum Workers:

A Plea for Radical Simplification, 55 Tex. L. Rev. 973, 973 (1977).

See also McDermott Int'l, Inc. v. Wilander, 498 U.S. 337, 353 (1991)

(where in discussing conflicting judicial interpretations of who is

a “seaman,” Justice O'Connor wrote: “our wayward case law has

led the lower courts to a ‘myriad of standards and lack of uni-

formity in administering the elements of seaman status.’ ”) (quot-

ing Engerrand & Bale, Seaman Status Reconsidered, 24 S. Tex.

L.J. 431, 494 (1983)). The Court also cited a Seventh Circuit sea-

man status case which noted: “We have made a labyrinth and got

lost in it. We must find our way out.” /d. (citing Johnson v. John F

Beasley Constr. Co., 742 F.2d 1054, 1060 (7th Cir. 1984)).

23

404, 424 (2009). If this Court affirms the Ninth Cir-

cuit’s decision below, we would expect to see the same

effect with regard to pleadings for punitive damages

based on unseaworthiness. Predicting a jury’s finding

as to such damages, however, is nigh impossible:

The borderline between willful and wanton

injury and injury as the result of simple neg-

ligence, is often a hairline distinction. The suf-

ferer gains little solace from the doubtful and

unpredictable uncertainty of judges and ju-

ries as they undertake to place the conduct of

the wrongdoer in the categories of willful, in-

tentional, wanton, gross, reckless, or other

categories of negligence.

Northwestern Nat. Cas. Co. v. McNulty, 307 F.2d 432,

444 (5th Cir. 1962) (Gewin, J., specially concurring). The

Court has recognized the “stark unpredictability” of

such awards and noted that “the spread between high

and low individual awards is unacceptable.” Exxon

Shipping Co. v. Baker, 554 U.S. 471, 494—501 (2008).

Facing the specter of punitive damages judgments,

some defendants will feel forced to settle for amounts

higher than the estimated range of actual damages

suffered by the seaman. Others will resist settlement

when faced with a settlement demand so unreasonable

that there seems to be no other alternative but trial on

the merits. Prolonging litigation does nothing to pro-

mote justice.*’ It also does nothing to further the

*’ Public policy wisely encourages settlements. McDermott,

Inc. v. AmClyde, 511 U.S. 202, 215 (1994); see also Airline Stewards

and Stewardesses Ass'n v. American Airlines, Inc., 573 F.2d 960,

24

interests of both Congress and the courts to ensure fair

compensation for injured seamen.

B. Disparate Treatment of Employers and

Vessel Owners

A seaman’s liability claims, Jones Act negligence

and unseaworthiness, are unique in that they typically

arise from the same set of liability facts, yet a seaman

may not receive cumulative damages. Pacific S.S. Co. v.

Peterson, 278 U.S. 130, 138 (1928) (“[Wlhether or not

the seaman’s injuries were occasioned by the unsea-

worthiness of the vessel or by the negligence of the

master or members of the crew, or both combined, there

is but a single wrongful invasion of his primary right

of bodily safety and but a single legal wrong ... for

which he is entitled to but one indemnity by way of

compensatory damages.”). Should this Court, however,

make punitive damages available via one path (unsea-

worthiness against the vessel owner), but not the other

(negligence against the employer), seamen and their

attorneys will most certainly proceed more often, and

more vigorously, against the vessel owner. The obliga-

tion of seaworthiness is peculiarly and exclusively that

of the owner or operator. Seas Shipping Co. v. Sieracki,

328 U.S. 85, 100 (1946). In the offshore oil and gas in-

dustry, where the seaman’s employer is often different

963 (7th Cir. 1978), cert. denied, 439 U.S. 876 (1979) (“The law

generally favors and encourages settlements.”). The courts favor

settlement as such is indicative that both parties have been sat-

isfied.

25

than the vessel owner, the vessel owner (typically the

drilling contractor) will be disparately impacted.

In addition, [ADC members who are Jones Act em-

ployers and vessel owners are already further exposed

to claims for negligence per se and unseaworthiness

per se. Both Jones Act negligence and unseaworthiness

can be the per se result of a regulatory violation.” Each

new regulation promulgated by BSEE adds to the sea-

man’s arsenal to make such claims. Although the de-

fense of comparative negligence is generally available

to a vessel owner against a claim of unseaworthiness,

that defense disappears if a seaman is injured as a re-

sult of a defendant’s violation of a safety regulation.”

IADC members will thus shoulder a disproportionate

share of unseaworthiness claims.

C. The Lack of, or Cost of, Available Insur-

ance Coverage for Punitive Damages Is

a Significant Burden

Similar to the existence of contractual indemnities

in the offshore energy sector, the availability and cost

of insurance coverage for seamen’s claims is a signifi-

cant burden on offshore drilling and service companies.

Some insurers, although willing to insure a punitive

damages award, will charge a hefty price for such

* Smith v. Trans-World Drilling Co., 772 F.2d 157, 160-62

(5th Cir. 1985).

® MacDonald v. Kahikolu Litd., 442 F.3d 1199, 1202 (9th Cir.

2006); Fuszek v. Royal King Fisheries, Inc., 98 F.3d 514, 517 (9th

Cir. 1996); Roy Crook & Sons, Inc. v. Allen, 778 F.2d 1037, 1041

(5th Cir. 1985).

26

coverage. State laws, however, impact whether such

coverage is even available in certain jurisdictions. Wil-

burn Boat Co. v. Fireman’s Fund Insurance Co., 348

U.S. 310, 335 (1955) (holding that state law, rather that

federal admiralty law, should govern marine insurance

contracts). Many states, including California where

the underlying injury occurred, do not sanction insur-

ance coverage for punitive damages awards.“ The un-

availability of insurance for punitive damages, as well

as the inability to benefit from such insurance where

it is available, will negatively impact the industry

when it comes to long-term planning for potential lia-

bilities.

D. Economic Impacts

The need to protect the safety of seamen is great,

but so is the need to protect domestic production of oil.

The offshore energy industry is already burdened with

the volatility of oil and gas prices due to production

abroad. In addition, the cost to comply with the many

regulations applicable to oil and gas vessels is great. If

workers are allowed to enhance their traditional sea-

men’s remedies with punitive damages, [ADC mem-

bers will be vulnerable to large judgments which

could severely impact a company’s bottom line. More

money will be diverted to protecting the company’s

legal interests, rather than in funding new projects.

IO ce nen poe eo eames

4 , ? naieiteiened euateal

27

Ultimately, the consumer will be affected at the gas

pump.

a

-

CONCLUSION

In The Genesee Chief, 53 U.S. 433, 459-60 (1851),

the Court long ago decided the maritime law was sub-

ject to regulation by Congress and its power to change

it will “hardly be questioned.” Later, as noted by the

McBride majority, the Court summarized: “[It] must

now be accepted as settled doctrine that . . . Congress

has paramount power to fix and determine the mari-

time law which shall prevail throughout the country.”

McBride v. Estis Well Service, L.L.C., 768 F.3d 382, 385

(5th Cir. 2014) (citing S. Pac. Co. v. Jensen, 244 U.S. 205,

215 (1917)). The Court should decline Respondent’s in-

vitation to sail into waters already occupied by Con-

gress. For the reasons stated above, the judgment of

the Ninth Circuit should be reversed.

Respectfully submitted,

JAMES T. BROWN

Counsel of Record

GLENN R. LEGGE

JEANIE TATE GOODWIN

Marc E. KuTNER

HOLMAN FENWICK WILLAN USA LLP

5151 San Felipe, Suite 400

Houston, Texas 77056

(713) 917-0888

Jim.Brown@hfw.com

Counsel for Amicus Curiae