Recent Development by Ellie T. Schilling
As Kermit Demette (Demette) hammered drilling pipe into the seabed, a metal retaining ring used to secure hoses fell from a derrick and struck him on the head. Demette, a Frank's Casing & Crew Rental Tools, Inc. (Frank's) employee, sustained this injury while performing casing work as a welder on a jack-up rig in the Gulf of Mexico. Prior to the accident, Frank's entered into a “Services and Drilling Master Contract” with Unocal Oil Company of California (Unocal) to perform casing services at offshore drilling sites. Frank's provided Demette as a worker pursuant to this agreement. Under the Master Contract, “Unocal agreed to defend and indemnify Frank's against any liabilities Frank's owes to Unocal, and Frank's agreed to defend and indemnify Unocal and all of its contractors and subcontractors against liabilities they may owe to Frank's.” The jack-up rig on which Demette was injured was supplied by one such contractor, R & B Falcon Drilling U.S.A., Inc. (Falcon). Falcon had previously entered into an “Offshore Daywork Drilling Contract” with Unocal to provide jack-up rigs. At the time of Demette's injury, the Falcon rig was jacked-up with its legs extended into the seabed of the Outer Continental Shelf (OCS), beyond the territorial waters of Louisiana.
Demette sued Falcon for his injuries under the Outer Continental Shelf Lands Act (OCSLA) and the Longshore and Harbor Workers Compensation Act (LHWCA). Falcon, pursuant to the Offshore Daywork Drilling Contract, filed a third-party complaint for defense and indemnity against Unocal. Unocal assumed the defense of Falcon without objection. Falcon then filed a third-party complaint against Frank's, seeking defense and indemnity pursuant to the Master Contract. Frank's argued that the indemnity agreement was invalid under either the LHWCA or under Louisiana law. The United States District Court for the Eastern District of Louisiana rejected these arguments and granted summary judgment to Falcon, holding that the indemnity agreement was valid. Frank's reached a settlement agreement with Demette but made a full reservation of appeal rights and, subsequently, appealed the summary judgment ruling on indemnity and defense. The United States Court of Appeals for the Fifth Circuit held that the OCSLA applied to a rig jacked-up over the OCS, that state law did not apply by operation of the OCSLA, that the LHWCA did apply by operation of the OCSLA, and that the LHWCA did not invalidate the indemnity agreement. Demette v. Falcon Drilling Co., 280 F.3d 492, 503 (5th Cir.), reh'g en banc denied, ___ F.3d ___ (5th Cir. 2002).
About the Author
Ellie T. Schilling.
Citation
76 Tul. L. Rev. 1785 (2002)