Petrobras America, Inc. v. Vicinay Cadenas, S.A.
815 F.3d 211
5th Cir.2016Background
- Petrobras contracted Technip to install free-standing hybrid risers (FSHRs) linking seabed wellheads to FPSO facilities; Technip subcontracted tether chains to Vicinay.
- Vicinay supplied tether chains with welded-over cracks; shortly after installation a tether chain broke, severing a riser and collapsing related equipment to the seabed, causing large production losses.
- Petrobras and the Underwriters sued Vicinay in federal court asserting negligence, products liability, and failure-to-warn claims; they pleaded admiralty jurisdiction or, alternatively, OCSLA jurisdiction.
- The district court (assuming admiralty law applied) granted summary judgment for Vicinay based on the maritime economic loss doctrine (East River).
- After judgment, the Underwriters sought leave to amend to assert that OCSLA required application of Louisiana law; the district court denied the untimely motion and the denial was appealed.
- The Fifth Circuit held (1) the Underwriters did not waive the OCSLA choice-of-law argument and (2) OCSLA requires applying adjacent-state law (Louisiana) because maritime law does not apply of its own force; court reversed and remanded for application of Louisiana law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether parties waived OCSLA choice-of-law by failing to raise it earlier | Underwriters: OCSLA choice-of-law must be applied and cannot be waived; timely once raised on appeal | Vicinay: Underwriters waived the argument by not asserting it before summary judgment | Held: No waiver; OCSLA's statutory choice-of-law is mandatory and not waivable by parties |
| Whether maritime law "applies of its own force" under OCSLA (Grubart tests) | Underwriters/Petrobras: Maritime law does not apply; OCSLA mandates adjacent-state law for fixed offshore installations | Vicinay: Maritime law applies because incident occurred in navigable waters and involved maritime-unique equipment (FPSO, tether chain) | Held: Maritime law does not apply — connection prong fails; activity is oil & gas resource development, not traditional maritime activity |
| Whether the location prong (incident on OCSLA situs) is satisfied | Underwriters: Incident occurred on an OCSLA-covered situs (subsoil/seabed/attached installation) so adjacent-state law governs | Vicinay: Emphasized that failure occurred in navigable waters, suggesting admiralty scope | Held: OCSLA situs satisfied; court did not need to resolve nav. waters prong because connection test failed |
| Whether Louisiana law is inconsistent with federal law such that it cannot be borrowed under OCSLA | Underwriters: Louisiana law governs and is not inconsistent | Vicinay: Implied potential conflict with maritime principles (e.g., economic loss rule) | Held: No inconsistency shown; Louisiana law applies as surrogate federal law under OCSLA |
Key Cases Cited
- East River Steamship Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1976) (establishes economic loss doctrine in admiralty)
- Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527 (1995) (two-part test for admiralty jurisdiction: location and connection)
- In re Deepwater Horizon, 745 F.3d 157 (5th Cir. 2014) (OCSLA choice-of-law governs and supersedes normal forum choice rules)
- Texaco Exploration & Production, Inc. v. AmClyde Engineered Prods. Co., Inc., 448 F.3d 760 (5th Cir. 2006) (resource development on OCS is not traditional maritime activity)
- Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473 (1981) (OCSLA supersedes normal choice-of-law rules)
- PLT Eng’g, Inc. v. [unnamed party], 895 F.2d 1043 (5th Cir. 1990) (adjacent-state law applies under OCSLA to OCS activities)
- Hufnagel v. Omega Serv. Indus., Inc., 183 F.3d 340 (5th Cir. 1999) (location test analysis for fixed offshore structures)
- In re La. Crawfish Producers, 772 F.3d 1026 (5th Cir. 2014) (application of Grubart location test focusing on where wrong "took effect")