In 1953, Congress passed the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. 1333, et seq. to provide a set of “comprehensive choice-of-law rules and federal regulation to a wide range of activity occurring beyond the territorial waters of the states on the outer continental shelf of the United States.” Important in OCS personal injury litigation, OCSLA provides that where applicable and not inconsistent, the substantive laws of the adjacent state will be incorporated to supplement and fill in the gaps of federal law.
Thus, in accordance with OCSLA, an injury to a worker on an OCS platform located off the coast of Louisiana will generally be governed by Louisiana law. As a result, a plaintiff must look to the substantive laws of Louisiana – where not inconsistent with Federal Law – to see what rights and remedies are afforded to them, including the types and measure of damages.
For those who practice law in Louisiana, it is well known that Louisiana has a general public policy against the award of punitive damages, except when expressly provided by statute. Currently, there are only five articles found in the Louisiana Civil Code addressing punitive damages: four of which are limited to cases involving child pornography, drunk driving, sexual abuse of a child, and domestic violence. Despite the inapplicability of those statutes in an offshore personal injury context, plaintiffs continue to seek punitive damages in nearly every case, usually without any supportable legal basis. As punitive damages are uninsurable, defendants tend to take these claims quite seriously. Recently, plaintiffs in Tajonera v. Black Elk Energy Offshore Operations, LLC, No. 13-366 (E.D. La. 2015) sought punitive damages through the fifth punitive damages article – article 3546.
Louisiana Civil Code article 3546 is found in Book IV of the Civil Code, entitled “Conflicts of Laws.” Article 3546 allows for punitive damages in a Louisiana case when two out of three elements are met: (1) the state where injury occurred allows punitive damages; (2) the state where injurious conduct occurred allows punitive damages; and (3) the state where defendant is domiciled allows punitive damages. Even though the vast majority of oil and gas operators and contractors are now domiciled in Texas – whose laws allow for punitive damages – we have not seen this article invoked very often. The Louisiana Supreme Court has fully analyzed this article for a land-based Louisiana tort, see Arabie v. CITGO Petroleum Corp., (La. 3/13/12); 89 So.3d 307, 327, and others have discussed the general interplay between OCSLA and choice-of-law rules, but no court has specifically addressed the applicability of article 3546 in an OCSLA case.
In Tajonera, the plaintiffs alleged that they were entitled to punitive damages from the Texas defendants under article 3546 because: (1) the defendants are domiciled in Texas and (2) the injurious conduct occurred at the Texas defendants’ Houston headquarters. But, the dispute never reached the merits of the article 3546 analysis, as the Court re-affirmed Wooton v. Pumpkin Air, 869 F.2d 848 (5th Cir. 1989), holding that Louisiana’s choice-of-law rules are inapplicable because OCSLA only adopts the adjacent state’s substantive laws, not its choice-of-law rules. Essentially, Wooton and its predecessors acknowledged that OCSLA contained its own express choice-of-law provision, naming the adjacent state’s substantive law as surrogate Federal law. Accordingly, the adjacent state’s choice-of-law rules are irrelevant to the extent they attempt to bring in another state’s laws. The Court rejected the plaintiffs’ attempt to characterize article 3546 as a substantive law article, instead pointing out the location of article 3546 in Book IV, “Conflicts of Laws.” The Court also correctly rejected the plaintiffs’ arguments that Wooton (1989) is inapplicable because it predated the enactment of article 3546 (1991).
Judge Brown’s decision closes the door on punitive damage claims asserted against OCS defendants under Louisiana law; though we are not so optimistic to expect any practical effect on reducing the number of baseless claims for punitive damages.