Carl Fruge, on Behalf of Casey Fruge; Darla Monk Fruge, on Behalf of Casey Fruge; Derrick Fruge, Plaintiffs-appellants, v. Parker Drilling Company, et al., Defendants,anadarko Petroleum Corporation; Stokes & Spiehler Usa Incorporated; Greg Zielinski Incorporated, Defendants-appellees, 337 F.3d 558 (5th Cir. 2003)

In this suit involving personal injuries on a drilling platform on the outer continental shelf off the coast of Louisiana, the district court granted summary judgment to the platform owner and two independent contractors whom the owner had hired to monitor the drilling operation. Holding as a matter of law that Appellees are not subject to strict liability, are not guilty of negligence, nor responsible for the negligent acts, if any, of the drilling contractor (another independent contractor not appearing in this appeal), or for loss of evidence, we affirm.

Defendant-Appellee Anadarko Petroleum Corporation ("Anadarko") as principal contracted with Parker Drilling Offshore Corporation ("Parker") as drilling contractor to complete a well on Anadarko's stationary platform. Plaintiff's employer, MI, LLC, was under contract with Anadarko to provide filtration services for the project. Plaintiff-Appellant Carl Fruge was operating a filter unit on the platform when a discharge hose which was part of Parker's rig ruptured and injured him.

The ruptured hose was not produced for examination despite Plaintiff's demands. The hose is lost. The on-site supervisors saw the ruptured hose at the time of the accident and several times after the accident. Those supervisors were employees of Defendants-Appellees Stokes & Spiehler USA, Inc., and Greg Zielinski, Inc., with whom Anadarko had contracted to provide company men for on-the-job supervision.

Fruge sued Parker, Anadarko, Stokes & Spiehler, and Zielinski, among others. Anadarko, Stokes & Spiehler, and Zielinski moved for summary judgment on the basis that they were not negligent and did not exercise operational control over Parker's drilling operations so bore no responsibility for Parker's alleged negligence.

The district court granted all three motions. Fruge's claims against Parker remain in the district court.¹ 

This Court reviews grants of summary judgment de novo, applying the same standard as the district court, viewing the evidence in a light most favorable to the non-movant. Coulter v. Texaco, 117 F.3d 909, 911 (5th Cir. 1997); Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).

Federal jurisdiction is predicated on the Outer Continental Shelf Lands Act (OSCLA), 43 U.S.C. § 1331 et seq. OCSLA adopts the law of the adjacent state (Louisiana) as surrogate federal law, to the extent that it is not inconsistent with other federal laws and regulations. Bartholomew v. CNG Producing Co., 832 F.2d 326, 328 (5th Cir. 1987); 43 U.S.C. § 1333(a) (2) (A). Thus the law applicable is "federal law, supplemented by state law of the adjacent state." Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S. 352, 355, 89 S. Ct. 1835, 1837, 23 L. Ed. 2d 360 (1969).

Bearing in mind these principles, we are first asked to determine whether federal regulations create civil liability beyond the liability under state law as enunciated in Coulter v. Texaco. Applying Louisiana negligence law, Coulter held that a principal is not liable for the actions of its independent contractor unless the principal retained "operational control" over the contractor's work (discussed infra) or expressly or impliedly approved its unsafe work practice that led to an injury. Coulter, 117 F.3d at 912.

Fruge argues that Coulter is not an appropriate precedent because it did not deal with federal Minerals Management Service ("MMS") regulations enacted after Coulter. Those regulations, according to Plaintiff, place primary responsibility on the mineral lessee (Anadarko) and its agents (Zielinski and Stokes & Spiehler) for supervising the operations and maintaining safety over the operations and equipment — without any regard to "operational control" or authorization of an unsafe work practice. If a mineral lessee establishes that it did not maintain operational control, according to Fruge, it has necessarily violated the federal regulations, creating liability as a matter of law. The key regulation, in Plaintiff's view, charges that the lessee, the operator, and the person actually performing the activity "are jointly and severally responsible" for complying with the offshore MMS regulations. 30 C.F.R. § 250.146(a) & (c). This regulation further allows the Regional Supervisor to require any or all co-lessees to fulfill obligations under the regulations or the lease, if the designated operator fails to fulfill obligations under the regulations. Id. § 146(b).² 

The MMS regulations in place at the time of Coulter similarly carried the concept of responsibility on the parts of both the lessee and the operator for obligations under the lease and the regulations.³  The Secretary has considered the law to have provided for joint and several liability of co-lessees and the operator since the enactment of OCSLA (1953) and the common law, through the present date.⁴  Although the regulations have been modified a number of times, the regulations and commentary mainfest the intention to retain this shared liability over the years. Nothing in the 2002 regulations preempts Coulter, and Coulter is therefore still precedent.

Additionally, this Court has held that a violation of the MMS regulations does not give rise to a private cause of action. Romero v. Mobil Exploration & Producing North America, Inc., 939 F.2d 307, 310-11 (5th Cir. 1991). The regulations govern the parties' joint and several liabilities vis-à-vis the Government,⁵  not amongst themselves.⁶  This principle also defeats Fruge's contention that Anadarko had a duty under the regulations to use the best available and safest technology to test the hose. Under the drilling contract, the obligation to maintain and repair Parker's equipment and to comply with applicable safety regulations rested on Parker's shoulders.⁷  The OCSLA regulations do not create an independent duty under Louisiana negligence law. Dupre v. Chevron U.S.A., Inc., 109 F.3d 230, 231 (5th Cir. 1997). Therefore, we will follow the guidance of Coulter and Romero, finding nothing in the MMS regulations to preempt their application.

Fruge next argues that, regardless of the MMS regulations, under the Coulter standard, the evidence left a question of fact whether Anadarko and its company representatives retained operational control over the work of its independent contractor, Parker. To determine whether the exception for operational control makes a principal liable, we first examine the extent to which Anadarko contractually reserved the right to control the work. Coulter, 117 F.3d at 912.

Under the contract between Parker and Anadarko, Parker was "responsible for the maintenance and repair of all [its own equipment]." Master Domestic Daywork Drilling Contract § 403. Parker also was responsible for the "operation and control of the Drilling Unit," including supervision and having "final authority and responsibility for the safety and operation of all systems and all personnel associated with the drilling operation." Contract § 502(a). When the contract assigns the independent contractor responsibility for its own activities, the principal does not retain operational control. Coulter, 117 F.3d at 912.

Operational control exists only if the principal has direct supervision over the step-by-step process of accomplishing the work such that the contractor is not entirely free to do the work in his own way. LeJeune v. Shell Oil Co., 950 F.2d 267-270 (5th Cir. 1992); McCormack v. Noble Drilling Corp., 608 F.2d 169, 175 n. 9 (5th Cir. 1979). Here, Parker was exclusively responsible for controlling the details of the work it performed: the contract provided that Parker "shall be an independent contractor with respect to performance of all work hereunder. [Anadarko] shall have no direction or control of [Parker] or [Parker's] Personnel except in the results to be obtained." Contract § 105 (emphasis added).

The summary judgment evidence shows Anadarko provided on-site supervision 24-hours per day, via various independent contractors whose employees reported to Anadarko staff engineers on a daily basis. The physical presence of a representative of a principal is not sufficient to show supervision or control. Ainsworth v. Shell Offshore, Inc., 829 F.2d 548, 550-51 (5th Cir. 1987), cert. denied, 485 U.S. 1034, 108 S. Ct. 1593, 99 L. Ed. 2d 908 (1988), Graham v. Amoco Oil Co., 21 F.3d 643, 646 (5th Cir. 1994). Periodic inspections by a principal's "company man" do not equate to that principal retaining control over the operations conducted by a drilling crew. Ainsworth, 829 F.2d at 550. "In short, absent an express or implied order to the contractor to engage in an unsafe work practice leading to an injury, a principal... cannot be liable under the operational control exception." Coulter, 117 F.3d at 912.

Summary judgment is appropriate because Plaintiff has failed to present facts sufficient to distinguish his case from Coulter. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (summary judgment is appropriate unless plaintiff can present evidence to support each essential element of his claim). "This Court has consistently held on similar facts that a principal, such as [Anadarko], who hires independent contractors over which he exercises no operational control has no duty to discover and remedy hazards created by its independent contractors." Wallace v. Oceaneering Int'l, 727 F.2d 427, 437 (5th Cir. 1984). On the evidence of record, summary judgment is proper for Anadarko as well as the employers of Anadarko's company men, Zielinski and Stokes & Spiehler, neither of whom are responsible for the alleged negligent acts of an independent contractor of their principal.

As alternative grounds for liability, Fruge argues that Anadarko or its representatives had custody of the defective hose that caused Fruge's injuries or that the hose was a component part or appurtenance to Anadarko's platform, resulting in custodian or premises liability under the Louisiana Civil Code. Indisputably, Parker provided the hose and Parker employees operated its equipment.

The first requirement for custodial liability under Louisiana Code articles 2317 and 2317.1,⁸  is that the "thing" that caused the injury be in the custody of the defendant. Although the owner is presumed to have custody, a non-owner defendant may have custody over property if "he exercises direction and control of the thing and derives some benefit from it." Coulter, 117 F.3d at 913 & n. 10. The mere presence of Anadarko's company man does not create the kind of supervision and control necessary to establish that Anadarko had custody over the Parker rig or the hose that ruptured. Neither the presence of company men who monitored the contractor's performance nor the limited involvement of engineers "comes anywhere close to creating the kind of supervision and control necessary" to establish the principal's custody over the drilling rig or the hose for purposes of article 2317. Coulter, 117 F.3d at 914.

As for premises liability under article 2322,⁹  a prerequisite to recovery is that Parker's rig "had become an appurtenance to, or integral part of, [Anadarko's] platform by virtue of that rig's physical attachment to that structure." Coulter, 117 F.3d at 914. Things are considered a component part of a construction for purposes of assessing premises liability under article 2322 if they are "permanently attached" to a building or other construction within the meaning of article 466. Coulter, 117 F.3d at 914. "Things are considered permanently attached if they cannot be removed without substantial damage to themselves or to the immovable to which they are attached." La. Civ.Code art. 466.

Plaintiff has pointed out no evidence that Parker's rig became a component part of Anadarko's platform. The only summary judgment evidence is to the contrary — that the rig moved from platform to platform without substantial damage to either the rig or the platform. As such, we hold as a matter of law that the rig is not an appurtenance for purposes of article 2322. See Coulter, 117 F.3d at 914-918.

Fruge's theories of recovery under articles 2317, 2317.1, and 2322 therefore fail.

Fruge finally argues that according to the two cases decided at Marrocco v. General Motors Corp., 966 F.2d 220 (7th Cir. 1992), Anadarko should be held liable as a matter of law for loss of the hose. Those two cases are distinguishable in that each involved violation of a protective order. See id. at 221.

Here, the hose was lost before the suit was filed, when no such order to preserve evidence had issued. Moreover, Plaintiff presented no evidence suggesting bad faith on the part of Anadarko. Accordingly, we discern no error in the district court's decision to dismiss Anadarko despite Plaintiff's arguments regarding spoliation of evidence.

After a de novo review of the record, we hold that the undisputed facts leave no room for finding liability against Anadarko, Stokes & Speihler, or Zeilinski under the various theories asserted. Under the Anadarko/Parker contract and based on the conduct of the parties, Anadarko and its company representatives did not have operational control over the work performed by Parker. A violation of MMS regulations, even if one occurred, does not give rise to a cause of action. The hose that ruptured was not in the custody of Anadarko or its representatives, at the time of the accident and the rig was not part of Anadarko's platform. We find no error in the decision not to sanction Anadarko for the loss of the hose. The judgment of the district court is

AFFIRMED.