Supreme Court Declines to Decide Maritime Contracts Case
Written by Kristin Lausten
The U.S. Supreme Court has declined to hear the case of Larry Doiron, Inc., et al., v. Specialty Rental Tools & Supply, L.L.P., et al. which sought review of the Fifth Circuit’s en banc decision. The decision means that the en banc opinion will stand as the final law of the case.
In the en banc decision, the court established a new test for determining whether contracts are maritime. Under the new test, judges and lawyers are to engage in a two-pronged analysis:
- First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?
- If yes, then second, does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?
According to the new test, if the answer is “yes” to both questions, then the contract is maritime in nature. Under this new test, the en banc Fifth Circuit held that the vessel’s role of loading and unloading equipment was “insubstantial” in the completion of the work order under the master service contract. As such, the contract was not maritime.
Thoughts and Criticisms
It is not clear that the new two-pronged test is an improvement over the long-standing decision in Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1990). It seems likely that many more cases will be needed to define “substantial role.” Further, it is unclear why the vessel’s role in this case was deemed by the en banc panel to be “insubstantial.” As acknowledged in the district court and the panel opinion, without the equipment, the work order could not have been completed. As such, the vessel’s role in this work order was essential. Furthermore, the new test seems to place an unnecessary emphasis on the subjective expectation of the parties, rather than the objective written expression of their agreement. This case is a good example of where original expectations may come to be at odds with the actual needs of the work. Plus, at what point in time are “expectations” to be evaluated? In this case, Apache had certain expectations in early February 2011, but had new expectation on February 24-25th 2011 when STS suggested a barge was needed.
Kristin M. Lausten is honored to have assisted in the representation of Larry Doiron and Robert Jackson, the mariners in this case. Although the United States Supreme Court denied writ, mariners providing services “to facilitate the drilling or production of oil and gas on navigable waters” in the Fifth Circuit and throughout the United States should take notice of the Doiron decision and tighten up their contracts. As demonstrated by this case, the era of verbal work-orders performed under the umbrella of a Master Service Agreement has come to an end as the protections once afforded by those Master Service Agreements is no longer guaranteed.
Need assistance? Have questions? Contact Kristin M. Lausten.
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Kristin M. Lausten
This article is provided as an educational service for general informational purposes only. The material does not constitute legal advice or rendering of professional services.