U.S. Fifth Circuit Judge Seeks to Change the Maritime Contract Test

On February 27, 2017, the United States Court of Appeals for the Fifth Circuit issued an opinion in which it affirmed a district court’s holding that a contract and an oral work order to provide flow-back services was a maritime contract. Specifically, the Fifth Circuit examined the contract using the multi-factor test articulated in Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1990). Circuit Judge W. Eugene Davis, joined by Circuit Judge Leslie H. Southwick, in the concurring opinion, urged the Fifth Circuit to hear the case en banc to abandon the Davis test and simplify the test for determining whether a contract is maritime.

In Davis, the Fifth Circuit established a two-part analysis for determining whether a contract is maritime. The first step is to determine the nature of the contract by reference to its historical treatment. If the historical treatment is unclear, the next step is to examine the contract using six factors:

1) What does the specific work order in effect at the time of the injury provide;

2) What work did the crew assigned under the work order actually do;

3) Was the crew assigned to work aboard a vessel in navigable waters;

4) To what extent did the work being done relate to the mission of that vessel;

5) What was the principal work of the injured worker; and

6) What work was the injured worker actually doing at the time of the injury?

After analyzing the contract for flow-back services in this case, the Court noted that four factors – one, two, four, and six – indicate the contract was maritime in nature. The Court then concluded that the district court correctly held that the oral contract for flow-back services was a maritime contract.

Circuit Judge W. Eugene Davis separately wrote a concurrence in which he requested the Fifth Circuit consider the case en banc to simplify the test for determining whether a contract is maritime. Judge Davis noted that the multi-factor Davis test had been criticized numerous times by judges in the Circuit. The Davis test lacked guidance regarding what weight should be attributed to each factor. Judge Davis then wrote that “in determining whether a contract being sued upon is a maritime contract, we should use contract principles rather than tort principles,” and only two of the Davis factors were appropriate in a contract case. The other four factors were more appropriate to determine whether maritime tort jurisdiction exists. As a result, Judge Davis proposed a new test for determining whether a contract to provide oilfield services is maritime or non-maritime.

Judge Davis posited that “so long as a contract’s primary purpose is to provide services to promote or assist in oil or gas drilling or production on navigable waters aboard a vessel, it is a maritime contract.” Further, Judge Davis added that a contract’s “character as a maritime contract is not defeated simply because the contract calls for incidental or insubstantial work unrelated to the use of a vessel.” Under this proposed test, a contract or work order to provide specialized services to promote the drilling and production of an oil and gas well from a vessel should be considered a maritime contract, regardless of whether the contract also provides for work on land or platforms that is incidental or insubstantial in relation to the vessel-related work. Conversely, a contract or work order to provide such specialized services from a stationary platform should not be considered a maritime contract because vessels are incidentally required.

Whether the Fifth Circuit rehears the case en banc and abandons the multi-factor Davis test remains to be seen.
Source: Phelps Dunbar LLP