In Larry Dorion Inc. vs. Specialty Rental Tools and Supply, 849 F.3d 602 (5th Cir. 2017), the Fifth Circuit for the first time decided whether a contract to preform flow-back services on an off-shore natural gas well was a maritime contract. The plaintiff argued maritime law applied while plaintiff’s employer argued Louisiana state law applied.

Apache Corporation hired Specialty Rental Tools and Supply (“STS”) to preform flow-back services on its offshore well located in the Atchafalaya Basin. Before work commenced, Apache and STS entered into a master services contract. The master services contract contained an indemnification provision requiring STS to defend and indemnify Apache and Larry Dorion, Inc. In order to preform flow-back operations, STS employees used a crane barge supplied by Larry Dorion, Inc. While working on the crane barge., one of STS’s employees fell and was injured.

After the accident, Larry Dorion, Inc. made a formal demand that STS defend and indemnify Larry Dorion against any claims the injured STS employee may bring. STS rejected the demand, arguing the master service contract (“MSC”) must be construed under Louisiana law, which would render the indemnity provision void under the Louisiana Oilfield Indemnity Act (“LOIA”). Larry Dorion, Inc. argued maritime law applied and the indemnification clause was valid and enforceable. The District Court agreed, ruling in Larry Dorion, Inc.’s favor on summary judgment. The issue on appeal was whether maritime law or state law should be applied to determine the validity of the MSC’s indemnity clause.

On appeal, the Fifth Circuit affirmed the ruling of the District Court, finding the contract was maritime. First, the Court looked to the nature of the contract to determine whether it is “historically maritime in nature.” Since this was an issue of first impression, however, the Court could not find any historical treatment of contracts for flow-back operations.

Next, the Court analyzed the contract by applying the six Davis factors. Davis & Sons, Inc. v. Gulf Oil Corp, 919 F2d 313 (5th Cir. 1990). The Court found that four of the six Davis factors indicated the contract was maritime in nature. According to the Court, the crew relied on the use of a barge to perform the contract and that the work performed under the contract was related to the mission of the vessel. Finally, the work performed at the time of the injury, crane operations on a barge, was maritime in nature. Applying the Davis factors under the totality of the circumstances, the Court held the work order for flow-back operations is a maritime contract.

Perhaps more notable than the Court’s decision was their criticism of the Davis test. In a Special Concurrence, Judge Eugene Davis and Judge Leslie H. Southwick wrote separately to urge the Court to take the case en banc and simplify the test for determining whether a contract is a maritime contract. Judge Davis references the U.S. Supreme Court case Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004) and the Fifth Circuit case of Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th Cir. 2009) (en banc) in determining an appropriate test for determining whether a contract to provide oil field services is maritime or non-maritime. Judge Davis would substitute the following test for the Davis test:

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. Its 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 test, a contract or work order to provide specialized services to promote the drilling and production of an oil or gas well from a vessel should be considered a maritime contract. If such a contract also provides for work on land or platforms that is incidental to the work on vessels or insubstantial in relation to the vessel-related work, this does not defeat the character of the contract as a maritime contract. Under this test and consistent with most of our cases, specialized services to promote drilling or production of oil or gas to be performed solely from a stationary platform should not be considered a maritime contract.

  Besides deciding an issue of first impression for flow-back operations, Larry Dorion Inc. vs. Specialty Rental Tools and Supply signals the Fifth Circuit may be ready to shift away from the Davis factors towards a simpler approach for deciding maritime contract issues.