## Facts

- Mobil Oil Corp. contracted with Gulf Offshore Co. to perform operations on offshore drilling platforms on the Outer Continental Shelf.
- The contract required Gulf to indemnify Mobil for claims arising directly or indirectly from Gulf’s work.
- A Gulf employee working on a platform was injured while being evacuated during a storm on a boat chartered by Mobil.
- The employee sued Mobil and the boatowner for negligence in Texas state court; Mobil filed a third-party indemnity claim against Gulf.
- Gulf argued the indemnity claim arose under the Outer Continental Shelf Lands Act (OCSLA) and therefore belonged exclusively in federal court.
- The state trial court exercised jurisdiction, declined to instruct the jury that personal-injury awards are not subject to federal income tax, and entered judgment after a jury verdict.
- The jury found Mobil negligent, awarded the employee $900,000, and found the employee’s work fell within the contract’s indemnity clause; judgment was entered for Mobil against Gulf for $900,000.
- Texas intermediate appellate court affirmed, and the Texas Supreme Court denied review.

## Issues

1. Whether OCSLA grants federal district courts exclusive jurisdiction over personal injury and related indemnity actions arising under OCSLA, thereby barring state-court adjudication.
2. Whether refusal to give a jury instruction that personal-injury damages are not subject to federal income taxation constitutes reversible error.

## Decision

- The Supreme Court affirmed.
- Federal courts do not have exclusive jurisdiction over OCSLA-based personal injury and indemnity actions; state courts may adjudicate them.
- OCSLA’s declaration of “exclusive federal jurisdiction” over the Outer Continental Shelf concerns sovereignty and governing law, not exclusive judicial forum selection.
- The trial court’s refusal to give the requested “no-tax” instruction was not reversible error.

## Legal Principles

- State courts may exercise subject-matter jurisdiction over federal causes of action unless Congress provides otherwise or state-court adjudication is incompatible with the federal scheme.
- OCSLA contains no express or implied directive making federal jurisdiction exclusive for personal injury and indemnity suits arising from Outer Continental Shelf operations.
- The incorporation of adjacent state law as surrogate federal law under OCSLA is consistent with state courts hearing OCSLA-related disputes.
- Failure to instruct a jury that personal-injury damages are not taxable is not automatically reversible; reversal depends on whether the omission amounts to prejudicial error under the circumstances.

## Conclusion

OCSLA does not displace the ordinary presumption of concurrent state-court jurisdiction over federal claims, and its “exclusive federal jurisdiction” language does not require that OCSLA personal injury and indemnity actions be heard only in federal court; the Court also held that the omitted “no-tax” damages instruction did not warrant reversal.


Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473 (1981)