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

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.
  • 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.