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Justices contemplate application of California wage-hour law to an offshore drilling platform

By Pamela Wolf, J.D.

The Ninth Circuit applied California law as a surrogate under the Outer Continental Shelf Lands Act, contrary to the Fifth Circuit’s requirement there must be a gap in coverage of federal law, to do so.

On April 16, the Supreme Court heard argument on the sticky question of whether, under the Outer Continental Shelf Lands Act (OCSLA), state law (in this case, California) is borrowed as the applicable federal law only when there is a gap in the coverage of federal law, as the Fifth Circuit has held, or whenever state law pertains to the subject matter of a lawsuit and is not preempted by inconsistent federal law, as the Ninth Circuit has held.

Pragmatically, the case boils down to whether the Ninth Circuit was right when, addressing the novel question whether claims under California wage and hour laws may be brought by workers employed on drilling platforms fixed on the Outer Continental Shelf (OCS), it held that the absence of federal law is not a prerequisite to adopting state law as surrogate federal law under the OCSLA.

The appeals court thus vacated the district court’s dismissal on the pleadings of a roustabout’s California wage and hour claims, holding that state wage and hour laws are adopted as surrogate federal law as long as they are “applicable and not inconsistent” with existing federal law, and California’s minimum wage and overtime laws are not inconsistent with the FLSA.

But what, exactly, is a gap in coverage? During oral argument, addressing Paul Clement (Kirkland & Ellis), arguing on behalf of the petitioner, Parker Drilling Management Services, Justice Sotomayor said, “One of the difficulties I have here is, how do you define void or gap?” She said you can always define it broadly or narrowly.

Turning to a hypothetical, the Justice queried: “If there’s a state law that says you can’t fire somebody for going to jury service for a state calling, not a federal, is that a void or gap that the federal law doesn’t do that?”

Clement said the example was probably a situation where there’s “not a gap in federal law because federal law addresses the general subject of sort of employment discrimination and the like.”

Ninth Circuit ruling an outlier. After further colloquy, Clement drove home his position, saying, “the Fifth Circuit, and really every court that’s wrestled with this question until the Ninth Circuit in the decision below, has been applying this Court’s cases, which they understood as applying this gap-filling analysis, and none of them have had a real problem with that. And, certainly, I don’t think any of them would identify a gap here, where the Fair Labor Standards Act comprehensively addresses issues of overtime and the like.”

Fifth circuit ruling being misread? Sotomayor suggested, however, that the Fifth Circuit decision, when talking about these gaps, “is really saying that there’s a federal remedial scheme that covers a problem and so that there’s no need to look for remedies anyplace else,” calling it “a very different kind of situation than the one we have here.”

But Clement disagreed, saying that this is exactly the same situation, “which is you do have a federal remedial regime that provides a remedy for overwork, and you don’t need to look to state law to borrow a different regime that you would then make a second and duplicative and I think inconsistent federal minimum wage statute.”

Applicable and not inconsistent. But David Frederick (Kellogg, Hansen, Todd, Figel & Frederick) arguing on behalf of the respondent, Brian Newton, saw it very differently. He said that “the plain language of OCSLA and the Fair Labor Standards Act control this case,” and that the Ninth Circuit got it right when it determined that the California Labor Code provisions at issue in the case are both applicable and not inconsistent with federal law.

Addressing a question posed by Chief Justice Roberts, Frederick said, “notably, this gap-filling notion on the other side is expressly written into two statutes that we cite in our brief: the Assimilative Crimes Act and the Civil Rights Attorney’s Fees Awards Act. But Congress didn’t choose to use those words in the OCSLA.”

Frederick seemed to face an uphill battle, though, over notions of preemption, savings clause interpretation, and the meaning of “application” and “not inconsistent with,” among other things, in questions leveled by the Justices.