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Newton v. Parker Drilling Management Services, Ltd.

United States Court of Appeals, Ninth Circuit

February 5, 2018

Brian Newton, an individual, Plaintiff-Appellant,
v.
Parker Drilling Management Services, Ltd., Erroneously Sued As Parker Drilling Management Services, Inc., Defendant-Appellee, and Parker Drilling Management Services, Inc., a Nevada Corporation, Defendant.

          Argued and Submitted March 7, 2017 Pasadena, California

         Appeal from the United States District Court No. 2:15-cv-02517-RGK-AGR for the Central District of California R. Gary Klausner, District Judge, Presiding

          Michael Strauss (argued), Strauss & Strauss APC, Ventura, California, for Plaintiff-Appellant.

          Ronald J. Holland (argued), Ellen M. Bronchetti, and Karin Dougan Vogel, Sheppard Mullin Richter & Hampton LLP, San Francisco, California, for Defendant-Appellee.

          Before: Richard A. Paez, Marsha S. Berzon, and Morgan Christen, Circuit Judges.

         SUMMARY[*]

         Labor Law

         The panel vacated the district court's dismissal on the pleadings of California wage and hour claims brought by workers employed on drilling platforms fixed on the Outer Continental Shelf.

         The Outer Continental Shelf Lands Act provides that the laws of the adjacent state are to apply to drilling platforms fixed to the seabed of the Outer Continental Shelf as long as state law is "applicable" and "not inconsistent" with federal law. The panel held that California's minimum wage and overtime laws are not inconsistent with the Fair Labor Standards Act, which establishes a national floor under which wage protections cannot drop. The panel therefore vacated the dismissal of these claims.

         In addition, the panel vacated the dismissal of claims brought pursuant to California's meal period, final pay, and pay stub laws, and instructed the district court to determine on remand whether these laws are "not inconsistent" with existing federal law. The panel also vacated claims under California's Private Attorney General Act and Unfair Competition Law, and it remanded the case for further proceedings.

          OPINION

          CHRISTEN, CIRCUIT JUDGE.

         This case presents the novel question whether claims under state wage and hour laws may be brought by workers employed on drilling platforms fixed on the outer Continental Shelf. Brian Newton worked on such a platform off the coast of Santa Barbara. His shifts lasted fourteen days and he regularly worked twelve hours per day. After Parker Drilling ("Parker") terminated him, Newton sued in state court for wage and hour violations under California law. Parker removed the case to federal district court and filed a motion for judgment on the pleadings. The district court granted the motion, concluding that the Fair Labor Standards Act is a comprehensive statutory scheme that is exclusive of California wage and hour laws. Newton appeals. We have jurisdiction pursuant to 28 U.S.C. § 1291.

         We hold that the absence of federal law is not, as the district court concluded, a prerequisite to adopting state law as surrogate federal law under the Outer Continental Shelf Lands Act, 43 U.S.C. § 1333(a)(2)(A). We thus reject the proposition that "necessity to fill a significant void or gap, " Cont'l Oil Co. v. London S.S. Owners' Mut. Ins. Ass'n, 417 F.2d 1030, 1036 (5th Cir. 1969), is required in order to assimilate "applicable and not inconsistent, " 43 U.S.C. § 1333(a)(2)(A), state law into federal law governing drilling platforms affixed to the outer Continental Shelf. We therefore vacate the district court's dismissal of Newton's claims and remand for further proceedings consistent with this opinion.

         I. FACTUAL & PROCEDURAL BACKGROUND

         Newton worked as a roustabout and painter for Parker on drilling platforms in the Santa Barbara Channel from approximately January 2013 to January 2015. It is uncontested that the drilling platforms where he worked were located more than three miles offshore and fixed to the seabed of the outer Continental Shelf. His fourteen-day shifts, known in the industry as "hitches, " comprised twelve hours on duty followed by twelve hours on "controlled standby." Newton was paid for twelve hours of work per day and he was not able to leave the platform during his shifts. Newton alleges that he usually took fifteen to thirty minutes during his shifts to eat without clocking out or ate while not working and remaining on call, and that Parker did not provide thirty-minute meal periods for each five hours worked, as required by California law. Parker paid Newton twice per month. In addition to compensation for twelve hours per day, his pay stubs showed pay for "two hours for the boat ride out, back and debriefing with the next crew."

         Newton filed a putative class action in California state court on February 17, 2015. Although Parker paid an hourly rate well above California and federal minimum wage, Newton maintained that California law required Parker to pay him for the twelve hours he was on controlled standby each day. The First Amended Complaint (FAC) alleged that Newton's final paycheck did not include all the wages owed to him, "including the overtime/doubletime and meal period wages." In all, Newton brought seven causes of action under California law for: (1) minimum wage violations; (2) failure to pay overtime and doubletime; (3) pay stub violations; (4) failure to pay timely final wages; (5) failure to provide lawful meal periods; (6) civil penalties under the Private Attorney General Act of 2004 (PAGA); and (7) unfair competition.

         Parker removed the action to federal court and filed a motion for judgment on the pleadings. Parker argued that, under the Outer Continental Shelf Lands Act, 43 U.S.C. §§ 1331-1356b (OCSLA), the Fair Labor Standards Act (FLSA) is a comprehensive statutory scheme that leaves no room for state law to address wage and hour grievances arising on the OCS.[1] For his part, Newton contended that California's more protective wage and hour laws may be applied concurrently with the minimum guarantees of their federal counterpart. See 29 U.S.C. § 201, et seq. Newton's opposition did not explain the complaint's allegation that some of Parker's allegedly unlawful conduct occurred in California rather than on the OCS, but did request that if the district court were to grant Parker's motion, it do so "without prejudice to allow Plaintiff to correct any deficiencies."[2]

         The district court granted Parker's motion for judgment on the pleadings, reasoning that "under [the] OCSLA, federal law governs and state law only applies to the extent it is necessary 'to fill a significant void or gap' in federal law." Finding no significant voids or gaps in the FLSA, the district court held that Newton could not invoke California wage and hour laws as surrogate federal law. The district court reached this decision after considering the Department of Labor (DOL) regulations elaborating the FLSA. While recognizing that the FLSA has a savings clause that expressly allows for more protective state minimum wage and overtime laws, the district court nevertheless concluded that California wage and hour claims were unavailable to Newton. The district court did not address Newton's request for leave to amend. Newton timely appealed.

         II. STANDARD OF REVIEW

         A dismissal on the pleadings pursuant to Rule 12(c) is reviewed de novo. Lyon v. Chase Bank USA, N.A., 656 F.3d 877, 883 (9th Cir. 2011). "Dismissal without leave to amend is improper unless it is clear, upon de novo review, that the complaint could not be saved by any amendment." Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004).

         III. DISCUSSION

         Except for any claims that may have arisen while Newton was transiting to and from the offshore drilling platforms where he worked, Newton's grievances relate to his employment on the OCS, and the parties agree that the fate of Newton's appeal rests on the OCSLA's choice of law provision. See 43 U.S.C. § 1333(a)(2)(A).

         A. The Outer Continental Shelf Lands Act

         1. OCSLA's Choice of Law Provision

         The outer Continental Shelf generally refers to submerged lands lying more than three miles offshore, outside the territorial jurisdiction of the states. See 43 U.S.C. §§ 1331(a), 1301(a)(2); Valladolid v. Pac. Operations Offshore, LLP, 604 F.3d 1126, 1130 (9th Cir. 2010). Subject to certain exceptions and conditions, the OCSLA declares that the Constitution and laws of the United States extend to the outer Continental Shelf, as well as "all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed . . . for the purpose of exploring for, developing, or producing resources therefrom . . . to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State." 43 U.S.C. § 1333(a)(1) (emphasis added). OCSLA's assertion of jurisdiction is unique because it comprises the ocean floor but not the waters above it. "[T]he jurisdiction asserted is a 'horizontal jurisdiction' and does not affect the status of superjacent waters." Warren M. Christopher, The Outer Continental Shelf Lands Act: Key to a New Frontier, 6 Stan. L. Rev. 23, 34 (1953) (citing S. Rep. No. 83-411, at 2 (1953)). The OCSLA's choice of law provision declares:

To the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereafter adopted, the civil and criminal laws of each adjacent State, now in effect or hereafter adopted, amended, or repealed are declared to be the law of the United States for that portion of the subsoil and seabed of the outer Continental Shelf, and artificial islands and fixed structures erected thereon, which would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf, and the President shall determine and publish in the Federal Register such projected lines extending seaward and defining each such area.

43 U.S.C. § 1333(a)(2)(A) (emphasis added). Because the OCSLA makes plain that the laws of the adjacent state are to apply to drilling platforms fixed to the seabed of the outer Continental Shelf as long as state law is "applicable and not inconsistent with . . . Federal laws, " the parties' dispute turns on the interpretation of the terms "applicable" and "not inconsistent." Id.

         The Supreme Court has not been called upon to decide a case involving wage and hour laws on the OCS. Both Newton and Parker ask us to look to the Fifth Circuit's interpretation of the OCSLA for guidance. Though the parties disagree as to the Fifth Circuit's prevailing test for choice of law on the OCS, they both argue that we ought to follow the Fifth Circuit's lead and adopt the approach it has taken in cases involving injury, wrongful death, and contract claims arising on the OCS. Newton urges that the Fifth Circuit's test is the one set out in Union Texas Petroleum Corp. v. PLT Engineering, Inc., 895 F.2d 1043 (5th Cir. 1990) (PLT). According to Newton, platform workers may bring state wage and hour claims to the extent that state law is not inconsistent with existing federal law, see Breton Energy, L.L.C. v. Mariner Energy Res., Inc., 764 F.3d 394, 398 (5th Cir. 2014), and California's wage and hour laws are not inconsistent with the FLSA insofar as they are preserved by the FLSA's savings clause. Relying on Continental Oil, 417 F.2d at 1036, Parker argues that the FLSA is a comprehensive statutory and regulatory scheme that leaves no voids or gaps for state law to fill, so state wage and hour laws do not apply on the OCS and Newton's grievances may be redressed only by the FLSA.

         Having examined the text of the original OCSLA and its 1975 amendment, the legislative history, and the Supreme Court's case law addressing the Act, we hold that state wage and hour laws are adopted as surrogate federal law on the OCS as long as they are "applicable and not inconsistent" with existing federal law.

         2. Origins of the OCSLA

         "The OCSLA grew out of a dispute, which first developed in the 1930's, between the adjacent States and the Federal Government over territorial jurisdiction and ownership of the OCS and, particularly, the right to lease the submerged lands for oil and gas exploration." Shell Oil Co. v. Iowa Dep't of Revenue, 488 U.S. 19, 26 (1988). Passed in 1953, "[t]he purpose of the [OCSLA] was to define a body of law applicable to the seabed, the subsoil, and the fixed structures such as [drilling platforms] on the outer Continental Shelf." Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S. 352, 355 (1969).

         Congress initially considered extending maritime law to the OCS, but it envisioned that 10, 000 or more people might eventually be employed on the OCS to develop mineral resources.[3] See 99 Cong. Rec. 6963-64 (1953); Shell Oil, 488 U.S. at 27 n.8. Anticipating a broad range of activity associated with this mineral resource development, Congress feared that federal law, standing alone, would be inadequate because it "was never designed to be a complete body of law in and of itself." 99 Cong. Rec. 6963 (1953). Congress also rejected the incorporation of the OCS into the boundaries of the several states, see S. Rep. No. 83-411, at 6 (1953), deciding instead that existing federal law and the law of the abutting state (except for state taxation laws)[4] were to comprise the body of law governing the OCS. Because the Department of Justice and several members of Congress voiced concerns that the prospective incorporation of state laws on the OCS might be an unconstitutional delegation of Congress's legislative authority, S. Rep. No. 83-411, at 33 (1953); see 99 Cong. Rec. 6963-64 (1953), the OCSLA only borrowed state law then in existence.[5] Thus, as originally adopted in 1953, "applicable" state law for purposes of § 1333(a)(2)(A) referred to state non-tax law, in existence on the effective date of the Act, that bore on the relevant subject matter.

         The "applicable" state law for purposes of § 1333(a)(2)(A) changed in 1975 when Congress enacted the Deepwater Port Act, 33 U.S.C. §§ 1501, et seq., and simultaneously amended the OCSLA, see Pub. L. No. 93-627, § 19(f), 88 Stat. 2176 (1975). By then, United States v. Sharpnack, 355 U.S. 286 (1958), had allayed the concern that the prospective adoption of state law might amount to an unconstitutional delegation of congressional legislative authority.[6] The 1975 amendment redefined state law in § 1333(a)(2)(A) as "the civil and criminal laws of each adjacent State, now in effect or hereafter adopted, amended, or repealed." § 1333(a)(2)(A) (emphasis added). This amendment ensured that the same law governed resource development structures on the OCS and deep water ports.[7]The OCSLA's choice of law provision has not undergone significant statutory amendments since 1975.

         3. Judicial Interpretation of the OCSLA

         The Supreme Court first applied the OCSLA's choice of law provision in Rodrigue v. Aetna Casualty & Surety Co., 395 U.S. 352, 355 (1969). The families of two workers who perished on drilling rigs fixed to the outer Continental Shelf off the Louisiana coast brought claims pursuant to Louisiana state law and the Death on the High Seas Act (High Seas Act). 395 U.S. at 352-53 (1969); see 46 U.S.C. §§ 30301-08. The High Seas Act provides an admiralty remedy for deaths resulting from traditional maritime activity on the high seas, i.e., in waters three or more nautical miles from shore. See Rodrigue, 395 U.S. at 359. The trial courts in the two cases that were consolidated in the Rodrigue appeal dismissed the state wrongful death claims, ruling that the federal statutory remedy was exclusive. Id. at 353-54. The Fifth Circuit affirmed that ruling, but the Supreme Court reversed. Id. at 355. The Supreme Court explained that the OCSLA requires fixed drilling platforms to be treated as artificial islands or federal enclaves within a landlocked state, not as vessels. Id. As such, "the [federal] admiralty action under the [High] Seas Act no more applies to these accidents actually occurring on the islands than it would to accidents occurring in an upland federal enclave."[8]Id. at 366. Moreover, since the accidents befalling the workers "involved no collision with a vessel, and the ...


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