Unanimous U.S. Supreme Court rejects argument that state labor laws apply to outer continental shelf

The U.S. Supreme Court unanimously sided with an offshore oil drilling company Monday, ruling that rig workers were not covered by California labor laws while stationed on the outer continental shelf.

In an opinion written by Justice Clarence Thomas, the high court said federal law governed that portion of the ocean, meaning state regulations could only apply in instances where it was applicable and consistent with federal law.

"[W]e hold that where federal law addresses the relevant issue, state law is not adopted as surrogate federal law on the [outer continental shelf]," Thomas wrote. Parker Drilling Management Services Ltd. v. Newton, 2019 DJDAR 5003 (U.S. June 10, 2019).

The 1953 Outer Continental Shelf Lands Act, which defines a region of U.S. territory beyond three miles of state coastal waters, says state law applies in the region only when it is "applicable and not inconsistent with" federal regulations, Thomas noted.

California wage and hour protections were redundant in an area where federal law sets a minimum wage, the high court held, sending the putative class action to continue in courts below.

The decision reverses a ruling from the 9th U.S. Circuit Court of Appeals, which held in 2018 that the state's protections covered oil rig work.

Brian Newton, an oil rig hand who worked off the coast of California, filed the putative class action against his employer, Parker Drilling Management Services Ltd., in 2015, claiming the company had failed to compensate him and other employees for off-time during which he was forced to remain on the rig platform and take work-related calls.

The lawsuit alleged several violations of California labor laws, including those regarding minimum wages, overtime, pay stub disclosures, timely final wages and meal periods.

A federal judge in Los Angeles dismissed the suit, citing precedent from the 5th U.S. Circuit Court of Appeals that held federal law superior in the offshore region.

But the 9th Circuit reversed last February. Judge Morgan B. Christen reasoned for a unanimous panel that California's more expansive labor laws were not inherently "inconsistent" with federal regulations just because they required a higher wage.

Attorneys for the putative class of rig workers advanced that argument before the justices, but Thomas rejected Christen's reasoning, saying such reasoning would render the terms used in the 1953 federal law meaningless.

Neither Paul D. Clement, a partner with Kirkland & Ellis LLP who represents Parker Drilling, nor David C. Frederick, a partner with Kellogg Hansen Todd Figel & Frederick PLLC who represents the rig workers, responded to requests for comment by press time Monday.