Texas Supreme Court Weighs In on Jones Act Coverage
The Texas Supreme Court recently addressed an important question of Jones Act coverage: when is a vessel “out of navigation” and thus outside the Act’s purview?1 With the number of stacked rigs in the Gulf of Mexico, this is an important case for companies with employees on those rigs. In a 5-4 split decision, the Court found that a ship that was taken out of service, subjected to a 20-month conversion process, and unable to engage in transportation was “out of navigation.”
Kelvin Gold was injured while working on the Helix 534, a vessel that was being converted from a drill ship to a well-intervention ship at a dry dock in Singapore. Gold sued Helix for maintenance-and-cure benefits under the Jones Act, which provides benefits to certain employees who have a substantial connection to a “vessel in navigation.” The Texas Supreme Court held that an otherwise seagoing ship can be out of “navigation” when it is withdrawn from service for major renovations that render it incapable of self-transportation, but not for temporary and routine repairs.
Perhaps the most surprising thing about the Court’s decision was that the question could be answered “as a matter of law,” at least in this particular case. In reaching this decision, the Court relied on factors such as (1) the significance of the work performed; (2) the cost of conversion relative to the value of the ship; (3) whether contractors exercised control over the work; (4) the duration of the repairs; and (5) whether the repairs took the ship out of service.
Because the Helix 534’s conversion had lasted 20 months, cost $115 million (compared to a purchase price of $85 million), and involved outside contractors, and the vessel had been unable to navigate on her own during the entirety of Gold’s time aboard, this may have been a unique case. As the Court recognized, admiralty law (including the Jones Act) is not a model of clarity, and there are probably many more cases that fall in a gray area which will require a jury trial. Yet, as the Court said, “we can nevertheless discern one rule of law with confidence: major overhauls that render watercraft practically incapable of transportation are sufficient to remove those crafts from ‘vessel in navigation’ status.”
1 Helix Energy Sols. Grp., Inc. v. Gold, No. 16-0075, 2017 WL 2608346 (Tex. June 16, 2017).
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.