Supreme Court Rules on Oil and Gas Employers’ Immunity

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On October 6, 2014, David Chambers, who was an employee of RDT Trucking, Inc., was dispatched to an oil-well site to pick up waste water. Stephens Production Company and Stephens Production Company Continental Properties, LLC (SPC) were the owners and operators of the well. While on site, during this work, Mr. Chambers suffered severe burns, which eventually led to his death. Glory Strickland, Mr. Chambers’ surviving daughter and Special Administrator of the Estate, filed a wrongful death lawsuit against SPC and others in the District Court of Oklahoma County, alleging negligence for failure to properly operate, maintain, and inspect the well, and failure to properly warn of dangerous conditions at the well site.

SPC filed a motion to dismiss, claiming immunity under the following referenced statute.:

85A §5(A) stated……. “For the purpose of extending the immunity of this section, any operator or owner of an oil or gas well or other operation for exploring for, drilling for, or producing oil or gas shall be deemed to be an intermediate or principal employer for services performed at a drill site or location with respect to injured or deceased workers whose immediate employer was hired by such operator or owner at the time of the injury or death”.

As the owner and operator of the well, SPC argued it was statutorily immune from suit in the district court. In response, Strickland argued that § 5 was an unconstitutional special law. Strickland also argued that the Legislature’s factual determination that all oil and gas well owners and operators are principal or intermediate employers, for purposes of immunity from civil liability, violated the constitutional principle of separation of powers.

This statute was addressed by the Supreme Court in Strickland v Stephens Production Company, 2018 OK 6.

The Supreme Court reasoned that the last sentence of § 5(A) carved out a special subclass of employers, specifically oil and gas employers, who are automatically deemed principal employers and given immunity in the district court regardless of whether the employer would be considered a principal employer under the facts of the case. All other employers seeking immunity from civil liability under the principal employer doctrine must present factual proof that a statutory employment relationship exists pursuant to the necessary and integral test. The court did not believe the created distinction was a permissible special law. It was not persuaded by SPC’s argument that oil and gas production involved complex processes including exploration, drilling, and production, and that such processes are routinely performed by different specialists subcontracted by the owner of the well, making the oil and gas industry unique. The Court could find no evidence specific to the oil and gas industry that would warrant differential treatment or furnish a practical and reasonable basis for discrimination. The Court held that the last sentence of § 5(A) is an unconstitutional special law under Art. 5, § 59 of the Oklahoma Constitution.

This decision does not preclude companies from arguing exclusive remedy protections regarding who was the principal employer at the time of a workers injuries.