United States: Eighth Circuit Holds Nonoperating Working Interest Owner And Engineering Contractor Not Liable For Negligence Of On-Site ‘Company Hand'

Last Updated: October 26 2016
Article by Bradley K. Jones

On Aug. 5, 2016, the United States Court of Appeals for the Eighth Circuit affirmed summary judgment in favor of a nonoperating working interest owner, Oasis, and its engineering subcontractor, RPM Consulting, holding that neither owed a duty of care to an employee of a drilling rig operator. North Dakota, like Texas and other states, follows Section 414 of the Restatement of Torts for determining liability for acts of independent contractors.

Oasis is an oil and gas exploration company that contracts with other entities to manage the day-to-day operations at its wells. It does not conduct drilling operations at its well sites; instead, it has a Master Service Contract with RPM Consulting to provide engineering support and subcontractors to oversee the drilling process and coordinate services needed to keep the sites operating efficiently.

In early 2011, Oasis obtained the rights to drill for oil at the Ross 5603 well in Williams County, North Dakota. Oasis engaged Nabors Drilling to drill the well and provide the rig and labor. RPM Consulting assigned Michael Bader as company hand to the rig. Bader, through the separate entity of Mike Bader Consulting LLC, had entered into a subcontractor agreement with RPM Consulting. The role of a company hand in this instance was to ensure that the drilling progressed safely, efficiently and according to plan. The company hand did not operate equipment or perform hands-on work but rather supervised drilling and contracts with third-party vendors for needed services. The company hand lived at the site, served as the Oasis representative at the well and emailed progress reports to Oasis and RPM Consulting each morning.

Joseph Kronberg worked for Nabors Drilling on Nabors Rig 177 and was electrocuted by a punctured and submerged electrical cord while exiting the Ross well's "change shack." Mr. Kronberg's widow brought wrongful death and survival actions against Oasis and RPM Consulting, among others, alleging defendants' negligence caused her husband's death. The district court granted summary judgment for Oasis and RPM Consulting, ruling that neither company owed Mr. Kronberg a duty of care under North Dakota law. The United States Court of Appeals for the Eighth Circuit affirmed.

Mrs. Kronberg argued that Bader, the company hand, was an employee of Oasis and RPM Consulting, and that the companies were vicariously liable to persons injured because of Bader's alleged negligence. As evidence, Mrs. Kronberg showed: (1) Bader was Oasis's lone representative at the well, and he was required to complete an accident report about Mr. Kronberg's death on an Oasis company form; (2) the RPM Consulting-Bader contract required Bader to complete his work personally; (3) RPM Consulting assigned Bader to a specific rig; (4) RPM Consulting provided Bader with documents; (5) Bader emailed RPM Consulting employees often; (6) Bader sent daily progress reports to RPM Consulting employees; (7) RPM Consulting furnished equipment, such as a computer, along with an email address and computer files for Bader's use; and (8) Bader was paid based on the number of days he worked and on a regular basis. The court held these circumstances were insufficient to support a finding that the companies directed the means and manner of Bader's work. The record established Bader was an independent contractor and not an employee of Oasis or RPM Consulting.

Alternatively, Mrs. Kronberg argued that the companies may be liable under the doctrine of retained control found in the Restatement (Second) of Torts § 414 (1965), which imposes liability on a company that treats an independent contractor like an employee by controlling the "method, manner, and operative detail" of a specific portion of the contractor's work. By retaining control, the companies may be liable directly for the negligence of the contractor if it fails to exercise its control with reasonable care. The court noted that companies concerned with only the finished results of the contractor's work are not liable.

As evidence that Oasis retained control, Mrs. Kronberg asserted that Oasis controlled Bader by mandating that he select third-party vendors from a vendor list that Oasis provided. Mrs. Kronberg also cited Oasis's control over the land where the Ross well was located. The court affirmed that this evidence does not demonstrate Oasis controlled the "operative details" of Bader's work for purposes of retained-control liability.

For retained control by RPM Consulting, Mrs. Kronberg relied principally on the subcontract, which provided that Bader must "comply with standard safety practices, any OSHA requirements applicable to [his] work and any safety practices required by RPM and/or RPM's customers." The court noted, however, that the contract also states that RPM Consulting "shall have no direction or control" of Bader.

Mrs. Kronberg also argued RPM Consulting exercised actual control of safety practices by offering safety training to company hands. RPM Consulting, however, did not require company hands to complete the training, and it was undisputed that RPM Consulting had no safety requirements in place at the time of Mr. Kronberg's death. The court held there was no genuine issue of material fact as to Oasis' or RPM Consulting's lack of control over Bader's safety practices, and neither company owed a duty to Mr. Kronberg under the doctrine of retained control. Thus, neither company may be held liable for Bader's alleged negligence as a company hand. Summary judgment affirmed. Kronberg v. Oasis Petroleum N. Am., LLC, 831 F.3d 1043 (8th Cir. 2016).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions