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The general principle of state-court jurisdiction over cases arising under federal laws is that state courts may assume subject-matter jurisdiction over a federal cause of action absent provision by congress to the contrary or disabling incompatibility between the federal claim and state-court adjudication.
The owner contracted for certain completion operations on oil drilling platforms offshore of Louisiana to be completed by the contractor. The contractor promised to indemnify the owner for all claims resulting directly or indirectly from the work. Thereafter, the advent of a hurricane required that workers be evacuated. An employee of the contractor was washed across the deck of the vessel by a wave and suffered injuries to his back. His personal injury action alleged negligence by the owner. The owner filed a third-party complaint for indemnification against the contractor. In its third-party answer, the contractor denied that the state court had subject-matter jurisdiction over the third-party complaint, arguing that the owner’s cause of action arose under the Outer Continental Shelf Lands Act (43 USCS 1331 et seq.) and that the Act invested exclusive subject-matter jurisdiction in a United States District Court. The Texas trial court rejected the contractor’s contention, and the case went to trial before a jury. In submitting the case to the jury, the trial court denied a request by the contractor to instruct the jury that personal injury damage awards were not subject to federal income taxation and that they should not increase or decrease an award in contemplation of tax consequences. The jury found the owner negligent and awarded the employee damages for his injuries, and it also found that the employee sustained his injuries while performing work subject to the contract of indemnification. Based on the two verdicts, the trial judge entered judgment against the contractor in the amount of the damage award. On appeal, the Court of Civil Appeals of Texas, Fourteenth Supreme Judicial District, affirmed, holding that the Texas state courts had subject-matter jurisdiction over the causes of action, there being no explicit command in the Act that federal-court jurisdiction be exclusive, and that the trial court did not err in refusing to instruct the jury that damages awards were not subject to federal income taxation. The Supreme Court of Texas denied review. Certiorari was granted.
2) Should be threshed out on remand.
On certiorari, the United States Supreme Court affirmed in part, vacated in part, and remanded. The Court held that held that federal courts did not have exclusive jurisdiction over personal injury and indemnity cases arising under Outer Continental Shelf Lands Act (OCSLA) because there was nothing in the language, structure, legislative history, or underlying policies of OCSLA suggesting that congress intended federal courts to exercise exclusive jurisdiction over personal injury actions arising under OCSLA. Moreover, the Court held that the issue on whether the jury should have been instructed that personal injury damage awards were not subject to federal income taxation required remand to the Texas appeals court for a determination of whether Louisiana law required the instruction.