On March 6, 2012, the Tenth Circuit Court of Appeals issued its opinion in Arnold Oil Properties LLC v. Schlumberger Technology Corporation.
Plaintiff Arnold Oil Properties (Arnold) hired Defendant Schlumberger Technology Corp. (Schlumberger) to perform a cement job on its gas well. The contract contained an indemnity provision and a limitation-of-liability provision. After Schlumberger poured too much cement into the well, Arnold incurred additional expenses and sued Schlumberger.
Schlumberger moved for summary judgment, arguing the contract precluded its liability based on what it claimed to be an exculpatory provision that barred Arnold’s recovery. Alternatively, Schlumberger argued the contract limited its liability to the cost of work performed. The district court ruled the alleged exculpatory provision was in fact an indemnification provision and therefore did not bar Arnold’s recovery. The district court also held that fact issues remained as to the parties bargaining positions, and therefore denied Schlumberger’s motion to enforce the limitation-of-liability provision.
A jury returned a verdict finding that Schlumberger breached its contract with Arnold. The jury also determined that the parties were in unequal bargaining positions. Pursuant to Rule 50(b), Schlumberger renewed its motion for judgment as a matter of law seeking to enforce the contract’s limitation-of-liability provision. The district court denied the motion. Schlumberger appealed the denial of this motion and the district court’s denial of Schlumberger’s motion for summary judgment.
Schlumberger argued that the district court misconstrued the indemnity provision of the contract. The 10thCircuit’s analysis of Oklahoma law led the Court to the conclusion that they need not decide this issue. Under Oklahoma law, courts may enforce contractual provisions limiting a party’s liability for ordinary negligence if the parties have equal bargaining power. Elsken v. Network Multi-Family Sec. Corp., 838 P.2d 1007, 1009-11 (Okla. 1992). The jury found that Arnold and Schlumberger did not have equal bargaining power. Accordingly, even if the Court were to hold the contract did exculpate Schlumberger from liability, because the jury found the parties to be in unequal bargaining positions, the exculpatory provision would be unenforceable under Oklahoma law.
Schlumberger also argued the district court erred in denying its Rule 50 motion for judgment as a matter of law to enforce the limitation-of-liability provision limiting recovery to the cost of work performed. In reviewing the denial of a Rule 50 motion, the Court needs to determine whether the jury’s verdict is supported by “substantial evidence when the record is viewed most favorable to the prevailing party.” Webco Indus., Inc. v. Thermatool Corp., 278 F.3d 1120, 1128 (10th Cir. 2002). The Court held that the evidence offered at trial was sufficient for the jury to conclude the parties were in unequal bargaining positions. Therefore, the district court was correct in denying Schlumberger’s Rule 50 motion for judgment as a matter of law to enforce the limitation-of-liability contract provision.