N.J. law to decide contract lawsuit

GONZALES — A state district judge has ruled New Jersey law applies to a whistleblower and breach of contract lawsuit accusing Mistras Group Inc. of firing a consultant who pointed out allegedly shoddy weld inspections on an oil pipeline underneath Interstate 10.

In August 2010, Edward O. Smith Jr. sued Mistras, Conam Inspection and Engineering Services Inc. and individual superiors in 23rd Judicial District Court over his dismissal, alleging the poor inspections risked a potentially unknown explosive threat.

Smith worked as a consultant for Mistras, a New Jersey-based company, after its subsidiary bought out his company, Gonzales Industrial X-Ray Inc. Smith is suing to be paid the rest of his contract.

The ExxonMobil crude pipeline lies 10 feet beneath Interstate 10 near Port Allen and the La. 415 interchange in West Baton Rouge Parish, state permit records say.

District Judge Guy Holdridge ruled Thursday at the Ascension Parish Courthouse Annex as he also rejected Mistras’ bid to dismiss the whistleblower claim before trial.

Mistras had inserted a provision in Smith’s contract saying the laws of New Jersey apply to the contract.

But in seeking to throw out the whistleblower claim, Mistras had argued Louisiana law should apply to that claim while New Jersey law would continue to apply to the breach of contract dispute.

The ruling allows the whistleblower claim to proceed with the others.

Plaintiff’s attorney James E. Thompson III said after the hearing Thursday that New Jersey’s whistleblower law is harsher on employers than Louisiana’s, and carries more penalties.

Thompson told Holdridge that under Louisiana law, the plaintiff must prove a state law was violated, but not under New Jersey law.

Smith is alleging Mistras violated widely accepted industry standards in its X-ray inspections but the guidelines are not law.

Smith has alleged that the company cut short the minimum standard number of X-ray “shots” to check welds joining pieces of cylindrical pipe.

In its legal responses, Mistras said company employees took enough shots to check all of the welds and an ExxonMobil supervisor approved of the method used.

During arguments Thursday, Holdridge quizzed both sides about whether the agreement’s New Jersey provision should apply because the whistleblower claim was part of a contract dispute.

Or, Holdridge asked, should Louisiana law apply because what is alleged by Smith is a civil wrong, or a “tort,” that happened in Louisiana.

“Why did the parties choose New Jersey? I didn’t choose New Jersey. Mistras drew up this contract, chose New Jersey laws to apply. Why should I now come in and say, ‘No, Louisiana law should apply,’ ” Holdridge asked Mistras attorney Peter S. Thriffiley Jr.

Thriffiley said later that even if New Jersey law was found to apply, a New Jersey court would find Louisiana law applied.

Holdridge told Thriffiley in later arguments it was premature to consider that point but it could be raised later.

ExxonMobil Pipeline Co. spokeswoman Amber Flournoy said Friday that the company is not directly involved in the suit and it would, therefore, not be appropriate to comment.

Flournoy said the company uses state-of-the-art inspections to ensure the integrity of its pipelines.