Hartland Dean West v. Kerr-Mcgee Corporation

765 F.2d 526, 1986 A.M.C. 150, 1985 U.S. App. LEXIS 20351, 54 U.S.L.W. 2091

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 18, 1985
• Docket: 84-3458
• Status: Published

Opinions

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Hartland Dean West, injured in an explosion on an offshore oil platform, sued Kerr-McGee Corporation, the platform operator and majority owner, along with three companies that held minority interests in the platform. The district court filed a thoughtful opinion granting Kerr-McGee's motion for summary judgment on the ground that West was Kerr-McGee’s borrowed employee, and that Kerr-McGee thus enjoyed tort immunity under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 905(a). 558 F.Supp. 669 (E.D.La.1983). Later, finding that Kerr-McGee and its co-platform owners were joint venturers, and that West was the borrowed employee of the joint venture, the court granted the remaining defendants’ summary judgment motions. 586 F.Supp. 493 (E.D.La.1984). We conclude that the 1984 amendments to the LHWCA did not abolish the borrowed-employee doctrine, but also hold that the evidence before the district court raised issues of material fact with respect to West’s status as a borrowed employee. We must therefore reverse and remand for trial.

I

In August of 1980, West applied to work for Kerr-McGee. Kerr-McGee wanted to hire West, but because it had filled its employment quota, it arranged an interview for West with one of its labor contractors, Berry Brothers. Berry hired West and sent him to work on offshore platform 229-A, operated solely by Kerr-McGee and owned by Kerr-McGee, Cabot Corporation, Felmont Oil Corporation, and Case-Pomer-oy Oil Corporation.

For five months, West worked on the night shift as a “pumper” on the platform, monitoring various gauges and recording data. West’s tools, other than a hard hat and shoes which he supplied himself, were provided by Kerr-McGee. West was periodically given instructions from Kerr-McGee supervisors, but he was usually not under direct supervision while on duty. Kerr-McGee employees had the power to grant West leave time, to discipline him, and to dismiss him from the platform. Kerr-McGee was not authorized to fire West from his position with Berry Brothers, though. West, as an employee on the Berry Brothers payroll, had a lower priority than Kerr-McGee employees in selecting sleeping quarters and obtaining transportation to and from the mainland.

The Master Service Contract between Berry Brothers and Kerr-McGee contained the following language:

Contractor [Berry Brothers] is an independent contractor, free of control and supervision by Kerr-McGee as to the means or manner of performing all work or services hereunder____ Neither Contractor nor any person used or employed by Contractor shall be deemed for any purpose to be the employee, agent, servant, or representative of Kerr-McGee in performance of any work or services ... under this Agreement.

In January of 1981, West was injured in a gas explosion allegedly caused when a Kerr-McGee employee lit a cigarette. West sued Kerr-McGee, alleging negligence, strict product liability under La.Civ.Code art. 2317, and “ruin,” or strict premises liability, under La.Civ.Code art. 2322. Later, West amended his complaint to name Cabot, Felmont, and Case-Pomeroy, the platform co-owners, as defendants. The district court, as previously mentioned, granted all defendants’ motions for summary judgment.

II

We first address an issue not briefed by the parties: whether the 1984 amendments to the LHWCA, Pub.L. No. 98-426, 98 Stat. 1639, 1641 (1984), eliminated the concept of a borrowed employee in LHWCA jurisprudence. Our review of the amendment’s legislative history and the context of its passage persuades us that Congress did not intend such a result.

Borrowed-servant disputes, as in this case, arise when a defendant who is not a plaintiffs formal employer argues that the plaintiff is in fact acting as the defendant’s employee. In a second line of cases, where employees of subcontractors have sued general contractors in tort, the general contractors have also asserted immunity under 33 U.S.C. § 905(a) (1976)¹ — not because the plaintiff was a “borrowed” or de facto employee of the general contractor, but because of the general contractor’s obligation under the pre-1984 LHWCA to guarantee the payment of compensation to subcontractors’ employees. See 33 U.S.C. 904(a) (1976).² General contractors argued that the quid pro quo for their assumption of this duty should be the extension of immunity to them as well as to the direct employer, the subcontractor.

Most courts, including this one, rejected this position, holding that general contractors’ statutory duty under the LHWCA was “secondary [and] guaranty-like,” and that immunity attached only in the event that a subcontractor failed to secure compensation and the general contractor was forced to pay it. Probst v. Southern Stevedoring Co., 379 F.2d 763, 767 (5th Cir.1967); Johnson v. Bechtel Associates Professional Corp., 717 F.2d 574, 582 (D.C.Cir.1983). In June of 1984, however, the Supreme Court reversed the cited D.C. Circuit decision, and adopted the general contractors’ argument that they enjoyed LHWCA immunity from subcontractors’ employees’ tort suits “unless the [general] contractor has neglected to secure workers’ compensation coverage after the subcontractor failed to do so.” Washington Metropolitan Area Transit Authority v. Johnson, — U.S. -, 104 S.Ct. 2827, 2835, 81 L.Ed.2d 768 (1984). Under WMATA, immunity for general contractors became the rule rather than the exception.

Three months later, Congress approved a bill amending the LHWCA. Section 904(a) was rewritten to read, in pertinent part:

In the case of an employer who is a subcontractor, only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation. A subcontractor shall not be deemed to have failed to secure the payment of compensation if the contractor has provided insurance for such compensation for the benefit of the subcontractor.

The following sentence was added to the end of § 905(a):

For purposes of this subsection, a contractor shall be deemed the employer of a subcontractor’s employees only if the subcontractor fails to secure the payment of compensation as required by section 904 of this title.

As we have previously noted, these amendments overturn WMATA, and are applicable to pending cases. Louviere v. Marathon Oil Co., 755 F.2d 428, 429-30 (5th Cir.1985); Martin v. Ingalls Shipbuilding, 746 F.2d 231 (5th Cir.1984).

The bare language of the amendment to § 905(a) could also be interpreted as foreclosing any designation of any contractor as the employer of its subcontractors’ employees — even if a borrowed-employee relationship existed — unless the subcontractor failed to secure compensation payments. If Congress meant for § 905(a) to be so read, the cases delineating indices of a borrowed employee would be obsolete. In actions such as this one, where the subcontractor paid LHWCA benefits, the general contractor would have no immunity as a matter of law. Another possible reading, though, is that the “shall be deemed” language of the 905(a) amendment refers only to “deeming” a contractor the employer of a subcontractor’s employee when the contractor is not the employee’s true employer as well. Under this view, if the contractor is the employee’s “employer” under the borrowed servant doctrine, the contractor is liable for § 904(a) compensation, and has § 905(a) immunity, whether or not its behavior as a general contractor and insurance guarantor would cause it to be “deemed” an employer under the amended scheme.

When, as here, a statute contains “latent ambiguities” despite its superficial clarity, we turn to the statute’s legislative history for guidance. James v. United States, 760 F.2d 590, 593-94 (5th Cir.1985) (en banc). The legislative history of the 1984 amendments unambiguously demonstrates that Congress’s sole purpose in amending § 904(a) and § 905(a) was to overrule WMATA, and not to amend the borrowed-servant doctrine or otherwise modify LHWCA law. The report of the Conference Committee that added the § 904(a) and § 905(a) amendments states that WMATA “changed key components of what had widely been regarded as the proper rules governing contractor and subcontractor liability under the [LHWCA],” and recites that the amendments “disapprove]” WMATA. After describing the amendments, the report concludes:

WMATA, the conferees believe, does not comport with the legislative intent of the Act nor its interpretation from 1927 through 1983. The case should not have any precedential effect.

H.R.Conf.Rep. No. 98-1027, 98th Cong., 2d Sess. 24, reprinted in 1984 U.S.Code Cong. & Admin.News 2734, 2771, 2774.

The narrow Congressional focus on reversing WMATA is underscored by the Conference Committee’s beginning and ending sentences. Congress characterized WMATA as an unwanted deviation from 56 years of precedent. That precedent includes the borrowed-employee doctrine, Ruiz v. Shell Oil Co., 413 F.2d 310 (5th Cir.1969), as well as the general-contractor rule rejected by WMATA, Probst v. Southern Stevedoring Co., 379 F.2d 763 (5th Cir.1967). Indeed, this court has explicitly recognized that Probst, whose rule is codified in the 1984 amendments, does not foreclose the possibility that a general contractor may be an employer under the borrowed-servant doctrine. Champagne v. Penrod Drilling Co., 462 F.2d 1372 (5th Cir.1972), cert. denied, 409 U.S. 1113, 93 S.Ct. 927, 34 L.Ed.2d 696 (1973). The committee language shows that Congress intended to do no more than restore the understanding that existed at the time of Ruiz, Probst, and Champagne. We conclude that the 1984 amendments have no bearing on the borrowed-employee issue before us.

Ill

-1-

This court most recently summarized the inquiries relevant to whether a worker is a borrowed employee in Alday v. Patterson Truck Line, Inc., 750 F.2d 375, 376 (5th Cir.1985): “(1) Who has control over the employee and the work he is performing ... ? (2) Whose work is being performed? (3) Was there an agreement ... between the original and borrowing employer? (4) Did the employee acquiesce in the new work situation? (5) Did the original employer terminate his relationship with the employee? (6) Who furnished tools and place for performance? (7) Was the new employment over a considerable length of time? (8) Who has the right to discharge the employee? (9) Who had the obligation to pay the employee?”

The district court, relying on Hebron v. Union Oil Co., 634 F.2d 245 (5th Cir.1981) and Ruiz v. Shell Oil Co., 413 F.2d 310 (5th Cir.1969), found control over the employee’s activities to be most important. The deposition testimony indicates that although West was not always under direct supervision, he was answerable to Kerr-McGee supervisory personnel. The record also reflects without dispute that Kerr-McGee could have dismissed West from work on the platform, although it could not have fired him as a Berry employee. Based on this evidence, the court found that Kerr-McGee had much the same control over West as did the employer in He-bron, where a directed verdict for the defendant was affirmed.

As we recognized in Alday, however, neither control nor any other single answer to the inquiries “is decisive, and no fixed test is used to determine the existence of a borrowed-servant relationship.” 750 F.2d at 376, quoting Ruiz, 413 F.2d at 312. In Alday, despite facts indicating that the defendant, Patterson, had exercised supervisory control over the assertedly borrowed plaintiff, Alday, we reversed a summary judgment for Patterson because other factors weighed in favor of Alday. The most significant of these was a provision in the contract between Patterson and Al-day’s nominal employer, Atchafalaya, which, like the contract between Kerr-McGee and Berry Brothers, recited that under no circumstances would an Atchafa-laya employee be deemed a Patterson employee.

Alday recognized that in Gaudet v. Exxon Corp., 562 F.2d 351 (5th Cir.1977), cert. denied, 436 U.S. 913, 98 S.Ct. 2253, 56 L.Ed.2d 414 (1978), we affirmed a summary judgment for the defendant despite the existence of a similar contract clause. In Gaudet, though, all factors other than the contract overwhelmingly established the plaintiffs’ borrowed-employee status. The Gaudet plaintiffs had worked on an Exxon platform for over 12 years, were furnished tools by Exxon, and were subject to dismissal by Exxon. In Alday, by contrast, Al-day had been working at Patterson’s job-site for only one day, and Atchafalaya, not Patterson, had paid Alday, supplied his tools, and retained the power to discharge him.

Here, Kerr-McGee signed a contract expressly rejecting the designation of Berry Brothers workers as Kerr-McGee employees “for any purpose.” Berry Brothers paid West and provided his LHWCA compensation benefits; West did not participate in any Kerr-McGee benefit scheme. Although Kerr-McGee could dismiss West from the platform, it could not fire him from his position with Berry Brothers. In addition, Kerr-McGee’s preferential treatment of its own employees over Berry Brothers employees in transportation and bunking arrangements is inconsistent with the notion that a borrowed servant differs from a true employee only as a paper formality. Even though Kerr-McGee supplied West’s tools and had the power to control his actions during his five months on platform 229-A, we hold that as in Alday, enough conflicting evidence has been surfaced to make summary judgment for the defense inappropriate. In so holding, of course, we express no opinion concerning the ultimate resolution of the borrowed-servant issue at trial.

-2-

West argues that even if he is found to be a borrowed employee of Kerr-McGee at trial, the borrowed-servant doctrine cannot foreclose his claim for “ruin” under La.Civ.Code article 2322. He asserts that because his ruin claim is addressed to the defendants in their capacity as owners of the platform, rather than as his employers, it is analogous to a suit against a vessel owner by the owner’s employee. See Pichoff v. Bisso Towboat Co., 748 F.2d 300 (5th Cir.1984); Smith v. M/V CAPTAIN FRED, 546 F.2d 119 (5th Cir.1977). These cases, though, are based on the pre1984 section 905(b) of the LHWCA, a narrow exception to the exclusive employer’s liability provisions of § 905(a). Section 905(b) permits tort suits only for injuries “caused by the negligence of a vessel.” West’s claim for ruin sounds in strict liability, not in negligence. Furthermore, as we held in Olsen v. Shell Oil Co., 708 F.2d 976, 982 (5th Cir.1983), cert. denied, — U.S. -, 104 S.Ct. 715, 79 L.Ed.2d 178 (1984), a fixed offshore platform is not a vessel. If, on remand, West is found to be a borrowed Kerr-McGee employee, all of his claims against Kerr-McGee will be barred by § 905(a). Barger v. Petroleum Helicopters, Inc., 692 F.2d 337, 341 n. 5 (5th Cir.1982), cert. denied, 461 U.S. 958, 103 S.Ct. 2430, 77 L.Ed.2d 1316 (1983).

IV

The district court granted summary judgment for Cabot, Case-Pomeroy, and Felmont based on the following syllogism: (1) West was Kerr-McGee’s borrowed employee; (2) Kerr-McGee and the other defendants were joint venturers; (3) therefore, West was the borrowed employee of the joint venture, and all the joint ventur-ers have LHWCA immunity from tort liability. Our reversal of the summary judgment for Kerr-McGee upsets the syllogism’s first premise, and requires that we reverse the summary judgments granted to the other defendants as well. We therefore need not address the validity of the rest of the district court’s reasoning at this time. If it becomes necessary for us to do so on a second appeal, we will then have the benefit of a factual record fully developed at trial.

The district court’s grants of summary judgment to all defendants are REVERSED, and the case is REMANDED for further proceedings.

1 . Section 905(a), before 1984, read in pertinent part:

The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee ... except that if an employer fails to secure payment of compensation as required by this chapter, an injured employee ... may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death.

2 . Section 904(a), before 1984, read:

Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under sections 907, 908, and 909 of this title. In the case of an employer who is a subcontractor, the contractor shall be liable for and shall secure the payment of such compensation to employees of the subcontractor unless the subcontractor has secured such payment.