Summary
In Forest Oil, a labor supply company assigned Terry Hudson to work on an oil production platform for Forest Oil Corporation. Hudson received injuries in the course of his employment for which he received LHWCA benefits through the labor supply company's workers' compensation insurance policy, which was funded by Forest Oil. Hudson then filed an action against Forest Oil seeking tort damages for his injuries.
Summary of this case from Sherman v. Henry Marine ServiceOpinion
CIVIL ACTION NO: 02-2225
April 28, 2003
ORDER AND REASONS
Before the Court is Defendants' Motion for Summary Judgment (Rec. Doc. 28) which was set for hearing on March 26, 2003 on the briefs. Plaintiffs have filed a memorandum in opposition (Rec. Doc. 33). Defendants subsequently filed a reply memorandum (Rec. Doc. 36). Upon consideration of the briefs submitted by counsel, the record, and the applicable law, the Court concludes that Defendants' motion should be GRANTED.
Background
Plaintiff Terry Hudson ("Hudson") was employed as an operator by Coastal Production Services ("Coastal"), a company that supplies labor personnel to inland and offshore oil and gas producers. Coastal contracted with Forest Oil Corporation ("Forest Oil") to supply personnel, including Hudson, to work on Forest Oil's production platform the SATURDAY ISLAND in Barataria Bay, Louisiana. On August 11, 2001, Hudson allegedly sustained injuries to his lower back, right hip, right arm, neck, face, and hands while attempting to repair a saltwater disposal well motor on the SATURDAY ISLAND.During his eight-month employment with Coastal prior to the accident, Hudson worked exclusively for Forest Oil. While on the SATURDAY ISLAND, Hudson worked a "seven and seven" schedule, whereby he would be on duty seven straight days, followed by seven days off. Forest Oil provided Hudson with his food and housing. While on the SATURDAY ISLAND, Hudson and another operator were responsible for overseeing the operation of fourteen oil production wells. Every morning, Hudson would call in reports and receive his daily assignments from Allen Ainsworth ("Ainsworth"), a Forest Oil representative. Forest Oil furnished Hudson with all transportation to and from the SATURDAY ISLAND and provided him with the tools and chemicals used on the job. Forest Oil had the authority to remove Hudson from the SATURDAY ISLAND if it was unhappy with his performance. However, Forest Oil could not terminate Hudson's employment with Coastal. Coastal had the obligation to pay Hudson. However, Coastal billed Forest Oil for Hudson's services and was paid by Forest Oil in accordance with the services provided.
On the day of the accident, Hudson attempted to repair the saltwater disposal well motor aboard the SATURDAY ISLAND. The motor required the replacement of a pulley and belt. While attempting to repair the motor, Hudson telephoned his supervisor at Coastal, Greg Labbeth ("Labbeth"), to receive instructions. Labbeth told Hudson to contact Reagan Equipment ("Reagan") to pick up a new pulley. Reagan brought the pulley to the SATURDAY ISLAND dock where Hudson then picked it up and transported it back to the platform. Hudson replaced the old pulley with the new one. When the motor would still not start, Hudson contacted Labbeth, who told him to wait another thirty minutes before attempting to start it again. When, Hudson later attempted to start the motor, it exploded, knocking him to the ground and causing burns to his face, neck, and hands. Hudson also allegedly suffered back and hip pain as a result of the fall. Hudson was eventually taken to West Jefferson Hospital in Marrero, Louisiana where he was treated and then released to the care of a Coastal, representative. Hudson claims to still suffer from back and hip pain.
Subsequent to the accident, Hudson received workers' compensation benefits through Coastal and its insurer, Ace American Indemnity Insurance — Company d/b/a Montlake Casualty Company ("Ace"), until May 2002. Hudson, along with his wife Judy, ("Plaintiffs") filed suit against Forest Oil on July 22, 2002. Forest Oil's liability insurer, Zurich American Insurance Company, was joined as a defendant on August 27, 2002. On March 7, 2003, Defendants filed. the instant motion for summary judgment arguing that under the "borrowed employee" doctrine, they have immunity from tort liability and are thus entitled to judgment as a matter of law. Defendants contend that Plaintiffs' exclusive remedy is workers' compensation benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. § 901-950. In opposition, Plaintiffs contend that summary judgment is inappropriate because genuine issues of material fact exist as to the applicability of the borrowed employee doctrine to the instant case. In the alternative, Plaintiffs assert that there remains a question of fact related to Forest Oil's maintenance of a proper workers' compensation plan for its employees as required by the LHWCA.
Discussion
I. Standard of Review
Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing FED. R. Civ. PRoc. 56(c)). The moving party bears the initial burden of demonstrating to the court that there is an absence of genuine factual issues. Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992). Once the movant meets that burden, the non-moving party must produce evidence sufficient to establish that there is a genuine issue of material fact in dispute. Id. Accordingly, a factual controversy exists when both parties have submitted evidence of contradictory facts.Little, 37 F.3d at 1075. On summary judgment, factual controversies are resolved in favor of the non-moving party. Id.
II. Borrowed Employee Doctrine
Under the, borrowed employee doctrine, the injured worker is permitted "to recover from the company that was actually directing his work. It may also determine which of the possible employers ultimately bears the cost of the injury." Baker v. Raymond Int'l. Inc., 656 F.2d 173, 178 (5th Cir. 1981). If a plaintiff is considered to be a borrowed employee, then the borrowing employer is immune from tort liability as workers' compensation provides the exclusive remedy under the LHWCA for an employee seeking to recover against his employer. 33 U.S.C. § 905 (a) 933(i). The issue of borrowed employee status is a question of law. Melancon v. Amoco Prod. Co., 834 F.2d 1238, 1244 (5th Cir. 1988), amended on other grounds, 841 F.2d 572 (5th Cir. 1988).
The Fifth Circuit has adopted nine factors which a district court must consider-in determining borrowed employee status. Ruiz v. Shell Oil Co., 413 F.2d 310, 312-13 (5th Cir. 1969). The nine factors to be considered are:
(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?
(2) Whose work is being performed?
(3) Was there an agreement, understanding, or meeting of the minds between the original and the 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 had the right to discharge the employee?
(9) Who had the obligation to pay the employee?
Melancon, 834 F.2d at 1244 (citing Ruiz, 413 F.2d at 312-13) "[N]o single factor, or any combination, is determinative of borrowed employee status." LaFleur v. Stone Energy Corp., 2002 WL 562664, at *3 (E.D. La. 2002).
Defendants argue that all nine factors weigh in favor of finding that Hudson was a borrowed employee. Plaintiffs only oppose Defendants' motion as to the first, fifth, and ninth factors from Melancon. Thus, the Court will focus its analysis on these three factors.
Defendants contend that Forest Oil had actual control over Hudson and the work that he was performing. Hudson was officially employed by Coastal. However, while an employee of Coastal, he worked exclusively at Forest Oil's facilities. He reported to and received his daily instructions from Ainsworth, the Forest Oil supervisor. Forest Oil provided Hudson with his food and housing while he was on duty. Forest Oil transported him to and from the SATURDAY ISLAND. Forest Oil also supplied Hudson with his equipment and tools, and instructed him that he could get replacement tools from Forest Oil.
In contrast, Coastal had no supervisors working with Hudson in the field. He did not receive daily instructions from Coastal. For the most part, Coastal was responsible for hiring Hudson, placing him with Forest Oil, and then paying him based on the number of hours he worked for Forest Oil. Plaintiffs argue that Coastal never lost control over Hudson's employment. In support, Plaintiffs cite to Hudson's deposition testimony wherein he stated that he contacted Labbeth, his supervisor at Coastal, for instructions on how to repair the motor that eventually exploded. Apparently, Labbeth did not instruct Hudson to contact Forest Oil, but told him to contact an equipment company that would replace the used pulley. Labbeth then instructed Hudson on restarting the motor after the new pulley had been installed.
The problem for Plaintiffs is that they do not produce any evidence to show that Hudson had recurring conversations with Coastal supervisors regarding his actual work duties on the SATURDAY ISLAND. Hudson does not say why he contacted Labbeth, and not Ainsworth, on August 11, 2001, or that Forest Oil approved of his contact with Labbeth. The facts in front of the Court make it clear that Forest Oil had complete control over Hudson's on-site employment. It is not clear that Hudson's call to Labbeth was anything more than an isolated occurrence. As far as Plaintiffs' argument is concerned, this factor is at most neutral in leading to a finding that the borrowed employee doctrine does not apply.
As to the fifth factor, Plaintiffs argue that Coastal never terminated its relationship with Hudson. This is evinced by Hudson's telephone call to Labbeth, the fact that a Coastal representative visited Hudson in the hospital, and that Coastal provided him with health insurance. However, the Fifth Circuit has never required that there be a complete termination of the relationship between employee and official employer. Melancon, 834 F.2d at 1246 (holding that to require complete termination "would effectively eliminate the `borrowed employee' doctrine"). In analyzing this factor, a court is to "`focus on the lending employer's relationship with the employee while the borrowing occurs.'" Id. (quoting Capps v. N.L. Baroid-NL Industries, 784 F.2d 615, 617-18 (5th Cir. 1986)). While working aboard the SATURDAY ISLAND, Hudson had two reported conversations with a Coastal supervisor relating to his employment duties. This is in direct contrast to Hudson's on-site relationship with Forest Oil. Additionally, Coastal's visit of Hudson at the hospital after the accident and its providing of health insurance do not speak to the employment relationship while Hudson was performing his actual duties for Forest Oil. Since it is clear that Coastal had almost no on-site relationship with Hudson during his time on the SATURDAY ISLAND, this factor weighs in favor of borrowed employee status.
Finally, Plaintiffs claim that the ninth factor weighs against borrowed employee status because Hudson was paid directly by Coastal. However, Hudson was paid by Coastal according to the number of his work hours reported by Forest Oil. Coastal then charged Forest Oil based on the number of reported hours. The instant case is factually similar toCapps, where the official employer had the obligation to pay the employee, but received funds from the borrowing employer based on the number of hours worked by the employee. 784 F.2d at 618. The Fifth Circuit held that in this type of scenario, the borrowing employer, not the official employer, in effect pays the employee. Id. Accordingly, this factor also weighs in favor of borrowed employee status.
In sum, Plaintiffs' arguments fail to show that borrowed employee status should not be applied in the instant case. The first factor is the only one that does not clearly favor Defendants' position. However, the other eight factors sufficiently outweigh any questions that the Court may have as to ultimate control over Hudson. Hudson was solely performing work for Forest Oil. He acquiesced in the placement with Forest Oil and his job responsibilities while on the SATURDAY ISLAND. Hudson worked on the SATURDAY ISLAND for eight months and was provided food, tools, and housing by Forest Oil. Lastly, Forest Oil had the authority to remove Hudson from the platform. It is irrelevant whether Forest Oil could terminate Hudson's employment with Coastal. Melancon, 834 F.2d at 1246. Since the eight Melancon factors other than the control factor overwhelmingly favor borrowed employee status, the Court concludes that as a matter of law, Hudson qualifies as a borrowed employee of Forest Oil.
Alternatively, Plaintiffs argue that a genuine issue of fact exists as to whether Forest Oil, as Hudson's borrowing employer, properly maintained the required workers' compensation coverage for its employees under the LHWCA. According to Plaintiffs, Forest Oil is not immune from tort liability under the LHWCA if it did not properly secure the payment of workers' compensation coverage under 33 U.S.C. § 932. Under 33 U.S.C. § 904 (a), "[e]very employer shall be liable for and shall secure the payment to his employees of [workers' compensation]." Under 33 U.S.C. § 905 (a), an employer's liability to his employee is limited to the workers' compensation benefits provided pursuant to the LHWCA. However, if an employer fails to secure payment of such compensation, the injured employee may choose to claim LHWCA compensation, or file suit against the employer for damages. Id. Under 33 U.S.C. § 932 (a), an employer may secure the payment of compensation by (1) participating in a workers' compensation insurance plan, or (2) furnishing proof to the Secretary. of Labor of its financial ability to pay such compensation and then receiving authorization from the Secretary to pay such compensation directly.
"[A] borrowing employer is liable for the compensation benefits of its borrowed employee under the LHWCA." Total Marine Servs., Inc. v. Dir., Office of Worker's Comp. Programs, U.S. Dep't of Labor, 87 F.3d 774, 777 (5th Cir. 1996). Thus, an official employer, who has already paid workers' compensation benefits to an employee, is entitled to reimbursement from the borrowing employer. Id. at 779. However, tort immunity under § 905(a) is not limited to the employer who actually pays for the workers' compensation. Melancon, 834 F.2d at 1247 n. 17. InMelancon, the borrowing employer paid the official employer $29 an hour for the plaintiff's services. Id. The official employer only paid the plaintiff $10 an hour. Id. The Fifth Circuit concluded that at least a portion of the extra $19 went to cover the official employer's workers' compensation costs. Id. Furthermore, the contract between the two employers expressly stated that the official employer was responsible for securing and maintaining workers' compensation insurance. Id. Thus, the Fifth Circuit held that the borrowing employer's failure to actually secure payment of compensation for the plaintiff did not bar the applicability of the borrowed employee doctrine. Id.
The court in Lott v. Moss Point Marine, Inc., 785 F. Supp. 600 (S.D. Miss. 1991) came to the same conclusion. In Lott, the plaintiff's official employer supplied labor personnel to a shipyard operator. 785 F. Supp. at 600. After suffering an injury while working for the borrowing employer, the plaintiff received workers compensation benefits from the official employer's insurance carrier. Id. at 601. Despite having already received compensation, the plaintiff sued his borrowing employer. Id. The borrowing employer moved for summary judgment contending that the plaintiff's receipt of LHWCA benefits was his exclusive remedy. Id. The court concluded that the Fifth Circuit's nine-factor test weighed in favor of borrowed employee status. Id. at 603. In so holding, the court concluded that the plaintiff's sole remedy was LHWCA benefits paid by his official employer. Id. The plaintiff was barred from bringing an action against his borrowing employer-, whether or not it had secured payment of workers' compensation benefits. Id.
In conclusion, it is irrelevant for purposes of the instant motion whether or not Forest Oil secured payment of workers' compensation for its borrowed employees. Coastal provided Hudson with compensation benefits through its insurer, Ace. Now, Ace has filed a complaint in intervention and a motion for summary judgment against Forest Oil, seeking reimbursement pursuant to the Fifth Circuit's holding in Total Marine Servs. 87 F.3d at 777. As in Melancon and Lott, Hudson's exclusive remedy for the injuries he suffered on the SATURDAY ISLAND is the workers' compensation benefits he has already received. Accordingly, Defendants are entitled to tort immunity under § 905(a). Summary judgment is appropriate as to Plaintiffs' claims against both Forest Oil and Zurich.
Therefore;
It is HEREBY ORDERED that Defendants' Motion for Summary Judgment (Rec. Doc. 28) is GRANTED.
It is FURTHER ORDERED that Plaintiffs' claims against Defendants Forest Oil and Zurich should be DISMISSED WITH PREJUDICE.