US Fire Insurance Co v. Liberty Services Inc, et a

United States Court of Appeals Fifth Circuit F I L E D In the July 6, 2004 United States Court of Appeals Charles R. Fulbruge III for the Fifth Circuit Clerk ___________________

No. 04-30002 Summary Calendar ___________________

UNITED STATES FIRE INSURANCE COMPANY,

Plaintiff-Appellee,

VERSUS

KERSHIA MILLER; ET AL.,

Defendants, LIBERTY SERVICES, INC.; LOUISIANA WORKERS’ COMPENSATION CORPORATION,

Defendants-Appellants.

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Appeal from the United States District Court for the Eastern District of Louisiana

___________________

Before SMITH, BARKSDALE, and DEMOSS, United States Fire, and United States Fire Circuit Judges. began to make medical and disability payments to Dyson. JERRY E. SMITH, Circuit Judge: At the time of the accident, Seacor owned Defendants Liberty Services, Inc. two-thirds of Energy Logistics, Inc. (“ELI”), (“Liberty”), and Louisiana Workers’ which, in turn, owned 100 percent of Liberty. Compensation Corporation (“LWCC”) appeal ELI acquired Liberty in 1999 with the a judgment for plaintiff United States Fire financing of Seacor. Before the acquisition, Insurance Company (“United States Fire”) Dyson was on the payroll of Baker Energy granting partial summary judgment. The (the minority owner of ELI). After the district court concluded that LWCC is liable acquisition, Dyson was moved to Seacor’s for half of the workers’ compensation payroll and was assigned the Liberty truck he payments made by United States Fire on behalf was driving when the accident occurred. of employer Seacor Marine (“Seacor”) to Dyson conducted most of his work in an office Roger Dyson pursuant to LA. REV. STAT. § trailer on Liberty’s work site and supervised 23:1031(C). LWCC and Liberty appeal on the thirteen Liberty employees. ground that Dyson was not a borrowed employee of Liberty and that Liberty (via its Factual disputes between the parties arise at workers’ compensation carrier, LWCC) this point. United States Fire argues Dyson should not be liable for subrogation. In light was the borrowed employee of Liberty, but of the facts offered by each party, and applying Liberty and LWCC maintain Dyson’s employ- the ten-part test in Ruiz v. Shell Oil Co., 413 er was Seacor or ELI. F.2d 310, 312-13 (5th Cir. 1969), we conclude that Dyson was a “borrowed employee” of II. Liberty, so we affirm. Using diversity jurisdiction, United States Fire sued Liberty and LWCC for recovery of I. workers’ compensation benefits paid on behalf In June 2001, Dyson was injured when a of Dyson. After discovery, United States Fire car driven by defendant Kershia Miller crossed moved for partial summary judgment, seeking the median and struck the vehicle Dyson was to resolve the legal liability of Liberty and driving. On the day of the accident, Dyson LWCC, leaving at issue the question of dam- was working at the Liberty work site and was ages. United States Fire argued that Dyson en route to pick up time sheets for Liberty’s was a “borrowed employee” of Liberty’s at the off-shore employees. There is no dispute that time of the accident. Under LA. REV. STAT. Dyson was acting within the course and scope § 23:1031(C), if United States Fire establishes of his employment when the accident that Dyson was a borrowed employee, United occurred. States Fire is entitled to seek contribution for one-half of the amount of workers’ Dyson then filed a claim for workers’ com- compensation benefits it has paid. See pensation benefits through his nominal Travelers Ins. Co. v. Paramount Drilling Co., employer, Seacor, which then requested cov- 395 So. 2d 849, 851-52 (La. App. 2d Cir. erage from its workers’ compensation carrier, 1981). The district court granted the motion,

finding that Dyson was a borrowed or special (4) Did the employee acquiesce in the new employee of Liberty at the time of the work situation? accident. (5) Did the original employer terminate his III. relationship with the employee? A. Summary judgment is appropriate only (6) Who furnished the tools and the place where there are no genuine issues of material of performance? fact and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. (7) Was the new employment over a P. 56(c). The moving party, in this case considerable length of time? United States Fire, bears the burden of establishing that there are no genuine issues of (8) Who had the right to discharge the em- material fact. In determining whether there is ployee? a fact issue, evidence and inferences must be drawn in the light most favorable to the non- (9) Who had the obligation to pay the em- moving party. Daniels v. City of Arlington, ployee? Tex., 246 F.3d 502 (5th Cir. 2001). We review a summary judgment de novo. Medi- (10) Who selects the employee? trust Fin. Serv. Corp. v. Sterling Chems., Inc., 168 F.3d 211, 213 (5th Cir. 1999). Although no single factor is determinative, this court has historically considered the fifth, B. eighth, ninth, and tenth factors to be the most The district court held that the evidence essential. Gaudet v. Exxon Corp., 562 F.2d presented by the parties overwhelmingly fa- 351, 356 (5th Cir. 1977). The district court vored the finding that Dyson was a borrowed found that all but the ninth factor were employee of Liberty, thereby entitling United resolved in favor of United States Fire and States Fire to subrogation from LWCC. The granted its motion accordingly. court reached this decision by applying the ten-factor test used by Louisiana courts and Liberty and LWCC argue that none of the this court. Ruiz v. Shell Oil Co., 413 F.2d ten factors can be resolved in favor of United 310, 312-13 (5th Cir. 1969). These ten factors States Fire. Liberty and LWCC doggedly are: maintain that Dyson was an employee of Sea- cor or, in the alternative, ELI. Liberty also (1) Who has the right of control over the contends that it had only tangential contact employee beyond mere suggestion of details or with Dyson at the time of the accident. cooperation? Application of the admittedly convoluted facts to the Ruiz test demonstrates that the district (2) Whose work is being performed? court correctly concluded that Dyson was Lib- erty’s borrowed employee. (3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

1. entertainment expenses by Liberty. The first factor is who has the right of con- trol over the employee. The district court Liberty and LWCC contend that Dyson’s notes that in the accident report, Liberty work was performed in furtherance of ELI, as describes Dyson as its “leased employee from the sole owner of Liberty. Naturally, any Seacor,” which indicates that Liberty initially work done by any employee of Liberty would claimed responsibility or control over Dyson. be to the benefit of the intermediate holding Liberty and LWCC object to the court’s company (and, by extension, the parent reliance on this fact, however, charging that corporation, Seacor), and to argue that ELI this is the only bit of evidence that would was the real employer simply because of this suggest that Dyson was under Liberty’s is, essentially, a semantic attempt to confuse. control.

This is not the case. Both parties Evidence plainly demonstrates that Dyson’s acknowledge that Dyson was under the direct work directly benefited Liberty, which thereby control of Butch Guidry, the operations indirectly helped ELI. To reason that ELI was manager for ELI and Liberty, who was in turn the sole beneficiary of Dyson’s work directly under Joe Sarne, the president of both. contravenes the evidence and ignores the fact Liberty and LWCC aver that Guidry was an that ELI, as an intermediate holding company, employee of Seacor, but Guidry’s deposition conducts no actual business, nor does it retain indicates that although his paycheck came any employees. Any benefits ELI accrues from Seacor, all his duties were with ELI and come from the work done by its subsidiary op- Liberty. Though Dyson may not have been erating companies. under the supervision of Liberty’s vice president Richard Johnston, the only people In the district court, LWCC and Liberty al- who could be considered his supervisors were ternatively argued that Dyson performed work officers of ELI and LibertySSnot SeacorSSthus for Seacor. In his deposition, however, Guid- suggesting that ultimate control over Dyson’s ry stated quite plainly that Dyson performed work lay in Liberty’s hands, not Seacor’s. no work for Seacor, nor did Dyson consider himself an employee of Seacor’s. 2. The second factor examines whose work 3. was being performed by the employee in ques- The third factor looks for any contract or tion. Evidence suggests unequivocally that other agreement regarding the employee. Lib- Dyson performed all his work for Liberty and erty and LWCC are correct to point to the lack not for Seacor. of a contract between Seacor and Liberty re- garding Dyson’s employment. Nevertheless, Dyson was driving Liberty’s vehicle so that the evidence presented in the depositions he might run an errand for Liberty. Liberty strongly suggests that there was an under- owned and operated the shore-based facility standing between Seacor and Liberty to entitle where Dyson supervised the thirteen Liberty Liberty to call Dyson a “leased employee from employees and maintained his office. Dyson Seacor” at the time of his accident. The fact was reimbursed for various office, travel, and that Liberty referred to Dyson as such on the

accident report evinces an explicit Rather, we are asked to examine the nature of acknowledgment of this implicit agreement. the lending employer’s relationship with the employee while the borrowing occurred. Id. at 4. 618. Liberty and LWCC maintain that Dyson The fourth factor examines whether the em- had less contact with Liberty than with Seacor ployee acquiesced in the new work situation. or ELI. The facts, however, do not support The “focus of this factor is whether the this conclusion in any way. employee was aware of his work conditions and chose to continue working in them.” Although Seacor issued his checks, Dyson Brown v. Union Oil Co., 948 F.2d 674, 678 appears to have had no contact with Seacor (5th Cir. 1993). Each side can make fairly whatsoever. As stated above, Dyson’s bosses persuasive arguments that this factor ought to were officers of both ELI and Liberty, and be decided in its favor. Guidry’s deposition makes plain that neither he nor Dyson ever performed any work for Liberty and LWCC accurately point out Seacor. On the other hand, many facts that Dyson believed that he and his boss, suggest that Dyson had significant contact Guidry, were employees of ELI. It is obvious with Liberty. from the depositions, however, that a great deal of confusion existed on the part of Most importantly, Dyson worked at a Lib- management and employees as to the precise erty site and managed its employees. Because arrangement that existed among Seacor, ELI, Liberty is a wholly owned subsidiary, its assets and Liberty. Moreover, as an intermediate are admittedly also ELI’s. ELI, however, holding company, ELI technically possessed performed no work on the site and retained no no employees of its own, making it impossible employees, and all work appears to have been for Dyson to have been employed by ELI. done for Liberty directly. Additionally, Liberty furnished Dyson with an expense Secondly, after the 1999 merger, Dyson account and a vehicle to perform his duties to willingly began managing the Liberty asset in Liberty. Liberty and LWCC’s argument that Venice. Regardless of who Dyson believed his Dyson’s only contact with Liberty was the technical employer to be, Dyson’s awareness supervision of Liberty employees is patently of his new work situation with Liberty be- false, and this fifth factor must be considered ginning in late 1999 is sufficient to in favor of borrowed employee status. demonstrate acquiescence on his part, and this factor weighs in favor of finding borrowed 6. employee status. The sixth factor examines who furnished the employee with the tools and place of busi- 5. ness necessary to carry out his duties. Liberty The fifth factor asks whether the original furnished Dyson with a place of employment. employer terminated its relationship with the Dyson worked out of a trailer owned by employee. This factor does not ask whether Liberty and located on Liberty’s work site. the lending employer severed its relationship Additionally, Liberty assigned Dyson the completely. Capps v. N.KL. Baroid-NL In- vehicle that was involved in the accident. dus., Inc., 784 F.2d 615, 617 (5th Cir. 1986). Finally, Liberty regularly reimbursed Dyson for

expenses he incurred in the course of his 9. employment. Thus, Liberty, and not Seacor, The ninth factor is who had the obligation furnished Dyson with the means necessary to to pay the employee. The district court conduct his daily business. Liberty and LWCC properly found that Dyson received his again attempt to argue that because Liberty is paycheck from Seacor and that this factor a wholly-owned operating company of ELI’s, weighs against a finding for borrowed Dyson’s office and car ought to be considered employee status. Neither party disputes this ELI’s assets and not Liberty’s. Yet again, all finding. of Liberty’s assets may be ELI’s by definition, but they are Liberty’s in practice. 10. The tenth and final factor examines who 7. hired the employee. The selection and The seventh factor examines how long the promotion of employees rested with Guidry arrangement between employers existed. This and Sarne. Guidry, in his deposition, stated court has noted that when “the length of that he promoted Dyson to manager of employment is considerable, this factor Liberty’s Venice shore base in 1999 after ELI supports a finding that the employee is a acquired Liberty. Yet again, Liberty and borrowed employee,” but that “the converse is LWCC’s only argument is that Guidry and not true.” Capps, 784 F.2d at 618. When ELI Sarne are more closely allied to Seacor and/or acquired Liberty in 1999, Dyson began his ELI than to Liberty. Because Guidry and employment situation that continued up until Sarne are officers of Liberty and ELI, this is the time of his accident in 2001. Though it is certainly not the case, and Guidry maintained debatable whether approximately a year and a in his deposition that he had no contact with half is a “considerable” length of time, the Seacor aside from receiving his checks from district court was correct in determining that them. Accordingly, this factor weighs in favor this evidence weighs in favor of finding for of borrowed employee status. borrowed employee status. IV. 8. We conclude, in light of the ten factors, that The eighth factor looks to who had the Dyson was, as a matter of law, the borrowed right to discharge the employee. The power to employee of Liberty. As a result, Liberty and terminate Dyson’s employment rested only Seacor are liable in solido for Dyson’s injuries, with Guidry and/or Sarne, both being officers thereby entitling United States Fire to a fifty- of ELI and Liberty. Liberty and LWCC’s con- percent contribution from LWCC. tention that Guidry is an employee of Seacor contradicts the evidence, because Guidry, de- AFFIRMED. spite being on Seacor’s payroll (as all management of ELI and Liberty appear to have been), worked solely with ELI and Liberty. Thus, the right to discharge Dyson lay with Liberty, lending further weight to finding for United States Fire.