Kronberg Ex Rel. Estate of Kronberg v. Oasis Petroleum North America LLC , 831 F.3d 1043 ( 2016 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-1617
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Margo Kronberg, as Personal Representative of the Estate of Joseph Kronberg, and
Margo Kronberg on Behalf of all the Heirs of Joseph Kronberg,
lllllllllllllllllllll Plaintiff - Appellant,
v.
Oasis Petroleum North America LLC; RPM Consulting, Inc.; American Portable
Mini Storage, Inc.,
lllllllllllllllllllll Defendants - Appellees.
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Appeal from United States District Court
for the District of North Dakota - Bismarck
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Submitted: February 11, 2016
Filed: August 5, 2016
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Before SMITH and COLLOTON, Circuit Judges, and GRITZNER,1 District Judge.
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1
The Honorable James E. Gritzner, United States District Judge for the Southern
District of Iowa, sitting by designation.
COLLOTON, Circuit Judge.
Joseph Kronberg was electrocuted and died while working at an oil well as an
employee of Nabors Drilling USA, LP. Mr. Kronberg’s widow, Margo Kronberg,
filed wrongful death and survival actions against Oasis Petroleum North America
LLC, RPM Consulting, Inc., and others involved with the well, alleging that their
negligence caused her husband’s death. The district court2 granted summary judgment
for Oasis and RPM Consulting. Mrs. Kronberg appeals, and we affirm.
I.
Oasis engages in oil and gas exploration activities and acquires property rights
to drill for the fuels. The company does not conduct drilling operations at its well
sites. Rather, Oasis contracts with other entities that manage the day-to-day
operations at its wells.
In June 2007, Oasis entered into a Master Service Contract with RPM
Consulting. RPM Consulting agreed to provide Oasis with engineering support and
subcontractors to oversee the drilling process and coordinate services needed to keep
those sites operating efficiently.
Under the Master Service Contract, RPM Consulting assigned “company
hands” to oil rigs operating at Oasis wells. A company hand is tasked with ensuring
that the drilling process is progressing safely, efficiently, and according to the well
plan. Company hands do not operate equipment or complete hands-on work. On
behalf of Oasis, they supervise drilling and contract with third-party vendors for
services needed at wells. RPM Consulting typically appoints two company hands to
2
The Honorable Daniel L. Hovland, United States District Judge for the District
of North Dakota.
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serve at each site, and one company hand is on duty at all times. While on duty, the
company hand lives at the site, serving as the Oasis representative at the well. Each
morning, the company hand on duty e-mails a progress report to several Oasis and
RPM Consulting employees.
In early 2011, Oasis obtained the rights to drill for oil at the Ross 5603 well in
Williams County, North Dakota. Oasis engaged Nabors Drilling to serve as the
drilling contractor at the well. Oasis agreed to supply Nabors Drilling with a suitable
location to drill the well. Nabors Drilling agreed to drill the well and to provide the
rig and labor necessary to accomplish the task.
Nabors Drilling dispatched Nabors Rig 177 to the well. RPM Consulting
assigned three subcontractors, including company hand Michael Bader, to the rig.
Bader, through the separate entity of Mike Bader Consulting, LLC, had entered into
a Subcontractor Agreement with RPM Consulting in February 2010.
Joseph Kronberg worked for Nabors Drilling on Nabors Rig 177. On the
evening of May 9, 2011, Mr. Kronberg entered the Ross well’s “change shack,” a
structure where Nabors Drilling employees changed into and out of their work clothes.
An electrical cord running from a generator to the well site’s transformer ran in front
of the change shack. Someone had positioned a metal grate in front of the shack’s
entrance. Foot traffic near the shack had caused the electrical cord and metal grate to
converge in a puddle of water, and the grate had punctured the cord. As Mr. Kronberg
exited the shack, he stepped onto the grate and was electrocuted.
Although it is not clear who placed the grate in front of the shack, the grate
previously had been located in another structure used by Nabors Drilling employees.
It had been raining at the well for several days before the accident, and workers at the
well suggested that the grate was set in front of the shack a few days earlier so that
Nabors Drilling employees could remove mud from their boots. Bader, who was on
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duty as company hand, filed an accident report with Oasis concerning the Kronberg
incident.
Mr. Kronberg’s widow brought wrongful death and survival actions against
Oasis Petroleum and RPM Consulting, among others. Mrs. Kronberg alleged that the
defendants’ negligence caused her husband’s death. The district court granted
summary judgment for Oasis and RPM Consulting, ruling that neither company owed
Mr. Kronberg a duty of care under North Dakota law. Mrs. Kronberg dismissed her
claims against the remaining defendants and now appeals the grant of summary
judgment in favor of Oasis and RPM Consulting.
We review the district court’s grant of summary judgment de novo, viewing the
record in the light most favorable to Mrs. Kronberg and drawing all reasonable
inferences in her favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Summary judgment is appropriate when “the movant shows that there is no genuine
dispute as to any material fact and . . . is entitled to judgment as a matter of law” based
on the pleadings, affidavits, depositions, answers, and other record materials. Fed. R.
Civ. P. 56(a), (c).
II.
A.
Mrs. Kronberg asserts that the companies owed her husband a duty of care
under North Dakota law for several independent reasons. She first argues that Bader
was an employee of Oasis and RPM Consulting, and that the companies were thus
vicariously liable to persons injured because of Bader’s alleged negligence. See
Zimprich v. Broekel, 519 N.W.2d 588, 590-91 (N.D. 1994); see also N.D. Cent. Code
Ann. § 3-03-09. Employers generally are not liable, however, for the negligent acts
of independent contractors. Doan ex rel. Doan v. City of Bismarck, 632 N.W.2d 815,
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822 (N.D. 2001). To determine whether an individual is an employee or independent
contractor, North Dakota courts review all of the circumstances and ask whether the
employer had the “right to direct or control the means and manner of performing the
work.” Id. at 821; see Zimprich, 519 N.W.2d at 591-92. Because undisputed
evidence shows that the companies did not direct the means and manner of Bader’s
work, we agree with the district court that the record establishes as a matter of law that
Bader was not an employee of Oasis or RPM Consulting.
The Oasis-RPM Consulting and RPM Consulting-Bader contracts contained
terms that give an independent contractor “control over the method, manner, and
operative details of its work.” See Rogstad v. Dakota Gasification Co., 623 N.W.2d
382, 387 (N.D. 2001); Pechtl v. Conoco, Inc., 567 N.W.2d 813, 816-17 (N.D. 1997).
Oasis’s contract with RPM Consulting provided that RPM Consulting was an
independent contractor and possessed “the authority to control and direct the
performance and safety of the details of the work.” RPM Consulting also agreed that
its employees, and those of its subcontractors, were not Oasis’s employees. Oasis,
according to the contract, was “interested only in the results obtained.” After reaching
its agreement with Oasis, RPM Consulting made a contract with Bader. This
agreement provided that RPM Consulting was to “have no direction or control” over
Bader, “except in the results to be obtained.” The RPM Consulting-Bader contract
referred to Bader as an independent contractor, and Bader disclaimed he was RPM
Consulting’s employee.
Undisputed testimony paralleled these contractual provisions. The three
subcontractors whom RPM Consulting assigned to Nabors Rig 177 testified that
neither Oasis nor RPM Consulting issued day-to-day instructions. Bader could
perform his duties as he saw fit. Bader’s work required a special skill set, and Oasis
and RPM Consulting were not in the business of drilling oil wells. See Newman v.
Sears, Roebuck & Co., 43 N.W.2d 411, 414-15 (N.D. 1950).
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Mrs. Kronberg contends nonetheless that Bader was Oasis’s employee because
he was the company’s lone representative at the well, and he was required to complete
an accident report about Mr. Kronberg’s death on an Oasis company form. But these
circumstances are not inconsistent with Bader’s retention of control over his work.
If Oasis had no employees at the well on a regular basis and no employees who had
knowledge about the well, then it could not direct Bader’s actions. See id.; see also
Pechtl, 567 N.W.2d at 817. Calling for Bader to fill out an accident report provided
by Oasis shows that the company wanted to know about the incident, but it does not
support a finding that Oasis controlled the means and manner of Bader’s work as
company hand.
As to RPM Consulting, Mrs. Kronberg argues that the company controlled
Bader’s work in multiple ways: (1) the RPM Consulting-Bader contract required
Bader to complete his work personally; (2) RPM Consulting assigned Bader to a
specific rig; (3) RPM Consulting provided Bader with documents; (4) Bader e-mailed
RPM Consulting employees often; (5) Bader sent daily progress reports to RPM
Consulting employees; (6) RPM Consulting furnished equipment, such as a computer,
along with an e-mail address and computer files for Bader’s use; and (7) Bader was
paid based on the number of days he worked and on a regular basis. For the reasons
discussed below, these several circumstances are insufficient to support a finding of
an employer-employee relationship between RPM Consulting and Bader.
A no-assignment clause in the RPM Consulting-Bader contract forbade Bader
to assign or sublet any part of the contract without RPM Consulting’s permission, but
it did not require Bader to perform his work personally as would an employee. Other
provisions of the contract referred to Bader’s “personnel” and his “employees and
agents,” thus contemplating that Bader could have others work for him. The no-
assignment clause merely prevented Bader from assigning his responsibilities to
someone not under his control without RPM Consulting’s consent. See Robb v.
United States, 80 F.3d 884, 892 (4th Cir. 1996).
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Although RPM Consulting assigned Bader to Nabors Rig 177, that assignment
did not prohibit Bader from performing his job as he wished. See Pechtl, 567 N.W.2d
at 817. Bader decided how to drill the well, and the two company hands enjoyed
discretion to amend their work schedules. Mrs. Kronberg points out that both RPM
Consulting and Bader could terminate their relationship at any time without penalty.
But that circumstance is consistent with Bader working as either an employee or an
independent contractor. In light of other evidence showing an independent contractor
arrangement, termination rights alone do not establish a genuine issue of material fact
about the nature of the relationship.
None of Bader’s correspondence with RPM Consulting demonstrates that RPM
Consulting controlled Bader. RPM Consulting sent Bader a plan that set forth the
parameters for the well and documents that provided information about the geology
and structure of the well. Bader exchanged numerous emails with RPM Consulting
employees, many of which contained his invoices, time sheets, and morning reports.
But Bader remained free to use his expertise to select his own approach to drilling the
well. See Schlenk v. Nw. Bell Tel. Co., 329 N.W.2d 605, 613 (N.D. 1983). None of
the e-mails from RPM Consulting directed Bader to take a specific course of action
or otherwise showed control by the company over Bader’s work. RPM Consulting’s
request to receive progress reports from Bader each morning gave it only a general
right to confirm that Bader was properly performing under the contract, and did not
create an employer-employee relationship. See Zimprich, 519 N.W.2d at 593-94.
RPM Consulting’s provision of equipment to Bader also does not support a
finding of control. See Kristianson v. Flying J Oil & Gas, Inc., 553 N.W.2d 186, 190
(N.D. 1996). Mrs. Kronberg argues that RPM Consulting directed Bader’s use of the
equipment for progress reports. But because RPM Consulting had the right to receive
such reports from its independent contractor, it could tell Bader how to transmit the
reports without controlling the means and manner of Bader’s work as company hand.
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RPM Consulting’s payment structure fails to demonstrate the company’s
control of Bader. RPM Consulting paid Bader for each day he worked, but Bader did
not receive an IRS Form W-2 for services provided by an employee, and RPM
Consulting did not withhold taxes from Bader’s checks. RPM Consulting provided
no fringe benefits or insurance for company hands. See Kirk v. Harter, 188 F.3d
1005, 1008 (8th Cir. 1999); Zimprich, 519 N.W.2d at 591-92. Although RPM
Consulting paid Bader on a regular basis when he submitted invoices, there is no
evidence that RPM Consulting controlled the method, manner, or operative details of
Bader’s work through this practice. We therefore conclude as a matter of law that
Bader was an independent contractor.
Mrs. Kronberg argues alternatively that the companies may be liable under the
doctrine of retained control. This doctrine applies when a company treats an
independent contractor like an employee, by controlling the “method, manner, and
operative detail” of a specific portion of the contractor’s work. Doan, 632 N.W.2d at
822. Under those circumstances, the company may be liable directly for the
negligence of the contractor if it fails to exercise its control with reasonable care. Id.;
Restatement (Second) of Torts § 414 (1965). But companies concerned with only the
finished results of the contractor’s work will not be held liable pursuant to the
doctrine. Schlenk, 329 N.W.2d at 612.
Mrs. Kronberg asserts that Oasis controlled Bader by mandating that he select
third-party vendors from a vendor list that Oasis provided. The list in question
included third parties that complied with Oasis’s standards; company hands could
select any of those vendors to provide services at the company’s wells. According to
Bader, however, he chose vendors without Oasis’s approval, and the company did not
require adherence to the list at the time of the accident. In any event, even if Bader
was required to obtain Oasis’s permission before hiring certain vendors, that is not
enough to establish actual control by Oasis. Oasis’s right to specify quality vendors
instead ensured that the “final results were in accord” with its plans. Schlenk, 329
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N.W.2d at 612-13; see Kristianson, 553 N.W.2d at 189. Mrs. Kronberg also cites to
Oasis’s alleged control over the land where the Ross well was located, but such
control does not demonstrate that Oasis controlled the “operative details” of Bader’s
work. The evidence thus does not support a finding that Oasis retained control of a
specific portion of Bader’s work.
As to RPM Consulting, Mrs. Kronberg relies principally on the Subcontractor
Agreement to assert that the company maintained control over Bader’s work on safety
practices. The Agreement provided that Bader must “comply with standard safety
practices, any OSHA requirements applicable to [his] work and any safety practices
required by RPM and/or RPM’s customers.” But the contract also states that RPM
Consulting “shall have no direction or control” of Bader. Because the Agreement
unambiguously gives Bader the right to control the method and manner of work, the
provisions regarding safety did not give RPM Consulting control over such matters.
The cited language on safety practices is more appropriately characterized as relating
to RPM Consulting’s “right to make certain that the results obtained conformed to the
specifications and requirements of the contract.” Schlenk, 329 N.W.2d at 613; see
Zimprich, 519 N.W.2d at 593-94.
Mrs. Kronberg argues that RPM Consulting actually exercised control of safety
practices by offering safety training to company hands. RPM Consulting, however,
did not require company hands to complete the training. Undisputed testimony,
moreover, showed that RPM Consulting had no safety requirements in place at the
time of Mr. Kronberg’s death. As there is no genuine issue of material fact as to RPM
Consulting’s lack of control over Bader’s safety practices, RPM Consulting owed no
duty to Mr. Kronberg under the doctrine of retained control. Thus, neither company
may be held liable for Bader’s alleged negligence as a company hand.
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B.
Mrs. Kronberg next contends that Oasis owed her husband a duty of care under
North Dakota premises liability law. For Oasis to be held liable on this theory, Mrs.
Kronberg must show that Oasis had “control over the property where the injury
occurred” and “an opportunity to observe” the hazardous condition that caused her
husband’s death. Saltsman v. Sharp, 803 N.W.2d 553, 559 (N.D. 2011).
The record does not support a finding that Oasis controlled the property and had
an opportunity to observe dangerous conditions at the well. Oasis contracted with
other entities that managed the well’s operations. Oasis owned no equipment at the
well, and none of its employees worked at the well on a regular basis. See Twogood
v. Wentz, 634 N.W.2d 514, 518 (N.D. 2001). Nabors Drilling, not Oasis, owned the
metal grate and the generator that electrified the cord that caused Mr. Kronberg’s
death. Nabors Drilling employees completed the wiring of the electrical transformer
and the generators needed to power the change shack and other structures at the well.
Nabors Drilling employees also led well safety meetings. Nabors Drilling was the
entity fined for violating Occupational Safety and Health Administration regulations
in connection with Mr. Kronberg’s death. On this record, there is insufficient
evidence to support a finding that Oasis owed a duty of care to Mr. Kronberg under
premises liability law.
C.
Mrs. Kronberg’s final argument is that Oasis had a duty to provide an
automated external defibrillator at the well. There was no defibrillator at the well on
the date of Mr. Kronberg’s death, and no North Dakota statute required the company
to provide one. Mrs. Kronberg suggests that entities like Oasis should have a common
law duty to make a defibrillator available.
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In the absence of North Dakota law on the question, we are not prepared to
predict that the North Dakota Supreme Court would adopt the proposed common law
duty. The appellate courts of several jurisdictions have declined to hold that a
business establishment has a common law duty to maintain an automated external
defibrillator on its premises. See, e.g., Verdugo v. Target Corp., 327 P.3d 774, 793-94
(Cal. 2014) (listing cases); L.A. Fitness Int’l, LLC v. Mayer, 980 So. 2d 550, 561-62
(Fla. Dist. Ct. App. 2008); Boller v. Robert W. Woodruff Arts Ctr., Inc., 716 S.E.2d
713, 715-16 (Ga. Ct. App. 2011); Atcovitz v. Gulph Mills Tennis Club, Inc., 812 A.2d
1218, 1220, 1222-25 (Pa. 2002). But cf. Aquila v. Ultimate Fitness, No.
CV085017159S, 2011 WL 2611820, at *3-4 (Conn. Super. Ct. June 15, 2011) (ruling
that record presented a genuine issue of material fact as to whether fitness company
breached a duty of care to business invitee by failing to own an automated external
defibrillator and have staff trained in its use). We are persuaded by the reasoning of
the California Supreme Court that the numerous factors that bear on whether a duty
should be imposed on businesses are best suited to legislative evaluation and line-
drawing. Verdugo, 327 P.3d at 792-93.
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For these reasons, the judgment of the district court is affirmed.
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