US Fire Insurance Co v. Liberty Services Inc, et a , 381 F.3d 385 ( 2004 )

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
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No. 04-30002
Summary Calendar
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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
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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,
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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?
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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
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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
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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.
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