Ensey v. Ozzie's Pipeline Padder, Inc.

FILED
United States Court of Appeals
Tenth Circuit
November 14, 2011
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
JOHN ENSEY,
Plaintiff - Appellant, No. 10-2128
v. (D. New Mexico)
OZZIE’S PIPELINE PADDER, INC., (D.C. No. 1:08-CV-00801-JAP-CG)
Defendant - Appellee.
ORDER AND JUDGMENT *
Before HARTZ, EBEL, and HOLMES, Circuit Judges.
Plaintiff John Ensey was employed by both Defendant Ozzie’s Pipeline
Padder, Inc. (Ozzie’s) and Rockford Corporation (Rockford) when he was
severely injured. He sued Ozzie’s but was denied relief on the ground that
Ozzie’s was protected by the exclusive-remedy provision of the New Mexico
Workers’ Compensation Act. Mr. Ensey appeals, contending that Ozzie’s could
not invoke the exclusivity provision because it failed to show that it contributed
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
to paying for the workers’ compensation policy obtained by co-employer
Rockford.
We have jurisdiction under 28 U.S.C. § 1291 and affirm. Under New
Mexico law Ozzie’s was protected by the exclusivity provision because its
contract with Rockford required Rockford to obtain workers’ compensation
insurance for Mr. Ensey and Mr. Ensey failed to produce evidence to overcome
the inference that Ozzie’s therefore contributed to paying the insurance premium.
See Vigil v. Digital Equip. Corp., 925 P.2d 883, 886 (N.M. Ct. App. 1996).
I. BACKGROUND
A. Facts
Ozzie’s manufactures pipeline padding machines. At the time relevant to
this case, it did not sell the machines but leased them and trained its employees to
operate them. It trained Mr. Ensey in Wyoming starting in August 2005. In July
2005 Rockford entered into a contract with Ozzie’s to lease one or two padding
machines. The contract said that Ozzie’s would provide names of qualified
operators, who would be paid their wages and benefits by Rockford. Rockford
would also be “responsible for applicable workers[’] compensation for the
Operator and [for providing] a certificate of insurance evidencing workers[’]
compensation coverage for a minimum of $50,000 . . . for each employee.” Aplt.
App. pt. 2 at 172.
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Ozzie’s sent Mr. Ensey to work on a Rockford project in southern New
Mexico in September 2005. On October 19, 2005, he was badly injured when
pulled into a padding machine
B. Court Proceedings
Mr. Ensey sued Ozzie’s in the United States District Court for the District
of New Mexico. Ozzie’s raised as a defense the exclusive-remedy provision of
the Workers’ Compensation Act, which states that “[a]ny employer who has
complied with the provisions of the Workers’ Compensation Act . . . relating to
insurance . . . shall not be subject to any other liability whatsoever for the death
of or personal injury to any employee, except as provided in the Workers’
Compensation Act.” N.M. Stat. Ann. § 52-1-8 (1978). Ozzie’s asserted that it
was protected by the exclusivity provision because (1) Mr. Ensey was an
employee of Ozzie’s when the accident occurred and (2) Ozzie’s had procured
workers’ compensation insurance for Mr. Ensey by contractually requiring
Rockford to obtain such insurance for Mr. Ensey.
The district court accepted Ozzie’s legal argument that its contract with
Rockford protected Ozzie’s under the exclusivity provision if Mr. Ensey was an
employee of Ozzie’s and Rockford. But it ruled that a jury would need to resolve
the disputed fact of whether Mr. Ensey was their employee. After a trial on the
issue, the jury rendered a verdict that Mr. Ensey was an employee of both Ozzie’s
and Rockford, thereby resulting in a judgment for Ozzie’s.
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II. DISCUSSION
On appeal Mr. Ensey does not challenge the jury’s verdict that he was an
employee of both Ozzie’s and Rockford at the time of his accident. His sole issue
is that the district court erred in ruling that Ozzie’s was protected by the
exclusivity provision of the Workers’ Compensation Act if he was a dual
employee of the two companies. Because that ruling did not require the court to
resolve any disputed questions of fact, the issue before us is solely a matter of
law, which we review de novo. See US Fax Law Ctr., Inc. v. iHire, Inc., 476 F.3d
1112, 1118 (10th Cir. 2007).
When this court must resolve an issue of state law, our task is to predict
how the highest court of that state would rule on the issue. See Grynberg v. Total
S.A., 538 F.3d 1336, 1354 (10th Cir. 2008). We can rely, however, on a decision
of a state’s intermediate appellate court if there is no reason to doubt that it
reflects state law. See id. In our view, the result in this case is compelled by the
New Mexico Court of Appeals’ decision in Vigil. In that case the worker was
employed by a personnel agency, Manpower Temporary Services, that contracted
with Digital Equipment Corporation to supply temporary workers. See Vigil, 925
P.2d at 884. Under the contract, Digital paid Manpower a fee for each worker,
while Manpower paid the worker’s salary and was “required . . . to carry workers’
compensation insurance for its employees” and “show proof of coverage to
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Digital.” Id. After the worker was injured on the job, he sued Digital and the
trial court granted Digital summary judgment. See id.
The court of appeals affirmed. See id. at 887. It held that even though the
worker was an employee of Manpower, he was also a special employee of Digital,
because he had a contract with Digital, he was performing Digital’s work, and
Digital had the right to control his work. See id. at 886–87. On the issue relevant
to this appeal, the court held that Digital complied with the Workers’
Compensation Act’s insurance requirement by contractually ensuring that
Manpower would purchase workers’ compensation insurance for the employee.
See id. at 886. Digital was therefore entitled to “invoke the protection of the
exclusive remedy provision of the Act.” Id. at 885.
The worker in Vigil argued that Digital could not enjoy the protections of
the Workers’ Compensation Act because it had not paid for his workers’
compensation insurance. See id. Although New Mexico courts had already held
that a special employer could comply with the Act by ensuring, in a contract with
the general employer, that the employee received workers’ compensation
insurance, the worker attempted to distinguish these cases on the ground that the
contract between Manpower and Digital did not explicitly provide that “Digital’s
payments to Manpower included payments for the purchase of workers’
compensation insurance.” Id. at 885. The appeals court rejected the argument,
holding that it sufficed that Digital had been “aware of its potential exposure to
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claims from” the employees of the general employer and had “negotiated the
contract to provide benefits to temporary employees in the event of an injury.”
Id. at 886. It was not necessary “that the parties’ agreement . . . spell out their
obligations regarding actual procurement of the insurance,” id, or that there be
“specific evidence concerning how the special employer pays for that coverage.”
Id. at 884. The court held that the contractual provision alone would suffice,
saying that Digital had “presented evidence in the form of its contract implying
that it paid the costs of workers’ compensation insurance indirectly as part of the
fee it paid to Manpower.” Id. at 886. It recognized that this evidence could be
rebutted, but it affirmed because the worker “presented no evidence contradicting
this prima facie evidence of indirect payment.” Id.
The essentials of this case are indistinguishable from Vigil. Mr. Ensey had
two employers, one of which sent him to the other on a temporary basis. The two
employers entered into a contract that required one to carry workers’
compensation insurance for the worker (and provide proof of that insurance). See
id. at 884. These contractual provisions are prima facie evidence that Ozzie’s
knew of its potential exposure to tort claims from its employees and had
indirectly paid for their workers’ compensation coverage. See id. at 886.
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Mr. Ensey failed to present evidence that Ozzie’s had not paid indirectly for that
insurance coverage. See id. at 886. 1
We reject Mr. Ensey’s arguments that Vigil does not govern his case. First,
his reliance on Harger v. Structural Services, Inc., 916 P.2d 1324, 1333 (N.M.
1996) is misplaced. He argues that Harger shows that a general contractor cannot
benefit from the exclusivity provisions of the Workers’ Compensation Act by
contractually ensuring that a subcontractor buys insurance for its employee. But,
as Vigil pointed out, 925 P.2d at 887, the Harger ruling applies only to employees
in a statutory employment relationship, not borrowed or special employees, as
Mr. Ensey was. See Hamberg v. Sandia Corp., 179 P.3d 1209, 1211 (N.M. 2008)
(“ A statutory employment relationship exists when any employer procures any
work to be done wholly or in part for him by a contractor other than an
independent contractor and the work so procured to be done is a part or process in
the trade or business or undertaking of such employer.” (internal quotation marks
omitted)).
Second, we reject Mr. Ensey’s claim that we are bound by Matkins v. Zero
Refrigerated Lines, Inc., 602 P.2d 195 (N.M. Ct. App. 1979). That case is
1
At oral argument, counsel for Mr. Ensey contended that there is such
contradicting evidence. But this contention came too late. We will not consider
an argument raised for the first time at oral argument. See Mondragón v.
Thompson, 519 F.3d 1078, 1081 n.2 (10th Cir. 2008).
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inapplicable here because the defendant was not an employer of the plaintiff.
Vigil limited Matkins to its facts, see 925 P.2d at 886, and we must do the same.
Third, we are not persuaded by Mr. Ensey’s argument that Vigil applies
only to leased-employee situations. True, the leading dual-employer cases of
Vigil, 925 P.2d at 884, Rivera v. Sagebrush Sales, Inc., 884 P.2d 832, 835 (N.M.
Ct. App. 1994), and Hamberg, 162 P.3d at 911, involved staffing agencies. But
Ozzie’s acted in essence as a staffing agency by loaning out Mr. Ensey’s services
on a temporary basis until the Rockford project was concluded. And more
importantly, the rationale of these cases is not limited to that context. The
underlying principle is that an employer complies with its responsibilities under
the Workers’ Compensation Act when it contractually ensures that the co-
employer will purchase insurance. As Rivera noted, “[I]t is the employee’s
receipt of the quid pro quo—workers’ compensation coverage with its attendant
quick recovery and simplified procedures—which justifies the loss of the right to
bring a tort case.” 884 P.2d at 836. So long as the employee “received the quid
pro quo in part through [the employer’s] efforts to insure that [its co-employer’s]
employees would be compensated through the worker’s compensation system,” it
complied with the Act and the lawsuit is barred. Id. Nothing about this principle
is dependent on an employee-leasing arrangement. See Harger, 916 P.2d at 1333
(“an employer may satisfy its obligation to comply with the insurance provisions
by providing insurance through a third party.”).
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Finally, Mr. Ensey suggests that Vigil should apply in only one
direction—when the special employer (here, Rockford) requires the general
employer (Ozzie’s) to obtain workers’ compensation insurance. But the essential
element is whether the employer claiming the benefits of exclusivity has
contributed to the workers’ compensation premiums. That contribution may be
more obvious when the employer claiming exclusivity is making payments to the
other employer, as when the special employer leases an employee from the
general employer. But when the money flows in the opposite direction (in our
case, from Rockford to Ozzie’s, which is seeking the benefit of exclusivity), basic
economics still tells us that Ozzie’s likely paid for the requirement that Rockford
procure workers’ compensation insurance by reducing what Rockford would
otherwise have to pay Ozzie’s to lease the padding machine. It is unusual for a
contractual provision to come free to the party benefitting from the provision,
although, as in Vigil, the worker is entitled to try to prove that in a specific case.
III. CONCLUSION
We AFFIRM the judgment of the district court.
ENTERED FOR THE COURT
Harris L Hartz
Circuit Judge
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