F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
DEC 3 1997
TENTH CIRCUIT
PATRICK FISHER
Clerk
CLIFFORD ALLEN LITTLEFIELD,
Plaintiff-Appellant,
v.
No. 96-4127
MOBIL EXPLORATION AND
(D.C. No. 94-CV-1078-S)
PRODUCING, NORTH AMERICA,
(Utah)
INC., a corporation; MOBIL
EXPLORATION & PRODUCING U.S.,
INC., a corporation,
Defendants-Appellees.
ORDER AND JUDGMENT*
Before BRORBY, Circuit Judge, KELLY, Circuit Judge, and McWILLIAMS, Senior
Circuit Judge.
The first issue to be resolved in this diversity negligence case is whether Colorado
or Utah workers’ compensation law applies. The district court held that Colorado law
applies. We agree.
*
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
By amended complaint, Clifford Allen Littlefield (“Littlefield”), a resident and
citizen of the State of Colorado, brought suit in the United States District Court for the
District of Utah against Mobil Exploration and Producing, North America, Inc.,
(“MEPNA”); Mobil Exploration & Producing, U.S., Inc., (“MEPUS”); and Navajo West,
Inc. (“NWI”). Jurisdiction was based on 28 U.S.C. § 1332(a). It was alleged in the
amended complaint that on June 13, 1991, Littlefield, while in the employ of Pool
Company (“Pool”), was working in the Aneth oil field in San Juan County, State of Utah,
which is located on Navajo Indian land, and that while thus working a flash fire occurred
which caused him severe injuries.
As stated, there were three named defendants in the amended complaint, namely
MEPNA, MEPUS, and NWI.1 In that complaint Littlefield alleged that MEPNA was the
lessee of the real property on which Littlefield suffered his injuries and further that at the
time of the accident MEPNA “was in a contractual relationship with defendant MEPUS
regarding the performance, by defendant MEPUS, of certain services on that real
property, including the services . . . which defendant MEPUS was engaged at the time of
and in connection with the subject incident.” We are further advised in the amended
1
MEPNA is a Nevada corporation authorized to acquire and own leasehold
interests in land and to conduct oil and gas exploration thereon in many states, including
Colorado and Utah. MEPUS is a Delaware corporation authorized to conduct oil and gas
exploration in many states, including Colorado and Utah. MEPNA and MEPUS are both
wholly owned subsidiaries of Mobil Corporation. NWI is a Navajo-owned New Mexico
corporation with its principal place of business in Shiprock, New Mexico and a local
Colorado office in Cortez, Colorado.
2
complaint that MEPUS employed, supervised and trained all “Mobil” workers who, as of
the date of the accident, worked on a regular basis at the Aneth oil field.
The amended complaint went on to state that MEPUS was also in a “contractual
relationship” with NWI regarding the performance by NWI of certain services on the
subject real estate, and that NWI, in turn, entered into a contract with Pool whereby Pool
would perform the services which NWI had contracted to perform for MEPUS. It was in
connection with the services being rendered by Pool under its contract with NWI that
Littlefield, an employee of Pool, was injured.
As concerns the defendant, MEPNA, Littlefield asserted a claim based on
MEPNA’s “direct negligence” and a second based on MEPNA’s “vicarious liability for
the negligence of defendant MEPUS.” As concerns the second defendant, MEPUS,
Littlefield asserted a claim based on MEPUS’ “direct negligence” and a second claim
based on MEPUS’ “vicarious liability for the negligence of defendant NWI.” Littlefield
also asserted a third claim against MEPUS based on the “vicarious liability for
negligence, if any, of Pool.” As concerned the third defendant, NWI, Littlefield asserted
a claim based on NWI’s “direct negligence” and a second claim based on NWI’s
“vicarious liability for the negligence, if any, of Pool.” The amended complaint
concluded by praying for judgment against the three defendants in an unspecified amount
in excess of $200,000, plus interest and costs.
3
MEPNA and MEPUS filed an answer to the amended complaint, and later, after
discovery, filed a motion for summary judgment.2 The district court granted the
defendants’ motion for summary judgment and entered judgment in favor of them and
against Littlefield on the ground that both entities were “statutorily immune” from
Littlefield’s negligence claims. Littlefield appeals.
On appeal, Littlefield urges two matters: (1) the district court erred in holding that
Colorado workers’ compensation law applied to the facts of this case, and that the district
court should have held that Utah workers’ compensation law applied; and (2) even
assuming that Colorado workers’ compensation law applies, the district court erred in
holding that under Colorado workers’ compensation law MEPNA and MEPUS were
“statutory employers” of Littlefield and immune from tort liability to Littlefield.
The root of this controversy is that, under Utah law, MEPNA and MEPUS, though
statutory employers, are not immune from suit by Littlefield, whereas under Colorado law
MEPNA and MEPUS, if they qualify as statutory employers, are immune from such suit.
It is agreed that if Utah law applies the district court’s judgment should be reversed. So,
the first issue to be resolved is whether the district court erred in holding that Colorado
law, and not Utah law, applies.
2
NWI filed a motion to dismiss on the grounds of comity, which was granted on
July 2, 1996. Littlefield does not appeal that order and NWI is not a party to this appeal.
4
Since Utah is the forum state, Littlefield having filed his action in the United
States District Court for the District of Utah, Utah’s choice of law rules are determinative
of the question of whether Utah or Colorado law applies. In other words, in a diversity
case a federal court must apply the choice of law rules of the forum state. Klaxon v.
Stanton Electric Mfg., 313 U.S. 487, 496 (1941); Tucker v. R. A. Hanson Co., Inc., 956
F.2d 215, 217 (10th Cir. 1992).
On the issue of whether Utah or Colorado workers’ compensation law governs, all
parties rely on Shaw v. Layton Construction Company, 872 P.2d 1059 (Utah Ct. App.)
cert. denied 883 P.2d 1359 (Utah 1994).3 Littlefield argues that under Shaw Utah law
governs, whereas the defendants argue that under Shaw, Colorado law governs. Shaw
obviously deserves close scrutiny.
Shaw, a resident of Utah, was injured when he fell through a hole in a roof while
working on the construction of a state prison in Ely, Nevada. Shaw was employed by
Harv & Higham Masonry, a Utah corporation, which was a subcontractor on the Nevada
prison project. Layton Construction, a Utah corporation, was the general contractor on
the Nevada project. Layton subcontracted with Harv & Higham in Salt Lake City for the
3
The parties agree that the Utah Supreme Court has not spoken on the choice of
law issue here presented, although, as noted, it did deny certiorari in Shaw. In such
circumstances a “federal court should consider state court decisions, decisions of other
states, federal decisions and the general weight and trend of authority.” Armijo v. Ex.
Cam. Inc., 843 F.2d 406, 407 (10th Cir. 1988).
5
masonry work on the project. At the same time, Layton had subcontracted with Steel
Deck Erectors, another Utah corporation, to perform all steel framing and decking work.
Subsequent to his injury, Shaw applied for, and received, workers’ compensation
benefits in Utah from his employer, Harv & Higham. He thereafter filed an action in the
district court for Salt Lake County, Utah against both Layton and Steel Deck, alleging
that their negligence contributed to his injuries. Layton moved to dismiss and Steel Deck
moved for summary judgment. Both claimed that Nevada, rather than Utah, workers’
compensation law applied, and that, under Nevada law, Shaw was precluded from suing
them for negligence. The district court for Salt Lake County granted those motions,
employing the lex loci delicti choice of law approach, and held that Nevada law applied
because the injury occurred in that state. The district court then held that under Nevada
law, Layton and Steel Deck were immune from suit. Shaw appealed and on appeal the
Utah Court of Appeals reversed. The Utah Supreme Court denied certiorari.
In reversing, the Utah Court of Appeals first noted that although under Utah law
Shaw was precluded from suing his employer, Harv & Higham, he was entitled to bring
an action for damages against “other parties” allegedly responsible for his work related
injuries, including Layton and Steel Deck. The Utah Court of Appeals also observed that
although under Nevada law a negligence action could, under certain circumstances, be
brought against “other persons,” such could not be brought against Layton, which under
6
Nevada law was deemed to be Shaw’s “employer,” or against Steel Deck, which, under
Nevada law, was deemed to be a “co-employee.”
In Shaw, the Utah Court of Appeals rejected the suggestion that there should be
“extra-territorial effect” given the Utah statute. However, such, according to that court,
did not necessarily preclude application of the Utah law, and the court opined that under
the “traditional choice of law analyses” there remained the question of whether Utah or
Nevada law applied. In addressing that question, the Utah Court of Appeals specifically
declined to apply the lex loci delicti approach to workers’ compensation cases. In this
connection the Utah Court of Appeals stated that “[w]hatever may be said of the
continued vitality of the lex loci approach in tort cases generally, we can only conclude
that a different analysis is required in the area of workers’ compensation.” Shaw, 872
P.2d at 1063.
In determining whether Utah or Nevada law applied, the Utah Court of Appeals in
Shaw then went on to speak as follows:
There are three approaches commonly employed to
resolve choice of law problems in contemporary workers’
compensation cases. Such approaches are: (1) application of
the law of the place of the employment relation; (2) an interest
analysis, which seeks to determine which state has the
greatest interest in having its law applied; or (3) a hybrid of
the first two approaches which focuses on the relationship of
the parties, their expectations, and the interests of the states
whose law might be applied.
Id. at 1063-64.
7
The Utah Court of Appeals in Shaw then adopted the “hybrid approach.” In so
doing, it spoke as follows:
In contrast, the hybrid approach preserves Utah’s
interests and public policy concerns, while at the same time
accommodating the intent and expectations of the various
parties. As such, it combines the best elements of both
interest analysis and the place of employment approach.
Since the hybrid approach appears the most reasonable and
accommodating of the various considerations involved, we
adopt it.
Id. at 1064.
In holding that Colorado law applied to the facts of our case, the district court
noted that Littlefield was a citizen and resident of Colorado, and that neither MEPNA nor
MEPUS was a Utah corporation. The district court stated that inasmuch as Littlefield was
a resident of Colorado who had been hired in Cortez, Colorado by Pool, the State of
Colorado had “a declared interest in having its residents temporarily working out of state
recover compensation benefits according to its workers’ compensation law,” citing Colo.
Rev. Stat. § 8-41-204 (1997).4 The district court indicated that Utah, under the
circumstances, did not have a “significant interest” in having its law applied to the facts
of the instant case and in thus concluding spoke as follows:
4
Colo. Rev. Stat . § 8-41-204 (1997) provides as follows.
If an employee who has been hired or is regularly employed in this state receives
personal injuries in an accident or an occupational disease arising out of and in the course
of such employment outside of the state, the employee . . . shall be entitled to
compensation according to the law of this state.
8
Conversely, Utah does not have a significant interest in
having its law applied so as to protect foreign entities or
nonresident plaintiffs who received worker’s compensation
benefits pursuant to Colorado law. Additionally, “the natural
focus of state workers’ compensation law is on the injured
worker and his or her employer, not the geographical location
of the work site or injury.” Shaw, 872 P.2d at 1064. Plaintiff
is not a resident of Utah, the defendants are not Utah
corporations, none of the employment contracts between the
parties were established in Utah and plaintiff did not apply for
or receive workers’ compensation benefits under Utah law. It
is undisputed that plaintiff was hired in Colorado at Pool’s
Cortez, Colorado office. Because plaintiff was hired in
Colorado, defendants were obligated to provide Colorado
workers compensation coverage. Plaintiff applied for and
received workers compensation benefits under Colorado law.
Finally, preservation of Colorado’s quid pro quo statutory
scheme (expanded workers’ compensation liability in
exchange for expanded tort immunity) does not offend Utah’s
public policy.
We are in general accord with the reasoning and the result reached by the district
court. We agree that Colorado’s interest in the application of its law is more “significant”
than Utah’s interest and that the reasonable expectations of the parties were that Colorado
law would apply. None of the parties are Utah residents. Under Shaw, the fact that the
accident occurred in Utah is not decisive. The district court did not err in concluding that
under Shaw Colorado workers’ compensation law applies, and not Utah law.
Alternatively, counsel argues that even assuming that Colorado law applies,
neither MEPNA nor MEPUS is a statutory employer of Littlefield under Colo. Rev. Stat.
§ 8-41-401 (1997). Colo. Rev. Stat. § 8-41-401 (1997) provides as follows:
9
(1)(a) Any person, company or corporation operating
or engaged in or conducting any business by leasing or
contracting out any part or all of the work thereof to any
lessee, sublessee, contractor, or subcontractor, irrespective of
the number of employees engaged in such work, shall be
construed to be an employer as defined in articles 40 to 47 of
this title and shall be liable as provided in said articles to pay
compensation for injury or death resulting therefrom to said
lessees, sublessees, contractors, and subcontractors and their
employees or employees’ dependents. . . .
(b) The employer, before commencing said work,
shall insure and keep insured against all liability as provided
in said articles, and such lessee, sublessee, contractor, or
subcontractor, as well as any employee thereof, shall be
deemed employees as defined in said articles. The employer
shall be entitled to recover the cost of such insurance from
said lessee, sublessee, contractor, or subcontractor and may
withhold and deduct the same from the contract price or any
royalties or other money due, owing, or to become due said
lessee, sublessee, contractor, or subcontractor.
(2) If said lessee, sublessee, contractor, or
subcontractor is also an employer in the doing of such work
and, before commencing such work, insures and keeps
insured its liability for compensation as provided in articles 40
to 47 of this title, neither said lessee, sublessee, contractor, or
subcontractor, its employees, or its insurers shall have any
right of contribution or action of any kind, including actions
under § 8-41-203, against the person, company, or corporation
operating or engaged in or conducting any business by leasing
or contracting out any part or all of the work thereof, or
against its employees, servants or agents. . . .
As concerns MEPNA, counsel for Littlefield argues that Colo. Rev. Stat. § 8-41-
401(1997) is inapplicable because of Colo. Rev. Stat. § 8-41-403 (1997), which reads as
follows:
§ 8-41-403. Exemption of certain lessors of real property.
10
(1) The provisions of this part 4 shall not apply to any
lessor or sublessor of real property who rents or leases real
property to any lessee or sublessee for the purpose of
conducting the business of such lessee or sublessee, whether
as a franchise holder, independent agent, or consignee or in
any other separate capacity and whether or not such person is
an employer, as defined in section 8-40-203, but in no event
where such lessee or sublessee is an employee, as defined in
section 8-40-202.
(2) No such lessee or sublessee, or any employee or
insurer thereof, shall have any right of contribution from or
action against such lessor or sublessor under articles 40 to 47
of this title. . . . . (emphasis added)
As concerns MEPUS, counsel argues that MEPUS is not a statutory employer by
virtue of its having contracted out to NWI the well conversion work because such work
was not a part of the “regular business” of MEPUS as required by Colo. Rev. Stat. § 8-41-
401 (1997).
Because of Littlefield’s challenge to the district court’s holding that under Colo.
Rev. Stat. § 8-41-401(1) (1997) both MEPNA and MEPUS were statutory employers of
Littlefield and therefore immune from tort liability, the relationship between the various
parties to this controversy merits review.
MEPNA obtained a leasehold interest on Navajo Indian lands which authorized it
to conduct oil and gas exploration, and the extraction of oil and gas from the leased land.
MEPNA thereafter entered into a service agreement with MEPUS whereby the latter
agreed to conduct the actual exploration and extraction. MEPUS later entered into a
contract with NWI whereby the latter agreed to do certain service work at the well where
11
Littlefield sustained his injuries, namely, to convert the oil well to a carbon dioxide
injection well. NWI, in turn, subcontracted the work which it had agreed to perform for
MEPUS to Pool.
We agree with the district court that under Colo. Rev. Stat. § 8-41-401(1) (1997)
MEPNA is a statutory employer of Littlefield and therefore is immune from tort liability
to Littlefield under Colo. Rev. Stat. § 8-41-401(2) (1997). We, like the district court,
reject the suggestion that MEPNA conveyed its leasehold interest to MEPUS, or
subleased its interest to MEPUS, and therefore, under Colo. Rev. Stat. § 8-41-403(1)
(1997), came within the exception to statutory immunity. The agreement between
MEPNA and MEPUS was a service agreement and did not create a landlord-tenant
relationship between MEPNA and MEPUS. In this connection, the present case is quite
different from Virginians Heritage Square v. Smith, 808 P.2d 366 (Colo. Ct. App. 1991)
(Unlike MEPNA’s situation, Virginians leased real property for investment purposes
only, and was not involved in the business of its lessees.).
Further, we agree with the district court that the “services” which NWI agreed to
perform for MEPUS were not outside MEPUS’ authorization from MEPNA to conduct
oil and gas exploration, and extract oil and gas from the leased property. Littlefield’s
concept of what constitutes the “business,” or “regular business,” of MEPUS is too
narrow. See Finlay vs. Storage Technology Corporation, 764 P.2d 62 (Colo. 1988)
(Storage Tech was determined to be the statutory employer of a maintenance worker
12
employed by an independent contractor providing janitorial services where the services
were such a regular part of Storage Tech’s business that, absent the contractor’s services,
they would of necessity be provided by the business’ own employees.).
In sum, we believe that the district court correctly understood, and applied, the
applicable state law of both Utah and Colorado.5
Judgment affirmed.
ENTERED FOR THE COURT
Robert H. McWilliams
Senior Circuit Judge
5
We reject Littlefield’s rather belated request that we certify the choice of law
question to the Utah Supreme Court and, depending on the outcome of that certification,
certify, if necessary, the statutory employer issues to the Colorado Supreme Court. One
who chooses to litigate his state action in the federal forum must ordinarily accept the
federal court’s reasonable interpretation of extant state law rather than seeking extensions
via the certification process. See Reynolds v. Bridgestone/Firestone, Inc., 989 F.2d. 465,
472 (11th Cir. 1993); Croteau v. Olin Corporation, 884 F.2d. 45, 46 (1st Cir. 1989);
Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988).
13
Littlefield v. Mobil Exploration
Combined Opinion