UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-30955
LARRY J. STEPHENS and CHARLENE STEPHENS,
Plaintiffs-Appellants,
VERSUS
WITCO CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
December 16, 1999
Before EMILIO M. GARZA and PARKER, Circuit Judges, and COBB,
District Judge.*
ROBERT M. PARKER, Circuit Judge:
Plaintiffs Larry Stephens (“Stephens”) and his wife Charlene
Stephens appeal the summary judgment rendered in favor of defendant
Witco Corporation (“Witco”). We reverse and remand to the district
court.
I. FACTS AND PROCEDURAL HISTORY
On April 1, 1996, Stephens was seriously injured in an
explosion and fire while he was supervising a crew engaged in
replacing a steel bar joist in an epoxy tank at a Louisiana
*
District Judge of the Eastern District of Texas, sitting by
designation.
1
chemical plant owned and operated by Witco. Stephens was employed
by Mundy Contract Maintenance (“Mundy”) at the time of the accident
and was assigned to work at the Witco plant as Mundy’s Project
Foreman pursuant to a contract for “construction, maintenance, and
plant services” between Witco and Mundy.
Stephens filed suit in Louisiana state court seeking damages.
Witco removed the case to federal court on the basis of the diverse
citizenship of the parties. Mundy intervened to recover worker’s
compensation benefits it paid to Stephens as a result of the
accident.
Witco moved for summary judgment, arguing that it was
Stephens’s “statutory employer” under La.R.S. §§ 23:1032 and 1061
and thus immune from tort liability, or, in the alternative, that
Stephens was its “borrowed employee,” also entitling it to immunity
under Louisiana’s workers’ compensation law. The district court
granted summary judgment for Witco, finding that Witco was
Stephens’s “statutory employer” but did not reach the “borrowed
employee” issue. The district court denied a Federal Rule of Civil
Procedure 59(e) motion for reconsideration and this appeal
followed.
II. DISCUSSION
a. Standard of review
We review a grant of summary judgment de novo, applying the
same criteria used by the district court in the first instance.
See Kemp v. G.D. Searle & Co., 103 F.3d 405, 407 (5th Cir. 1997).
Summary judgment is warranted when “the pleadings, depositions,
2
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact.” Firesheets v. A.G. Bldg. Specialists, Inc., 134
F.3d 729 (5th Cir. 1998)(citing Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986)).
Because the basis for federal jurisdiction in this case is
diversity of citizenship, Louisiana substantive law applies. See
Kemp, 103 F.3d at 407. We review the district court’s
interpretation of state statutes de novo, resolving questions of
Louisiana law “the way the Louisiana Supreme Court would interpret
the statute based upon prior precedent, legislation, and relevant
commentary.” Occidental Chemical Corp. v. Elliott Turbomachinery
Co., Inc., 84 F.3d 172, 175 (5th Cir. 1996).
b. Statutory Employer Doctrine
A principal who hires a contractor to perform work that is
part of its trade, business, or occupation is a statutory employer
of the contractor’s employees. See LA. REV. STAT. ANN. § 23:1061
(1990). A statutory employer is liable to pay worker’s
compensation benefits, but is immune from tort liability. See LA.
REV. STAT. ANN. § 23:1032 (West 1989).
Stephens contends that there are genuine issues of material
fact in dispute regarding the existence of a statutory employer
relationship between him and Witco. The central question is
whether the contract work performed by Mundy was part of Witco’s
“trade, business or occupation.” Neither party disputes the
district court’s use of the factors set out by the Louisiana
3
Supreme Court in Kirkland v. Riverwood Intern. USA, Inc., 681 So.2d
329 (La. 1996), for interpreting the applicable version of § 1061.1
We agree that Kirkland controls the question before us.
Kirkland established a totality of the circumstances test,
requiring a fact-intensive consideration of all pertinent factors.
See Kirkland, 681 So.2d at 336.
Among those factors to be considered in determining
whether a statutory employment relationship exists are
the following:
(1) The nature of the business of the alleged principal;
(2) Whether the work was specialized;
(3) Whether the contract work was routine, customary,
ordinary or usual;
(4) Whether the alleged principal customarily used his
own employees to perform the work, or whether he
contracted out all or most of such work;
(5) Whether the alleged principal had the equipment and
personnel capable of performing the contract work;
(6) Whether those in similar businesses normally
contract out this type of work or whether they have
their own employees perform the work;
(7) Whether the direct employer of the claimant was an
independent business enterprise who insured his own
workers and included that cost in the contract; and
(8) Whether the principal was engaged in the contract
work at the time of the incident.
Kirkland, 681 So.2d at 336-37.
The district court stated that it “is undisputed that Witco
was in the business of chemical manufacturing and that part of its
business includes maintaining its facilities.” We agree.
The specific task being performed by the individual employee
1
In 1997, Louisiana amended § 1061 by Acts 1997, No. 315, §§
1 and 2, legislatively overruling Kirkland. See Felan v. F & F
Trucking, Inc., 708 So.2d 430, 437 n.1 (La.App.3 Cir. 1998).
However, the changes do not affect this case because the amendment
expressly provided that the changes applied prospectively only.
See id.
4
at the time of the accident is not controlling. See Lewis v. Exxon
Corp., 441 So.2d 192, 198 (La. 1983). Rather, the entire scope of
the contract work must be considered. See id.
Witco argues that the district court was correct in
characterizing Mundy’s work under the contract as maintenance of
the chemical plant. Once that characterization is accepted as
undisputed, it follows that factors 2-6 and 8 weigh in favor of
Witco. That is, maintenance work is not specialized, it is
routine, Witco uses its own employees and equipment for
maintenance, chemical plants normally have their own maintenance
crews, and Witco had employees engaged in maintenance work at the
time of Stephens’s accident. However, the record does not support
such a simplistic approach. Witco contracted with Mundy for
“construction, maintenance and service work.” Stephens submitted
evidence that Mundy’s contract required it to replace structural
steel joists, which work was extraordinary, nonroutine,
nonrecurring work that is not customarily done by Witco maintenance
crews nor by the hypothetical ordinary chemical plant maintenance
crew, nor were Witco’s employees engaged in joist replacement or
construction at the time of Stephens’s accident. We conclude that,
based on this evidence, there is at least a fact question
concerning whether factors 2-6 and 8 weigh in his favor.
Additionally, Kirkland asks whether Mundy insured its own
workers and included that cost in the contract. See Kirkland, 681
So.2d at 337. The parties do not dispute that Mundy is an
independent business entity that insured Stephens and included the
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cost in the contract. The district court found that the
arrangement favored statutory employer status. However, we read
Kirkland to require that such an arrangement be weighed in favor of
Stephens’s position that he is not Witco’s statutory employee. See
id.
Based on the foregoing, we find that there remain genuine
issues of material fact concerning whether or not Witco is
Stephens’s statutory employer.
c. Borrowed Employee Doctrine
Witco argued in the alternative that it was entitled to
summary judgment because Stephens was its borrowed employee. The
district court did not reach this issue, but Witco urges us to
affirm the grant of summary judgment on this basis.
Under the borrowed employee doctrine, an employee of one
company may become the servant of another if he is transferred by
the former to the employ of the latter. In Louisiana, there is a
presumption that a general employer such as Mundy retains control
of his employees. See Marzula v. White, 488 So.2d 1092, 1095 (La.
App. 2 Cir. 1986). Although there is no fixed test, case law has
relied on the following factors in determining whether the borrowed
servant doctrine applies: (1) right of control; (2) selection; (3)
payment of wages; (4) power of dismissal; (5) relinquishment of
control by general employer; (6) which employer’s work was being
performed at the time in question; (7) agreement between the
borrowing and lending employer; (8) furnishing of tools and place
of performance of work in question; (9) length of employment; (10)
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acquiescence by the employee in the new work arrangement. See,
e.g., Green v. Popeye’s Inc., 619 So.2d 69 (La. App. 3 Cir. 1993).2
Although the borrowed servant issue has been treated as a question
of law, we decline to affirm summary judgment on this alternative
basis because questions of fact remain concerning those factors
that must be resolved before the factors can be weighed. For
instance, Witco contends, based on circumstantial evidence, that it
was “fully understood between Witco and Mundy that the Mundy
workers were mere payroll employees of Mundy who were loaned to
Witco.” Stephens offers in reply the language of the Witco/Mundy
contract providing that “all persons employed by [Mundy] to perform
such work shall be and remain employees of [Mundy] subject to the
supervision of [Mundy’s] supervisory personnel.” Contrariwise, in
discussing the payment of wages and power of dismissal factors,
Witco invokes the language from the contract which Stephens
contests. Because it is necessary for a trier of fact to resolve
these desputes before the factors can be weighed, we cannot affirm
the district court’s summary judgment on this alternative basis.
CONCLUSION
Due to remaining genuine issues of material fact, we reverse
the summary judgment in favor of Witco and remand this case for
further proceedings.
2
The Louisiana Legislature recently codified the borrowed
employee doctrine by enacting LA.REV.STAT. 23:1031(c). See La. Acts
315. However, this enactment expressly provides for prospective
application from the effective date of June 17, 1997. Id. § 3.
Because this case arose before Act 315's effective date, the
factors articulated in Green govern our analysis of the borrowed
employee doctrine.
7
REVERSED and REMANDED.
8
EMILIO M. GARZA, Circuit Judge, dissenting:
The majority asserts that the district court erred in holding that Larry Stephens (“Stephens”)
was a “statutory employee” of Witco Corporation (“Witco”) as a matter of law. I disagree.
Our inquiry into whether Witco was Stephens’s “statutory employer,” as the majority notes,
is governed by Kirkland v Riverwood Int’l USA Inc., 681 So.2d 329 (La. 1996), which provides an
eight-factor, totality-of-the-circumstances test. These factors, as the majority notes, are:
(1) The nature of the business of the alleged [statutory employer].
(2) Whether the work was specialized or non-specialized.
(3) Whether the contract work was routine, customary, ordinary, or usual.
(4) Whether the alleged [statutory employer] customarily used his own employees to
perform the work, or whether he contracted out all or most of such work.
(5) Whether the alleged [statutory employer] had the equipment and personnel
capable of performing the contract work.
(6) Whether those in similar businesses normally contract out this type of work or
whether they have their own employees perform the work.
(7) Whether the direct employer of the claimant was an independent business
enterprise who insured his own workers and included that cost in the contract.
(8) Whether the principal was engaged in the contract work at the time of the
incident.
Id. at 337. “No single factor is determinative.” Id.
In viewing the nature of Stephens’s “work” at the Witco plant for purposes of our Kirkland
inquiry, we look not to the work Stephens was performing at the time of his injury, but rather to the
work called for by the contract between Witco and Mundy Contract Maintenance (“Mundy”),
Stephens’s actual employer. In this inquiry, “[t]he specific task to which [Stephens was] put should
not be determinative of his coverage under the act. Instead, the entire scope of the work contract
must be considered.” Lewis v. Exxon Corp., 441 So.2d 192, 197 (La. 1983) (on rehearing) (emphasis
added).
The contract between Witco and Mundy provided, inter alia:
ARTICLE 1. SCOPE OF WORK [Mundy] agrees to furnish labor and supervision,
needed for the performance of construction, maintenance, and plant services . . .
The district court characterized the scope of the contract work as “ongoing repair work and
preventative maintenance.” Stephens v. Witco Corp., 1998 WL 274248, at *1, *2 (E.D. La. May 21,
9
1998). Applying the Kirkland factors, the district court held that the contract work: was part of the
nature of Witco’s business (factor 1), was not specialized (factor 2), was routine (factor 3), was the
same as work for which Witco and any hypothetical chemical plant had the necessary employees and
equipment necessary (factors 4-6), and that Stephens was performing contract work at the time of
the accident (factor 8). Stephens, 1998 WL 272248, at *2-3.
The majority asserts that “the record does not support” the district court’s “simplistic”
approach. Basically, the majority claims that because the contract between Witco and Mundy
required Mundy employees to, among many other tasks, replace structural steel bar joints, a type of
work which the majority asserts was “extraordinary, non-routine, [and] non-recurring work,” factors
2-6 and 8 weigh against statutory employee status.
However, in focusing its attention on one particular task that the contract between Witco and
Mundy called for, the majority uses far too powerful a lens. We are bound by a rationale directing
us to look at the entire scope of the contract:
[A] broader view o f the work as a whole is considerably more reasonable than the
narrow view. The “work” contemplated by the statute can hardly be the individual
tasks performed by each worker. Plaintiff, it is true, was injured while installing a
particular device; his employer, however, was engaged in the conversion of a plant
from one manufacturing process to another. The “work” at i ssue here is the
employer’s work))the construction project. If Exxon was in the business of plant
construction or conversion, it then would be protected by the statute.
Lewis, 441 So.2d at 199. In Lewis, the plaintiff was injured while performing a non-specialized,
routine function as part of his employer’s contract work, which involved completely reconstructing
an Exxon chemical plant. While merely considering the plaintiff’s work would have placed him within
the definition of a “statutory employee”, the Louisiana Supreme Court held that since the contractor’s
function, completely rebuilding the plant, was specialized and non-routine, Exxon was not the
plaintiff’s statutory employee. Id. The same analysis applies to the reverse factual scenario here.
While Stephens may have been involved in a specialized, non-routine function when injured, the
contract between Mundy and Witco called almost exclusively for mere “ongoing repair work and
preventative maintenance.” Stephens, 1998 WL 274248 at *2. It is well-settled under Louisiana law
10
that employees of a contractor hired to perform these functions are the statutory employees of the
principal company. See Hester v. Pioneer Chlor Alkali Co., Inc., 955 F. Supp. 656, 659-60 (M.D.
La. 1996) (citing cases).
The majority’s conclusion is based on its overemphasis of a single portion of the record. The
only evidence in the record indicating that the struct ural steel bar joint replacement Stephens was
involved in may have been “non-routine or non-recurring” was a statement by plant manager James
Goletz that of the 500 steel bar joints in the Witco plant, only around twenty had been replaced since
1968. However, the remainder of Mr. Goletz’s testimony makes clear that Mundy’s contract was
almost exclusively of a “routine” nature when one takes the focus off bar joists in particular and
places it on the many other tasks Mundy employees perform at Witco. As Goletz stated i n his
deposition:
Like all [chemical] plants, they require maintenance. You are replacing steel. After
30 years, there is a lot of steel that has to be replaced. If we limit it to a bar joist as
being one part icular piece of steel . . . maybe it’s 20, but steel, there are probably
hundreds of pieces that have been replaced.
Any task, no matter how fundamental, can be considered “non-recurring” or “non-routine” when
analyzed down to its most minor detail. I believe that Kirkland and Lewis require a broader scope
of inquiry into the nature of the contract work. Accordingly, I believe the district court correctly
characterized the scope of work under the Mundy-Witco contract and that its determinations on
factors 2-6 and 8 were correct.
The majority also asserts that the district court erred in its analysis on Kirkland factor 7,
claiming that under its reading of Kirkland, the fact that Mundy insured Stephens and included the
cost in its contract with Witco weighed against statutory employee status. The district court held that
since “Witco was required to reimburse Mundy for premiums it paid for worker’s compensation
insurance,” that factor favored statutory employee status. Stephens, 1998 WL 274248 at *3. I agree
with the district court.3 The purpose of the Kirkland test is to decide whether Stephens will be
3
In coming to the contrary conclusion, the majority provides no analysis behind its reading of
Kirkland factor 7.
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relegated to workers’ compensation for injuries suffered at the Witco plant. Since Witco for all
practical purposes pays Stephens’ workers’ compensation premiums, Stephens should be covered by
workers’ compensation as if he were a Witco employee. Cf. Gaspard v. Orleans Parish School
Board, 688 So.2d 1298, 1303 (La. Ct . App. 1997) (holding that a plumber was not a statutory
employee of a school district in part because the plumber’s employer “was an independent business
enterprise with its own worker’s compensation insurer”).
Our job, as defined by the Louisiana Supreme Court, is to decide whether Mundy employees
who work at Witco pursuant to the “construction, maintenance, and plant services” contract are
Witco’s statutory employees for workers’ compensation purposes. The majority, in narrowly
focusing on the particular job Stephens was performing at the time of the accident, performs the
incorrect inquiry. I recognize that, under Kirkland, “[a] totality of the circumstances inquiry is
frequently difficult to accomplish on motion for summary judgment.” Kirkland, 681 So.2d at 337.4
However, in the case at bar, the single piece of evidence relied on by the majority is insufficient to
create a genuine issue of material fact on the scope of Mundy’s contract work. Therefore, the district
court correctly concluded that Mundy employees who work at Witco pursuant to the “construction,
maintenance, and plant services” contract and for whom Witco, for all pract ical purposes, pays
workers’ compensation insurance, are Witco’s “statutory employees” as a matter of law.
Accordingly, I dissent.
4
“While [after Kirkland] it may be difficult to satisfy one’s burden on summary judgment, it
is not impossible.” Hester, 955 F. Supp. at 658-59; see also Jones v. Vela’s Garage & Rental, Inc.,
717 So.2d 246, 248-49 (La. Ct. App. 1998) (granting summary judgment under the Kirkland factors);
Jackson v. Latini Machine Co., 960 F. Supp. 1043, 1049 (E.D. La. 1997) (“Sathers has proven the
presence of seven of the eight factors pointing to an existence of a statutory employment relationship.
The absence of one of the factors is adequat ely compensated by the presence of the seven other
factors. Thus, Sathers has carried its [summary judgment] burden.”).
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