Gass v. VI Telephone Corp

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit

11-18-2002

Gass v. VI Telephone Corp
Precedential or Non-Precedential: Precedential

Docket No. 01-2507

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PRECEDENTIAL

Filed November 18, 2002

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 01-2507

CHAD S. GASS,
Appellant

v.

VIRGIN ISLANDS TELEPHONE CORPORATION,
RACO, INCORPORATED, and
ANN MARIE ESTES

On Appeal from the District Court of the Virgin Islands

District Court Judge: The Honorable Thomas K. Moore
(D.C. No. 97-cv-00184)

Argued on May 14, 2002

Before: AMBRO, FUENTES, and GARTH, Circuit Jud ges

(Opinion Filed: November 18, 2002)

Thomas Alkon [Argued]
Thomas H. Hart, III
Alkon, Meaney & Hart
2115 Queen Street
Christiansted, St. Croix, VI 00820
Attorney for Appellant,
Chad S. Gass

R. Eric Moore [Argued]
Law Offices of R. Eric Moore
Post Office Box 223086
Downtown Station
Christiansted, VI 00822-3086
Attorney for Appellee
Virgin Islands Telephone Corporation

Daryl C. Barnes
Carl A. Beckstedt, III [Argued]
Bryant, Barnes & Moss, LLP
1134 King Street, 2nd Floor
Christiansted, VI 00820

Kelly L. Faglioni
W. Jeffrey Edwards
Hunton & Williams
951 East Byrd Street, 13th Floor
Richmond, VA 23219
Attorneys for Appellee
 RACO, Incorporated

OPINION OF THE COURT

FUENTES, Circuit Judge:

As a result of the damage caused by Hurricane Marilyn,
the Virgin Islands Telephone Company ("VITELCO") hired
an independent contractor, RACO, to repair phone lines in
the Virgin Islands. Chad Gass, a RACO employee, was
repairing a phone cable and was seriously injured when a
car drove over the cable he was holding. Gass filed this
negligence action against RACO, VITELCO, and the driver
of the car. The primary issue in this appeal is whether an
employee of an independent contractor may sue the hirer of
the contractor under the direct liability theories set forth in
sections 410 and 414 of Chapter 15 of the Restatement
(Second) of Torts (1965 & App. 1986) ("Restatement").

The District Court granted summary judgment to
defendant VITELCO because it found that an injured
employee of an independent contractor has no cause of
action in tort against the employer of the contractor under

2

Restatement sections 410 and 414. The District Court
granted summary judgment to defendant RACO because it
held that RACO was shielded from liability by the
exclusivity provision of the Virgin Islands Workmen’s
Compensation Act ("WCA"). The District Court denied
summary judgment to defendant Ann Marie Estes.1 We will
reverse the District Court’s judgment with respect to
VITELCO and affirm with respect to RACO.

I.

In September of 1995, Hurricane Marilyn struck the
Virgin Islands, bringing down many VITELCO telephone
lines on the islands of St. Thomas and St. John. In the
following months, VITELCO hired contractors to assist in
repairing the damaged telephone lines. These contractors
included RACO, a construction firm based in North
Carolina. RACO employed Chad Gass. VITELCO also hired
Carnes, Burkett, Wiltsee & Associates, the engineering firm
whose employee, Phillip Day, developed the blueprints and
plans for the repair sites in the Virgin Islands.

On February 5, 1996, a RACO supervisor directed a
RACO foreman, Jack Bryson, to take two linemen, Lee
Fowler and Gass, from St. Thomas to St. John the next
morning to repair telephone lines. Bryson complained to
the RACO supervisor that three men were not sufficient to
perform the job safely and that RACO’s trucks lacked
certain safety equipment, including road signs. The RACO
supervisor instructed Bryson to proceed to St. John with
the safety equipment to follow. Bryson had been assured
that safety equipment, additional workers, and a cellular
phone which he had requested would be available in a few
days.

The following morning, Bryson, Fowler, and Gass traveled
to St. John. Bryson reported to Day, who provided the work
blueprint for the job of stringing an aerial "slack span"
cable between telephone poles on opposite sides of a road.
_________________________________________________________________

1. Subsequent to the District Court’s denial of her motion for summary
judgment, Ms. Estes reached a settlement with Gass, and thus, is not a
party to this appeal.

3

Day also showed the men where to get most of the
materials for the job and led them to the job site. After Day
left, the crew first "framed" a pole on the left side of the
two-lane road, then parked the bucket truck in the right
lane. The crew placed at least one of the bucket truck’s two
traffic cones at one end of the truck, and turned on the
truck’s flashing lights. They did not block traffic in the left
lane, thus allowing vehicles from either direction to drive
along one side of the truck. When the road was clear of
traffic, Bryson laid a cable in front of the bucket truck
across the road surface from one telephone pole to another.
Bryson left some slack in the cable so that he could reach
it from the bucket and motorists could drive over it safely.
At approximately the same time, Bryson sent Fowler away
from the work site to obtain the additional wire needed to
complete the assignment.

Bryson then got in the bucket and instructed Gass to
hand him the end of the cable when there were no vehicles
approaching. After Gass handed the cable to Bryson, Estes
drove her car over the cable. The cable wrapped around the
rear axle of her car. As she continued driving forward, not
realizing what had just occurred, the cable jerked out of
Bryson’s hands, coiled around Gass, and flung Gass into
the air and across the bucket truck. Gass suffered serious
injuries.

The workmen’s compensation insurance provided by
RACO covered Gass’s medical expenses. In total, he
recovered over $500,000 in workmen’s compensation from
RACO’s insurer. On December 31, 1997, Gass filed the
Complaint in this case, alleging that the negligent acts of
Estes, VITELCO, and RACO caused his substantial injuries.
Each of the defendants moved for summary judgment. On
April 20, 2001, the District Court entered an order denying
Estes’ motion and granting the motions of VITELCO and
RACO. On May 29, 2001, after Gass and Estes reached a
settlement, the District Court ordered the case closed. Gass
filed a timely appeal from the entry of summary judgment
in favor of VITELCO and RACO.

II.

The District Court had diversity jurisdiction under 28
U.S.C. S 1332. We have jurisdiction over the District Court’s
 4

final order granting summary judgment to VITELCO and
RACO pursuant to 28 U.S.C. S 1291.

The standard of review applicable to an order granting
summary judgment is plenary. See Curley v. Klem , 298
F.3d 271, 276-77 (3d Cir. 2002). We apply the same test
employed by a district court under Federal Rule of Civil
Procedure 56(c). See Kelley v. TYK Refractories Co., 860
F.2d 1188, 1192 (3d Cir. 1988). Accordingly, the District
Court’s grant of summary judgment in favor of VITELCO
and RACO was proper only if it appears that "there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Fed. R.
Civ. P. 56(c). In evaluating the evidence, we are required "to
view [the] inferences to be drawn from the underlying facts
in the light most favorable to the party opposing the
motion." Bartnicki v. Vopper, 200 F.3d 109, 114 (3d Cir.
1999) (citation omitted).

III.

The District Court granted summary judgment to
VITELCO because it found that an injured employee of an
independent contractor does not have a cause of action
against the employer of the contractor under sections 410
or 414 of Chapter 15 of the Restatement. See Gass v. Virgin
Islands Telephone Corp. et al., 149 F. Supp. 2d 205, 220
(D.V.I. 2001). The District Court based its conclusion on
Monk v. Virgin Islands Water & Power Auth., 53 F.3d 1381
(3d Cir. 1995). In a subsequent opinion by the District
Court of the Virgin Islands sitting as a three-judge appellate
panel reviewing a Territorial Court decision, the panel
explicitly rejected the District Court’s interpretation of Monk
in this case and held that an injured employee of an
independent contractor does have a cause of action against
the employer of the contractor under section 414. Figueroa
v. HOVIC, 198 F. Supp. 2d 632 (D.V.I. 2002). 2 We must
_________________________________________________________________

2. The District Judge in this case was also a member of the three-judge
panel in Figueroa. He dissented from the majority opinion, confirming his
view stated in Gass that section 414 does not permit a suit by an injured
employee of an independent contractor against the contractor’s
employer.

5

decide here whether the District Court’s view of section 410
and 414 hirer liability is correct.3 Chapter 15 of the
Restatement, comprised of sections 409 through 429,
covers the "Liability of an Employer of an Independent
Contractor." Restatement div. 2, ch. 15, at 369. The first
provision recites the general rule of non-liability of the
employer of an independent contractor. RestatementS 409.4
The Restatement divides the exceptions to that general rule
into those based on an employer’s direct negligence, see
SS 410-15, and those involving vicarious liability imposed
on the employer due to the negligence of the independent
contractor, see SS 416-429. See Restatement ch. 15, topic
2, introductory note, at 394; Monk, 53 F.3d at 1389.

Gass argues that VITELCO is directly liable for its
negligent acts under the sections 410 and 414.5 Gass’s
_________________________________________________________________

3. Although the Figueroa court only addressed section 414, we clarify
that our analysis in this section applies to both sections 410 and 414.
With respect to the issue presented in this case, there is no need to
distinguish between the sections because they differ only in the degree
of control exercised by the employer of the independent contractor.
Under section 410, the employer must be alleged to have given orders or
directions negligently, and under section 414, the employer must be
alleged to have exercised his retained control negligently. Both sections
deal with the direct liability imposed on the employer of the independent
contractor for his own negligent acts. That commonality between the
sections is at the core of this Court’s analysis of the issue of the
availability of employer liability.

4. Restatement S 409 states:

Except as stated in SS 410-429, the employer of an independent
contractor is not liable for physical harm caused to another by an
act or omission of the contractor or his servants.

5. Restatement S 410, "Contractor’s Conduct in Obedience to Employer’s
Directions," provides:

The employer of an independent contractor is subject to the same
liability for physical harm caused by an act or omission committed
by the contractor pursuant to orders or directions negligently given
by the employer, as though the act or omission were that of the
employer himself.

Restatement S 414, "Negligence in Exercising Control Retained by
Employer," provides:

6

theory is that VITELCO is liable under section 410, the
negligent instruction section, because Phillip Day, acting as
a representative of VITELCO, negligently gave the orders
that caused RACO, through its supervisor, to commit the
acts and omissions resulting in Gass’s injuries. 6
Alternatively, Gass argues that VITELCO retained sufficient
control over the performance of the job to render VITELCO
liable under section 414, the negligent exercise of retained
control section.

Rather than discussing the merits of Gass’s claims, the
District Court determined as a matter of law that Gass
could not state a claim under either section 410 or 414
against VITELCO as the employer of the independent
contractor. Gass, 149 F. Supp. 2d at 220. The District
Court interpreted this Court’s decision in Monk as dictating
this result. Id. at 219-20. The District Court’s interpretation
of Monk, however, is incorrect.

To begin, the District Court’s interpretation of Monk
conflicts with a prior decision of this Court. In Williams v.
Martin Marietta Alumina, Inc., 817 F.2d 1030, 1036-37 (3d
Cir. 1987), we determined that an employee of an
independent contractor may bring a claim against the
contractor’s employer for harm caused by the employer’s
own negligence under Restatement sections 410 or 414. We
did not indicate in Monk, nor have we indicated in any
other case, that we intended to overrule Williams. The
Williams decision, therefore, remains binding in this
Circuit. See Third Circuit Internal Operation Procedure
_________________________________________________________________

One who entrusts work to an independent contractor, but who
retains the control of any part of the work, is subject to liability for
physical harm to others for whose safety the employer owes a duty
to exercise reasonable care, which is caused by his failure to
exercise his control with reasonable care.

6. The District Court assumed, without deciding the truth of Gass’s
assertion, that Day was an agent and servant of VITELCO under the
Restatement and the doctrine of respondeat superior. This Court will
assume the same for purposes of resolving the issue on appeal, although
this material disputed fact is ultimately one for the jury to consider at
trial on remand.

7

VII(C) ("It is the tradition of this court that reported panel
opinions are binding on subsequent panels. Thus, no
subsequent panel overrules a published opinion of a
previous panel. Court en banc consideration is required to
overrule a published opinion of this court.") Thus, it is clear
that the Monk decision must be read in keeping with the
ruling in Williams.7 The District Court did not interpret
Monk accordingly.

In Monk, the plaintiff, an employee of an independent
contractor who brought suit against the employer of the
contractor, asserted a claim under Restatement section
413, which involves an employer’s "Duty to Provide for
Taking of Precautions Against Dangers Involved in Work
Entrusted to Contractor." 53 F.3d at 1389. We began our
discussion in Monk by pointing out that section 413 deals
with the "peculiar risk" doctrine, "which developed in the
latter half of the nineteenth century out of recognition that
‘a landowner who chose to undertake inherently dangerous
activity on his land should not escape liability for injuries
_________________________________________________________________

7. VITELCO argues that this Court is not bound by the Williams decision
because it was based on cases dealing with Pennsylvania law rather than
Virgin Islands law. After concluding that the employer of an independent
contractor is liable to an employee of the contractor for harm caused by
its own instructions, the Williams court explained that we "have
previously stated that this section applies when an employee of the
independent contractor is injured," and cited to Draper v. Airco, Inc., 580
F.2d 91, 101-02 (3d Cir. 1978). 817 F.2d at 1037. In Draper, we held
that the law of Pennsylvania allows employees of independent
contractors to bring suit against employers of independent contractors
under Restatement sections 410, 414, and 416. 580 F.2d at 101-02
(citing Byrd v. Merwin, 456 Pa. 516 (1974); Gonzalez v. United States
Steel Corp., 248 Pa. Super. 95 (1977); Hargrove v. Frommeyer & Co., 229
Pa. Super. 298 (1974)).

VITELCO asserts that "an interpretation of the Restatement by one
jurisdiction within this circuit does not compel the same interpretation
for another such jurisdiction." Monk, 53 F.3d at 1392, n. 30. While that
assertion is absolutely correct, it simply does not inform our reading of
Williams because that case involved the interpretation of Virgin Islands
law, not Pennsylvania law. In deciding the issue of Virgin Islands law in
Williams, we referred to Pennsylvania law merely as persuasive authority.
We are bound by the portion of the Williams decision interpreting
Restatement sections 410 and 414, which comprises Virgin Islands law.

8

to others simply by hiring an independent contractor to do
the work.’ " Id. at 1390 (quoting Privette v. Superior Court,
5 Cal.4th 689 (1993)). The American Law Institute
incorporated the doctrine in sections 413, 416, and 427 of
Chapter 15 of the Restatement of Torts.8 The defendant in
Monk, the employer of the independent contractor, urged
this Court to consider whether the "others" protected under
sections 413, 416, and 427 includes an independent
contractor’s employees. Id. at 1389. In resolving this issue,
we set forth approvingly several reasons cited by other
courts for denying employer liability to a contractor’s
employees under the "peculiar risk" sections. Id. at 1392-
94. Based on these reasons, we concluded that an
employee of an independent contractor is not one of the
_________________________________________________________________

8. Section 413 provides:

One who employs an independent contractor to do work which the
employer should recognize as likely to create, during its progress, a
peculiar unreasonable risk of physical harm to others unless special
precautions are taken, is subject to liability for physical harm
caused to them by the absence of such precautions if the employer

(a) fails to provide in the contract that the contractor shall take such
precautions, or

(b) fails to exercise reasonable care to provide in some other manner
for the taking of such precautions.

Section 416 provides:

One who employs an independent contractor to do work which the
employer should recognize as likely to create during its progress a
peculiar risk of physical harm to others unless special precautions
are taken, is subject to liability for physical harm caused to them by
the failure of the contractor to exercise reasonable care to take such
precautions, even though the employer has provided for such
 precautions in the contract or otherwise.

Section 427 provides:

One who employs an independent contractor to do work involving a
special danger to others which the employer knows or has reason to
know to be inherent in or normal to the work, or which he
contemplates or has reason to contemplate when making the
contract, is subject to liability for physical harm caused to such
others by the contractor’s failure to take reasonable precautions
against such danger.

9

"others" allowed to bring suit against an employer of an
independent contractor under the "peculiar risk" sections.
Id. at 1393-94.

It is clear that we intended to limit the holding in Monk
to sections 413, 416, and 427 given that we expressly
limited the holding to "the peculiar risk provisions of
Chapter 15 of the Restatement," and further clarified that
the holding "extends to actions under the direct liability
provision of section 413, as well as the vicarious liability
provisions of sections 416 and 427." Id. We declined to rule
that an employee of an independent contractor could never
sue the employer of an independent contractor under any
section of chapter 15. Instead, we carefully limited the
reach of the Monk decision to the "peculiar risk" sections of
Chapter 15. Therefore, the District Court’s interpretation of
Monk as prohibiting hirer liability under sections 410 and
414 can not be upheld on the basis of the plain language
of the stated holding.

The District Court conceded as much, but interpreted
Monk to have extended implicitly the reach of the holding to
include sections 410 and 414. Gass, 149 F. Supp. 2d at
216-17, 220. The District Court based its interpretation in
part on its assertion that the Monk court rejected the
distinction between direct and vicarious liability, and in the
process "implicitly rejected any limitation of its ruling to
only those provisions involving a peculiar risk to others." Id.
at 216-17.

We disagree with the District Court’s assertion. The Monk
court did not reject the overall division of direct and
vicarious liability provisions in Chapter 15. Rather, the
Monk court underscored the importance of the commonality
of the "peculiar risk" doctrine in sections 413, 416, and
427, and thus concluded that the same policy
considerations preclude hirer liability under those sections.
Stated differently, the Monk court determined only that the
"peculiar risk" doctrine differentiates sections 413, 416,
and 427 from other sections in Chapter 15 for the purpose
of determining the availability of hirer liability. The Court
did not make a broader determination to eliminate the
distinction between direct and vicarious liability set forth in
Chapter 15 of the Restatement.
 10

In fact, we find that there is good reason to distinguish
between direct liability under sections 410 and 414 and
"peculiar risk" liability under sections 413, 416, and 427 of
the Restatement. Most importantly, the policy
considerations underlying the "peculiar risk" sections of the
Restatement differ from those underlying the other direct
liability sections. The District Court of the Virgin Islands
provided an excellent explanation of that difference in
Figueroa:

Peculiar risk analysis is conceptually distinct from
traditional negligence analysis: while negligence and
section 414 involve a failure to act with reasonable
care, peculiar risk liability functions more as a strict
liability principle resulting from a variety of policy
considerations. Peculiar risk doctrine provides for
liability even when a defendant is not personally
negligent and does not cause an injury. Rather, the
defendant’s liability is derivative or vicarious of the acts
of another, and is not related to any duty of his own.
Thus, the doctrine allows courts to impose liability on
landowners even when they utilized independent
contractors to perform dangerous work and [does not
allow that they] . . . limit their own liability by shifting
the duty of care to another. In this way, the peculiar
risk doctrine has helped to ensure that persons who
were injured by dangerous [activities] have recourse, in
the event that the independent contractor is insolvent.
See Monk, 53 F.3d at 1390. Thus, in a sense, the
courts have determined that landowners should be
liable, even if the person who was actually negligent
was beyond their control, i.e. an independent
contractor; and, this is why the peculiar risk
provisions, set forth in the Restatement, are utterly
distinguishable from section 414.

In contrast, . . . Section 414 provides for liability for
an employer’s own negligence where he retains
sufficient control over the operative details of his work.

Figueroa, 198 F. Supp. 2d at 640 (emphasis supplied).9
_________________________________________________________________

9. The Figueroa court is joined by several other courts in distinguishing
between the "peculiar risk" sections and section 414. In Thompson v.

11

Because the holding in Monk stems from the unique policy
considerations regarding the "peculiar risk" sections and
because liability arises under section 414 as a result of
different policy considerations, we see no reason to extend
the prohibition in Monk to section 414.

Moreover, the peculiar risk sections interact differently
with the workmen’s compensation exclusivity provisions
than do sections 410 and 414. The peculiar risk sections
address vicarious liability for the contractor’s acts and
omissions. Therefore, imposing liability against the
independent contractor’s employer for acts omitted or
committed by the contractor, who is shielded from liability
by the exclusivity provision of the WCA, conflicts with a
major purpose of the WCA. Sections 410 and 414, on the
other hand, address the direct liability of the contractor’s
employer for his own actions, and therefore do not conflict
with the purpose of the exclusivity provision of the WCA.
"The rule of workers’ compensation exclusivity does not
preclude the employee from suing anyone else whose
conduct was a proximate cause of the injury, and when
affirmative conduct by the hirer of a contractor is a
proximate cause contributing to the injuries of an employee
of a contractor, the employee should not be precluded from
suing the hirer." Hooker v. Dep’t of Transp. , 27 Cal. 4th
198, 214 (2002) (internal citation and quotations omitted).

Presenting a slightly different justification for extending
Monk to include sections 410 and 414, the District Court
opined that it "would make no sense whatsoever to
preclude, under Monk, the injured employee from suing the
negligent employer who has contracted out peculiarly
dangerous work and failed to ensure that special
precautions were taken (section 413), and yet to allow the
employee to sue the negligent employer who has contracted
out work that poses only ordinary risks of harm (sections
410 and 414). Accordingly, that sections 410 and 414 are
_________________________________________________________________

Jess, 979 P.2d 322, 329-30 (Utah 1999), Fleck v. ANG Coal Gasification
Co., 522 N.W.2d 445, 454, n.3 (N. Dakota 1994), and Robinson v. Poured
Walls of Iowa, Inc., 553 N.W.2d 873, 876-77 (Iowa 1996), the courts
differentiated "peculiar risk" liability from section 414 liability for
substantially similar reasons to those articulated by the Figueroa court.

12

premised on the employer’s own negligence and involve no
underlying peculiar risk of harm to others is no basis for
imposing liability on the independent contractor’s
employer." Gass, 149 F. Supp. 2d at 218.

Even if the District Court’s analysis were compelling, it
cannot be reconciled with the law in the Virgin Islands.10 In
the Virgin Islands, the various Restatements of law provide
the rules of decision in the absence of local laws to the
contrary. 1 V.I. Code Ann. S 4 (1967) ("V.I.C."); Williams,
817 F.2d at 1033. Regarding this issue, the Legislature of
the Virgin Islands has decided that a contractor’s employer
can be liable to a subcontractor’s employees. Figueroa, 198
F. Supp. 2d at 641; see 24 V.I.C. SS 263a, 284(b).11

At one time, the rule in the Virgin Islands was that the
exclusivity of the worker’s compensation remedy prohibited
suit against a secondary employer. See Vanterpool v. Hess
Oil Virgin Islands Corp., 766 F.2d 117 (3d Cir. 1985). The
Legislature reacted to the Vanterpool decision by enacting
24 V.I.C. S 263a, which states in pertinent part:

It shall not be a defense to any action brought by or on
behalf of an employee, that the employee at the time of
his injury or death, was the borrowed, loaned, or
rented employee of another employer.

Thus, the Legislature abolished the borrowed servant
_________________________________________________________________

10. We note that we do not find the District Court’s reasoning in this
regard to be persuasive. In fact, it would make little sense, as apparently
the Virgin Islands Legislature has concluded, see infra, to shield a
contractor’s employer from liability when the employer’s own conduct
caused the employee’s injury. Such a rule would unfairly allocate liability
and conflict with well-established common law.

11. VITELCO urges this Court not to consider Gass’s argument with
respect the amendments to the Virgin Islands code as they relate to the
issue of hirer liability under sections 410 and 414 because it was not
presented to the District Court. While Gass did not make this specific
argument to the District Court, he did argue that hirer liability is
available to a contractor’s employee under sections 410 and 414. We find
that the changes to the law found in 24 V.I.C. SS 263a, 284(b) inform our
analysis of sections 410 and 414. VITELCO had ample opportunity to
respond to this argument in its reply brief on appeal. We will, therefore,
consider the argument.

13

doctrine and clarified that an employer of an independent
contractor is not immune from suit simply because the
contractor is protected by the exclusivity provision of the
WCA. To further clarify its position with respect to this
issue, the Legislature amended the exclusive remedy
provision of the WCA to state:

For purposes of this section, a contractor shall be
deemed the employer of a subcontractor’s employees
only if the subcontractor fails to comply with the
provisions of this chapter with respect to being an
insured employer. The "statutory employer and
borrowed servant" doctrine are not recognized in this
jurisdiction, and an injured employee may sue any
person responsible for his injuries other than the
employer named in a certificate of insurance issued
under section 272 of this title.

24 V.I.C. S 284(b) (emphasis added). Therefore, the
Legislature has made clear that "an employee of a
subcontractor can sue the subcontractor’s employer unless
the subcontractor is not, itself, insured." Figueroa, 198 F.
Supp. 2d at 642.

If there were any doubt as to the proper interpretation of
Section 284(b), the Official Note attached to the bill removes
it. The explanation attached to the bill provides in relevant
part:
 This bill is needed to assist person [sic] who are injured
while on the job . . . This need arises because the
courts have been interpreting Section 284 of Title 24 of
the Workmen’s Compensation Act to grant immunity
not only to a worker’s immediate employer, but also to
secondary employers although the Legislature never
intended immunity for these secondary wrongdoers.

* * *

Take a situation where a [contractor’s] employee is
injured at Hess. Under the present law, the Courts say
our Legislature intended not only to grant immunity to
the injured worker’s employer . . . , but also to Hess.
The Bill would avoid that. . . . [I]f the[contractor’s]
employee is badly hurt as a result of the negligence of

14

Hess, and the employee has collected . . . workmen’s
compensation benefits, . . . he can sue Hess.

Bill No. 498, 16th Legislature (1986) (attached explanation).

These legislative enactments comprise local laws, which
preclude reliance on contrary interpretations of the
Restatement. See 1 V.I.C. S 4 (1967). They also provide a
clear statement of the public policy of the Virgin Islands.
Therefore, we agree with the Figueroa court that "an injured
employee of an independent contractor may sue the
employer of the independent contractor under the
provisions of section 414 [and section 410], if that employer
is not named in the worker’s compensation certificate, and
[the employer’s] negligent conduct caused the employee’s
injuries." 198 F. Supp. 2d at 643; 24 V.I.C.SS 263a, 284(b).

We find that the District Court erred in determining that
Gass could not, as a matter of law, state a claim against
VITELCO under sections 410 and 414 because such a
conclusion contradicts our holding in Williams ,
misinterprets our decision in Monk, and ignores sections
263a and 284 of the Virgin Islands Code. Accordingly, Gass
may sue VITELCO under sections 410 and 414 for
VITELCO’s liability for its own negligence.

IV.

The District Court granted summary judgment to RACO
because, under Virgin Islands law, an injured employee
who receives proceeds from workmen’s compensation
insurance paid for by his employer cannot sue that
employer for negligent infliction of personal injuries. See
Gass, 149 F. Supp. 2d at 211. The District Court
determined that the WCA has been construed to allow
employees to sue their employers when there is an
allegation that the employer committed a tortious act with
an actual, specific, and deliberate intent to injure, but that
Gass had adduced no evidence to show that RACO
intentionally injured him. Id.
Gass does not contest the District Court’s conclusion
that, under the WCA, employers who pay for workmen’s
compensation insurance are immune from negligence suits

15

by employees who receive insurance workmen’s
compensation payments. He also does not renew his
argument that RACO committed an intentional tort against
him. Instead, Gass argues on appeal that RACO was not an
insured employer under the WCA, and therefore is not
entitled to protection under the exclusivity provision. He
urges this Court to consider this issue despite the fact that
it was not argued below.

However, "[i]t is well established that failure to raise an
issue in the district court constitutes a waiver of the
argument." Medical Protective Co. v. Watkins , 198 F.3d 100,
105-06 n.3 (3d Cir. 1999) (citation omitted); see also Harris
v. City of Philadelphia, 35 F.3d 840, 845 (3d Cir. 1994).
This rule "applies with added force where the timely raising
of the issue would have permitted the parties to develop a
factual record." In re American Biomaterials Corp., 954 F.2d
919, 927-28 (3d Cir. 1992). We only depart from this rule
when "manifest injustice would result" from a failure to
consider a novel issue. Pritzker v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 7 F.3d 1110, 1115 (3d Cir. 1993); see
also Newark Morning Ledger Co. v. United States, 539 F.2d
929, 932 (3d Cir. 1976) (citing Hormel v. Helvering, 312
U.S. 552 (1940)).

This case does not present an exceptional circumstance
warranting the review of an issue for the first time on
appeal. First, no "manifest injustice" will result from this
Court refusing to hear this issue for the first time on appeal
because Gass will not be left without coverage for his
injuries. Gass has received over $500,000 in workmen’s
compensation from North Carolina. Over half of that
amount was for medical treatment. Under the WCA, Gass
would only have been eligible to receive $75,000 for medical
treatment. See 24 V.I.C. S 254a(f). Second, timely raising of
this issue below would have allowed the parties to develop
the record more fully. Because Gass raised the issue of
RACO’s alleged failure to pay premiums to the Government
Insurance Fund as required by the WCA for the first time
on appeal, RACO was forced to submit a supplemental
appendix containing apparently new documents to this
Court. For these reasons, we will not take this opportunity
to depart from our general rule of not considering issues

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raised for the first time on appeal. Accordingly, we will
affirm the District Court’s decision with respect to RACO.

V.
For the aforementioned reasons, we will AFFIRM the
grant of summary judgment to RACO, but REVERSE the
grant of summary judgment to VITELCO and REMAND to
the District Court for trial of the claims against VITELCO
under Restatement sections 410 and 414, in accordance
with this opinion.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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