JOHN R. BROWN, Circuit Judge:
As it once was,
Twice Told Tales
George E. Blanchard was employed as a mechanical supervisor by Engine and Gas Compression Service, Inc. (Engine and Gas). This company supplied mechanical services to Gulf Oil Corporation (Gulf) to maintain and repair compressors at its Ingersoll Rand Station in the Mississippi River Delta, about thirty minutes from Venice, Louisiana.
Blanchard and Pollard Lee, another employee of Engine and Gas, were assigned to the Ingersoll Rand Station. While performing some extensive repairs on a compressor there, Blanchard became covered with oil. In this condition, he tried to replace
Blanchard sued his employer and Gulf for damages under the Jones Act and in diversity under Louisiana tort law. The District Court granted the defendants' motion for summary judgment on the Jones Act claim which we affirmed. The diversity action proceeded to trial where the District Court entered a directed verdict against Blanchard on the grounds that he was a statutory employee of Gulf under the Louisiana Workmen's Compensation Act, and his right of recovery was therefore limited to workmen's compensation. Blanchard appealed and we certified this issue to the Louisiana Supreme Court.
An Unanswered Query
But our hopes for a surer, if not easier, answer were dashed by the Supreme Court's cryptic, enigmatic response, relying as it properly could on the Rule's
We continue to feel that Louisiana jurisprudence demonstrates two different standards for determining when a principal is considered the statutory employer of his contractor's employee, and we express here our feelings of hesitation at the prospect of divining Louisiana law without the guidance which the Louisiana Supreme Court is in the best position to give. We pay special attention to the cases cited for us by our brethren on the Louisiana Supreme Court, Reeves v. Louisiana & Arkansas Railway, 282 So.2d 503 (La.1973) and Lushute v. Diesi, 354 So.2d 179 (La.1978).
The Louisiana Statutory Employer
Louisiana Workmen's Compensation Law, LSA-R.S. 23:1061, provides that the principal for whom a contractor is performing work which is part of the principal's "trade, business or occupation,"
Although in practice — at least as we see it in the flood of diversity and maritime or quasi-maritime cases — the purpose of the section is urged, looked upon or held to be immunity to traditional third party tort liability,
Coincident with this responsibility placed on the statutory employer, the Louisiana Workman's Compensation Act, LSA-R.S. 23:1032
Thus, we turn to Louisiana jurisprudence to determine what standard to use in deciding whether the work done by Blanchard was part of the "trade, business or occupation" of Gulf. In our previous opinion in this case, 575 F.2d at 1143-45, we discussed various Louisiana cases and found them somewhat inconsistent. However, the Louisiana Supreme Court has indicated to us that Reeves, supra, states the controlling rule of law.
Reeves involved the installation of a coking unit by Foster Wheeler Corporation on the premises of Humble Oil and Refining Company. The plaintiff, an employee of Foster Wheeler, was injured on the job and asserted a tort action against Humble. The Court ruled in favor of the plaintiff, holding that he was not Humble's statutory employee. The Court did not mention the "essential to business" test articulated in Thibodaux v. Sun Oil Company, La.App., 40 So.2d 761 (1949), aff'd, 218 La. 453, 49 So.2d 852 (1950). Under this test, the statutory employer-employee relationship exists between a principal and the employee of its subcontractor whenever the work done by the employee is essential to the principal's business. However, in Reeves, the Court did find that
Reeves, supra, 282 So.2d at 508.
In Freeman v. Chevron Oil Co., 517 F.2d 201 (5th Cir. 1975), Judge Ainsworth for this Circuit followed Reeves in holding that the installation of a septic tank on a fixed drilling platform was not a part of the business of the defendant Chevron. Judge Ainsworth criticized the "essential to business" test as too superficial to be used as the sole criterion in identifying statutory employment:
Id. at 206.
Instead, Judge Ainsworth looked at all the facts of the case, including whether Chevron had the facilities to install its own septic tanks (id. at 208), to determine whether installation of the sewerage system was part of the usual and customary practice of Chevron. Although the Court had to recognize that in this day and time an adequate sewerage system was absolutely necessary, the "essential to business" test so long extolled had to be given a reasonable and practical application:
Id. at 209.
Professor Larson has also criticized the "essential to business" test and after analyzing scores of cases has expressed what he believed to be the true test:
In Ball v. Kaiser Aluminum and Chemical Corporation, La.App., 112 So.2d 741, 745 (1959), the Louisiana Court of Appeals remarked:
More recently, we find this language concerning the "customary" practice of those engaged in that particular operational activity echoed throughout Louisiana and federal cases interpreting § 1061. See, e. g., Massey v. Rowan Drilling Co., 368 F.2d 92,
Despite our already expressed hesitation to rule on a state law issue which has not been categorically resolved in state court, we are, by the Supreme Court's expressed unwillingness to answer the certified question, now forced to do so. Therefore, after due consideration of Larson and Louisiana and federal cases, including Reeves and Freeman, we hold that in Louisiana, the "essential to business" test is no longer, if it ever was, the controlling factor in the identification of a statutory employer. The proper standard, as we see it, is whether the activity done by the injured employee or his actual immediate employer is part of the usual or customary practice of the principal or others in the same operational business.
More specifically, we should first consider whether the particular principal involved in the case customarily does the type of work performed by the contractor and whether the contractor's work is an integral part of the work customarily performed by the principal. If either of these situations exist, then there is a statutory employment relationship, and the inquiry ends there. If, however, the principal does not normally engage in this type of activity, or if it is not normally a part of his practices, then it is necessary to determine if others engaged in businesses similar to that of the principal customarily do this type of work or if it is an integral part of their businesses. If either of these inquiries yields an affirmative answer, then the general custom of the trade will control to make the relationship between the principal in question and his contractors' employees that of statutory employer and employee.
In applying this test, it is proper to consider all facts which would or would not suggest a statutory employment relationship. Whether the work is essential to the business of the principal or others engaged in similar businesses, may be one such fact.
Another fact to consider is whether the principal, or others engaged in like operational activities, normally subcontract out the work or whether they have employees who can, and customarily do, do the work. If the only fact which suggests the activity is not part of the principal's trade or business is that the principal has no employees of his own to do the work, this fact alone will not preclude the application of § 1061, provided all other evidence indicates the activity is an integral part of the principal's business. This was the holding of a recent Louisiana Supreme Court case, Barnes v. Sun Oil Company, 362 So.2d 761 (La.1978). Barnes involved the repair of Sun Oil Company pipelines by a contractor whose employee was injured on the job. Although Sun Oil maintained no employees to do this kind of work, the Louisiana Supreme Court held that "this fact alone [did] not prevent the labor from being part of [Sun Oil's] regular business." 362 So.2d at 764. Just as § 1061 prevents a principal from avoiding statutory employer status and workmen's compensation liability by contracting out all his business, this provision also implies that the mere fact that a principal contracts out all of his work does not necessarily mean he is not a statutory employer for purposes of avoiding tort liability.
In reviewing the District Court's directed verdict in defendant's favor we must apply the "usual and customary practice" test to the specific facts of the case, keeping in mind the standard of Boeing Company v. Shipman, en banc, 411 F.2d 365, 374-75 (5th Cir. 1969), for review of directed verdicts in federal diversity cases:
Blanchard was an employee of Engine and Gas, a company which provided mechanical services to Gulf's compressor station. A compressor station runs twenty-four hours a day, gathering natural gas from wells and building up the pressure in order to transport the gas.
Gulf employed its own mechanics to do overhauls and routine maintenance of the compressor engines. Gulf also hired additional men, through companies such as Engine and Gas, when things got busy or when there was an emergency situation, called a "flare." There was a flare at the time of the accident in question, and Gulf's most specialized mechanics were not available. The Engine & Gas mechanics, including Blanchard, performed both routine maintenance and more specialized tasks. Blanchard was paid by Engine and Gas but the time was approved by Gulf. Gulf supplied Blanchard with tools and repair manuals. Blanchard testified that Gulf supervisors had the power to remove him.
There is conflicting testimony as to the extent of Blanchard's expertise. There seems to be no dispute that he was capable of doing the most specialized types of repairs. He once testified he did not know if Gulf had its own employees who could do work as specialized. But he also stated that Gulf had no employee as expert in specialized repairs as Blanchard. Pollard Lee, a fellow Engine and Gas employee and a co-worker at Gulf, agreed with the latter statement by Blanchard. Another Engine and Gas employee who worked at Gulf, Herbert Ellis, stated that Gulf had mechanics just as specialized as Blanchard, and Engine and Gas employees were used only as extra hands when things got particularly busy and there were not enough Gulf employees to do the job. Of course, Gulf agrees with Ellis' testimony.
Even if Gulf had no employees as expert as Blanchard, the recent Louisiana Supreme Court decision in Barnes v. Sun Oil Company, supra, would indicate that "this fact alone does not prevent the labor from being
But on the now critical problem of the principal's normal trade or practice (or that of the particular industry) the evidence does not really address the issue. And in no sense is it sufficient to meet Boeing standards for an instructed verdict.
While many facts in the record, considered in conjunction with Barnes, would weigh in favor of affirming, we are mindful that the District Court must have felt as much uncertainty as to the applicable standard for ascertaining statutory employment status as we felt when we certified the issue to the Louisiana Supreme Court. It is very likely the District Court applied the "essential to business" test, and certainly the record reveals no consideration of the usual and customary practices of Gulf and other oil companies, the test which we spell out today.
The cause must therefore be remanded for a determination of this issue on the facts. The remand does not necessarily envisage a full dress trial. Based upon facts, not what a party says the facts are or what such facts say, the case may or may not survive a motion for summary judgment, a motion for directed verdict or a motion for judgment notwithstanding the verdict after a verdict is rendered.
REVERSED and REMANDED.
FootNotes
This was a case in which the principal, engaged in the business of purchasing and selling tree stumps, hired a subcontractor to cut and haul tree stumps, undeniably a part of the principal's business. The injury to the subcontractor's employee occurred while he was repairing his immediate employer's truck. Thus, the issue on remand was not whether the principal normally repaired his trucks, but whether the subcontractor usually did his own repairs.
Comment
User Comments