## F I L E D United States Court of Appeals Tenth Circuit 

### MAY 14 1999 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

KENNETH D. HARDMAN and MICHELLE HARDMAN, Plaintiffs-Appellants, v. SPECIALTY SERVICES, a Washington Corporation; IKE LOBATO, dba Specialty Services, Defendants, SHEA-KIEWIT-KENNY, a joint venture of J.F. Shea Co., Inc., a Nevada Corporation; KIEWIT CONSTRUCTION COMPANY, a Delaware Corporation, both in their capacities as individual entities, and as participants in the above joint venture; and KENNY CONSTRUCTION COMPANY, an Illinois Corporation; both in their capacities as individual entities, and as participants in the above joint venture, Defendants-Third-Party- Plaintiffs-Appellees, v. MOUNTAIN STATES STEEL, INC., a Utah corporation, Third-Party Defendant. No. 97-4116* The Honorable J. Thomas Marten, District Judge, Uni ted States District

Court for the District of Kansas, sitting by design ation. - 2 - Appeal from the United States District Court

for the District of Utah (D.C. No. 95-CV-180-C)
Vicki E. Rinne, (Lynn C. Harris with her on the bri ef), of Spence, Moriarity & Schuster, Provo, Utah, for Plaintiffs-Appellants. Karra J. Porter (Jay E. Jensen and Geoffrey C. Hasl am with her on the brief), of Christensen & Jensen, P.C., Salt Lake City, Utah, f or Defendants-Appellees.

Before EBEL andBRISCOE , Circuit Judges, and MARTEN , * District Judge.

EBEL , Circuit Judge.

Kenneth P. Hardman (“Hardman”) and his wife Michell e Hardman sued Shea-Kiewit-Kenny (“SKK”) in tort for injuries incu rred by Hardman while working at Mountain States Steel (“MSS”) on a proje ct for SKK. The district court granted summary judgment to SKK on the ground that SKK was a special employer under the loaned-employee doctrine, and he nce was immune from suit under the Utah Workers’ Compensation Act (“Act”). The Hardmans appeal. We

reverse.- 3 - BACKGROUND

In 1991, J.F. Shea Co., Inc., Kiewit Construction C ompany, and Kenny Construction Company of Illinois entered into a joi nt venture known as SheaKiewit-Kenny to build and assemble tunnel boring ma chines for SKK’s use in a tunneling project in Los Angeles. In 1992, SKK and MSS entered into a written agreement whereby MSS would provide shop space, workers, equipment, and other services to SKK for the building of the tunne l boring machines. In return, SKK would pay an hourly rate for each worker MSS pr ovided. The agreement specified that this rate covered all compensation, taxes, insurance, and benefits. The agreement also required MSS to provide SKK with certificates verifying that it had obtained workers’ compensation insurance forthose workers. Additionally, the agreement specified the roles of SKK and MSS in the project. SKK had the right to quality control supervision, and was respo nsible for general mechanical and electrical supervision. While all workers were to be screened and hired by MSS, the workers’ performance and acceptability wou ld be at the sole discretion of SKK. Among the SKK employees primarily responsible for t he tunnel boring project was Rick Cook, the graveyard-shift foreman. Among the MSS-hired- 4 -

employees working on the project were Rick Thatcher , a lead man, Wade Opfar, a welder and fitter, and Hardman, also a welder and f itter. On May 8, 1993, Cook told Thatcher that he wanted h im, Opfar, and Hardman to help him trim a hydraulic door on one of the tunnel borers so that it would close properly. Thatcher then instructed Opf ar and Hardman to build a scaffold and use it as a platform to trim the door. Hardman and Opfar completed their work with only Cook providing supervision andinstruction. In testing the door, Cook accidentally pressed a lever which contr olled another door, one near where Hardman was standing. That door swung inward , struck Hardman, and knocked him off the scaffold, causing him to fall a gainst stairs and equipment and land on the floor. As a result of the accident, Ha rdman suffered injuries which still linger. Hardman’s resulting medical expenses and other workers’ compensation benefits were paid under MSS’ workers’ compensation policy. On January 29, 1995, Hardman and his wife brought t his diversity action against SKK and the individual participants in the joint venture (collectively, “SKK”), alleging negligence, infliction of emotiona l distress, and loss of consortium. SKK answered and filed a third-party a ction against MSS for indemnification. On January 17, 1997, after the co mpletion of discovery, SKK moved for summary judgment, arguing that Hardman wa s a loaned employee and therefore that it was a special employer immune fro m tort liability under the Utah- 5 -

Workers’ Compensation Act. The Hardmans filed a cr oss-motion for partial summary judgment on the ground that SKK was actuall y a general contractor and thus a statutory employer liable in tort. The dist rict court entered summary judgment in favor of SKK, finding as a matter of law that SKK was Hardman’s special employer, and therefore entitled to immunity under the exclusive remedy provision of the Act. The Hardmans filed a timely notice of appeal under Fed. R. App. P. 4(a).

DISCUSSION “We review the grant or denial of summary judgment de novo, applying the same standards as the district court.” Habermehl v . Potter , 153 F.3d 1137, 1138 (10th Cir. 1998). Thus, “[s]ummary judgment is app ropriate if the evidence before the court, when viewed in the light most fav orable to the nonmoving party, demonstrates that no genuine issue of material factexists and that the moving party is entitled to judgment as a matter of law.” Id. at 1139; see also Fed. R. Civ. P. 56(c).

I. The Loaned-Employee Doctrine On appeal, the Hardmans assert that genuine issues of material fact exist concerning whether SKK was a special employer underthe loaned-employee1 The statute provides, in relevant part: (1) The right to recover compensation pursuant to t he provisions of this title for injuries sustained by an employee, whether resulting in death or not, shall be the exclusive r emedy against the employer . . . and the liabilities of the employer imposed by this act shall be in place of any and all other civil liabil ity whatsoever, at common law or otherwise, to the employee or to his spouse . . . on account of any accident or injury or death, in any way contracted, sustained, aggravated, or incurred by the employee in the course of or because of or arising out of his employment, and no action at law may be maintained against an employer . . . based upon any accident, (continued...) - 6 - doctrine. We agree and hold that SKK was not entit led to summary judgment on the ground that it was a special employer immune fr om suit under the loanedemployee doctrine. Under Utah law, the loaned-employee doctrine “provi des that if a labor service loans an employee to a special employer forthe performance of work, then the employee, with respect to that work, is th e employee of the special employer for whom the work or service is performed. ” Ghersi v. Salazar , 883 P.2d 1352, 1356 (Utah 1994). A special employer is the business to which the employee is assigned, while the labor service provi ding the employee is the general employer. See id. For purposes of workers’ compensation, the specia l employer is the loaned employee’s employer. See id. Under Utah Code Ann. § 35-1-60, workers’ compensation is an employee’s exc lusive remedy against his or her employer for injuries sustained on the job. Se e Ghersi , 883 P.2d at 1354. 11 (...continued) injury, or death of an employee. Utah Code Ann. § 35-1-60 (1993) (renumbered § 35A-3 -105, effective July 1, 1997). - 7 - Thus, under the loaned-employee doctrine, a special employer is immune from suit for employer injuries sustained on the job if it pays workers’ compensation insurance for the loaned employee. See id. at 1358. The loaned employee doctrine is triggered when thre e requirements are met: “(a) the employee has made a contract of hire, expr ess or implied, with the special employer; (b) the work being done is essentially th at of the special employer; and (c) the special employer has the right to control t he details of the work.” Id. at 1356-57 (quoting 1B Arthur Larson, Workers’ Compens ation Law§ 48.00, at 8- 434 (1992)). Before we can analyze whether the loaned-employee t est is satisfied in this case, we first must decide the threshold question o f whether it is appropriate to apply the loaned-employee doctrine at all to the employment context of this case. The Hardmans contend that Hardman cannot be a loane d employee on the ground that MSS cannot be a general employer because, unli ke companies described in Utah cases which apply the doctrine, MSS performs w ork for its own customers. In essence, the Hardmans argue that the loaned-empl oyee doctrine should be limited to cases involving temporary help agencies.- 8 -

We disagree. While several Utah cases do discuss a nd apply the loanedemployee doctrine in the context of temporary help agencies, see, e.g. , Kunz v. Beneficial Temporaries , 921 P.2d 456, 458 (Utah 1996); Walker v. U.S. Gen eral , 916 P.2d 903, 905 (Utah 1996); Ghersi , 883 P.2d at 1354, other loaned-employee cases involve general employers which were not temp orary help agencies but rather companies that performed work for their own customers, see, e.g. , Bambrough v. Bethers , 552 P.2d 1286, 1289 (Utah 1976); Pace v. Cummins Engine Co., Inc. , 905 P.2d 308, 310 (Utah Ct. App. 1995). Indeed, Larson’s Workers’ Compensation Law , the treatise from which the Utah Supreme Court borrowed its three-prong test for the loaned-employ ee doctrine, see Ghersi , 883 P.2d at 1356-57, does not limit the concept of loan ed employees to temporary help agencies, and in fact cites numerous cases whe re the general employer was not a temporary help agency. See 3 Larson, §§ 48.00-48.30, at 8-434 to 8-552. Thus, we conclude that the loaned-employee doctrine can apply to the employment context of this case even though MSS was not a temporary help agency. Consequently, we now turn to whether the t hree-prong test for the doctrine is in fact satisfied.- 9 - II. Application of the Loaned-Employee Doctrine After reviewing the record, we find the second and third prongs of the test for the loaned-employee doctrine—that the work done be essentially that of the special employer, and that the special employer hav e the right to control the details of the work—to be met without dispute. How ever, we find a genuine issue of material fact as to whether Hardman entered a co ntract of hire with SKK as required by the first prong of the test. With regard to the second prong, the undisputed fac ts that Hardman was not hired for any other purpose than to work on SKK’s p roject, that he worked only on the project, and that he was injured while worki ng on the project, lead us to conclude that the work Hardman did was essentially that of SKK. With regard to the third prong, the right to contro l, the Utah Supreme Court looks at whether the employer had the right to cont rol details such as “where, when, and how the work is to be performed,” Walker , 916 P.2d at 907, and also at whether the employer could discharge the employee f or unsatisfactory performance. See Ghersi , 883 P.2d at 1357. It is undisputed from Hardman’ s own testimony that SKK foreman Cook was in charge o f the night shift; from the testimony of MSS’ general manager, Chris Olsen, that SKK decided which crews would work on the SKK project, as well as when and how the work would be done; and again from Olsen’s testimony that SKK had 100 percent control over- 10 -

the workers on the project. It is also undisputed that Cook had supervised Hardman and Opfar’s work on the scaffolding and doo r, and that the SKK-MSS agreement gave SKK sole discretion over the perform ance and acceptability of all workers on the SKK project. From these undisputed facts, it is apparent that SKK had the right to control the details of Hardman’s w ork. However, with regard to the first prong of the testfor the loaned-employee doctrine, the contract of hire prong, we find a gen uine issue of material fact. Under the loaned-employee doctrine, a contract of h ire “need not be express but may be inferred from the circumstances.” See Walker , 916 P.2d at 906. “The critical determination is not whether [the employee ] subjectively consented” to work for the special employer, “but rather whether he objectively manifested consent to the employment relationship.” Id. “‘Consent may be implied from the employee’s acceptance of the special employer’s con trol and direction.’” Pace , 905 P.2d at 310 (quoting 1B Larson, § 48.15, at 8-4 64). Obviously, an employee cannot accept the special employer’s control and di rection unless he or she knew or reasonably should have known that such control a nd direction comes from the special employer. Cf. Bambrough v. Bethers , 552 P.2d 1286, 1292 (Utah 1976) (“Consent, whether express or implied, was not poss ible . . . because it involved a second employer who was not known to exist by the e mployee.”); 1B Larson, § 48.16, at 8-472 (“An employee, for compensation purposes, cannot have an2 Of course, an employee’s knowledge regarding the co ntrol and direction of

the special employer is different from his subjecti ve belief about his status as the special employer’s employee. An employee who knows or reasonably should know that he is accepting the control and direction of the special employer objectively manifests consent to the employment rel ationship with the special employer even if he does not believe that he is doi ng so. See Walker v. U.S. General, Inc. , 916 P.2d 903, 906 (1996); Pace , 905 P.2d at 310; cf. Bambrough , 552 P.2d at 1292. - 11 - employer thrust upon him against his will or withou t his knowledge.”). 2 Since Hardman never entered an express contract of hire w ith SKK, our inquiry turns to whether he objectively manifested consent to an emp loyment relationship with SKK by accepting SKK’s control and direction. We f ind the record in dispute on whether Hardman knew or reasonably should have know n that he was accepting SKK’s control and direction while working on the SK K project. On the one hand, certain facts indicate that Hardma n impliedly accepted the control and direction of SKK. For example, althoug h Hardman was hired pursuant to the MSS-SKK agreement as an MSS employe e, he actually may have been interviewed and hired by SKK personnel. Hardm an at least knew when he was hired that he would be working on the SKK proje ct, and he worked only on that project. Hardman regarded his graveyard-shiftforeman, SKK employee Cook, as the person in charge of the project, and H ardman took orders from Cook during the night of the accident. Additionally, th e area in which Hardman- 12 -

worked, the north shop of the MSS facility, was lea sed out to SKK for its project, and was under SKK’s control and direction. On the other hand, certain facts in the record leav e doubt as to whether Hardman himself knew or reasonably should have know n that he was under the control and direction of SKK. Hardman had worked at MSS for less than two weeks before the accident, and apparently did not l earn the nature or extent of SKK’s role in his hiring or the supervision of the SKK project. Hardman thought that he was interviewed and hired by MSS employees, and that Cook was an MSS employee. Nothing in the record clearly indicates that Hardman knew or should have known otherwise. For instance, MSS general ma nager Olsen testified that he did not know whether the arrangement between MSS and SKK was specifically explained to Hardman and the other workers on the p roject; rather, Olsen thought “their understanding was that they had two or three bosses and they did whatever they were told by whoever told them up the chain of command.” While Olsen thought that SKK employees had hard hats that had “ SKK” on them, Cook testified that he did not wear any hard hat or unif orm indicating that he worked for SKK. Additionally, there may have been a sign marking the SKK office at the MSS facility, but the record does not indicate whet her Hardman should have seen the sign or understood from it the nature and exten t of SKK’s control over the project. Furthermore, there is no indication in th e record that SKK had any signs- 13 -

in the shop where Hardman worked to suggest that th e shop was under SKK’s supervision. Based upon these facts, we cannot conclude as a matter of law that Hardman knew or reasonably should have known that h e was accepting control and direction from SKK. As a result, we hold that there exists a genuine issue of material fact regarding whether Hardman objectively manifested consent to an employment relationship with SKK such that a contra ct of hire existed between them. Cf. Pace , 905 P.2d at 309 (finding employee objectively man ifested consent to employment relationship with special emp loyer where employee knowingly went over to special employer’s facility to work on engine with special employer’s “lead man on [the] job”). The first pro ng of the loaned-employee doctrine therefore could not have been satisfied atsummary judgment. Accordingly, we hold that the district court erred in granting summary judgment to SKK on the basis of the loaned-employee doctrine

.

CONCLUSION The district court’s grant of summary judgment for SKK is REVERSED. The case is REMANDED for proceedings consistent with this opinion.