Court Opinion

ID: 617108
Source: CourtListenerOpinion
Date Created: 2011-11-14 18:06:44+00
Date Added: 2024-06-11T17:50:39.927630
License: Public Domain

FILED
                                                            United States Court of Appeals
                                                                    Tenth Circuit

                                                                November 14, 2011
                    UNITED STATES COURT OF APPEALS
                                                 Elisabeth A. Shumaker
                                                                    Clerk of Court
                                 TENTH CIRCUIT

 JOHN ENSEY,

               Plaintiff - Appellant,                    No. 10-2128
          v.                                           (D. New Mexico)
 OZZIE’S PIPELINE PADDER, INC.,              (D.C. No. 1:08-CV-00801-JAP-CG)

               Defendant - Appellee.

                            ORDER AND JUDGMENT *

Before HARTZ, EBEL, and HOLMES, Circuit Judges.

      Plaintiff John Ensey was employed by both Defendant Ozzie’s Pipeline

Padder, Inc. (Ozzie’s) and Rockford Corporation (Rockford) when he was

severely injured. He sued Ozzie’s but was denied relief on the ground that

Ozzie’s was protected by the exclusive-remedy provision of the New Mexico

Workers’ Compensation Act. Mr. Ensey appeals, contending that Ozzie’s could

not invoke the exclusivity provision because it failed to show that it contributed

      *
        This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
to paying for the workers’ compensation policy obtained by co-employer

Rockford.

      We have jurisdiction under 28 U.S.C. § 1291 and affirm. Under New

Mexico law Ozzie’s was protected by the exclusivity provision because its

contract with Rockford required Rockford to obtain workers’ compensation

insurance for Mr. Ensey and Mr. Ensey failed to produce evidence to overcome

the inference that Ozzie’s therefore contributed to paying the insurance premium.

See Vigil v. Digital Equip. Corp., 925 P.2d 883, 886 (N.M. Ct. App. 1996).

I.    BACKGROUND

      A.     Facts

      Ozzie’s manufactures pipeline padding machines. At the time relevant to

this case, it did not sell the machines but leased them and trained its employees to

operate them. It trained Mr. Ensey in Wyoming starting in August 2005. In July

2005 Rockford entered into a contract with Ozzie’s to lease one or two padding

machines. The contract said that Ozzie’s would provide names of qualified

operators, who would be paid their wages and benefits by Rockford. Rockford

would also be “responsible for applicable workers[’] compensation for the

Operator and [for providing] a certificate of insurance evidencing workers[’]

compensation coverage for a minimum of $50,000 . . . for each employee.” Aplt.

App. pt. 2 at 172.

                                        -2-
      Ozzie’s sent Mr. Ensey to work on a Rockford project in southern New

Mexico in September 2005. On October 19, 2005, he was badly injured when

pulled into a padding machine

      B.     Court Proceedings

      Mr. Ensey sued Ozzie’s in the United States District Court for the District

of New Mexico. Ozzie’s raised as a defense the exclusive-remedy provision of

the Workers’ Compensation Act, which states that “[a]ny employer who has

complied with the provisions of the Workers’ Compensation Act . . . relating to

insurance . . . shall not be subject to any other liability whatsoever for the death

of or personal injury to any employee, except as provided in the Workers’

Compensation Act.” N.M. Stat. Ann. § 52-1-8 (1978). Ozzie’s asserted that it

was protected by the exclusivity provision because (1) Mr. Ensey was an

employee of Ozzie’s when the accident occurred and (2) Ozzie’s had procured

workers’ compensation insurance for Mr. Ensey by contractually requiring

Rockford to obtain such insurance for Mr. Ensey.

      The district court accepted Ozzie’s legal argument that its contract with

Rockford protected Ozzie’s under the exclusivity provision if Mr. Ensey was an

employee of Ozzie’s and Rockford. But it ruled that a jury would need to resolve

the disputed fact of whether Mr. Ensey was their employee. After a trial on the

issue, the jury rendered a verdict that Mr. Ensey was an employee of both Ozzie’s

and Rockford, thereby resulting in a judgment for Ozzie’s.

                                         -3-
II.   DISCUSSION

      On appeal Mr. Ensey does not challenge the jury’s verdict that he was an

employee of both Ozzie’s and Rockford at the time of his accident. His sole issue

is that the district court erred in ruling that Ozzie’s was protected by the

exclusivity provision of the Workers’ Compensation Act if he was a dual

employee of the two companies. Because that ruling did not require the court to

resolve any disputed questions of fact, the issue before us is solely a matter of

law, which we review de novo. See US Fax Law Ctr., Inc. v. iHire, Inc., 476 F.3d
1112, 1118 (10th Cir. 2007).

      When this court must resolve an issue of state law, our task is to predict

how the highest court of that state would rule on the issue. See Grynberg v. Total

S.A., 538 F.3d 1336, 1354 (10th Cir. 2008). We can rely, however, on a decision

of a state’s intermediate appellate court if there is no reason to doubt that it

reflects state law. See id. In our view, the result in this case is compelled by the

New Mexico Court of Appeals’ decision in Vigil. In that case the worker was

employed by a personnel agency, Manpower Temporary Services, that contracted

with Digital Equipment Corporation to supply temporary workers. See Vigil, 925
P.2d at 884. Under the contract, Digital paid Manpower a fee for each worker,

while Manpower paid the worker’s salary and was “required . . . to carry workers’

compensation insurance for its employees” and “show proof of coverage to

                                          -4-
Digital.” Id. After the worker was injured on the job, he sued Digital and the

trial court granted Digital summary judgment. See id.

      The court of appeals affirmed. See id. at 887. It held that even though the

worker was an employee of Manpower, he was also a special employee of Digital,

because he had a contract with Digital, he was performing Digital’s work, and

Digital had the right to control his work. See id. at 886–87. On the issue relevant

to this appeal, the court held that Digital complied with the Workers’

Compensation Act’s insurance requirement by contractually ensuring that

Manpower would purchase workers’ compensation insurance for the employee.

See id. at 886. Digital was therefore entitled to “invoke the protection of the

exclusive remedy provision of the Act.” Id. at 885.

      The worker in Vigil argued that Digital could not enjoy the protections of

the Workers’ Compensation Act because it had not paid for his workers’

compensation insurance. See id. Although New Mexico courts had already held

that a special employer could comply with the Act by ensuring, in a contract with

the general employer, that the employee received workers’ compensation

insurance, the worker attempted to distinguish these cases on the ground that the

contract between Manpower and Digital did not explicitly provide that “Digital’s

payments to Manpower included payments for the purchase of workers’

compensation insurance.” Id. at 885. The appeals court rejected the argument,

holding that it sufficed that Digital had been “aware of its potential exposure to

                                         -5-
claims from” the employees of the general employer and had “negotiated the

contract to provide benefits to temporary employees in the event of an injury.”

Id. at 886. It was not necessary “that the parties’ agreement . . . spell out their

obligations regarding actual procurement of the insurance,” id, or that there be

“specific evidence concerning how the special employer pays for that coverage.”

Id. at 884. The court held that the contractual provision alone would suffice,

saying that Digital had “presented evidence in the form of its contract implying

that it paid the costs of workers’ compensation insurance indirectly as part of the

fee it paid to Manpower.” Id. at 886. It recognized that this evidence could be

rebutted, but it affirmed because the worker “presented no evidence contradicting

this prima facie evidence of indirect payment.” Id.

      The essentials of this case are indistinguishable from Vigil. Mr. Ensey had

two employers, one of which sent him to the other on a temporary basis. The two

employers entered into a contract that required one to carry workers’

compensation insurance for the worker (and provide proof of that insurance). See

id. at 884. These contractual provisions are prima facie evidence that Ozzie’s

knew of its potential exposure to tort claims from its employees and had

indirectly paid for their workers’ compensation coverage. See id. at 886.

                                          -6-
Mr. Ensey failed to present evidence that Ozzie’s had not paid indirectly for that

insurance coverage. See id. at 886. 1

      We reject Mr. Ensey’s arguments that Vigil does not govern his case. First,

his reliance on Harger v. Structural Services, Inc., 916 P.2d 1324, 1333 (N.M.

1996) is misplaced. He argues that Harger shows that a general contractor cannot

benefit from the exclusivity provisions of the Workers’ Compensation Act by

contractually ensuring that a subcontractor buys insurance for its employee. But,

as Vigil pointed out, 925 P.2d at 887, the Harger ruling applies only to employees

in a statutory employment relationship, not borrowed or special employees, as

Mr. Ensey was. See Hamberg v. Sandia Corp., 179 P.3d 1209, 1211 (N.M. 2008)

(“ A statutory employment relationship exists when any employer procures any

work to be done wholly or in part for him by a contractor other than an

independent contractor and the work so procured to be done is a part or process in

the trade or business or undertaking of such employer.” (internal quotation marks

omitted)).

      Second, we reject Mr. Ensey’s claim that we are bound by Matkins v. Zero

Refrigerated Lines, Inc., 602 P.2d 195 (N.M. Ct. App. 1979). That case is

      1
       At oral argument, counsel for Mr. Ensey contended that there is such
contradicting evidence. But this contention came too late. We will not consider
an argument raised for the first time at oral argument. See Mondragón v.
Thompson, 519 F.3d 1078, 1081 n.2 (10th Cir. 2008).

                                         -7-
inapplicable here because the defendant was not an employer of the plaintiff.

Vigil limited Matkins to its facts, see 925 P.2d at 886, and we must do the same.

      Third, we are not persuaded by Mr. Ensey’s argument that Vigil applies

only to leased-employee situations. True, the leading dual-employer cases of

Vigil, 925 P.2d at 884, Rivera v. Sagebrush Sales, Inc., 884 P.2d 832, 835 (N.M.

Ct. App. 1994), and Hamberg, 162 P.3d at 911, involved staffing agencies. But

Ozzie’s acted in essence as a staffing agency by loaning out Mr. Ensey’s services

on a temporary basis until the Rockford project was concluded. And more

importantly, the rationale of these cases is not limited to that context. The

underlying principle is that an employer complies with its responsibilities under

the Workers’ Compensation Act when it contractually ensures that the co-

employer will purchase insurance. As Rivera noted, “[I]t is the employee’s

receipt of the quid pro quo—workers’ compensation coverage with its attendant

quick recovery and simplified procedures—which justifies the loss of the right to

bring a tort case.” 884 P.2d at 836. So long as the employee “received the quid

pro quo in part through [the employer’s] efforts to insure that [its co-employer’s]

employees would be compensated through the worker’s compensation system,” it

complied with the Act and the lawsuit is barred. Id. Nothing about this principle

is dependent on an employee-leasing arrangement. See Harger, 916 P.2d at 1333

(“an employer may satisfy its obligation to comply with the insurance provisions

by providing insurance through a third party.”).

                                         -8-
       Finally, Mr. Ensey suggests that Vigil should apply in only one

direction—when the special employer (here, Rockford) requires the general

employer (Ozzie’s) to obtain workers’ compensation insurance. But the essential

element is whether the employer claiming the benefits of exclusivity has

contributed to the workers’ compensation premiums. That contribution may be

more obvious when the employer claiming exclusivity is making payments to the

other employer, as when the special employer leases an employee from the

general employer. But when the money flows in the opposite direction (in our

case, from Rockford to Ozzie’s, which is seeking the benefit of exclusivity), basic

economics still tells us that Ozzie’s likely paid for the requirement that Rockford

procure workers’ compensation insurance by reducing what Rockford would

otherwise have to pay Ozzie’s to lease the padding machine. It is unusual for a

contractual provision to come free to the party benefitting from the provision,

although, as in Vigil, the worker is entitled to try to prove that in a specific case.

III.   CONCLUSION

       We AFFIRM the judgment of the district court.

                                         ENTERED FOR THE COURT

                                         Harris L Hartz
                                         Circuit Judge

                                           -9-