Court Opinion

ID: 3161009
Source: CourtListenerOpinion
Date Created: 2015-12-09 01:00:48.244273+00
Date Added: 2024-06-11T12:03:19.679906
License: Public Domain

Case: 14-31215   Document: 00513299006    Page: 1      Date Filed: 12/08/2015

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                   United States Court of Appeals
                                                                            Fifth Circuit
                                No. 14-31215                              FILED
                                                                   December 8, 2015
                                                                     Lyle W. Cayce
DUSTIN BLAKE WRIGHT,                                                      Clerk

                                    Plaintiff - Appellant

v.

EXCEL PARALUBES; CONOCOPHILLIPS COMPANY,

                                    Defendants - Appellees

                Appeal from the United States District Court
                   for the Western District of Louisiana

Before JONES, SMITH, and COSTA, Circuit Judges.
EDITH H. JONES, Circuit Judge:
      This case requires us to determine whether a non-operating partner in a
joint-venture qualifies as a “statutory employer” as that term is used in the
Louisiana Workers’ Compensation Act (“LWCA”), LA. STAT. ANN. 23:1021
(2014), et seq., even though the operating partner signed a contract with a
contractor that did not specifically designate the non-operating partner as a
“statutory employer.”    Holding that the plaintiff has not overcome the
presumption that the non-operating partner is a statutory employer, we affirm.
    Case: 14-31215         Document: 00513299006       Page: 2    Date Filed: 12/08/2015

                                       No. 14-31215
                                    BACKGROUND
       Excel Paralubes (“Excel”), a Texas general partnership, and Conoco, Inc.
(“CP”), 1 a Delaware corporation, agreed to construct and jointly own a
lubricating base oil plant in Westlake, Louisiana.               The parties (together,
“Defendants”) designated CP the construction manager and operator of the
plant on behalf of Excel. In this capacity, CP had the duty and authority to
select and contract for engineers and contractors to construct the facility and
to arrange for routine engineering, technical, and support services during its
operation. CP accordingly entered into a contract with Wyatt Field Service Co.
(“Wyatt”) to perform work on a vacuum tower at the facility. CP and Wyatt
signed a Master Services Agreement (“MSA”) to effectuate this work.
       Dustin Wright was a boilermaker employed by Wyatt. He was injured
while performing arc gouging activities in the vacuum tower pursuant to the
MSA.       After initially collecting workers’ compensation benefits under the
LWCA from Wyatt, his immediate employer, he brought a negligence suit in
state court against Excel and CP for tort damages. Defendants removed the
case to the United States District Court for the Western District of Louisiana.
       Defendants moved for summary judgment, arguing that Wright was the
statutory employee of both CP and Excel at the time of the accident. He could
therefore not sue them for tort damages because the LWCA makes workers’
compensation the exclusive remedy against statutory employers. Thereafter,
Wright amended his complaint to include a claim for gross negligence. In
response to the Defendants’ motion for summary judgment, Wright asserted
that because Excel was not named in the MSA between CP and Wyatt, it could
not be considered Wright’s statutory employer. He also argued that the newly
alleged gross negligence opened the door for tort liability.

       1   Conoco, Inc. was later merged into defendant ConocoPhillips Company.
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      The district court rejected both of Wright’s arguments and dismissed the
case with prejudice. It held that Wright was a statutory employee of both Excel
and CP. It also held that even if the Defendants were grossly negligent,
Wright’s claims were still limited to workers’ compensation. Wright timely
appeals that dismissal and raises the same issues in this court.
                                DISCUSSION
      This court reviews a district court’s grant of summary judgment de novo,
applying the same standards as the district court. Bluebonnet Hotel Ventures,
L.L.C. v. Wells Fargo Bank, N.A., 754 F.3d 272, 275-76 (5th Cir. 2014).
Summary judgment is proper when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED.
R. CIV. P. 56(a).
      The principal issue on appeal is whether Excel qualifies as a “statutory
employer” even though it did not sign the MSA and was not expressly named
as CP’s affiliate in the LWCA-invoking provision. The LWCA makes workers’
compensation the exclusive remedy for injured employees against their direct
employers and against “principals” or “partner[s]” of a principal. LA. STAT.
ANN. §§ 23:1032.A(1)(a)-(b) (2014). A “principal” is defined as “any person who
undertakes to execute any work which is a part of his trade, business, or
occupation in which he was engaged at the time of the injury.” LA. STAT. ANN.
§ 23:1032.A(2) (2014). When a principal hires a contractor “for the execution
by or under the contractor of the whole or any part of the work undertaken by
the principal,” the principal is a “statutory employer” and entitled to the same
exclusive remedy protections against the contractor’s employees as against its
own. LA. STAT. ANN. § 23:1061.A(1) (2014).
      In two situations, a principal’s relationship with a contractor leads to a
statutory employer relationship and limited liability. See Daigle v. McGee
Backhoe and Dozer Serv., 08-1183, p. 5 (La. App. 5 Cir. 4/28/2009); 16 So. 3d 4,
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7. First, the principal may contract to perform work and then subcontract all
or a portion of that work to another (the “two contract theory”). LA. STAT. ANN.
§ 23:1061.A(2) (2014). Second, the principal may enter into a written contract
“recognizing” it as the statutory employer of the other party’s employees. LA.
STAT. ANN. § 23:1061.A(3) (2014). In the latter circumstance, relevant in this
case, a contract recognizing a statutory employer relationship creates a
rebuttable presumption of such a relationship that may be overcome only when
the employee shows that the work “is not an integral part of or essential to the
ability of the principal to generate that individual principal's goods, products,
or services.” Id. Louisiana courts have held that this rebuttable presumption
amendment effects a more liberal standard for statutory employer status. St.
Angelo v. United Scaffolding, Inc./X-Serv., Inc., 2009-1420, p. 7 (La. App. 4
Cir. 5/19/2010); 40 So. 3d 365, 370; Everett v. Rubicon, Inc., 2004-1988, p. 10
(La. App. 1 Cir. 6/14/06); 938 So. 2d 1032, 1040. The basic issue here is whether
the MSA “recognizes” a statutory employer relationship between CP, Excel,
and Wyatt’s employees.
      Several provisions of the MSA between CP and Wyatt are relevant to
this dispute.   First, “this Agreement,” as used in the contract, refers to the
entirety of the MSA. In the “General Provisions,” Paragraph 30, the MSA
provides that captions and headings used in the Agreement “are intended for
convenience only and shall not be used for purposes of construction or
interpretation.” Further in that paragraph, all exhibits “are incorporated and
made a part of this Agreement.”
      Second, Paragraph 12 is titled (but not for purposes of interpretation)
“Risk Structure,” and contains Subsection (f), “Extension of Indemnities” (also
non-interpretively titled), which states (emphasis added):
      To the maximum extent permitted by applicable law, the
      exclusions of liability and indemnities . . . above and elsewhere in

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     this Agreement shall extend to the employees, officers and directors
     of each party and to their respective Affiliates . . . . For purposes of
     this Agreement, unless the context requires otherwise:

     ....

            “Affiliate” shall mean a company . . . . which is specifically
            identified to one party as an entity for which the other party
            has operating or management responsibilities.

     Third, Exhibit G to the MSA designates CP as the statutory employer of
Wyatt’s employees. The relevant language states (emphasis added):
     The following provisions and terms shall apply in all cases where
     [Wyatt’s] employees (defined to include [Wyatt’s] direct, borrowed,
     special, or statutory employees) are covered by the Louisiana
     Workers’ Compensation Law, Louisiana Revised Statutes (“La.
     R.S.”) 23:1021 et seq, as to work or services performed under this
     Agreement.

     1.     In all cases where [Wyatt’s] employees (as defined above) are
            covered by the Louisiana Workers’ Compensation Law, La.
            R.S. 23:1021 et seq., [CP] and [Wyatt] agree that the work
            and operations performed by [Wyatt] and its employees
            pursuant to the Agreement are an integral part of and are
            essential to the ability of [CP] to generate [CP’s] goods,
            products and services, and that [Wyatt’s] work and services
            shall be considered part of [CP’s] trade, business, and
            occupation, for purposes of La. R.S. 23:1061(A)(1).
            Furthermore, [CP] and [Wyatt] agree that [CP] is the
            principal or statutory employer of [Wyatt’s] employees for
            purposes of La. R.S. 23:1061(A) only. Irrespective of [CP’s]
            status either as the statutory employer or as the special
            employer (as defined in La. R.S. 23:1031(C)) of [Wyatt’s]
            employees, and regardless of any other relationship or
            alleged relationship between [CP] and [Wyatt’s] employees,
            [Wyatt] shall be and remain at all times primarily
            responsible for the payment of Louisiana workers’
            compensation benefits to its employees, and shall not be
            entitled to seek contribution for any such payments from
            [CP]. This Exhibit is limited to and shall apply only in and

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            to the extent of instances involving coverage of the Louisiana
            Workers’ Compensation Law.

These provisions explain, and Wright does not here dispute, that at least CP is
the statutory employer of Wyatt’s employees, including Wright. The same
provisions also bear on the question whether statutory employer status
extends to Excel as CP’s non-operating partner in the joint venture.
      Because the Louisiana Supreme Court has not decided the issue
presented, we must make an “Erie guess” as to how it would apply state law.
See Beavers v. Metro. Life Ins. Co., 566 F.3d 436, 439 (5th Cir. 2009). In doing
so, decisions of intermediate state appellate courts are our guide unless other
persuasive data indicates the Louisiana Supreme Court would decide
otherwise. See Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 646
(2002).
      Particularly instructive here is the appellate court decision in St. Angelo.
40 So. 3d 365. In that case, ExxonMobil signed an agreement with Chalmette
to operate a refinery Chalmette owned. Id. at 372. ExxonMobil exercised this
operational authority through a division of one of its subsidiaries by entering
into a services contract with S.J. Owens.          Id.     The contract between
ExxonMobil’s subsidiary and S.J. Owens designated the subsidiary as the
statutory employer of S.J. Owens’s employees. Id. at 371. Two of S.J. Owens’s
employees brought tort actions against ExxonMobil and Chalmette after being
injured on the job.    Id. at 367.   Holding that “statutory employer status
is . . . liberally favored,” the court concluded that both ExxonMobil as operator
and Chalmette as owner were statutory employers even though ExxonMobil’s
subsidiary executed the agreement. Id. at 374. As they were “clearly the
principal parties to the agreement,” they could enjoy statutory employer status
under it. Id. The court noted that its prior precedent “seems to hold a broad
view of what defines a principal.” Id. at 373.
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                                    No. 14-31215
      Another state appellate court relied on St. Angelo to reject a “rigid
application of La. R.S. 23:1061(A)(3)” that would “limit the creation of a
statutory employer status to the parties executing the agreement.” Johnson v.
Motiva Enters., LLC, 13-305, p. 10 (La. App. 5 Cir. 10/30/2013); 128 So. 3d 483,
490. In Johnson, Motiva was an affiliate of Shell, and Shell contracted to be
the statutory employer of AbClean’s employees. 128 So. 3d at 486. The plaintiff
was injured at Motiva’s plant and sued in tort. Id. The court held that Motiva
was the plaintiff’s statutory employer even though it did not sign the
agreement because there is a “broad view of what constitutes a statutory
employer” and “the common intent of the parties in creating statutory
employer status” matters. Id. at 490. Because the Shell/AbClean agreement
intended to make Shell affiliates like Motiva statutory employers, they were
classified as such.
      In St. Angelo, the refinery owner was entitled to statutory employer
status when the refinery’s operator was authorized to and did enter into a
contract on the owner’s behalf that designated a statutory employer. The same
“broad presumption of statutory employer status,” 40 So. 3d at 374, should
apply to Excel in this case. Not only did CP, as operator, enter into a contract
on Excel’s behalf as a co-owner, but CP is also a co-owner of the joint venture.
See LA. CIV. CODE ANN. art. 2814 (2014) (“A partner is a mandatary of the
partnership for all matters in the ordinary course of its business other than
the alienation, lease, or encumbrance of its immovables.”). 2 CP’s execution of
the contract inured to the benefit of, and could have been enforced by the co-
owner Excel.

      2  Joint ventures and partnerships are treated analogously for the purposes of the
LWCA’s exclusive remedy provisions. See Buckbee v. AWECO, Inc., 418 So. 2d 698, 702 (La.
Ct. App. 1982).
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       Wright argues, however, that because Exhibit G to the MSA explicitly
references only CP as the statutory employer, Excel lacks the protection of this
provision of the “written contract.” It is true that in the cases just cited, the
non-signing party later deemed a statutory employer was either mentioned in
the written services contract or listed as a subsidiary or affiliate in it. It is also
true that where no written agreement existed denominating any party as the
statutory employer, that status has been rejected. See Ernest v. Petroleum
Serv. Corp., 2002-2482, p. 5-6 (La. App. 1 Cir. 11/19/03); 868 So. 2d 96, 99. 3
        Although the MSA between Wyatt and CP makes no direct mention of
Excel, nonetheless, a careful exegesis of the above-quoted MSA provisions
supports including Excel in the scope of Exhibit G. First, the agreement’s titles
are irrelevant to the contract’s interpretation, and Exhibit G is fully
incorporated within the body of the Agreement. Second, the exclusions of
liability and indemnities described in paragraph 12 explicitly adds those
provisions found “elsewhere in this Agreement.”                    Such exclusions and
indemnities, further, apply to Affiliates of the parties, a term that includes
Excel as an “entity for which the other party has operating or management
responsibilities” pursuant to the joint venture. That Exhibit G amounts to an
exclusion of liability or indemnity protection for the “Company” is evident
because, were the “Company” not a statutory employer of Wyatt’s employees,
it could be sued in tort, and as a result, issues of both liability and indemnity
would arise between the “Company” and Wyatt. See Paragraph 12(b) (Wyatt

       3 The partial dissent, citing Ernest, asserts “[t]he only intermediate state court that
has considered such a situation [presented here] has rejected statutory employer status.”
Diss. Op. at 11. Ernest has little bearing on the situation presented by this case. In Ernest,
the contract between the principal and the contractor made no designation of statutory
employer status at all, so it was clear the defendant “failed to demonstrate the existence of a
written contract providing for the statutory relationship.” 868 So. 2d at 99. Here, there is an
express designation of statutory employer status, but the issue is which parties it covers.
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indemnifies “Company” for, inter alia, death or injury to Wyatt’s employees,
and “Company” has no responsibility to Wyatt for such injury or death).
Finally, because the signatory “Company,” CP, achieves the benefit of Exhibit
G as a statutory employer, its Affiliate Excel also benefits through Paragraph
12(f).
         Whether viewed in terms of the inherent legal relationships among CP,
Excel, and the joint venture and Wyatt, or proper inferences drawn from the
MSA, we do not think the parties’ failure to name or require the signature of
Excel in the MSA can overcome the broad presumption of statutory employer
status approved by Louisiana courts in St. Angelo and Johnson. The very
purpose of CP and Excel in creating the joint venture was to give CP the exact
operational authority it exercised on behalf of the joint venture when it signed
the MSA with Wyatt. The parties’ written contract, in essence, “recognized”
the parties to the joint venture as the statutory employers through their
authorized agent. LA. REV. STAT. ANN. § 32:1061(A)(3). Though unpublished
and non-precedential, our decision in Joseph v. Shell Chem., LP, 390 Fed.
Appx. 401 (5th Cir. 2010) is instructive on this point. There, Shell and Motiva
contracted with Wyatt, which subcontracted part of the work to Atlantic, which
directly employed the injured plaintiffs. Id. at 402. The contract between
Shell, Motiva, and Wyatt designated Shell and Motiva statutory employers for
Wyatt’s employees. Id. at 404. We rejected the plaintiffs’ argument that Shell
and Wyatt were not also statutory employers of Atlantic’s employees because
there was no signed agreement between Shell, Motiva, and Atlantic. Id.
         The liberal attribution of statutory employer status by Louisiana courts
in cases like this reflects economic realities and efficiency. Most joint venturers
would expect the non-operating partner in a joint venture to enjoy the same
statutory employer status the operating partner agrees to.            Indeed, the
indemnity and liability exclusion provisions of the MSA in the case at hand
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were intended to extend to Excel.       Likewise, most contractors in Wyatt’s
position would have no problem designating a non-operating partner as a
statutory employer. Courts promote efficiency by reaching the decision that
aligns with the parties’ rational expectations. See ROBERT COOTER & THOMAS
ULEN, LAW & ECONOMICS 292-94 (6th ed. 2012); c.f. Johnson, 128 So. 3d at 490
(Defendants “contend that requiring a separate contract between large
corporations by each affiliate and each contractor would be cost prohibitive and
is not required by the LWCA.”).
      The MSA in this case recognizes a statutory employer relationship for
both CP and Excel. This creates a rebuttable presumption of a statutory
employer relationship that Wright has not overcome.
      Finally, Wright’s gross negligence claim is easily resolved.             As
mentioned, the LWCA makes workers’ compensation the exclusive remedy for
employees injured on the job. LA. STAT. ANN. § 23:1032.A(1)(a) (2014). The
only exception is for intentional acts. Id. “[A]nything less than intentional,
whether it be gross negligence or violation of a safety rule, remains in workers'
compensation.”    Perret v. Cytec Inds., Inc., 04-745, p.6 (La. App. 5 Cir.
11/30/2004); 889 So. 2d 1121, 1125. Thus, “gross negligence does not meet the
intentional act requirement,” Reeves v. Structural Pres. Sys., 98-1795, p. 8 (La.
3/12/99); 731 So. 2d 208, 212, and Wright’s gross negligence allegation is
subsumed within workers’ compensation. Recognizing this, Wright attempts
in his reply brief to reframe (or replead) his gross negligence claim into an
intentional act allegation. But this court will not consider issues raised for the
first time in a reply brief. See Otto Candies, L.L.C. v. Nippon Kaiji Kyokai
Corp., 346 F.3d 530, 536 (5th Cir. 2003). The district court was correct to hold
that even if the Defendants were grossly negligent, Wright’s sole remedy is
workers’ compensation, and he has waived any intentional act allegation.
      For these reasons, the judgment of the district court is AFFIRMED.
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                                     No. 14-31215
GREGG COSTA, Circuit Judge, dissenting in part:
      The very nature of an Erie guess means that one cannot disagree with
certitude.   The majority opinion provides reasoned arguments for why the
Supreme Court of Louisiana might rule in favor of Excel’s position if it ever
confronts this situation. But one thing is certain. As the majority opinion
recognizes, it is extending statutory employer status beyond what any
Louisiana state court has ever recognized.        No case prior to this one has
assigned such status to a party that is neither “mentioned in the written
services contract [n]or listed as a subsidiary or affiliate in it.” Maj. Op. at 8.
The only intermediate state court that has considered such a situation has
rejected statutory employer status. See Ernest v. Petroleum Serv. Corp., 868
So. 2d 96, 99 (La. App. 1 Cir. 11/19/03). The broadest reading a Louisiana court
has given the post-1997 statute is St. Angelo, and it was a divided opinion even
though unlike here the services agreement was expressly entered into on
behalf of the defendant. St. Angelo v. United Scaffolding, Inc./X-Serv., Inc.,
40 So. 3d 365, 374 (La. App. 4 Cir. 5/19/2010) (Bonin, J., dissenting). I therefore
believe that the better approach is to not extend a state law immunity beyond
the already-controversial outer bounds of state case law. Cf. Doddy v. Oxy
USA, Inc., 101 F.3d 448, 463 (5th Cir. 1996) (citing cases recognizing that
federal court sitting in diversity should not “fashion new theories of recoveries”
for plaintiffs or “adopt innovative” defenses).
      That is especially true when that extension of state law requires us to
rely on “inferences” drawn from various provisions of a contract (Maj. Op. at
9), rather than follow the contract’s express terms.         Although the 1997
amendments to the Lousiana Worker’s Compensation Act “establish a more
liberal standard for establishing statutory employer status,” St. Angelo, 40 So.
3d at 370, that comparative observation is not the same thing as saying that
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the amended standard should be construed liberally or that courts have license
to broadly construe contracts beyond what the plain language supports.                      It
also does not change that the defendant bears the burden of establishing its
entitlement to immunity as a statutory employer and that such immunity
“must be strictly construed against the party claiming the immunity,” see
Weber v. State, 635 So. 2d 188, 191, 193 (La. 1994), 1 rules which can serve as
tiebreakers in close cases.
       Ordinary principles of contract interpretation are thus used in
determining whether a party has immunity under the 1997 statute, which
simply asks “whether the contract—whatever type of contract it might be—
‘recognizes’ the principal as a statutory employer.” H. Alston Johnson III, 13
La. Civ. L. Treatise, Workers’ Comp. L. & Prac. § 123 (5th ed. 2014); La. R.S.
23:1061(A)(3). The majority opinion rightly notes the importance of following
the contractual expectations of the parties. Maj. Op. at 9. Of course, the typical
and easy way to make those expectations clear is to draft unambiguous
language, such as a provision stating that “BUYER or any of its subsidiaries
or affiliates involved in the Services performed hereunder in Louisiana shall
be considered a Statutory Employer.” Johnson v. Motiva Enterprises LLC, 128
So. 3d 483, 489 (La. App. 5 Cir. 10/30/13) (emphasis in original); see also Joseph

       1 There is no “Erie guess” on these standards given that Weber is a state supreme court
decision and no Louisiana court has held that the 1997 amendments alter these general
principles. To the contrary, intermediate courts have continued to rely on Weber for these
principles when addressing statutory employer questions. See, e.g., Ernest, 868 So. 2d at 98;
Labranche v. Fatty’s, LLC, 48 So. 3d 1270, 1272 (La. App. 1 Cir. 10/29/10). Also counseling
against a liberal construction of contracts when applying section 1061(a)(3) is that the clause
at issue in this case is stated as an exception to the general principle that “a statutory
employer relationship shall not exist between the principal and the contractor’s employees.”
La. R.S. 23:1061(A)(3) (stating this as the law “unless there is a written contract between the
principal and a contractor which is the employee’s immediate employer or his statutory
employer, which recognizes a statutory employer relationship”).
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v. Shell Chem. Co., 2009 WL 1789422, at *4 (E.D. La. June 23, 2009), aff’d, 390
F. App’x 401 (5th Cir. 2010) (same language). That language provides clear
guidance and prevents a party from invoking ambiguities in the overall
structure of a services agreement to seek statutory employer status when it
benefits from doing so, but take the opposition position if its interests were
aligned differently.
      I would thus reverse the district court on the statutory employer issue,
though I agree with the majority opinion that Wright has not identified any
intentional acts sufficient to establish that exception.

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