Bernard Williams, Plaintiff-appellant, v. Shell Oil Company and Insurance Company of North America,defendants-appellees, 677 F.2d 506 (5th Cir. 1982)

The plaintiff, Bernard Williams, an employee injured while working at the defendant Shell's plant, brought suit against Shell for negligence. The district court granted Shell's motion for summary judgment on the ground that Williams was the statutory employee of Shell, with an exclusive remedy under the Louisiana workmen's compensation law. The plaintiff appeals.

Bernard Williams, an employee of Gulf Coast Cooling Tower Service, Inc., was working as a carpenter at the Shell Oil Company's Norco Manufacturing Complex pursuant to a contract between Gulf Coast and Shell Oil for the repair and maintenance of the plant's "cooling towers." Williams was injured in the course of his work when a pressurized line burst, spraying him with acid and causing chemical burns. Shell claims that the maintenance being done by the plaintiff is of a type ordinarily done by Shell's own employees, but on such a scale that Shell did not have sufficient employees to do the work itself. Shell argues that Williams's sole remedy against it is in workmen's compensation.

The central issue is whether Williams may sue Shell Oil in ordinary tort for the injuries he sustained. Williams may not sue his direct employer, Gulf Coast, because of the exclusive remedy under the workmen's compensation law. The district court found that the plaintiff was the "statutory employee" of Shell Oil at the time of the accident and granted Shell's motion for summary judgment, dismissing the plaintiff's suit. We find that there exists a genuine issue of fact as to whether the specific carpentry work Williams was doing on the cooling tower is an integral part of Shell's own trade, business, or occupation. Therefore, summary judgment was not proper in this case and we reverse.

Overview

The Louisiana Workmen's Compensation Law, LSA-R.S. 23:1061¹  provides that when a principal has contracted to have performed work "which is part of his trade, business or occupation," he shall be liable for workmen's compensation benefits to the contractor's employees. A statutory employer subject to paying compensation benefits cannot be held liable in tort to an injured employee of the contractor since the compensation remedy is exclusive. LSA-R.S. 23:1032 (Supp.1981); Thompson v. South Central Bell Co., 411 So. 2d 26 (La.1982); Thibodaux v. Sun Oil Co., 218 La. 453, 49 So. 2d 852 (1950). If, however, the work being performed by the injured employee does not fall within the defendant's "trade, business or occupation," the exclusivity of compensation will not be a defense to a tort action brought against the principal.

While much of the litigation concerning section 1061 has occurred in suits where the injured worker is claiming a tort remedy against a defendant who raises the exclusivity of compensation as a defense, that was not the primary purpose of the statute. The fundamental purpose behind the liability of a principal to the employees of a contractor is to prevent principals from contracting out their work in order to evade liability for workmen's compensation benefits to the employees who actually perform the principal's business by interposing an impecunious independent contractor or subcontractor between the principal and his employee. Malone and Johnson, Louisiana Civil Law Treatise: Workers' Compensation, §§ 121-127 (2d ed. 1980). To this end, the coverage had been liberally construed. However, "it is well to keep in mind the purpose of Section 1061. Ordinarily the principal should not be subjected to the compensation claims of his contractor's employees; it should rest with the contractor. It is only when the principal seeks to avoid his compensation obligation by farming out part of his own normal operations to a contractor that an evil arises which requires exceptional treatment. Section 1061 serves as a secondary protection for the injured worker, rather than as the primary remedy." Malone and Johnson, supra, § 126 at 262. Thus, when work is customarily done by specialized contractors, the purpose behind the rule is not violated and the reason for holding the principal directly liable in compensation exclusively does not come into play. Malone and Johnson, supra, § 78 at 144, § 126 at 262.

Principal's "Trade, Business, or Occupation": The Test

Whether the work performed by the injured employee is part of the trade or business of the principal is an issue of fact to be determined by the circumstances of each case. See Blanchard v. Engine & Gas Compressor Services, Inc., 613 F.2d 65, 71 (5th Cir. 1980); see, e.g., Thompson v. South Central Bell Co., supra, 411 So. 2d 26; Duvalle v. Lake Kenilworth, Inc., 396 So. 2d 1268 (La.1981); Barnes v. Sun Oil Company, 362 So. 2d 761 (La.1978); Lushute v. Diesi, 354 So. 2d 179, 183 (La.1978); Boudreaux v. Boudreaux, 369 So. 2d 1117, 1119 (La.App. 1st Cir. 1979).

The standard to be applied is not a mechanical test. In considering the proper standard to apply under Louisiana law, this court in Blanchard, the controlling seminal precedent in this circuit, recently articulated the test for statutory employment:

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.

613 F.2d at 71.² 

Summary Judgment

The trial court granted Shell's motion for summary judgment. Shell argues that the motion was properly granted as the work being performed by Gulf Coast formed part of the regular trade, business, or occupation of Shell Oil at its Norco complex. In support of that position, Shell claims that its own employees had performed, and continue to perform, the same type of work, but that the job in question was on a larger scale so that Shell did not have a sufficient number of employees at the plant to complete the job.³  Williams contests the summary disposition, arguing that there are disputed issues of material fact and disputed inferences that might be properly drawn from the disputed facts. Fed. R. Civ. P. 56(c). Winters v. Highlands Ins. Co., 569 F.2d 297, 299 (5th Cir. 1978).

A grant of summary judgment is appropriate only where it appears from the pleadings, depositions, admissions, answers to interrogatories, and affidavits-considered in the light most favorable to the opposing party-that there is "no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Cubbage v. Averett, 626 F.2d 1307, 1308 (5th Cir. 1980). The burden of proof falls on the moving party (Shell) and any doubt as to the existence of a genuine issue of material fact should be resolved against the movant. Murphy v. Georgia-Pac. Corp., 628 F.2d 862, 866 (5th Cir. 1980).

Application of the Blanchard Test to the Present Case

Examining the showing made by Shell to determine whether under the Blanchard test the work-injury activity of the plaintiff Williams or his direct employer (Gulf Coast) was part of Shell's trade, business, or occupation, we find that both the defendants' statement of uncontested facts⁴  and the affidavit of its maintenance manager⁵  state that, while Shell uses its own employees to perform small and medium scale maintenance, it customarily contracts with outside concerns to perform large scale repairs, such as the job in question. In short, by its own statements, the job being done by Gulf Coast was not that customarily or regularly performed by Shell itself through its own employees.⁶  See, e.g., Murphy v. Georgia-Pac. Corp., supra, 628 F.2d at 866-67.

A further consideration then suggested by Blanchard is to inquire into the practices of the industry. Again, Shell, in its statement of uncontested facts, states

(t)hat it is customary within the petroleum refining industry to employ independent contractors such as Gulf Coast Cooling Tower Service, Inc. to perform the type of work being performed by Gulf Coast Cooling Tower Service, Inc. on August 5, 1980. (Emphasis added.)⁷ 

The plaintiff's deposition states that this type of work is never performed by Shell employees and does not form any part of Shell's usual and customary business. The defendants argue on appeal that the plaintiff's affidavit is not based on "personal knowledge" and, therefore, does not meet the requirements of Fed. R. Civ. P. 56(e). However, we need not decide whether the district court erred in refusing to consider this deposition testimony as raising a factual dispute:

Under the factual showing of the defendant Shell itself, the work being done by the plaintiff Williams' contractor-employer was shown to be not part of Shell's trade, business, or occupation so as to constitute Shell a tort-immune employer of Williams: (1) Shell did not itself customarily perform the type of work done by Williams' immediate employer, the contractor Gulf Coast; and (2) the contractor-employer's work is not an integral part of the work customarily performed by the employees of the principal Shell.⁸ 

Conclusion

Accordingly, we find that the defendants have failed to sustain their burden of proving that no material issue of fact exists regarding the statutory employment relationship between Shell Oil and Williams and that summary judgment was improperly granted. Accordingly, we REVERSE the district court's grant of summary judgment.