26,741 La.App. 2 Cir. 6/21/95, Kirkland v. Riverwood Intern. USA, Inc.

• Decision Date: 21 June 1995
• Citation: 658 So.2d 715
• Parties: 26,741 La.App. 2 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 715

658 So.2d 715

26,741 La.App. 2 Cir. 6/21/95

Roger KIRKLAND, Plaintiff-Appellant-Appellee, v. RIVERWOOD INTERNATIONAL USA, INC., Defendant-Appellee-Appellant.

No. 26741-CA.

Court of Appeal of Louisiana Second Circuit.

June 21, 1995.

Writ Granted Nov. 3, 1995.

Graydon K. Kitchens, III, Minden, for Roger Kirkland.

Charles S. Smith, Monroe, John M. Frazier, Shreveport, for Riverwood USA, Inc.

John M. Frazier, Shreveport, for Insurance Company of North America.

Before MARVIN, NORRIS, LINDSAY, HIGHTOWER and BROWN, JJ.

BROWN, Judge.

Plaintiff filed this tort action against the owner of a paper products mill to recover for injuries sustained as a contract laborer. Claiming tort immunity under Louisiana's Workers' Compensation law, defendant was granted summary judgment. Plaintiff and his intervening workers' compensation provider appeal. For the reasons assigned below, we reverse and remand.

FACTS

Defendant, Riverwood International USA, Inc. ("Riverwood"), is engaged in the production of paper products at its mill in West Monroe, Louisiana. In 1991, Riverwood began a renovation program to modernize its facilities. One phase of this program called for an overhaul of two identical systems used in the production and recycling of white liquor, which is used in the processing of wood chips for making paper. Riverwood contracted with Republic Contractors ("Republic") for the renovation of the white liquor systems. Plaintiff, Roger Kirkland, who was employed by Republic, worked in a four-man crew at the Riverwood mill.

The mill was shut down when work started on the first of two white liquor systems. When work on the first system was completed, the mill resumed production. Thereafter, renovation work began on the second system. Plaintiff was assisting in replacing a lime conveyor when he lost his footing, fell approximately 30 feet and rolled into a white liquor/alkali mixture that had accumulated on the ground. Plaintiff broke two vertebrae in the fall and suffered severe burns resulting from his contact with the spilled chemical.

Plaintiff filed suit against Riverwood and its liability insurer alleging that Riverwood was strictly liable for his injuries, or alternatively, that Riverwood's negligence caused the accident. Insurance Company of North America, plaintiff's employer's workers' compensation insurer, intervened to recover benefits paid to plaintiff. Riverwood moved for summary judgment arguing that the renovation work performed by plaintiff was integrally related to Riverwood's trade, business or occupation. The trial court agreed and granted defendant's motion. Plaintiff and intervenor appeal.

LAW

Summary Judgment

Appellate courts review summary judgments de novo, using the same criteria applied by the trial court in determining whether summary judgment is appropriate. Tugwell v. State Farm Ins. Co., 609 So.2d 195 (La.1992). A motion for summary judgment is appropriately granted only when the pleadings, depositions, answers to interrogatories, admissions on file and affidavits, if any, show that there is no genuine issue as to a material fact and that mover is entitled to judgment as a matter of law. LSA-C.C.P. Art. 966. In determining whether all material issues have in fact been disposed of, any reasonable doubt is to be resolved against the granting of summary judgment and in favor of a trial on the merits. Penalber v. Blount, 550 So.2d 577 (La.1989).

The mover bears the burden of establishing that there are no genuine issues of material fact. A fact is material if its existence or nonexistence may be essential to plaintiff's cause of action under the applicable theory of recovery. Facts are material if they potentially insure or preclude recovery, affect a litigant's ultimate success, or determine the outcome of the legal dispute. Penalber, supra. Materiality is also a relative concept defined and circumscribed by the substantive law applicable to the case. Accordingly, we begin our analysis with a review of the law applicable to Riverwood's defense.

Statutory Employer Doctrine

Under Louisiana workers' compensation law, a principal (Riverwood), who contracts with another (Republic) to perform work that is part of the principal's "trade, business or occupation", is liable to pay workers' compensation benefits to any employee of the contractor who is injured while performing such work. LSA-R.S. 23:1061. In such instances, the principal is commonly referred to as a statutory employer. Because of the exclusiveness of the compensation remedy, statutory employers are afforded immunity from tort liability for work-related injuries suffered by the employees of their various contractors even though they never actually pay any workers' compensation benefits. LSA-R.S. 23:1032.

The concept of statutory employer tort immunity has long been part of our workers' compensation law. It was designed to prevent the avoidance of responsibility under the workers' compensation law by a principal who interposes an intermediary who is typically insolvent and uninsured to perform work that is part of the principal's trade, business or occupation. The terms by which the status of statutory employer is recognized were crafted by our courts through a series of opinions spanning nearly forty years. In response to a perceived restriction on this defense pronounced in Berry v. Holston Well Service, Inc., 488 So.2d 934 (La.1986), the legislature amended LSA-R.S. 23:1061 in 1989. This amendment, however, did not provide an affirmative statement regarding the test for statutory employer status. To discern the appropriate standard, we must revisit earlier jurisprudence, consider the analyses therein and the impact of the amendments made to LSA-R.S. 23:1061.

The treatment of the relevant substantive law was authoritatively addressed for the first time in Thibodaux v. Sun Oil Co., 218 La. 453, 49 So.2d 852 (1950). Therein, a defendant oil producer contracted out various work related to the drilling and reworking of one of its wells. One contract laborer was killed and another injured while working to retrieve equipment that had fallen into the well shaft. When plaintiff filed a suit for tort damages, defendant relied on the statutory employer defense and the exclusivity of the compensation remedy. In affirming the judgment in favor of defendant, the court stated that the contractors:

were performing services in connection with work which was part of the business, trade or occupation of Sun Oil Company, or so closely related thereto as to become an integral part thereof.

Thibodaux, supra at 854.

The "integral relation" test, as formulated in Thibodaux, was a loosely defined factual inquiry that produced inconsistent and often illogical results since almost everything could be said to be integrally related to the principal's trade, business or occupation. During the years that followed, courts attempted to lend structure to this analysis by identifying relevant factors for the assessment of statutory employer status. At the same time, the evolving analysis illustrated a shift from the liberal application of statutory employer tort immunity to a more restrictive approach. These efforts culminated in Berry v. Holston Well Service, Inc., supra, wherein the Louisiana Supreme Court announced a three-tiered analysis. To be classified as a statutory employer under the Berry analysis, the principal must clear three hurdles:

(1) Is the contract work specialized? Specialized work is, as a matter of law, not a part of the principal's trade, business or occupation, and the principal is not the statutory employer of the specialized contractor's employees.

(2) Where the contract work is non-specialized, the court must compare the contract work with the principal's trade, business or occupation. At this level the court should make the following inquiries:

(i) Is the contract work routine and customary? Is it regular and predictable?

(ii) Does the principal have the equipment and personnel capable of performing the work?

(iii) What is the practice of the industry? Do industry participants normally contract out this type of work or do they have their own employees perform the work?

(3) Was the principal engaged in the work at the time of the alleged accident?

As stated by Alston Johnson in his analysis of the Berry decision:

The court found the roots of its three-level inquiry in the appellate cases over the years so there really is nothing new in the substance of the test; rather, there is a restatement of existing law.

W. Malone & A. Johnson, Workers' Compensation Law and Practice, § 364 at 183, 14 La.Civil Law Treatise (1994). The new test, however, did contain two elements, parts one and three, that were by themselves potentially dispositive of a statutory employment inquiry. As a result, the Berry three-tiered test was often applied in a rigid, mechanical fashion without due consideration for other facts and circumstances relevant to a determination of statutory employer status. See Bourgeois v. Puerto Rican Marine Management, Inc., 589 So.2d 1226 (La.App. 4th Cir.1991), writ denied, 592 So.2d 1299 (La.1992); Fontana v. Hibernia National Bank, 568 So.2d 569 (La.App. 4th Cir.1990); Ardoin v. BASF Wyandotte Corporation, 525 So.2d 684 (La.App. 1st Cir.1988); Chauvin v. Gulf Coast Minerals, Inc., 509 So.2d 622 (La.App. 3d Cir.1987), writ denied, 512 So.2d 1175 (La.1987).

In response to the Berry decision and its subsequent application, the Louisiana legislature amended LSA-R.S. 23:1061 in 1989 by adding the following sentence:

The fact that work is specialized or nonspecialized, is extraordinary construction or simple maintenance, is work that is usually done by contract or by the principal's direct employee, or is routine or unpredictable, shall not prevent the work undertaken by the principal from being considered part of the principal's trade, business, or occupation, regardless of whether the principal has the equipment...