Blanchard v. Engine and Gas Compressor Services, Inc., 75-4216

• Citation: 613 F.2d 65
• Decision Date: 06 March 1980
• Docket Number: No. 75-4216,75-4216
• Parties: George E. BLANCHARD, Plaintiff-Appellant, Cross-Appellee, v. ENGINE AND GAS COMPRESSOR SERVICES, INC. and Gulf Oil Corporation, Defendants-Appellees, v. COMMERCIAL UNION INSURANCE COMPANY, Intervenor-Appellee, Cross-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 65

613 F.2d 65

George E. BLANCHARD, Plaintiff-Appellant, Cross-Appellee, v. ENGINE AND GAS COMPRESSOR SERVICES, INC. and Gulf Oil

Corporation, Defendants-Appellees, v. COMMERCIAL UNION INSURANCE COMPANY, Intervenor-Appellee,

Cross-Appellant.

No. 75-4216.

United States Court of Appeals,

Fifth Circuit.

March 6, 1980.

Harry R. Allen, Gulfport, Miss., Walter E. Ross, Jr., Biloxi, Miss., for plaintiff-appellant, cross-appellee.

George E. Morse, Gulfport, Miss., for Gulf Oil Corp.

Thomas L. Stennis, II, Gulfport, Miss., Felicien P. Lozes, New Orleans, La., for Commercial Union Ins. Co.

Sherman L. Muths, Jr., Gulfport, Miss., for Engine Compressor Services, Inc.

Claude D. Vasser, New Orleans, La., for defendants-appellees.

Appeals from the United States District Court for the Southern District of Mississippi.

Before BROWN, GEWIN and TJOFLAT, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

As it once was, ¹ the issue which will not go away is whether the District Court erred by entering a directed verdict in favor of Gulf Oil Corporation, ruling that it was the "statutory employer" of Blanchard under LSA-R.S. 23:1061 (West 1964) and that his sole remedy against Gulf was under the Louisiana Workmen's Compensation Act. We reverse the holding of the District Court and remand for further proceedings consistent with this opinion.

Twice Told Tales

George E. Blanchard was employed as a mechanical supervisor by Engine and Gas Compression Service, Inc. (Engine and Gas). This company supplied mechanical services to Gulf Oil Corporation (Gulf) to maintain and repair compressors at its Ingersoll Rand Station in the Mississippi River Delta, about thirty minutes from Venice, Louisiana.

Blanchard and Pollard Lee, another employee of Engine and Gas, were assigned to the Ingersoll Rand Station. While performing some extensive repairs on a compressor there, Blanchard became covered with oil. In this condition, he tried to replace a 150 pound compressor bearing cap. The cap fell on him, and Blanchard slipped and injured his back, suffering permanent partial disability.

Blanchard sued his employer and Gulf for damages under the Jones Act and in diversity under Louisiana tort law. The District Court granted the defendants' motion for summary judgment on the Jones Act claim which we affirmed. The diversity action proceeded to trial where the District Court entered a directed verdict against Blanchard on the grounds that he was a statutory employee of Gulf under the Louisiana Workmen's Compensation Act, and his right of recovery was therefore limited to workmen's compensation. Blanchard appealed and we certified this issue to the Louisiana Supreme Court.

An Unanswered Query

But our hopes for a surer, if not easier, answer were dashed by the Supreme Court's cryptic, enigmatic response, relying as it properly could on the Rule's ² discretion to decline to answer:

In Re: George E. Blanchard, applying for Certification from the Fifth Circuit Court of Appeal, No. 75-4216.

Decline. The jurisprudence of this Court does not warrant an additional pronouncement at this time. See Reeves v. Louisiana & Arkansas Ry., 282 So.2d 503 (La.1973); Lushute v. Diesi, 354 So.2d 179 (La.1978); La.Sup.Ct. Rules XII, Sec. 1.

We continue to feel that Louisiana jurisprudence demonstrates two different standards for determining when a principal is considered the statutory employer of his contractor's employee, and we express here our feelings of hesitation at the prospect of divining Louisiana law without the guidance which the Louisiana Supreme Court is in the best position to give. We pay special attention to the cases cited for us by our brethren on the Louisiana Supreme Court, Reeves v. Louisiana & Arkansas Railway, 282 So.2d 503 (La.1973) and Lushute v. Diesi, 354 So.2d 179 (La.1978).

The Louisiana Statutory Employer

Louisiana Workmen's Compensation Law, LSA-R.S. 23:1061, provides that the principal for whom a contractor is performing work which is part of the principal's "trade, business or occupation," ³ shall be liable for workmen's compensation benefits to the contractor's employees.

Although in practice at least as we see it in the flood of diversity and maritime or quasi-maritime cases the purpose of the section is urged, looked upon or held to be immunity to traditional third party tort liability, ⁴ the true purpose of this provision, as long ago described (and since many times echoed) in Horrell v. Gulf & Valley Cotton Oil Company, Inc., 15 La.App. 603, 610, 131 So. 709, 714 (1930) is:

to protect employees of minor contractors against the irresponsibility of their immediate employers by making the principal employer, who has general control of the business in hand, liable as if he had directly employed all who work upon any part of the business which he has undertaken to carry on.

Coincident with this responsibility placed on the statutory employer, the Louisiana Workman's Compensation Act, LSA-R.S. 23:1032 ⁵ (West Supp.1979), limits a contractor's employee's recovery to the compensation benefits. The result is that a statutory employer cannot be sued in tort. Of course, the "exclusive remedy" defense will not bar a tort action against the principal if it is not a statutory employer, that is, if the work performed by the contractor was not part of the defendant's "trade, business or occupation."

Thus, we turn to Louisiana jurisprudence to determine what standard to use in deciding whether the work done by Blanchard was part of the "trade, business or occupation" of Gulf. In our previous opinion in this case, 575 F.2d at 1143-45, we discussed various Louisiana cases and found them somewhat inconsistent. However, the Louisiana Supreme Court has indicated to us that Reeves, supra, states the controlling rule of law. ⁶

Reeves involved the installation of a coking unit by Foster Wheeler Corporation on the premises of Humble Oil and Refining Company. The plaintiff, an employee of Foster Wheeler, was injured on the job and asserted a tort action against Humble. The Court ruled in favor of the plaintiff, holding that he was not Humble's statutory employee. The Court did not mention the "essential to business" test articulated in Thibodaux v. Sun Oil Company, La.App., 40 So.2d 761 (1949), Aff'd, 218 La. 453, 49 So.2d 852 (1950). Under this test, the statutory employer-employee relationship exists between a principal and the employee of its subcontractor whenever the work done by the employee is essential to the principal's business. However, in Reeves, the Court did find that

it was not Humble's business practice to engage in new construction of this type and magnitude, nor does the record support a conclusion that this type work was customarily done by Humble or other employers similarly situated. The record does not support a conclusion that Humble is a statutory employer.

Reeves, supra, 282 So.2d at 508.

In Freeman v. Chevron Oil Co., 517 F.2d 201 (5th Cir. 1975), Judge Ainsworth for this Circuit followed Reeves in holding that the installation of a septic tank on a fixed drilling platform was not a part of the business of the defendant Chevron. Judge Ainsworth criticized the "essential to business" test as too superficial to be used as the sole criterion in identifying statutory employment:

The testimony of the Chevron witness, Baudouin, that the work being performed is "absolutely necessary" to his company's business, is not decisive because we infer that Chevron does not contract for work by independent contractors such as Herb's unless it is helpful and necessary to the operation of its business enterprise. See Cole v. Chevron Chemical Co., 5 Cir., 1970, 427 F.2d 390, 394. If every employee of such an independent contractor thereby becomes a statutory employee of Chevron, the concept of statutory employee would be expanded beyond practical limits and lead to ridiculous consequences. We decline to reach such an unsound result.

Id. at 206.

Instead, Judge Ainsworth looked at all the facts of the case, including whether Chevron had the facilities to install its own septic tanks (Id. at 208), to determine whether installation of the sewerage system was part of the usual and customary practice of Chevron. Although the Court had to recognize that in this day and time an adequate sewerage system was absolutely necessary, the "essential to business" test so long extolled had to be given a reasonable and practical application:

While the installation of the sewerage system was important to pollution control on its drilling platform in the Gulf of Mexico, it was not so closely related thereto as to become an integral part thereof and therefore was not essential to the employer's business as that term is understood in the context of being basic, fundamental, indispensable or imperative.

Id. at 209.

Professor Larson has also criticized the "essential to business" test and after analyzing scores of cases has expressed what he believed to be the true test:

From these cases it will be readily seen that the test is not one of whether the subcontractor's activity is useful, necessary, or even absolutely indispensable to the statutory employer's business, since, after all, this could be said of practically any repair, construction or transportation service. The test (except in cases where the work is obviously a subcontracted fraction of a main contract) is whether this indispensable activity is, in that business, normally carried on through employees rather than independent contractors.

A. Larson, The Law of Workmen's Compensation § 49.12, at 9-23 to 9-24 (1973).

In Ball v. Kaiser Aluminum and Chemical Corporation, La.App., 112 So.2d 741, 745 (1959), the Louisiana Court of Appeals remarked:

The jurisprudence as it has developed since the Horrell case reveals that there possibly exists what counsel has referred to as a "twilight zone" (which was also recognized by Judge Janvier, who authored the opinion in the Horrell case) where...