Vanterpool v. Hess Oil V.I. Corp., 84-3506

• Citation: 766 F.2d 117
• Decision Date: 28 June 1985
• Docket Number: No. 84-3506,84-3506
• Parties: George N. VANTERPOOL, Marjorie Vanterpool, his wife v. HESS OIL V.I. CORP., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 117

766 F.2d 117

George N. VANTERPOOL, Marjorie Vanterpool, his wife v. HESS OIL V.I. CORP., Appellant.

No. 84-3506.

United States Court of Appeals,

Third Circuit.

Argued Feb. 7, 1985.

Decided June 28, 1985.

Britain H. Bryant (Argued), Bryant, Lenahan and Eltman, Christiansted, St. Croix, U.S. Virgin Islands, for appellant.

John R. Coon (Argued), Christiansted, St. Croix, U.S. Virgin Islands, for appellee.

Before GARTH and BECKER, Circuit Judges, and ROSENN, Senior Circuit Judge.

OPINION OF THE COURT

GARTH, Circuit Judge.

This appeal comes to us as a certified question pursuant to 28 U.S.C. Sec. 1292(b). We are asked to decide two questions: 1) whether the borrowed employee doctrine applies in the Virgin Islands so that workers' compensation may supply the exclusive remedy for injuries sustained by an employee loaned to the borrowing employer and engaged in the performance of a borrowing employer's work; ¹ and 2) whether, to establish workers' compensation as an injured employee's exclusive remedy against a borrowing employer, the borrowed employee must be shown to have knowingly waived his common law right to maintain a tort action for personal injury against the borrowing employer.

We hold that the "borrowed employee doctrine" applies in the Virgin Islands and that no express waiver of an employee's common law rights as against the borrowing employer need be demonstrated.

I.

Litwin Panamerican Corporation ("Litwin") and Hess Oil Virgin Islands Corporation ("HOVIC") entered into an agreement whereby Litwin was to provide personnel to perform general maintenance and turnaround work at HOVIC's St. Croix refinery. ² 2] Litwin workers were divided into two labor classifications: Type-I personnel, over whom HOVIC assumed direct control and supervision, and Type II personnel, over whom Litwin retained direct control and supervision. This appeal concerns only Type I personnel.

The Litwin-HOVIC agreement expressly provided that "Type I work is defined as that performed by CONTRACTOR'S (Litwin's) craftsmen, foremen and supervisors ... where such employees have been loaned to HOVIC and are under HOVIC's direct supervision, direction and control, and CONTRACTOR has no general or turnaround superintendent assigned to the work." App. at 23. The agreement further provided that maintenance and turnaround workers would be furnished in the numbers and according to the skills requested by HOVIC. See app. at 24-25. Even if Litwin were asked on occasion to supply a turnaround supervisor or coordinator, HOVIC would thereafter assume direction and control of all personnel. See app. at 25.

Thus, although the term of a given employee's assignment to HOVIC was not fixed, any assigned Type-I employee would necessarily work under the direct supervision and control of HOVIC. Borrowed employees, such as Vanterpool, who was borrowed by HOVIC from Litwin, remained on the Litwin payroll and Litwin made insurance premium payments to the statutory workers' compensation fund. See app. at 31. HOVIC, in turn, reimbursed Litwin for all payroll expenses incurred for borrowed employees, including workers' compensation premiums. See app. at 104 (affidavit of Edward L. Weinman, Controller of HOVIC). This reimbursement was made by including the cost of procuring workers' compensation insurance as a factor in the scheduled time and materials rate paid to Litwin for borrowed employees. Id.

George Vanterpool was first hired by Litwin to work as a Hess turnaround loanee (borrowed employee) in July 1976. Thereafter, he was rehired on nine separate occasions. Prior to each assignment, Vanterpool signed a "Rehire Form" prepared by Litwin. The rehire form stated in pertinent part:

This is to inform you of the conditions under which you will be working while a "Hess Turnaround Loanee".

You should be aware that while working as a Loanee:

1. HOVIC personnel will control, direct and supervise all aspects of your work.

2. At no time should you receive, or act under instructions from Litwin Supervision.

3. HOVIC will provide you with safety equipment and will ensure that all safety conditions surrounding your work are met.

Vanterpool both signed the rehire form in its entirety and initialed the specific provision relating to the conditions of his employment.

On September 11, 1979, Vanterpool signed a rehire form and began work at the HOVIC refinery. On November 17, 1981, while working with a large mobile welding machine, Vanterpool injured his back. He thereafter filed a claim for workers' compensation and received compensation from the Government Insurance Fund for $110.00 in medical costs. App. at 91. Although this compensation claim was processed by the Fund against Litwin, HOVIC reimbursed Litwin for the actual cost of Litwin's contribution to the Fund pursuant to the rate schedules established by the Litwin-HOVIC agreement.

Vanterpool then brought the present action against HOVIC, seeking damages for personal injury sustained because of HOVIC's alleged negligence. HOVIC moved for summary judgment ³ on the grounds that the action of a borrowed employee was barred by the exclusive remedy provision of the Virgin Islands Workmen's Compensation Act, V.I.Code Ann. tit. 24, Sec. 284. ⁴ This motion was denied. The district court held that although the borrowed employee doctrine applied, the borrowed employee's knowing consent to the waiver of his common law rights against his borrowing employer was necessary to establish workers' compensation as his exclusive remedy. See Vanterpool v. Hess Oil Virgin Islands Corp., 589 F.Supp. 334, 340 (D.C.V.I.1984) Because the court found a material issue of fact existed as to whether Vanterpool had knowingly consented to waive his common law rights against HOVIC, it declined to enter summary judgment for HOVIC. Id. at 341.

Upon motion by HOVIC, the district court certified for appeal to this court the questions of the applicability of the borrowed servant doctrine and the requirement that a borrowed employee knowingly waive his common law rights against his borrowing employer. We, in turn, granted HOVIC's petition for leave to appeal pursuant to 28 U.S.C. Sec. 1292(b).

II.

A.

The initial question which we must decide is whether the borrowed employee doctrine applies within the statutory framework of the Virgin Islands Workmen's Compensation Act, V.I.Code Ann. tit. 24, Sec. 251 et seq. To answer that question, an understanding of the doctrine and its origins is essential.

Under the borrowed employee doctrine, if a special (borrowing) employer exercises a sufficient degree of control over a borrowed employee for a time sufficient to suggest that the employee has assessed the risks of his new employment and has acquiesced in his borrowing employer's control, the borrowing employer may be deemed a statutory employer for purposes of workers' compensation. See generally 1C A. Larsen, Workmen's Compensation Law Sec. 48.10 (1982). The borrowed employee is then barred from suing his borrowing employer for injuries sustained during the course of his employment; instead, the borrowed employee is remitted to the exclusive remedy provided by the relevant workers' compensation act. We must therefore determine whether HOVIC is shielded from common law tort liability as Vanterpool's employer within the meaning of the Virgin Islands Act or whether HOVIC remains a third-party tortfeasor against whom Vanterpool may maintain an individual action.

The borrowed employee doctrine was first recognized by the Supreme Court in Standard Oil v. Anderson, 212 U.S. 215, 29 S.Ct. 252, 53 L.Ed. 480 (1909). The Court stated that "[o]ne may be in the general service of another, and, nevertheless, with respect to particular work, may be transferred, with his own consent or acquiescence, to the service of a third person so that he becomes the servant of that person with all the legal consequences of the new relation." 212 U.S. at 220, 29 S.Ct. 253. The Court further explained:

It sometimes happens that one wishes a certain work to be done for his benefit and neither has persons in his employ who can do it nor is willing to take such persons into his general service. He may then enter into an agreement with another. If that other furnishes him with men to do the work and places them under his exclusive control in the performance of it, those men become pro hac vice the servants of him to whom they are furnished.

Id. at 221, 29 S.Ct. at 254.

Because Anderson concerned the imputed negligence of a borrowed employee (a winchman "borrowed" by the shipowner defendant from the winchman's general employer, the stevedore), this initial statement of the doctrine was developed in the context of respondeat superior. Accordingly, the Court emphasized the element of control as determinative of the question of vicarious liability. That the borrowed employee doctrine originated in an attempt to assign tort liability to the employer (shipowner) properly responsible for an employee's (the winchman's) tortious acts has not prevented the doctrine's extension to the context of workers' compensation disputes where it, in effect, limits the common law liabilities of the controlling employer.

The application of the borrowed employee doctrine in the workers' compensation setting is neither unfair nor unreasonable when it is remembered that compensation liability cannot exist in the absence of some express or implied contract of hire between the borrowed employee and the borrowing employer. See 1C. A. Larsen, supra at 8-319. To ensure that the doctrine is not invoked indiscriminately to curtail the common law rights of borrowed employees, other courts have emphasized a number of factors beyond mere control which are to be considered in the workers' compensation context. These include inter alia: 1) whether the second (borrowing) employer was itself responsible for the working conditions and the attendant risks experienced by the employee; 2) whether...