W & T Offshore, Inc. v. Fredieu

• Decision Date: 05 June 2020
• Docket Number: NO. 18-1134,18-1134
• Citation: 610 S.W.3d 884
• Parties: W & T OFFSHORE, INC., Petitioner, v. Wesley FREDIEU, Respondent
• Court: Texas Supreme Court

610 S.W.3d 884

W & T OFFSHORE, INC., Petitioner,

v.Wesley FREDIEU, Respondent

NO. 18-1134

Supreme Court of Texas.

Argued April 8, 2020

OPINION DELIVERED: June 5, 2020

Rehearing Denied October 2, 2020

R. Russell Hollenbeck, Natasha N. Taylor, Shelly White, Thomas C. Wright, Wright Close & Barger LLP, Norman E. Snyder Jr., Staci Mims Vetterling, Taunton, Snyder & Slade, PC, Houston, for Petitioner.

Kevin H. Dubose, Alexander Dubose & Jefferson LLP, Houston, Anna M. Baker, Alexander Dubose & Jefferson LLP, Austin, Kirsten M. Castañeda, Alexander Dubose & Jefferson LLP, Dallas, Kurt Brynilde Arnold, Micajah Daniel Boatright, Arnold & Itkin, LLP, Houston, for Respondent.

Justice Blacklock delivered the opinion of the Court, in which Chief Justice Hecht, Justice Green, Justice Guzman, Justice Devine, Justice Busby, and Justice Bland joined.

The federal Longshore and Harbor Workers' Compensation Act (LHWCA) provides the exclusive remedy for covered employees injured on the job. Respondent Wesley Fredieu was injured on an offshore oil rig owned by W & T Offshore. He sued W & T. Fredieu was not W & T's employee, but the parties dispute whether he was nevertheless covered by the LHWCA as W & T's "borrowed employee." If he was, this suit cannot proceed, and he must pursue his claim through the LHWCA's workers' compensation process.

Although federal courts consider borrowed-employee status a question of law, the jury in this case was asked whether Fredieu was a borrowed employee. To make that determination, the jury was instructed to consider nine factors derived from Ruiz v. Shell Oil Co. See 413 F.2d 310, 312–14 (5th Cir. 1969). The jury found that Fredieu was not W & T's borrowed employee and awarded damages to Fredieu. The trial court determined that submission of the borrowed-employee question to the jury was improper. After making fact-findings on the Ruiz factors itself, the trial court found that the evidence supported W & T's borrowed-employee defense. On that basis, the trial court granted W & T's motion for judgment notwithstanding the verdict. The court of appeals reversed, rejecting the trial court's fact-findings and holding that the borrowed-employee inquiry can be a fact question for the jury. The court of appeals reinstated the jury's verdict in Fredieu's favor.

We disagree with some of the court of appeals' analysis but conclude it reached the correct result. The trial court was correct that the borrowed-employee inquiry is a legal question for the court, not a fact question for the jury. In resolving that legal question on this record, however, we conclude that W & T did not carry its burden to establish Fredieu was its borrowed employee. We also affirm the jury's award of damages for Fredieu's future lost earning capacity. The court of appeals' judgment is affirmed, and the case is remanded to the trial court for entry of judgment for Fredieu.

I. Background

W & T Offshore is an oil and gas producer based in Houston. Wesley Fredieu was an employee of Wood Group Production Services, Inc., an independent contractor that provides maintenance and service work on offshore drilling platforms in the Gulf of Mexico. Wood Group contracted with W & T Offshore to provide these services. Wood Group assigned Fredieu to work on a W & T platform, where he worked for over a year. In October 2011, Fredieu was sent to work on a nearby platform, where he supervised several workers who were painting and repairing handrails. While performing a safety check, Fredieu noticed a malfunctioning regulator, which regulates pressure in the gas lines on the platform. Fredieu radioed W & T's lead operator, located on another platform, to ask how to proceed. The lead operator told Fredieu that he should remove the regulator and bring it back to him. The two began a safety analysis, which was required before potentially hazardous operations. Over the radio, the supervisor gave Fredieu instructions for removing the regulator. Before Fredieu had removed it, a pressurized pipe near the regulator broke loose, hitting his arm and knocking him to the ground. The impact fractured both bones in his left forearm, which Fredieu underwent surgery to repair.

Fredieu sued W & T for negligence. In response, W & T claimed workers' compensation benefits were Fredieu's sole remedy because Fredieu was acting as its borrowed employee under the LHWCA. The platform where the injury occurred is on the Outer Continental Shelf in the Gulf of Mexico. Congress passed the Outer Continental Shelf Lands Act (OCSLA) in 1953, which asserted the Federal Government's exclusive control over the Outer Continental Shelf. See 43 U.S.C. §§ 1331 – 1356b. The LHWCA provides workers' compensation for certain injuries sustained by covered persons on navigable waters of the United States. See 33 U.S.C. §§ 902 – 03. Relevant to this case, the OCSLA applies federal law to fixed platforms on the Outer Continental Shelf and applies the LHWCA to injuries sustained by persons working on them. See 43 U.S.C. § 1333 (a)(1), (b).

The LHWCA, when it applies, provides the exclusive remedy for an injured employee who seeks compensation from his employer. See 33 U.S.C. §§ 904 – 05. Federal courts consider a "borrowed employee" to be an employee for purposes of the LHWCA. See, e.g. , West v. Kerr-McGee Corp. , 765 F.2d 526, 528–30 (5th Cir. 1985). In Ruiz v. Shell Oil Co. , the Fifth Circuit announced a nine-factor test for determining whether a person is a borrowed employee. 413 F.2d at 312–14. Those factors are:

(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?

(2) Whose work is being performed?

(3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

(4) Did the employee acquiesce in the new work situation?

(5) Did the original employer terminate his relationship with the employee?

(6) Who furnished tools and place for performance?

(7) Was the new employment over a considerable length of time?

(8) Who had the right to discharge the employee?

(9) Who had the obligation to pay the employee?

Gaudet v. Exxon Corp. , 562 F.2d 351, 355 (5th Cir. 1977) (citing Ruiz , 413 F.2d at 312–13 ). This multi-factor balancing test, routinely used in the Fifth Circuit, has also been employed by many state and federal courts across the country. See, e.g. , Canty v. A. Bottacchi, S.A. De Navegacion , 849 F. Supp. 1552, 1557–59 (S.D. Fla. 1994) ; Roberts v. Northrop Grumman Ship Sys. , 108 So. 3d 471, 473 (Miss. Ct. App. 2013). Not all federal courts apply these factors, however. See, e.g. , White v. Bethlehem Steel Corp. , 222 F.3d 146, 150 (4th Cir. 2000).

The trial court here submitted the borrowed-employee question to the jury. It was submitted as a broad-form, yes-or-no question, asking only whether Fredieu was W & T's borrowed employee at the time of the accident:

At the time of the injury in question, was Wesley Fredieu the borrowed employee of W & T?

Factors to consider in determining whether Mr. Fredieu was the borrowed employee of W & T include

[nine Ruiz factors listed]

Answer "Yes" or "No"

Answer ____________

The jury answered "No." Although all nine Ruiz factors were listed for the jury's consideration, the jury was not asked to make findings for any specific Ruiz factor. The jury found W & T negligent and awarded Fredieu more than $1.7 million in damages. After the verdict, W & T moved to disregard the jury's borrowed-employee finding as immaterial, for determination of borrowed-employee status as a matter of law, for entry of a take-nothing judgment, and for judgment notwithstanding the verdict.

The trial court determined that borrowed-employee status was actually a question of law to be decided by the court. It further held that, because the broad-form borrowed-employee question did not ask the jury to make findings for each Ruiz factor, Rule 279 of the Texas Rules of Civil Procedure allowed the court to make those findings itself. After making twelve written findings of fact for the Ruiz factors, the trial court held that Fredieu was W & T's borrowed employee. The trial court granted W & T's motions and entered judgment notwithstanding the jury's verdict.

The court of appeals reversed. 584 S.W.3d 200, 213 (Tex. App.—Houston [14th Dist.] 2018). It held that disputed fact issues related to various Ruiz factors made the question of borrowed-employee status a question of fact. It also concluded that it was proper for the jury to balance the Ruiz factors and decide the ultimate question of borrowed-employee status. On this basis, the court of appeals held that the trial court erroneously disregarded the jury's verdict as immaterial. It further held that Rule 279 did not permit the trial court to make fact-findings related to the Ruiz factors. The court of appeals then reviewed the jury's borrowed-employee finding for legal sufficiency, and, after considering the Ruiz factors, affirmed. It also upheld the jury's damages award, with one justice dissenting.

II. Discussion

W & T challenges the court of appeals' treatment of the borrowed-employee question as well as the jury's damages award for future lost earning capacity. We address these issues in turn.

A. The Borrowed-Employee Question of Law

"When a state court hears an admiralty case, that court occupies essentially the same position occupied by a federal court sitting in diversity: the state court must apply substantive federal maritime law but follow state procedure." Maritime Overseas Corp. v. Ellis , 971 S.W.2d 402, 406 (Tex. 1998). The parties agree that federal substantive law and state procedural law apply to this case. They disagree about how the two interact. W & T argues that the borrowed-employee inquiry is a question of law, which means juries may not answer it in either state or federal court. Fredieu and the court of appeals reason that who decides the borrowed-employee question—as between judge and jury—can sometimes be considered a...