Baker v. Raymond Intern., Inc.

• Decision Date: 14 September 1981
• Docket Number: No. 80-3019,80-3019
• Citation: 656 F.2d 173,1982 A.M.C. 2752
• Parties: Glenn Paul BAKER, Sr., Plaintiff-Appellee, Cross-Appellant, v. RAYMOND INTERNATIONAL, INC., Defendant-Appellant, Cross-Appellee. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 173

656 F.2d 173

Glenn Paul BAKER, Sr., Plaintiff-Appellee, Cross-Appellant, v.RAYMOND INTERNATIONAL, INC., Defendant-Appellant, Cross-Appellee.

No. 80-3019.

United States Court of Appeals, Fifth Circuit.

Unit A

Sept. 14, 1981.

As amended on Denial of Rehearing and Rehearing En Banc Nov. 2, 1981.

Deutsch, Kerrigan & Stiles, Ralph E. Smith, Eileen Madrid, New Orleans, La., for defendant-appellant, cross-appellee.

Henderson, Hanemann & Morris, Philip E. Henderson, Houma, La., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before SKELTON^*, Senior Judge, and RUBIN and REAVLEY, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The complex relationship between an American corporation and the affiliated Saudi Arabian corporation through which it transacts business in that country requires that we carefully examine whether the American corporation is responsible under the Jones Act and general maritime law for injuries to American seamen working on foreign waters.

Glenn Baker, an American seaman accidentally injured while working in the Persian Gulf, seeks to hold Raymond International, Inc.(Raymond), an American corporation, liable for his injuries even though, at the time of the accident, he was nominally employed by Raymond's affiliated Saudi Arabian corporation, Raymond Saudi Arabia, Ltd.(RSA).At trial, Baker based his claims on the theory that he was Raymond's borrowed seaman under the Jones Act; that because Raymond treated RSA as a mere instrumentality, the court should pierce RSA's corporate veil and regard Raymond as his employer under the Jones Act; and that Raymond should be held liable for furnishing RSA with the unseaworthy barge on which the accident occurred.Responding to special interrogatories, ¹ the jury found for Baker on all three claims.Relying exclusively on the unseaworthiness of the barge, we affirm the award of compensatory damages.We reverse and remand for a new trial on the issue of liability for maintenance, cure, and wages to the end of the voyage, and we affirm the trial judge's alternative grant of a new trial on the American corporation's liability for damages for failure to pay these items.These apparently anomalous results are occasioned by the unusual manner in which the issues were framed and the case was tried.We now explain.

I.

Glenn Baker contended that the sole defendant, Raymond, was responsible for the injuries he sustained.In addition to defending on the merits, Raymond sought to show that Baker was employed by RSA, only 50% of whose stock was owned by Raymond, through a subsidiary, and that, if Baker was injured as a result of either negligence or unseaworthiness, Raymond itself was not liable.

Baker's trip to the Persian Gulf began when, unemployed after working in the North Sea, he responded to a Raymond newspaper advertisement in a New Orleans newspaper, the Times Picayune, offering marine construction workers employment in Saudi Arabia.The advertisement stated: "We are currently recruiting for a number of skilled craft personnel to work on our LPG pipeline trestle in the Arabian Gulf."Another Raymond advertisement stated: "Positions continue to open up on our construction work force now building a major piling trestle in the Arabian Gulf."Applicants were invited to send a resume to Manager, Foreign Recruiting, Raymond International, Inc. or to Gene La Grose or Herb Morgan at Raymond International, Inc., Houston, Texas.Instead of writing, Baker went to Raymond's office in Houston, where he was interviewed by a Raymond employee and accepted for employment.

After taking a physical examination, Baker signed an employment contract in Raymond's office.This contract stated that he was employed by RSA, and was signed by a representative of RSA.The person who signed the contract for RSA, however, was a Raymond employee.Baker testified that the employee who explained the contract to him told him that Raymond and RSA were the same company and that the difference in names was only for "tax purposes."

On the same day, a Raymond employee gave Baker a form for claiming income tax benefits while employed abroad.This form, filled in by a Raymond employee for Baker, stated: "I am employed by Raymond International, Inc."Baker also signed a life insurance beneficiary designation, filled in by a Raymond employee, stating that his employer was Raymond.

Baker was transported to Saudi Arabia and began work.He received a monthly pay sheet stamped with Raymond's logo, the letters RI superimposed on a globe, which had also appeared on each of the newspaper advertisements.

A trestle extending seven miles into the Persian Gulf was being built pursuant to a contract between RSA and the Arabian American Oil Company(Aramco).Baker was assigned to this project, working aboard the pile-driving barge Loretta, which belonged to Raymond, as a piledriver-rigger.In September, together with other workers, he was engaged in repairing the barge when he was injured.

After his return to the United States, Baker sued Raymond, as sole defendant, under the Jones Act for negligence causing his injury and for unseaworthiness of the Loretta.The theory of this suit was that Raymond was Baker's employer, and, as owner, was responsible for the condition of the Loretta.On the morning that trial commenced, before the jury was empaneled, the trial judge told counsel that Baker could recover on the Jones Act claim only by proving that Baker was Raymond's borrowed servant or that RSA was Raymond's instrumentality.After brief expostulation, Baker's counsel accepted these theses.Raymond's counsel objected, but evidently was able to confront the revised claims; Raymond does not contend on appeal that the changes so surprised it as to have required postponing the trial.

In response to interrogatories, the jury found that Raymond was negligent in a manner that caused Baker's injury and that the Loretta was unseaworthy in a manner that proximately caused his injury, and returned a verdict in Baker's favor.No issue is raised on appeal with regard to either of these findings.

Raymond's defense was that Baker was employed solely by RSA, and that, because RSA had chartered the Loretta, Raymond was not liable for its condition.The jury was not asked, however, whether Raymond was Baker's employer or was responsible for the condition of the Loretta.Instead, the interrogatories asked only whether Raymond was RSA's corporate alter ego or whether Baker was Raymond's borrowed servant.On appeal, Raymond contends both that the alter ego jury charge was erroneous and that the evidence was insufficient to support the borrowed servant verdict.

Raymond presented evidence that it owns none of the stock of RSA.It does own all of the stock of Raymond International of Delaware, Inc., which, in turn, owns 50% of the stock of RSA.The remainder of the stock of RSA is owned by Saudi Arabian corporations and princes of the Saudi Arabian realm.The reason, business or otherwise, for this complex arrangement does not appear in the record.

RSA was chartered in Saudi Arabia in 1977.Some of its officers and directors were officers and directors of Raymond.Shortly after its formation, it entered into a contract with Aramco to build the marine trestle, its first project.²Raymond recruited employees in the United States for this work and interviewed them.A Raymond employee testified that RSA made the final employment decision, but the record does not show how the decision was made or what person made it.³

Raymond furnished the barge Loretta for the project.It purchased material, equipment, and parts for the barge.It also arranged transportation and provided group insurance plans and retirement plans for RSA employees when it recruited.The costs of these services were paid by RSA, some from RSA operating accounts maintained in Houston banks and others, together with a fee for Raymond's services, by intercorporate charges.Because RSA was not joined as a defendant, we need not consider whether it was doing business or was amenable to service of process in the United States.

II.Jones Act Claim

A.The Borrowed Servant Doctrine

The Jones Act, 46 U.S.C. § 688, confers upon a seaman the right to sue his employer for negligence resulting in his personal injury, extending to him the rights accorded railway workers under the Federal Employers' Liability Act, 45 U.S.C. §§ 51-60.Although recovery may be had in admiralty for negligence resulting in the injury of a person who is not an employee, the Jones Act provides the only negligence remedy for an employee against his employer.Ivy v. Security Barge Lines, Inc., 606 F.2d 524, 525(5th Cir.1979)(en banc), cert. denied, 446 U.S. 956, 100 S.Ct. 2927, 64 L.Ed.2d 815(1980).Correlatively, it is applicable only if the employment relationship exists.Cosmopolitan Shipping Co. v. McAllister, 337 U.S. 783, 791, 69 S.Ct. 1317, 1322, 93 L.Ed. 1692, 1698(1949);Moragne v. States Marine Lines, Inc., 398 U.S. 375, 394, 90 S.Ct. 1772, 1784, 26 L.Ed.2d 339, 353(1970);Spinks v. Chevron Oil Co., 507 F.2d 216, 224(5th Cir.1975);G. Gilmore & C. Black, The Law of Admiralty§§ 6-21, -21(a)(2d ed. 1975)(hereinafter Gilmore & Black ).

The employer-employee bond is usually evident: the vessel owner engages the seaman, pays his wages, and, through the master, directs his work.In the complex industrial arrangements typical of offshore petroleum development operations, however, the attributes of employment may not all inhere in the vessel owner.A number of companies may engage in a single project, usually by subcontract from the company undertaking the venture.Each subcontractor undertakes to do a particular task as an independent contractor, but a worker on the payroll of one company may actually perform his job under the direction and control of another.Moreover, the vessel on which...