Colon Nunez v. Horn-Linie, 7275.

• Decision Date: 27 March 1970
• Docket Number: No. 7275.,7275.
• Citation: 423 F.2d 952
• Parties: Ismael COLON NUNEZ, Plaintiff, Appellant, v. HORN-LINIE, Defendant, Third-Party Plaintiff, Appellee, v. FRED IMBERT, INC., et al., Third-Party Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

423 F.2d 952 (1970)

Ismael COLON NUNEZ, Plaintiff, Appellant, v. HORN-LINIE, Defendant, Third-Party Plaintiff, Appellee, v. FRED IMBERT, INC., et al., Third-Party Defendants, Appellees.

No. 7275.

United States Court of Appeals, First Circuit.

Heard February 2, 1970.

Decided March 27, 1970.

Harvey B. Nachman, San Juan, P. R., with whom Nachman, Feldstein, Lafitte & Smith, San Juan, P. R., was on brief, for appellant.

A. Santiago Villalonga, San Juan, P. R., with whom Hartzell, Fernandez, Novas & Ydrach, San Juan, P. R., was on brief, for appellee.

Before ALDRICH, Chief Judge, and McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

This appeal raises a difficult issue concerning the construction of Puerto Rico's Workmen's Accident Compensation Act, 11 L.P.R.A. § 1 et seq. More specifically, we must decide whether a shipowner who hires an independent stevedoring contractor is a "third party" within the meaning of 11 L.P.R.A. § 32, and hence liable to suit by an injured longshoreman, or an "employer" who "insures his workmen" within the meaning of 11 L.P.R.A. § 21, and therefore immune from civil liability.

The case arises from injuries sustained by plaintiff Ismael Colon Nunez, a Puerto Rican longshoreman, while working aboard a vessel owned by defendant Horn-Linie, a West German corporation. Plaintiff filed suit in federal district court, alleging that his injuries had been caused by defendant's negligence and the unseaworthiness of its vessel. Defendant moved for summary judgment on the grounds that it was plaintiff's "statutory employer" and hence entitled to immunity from suit under the Compensation Act, 11 L.P.R.A. § 21. For purposes of defendant's motion, the parties stipulated that plaintiff had been employed by an independent stevedoring contractor, who had insured plaintiff as required by the Compensation Act; that plaintiff had already received the benefits to which he was entitled under the Compensation Act; and that defendant carried no workmen's compensation insurance. The district court, relying on this court's decision in Musick v. Puerto Rico Telephone Co., 357 F.2d 603 (1st Cir. 1966), and its own extensive opinion in Lopez Correa v. Marine Navigation Co., 289 F.Supp. 993 (D.P.R. 1968), granted defendant's motion.

The decision of the district court highlights a latent conflict among the decisions of this circuit interpreting Puerto Rico's Compensation Act. In a case similar to this, Guerrido v. Alcoa Steamship Co., 234 F.2d 349 (1st Cir. 1956), we permitted a longshoreman's action for unseaworthiness on the grounds that the shipowner was a "third party" within the meaning of 11 L.P.R. A. § 32, a provision which preserves the rights of employees against strangers who contribute to their injuries. We reaffirmed this holding in Waterman Steamship Corp. v. Rodriguez, 290 F.2d 175 (1st Cir. 1961). Subsequently, in Musick v. Puerto Rico Telephone Co., supra, a diversity case involving no issue of maritime law, we decided that principal contractors who were potentially liable to the employees of their subcontractors under the Compensation Act, 11 L. P.R.A. § 20, were also entitled to immunity from suit under the statute's exclusive remedy provision, 11 L.P.R.A. § 21. As plaintiff points out, applying Musick in a maritime context would effectively overrule Guerrido.¹

Plaintiff seeks to avoid this result by emphasizing that the rights he asserts are based on federal rather than Puerto Rican law, but his attempt founders on the special status of Puerto Rico's coastal waters. Normally, federal law governs maritime torts, Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 79 S.Ct. 409, 3 L.Ed.2d 550 (1959), but Congress has granted Puerto Rico the power to pass inconsistent legislation governing the rights of local workers in local waters. Guerrido v. Alcoa Steamship Co., supra. Thus, if Puerto Rico's Compensation Act conflicts with the federal remedies which plaintiff asserts, Puerto Rican law prevails. Fonseca v. Prann, 282 F.2d 153 (1st Cir. 1960); Alcoa Steamship Co. v. Perez Rodriguez, 376 F.2d 35 (1st Cir. 1967).

To avoid this logic, plaintiff challenges the Musick doctrine itself. He places special emphasis on the decision of the Supreme Court of Puerto Rico in Gonzalez v. Cerveceria Corona, Inc. (No. R-68-272, Jan. 29, 1969), a decision which, though cryptic, seems inconsistent with Musick. Plaintiffs in Gonzalez sought recovery from a building owner for the wrongful death of a painter. The deceased had been employed by an independent contractor who had procured the necessary compensation insurance. Relying on our decision in Musick, the lower court granted the building owner's motion for summary judgment on the grounds that it was the deceased's "statutory employer" and hence entitled to immunity from suit. Plaintiffs sought review by Puerto Rico's Supreme Court, arguing that the Musick doctrine did not reflect the law of Puerto Rico. A division of the court reversed without opinion, remanding for findings on who was in fact the deceased's employer and for trial on the issue of the building owner's negligence. Although the lack of an opinion obscures the rationale of this decision, the court's failure to apply Musick in a case where Musick seemed clearly applicable provides us with a strong incentive to reexamine our interpretation of Puerto Rican law.

When we decided Musick we recognized that the precise question was one of first impression. No decision of the Supreme Court of Puerto Rico then provided guidance. Nor were we aware of the possible relevance of Guerrido, perhaps because Musick contained no smell of the sea. We therefore addressed ourselves directly to the language of 11 L. P.R.A. § 21, which grants exemption from civil liability "when an employer insures his workmen or employees".² We decided that the principal contractor was an "employer" within the meaning of this section because the statute sometimes imposed on him an employer's liability for compensation. He "insured" his subcontractor's employees, we thought, because he bore the additional expense of hiring insured subcontractors. However, after a careful reconsideration prompted by a recognition of the relevance of Guerrido and by the subsequent decision of the Supreme Court in Gonzalez v. Cerveceria Corona, we have decided that our earlier views were not required by the statute.

We first inquire whether the principal contractor is an "employer" within the meaning of the statute. No provision of the Compensation Act defines employer. Nevertheless, inspection of the statute as a whole indicates that the term is usually used in the ordinary sense to denote one who engages the services of workers and supervises their labors. For example, the statute obliges "every employer" to keep a register of his employees, their positions and wages, 11 L. P.R.A. § 29, to make detailed annual statements concerning wages and types of employment to the Manager of the State Insurance Fund, 11 L.P.R.A. § 28, and to report all accidents involving his employees, 11 L.P.R.A. § 14. These duties fall most naturally on the subcontractor who engages a worker for hire rather than on the principal contractor whose dealings with his subcontractor's employees are likely to be few and fleeting.

An exception to this general usage is 11 L.P.R.A. § 20, which provides that:

"Every insured employer shall, on reporting his annual payrolls, include in said payrolls the wages paid to all the workmen and employees working for or employed by him, whether by job or under some person with whom the employer contracted for the job, or under a contractor or independent subcontractor employed or contracted by said employer; and all accounts or taxes collected by the State shall be based on the employer\'s current payroll in which shall be included the above-mentioned laborers; Provided, that this provision shall not be applicable to employers for whom work is done by an independent contractor who is insured as an employer under the provisions of this chapter." (Italics added.)

This provision by its terms seems to treat a principal contractor as the "employer" of all workers engaged in his business, regardless of contractual relations of hire. However, as the Supreme Court of Puerto Rico has pointed out, the liability of the principal contractor is conditional and attaches only when the subcontractor fails to meet his obligations. Montaner, Mgr. v. Industrial Comm., 59 P.R.R. 284, 289 (1941). As long as the subcontractor remains insured, the principal contractor escapes all the manifold duties which the Act imposes on employers. The choice of terminology in section 20 does not, in our opinion, necessarily reflect an intent to make the principal contractor the employer for all purposes, but only a desire to avoid the technical distinctions between employees and independent contractors to which employers sometimes resort in an effort to avoid the burden of social legislation. See Montaner, Mgr. v. Industrial Comm., 59 P.R.R. at 290; cf. N. L. R. B. v. Hearst Publications, Inc., 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 (1944); Brodie, The Adequacy of Workmen's Compensation as Social Insurance, 1963 Wisc.L.Rev. 57, 63-65. This rationale does not, we think, compel extending an employer's immunity to a principal contractor who bears none of an employer's statutory burdens.

A second exception to the statute's general usage of "employer" may be found in 11 L.P.R.A. § 16, a provision dealing with the penalties to be assessed against uninsured employers. Section 16 provides that injured employees prejudiced by their employer's failure to insure may bring suit for damages, and goes on to provide:

"In such proceedings, the fact that the workman or employee was guilty of contributory negligence; or that he assumed the risk of the injury; or that the injury was caused by the negligence of a contractor or independent subcontractor, unless such

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