Cruz v. Nat'l Steel & Shipbuilding Co.

• Decision Date: 19 December 2018
• Docket Number: No. 17-55441,17-55441
• Citation: 910 F.3d 1263
• Parties: Sira CRUZ, Plaintiff-Appellant, v. NATIONAL STEEL AND SHIPBUILDING COMPANY; Peterson Industrial Scaffolding, Inc., Defendants-Appellees, and United States of America, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

910 F.3d 1263

Sira CRUZ, Plaintiff-Appellant,

v.NATIONAL STEEL AND SHIPBUILDING COMPANY; Peterson Industrial Scaffolding, Inc., Defendants-Appellees,andUnited States of America, Defendant.

No. 17-55441

United States Court of Appeals, Ninth Circuit.

Submitted August 29, 2018^* Pasadena, California

Filed December 19, 2018

Preston Easley, Law Offices of Preston Easley, San Pedro, California; Dawn Schock, SK Appellate Group LLP, San Pedro, California; for Plaintiff-Appellant.

Pamela L. Schultz, Philip Barilovits, and Bradley H. Pace, Hinshaw & Culbertson LLP, San Francisco, California, for Defendant-Appellee.

Before: Kim McLane Wardlaw, Jay S. Bybee, and Sandra S. Ikuta, Circuit Judges.

OPINION

BYBEE, Circuit Judge:

In this case we are asked to determine whether a maritime worker who has collected statutory workers’ compensation for her injuries may further recover against a so-called "borrowing employer." Sira Cruz suffered injuries to her ribs and lungs while working as a tank tester aboard a Navy ship that was docked for repairs. She collected workers’ compensation from her primary employer, a staffing agency. Then, she brought a negligence action against general contractor National Steel and Shipbuilding Company ("Nassco") seeking recovery for the same injuries. Nassco, which had functioned as Cruz’s borrowing employer for several years at the time of the accident, asserted that it was immune from suit pursuant to the "one recovery" policy at the heart of workers’ compensation law. The district court granted Nassco’s motion for summary judgment on these grounds. Cruz appeals from that judgment, and we affirm. In this, we join the Third, Fourth, Fifth, and Eleventh Circuits in holding that the borrowed employee doctrine applies to "employees" under the Longshore and Harbor Workers’ Compensation Act ("LHWCA"), 33 U.S.C. §§ 901 – 50.

I

Except where noted, Cruz and Nassco have stipulated to the following facts.

Nassco is a shipbuilding company that contracts with the U.S. government to build and repair Navy vessels. To carry out this work, Nassco also contracts with labor brokers, including Tradesmen International, Inc. ("Tradesmen"), for temporary personnel. The contract between Nassco and Tradesmen granted Nassco significant control over the temporary employees Tradesmen assigned to Nassco. Nassco could terminate the temporary employees at any time, Tradesmen was required to provide Nassco notice if a temporary employee resigned, and temporary employees needed to seek approval for vacation time from Nassco. Tradesmen employees assigned to Nassco received a badge bearing both companies’ names enabling them to access Nassco job sites. These employees attended daily meetings led by Nassco employees who discussed task assignments. Tradesmen provided some general safety training to employees, but Nassco trained these employees on how to perform shipbuilding and ship repair roles, including "fire watch" and "tank tester." Tradesmen invoiced Nassco for its employees’ services at a rate agreed upon between the companies, and Tradesmen then paid its employees a separately agreed-upon hourly rate. The contract also required Tradesmen to obtain workers’ compensation coverage for each employee pursuant to the Longshore and Harbor Workers’ Compensation Act ("LHWCA").

Sira Cruz, a Tradesmen employee assigned to Nassco, was injured while conducting repair work on the USS Makin Island —a Nassco work site—on February 20, 2013. Prior to working for Tradesmen, Cruz had worked at another temporary staffing agency and did some work at Nassco on behalf of that agency. Cruz began her work for Tradesmen in October 2010. In the two years immediately preceding her injury Tradesmen assigned Cruz to work exclusively for Nassco, with the exception of one week where it assigned her to work for another Tradesmen client. In support of its motion for summary judgment, Nassco submitted an August 16, 2016 screenshot of Cruz’s Facebook profile, where she listed her employer as "Nasco" [sic] from March 2008 to the present.

Cruz started her work for Tradesmen at Nassco as a fire watch. She later asked a Nassco employee to move her to the position of tank tester. After many conversations with Nassco employees about this move, Nassco informed Cruz she would become a tank tester. Cruz learned how to test tanks on the job with instructions from another Nassco employee. She has stipulated that she would not have otherwise known how to do the work because Tradesmen did not provide her with tank-testing training. Cruz attended meetings led by Nassco employees each morning, and some of her work clothing had Nassco’s name on it. However, Cruz alleges that even when Nassco gave her work assignments, she controlled the details of her work and Nassco employees did not supervise or direct her.

At the time of her injury on February 20, 2013, Cruz had worked as a tank tester for at least six months on approximately eight different ships that Nassco was repairing. On that day, Nassco employees instructed her to work in a tank on the USS Makin Island . Cruz fell through an access hole in the tank while descending a ladder and suffered rib fractures

and a collapsed lung.

Cruz collected LHWCA benefits from Tradesmen, which had obtained LHWCA insurance coverage for her in accordance with its contract with Nassco. She then filed a complaint in admiralty in the Central District of California alleging, among other charges, that Nassco’s negligence caused her injuries. Nassco moved for summary judgment. It argued that it was immune from suit in tort under the LHWCA’s single-recovery provisions. The district court granted summary judgment, holding that "as a matter of law[ ] ... Cruz was Nassco’s borrowed employee and is barred from suing her employer under [the LHWCA]." Cruz now appeals this judgment.

II

The district court had original jurisdiction over this suit in admiralty, 28 U.S.C. § 1333, and we have appellate jurisdiction to review the district court’s final decision on the merits, 28 U.S.C. § 1291. We review the district court’s grant of summary judgment de novo. Bravo v. City of Santa Maria , 665 F.3d 1076, 1083 (9th Cir. 2011). Viewing the evidence in the light most favorable to the nonmoving party, we consider whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Frudden v. Pilling , 877 F.3d 821, 828 (9th Cir. 2017).

A

The district court correctly found no genuine issue of material fact and ruled as a matter of law that Nassco was immune from Cruz’s tort claims under the LHWCA, 33 U.S.C. §§ 901 – 50. Enacted in 1927, the LHWCA establishes a mandatory framework for compensation of maritime employees injured on the navigable waters of the United States. A 1972 revision to the statute expanded its coverage to injuries suffered in "any ... adjoining area customarily used by an employer in loading, unloading, [or] repairing ... a vessel." LHWCA Amendments of 1972, Pub. L. No. 92-576, § 2(c), 86 Stat. 1251, 1251 (codified as amended at 33 U.S.C. § 903(a) ). When a covered employee is injured, the employer is liable regardless of fault. 33 U.S.C. § 904(b). A general contractor is liable to the employee of a subcontractor only where the subcontractor fails to procure workers’ compensation insurance or otherwise fails to pay compensation. See id. § 905(a).

An injured employee may file a claim for workers’ compensation benefits with the Office of Workers’ Compensation Programs, which has sole authority to investigate the claim and hold a hearing, and must either reject the claim or make an award. Id. § 919; 20 C.F.R. § 1.2(e). The LHWCA fixes the amount of compensation based on the nature and extent of the injury and the employee’s weekly pay rate. See 33 U.S.C. §§ 906, 908 – 10.

When the LHWCA applies, its remedy is "exclusive and in place of all other liability of [the] employer to the employee." Id. § 905(a); see Figueroa v. Campbell Indus. , 45 F.3d 311, 314–15 (9th Cir. 1995) (applying the LHWCA’s one-recovery rule). The Supreme Court described the LHWCA’s compensation scheme as a quid pro quo: "In return for the guarantee of compensation, the employees surrender common-law remedies against their employers for work-related injuries." Wash. Metro. Area Transit Auth. v. Johnson , 467 U.S. 925, 931, 104 S.Ct. 2827, 81 L.Ed.2d 768 (1984) (superseded on other grounds by statute , LHWCA Amendments of 1984, Pub. L. No. 98-426, 98 Stat. 1639 ). An employer is thus immune from any suit seeking further recovery for the same injury. See id.

Tradesmen, which paid Cruz’s LHWCA claim, was Cruz’s contractual employer at the time of her injury. However, the district court held that Nassco was legally Cruz’s employer at this time under the borrowed employee doctrine and thus was entitled to assert the defense of LHWCA immunity.

B

We have long recognized the borrowed employee—traditionally, "borrowed servant" or "loaned servant"—doctrine. Parker v. Joe Lujan Enters., Inc. , 848 F.2d 118, 120 (9th Cir. 1988) ; United States v. Bissett-Berman Corp. , 481 F.2d 764, 772 (9th Cir. 1973) ; McCollum v. Smith , 339 F.2d 348, 351–52 (9th Cir. 1964). "When one person puts his [employee] at the disposal and under the control of another for the performance of a particular service ... [the employee] is to be dealt with as [that] of the latter and not of the former." Denton v. Yazoo & Miss. Valley R.R. Co. , 284 U.S. 305, 308, 52 S.Ct. 141, 76 L.Ed. 310 (1932). The relationship between a borrowing employer and borrowed employee carries "all the legal consequences" of a conventional employer-employee relationship. See id. (quoting Standard Oil Co. v. Anderson , 212 U.S. 215, 220, 29 S.Ct. 252, 53 L.Ed. 480 (1909) ). "[A]uthoritative direction and control" are the "critical factors" by which we resolve a borrowed employee inquiry. Parker , 848 F.2d at 120 (citing McCollum , 339 F.2d at 351 ); see United States v. N.A. Degerstrom, Inc. , ...