Morgan v. ABC Manufacturer

• Decision Date: 01 May 1998
• Parties: 97-0956 La
• Court: Louisiana Supreme Court

Page 1077

710 So.2d 1077

97-0956 La. 5/1/98

Edward MORGAN v. ABC MANUFACTURER, DEF Insurance Company, GHI Parts Suppliers, et al.

No. 97-C-0956.

Supreme Court of Louisiana.

May 1, 1998.

Rehearing Denied June 26, 1998.

Lisa A. Montgomery, for Applicant.

Bettye A. Barrios, Ronald A. Johnson, Johnson, Johnson, Barrios & Yacoubian, New Orleans, for Respondent.

[97-0956 La. 1] KNOLL, Justice. ^*

This case presents the issue of whether a general or lending employer who is in the business of hiring out temporary employees to other businesses is liable for its borrowed employee's tortious conduct while in the performance of his work with the borrowing employer. In LeJeune v. Allstate Insurance Co., 365 So.2d 471 (La.1978), this Court determined that both the special and the general employer may be solidarily liable for the torts of a "borrowed" employee. This opinion revisits LeJeune in the context of a temporary agency providing industrial workers. We reaffirm our holding in LeJeune, and we further hold that where a general employer is engaged in the business of hiring out its employees under the supervision of another employer, the general employer remains liable for the torts of the "borrowed" employees.

[97-0956 La. 2] FACTS

On October 23, 1992, Edward Morgan, an employee of Goldin Industries of Louisiana, Inc. (Goldin), was cutting iron for scrap in the "burning field" of Goldin's yard in Harvey, Louisiana. Morgan was severely injured when he was struck by a large piece of scrap iron which fell free while being transported across the Goldin yard by a crane. Morgan alleged that the iron which struck him was negligently hooked to the crane by Daryl Hines, an employee of Worktec Temporaries, Inc. (Worktec), who was working in the Goldin yard that day as an industrial laborer. ²

Worktec is a temporary services provider, supplying technical employees such as engineers in addition to general laborers to its customers. In the instant case, Worktec entered into an agreement with Goldin to provide industrial laborers to work in Goldin's scrap yard in Harvey, Louisiana. In accordance with service standards submitted to Goldin, Worktec agreed to "recruit, screen, test, provide orientation, assign and continually monitor the performance" of the assigned employees. Worktec also agreed to provide workers compensation insurance, general liability insurance, and unemployment insurance for any assigned employee. Worktec handled all administration and clerical duties that were required, and it billed Goldin $7.65 per hour for the industrial laborers it provided.

Once assigned, Hines followed the instructions given him by Mark Harding, Goldin's operations manager, and Keith Templet, the operator of the crane at Goldin's facility. Any tools or equipment required were provided by Goldin. Although Goldin could dismiss Hines from its yard, only Worktec had the power to hire and fire Hines. At the end of each week, Hines would fill out a Worktec time [97-0956 La. 3] sheet stating his hours worked and submit it to a Goldin supervisor for verification. Hines would then submit the verified time sheet to Worktec who would issue his paycheck. Worktec paid Hines an hourly wage of $5.00 from which it deducted Hines' state and federal payroll taxes.

There is no dispute that under the agreement, Hines at all times remained Worktec's payroll employee. The agreement provided that after a Worktec employee had been assigned for 12 weeks, Goldin could transfer that employee to its own payroll with no further obligation. However, the agreement provided that any Worktec employee hired away by Goldin during the first 12 weeks of an assignment would result in a "liquidation fee." Although Hines had been assigned to report to work in the Goldin yard for several months before the accident occurred, Goldin did not exercise its option to place Hines on its own payroll. Following the accident, Hines continued working for Worktec at the Goldin assignment as well as assignments with other Worktec customers. Additionally, as a result of the accident, Worktec required Hines to submit to a drug screening in accordance with Worktec personnel policies.

In addition to its assertions that Hines did not hook the load and that the accident was caused by the crane operator's negligence, Worktec maintained that it was not liable as Hines' employer because Hines had become the borrowed employee of Goldin. ³ In support of its borrowed employee defense, Worktec submitted the following jury instruction, which was approved by the trial court and read to the jury: ⁴

[97-0956 La. 4] An employer, such as Worktec Temporaries, Inc., who lends its employees to another company is called a general or lending employer. The borrowing employer, such as Goldin Industries, is called the borrowing or special employer. If, after consideration of the ten factors listed above, you find that Worktec Temporaries was a lending employer, then Worktec is relieved of liability. The party who alleges that an employee has become a borrowed employee, in this case Worktec Temporaries, bears the burden of proving it by a preponderance of the evidence. In this matter, in order to escape liability, Worktec must prove that its employee, Darryl Hines, at some point became the borrowed employee of Goldin Industries, Inc. If you find that Darryl Hines was Worktec's employee, and not Goldin Industries' borrowed employee, then you may find Worktec liable for damages to Edward Morgan caused by Worktec's negligence, if any. ⁵

In its answer to a jury interrogatory, the jury found that Hines was the borrowed employee of Goldin. As instructed by the jury interrogatory, the jury then ended its deliberation and returned its verdict to the court. The trial court entered judgment in favor of Worktec, dismissing Morgan's suit with prejudice. The court of appeal affirmed. We granted writs to determine whether a general employer that [97-0956 La. 5] operates as a temporary employment service agency can be held vicariously liable for the negligent conduct of its loaned employees.

EMPLOYER LIABILITY FOR BORROWED SERVANT

In Louisiana, employers are vicariously liable for the torts of their employees under La.Civ.Code art. 2320, which provides Masters and employers are answerable for the damage occasioned by their servants and overseers, in the exercise of the functions in which they are employed.

Teachers and artisans are answerable for the damage caused by their scholars or apprentices, while under their superintendence.

In the above cases, responsibility only attaches, when the masters or employers, teachers and artisans, might have prevented the act which caused the damage, and have not done it.

The master is answerable for the offenses and quasi-offenses committed by his servants, according to the rules which are explained under the title: Of quasi-contracts, and of offenses and quasi-offenses.

Although Article 2320 provides that employers are only liable when they might have prevented the act which caused the damage, the courts of this state have consistently held that employers are vicariously liable for any torts occasioned by their employees. Ermert v. Hartford Ins. Co., 559 So.2d 467 (La.1990). ⁶ This [97-0956 La. 6] judicial interpretation of La.Civ.Code art. 2320 has been codified by the legislature in La.R.S. 9:3921, which provides, in part: "every master or employer is answerable for the damage occasioned by his servant or employee in the exercise of the functions in which they are employed."

In the past, the courts of this state recognized that under certain circumstances, an employer, called the "general employer," who has relinquished control of his employee to another employer, known as the "special employer," may be legally absolved of liability for that employee's torts. This legal fiction, known as the "borrowed employee" defense was recognized by this Court in Benoit v. Hunt Tool Co., 219 La. 380, 53 So.2d 137 (1951). In Benoit, a welder in the general employ of Hunt Tool Company negligently injured two employees of his special employer, Morris and Meredith, Inc., a drilling company. The court stated:

[I]t is often difficult where two possible masters are involved to determine which is liable for the tort, and to determine such liability we must look to the doctrine of the borrowed servant or employee pro hac vice. In determining liability under this doctrine, in some cases the courts have imposed liability on the person in whose business the employee was engaged at the time the tort was committed. In others the test has been the right of control over the servant at the time the tort was committed.

Benoit, supra at 389-90, 53 So.2d 137.

The two prevailing tests for determining borrowed employee status can be summarized as follows. The "whose business" test inquires as to which employer's work was being performed at the time the accident occurred. The "right of control" test focuses on which employer had the right to control the specific acts of the employee at the time of the accident, the reasoning being that that employer is in the best position to prevent the injury. The two tests tend to overlap since an employer's [97-0956 La. 7] right to control is generally coextensive with the scope of his business, and the tests are often used in a complimentary fashion by the courts in an attempt to determine which of the two employers should be liable. Benoit, supra; The Standard Oil Company v. Anderson, 212 U.S. 215, 29 S.Ct. 252, 53 L.Ed. 480 (1909).

In Benoit, the Court held that under the circumstances, Hunt was vicariously liable for the welder's tortious conduct based on a finding that he was not the borrowed servant of Morris and Meredith. This determination was based on the fact that Hunt retained almost complete control over its loaned employee. Hunt selected the welder, provided him with welding tools, paid his wages, and had the right to fire him. Morris and Meredith had no...