Nieves v. Hess Oil Virgin Islands Corp., s. 86-3049

• Decision Date: 22 May 1987
• Docket Number: 86-3065,Nos. 86-3049,s. 86-3049
• Citation: 819 F.2d 1237
• Parties: Antonio NIEVES and Ellen Schuster Nieves, Appellants, v. HESS OIL VIRGIN ISLANDS CORPORATION. Samuel COTTO, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION. Joseph R. TAYLOR, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION. George THOMAS, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION. Phillip SCOTLAND and Pearline Scotland v. HESS OIL VIRGIN ISLANDS CORPORATION, Appellant. Pauliphy PREVOST v. HESS OIL VIRGIN ISLANDS CORPORATION, Appellant. to 86-3067, 86-3584 and 86-3585.
• Court: U.S. Court of Appeals — Third Circuit

Page 1237

819 F.2d 1237

55 USLW 2665

Antonio NIEVES and Ellen Schuster Nieves, Appellants, v. HESS OIL VIRGIN ISLANDS CORPORATION.

Samuel COTTO, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION.

Joseph R. TAYLOR, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION.

George THOMAS, Appellant, v. HESS OIL VIRGIN ISLANDS CORPORATION.

Phillip SCOTLAND and Pearline Scotland v. HESS OIL VIRGIN ISLANDS CORPORATION, Appellant.

Pauliphy PREVOST v. HESS OIL VIRGIN ISLANDS CORPORATION, Appellant.

Nos. 86-3049, 86-3065 to 86-3067, 86-3584 and 86-3585.

United States Court of Appeals, Third Circuit.

Argued Dec. 1, 1986.

Decided May 22, 1987.

Rehearing and Rehearing In Banc in Nos. 86-3049, 86-3065 to

86-3067, and 86- 3585 Denied June 18 and June 22, 1987.

John K. Dema, John K. Dema, P.C., Christiansted, St. Croix, U.S. Virgin Islands, for Antonio Nieves and Ellen Schuster Nieves, appellants in No. 86-3049.

Thomas Alkon, Gordon C. Rhea (argued), Christiansted, St. Croix, U.S. Virgin Islands, for Samuel Cotto, appellant in No. 86-3065, Joseph R. Taylor, appellant in No. 86-3066 and George Thomas, appellant in No. 86-3067.

Mary Faith Carpenter, Law Offices of Desmond L. Maynard, St. Thomas, U.S. Virgin Islands, for Phillip Scotland and Pearline Scotland, appellees in No. 86-3584.

John R. Coon, Christiansted, St. Croix, U.S. Virgin Islands, for Pauliphy Prevost, appellee in No. 86-3585.

Britain H. Bryant, Nancy V. Young, St. Croix, U.S. Virgin Islands, M. David Gelfand (argued), New Orleans, La., for Hess Oil Virgin Islands Corp., appellee in No. 86-3049, No. 86-3065, No. 86-3066, and No. 86-3067, appellant in No. 86-3584 and No. 86-3585.

Before SLOVITER, STAPLETON and ROSENN, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

The issue on appeal is whether the Virgin Islands legislature's amendment of the Virgin Islands Workmen's Compensation Act (the Act) to retroactively eliminate application of the "borrowed employee" doctrine as a bar to pending tort suits constitutes an unjustified impairment of the contractual obligations of Hess Oil Virgin Islands Corporation (Hess or HOVIC), or a violation of Hess' due process rights. Six employees of Litwin Panamerican, Inc. (Litwin) who were injured while on loan to and working for Hess filed separate tort actions against Hess. In each case, Hess moved for summary judgment on the basis of the "borrowed employee" doctrine under which workmen's compensation was the employee's exclusive remedy. In four of the cases, Hess' motions were granted. The legislature then amended the Act, and Hess' motions in the two remaining cases were denied. Appeals are before us in all six cases. Our jurisdiction rests on 28 U.S.C. Secs. 1291, 1292(b).

I. Facts

A. The "Borrowed Employee" Doctrine

In 1976, Hess and Litwin entered into an agreement, amended in 1980, whereby Litwin was to provide personnel to perform general maintenance and turnaround work at Hess' St. Croix refinery. Under the agreement, Litwin workers were divided into two classes. Employees in the class involved here, Type-I personnel, were furnished "as loanees under HOVIC's direction and control in the numbers and by skills as ordered from time to time by HOVIC." Nieves App. at 25. ¹ Hess assumed "direct supervision, direction and control" over these employees, and Litwin was not "responsible to HOVIC or liable for the workmanship of such personnel or for any mistake, error or act of negligence of such personnel." Nieves App. at 24. Litwin was responsible for maintaining "at its own expense" Virgin Islands workmen's compensation insurance, any other statutorily required workmen's compensation insurance and employer's liability insurance against common law claims. Nieves App. at 32. With respect to Type I work, Hess agreed to "defend, indemnify and hold [Litwin] harmless from any and all loss, damage, injury, liability, claim, demand, cause of action and judgment for personal injuries or death or for damage to or loss of property ... from any occurrence resulting from the performance of said work under this Agreement...." Nieves App. at 33-34. When hiring employees to serve as Type-I employees on loan to Hess, it was Litwin's practice to have them sign a Hess loanee form. That form states:

This is to inform you of the conditions under which you will be working as a "HESS LOANEE". You should be aware that while working as a loanee:

1. HOVIC personnel will control, direct, and supervise all aspects of your work.

2. At no time should you receive, or act under instructions from Litwin Supervision.

3. HOVIC will provide you with safety equipment and will ensure that all safety conditions surrounding your work are met.

Nieves App. at 61.

George Vanterpool, originally hired by Litwin as a Type-I employee in 1976, brought suit against Hess seeking damages for injuries sustained as a result of Hess' alleged negligence while Vanterpool was on loan to Hess in 1981. At that time, the exclusive remedy provision of the Virgin Islands Workmen's Compensation Act stated:

When an employer is insured under this chapter, the right herein established to obtain compensation shall be the only remedy against the employer.

24 V.I.C. Sec. 284 (1970). In 1984, the district court held that under the borrowed employee doctrine this section could apply to bar Vanterpool's tort action against Hess, his borrowing employer. See Vanterpool v. Hess Oil Virgin Islands Corp., 589 F.Supp. 334, 339 (D.V.I.1984), aff'd in part and rev'd in part, 766 F.2d 117 (3d Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 801, 88 L.Ed.2d 777 (1986). Under the common law borrowed employee doctrine:

... if a special (borrowing) employer exercises a sufficient degree of control over a borrowed employee for a time sufficient to suggest that the employee has assessed the risks of his new employment and has acquiesced in his borrowing employer's control, the borrowing employer may be deemed a statutory employer for purposes of workers' compensation.... The borrowed employee is then barred from suing his borrowing employer for injuries sustained during the course of his employment; instead, the borrowed employee is remitted to the exclusive remedy provided by the relevant workers' compensation act.

Vanterpool v. Hess Oil Virgin Islands Corp., 766 F.2d 117, 121 (3d Cir.1985).

The district court's holding was the first application of the borrowed employee doctrine in the Virgin Islands. In response, on October 19, 1984, the Virgin Islands legislature added to the Workmen's Compensation Act a section abrogating the borrowed employee doctrine. That section states:

It shall not be a defense to any action brought by or on behalf of an employee, that the employee at the time of his injury or death was the borrowed loaned, or rented employee of another employer. Any oral or written agreement between an employer and employee which makes the employee the borrowed, loaned or rented employee of another employer shall be null and void as being against the public policy of this Territory.

24 V.I.C. Sec. 263a (1986).

Although section 263a had been enacted when Vanterpool's appeal came before this court, we referred to it in a footnote only, stating that the "amendment's effect is prospective only." Vanterpool, 766 F.2d at 119 n. 1. We agreed with the district court that the borrowed employee doctrine was applicable in the Virgin Islands. Id. at 121-26.

On January 23, 1986, the Virgin Islands legislature amended the exclusive remedy provision of the Workmen's Compensation Act, adding a statement that:

The "statutory employer and borrowed servant" doctrine are not recognized in this jurisdiction, and an injured employee may sue any person responsible for his injuries other than the employer named in a certificate of Insurance issued under Section 272 of this Title.

Bill No. 498, 16th Legislature Sec. 1(a) (1986) (to be codified at 24 V.I.C. Sec. 284(b)), Nieves App. at 150. This provision, to be codified as 24 V.I.C. Sec. 284(b), does not appear to be substantively different from the 1984 amendment codified as 24 V.I.C. 263a in its effect on the borrowed employee doctrine. However, the proposed addition was made applicable not only to claims filed after the effective date of the amendment but also to "claims pending as of the effective date of this Act: regardless of when the accident which gave rise to the claim occurred." Bill No. 498, 16th Legislature Sec. 1(b) (1986), Nieves App. at 151. On February 5, 1986, the Governor of the Virgin Islands vetoed the Bill, referring to the effect of its retrospective application in the six pending cases presently before us on appeal. See Prevost v. Hess Oil Virgin Islands Corp., 640 F.Supp. 1220, 1221-22 n. 2 (D.V.I.1986). On February 27, 1986, the veto was overridden and the bill, including the retroactive application provision, became law. Id.

B. The Current Proceedings

Each of the six cases before us was brought by a borrowed employee of Hess who sued Hess for injuries allegedly caused by Hess' negligence. Each case was pending at the time the retroactive application provision became law.

Antonio Nieves was hired by Litwin on June 27, 1983, and was assigned to work at Hess as a heavy equipment mechanic. On September 28, 1983, while on loan to Hess, he fell from a cherry picker and suffered a double hernia and nerve damage in his pelvic area. He filed his complaint against Hess on December 3, 1984. On November 1, 1985, the district court granted Hess summary judgment on the ground that Nieves was "the borrowed employee of HOVIC. HOVIC is therefore immune from Nieves' suit." Nieves v. Hess Oil Virgin Islands Corp., No. 84-336, slip op. at 5 (D.V.I. Nov. 1, 1985), Nieves App. at 178.

Joseph Taylor began intermittent employment with Litwin in 1976. On April 2, 1984, after five months of continuous employment on loan to Hess, he suffered a back injury as the result of a scaffold collapse. He filed his complaint on July 11, 1984. On ...