Oilfield Safety and Mach. Specialties, Inc. v. Harman Unlimited, Inc.
| Decision Date | 18 September 1980 |
| Docket Number | Nos. 79-1145,79-1211,s. 79-1145 |
| Citation | 625 F.2d 1248 |
| Parties | OILFIELD SAFETY AND MACHINE SPECIALTIES, INC. and The Aetna Casualty and Surety Company, Petitioners, v. HARMAN UNLIMITED, INC., Gray & Company, Inc. Charles Hansen and Director, Office of Workers' Compensation Programs, U. S. Department of Labor, Respondents. HARMAN UNLIMITED, INC. and Gray & Company, Inc., Petitioners, v. OILFIELD SAFETY, INC., Aetna Casualty & Surety Company, Charles Hansen and Director, Office of Workers' Compensation Programs, U. S. Department of Labor, Respondents. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Bailey & Leininger, B. Ralph Bailey, Metairie, La., for petitioners in No. 79-1211.
Henderson, Hanemann & Morris, Charles J. Hanemann, Houma, La., for Oilfield Safety, Inc. and Aetna Cas. & Sur. Co.
Barron M. Whipple, Houma, La., for Charles Hansen.
Catherine A. Giacona, U.S. Dept. of Labor, Washington, D.C., for Director, O.W.C.P.
Petitions for Review of Orders of the Benefits Review Board.
Before GOLDBERG, TATE and SAM D. JOHNSON, Circuit Judges.
When confronted with two women, each claiming to be the mother of a small child, King Solomon ordered the child cut in two, with one half to be given to each mother. Upon hearing his decree, one of the women insisted that the child be given to her competitor. King Solomon recognized that only the true mother would concede her child in order to save its life, and he ordered the young baby given to its rightful parent. In the case at bar, this Court faces exactly the reverse situation. Charles Hansen was injured while making a safety inspection of an oil drilling platform in the Gulf of Mexico. Hansen's two employers, Oilfield Safety, Inc., and Harman Unlimited, Inc., each denied being his employer at the time of the injury and instead pointed their finger at the other party. The Administrative Law Judge (ALJ) and the Benefits Review Board (Board) held that both Oilfield Safety and Harman Unlimited were Hansen's employers at the time of the accident, and that both were jointly and severally liable for his worker's compensation benefits under the Longshoremen's and Harbor Workers' Compensation Act, (LHWCA). Additionally, the ALJ and the Board awarded attorney's fees to Hansen's counsel. Both employers appeal. We affirm.
On November 2, 1976, while making a safety inspection of an oil drilling platform owned by Amoco Production Company, Clarence Hansen fell through a hole in the main platform and landed on the lower deck fifty feet below. 1 As a result of this fall, Hansen suffered multiple fractures of the left ankle, right leg, right elbow and wrist, and five cervical vertebrae. He subsequently filed for compensation benefits pursuant to the LHWCA. Oilfield Safety and Harman Unlimited immediately began paying compensation benefits. A hearing was held before the ALJ to determine, not whether Hansen was entitled to compensation, for that was undisputed, but rather whether Oilfield Safety, Inc. or Harman Unlimited, Inc. was Hansen's employer. The ALJ found that at the time of the injury both Oilfield Safety and Harman Unlimited were Hansen's employers. The ALJ awarded Hansen temporary total disability compensation from November 3, 1976, continuing medical costs and services, interest, and attorney's fees. He also decreed that Oilfield Safety and Harman Unlimited were to be jointly and severally liable.
Both Oilfield Safety and Harman Unlimited appealed to the Board. Each contended that Hansen was an employee of the other or, in the alternative, that Hansen was an independent contractor. They both also argued that the ALJ erred in holding them liable for attorney's fees; that such fees, if proper, were excessive; and that the ALJ improperly excluded certain evidence. The Board affirmed the ALJ's decision. Oilfield Safety and Harman Unlimited then instituted this appeal. 2
While Hansen was pursuing his worker's compensation claim, he also filed suit against Amoco Production Company and Texaco, Inc. in federal district court to recover for the injuries sustained as a result of the November 2nd fall. Harman Unlimited intervened in the lawsuit to recover from Hansen an amount equal to the compensation and medical expenditures it had made to Hansen. On December 19, 1979, while this appeal was pending, Hansen settled his civil action with Amoco Production and Texaco for $650,000. Two days prior to settlement Hansen and Harman Unlimited resolved the third party action. Hansen agreed to reimburse Harman Unlimited for all compensation and medical expenditures made as a result of the accident. The agreement also provided that if this Court should hold Oilfield Safety was Hansen's sole employer at the time of the accident, then Hansen and Harman Unlimited would share on an equal basis any reimbursement due from Oilfield Safety to Harman Unlimited. On the other hand, Hansen and Harman Unlimited agreed that Harman Unlimited would be solely responsible for reimbursement due to Oilfield Safety if this Court should hold that Harman Unlimited was the sole employer at the time of the accident. After the December 19th settlement Hansen paid Harman Unlimited approximately $41,000, an amount equal to Harman Unlimited's compensation and medical expenditures at that time.
The first issue before this Court is whether Harman Unlimited's appeal is now moot. Oilfield Safety filed a pre-argument motion contending that Harman Unlimited's appeal is moot and should be dismissed. Oilfield Safety argues that since Hansen fully reimbursed Harman Unlimited for all payments made by Harman Unlimited pursuant to the LHWCA, Harman Unlimited now has suffered no loss. Oilfield Safety insists that Harman Unlimited no longer has a live controversy.
We disagree with Oilfield Safety's contention. The agreement between Harman Unlimited and Clarence Hansen provides that Harman Unlimited is to receive one-half of any reimbursement obtained from Oilfield Safety if this Court should find that Oilfield Safety was Hansen's sole employer. A prerequisite to a finding that Oilfield Safety was Hansen's sole employer is a holding that Harman Unlimited was not Hansen's employer. Harman Unlimited has an interest in a reversal of the Board's holding that it was one of Hansen's employers. Harman Unlimited's appeal is not moot and Oilfield Safety's Motion to Dismiss is denied.
The central issue on appeal is whether an employee-employer relationship existed between Clarence Hansen and Harman Unlimited, Oilfield Safety, or both. Harman Unlimited and Oilfield Safety contend that the Board erred in holding Hansen was their employee. In order to resolve this dispute this Court must first determine the standard for deciding whether an individual is an employee. Second, we must decide whether the Board correctly held that the ALJ's finding of dual employment is supported by substantial evidence on the record as a whole and is in accordance with the law. Finally, if both Harman Unlimited and Oilfield Safety are found to have been Hansen's employers at the time of the injury, this Court must determine which of them is liable.
The initial step in resolving the employment question is to ascertain the standard to be applied in deciding whether an individual is an employee. Surprisingly, this is a question of first impression in this Circuit. All prior litigation in this Circuit has involved the question of whether an employee is covered by the LHWCA. See, e. g., Odom Construction Co., Inc. v. United States Department of Labor, 622 F.2d 110 (5th Cir. 1980); Alabama Dry Dock and Shipbuilding Co. v. Kininess, 554 F.2d 176 (5th Cir.), cert. denied, 434 U.S. 903, 98 S.Ct. 299, 54 L.Ed.2d 190 (1977). This Court has not yet had an opportunity to set forth a test to be used in determining the existence of an employee-employer relationship under the LHWCA.
Both Oilfield Safety and Harman Unlimited urge that this Court adopt the "right to control" test. They contend that only if a party has the right to control the details of another's work does an employee-employer relationship exist. Two other courts that have considered this issue have adopted this standard. Cardillo v. Mockabee, 102 F.2d 620 (D.C. Cir. 1939); Yellow Cab Co. v. Magruder, 49 F.Supp. 605 (D.Md.1943), affirmed 141 F.2d 324 (4th Cir. 1944). Both the ALJ and the Board used the "relative nature of the work" test. That test requires examining the nature of a claimant's work and the relation of that work to an employer's regular business. In deciding which test should be incorporated into LHWCA jurisprudence, this Court must examine the background and policies underlying the two standards. The test that best promotes the purposes and policies of the LHWCA should be used in determining the existence of an employer-employee relationship.
The "right to control" test comes from common law. It serves one main function in common law: to limit the scope of an employer's vicarious tort liability. 1C A. Larson, Workmen's Compensation Law § 43.42 (1980). Within the context of respondeat superior the focus on control is proper, because only if an employer controlled the details of an employee's work should the employer be liable for the employee's negligence. The principles underlying worker's compensation, however, are completely different from those that animate respondeat superior.
The theory of compensation legislation is that the cost of all industrial accidents should be borne by the consumer as part of the cost of the product. It follows that any worker whose services form a regular and continuing part of the cost of that product, and whose method of operation is not such an independent business that it forms in itself a separate route through which his own cost of industrial accidents can be channeled, is within the presumptive area of intended protection.
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