Zeigler v. Eastman Chem. Co.
| Decision Date | 23 November 2022 |
| Docket Number | 19-1643, No. 19-1646, No. 19-1647 |
| Parties | Sallie M. ZEIGLER, as Personal Representative of the Estate of Alton Ray Zeigler, Plaintiff - Appellant, v. EASTMAN CHEMICAL COMPANY; Mundy Maintenance Service and Operations LLC, Defendants - Appellees. Jacob S. Jackson, Plaintiff - Appellant, v. Eastman Chemical Company; Mundy Maintenance Service and Operations LLC, Defendants - Appellees. Kevin R. Vann; Kelli D. Vann, Plaintiffs - Appellants, v. Eastman Chemical Company; Mundy Maintenance Service and Operations LLC, Defendants - Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Louis M. Bograd, MOTLEY RICE LLC, Washington, D.C., for Appellant. Allen Mattison Bogan, NELSON MULLINS RILEY & SCARBOROUGH LLP, Columbia, South Carolina; Keith D. Munson, RIMON LAW, Greenville, South Carolina, for Appellees. ON BRIEF: Heath P. Taylor, TAYLOR LAW FIRM LLC, West Columbia, South Carolina, for Appellant Jacob S. Jackson. Charles T. Slaughter, WALKER MORGAN, LLC, Lexington, South Carolina, for Appellants Kevin R. Vann and Kelli D. Vann. George C. Johnson, JOHNSON, TOAL & BATTISTE, P.A., Columbia, South Carolina, for Appellant Sallie M. Zeigler. T. David Hoyle, John David O'Neill, Marlon E. Kimpson, MOTLEY RICE, LLC, Mount Pleasant, South Carolina, for Appellants. John F. Kuppens, Blake T. Williams, Columbia, South Carolina, Samuel O. Outten, NELSON MULLINS RILEY & SCARBOROUGH LLP, Greenville, South Carolina, for Appellee Eastman Chemical Company. Catherine F. Wrenn, WOMBLE BOND DICKINSON (US) LLP, Greenville, South Carolina, for Appellee Mundy Maintenance Service and Operations, LLC.
Before WYNN and HARRIS, Circuit Judges, and KEENAN, Senior Circuit Judge.
Reversed and remanded by published opinion. Judge Harris wrote the opinion, in which Judge Wynn and Senior Judge Keenan joined.
These consolidated tort actions arise out of a 2016 industrial accident at a South Carolina chemical-manufacturing plant. Three independent contractors of Eastman Chemical Company were severely injured, one of them fatally, when a pump exploded during maintenance. Eastman moved to dismiss their state-law personal injury suits, contending that the contractors qualified as Eastman's "statutory employees" under the South Carolina Workers' Compensation Law – which would mean that workers' compensation was their exclusive remedy and that the courts lacked jurisdiction to hear their claims. See S.C. Code §§ 42-1-10 et seq.
The district court agreed that the plaintiffs were Eastman's "statutory employees" under the workers' compensation law and dismissed their actions. On appeal, we held their cases in abeyance pending the decision of South Carolina's Supreme Court in Keene v. CNA Holdings, LLC , 436 S.C. 1, 870 S.E.2d 156 (2021).
That court has now clarified, in Keene , that when an employer makes a "legitimate business decision" to outsource a portion of its work, the contractors it hires to perform that work are not "statutory employees" for workers' compensation purposes. 870 S.E.2d at 163. No party here contests that Eastman's outsourcing of its maintenance and repair work was a "legitimate business decision." It follows that the plaintiffs, independent contractors performing maintenance at the time of the 2016 pump explosion, were not statutory employees and may bring personal injury actions. Accordingly, we reverse the district court's judgment dismissing the actions for lack of subject matter jurisdiction and remand for further proceedings.
We begin with a brief description of the governing statutory framework. This appeal turns on one question: whether the South Carolina Workers' Compensation Law ("the Act"), S.C. Code §§ 42-1-10 et seq. , which provides the exclusive remedy for covered employment-related injuries, bars the plaintiffs' tort actions. The Act creates a "quid pro quo arrangement," in which an "employee receives the right to swift and sure compensation in exchange for giving up the right to sue in tort." Harrell v. Pineland Plantation, Ltd. , 337 S.C. 313, 523 S.E.2d 766, 772 (1999) (internal quotation marks omitted). Consistent with that trade-off, the Act's exclusivity provision states that the workers' compensation "rights and remedies granted by this title to an employee ... shall exclude all other rights and remedies of such employee ... against his employer, at common law or otherwise[.]" S.C. Code § 42-1-540 (emphasis added). This immunity extends both to the employer and to any co-employees "conducting [the employer's] business." S.C. Code § 42-5-10. Eastman contends that the plaintiffs' injuries are covered by workers' compensation, and that the Act's exclusive remedy thus deprives us of subject matter jurisdiction to hear their personal injury actions.
The plaintiffs, on the other hand, point to an express exemption in the Act for "injuries resulting from acts of a subcontractor of the employer," which preserves a tort remedy for workers – like themselves – who are independent contractors of a business owner. S.C. Code § 42-1-540. But the Act clarifies that not all independent contractors are exempt from its coverage. The so-called "statutory employee provision" – at the heart of this case – makes independent contractors the equivalent of employees in certain circumstances: When an employer "undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts" with an independent contractor to complete that work, the terms of the Act apply as if "the work[er] had been immediately employed by him." Id. § 42-1-400 (emphasis added). Eastman claims that the plaintiffs, though admittedly independent contractors, were injured while performing maintenance work that was "part of [Eastman's] trade, business or occupation." As a result, Eastman contends, we must treat the plaintiffs as if they were Eastman's direct employees and conclude that the Act bars their personal injury actions.
After jurisdictional discovery, the district court concluded that the plaintiffs' maintenance and repair work was indeed part of Eastman's "trade, business or occupation" and that it therefore lacked subject matter jurisdiction to hear their tort claims. The questions before us, then, are how South Carolina courts interpret the scope of an owner's "trade, business or occupation" under the statutory employee provision and whether the plaintiffs' labor qualifies under that definition.
On December 6, 2016, Alton Zeigler, Jacob Jackson, and Kevin Vann – three maintenance employees of DAK Americas LLC – attempted to remove a faulty pump on a chemical production line owned by Eastman Chemical Company. During this process, the pump exploded, injuring or killing the DAK employees and giving rise to this action.
To understand the business relationship between Eastman and DAK, the plaintiffs' employer, we first rewind several decades. In 1967, Eastman Chemical Company opened the chemical-manufacturing facility at issue in this case, in Calhoun County, South Carolina. It continuously operated the plant until 2011, when it sold the facility to DAK Americas LLC, a subsidiary of a Mexican chemical company. In the sale, Eastman retained several assets at the facility, including four of the plant's 13 chemical production lines.
At the same time, Eastman terminated virtually its entire 400-person workforce at the facility. Former Eastman workers were required to reapply for employment with DAK, and nearly all 400 Eastman employees became DAK employees. Eastman then contracted with DAK to operate and maintain its retained lines – to provide, in essence, the same labor previously done by its own employees. Eastman preserved only a small managerial force (three employees, at the time of the 2016 accident) to coordinate with DAK's on-site labor. DAK, in turn, contracted with Mundy Maintenance Service and Operations LLC, also a defendant in this action, for supplemental maintenance and other services at the Calhoun County plant.
These contractual relationships set the backdrop for the accident at issue here. In December 2016, production halted on Eastman's retained lines for an annual maintenance shutdown. This maintenance included removal of a pump that helped feed superheated liquid monomer through the production line. DAK employees planned to drain the superheated chemicals from the line before removing the pump. The line's drain was not working, however, possibly because a cooled chemical was plugging the drainpipe. On December 3, Mundy employees attempted to use a torch to heat the drainpipe, in hopes of melting any chemicals clogging the drain. This attempt was apparently unsuccessful.
As a result, on December 6, DAK used an alternative procedure to remove the pump "hot" – that is, without first draining the monomer. But soon after Zeigler, Jackson, and Vann loosened the bolts securing the pump, an explosion erupted, spewing chemicals across the room. The molten liquid – which was heated to approximately 300 degrees Celsius – killed Zeigler and severely burned Jackson and Vann.
In April 2017, the plaintiffs – Zeigler's surviving spouse, Jackson, and Vann and his spouse – commenced separate personal injury actions against Eastman and Mundy in federal district court, invoking diversity jurisdiction under 28 U.S.C. § 1332. The plaintiffs alleged, in sum, that Eastman's employees were negligent in their management of the retained line, and that Mundy's employees were negligent in their attempt to unclog the drainpipe prior to the explosion.
Eastman's answers asserted "that all claims against it must be dismissed pursuant to Rule 12(b)(1)" on the basis that the plaintiffs were Eastman's statutory employees and thus subject to the South Carolina Workers' Compensation Commission's exclusive jurisdiction. J.A. 74. At an initial scheduling conference, the district court ordered limited discovery and briefing on the statutory employment...
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