IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 94-40488 (Summary Calendar) __________________________

SCOTTY DUHON, ET AL., Plaintiffs-Appellants,

versus

UNION PACIFIC RESOURCES COMPANY, Defendant-Appellee.

_______________________________________________

Appeal from the United States District Court for the Western District of Louisiana (93-CV-108) _______________________________________________

Before DUHÉ, WIENER and STEWART, Circuit Judges.

This is a third party action brought by an oil rig employee

and his wife against the developer and operator of the rig, Union

Pacific Resources Company ("UPRC"). Plaintiff, Scotty Duhon, is a

Louisiana resident who was hired in Louisiana by Grey Wolf

Drilling, a Texas corporation which does business in Louisiana and

Texas. Grey Wolf was under contract with UPRC to drill a well in

Texas. Duhon was injured in the course and scope of his employment

while working on this well. Thus, he was entitled to worker's

compensation benefits under either Louisiana or Texas law.

Plaintiff received benefits under Louisiana's worker's compensation

scheme through Grey Wolf's carrier.

Scotty Duhon and his wife, Dawna Duhon, filed a third party

tort suit against UPRC. UPRC filed a third party complaint against

Grey Wolf and The Gray Insurance Company for defense and indemnity. Grey Wolf and The Gray Insurance Company intervened, asserting

their subrogation rights for worker's compensation benefits paid to

Duhon.

UPRC filed a motion for summary judgment, claiming tort

immunity based on the statutory employer doctrine in Louisiana's

worker's compensation law.1 The district court granted the motion,

and plaintiffs have appealed. Because we conclude that Louisiana

law applies to the dispute, the district court properly granted

summary judgment in favor of UPRC.

Standard of Review

We review a district court's choice-of-laws determination de

novo. Arochem Corp. v. Wilomi, Inc.,

(5th Cir. 1992);

Federal Deposit Insurance Corp. v. Massingill,

(5th

Cir. 1994).

Federal courts sitting in diversity must apply the choice-of-

laws provisions of the state in which they sit. Klaxon Co. v.

Stentor Elec. Mfg. Co., Inc.,

(1941). Thus, we

must apply Louisiana's choice-of-laws principles to determine which

state's substantive law will apply.

Discussion

Louisiana has a new set of choice-of-laws provisions, codified

as Book IV to the Louisiana Civil Code. These articles apply to

all actions filed after January 1, 1992. This suit was filed

1 See La. R. S. 23:1032

2 January 19, 1993. Thus, Book IV will apply to resolve the choice-

of-law issues in this case.

Plaintiffs submit that Louisiana Civil Code art. 3544 governs

this case. Article 3544 provides a mechanical rule for choice-of-

law determinations in issues related to loss distribution and

financial protection. Statutes that provide immunity from suit,

such as La. R.S. 23:1032, are appropriately classified as rules of

loss distribution or financial protection. Kennington v. H. Blume

Johnson, Inc.,

(La. App. 2d Cir. 1994). Thus,

art. 3544 is an appropriate starting point in our choice-of-laws

analysis of this tort immunity/worker's compensation issue. That

article provides, in relevant part:

Issues pertaining to loss distribution and financial protection are governed, as between a person injured by an offense or quasi-offense and the person who caused the injury, by the law designated in the following order:

. . . .

(2) If, at the time of the injury, the injured person and the person who caused the injury were domiciled in different states: (a) when both the injury and the conduct that caused it occurred in one of those states, by the law of that state; . . .

In this case, Duhon, the injured person, is a domiciliary of

Louisiana. For purposes of a choice-of-laws analysis under Book

IV, the "person"2 who allegedly caused the injury, Union Pacific,

may be treated as a domiciliary of either Delaware, its place of

incorporation, or Texas, the state of its principal place of

business, whichever is most pertinent to the particular issue. La.

2 Under Louisiana law, a corporation is a juridical person. La. Civ. C. art. 24.

3 Civ. C. art. 3518. In this case, Union Pacific clearly should be

treated as a domiciliary of Texas. Accordingly, under the

mechanical rule of art. 3544, we would apply Texas law because

Texas is the domicile of one of the parties, and the injury and the

wrongful conduct occurred there. Plaintiffs contend that the

inquiry should end at article 3544, and that Texas law should apply

to the case. Accordingly, UPRC would not be entitled to the

"statutory employer" tort immunity afforded to it under Louisiana

law.

UPRC contends, and the district court agreed, that the choice-

of-law analysis does not begin and end with the rote application of

art. 3544 only. Article 3547 provides an "escape hatch" to be

used when the mechanical rule of 3544 yields an incorrect result,

i.e., one that is incompatible with the principles of Article 3542,

infra, from which these rules have been derived. See Comment to

La. Civ. C. art. 3547.

Louisiana Civil Code article 3547 provides:

The law applicable under Articles 3543-3546 shall not apply if, from the totality of the circumstances of an exceptional case, it is clearly evident under the principles of Article 3542, that the policies of another state would be more seriously impaired if its law were not applied to the particular issue. In such event, the law of the other state shall apply.

Louisiana Civil Code article 3542, in turn, states:

Except as otherwise provided in this Title, an issue of delictual3 or quasi-delictual obligations is governed by the law of the state whose policies would be most

3 Louisiana is a civil law jurisdiction: the civilian term "delictual obligation" means a tort obligation.

4 seriously impaired if its law were not applied to that issue.

That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the events giving rise to the dispute, including the place of conduct and injury, the domicile, habitual residence, or place of business of the parties, and the state in which the relationship, if any, between the parties was centered; and (2) the policies referred to in Article 3515, as well as the policies of deterring wrongful conduct and of repairing the consequences of injurious acts.

Thus, the issue is whether this is an "exceptional case" which

warrants the application of art. 3547 over art. 3544. Appellants

assert that this is not an exceptional case, and that the district

court erred in applying article 3547. Appellants urge the

application of Texas law. Appellants point out that they should

not be bound to the application of Louisiana law because they never

"elected" to receive worker's compensation benefits under

Louisiana's worker's compensation scheme: Grey Wolf's arrangement

with its compensation carrier just happened to provide for payment

under Louisiana's scheme.

This case presents exactly the same scenario as a case

recently decided by this Court. Accordingly, we are persuaded to

follow it. Carriere v. Chandeleur Energy Corp., 94-40119, (5th

Cir. Dec. 9, 1994) (unpublished opinion, attached for the parties'

reference), held that art. 3547 applied instead of art. 3544 in a

third party action where the plaintiff received worker's

compensation benefits under Louisiana's compensation scheme and

thereafter sued his statutory employer, a Texas domiciliary, in

Louisiana. Accordingly, this Court in Carriere determined that

5 such a factual scenario constituted an exceptional case and applied

Louisiana law to the dispute, thereby affording tort immunity to

the statutory employer. We consider these facts indistinguishable

from Carriere; therefore, we do not do an interest analysis

comparing the interests of Texas and Louisiana in this case.

Carriere held that facts such as these constitute an exceptional

case under art. 3547, dictating the application of Louisiana law.

The same result is in order here.

Under art. 3547, Louisiana law would seem to apply in this

case because the plaintiffs are Louisiana citizens, Duhon was hired

in Louisiana by Grey Wolf, suit was filed in Louisiana, and Duhon

received worker's compensation benefits in accordance with

Louisiana's worker's compensation scheme. Under Louisiana law,

UPRC qualifies as Duhon's statutory employer and could have been

forced to pay worker's compensation benefits to him had Grey Wolf

failed to do so. Because Louisiana law imposes this burden on

statutory employers such as UPRC to provide compensation benefits

to statutory employees hired in Louisiana, no matter where they are

injured, it is reasonable that they should be entitled to the

corollary benefit of tort immunity.

Appellants' final argument is that UPRC is not Duhon's

statutory employer. We reject this argument as well. Under La.

R.S. 23:1061, when a "principal" engages a contractor to perform

work that is a part of the principal's trade, business, or

occupation, the principal is liable to pay compensation benefits to

any injured employee of the contractor. A worker is performing

6 work that is within the trade, business, or occupation of the

principal whenever the work done by the employee is essential to

the principal's business. Maddox v. Baker Oil Tools, Inc.,

(E.D. La. 1991). Plaintiff was a floorhand whose

activities were essential and integral to the drilling of the well,

which is an essential part of UPRC's business of exploring and

producing oil and gas. Thus, the district court properly concluded

that under La. R.S. 23:1061, based on undisputed facts, UPRC was

Duhon's "statutory employer." Provisions in the drilling contract

between Grey Wolf and UPRC which state that the employees of Grey

Wolf were not to be considered employees of UPRC are inapposite.

The parties could not by their contract contravene the statutory

duty imposed upon UPRC to provide worker's compensation benefits to

its "statutory employees."

Conclusion

The district court properly concluded that UPRC was Duhon's

statutory employer under Louisiana law. Thus, UPRC is entitled to

tort immunity. The district court's grant of UPRC's motion for

summary judgment is AFFIRMED.

7