Holder v. Fraser Shipyards, Inc.
Holder v. Fraser Shipyards, Inc.
Opinion of the Court
Plaintiff James Holder alleges that he suffered from lead poisoning while working on a project to convert the Herbert C. Jackson 's propulsion system from steam- to diesel-powered. He sued the ship's owner, The Interlake Steamship Company, alleging negligence under the Longshore and Harbor Workers' Compensation Act (the "Act" or "LHWCA"),
*922UNDISPUTED FACTS
A. Background
Defendant Interlake, the owner of the Jackson , is a Delaware corporation that maintains its principal place of business in Ohio. Beginning in 2006, Interlake started a ten-year project to upgrade five ships in its fleet, including converting four to diesel-powered. The last ship due for an upgrade was the Jackson . To facilitate this, Interlake entered into a contract on September 30, 2015, with defendant Fraser.
Fraser is a Wisconsin corporation with its principal place of business in Superior, Wisconsin, which provides shipyard services, such as construction, repairs and inspections. Fraser's work on the Jackson was its "first major repowering [project] ... since the mid-1980s." (Press Release (dkt. # 101-2) 5.) The majority of the work Fraser performs occurs at its property in Superior, Wisconsin. Defendant Capstan is Fraser's sole shareholder and parent corporation and it is a Wisconsin corporation, but with an office in Duluth, Minnesota.
*923Since February 18, 2011, Fraser had a Client Services Agreement with Tradesmen International, under which Tradesmen would assign workers to Fraser. By its terms, this agreement specified that Fraser would be "solely responsible for directing, supervising and controlling Tradesmen employees as well as their work." (Client Services Agreement (dkt. # 15-1) ¶ 3(a).) This agreement also detailed that Fraser had the right "in its sole discretion, [to] release a Tradesmen employee back to Tradesmen at any time." (Id. )
On December 14, 2015, Holder applied for a job as a "ship fitter" with Tradesmen, believing that the job consisted of working for Tradesmen in Superior, Wisconsin. As part of the application process, Holder acknowledged that he would be subject to a background check, including signing off on execution of a background check release form, which referred to Tradesmen as the employer. Holder also received a Tradesmen Employment Orientation Recap, which involved reviewing OSHA training and the Tradesmen Employee Safety Handbook, watching a safety video, and discussing fringe benefits. In addition, he was instructed to report injuries and accidents to Tradesmen for investigation and to direct questions about the Field Employee Policy Manual to his manager. Finally, Holder understood that Tradesmen would manage his employee withholdings.
Beginning in January 2016, Tradesmen assigned workers to Fraser Shipyards for the Jackson upgrade, including Holder. Holder disputes that: (1) the Fraser-Tradesmen Client Services Agreement was followed in practice; (2) he acknowledged Fraser's responsibility and authority for his direction and supervision; and (3) he acknowledged being a Fraser employee. Fraser paid Tradesmen for the work done by Holder based on a bill-out rate, multiplied by the number of hours Holder worked.
B. Holder's Work on the Jackson
Holder worked aboard the ship at Fraser's dry dock for 37 days, from January 5 until February 29, 2016. On the 5th, Holder signed a notice agreeing to abide by Tradesmen's policies, as well as acknowledging that Tradesmen or he could terminate his employment "with or without cause, and with or without notice, at any time." (Holder Personnel File (dkt. # 102-1) 10.)
Holder's work involved "removing and replacing the bottom and side shell on the vessel and also framework," which required him "to burn out the old steel with a torch," make "final cuts, take whatever framework had to be taken out, and go ahead and replac[e] everything with new steel." (Holder Dep. (dkt. # 85) 98:4-15.) He only worked on the turn-of-the-bilge/ballast area of the ship. Holder avers that his supervisors were Chris Duncan and Joe Kutzler (apparently misspelled as Cunsler) and that they directed his work, although Fraser and Capstan dispute this. The parties also dispute whether Duncan and Kutzler were employees of Reuben *924Johnson & Sons ("RJS") or Chris Jensen & Sons, and whether they were working for Fraser on the Jackson project. Fraser avers that no RJS employees were on the Jackson .
Regardless, Holder believed that he was working for Tradesmen, not Fraser. Moreover, the parties agree that Holder was paid by Tradesmen during the course of his work at the Fraser Shipyards, although they dispute whether Fraser provided Holder with tools or whether Holder brought his own, with the exception of heavy equipment which they agree was available at the job site. The parties also dispute whether Fraser made available safety and protective equipment. Holder contends that when he checked out equipment, he identified himself as a Tradesmen employee.
Fraser asserts that Holder worked on a different project unrelated to the repowering project-specifically, one replacing shell plates, which was covered by a different Interlake purchase order-while Holder maintains that he worked on the repowering project. In either case, Holder maintains that he was exposed to lead during his work on the project. He also avers that: (1) a Fraser representative informed him respirators were optional; (2) no one told him about designated changing areas, to vacuum his clothing, or other preventive hygiene; (3) the respirator he used at work was not fit tested; and (4) on January 29, 2016, Farkas informed him that "there is no lead paint" (Holder Dep. (dkt. # 85) 164:6-165:5). Holder does not recall speaking with anyone from Interlake while working on the Jackson .
C. Work Performed on the Jackson
The goal of the contract between Interlake and Fraser Shipyards was to convert the Jackson from steam- to diesel-powered. For the price of $9,784,295, plus costs for equipment, the Jackson repowering project included the installation of new diesel engines, operating and main decks, propeller and blades, control room and console, and a tailshaft, plus related piping, electrical components and equipment. During the work, the propeller blades, rudder, hub, unloading diesel generators, and stack were removed; the propeller shaft cut; the main propulsion turbine, propulsion boilers, propulsion controls, and reduction gear were demolished; and the outer hull below the waterline had a 7-foot by 4-foot hole in it. The ship was unable to propel itself and was no longer watertight and or capable of floating while in dry dock. Holder himself testified about "holes all over the shell of the boat," such that it looked like "Swiss cheese," and there was "no way in the world that boat was going to float if you flooded the dry dock at that point." (Holder Dep. (dkt. # 85) 151:3-15.)
As a result, the Jackson was in dry dock from December 15, 2015 until May 31, 2016, and could not have been used for transport during this time. The Jackson entered a Fraser "graving" dry dock, such that it was out of water and did not have a captain in service onboard. Although this repowering project was supposed to take approximately six months, and actually took nine, the parties agree that it was typical for a Great Lakes ship to be out of use during at least a few of the winter months, when maintenance is routinely done.
The parties dispute who controlled the Jackson during this upgrade. Holder argues that the ship remained in Interlake's active control, while Interlake points to Fraser. They likewise dispute whether Interlake controlled the details of the work performed by Fraser. They also disagree whether there was crew aboard. Holder avers that Mike Wolny was working on the ship on behalf of Interlake, while Interlake *925responds that Wolny was a "field project manager," who updated Interlake on the status of the project, but did not reside on the ship and was provided office space by Fraser. Holder contends Wolny's presence practically gave Interlake the ability to intervene in the work being completed and to direct workers on how to do their jobs, while Interlake contends that Wolny was merely a "technical advisor," who advised about the positioning of valves. Interlake maintains further that it only had the right to approve and inspect work, material and workmanship, to assure conformance with the contract.
Still, the parties agree that Wolny met weekly with Fraser's Currelli and that Interlake needed to pre-approve additional work. Wolny also created "Weekly Repower Reports" for Interlake's director of fleet projects, Ian Sharp, in which he regularly reported that Fraser "require[d] a procedure to deal with the discovery of lead paint" and that no testing for lead paint had been performed. (See e.g. Weekly Reports (dkt. # 100-2) 27, 36, 64, 84.) According to plaintiff, Fraser relied on Grant Huttel, a Capstan employee, for safety management during the Jackson repowering project.
The ship was returned to Interlake on September 25, 2016, a Certificate of Inspection was issued on September 23, 2016, and an American Bureau of Shipping Certificate for the Jackson was issued on December 15, 2016. The parties dispute whether the Jackson needed these certificates before it could sail.
D. Knowledge of Lead
The parties next dispute whether Fraser assumed the ship had lead paint based on its age, but Interlake expressly warned Fraser in the contract that "there may be asbestos and lead paint" on the ship and that the "responsibility to safely remove any and all asbestos and lead paint that is disturbed as a result of this conversion" fell to Fraser. (Shipbuilding Contract for the Re-Powering of the Str. Herbert C. Jackson and Attachments (dkt. # 81-1) 43.) Moreover, a kick-off meeting between Fraser, Interlake, Seeley Electric, Toromont, MAST, Northern Engineering, Bay Engineering, Robinson Brothers, and Benson Electric was held on October 12-13, 2015, at which they discussed asbestos abatement. At that meeting, Interlake avers it again warned Fraser that lead paint was likely to be found on the Jackson , to which Fraser responded that it had a procedure for handling lead.
On November 30, 2015, Robinson Brothers gave Fraser a price quote on lead paint removal from the engine room of the Jackson . Interlake contends that this quote addressed only a "localized spot," and such work was completed. Plaintiff alleges that Interlake chose not to repaint the engine room because the cost of removing and replacing the paint was too high and would take too long.
At a meeting on December 15, 2015, Interlake again informed Fraser that there likely was lead paint on the ship, this time pointing out that other shipyards working on the Jackson during prior winters had developed procedures for detecting lead paint and ensuring worker safety by monitoring air quality. Plaintiff disputes Interlake's assertion that Fraser's Tom Currelli assured that a system was in place for dealing with toxins, including lead paint, that was similar to other shipyards'.
Plaintiff further hypothesizes that Fraser's allegedly written, lead compliance program was only created after the Jackson project was terminated, disputing the assertion that Fraser informed Interlake at a January 8, 2016, meeting of its intent to activate its lead detection and remediation procedures. Plaintiff also disputes Interlake's *926assertion that it did not know Fraser had failed to act to protect workers from lead paint and other toxic substances.
E. OSHA Investigation
Workers complained to defendants Capstan and Fraser about the air quality aboard the Jackson . When Capstan and Fraser did nothing, workers then turned to OSHA. OSHA conducted air sample testing on the Jackson on February 10-11, 2016, resulting in a citation and notice of penalty on July 29, 2016. (OSHA Citation (dkt. # 101) 36.) On both days, OSHA found "[t]he employer did not ensure that employee(s) exposure to lead did not exceed 40 micrograms per cubic meter (ug/m3) of air, as a reduced 10-hour time weighted average (TWA) for the extended work shift." (Id. )
F. Holder's Injury
After Holder stopped working on the Jackson on February 29, 2016, a former colleague advised him to have his blood tested because others had been exposed to lead. When Holder did so on April 1, 2016, his blood test revealed a blood-level of 36.5 µg/dL. In contrast, a normal blood lead level (BLL) for adults at that time was considered to be less than 5 µg/dL, with an average of 1.2 µg/dL. See The National Institute for Occupational Safety and Health (NIOSH) Adult Blood Lead Epidemiology and Surveillance (ABLES) Program Description, Centers for Disease Control and Prevention (Aug. 10, 2017), https://www.cdc.gov/niosh/topics/ables/description.html (hereinafter "NIOSH ABLES").
Holder applied for benefits under the Act on January 9, 2017, identifying Tradesmen as his employer and Chris Pooler as his supervisor. (LHWCA Claim Form (dkt. # 102-2) 1.)
Dr. David Parker, a licensed physician with a master's of public health in occupational epidemiology, who has consulted with labor and industry about worker health and safety, spoke with Holder on the phone and reviewed his medical records.
OPINION
Summary judgment is appropriate if the moving party establishes "that there is no genuine dispute as to any material fact" and it "is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). At summary judgment, the district court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. ,
The Longshoreman and Harbor Workers Compensation Act provides worker's compensation to employees for
disability or death ... if [such] results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading or unloading, repairing, or building a vessel).
*928
any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel).
The Act's coverage was expanded in 1972 to include "adjoining area[s] customarily used by an employer in loading, unloading, dismantling, or building a vessel" to erase disparity between the benefits available to longshoremen injured on navigable waters and those injured on adjacent piers, with Congress seeking "to provide a seamless blanket of coverage for all longshore injuries." Peter ,
Just as most other workers compensation acts, however, the LHWCA does permit an injured employee to sue third parties. See
I. Claims Against Interlake
A. § 905(b) of the LHWCA
Section 905(b) of the Act allows the exclusive remedy for maritime torts to be *929asserted against "vessels," which include "said vessel's owner, owner pro hac vice, agent, operator, charter or bare boat charter, master, officer, or crew member." See
1. Maritime Tort
As the court explained in its opinion on the motion to dismiss,
To prevail on a negligence claim against a "vessel" under § 905(b), a plaintiff must satisfy a two part test: "(1) his injury must occur within an area adjoining navigable waters of the United States, known as the 'situs' test, and (2) the nature of the work performed by him must be maritime in nature, known as the 'status' test."
(Mot. Dismiss Op. (dkt. # 59) 8 (quoting McLaurin ,
Turning first to Interlake's assertion that the situs of plaintiff's injury was on land because the Jackson was in "dry dock," as plaintiff points out, that term is included within the definition of "navigable waters" in § 903(a) itself. Indeed, a vessel in dry dock-even a so-called "graving" dry dock
*930Simmons v. The Steamship Jefferson ,
As to the argument that the Jackson was no longer a vessel, however, Interlake has a better argument, albeit one that also does not warrant summary judgment. As an initial matter, a "vessel" incorporates "every description of water-craft or other artificial contrivance used, or capable of being used, as a means of transportation on water." Stewart v. Dutra Const. Co. ,
For purposes of this case, therefore, the relevant question is whether the work on the Jackson became significant enough that it was no longer " 'capable of being used' for maritime transportation." Stewart ,
Regardless of whether Holder was working on the repowering project or another project, it is undisputed that the Jackson was undergoing major construction during the time that he was working.
However, that is not the end of the inquiry. First, the physical structure of the Jackson still indicated to any reasonable observer that it was designed for water transport. (See Photo of Jackson in Dry Dock (dkt. # 81-2) 2; Photo of Jackson with Rudder Removed (dkt. # 81-3) 2; Photo of Jackson Holes (dkt. # 81-4) 2.) Second, it is unknown for how long the Jackson was practically incapable of maritime transport and how this amount of time related to plaintiff's work on the ship.
Plaintiff's proposed expert John Sullivan opined that "[t]he Jackson never stopped being a vessel while it was in the dry dock" because "[t]he work on [it] was not, in any way, comparable to a vessel being taken out of service and permanently moored to the shore or the ocean *932floor."
B. State Law Claims
1. Ability to Assert
In his summary judgment opposition, plaintiff argues that " § 905(b) is not the sine qua non of Interlake's liability" because "if § 905(b) does not apply, then plaintiff is free to pursue state law claims against Interlake even though ... not expressly included ... in his complaint." (Pl.'s Opp'n (dkt. # 98) 9, 10 n.1.) However, as Interlake notes, plaintiff appeared to disclaim possible state law claims against Interlake in his complaint. (Interlake Reply (dkt. # 119) 2-3; see also 3d Am. Compl. (dkt. # 106) ¶¶ 64-65; compare id. ¶ 65 ("The claims for relief against [Interlake] are expressly authorized by LHWCA § 905(b) and this statute makes clear that general admiralty and maritime law governs these claims.") with id. ¶ 66 ("The claims for relief against [Capstan and Fraser] are permitted by LHWCA § 933 and brought pursuant to general admiralty and maritime law, or alternatively general admiralty and maritime law supplemented by state law, or alternatively applicable state law.").) Following the court's invitation to address Interlake's waiver argument, plaintiff responded that
Over fourteen months ago, in response to Interlake's motion to dismiss, counsel for the plaintiff stated in a footnote: "If for any reason the Court disagrees [with plaintiff's argument LHWCA Section 905(b) governs plaintiff's claims against Interlake], plaintiff moves for leave to file a second amended complaint, in order to state claims for relief against Interlake and others under state law."
(Pl.'s Sur-Reply (dkt. # 136) 1 (quoting Pl.'s Mot. Dismiss Opp'n (dkt. # 32) 7 n.1).) Thus, plaintiff argues "it cannot be a surprise to Interlake" that he "will seek leave to amend the complaint" if the court concludes that § 905(b) does not apply.
*933(Id. at 2.) He adds that the "plain language" of Paragraphs 64 and 65 of his complaint "belie" Interlake's argument that plaintiff disclaimed reliance on state law. (Id. )
Plaintiff is correct that he did not need to "plead legal theories in [his] complaint." King v. Kramer ,
The court will, however, consider this belated assertion of state law claims as a motion to amend his complaint under Rule 15(a)(2), which provides that leave should be "freely given ... when justice so requires." Fed. R. Civ. P. 15(a)(2). As noted at the motion to dismiss stage, that does not require leave always be given: "district courts have broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the defendants, or where the amendment would be futile[.]" See Arreola v. Godinez ,
*934Defendant's sole argument is that plaintiff waived or disclaimed his state law claims. Importantly, plaintiff is only able to assert his state claims if § 905(b) does not apply. See McLaurin ,
Could the plaintiff have avoided this uncertainty by pleading his state and federal claims as alternatives? Certainly, but this failing does not doom his ability to claim both. Plaintiff argues that "there will be no delay at all and the case will not be any more costly or difficult to defend" because "the same witnesses will testify and the same exhibits will be offered and received" and the "fundamental factual allegations are the same" regardless of if "plaintiff's legal right of action is based on federal or state law." (Pl.'s Sur-Reply (dkt. # 136) 5, 4.) The court agrees that because plaintiff's state law claims arise from the same facts and rely on the evidence, Interlake should not be meaningfully prejudiced by this addition. Thus, the court again will grant plaintiff's implicit request to amend the complaint, though for the last time.
2. Asserted Claims
Plaintiff purports to raise a negligence claim under the Wisconsin Safe-Place Statute.
Wisconsin's Safe-Place Statute requires all employers provide a "safe" "place of employment" "for employees therein and for frequenters thereof," as well as all employers and owners of "place[s] of employment ... construct, repair or maintain such place[s] ... as to render the same safe."
Employees of an independent contractor working on the property qualify as "frequenters" under the statute. Neitzke v. Kraft-Phenix Dairies, Inc. ,
when the employer knows that a dangerous instrumentality which he has located in the "place to work" is to be brought within the range of the operation to be engaged in by those properly on the premises, he is liable for failure to reduce to a minimum the possibility of danger from that instrumentality.
A reasonable interpretation of the statute as it applies to frequenters, is that the employer's duty is to make the premises safe for the performance of acts which he knows or reasonably should know are going to be performed thereon.
Neitzke ,
The statute differentiates between "hazardous condition[s] result[ing] from an unsafe condition associated with the structure" and "reckless or negligent acts of persons on the premises." Viola ,
Adequate notice is typically a question for the jury.
Under the Safe-Place statute, a "duty is imposed upon an owner only when there is retention of a right of control beyond mere legal ownership or right of inspection." Kaltenbrun ,
Ownership "is determined by factors such as possession, control, dominion and supervision." Kaltenbrun ,
[s]ituations ... where the premises are so changed by the independent contractor as to excuse the owner from liability. If, for instance, the dangerous instrumentality is erected by the independent contractor himself, or a defective scaffolding is installed, the owner may not be liable for the injuries resulting. Or, if the independent contractor conducts his work, unknown to the owner, in a manner so unusual and at variance with the customary methods of doing that work, that because of it an existing instrumentality becomes dangerous and renders the premises unsafe, the owner may be free from liability.
Neitzke ,
Because the facts concerning control of the Jackson while plaintiff worked on it are in dispute, summary judgment is not appropriate on any state law claim. Plaintiff alleges that Interlake's representative Mike Wolny practically gave Interlake the ability to intervene in the work being completed and actually did direct workers about how to do their jobs. Interlake contends that it only had the right to inspect material and workmanship, it required to approve work and materials that conformed to the contract, and Wolny was a technical advisor who advised about the positioning of valves. Likewise, Interlake posits that Fraser had active control. Therefore, plaintiff will be able to proceed on his late-asserted state law negligence claim.
C. Liability
Finally, defendant Interlake contends that it is not liable regardless of whether the standard under § 905(b) of the Act or Wisconsin negligence law applies. The Seventh Circuit described the Scindia duties owed by a shipowner under § 905(b) as follows:
First, when a shipowner turns a ship over to the stevedore, the shipowner must exercise ordinary care to have the ship and its equipment in a reasonably safe condition and must "warn[ ] the stevedore of any hazards on the ship or with respect to its equipment that are known to the vessel or should be known to it, that would likely be encountered by the stevedore ... and that are not known by the stevedore and would not be obvious to or anticipated by him if reasonably competent in the performance of his work." Scindia [Steam Navigation Co. v. De Los Santos ,451 U.S. 156 , 167,101 S.Ct. 1614 ,68 L.Ed.2d 1 (1981) ]. Second, a shipowner may be liable if it actively involves itself in the operations of the stevedore or if it fails to exercise due care to avoid exposing longshoremen to harm from hazards they may encounter in areas, or from equipment, under the active control of the vessel during the stevedoring operation. Lastly, even if the shipowner is not actively involved in operations and does not have active control of the vessel, if the shipowner has actual knowledge of a dangerous condition which has arisen *938after the turning over of the ship to the stevedore, the shipowner has a duty to intervene, under certain circumstances ... to correct the dangerous condition.
Elberg v. Mobil Oil Corp. ,
As to the first so-called "turnover duty," a shipowner has two responsibilities:
(1) a duty to exercise ordinary care under the circumstances to turnover the ship and its equipment in such a condition that a competent contractor/repair yard can carry on its operations with reasonable safety; and (2) a duty to warn the contractor of latent or hidden dangers which are known to the vessel or should be known to it.
Knudsen ,
As to the second duty, a shipowner lacks a duty of active control where it lacks control over both the vessel and the repairs being performed. West v. United States ,
Finally, as to the third duty to intervene, the Seventh Circuit explained in Elberg that it is not enough for the shipowner to have actual knowledge of a dangerous condition, rather it must have actual knowledge of the unsafe condition and the contractor permitting the condition to continue, where the decision to not correct the unsafe condition is "obviously improvident."
II. Claim Against Fraser
Plaintiff also brings a negligence claim against Fraser under § 933 of the Act. (3d Am. Compl. (dkt. # 106) ¶ 66.) Fraser argues that Holder was its "borrowed employee" when he was injured, and as such, § 933 is unavailable because the LHWCA limits employer liability to compensation under § 904. (See Fraser & Northern's Summ. J. Br. (dkt. # 51) 19.) Under the LHWCA, worker's compensation is the only remedy available to an injured employee against his employer. See
The borrowed employee (or borrowed servant) doctrine provides that "an employee directed or permitted by his employer to perform services for another principal may become the employee-i.e., the 'borrowed servant'-of the borrowing principal in performing those services." Langfitt v. Federal Marine Terminals, Inc. ,
Plaintiff and Interlake argue that "a contractor (such as Fraser) is not the LHWCA employer of a subcontractor's (i.e., [Tradesmen] ) employees unless the subcontractor (Tradesm[e]n) failed to secure payment of LHWCA benefits and the contractor (Fraser) stepped in to fill the gap." (Interlake's Resp. to Fraser's Summ. J. Mot. (dkt. # 92) 3; see also Pl.'s Opp'n (dkt. # 98) 46-47 ("Fraser Shipyards would only be the employer of the plaintiff if [Tradesmen] failed to secure payment of LHWCA benefits to the plaintiff, and Fraser Shipyards stepped in and paid those benefits to the plaintiff." (emphasis in original) ).) They base their argument on the following provisions:
• Section 904(a) : "only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation."33 U.S.C. § 904 (a).
• Section 905(a) : "a contractor shall be deemed the employer of a subcontractor's employees only if the subcontractor fails to secure the payment of compensation as required by section 904 of this title."33 U.S.C. § 905 (a).
As pointed out by Fraser, however, this argument has been addressed and rejected by other courts on the ground that the 1984 amendment to § 905(a) did not eliminate the borrowed employee doctrine. E.g. , Melancon ,
[T]here is nothing in the legislative history indicating that Congress intended to do anything other than overrule Washington Metro [politan Transit Authority v. Johnson ,467 U.S. 925 ,104 S.Ct. 2827 ,81 L.Ed.2d 768 (1984) (holding a contractor who purchased LHWCA coverage for its subcontractors' employees could be considered those employees' employer under § 905(a) ) ]. That brief history does not support the proposition that Congress wished to upset the use of the borrowed servant doctrine as utilized by the Fourth and Fifth Circuit cases.
Peter v. Hess Oil V.I. Corp. ,
Based on the court's decision on defendants' motions to dismiss (see dkt. # 59 at 21-22), the parties understandably focus on the nine factors enumerated in Capps v. N.L. Baroid-NL Industries, Inc. ,
(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?
(2) Whose work is being performed?
(3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?
(4) Did the employee acquiesce in the new work situation?
(5) Did the original employer terminate his relationship with the employee?
(6) Who furnished tools and place for performance?
(7) Was the new employment over a considerable length of time?
(8) Who had the right to discharge the employee?
(9) Who had the obligation to pay the employee?
The court will use this same framework.
No one factor is determinative, but control is the most important. Id. at 617. Because of the statutory scheme creating no-fault compensation as the only remedy for injured employees from employers, the borrowed employee doctrine requires consideration not just of who controlled the employee's work, but whether the employee consented to the borrowed employee situation. Langfitt ,
1. Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?
Importantly, the question is whether Fraser Shipyards "had assumed the right to control [plaintiff's] longshoring work." Langfitt ,
While the parties agree that the terms of the agreement specified that Fraser would be "solely responsible for directing, supervising and controlling Tradesmen employees, as well as their work" (Client Services Agreement (dkt. # 15-1) ¶ 3(a) ), Holder disputes that this was followed in practice and argues that his direct supervisors, Kutzler and Duncan, were employees of RJS Construction, so that Fraser did not control his work. In response, Fraser points out that: (1) RJS did not work on the Jackson while Holder was working on the ship; (2) Holder's supervisors were CJS employees; (3) Fraser relied on CJS to provide needed additional labor; (4) Holder was assigned his work by a Fraser foreman before Kutzler sought assistance; (5) Holder worked on a team comprised of workers from Fraser, CJS and Tradesmen, with supervision from Fraser; and (6) Fraser supervised Holder's CJS supervisor, who was also a borrowed employee. (See Fraser Reply (dkt. # 112) 7-9.) Accordingly, which party had control over plaintiff is at least arguably "an undetermined factual issue" on this record, although leaning toward Fraser. Barrios v. Freeport-McMoran Res. Partners Ltd. , Civ. A. Nos. 93-0092,
This factual dispute need not be the end of the court's analysis. As the district court concluded in Tajonera ,
*9422. Whose work is being performed?
Under this factor the question is whose business did Holder 's work further? See Capps ,
The dispute over whether Duncan and Kutzler were employees of CJS or RJS is immaterial. Regardless of who legally employed plaintiff's supervisors, Holder's supervisors were directed by Fraser and doing work for its benefit. Certainly, Holder offers no evidence to support any other inference. The ship was still at Fraser's shipyard and the work-whether part of the Jackson repowering project or requested under a separate work order-was performed on Fraser's behalf. (See Duncan Aff. (dkt. # 124-1) ¶ 6 ("It was my understanding that RJS Construction Group, LLC had been hired as a subcontractor to Fraser Shipyards in order to provide construction foremen to supervise work on the Herbert C. Jackson.").) Therefore, this factor weighs in favor of borrowed employee status.
3. Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?
There is no dispute that since February 2011, Fraser and Tradesmen had a written agreement under which Tradesmen would provide workers to Fraser, and Fraser would be "solely responsible for directing, supervising and controlling Tradesmen employees as well as their work." (Client Services Agreement (dkt. # 15-1) ¶ 3(a).) This agreement also details that Fraser had the right "in its sole discretion, [to] release a Tradesmen employee back to Tradesmen at any time." (Id. ) Plaintiff's complaint that there was no explicit language about borrowing employees is unfounded. This factor weighs strongly in favor of borrowed employee status.
4. Did the employee acquiesce in the new work situation?
While Holder argues that he believed himself to be, and held himself out to be, an employee of Tradesmen while working on the Jackson , the question of employee acquiescence is an objective one. See Langfitt ,
5. Did the original employer terminate his relationship with the employee?
This factor does not require the complete and utter severance of the relationship between the lending employer and the lent employee. Indeed, such a requirement would moot the borrowed employee doctrine altogether, since the employee would have become the borrowing employer's employee. Capps ,
6. Who furnished tools and place for performance?
The parties agree that Holder brought some of his own tools, but that heavy equipment was available at the jobsite for his use. The parties also agree that the jobsite-the Jackson -was set in Fraser's dry dock. As such, this factor at least "leans" towards borrowed employee status. See In re Knudsen ,
7. Was the new employment over a considerable length of time?
"[W]here the length of employment is considerable, this factor supports a finding that the employee is a borrowed employee; however, the converse is not true." Capps ,
8. Who had the right to discharge the employee?
The question here is who had the power to fire Holder from his work with Fraser , not who could fire him from his employment with Tradesmen. See Capps ,
9. Who had the obligation to pay the employee?
While there is no dispute that Tradesmen paid plaintiff's wages and managed his tax withholdings, the inquiry does not end there. Rather, the question is intended to be broader: who provided the *944funds to pay the Holder? See Capps ,
Accordingly, even assuming that the control factor is open to some factual dispute, seven of the other eight factors weigh in favor of borrowed employee status and the remaining factor is neutral. Accordingly, the court finds that any reasonable jury would find plaintiff was the borrowed employee of Fraser and therefore his only recourse is a workers' compensation claim.
III. Claim against Capstan
Like the claim against Fraser, plaintiff brings a § 933 claim against Capstan. (See 3d Am. Compl. (dkt. # 106) ¶ 66.) Seeking summary judgment, Capstan argues that it "is so interrelated with Fraser ... [that] it is treated as a single entity for purposes of the [LHWCA's] exclusive remedy provision." (Capstan Summ. J. Br. (dkt. # 73) 1.) Capstan adds that the two companies "are so interrelated[ ] that a suit against one is essentially a suit against the other" because of their shared management employees and corporate offices, and the fact that Capstan is the parent corporation and sole shareholder of Fraser. (Id. at 4-5.) For this reason, Capstan argues it is entitled to immunity to the same extent as Fraser. (Capstan Reply (dkt. # 113) 1.) Plaintiff argues that Capstan is not entitled to immunity whether or not Fraser is entitled to immunity. (Pl.'s Opp'n (dkt. # 98) 57-58.) Specifically, plaintiff argues that Fraser and Capstan are different corporate entities (with different workspaces, websites, logos, and email domains) that played different roles on the Jackson , with Capstan having responsibility for safety. (Id. at 58, 60.)
Recognizing "that there are many times when separate corporate existence is disregarded in favor of the reality of viewing the corporate organizations in question as a single entity," the court in Claudio v. United States ,
*945While legally separate entities, Capstan is the sole shareholder and parent corporation of Fraser. Moreover, Todd Johnson is the chairman and chief executive officer of both companies, and Scott Brantly is the treasurer and chief financial officer of both as well. They also share a corporate office. Still, they have different worksites, corporate logos and websites, and their employee email addresses have different domains. The only facts addressing the interrelation of the businesses are plaintiff's assertions regarding Fraser's reliance on Capstan for safety management. These facts relate only to safety management, not addressing any other overlap. Further, no party addressed whether Fraser and Capstan share centrally controlled labor relations. Regardless unlike Fraser, Capstan has not established its entitlement to summary judgment.
ORDER
IT IS ORDERED that:
1) Defendant Fraser's motion for summary judgment (dkt. # 50) is GRANTED IN PART as to defendant Fraser and DENIED AS MOOT as to former defendant Northern.
2) Defendant Capstan's motion for summary judgment (dkt. # 72) is DENIED.
3) Defendant Interlake's motion for summary judgment (dkt. # 78) is DENIED. Plaintiff's implicit request to amend the complaint to add explicitly his alternative state law claims (dkt. # 98) is GRANTED, and he shall file the amended complaint within 10 days. Except to respond to any newly asserted state law claims and to assert any additional, affirmative defenses specific to those claims, the defendants need not answer.
4) Plaintiff's motion to strike (dkt. # 124) is DENIED AS MOOT.
5) Defendant Fraser's motion to sever (dkt. # 127) is RESERVED.
6) Trial will proceed on a trifurcated basis: first, the jury will determine whether the Jackson was a vessel at the time of plaintiff's injuries; then it will determine liability; finally, if the jury finds liability, it will calculate damages.
While the plaintiff previously alleged negligence against Northern Engineering, the parties stipulated to that defendant's dismissal with prejudice. (Dkt. # 89; see also Nov. 3, 2017 docket entry terminating Northern.) According, the court need not address Northern's separate arguments for summary judgment.
"It is not a vessel owner's status as a vessel owner that dictates which LHWCA provision a maritime worker may use; it is the type of negligence that the worker alleges and the duty that is owed by the vessel owner that is controlling." McLaurin v. Noble Drilling (US) Inc. ,
Fraser's request to sever or order separate trial for Interlake's cross-claim (dkt. # 128) is also under advisement as of December 12, 2017. However, the court will treat this request a motion in limine and reserve ruling on it until closer to trial.
Viewing the facts in the light most favorable to plaintiff as the non-moving party, the following facts are material and undisputed for purposes of summary judgment, except as specifically noted. At the outset, the court briefly addresses Capstan and Fraser's rampant use of hearsay objections in their responses to plaintiff's proposed findings of fact, many of which are ill-founded because they are statements of an opposing party, which are categorically not hearsay. See Fed. R. Evid. 801(d)(2). The court will not address these repetitive boilerplate hearsay challenges. Similarly, these same defendants repeatedly object on relevance grounds to plaintiff's proposed findings of fact for no apparent purpose. While the court understands that defendants consider many of plaintiff's proposed facts to be "completely irrelevant to the grounds for [their] summary judgment motions," plaintiff only had one opportunity to submit contrary proposed findings of fact to marshal his evidence and attempt to show a genuine, material dispute of fact. Whether objecting or not, defendants were free to argue the relevant facts. Moreover, some of the defendants' relevance objections were baseless, and many more invoked facts that had some "tendency to make a fact [of consequence in determining the action] more or less probable than it would be without the evidence." Fed. R. Evid. 401, 402. By and large, therefore, the court will not address these objections further in this opinion either, trusting that kneejerk and pointless blanket objections will not be part of any sides' response to an opposing parties' proposed trial exhibits.
Fraser and then-defendant Northern had proposed a fact that both were solely owned by Fraser Industries, LLC. However, plaintiff apparently chose not to answer because he had already dismissed Northern as a defendant. (Compare Pl.'s Resp. to Fraser & N. Eng'g's PFOF (dkt. # 96) ¶ 32 with Pl.'s Resp. to Capstan's PFOF (dkt. # 95) ¶ 3.)
Former defendant Northern, a Wisconsin limited liability company, focuses on repair and renewal of mechanical equipment, conveying and propulsion systems, industrial gear drives, engine heads and valves, analytical assessment and testing, and shaft and bearing equipment. Its sole member is Fraser Industries, LLC, which in turn has a sole member: Capstan. Northern was identified by Fraser as a "related employer" on Fraser's LHWCA insurance.
In response to plaintiff's proposed facts regarding Fraser's reliance on Capstan for safety management, defendants Capstan and Fraser both relied on the same, oft repeated response: "Dispute. This Proposed Finding of Fact is completely irrelevant to the grounds for Capstan and Fraser's summary judgment motions. Fed. R. Evid. 401 and 402." (See Capstan & Fraser's Resp. to Pl.'s PFOF (dkt. # 111) ¶¶ 86-92.) Because the defendants have failed to put forward evidence disputing plaintiff's assertions, however, the court will take them as true for purposes of summary judgment, leaving the court perplexed as to how the defendants consider these proposed facts "irrelevant," particularly when Capstan argues it is entitled to summary judgment because of its business being interrelated with Fraser's.
Fraser disputes plaintiff's reliance on the subsequent citation based on these findings because Fraser entered an agreement with OSHA to resolve their disputes, which agreement and actions taken pursuant thereto were expressly not to be deemed admissions. Moreover, the parties to that agreement agreed that OSHA's findings could not be used for any purpose other than proceedings and matters arising under the Occupational Safety and Health Act of 1970. However, the plaintiff was not a party to that agreement, and regardless, the "findings" referred to in the agreement appear to refer to the findings referred to within the agreement itself , which amends the citations and notifications to include the agreement, not the other way around. (See OSHA Stipulation (dkt. # 118-1) 4, 11.) Although some objection might be made to admission of the citation itself (or even OSHA's underlying findings) on foundation or hearsay grounds, the court will assume for purposes of summary judgment that plaintiff can clear that hurdle at trial, or at minimum an expert could rely on the citations in forming his own opinions.
Even if one considered the guidance for adults for 2009-2015, normal BLL was = 10 µg/dL. See NIOSH ABLES.
Defendants Fraser and Capstan point out that the claim form was not signed by Holder, but rather by Tommy Dulin, his attorney for his LHWCA claim.
For purposes of summary judgment, Interlake does not challenge Dr. Parker's qualifications or analysis, but reserves the right to do so at trial. Although no such reservation was required, apparently discovery had not been taken regarding Dr. Parker when summary judgment was being briefed.
On the question of exclusivity, Peter specifically held that "where an employer has obtained workmen's compensation coverage for its LHWCA employee under both LHWCA and the state or territorial statute, § 905(a) and the Supremacy Clause bar a state or territorial tort recovery against the employer."
Undoubtedly, this is because the work performed by plaintiff appears to be maritime in nature.
"A graving [dry] dock is 'a permanent structure on land with gates that allow vessels to enter and that then can be closed to drain out the water. In other words, it is a dry drydock." Vasquez v. GMD Shipyard Corp. ,
The only change to this definition since 1873 was the removal of the hyphen in "water-craft" in the 1947 Rules of Construction Act. See Stewart ,
The Stewart Court explained that "[a] ship and its crew do not move in and out of Jones Act coverage depending on whether the ship is at anchor, docked for loading or unloading, or berthed for minor repairs, in the same way that ships taken permanently out of the water as a practical matter do not remain vessels merely because of the remote possibility that they may one day sail again."
In Stewart , the Supreme Court noted
that the "in navigation' requirement" [does not] st[and] apart from § 3, such that a "vessel" for purposes of § 3 might nevertheless not be a "vessel in navigation" for purposes of the Jones Act or the LHWCA. Instead, the "in navigation" requirement is an element of the vessel status of a watercraft. It is relevant to whether the craft is "used, or capable of being used" for maritime transportation.
Stewart ,
The court does not view the dispute about whether plaintiff was working on the repowering project as material because the repowering project was ongoing when plaintiff was working on the Jackson such that the structure and capability of the Jackson was impacted thereby. See West ,
John Sullivan has licensing from the U.S. Coast Guard as a chief engineer of steam, motor and gas turbine powered vessels of any tonnage and unlimited horsepower. He is also an American Bureau of Shipping accredited marine surveyor. As with Dr. Parker, Interlake does not challenge the qualifications or analysis of Mr. Sullivan for purposes of summary judgment, but reserves the right to do so at trial because expert discovery had not been conducted before briefing for summary judgment. The court notes that plaintiff purported to "adopt[ ] by reference" "[t]he supporting reasons for each of [Sullivan's] opinions" as "set forth in Mr. Sullivan's affidavit." (Pl.'s PFOF (dkt. # 99) ¶ 110.) The court considered Sullivan's affidavit, but such incorporation by cross-reference is not appropriate. (See Procedure to Be Followed on Motions for Summary Judgment (dkt. # 35) 11 ("Each fact must be proposed in a separate, numbered paragraph, limited as nearly as possible to a single factual proposition.").)
Further, King is distinguishable. King involved the risk of "grave inequity" caused by application of the incorrect legal standard, despite "all parties and the court [being] aware of the correct standard." King ,
"Prejudice exists where the new theory would surprise the defendant because the complaint 'explicitly or implicitly disclaims' the theory or where the parties have 'tacitly' agreed not [to] pursue the theory and raising it would unreasonably delay the litigation." Wis. Bell,
Plaintiff denotes his state law claim as two claims: one under common law negligence and one under the Wisconsin Safe-Place Statute. However, "the Safe Place Statute does not create a cause of action. 'It merely lays down a standard of care and if those to whom it applies violate the provisions thereof they are negligent.' " Krause v. Veterans of Foreign Wars, Post ,
"Generally, a principal employer is only liable in tort for injuries sustained by an independent contractor's employee while he is performing the contracted work if (1) the owner commits an affirmative act of negligence, or (2) the employee was injured while engaged in an extrahazardous activity." Anderson v. Proctor & Gamble Paper Prod. Co. ,
The court in Viola concluded that summary judgment for defendant was improper because:
Viola's amended complaint does allege an "unsafe condition." The amended complaint alleges that Viola worked in premises where pipes were covered with asbestos-containing insulations. The regular maintenance and/or repair of the premises required that the asbestos be disturbed. The asbestos was disturbed-in some instances by the decedent while performing work in the usual way as required by the decedent's employer and/or Wisconsin Electric. There is no evidence that Viola performed any of this necessary maintenance or repair work negligently. Furthermore, Wisconsin Electric knew about the asbestos and its health hazards, but failed to protect Viola from these hazards. Finally, Viola died from mesothelioma caused by his asbestos exposure. Given these facts, we conclude that the presence of asbestos dust in the air at Wisconsin's Electric's premises was an "unsafe condition" and that Viola's amended complaint properly alleges a negligence claim asserting Wisconsin Electric's violation of the Safe Place statute.
Viola , 2014 WI App ¶ 52.
Described in terms of duties owed to stevedores, these same duties should likewise apply to other independent contractors and harborworker employees, unless the danger is inherent in the activity itself. See Casaceli v. Martech Int'l, Inc. ,
The Seventh Circuit in Elberg agreed with the district court's conclusion that Mobil could reasonably rely on the contractor to correct any dangerous situations and that the contractor's decision to leave the tanks open without barricades during work was not "obviously improvident." Mobil had no duty to intervene.
The court in Langfitt makes this statement in addressing plaintiff's argument that facts were disputed as to whether FMT or BBC exercised control over him. The court then went on to find that FMT had exercised control over him and that it didn't matter that BBC had directed FMT's employee who supervised plaintiff.
In fairness, the Tajonera court arguably asked a different question: whether the lending or borrowing employer controlled plaintiff's work, not whether the borrowing employer or a third-party controlled plaintiff's work. In Tajonera , the parties argued that the express contract governing the lending employer's provision of labor had been modified by the reality of the worksite, creating a dispute of material fact.
Reference
- Full Case Name
- James HOLDER v. FRASER SHIPYARDS, INC., The Interlake Steamship Co., and Capstan Corp.
- Cited By
- 6 cases
- Status
- Published