Evans v. BF Perkins Company , 166 F.3d 642 ( 1999 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DAVID WAYNE EVANS,
Plaintiff-Appellant,
v.
B. F. PERKINS COMPANY, a division
of Standex International
Corporation; DIVERSIFIED
CONVERTERS, INCORPORATED; E. I.
No. 98-1002
DUPONT DE NEMOURS AND COMPANY,
INCORPORATED,
Defendants-Appellees,
and
MEDICAL COLLEGE OF VIRGINIA
HOSPITALS AUTHORITY,
Party in Interest.
Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Robert R. Merhige, Jr., Senior District Judge.
(CA-97-522)
Argued: October 28, 1998
Decided: January 28, 1999
Before ERVIN and HAMILTON, Circuit Judges, and
MOON, United States District Judge for the
Western District of Virginia, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Hamilton wrote the opinion in
which Judge Ervin joined. Judge Moon wrote a separate opinion con-
curring in part and dissenting in part.
COUNSEL
ARGUED: Bradford Manson Young, Karl Lloyd Santone, CHAND-
LER, FRANKLIN & O'BRYAN, Charlottesville, Virginia, for
Appellant. Raymond Michael Ripple, E.I. DUPONT DE NEMOURS
AND COMPANY, Wilmington, Delaware; Philip Browder Morris,
MORRIS & MORRIS, P.C., Richmond, Virginia, for Appellees. ON
BRIEF: Lawrence B. Chandler, Jr., CHANDLER, FRANKLIN &
O'BRYAN, Charlottesville, Virginia, for Appellant. Donna L. Good-
man, E.I. DUPONT DE NEMOURS AND COMPANY, Wilmington,
Delaware; Ann Adams Webster, MORRIS & MORRIS, P.C., Rich-
mond, Virginia; H. Aubrey Ford, III, CANTOR, ARKEMA &
EDMUNDS, Richmond, Virginia, for Appellees.
_________________________________________________________________
OPINION
HAMILTON, Circuit Judge:
David Evans appeals the district court's order dismissing his Vir-
ginia common law action against E. I. du Pont de Nemours and Com-
pany, Incorporated (Du Pont) and two of Du Pont's independent
contractors, Diversified Converters, Incorporated (DCI) and B. F. Per-
kins Company (Perkins),1 to recover damages for injuries he sustained
in an industrial accident at DCI's plant in Chester, Virginia, on March
28, 1996, allegedly as a result of the defendants' negligence and
breach of warranties. The district court concluded that it lacked sub-
ject matter jurisdiction, see Fed. R. Civ. P. 12(b)(1), over Evans' Vir-
ginia common law action because under the Virginia Workers'
Compensation Act, Va. Code Ann. §§ 65.2-100 to 65.2-1310 (VWCA
or the Act), Du Pont and DCI were statutory employers of Evans, and
Perkins was Evans' fellow statutory employee, and, therefore, the
defendants were immune from Evans' Virginia common law action
under the VWCA, which provides the exclusive remedy for Evans.
For the reasons stated below, we affirm.
_________________________________________________________________
1 We will refer to Du Pont, DCI and Perkins collectively as "the defen-
dants."
2
I
Du Pont is a global chemical and energy company that manufac-
tures, among other products, TYVEK. TYVEK is a synthetic paper
replacement used as construction sheeting material. Prior to the mid-
1990's, Du Pont produced TYVEK in four steps: step one was the
production of rolls of high-density polyethylene fibers; step two
involved the thermal heat and pressure bonding of the polyethylene
fiber rolls into sheets for various end-use applications; step three was
the printing of logos on the sheets; and step four involved the conver-
sion of the sheets into small rolls according to customer width and
length specifications.
In the mid 1990's, Du Pont decided to diversify its TYVEK sheet-
ing business by offering market-specific TYVEK products. Du Pont
contracted with Perkins for Perkins to develop a machine to allow
Du Pont to produce market-specific TYVEK products, to develop an
operating procedure for the new machine, to demonstrate the use of
the machine applying the operating procedure, and to supply the aux-
iliary safety equipment for the machine.
In compliance with its contract with Du Pont, Perkins designed and
produced the "TCP machines." The TCP machines added a new ther-
mal embossing step to the TYVEK processing. The TCP machines
combined this new thermal embossing step with the previously used
thermal bonding step and the previously used logo printing step. This
new thermal embossing step, which required the changing of emboss-
ing rolls, enabled Du Pont to produce market-specific TYVEK prod-
ucts. Also, in accordance with its contract with Du Pont, Perkins
developed a "Roll Changing System Operating Procedure" (Roll
Changing Procedure or TCP Roll Changing Procedure) for Du Pont's
TCP machines. This Roll Changing Procedure set forth the steps for
changing the rolls on Du Pont's TCP machines and also designated
exactly what auxiliary safety equipment Perkins and Du Pont would
supply for the roll changes, including Perkins' roll change demonstra-
tion.
At this same time, Du Pont contracted with DCI for DCI to com-
plete the processing of TYVEK at the DCI plant in Chester, Virginia.
Specifically, Du Pont contracted with DCI for DCI to perform the
3
new thermal embossing step and the final step of converting the
TYVEK rolls into smaller rolls for Du Pont's customers. DCI agreed
to use Du Pont's TCP machines to perform the thermal embossing
step and agreed to follow Du Pont's procedure for roll changes, devel-
oped by Perkins.
After designing and producing the TCP machines and developing
the TCP Roll Changing Procedure for Du Pont, Perkins still had some
obligations to fulfill under its contract with Du Pont. In an effort to
comply with its remaining obligations, Perkins subcontracted with
M&R Constructors, Incorporated (M&R), for M&R to demonstrate
the roll change on Du Pont's TCP machines at the DCI plant on
March 11-13, 1996. Further, as required by the Du Pont-Perkins con-
tract, Perkins provided DCI with Du Pont's TCP Roll Changing Pro-
cedure for use during the March 11-13 roll change and also supplied
DCI with auxiliary safety equipment necessary for the March 11-13
roll change and future roll changes.
On March 11-13, 1996, M&R, under the direction of Perkins, per-
formed the roll change on Du Pont's TCP machines at DCI. Evans,
an employee of M&R, participated in the roll change. During the roll
change, Perkins, DCI, and M&R discussed and analyzed Du Pont's
TCP Roll Changing Procedure and modified the procedure to the sat-
isfaction of Du Pont and DCI.
The next roll change on Du Pont's TCP machines at DCI was
scheduled for March 28, 1996. Under its contract with Du Pont, DCI
was responsible for the completion of the March 28 roll change. DCI
subcontracted with M&R for the M&R crew, who had participated in
the March 11-13 roll change, to complete the March 28 roll change.
On March 28, 1996, prior to the roll change, an M&R employee
performed work for Perkins on Du Pont's TCP machines at DCI.
Later that day, the M&R crew hired by DCI arrived at DCI to change
the rolls on the TCP machines. Evans, M&R's employee, was part of
this M&R roll change crew. No representative of Perkins was present
for the roll change. During the roll change, one of the seven and one-
half ton embossing rolls fell on Evans' leg, causing severe injuries.
As a result of his injuries, Evans lost his right leg below the knee,
three toes from his left foot, and a portion of his left foot.
4
On July 10, 1997, Evans filed this diversity action in the United
States District Court for the Eastern District of Virginia against
Du Pont, DCI and Perkins. See 28 U.S.C.§ 1332. Pursuant to Virginia
common law, Evans sought to recover damages from the defendants
for the injuries he sustained in the roll change accident at DCI's plant
in Chester, Virginia, on March 28, 1996, allegedly as a result of the
defendants' negligence and breach of warranties. Specifically, Evans
averred he sustained injuries because (1) Du Pont negligently
designed, developed, manufactured, and distributed the TCP
machines and its operating procedure; (2) Perkins negligently
designed, developed, and produced the TCP machines and the TCP
Roll Changing Procedure; (3) DCI negligently modified the TCP Roll
Changing Procedure and negligently conducted the March 28 roll
change; and (4) Du Pont, DCI and Perkins breached their warranties
that the TCP machines, the auxiliary safety equipment, and the modi-
fied TCP Roll Changing Procedure "were safe." (J.A. 12-14).
Du Pont, DCI and Perkins filed motions to dismiss Evans' Virginia
common law action pursuant to Federal Rules of Civil Procedure
12(b)(1) and 12(b)(6), claiming the district court lacked subject matter
jurisdiction over Evans' action because Evans' sole remedy was pur-
suant to the VWCA. Specifically, Du Pont and DCI claimed Evans'
sole remedy was under the VWCA, because Evans was a statutory
employee of Du Pont and DCI. Perkins contended Evans' sole rem-
edy was pursuant to the VWCA because Perkins and Evans were fel-
low statutory employees of Du Pont.
After hearings on the motions to dismiss, the district court entered
an order granting Du Pont, DCI and Perkins' motions to dismiss
Evans' Virginia common law action for lack of subject matter juris-
diction pursuant to Rule 12(b)(1). The district court concluded that
DCI, in contracting for the changing of the TCP rolls, performed a
part of Du Pont's business of processing TYVEK. Therefore, the dis-
trict court concluded that under the VWCA, Du Pont and DCI were
statutory employers. With regard to Perkins, the district court recog-
nized that Du Pont contracted with Perkins for Perkins to develop the
procedure for the TCP roll changes, DCI followed the procedure
developed by Perkins during the March 11-13 roll change, and DCI
used a modified version for the March 28 roll change. The district
court, without further discussion, granted Perkins' motion to dismiss
5
on the ground that it and Evans were fellow statutory employees of
Du Pont, and, therefore, Evans' sole remedy was pursuant to the
VWCA. Evans noticed a timely appeal of the district court's order
granting the defendants' motions to dismiss.2
On appeal, Evans contends that the district court erred in granting
the defendants' Rule 12(b)(1) motions to dismiss his Virginia com-
mon law action for lack of subject matter jurisdiction. Specifically,
Evans contends that the TCP Roll Changing Procedure that DCI con-
tracted with M&R for M&R to perform was not part of Du Pont's
business, and, therefore, Du Pont and DCI were not statutory employ-
ers under the VWCA. With regard to Perkins, Evans contends that
Perkins may not claim to be Du Pont's statutory employee under the
VWCA because developing the TCP Roll Changing Procedure was
not part of Du Pont's business, and furthermore, because Perkins had
completed the development of Du Pont's TCP Roll Changing Proce-
dure prior to the March 28, 1996 accident.
II
The plaintiff has the burden of proving that subject matter jurisdic-
tion exists. See Richmond, Fredericksburg & Potomac R.R. Co. v.
United States, 945 F.2d 765, 768 (4th Cir. 1991). When a defendant
challenges subject matter jurisdiction pursuant to Rule 12(b)(1), "the
district court is to regard the pleadings as mere evidence on the issue,
and may consider evidence outside the pleadings without converting
the proceeding to one for summary judgment." Id. The district court
should grant the Rule 12(b)(1) motion to dismiss"only if the material
jurisdictional facts are not in dispute and the moving party is entitled
to prevail as a matter of law." Id. A district court's dismissal of a case
_________________________________________________________________
2 Following the entry of the defendants' motions to dismiss, Evans
moved pursuant to Federal Rules of Civil Procedure 52(b) and 59(e) for
the district court to alter or amend judgment by more fully discussing the
basis for the dismissal of his claims against Perkins. The district court
denied the motions because it found its discussion of Perkins' dismissal
adequate and because Evans did not establish that"the alleged deficiency
amount[ed] to a clear error of law." Evans does not appeal the denial of
these motions.
6
for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) is
subject to de novo review.3 See id. at 768-69.
III
We first address Evans' contention that the district court erred in
dismissing his Virginia common law negligence and breach of war-
ranties claims against Du Pont and DCI. Evans avers that Du Pont and
DCI do not qualify under the VWCA as statutory employers, and,
therefore, are not immune from his Virginia common law action. We
disagree.
The VWCA provides that a worker who is injured in the course of
a statutory employer's trade, business or occupation shall be entitled
to compensation from his statutory employer for his injuries without
regard to fault. See Va. Code Ann. § 65.2-307. If the injured
employee elects to recover workers' compensation from his statutory
employer, his recovery "shall exclude all other rights and remedies
. . . at common law or otherwise." Id. The injured employee, however,
is not prohibited by the VWCA from seeking common law remedies
from employers who are not within the scope of the VWCA's exclu-
sion -- not statutory employers but strangers to the covered employ-
ment relationship and work. See id.
The VWCA specifies the circumstances under which original con-
tractors (owners) qualify as statutory employers of employees of gen-
eral contractors and subcontractors. See Va. Code Ann. § 65.2-302.
Under § 65.2-302(A), if an owner contracts with a general contractor
for the general contractor to perform work that is part of the owner's
trade, business or occupation, the owner becomes the"statutory
_________________________________________________________________
3 To the extent Evans contends the district court considered matters
outside the pleadings, and, therefore, converted the defendants' Rule
12(b)(6) motions into motions for summary judgment, thereby entitling
him on appeal to have the evidence reviewed de novo and in the light
most favorable to him, we conclude his claim is unavailing. The district
court dismissed Evans' claims under Rule 12(b)(1), and, therefore, the
district court's consideration of matters outside the pleadings did not
convert the proceeding into one for summary judgment. See Richmond,
945 F.2d at 768.
7
employer" of the general contractor's employees. Further, if the gen-
eral contractor then, in turn, contracts with a subcontractor for the
subcontractor to perform part of the owner's work that the general
contractor agreed to perform, the owner becomes the"statutory
employer" of the subcontractor's employees. See id. In such a circum-
stance, the general contractor is also the statutory employer of the
subcontractor's employees. See Turnage v. Northern Virginia Steel
Corp., 336 F.2d 837, 841 (4th Cir. 1964) (stating that under the
VWCA "those persons conducting the business of the owner or con-
tractor who is made a statutory employer are likewise protected from
actions for damages brought by such employees"); Floyd v. Mitchell,
123 S.E.2d 369, 372 (Va. 1962); Anderson v. Thorington Const. Co.,
110 S.E.2d 396, 400 (Va. 1959); see also Evans v. Hook, 387 S.E.2d
777, 779 (Va. 1990) (holding that independent contractors, even
though they are not the common law employer of the injured
employee and are not paying workers' compensation benefits to the
injured employee, "are entitled to the immediate employer's statutory
immunity from common law actions" if they are engaged in the
owner's business). As statutory employers, owners and general con-
tractors are shielded from common law liability for the injuries sus-
tained during the performance of the owners' work. See § 65-2.307.
The VWCA also specifies the circumstances under which general
contractors that contract to perform work which is not part of the
owner's trade, business or occupation become statutory employers of
the employees of subcontractors. Section 65.2-302(B) provides that
when a general contractor contracts to perform work for an owner that
is not a part of the owner's trade, business or occupation, and then,
in turn, contracts with a subcontractor for the subcontractor to per-
form any part of the work the general contractor agreed to perform,
the general contractor becomes the "statutory employer" of the sub-
contractor's employees. As such, the general contractor becomes
immune from actions at law by the subcontractor's employees for any
injuries sustained by such employees during the performance of the
contracted work. See § 65.2-307.
The Virginia Supreme Court, applying the language of§ 65.2-
302(A) of the VWCA, has stated that when deciding whether an
owner is a statutory employer of a general contractor or subcontrac-
tor's injured employee, the focus is on whether the general contractor
8
or subcontractor's employee is performing work that is a part of the
owner's trade, business or occupation. See Cinnamon v. IBM Corp.,
384 S.E.2d 618, 621 (Va. 1989). Similarly, the Virginia Supreme
Court, applying the language of § 65.2-302(B) of the VWCA, has
stated that when deciding whether a general contractor is a statutory
employer of a subcontractor's employee, the focus is on whether the
subcontractor's employee is performing work that is not part of the
owner's trade, business or occupation, but is part of the work which
the general contractor agreed to perform for the owner. See id. The
Virginia Supreme Court has noted that the determinations of statutory
employer status are case-specific. Id. However, in Shell Oil Co. v.
Leftwich, 187 S.E.2d 162 (Va. 1972), the Virginia Supreme Court
adopted a test set forth in Arthur Larson's treatise entitled The Law
of Workmen's Compensation to aid courts in determining whether a
general contractor or a subcontractor's employee is performing work
which is part of the owner's trade, business or occupation, as now
defined in § 65.2 302(A),(B): "`The test (except in cases where the
work is obviously a subcontracted fraction of a main contract) is
whether this indispensable activity is, in that business, [n]ormally car-
ried on through employees rather than independent contractors.'"
Shell Oil, 187 S.E.2d at 167 (quoting 1A Arthur Larson, The Law of
Workmen's Compensation § 49.12, at 872-73). The Virginia courts
have interpreted the language of § 65.2-302 and the language from
Shell Oil as setting forth a "normal work test"/"Shell Oil test" and a
"subcontracted fraction exception" to the Shell Oil test.4 See
Cinnamon, 384 S.E.2d at 620.
The normal work test, as defined by the Virginia Supreme Court,
relates to the determination of whether an owner is the statutory
employer of the employees of the owner's general contractors or sub-
_________________________________________________________________
4 The Virginia Supreme Court acknowledges that the Shell Oil test is
"only a corollary guide, sometimes useful but not indispensable, in
applying the literal language of [§ 65.2-302] to the facts in a particular
case." Cinnamon, 384 S.E.2d at 621. Thus, if the Virginia Supreme Court
determines that the application of the Shell Oil test or its exception is not
necessary, the court simply applies the language of the VWCA to the
facts of the case. See Cinnamon, 384 S.E.2d at 621. As discussed below,
we determine this case appropriate for application of the "subcontracted
fraction exception."
9
contractors in the circumstances set forth in § 65.2-302(A). See
Cinnamon, 384 S.E.2d at 620. Specifically, the Virginia Supreme
Court has defined the normal work test as follows:
If the work out of which the industrial accident arose is, in
the language of Shell Oil, work "normally carried on
through [the owner's] employees rather than independent
contractors", [sic] it is, in the language of the statute, a "part
of [the owner's] trade, business or occupation". [sic] In such
case, the owner is the statutory employer of the injured
worker, whether directly employed by the independent con-
tractor or by a subcontractor.
Cinnamon, 384 S.E.2d at 620.
The subcontracted fraction exception to the normal work test, as
defined by the Virginia Supreme Court, relates to the determination
of whether a general contractor is the statutory employer of a subcon-
tractor's employees in the circumstances set forth in § 65.2-302(B).
Specifically, the Virginia Supreme Court has defined the subcon-
tracted fraction exception as follows:
If the work out of which the accident arose was, in the lan-
guage of Shell Oil, "obviously a subcontracted fraction of
[that] contract" and, in the language of the statute, "not part
of the trade, business or occupation of" the owner, the gen-
eral contractor who engaged the subcontractor to perform
that fraction is the statutory employer of the injured worker,
whether directly employed by the primary subcontractor or
by a secondary subcontractor.
See Cinnamon, 384 S.E.2d at 620 (alteration in original).
In their application of the Shell Oil test, Du Pont and DCI contend
that the changing of the embossing rolls on the TCP machines was a
subcontracted fraction of Du Pont's "main business concern" of pro-
cessing TYVEK. We agree and, therefore, conclude that under § 65.2-
302(B), Du Pont and DCI qualify as Evans' statutory employers and,
as such, are immune from Evans' Virginia common law action.
10
At first glance, the language of the VWCA appears, see § 65.2-
302(B), to indicate that the subcontracted fraction exception might
apply only to contractors and not to owners. Section 65.2-302(B),
from which the Virginia Supreme Court derived the subcontracted
fraction exception, relates to the determination of whether a general
contractor is the statutory employer of a subcontractor's employees.
However, "Virginia case law does not indicate . .. that the subcon-
tracted fraction exception applies only to `contractors' who contract
to perform work for other entities." Bowling v. Wellmore Coal Corp.,
114 F.3d 458, 462 (4th Cir. 1997).
The seminal case in which the Virginia Supreme Court determined
that the subcontracted fraction exception may apply to owners is
Smith v. Horn, 351 S.E.2d 14 (Va. 1986). In Smith, the owner of a
mining company engaged two independent contractors to mine coal
on land owned or leased by the owner and to transport coal to the
owner's plant for processing. See id. at 15. An employee of one of the
independent contractors was injured when he was performing the
work of the owner. See id. The trial court determined, and on appeal
the Supreme Court of Appeals of Virginia affirmed, that the owner
qualified as the statutory employer of the contractor's employee under
the subcontracted fraction exception to the Shell Oil test because the
contractor's employees were executing a subcontracted fraction of the
owner's main business concern. See Smith, 351 S.E.2d at 15, 17-18.
Therefore, under the Virginia Supreme Court's holding in Smith,
Du Pont, the owner, may qualify under the subcontracted fraction
exception as the statutory employer of Evans if Evans was performing
part of Du Pont's main business concern when he was changing the
TCP machines' rolls at DCI on March 28, 1996. See id. If Du Pont,
as owner, qualifies as Evans' statutory employer, then DCI, as a gen-
eral contractor of Du Pont also qualifies as Evans' statutory employer.
See Turnage, 336 F.2d at 841; Floyd, 123 S.E.2d at 372; Anderson,
110 S.E.2d at 400; see also Evans, 387 S.E.2d at 779.
In determining whether Du Pont and DCI qualify as Evans' statu-
tory employers, the question before us is whether Evans, in changing
the rolls, was performing part of Du Pont's main business concern.
Du Pont was engaged in the business of processing TYVEK. Du Pont
contracted with DCI, an independent contractor, for DCI to perform
11
a fraction of Du Pont's main business concern of processing TYVEK,
specifically, for DCI to complete the final stages of processing
Du Pont's TYVEK using Du Pont's new machines and using
Du Pont's TCP Roll Changing Procedure. As part of the final stages
of processing Du Pont's TYVEK, DCI was required to perform or
contract for the performance of roll changes on Du Pont's TCP
machines. DCI contracted with M&R for M&R to complete the
March 28 roll change. Because Evans, as an employee of M&R, in
performing the March 28 roll change, was engaged in work that was
part of Du Pont's main business concern of processing TYVEK,
Du Pont was Evans' statutory employer and is immune from Virginia
common law action for injuries sustained during the March 28 roll
change. See Smith, 351 S.E.2d at 15. Further, because DCI, in con-
tracting for the performance of roll changes in order to complete the
processing of Du Pont's TYVEK, was conducting part of a main busi-
ness concern of Du Pont, which we conclude is a statutory employer,
DCI is likewise protected from Virginia common law action by Evans
for injuries sustained during the performance of such work. See
Turnage, 336 F.2d at 841; Floyd, 123 S.E.2d at 372; Anderson, 110
S.E.2d at 400; see also Evans, 387 S.E.2d at 779.
In sum, because we conclude that Du Pont and DCI were Evans'
statutory employers, we agree with the district court's conclusion that
Evans' sole remedy against Du Pont and DCI is pursuant to the
VWCA. Accordingly, we affirm the district court's dismissal of
Evans' Virginia common law action against Du Pont and DCI for lack
of subject matter jurisdiction.
IV
Next, we turn to Evans' contention that the district court erred in
granting Perkins' motion to dismiss Evans' claims that Perkins negli-
gently developed Du Pont's TCP Roll Changing Procedure and
breached its warranties that Du Pont's TCP Roll Changing Procedure
"was safe," on the ground that Perkins and Evans were fellow statu-
tory employees of Du Pont, and, therefore, Evans was barred from
suing Perkins at common law under Virginia's fellow statutory
employee doctrine.
In addition to recognizing that statutory employers of an injured
employee are shielded by the VWCA from common law actions
12
brought by the injured employee, Virginia courts have recognized that
"fellow statutory employees" of an injured employee are also shielded
by the VWCA from the injured employee's common law actions. See
Evans, 387 S.E.2d at 779; Smith, 351 S.E.2d at 17; Anderson, 110
S.E.2d at 400-01. Pursuant to Virginia's "fellow statutory employee
doctrine," an injured employee of an owner's contractor may not pro-
ceed in an action at law against another contractor of the owner or
against the other contractor's employees, if the two contractors are
engaged in part of the trade, business or occupation of the owner. See,
e.g., Evans, 387 S.E.2d at 779. This doctrine is consistent with the
purpose of the VWCA, which is to bring within the canopy of the Act
all persons engaged in any work that is part of the owner's trade, busi-
ness or occupation. See Cinnamon, 384 S.E.2d at 619 n.1.
One of the first cases in which Virginia's highest court applied the
"fellow statutory employee doctrine" was Anderson. In Anderson, the
owner conducted its business of constructing a turnpike through vari-
ous independent contractors. See 110 S.E.2d at 398. An employee of
one of the owner's independent contractors, an engineering firm, was
injured in the performance of his duties. See id. The injured employee
sued another independent contractor of the owner, a construction
company, alleging that he had been injured as a result of the construc-
tion company's employees' negligence in violation of Virginia com-
mon law. See id. The trial court dismissed the injured employee's
action for lack of jurisdiction because the matter was within the
exclusive jurisdiction of the workers' compensation commission. See
id. at 397. The Supreme Court of Appeals of Virginia determined that
both independent contractors -- the engineering firm and the con-
struction company -- were engaged in the owner's business of con-
structing a turnpike. See id. at 400. Therefore, the Supreme Court of
Appeals of Virginia concluded that the employees of the engineering
firm and the employees of the construction company were fellow stat-
utory employees of the owner. See id. Accordingly, the Supreme
Court of Appeals of Virginia held that the injured employee of the
engineering firm was barred by the VWCA from suing the construc-
tion company under common law for injuries sustained while both
contractors were performing the owner's work. See id. at 400-01.
We conclude Anderson controls the instant case. Under Anderson,
in order to determine whether Evans may proceed with his Virginia
13
common law action against Perkins for the injuries he sustained dur-
ing the March 28 accident at the DCI plant, we must decide whether
Evans and Perkins were Du Pont's statutory employees at the time of
the accident. As discussed above in Section III of this opinion, Evans
was a statutory employee of Du Pont at the time of the accident.
Therefore, the question before us is whether Perkins was a statutory
employee of Du Pont at the time of the accident. Evans contends that
Perkins was not a statutory employee of Du Pont because Perkins was
merely supplying a machine and its owner's manual, and, therefore,
was not performing part of Du Pont's business at the time of the acci-
dent. Perkins contends, and we agree that, Perkins was more than a
mere supplier of a machine and its owner's manual, and, as such, was
performing a subcontracted fraction of Du Pont's business of process-
ing TYVEK at the time of the accident.
As we recognized in Turnage, a contractor that manufactures a
product to meet the requirements of a specific project of the owner
may be engaged in the business of the owner so as to fall within the
protection of the VWCA and be immune from common law liability.
See 336 F.2d at 842-43. In Turnage, the owner, a construction com-
pany, acted as general contractor and conducted its business of con-
structing an apartment building through various independent
subcontractors, including a steel company and a cement finisher. See
id. at 838. After an employee of the cement finisher sustained injuries
during the construction of the owner's apartment building, the
employee sued the steel company, alleging that his injuries were the
result of the steel company's negligence. See id. at 838-39. The dis-
trict court determined, and we affirmed on appeal, that the cement fin-
isher and the steel company were engaged in the owner's business,
and, therefore, were fellow statutory employees of the owner. See id.
at 839. Specifically, on appeal the question before us was whether the
steel company was engaged in the owner's business. See id. at 842.
We concluded that under the VWCA the steel company was immune
from the injured employee's common law action under the fellow
statutory employee doctrine because the steel company was more than
a mere supplier of a product and was, like the cement finisher, actu-
ally engaged in the owner's business:
[T]he work of [the steel company], like that of other con-
tractors engaged in the project, was closely related to and
14
dependent upon the work of the other trades and when
changes in the steel were required, either by modifications
in design or errors of other trades, it went to the job site and
made them. By performing such work which was the
responsibility of the [owner], by giving advice relative to
various construction problems and by working generally
under [the owner's] supervision, [the steel company] was
conducting the business of [the owner]. . . .[The steel com-
pany] was not a stranger to the business; it is within the cov-
erage of the Act and immune from suit at common law.
Id. at 843.
The record reflects that Perkins, like the contractor in Turnage, was
more than a mere supplier and was performing part of the owner's
main business concern. Du Pont contracted with Perkins for Perkins
to perform fractions of Du Pont's main business concern of process-
ing TYVEK. Specifically, Du Pont contracted with Perkins for Per-
kins to design a machine that would allow Du Pont to produce
market-specific TYVEK products and for Perkins to develop a roll
changing procedure for the new machine in accordance with
Du Pont's specifications. Additionally, Du Pont contracted with Per-
kins for Perkins to demonstrate the Roll Changing Procedure on
Du Pont's TCP machines to Du Pont and DCI's satisfaction and to
provide the auxiliary safety equipment necessary for the roll changing
demonstration and all further roll changes. The record reflects that
Perkins, in fulfilling these contractual obligations, was more than a
mere supplier of a machine and an owner's manual and was in fact
performing fractions of Du Pont's main business concern of process-
ing market-specific TYVEK.
Unlike a mere supplier, Perkins did not simply fill an order for a
product and ship it for delivery. On the contrary, the work of Perkins
was closely related and dependent upon the work of the other contrac-
tors involved in the processing of Du Pont's TYVEK. By developing
a machine and an operating procedure specific to Du Pont's business
goal of processing market-specific TYVEK, by preparing a detailed
operating procedure specific to Du Pont's TCP machines and in
accordance with Du Pont's specifications, by demonstrating
Du Pont's Roll Changing Procedure at the job site, by working with
15
Du Pont and the other contractors to modify the procedure to
Du Pont's satisfaction, by supplying the auxiliary safety equipment
necessary for the roll changing demonstration and all future roll
changes, including the March 28 roll change, and by visiting the job
site on occasion, including on March 28, 1996, to repair equipment,
Perkins was conducting the business of Du Pont.
Having concluded that Perkins, in fulfilling its contractual obliga-
tions under its contract with Du Pont, was performing part of
Du Pont's business, we must now address whether Perkins was per-
forming Du Pont's business at the time of the accident. Evans con-
tends that Perkins' obligations under its contract with Du Pont had
been completed at the time of the March 28, 1996 accident, and,
therefore, Perkins may not claim statutory employee status and shield
itself from liability for claims stemming from the injuries he sustained
on March 28, 1996. Evans' claim is belied by the record.
Evans does not dispute that Du Pont contracted with Perkins for it
to design Du Pont's TCP machine, develop Du Pont's TCP Roll
Changing Procedure, demonstrate Du Pont's TCP Roll Changing Pro-
cedure on Du Pont's machines at the DCI plant, and provide the aux-
iliary safety equipment necessary for the TCP roll changes. In fact,
Evans' averments in his complaint are that he was injured because
Perkins, in completing such obligations, was negligent and in breach
of its warranties. In attempting to circumvent the shield of the VWCA
so that he may bring his claims, Evans simply alleges that Perkins had
completed its contractual obligations as of March 28, 1996, and,
therefore, was not a statutory employee of Du Pont at the time of his
injuries. Evans' conclusory allegation, however, fails to rebut the evi-
dence in the record that at the time of the accident Perkins' obliga-
tions under its contract with Du Pont had not been completed. The
record reflects that as of March 28, 1996, Perkins continued to have
contractual obligations to Du Pont. As noted above, Perkins con-
tracted with M&R for an M&R employee to perform work for Perkins
on Du Pont's TCP machines at DCI on March 28, 1996, prior to the
roll change on that day. Based upon this unrebutted evidence, Perkins
was engaged in a fraction of Du Pont's business of processing
TYVEK as of March 28, 1996, and, therefore, was, like Evans, a stat-
utory employee of Du Pont.
16
Our conclusion that Perkins was a statutory employee of Du Pont
comports with the purpose of the VWCA, which is"`to limit recovery
of all persons engaged in the business under consideration to compen-
sation under the act, and to deny an injured person the right of recov-
ery against any person unless he be a stranger to the business.'"
Turnage, 336 F.2d at 843 (quoting Doane v. E.I. du Pont de Nemours
& Co., 209 F.2d 921, 926 (4th Cir. 1954)). Clearly, Perkins was not
a stranger to the March 28 roll change. On March 28, 1996, prior to
the roll change, Perkins contracted with M&R for an M&R employee
to perform work for Perkins on Du Pont's TCP machines at DCI.
During the March 28 roll change, the M&R crew changed the TCP
rolls using a modified version of Du Pont's TCP Roll Changing Pro-
cedure that Perkins had developed. The M&R crew changing the rolls
on March 28, 1996, was the same crew that Perkins had trained at
DCI on March 11-13, 1996, to change Du Pont's TCP rolls using
Du Pont's TCP Roll Changing Procedure that Perkins had developed.
In sum, because we conclude that Perkins and Evans were fellow
statutory employees of Du Pont as of March 28, 1996, we agree with
the district court's conclusion that Evans' sole remedy against Perkins
is pursuant to the VWCA. Accordingly, we affirm the district court's
dismissal of Evans' Virginia common law action against Perkins for
lack of subject matter jurisdiction.
V
For the reasons stated above, we affirm the district court's dis-
missal of Evans' Virginia common law action against Du Pont, DCI,
and Perkins for lack of subject matter jurisdiction pursuant to Rule
12(b)(1), because Evans' sole remedy is pursuant to the VWCA.
AFFIRMED
MOON, District Judge, concurring in part, dissenting in part.
I concur in the majority opinion in so far as it holds that Evans was
the statutory employee of Du Pont and Diversified Converters, Inc.
(DCI), but I do not to agree that Evans should be barred from suing
Perkins at common law under Virginia's fellow statutory employee
doctrine.
17
I do not believe that under any test Perkins can be found to be the
statutory employee of Du Pont because both tests require that the stat-
utory employee be engaged in the "trade, business or occupation" of
the employer (Du Pont). See Cinnamon v. IBM Corp., 384 S.E.2d
618, 621 (Va. 1989). Additionally, the record does not support a find-
ing that Perkins was performing "a subcontracted-fraction of
Du Pont's `main business concern'1 of processing TYVEK," but
instead was an independent contractor engaged to perform a task that
was not part of the normal business of Du Pont, i.e. manufacturing a
machine and performing services incidental to its installation so that
Du Pont could process TYVEK. Perkins was required to demonstrate
that the machine it designed and constructed to Du Pont's specifica-
tions worked, but was not required to engage in the production of the
product.
To determine whether a subcontractor is a fellow statutory
employee of another subcontractor, the court must determine if both
parties are engaged in the trade, business or occupation of the owner.
Shell Oil Co. v. Leftwich, 187 S.E.2d 162 (Va. 1972); Nichols v.
VVKR, Inc., 403 S.E.2d 698, 701 (Va. 1991); Wilton, Inc. v. Gibson,
471 S.E.2d 832 (Va. App. 1996). In this case, the court must examine
whether Perkins' activities necessarily constitute the trade, business,
or occupation of Du Pont.
Du Pont contracted with Perkins (1) to develop a machine to allow
Du Pont to produce market-specific TYVEK products, (2) to develop
an operating procedure for the new machine, (3) to demonstrate the
use of the machine applying the operating procedures, and (4) to sup-
ply the auxiliary safety equipment for the machine. Inherent in Per-
kins' job to supply the machine and operating manual is the
requirement to ensure that the machine works properly for the pur-
pose for which it is intended.
_________________________________________________________________
1 The term "main business concern," as used in the only case in which
the words appear in that order, is synonymous with"trade, business or
occupation." In Horn v. Smith, the court stated that because both inde-
pendent contractors were "engaged in the trade, business, or occupation
of [the owner]," their work "was unquestionably a fraction of this main
business concern." 351 S.E.2d 14, 17-18 (Va. 1986)(emphasis supplied).
18
Therefore, Perkins contracted with M & R Construction to demon-
strate the roll changes in Du Pont's TCP machines on March 11-13.
After that demonstration, DCI, under a separate contract with
Du Pont, was to make the roll changes for Du Pont's regular produc-
tion. Perkins developed the machine and procedures for operating it,
but it was to withdraw after its contractual obligations were com-
pleted. DCI would then be the only subcontractor directly involved in
the production of TYVEK.
While Perkins also provided DCI with the safety equipment to
make the roll changes, this was just another facet of supplying a
machine to be used in Du Pont's manufacturing process. Perkins was
not actively involved in the manufacturing of TYVEK.
The Virginia courts have made it clear that when examining the
relationship between owners/general contractors and subcontractors in
the context of the VWCA, the Shell Oil test is only a guide that may
not always prove helpful because not all activities which are useful
to an owner are necessarily part of that owner's trade, business or
occupation. Cinnamon, 384 S.E.2d at 618; see also Wilton, 471
S.E.2d at 834 (stating that not all "absolutely indispensable" activities
fall within VWCA "since, after all, this could be said of practically
any repair, construction or transportation service"). (Therefore, "anal-
ysis of a project owner's trade, business, and occupation begins with
identification of the nature of the particular owner... [I]f the owner is
a private entity, [the court must focus] on whether the `the activity is,
in that business, normally carried on through employees rather than
independent contractors.'" Nichols, 403 S.E.2d at 701 (quoting Shell
Oil Co. v. Leftwich, 212 Va. 715, 722, 187 S.E.2d 162, 167 (1972)).
To determine whether work is "normally carried on through employ-
ees," the court may examine the frequency and regularity of an inde-
pendent contractor's performance, Bassett Furniture Industries, Inc.
v. McReynolds, 224 S.E.2d 323, 326 (Va. 1976), as well as the extent
to which the activities carried on by the independent contractor are
incorporated into the owner's normal business operations. Yancey v.
JTE Constructors, Inc., 471 S.E.2d 473, 474 (Va. 1996).
Examples of this premise are evident in a number of cases cited in
the majority opinion. See Anderson v. Thorington Construction Co.,
110 S.E.2d 386 (Va. 1959); Evans v. Hook 387 S.E.2d 777 (Va.
19
1990); Bowling v. Wellmore Construction Co., 114 F.3d 458 (4th Cir.
1997); Floyd v. Mitchell, 123 S.E.2d 369 (Va. 1952). In all of these
cases, a primary business purpose of the owner was undertaken by a
subcontractor at the time of the accident. In each, the subcontractor
was contracted with to perform part of the normal business of the
owner, or was performing an integral part of the ongoing business of
the owner, such as was Mitchell and Powell Trucking Company in
Floyd v. Mitchell.
These cases are to be distinguished from Cinnamon, 384 S.E.2d
618, where the owner, IBM, initiated a construction project in order
to conduct its core business and was held not to be a statutory
employer. In my opinion, IBM's case for Cinnamon being its statu-
tory employee is stronger than Perkins' case that it was the statutory
employee of Du Pont. Although IBM had a construction division, the
court held that IBM could not claim to be the statutory employer of
Cinnamon, a subcontractor's employee who was injured while work-
ing on the IBM construction site. The court reasoned that nothing in
the record showed that the construction work being performed by
Cinnamon had ever been part of IBM's core "trade, business or occu-
pation."
I believe that the reasoning in the case of Bassett Furniture Indus-
tries, Inc. v. McReynolds, 224 S.E.2d 323 (Va. 1976) is the closest
authority to the set of facts in this case. In Bassett, a large furniture
manufacturer engaged an independent contractor to install a conveyor
system in its Virginia plant. Bassett Furniture hired Industrial Air,
Inc. to do the work, including the design and manufacture of the sys-
tem. While Bassett Furniture employed engineers who helped Indus-
trial with the initial arrangement of the conveyor system and
performed the electrical work, Bassett did not have control over
Industrial's employees. When one of Industrial's employees,
McReynolds, was injured after falling through a hole in a floor which
had been cut by Bassett to accommodate the conveyor system, the
court held that Bassett was not McReynolds' statutory employer. The
court noted that even though Bassett had the capacity to build new
conveyors, its core business was to manufacture furniture, not build
conveyors.
Likewise, there is nothing in the record here to indicate that
Du Pont develops and tests its own machines used in its manufactur-
20
ing processes. Only if the work performed by the independent con-
tractor or subcontractor is directly connected to the owner's core
business purpose can the subcontractor then be classified as a statu-
tory employee. Wilton, 471 S.E.2d at 834; see also Nichols, 403
S.E.2d at 701. Du Pont's core business is to manufacture materials
such as TYVEK, not to develop the machines which are used to carry
out this purpose. Consequently, Du Pont would not be a statutory
employer of Perkins because Perkins was not performing a part of the
normal business of Du Pont. Thus, Perkins should not be considered
a fellow statutory employee along with Evans.
Consequently, I must respectfully dissent from Part IV of the
majority opinion.
21