Duhon v. Union Pacific Resources Co. ( 1995 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 94-40488
(Summary Calendar)
__________________________
SCOTTY DUHON, ET AL.,
Plaintiffs-Appellants,
versus
UNION PACIFIC RESOURCES COMPANY,
Defendant-Appellee.
_______________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
(93-CV-108)
_______________________________________________
Before DUHÉ, WIENER and STEWART, Circuit Judges.
This is a third party action brought by an oil rig employee
and his wife against the developer and operator of the rig, Union
Pacific Resources Company ("UPRC"). Plaintiff, Scotty Duhon, is a
Louisiana resident who was hired in Louisiana by Grey Wolf
Drilling, a Texas corporation which does business in Louisiana and
Texas. Grey Wolf was under contract with UPRC to drill a well in
Texas. Duhon was injured in the course and scope of his employment
while working on this well. Thus, he was entitled to worker's
compensation benefits under either Louisiana or Texas law.
Plaintiff received benefits under Louisiana's worker's compensation
scheme through Grey Wolf's carrier.
Scotty Duhon and his wife, Dawna Duhon, filed a third party
tort suit against UPRC. UPRC filed a third party complaint against
Grey Wolf and The Gray Insurance Company for defense and indemnity.
Grey Wolf and The Gray Insurance Company intervened, asserting
their subrogation rights for worker's compensation benefits paid to
Duhon.
UPRC filed a motion for summary judgment, claiming tort
immunity based on the statutory employer doctrine in Louisiana's
worker's compensation law.1 The district court granted the motion,
and plaintiffs have appealed. Because we conclude that Louisiana
law applies to the dispute, the district court properly granted
summary judgment in favor of UPRC.
Standard of Review
We review a district court's choice-of-laws determination de
novo. Arochem Corp. v. Wilomi, Inc., 962 F.2d 496 (5th Cir. 1992);
Federal Deposit Insurance Corp. v. Massingill, 24 F.3d 768 (5th
Cir. 1994).
Federal courts sitting in diversity must apply the choice-of-
laws provisions of the state in which they sit. Klaxon Co. v.
Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496 (1941). Thus, we
must apply Louisiana's choice-of-laws principles to determine which
state's substantive law will apply.
Discussion
Louisiana has a new set of choice-of-laws provisions, codified
as Book IV to the Louisiana Civil Code. These articles apply to
all actions filed after January 1, 1992. This suit was filed
1
See La. R. S. 23:1032
2
January 19, 1993. Thus, Book IV will apply to resolve the choice-
of-law issues in this case.
Plaintiffs submit that Louisiana Civil Code art. 3544 governs
this case. Article 3544 provides a mechanical rule for choice-of-
law determinations in issues related to loss distribution and
financial protection. Statutes that provide immunity from suit,
such as La. R.S. 23:1032, are appropriately classified as rules of
loss distribution or financial protection. Kennington v. H. Blume
Johnson, Inc., 632 So. 2d 883, 886 (La. App. 2d Cir. 1994). Thus,
art. 3544 is an appropriate starting point in our choice-of-laws
analysis of this tort immunity/worker's compensation issue. That
article provides, in relevant part:
Issues pertaining to loss distribution and financial
protection are governed, as between a person injured by
an offense or quasi-offense and the person who caused the
injury, by the law designated in the following order:
. . . .
(2) If, at the time of the injury, the injured
person and the person who caused the injury were
domiciled in different states: (a) when both the injury
and the conduct that caused it occurred in one of those
states, by the law of that state; . . .
In this case, Duhon, the injured person, is a domiciliary of
Louisiana. For purposes of a choice-of-laws analysis under Book
IV, the "person"2 who allegedly caused the injury, Union Pacific,
may be treated as a domiciliary of either Delaware, its place of
incorporation, or Texas, the state of its principal place of
business, whichever is most pertinent to the particular issue. La.
2
Under Louisiana law, a corporation is a juridical person.
La. Civ. C. art. 24.
3
Civ. C. art. 3518. In this case, Union Pacific clearly should be
treated as a domiciliary of Texas. Accordingly, under the
mechanical rule of art. 3544, we would apply Texas law because
Texas is the domicile of one of the parties, and the injury and the
wrongful conduct occurred there. Plaintiffs contend that the
inquiry should end at article 3544, and that Texas law should apply
to the case. Accordingly, UPRC would not be entitled to the
"statutory employer" tort immunity afforded to it under Louisiana
law.
UPRC contends, and the district court agreed, that the choice-
of-law analysis does not begin and end with the rote application of
art. 3544 only. Article 3547 provides an "escape hatch" to be
used when the mechanical rule of 3544 yields an incorrect result,
i.e., one that is incompatible with the principles of Article 3542,
infra, from which these rules have been derived. See Comment to
La. Civ. C. art. 3547.
Louisiana Civil Code article 3547 provides:
The law applicable under Articles 3543-3546 shall
not apply if, from the totality of the circumstances of
an exceptional case, it is clearly evident under the
principles of Article 3542, that the policies of another
state would be more seriously impaired if its law were
not applied to the particular issue. In such event, the
law of the other state shall apply.
Louisiana Civil Code article 3542, in turn, states:
Except as otherwise provided in this Title, an issue
of delictual3 or quasi-delictual obligations is governed
by the law of the state whose policies would be most
3
Louisiana is a civil law jurisdiction: the civilian term
"delictual obligation" means a tort obligation.
4
seriously impaired if its law were not applied to that
issue.
That state is determined by evaluating the strength
and pertinence of the relevant policies of the involved
states in the light of: (1) the pertinent contacts of
each state to the parties and the events giving rise to
the dispute, including the place of conduct and injury,
the domicile, habitual residence, or place of business of
the parties, and the state in which the relationship, if
any, between the parties was centered; and (2) the
policies referred to in Article 3515, as well as the
policies of deterring wrongful conduct and of repairing
the consequences of injurious acts.
Thus, the issue is whether this is an "exceptional case" which
warrants the application of art. 3547 over art. 3544. Appellants
assert that this is not an exceptional case, and that the district
court erred in applying article 3547. Appellants urge the
application of Texas law. Appellants point out that they should
not be bound to the application of Louisiana law because they never
"elected" to receive worker's compensation benefits under
Louisiana's worker's compensation scheme: Grey Wolf's arrangement
with its compensation carrier just happened to provide for payment
under Louisiana's scheme.
This case presents exactly the same scenario as a case
recently decided by this Court. Accordingly, we are persuaded to
follow it. Carriere v. Chandeleur Energy Corp., 94-40119, (5th
Cir. Dec. 9, 1994) (unpublished opinion, attached for the parties'
reference), held that art. 3547 applied instead of art. 3544 in a
third party action where the plaintiff received worker's
compensation benefits under Louisiana's compensation scheme and
thereafter sued his statutory employer, a Texas domiciliary, in
Louisiana. Accordingly, this Court in Carriere determined that
5
such a factual scenario constituted an exceptional case and applied
Louisiana law to the dispute, thereby affording tort immunity to
the statutory employer. We consider these facts indistinguishable
from Carriere; therefore, we do not do an interest analysis
comparing the interests of Texas and Louisiana in this case.
Carriere held that facts such as these constitute an exceptional
case under art. 3547, dictating the application of Louisiana law.
The same result is in order here.
Under art. 3547, Louisiana law would seem to apply in this
case because the plaintiffs are Louisiana citizens, Duhon was hired
in Louisiana by Grey Wolf, suit was filed in Louisiana, and Duhon
received worker's compensation benefits in accordance with
Louisiana's worker's compensation scheme. Under Louisiana law,
UPRC qualifies as Duhon's statutory employer and could have been
forced to pay worker's compensation benefits to him had Grey Wolf
failed to do so. Because Louisiana law imposes this burden on
statutory employers such as UPRC to provide compensation benefits
to statutory employees hired in Louisiana, no matter where they are
injured, it is reasonable that they should be entitled to the
corollary benefit of tort immunity.
Appellants' final argument is that UPRC is not Duhon's
statutory employer. We reject this argument as well. Under La.
R.S. 23:1061, when a "principal" engages a contractor to perform
work that is a part of the principal's trade, business, or
occupation, the principal is liable to pay compensation benefits to
any injured employee of the contractor. A worker is performing
6
work that is within the trade, business, or occupation of the
principal whenever the work done by the employee is essential to
the principal's business. Maddox v. Baker Oil Tools, Inc., 77
F. Supp. 419 (E.D. La. 1991). Plaintiff was a floorhand whose
activities were essential and integral to the drilling of the well,
which is an essential part of UPRC's business of exploring and
producing oil and gas. Thus, the district court properly concluded
that under La. R.S. 23:1061, based on undisputed facts, UPRC was
Duhon's "statutory employer." Provisions in the drilling contract
between Grey Wolf and UPRC which state that the employees of Grey
Wolf were not to be considered employees of UPRC are inapposite.
The parties could not by their contract contravene the statutory
duty imposed upon UPRC to provide worker's compensation benefits to
its "statutory employees."
Conclusion
The district court properly concluded that UPRC was Duhon's
statutory employer under Louisiana law. Thus, UPRC is entitled to
tort immunity. The district court's grant of UPRC's motion for
summary judgment is AFFIRMED.
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