Ryes v. BCS Insurance , 379 F. App'x 412 ( 2010 )

Case: 09-30077 Document: 00511122152 Page: 1 Date Filed: 05/26/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 09-30077 May 26, 2010
Lyle W. Cayce
Clerk
LINEY RYES,
Plaintiff-Appellee
v.
B C S INSURANCE CO,
Defendant-Appellant
SCOUT TRANSPORTATION SERVICES INC; PHILLIP BOUDREAUX;
HOME STATE COUNTY MUTUAL INSURANCE COMPANY,
Defendants - Appellees
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 6:07-CV-1209
Before REAVLEY, JOLLY, and WIENER, Circuit Judges.
PER CURIAM:*
In this interlocutory appeal certified by the district court pursuant to 28
U.S.C. § 1292, the issue is whether Plaintiff-Appellee Liney Ryes is an
independent contractor of Defendant-Appellee Scout Transportation Services,
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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Inc., or whether he is an independent contractor of Defendant-Appellee Phillip
Boudreaux. The answer affects Ryes’s eligibility for benefits under an accident
and disability policy issued by Defendant-Appellant BCS Insurance Company.
Applying Louisiana law, the district court held that Ryes was an independent
contractor of both Scout and Boudreaux.1 We AFFIRM.
There is no dispute that Boudreaux agreed in writing as an independent
contractor to lease a truck to Scout. That contract also provided that Boudreaux
would provide drivers. Boudreaux in turn orally agreed with Ryes that Ryes
would drive the truck for Scout and would be paid a percentage of earnings that
Scout paid to Boudreaux. BCS contends that the agreement between Boudreaux
and Scout establishes that Ryes was an independent contractor of Boudreaux
only, and that Ryes could not at the same time be an independent contractor of
Scout. But we do not view the contract between Scout and Boudreaux to control
the relationship between Scout and Ryes. After reviewing the relevant
documents in the record and the deposition testimony of the parties, and
considering the somewhat unusual tripartite relationship present here, we
conclude that Ryes was an independent contractor of both Scout and Boudreaux.
The independent contractor employment status is determined on a case by
case basis in light of the entire record. See Tate v. Progressive Sec. Ins. Co., 4 So.
3d 915, 916 (La. Ct. App. 2009); Kibodeaux v. Progressive Ins. Co., 4 So. 3d 222,
225–26 (La. Ct. App. 2009). Courts will consider whether:
(1) there is a valid contract between the parties; (2) the work being
done is of an independent nature such that the contractor may
employ non-exclusive means in accomplishing it; (3) the contract
calls for specific piecework as a unit to be done according to the
independent contractor’s own methods, without being subject to the
control and direction of the principal, except as to the result of the
1
Scout Transportation Services, Inc. no longer operates and has no assets after
discharge from Chapter 7 bankruptcy. That has no effect on this appeal because the date of
the injury of Ryes and his relationship to Scout at that time is the issue here.
2
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services to be rendered; (4) there is a specific price for the overall
undertaking agreed upon; and (5) the duration of the work is for a
specific time and not subject to termination or discontinuance at the
will of either side without a corresponding liability for its breach.
Kibodeaux, 4 So. 3d at 225–26; see also Hickman v. S. Pac. Transp. Co., 262
So. 2d 385, 390–91 (La. 1972).
The record here shows that in addition to his oral agreement with
Boudreaux, Ryes entered into an agreement to drive for Scout and represent
Scout in the hauling and delivery of freight. Ryes filled out an extensive
employment application packet with Scout in order to comply with Scout’s
requirements, underwent a physical examination paid for by Scout, and also
executed a Driver Contractual Service Agreement with Scout. The Service
Agreement, which referred to Ryes as a “contract driver,” established that Ryes
was not an employee of Scout, but the agreement was consistent with Ryes being
an independent contractor. It provided that Ryes would perform certain duties
and that Scout would reimburse him for certain expenses, that Ryes was
responsible for his own taxes, that Scout would pay Boudreaux at fixed intervals,
and that Ryes would then look to Boudreaux for his compensation. Although
Scout did not compensate Ryes directly, and Boudreaux issued him a Form 1099,
this was contemplated by the parties in the Service Agreement. Ryes explained
that if Scout failed to pay Boudreaux he would not be paid. Ryes exercised
independent control over whether and how to deliver any particular load, and
Scout did not exercise control over Ryes’s methods of performing his duties. All
this is consistent with Ryes and Boudreaux’s testimony and the oral agreement
between them, and with Ryes being an independent contractor of Scout.
The parties’ testimony and conduct show that the parties viewed Ryes as
a contractor of Scout. Scout’s president testified that Scout was ultimately
responsible for the hiring and firing of drivers for its leased trucks. He
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explained that although Boudreaux could also fire Ryes, Scout could continue to
use Ryes as a driver on another truck if that happened. Boudreaux testified that
Ryes was not his employee and that all necessary employment forms were done
through Scout. Ryes testified that his oral agreement with Boudreaux was a
deal that “would let [him] lease the truck on with Scout.” When Scout applied
for the BCS accident and disability policy, it listed Ryes by name on the self-
administered premium statement as a covered driver. It also checked off a box
asking whether drivers to be covered were independent contractors. The
premium forms show that at the time Scout was applying for coverage it viewed
Ryes as an independent contractor for purposes of the policy.
In the words of Scout’s president, the relationship of Scout, Boudreaux,
and Ryes was “triangular.” Under this relationship, we are satisfied that Ryes
had agreements with both Boudreaux and Scout that met the independent
contractor test under applicable state law, and that the district court did not err.
BCS also argues that because the policy is an ERISA plan, the denial of
benefits to Ryes was entitled to review under an abuse of discretion standard but
that there is no showing that the district court applied this standard to the plan
administrator’s decision. We decline to address this issue. This is an
interlocutory appeal certified by the district court on a controlling question of
law under § 1292. BCS’s argument that the district court failed to apply an
abuse of discretion standard is raised for the first time on appeal. It is settled
that “[a]ppellants ‘cannot attack summary judgment on appeal by raising
distinct issues that were not before the district court.’” Colony Creek, Ltd. v.
Resolution Trust Corp., 941 F.2d 1323, 1326 (5th Cir. 1991) (citation omitted);
see also Leverette v. Louisville Ladder Co., 183 F.3d 339, 342 (5th Cir. 1999) (a
party generally may not raise a claim for the first time in its appellate brief).
Accordingly, we decline to review this issue.
AFFIRMED.
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JACQUES L. WIENER, JR., Circuit Judge, dissenting:
Like the unknowable sound of one hand clapping, the legal conclusion that
the panel majority embraces—one truck driver serving as the independent
contractor of both the lessor and the lessee of one truck while performing the
one, indivisible act of driving that truck from Point A to Point B—is simply
beyond my powers of comprehension. All the parties are now in agreement that
(1) Ryes (the truck driver) never was the employee of either the lessee of the
truck (Scout) or the lessor (Boudreaux), and (2) Ryes was at all times
Boudreaux’s independent contractor, whose truck-driving services Boudreaux
furnished to Scout pursuant to their truck-and-driver lease agreement.
Accordingly, I cannot imagine any way that, as a matter of law, we can also
classify Ryes as the independent contractor of Scout, since, as Boudreaux’s
independent contractor, Ryes was performing precisely the same truck driving
function at precisely the same time.
Regrettably, this ERISA 1 case got badly wrapped around the axle before
it came to this panel certified under 28 U.S.C. 1292(b) as a single, up-or-down
interlocutory appeal of the district court’s determination of Ryes’s legal status
vis à vis both Scout and Boudreaux. Now, following as it does the severance of
all other issues and claims and their remand to state court, only that one ERISA
issue remains before us on appeal, providing both federal jurisdiction and the
framework within which we must rule on the questionably relevant issue of the
contractual relationships among Ryes, Boudreaux, and Scout. As I have been
unable to convince my learned colleagues of the panel majority that the over-
arching principle of ERISA deference owed to the independent plan
administrator of Scout’s occupational disability “fringe benefit” plan was duly
1
Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 891, 29 U.S.C.
§ 1001 et seq.
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raised in the district court, was carried with the 28 U.S.C. § 1292(b) certification,
and is—or at least should be—determinative of the instant appeal, I must
respectfully dissent.
I. Violation of ERISA preemption for employee benefit plans
The record makes plain that over the course of this dispute, Scout and
Boudreaux offered inconsistent and ever-changing evidence and testimony
regarding the factual and legal relationships among Ryes, Scout, and
Boudreaux. Initially, BCS’s independent plan administrator, North American
Benefits Co., determined that Ryes was not eligible to participate in Scout’s
occupational-disability ERISA plan because he was a sub-contractor of
Boudreaux, who in turn was Scout’s independent contractor. This is because all
sub-contractors of Scout’s independent contractors were expressly excluded from
coverage. Then, in an effort to evade the plan administrator’s determination
that Ryes was a sub-contractor and thus ineligible for disability benefits, Scout
came up with (1) an affidavit signed by Boudreaux attesting that Ryes was his
employee (!) and (2) a Form-W4, allegedly signed by Ryes, purporting to support
Scout’s contention that Ryes was Boudreaux’s employee and thus eligible, as the
employee of Scout’s independent contractor, for benefits under Scout’s plan.
When later confronted with this preposterous position, however, Boudreaux, in
his deposition testimony, distanced himself from the affidavit, volunteering that
he would automatically sign anything Scout put in front of him. Consistent with
that admitted falsehood, the Form W-4 was proved to be a forgery when Ryes
himself averred under oath in deposition testimony that the signature on the W-
4 was not his.
Neither my colleagues of the panel majority nor any of the parties have
questioned that the BCS policy is Scout’s ERISA employee benefit plan. Yet
BCS and its independent plan administrator, North American Benefits Co., have
never been afforded the opportunity to determine Ryes’s eligibility for “fringe
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benefits,” one way or another, on the basis of the complete and accurate record,
including the opportunity to reject as incredible the inconsistent and
irreconcilably mendacious testimony of Scout’s president.2 Moreover, the plan
administrator’s initial determination that Ryes was not eligible under the
employee benefit policy has never been judicially reviewed under the “deferential
standard of review appropriate when a trustee exercises discretionary powers.”3
Inasmuch as our affirming the district court’s determination skips over the
statutorily mandated administrative process, the panel majority effectively puts
the cart before the horse when it upholds the district court’s grant of summary
judgment with respect to Ryes’s contractual status vis à vis both Scout and
Boudreaux.
II. The fallacy of “dual” independent contractor status
Turning to the merits, the district court’s determination—affirmed here
by the panel majority—that as a matter of law Ryes was somehow
simultaneously the independent contractor of both Boudreaux and Scout for the
single purpose of performing the very same work, at the very same time,
countenances a legal impossibility under the now-undisputed facts of this case.4
2
29 U.S.C. § 1133; Bourgeois v. Pension Plan for Employees of Santa Fe Int’l
Corp., 215 F.3d 475, 479 n.4 (5th Cir. 2000) (noting among the purposes of exhaustion
“upholding Congress's desire that ERISA trustees and not the federal courts be responsible
for the actions of plan administrators, providing a clear record of administrative action if
litigation ensues, and allowing judicial review of fiduciary action or inaction under the abuse
of discretion standard, where applicable, rather than de novo.”) (internal marks and citations
omitted).
3
Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948(1989); accord Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343, 2347-48 (U.S. 2008).
4
I acknowledge, of course, that any of us could conjure up different hypothe-
tical facts under which one person could indeed serve as the independent contractor of two
other contracting parties, but never when, as here, the person in question performs a single
function at a single time. Similarly, a contract reflecting a “borrowed servant” arrangement
between Scout and Boudreaux with respect Ryes’s services, or one providing that Ryes was the
legal employee of Scout for one purpose and the legal employee of Boudreaux for another,
would be possible, but not in the light of the unequivocal documentation in this case, which
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No party to this dispute contends before this panel that Ryes was anything
other than an independent contractor, i.e., none now contends that he ever was
an employee of either Boudreaux or Scout, alternative positions that Scout tried
to advance before the district court. Before this suit began, however, Scout
appears to have contended that Ryes was Boudreaux’s employee and thus
covered by BCS as the employee of an independent contractor of Scout. But,
BCS denied Ryes’s application for benefits because it was furnished with a Form
1099—not a Form W-2—that Boudreaux (not Scout) had issued to Ryes,
reflecting that Ryes was Boudreaux’s independent contractor (not his employee)
and thus a sub-contractor (not an employee) of Scout’s independent contractor.
As such, Ryes was indisputably excluded from coverage under Scout’s employee
benefit policy with BCS.
This realization is apparently what prompted Scout’s disingenuous
attempts to re-classify Ryes as Boudreaux’s employee by producing the forged
Form W-4 along with Boudreaux’s later-disavowed affidavit. That was a
transparent attempt to ensure that Ryes’s disability claims against Scout would
be covered under Scout’s accident and disability plan, which was insured by the
BCS policy. When that too failed because the Form W-4 and the Boudreaux
affidavit were discredited, Scout tried yet another artful dodge, this time
asserting that Ryes was somehow both Boudreaux’s independent contractor and
Scout’s independent contractor, albeit for the purpose of performing the self-
same, singular act of driving the truck that Boudreaux leased to Scout on terms
that indivisibly obligated Boudreaux to furnish not just the truck but its driver
too. This third try by Scout proved to be the charm, as both the district court
and the panel majority accepted it.
repeatedly eschews any such arrangement here. See, e.g., Cobb v. Delta Exports, Inc., 918
So.2d 1080 (La. App. 3rd Cir. 2005); La. Civ. Code 2320.
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Although Scout’s machinations are not—or at least should not be—
dispositive, they do expose the flaw in the panel majority’s narrow focus on
Scout’s lopsided contract of adhesion with Ryes. Despite its ambiguously
misleading title, “Driver Contractual Service Agreement,” Scout’s printed-form
document goes to great lengths to negate any employee or contractor
relationship whatsoever between Scout and Ryes, even to the point of eschewing
any possibility that Scout could ever owe any compensation, insurance coverage,
or other consideration whatsoever to Ryes. To me, this alone is enough to make
it legally impossible for Ryes to have been Scout’s independent contractor. Who
ever heard of a wholly uncompensated contractor or a commutative contract
devoid of any consideration whatsoever to one of the parties?
That so-called “Service Agreement” between Scout and Ryes stipulates
that “[Scout] shall pay [Ryes] no salary, wages, or commissions.” Lest this leave
Ryes with any illusions, that instrument adds the belt-and-suspenders
declaration that “CONTRACT DRIVER is not an employee of [Scout].” It then
goes on to expressly negate contractor status with Scout by declaring of Ryes:
“At best, he/she may be considered an employee of an OWNER-OPERATOR
[Boudreaux] who is engaged in a contractual agreement with [Scout] to
provide certain equipment, services, and personnel [driver of the leased
truck] to fulfill the covenants outlined in the Independent Contractor
Agreement.” (emphasis added). Further driving this tack with the proverbial
sledgehammer, Scout’s form instrument reiterates that “[Ryes] agrees that
he/she is not an employee of [Scout] for any purpose whatsoever,” adding that
Ryes “agrees that he . . . shall be compensated by [Boudreaux]. . . .”
Most importantly for today’s consideration of Ryes’s eligibility for benefits
under Scout’s ERISA disability policy, Scout’s printed “Service Agreement”
declares: “As a CONTRACT DRIVER you [Ryes] are not eligible to
participate in any of [Scout’s] fringe benefit programs” (emphasis added).
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And none disputes (nor could they) that the BCS disability policy funds a Scout
ERISA “fringe benefit” within the clear intendment of that instrument—the very
denied benefit that the panel majority now extends to Ryes—at the expense of
BCS, not Scout.
But, that’s not all. Not only does Scout’s misleadingly labeled “Service
Agreement” emphatically negate any possibility that Ryes might conceivably be
deemed either an “employee” or an “independent contractor” of Scout, so as to
entitle him to any “fringe benefit” such as disability coverage; by its own terms,
Scout’s form declares itself to be ancillary to the truck-and-driver lease
agreement between Scout and Boudreaux. The Scout-Ryes agreement refers
explicitly to the duty owed to Scout by Boudreaux to provide
“personnel”—meaning drivers such as Ryes—and expressly disclaims any
conceivable responsibility of Scout for compensation, fringe benefits (such as the
occupational accident and disability policy at issue here), or any other
consideration owed to or liability for such a driver. Again, the Scout-Ryes
document specifically instructs Ryes to look only to the “owner-
operator”—Boudreaux—to resolve any such issues. Unsurprisingly then, it was
Boudreaux, not Scout, who issued the Form 1099 to Ryes, correctly identifying
him as an independent contractor—not of Scout but of Boudreaux—and thus
Scout’s independent contractor’s subcontractor, a category of persons expressly
excluded from coverage in the BCS policy.
That “other” contract, the one between Scout and Boudreaux, accurately
labeled “Independent Contractor Agreement,” reinforces the conclusion that
Ryes was the independent contractor of Boudreaux only, and thus the sub-
contractor of Scout’s independent contractor, not Scout’s own independent
contractor. The Scout-Boudreaux truck-and-driver lease contract states that
Boudreaux “agrees to lease to Scout . . . [the truck in question] and furnish
Department of Transportation qualified drivers.” That Scout-Boudreaux
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contract further specifies that “THE CARRIER [Scout] shall not provide any
insurance coverage of any kind for THE CONTRATOR [sic] or THE
CONTRACTOR’S Representatives, staff or drivers. . . . This includes but
[sic] not limited to claim [sic] for wages, unemployment benefit, industrial
accident compensation or any on the job related compensation.”
(emphasis added). How, then, I must ask rhetorically, can Scout possibly
maintain that Ryes is covered by Scout’s disability policy in the light of that
express negation, articulated as it is in both the Scout-Ryes document and the
Scout-Boudreaux contract? Yet that is precisely what the district court held and
precisely what the panel majority holds today.
As the panel majority correctly notes, it is uncontested that (1) Ryes
received his trucking assignments (but no detailed time-and-route instructions)
from Scout as the lessee of Boudreaux’s truck, and (2) prior to ever driving that
leased truck, Scout had Ryes fill out an extensive driver-safety certification
package, which entailed, inter alia, submitting to a physical examination paid
for by Scout. It is also uncontested that Scout included Ryes’s name—as well as
Boudreaux’s—among the names of several individuals listed in its annual
premium statement for the BCS policy (conceivably entitling Scout to recover,
at most, a portion of its premiums from BCS). Perhaps these facts, coupled with
the conflicting documentary record and irreconcilable testimony, should have
lead our panel to conclude that this case is not ripe for summary judgment.
But, as the panel majority elected to address the merits instead of returning the
issue to the plan administrator, I find inescapable the conclusion that together
Ryes’s markedly harsh contract of adhesion with Scout and Scout’s extreme
disclaimer in that contract, work to negate any employee or independent-
contractor status, rights, or duties between Ryes and Scout. Only when faced
with the potential out-of-pocket liability for Ryes’s injuries did Scout squirm and
wiggle and advance inconsistent statements in a desperate effort to have Ryes
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re-classified as an independent contractor of both Scout and Boudreaux, so as to
shoe-horn Ryes into eligibility for benefits under Scout’s ERISA plan that BCS
insured and North American Benefits Co. administered.
But, under the undisputed, credible facts of this case (as distinguished
from the ever-shifting and inconsistent series of irreconcilable facts and legal
classifications advanced by Scout), I can see no way that Ryes could have served
as the independent contractor of both Scout and Boudreaux at the very same time
while performing the very same, single act, viz., the driving of the one leased
truck. This is especially obvious in the light of the fact that Boudreaux was
contractually bound to furnish Scout with a driver of that truck, and Boudreaux
alone was contractually bound to Ryes (and to Scout!) to provide all
compensation and all insurance coverage for that non-employee truck driver.
Scout made this bed; it should be made to lie in it.
These are the reasons why, despite my utmost respect for my colleagues
of the panel majority, I am constrained to dissent.
12