US Fire Insurance Co v. Liberty Services Inc, et a

United States Court of Appeals
Fifth Circuit
F I L E D
July 6, 2004
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
___________________
No. 04-30002
Summary Calendar
___________________
UNITED STATES FIRE INSURANCE COMPANY,
Plaintiff-Appellee,
VERSUS
KERSHIA MILLER; ET AL.,
Defendants,
LIBERTY SERVICES, INC.; LOUISIANA WORKERS’ COMPENSATION CORPORATION,
Defendants-Appellants.
___________________
Appeal from the United States District Court
for the Eastern District of Louisiana
___________________

-- 1 of 6 --

2
Before SMITH, BARKSDALE, and DEMOSS,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Defendants Liberty Services, Inc.
(“Liberty”), and Louisiana Workers’
Compensation Corporation (“LWCC”) appeal
a judgment for plaintiff United States Fire
Insurance Company (“United States Fire”)
granting partial summary judgment. The
district court concluded that LWCC is liable
for half of the workers’ compensation
payments made by United States Fire on behalf
of employer Seacor Marine (“Seacor”) to
Roger Dyson pursuant to LA. REV. STAT. §
23:1031(C). LWCC and Liberty appeal on the
ground that Dyson was not a borrowed
employee of Liberty and that Liberty (via its
workers’ compensation carrier, LWCC)
should not be liable for subrogation. In light
of the facts offered by each party, and applying
the ten-part test in Ruiz v. Shell Oil Co., 413
F.2d 310, 312-13 (5th Cir. 1969), we conclude
that Dyson was a “borrowed employee” of
Liberty, so we affirm.
I.
In June 2001, Dyson was injured when a
car driven by defendant Kershia Miller crossed
the median and struck the vehicle Dyson was
driving. On the day of the accident, Dyson
was working at the Liberty work site and was
en route to pick up time sheets for Liberty’s
off-shore employees. There is no dispute that
Dyson was acting within the course and scope
of his employment when the accident
occurred.
Dyson then filed a claim for workers’ com-
pensation benefits through his nominal
employer, Seacor, which then requested cov-
erage from its workers’ compensation carrier,
United States Fire, and United States Fire
began to make medical and disability payments
to Dyson.
At the time of the accident, Seacor owned
two-thirds of Energy Logistics, Inc. (“ELI”),
which, in turn, owned 100 percent of Liberty.
ELI acquired Liberty in 1999 with the
financing of Seacor. Before the acquisition,
Dyson was on the payroll of Baker Energy
(the minority owner of ELI). After the
acquisition, Dyson was moved to Seacor’s
payroll and was assigned the Liberty truck he
was driving when the accident occurred.
Dyson conducted most of his work in an office
trailer on Liberty’s work site and supervised
thirteen Liberty employees.
Factual disputes between the parties arise at
this point. United States Fire argues Dyson
was the borrowed employee of Liberty, but
Liberty and LWCC maintain Dyson’s employ-
er was Seacor or ELI.
II.
Using diversity jurisdiction, United States
Fire sued Liberty and LWCC for recovery of
workers’ compensation benefits paid on behalf
of Dyson. After discovery, United States Fire
moved for partial summary judgment, seeking
to resolve the legal liability of Liberty and
LWCC, leaving at issue the question of dam-
ages. United States Fire argued that Dyson
was a “borrowed employee” of Liberty’s at the
time of the accident. Under LA. REV. STAT.
§ 23:1031(C), if United States Fire establishes
that Dyson was a borrowed employee, United
States Fire is entitled to seek contribution for
one-half of the amount of workers’
compensation benefits it has paid. See
Travelers Ins. Co. v. Paramount Drilling Co.,
395 So. 2d 849, 851-52 (La. App. 2d Cir.
1981). The district court granted the motion,

-- 2 of 6 --

3
finding that Dyson was a borrowed or special
employee of Liberty at the time of the
accident.
III.
A.
Summary judgment is appropriate only
where there are no genuine issues of material
fact and the moving party is entitled to
judgment as a matter of law. See FED. R. CIV.
P. 56(c). The moving party, in this case
United States Fire, bears the burden of
establishing that there are no genuine issues of
material fact. In determining whether there is
a fact issue, evidence and inferences must be
drawn in the light most favorable to the non-
moving party. Daniels v. City of Arlington,
Tex., 246 F.3d 502 (5th Cir. 2001). We
review a summary judgment de novo. Medi-
trust Fin. Serv. Corp. v. Sterling Chems., Inc.,
168 F.3d 211, 213 (5th Cir. 1999).
B.
The district court held that the evidence
presented by the parties overwhelmingly fa-
vored the finding that Dyson was a borrowed
employee of Liberty, thereby entitling United
States Fire to subrogation from LWCC. The
court reached this decision by applying the
ten-factor test used by Louisiana courts and
this court. Ruiz v. Shell Oil Co., 413 F.2d
310, 312-13 (5th Cir. 1969). These ten factors
are:
(1) Who has the right of control over the
employee 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 the tools and the place
of performance?
(7) Was the new employment over a
considerable length of time?
(8) Who had the right to discharge the em-
ployee?
(9) Who had the obligation to pay the em-
ployee?
(10) Who selects the employee?
Although no single factor is determinative,
this court has historically considered the fifth,
eighth, ninth, and tenth factors to be the most
essential. Gaudet v. Exxon Corp., 562 F.2d
351, 356 (5th Cir. 1977). The district court
found that all but the ninth factor were
resolved in favor of United States Fire and
granted its motion accordingly.
Liberty and LWCC argue that none of the
ten factors can be resolved in favor of United
States Fire. Liberty and LWCC doggedly
maintain that Dyson was an employee of Sea-
cor or, in the alternative, ELI. Liberty also
contends that it had only tangential contact
with Dyson at the time of the accident.
Application of the admittedly convoluted facts
to the Ruiz test demonstrates that the district
court correctly concluded that Dyson was Lib-
erty’s borrowed employee.

-- 3 of 6 --

4
1.
The first factor is who has the right of con-
trol over the employee. The district court
notes that in the accident report, Liberty
describes Dyson as its “leased employee from
Seacor,” which indicates that Liberty initially
claimed responsibility or control over Dyson.
Liberty and LWCC object to the court’s
reliance on this fact, however, charging that
this is the only bit of evidence that would
suggest that Dyson was under Liberty’s
control.
This is not the case. Both parties
acknowledge that Dyson was under the direct
control of Butch Guidry, the operations
manager for ELI and Liberty, who was in turn
directly under Joe Sarne, the president of both.
Liberty and LWCC aver that Guidry was an
employee of Seacor, but Guidry’s deposition
indicates that although his paycheck came
from Seacor, all his duties were with ELI and
Liberty. Though Dyson may not have been
under the supervision of Liberty’s vice
president Richard Johnston, the only people
who could be considered his supervisors were
officers of ELI and LibertySSnot SeacorSSthus
suggesting that ultimate control over Dyson’s
work lay in Liberty’s hands, not Seacor’s.
2.
The second factor examines whose work
was being performed by the employee in ques-
tion. Evidence suggests unequivocally that
Dyson performed all his work for Liberty and
not for Seacor.
Dyson was driving Liberty’s vehicle so that
he might run an errand for Liberty. Liberty
owned and operated the shore-based facility
where Dyson supervised the thirteen Liberty
employees and maintained his office. Dyson
was reimbursed for various office, travel, and
entertainment expenses by Liberty.
Liberty and LWCC contend that Dyson’s
work was performed in furtherance of ELI, as
the sole owner of Liberty. Naturally, any
work done by any employee of Liberty would
be to the benefit of the intermediate holding
company (and, by extension, the parent
corporation, Seacor), and to argue that ELI
was the real employer simply because of this
is, essentially, a semantic attempt to confuse.
Evidence plainly demonstrates that Dyson’s
work directly benefited Liberty, which thereby
indirectly helped ELI. To reason that ELI was
the sole beneficiary of Dyson’s work
contravenes the evidence and ignores the fact
that ELI, as an intermediate holding company,
conducts no actual business, nor does it retain
any employees. Any benefits ELI accrues
come from the work done by its subsidiary op-
erating companies.
In the district court, LWCC and Liberty al-
ternatively argued that Dyson performed work
for Seacor. In his deposition, however, Guid-
ry stated quite plainly that Dyson performed
no work for Seacor, nor did Dyson consider
himself an employee of Seacor’s.
3.
The third factor looks for any contract or
other agreement regarding the employee. Lib-
erty and LWCC are correct to point to the lack
of a contract between Seacor and Liberty re-
garding Dyson’s employment. Nevertheless,
the evidence presented in the depositions
strongly suggests that there was an under-
standing between Seacor and Liberty to entitle
Liberty to call Dyson a “leased employee from
Seacor” at the time of his accident. The fact
that Liberty referred to Dyson as such on the

-- 4 of 6 --

5
accident report evinces an explicit
acknowledgment of this implicit agreement.
4.
The fourth factor examines whether the em-
ployee acquiesced in the new work situation.
The “focus of this factor is whether the
employee was aware of his work conditions
and chose to continue working in them.”
Brown v. Union Oil Co., 948 F.2d 674, 678
(5th Cir. 1993). Each side can make fairly
persuasive arguments that this factor ought to
be decided in its favor.
Liberty and LWCC accurately point out
that Dyson believed that he and his boss,
Guidry, were employees of ELI. It is obvious
from the depositions, however, that a great
deal of confusion existed on the part of
management and employees as to the precise
arrangement that existed among Seacor, ELI,
and Liberty. Moreover, as an intermediate
holding company, ELI technically possessed
no employees of its own, making it impossible
for Dyson to have been employed by ELI.
Secondly, after the 1999 merger, Dyson
willingly began managing the Liberty asset in
Venice. Regardless of who Dyson believed his
technical employer to be, Dyson’s awareness
of his new work situation with Liberty be-
ginning in late 1999 is sufficient to
demonstrate acquiescence on his part, and this
factor weighs in favor of finding borrowed
employee status.
5.
The fifth factor asks whether the original
employer terminated its relationship with the
employee. This factor does not ask whether
the lending employer severed its relationship
completely. Capps v. N.KL. Baroid-NL In-
dus., Inc., 784 F.2d 615, 617 (5th Cir. 1986).
Rather, we are asked to examine the nature of
the lending employer’s relationship with the
employee while the borrowing occurred. Id. at
618. Liberty and LWCC maintain that Dyson
had less contact with Liberty than with Seacor
or ELI. The facts, however, do not support
this conclusion in any way.
Although Seacor issued his checks, Dyson
appears to have had no contact with Seacor
whatsoever. As stated above, Dyson’s bosses
were officers of both ELI and Liberty, and
Guidry’s deposition makes plain that neither he
nor Dyson ever performed any work for
Seacor. On the other hand, many facts
suggest that Dyson had significant contact
with Liberty.
Most importantly, Dyson worked at a Lib-
erty site and managed its employees. Because
Liberty is a wholly owned subsidiary, its assets
are admittedly also ELI’s. ELI, however,
performed no work on the site and retained no
employees, and all work appears to have been
done for Liberty directly. Additionally,
Liberty furnished Dyson with an expense
account and a vehicle to perform his duties to
Liberty. Liberty and LWCC’s argument that
Dyson’s only contact with Liberty was the
supervision of Liberty employees is patently
false, and this fifth factor must be considered
in favor of borrowed employee status.
6.
The sixth factor examines who furnished
the employee with the tools and place of busi-
ness necessary to carry out his duties. Liberty
furnished Dyson with a place of employment.
Dyson worked out of a trailer owned by
Liberty and located on Liberty’s work site.
Additionally, Liberty assigned Dyson the
vehicle that was involved in the accident.
Finally, Liberty regularly reimbursed Dyson for

-- 5 of 6 --

6
expenses he incurred in the course of his
employment. Thus, Liberty, and not Seacor,
furnished Dyson with the means necessary to
conduct his daily business. Liberty and LWCC
again attempt to argue that because Liberty is
a wholly-owned operating company of ELI’s,
Dyson’s office and car ought to be considered
ELI’s assets and not Liberty’s. Yet again, all
of Liberty’s assets may be ELI’s by definition,
but they are Liberty’s in practice.
7.
The seventh factor examines how long the
arrangement between employers existed. This
court has noted that when “the length of
employment is considerable, this factor
supports a finding that the employee is a
borrowed employee,” but that “the converse is
not true.” Capps, 784 F.2d at 618. When ELI
acquired Liberty in 1999, Dyson began his
employment situation that continued up until
the time of his accident in 2001. Though it is
debatable whether approximately a year and a
half is a “considerable” length of time, the
district court was correct in determining that
this evidence weighs in favor of finding for
borrowed employee status.
8.
The eighth factor looks to who had the
right to discharge the employee. The power to
terminate Dyson’s employment rested only
with Guidry and/or Sarne, both being officers
of ELI and Liberty. Liberty and LWCC’s con-
tention that Guidry is an employee of Seacor
contradicts the evidence, because Guidry, de-
spite being on Seacor’s payroll (as all
management of ELI and Liberty appear to
have been), worked solely with ELI and
Liberty. Thus, the right to discharge Dyson
lay with Liberty, lending further weight to
finding for United States Fire.
9.
The ninth factor is who had the obligation
to pay the employee. The district court
properly found that Dyson received his
paycheck from Seacor and that this factor
weighs against a finding for borrowed
employee status. Neither party disputes this
finding.
10.
The tenth and final factor examines who
hired the employee. The selection and
promotion of employees rested with Guidry
and Sarne. Guidry, in his deposition, stated
that he promoted Dyson to manager of
Liberty’s Venice shore base in 1999 after ELI
acquired Liberty. Yet again, Liberty and
LWCC’s only argument is that Guidry and
Sarne are more closely allied to Seacor and/or
ELI than to Liberty. Because Guidry and
Sarne are officers of Liberty and ELI, this is
certainly not the case, and Guidry maintained
in his deposition that he had no contact with
Seacor aside from receiving his checks from
them. Accordingly, this factor weighs in favor
of borrowed employee status.
IV.
We conclude, in light of the ten factors, that
Dyson was, as a matter of law, the borrowed
employee of Liberty. As a result, Liberty and
Seacor are liable in solido for Dyson’s injuries,
thereby entitling United States Fire to a fifty-
percent contribution from LWCC.
AFFIRMED.

-- 6 of 6 --