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Peter v. Hess Oil Virgin Islands Corp.

filed: May 17, 1990.

CONRAD PETER, APPELLANT IN NO. 88-3797
v.
HESS OIL VIRGIN ISLANDS CORP., APPELLANT IN NO. 88-3798



Appeal from the District Court of the Virgin Islands; Division of St. Croix; Civil Action No. 86-0221.

Higginbotham, Stapleton, and Scirica, Circuit Judges.

Author: Stapleton

Opinion OF THE COURT

STAPLETON, Circuit Judge.

I.

This is a negligence action brought by Conrad Peter against Hess Oil Virgin Islands Corporation ("Hess") under Virgin Islands law. Peter alleged that Hess did not take the safety measures necessary to protect him from exposure to jet fuel while working with fuel hoses at Hess' St. Croix refinery in 1984 and 1985, and that as a result of this exposure he suffered permanent lung injuries. A jury agreed and assessed his damages at $1.5 million. His recovery was reduced by $300,000, however, because of contributory negligence. These cross-appeals ensued. Jurisdiction below was based on 48 U.S.C. §§ 1612 and 4 V.I.C. §§ 32. We have jurisdiction over appeals from final decisions of the District Court of the Virgin Islands pursuant to 28 U.S.C. §§ 1291 and §§ 1294(3).

Several issues are presented on appeal. However, we address ourselves solely to Hess' contention that the judgment below must be reversed because allowing Peter a tort recovery against Hess under Virgin Islands law conflicts with the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901 et seq. Because we find that the common law negligence action Peter is pursuing obstructs the congressional policies advanced by LHWCA, we reverse.

II.

Hess argues that the Virgin Islands may not afford Peter a negligence action against Hess, his "borrowing employer", since §§ 905(a) of LHWCA purports to make the remedies available under LHWCA the exclusive source of relief for an injured longshoreman against his employer.*fn1 Our review of this question of law is plenary. This argument depends heavily on the answers to certain predicate questions. First, where was Peter working when he was exposed to jet fuel? Second, do his injuries fall within the scope of LHWCA? Third, does LHWCA recognize the borrowed servant doctrine? Fourth, was Peter Hess' borrowed servant? We address these questions seriatim.

A.

At Hess, Peter tied ships up to the dock, swept the dock, ran errands, and performed other maintenance chores. He also performed two tasks which required him to work with fuel hoses. The jury found that Peter suffered permanent lung injuries as a result of exposure to kerosene-based jet fuel while working with fuel hoses at Hess' refinery. These hoses were used to pump fuel aboard ships docked at Hess' refinery, and were permanently connected at one end to equipment based on Hess' pier. During this work Peter was not equipped with a face shield or other respiratory protection.

One of Peter's jobs was to connect and disconnect these hoses to ships. He would stand on the deck of the ship and a hose would be lowered to him by a crane on the dock. To attach the hose to the ship, Peter removed the bolts from flanges which sealed the line and then secured the hose to the ship's manifold. Before the unsealed hose could be connected to the ship Peter was often sprayed with jet fuel, causing him to inhale fumes from and ingest the jet fuel.

Hess does not dispute there is evidence that Peter was exposed to jet fuel while connecting hoses to ships docked at Hess. What it disputes is whether Peter was also so exposed while performing a second task, the "hose around", on the adjacent dock. This procedure involved connecting two fuel lines to ensure they were clean before use in loading or unloading fuel from a ship. The hoses were lifted by a crane down to the dock where Peter would remove flanges from the lines so they could be connected and flushed out. Peter's co-worker Morton indicated that Peter was splashed and sprayed with jet fuel during the hose around because of releases occurring when gaskets blew, bolts were removed, line blockages gave way, or the crane operator tilted the hoses at too great an angle. Morton testified that Peter actually swallowed fuel during this process.

The district court, in the course of ruling on a motion to dismiss filed before and determined after trial, indicated that Peter's "most substantial exposure to the offending fuel was when he was on land on the dock engaged in disconnecting hoses" and thus "to a large extent his injuries were land-based." App. at 219. The trial record does not support this conclusion, since we find no rational basis in the record to determine which activity resulted in greater exposure. However, we do find evidence which supports a finding that Peter suffered substantial exposure to jet fuel both during the hose around and while working with fuel hoses aboard ships.*fn2

B.

We answer the second question by agreeing with Hess that Peter's injuries fall within the scope of LHWCA, a federal workmen's compensation statute which provides compensation to certain employees for:

disability or death . . . if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading or unloading, repairing, or building a vessel). . . .

33 U.S.C. §§ 903. Under LHWCA, an employee "means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations. . . ." 33 U.S.C. §§ 902(3). To be covered by LHWCA an employee must have been injured on a "situs" included in §§ 903's definition of navigable waters and a satisfy a "status" test. Herb's Welding, Inc. v. Gray, 470 U.S. 414, 416, 84 L. Ed. 2d 406, 105 S. Ct. 1421 (1985).*fn3 Since Peter was exposed to jet fuel on a ship and on a pier adjacent to the navigable waters, he satisfies the situs requirement.*fn4 As both the hose around and connecting of fuel hoses were tasks necessary to the loading of vessels, Peter also satisfies the "status" requirement. Chesapeake and Ohio Railway Co. v. Schwalb, 493 U.S. 40, 110 S. Ct. 381, 107 L. Ed. 2d 278 (1989); P.C. Pfeiffer v. Ford, 444 U.S. 69, 80, 62 L. Ed. 2d 225, 100 S. Ct. 328 (1979); Northeast Marine Terminal Co. Inc. v. Caputo, 432 U.S. 249, 53 L. Ed. 2d 320, 97 S. Ct. 2348 (1977).

C.

The third and fourth questions we have posed require us to determine: (a) whether LHWCA is properly construed in accordance with the borrowed servant doctrine, and, if so, (b) whether Peter was Hess' borrowed employee at the time he worked at its refinery. If the answer to these questions is yes, this has important consequences for our analysis since LHWCA has contained, from its inception, a provision specifying that LHWCA benefits are the exclusive remedy against an employer who is responsible for them:

The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee . . . except that if an employer fails to secure payment of compensation as required by this chapter, an injured employee . . . may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death. . . .

33 U.S.C. §§ 905(a).*fn5 Hess contends that as Peter's borrowing employer, it is entitled to the immunity afforded by this provision, an immunity it believes bars the tort action Peter is pursuing against it.

The borrowed servant doctrine has commonly been applied in the context of workmen's compensation statutes to hold borrowing employers liable for compensation for injuries suffered by their borrowed employees. See generally 1C A. Larson, Workmen's Compensation Law §§ 48 (1989) ("Larson") (discussing doctrine and citing cases). Concomitantly, it has been applied to afford the borrowing employer with the immunity provided by workmen's compensation statutes that, as a general rule, make their statutory benefits the exclusive remedy against the employer of the injured party. Id. We have recently described this use of the doctrine:

Under the borrowed employee doctrine, if a special (borrowing) employer exercises a sufficient degree of control over a borrowed employee for a time sufficient to suggest that the employee has assessed the risks of his new employment and has acquiesced in his borrowing employer's control, the borrowing employer may be deemed a statutory employer for purposes of workers' compensation. See generally 1C A. Larson, Workmen's Compensation Law §§ 48.10 (1982). The borrowed employee is then barred from suing his borrowing employer for injuries sustained during the course of his employment; instead, the borrowed employee is remitted to the exclusive remedy provided by the relevant workers' compensation act.

Vanterpool v. Hess Oil V.I. Corp., 766 F.2d 117, 121 (3d Cir. 1985).

n Vanterpool, we found the borrowed servant doctrine applied within the statutory scheme of the Virgin Islands Workmen's Compensation Act, 24 V.I.C. §§ 251 et seq., as it existed at the time plaintiff Vanterpool was injured. Therefore, we held that the doctrine barred Vanterpool, an employee loaned from Litwin to Hess, from maintaining a tort action against Hess under Virgin Islands law to recover damages for an injury suffered at its refinery.

On October 19, 1984, a month before Peter came to work at Hess' refinery, the legislature amended the Islands' compensation act to add a section abrogating the borrowed employee doctrine:

It shall not be a defense to any action brought by or on behalf of an employee, that the employee at the time of his injury or death was the borrowed, loaned or rented employee of another employer. Any oral or written agreement between an employer and employee which makes the employee the borrowed, loaned or rented employee of another employer shall be null and void as being against the public policy of this Territory.

24 V.I.C. §§ 263a; see also 24 V.I.C. §§ 284(b). Since the Virgin Islands legislature has no legislative authority with respect to federal law, this statute abrogated the borrowed servant doctrine for purposes of the Virgin Islands workmen's compensation statute but had no effect upon LHWCA.

Although this court has never faced the question of whether the borrowed servant doctrine is properly applied to LHWCA, two sister courts of appeals have held that that doctrine is a valid way to determine whether a particular business entity is liable for a worker's LHWCA compensation and therefore eligible for protection under §§ 905(a). The Fifth Circuit first applied the borrowed servant doctrine for purposes of determining whether the defendant was shielded by the exclusivity provision of §§ 905(a) of LHWCA in Ruiz v. Shell Oil Company, 413 ...


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