Legal Update: The Fifth Circuit Provides Glimmer of Hope that Statutory Employer Protections Remain a Reliable Legal Defense for Contractors and Owners when Statutory Employee Injuries Occur.
Authors: Christopher K. LeMieux and Hannah M. Marler.
The recent ruling in Valdivia vs. Brock Industrial Services and Phillips 66 sent shockwaves through the construction industry, as it called into question the applicability of the long-relied-upon statutory employer defense in Louisiana regarding workplace injuries. The statutory employer legal landscape is a frequently used contractor protection which limit contractor liability to worker’s compensation, unless the injury was considered intentional or “substantially certain” to occur.
Now, the Louisiana Fifth Circuit is attempting to restore some predictability to the long-standing statutory employer protection in its ruling in Zamora v. Equilon Enterprises, LLC. In that case, plaintiffs, Zamora and Trinidad were employees of BroadSafway, LLC, who were involved in a work-related accident at the Shell Oil Company Norco Refinery, operated by Equilon Enterprises, LLC (“Equilon”). The accident involved the unexpected release of vent steam from a clogged valve, which caused severe burns. It was undisputed that Equilon was the statutory employer pursuant to La. R.S. 23:1061, which typically limits the plaintiffs’ remedy to workers’ compensation as per La. R.S. 23:1032(A). For that reason, Equilon filed a motion for summary judgment asserting that plaintiffs’ claims should be limited to workers’ compensation.
Equilon’s motion for summary judgment argued that plaintiffs could not prove that Equilon “consciously desired” the injury or knew it was “inevitable,” as required by the “intentional act exception” under La. R.S. 23:1032(B). Plaintiffs argued that the “intentional act” exception to the exclusive remedy provisions of the Louisiana Workers’ Compensation Law applies, citing Equilon’s knowledge of past similar incidents and failure to implement remedial measures, such that Equilon was “substantially certain” the injury would occur. Plaintiffs cited facts that a similar incident happened on four separate occasions in different locations of the plant and in one other California facility. However, there was no evidence of this particular equipment malfunctioning before. The trial court granted summary judgment in favor of Equilon, finding that plaintiffs failed to present sufficient evidence of an “intentional act” by Equilon under La. R.S. 23:1032(B), thus dismissing the Plaintiffs’ tort claims with prejudice. The Fifth Circuit affirmed the trial court’s ruling concluding that the facts did not support the application of the “intentional act” exception. In rendering its opinion, the Fifth Circuit opined that the plaintiffs could not meet their burden of proof that Equilon was “substantially certain” that injury would occur such that an exception to the statutory employer exception would apply. The court focused on the fact that plaintiffs had no evidence that the same equipment malfunctioned before and the fact that the equipment was used throughout the facility without issue on a regular basis such that Equilon could not be “substantially certain” of the occurrence.
While concerns remain, this ruling from the Fifth Circuit restores some hope that the statutory employer protections long afforded to both contractors and owners may still be relied upon, and that courts will not hold that injury was “substantially certain” to occur, simply because arguably similar accidents had occurred on projects in the past.
