Donahue et al v. Republic National Distributing Company, LLC et al

Filing 244

ORDER AND REASONS - IT IS ORDERED that Republic National Distributing Company, LLC's Motion for Summary Judgment (Rec. Doc. 212 ) is DENIED, as set forth in document. Signed by Judge Jane Triche Milazzo on 10/29/2018. (sa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOSHUA DONAHUE ET AL.

CIVIL ACTION

VERSUS

NO: 16-13948

REPUBLIC NATIONAL
DISTRIBUTING COMPANY,
LLC ET AL.

SECTION: “H”(1)

ORDER AND REASONS
Before the Court is Defendant Republic National Distributing Company,
LLC’s Motion for Summary Judgment (Doc. 212). For the following reasons,
Defendant’s Motion is DENIED.
BACKGROUND
This action arises from injuries that Plaintiff Joshua Donahue suffered
while working in the facility of Defendant Republic National Distribution
Company, LLC (“Republic”). Republic distributes alcohol products. To replace
an outdated conveyor system in its warehouse in Jefferson Parish, Louisiana,
Republic contracted with Defendant W&H Systems, Inc. (“W&H Systems”) to
install a new conveyor in the warehouse. W&H Systems then contracted with
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Defendant Darana Hybrid, Inc. (“Darana”) to perform electrical work as part
of that installation. At the time, Darana had an outstanding contract with
Defendant American ManPower Services, Inc. (“AMPS”) whereby AMPS
provided labor to Darana. Plaintiff worked for AMPS and under the contract
with Darana was assigned to Darana’s electrical project for W&H Systems at
the Republic facility. On July 29, 2015, while descending a scaffold in
Republic’s facility, Plaintiff was struck in the head by the blades of an
unguarded overhead fan.
Plaintiff filed this suit on June 8, 2016, in Civil District Court for the
Parish of Orleans asserting claims for negligence and premises liability.
Defendants removed the action to this Court on August 18, 2016.
On September 21, 2018, Defendant Republic filed a Motion for Summary
Judgment asserting immunity from Plaintiff’s tort claims under the Louisiana
Worker’s Compensation Law. 1 Specifically, Republic argues it enjoys immunity
from tort liability as Plaintiff’s “statutory employer.” 2 Plaintiff opposes. 3
This Court previously recognized Defendants W&H Systems and Darana
as Plaintiff’s statutory employers and accordingly granted Motions for
Summary Judgment in their favor. 4 The Court heard oral argument on
Defendant Republic’s Motion for Summary Judgment on October 24, 2018.
LEGAL STANDARD
Summary judgment is appropriate if “the record, including depositions,
documents, electronically stored information, affidavits or declarations,
stipulations. . . , admissions, interrogatory answers, or other materials” “shows

1
2
3
4

See Doc. 212-1.
See id.
See Doc. 223.
Doc. 207.

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that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” 5 A genuine issue of fact exists only “if
the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” 6
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 7 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.” 8 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.” 9 “In response to a
properly supported motion for summary judgment, the nonmovant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the nonmovant on all issues as to which the
nonmovant would bear the burden of proof at trial.” 10 The Court does “not . . .
in the absence of any proof, assume that the nonmoving party could or would
prove the necessary facts.” 11 Additionally, “[t]he mere argued existence of a
factual dispute will not defeat an otherwise properly supported motion.” 12

FED. R. CIV. P. 56 (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
7 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).
8 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
9 Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
10 Johnson v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.
2004) (internal citations omitted).
11 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 393–94 (5th Cir. 2000) (quoting Little v. Liquid
Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
12 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
5
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LAW AND ANALYSIS
The Louisiana Worker’s Compensation Law (“LWCL”) provides
employers immunity from tort liability for injuries their employees suffer in
the course and scope of employment. 13 When an employer enters into a contract
with a “principal” to perform the principal’s work, and the principal qualifies
as a “statutory employer” under the LWCL, tort immunity extends to the
principal. 14
In this case, Defendant Republic argues that it enjoys immunity from
Plaintiff’s tort claims against it because it is a statutory employer of Plaintiff.
Plaintiff responds first that Republic is not a “principal” as defined in the
LWCL, and that even if it is, Republic still does not qualify as Plaintiff’s
statutory employer. This Court assumes for purposes of argument that
Republic qualifies as a principal under the LWCL. 15 Even so, Republic fails to
qualify as a statutory employer under Louisiana law.
Louisiana Revised Statute § 23:1061 establishes the requirements that
a principal must meet to qualify as a statutory employer. 16 Although the
statute is relatively lengthy, it cannot be properly interpreted without
reference to each subsection in the statute. As such, this Court reproduces the
entire text of the statute here.
The statute provides:
(1) Subject to the provisions of Paragraphs (2) and (3) of this
Subsection, when any “principal” as defined in R.S. 23:1032(A)(2),
undertakes to execute any work, which is a part of his trade,
business, or occupation and contracts with any person, in this

LA. REV. STAT. § 23:1032.
See id. § 23:1061; see also id. § 23:1032(A)(2) (defining “principal” as used in § 1061).
15 But see Beaver v. Exxon Mobil Corp., 361 F. Supp. 2d 565, 569 (M.D. La. 2005) (holding
under similar circumstances that the relevant party was not a “principal” as defined in the
statute and thus did not qualify as a statutory employer).
16 LA. REV. STAT. § 23:1061.
13
14

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Section referred to as the “contractor”, for the execution by or
under the contractor of the whole or any part of the work
undertaken by the principal, the principal, as a statutory
employer, shall be granted the exclusive remedy protections of R.S.
23:1032 and shall be liable to pay to any employee employed in the
execution of the work or to his dependent, any compensation under
this Chapter which he would have been liable to pay if the
employee had been immediately employed by him; and where
compensation is claimed from, or proceedings are taken against,
the principal, then, in the application of this Chapter reference to
the principal shall be substituted for reference to the employer,
except that the amount of compensation shall be calculated with
reference to the earnings of the employee under the employer by
whom he is immediately employed. For purposes of this Section,
work shall be considered part of the principal's trade, business, or
occupation if it is an integral part of or essential to the ability of
the principal to generate that individual principal's goods,
products, or services.
(2) A statutory employer relationship shall exist whenever the
services or work provided by the immediate employer is
contemplated by or included in a contract between the principal
and any person or entity other than the employee’s immediate
employer.
(3) Except in those instances covered by Paragraph (2) of this
Subsection, a statutory employer relationship shall not exist
between the principal and the contractor’s employees, whether
they are direct employees or statutory employees, unless there is
a written contract between the principal and a contractor which is
the employee’s immediate employer or his statutory employer,
which recognizes the principal as a statutory employer. 17
The statute, then, clearly provides that a statutory employer relationship
“shall not exist” unless one of two situations arise: either (1) “there is a written
contract . . . which recognizes the principal as a statutory employer;” or (2)
“whenever the services or work provided by the immediate employer is

17

Id.

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contemplated by or included in a contract between the principal and any
person or entity other than the employee’s immediate employer.” 18
In this case, Republic does not argue that any written contract exists
between it and anyone else that expressly recognizes it as a statutory employer
of Plaintiff. Therefore, Republic can only qualify as a statutory employer under
§ 1061(A)(2), which is commonly referred to as the “two-contract” defense. 19
I.

The Two-Contract Defense Does Not Apply to Republic
“The ‘two-contract’ defense applies when: (1) the principal enters into a

contract with a third party; (2) pursuant to that contract, work must be
performed; and (3) in order for the principal to fulfill its contractual obligation
to perform the work, the principal enters into a subcontract for all or part of
the work performed.” 20 Republic argues that it meets the first element because
it is a principal that contracted with suppliers of alcohol products to distribute
those products to vendors throughout Louisiana. 21 It argues that it meets the
second element because for it to honor its obligations to those suppliers,
Republic needed to install a new conveyor system. 22 And finally, Republic
argues that it meets the third element because it entered into a subcontract
with W&H Systems to install the conveyor system. 23
Republic, however, overstates the scope of the two-contract defense.
Under Republic’s interpretation of the defense, virtually all businesses would
qualify as statutory employers. But the defense has never been interpreted so
broadly. As stated by Louisiana’s Fifth Circuit Court of Appeal in a case cited

See id.
See Allen v. State ex rel. Ernest N. Morial-New Orleans Exhibition Hall Auth., 842 So. 2d
373, 379 (La. 2003) (explaining when the “two-contract” theory applies).
20 Id.
21 See Doc. 234 at 4.
22 See id.
23 See id.
18
19

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to by Defendant Republic, “the purpose behind the two contract theory is to
establish a compensation obligation on the part of the principal who
contractually obligates itself to a party for the performance of work and who
then subcontracts with intermediaries whose employees perform any part of
that work.” 24 Republic argues that the relevant “work” it contracted for with a
third party was the distribution of alcohol products. It further argues that
Plaintiff’s work installing the new conveyor system in Republic’s warehouse
represented “part of that work.” This Court refuses to adopt such a broad
definition of the word “work.” Plaintiff’s employer was not hired to help
distribute alcohol products. It was hired to do electrical work on a conveyor
system. 25 The two jobs are not so related as to form part of the same “work” for
statutory employer purposes.
Republic cites to the Louisiana Supreme Court’s decision in Allen to
support its contention that the two-contract defense applies here. 26 In that
case, a convention center contracted with a catering company to provide
services for events at the convention center, and then the convention center
contracted with a hardware company to host an event at the center. 27 An
employee of the catering company injured herself while doing work for the
hardware company’s trade show, and the Court held that the convention center
was the injured employee’s statutory employer. 28 Thus, the employee injured
herself performing obligations that the convention center had directly bound
itself to perform to the hardware company. 29 Here, however, Plaintiff injured
Orillion v. Alton Ochsner Med. Found., 685 So. 2d 329, 333 (La. App. 5 Cir. 1996) (emphasis
added).
25 See Doc. 212-1 at 2.
26 See Allen v. State ex rel. Ernest N. Morial-New Orleans Exhibition Hall Auth., 842 So. 2d
373 (La. 2003).
27 See id. at 375.
28 See id. at 375, 383.
29 See id. at 375.
24

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himself not while distributing alcohol products—the service that Republic
obligated itself to perform to third parties—but while doing electric work on a
conveyer system. Even if it is true that the work being performed by Plaintiff
would help Defendant Republic better perform its obligations to third parties,
the jobs are not sufficiently similar to warrant application of the two-contract
defense.
Republic also cites to the Louisiana Fifth Circuit Court of Appeal’s
decision in Orillion v. Alton Ochsner Medical Foundation to support its
position. 30 In Orillion, a hospital hired a general contractor to construct a new
building, and the general contractor subcontracted with another company to
perform masonry services for the project. 31 An employee of the masonry
company injured himself during the project and sued, among other defendants,
the hospital, which sought to avoid liability on statutory employer grounds. 32
The court of appeal ultimately affirmed the trial court’s ruling that the hospital
was the plaintiff’s statutory employer. 33
For several reasons, this Court does not find Orillion persuasive. First,
because the opinion does not specifically address how the hospital qualified as
a statutory employer, the opinion lacks explicit reasoning to support Defendant
Republic’s argument. 34 Second, and perhaps most importantly, Orillion was
decided in 1996, the year before the Louisiana Legislature amended the LWCL
in a way that materially changed how employers could qualify as statutory

See Orillion, 685 So. 2d at 329.
Id. at 331.
32 See id. at 330–31.
33 See id. at 330–33.
34 See id. See also Beaver, 361 F. Supp. 2d at 569 (“The holding in Orillion, as it pertains to
[the hospital], is questionable at best.”); Orillion, 685 So. 2d 329, 332–33 (J. Gothard,
dissenting) (“[T]he two contract rule does not apply to [the hospital] because [the hospital]
is one step removed from the contract between the general contractor and the
subcontractor.”).
30
31

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employers. 35 For the reasons explained below, the change in the law rendered
opinions published before 1997 about statutory employer issues largely
irrelevant to post-1997 interpretations of the statute.
II.

The “Trade, Business, or Occupation” Defense Was Eliminated
by the 1997 Amendment to the LWCL
Defendant Republic argues that even if it is not Plaintiff’s statutory

employer under the two-contract defense, it nonetheless qualifies as Plaintiff’s
statutory employer under the “trade, business, or occupation” defense. 36 Such
a defense, however, does not exist under current Louisiana law.
Prior to 1997, Louisiana Revised Statute § 23:1061 provided:
(A) Where any person, in this Section referred to as “principal”,
undertakes to execute any work, which is a part of his trade,
business, or occupation or which he had contracted to perform, and
contracts with any person, in this Section referred to as
“contractor”, for the execution by or under the contractor of the
whole or any part of the work undertaken by the principal, the
principal shall be liable to pay to any employee employed in the
execution of the work or to his dependent, any compensation under
this Chapter which he would have been liable to pay if the
employee had been immediately employed by him; and where
compensation is claimed from, or proceedings are taken against,
the principal, then, in the application of this Chapter reference to
the principal shall be substituted for reference to the employer,
except that the amount of compensation shall be calculated with
reference to the earnings of the employee under the employer by
whom he is immediately employed. The fact that work is
specialized or nonspecialized, is extraordinary construction or
simple maintenance, is work that is usually done by contract or by
the principal’s direct employee, or is routine or unpredictable, shall
not prevent the work undertaken by the principal from being
considered part of the principal’s trade, business, or occupation,
regardless of whether the principal has the equipment or
manpower capable of performing the work.
35
36

See 1997 La. Sess. Law Serv. Act 315 (S.B. 922) (West).
See Docs. 212-1 at 8–11, 234 at 4–6.

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(B) Where the principal is liable to pay compensation under this
Section, he shall be entitled to indemnity from any person who
independently of this Section would have been liable to pay
compensation to the employee or his dependent, and shall have a
cause of action therefor. 37
Thus, at least between 1989 and 1997, any “principal” was a statutory
employer of employees of “contractors” that performed part of the
principal’s “trade, business, or occupation.” 38 But that changed in 1997
when the Legislature again amended § 23:1061. 39 Ever since that
amendment, the statute has provided that a “statutory employer
relationship shall not exist” unless either the two-contract defense
applies or a contract specifically refers to a principal as a statutory
employer. 40 Thus, although § 23:1061(A)(1) retains much of the statute’s
pre-amendment language, providing

that a statutory employer

relationship does not arise unless a principal contracts for work that is
part of the principal’s trade, business, or occupation, Section (A)(1) of the
statute is now subject to the limitations provided by Sections (A)(2) and
(A)(3). 41 A contract involving work for a principal’s trade, business, or
occupation is therefore a necessary but not sufficient element of a

1989 La. Sess. Law Serv. Act 454 (H.B. 1431) (West) (emphasis added).
See id. See also Kirkland v. Riverwood Int’l USA, Inc., 681 So. 2d 329, 331–337 (La. 1996)
(discussing the history of the statute).
39 See 1997 La. Sess. Law Serv. Act 315 (S.B. 922) (West). In fact, the Legislature’s
amendment specifically overruled previous Louisiana Supreme Court decisions
interpreting the scope of the trade, business, or occupation defense. Id. (“The provisions of
this Act are intended to legislatively overrule the statutory employer tests as stated in the
Louisiana Supreme Court decisions [Berry v. Holston Well Service, 488 So. 2d 934 (La.
1986)] and [Kirkland v. Riverwood Int’l USA, Inc., 681 So. 2d 329 (La. 1996)].”). In
Kirkland, the court had noted that the previous version of § 23:1061 was “silent as to the
standard to be applied for determining statutory employer status.” Kirkland, 681 So. 2d at
335.
40 See LA. REV. STAT. § 23:1061(A)(2)–(A)(3) (emphasis added).
41 See id. § 23:1061.
37
38

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statutory employer relationship. As such, this Court does not find
persuasive post-1997 cases cited to by Defendant Republic that rely on
pre-1997 cases in holding that the trade, business, or occupation defense
applied after the 1997 amendment to the statute. 42
Because the two-contract defense does not apply to Defendant
Republic and the trade, business, or occupation defense no longer exists,
Republic is not Plaintiff Donahue’s statutory employer. Therefore,
Republic is not immune from Plaintiff Donahue’s tort claims under the
LWCL, and it is thus not entitled to summary judgment on the issue of
liability in this case.
CONCLUSION
For the foregoing reasons, Defendant’s Motion is DENIED.

New Orleans, Louisiana this 29th day of October, 2018.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

42

See Doc. 212-1 at 8–11; McCann v. Best Buy Co., No. 17-108, 2018 WL 3244999, at *4 n.2
(M.D. La. July 3, 2018) (citing Thomas v. State, Dep’t of Transp. & Dev., 662 So. 2d 788,
792 (La. App. 2 Cir. 1995)); Lopez v. U.S. Sprint Communications Co., 973 So. 2d 819, 825
(La. App. 4 Cir. 2007) (citing Thomas, 662 So. 2d at 792). See also Thomas, 662 So. 2d at
792 (citing Freeman v. Moss Well Service, Inc., 614 So. 2d 784, 786 (La. App. 2 Cir. 1993)).

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