Pettiford v. Graphic Packaging International Inc

Filing 30

RULING re 13 MOTION for Summary Judgment filed by Graphic Packaging International Inc. Signed by Judge Robert G James on 9/20/13. (crt,DickersonSld, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
NATHANIEL THOMAS PETTIFORD, JR.

CIVIL ACTION NO. 12-2883

VERSUS

JUDGE ROBERT G. JAMES

GRAPHIC PACKAGING INTERNATIONAL, MAG. JUDGE KAREN L. HAYES
INC., ET AL.
RULING
This case arises out of an alleged injury to Plaintiff Nathaniel Thomas Pettiford Jr.,
(“Pettiford”) while he was working at Graphic Packaging International, Inc.’s (“GPI”) facility in
West Monroe, Louisiana. Pending before the Court is a Motion for Summary Judgment [Doc.
No. 13] filed by Defendant GPI.

For the following reasons, GPI’s Motion for Summary

Judgment is GRANTED.
I.

FACTS
On May 19, 2011, GPI, a paper manufacturer, and Bearings and Drives Industrial, Inc.

(“B&D”) entered into a written contract (“Purchase Order”) [Doc. No. 13-7]. Pettiford was
employed by B&D in its service division.
The Purchase Order [Doc. No. 13-7, pp. 9] provided that “[t]he clauses printed on the
attachment hereof and any supplemental conditions attached hereto are essential terms of this
order.” Further, in pertinent part, the Purchase Order’s General Terms and Conditions (“Terms”)
state:
Acknowledgement, shipment or performance of any part of this
Purchase Order will constitute acceptance by [B&D] of all Terms

and Conditions hereof, including all documents incorporated
herein by reference, without reservation, and shall constitute the
entire agreement between the parties superseding all prior
agreements relating to the subject matter hereof.
…
SECTION 9: INSURANCE:
A. MINIMUM GENERAL REQUIREMENTS. Unless agreed
otherwise in writing by Buyer, at a minimum, Seller and all of its
subcontractors, vendors and/or consultants shall produce and
maintain the following insurance:
(i)

Worker’s

Compensation-

statutory

limits

and

Employer’s Liability- $500,000 per occurrence.
…
SECTION 13: STATUTORY EMPLOYMENT: If services are to
be performed at Buyer’s facilities in the state of Louisiana, it is
agreed that pursuant the provisions of the Louisiana Revised
Statutes 23:1061(A)(3), that it is the intent and agreement of the
partied hereto that the relationship of the [GPI] to the direct
employees and the statutory employees of the [B&D] be that of a
statutory employer.
…
SECTION 15: GOVERNING LAW: Seller and Buyer agree that
the terms and provisions hereof shall be carried out and interpreted
according to the laws of the State of Georgia.”
[Doc. No. 13-7, pp. 10].
On May 25, 2011, Pettiford was allegedly injured while changing idler gear parts on a
paper machine at GPI’s facility.

2

B&D had previously purchased workers’ compensation insurance for $1,000,000. [Doc.
No. 13-9]. At the time of Pettiford’s accident, the insurance policy was in effect.

On April 19, 2012, Pettiford filed suit against GPI in the Fourth Judicial District Court,
Ouachita Parish, Louisiana.
On November 13, 2012, GPI removed the case to this Court based on diversity
jurisdiction.
On January 29, 2013, GPI filed a Motion for Summary Judgment [Doc. No. 13].
Pettiford filed an opposition memorandum [Doc. No. 28], and GPI filed a reply memorandum
[Doc. No. 29].
II.

LAW AND ANALYSIS
A. Standard of Review for Summary Judgment
Summary judgment “should be rendered if the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c)(2). The
moving party bears the initial burden of informing the court of the basis for its motion by
identifying portions of the record which highlight the absence of genuine issues of material fact.
Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992). A fact is “material” if proof of its
existence or nonexistence would affect the outcome of the lawsuit under applicable law in the
case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material

3

fact is “genuine” if the evidence is such that a reasonable fact finder could render a verdict for
the nonmoving party. Id.
If the moving party can meet the initial burden, the burden then shifts to the nonmoving
party to establish the existence of a genuine issue of material fact for trial. Norman v. Apache
Corp., 19 F.3d 1017, 1023 (5th Cir. 1994). The nonmoving party must show more than “some
metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). In evaluating the evidence tendered by the parties, the Court
must accept the evidence of the nonmovant as credible and draw all justifiable inferences in its
favor. Anderson, 477 U.S. at 255.
B. Tort Immunity
In this case, GPI asserts, pursuant to its contract with B&D and Louisiana Revised Statute
§ 23:1061(A)(3), that it is immune from Pettiford’s tort claim because it was Pettiford’s statutory
employer.
“Except for intentional acts, workers’ compensation is the exclusive remedy for workrelated injuries and illnesses.” Dugan v. Waste Mgmt., Inc., 45-407-CA (La. App. 2 Cir.
6/23/10); 41 So.3d 1263, 1266 (citing LA. REV. STAT. § 23:1032). The exclusive remedy
provision of the workers’ compensation statute precludes an employee from filing a lawsuit for
damages against “his employer[] or any principal.” LA. REV. STAT. § 23:1032(A). A “principal”
is “any person who undertakes to execute any work which is a part of his trade, business, or
occupation in which he was engaged at the time of the injury, or which he had contracted to
perform and contracts with any person for the execution thereof.”

Id.

“[W]ork shall be

considered part of the principal’s trade, business, or occupation if it is an integral part of or
4

essential to the ability of the principal to generate that individual principal’s goods, products, or
services.” Id. “In some instances, an employer may be deemed the statutory employer of a
worker that it does not directly employ” and is therefore immune from tort liability pursuant to
Louisiana Revised Statute § 23:1061(A). Dugan, 41 So.3d at 1266.
A statutory employment relationship does not exist “unless there is a written contract
between the principal and a contractor. . . which recognizes the principal as a statutory
employer.” LA. REV. STAT. § 23:1061(A)(3). The statutory employee must be hired to perform
services that are part of the principle’s business, and his injury must occur during the course and
scope of his employment, as defined by the agreement. See LA. REV. STAT. §§ 23:1061(A)(1) &
(A)(2). If a “contract recognizes a statutory employer, [then] a rebuttable presumption of a
statutory employer relationship between the principle and the contractor’s employees” shall
exist. LA. REV. STAT. § 23:1061(A)(3). “This presumption may be overcome only by showing
that the work is not an integral part of or essential to the ability of the principal to generate that
individual principal’s goods, products, or service.” Id. (emphasis added). Simply put, a statutory
employer/employee relationship exists when a principle hires a contractor, in conformance with
§23:1061, to perform services that are a part of the principle’s business and a written contract
exists between the principle and contractor that recognizes the principle as a statutory employer.
This Court has previously acknowledged that Section 13 of GPI’s Terms recognizes GPI
as a statutory employer of its contractors’ direct employees. See Nielsen v. Graphic Packaging
Int’l, Inc., Civil Action No. 09-1757, 2011 WL 2462496 (W.D. La. June 17, 2011) aff’d, 469 F.
App’x 305 (5th Cir. 2012) (finding that identical language in a GPI Purchase Order was
sufficient to recognize a statutory employment relationship) and Gilbreath v. Averitt Express,
Inc., Civil Action No. 09-1922, 2011 WL 121892 (W.D. La. Jan. 13, 2011) (same).
5

In its Motion for Summary Judgment, GPI puts forth that it is immune from Pettiford’s
tort claim because it was Pettiford’s statutory employer.

GPI makes three indispensable

assertions: (1) “the work [Pettiford] was performing at the time of the accident was done
pursuant to a contract between GPI and B&D”; (2) the Purchase Order recognized GPI as the
statutory employer of B&D’s employees who performed at GPI’s facility; and, (3) “B&D’s work
was an essential part of and was integral to the ability of GPI to produce its goods and products.”
[Doc. No. 13-3, pp. 1].
Pettiford opposes GPI’s Motion for Summary Judgment, contending that there are at least
four genuine issues of material facts for trial: (1) the contract was nonbinding because it was
unsigned; (2) the contract is contradictory and, therefore, invalid; (3) the maintenance work
Pettiford was hired to perform was not an integral part of or essential to the ability of GPI to
generate its goods and products; and (4) GPI did not intend to be a statutory employer because it
did not provide workers’ compensation coverage.

The Court will address each of these

arguments in turn.
1. The Unsigned Purchase Order
Although it is undisputed that the Purchase Order between GPI and B&D was unsigned,
the Court finds that the parties were bound by its terms.
Pursuant to Louisiana Civil Code Annotated article 1927, “[a] contract is formed by the
consent of the parties established through offer and acceptance.” “[O]ffer and acceptance may
be made orally, in writing, or by action or inaction that under the circumstances is clearly
indicative of consent.” Id.

Moreover, “[w]hen an offeror invites an offeree to accept by

performance and, according to usage or the nature or the terms of the contract, it is contemplated
6

that the performance will be completed if commenced, a contract is formed when the offeree
begins the requested performance.” Id.; see also Trahan v. Scott Equip. Co., L.L.C., 493 Fed.
App’x 571, 574 (5th Cir. 2012) (finding a valid contract where “[a buyer] issued a service
request to [the seller]; the seller complied and completed the requested service in exchange for
[money], which [buyer] paid,” although both parties did not sign the instrument).
Under these principles, the undisputed facts in the record clearly establish the existence
of a contract. GPI entered into an agreement with B&D for the performance of repairs and
maintenance on machinery at GPI’s factory.

This agreement was negotiated and then

memorialized in a Purchase Order containing certain Terms, which provides for “acceptance by
performance of any part.” [Doc. No. 13-7, pp. 10]. B&D began the requested performance
before Pettiford’s alleged accident; thus, B&D accepted GPI’s offer and terms through
performance. The Purchase Order, including its Terms, are binding.
2. Sections 13 and 15 of the Terms and Conditions
The Court has next considered and rejected Pettiford’s argument that Sections 13 and 15
of the Purchase Order’s Terms are contradictory.
Section 15 requires that the contract be interpreted under Georgia law if there is a dispute
as to its terms, while Section 13 relies on Louisiana law to establish a statutory employment
relationship. There is no such dispute here. The Terms merely recognize that B&D’s direct
employees are to be statutory employees with Louisiana substantive workers’ compensation law,
the state where they are employed. A party may create a contract that is governed by the laws of
one state and utilize the substantive law of another. Thus, the contract is not contradictory and
is valid.
7

3. Relationship of B&D’s Services to GPI’s Ability to Produce Paper
The Court also finds that Pettiford has failed to show that B&D’s employees performed
work that was “not an integral part of or essential to the ability of [GPI] to generate [its] goods,
products, and services.” LA. REV. STAT. § 23:1061(A)(3).
GPI produced deposition testimony from Ryan Canales stating that “[B&D] was hired to
perform a gear change operation” because “[GPI’s] internal predictive maintenance group [did]
vibration rounds, and they obviously picked up a bad bearing.” [Doc. No. 29-1, pp. 2-3].
Pettiford argues in response that the work was neither an integral part of nor essential to GPI
because: (1) “B&D brought employees [from] out of state to perform the work”; (2) “[B&D] was
hired specifically for a specialized job, rather than using [GPI’s] employees” who were capable
of performing the job; and (3) Pettiford was merely repairing the machine and “was not
manufacturing a paper product or otherwise contributing to the actual product.”

These

arguments are without merit. The origin of B&D’s employees and the ability of GPI to perform
the work internally are immaterial. As testified by Mr. Canales, paper machine repairs are
required for the operation of the machines, and the machines are essential to a paper mill’s
ability to produce paper.
4. GPI’s Failure to Provide Workers’ Compensation Coverage for
B&D’s Employees
Finally, the Court rejects Pettiford’s argument that GPI cannot be his statutory employer
when it failed to directly pay his workers’ compensation insurance.
A statutory employer’s tort immunity is not dependent on whether it directly pays
workers’ compensation coverage. 13 H. ALSTON JOHNSON, III, LA. CIV. L. TREATISE, Workers’
Compensation § 128 (5th ed. 2012). The purpose of Louisiana Revised Statutes §§ 23:1061 and
8

23:1063 is to prevent the circumvention of compensation. Miller v. Billy Ogden Logging, 951579 (La. App. 1 Cir. 4/4/96), 672 So. 2d 316, 318. Section 23:1061 specifically permits
principles to seek indemnity from contractors. 1 This provision affords statutory employers
immunity from tort liability by requiring contractors to provide workers’ compensation
insurance, while guaranteeing workers a method of recovery from the statutory employer if the
contractor does not provide insurance. 2 Thus, a statutory employer need not directly provide
workers’ compensation insurance to be immune from tort liability.
Pettiford incorrectly interprets GPI’s failure to provide workers’ compensation coverage
directly as evidence of GPI having no intention to be a statutory employer. Consistent with the
applicable statutory provisions, GPI actively ensured that Pettiford was insured, requiring in its
Purchase Order that B&D “procure and maintain” workers’ compensation insurance. [Doc. No.
13-7, pp. 9]. B&D complied with this requirement and had a workers’ compensation policy
[Doc. No. 13-9] to cover its employees, including Pettiford.
The Court finds that GPI was a principal because it contracted with B&D to execute its
work. Further, under § 23:1061(A)(3), GPI had a statutory employer relationship with B&D’s
employees because GPI (principal) entered into a written contract with B&D (contractor) that
1

“When 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.” LA. REV. STAT. § 23:1061(B).
2

As between the principal and the contractor, it is fair that the latter, as the direct
or “payroll” employer, should bear the ultimate risk of accident. For this reason,
the principal who is made liable under these sections is entitled to indemnity and
he can file a third-party demand against the contractor and demand judgment
over against him. The net effect is that the principal merely lends his solvency
to the worker's [sic] claim, and he can effectively protect himself in advance
either by satisfying himself that the contractor is solvent or by insisting that the
latter insure against work accidents.
13 H. ALSTON JOHNSON, III, LA. CIV. L. TREATISE, Workers’ Compensation § 121 (5th ed. 2012).

9

recognized GPI as a statutory employer of B&D’s employees.

Because Pettiford was an

employee of B&D, GPI enjoys a rebuttable presumption that it was Pettiford’s statutory
employer, unless the work performed was not integral to GPI’s business. § 23: 1061(A)(3). The
work performed was integral to GPI’s business. Accordingly, GPI was Pettiford’s statutory
employer and is immune from tort liability to Pettiford under §23:1061.
III.

CONCLUSION
Based on the foregoing, GPI’s Motion for Summary Judgment [Doc. No. 13] is

GRANTED, and Pettiford’s claims against GPI are DISSMISSED WITH PREJUDICE.
MONROE, LOUISIANA, this 20th day of September, 2013.

10