Maritime Proctor Blog

Most casual sports fans in the United States are familiar with the concept of professional teams trading players.  With respect to the American Pastime of baseball, one of the most consequential trades in Houston sports history involved a good to great relief pitcher named Larry Anderson.  The Boston Red Sox needed pitching help, and the Astros wanted young talent. 

So, in 1990, the Red Sox sent a skinny third baseman playing at the AA level to the Astros in exchange for a rental of Anderson (who was a free agent at the end of the season) to help in their playoff run.  The Red Sox made the playoffs and lost to the Oakland As in the American League Championship Series.  Anderson pitched well for them for about three months, then signed a free agent contract with a different team.

 The skinny third baseman? 

After discovering the weight room, switching positions, winning one Rookie of the Year award, one National League MVP, hitting 449 home runs and 1529 RBI with a career OPS of .948, and leading the Astros to one World Series and 6 playoff appearances in his career, Jeff Bagwell became a member of the Baseball Hall of Fame in 2017.

That’s a pretty lopsided deal.

In Europe, the continental pastime is not baseball, but soccer/football.  In leagues such as La Liga or the Premier League, teams also trade players.  But, a difference between the major American sports (baseball, football, basketball, and hockey) and soccer is that in the latter, it is also common for soccer clubs to loan players to other teams. This is primarily done to give younger talent a chance to get playing time. 

An example of this is Dean Henderson, who is the starting keeper for Premier League club Manchester United. 

From 2016 to 2020, when Henderson became the starting keeper, ManU loaned Henderson to four different clubs – Stockport County, Grimsbury Town, Shrewsbury Town, and Sheffield United – ostensibly to gain experience.  Loans, unlike trades, are temporary, and the loaning club can, depending on the terms of the deal, pay some, all, or none of the loaned player’s salary.

Borrowing Employees In Maritime Law

So, what does trading or loaning players have to do with maritime law?  The answer is the application of the borrowed servant/employee doctrine to maritime employees.  

“Borrowed employee” is a legal theory that allows for a worker employed by one company to be considered as an employee of another company.  It can be used in several ways. 

A plaintiff can use it in the Jones Act context to argue that he has more than one Jones Act employer[1] or to attempt to create vicarious liability against a third party.[2] 

Defendants can use the doctrine to avoid tort liability and instead force a plaintiff into a worker’s compensation scheme of recovery. If the Longshore & Harbor Worker’s Compensation Act (“LHWCA”) covers a worker, it is the exclusive remedy for any personal injuries to the worker.[3] 

A worker employed by a third party contractor can be a borrowed employee of another company if that company pleads and proves the status.[4] 

Invocation of the “borrowed employee” argument is best explained in the ovular 1969 case from the Fifth Circuit on the issue: Ruiz v. Shell Oil Co.[5]  Ruiz requires evaluation of the following factors to determine whether a worker is a borrowed employee so as to receive coverage under the LHWCA:[6]

-1-      Who has control over the employee and the work he is performing, 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 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 tools and place for performance?

-7-      Was the new employment over a considerable period of time?

-8-      Who had the right to fire or discharge the employee?

-9-      Who had the obligation to pay the employee?

Earlier this year, the Supreme Court of Texas addressed the potential defensive application of the borrowed employee theory in the case of W&T Offshore, Inc. v. Fredieu,[7] in the context of workers covered by the LHWCA.[8]  To fully comprehend this case, we must go back to the beginning of Wesley Fredieu’s saga.  This requires evaluation of not just the Supreme Court of Texas decision, but also the 2018 opinion of the Fourteenth Court of Appeals,[9] which the Supreme Court affirmed (albeit on different grounds).

What Happened to Wesley Fredieu?

The Wood Group (“TWG”) employed Fredieu as an offshore platform operator[10] and assigned him to perform maintenance and service work on an offshore platform named the Ship Shoal 149-A (“Platform A”) and owned by W&T Offshore (“W&T”).  TWG had a master service contract (“MSC”) with W&T that, among other things, expressly stated TWG’s employees were not employees of W&T, but also required W&T to maintain worker’s compensation insurance that would cover all of TWG’s employees.[11]  Some of Fredieu’s work took him to different W&T owned platforms, including the Ship Shoal 149-D (“Platform D”).[12]

On October 20, 2011, Fredieu was aboard the Platform A but left with a crew to go to Platform D.[13]  While performing a safety walk-around, Fredieu – with no W&T employees present – noticed a regulator on the platform was not working correctly.[14] In the process of disconnecting the regulator to take it back to Platform A, a nearby pipe separated under high pressure and struck Fredieu, causing a severe fracture of his left arm.[15]  Apparently Fredieu was on the phone with a W&T employee at the time of the accident, as the W&T employee was walking Fredieu through the process on how to remove the regulator.[16]  Eventually, Fredieu underwent surgery to repair the fractures, with a significant amount of medical hardware in his arm.[17]

The Underlying Lawsuit

Fredieu sued W&T in Harris County District Court in 2013 and, after a four day trial in August 2015, the jury found W&T liable for Fredieu’s injuries with no contributory negligence finding against him, and awarded Fredieu over $1,700,000.00 in damages available for negligence under the General Maritime Law of the United States (“GML”).[18]

W&T asserted a borrowed employee defense, and thusly the jury was asked if Fredieu was a borrowed employee of W&T.  Thus, if the jury answered yes, Fredieu would receive nothing save for LHWCA benefits.  The question incorporated the Ruiz factors in the preferred broad-form method employed by Texas state courts, and read as follows:[19]

After the jury rendered its verdict, W&T requested in a Motion made under Texas Rule of Civil Procedure 301 that the trial court disregard the verdict, specifically the jury’s answer to the borrowed servant question.[20] 

Part of W&T’s argument was that the issue of borrowed servant status is a question of law, reserved for the trial court, and the jury should not have addressed the issue.[21]  There is no mention in either reported decision of an effort to obtain a summary judgment on the issue by either party prior to trial.

After trial began but before the trial court charged the jury, both Fredieu and W&T did move for a directed verdict on the borrowed employee issue.  The trial court denied both motions.[22]  Moreover, as both the Fourteenth Court and the Supreme Court noted, W&T requested the jury question on the issue, and neither W&T nor Fredieu requested specific findings for each or all of the 9 Ruiz factors.[23]

After extensive post-trial briefing, the trial court set aside the verdict, and found that as a matter of law Fredieu was a borrowed employee of W&T, meaning LHWCA benefits, and not tort damages, constituted Fredieu’s exclusive remedy.[24]  The trial court made specific findings of fact as to each of the 9 Ruiz factors, under Texas Rule of Civil Procedure 279.  The trial court believed Rule 279 allowed for specific findings of fact because the broad form question used did not require the jury to make specific findings as to each of the 9 Ruiz factors,[25] which the trial court considered to be elements of the affirmative defense.[26]

The Fourteenth Court of Appeals Decision

Fredieu obviously appealed on the issue of borrowed employee.  W&T cross-appealed, and argued that if W&T was wrong on the borrowed employee question, the verdict was still improper because of the massive award of future lost earnings/wages.[27]

The Fourteenth Court of Appeals issued its opinion in the case in 2018, and reversed the trial court, reinstating the substantial verdict for Fredieu.[28]  The three-judge panel consisted of Justices Boyce and Jewell, as well as Chief Justice Frost.  Justice Boyce authored the 2-1 majority opinion, while Chief Justice Frost dissented.

The ultimate holding by this panel was as follows:

-1-       W&T did not waive the argument that a borrowed employee analysis is a legal analysis reserved for the Court;

-2-       The trial court’s application of the Rule 279 “omitted element mechanism” did not apply to the borrowed employee question, as the Ruiz factors are not elements as contemplated by the Rule;

-3-       Sufficient evidence existed to support the jury’s answer of NO to the borrowed employee question; and

-4-       A sufficient factual basis existed for the Jury’s finding of future economic losses.

The first and fourth holdings are immaterial to the main issue but do require some discussion.  The Fourteenth Court found no waiver by W&T, because a “no evidence” contention as to the evidentiary support for a jury answer can be made through either an objection to the charge or by a Rule 301 motion, which W&T made post-verdict.[29]  Likewise, the Fourteenth Court held that there was sufficient evidence of future economic loss to support the jury findings on that issue because of medical and economic evidence of a reduced earning capacity in the future.  Notably, Fredieu presented Dr. Ken McCoin, a noted Houston-area forensic economist, who testified as to future lost earning capacity without objection by W&T.[30]

The second holding by the Fourteenth Court is the meat on the hoof for our discussion.  Therein, the Court determined that while the borrowed employee issue is normally an issue of law for the trial court, there are some instances where it is a fact issue for the fact-finder.[31]  Specifically, the Court stated:

Determining whether borrowed employee status is treated as a question of law or fact in any given case requires analysis of evidence pertaining to individual factors.[32]

Moreover, this was one of those cases where it could go to the jury under Texas procedural rules.[33]

The Court of Appeals determined that the trial court could not “fill in the blanks” with specific fact findings on the Ruiz factors under Rule 279 because the factors were not elements, and then analyzed each factor, finding questions of fact on three of them that required submission to the jury.[34] 

The Fourteenth Court also noted that because there was a jury question, and because the jury answered no, to overturn the answer in a post-trial motion, W&T had to conclusively establish all vital facts in support of that issue.

Notably, one of the factors where a fact issue existed was on whether contractual language precluded Fredieu from being a borrowed employee of W&T.  The Fourteenth Court held this was not dispositive, citing to Fifth Circuit precedent which stated essentially that the realities of the workplace can “impliedly modify, alter, or waive express contract provisions.”[35]  Thus, the Fourteenth Court of Appeals held that the language in the MSC mandating Fredieu was only a TWG employee was not dispositive, based upon the facts established at trial that a W&T employee was telling Fredieu how to remove the regulator at the time he did it (and was injured).[36]  These fact issues precluded W&T satisfying the requirement to conclusively establish all vital facts, and meant Fredieu was not a borrowed employee.

The Supreme Court of Texas Decision

W&T thereafter appealed, and the Supreme Court affirmed the Fourteenth Court of Appeals, but on different grounds than those advanced by the learned three judge panel in Houston.  The decision was 7-1, with Justice Lehrmann not participating.  Justice Boyd dissented, and Justice Blacklock wrote the majority opinion.

Much like Larry Anderson’s trade to the Red Sox, the Supreme Court decision starts off well for W&T.  The Supreme Court rejected the analysis of the Fourteenth Court of Appeals and agreed with W&T that the question of whether a worker is a borrowed employee is always a question of law for the trial court, and not a fact question for the jury.  Indeed, Justice Blacklock noted that the Fourteenth Court did not cite to any authority to support its holding, quoted above, that the question could turn from one of law to a question of fact if the facts were in dispute.

But, ultimately Fredieu, like the Astros, got the better end of this transaction.  The Supreme Court noted that it is inappropriate to submit all of the Ruiz factors as a broad form question, and instead held as follows:

As the Fifth Circuit understands the LHWCA, submission of the Ruiz factors in a single broad-form question is not “feasible” because the balancing of the Ruiz factors and the ultimate determination of borrowed-employee status is a question of law.  Submission to the jury of individual Ruiz factors may be necessary, however, if the resolution of fact issues related to one or more factors would be material to the court’s determination of the ultimate legal question.[37]

It has long been the stated rule by the Supreme Court of Texas that when an Admiralty case is filed in Texas state court, the GML provides the substantive law but Texas provides the procedural framework for the case.[38]  The Supreme Court adopted the Fifth Circuit’s framework for resolving this issue.

Substantively, the issue of a borrowed employee is resolved by the GML and is an issue of law for the trial court.  BUT … procedurally any party in Texas that pleads an affirmative defense bears the burden of proof, meaning that W&T had to obtain “jury findings necessary to support its defense.”[39]  W&T did not obtain specific findings from the jury, instead choosing to submit a broad form question.[40]

The Supreme Court reviewed the evidence concerning the Ruiz factors on a de novo standard, and found fact issues present in 3 of the 9 factors – Factors 1 (control), 3 (contractual terms), and 5 (whether the employee terminated his original relationship while working for the second company).  Of particular note is the Supreme Court’s analysis of the third factor, wherein it noted the tension between the MSC’s language disclaiming TWG employees as employees of W&T on the one hand, and the insurance requirements to name TWG employees as covered employees under W&T’s worker’s compensation policies.[41]

Because of these fact issues, the Supreme Court held W&T failed to conclusively establish the evidence to support the borrowed employee defense.  The Supreme Court also upheld the future lost earnings award.  Fredieu, like Jeff Bagwell, finished this saga on top.

Take Aways

If you are going to assert the borrowed employee defense in a maritime action filed in Texas state court where there is a jury, understand the standard.

-1-       Whether a worker is a borrowed employee is a legal issue, meaning a prudent maritime proctor should try to make the trial court decide it (or narrow the factors where a fact question does not exist) in a pre-trial motion or a directed verdict. 

-2-       If the opposing party creates a fact issue as to one of the Ruiz factors with the court, the issue of borrowed employee status has to go to the jury in order for the party asserting it to satisfy Texas procedural requirements.

-3-       My reading of W&T Offshore – the Supreme Court decision – is that the individual factors should be presented to the jury as individual questions, as opposed to a broad form question.  The ultimate question of whether the worker is or is not a borrowed employee should not be submitted to the jury, but instead resolved (based on the answers on the specific, contested Ruiz factors) by the trial court post-verdict.

-4-       Always object to the evidence of future economic losses to preserve the right to contest the evidentiary sufficiency of same on appeal.

[1] See Johnson v. PPI Tech Services, L.P., 605 Fed. Appx. 366, 370 (5^th Cir. 2015).

[2] See Johnson v. Globalsantafe Offshore Services, 799 F.3d 317, (5^th Cir. 2015).  The attempt was not successful.

[3] 33 U.S.C. §904-05.

[4] Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex. 1993); Ruiz,

[5] 413 F.2d 310 (5^th Cir. 1969).

[6] 413 F.2d 310, 312-13.

[7] 63 Tex. Sup. J. 1225, 2020 Tex. LEXIS 477 (Tex. 2020); affirming Fredieu v. W&T Offshore, Inc., 584 S.W.3d 200 (Tex. App. – Houston [14^th Dist.] 2018).  As the Supreme Court decision is still pending publication, all citations to that decision to the LEXIS version, as it is currently the only paginated version available for pinpoint citation.

[8] 33 U.S.C. §§901-950.

[9] 584 S.W.3d 200 (Tex. App. – Houston [14^th Dist.] 2018).

[10] 584 S.W.3d 200, 206.

[11] 2020 Tex. LEXIS 477, *17 (Tex. 2020).

[12] 584 S.W.3d at 206.

[13] Id.

[14] 584 S.W. 200, 206.

[15] Id.

[16] NEED CITE

[17] Id.

[18] Id. at 206-07.

[19] 584 S.W.3d 200, 206.

[20] 584 S.W.3d 200, 207-08.

[21] 584 S.W.3d

[22] 2020 Tex. LEXIS 477, *13 n. 3

[23] 2020 Tex. LEXIS 477, *13 n.3;

[24] 584 S.W.3d at 208.

[25] 2020 Tex. LEXIS 477, *6.

[26] 584 S.W.3d 200, 208.

[27] W&T lost this issue at both the Fourteenth Court of Appeals and the Supreme Court of Texas.  It is immaterial to our discussion here.

[28] 584 S.W.3d 200,

[29] 584 S.W.3d 200, 210.

[30] 584 S.W.3d 200, 227.

[31] 584 S.W.3d 200, 212.

[32] 584 S.W.3d 200, 213.

[33] At least, this is how the Supreme Court saw the holding.  See 2020 Tex. LEXIS 477, *8.

[34] 584 S.W.3d 200, 215-222.

[35] 584 S.W.3d 200, 218-19, citing to Lomei v. Southwest Shipyard, L.P., 363 S.W.3d 681, 685-86 (Tex. App. – Houston [1^st Dist.] 2011, no pet.), citing in turn to Melancon v. Amoco Prod. Co., 834 F.2d 1238, 1245 (5^th Cir. 1988).

[36] Id.

[37] 2020 Tex. LEXIS 477, *10-11, citing to Brown v. Union Oil Co. of Cal., 984 F.2d 674, 677 (5^th Cir. 1993).

[38] Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406 (Tex. 1998).

[39] 2020 Tex. LEXIS 477, *11-12, citing to Philadelphia Indemnity Insurance Company v. White, 490 S.W.3d 468, 485 (Tex. 2016).

[40] Id.

[41] 2020 Tex. LEXIS 477, *18-19, citing to Melancon v. Amoco Prod. Co., 834 F.2d 1238, 1245 (5^th Cir. 1988).