Litigation for Workplace Injury Requires Proper Naming of Defendants

In Louisiana, the Third Circuit Court of Appeal upheld a summary judgment against plaintiff Louis Fox in a tort claim ensuing from a work-related injury at the Rodemacher Power Station. On August 12, 2008, Louis Fox, while working inside a cyclone tower at the Rodemacher Power Station, sustained an injury when an object fell from above, striking him in the head and neck area. At the time of the accident, CLECO Power L.L.C. is the owner of the Rodemacher Power Station. Shaw had a contract with CLECO Power L.L.C.in furtherance of the project known as Rodemacher Unit 3. Shaw subcontracted a portion of the work to Foster Wheeler CLECO Power while Mr. Fox was employed by Foster Wheeler Constructors, Inc. as a refractory gunner. Mr. Fox and his wife filed a petition for personal injuries against several defendants: Shaw, CLECO Power, L.L.C., CLECO Corporation, Rodemacher Power Station, etc. CLECO Power and Shaw filed a motion for summary judgment requesting the court find that CLECO Power and Shaw are the statutory employers of Mr. Fox and thus immune from any tort claim brought by him.

If CLECO Power and Shaw were statutory employers of Mr. Fox, it would render the issue of liability moot as workers’ compensation was Mr. Fox’s exclusive remedy against those two defendants. Therefore, the main question is, whether CLECO Power and Shaw were statutory employers of Mr. Fox? There are two instances in which a statutory relationship will be found, thus holding the statutory employer only liable for workers’ compensation benefits: (1) being a principal in the middle of two contracts, referred to as the “two-contract” theory, and (2) the existence of a written contract recognizing the principal as the statutory employer. In addition, the “two-contract” theory “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.

However, in Mr. Fox’s case, the existence of a written contract is lacking. In other words, CLECO Power and Shaw’s summary judgment motion was based on “two-contract” theory. Firstly, there is no question the first two requirements for application of the “two-contract” theory were met. Shaw entered into a contract with CLECO Power and, pursuant to that general contract, work was performed. There is no question the first two requirements for application of the “two-contract” theory were met. Regarding the last element, Shaw did not subcontract directly with Foster Wheele and it was Stone who signed directly with Foster Wheele. The court agreed with the defendants that Stone was acting on behalf and for the benefit of Shaw, as the principal of Stone, thus entitling Shaw to classification as the statutory employer of Foster Wheeler’s direct employee, Louis Fox. The trial court did not err in granting Shaw and CLECO Power’s motion for summary judgment.

The court’s “game-changing” decision, which came down for the defendants, essentially means while the required contractual chain necessary for application of the “two-contract” theory is breached, contractors may still be viewed as statutory employers for the purpose of claiming benefits.