Sira Cruz v. Nat'l Steel & Shipbuilding Co.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SIRA CRUZ, No. 17-55441

Plaintiff-Appellant,

D.C. No.

v. 3:14-cv-02956-

LAB-DHB

NATIONAL STEEL AND SHIPBUILDING

COMPANY; PETERSON INDUSTRIAL

SCAFFOLDING, INC., OPINION

Defendants-Appellees,

and

UNITED STATES OF AMERICA,

Defendant.

Appeal from the United States District Court

for the Southern District of California

Larry A. Burns, District Judge, Presiding

Submitted August 29, 2018*

Pasadena, California

Filed December 19, 2018

*

The panel unanimously concludes this case is suitable for decision

without oral argument. See Fed. R. App. P. 34(a)(2).

2 CRUZ V. NAT’L STEEL & SHIPBUILDING

Before: Kim McLane Wardlaw, Jay S. Bybee,

and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Bybee

SUMMARY**

Admiralty

The panel affirmed the district court’s summary judgment

in favor of the defendant in an admiralty action brought by an

injured maritime worker.

The plaintiff was injured while working as a tank tester

aboard a Navy ship that was docked for repairs. She

collected workers’ compensation under the Longshore and

Harbor Workers’ Compensation Act from her primary

employer, a staffing agency, and she brought a negligence

action against the general contractor that had functioned as

her borrowing employer.

The panel held that the defendant general contractor was

immune from suit pursuant to the “one recovery” policy at the

heart of workers’ compensation law. Joining other circuits,

the panel held that the “borrowed employee” doctrine applies

to “employees” under the Longshore Act. The worker was

the defendant’s borrowed employee because her work was

subject to its direction and control at all times. She therefore

was barred from bringing tort claims against the defendant.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

CRUZ V. NAT’L STEEL & SHIPBUILDING 3

COUNSEL

Preston Easley, Law Offices of Preston Easley, San Pedro,

California; Dawn Schock, SK Appellate Group LLP, San

Pedro, California; for Plaintiff-Appellant.

Bradley H. Pace, Philip Barilovits, and Pamela L. Schultz,

Hinshaw & Culbertson LLP, San Francisco, California, for

Defendant-Appellee.

OPINION

BYBEE, Circuit Judge:

In this case we are asked to determine whether a maritime

worker who has collected statutory workers’ compensation

for her injuries may further recover against a so-called

“borrowing employer.” Sira Cruz suffered injuries to her ribs

and lungs while working as a tank tester aboard a Navy ship

that was docked for repairs. She collected workers’

compensation from her primary employer, a staffing agency.

Then, she brought a negligence action against general

contractor National Steel and Shipbuilding Company

(“Nassco”) seeking recovery for the same injuries. Nassco,

which had functioned as Cruz’s borrowing employer for

several years at the time of the accident, asserted that it was

immune from suit pursuant to the “one recovery” policy at the

heart of workers’ compensation law. The district court

granted Nassco’s motion for summary judgment on these

grounds. Cruz appeals from that judgment, and we affirm.

In this, we join the Third, Fourth, Fifth, and Eleventh Circuits

in holding that the borrowed employee doctrine applies to

4 CRUZ V. NAT’L STEEL & SHIPBUILDING

“employees” under the Longshore and Harbor Workers’

Compensation Act (“LHWCA”), 33 U.S.C. §§ 901–50.

I

Except where noted, Cruz and Nassco have stipulated to

the following facts.

Nassco is a shipbuilding company that contracts with the

U.S. government to build and repair Navy vessels. To carry

out this work, Nassco also contracts with labor brokers,

including Tradesmen International, Inc. (“Tradesmen”), for

temporary personnel. The contract between Nassco and

Tradesmen granted Nassco significant control over the

temporary employees Tradesmen assigned to Nassco. Nassco

could terminate the temporary employees at any time,

Tradesmen was required to provide Nassco notice if a

temporary employee resigned, and temporary employees

needed to seek approval for vacation time from Nassco.

Tradesmen employees assigned to Nassco received a badge

bearing both companies’ names enabling them to access

Nassco job sites. These employees attended daily meetings

led by Nassco employees who discussed task assignments.

Tradesmen provided some general safety training to

employees, but Nassco trained these employees on how to

perform shipbuilding and ship repair roles, including “fire

watch” and “tank tester.” Tradesmen invoiced Nassco for its

employees’ services at a rate agreed upon between the

companies, and Tradesmen then paid its employees a

separately agreed-upon hourly rate. The contract also

required Tradesmen to obtain workers’ compensation

coverage for each employee pursuant to the Longshore and

Harbor Workers’ Compensation Act (“LHWCA”).

CRUZ V. NAT’L STEEL & SHIPBUILDING 5

Sira Cruz, a Tradesmen employee assigned to Nassco,

was injured while conducting repair work on the USS Makin

Island—a Nassco work site—on February 20, 2013. Prior to

working for Tradesmen, Cruz had worked at another

temporary staffing agency and did some work at Nassco on

behalf of that agency. Cruz began her work for Tradesmen in

October 2010. In the two years immediately preceding her

injury Tradesmen assigned Cruz to work exclusively for

Nassco, with the exception of one week where it assigned her

to work for another Tradesmen client. In support of its

motion for summary judgment, Nassco submitted an August

16, 2016 screenshot of Cruz’s Facebook profile, where she

listed her employer as “Nasco” [sic] from March 2008 to the

present.

Cruz started her work for Tradesmen at Nassco as a fire

watch. She later asked a Nassco employee to move her to the

position of tank tester. After many conversations with

Nassco employees about this move, Nassco informed Cruz

she would become a tank tester. Cruz learned how to test

tanks on the job with instructions from another Nassco

employee. She has stipulated that she would not have

otherwise known how to do the work because Tradesmen did

not provide her with tank-testing training. Cruz attended

meetings led by Nassco employees each morning, and some

of her work clothing had Nassco’s name on it. However,

Cruz alleges that even when Nassco gave her work

assignments, she controlled the details of her work and

Nassco employees did not supervise or direct her.

At the time of her injury on February 20, 2013, Cruz had

worked as a tank tester for at least six months on

approximately eight different ships that Nassco was repairing.

On that day, Nassco employees instructed her to work in a

6 CRUZ V. NAT’L STEEL & SHIPBUILDING

tank on the USS Makin Island. Cruz fell through an access

hole in the tank while descending a ladder and suffered rib

fractures and a collapsed lung.

Cruz collected LHWCA benefits from Tradesmen, which

had obtained LHWCA insurance coverage for her in

accordance with its contract with Nassco. She then filed a

complaint in admiralty in the Central District of California

alleging, among other charges, that Nassco’s negligence

caused her injuries. Nassco moved for summary judgment.

It argued that it was immune from suit in tort under the

LHWCA’s single-recovery provisions. The district court

granted summary judgment, holding that “as a matter of law[]

. . . Cruz was Nassco’s borrowed employee and is barred

from suing her employer under [the LHWCA].” Cruz now

appeals this judgment.

II

The district court had original jurisdiction over this suit in

admiralty, 28 U.S.C. § 1333, and we have appellate

jurisdiction to review the district court’s final decision on the

merits, 28 U.S.C. § 1291. We review the district court’s grant

of summary judgment de novo. Bravo v. City of Santa Maria,

665 F.3d 1076, 1083 (9th Cir. 2011). Viewing the evidence

in the light most favorable to the nonmoving party, we

consider whether there are any genuine issues of material fact

and whether the district court correctly applied the relevant

substantive law. Frudden v. Pilling, 877 F.3d 821, 828 (9th

Cir. 2017).

CRUZ V. NAT’L STEEL & SHIPBUILDING 7

A

The district court correctly found no genuine issue of

material fact and ruled as a matter of law that Nassco was

immune from Cruz’s tort claims under the LHWCA,

33 U.S.C. §§ 901–50. Enacted in 1927, the LHWCA

establishes a mandatory framework for compensation of

maritime employees injured on the navigable waters of the

United States. A 1972 revision to the statute expanded its

coverage to injuries suffered in “any . . . adjoining area

customarily used by an employer in loading, unloading, [or]

repairing . . . a vessel.” LHWCA Amendments of 1972, Pub.

L. No. 92-576, § 2(c), 86 Stat. 1251, 1251 (codified as

amended at 33 U.S.C. § 903(a)). When a covered employee

is injured, the employer is liable regardless of fault.

33 U.S.C. § 904(b). A general contractor is liable to the

employee of a subcontractor only where the subcontractor

fails to procure workers’ compensation insurance or

otherwise fails to pay compensation. See id. § 905(a).

An injured employee may file a claim for workers’

compensation benefits with the Office of Workers’

Compensation Programs, which has sole authority to

investigate the claim and hold a hearing, and must either

reject the claim or make an award. Id. § 919; 20 C.F.R.

§ 1.2(e). The LHWCA fixes the amount of compensation

based on the nature and extent of the injury and the

employee’s weekly pay rate. See 33 U.S.C. §§ 906, 908–10.

When the LHWCA applies, its remedy is “exclusive and

in place of all other liability of [the] employer to the

employee.” Id. § 905(a); see Figueroa v. Campbell Indus.,

45 F.3d 311, 314–15 (9th Cir. 1995) (applying the LHWCA’s

one-recovery rule). The Supreme Court described the

8 CRUZ V. NAT’L STEEL & SHIPBUILDING

LHWCA’s compensation scheme as a quid pro quo: “In

return for the guarantee of compensation, the employees

surrender common-law remedies against their employers for

work-related injuries.” Wash. Metro. Area Transit Auth. v.

Johnson, 467 U.S. 925, 931 (1984) (superseded on other

grounds by statute, LHWCA Amendments of 1984, Pub. L.

No. 98-426, 98 Stat. 1639). An employer is thus immune

from any suit seeking further recovery for the same injury.

See id.

Tradesmen, which paid Cruz’s LHWCA claim, was

Cruz’s contractual employer at the time of her injury.

However, the district court held that Nassco was legally

Cruz’s employer at this time under the borrowed employee

doctrine and thus was entitled to assert the defense of

LHWCA immunity.

B

We have long recognized the borrowed employee—

traditionally, “borrowed servant” or “loaned servant”—

doctrine. Parker v. Joe Lujan Enters., Inc., 848 F.2d 118, 120

(9th Cir. 1988); United States v. Bissett-Berman Corp., 481

F.2d 764, 772 (9th Cir. 1973); McCollum v. Smith, 339 F.2d

348, 351–52 (9th Cir. 1964). “When one person puts his

[employee] at the disposal and under the control of another

for the performance of a particular service . . . [the employee]

is to be dealt with as [that] of the latter and not of the

former.” Denton v. Yazoo & Miss. Valley R.R. Co., 284 U.S.

305, 308 (1932). The relationship between a borrowing

employer and borrowed employee carries “all the legal

consequences” of a conventional employer-employee

relationship. See id. (quoting Standard Oil Co. v. Anderson,

212 U.S. 215, 220 (1909)). “[A]uthoritative direction and

CRUZ V. NAT’L STEEL & SHIPBUILDING 9

control” are the “critical factors” by which we resolve a

borrowed employee inquiry. Parker, 848 F.2d at 120 (citing

McCollum, 339 F.2d at 351); see United States v. N.A.

Degerstrom, Inc., 408 F.2d 1130, 1133 (9th Cir. 1969) (“The

critical factual inquiry in determining whether the loaned-

servant doctrine should be applied is the location of the power

to control the servant. . . . [R]esponsibility is regarded as a

correlative of power.” (quoting McCollum, 339 F.2d at 351));

see also Wolsiffer v. Atlantis Submarines, Inc., 848 F. Supp.

1489, 1495 (D. Haw. 1994) (applying McCollum and also

considering “whether there was a written agreement by the

employers regarding the loan of the employee, who paid the

employee’s wages and benefits, whether the employee

assented to the transfer, and the length of time of the

employment”).

Here, the record establishes that Nassco was Cruz’s

borrowing employer because her work was subject to its

direction and control at all relevant times. Cruz had been

“loaned” from Tradesmen to Nassco for two nearly

uninterrupted years prior to her injury, and she had worked

for Nassco prior to that while she was affiliated with a

different temporary staffing agency. Cruz attended daily

morning meetings at which Nassco employees gave her tasks

to perform. On site, she wore an ID badge identifying her as

a Nassco employee. Cruz became a tank tester, the job she

performed on the day of her injury and for the six months

prior, only because she asked a Nassco employee to promote

her to the position and because another Nassco employee

trained her. Conversely, Tradesmen provided her with no

training or direction on how to perform this job. Nassco had

the authority to terminate Cruz’s temporary employment at

any time, and Cruz had to seek Nassco’s approval for

vacation time. On the day before her injury, Nassco

10 CRUZ V. NAT’L STEEL & SHIPBUILDING

employees instructed Cruz to work in the tank where she was

injured.

Cruz presents no compelling argument that she was not

subject to Nassco’s direction and control. Although she

remained on the payroll of Tradesmen, payroll status is not

dispositive in borrowed employee inquiries. See N.A.

Degerstrom, 408 F.2d at 1132–33 (affirming a district court’s

holding that a loader operator was the borrowed employee of

the government despite being on the payroll of the plaintiff

company). Her signed declaration that she subjectively

considered herself a Tradesmen employee is insufficient to

put the matter in controversy: the borrowed employee

inquiry is objective; and this declaration made for litigation

purposes contradicts Cruz’s personal Facebook profile, where

she listed “Nasco” [sic] as her employer from March 2008

until at least August 2016. Finally, Cruz’s assertion that she

“sometimes worked in the Tradesmen office” is immaterial to

our conclusion that Nassco functioned as her borrowing

employer while she was performing repairs on the USS Makin

Island.

C

We next review the district court’s conclusion that

Nassco, as a borrowing employer, was entitled to the same

immunity as a conventional employer under the LHWCA.

Until now, we have never directly addressed this question.

See Burnette v. Sierra Nev. Corp., No. 2:14-cv-2761, 2015

WL 5475262 at *6 (D. Ariz. Sept. 18, 2015) (commenting on

the lack of Ninth Circuit precedent). We now expressly hold

that a borrowed employee is an “employee” and a borrowing

employer is an “employer” for purposes of the LHWCA, and

accordingly, a borrowed employee who has been fully

CRUZ V. NAT’L STEEL & SHIPBUILDING 11

compensated under the LHWCA by any party has no further

remedy for the same injury against her borrowing employer.

Sound construction of the LHWCA compels this

conclusion. Congress enacted the statute’s current definition

of the term “employee” in 1984. LHWCA Amendments of

1984, Pub. L. No. 98-426, § 2, 98 Stat. 1639, 1639 (codified

as amended at 33 U.S.C. § 902(3)). An “employee,” for

purposes of the statute, is “any person engaged in maritime

employment . . . including a ship repairman,” but excluding

eight enumerated categories of individuals. 33 U.S.C.

§ 902(3). Those Congress excluded from employee status

include, among others, secretarial and marina personnel,

certain types of laborers on small vessels, and “individuals

who (i) are employed by suppliers, transporters, or vendors,

(ii) are temporarily doing business on the premises of an

employer . . . and (iii) are not engaged in work normally

performed by employees of that employer . . . .” Id.

§ 902(3)(A)–(H).

Borrowed employees are not among the eight categories

of laborers Congress chose to categorically exclude from

coverage in § 902(3). Moreover, § 902(3)(D)’s exclusion of

individuals (i) employed by suppliers, transporters, or

vendors, (ii) temporarily doing business on the premises of an

employer, and (iii) not engaged in work normally performed

by employees of the employer further supports our

conclusion. Section 902(3)(D) excludes only a narrow subset

of borrowed employees: those who perform work for the

borrowing employer distinct from the type of work that

12 CRUZ V. NAT’L STEEL & SHIPBUILDING

employer’s conventional employees perform.1 This precise

language reflects a policy decision by Congress to exclude

some borrowed employees—but not all. See also id. § 905(a)

(describing the conditions under which a subcontractor’s

employees will be deemed employees of the contractor).

We may assume that Congress understood in 1984 that

the Supreme Court had long recognized the borrowed

employee doctrine and that the statute’s definitions thus

reflect this understanding. Denton, 284 U.S. at 308; see

Merck & Co. v. Reynolds, 559 U.S. 633, 648 (2010) (“We

normally assume that, when Congress enacts statutes, it is

aware of relevant judicial precedent.”); Miranda B. v.

Kitzhaber, 328 F.3d 1181, 1189 (9th Cir. 2003) (“Congress is

presumed to know the law and to have incorporated judicial

interpretations when adopting a preexisting remedial scheme

. . . .”). Thus, applying the well-recognized canon of

expressio unius est exclusio alterius, we conclude that the

LHWCA reaches borrowed employees who otherwise fall

within Congress’s definition of “employee.” See Andrus v.

Glover Constr. Co., 446 U.S. 608, 616–17 (1980) (“Where

Congress explicitly enumerates certain exceptions to a

general prohibition, additional exceptions are not to be

implied, in the absence of evidence of a contrary legislative

intent.”).

Our conclusion places us in agreement with the other

circuits to address this question. See Langfitt v. Fed. Marine

Terminals, Inc., 647 F.3d 1116, 1124 (11th Cir. 2011); White

v. Bethlehem Steel Corp., 222 F.3d 146, 149 (4th Cir. 2000);

1

Cruz, who performed the same type of work on the USS Makin

Island as Nassco employees, does not argue that she qualifies for this

exclusion.

CRUZ V. NAT’L STEEL & SHIPBUILDING 13

Peter v. Hess Oil Virgin Islands Corp., 903 F.2d 935, 940 (3d

Cir. 1990); Gaudet v. Exxon Corp., 562 F.2d 351, 355 (5th

Cir. 1977). It is also consistent with the broader body of

workers’ compensation law. Borrowing employers are

generally immune from borrowed employees’ tort suits under

various other workers’ compensation schemes. See 1 Modern

Workers Compensation § 103:30 (compiling state and federal

statutes and cases to conclude that “[e]xcept when the loaned

servant doctrine has been abrogated for this purpose, the

loaned employee cannot maintain a tort action against the

borrowing employer, even if the borrowing employer does

not provide workers’ compensation benefits to the loaned

employee.” (citations omitted)).

III

Cruz’s remaining arguments are without merit. She

alleges that Nassco waived its right to assert that she was its

borrowed employee through its contract with Tradesmen,

citing two vague provisions of the contract which do not

address the borrowed employee doctrine. Under California

law,2 “waiver is the intentional relinquishment of a known

right after knowledge of the facts.” Waller v. Truck Ins.

Exch., Inc., 900 P.2d 619, 636 (Cal. 1995) (emphasis added)

2

We interpret the agreement between Nassco and Tradesmen

according to California contract law. As a general contract principle, the

law of the situs state applies. See Thompson v. Enomoto, 915 F.2d 1383,

1388 (9th Cir. 1990). State law may apply in an admiralty case so long as

it merely supplements federal maritime law and does not deprive a party

of substantive admiralty rights. Pope & Talbot v. Hawn, 346 U.S. 406,

409–10 (1953). Waiver does not disrupt any admiralty right, and we have

previously considered claims of contractual waiver while sitting in

admiralty. Dant & Russell, Inc. v. Dillingham Tug & Barge Corp.,

895 F.2d 507, 511 (9th Cir. 1989).

14 CRUZ V. NAT’L STEEL & SHIPBUILDING

(internal quotation marks and citation omitted). Cruz bears

the burden to “prove [waiver] by clear and convincing

evidence that does not leave the matter to speculation,” and

we resolve doubtful cases against the party asserting waiver.

Id. She has not met this burden. Nothing in the contract

suggests Nassco intentionally waived its right to assert the

borrowed employee doctrine, and even so, a contract cannot

alter the truth of an employment relationship by placing

parties in different positions from those they actually held.

See Kowalski v. Shell Oil Co., 588 P.2d 811, 816 (Cal. 1979)

(en banc) (citing Martin v. Phillips Petroleum Co., 117 Cal.

Rptr. 269, 271 (Ct. App. 1974)).

Cruz also argues that the district court improperly allowed

Nassco to join another defendant’s motion for summary

judgment. This argument is irrelevant because Nassco filed

its own motion for summary judgment—in which it asserted

the defense of immunity under the LHWCA—and we may

affirm the district court’s grant of summary judgment on any

ground supported by the record. Campidoglio LLC v. Wells

Fargo & Co., 870 F.3d 963, 973 (9th Cir. 2017).

IV

The LHWCA provides maritime employees one

guaranteed recovery for covered injuries. Cruz received her

recovery, and the district court was correct to preclude her

from pursuing a second. For these reasons, the judgment of

the district court is AFFIRMED.