The Maritime Litigation Roundup is published by Seward & Kissel LLP and covers decisions of interest in judicial, administrative or arbitral bodies as well as notable regulatory or other newsworthy developments in the space. For any suggestions on future coverage or should you like more information about the matters addressed, please contact Brian P. Maloney at maloney@sewkis.com. Special thanks to Cody Hubbs for his contributions to this month’s roundup.
This month’s roundup focuses on the “borrowed servant doctrine” and its use in litigation concerning § 905(b) negligence claims under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), with recent cases from the Third Circuit Court of Appeals, in Fetter v. Maersk Line, Ltd., and the United States District Court for the Eastern District of Wisconsin, in White v. Fincantieri Bay Shipbuilding, that illuminate the nine-factor test concerning when an employee directed or permitted by his employer to perform services for another principal may become the employee (or the “borrowed servant”) of the borrowing principal in performing those services.
•The “Borrowed Servant Doctrine” and the Nine-Factor Test
• The borrowed servant doctrine provides that an employee directed or permitted by his employer to perform services for another principal may become the employee – i.e. the borrowed servant – of the borrowing principal in performing those services.
• Under § 905(b) of the LHWCA, a “vessel,” as well as the vessel’s “owner, owner pro hac vice, agent, operator, charter or bareboat charterer, master, officer, or crew member” are subject to liability for negligence.
• Employers, on the other hand, are not liable under Section 905(b) and fall instead within the statutory workers’ compensation regime set out by the LHWCA, displacing an employee’s right to bring a common law tort action in exchange for no-fault compensation payments.
• For the purposes of the LHWCA, the term “employer” includes a “borrowing employer” under the borrowed servant doctrine.
• Under the nine-factor test typically followed by federal courts, courts will weigh the following factors to determine whether a person qualifies as a borrowed servant:
• Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?
• Whose work is being performed?
• Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?
• Did the employee acquiesce in the new work situation?
• Did the original employer terminate his relationship with the employee?
• Who furnished tools and place for performance?
• Was the new employment over a considerable length of time?
• Who had the right to discharge the employee?
• Who had the obligation to pay the employee?
• While no one factor is determinative, control is the most important.
• White v. Fincantieri Bay Shipbuilding (E.D. Wis.) Determines Captain Hired to Perform Sea Trials for Vessel Was Not a Borrowed Servant, Dismissing § 905(b) Negligence Claim Against Prospective Vessel Owner
• On November 2, 2021, the United States District Court for the Eastern District of Wisconsin decided White. There, the issue was whether the captain of the vessel during sea trials was a borrowed servant of Wawa, Inc. (“Wawa”), a company that chose the crew for the sea trials but did not own the vessel.
• The Plaintiff made a somewhat novel contention that if the captain was a borrowed servant, his alleged negligence should be imputed to Wawa as the “employer” of the master.
• The Court applied the nine-factor test and found that Wawa did not exert sufficient control over the captain. Among other things, the captain’s employment was not over a considerable amount of time, Wawa did not directly pay the captain, and Wawa did not furnish the captain with tools and a place for performance since Wawa did not own the vessel yet.
• As the prospective vessel owner, Wawa’s role was to supply the crew in connection with sea trials for a newly built vessel, but legal title to the vessel did not pass until after those trials were complete.
• Since the captain was not a borrowed servant, Wawa could not be held liable for the allegedly negligent acts of the master, and the Court granted summary judgment in favor of Wawa on the § 905(b) negligence claim.
• Third Circuit Applies Nine-Factor Test to Determine that Injured Plaintiff Was a Borrowed Servant of the Vessel
• More traditionally, a vessel owner may look to the borrowed servant doctrine to contend that because it had control over the seafarer, it qualifies as a “borrowing employer,” exempt from LHWCA § 905(b) negligence claims.
• In Fetter v. Maersk Line, Ltd., the Third Circuit applied this doctrine to affirm summary judgment denying negligence claims by a day engineer against Maersk Line, Limited (“Maersk”) as vessel owner, and 3MC Mobile & Mechanical Repair, LLC (“3MC”), a vendor hired to supervise engineers aboard the vessel. Plaintiff alleged that 3MC and Maersk should be liable for negligence under LHWCA § 905(b). Maersk and 3MC responded that the negligence claims were barred because the record reflected that the plaintiff day engineer and the employee of 3MC were both “borrowed servants” of Maersk.
• Applying the nine-factor test, the Third Circuit found that the negligence claims were barred under the LHWCA.
• Maersk had engaged the day engineer’s services pursuant to a collective bargaining agreement with the Union and exercised overall control of the work, and paid the Union for his services, who (after deducting certain fees and taxes), paid the engineer directly. Even though the outside vendor, 3MC, exercised some control and “supervisory assistance,” the Court found that Maersk retained ultimate control over the engine room and the individuals working in it.
• As a borrowed servant, the day engineer was thus barred from bringing a common law tort claim against Maersk. For the same reasons, Maersk’s overall control of the vessel reflected that the employee of 3MC was likewise a borrowed servant subject to Maersk’s control.
• Importantly, although the nature of the work involved a short-term temporary assignment, the Third Circuit found that although “duration of work is often a factor in determining whether a worker acquiesced to a borrowing employer, that does not mean that a borrowed servant relationship can never arise from brief assignments.”
• The parties at issue here were experienced at what they did and the Court found that the record supported that they knew, appreciated and acquiesced to the hazards and risks of working aboard the vessel and subject to Maersk’s control as their “borrowing employer.”
• Unfortunately for the plaintiff day engineer, the Third Circuit likewise found that the district court was correct in dismissing his separate Jones Act claim because the temporary nature of his work on the vessel did not qualify him as a “seaman” under that statute, where the work “did not regularly expose him to the special hazards and disadvantages of the sea.” As such, the Third Circuit thus affirmed the district court’s order granting summary judgment in favor of Maersk and 3MC, dismissing the plaintiff’s claims.