Federal Fifth Circuit Affirms Finding of Statutory Employer Relationship Between Mill and Contractor Based on Express Language of Contract

Earlier this month, the United States Court of Appeals for the Fifth Circuit affirmed a finding in favor of a local containerboard mill, who argued that a worker killed on its premises was the mill’s statutory employee and therefore limited to the exclusive remedy provided by the Louisiana Workers’ Compensation Act. The Fifth Circuit held that the clear and unambiguous language of the purchase order between the mill and the workers’ direct employer established this relationship under Louisiana law.

Rolls v. Packaging Corporation of America, Inc. – Background

In February 2017, an explosion killed several workmen at a containerboard mill operated by Packaging Corporation of American (“PCA”). The ex-wife of one of the deceased workers filed a wrongful death action on behalf of their minor daughter, specifically naming as defendants both PCA as the operator of the mill and the mill supervisor individually. PCA removed the matter to federal court based on diversity jurisdiction and alleged improper joinder of the mill supervisor. (While Plaintiffs and PCA were diverse parties, Plaintiffs and the mill supervisor were both Louisiana residents).

Once in federal court, the magistrate allowed limited discovery on the diversity jurisdiction issue, ultimately “piercing the pleadings” and finding that the mill supervisor was improperly joined. Thus, jurisdiction in federal court was proper, which allowed PCA to file its Motion for Summary Judgment on the merits. PCA argued in its dispositive motion that the Purchase Order that PCA issued to the decedent’s direct employer constituted a contract that rendered PCA the statutory employer of the decedent pursuant to Louisiana Revised Statutes 23:1031(A) and 23:1032.

Plaintiffs, however, asserted that that purchase order was insufficient to serve as such a contract because it was unsigned. Alternatively, Plaintiff argued that the exclusive remedy provision of the Louisiana Workers’ Compensation Act (“LWCA”) did not apply because the mill supervisor’s actions that led to the explosion were intentional and thus the intentional act exception applied.

The district court granted PCA’s Motion for Summary Judgment, and Plaintiffs appealed.

The Appeal to the Fifth Circuit

On appeal, the Fifth Circuit affirmed on all issues. First, the Fifth Circuit held that it was not an abuse of discretion for the magistrate to conduct limited discovery to challenge the omissions of Plaintiffs’ allegations about the mill supervisor and reach the conclusion that it was unlikely that Plaintiffs would recover against the mill supervisor.

Second, the Fifth Circuit reviewed the Purchase Order, which contained clear and unambiguous language that PCA and decedent’s direct employer expressly intended for PCA to become the statutory employer for workers’ compensation purposes. The court did not find Plaintiffs’ argument that the order was unsigned compelling, as performance of a contract in Louisiana constitutes acceptance of the terms.

Third, the Fifth Circuit affirmed the district court’s finding that there was essentially zero evidence that the mill supervisor acted intentionally to endanger workman performing work. The court affirmed, leaving Plaintiffs with the exclusive remedy of seeking death benefits under the LWCA.

Rolls v. Packaging Corporation of America, Inc., No. 21-3435