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4th Circuit Issues Borrowed Servant Decision

Published by on July 17, 2009

In Ladd v. Research Triangle Inst., the Fourth Circuit addressed the borrowed servant doctrine under the Longshore and Harbor Workers’ Compensation Act (LHCWA).  More after the break. In this appeal, Fred Ladd, a civilian water and sewer engineer, was hired by the Research Triangle Institute (RTI) to perform reconstruction services in Iraq following the 2003 […]

In Ladd v. Research Triangle Inst., the Fourth Circuit addressed the borrowed servant doctrine under the Longshore and Harbor Workers’ Compensation Act (LHCWA).  More after the break.

In this appeal, Fred Ladd, a civilian water and sewer engineer, was hired by the Research Triangle Institute (RTI) to perform reconstruction services in Iraq following the 2003 U.S. invasion.  RTI contracted with the United States Agency for International Development (USAID).  RTI also subcontracted with Chemonics International Inc., Ladd’s direct employer.  Ladd sued RTI after he suffered serious injuries from a road accident in October 2003.  He alleged RTI failed to supply vehicles for operations in Iraq consistent with those promised during orientation.  Ladd further alleged negligence by the RTI driver and the defective condition of the car.

The district court awarded RTI summary judgment, finding that Ladd was a statutory employee of RTI under the borrowed servant doctrine and holding that his suit was barred under the Defense Base Act, 42 U.S.C. § 1651 (DBA).  On appeal, the Fourth Circuit reviewed the summary judgment de novo.  Ladds argued that the lower court erred in applying the borrowed servant doctrine to conclude that Ladd was a statutory employee of RTI under DBA.

Relying on their precedent in White v. Bethlehem Steel Corp., 222 F.3d 146 (4th Cir. 2000) and Supreme Court precedent in Standard Oil Co. v. Anderson, 212 U.S. 215, 220 (1990), the Fourth Circuit found that Ladd was a borrowed servant, and as such, barred by the DBA.  Therefore, they affirmed the lower court.  Specifically, they reasoned that the DBA applied to injury or death of any employee engaged in any employment under a contract with the U.S., where such contract is performed outside the U.S. 

The borrowed servant doctrine provides immunity from suit to an employee’s general or contract employer, as well as other employers who “borrow” a servant from that employer.  In determining who qualifies as a borrowed servant, the court stressed the importance of ascertaining who the work is performed for, and who has the power to control and direct the servants in the performance of their work.  The Supreme Court precedent highlighted an additional difference between authoritative direction and control versus mere suggestion as to details. 

RTI’s control over Ladd was evident in several ways.  First, he reported directly to RTI’s Chief of Party, who monitored his performance under the terms of his contract.  Second, his salary was subject to RTI approval.  Third, RTI had the power to terminate Ladd’s employment, amend his duties, or transfer him to different parts of Iraq.  Finally, Ladd admitted in his deposition, that on the day of his accident, it was RTI that ordered and arranged the trip.  These factors sufficiently established the authoritative direction and control.  Therefore, as a borrowed servant, “Ladd was a statutory employee of RTI under the LHCWA and the DBA.  Accordingly, the Ladds’ suit is barred by the DBA as a matter of law and we affirm the judgment of the district court.”

Contributed by K.C. Osuji

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