insurance benefits prescribed by statute is "exclusive and in place for all other liability of such employer to the employee, his legal representative, husband or wife. . . " 33 U.S.C. § 905(a). "Employer" under this statute includes "an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States." 33 U.S.C. § 902(4). "Employee" means "any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker." 33 U.S.C. § 902(3).
The work performed by Claudio on the Nathan Berman involved maritime employment upon the navigable waters of the United States. See generally Director, OWCP v. Perini North River Assoc., 459 U.S. 297, 74 L. Ed. 2d 465, 103 S. Ct. 634 (1983). The LHWCA therefore bars any recovery by Claudio from his employer other than that provided under this statute.
KMS as Claudio's Employer
In support of its contention that KMS was Claudio's employer on the date of the accident, KMS has submitted a Daily Safety Meeting Attendance Sheet for the date of Claudio's accident in which Claudio wrote "KMS" under the heading "company." Supp. Donat Aff. Ex. C. KMS has also submitted evidence of two separate accident reports filed with the State of New Jersey, one listing plaintiff's employer as KMS and the other listing the employer as KMOS. KMS has submitted W2 forms issued to Claudio by KMS, and a photograph of Claudio in a KMS uniform. Neither the photograph nor the W2 forms, however, make reference to the date of the accident.
Claudio has not specifically denied that he was employed by KMS on the date in question. However, he has submitted an affidavit in support of his contention that he was an employee of KMOS at the time of the accident, based on the fact that "In 1989 or 1990, I and other employees of KMS were transferred to, and became employees of, Ken's Marine and Oil Service, Inc. ("KMOS"). Thereafter, and as far as I was concerned and understood, I was an employee of KMOS and retained that status through the date of my accident on October 1, 1993." Claudio Aff. P 4. Although Claudio does not deny receiving checks and W-2 forms from KMS during the years in which he states he was employed by KMOS, he asserts that he does "not know the basis for the monies paid to me by KMS shown on the W-2 forms." Claudio Aff. P 5. In addition, Claudio states that he does not know who employed his two immediate supervisors. Claudio Aff. P 7. He also states that he did not wear any type of shirt containing an employer's logo. Claudio Aff. P 9.
As is hereafter demonstrated, the unique relationship between KMS and KMOS requires that the protection afforded to KMOS as Claudio's employer under the LHWCA be extended to KMS as well.
The Joint Venture
Defendant KMS argues that a joint venture existed between KMS and KMOS and that the LHWCA therefore precludes Claudio's recovery from KMS. See generally Heavin v. Mobil Oil Exploration and Producing Southeast, Inc., 913 F.2d 178 (5th Cir. 1990); Haas v. 653 Leasing Co., 425 F. Supp. 1305 (D.C. Pa. 1977). In support of its position that KMS and KMOS were joint venturers, defendant KMS has submitted an affidavit by Kenneth Poesl, President and Treasurer of KMS. In his affidavit, Mr. Poesl states that while KMS and KMOS originally started as separate companies, they "have become commingled to a point that it is impossible to differentiate any distinction between" them; the companies shared the same corporate offices, had the same address, operated out of the same office, and have the same post office box, the same telephone number, and the same fax number. Poesl Aff. at 2. Mr. Poesl asserts that both companies "shared or allocated the costs of a particular job, and also the profits or payments from a particular job." Poesl Aff. at 2-3.
Mr. Poesl additionally asserts that all of the "employees, customers, colleagues in the industry and regulatory agencies acknowledged Ken's Marine and Ken's Marine & Oil as one company." Poesl Aff. at 3. Finally, he states that "because it was clearly understood that both companies acted as one to perform any work, no formal joint venture agreement per se was ever entered into by myself as President of Ken's marine and myself as President of Ken's Marine & Oil." Poesl Aff. at 4.
While a formal written agreement is not necessary to create a joint venture, "an agreement between the parties to create a joint venture is essential." Backus Plywood Corp. v. Commercial Decal, Inc., 208 F. Supp. 687, 687 (S.D.N.Y. 1962), aff'd in part, appeal dismissed in part, 317 F.2d 339 (1963), cert. denied, 375 U.S. 879 (1963); In Re PCH Assoc., 949 F.2d 585, 599 (2d Cir. 1991). It is axiomatic that an agreement requires at least two parties, but to require Mr. Poesl to assume two different personae and as chief executive officer of KMS to agree with himself as chief executive officer of KMOS would exalt form over substance and unwisely transmogrify legal fiction into reality. Mr. Poesl's statement that KMS and KMOS were "so commingled to a point that it is impossible to differentiate any distinction between" them tends to demonstrate the existence of a single entity, rather than the two separate entities required to create the agreement necessary for a joint venture.
In addition, "a joint venture is usually arranged for a single transaction whereas a partnership is formed to conduct a continuing business." In Re PCH Assoc., 949 F.2d at 599 (applying Pennsylvania law). See also Backus Plywood Corp. v. Commercial Decal, Inc., 208 F. Supp. at 690-91 (citing cases) ("As a general rule joint ventures are thought of in relation to a specific venture, a single undertaking, although the undertaking need not be one susceptible of immediate accomplishment. It is in the nature of a partnership limited to a particular venture, not general in operation or duration."). The application of the general rule to the facts as stated by Mr. Poesl point more convincingly to a single entity with two branches rather than a joint venture.
Although disagreeing with the assertion made by KMS that a joint venture existed between KMS and KMOS, I find that the facts alleged establish that KMS and KMOS operated as a single entity. The cases which hold that the LHWCA applies to joint ventures, as well as cases applying the New York Workers' Compensation Law, and cases interpreting statutes in other areas of law, teach that the ties between KMS and KMOS establish the existence of a single entity for purposes of prohibiting recovery from KMS under the LHWCA.
KMS and KMOS as a Single Entity
In Heavin v. Mobil Oil Exploration and Producing Southeast, Inc., 913 F.2d 178 (5th Cir. 1990), a joint operating agreement existing between the defendants created a joint venture for LHWCA purposes; the parties did not dispute that each member of a joint venture attains LHWCA tort immunity against the employees of the joint venture. The court rejected the plaintiff's argument that the fact that only one of the joint venturers paid his wages and disability benefits, and provided him with tools and supervision for his work, meant that he was an employee of this company only and not of the joint venture. See also Davidson v. Enstar Corp., 860 F.2d 167 (5th Cir. 1988) (on reh'g).
In Haas v. 653 Leasing Co., 425 F. Supp. 1305 (D.C. Pa. 1977), the court distinguished the general contractor/subcontractor relationship from the relationship existing among joint venturers for purposes of the LHWCA. The court found that while the LHWCA does not apply in the contractor/subcontractor relationship because these entities do not share the profits of their labors, or have a joint proprietary interest or right of mutual control over the enterprise, the characteristics of a joint venture meet the requirements for precluding liability of all joint venturers under the LHWCA.
The separate entity, the joint venture, is the de facto employer of the workers carrying out the purposes of the venture, even though technically the workers may be on the payroll of only one of the venturers and that particular venturer may provide the workers' workmen's compensation coverage. We hold that the joint venture and, derivatively, the participants in the venture, are thus the worker's "employer" for purposes of the Act and thus enjoy the protection of the exclusive remedy provision.
Haas, 425 F. Supp. 1305 (emphasis added).
The courts have held that the New York Workers' Compensation Law, and decisions construing the same, are "very persuasive" in the interpretation of the LHWCA, because the LHWCA was based largely on the New York law. See Iacone v. Cardillo, 208 F.2d 696 (2d Cir. 1953); Smither & Co., Inc. v. Coles, 100 U.S. App. D.C. 68, 242 F.2d 220, 222-23 (D.C. Cir.), cert. denied, 354 U.S. 914, 1 L. Ed. 2d 1429, 77 S. Ct. 1299 (1957). See also Haas v. 653 Leasing Co., 425 F. Supp. 1305 (D.C. Pa. 1977) (relying on New York law). The New York Workers' Compensation Law defines "employer" as "a person, partnership, association, corporation, and the legal representatives of a deceased employer, or the receiver or trustee of a person, partnership, association or corporation, having one or more persons in employment." N.Y. Work. Comp. Law. § 2 (McKinney's 1992). New York courts in interpreting the Workers' Compensation Law have explicitly held that it applies to joint ventures. See Fallone v. Misericordia Hosp., 23 A.D.2d 222, 259 N.Y.S.2d 947, 952 (1965), aff'd, 17 N.Y.2d 648, 269 N.Y.S.2d 431, 216 N.E.2d 594 (1966). The reasoning used in these cases may be applied in the present case as well:
We see no reason in law or public policy why such [workers' compensation] insurance should not insulate the members of the joint venture from liability for negligence where an employee of the joint venture has been injured. . . . the purposes of the Workmen's Compensation Law are not hindered or frustrated if members of such joint ventures are permitted to free themselves of common-law liability for injuries to employees so long as adequate workmen's compensation insurance is obtained. The Workmen's Compensation Law was designed not only to assure injured employees of certain compensation but also to afford protection to employers against excessive claims for injuries."