The issue of whether a company is an independent contractor of an E & P company is frequently litigated in oilfield injury accidents, as the injured worker searches for multiple sources of possible recovery. In McDaniel v R.J.’s Transportation, LLC, —- So.3d —, 2021 WL115917, the Second Circuit affirmed summary judgment in favor of Comstock Oil & Gas, LLC, emphasizing not only the importance of the language of Comstock’s Master Service Agreement (“MSA”), but the absence of any contractual or actual operational control over the activities of its independent contractor.
Plaintiff was injured when he was exposed to a hydrochloric acid spill at a Comstock well site during fracking operations. All of the operations at the time of the accident were being conducted by various contractors, including Chaps Oilfield Services, and Comstock had no employees at the site during those operations. The issues before the Second Circuit were the determination of the independent contractor status of Chaps, and whether Comstock retained or exercised “operational control” over Chaps’ activities at the well site.
While the court expressed concern of the “risk of the potential for a troubling cramdown of overly broad indemnifications from liability which can result from master service agreements that are not the product of equal bargaining positions,” it went on to recognize that Louisiana law is clear that a principal is generally not liable for the offenses of an independent contractor. The court had little difficulty in concluding that the terms of the MSA between Chaps and Comstock explicitly provided that Chaps was an independent contractor, but that finding was not the end of the inquiry. The court next considered the two exceptions to the general rule that a contractor is not responsible for the conduct of its independent contractor: if the liability arises from ultrahazardous activity (which was not argued) and the retention by the principal of “operational control.”
In examining operational control, the Second Circuit looked at both the contractual reservation of the right to control the contractor’s work, and the actual exercise of control. The MSA clearly provided that Comstock did not retain the right to control Chaps’ work, as it specifically provided Chaps would act free and clear of any dominion or control by Comstock. As to actual control, the Second Circuit found mere supervision and reporting is not enough- operational control exists only if the principal has direct supervision over the step-by-step process of accomplishing the work such that the contractor is not entirely free to do the work his own way. Accordingly, the Second Circuit affirmed the dismissal of plaintiff’s claims against Comstock. A copy of the Court’s opinion can be found here.
This case was handled by Paul Adkins in Liskow’s Baton Rouge office.
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