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Smart Summary

Factual and Procedural Background

Clarence DeShong, a truck driver employed by Seacoast Transportation Company, a wholly owned subsidiary of Seaboard Coast Line Railroad Company ("Seaboard"), was injured while coupling his truck to a Seaboard trailer. He received workers' compensation benefits from Seacoast under Florida's Workmen's Compensation Act. Subsequently, DeShong initiated an action under the Federal Employers' Liability Act ("FELA") against Seaboard in the United States District Court for the Middle District of Florida, claiming employment by Seaboard. Seaboard moved for summary judgment, asserting DeShong was not its employee but rather Seacoast's. The district court initially denied summary judgment, finding the employment relationship a factual question for the jury. Upon reconsideration, the district court granted summary judgment for Seaboard based on estoppel, reasoning that DeShong could not claim to be Seaboard's employee after having represented himself as Seacoast's employee for workers' compensation benefits. DeShong appealed this estoppel ruling.

Legal Issues Presented

  1. Whether the doctrine of estoppel bars a plaintiff from claiming employment by a railroad under FELA when the plaintiff previously claimed employment by a subsidiary for workers' compensation benefits.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kelley v. Southern Pacific Co., 419 U.S. 318 (1978) Established that an employee can be employed by more than one corporation for FELA purposes, including being a "borrowed servant," acting for two masters, or being a subservant of a company serving the railroad. Court relied on Kelley to reject estoppel, holding that DeShong's dual employment claim was consistent and merited jury determination.
Ward v. Atlantic Coast Line Railroad Co., 362 U.S. 396 (1960) Supports the principle that employment status for FELA purposes is a factual question for the jury. Used to reinforce that the jury should decide DeShong's employment status rather than summary judgment based on estoppel.
Barrera v. Roscoe, Snyder Pacific Railway Co., 385 F. Supp. 455 (N.D. Tex. 1973), aff'd mem., 503 F.2d 1058 (5th Cir. 1974) District court applied estoppel to bar FELA claim after workers' compensation recovery; Fifth Circuit affirmed by summary order without opinion. Court distinguished Barrera as non-binding precedent on estoppel issue because plaintiff did not claim employment by railroad and estoppel ruling was dictum.
Kaneb Services, Inc. v. Federal Savings and Loan Ins. Corp., 650 F.2d 78 (5th Cir. 1981) General principles of equitable estoppel based on fair dealing and prevention of injustice. Referenced to explain the doctrine of estoppel and its equitable foundation.
Aetna Life Ins. Co. v. Bocanegra, 572 S.W.2d 355 (Tex. Civ. App. 1978) Equitable estoppel prevents a party from taking inconsistent positions after accepting benefits. Used to illustrate the typical application of estoppel principles.
Metroflight, Inc. v. Shaffer, 581 S.W.2d 704 (Tex. Civ. App. 1979) Judicial estoppel prevents abuse of judicial process by asserting contradictory positions in successive claims. Referenced to explain the type of estoppel the district court applied.
Vanskike v. ACF Industries, Inc., 665 F.2d 188 (8th Cir. 1981) Payment of benefits by a subsidiary does not necessarily preclude a finding of employment by the railroad under the subservant theory. Supports the argument that dual employment claims are consistent and estoppel does not apply.
Dillenburg v. Kramer, 469 F.2d 1222 (9th Cir. 1972) Summary affirmance without opinion has little precedential value. Used to support the view that Barrera's affirmance lacks binding precedential effect.
American Fidelity Casualty Co. v. Indemnity Insurance Co. of North America, 308 F.2d 697 (6th Cir. 1962), cert. denied, 372 U.S. 942 (1963) Per curiam memorandum affirmance without opinion does not constitute binding precedent on state law questions. Supports the non-precedential status of Barrera on estoppel issues.
Biggs v. Norfolk Dredging Co., 360 F.2d 360 (4th Cir. 1966) Supports the requirement that a compensation carrier may file a lien to prevent unjust enrichment. Referenced to explain how Florida's workers' compensation statute interacts with federal remedies and liens.

Court's Reasoning and Analysis

The court analyzed the district court's application of estoppel, which barred DeShong's FELA claim because he had previously claimed to be an employee of Seacoast for workers' compensation benefits. Estoppel requires inconsistency between positions taken. However, the Supreme Court in Kelley v. Southern Pacific Co. held that an individual may be employed by both a railroad and its wholly owned subsidiary simultaneously under FELA. DeShong's claim to be employed by Seacoast for workers' compensation and by Seaboard for FELA purposes were not inconsistent but rather potentially concurrent. The court noted that the district court's reliance on Barrera v. Roscoe was misplaced because Barrera did not involve a claim of dual employment and its estoppel discussion was dictum, with the appellate court affirming only by summary order without precedential effect. The court concluded that estoppel did not apply because the critical element of inconsistency was absent, and the question of employment status should be resolved by a jury.

Holding and Implications

REVERSED.

The court reversed the district court's grant of summary judgment based on estoppel. The decision permits a plaintiff to claim employment by a railroad under FELA even if the plaintiff previously claimed employment by a subsidiary for workers' compensation benefits, recognizing the possibility of dual employment. The direct effect is to allow DeShong's FELA claim to proceed to jury determination on the employment issue. No new precedent was established beyond reaffirming the principles in Kelley and clarifying the limited precedential value of Barrera.

CLARENCE DeSHONG, PLAINTIFF-APPELLANT, v. SEABOARD COAST LINE RAILROAD COMPANY, A CORPORATION, DEFENDANT-APPELLEE.

FAY, Circuit Judge:

Appellant, Clarence DeShong, a truck driver for Seacoast Transportation Company ("Seacoast"), was injured while he was coupling his truck to a Seaboard Coast Line Railroad Company ("Seaboard") trailer. He received benefits from Seacoast for his injuries under Florida's Workmen's Compensation Act. He then brought an action as Seaboard's employee in the United States District Court for the Middle District of Florida under the Federal Employers' Liability Act ("FELA"), 45 U.S.C. § 51-60 (1980). Seaboard moved for summary judgment and the district judge granted the motion. The trial court found DeShong was estopped from claiming that he was Seaboard's employee for FELA purposes when he had previously claimed that he was Seacoast's employee to collect his workmen's compensation benefits. We disagree. The doctrine of estoppel does not apply in this case because an FELA plaintiff can be an employee of more than one corporation.

FACTS

Seacoast, a wholly owned subsidiary of Seaboard, picks up and delivers trailers to ramps as part of Seaboard's piggyback operation. On June 9, 1977, DeShong, a truck driver for Seacoast, was injured while trying to hook up his truck to a fully loaded trailer which had been allowed to drop too close to the ground. He received a lump sum settlement from Seacoast's carrier for his injuries under Florida's Workmen's Compensation Act. A year later he initiated an action in district court under the FELA. Under the act a covered railroad is liable for negligently causing the injury or death of any person "while he is employed" by the railroad. Thus, in order to establish liability under the act, a plaintiff must first establish the requisite employment relationship with the defendant railroad.

45 U.S.C. § 51 (1980) provides:

Every common carrier by railroad while engaging in commerce between any of the several States or Territories, or . . . any foreign nation or nations shall be liable in damages to any person suffering injury while he was employed by such carrier in such commerce, . . . for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment . . . .

Following extensive discovery, Seaboard filed a motion for summary judgment. It asserted that the evidence clearly demonstrated that Mr. DeShong had no remedy under the FELA because he was employed by Seacoast, not Seaboard. The district judge denied the motion because the issue of plaintiff's employment was a factual question to be resolved by a jury. R. Vol. I at 200.

Seaboard filed a motion for reconsideration. It asserted that DeShong could not claim to be an employee of Seaboard to collect damages under the FELA when he had previously asserted that he was Seacoast's employee in order to receive the benefits of Florida's Workmen's Compensation Act. The district judge granted Seaboard's motion for summary judgment based only on the theory of estoppel and DeShong appealed. The only issue before us is whether the appellant is estopped from claiming he was an employee of the railroad when he had previously asserted he was an employee of the transportation company.

The judge stated:

This court is of the opinion that SCL's [Seaboard's] Motion for Summary Judgment should be granted on the ground that the Plaintiff is estopped to assert a claim against SCL [Seaboard] under the FELA by reason of his having represented himself to be an employee of Seacoast Transportation Company in order to receive Florida workers' compensation benefits.

R. Vol. I at 211.

We need not reach the election of remedies issue because the district judge clearly stated in his order:

This [estoppel] theory is not an election of remedies, but an estoppel based on the Plaintiff's representation that he was an employee of Seacoast.

R. Vol. I at 211.

ESTOPPEL

The district court's decision in this case was based solely on the doctrine of estoppel. This doctrine is grounded on a notion of fair dealing and good conscience. It is designed to aid the law in the administration of justice where without its aid injustice might result. See, e.g., Kaneb Services, Inc. v. Federal Savings and Loan Ins. Corp., 650 F.2d 78 (5th Cir. 1981). Under the doctrine of equitable estoppel a party with full knowledge of the facts, who accepts the benefits of a transaction, contract, statute, regulation or order, may not subsequently take an inconsistent position to avoid the corresponding obligations or effects. See, e.g., Aetna Life Ins. Co. v. Bocanegra, 572 S.W.2d 355 (Tex.Civ.App. 1978). Thus, a plaintiff should not be permitted to assert formally the existence of one state of facts in a claim against one party and accept benefits in satisfaction of that claim, and then maintain an action against another party on the ground that the facts first asserted did not exist.

The district court found estoppel especially applicable in this case because Florida Statute § 440.09(2) (1977) provides that:

No compensation shall be payable in respect of the disability or death of any employee covered by the Federal Employers' Liability Act, the Longshoremen's and Harbor Workers' Compensation Act, or the Jones Act.

We disagree. All that this statute says is that workers covered by federal compensation schemes have no right to benefits under Florida's act. To prevent unjust enrichment in this case all that is required is for the compensation carrier to file a lien in this action. See e.g., Biggs v. Norfolk Dredging Co., 360 F.2d 360 (4th Cir. 1966). Because Seacoast is a wholly-owned subsidiary of Seaboard, Seaboard is in a perfect position to repay Aetna if Mr. DeShong proves that his remedy actually lies under FELA and the compensation carrier meets the requirements of the Florida lien statute.

This principle requiring consistency is usually considered a form of equitable estoppel, although it lacks the element of detrimental reliance. It has also been considered a variation of judicial estoppel, based on the principle that a party should not be permitted to abuse the judicial process by obtaining one recovery based first on affirming a certain set of facts and then another recovery based on denying the same state of facts. See, Metroflight, Inc. v. Shaffer, 581 S.W.2d 704 (Tex.Civ.App. 1979).

The district judge in this case concluded that this was exactly what DeShong was trying to do. DeShong first asserted he was an employee of Seacoast to collect workmen's compensation benefits from Seacoast's carrier. He accepted benefits in satisfaction of that claim. He then tried to maintain a FELA action against Seaboard by claiming that he was Seaboard's employee. The district judge concluded that DeShong could not assert these inconsistent positions and granted Seaboard's summary judgment motion. We disagree.

The Supreme Court in Kelley v. Southern Pacific Co., 419 U.S. 318, 95 S.Ct. 472, 42 L.Ed.2d 498 (1978), clearly found that an employee could be employed by more than one corporation. In Kelley, an employee of a wholly-owned subsidiary motor carrier sued a railroad under the FELA for injuries sustained from falling off a railroad car. Kelley acknowledged that he was technically an employee of the trucking company rather than the railroad but he contended that "his work was sufficiently under the control of the railroad to bring him within the coverage of the FELA." Id. at 320, 95 S.Ct. at 474. Just like DeShong, Kelley had also received workmen's compensation benefits from the trucking company prior to initiating the FELA claim. Notwithstanding this the Supreme Court held that the plaintiff could also be found to be an employee of the railroad for FELA purposes. The Court stated that:

It is also interesting to note that although the Court's holding in Kelley dealt only with the employment status issue, the plaintiff in Kelley, as the plaintiff in this case, had received workmen's compensation benefits from the defendant railroad's subsidiary. The Supreme Court held, nevertheless, that the plaintiff could recover in his FELA action if he proved as a matter of fact that he was an employee of the railroad. Accord, Vanskike v. ACF Industries, Inc., 665 F.2d 188, 200 n. 9 (8th Cir. 1981) (payment of benefits by wholly-owned subsidiary of defendant railroad was not necessarily inconsistent with a finding of employment by the railroad under the subservant concept discussed in Kelley).

[u]nder common-law principles, there are basically three methods by which a plaintiff can establish his "employment" with a rail carrier for FELA purposes even while he is nominally employed by another. First, the employee could be serving as the borrowed servant of the railroad at the time of his injury. [Citations omitted.] Second, he could be deemed to be acting for two masters simultaneously. [Citations omitted.] Finally, he could be a subservant of a company that was in turn a servant of the railroad. [Citations omitted.]

Id. at 324, 95 S.Ct. at 476.

If, in an FELA action, a plaintiff can properly be found to be an employee of both a wholly-owned subsidiary of a railroad and the railroad itself, then a representation that he is employed by the wholly-owned subsidiary is not inconsistent with a claim that he is also employed by the railroad. Because inconsistency is the crucial element of the doctrine of estoppel, there is no basis for applying estoppel in this case. The positions presented in DeShong's two claims were consistent and a jury should have been allowed to determine the question of DeShong's employment status for FELA purposes. Ward v. Atlantic Coast Line Railroad Company, 362 U.S. 396, 399, 80 S.Ct. 789, 791, 4 L.Ed.2d 820 (1960).

The district judge relied solely on Barrera v. Roscoe, Snyder Pacific Railway Co., 385 F. Supp. 455 (N.D.Tex. 1973), aff'd. mem., 503 F.2d 1058 (5th Cir. 1974), cert. denied, 420 U.S. 1004, 95 S.Ct. 1446, 43 L.Ed.2d 762 (1975), in reaching its conclusion. In Barrera, the plaintiff brought an FELA action against the railroad after having recovered workmen's compensation benefits from a subsidiary of the railroad. He did not claim to be an employee of the railroad and instead acknowledged that he was an employee of the subsidiary. He sought recovery against the railroad for the subsidiary's negligence on the theory that the subsidiary was the alter ego of the railroad. The jury returned a verdict in favor of the plaintiff and the district court granted the railroad's motion for judgment n.o.v. This ruling was based on two grounds. First, the court found that the evidence presented at trial did not support a finding that the subsidiary was an alter ego of the railroad. In addition to the court concluded that the plaintiff was estopped from asserting a claim against the railroad under the FELA since he had successfully prosecuted a claim under the Texas Workmen's Compensation Act. 385 F. Supp. at 462. On appeal, the Fifth Circuit affirmed the decision in a memorandum opinion.

The decision reads in its entirety as follows:
PER CURIAM:

We have given careful consideration to the contentions of the parties as set forth in their well-prepared briefs and further amplified at oral argument. It is our opinion that the district court arrived at the proper conclusion and that the appellant has not presented any valid basis for reversal. Accordingly, the judgment entered for appellee by the district court is affirmed.


Although we acknowledge that Barrera is confusing, we find that it is not binding on this court since it has no precedential value. Barrera acknowledged that he was not an employee of the railroad and he did not assert that the railroad's negligence had caused his injuries. He, therefore, only had an FELA action if he could prove that his employer was merely an alter ego of the railroad. The district court's conclusion on this issue was dispositive of the case. Its alternative conclusion on estoppel grounds was therefore unnecessary and purely dictum. The Fifth Circuit only approved the result reached in the district court without expressly approving the opinion or adopting its reasons. The decision cannot be viewed as binding precedent on the estoppel issue. Cf. Dillenburg v. Kramer, 469 F.2d 1222 (9th Cir. 1972) (summary affirmance without opinion has little precedential significance); American Fidelity Casualty Co. v. Indemnity Insurance Co. of North America, 308 F.2d 697 (6th Cir. 1962), cert. denied, 372 U.S. 942, 83 S.Ct. 935, 9 L.Ed.2d 968 (1963) (a per curiam memorandum affirmance without approval of the opinion of the trial court or adoption of its reasoning does not constitute precedent on questions of state law binding upon a federal court in a diversity action.) The doctrine of estoppel is inapplicable in this case.

REVERSED.

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DeSHONG v. SEABOARD COAST LINE R. CO
(Aug 1, 1984)