April 29, 2019

A three-judge panel of the 10^th U.S. Circuit Court of Appeals affirmed the district court's ruling holding that an oil refinery did not have a duty of care to a worker who was injured in an oil pump explosion. The case is Grice v. CVR Energy, Inc., No. 17-5079, 2019 U.S. App. LEXIS 11830 (10^th Cir. Apr. 23, 2019).

Benjamin Grice was an employee of Coffeyville Resources LLC, located in Coffeyville Kansas. He had been working all day at an oil refinery when an oil pump exploded causing severe burns to Grice's body. The blast also killed one of Grice's co-workers. An investigation revealed that excessive wear and tear caused the rotating parts of the pump to contact which shattered the pumps seal. The record indicates that it is undisputed that if a double mechanical seal had been installed, the explosion could have been prevented.

Grice received workers' compensation benefits for his injuries and filed a complaint against Coffeyville Resources LLC's parent company, CVR Energy Inc., (CVR) under the theory of assumption of liability, arguing that in entering into the services agreement, CVR had assumed responsibility for workplace safety. The district court that heard this case granted summary judgment to CVR based on the conclusion that the agreement only provided a “cost-allocation mechanism for shared services.” Grice appealed.

The 10^th U.S. Circuit Court of Appeals affirmed the decision of the district court. Grice argued that the service agreement that CVR signed “unambiguously proves” that CVR undertook duties that were necessary to prevent workers from harm. The court disagreed and found that the service agreement created a system under which CVR and its subsidiaries could share the costs of operating a business. The agreement stated that CVR would provide safety and environmental advice. Grice asserted that that advice constituted an “unequivocal description”. The court determined that without further context there is little regarding the scope and nature of the management services or safety advice. Plus, the court found that if CVR was “ultimately responsible for workplace safety from the ground up” then there would be no point in giving Coffeyville any safety advice. This suggests that the company retained only the level of control necessary to provide “ordinary parental” oversight of the subsidiaries, and because of that CVR did not assume a duty to Grice.

Editors Note: The reason that CVR did not owe a duty of care to Grice was, since CVR was not Grice's employer, CVR did not assume the liability for injuries happening at the workplace. Since the service agreement that CVR entered into merely created a system under which CVR and its subsidiaries, relevantly Coffeyville Resources LLC, could share costs of operating a business, CVR did not enter into an agreement that stipulated their liability for a workplace injury. Instead, CVR's role was to oversee the subsidiaries and only maintained a level of control necessary to fulfill that duty.