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LUNA v. U.S.

May 21, 2003


The opinion of the court was delivered by: Rebecca R. Pallmeyer, United States District Judge


Plaintiff Patricia A. Luna has filed this action against Defendant United States of America, Department of the Navy, pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. § 1346(b), 2761 et seq. Plaintiff was injured while performing professional services at the U.S. Navy's Service School Command ("SSC") as an employee of Resource Consultants, Inc. ("RCI"), a contractor for the Navy, and has already received workers' compensation for her injuries. In this action, Plaintiff seeks to recover damages from the United States.

Most private employers operating in Illinois contribute to the state's workers' compensation fund. Workers' compensation entitles an employee who has been injured in the course of her employment to an award of benefits without regard to fault. In exchange, the employee forfeits the right to recover tort damages for the same injury; the award constitutes that employee's exclusive remedy. Illinois Workers' Compensation Act ("IWCA"), 820 ILCS 305/1; Belluomini v. United States, 64 F.3d 299, 302 (7th Cir. 1995). Of particular importance in this case, the scope of the IWCA extends to the scenario in which one employer loans an employee to another employer. 820 ILCS 305/1(a)(4). If the employee is injured while in the employ of the borrowing employer, the loaning employer and the borrowing employer are jointly and severally liable for any benefits to which the employee is entitled. Id. And both employers share the immunity from tort liability conferred by the act. Belluomini, 64 F.3d at 302 (citations omitted). As the court discusses in greater depth below, under Illinois law, the determination of whether a borrowed employee-employer relationship exists depends on the amount of control the alleged borrowing employer has over the employee. Crespo v. Weber Stephen Prods. Co., 275 Ill. App.3d 638, 641, 656 N.E.2d 154, 156 (1st Dist. 1995).

In an earlier opinion in this case, this court concluded that there was a dispute of fact as to whether Defendant was a "borrowing employer," and thus protected from this FTCA lawsuit by the exclusive remedy provision of the IWCA, 820 ILCS 305/1 et seq. Luna v. United States, No. 00 C 1329, 2001 WL 664445 (N.D.Ill. June 13, 2001). Subsequently, the parties have submitted numerous depositions and the court held a bench trial on February 21, 2003. For the reasons explained here, the court finds no evidence that Defendant acted negligently, and therefore enters judgment in favor of the United States on the merits. Because the parties focused nearly all of their attention on Defendant's status as a "borrowing employer," the court addresses the evidence on this issue, as well, and concludes, as explained here, that the government does not qualify as a borrowing employer under the IWCA.


RCI is an international company with more than 20 years of experience in providing administrative, personnel, and training support to the Navy and other Department of Defense offices. (RCI Proposal, Gov't Ex. A-2.) All of RCI's work is obtained through contracts, and most of its contracts are with the United States Government. (Witt Dep., at 16, 20.) Among other things, RCI has designed and developed curricula, designed and presented courses of instruction, provided training to military and Department of Defense civilian personnel, and operated schools. (RCI Proposal, Gov't Ex. A-2.) RCI also provides outplacement assistance to people who are exiting the military, for example, by assisting workers with writing resumes, interviewing, and negotiating. (Witt Dep., at 18.)

Contract Between RCI and the Navy

On March 31, 1997, RCI entered into a five-year contract with Defendant under which RCI employees provided administrative services in support of students and staff at the Service School Command (SSC) at the Naval Training Center in Great Lakes, Illinois. (Gumbert Dep., at 19.) Jill Wells, a government witness, explained that the parties understood that RCI employees would perform functions formerly carried out by employees ("billets") of the Navy. (Wells Dep., at 18.)

Section C-1 of the contract entered into by RCI and Defendant in 1997 stated that:

The services rendered by the Contractor are rendered in the capacity as an independent, non-personal service Contractor. The Government may evaluate the quality of administrative services for purposes of contract inspection and acceptance. The Government retains no direct control over the administrative services rendered, and the Contractor shall be solely responsible for any and all liability caused by the acts or omissions of its agents or employees. The Contractor shall not in any manner represent or infer that it is an instrumentality or agent of the United States Government.
(Contract Section C-1, § 1.3.2, Gov't Ex. A-3.)

According to Elizabeth Gumbert, a government employee and one of the two administrators assigned to the RCI contract, RCI's contract with Defendant was a "firm, fixed price contract." (Gumbert Dep., at 20-22.) Jill Wells, the other administrator for the RCI contract, explained that this means that RCI proposed a price for each of the services that were identified in the government's bid schedule. Once the government accepted RCI's proposal, RCI was required to perform at the price quoted; there were no adjustments to the quoted price. (Wells Dep., at 46-47.) Theodore ("Ted") Witt, a former Navy officer who began working for RCI in 1995 and who served as the manager for the contract, explained that government managers told RCI staff what jobs needed to be done and gave them guidance on how to do them, but then RCI came up with the number of people necessary to get the work done. The initial contract in 1997 called for 88 RCI employees to work at the Naval base; it was RCI who proposed that number, which government representatives accepted. (Witt Dep., at 26.)

As noted, the RCI contract characterized RCI as a "non-personal service" provider. According to George Troendle, one of RCI's founding partners, the term "non-personal service contract" typically means that the government selects the company (here, RCI) and the company chooses the people to carry out the required functions. (Troendle Dep., at 42.) Under such a contract, "an independent company . . . take[s] responsibility for the sourcing and management and care and feeding and career development for those employees." (Id., at 56.) Under the contract at issue here, RCI agreed "to handle all of the management of their employees, all of the details of their employees' work, all of the scope of their employees' work, all of the supervision of their employees, all of the hiring and the firing and the pay rates, as long as they went above the minimum*fn1 with the government, just expecting that the contract results would be fulfilled." (Id., at 58.) Jill Wells acknowledged, however, that a personal services contractor gives the appearance that its employees are government employees because "they're right in there, they're taking direction from the Government, whereas nonpersonal there's no direction or supervision involved." (Wells Dep., at 40.)

The contract describes the duties to be performed by RCI employees in a 25-page Statement of Work. The responsibilities include: control and management of hazardous materials, administrative support for students and staff, inventory of supplies at the base, re-supply of needed materials at the base, and student housing assistance. (Contract § C-5, Gov't Ex. A-3.) With regard to the student/staff support function, for example, the contract requires, among other things, that "[t]he Contractor personnel shall provide liaison between the student and/or staff member and PSD [Personnel Support Detachment] regarding personnel information, military pay and allowances and other personnel support required for the accomplishment of SERVSCOLCOM mission. This function is conducted continuously on a daily basis via personal visits to PSD, telephone and electronic media." (Contract § 5.3.5, Gov't Ex. A-3.) This description is typical; the contract carefully delineated all of the tasks required and the frequency with which they must be carried out, but did not dictate precisely how the tasks are to be accomplished. The contract also listed the minimum qualifications for the various jobs titles, such as the "student/staff support function." (Contract Attachment 8, Gov't Ex. A-3.)

The contract provided the government personnel who had been performing the services contemplated by the contract would remain on-site for 30 days after RCI's commencement of performance under the contract (which the court understands was on or after March 31, 1997, the date the contract was awarded to RCI) in order to ensure a smooth transition to RCI personnel, to turn over files, documents and publications, and to respond to inquiries. (Id., § 1.11.) Brian Johnson, Vice-President of RCI, explained that he understood the term "independent non-personal contract" to mean that the government did not specify nor care how the services were to be provided, as long as they were done as required. As a result, RCI did not replace every former Naval employee with an RCI employee; instead, it eliminated some jobs that were not deemed necessary to accomplish the requirements of the contract. (Johnson Dep., at 28, 56-57.) Under the contract, RCI provided a site manager and assistant site manager to oversee the other RCI employees at the SSC. (Wells Dep., at 20.) RCI also provided supervisors in charge of each of the training schools at the base (e.g. Diesel School, Engineering Corps School, Gun School, Advance Electric Training Course, Seamen Apprenticeship Training Division ("Seamen ATD"), Communications Navigation Division), as well as employees working under these supervisors to provide administrative services. (Id., at 21-24.) Although the record is unclear on this point, the court understands that the positions described above were previously held by employees of the Navy. (Id., at 20-24.)

The United States Department of Labor established all of the job qualifications and classifications and set the minimum wage RCI employees were required to receive, and set the dress code for RCI employees working under the contract. (Anastasi Dep., at 18.) RCI supervisors were responsible, however, for ensuring that its employees met the requirements, and RCI had responsibility for their supervision, oversight, and evaluation. (Anastasi Dep., at 18.) Witt stated that although he did not believe they were required to do so under the contract, RCI supervisors instructed their employees to comport themselves in a manner appropriate for working on a military base. (Witt Dep., at 97-98.)

To ease the difficulty of training them for work at the Naval base, most of the employees recruited by RCI to work on the contract already had some military experience. (Witt. Dep., at 23.) Of the RCI employees hired initially under this contract, 90 percent received at least some training directly from the government, for example, on-the-job training during the 30-day overlap between the outgoing Navy billets and the incoming RCI employees; government training of command financial specialists;*fn2 and three days of government training for certain RCI employees on use of the military message system. (Witt Dep., at 23-25.) Wells testified that the hazardous material technicians hired by RCI also received training from the Navy. Wells explained that remaining employees were more or less trained by RCI, with the exception of a one-week financial counseling course sponsored by the government and given to some RCI employees (she did not explain who receives such training and when). (Wells Dep., at 52.)

Under the contract, the government agreed to provide RCI with office space and facilities, parking spaces, telephone services, utilities, office supplies, computer equipment, computer software, four government vehicles, and other equipment. (Contract Section C-3, § 3.1, Gov't Ex. A-3.) The government also agreed to provide routine custodial services. (Id. § 3.10.1.) The contract provided that the government would provide emergency medical service for any injuries on the job, but RCI was require to reimburse the government and to move any injured employee to a civilian hospital as soon as possible. (Wells Dep., at 47-48.) RCI also provided many of its own office supplies to carry out its work under the contract. (Witt Dep., at 73.)

The contract provided that government safety officials, environmental engineers, fire inspectors, security officers and other agencies were allowed to conduct surveys, studies and inspections of operations and facilities at all reasonable times. Other government personnel, such as Service School Command management and Inspector General or higher headquarters staff were also authorized to observe contractor operations, but the contract further stated that "these personnel will not interfere with Contractor performance and will refer all documents concerning the Contractor's operation to the COR [Contracting Officer's Representative]." (Id. § 1.12.)

The contract contemplated that the COR (the government's point of contact with RCI) would monitor the contractor's performance and progress, but would not directly supervise the work. Specifically, the Contract Administration Plan (a section of the larger contract) explained:

In performing contract surveillance duties, the COR should exercise extreme care to ensure that he/she does not cross the line of personal services. The COR must be able to distinguish between surveillance (which is proper and necessary) and supervision (which is not permitted). Surveillance becomes supervision when you go beyond enforcing the terms of the contract. If the contractor is directed to perform the contract services in a specific manner, the line is being crossed. In such a situation, the COR's actions would be equivalent to using the contractor's personnel as if ...

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