Oil & Gas Transfer L.L.C. Plaintiff - Appellant
John Karr Defendant-Appellee
Submitted: March 13, 2019
from United States District Court for the District of North
Dakota - Bismarck
GRUENDER, BENTON, and GRASZ, Circuit Judges.
GRUENDER, Circuit Judge.
Karr appeals the district court's grant of summary judgment in
favor of Oil & Gas Transfer L.L.C. ("OGT"). We
an oil field construction company that hired Karr to manage
and expand its business in North Dakota. When Karr left OGT
in April 2015, he claimed that OGT owed him $1, 304, 026.42,
which OGT disputed. Karr filed a pipeline construction lien
statement under North Dakota Century Code section 35-24-04,
purporting to establish a lien on a pipeline construction
project that he had managed while working for OGT. After
filing the lien statement, Karr sued OGT in North Dakota
federal court, alleging breach of contract, fraud, promissory
estoppel, reformation, and unjust enrichment.
filed this action in January 2016 in North Dakota state
court, seeking to quiet the pipeline title based on
Karr's ineligibility to claim a lien under section
35-24-04. OGT also sought a declaratory judgment, claiming
that, as an employee, Karr was not entitled to a lien. Karr
removed the action to federal court on the basis of diversity
jurisdiction. In federal court, OGT moved for summary
judgment, arguing that the undisputed facts establish that
Karr was an employee and that section 35-24-04 does not
confer lien rights to employees. The district court agreed
and granted OGT's motion. Karr appeals.
review de novo the district court's order
granting summary judgment in favor of OGT. See Gibson v.
Am. Greetings Corp., 670 F.3d 844, 852 (8th Cir. 2012).
We agree with the district court that Karr was an employee
and that section 35-24-04 does not confer lien rights upon
this diversity action, we apply the substantive law of North
Dakota to determine whether Karr was an employee or an
independent contractor. See Vandewarker v.
Cont'l Res., Inc., 917 F.3d 626, 629 (8th Cir.
2019). Under North Dakota law, Karr bears the burden of
establishing that he was an independent contractor and not an
employee. N.D. Cent. Code § 65-01-03(1) ("The
person that asserts that an individual is an independent
contractor under the common-law test . . . has the burden of
proving that fact."). "The central question in
determining whether an individual is an employee or
independent contractor is: Who is in control?" BAHA
Petroleum Consulting Corp. v. Job Serv. N.D., 2015 ND
199, ¶ 12, 868 N.W.2d 356, 360. This is determined by
the common-law "right-to-control"
test. N.D. Admin. Code §§
27-02-14-01(5)(a), 92-01-02-49(1)(a). "The
right to control is dispositive, whether or not it
has been exercised." Myers-Weigel Funeral Home v.
Job Ins. Div. of Job Serv. N.D., 1998 ND 87, ¶ 9,
578 N.W.2d 125, 127.
assist in this inquiry, North Dakota administrative agencies
adopted twenty factors to consider when determining whether
an individual is an employee or an independent contractor.
See N.D. Admin. Code §§
"The degree of importance of each factor varies
depending on the occupation and the factual context in which
the services are performed." Id. §
27-02-14-01(5)(b). But, several factors "must be given
more weight in determining whether an employer-employee
relationship exists." Id. §
92-01-02-49(2). Those factors-restated to indicate an
employer-employee relationship-include (a) the company's
significant integration of the individual's services into
its operations, (b) a continuing relationship between the
individual and the company, (c) the individual's lack of
investment in business expenses and facilities, (d) the
company not sharing its profits or losses with the
individual, (e) the individual working exclusively for the
company, (f) the individual not making his services available
to the general public, and (g) the company's right to
fire the individual without liability for breaching a
contract. N.D. Admin. Code §§
27-02-14-01(5)(b)(1)-(20), 92-01-02-49(1)(b)(1)-(20). Other
relevant factors that need not be given as much weight
include (h) the company requiring the individual to comply
with its instructions about "when, where, and how . . .
to work"; (i) the individual rendering services
personally; (j) the company imposing set hours of work; (k)
the individual working full-time for the company; (1) the
company paying the employee by the hour, week, or month; and
(m) the company paying the individual's business and
traveling expenses. Id.
claims that he was an independent contractor and that the
district court incorrectly weighed the factors when
determining that he was an employee. First, he alleges that
"OGT had neither control over nor the authority to
direct [his] work." But his only support for this
proposition is a statement in his own affidavit that he
"took over all operational duties of the [pipeline]
project" and that "[n]o one directed [his]
work." The fact that no one directed his work, however,
does not establish that OGT did not have the
authority to do so. See Myers-Weigel, 1998
ND 87, ¶ 9, 578 N.W.2d 125. Second, Karr notes that he
was entitled to a bonus of 12.5% of OGT's net income on
profitable projects, but he also acknowledges that the weekly
base salary he received is "similar to what is commonly
found in employment relationships." Third, Karr
highlights the fact that his contract with OGT was limited to
a 12-month term. But the contract was
response, OGT reiterates arguments that the district court
considered when determining that Karr was an employee,
including (1) that Karr earned a weekly salary that OGT paid
him regardless of the number of hours, amount of work, or
number of projects Karr completed; (2) that Karr completed a
Form W-4 to indicate his tax withholdings; (3) that OGT
withheld and paid employment taxes on Karr's wages and
reported his income to him and the IRS on a Form W-2; (4)
that OGT offered Karr regular employment benefits
(e.g., health insurance, retirement benefits); (5)
that Karr worked full-time for OGT and no one else; and (6)
that OGT retained the right to direct Karr's work in all
respects. OGT also notes that it provided a truck, housing,
and communications equipment for Karr. While Karr
"disagrees and vigorously disputes" these
assertions on appeal, he does not ...