356 U.S. 525, 537–38 (1958)
The petitioner, a resident of North Carolina, sued respondent, a South Carolina corporation, for damages for injuries allegedly caused by the respondent's negligence.1 He was employed as a lineman in the construction crew of a construction contractor.2
Respondent Blue Ridge Rural Electrical Cooperative, Inc., a South Carolina corporation in the business of selling electric power, had contracted with R. H. Bouligny, Inc. for $334,300 to build approximately 24 miles of new power lines, reconvert about 88 miles of existing lines to higher capacities, and construct two new substations and a breaker station.3 The petitioner was injured while connecting power lines to one of the new substations.4
Byrd first recovered full benefits under the South Carolina Workmen's Compensation Law from his direct employer Bouligny.5 He then filed a negligence action against Blue Ridge in the United States District Court for the Western District of South Carolina under diversity jurisdiction pursuant to 28 U.S.C. § 1332.6
At trial Blue Ridge asserted an affirmative defense that Byrd qualified as its statutory employee because the contracted work was part of its trade, business, or occupation.7 Blue Ridge's manager testified on direct examination that three of its substations had been built by its own construction and maintenance crews.8 His answers on cross-examination created uncertainty that prompted the trial judge to note he appeared to have changed his testimony.9 Blue Ridge also introduced evidence that it financed the project with a federal loan, purchased the materials, and maintained an engineering service contract with an independent firm for design and supervision.10 Its charter under the South Carolina Rural Electric Cooperative Act authorized it to construct generating plants, buildings, and equipment necessary for its operations.11
After all evidence was presented the district judge struck the affirmative defense, ruling that Blue Ridge could not be a statutory employer because its crews performed work only for its own use rather than for others.12 The judge then denied Blue Ridge's motion for a directed verdict and submitted the negligence claim to the jury, which returned a verdict for Byrd in the amount of $126,786.80.13 The Court of Appeals for the Fourth Circuit reversed, resolved uncertainties in the manager's testimony in Blue Ridge's favor, and directed entry of judgment for Blue Ridge without remanding for further proceedings.14 Byrd petitioned for certiorari, which the Supreme Court granted.15 The case had previously been dismissed on the ground that Blue Ridge enjoyed tort immunity as a nonprofit corporation, but the Court of Appeals had reversed that dismissal and remanded for trial.16 On the present appeal the Court of Appeals did not reach other grounds raised by Blue Ridge because its resolution of the statutory employer issue disposed of the case.17
Whether the Court of Appeals erred in directing judgment for respondent without a remand to give petitioner an opportunity to introduce further evidence?18
When a district court strikes an affirmative defense on an erroneous interpretation of state law, the plaintiff is entitled under federal procedure to an opportunity to present evidence under the correct interpretation before judgment may be directed against him.19 The motion to strike is analogous to a Rule 41(b) motion.20 The plaintiff cannot be penalized for not offering proof under the trial court's view of the statute.21
Yes. The district court struck Blue Ridge's statutory employer defense after ruling that the work must be performed for others, a construction later rejected by the Court of Appeals.22 Byrd therefore had no occasion to offer rebuttal evidence on whether Blue Ridge's own crews performed the same class of work.23 The Court of Appeals resolved credibility questions in the manager's testimony and directed judgment without remand, even though Byrd's counsel had indicated uncertainty about additional evidence only because the erroneous legal ruling left nothing to meet.24
Although the respondent's evidence was sufficient to withstand the motion under the meaning given the statute by the Court of Appeals, it presented a fact question, which, in the circumstances of this case to be discussed infra, is properly to be decided by a jury.25
The Court of Appeals erred in directing judgment without remand.26
Related opinions on this issue
Joined by Justice Harlan
Justice Frankfurter dissented on the ground that the record showed petitioner had no intention of introducing further evidence and had submitted the statutory employer issue to the court on the existing testimony.27 He emphasized that the colloquy occurred before the district court revealed its erroneous construction and that petitioner gave no indication he would offer proof regardless of the ruling.28 In his view the Court of Appeals correctly interpreted the record in light of local practice and properly directed judgment for Blue Ridge.
Frankfurter stressed that counsel's statements demonstrated a willingness to have the court decide the issue on the evidence already presented, making any claim of surprise untenable.29
Whether petitioner is entitled to a jury determination of the factual issues raised by respondent's affirmative defense?30
In diversity cases the federal policy favoring jury resolution of disputed factual questions under the Seventh Amendment prevails over a state procedural rule that assigns the same factual issue to the judge.31 This holds unless the state rule is so bound up with the definition of the substantive right that its application is required to avoid a different outcome.32
Yes. The factual question whether Blue Ridge was a statutory employer under South Carolina Code section 72-111 is one of degree and fact under state decisions.33 Yet the Supreme Court of South Carolina in Adams v. Davison-Paxon Co. assigns it to the judge.34 That allocation is not integral to the immunity created by the Workmen's Compensation Act but reflects only the historical practice of reviewing Industrial Commission decisions.35 The federal system therefore assigns the issue to the jury.36
Application to the established facts shows that Blue Ridge's manager's testimony left credibility questions.37 The project financing and engineering contracts were undisputed.38 The jury could reasonably have reached a different conclusion on whether the contracted work was part of Blue Ridge's trade or business.39
Petitioner is entitled to a jury determination of the factual issues.40
Related opinions on this issue
Justice Whittaker concurred in the remand for further evidence but dissented from the jury holding.41 He maintained that South Carolina law treats the jurisdictional question of statutory employer status as a matter of law for the court, supported by repeated decisions requiring the judge to find the facts relating to jurisdiction.42 Because the outcome would be substantially affected by judge versus jury resolution, he concluded that Erie and Guaranty Trust require the federal court to follow the state rule and assign the issue to the judge.43
Whittaker reviewed the structure of the Workmen's Compensation Law and its exclusive jurisdiction provisions to show that the allocation to the court was substantive rather than merely procedural.44
Whether federal courts in diversity cases must follow the state practice of having the judge rather than the jury decide factual issues on the statutory employer defense under the South Carolina Workmen's Compensation Act?45
A state rule allocating a factual issue to the judge rather than the jury is not binding in federal court under Erie when the rule is merely a form and mode of enforcing a state-created immunity.46 Countervailing federal policies, including the Seventh Amendment allocation of fact-finding to the jury, are present.47
No. The Adams rule displacing the jury is grounded in administrative-review practice rather than in the substantive definition of statutory-employer immunity.48 Although the outcome might be affected, the strong federal policy against disrupting the judge-jury relationship in civil actions prevents adoption of the state practice.49 Application to the established facts shows that the manager's testimony created credibility issues on substation construction.50 Blue Ridge's charter and financing evidence was before the court.51
The jury could reasonably decide the degree-of-fact question differently from the Court of Appeals.52
Federal courts need not follow the state practice assigning the issue to the judge.53
Related opinions on this issue
Justice Harlan joined Justice Frankfurter's dissent and added that the Court of Appeals had held construction of transmission facilities to be necessarily part of the business of furnishing power.54 Because that legal conclusion left no room for additional evidence to change the result, he would have affirmed the directed judgment without requiring further proceedings.55 Harlan reasoned that the legal determination under South Carolina law made any further factual development irrelevant to the outcome.56
He further noted that the record disclosed no dispute that respondent was engaged in furnishing power and that petitioner was injured while engaged in construction in furtherance of that business.57 In his view any additional evidence could not alter the legal conclusion reached by the Court of Appeals under state law.58