Court of Civil Appeals of Alabama.

KERNS TRUCKING, INC.

v.

Kathy WHITESIDE.

Nov. 23, 2005.

CRAWLEY, Presiding Judge.

This is a workers’ compensation case. This appeal concerns whether Kathy Whiteside (“the worker”) was an employee of Kerns Trucking, Inc. (“the company”), at the time she was injured. Specifically, the issue is whether the company is excluded by definition from being the worker’s employer under Ala.Code 1975, § 25-5-1(4).

The record indicates that at the time of her injury on May 2, 2001, the worker was operating a dump truck owned by Angie Grimes. Grimes, doing business as AG Enterprises (“AG”), had leased the truck to the company pursuant to a contract. The trial court found that the lease agreement specified that AG was to assume the responsibility for hiring; setting wages; collecting and paying federal, state, or local employee taxes; controlling hours and working conditions; handling the grievances; and supervising, training, disciplining, and firing of all drivers.

The record also indicates that Grimes, the owner of AG, became an employee and a manager of the company 11 days after the worker was hired. Additionally, the application the worker completed on February 15, 2001, to apply for her job was the company’s form, on which the company was identified as the employer. Also, the company provided a manual to the worker that specified the company’s policies. The worker signed a document stating that she had received a copy of the manual and that she agreed to comply with its policies and procedures. The company required drivers to attend safety meetings, which were in fact held on several occasions. Grimes, then a company employee, would inform the drivers regarding when the meetings were to occur. The worker was also told that she could be discharged by the company if she did not meet all of the company’s requirements. The truck driven by the worker had the company’s emblems on the sides, and the worker’s personnel file was maintained by the company, not by AG. When Grimes processed the worker’s injury claim, Grimes identified the worker as an employee of the company. However, from the time she was hired until her accident, the worker was paid by check from AG. The trial court found that the evidence indicated that the company was the special employer of the worker and that the worker could therefore collect workers’ compensation benefits from the company.

The standard of review in a workers’ compensation case was stated by our supreme court in Ex parte Trinity Industries, Inc., 680 So.2d 262 (Ala.1996):

“[W]e will not reverse the trial court’s finding of fact if that finding is supported by substantial evidence–if that finding is supported by ‘evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.’ “

680 So.2d at 268-69 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989)). However, “[i]n reviewing the standard of proof … and other legal issues, review by the Court of Civil Appeals shall be without a presumption of correctness.” Ala.Code 1975, § 25-5-81(e)(1); see also King Power Equip., Inc. v. Robinson, 777 So.2d 723, 724-25 (Ala.Civ.App.2000). On appeal, this case presents a question of law, and the trial court’s judgment is to be reviewed without affording it a presumption of correctness.

In Alaplex Transportation, Inc. v. Rossen, 836 So.2d 901 (Ala.Civ.App.2002), this court addressed, in a case of first impression, the proper application of Ala.Code 1975, § 25-5-1(4), to truck drivers operating under an owner-operator or leased-operator agreement with common carriers. Specifically, the statute provides, in relevant part, that an employer is:

“Every person who employs another to perform a service for hire and pays wages directly to the person…. Notwithstanding the provisions of this chapter, in no event shall a common carrier by motor vehicle operating pursuant to a certificate of public convenience and necessity be deemed the ’employer’ of a leased-operator or owner-operator of a motor vehicle or vehicles under contract to the common carrier.”

Ala.Code 1975, § 25-5-1(4)(emphasis added).

In Alaplex, the owner of a fleet of trucks, R.P. Gray, leased those trucks to the defendant company, Alaplex Transportation, Inc. Gray also hired Robert Rossen to drive those trucks. Rossen was injured in an accident while he was driving one of Gray’s trucks leased to Alaplex.

In Alaplex, the trial court held that Rossen was an employee of Alaplex based upon evidence tending to show (1) that Rossen had been paid based upon the loads provided by Alaplex; (2) that Alaplex’s dispatchers had instructed Rossen to pick up and deliver shipments in the same manner that those dispatchers had instructed Alaplex’s own employees; (3) that Rossen was expected to contact Alaplex should he encounter problems on the road or should he need an advance for expenses; (4) that Rossen was required to comply with procedures imposed by Alaplex, its customers, and the United States Department of Transportation; (5) that Alaplex had held meetings with Rossen and other drivers; (6) that Alaplex had issued “certificates of appreciation” to Rossen in 1991 and 1996; (7) and that under federal precedents and regulations, Rossen would be classified as a “statutory” employee of Alaplex. Alaplex, 836 So.2d at 904.

After an analysis of the legislative evolution of § 25-5-1(4), and similar legislation in other states, this court unanimously reversed the trial court’s judgment, noting that, “where the Legislature manifests an intent to exclude common carriers entering into lease contracts with owner-operators from the class of employers subject to liability under a workers’ compensation law, that intent may not be defeated by an owner-operator’s mere delegation of driving duties to another driver….” Alaplex, 836 So.2d at 907.

Additionally, this court held that “the Legislature has, in this limited factual context, unequivocally foreclosed consideration of other factors by stating in § 25-5-1(4) that in no event shall a common carrier be deemed the ’employer’ of an owner-operator or a leased operator.” Id.

The facts of the case at hand are substantially similar to those of Alaplex. In both cases, the owner of the vehicle leased his or her vehicle to a common carrier operating pursuant to a certificate of public convenience and necessity. In both cases the owner of the vehicle hired a person to drive the vehicle for the common carrier pursuant to the lease agreement. In both cases the driver of the leased vehicle was injured on the job while operating the vehicle.

There is an additional fact that at first blush makes the situations in the two cases seem different but, upon closer inspection, is revealed to be inconsequential to the resolution of this case. In the present case, as the worker noted, the owner of the vehicle, Grimes, became an employee of the company by the time of the worker’s accident. However, Grimes’s employment status is not relevant to the application of § 25-5-1(4), since the company’s use of Grimes’s truck was still pursuant to the lease agreement.

Based upon the foregoing facts and authorities, we conclude that the trial court’s legal conclusion that the company was the worker’s “employer” for purposes of determining responsibility for providing workers’ compensation benefits was erroneous. We reverse the trial court’s judgment and remand the cause for the trial court to enter a judgment in favor of the company on the worker’s claims against it.

REVERSED AND REMANDED.

 

United States Court of Appeals,

Fourth Circuit.

ALSTOM POWER, INCORPORATED, a Delaware corporation, Plaintiff–Appellee,

v.

NORFOLK SOUTHERN RAILWAY COMPANY, an entity operating in Maryland, Defendant–

Appellant.

Argued Sept. 20, 2005.

Decided Nov. 17, 2005.

PER CURIAM:

Norfolk Southern Railway Company (“Norfolk Southern”) appeals various findings of fact and conclusions of law entered by the district court following a bench trial in an action brought by Alstom Power, Inc. (“Alstom”) under the Carmack Amendment to the Interstate Commerce Act. See 49 U.S.C.A. § 11706 (West 1997). For the reasons that follow, we affirm.

I.

Alstom designs, fabricates and supplies components for heat recovery steam generators (“HRS generators”) used in electric power plants. In July 1998, Alstom entered into a five-year contract to supply HRS generators to Duke/Fluor Daniel, Inc. (“DFD”), the general contractor for the construction of power plants in Hidalgo, Texas, and Veazie, Maine. The contract imposed various delivery deadlines for the HRS generator components to arrive at the DFD construction sites. The contract included a liquidated damages provision that was triggered by a missed delivery date. The amount of liquidated damages due under this provision increased proportionally with the length of the delay.

Alstom fabricates the components for its HRS generators–steel modules and steam drums–at plants in Kings Mountain, North Carolina, and Chattanooga, Tennessee. The tremendous weight of the components generally requires Alstom to ship them by rail. In the fall of 1998, Alstom’s Manager of Transportation, Gregory Gowans, arranged for the shipment of the HRS generator components to DFD’s construction site at Veazie with Norfolk Southern, the only rail carrier that serviced Alstom’s North Carolina and Tennessee plants. In explaining Alstom’s shipping requirements for the DFD contract, Gowans informed Norfolk Southern that Alstom’s planning was predicated upon an expected transit time of seven to fourteen days, and that the final deadline for the delivery of the modules to Veazie was June 30, 1999, pursuant to Alstom’s contract with DFD. Gowans also informed upper-level managers from Norfolk Southern that late delivery would give DFD the right to seek liquidated damages from Alstom.

In May 1999, Alstom began delivering modules to Norfolk Southern for shipment. Each module was shipped under a separate Uniform Bill of Lading requiring Norfolk Southern to transport the shipments with “reasonable dispatch.” The “reasonable dispatch” period was not defined. Ultimately, twenty-six out of thirty steel modules being shipped to Veazie arrived after the June 30 deadline. Both parties contributed to the delays: Norfolk Southern’s actual transit time ranged from 29-62 days, and Alstom experienced manufacturing problems that contributed to the delay of certain shipments. At some point during the summer of 1999, when it was apparent that Alstom would have difficulty meeting the delivery deadlines, Gowans secured premium transportation services for some of the shipments, including special trains to transport only Alstom’s modules and weekend inspections at transfer points.

In September 1999, Alstom and DFD began negotiating DFD’s claim for damages as a result of the untimely deliveries. Initially, DFD sought liquidated damages under the contract of more than ten million dollars–$5.08 million attributable to the late deliveries to Veazie and the remainder attributable to late deliveries to DFD’s Hidalgo, Texas, construction site. Eventually, however, DFD relented on its demand for liquidated damages and indicated that it would settle for actual damages caused by the delayed deliveries, provided that a settlement could be reached quickly and without haggling.

The parties ultimately reached a settlement based on DFD’s unilateral calculation of actual damages. Mike Stark, a former DFD employee who negotiated the settlement terms with Alstom, testified that on November 15, 1999, DFD presented its calculation of actual damages to Alstom and explained the general basis for the claim. However, in light of DFD’s right to pursue liquidated damages under the contract, DFD “made it quite clear … that [DFD] had no contractual obligation to give [Alstom] … information” about how DFD arrived at an actual damages figure or to “prove that this was right or wrong.” J.A. 1638.

Concluding that DFD’s calculations were accurate and reasonable under the circumstances–indeed, they were much less than the liquidated damages originally sought by DFD–Alstom’s negotiators accepted DFD’s settlement offer without requiring an accounting or itemization of the alleged actual damages. The final settlement figure was $3.6 million, covering damages incurred by DFD at both the Veazie and Hidalgo sites. The $3.6 million amount consisted of $1.8 million in cash and $1.8 million in extended warranties.

On December 22, 1999, the parties confirmed the essential terms of the settlement agreement in a two-page document (the “Term Sheet”). The Term Sheet purported to “serve as the basis for a negotiated settlement agreement between [DFD] and [Alstom] for Liquidated Damages arising from delayed deliveries for the Maine Independence Project … and for Hidalgo Energy Project.” J.A. 2906. The Term Sheet set forth the amount of the cash payment, explained Alstom’s extended warranty obligations, and indicated that the settlement covered all past and present claims relating to delays at the Veazie and Hidalgo construction sites. The Term Sheet, however, did not apportion settlement between the Veazie and Hidalgo sites, and it did not distinguish between damages resulting from Alstom’s own manufacturing delays and those caused by Norfolk Southern’s transit issues. The Term Sheet also reflected the parties’ agreement “to reduce these terms to a settlement agreement for signature as soon as possible after the holidays.” J.A. 2907. There is no evidence, however, that the parties subsequently executed a formal settlement agreement. According to John Stratton, an Alstom employee who participated in the negotiation process, the parties honored the Term Sheet even though no formal agreement was prepared or signed after the holidays.

On March 6, 2000, Alstom’s attorney submitted an eleven-page letter to Norfolk Southern asserting a claim under the Carmack Amendment for damages caused by the late deliveries to the Veazie site. Neither this letter nor the subsequent lawsuit sought indemnification for damages paid by Alstom in connection with the Hidalgo site. Although the letter incorrectly indicated that, pursuant to its contract with DFD, Alstom had already paid $1,695,000 in liquidated damages, it acknowledged that Alstom’s production problems contributed to the delays and thus demanded reimbursement from Norfolk Southern in the amount of $930,000–less than the full amount. Alstom’s claim also included $203,276 in premium freight charges that Alstom paid for substitute rail service incurred “[a]s a direct result of [Norfolk Southern’s] failure to provide timely service to Veazie.” J.A. 2916. In the claim letter, Alstom offered to disclose to Norfolk Southern “confidential contract provisions” and other relevant documents upon the execution of a confidentiality agreement. J.A. 2908. Norfolk Southern, which was undergoing a merger with another rail carrier, indicated it would respond to the claim as soon as possible. Although Alstom sent additional letters in April and September 2000, Norfolk Southern failed to respond.

On March 2, 2001, Alstom filed this action, seeking to recover damages for the late deliveries to Veazie under the Carmack Amendment. Following the completion of discovery, Alstom moved for partial summary judgment, seeking a ruling that Norfolk Southern, as a matter of law, “violated its statutory obligation under the Carmack Amendment to transport Alstom’s modules with reasonable dispatch.” J.A. 848. The parties agreed that, in order to rule on this issue, the district court would first need to determine the reasonable dispatch period for these shipments, the point at which the reasonable dispatch period begins to run, and the actual delivery time. Even accepting Norfolk Southern’s evidence as true, the court determined that thirty-one of thirty-two modules were not delivered with reasonable dispatch. The district court concluded that it would be for the finder of fact at trial to decide whether the remaining module was delivered with reasonable dispatch.

Alstom also included claims for (1) breach of the bills of lading, (2) breach of the duty of good faith and fair dealing, and (3) breach of contract. The district court dismissed the first two claims and Norfolk Southern was awarded summary judgment on the third.

Norfolk Southern filed a cross-motion for summary judgment, contending that Alstom offered insufficient evidence that Norfolk Southern, regardless of whether it delivered with reasonable dispatch, caused any of the damages claimed by Alstom. Specifically, Norfolk Southern argued that because the modules at the time of delivery were missing parts due to manufacturing problems, Norfolk Southern’s failure to deliver with reasonable dispatch did not cause Alstom to violate its delivery deadlines. Norfolk Southern also argued that it was not liable for any portion of the unallocated settlement because the apportionment of damages rested on speculation. Finally, Norfolk Southern contended that it was not liable for the premium rail services procured by Alstom. The district court concluded that a triable issue of fact existed as to all three issues and denied the motion.

In November 2003, the district court conducted a four-day bench trial and reached the following conclusions. First, the court rejected Norfolk Southern’s argument that Alstom failed to file a valid notice of claim under the Carmack Amendment–a prerequisite for imposing liability upon a rail carrier–because Alstom’s March 6, 2000, letter did not claim a “specified or determinable amount of money.” 49 C.F.R. 1005.2(b). The district court concluded that the letter satisfied the claim requirement. The court reasoned that “[a] Carmack Amendment claim is not intended to serve as an itemized statement of account that the carrier is expected to pay by return mail. Instead, the claim triggers the carrier’s obligation to investigate it promptly upon receipt.” J.A. 3214.

Next, the district court considered whether Norfolk Southern delivered with reasonable dispatch the remaining module, an issue left for trial following the court’s summary judgment ruling. The court found that the reasonable dispatch period for regular train service in this case was fourteen days, a factual determination that fell comfortably between the range of reasonableness suggested by the parties’ witnesses–Alstom took the position that the reasonable transit time was between seven and fourteen days, and Norfolk Southern estimated between sixteen and twenty days. With respect to special trains that charge a premium rate, the court found that a reasonable dispatch period of seven days was appropriate. The district court also determined, contrary to the position taken by Norfolk Southern, that the reasonable dispatch period should be measured from the time that a rail carrier issues a waybill signifying the shipment has been inspected and is approved for transit, not the time that the carrier actually begins “pulling” the shipment. Finally, applying these findings, the court concluded that the last of the thirty-two modules was delivered beyond the reasonable dispatch period in violation of the Carmack Amendment.

As for causation, the district court concluded that Norfolk Southern’s late deliveries caused actual harm even though many of the modules arrived at Veazie without pressure nozzles because of production problems at the Alstom plants. The court found that the missing nozzles did not impede the construction schedule because the nozzles were not needed until shortly before the power plant began operating.

The district court rejected Norfolk Southern’s argument that it was not liable for the premium freight charges paid by Alstom because Alstom’s manufacturing problems would have required the hiring of these special trains in any event. The court reasoned that Gowan’s decision to secure an alternate carrier–before there was any indication of a manufacturing problem–was a reasonable response to the fact that there were transit delays for even the earliest shipments. The district court found, therefore, that “Gowans would have engaged these services regardless of Alstom’s manufacturing problems.” J.A. 3226.

Finally, the district court concluded that, before it could determine the damages owed by Norfolk Southern for its untimely deliveries, it was required to identify the portion of the settlement between Alstom and DFD that was attributable to delays at Veazie, not Hidalgo; to identify the portion of the settlement paid for the late delivery of modules, as opposed to other parts arriving late; to determine a dollar value for the extended warranties portion of the settlement; and to “determine the share attributable to Norfolk [Southern]’s transit delays (rather than Alstom’s manufacturing delays).” J.A. 3226.

Based on the testimony of Mike Stark, a former DFD employee who participated in negotiating the settlement, the district court concluded that sixty-three percent of the settlement amount was attributable to delays at Veazie. The court further found that the entire settlement amount was based on the late delivery of modules as opposed to other parts and equipment. Furthermore, the district court credited the testimony of John Stratton, Alstom’s project director for generators, that it would cost Alstom $700,000 to honor the extended warranty portion of the settlement. Finally, the district court recognized that Norfolk Southern was not solely at fault for the late deliveries, given that Alstom failed to have some of the modules ready for shipping until after the June 30 deadline. Accordingly, the court arrived at the following formula for calculating damages: “$1.575 million multiplied by the percentage of total delay attributable to Norfolk [Southern], plus the cost of premium transportation services.” J.A. 3255.

The district court invited Alstom to submit a proposed final damages figure using this formula and to brief the court on the propriety of pre-judgment interest. The district court likewise invited a response from Norfolk Southern. Alstom submitted a final figure of $1,459,485, including interest. The court reduced the interest claimed by Alstom but otherwise adopted Alstom’s calculation and entered judgment in the amount of $1,230,871.

On appeal, Norfolk Southern does not specifically challenge the award of prejudgment interest.

II.

A.

Norfolk Southern argues that Alstom failed to file a proper written notice of claim and was therefore precluded from bringing suit on its delay claim under the Carmack Amendment. Like the district court, we reject this claim.