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Kelly v. TRC Fabrication

2021 WL 1603734

NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
Supreme Court of Idaho,
Boise, January 2021 Term.
Dale KELLY and Nancy Kelly, Husband and Wife, Plaintiffs-Appellants,
v.
TRC FABRICATION, LLC, an Idaho limited liability company, Defendant-Respondent.
Docket No. 47653
|
Opinion Filed: April 26, 2021
Synopsis
Background: Subcontractor, an independent owner-operator of a semi-truck who was engaged by seller’s contractor to transport steel tubing from California to the buyer in Idaho, brought action against buyer, seeking to recover damages for injuries he allegedly sustained when buyer’s forklift operator dropped the steel tubing while buyer’s employees were unloading it from the truck, which slid across the pavement and struck him. The Seventh Judicial District Court, Bonneville County, Dane Watkins, Jr., J., granted buyer’s motion for summary judgment. Subcontractor appealed.

Holdings: The Supreme Court, Stegner, J., held that:

[1] contract between buyer and seller did not create a “category one” statutory employer relationship subject to the exclusive remedy provision of the Workers’ Compensation Act, and

[2] as a matter of first impression, delivery services ancillary to a contract for the sale of goods do not in and of themselves create a “category one” statutory employer contractual relationship, except when the contract to sell is accompanied by an undertaking to render substantial services in connection with the goods sold, or where the transaction is a mere device or subterfuge to avoid liability under the workers’ compensation laws.

Reversed, vacated, and remanded.

West Headnotes (11)

[1]
Appeal and Error Review using standard applied below

The Supreme Court’s review of a trial court’s ruling on a motion for summary judgment is the same standard used by the trial court in originally ruling on the motion.

[2]
Judgment Absence of issue of fact

Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Idaho R. Civ. P. 56(a).

[3]
Appeal and Error Statutory or legislative law

The interpretation of a statute is a question of law over which the Supreme Court exercises de novo review.

[4]
Workers’ Compensation Liberal or strict construction in general

The Supreme Court will liberally construe workers’ compensation statutes to serve the scheme’s humane purposes.

[5]
Workers’ Compensation Purpose of legislation
Workers’ Compensation Injuries Arising out of and in Course of Employment in General

The Worker’s Compensation Act provides a statutory system by which employees are guaranteed a definite remedy for injuries arising out of and in the course of employment. Idaho Code Ann. § 72-201.

[6]
Workers’ Compensation Exclusiveness of Remedies Afforded by Acts

The exclusive remedy rule of the Workers’ Compensation Act limits the liability of direct employers. Idaho Code Ann. §§ 72-209(1), 72-211.

[7]
Workers’ Compensation What Persons Liable as Third Persons

Interpreting the applicability of the exclusive remedy rule in workers’ compensation cases requires the court to analyze whether a specific entity is a “statutory employer” of the injured worker. Idaho Code Ann. §§ 72-209(1), 72-211.

[8]
Workers’ Compensation Statutory employers

Statutory analysis of “category one” type of indirect employers under the Workers’ Compensation Act involves an examination of the contractual employment relationship between the parties and whether the direct employer provided worker’s compensation coverage. Idaho Code Ann. § 72-216(1).

[9]
Workers’ Compensation What Persons Liable as Third Persons

In determining whether a party is immune under the Workers’ Compensation Act to a third party liability suit, the Supreme Court looks to the previously established statutory definition of “employer” found in the Act as interpreted by the Supreme Court. Idaho Code Ann. §§ 72-102(13)(a), 72-223.

[10]
Workers’ Compensation Principal employer or employer of injured person

Sales contract between buyer and seller of steel tubing, which were sold “free on board” and delivered by seller’s subcontractor, an independent owner-operator of a semi-truck, did not create a “category one” statutory employer relationship subject to the exclusive remedy provision of the Workers’ Compensation Act, and thus, buyer was not entitled to statutory immunity from subcontractor’s suit seeking damages for injuries resulting from the allegedly negligent operation of a forklift by buyer’s employee; services necessary to complete the contract were incidental in relation to the gravamen of the contract, which was for sale of goods, and there was nothing suggesting that the contract included substantial services to be provided by seller, or that the contract was a device or subterfuge to avoid liability. Idaho Code Ann. §§ 72-216(1), 72-223.

[11]
Workers’ Compensation What Persons Liable as Third Persons

Delivery services ancillary to a contract for the sale of goods do not in and of themselves create a “category one” statutory employer contractual relationship subject to tort immunity under the workers’ compensation laws, except when the contract to sell is accompanied by an undertaking to render substantial services in connection with the goods sold, or where the transaction is a mere device or subterfuge to avoid liability under the workers’ compensation laws. Idaho Code Ann. §§ 72-216(1), 72-223.

Appeal from the District Court of the Seventh Judicial District, State of Idaho, Bonneville County. Dane H. Watkins, Jr., District Judge.
The decision of the district court is reversed, the judgment is vacated, and the case is remanded.
Attorneys and Law Firms
Racine Olson PLLP, Pocatello, for appellants Dale and Nancy Kelly. Brent O. Roche argued.
Hawley Troxell Ennis & Hawley LLP, Pocatello, for respondent TRC Fabrication, LLC. John A. Bailey, Jr., argued.
Opinion

STEGNER, Justice.

*1 This case explores the scope of tort immunity afforded to a putative employer under the Idaho Worker’s Compensation Act. The question presented is whether the immunity afforded a statutory employer applies to TRC Fabrication, LLC, to bar Dale and Nancy Kelly’s complaint for damages.

The facts are relatively straight-forward. TRC Fabrication, LLC, (TRC) purchased steel tubing from Brown Strauss Steel Co. (Brown Strauss), a company located in Fontana, California. Under the sales contract, Brown Strauss sold the tubing “free on board” to TRC, which meant Brown Strauss would retain ownership of the tubing until it was tendered to and accepted by TRC at its Idaho Falls, Idaho, facility. In other words, Brown Strauss agreed that the price of the metal tubing included transportation of the tubing from California to Idaho. Brown Strauss contracted with Jay Transport, a trucking company based in Rigby, Idaho, which in turn engaged Dale Kelly (Kelly), an independent owner-operator of a semi-truck to transport the tubing. Kelly hauled the tubing to Idaho Falls and delivered the load to TRC. When employees of TRC began to unload the tubing from the trailer, a forklift operator dropped the steel tubing, which then slid across the pavement and struck Kelly, seriously injuring his right leg, ankle, and foot.

Kelly and his wife Nancy filed a complaint against TRC, seeking to recover damages for negligence and loss of consortium. After TRC filed a motion seeking summary judgment, the district court granted the motion and dismissed the Kellys’ complaint. The district court concluded that Idaho’s worker’s compensation law extended statutory immunity to TRC and limited the Kellys’ recovery to workers’ compensation benefits. For the reasons set out below, we reverse the district court’s order granting summary judgment, vacate the judgment entered, and remand the case for further proceedings.

I. Factual and Procedural Background

A. Factual Background.
Kelly is a professional truck driver. At the time of the events giving rise to the case, Kelly was an owner-operator of a semi-truck and flatbed trailer.

TRC is an Idaho limited liability company that performs steel fabrication work. In January 2018, TRC purchased more than 43,000 pounds of metal tubing from Brown Strauss. Under the terms of the sales contract, it was Brown Strauss’s responsibility to arrange delivery of the tubing to TRC. Brown Strauss bore the risk of loss until delivery to and acceptance by TRC. Brown Strauss arranged transportation through Jay Transport. Jay Transport then contracted with Kelly to haul the metal tubing from California to Idaho.

Kelly picked up the shipment on January 19, 2018, and arrived at TRC’s facility on January 22, 2018. Unfortunately, during unloading the TRC employee operating the telehandler1 lost control of the top tier of the shipment after lifting it from Kelly’s trailer. Pieces of heavy steel tubing slid along the pavement, striking Kelly and severely injuring his right leg, ankle, and foot. Kelly was transported to the hospital by ambulance. Kelly has undergone three surgeries as a result of his injuries. His medical expenses at the time of the hearing on the motion for summary judgment exceeded $145,000.

B. Procedural Background.
*2 On December 20, 2018, Kelly and his wife Nancy2 filed suit against TRC, alleging that TRC’s forklift operator was negligent in his operation of the telehandler, and claiming damages for personal injury and loss of consortium. TRC answered, and asserted numerous affirmative defenses, the chief of which (for purposes of this appeal) was that the Kellys’ exclusive remedy was through Idaho’s worker’s compensation system.

After discovery, TRC moved for summary judgment, arguing that it was both a category one and category two statutory employer of Kelly, and that TRC was entitled to immunity under the exclusive remedy rule of Idaho Code section 72-201, which shields most workplace injuries from “private controversy.” TRC also argued that, because Kelly could only recover through the worker’s compensation system, Nancy’s derivative claim of loss of consortium necessarily failed. (Citing Coddington v. City of Lewiston, 96 Idaho 135, 525 P.2d 330 (1974) for this proposition.)

The Kellys responded, arguing that immunity under the Idaho Worker’s Compensation Act only applies in the context of a contract for services, and that because the core contract in the case was for the sale of goods, the Idaho Worker’s Compensation Act does not apply. The Kellys reasoned that TRC was required to establish “the existence of an unbroken chain of interrelated contracts for services between TRC and the injured party[.]” (Italics in original.) The Kellys contended that under the Uniform Commercial Code’s “predominant factor test,” “a contract for the sale of goods with ancillary delivery is still a contract for the sale of goods and not a contract for services[.]”

In response, TRC argued that there was no statutory requirement of an “unbroken chain” of service contracts for TRC to be a category one statutory employer under the Idaho Worker’s Compensation Act. TRC also argued that the Kellys’ proposed interpretation would undermine the statutory employer doctrine. In addition, TRC asserted that it was a category two statutory employer.

Following briefing and oral argument, the district court entered its memorandum decision and order, granting TRC’s motion for summary judgment and dismissing the Kellys’ complaint. The district court found that TRC was a category one statutory employer, relying on the definition in Idaho Code section 72-102(13)(a) and on Spencer v. Allpress Logging, Inc., 134 Idaho 856, 11 P.3d 475 (2000), in which this Court held that a contract involving both goods and services forms the necessary predicate for the applicability of statutory employer immunity. Although the district court held that there was a genuine issue of material fact regarding TRC’s alternate argument, i.e., whether TRC was a category two statutory employer, the district court concluded that TRC was Kelly’s category one statutory employer and therefore entitled to summary judgment. Finally, the district court concluded that Nancy could not maintain her loss of consortium claim because TRC was immune from being sued in tort as a result of Kelly’s injuries.

The Kellys timely appealed.

II. Standard of Review
[1] [2] [3]“This Court’s review of a trial court’s ruling on a motion for summary judgment is the same standard used by the trial court in originally ruling on the motion.” Robison v. Bateman-Hall, Inc., 139 Idaho 207, 209, 76 P.3d 951, 953 (2003). “Summary judgment is appropriate ‘if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Taylor v. Taylor, 163 Idaho 910, 916, 422 P.3d 1116, 1122 (2018) (citing I.R.C.P. 56(a)).
*3 Gomez v. Crookham Co., 166 Idaho 249, 253, 457 P.3d 901, 905 (2020). “The interpretation of a statute is a question of law over which this Court exercises de novo review.” Robison, 139 Idaho at 210, 76 P.3d at 954 (citation omitted).
[4]“This Court will liberally construe the worker’s compensation statutes to serve the scheme’s humane purposes.” Kennedy v. Forest, 129 Idaho 584, 587, 930 P.2d 1026, 1029 (1997) (citation omitted).

III. Analysis

A. The district court erred in concluding that TRC is Kelly’s category one statutory employer.
In granting summary judgment, the district court concluded that TRC was Kelly’s statutory employer under Idaho Code section 72-102(13)(a) because TRC implicitly paid the costs of delivery services as part of its purchase of the metal tubing and because delivery of the tubing was part of the contract. The district court relied on Spencer v. Allpress Logging, Inc., 134 Idaho 856, 11 P.3d 475 (2000), in reasoning that the Idaho Worker’s Compensation Act applies to contracts involving the provision of both goods and services.

On appeal, the gravamen of the Kellys’ argument is that the district court erred in determining that TRC had contracted for Kelly’s services because the contract between Brown Strauss and TRC was primarily a contract for goods, not one for services. The Kellys contend that the delivery term “F.O.B. DELIVERED” in the contract does not render the contract one for services. The Kellys also argue that the district court incorrectly relied on Spencer v. Allpress Logging, Inc., to determine that the Idaho Worker’s Compensation Act applied to hybrid contracts involving both goods and services, and point to several other cases they argue are more analogous.

[5] [6]The Idaho Worker’s Compensation Act provides a statutory system by which employees are guaranteed “a definite remedy for injuries arising out of and in the course of employment.” Robison, 139 Idaho at 209, 76 P.3d at 953 (citing I.C. § 72-201). The Act also limits the liability of direct employers. See I.C. § 72-209(1); I.C. § 72-211. This is referred to as the “exclusive remedy” rule. Robison, 139 Idaho at 209, 76 P.3d at 953.

[7]This Court has described the exclusive remedy rule as affording broad immunity to those falling under the definition of a “statutory employer.” Richardson v. Z & H Constr., LLC, 167 Idaho 345, 353, 470 P.3d 1154, 1162 (2020). Accordingly, interpreting the applicability of the exclusive remedy rule requires us to analyze whether a specific entity is a “statutory employer” of the injured worker. See Robison, 139 Idaho at 211, 76 P.3d at 955.

Idaho Code section 72-223 makes it clear that the exclusive remedy rule does not affect an employee’s ability to recover damages from certain third parties. See I.C. § 72-223. “Even if an injured employee is entitled to compensation under the Worker’s Compensation Law, a third party may still have legal liability to the injured person. I.C. § 72-223(1). The statute specifically excludes certain employers from third party liability.” Fuhriman v. State, Dep’t of Transp., 143 Idaho 800, 804, 153 P.3d 480, 484 (2007). There are two categories of these excluded employers, the first of which is implicated here. See I.C. § 72-223(1). “Category one” statutory employers are employers described in Idaho Code section 72-216(1) as “having under them contractors or subcontractors” who provide worker’s compensation insurance. See id. Idaho Code section 72-216 declares that
*4 [a]n employer subject to the provisions of this law shall be liable for compensation to an employee of a contractor or subcontractor under him who has not complied with the provisions of section 72-301 in any case where such employer would have been liable for compensation if such employee had been working directly for such employer.
I.C. § 72-216(1) (italics added).3

In turn, “employer” is defined as
any person who has expressly or impliedly hired or contracted the services of another. It includes contractors and subcontractors. It includes the owner or lessee of premises, or other person who is virtually the proprietor or operator of the business there carried on, but who, by reason of there being an independent contractor or for any other reason, is not the direct employer of the workers there employed.
I.C. § 72-102(13)(a) (italics added).

[8] [9]The statutory analysis of “category one” employers involves an examination of “the contractual employment relationship between the parties and whether the direct employer provided worker’s compensation coverage.” Pierce v. Sch. Dist. # 21, 144 Idaho 537, 539, 164 P.3d 817, 819 (2007). “In determining whether a party is immune to an I.C. § 72-223 third party liability suit, we ‘look to the previously established statutory definition of “employer” found in [I.C. § 72-102(13)(a)], as interpreted by this Court.’ ” Fuhriman, 143 Idaho 800, 804, 153 P.3d 480, 484 (2007) (quoting Venters v. Sorrento Delaware, Inc., 141 Idaho 245, 249, 108 P.3d 392, 396 (2005)) (alteration in original).

This Court has never addressed the narrow question raised here: whether contracts for goods with ancillary delivery services can create a “category one” statutory employer relationship. However, this Court has, on prior occasions, addressed aspects of contractual relationships that are consistent with the statutory employer definition. For example, contracts that include the sale of goods and provision of services are within the scope of the “statutory employer” definition. See Spencer v. Allpress Logging, Inc., 134 Idaho 856, 11 P.3d 475 (2000). In Spencer, a landowner contracted with two mills to sell Douglas fir and Ponderosa pine logs. Id. at 857, 11 P.3d at 476. As part of the contract, the landowner was required to harvest and deliver the timber, and in turn, the landowner contracted with Allpress Logging to perform these services. Id. at 857–58, 11 P.3d at 476–77. During the logging operation, Spencer—an employee of Allpress Logging—was injured. Id. at 858–59, 11 P.3d at 477–78. Spencer filed a worker’s compensation claim, and the Industrial Commission eventually entered an order holding that one of the mills was not Spencer’s statutory employer and, therefore, not liable for his worker’s compensation benefits. Id. at 859, 11 P.3d at 478. This Court reversed the Commission’s holding, reasoning that the mill had contracted with the landowner for the purchase of the logs, and it ultimately paid for the harvesting and delivery services, so the mill “was contracting with [the landowner] for logging the pine [sic] on the property.” Id. at 861, 11 P.3d at 480 (italics added). Notably, the services provided as part of the contract were not limited to delivery of the logs; they also included harvesting the logs being transported. See id.

*5 Today we reject the notion that any conceivable service ancillary to a contract for the sale of goods automatically brings that contract within the scope of the definition of the “category one” statutory employer. This Court has described the immunity provided by the exclusive remedy rule as a “quid pro quo” in exchange for the statutory employer’s assumption of liability for worker’s compensation benefits. See Venters, 141 Idaho at 251, 108 P.3d at 398. The quid pro quo contemplates affording the category one employer immunity from an action in tort in exchange for its acceptance of responsibility for providing worker’s compensation benefits in the event the worker has no worker’s compensation benefits.

We are not alone in our view. The U.S. District Court of the Western District of Kentucky observed:
The rule that the mere recipient of goods is not a statutory contractor4 makes a great deal of sense. To apply workers’ compensation statutes to the ordinary sale of merchandise would significantly disrupt and change commerce and business dealings. Classifying mere purchasers of goods as “contractors” simply because they use the purchased goods stretches the immunity provisions of the workers’ compensation laws far beyond their intent and the limits of reason.
Davis v. Ford Motor Co., 244 F. Supp. 2d 784, 788 (W.D. Ky. 2003) (applying Kentucky law) (citations omitted). In the last century, multiple states have examined the interaction between their worker’s compensation schemes and the provision of delivery services ancillary to the purchase of goods, and have adopted what the Supreme Court of Kansas described in 1967 as the “general rule”: “ ‘The compensation act does not apply where the transaction between the immediate employer and the person sought to be held liable as his employer is that of purchase and sale[.]’ ” Bendure v. Great Lakes Pipe Line Co., 199 Kan. 696, 433 P.2d 558, 564 (1967) (quoting Corpus Juris Secundum Workmen’s Compensation § 107 (1967)). There are two notable exceptions to this rule: when the contract to sell is accompanied by an undertaking to render substantial services in connection with the goods sold, or where the transaction is a mere device or subterfuge to avoid liability under the state’s worker’s compensation laws. Id. States adopting this “general rule” include Arkansas, Georgia, Kansas, Louisiana, Michigan, Nebraska, South Carolina, and Virginia. Bros. v. Dierks Lumber & Coal Co., 217 Ark. 632, 232 S.W.2d 646, 650 (1950); Gray Bldg. Systems v. Trine, 260 Ga. 252, 391 S.E.2d 764 (1990); Bendure, 433 P.2d at 564; Hart v. Richardson, 272 So. 2d 316, 319 (La. 1973); Hooks v. Wayne Cnty. Rd. Comm’rs, 345 Mich. 384, 76 N.W.2d 9, 12 (1956); Heider v. Stoughton, 150 Neb. 741, 35 N.W.2d 814, 815 (1949); Meyer v. Piggly Wiggly No. 24, Inc., 338 S.C. 471, 527 S.E.2d 761 (2000); Yancey v. JTE Constrs., Inc., 252 Va. 42, 471 S.E.2d 473 (1996).

*6 [10] [11]Accordingly, we now adopt the “general rule.” Delivery services ancillary to a contract for the sale of goods do not in and of themselves create a category one statutory employer contractual relationship, except when the contract to sell is accompanied by an undertaking to render substantial services in connection with the goods sold, or where the transaction is a mere device or subterfuge to avoid liability under the Idaho worker’s compensation laws. In applying this rule to these facts we conclude that the sales contract between TRC and Brown Strauss did not create a “category one” statutory employer relationship such that TRC is entitled to immunity from suit by the Kellys that would be afforded by the exclusive remedy rule. The contract at issue in this case is a contract for the sale of goods in which the only conceivable “service” is their delivery.5 There is no mention of “services” in the contract. The contract deals exclusively with the sale of goods. Consequently, there is nothing to suggest the contract included “substantial services” to be provided by Brown Strauss (or its independent sub-contractor, Kelly). There is also nothing to suggest the contract between Brown Strauss and TRC was a device or subterfuge to avoid liability. (In fact, Kelly received worker’s compensation benefits as a result of his injuries.) It represented a routine commercial transaction for the sale of metal tubing.

This contract is also readily distinguishable from that found in Spencer v. Allpress Logging. There, the contract apparently included the felling, skidding, limbing, and loading of logs at the site of their harvesting, as well as trucking them to the lumber mill. 134 Idaho at 857, 11 P.3d at 476. As a result, the contract in Spencer included “substantial services,” thereby distinguishing it from the contract between TRC and Brown Strauss. In addition, the terms of the Brown Strauss contract stated the purchased goods were sold “F.O.B. DELIVERED” meaning title to the goods was retained by Brown Strauss until the goods were delivered to and accepted by TRC. The services necessary for the completion of the contract were incidental in relation to the gravamen of the contract, which was the sale of goods. There is nothing in this record to suggest Kelly contracted to or was employed to physically unload the semi he had driven to Idaho Falls from California. Kelly was not operating the telehandler when he was injured.

Were we to agree with TRC’s construction of the statute, a driver, working as an independent contractor for a meal delivery service, such as Uber Eats, DoorDash, or any other delivery provider, such as Amazon, would be able to obtain workers compensation benefits from the person ordering that delivery because the person ordering the delivery would become the category one employer of the deliverer if the delivery person did not have worker’s compensation insurance. Suppose the delivery person was injured while driving to the purchaser’s house. The question arises: would the purchaser be liable for worker’s compensation benefits for the driver if the driver lacked worker’s compensation insurance? If we conclude TRC is a statutory employer under these facts, the answer would be “yes.” While the purchaser might enjoy immunity from suit in tort, the quid pro quo for such a finding would mean the purchaser would be liable for worker’s compensation benefits in the event the delivery person has no applicable worker’s compensation insurance. Contrary to TRC’s characterization, such a holding would inevitably constitute a “sea change,” especially in light of the significant development in delivery services prompted by the coronavirus pandemic.

The district court made no other findings on which we may affirm its grant of summary judgment. Accordingly, we reverse the district court’s decision to award TRC summary judgment, vacate the judgment entered, and remand for further proceedings. Because neither exception to the general rule are applicable here, we determine as a matter of law that TRC is not Kelly’s category one employer. (There is nothing in the contract or this record to suggest Brown Strauss (or its independent contractor) was contracted to perform “substantial services” as part of the contract. Nor is there any suggestion that the contract was entered into as a subterfuge to avoid worker’s compensation benefits, since Kelly obtained worker’s compensation benefits as a result of his injury.) As a result, TRC is foreclosed from asserting it is Kelly’s category one employer on remand.

IV. Conclusion
*7 For the reasons stated, we reverse the district court’s grant of summary judgment, vacate the judgment entered, and remand the matter for further proceedings, because TRC is not Kelly’s “category one” statutory employer. Costs are awarded to the Kellys since they prevailed on appeal.

Chief Justice BEVAN, Justices BURDICK, BRODY, and MOELLER concur.
All Citations
— P.3d —-, 2021 WL 1603734

Footnotes

1
The Kellys’ complaint describes this machine as “a Gehl telehandler, aka a large forklift.”

2
When referring to Nancy Kelly in her individual capacity, she will be referred to as “Nancy.” When referring to Dale and Nancy Kelly collectively, they will be referred to as “the Kellys.”

3
While the “category two” statutory employer definition is not part of this appeal, category two has been referred to as the “virtual proprietor” category and is defined in the second half of Idaho Code section 72-223(1): “the owner or lessee of premises, or other person who is virtually the proprietor or operator of the business there carried on, but who, by reason of there being an independent contractor or for any other reason, is not the direct employer of the workmen there employed.” I.C. § 72-223(1); see also Pierce v. Sch. Dist. No. 21, 144 Idaho 537, 539, 164 P.3d 817, 819 (2007). In defining the “category two” statutory employer, this Court examines the type of work conducted by the purported employee and the purported employer: “[T]he true test is, [d]id the work being done pertain to the business, trade, or occupation of the [putative statutory employer], carried on by it for pecuniary gain? If so, the fact that it was being done through the medium of an independent contractor would not relieve the defendant from liability.” Harpole v. State, 131 Idaho 437, 440, 958 P.2d 594, 597 (1998) (quoting Jones v. Packer John Mines Corp., 60 Idaho 653, 95 P.2d 572 (1939)) (alterations in original).

4
While Kentucky uses the phrase “statutory contractor” instead of “statutory employer,” the two phrases are roughly equivalent when comparing the worker’s compensation laws of Kentucky and Idaho. Under Kentucky law, a party who is not a traditional employer may still enjoy tort immunity under the exclusive remedy rule if it qualifies as a “contractor” who is “up the ladder” from the injured employee. See Goldsmith v. Allied Bldg. Components, Inc., 833 S.W.2d 378, 381 (Ky. 1992); see also K.R.S. §§ 342.610(2)(b) and 342.0011(34). Kentucky’s definition of “contractor” uses the term “work,” which is narrowly defined to include services. See K.R.S. § 342.0011(34). Likewise, in Idaho the category one statutory employer must establish that it meets the definition of “employer” and has under it contractors subject to and compliant with the worker’s compensation laws. See I.C. § 72-223; see also I.C. § 72-216. Kentucky’s use of “services” in defining a contractor echoes that of Idaho Code section 72-102(13)(a), which uses “services” in defining an employer. See I.C. § 72-102(13)(a).

5
The only term in the contract referencing delivery is the “F.O.B.” term. Under the UCC, the “F.O.B.” delivery term is used to delineate which party bears the expense and risk of transporting the goods, and at what point liability and title to goods transfer to the buyer. See I.C. § 28-2-319(1). When the term “F.O.B. DELIVERED” is used, “the seller must at his own expense and risk transport the goods to that place and there tender delivery of them in the manner provided in [section 28-2-503.]” Id.

Estate of Ratley v. Awad

2021 WL 1845497

United States District Court, W.D. Oklahoma.
The ESTATE OF Laura RATLEY, BY AND THROUGH its duly appointed special administrator Robert RATLEY; Robert Ratley and Amy Ratley as heirs at law of Laura Ratley, deceased; Leah Ratley; the Estate of Rebecca Fulcher, by and through its duly appointed special administrators John Fulcher and Amy Fulcher; John Fulcher and Amy Fulcher as heirs at law of Rebecca Fulcher, deceased; and Ryan Fulcher, Plaintiffs,
v.
Dhafer M. AWAD, and Shamrock Farms Foods Company, Defendants.
Case No. CV-19-00265-PRW
|
Signed 05/07/2021
Attorneys and Law Firms
Matthew L. Bretz, Bretz Law Offices, Hutchinson, KS, for Plaintiffs Laura Ratley, Robert Ratley, Amy Ratley, Leah Ratley.
James V. Murray, Stillwater, OK, for Plaintiffs Rebecca Fulcher, John Fulcher, Amy Fulcher.
Michael D. Denton, Jr., Denton Law Firm PC, Mustang, OK, for Plaintiff Ryan Fulcher.
C. Michael Copeland, Patrick G. Colvin, Jones Gotcher & Bogan PC, Tulsa, OK, for Defendants.

ORDER
PATRICK R. WYRICK, UNITED STATES DISTRICT JUDGE
*1 Before the Court are Defendants’ Motions for Judgment on the Pleadings and Briefs in Support (Dkts. 52 & 63). For the reasons that follow, the Court GRANTS both motions.

Background
In April 2017, Defendant Shamrock Foods Company dispatched Defendant truck driver Dhafer M. Awad to drive one of its trucks from Waukesha, Wisconsin, to Commerce City, Colorado. At some point late on the night of April 4, 2017, a tired Awad pulled his truck onto the shoulder of the turnpike he was on and parked so that he could rest. Meanwhile, Ryan Fulcher, Laura Ratley, Leah Ratley, and Rebecca Fulcher were also westbound on the turnpike returning home after attending a concert in Tulsa. Ryan was driving. Ryan fell asleep and swerved off the roadway, striking the rear of the parked Shamrock truck. Laura and Rebecca were killed; Ryan and Leah were injured but survived.

This lawsuit followed. The survivors and the estates of Laura and Rebecca brought this action in 2019 against both Shamrock and Awad asserting claims seeking “all damages which are proper under Oklahoma Law.”1 The heirs at law have also asserted claims “for the wrongful death of their daughter[s].”2

Plaintiffs in this action are therefore survivors Ryan Fulcher and Leah Ratley, the Estate of Laura Ratley by and through its duly appointed special administrator Robert Ratley, Robert Ratley and Amy Ratley as heirs at law of Laura Ratley, and the Estate of Rebecca Fulcher by and through its duly appointed special administrators John Fulcher and Amy Fulcher, and John and Amy Fulcher individually as heirs at law of Rebecca Fulcher. They claim, amongst other things, that Shamrock was negligent by: (1) violating the Federal Motor Carrier Safety Regulations, and (2) entrusting the tractor-trailer to Awad. Plaintiffs claim that Shamrock violated the Federal Motor Carrier Safety Regulations by purportedly “[a]llowing [ ] Defendant Awad to drive without proper qualifications,” “[c]onducting an inadequate background check and application investigation,” “[n]ot properly updating driving records,” “[n]ot performing a proper annual driver review,” and “[n]ot keeping an active proper employment or driver qualification file”3-which in substance are negligent hiring, training, supervision, and retention claims. Plaintiffs also claim that Shamrock is vicariously liable for any tort committed by Awad in the scope of his employment pursuant to the theory of respondeat superior. In its Answer (Dkt. 25), Shamrock admits that Awad was acting in the scope of his employment at the time of the collision.4

On August 3, 2020, Defendants filed a Motion for Judgment on the Pleadings (Dkt. 52) pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, asking the Court to enter judgment in their favor and against Plaintiffs Robert Ratley and Amy Ratley in their capacity as heirs of the Estate of Laura Ratley, and against Plaintiffs John Fulcher and Amy Fulcher in their capacity as heirs of the Estate of Rebecca Fulcher (the “Heir Plaintiffs”). In support of their motion, Defendants essentially argue that the Heir Plaintiffs lack capacity to sue insofar as Oklahoma’s wrongful death statute5 authorizes only the personal representatives—i.e., in this case Plaintiff Robert Ratley, in his capacity as special administrator for the Estate of Laura Ratley, and Plaintiffs John and Amy Fulcher, in their capacity as special administrators of the Estate of Rebecca Fulcher (the “Personal Representative Plaintiffs”)—to maintain this action. Plaintiffs, on the other hand, claim that the Heir Plaintiffs have a right to assert claims in this lawsuit because Oklahoma’s wrongful death statute authorizes damages for a parent’s grief and loss of companionship.

*2 Shortly thereafter, on September 2, 2020, Defendants filed another Motion for Judgment on the Pleadings and Brief in Support (Dkt. 63) pursuant to Rule 12(c), this time asking the Court to dismiss on state law grounds Plaintiffs’ claims against it for negligent hiring, training, supervision, and retention. Plaintiffs contest this motion on all fronts in their Response and now ask the Court to grant them leave to amend their Complaint.

Legal Standard
Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” In the Tenth Circuit, “[a] motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6).”6 Accordingly, the Court “accepts as true all well-pleaded factual allegations in the complaint, ‘resolve[s] all reasonable inferences in the plaintiff’s favor, and ask[s] whether it is plausible that the plaintiff is entitled to relief.’ ”7 “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ”8

However, unlike with a motion to dismiss, in ruling on a motion for judgment on the pleadings, the Court may, as the name suggests, consider the answer to the complaint.9 As Wright and Miller explain:
As numerous judicial opinions make clear, a Rule 12(c) motion is designed to provide a means of disposing of cases when the material facts are not in dispute between the parties and a judgment on the merits can be achieved by focusing on the content of the competing pleadings, exhibits thereto, matters incorporated by reference in the pleadings, whatever is central or integral to the claim for relief or defense, and any facts of which the district court will take judicial notice. The motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court.10

Discussion

I. Defendants’ Motion for Judgment on the Pleadings (Dkt. 52) regarding capacity to sue under Oklahoma’s wrongful death statute.
With respect to Defendants’ first Motion for Judgment on the Pleadings (Dkt. 52), filed on August 3, 2020, the Parties dispute the interpretation of Oklahoma’s wrongful death statute. This presents a question of law: Who may prosecute wrongful death actions on behalf of the decedents, Laura Ratley and Rebecca Fulcher? Because this case is grounded on diversity jurisdiction, Oklahoma law provides the answer.11

*3 Title 12, section 1053(A) of the Oklahoma Statutes says that, “[w]hen the death of one is caused by the wrongful act or omission of another, the personal representative of the former may maintain an action therefore against the latter … if the former might have maintained an action, had he or she lived, against the latter … for an injury for the same act or omission.”12 A personal representative is thus authorized to bring a wrongful death action seeking damages on behalf of both the estate and the decedent’s heirs.

Further, according to the Oklahoma courts’ interpretation of the wrongful death statute, “[a] wrongful-death claim may be pressed only by persons authorized to bring it.”13 “By force of § 1053(A), the action may be brought by the personal representative of the decedent, but if none has been appointed, then by the widow, or where there is no widow, by the decedent’s next of kin.”14 Furthermore, “[t]here can be only one wrongful-death claim and one recovery.”15 Because “only the authorized representative of a decedent’s estate may prosecute a wrongful death action under § 1053(A),” a decedent’s heir “is statutorily prohibited from bringing any action on her own.”16 Thus, the personal representative, if one has been appointed, is the only proper party to bring both a survivorship action and a wrongful death action.17

Therefore, this lawsuit cannot be maintained by both the Personal Representative Plaintiffs and the Heir Plaintiffs.18 As such, the Personal Representative Plaintiffs are the real parties in interest in this action, and thus the only proper plaintiffs. The Heir Plaintiffs must therefore be dismissed.19

II. Defendants’ Motion for Judgment on the Pleadings (Dkt. 63) regarding Plaintiffs’ negligence claims.
*4 With respect to Defendants’ second Motion for Judgment on the Pleadings (Dkt. 63), filed on September 2, 2020, Shamrock argues, and the Court agrees, that Plaintiffs’ claims for negligent hiring, training, supervision, and retention claims, asserted under the Federal Motor Carrier Safety Regulations, must fail as a matter of law under Jordan v. Cates because Shamrock admits in its Answer that Awad was acting in the scope of his employment.

In Jordan v. Cates, the Oklahoma Supreme Court held that “[w]hen an employer stipulates that an employee is acting within the scope of employment … and punitive damages are available against it under the theory of respondeat superior, an additional claim for negligent hiring [and retention] exposes the employer to no additional liability.”20 “[W]here the employer stipulates that liability, if any, would be under the respondeat superior doctrine,” it explained, “any other theory for imposing liability on the employer [becomes] unnecessary and superfluous.”21,22

Though roundly criticized,23 now “limited to its facts,”24 and ripe for reconsideration,25 courts continue to recognize Jordan v. Cates as good law requiring dismissal of negligent hiring, training, supervision, and retention claims where the employer admits the employee acted in the scope of their employment.26

*5 The import of Jordan v. Cates here is thus clear. Plaintiffs simultaneously assert claims against Shamrock for negligence under the doctrine of respondeat superior and, in substance, for negligent hiring, training, supervision, and retention in alleging Shamrock was negligent by purportedly violating Federal Motor Carrier Safety Regulations. All Parties agree that Awad was acting within the scope of his employment immediately before and during the accident.27 Accordingly, Plaintiffs’ claims for direct liability against Shamrock (except for negligent entrustment) should be dismissed.

Conclusion
For the foregoing reasons, the Court GRANTS Defendant Shamrock’s Motions for Judgment on the Pleadings and Brief in Support (Dkts. 52 & 63). Accordingly, certain Plaintiffs, including Robert Ratley and Amy Ratley in their capacity as heirs of the Estate of Laura Ratley, and John Fulcher and Amy Fulcher in their capacity as heirs of the Estate of Rebecca Fulcher, are DISMISSED from this lawsuit as they are not proper parties in accordance with Okla. Stat. tit. 12, § 1053(A) (2011). Further, Plaintiffs’ claims that Shamrock was negligent by violating the Federal Motor Carrier Safety Regulation, i.e. Plaintiffs’ claims for negligent hiring, training, supervision, and retention, are DISMISSED. To the extent Plaintiffs wish to amend their Complaint, they may file a motion requesting permission to do so.

IT IS SO ORDERED this 7th day of May 2021.

All Citations
Slip Copy, 2021 WL 1845497

Footnotes

1
Compl. (Dkt. 1) ¶¶ 40, 42, at 6.

2
Id. ¶¶ 41, 43, at 6.

3
Compl. (Dkt. 1) ¶ 36.

4
Answer (Dkt. 25) ¶ 10.

5
Okla. Stat. tit. 12, § 1053 (2011).

6
Zevallos v. Allstate Prop. & Cas. Co., 776 F. App’x 559, 561 n.1 (10th Cir. 2019) (quoting Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000)).

7
Woodie v. Berkshire Hathaway Homestate Ins. Co., 806 F. App’x 658, 666 (10th Cir. 2020) (quoting Diversey v. Schmidly, 738 F.3d 1196, 1199 (10th Cir. 2013) and citing Ashcroft v. Iqbal, 556 U.S. 662 (2009) (“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)))).

8
Id. (quoting Iqbal, 556 U.S. at 678).

9
See Park Univ. Enterprises, Inc. v. Am. Cas. Co. of Reading, PA, 442 F.3d 1239, 1244 (10th Cir. 2006), abrogated on other grounds by Magnus, Inc. v. Diamond State Ins. Co., 545 F. App’x. 750 (10th Cir. 2013).

10
5C Wright & Miller, Federal Practice and Procedure: Civil 3d § 1367 (footnotes omitted).

11
Blanke v. Alexander, 152 F.3d 1224, 1228 (10th Cir. 1998) (citing Hays v. Jackson Nat’l Life Ins. Co., 105 F.3d 583, 537 (10th Cir. 1997); Wood v. Eli Lilly & Co., 38 F.3d 510, 512 (10th Cir. 1994)).

12
Okla. Stat. tit. 12, § 1053(A) (2011).

13
Ouellette v. State Farm Mut. Automobile Ins. Co., 918 P.2d 1363, 1366 (Okla. 1994) (emphasis in original).

14
Id. (citing Okla. Stat. tit. 12 § 1054).

15
Ouelette, 918 P.2d at 1367 (emphasis in original); Guinn v. Great W. Cas. Co., No. CIV-09-1198-D, 2010 WL 4363784, at *4 (W.D. Okla. Oct. 27, 2010).

16
Socia v. Traditions, Inc., 109 P.3d 359, 361 (Okla. Civ. App. 2005) (citing Ouelette,918 P.2d at 1366).

17
The heir may assert a claim for a share of the proceeds of the administrator’s successful wrongful death action, but that claim is to be asserted in the “post-recovery phase” of the action, in which the Court determines the apportionment of the damages under § 1053(D). Id. at 363; see also Plain v. Murphy Family Farms, 296 F.3d 975, 978–79 (10th Cir. 2002) (applying Oklahoma law).

18
See Cornwell, 2011 WL 2441884, at *2 (“Plaintiff has correctly state that, under Oklahoma law, either the personal representative of the decedent’s estate or the decedent’s next of kin may prosecute a wrongful death cause of action. Applying this rule to the instant case, Mr. Cornwell cannot properly bring this case as plaintiff in both his individual capacity and his capacity as personal representative of the estate of Renia A. Cornwell; Mr. Cornwell is a proper plaintiff in only one of his legal capacities.”); Guinn v. Great West Cas. Co., No. 5:09-cv-01198-D, 2010 WL 4363784, at *4 (W.D. Okla. Oct. 27, 2010) (dismissing all plaintiffs but the administrator of the decedent’s estate, as she was “the only proper plaintiff”).

19
However, their dismissal does not preclude their right to share in recovery of any damages that may be awarded as a result of this action; if the administrators prevail on the asserted claims, the apportionment of damages will be considered by the Court at the appropriate time.

20
Jordan v. Cates, 1997 OK 9, ¶ 21, 935 P.2d 289, 294.

21
Id. ¶ 16, 935 P.2d at 293.

22
Despite an isolated, non-binding decision to the contrary, see Ramiro v. J.B. Hunt Transp. Servs., Inc., No. CIV-04-1033-M (W.D. Okla. Nov. 12, 2004), the language of Jordan v. Cates does not appear to restrict the rule to intentional torts, see Oliver v. Soto, No. CIV-15-1106-R, 2016 WL 815343, at *2 (W.D. Okla. Feb. 29, 2016) (“This Court already has rejected Plaintiff’s argument that Jordan is limited to claims based on employees’ intentional torts.” (citations omitted)); Avery v. Roadrunner Transp. Servs., Inc., No. CIV–11–1203–D, 2012 WL 6016899, *3 (W.D. Okla. Dec. 3, 2012) (“Jordan is not limited to cases involving intentional torts.”); Chamberlain v. Thomas, No. CIV-11-1430-HE, 2012 WL 4355908, at *1 (W.D. Okla. Sept. 24, 2012) (“[T]he court’s broad language [in Jordan v. Cates] does not seem to restrict the rule to intentional torts….”).

23
See, e.g., Chamberlain v. Thomas, No. CIV-11-1430-HE, 2012 WL 4355908, at *1 (W.D. Okla. Sept. 24, 2012) (“The Jordan rule gives the court some pause. While it is true that, under either a respondeat superior theory or a negligent hiring/supervision/retention theory, a successful plaintiff would have to establish the underlying tort—here negligence—of the agent, the court can envision situations where the punitive damages exposure of the defendant could differ significantly based on whether the focus of the punitive damages inquiry was the wrongful/negligent conduct of the agent or the negligent conduct of the employer. And that focus might well impact, as it did in Jordan, the question of what evidence is admissible to establish the basis for punitive damages. Against the backdrop of the general principle, recognized under both federal and Oklahoma law, that a plaintiff can ordinarily pursue alternate or even inconsistent theories of recovery, and that he is not ordinarily required to elect his remedies, it seems somewhat anomalous to allow the defendant to do the election for him.” (footnotes omitted)).

24
The Oklahoma Supreme Court in Fox v. Mize in word “limit[s] [Jordan v. Cates] to its facts,” Fox v. Mize, 2018 OK 75, ¶ 14 n.12, 428 P.3d 314, 322 n.12 (“We do take this opportunity, however, to expressly state that, for now, the holding in Jordan is limited to its facts.”), while merely declining to extend the holding in Jordan to claims for negligent entrustment.

25
See Fox v. Mize, 2018 OK 75, ¶ 14 n.12, 428 P.3d 314, 322 n.12 (declining to reconsider Jordan v. Cates because the issue was not before it on appeal but “recogniz[ing] the tension in our case law”).

26
See, e.g., Sinclair v. Hembree & Hodgson Constr., LLC, No. CIV-18-938-D, 2020 WL 3965010, *2–3 & n.4 (W.D. Okla. July 13, 2020) (holding that Jordan remains good law after Fox and that a stipulation of vicarious liability bars a negligent hiring, training, and supervision claim); Annese v. U.S. Xpress, Inc., No. CIV-17-655-C, 2019 WL 1246207, at *3 (W.D. Okla. Mar. 18, 2019) (dismissing the plaintiff’s negligent hiring claim because Jordan has not been overruled); Thurmond v. CRST Expedited, Inc., No. CIV-18-1142-R, 2019 WL 6311996, at *1 (W.D. Okla. Nov. 25, 2019) (maintaining the prior status of the law that a negligent hiring claim is superfluous where an employer stipulates that its employee was acting within the scope of employment at the time of the accident).

27
Compl. (Dkt. 1) ¶ 10; Answer (Dkt. 25) ¶ 10.

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