2018 WL 4579690

United States Court of Appeals, Sixth Circuit.
EXEL, INC., f/u/b/o Sandoz, Inc., Plaintiff-Appellee/Cross-Appellant,
v.
SOUTHERN REFRIGERATED TRANSPORT, INC., Defendant-Appellant/Cross-Appellee.
Nos. 17-3904/3917
|
Argued: August 1, 2018
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Decided and Filed: September 25, 2018
Appeal from the United States District Court for the Southern District of Ohio at Columbus. No. 2:10-cv-00994—James L. Graham, District Judge.
Attorneys and Law Firms
ARGUED: Joshua S. Lipshutz, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellant/Cross-Appellee. Marc Rubin, SPECTOR RUBIN, P.A., Miami, Florida, for Appellee/Cross-Appellant. ON BRIEF: Joshua S. Lipshutz, Thomas H. Dupree, Jr., Stephen P. Dent, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellant/Cross-Appellee. Marc Rubin, SPECTOR RUBIN, P.A., Miami, Florida, Kendra L. Carpenter, FREYTAG CARPENTER LLC, Columbus, Ohio, for Appellee/Cross-Appellant.
Before: GILMAN, GIBBONS, and THAPAR, Circuit Judges.

OPINION
RONALD LEE GILMAN, Circuit Judge.
*1 This case arises under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 et seq. Exel, Inc., a shipping broker, sued Southern Refrigerated Transport, Inc. (SRT), an interstate motor carrier, after SRT lost a load of pharmaceuticals owned by Exel’s customer, Sandoz, Inc., that was being transported from Pennsylvania to Tennessee. After nearly seven years of litigation, including a prior appeal, the district court entered judgment for Exel and awarded it the replacement cost of the lost pharmaceuticals, which amounted to approximately $5.9 million.

SRT now appeals, arguing that the district court erred in discounting the significance of language in the bills of lading that ostensibly limited SRT’s liability to a small fraction of the shipment’s value. Exel cross-appeals, arguing that the district court erred in measuring damages by the replacement cost of the pharmaceuticals rather than by their higher market value. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Factual background
In the prior appeal, Exel, Inc. v. Southern Refrigerated Transport, Inc., 807 F.3d 140 (6th Cir. 2015) (hereinafter “Exel I ”), this court summarized the facts giving rise to this litigation as follows:
SRT is a motor carrier that provides transportation of cargo in interstate commerce. Exel, a freight broker, arranges for the transportation of its customer’s commodities. In December, 2007, Exel and SRT executed a Master Transportation Services Agreement (MTSA). The MTSA is a standard agreement that Exel executes with any carrier it hires to transport its clients’ goods. It establishes non-exclusivity, delineates various delivery terms, sets forth the billing arrangements and insurance requirements, and prescribes other terms that govern the parties’ ongoing relationship. It does not contain shipment-specific terms.
Section 4 of the MTSA states that Exel will issue freight receipts for each shipment. Further, “[i]f a bill of lading is issued as a freight receipt, any terms, conditions or provisions” in the bill of lading “shall be subject to and subordinate to the terms of” the MTSA, and “in the event of a conflict,” the MTSA “shall govern.” The MTSA also provides that SRT “shall be liable” to Exel for any “loss” to commodities shipped pursuant to the agreement, and that the “measurement of the loss … shall be the Shipper’s replacement value applicable to the kind and quantity of Commodities so lost….”
Sandoz, who is not a party to this litigation, is one of Exel’s customers. In November, 2008, Exel arranged for SRT to transport a shipment of Sandoz’s pharmaceuticals from Exel’s warehouse in Mechanicsburg, Pennsylvania, to Memphis, Tennessee. Before the shipment, Exel prepared five documents, designated as bills of lading, on Sandoz’s behalf. Exel personnel loaded the pharmaceuticals onto SRT’s container. Exel personnel signed the bills of lading and gave them to the SRT driver, who also signed them.
The bills of lading include the number of units to be transported, the weight of each shipment, and special instructions for delivery. In the section labeled “KIND OF PACKAGES, DESCRIPTION OF ARTICLES SPECIAL MARKS EXCEPTIONS” the freight is designated as “Drugs or Medicines Non Hazardous.” The freight is labeled “Item 60000 Class 85, RVNX $2.40.” Neither of the latter terms is defined in the bills of lading.

*2 The bills of lading contain the following “certification” language:
Carrier, SFRI … RECEIVED, subject to the classifications and Tariff, in effect on the date of issue of this bill of lading … The Proper[sic] described below, in apparent good order, … which said carrier … agrees to carry … that every service to be performed here-under shall be subject to all terms and conditions of the Uniform Domestic Straight Bill of Lading … in the applicable motor carrier classification or tariff if this is a motor carrier shipment. Shipper hereby certifies that he is familiar with all the said terms and conditions of the said bill of lading set forth in the classification or tariff which governs the transportation of this shipment and the terms and conditions are hereby agreed to by shipper and accepted by himself and his assigns.

(Emphases added). The bills of lading also have a “declared value” box:
NOTE—Where the rate is depend[e]nt on value, shippers are required to state specifically in writing the agree[d] or declared value of property. The agreed or declared value on the property is hereby specifically stated by the shipper not to be not exceeding ___ per ___.

No value is declared on the bills of lading.
“RVNX” is not defined in the bills of lading. According to SRT, RVNX is an abbreviation for “Released Value Not to Exceed”—it is a per pound limit of liability for any claim against the carrier related to the loss or damage of the cargo, calculated by multiplying the per-pound limit of liability by the weight in pounds of the cargo.
Id. at 143–144 (alterations and mistakes in original; footnotes omitted).

SRT thus understood the label “ITEM 60000 CLASS 85” to refer to a “category of freight.” Id. at 151. And it understood the letters “RVNX” “to designate a per pound limit of liability of any claim against the carrier in the event that the cargo is lost or damaged in transit.” Id.

Exel had a different understanding. According to Exel, “RVNX” was simply “a freight classification which ha[d] been programmed into Exel’s computer.” Id. Exel later pointed to the fact that “[t]here [was] no declaration of the value of the property” in the bills of lading (which, as noted above, required the shipper to declare a value for the shipment if the rate depended on value). Id. In Exel’s view, this omission showed that the “bills of lading are merely freight receipts and not evidence of a written agreement to limit liability between Sandoz and SRT.” Id. Exel maintained, in other words, that it left blank the spaces in the bills of lading for declaring the shipment’s value because the parties had negotiated a flat rate, and the bills of lading, by their terms, required the shipper to declare a value for the shipment only if the shipping rate depended on the value of the goods being shipped.

As explained in Exel I, the bills of lading’s cryptic language soon became important because,
[o]n November 7, 2008, the SRT truck carrying the Sandoz shipment was stolen and the goods were never recovered. On November 14, 2008, Sandoz made a claim for the lost goods with Exel.
*3 The November lost shipment was not the first cargo loss involving Sandoz, Exel, and SRT. Three months prior, on August 24, 2008, a SRT truck carrying Sandoz’s cargo was stolen near Memphis, Tennessee, and the goods were never recovered. Exel submitted a written notice of claim to SRT pursuant to the MTSA, seeking full value recovery of the August shipment based on replacement cost for the shipment, which SRT paid (although the amount at issue was much less). Also after the August 24 theft, SRT allegedly agreed to assign Sandoz–Exel shipments to SRT’s Constant Security Program (CSP), which requires that a truck never be left unattended. Exel admits that neither Exel nor Sandoz paid SRT for any special handling under the CSP, but maintains that “SRT apparently chose to absorb the cost of the CSP in order to keep” Exel’s business.
Thus, on December 9, 2008, Exel submitted on behalf of Sandoz a claim to SRT pursuant to the MTSA demanding the full replacement [sic] value of the November shipment, $8,583,631.10. This time SRT denied the claim, stating that its recovery was limited to $56,766.36, based on the terms in the bills of lading, namely the “RVNX $2.40”, times the weight of the cargo. In a letter dated January 29, 2009, Martin Gargiule, Director of Finance in Business Planning and Analysis Group for Sandoz, reiterated its position that “Sandoz holds Exel fully liable for the Claim, and demands payment for the claim in the amount of $8,585,631.10,” and that “Sandoz therefore rejects Exel’s position that it is not liable for the loss, or that Sandoz must look to the carrier for recovery.”
On October 18, 2010, Sandoz assigned its rights and interests in the second lost cargo to Exel. On November 5, 2010, Exel, “for the use and benefit of” Sandoz, filed a complaint against SRT, … [seeking] $8,583,671.12 in damages.
Id. at 144–45.

B. Procedural background
Sandoz assigned its interest in the lost shipment to Exel shortly before Exel filed this lawsuit. In its complaint, Exel brought claims against SRT for (1) breach of contract, (2) breach of bailment, (3) breach of statutory duties under the Carmack Amendment, and (4) a declaratory judgment as to which document—the MTSA or the bills of lading—governed Exel’s claim for damages. After SRT moved for judgment on the pleadings, the district court dismissed Exel’s claims for (1) breach of contract, and (2) breach of bailment.

Both parties then moved for summary judgment. The district court granted summary judgment in favor of Exel on its declaratory-judgment claim, holding that the MTSA, rather than the bills of lading, governed Exel’s claims for damages. Pursuant to the terms of the MTSA, the court awarded Exel damages in the amount of the replacement cost of the lost goods, which was $5,890,338.82. The court dismissed Exel’s claim under the Carmack Amendment, apparently having concluded that it was duplicative.

Both parties appealed. SRT challenged the damages award, arguing that Exel lacked standing to sue under the MTSA because Exel had suffered no direct injury. Exel conditionally appealed the dismissal of its claim under the Carmack Amendment, seeking reinstatement of that claim if the award of damages was overturned.

This court granted partial relief to both parties. It agreed with SRT that Exel lacked standing under the MTSA because Exel had suffered “no injury” under that agreement. Exel I, 807 F.3d at 147. The court further held that Exel’s only cause of action against SRT, as the assignee of Sandoz’s claim, arose under the Carmack Amendment. Id. Accordingly, the court vacated the judgment for damages under the MTSA. Id. at 148. At the same time, it reinstated Exel’s claim (for the use and benefit of Sandoz) under the Carmack Amendment and narrowed the case on remand to a single issue: “whether SRT’s liability is effectively limited in the bills of lading.” Id. at 151, 153–54.

*4 The resolution of that issue, the Exel I court said, would turn on the district court’s determination of whether SRT had carried its burden on summary judgment of meeting four requirements in order to effectively limit its liability to a shipper under the Carmack Amendment. Those four requirements are that a carrier
(1) maintain approved tariff rates with the ICC; (2) provide the shipper with a fair opportunity to choose between two or more levels of liability; (3) obtain the shipper’s written agreement as to its choice of liability; and (4) issue a receipt or bill of lading prior to moving the shipment.
Id.

On remand, the parties cross-moved for summary judgment on the sole remaining issue. The district court concluded that SRT had not satisfied the second requirement listed above—that is, SRT had not proved that it provided Exel with a fair opportunity to choose between two or more levels of liability.

This conclusion was driven largely by the district court’s factual findings. The court deemed the bills of lading ambiguous because, among other things, the significance of the terms “ITEM 60000 CLASS 85” and “RVNX $2.40” was unclear, especially given that Exel had not declared a value for the shipment despite language requiring it to do so if the rate depended on value. This ambiguity led the court to consider parol evidence. That evidence showed, in turn, that “Exel and SRT negotiated a flat rate” that “did not depend on [the released] value”; that “Sandoz and SRT had no negotiations over rates”; and that “the parties assumed that the MTSA, and not the bills of lading, dictated liability at the time the bills of lading were drafted and signed.” Accordingly, the court determined that the term “RVNX $2.40” in the bills of lading did not constitute a “valid limitation of liability.”

In a subsequent order, the district court concluded that the proper measure of damages is the cost that Sandoz incurred to replace the stolen pharmaceuticals, which was $5,890,332.82 plus interest. The appeal and cross-appeal now before us timely followed.

II. ANALYSIS

A. Standard of review
We “review[ ] a grant of summary judgment de novo.” ACLU of Ky. v. Grayson Cty., 591 F.3d 837, 843 (6th Cir. 2010). Summary judgment is proper when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). All reasonable inferences must be drawn in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The principal inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. SRT bears the burden of proving that Exel agreed to a limitation of SRT’s liability.
“The Carmack Amendment, enacted in 1906 as an amendment to the Interstate Commerce Act, 24 Stat. 379, created a national scheme of carrier liability for loss or damages to goods transported in interstate commerce.” Exel I, 807 F.3d at 148. It “restricts carriers’ ability to limit their liability for cargo damage” and “makes a motor carrier fully liable for damage to its cargo unless the shipper has agreed to some limitation in writing.” Id. (citing 49 U.S.C. § 11706(a) & (c), and § 14101(b) ).

*5 “To overcome this default posture of full liability,” the carrier “must have a written agreement [with the shipper] that is sufficiently specific to manifest that the shipper in fact agreed to a limitation of liability.” ABB Inc. v. CSX Transp., Inc., 721 F.3d 135, 142 (4th Cir. 2013). “[A] carrier cannot limit liability by implication. There must be an absolute, deliberate and well-informed choice by the shipper.” Id. (quoting Acro Automation Sys. v. Iscont Shipping, 706 F.Supp. 413, 416 (D. Md. 1989) ). Accordingly, the Carmack Amendment “puts the burden on the carrier to demonstrate that the parties had a written agreement to limit the carrier’s liability, irrespective [of] whether the shipper drafted the bill of lading.” Id. at 145. SRT bears this burden here.

C. SRT did not carry its burden to show that it effectively limited its liability under the Carmack Amendment.
Of the four requirements that a carrier must satisfy in order to limit its liability to a shipper under the Carmack Amendment, only the second—that a carrier must “provide the shipper with a fair opportunity to choose between two or more levels of liability,” Exel I, 807 F.3d at 151—is at issue here. The Supreme Court has made clear that this requirement contemplates not only a choice between levels of liability, but also a choice between rates, such that the rate paid by the shipper varies according to the liability borne by the carrier. “[O]nly by granting its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge can a carrier lawfully limit recovery to an amount less than the actual loss sustained.” New York, N.H. & Hartford R.R. v. Nothnagle, 346 U.S. 128, 135, 73 S.Ct. 986, 97 L.Ed. 1500 (1953).

In fact, the very purpose of the requirement that the carrier provide the shipper with a choice between levels of liability is to allow the shipper to “obtain[ ] the lower of two or more rates of charges proportioned to the amount of the risk.” Adams Express Co. v. Croninger, 226 U.S. 491, 509–10, 33 S.Ct. 148, 57 L.Ed. 314 (1913) (explaining the requirement’s rationale at common law).

This court has explained the requirement’s purpose as follows:
If … a carrier receives authorization for a tariff that includes a shipping rate limiting its liability for lost or damaged goods to the value established by the shipper (called the “released value” of the goods), and the shipper is willing to limit the carrier’s liability to a value lower than the actual worth of the goods, the carrier will be in a position to shift some of the risk of loss of the goods back to the shipper. In exchange for agreeing to this lower released valuation, the shipper can expect to enjoy a lower shipping cost. The shipper is not required to accept the lower shipping rate and share the risk of loss; instead, it can select a higher rate, thus placing the risk of loss on the carrier.
Toledo Ticket Co. v. Roadway Express, Inc., 133 F.3d 439, 441–42 (6th Cir. 1998) (emphasis added). The rationale for the requirement would be frustrated if a carrier were permitted to enjoy the benefit of limited liability without the shipper enjoying a corresponding discount.

In the present case, the district court found that Exel and SRT “negotiated a flat rate” and that the “rate for the … shipment did not depend on [the shipment’s] value.” This finding is supported by two key pieces of evidence. First, when Exel requested price information from SRT, it requested a “rate per mile” or a “flat rate.” Second, the bills of lading for the stolen shipment provide: “Where the rate is depend[e]nt on value, shippers are required to state specifically in writing the agree[d] or declared value of property.” Exel did not state any agreed or declared value, indicating that the rate was not dependent on value. Based on this evidence, and because no evidence suggests that the rate paid by Exel varied with the shipment’s value, the district court’s finding that the parties had negotiated a flat rate is not clearly erroneous.

*6 On appeal, SRT does not dispute the district court’s finding that SRT charged Exel a flat rate. SRT instead asserts that it would have declined to carry the shipment altogether if it had known its value—the implication being that the rate did depend on the shipment’s value in the sense that SRT would not have offered any rate to carry such a valuable shipment. To support this assertion, SRT points to Exel’s representation in its initial pricing inquiry that the value of Exel’s shipments would “typically” be $1 million or less. SRT also points to the deposition testimony of its director of pricing, Rodney Danley, who testified that SRT “would not have handled” the stolen shipment if it had known its true value.

But SRT’s assertion that it would not have knowingly carried such a valuable shipment is unpersuasive. If SRT had wished to exclude such high-value cargo from its business, it presumably could have done so. SRT, however, did not follow that route. It instead agreed with Exel to ship the goods at a rate not dependent on their value without inquiring into what that value was. This decision by SRT did not excuse it from the requirement that it provide the shipper with a fair opportunity to choose between two or more levels of liability in exchange for a corresponding adjustment in rate. Embracing SRT’s argument that a shipper can be required to choose between accepting a single rate-and-liability offering or finding a different carrier altogether to transport its goods would eviscerate the Carmack Amendment’s opportunity-to-choose requirement.

And to the extent that SRT claims any reliance on Exel’s representation in “a ‘Truckload Pricing Request’ … that the value of the Sandoz cargo transported by SRT would be ‘typically $1 Million or less,’ ” we note that typically is an important qualifier and that SRT did not inquire about the value of the particular shipment at issue here. Nor did SRT give Exel any notice that it would decline to carry goods worth more than those that Sandoz typically shipped.

SRT next argues that the opportunity-to-choose requirement is satisfied as a matter of law whenever the documents that might limit the carrier’s liability (in this case, the bills of lading) were drafted by the shipper. The logic of this argument is that a shipper who drafts the liability-limiting documents has full freedom to determine the carrier’s level of liability, so the carrier need not provide the shipper with a menu of options.

To be sure, “the fact that the shipper drafted the bills of lading is relevant in ascertaining whether the shipper was offered, and agreed to, a limitation of liability by the carrier.” Exel I, 807 F.3d at 153. But that fact is “not dispositive.” Id.; accord ABB Inc. v. CSX Transp., Inc., 721 F.3d 135, 142 (4th Cir. 2013) (“The text of the Carmack Amendment imposes full liability on carriers, without regard to which party prepared the bill of lading.”). And critically, “[t]he general contract principle that ambiguous contracts be construed against the drafter is inapplicable in the face of statutory language that unambiguously imposes the risk of error on one particular party, the carrier, to the exclusion of the other party, the shipper.” Id. at 145 (internal citation omitted).

None of the cases cited by SRT supports its position that, when a shipper drafts the bills of lading, the carrier is excused from the requirement to give the shipper a choice between two or more levels of liability. The cases cited by SRT—besides being nonbinding—are distinguishable because the shippers in those cases in fact paid a lower rate as a benefit of having chosen a lower level of carrier liability. See Werner Enters., Inc. v. Westwind Mar. Int’l, Inc., 554 F.3d 1319, 1328 (11th Cir. 2009) (“The manifest itself did not need to include the choice of levels of liability and rates; that choice was provided in a separate written contract, and Transpro chose not to increase the liability for this shipment….”); Siren, Inc. v. Estes Express Lines, 249 F.3d 1268, 1273 (11th Cir. 2001) (“Siren knew ‘Class 85’ determined the freight rate charged, and Siren knew that it received a 62% discount from Estes’ full freight rate.”); Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 612–13 (9th Cir. 1992) (finding that the shipper received discounted rates “in return for the lower release value”); Am. Cyanamid Co. v. New Penn Motor Express, Inc., 979 F.2d 310, 311 (3d Cir. 1992) (noting that, under the bill of lading’s “ ‘released value’ clause,” the transportation charges varied according to the level of carrier liability selected by the shipper); Mech. Tech. Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085, 1090 (2d Cir. 1985) (Winter, J., concurring) (“MTI’s failure to complete the bill of lading led to its paying the lowest freight rate. I would hold MTI to the limitation of liability that corresponds to the rate paid.”).

*7 Accordingly, the carriers in those cases complied with the rule that “only by granting its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge can a carrier limit recovery to an amount less than the actual loss sustained.” See New York, N.H. & Hartford R.R. v. Nothnagle, 346 U.S. 128, 134, 73 S.Ct. 986, 97 L.Ed. 1500 (1953). The same is not true here because Exel received no discount by including liability-limiting language in the bills of lading.

Because we conclude that SRT failed to satisfy the opportunity-to-choose requirement, we do not reach the question of whether the value to which the bills of lading limited SRT’s liability would be “reasonable under the circumstances surrounding the transportation,” as required by 49 U.S.C. § 14706(c)(1)(A). Nor do we have any need to consider Exel’s fallback argument that the “material-deviation doctrine” (a doctrine from admiralty law that this court has never applied in the context of the Carmack Amendment) negates any otherwise-valid limitation of liability because SRT breached its promise to not leave its truck unattended.

D. The district court did not err in measuring Exel’s damages by the stolen goods’ replacement cost rather than by their market value.
In its cross-appeal, Exel argues that the district court erred in measuring Exel’s damages by the replacement cost of the pharmaceuticals rather than by their market value, which was considerably higher. The Carmack Amendment allows shippers to recover damages for “actual loss or injury to the property.” 49 U.S.C. § 14706(a)(1). Here, the court measured Exel’s “actual loss or injury” by the pharmaceuticals’ replacement cost based on the finding that Sandoz successfully provided a substitute shipment to its customer and did not lose any sales.

To begin with, Exel points out that “courts have generally held that ‘full actual loss’ under [the statute] is equivalent to market value at destination.” See Polaroid Corp. v. Schuster’s Express, Inc., 484 F.2d 349, 351 (1st Cir. 1973) (per curium). This general statement, however, has little bearing on any individual case because how the shipper’s loss should be measured depends on the circumstances. See Ill. Cent. R. Co. v. Crail, 281 U.S. 57, 64, 50 S.Ct. 180, 74 L.Ed. 699 (1930) (“The test of market value is at best but a convenient means of getting at the loss suffered. It may be discarded and other more accurate means resorted to, if, for special reasons, it is not exact or otherwise not applicable.”); U.S. v. Palmer & Parker Co., 61 F.2d 455, 459 (1st Cir. 1932) (“[T]he market value rule is inapplicable when, on the facts, it is not the nearest practicable approach to an ascertainment of the actual loss. Each case must be governed by its own facts.”).

Moreover, courts have recognized that “[r]eplacement cost is an appropriate measure of damages where the injured party could mitigate the loss by replacing the goods.” Neptune Orient Lines, Ltd. v. Burlington N. & Santa Fe Ry. Co., 213 F.3d 1118, 1120 (9th Cir. 2000); see also Oak Hall Cap & Gown Co., Inc. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir. 1990) (concluding “that the magistrate properly computed the damages using the replacement cost figure” because the plaintiff “secured substitute goods after the accident, lost no sales, and had no opportunity for a sale with these damaged goods,” so its “ ‘actual loss was obviously the cost of replacing the damaged merchandise’ ” (quoting Meletio Sea Food Co., Inc. v. Gordons Transps., Inc., 191 S.W.2d 983, 986 (Mo. App. 1946) ) ).

*8 But Exel points out that, although it bears the ultimate burden of proving damages, several courts have “held that the burden of proving that the market value rule will not result in a just measure of actual damage is on the carrier.” See Great Atl. & Pac. Tea Co. v. Atchison, Topeka & Santa Fe Ry. Co., 333 F.2d 705, 708 (7th Cir. 1964) (citing Reider v. Thompson, 197 F.2d 158, 160 (5th Cir. 1952) ); Robert Burton Assocs., Inc. v. Preston Trucking Co., Inc., 149 F.3d 218, 221 (3d Cir. 1998) (“[T]he carrier has the burden of proof to demonstrate that a court should deviate from the market value rule.”).

Here, the district court agreed with Exel’s view that SRT bore the burden of proving that damages should be calculated based on replacement cost rather than market value, so Exel cannot complain that the court applied the wrong standard. This leaves Exel to argue that SRT simply failed to carry its burden—an argument that turns on the facts.

The evidence shows that Sandoz successfully replaced the stolen shipment and did not lose any sales. In the parties’ final pretrial statement, which they filed jointly, they listed as an “Uncontroverted Fact[ ]” that “Sandoz provided McKesson with a subsequent shipment to replace the stolen shipment.” And a director of finance at Sandoz, Martin Gargiule, testified in his deposition that the company’s customer-service “report cards” do not attribute any lost sales to the stolen shipment. This is strong, direct evidence that the theft did not cause Sandoz to lose any sales.

In contrast, the evidence cited by Exel for its assertion that Sandoz did lose sales is weak. Exel points to deposition testimony by Gargiule that purportedly establishes that Sandoz had a “continual stream of additional orders that come in on the next day, and the next day, and the next day after that” (counsel’s words in briefing). But Exel overstates the case. Gargiule in fact made an ambiguous statement regarding Sandoz’s supply chain that the district court determined was not “evidence that Sandoz lost any sales; it’s just a description of a company’s supply chain.”

Moreover, the cases that Exel cites in asserting that market value is the appropriate measure of damages here are distinguishable. In Polaroid Corp. v. Schuster’s Express, Inc., 484 F.2d 349, 350–51 (1st Cir. 1973) (per curium), the shipper presented “detailed proof” that the stolen goods were in “great demand.” The shipper was also “the sole manufacturer of the types of products lost,” which meant that, if the goods had not been stolen and shunted into the black market, “all the purchasers of the hijacked goods would have had to purchase them from [the shipper]” instead. Id. at 351. No equivalent facts exist here.

The case of Robert Burton Associates, Inc. v. Preston Trucking Co., Inc., 149 F.3d 218 (3d Cir. 1998), is distinguishable for similar reasons. Although the shipper in that case successfully replaced the lost shipment, evidence showed that the stolen goods “were flooding the market ‘at significantly reduced prices,’ ” causing “a drastic decline” in the shipper’s sales. Id. at 220. No such proof is in the record here.

The final case that Exel relies upon, Eastman Kodak Co. v. Westway Motor Freight, Inc., 949 F.2d 317 (10th Cir. 1991), is distinguishable because the shipper in that case was a volume seller, and the carrier’s evidence that the shipper lost no sales was relatively weak. In Eastman Kodak, the shipper “produced evidence that it [sold] virtually all of its … merchandise shortly after production [was] completed.” Id. at 319. The carrier “failed to offer evidence to rebut [that] claim.” Id. at 320. Moreover, the only evidence suggesting that the shipper did not lose any sales was the carrier’s affidavit. Id. at 319.

*9 In the present case, by contrast, there is no evidence—apart from Gargiule’s ambiguous testimony discussed above, which the district court properly discounted—that the shipper is a volume seller. And the shipper’s own customer-service records suggest that the shipper did not lose any sales.

We therefore conclude that the court did not err in measuring Exel’s damages by the replacement cost of the pharmaceuticals. Measuring Exel’s damages by the pharmaceuticals’ market value would give Exel a windfall. See Robert Burton, 149 F.3d at 221 (recognizing that an “unjustified windfall” would result from “awarding [the shipper] the invoice price” of the lost goods if that loss “did not cause [the shipper] any loss of sales”).

III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the judgment of the district court.

All Citations
— F.3d —-, 2018 WL 4579690

2018 WL 5292264

NOTICE: THIS OPINION IS DESIGNATED AS NOT FOR PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY TENN. S.CT. RULE 4.
Supreme Court of Tennessee, Special Workers Compensation Appeals Panel.
DARRY OSBORNE
v.
STARRUN, INC., ET AL.
No. E2018-00282-SC-R3-WC
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August 6, 2018 Session
|
Mailed September 12, 2018
|
OCTOBER 19, 2018
Appeal from the Court of Workers’ Compensation Claims
No. 2016-02-0562 Brian K. Addington, Judge
A truck driver, whose employer had no workers’ compensation insurance coverage, was injured after falling from his employer’s truck while tarping a load of goods at a manufacturer’s facility. The truck driver filed a workers’ compensation claim against the manufacturer, asserting that the manufacturer was the truck driver’s statutory employer under Tennessee Code Annotated section 50-6-113 (2014 & Supp. 2017). The Court of Workers’ Compensation Claims granted the manufacturer’s motion for summary judgment, holding that the truck driver failed to establish that the manufacturer undertook work for an entity other than itself, retained the right of control over the conduct of the work, or that the truck driver’s conduct in tarping the load was part of the manufacturer’s regular business or the same type of work usually performed by its employees. After review, we affirm.
Tenn. Code Ann. § 50-6-225(a) (2014 & Supp. 2017) (applicable to injuries occurring on and after July 1, 2014) Appeal as of Right; Judgement of the Court of Workers’ Compensation Claims Affirmed
Attorneys and Law Firms
Dan Bieger, Bristol, Tennessee, for the appellant, Darry Osborne.
Eric Shen, Brentwood, Tennessee, for appellees, KPS Global and Liberty Mutual Insurance Company.
SHARON G. LEE, J., delivered the opinion of the Court, in which WILLIAM B. ACREE, SR.J., and DON R. ASH, SR.J., joined.

OPINION
SHARON G. LEE, JUSTICE

I.
*1 On October 21, 2016, Darry Osborne, a truck driver for Starrun, Inc., arrived at the manufacturing facility of KPS Global (“KPS”)1 in Piney Flats, Tennessee, to pick up a load of refrigerator panels for transport. After KPS employees had loaded the panels onto Starrun’s flatbed truck, Osborne pulled away from the loading dock to tarp the load. As he was tarping the load, Osborne fell from the truck and was injured.

KPS had contracted with a broker, Meadow Lark Agency, Inc., which, in turn, had contracted with carrier Starrun to transport KPS’s finished goods to its customers. Starrun had fewer than five employees and no workers’ compensation insurance. See Term. Code Ann. § 50-6-102(13) (2016) (defining “employer” for purposes of the Workers’ Compensation Act as entities “using the services of not less than five (5) persons for pay”).

On November 30, 2016, Osborne filed a claim with the Tennessee Bureau of Workers’ Compensation seeking workers’ compensation benefits from KPS and asserting that KPS was his statutory employer under Tennessee Code Annotated section 50-6-113 (2014 & Supp. 2017).2 KPS denied liability.

On May 31, 2017, the Court of Workers’ Compensation Claims (the “trial court”) held an expedited hearing on Osborne’s claim against KPS. At the hearing, Osborne said that he was not an employee of KPS and that “all [he] was doing was hauler through Starrun to drive the truck to haul for KPS.” He testified that Starrun supplied him with the truck and the tarp he used on the day of his injury. After arriving at KPS’s facility, Osborne backed the truck into the loading dock and a KPS forklift operator loaded the refrigerator panels onto the truck. He then asked the forklift operator to lift the tarp on top of the load. Osborne testified that KPS had a tarping machine, but that it was not being used at that time. According to Osborne, a KPS employee asked him to pull the truck outside the loading bay (but still within KPS property) to finish tarping. Osborne admitted that it was his duty to put the tarp over the load. After moving the truck, Osborne climbed on top of the load and as he began to pull the tarp, “my feet come out from under me, and I went over the front down to the catwalk.” He estimated he fell about ten feet.

Several other witnesses testified. Dwayne Fillers, a truck driver who was present at KPS’s facility at the time of the accident, testified that Osborne showed him how to use the tarping machine at KPS’s loading dock and that he had “to finish bungee cording [the tarp over his load]” after using the tarping machine.

Kevin Bennett, a Quality Technician for KPS,3 testified that KPS manufactures walk-in coolers and freezers and relies on transportation brokers, including Meadow Lark Agency, to get its products to customers. Bennett explained that KPS would send brokers a schedule with a pickup date and a delivery date; the brokers would procure carriers to transport the load. He stated that KPS was responsible for loading its products onto trucks and conducting a final inspection before tarping; the drivers were responsible for tarping the load. On the day of the accident, Bennett said that the tarping machine was not in use because drivers had been complaining about the machine tearing the tarps, but that it was possible that Fillers used it. Bennett stated that KPS had no direct contact with Starrun about the load Osborne was to transport, and that Meadow Lark Agency alone selected Starrun as the carrier for the load. He added that KPS did not hire or pay Starrun, did not supply trucks or equipment to Starrun, did not train or select any of Starrun’s drivers (including Osborne), and did not choose the routes used by Starrun drivers.

*2 Mollie O’Dell, environmental health and safety representative for KPS, was at the Piney Flats facility on the day of Osborne’s injury. She testified that although KPS was not a shipping company, it had a shipping department in charge of loading and unloading trucks. O’Dell also said that KPS’s involvement with the loading process ended once the forklift operators loaded the trucks.

The trial court denied Osborne’s claim, holding that he had failed to establish that KPS was his statutory employer under Tennessee Code Annotated section 50-6-113 and that, therefore, he was not likely to prevail at a hearing on the merits. The trial court found that Tennessee Code Annotated section 50-6-113(d) applied because KPS controlled and managed the premises where Osborne’s accident occurred, but that the evidence did not establish that KPS was a statutory employer based on the factors set forth by the Tennessee Supreme Court in Lindsey v. Trinity Communications, Inc., 275 S.W.3d 411 (Tenn. 2009).

Osborne appealed to the Workers’ Compensation Appeals Board, arguing that the work he performed was part of the regular business of KPS. Osborne asserted that the evidence established that loading the product and securing the load is the type of work usually performed or assisted by KPS’s employees. The Board found, based on undisputed testimony, that tarping the load was a separate process from the loading of the product and that there was “insufficient evidence to find that the actual tarping process was part of the regular business of KPS or the type of work usually performed by KPS’s employees.” Concluding that the evidence did not preponderate against the trial court’s determination that KPS was not Osborne’s statutory employer, the Board affirmed and remanded the case to the trial court.

On remand, KPS moved for summary judgment, asserting that the undisputed facts as found by the trial court on expedited hearing and affirmed by the Board on appeal showed that Osborne’s evidence did not establish, as a matter of law, that KPS was Osborne’s statutory employer. Osborne responded that he had established that the tarping process was a part of KPS’s regular business because it was undisputed that KPS “owned two tarping machines and decided when to use or not to use them.” Neither party introduced additional evidence on remand.

On February 13, 2018, the trial court granted KPS’s motion for summary judgment and dismissed Osborne’s claim. Applying the Lindsey factors to the facts, the trial court found that KPS did not work for an entity other than itself, control Starrun’s or Osborne’s conduct (including the tarping of the load), or secure tarps to trucks. It found that “the drivers, not KPS employees, [were] responsible for securing the tarps to the trucks.” Concluding that there was no genuine issue of material fact about whether KPS was Osborne’s statutory employer, the trial court held that KPS was entitled to judgment as a matter of law.

Osborne appealed to the Tennessee Supreme Court. His appeal was referred to this Special Workers’ Compensation Appeals Panel for a hearing and a report of findings of fact and conclusions of law under Tennessee Supreme Court Rule 51, Section 1.

II.
We review a trial court’s ruling on a motion for summary judgment de novo with no presumption of correctness. Martin v. Powers, 505 S.W.3d 512, 517 (Tenn. 2016). This review requires “a fresh determination of whether the requirements of Rule 56 of the Tennessee Rules of Civil Procedure have been satisfied.” Rye v. Women’s Care Ctr. of Memphis, MPLLC, 477 S.W.3d 235, 250 (Tenn. 2015), cert. denied, 136 S. Ct. 2452 (2016). Summary judgment is proper where “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Tenn. R. Civ. P. 56.04.

*3 A party who moves for summary judgment, but who does not bear the burden of proof at trial, may satisfy its burden of production under Rule 56 by “affirmatively negating an essential element of the nonmoving party’s claim” or by showing “that the nonmoving party’s evidence at the summary judgment stage is insufficient to establish the nonmoving party’s claim or defense.” Rye, 477 S.W.3d at 264. A party who pursues summary judgment by attacking the nonmoving party’s evidence must do more than make a conclusory assertion that summary judgment is appropriate on this basis. Id. Rule 56.03 requires the moving party to support its motion with “material facts as to which the moving party contends there is no genuine issue for trial.” Tenn. R. Civ. P. 56.03. In responding, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Rye, 477 S.W.3d at 265 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The nonmoving party must establish the existence of facts in the record that could lead a rational trier of fact to find in its favor. Id.

Osborne challenges the trial court’s conclusion that, under Rule 56, the evidence he presented did not establish that KPS was his statutory employer under Tennessee Code Annotated section 50-6-113. KPS responds that the trial court properly granted summary judgment because the evidence did not satisfy the Lindsey criteria for KPS to be deemed Osborne’s statutory employer.

We begin our analysis with section 50-6-113, which allows a worker, whose employer does not have workers’ compensation insurance, to receive workers’ compensation benefits by extending liability to an intermediate or principal contractor that does have workers’ compensation insurance coverage. This section prevents employers avoiding workers’ compensation liability simply by contracting out work. Lindsey, 275 S.W.3d at 420 (citing Stratton v. United Inter-Mountain Tel. Co., 695 S.W.2d 947, 951 (Tenn. 1985)).

Section 50-6-113 provides that
(a) A principal contractor, intermediate contractor or subcontractor shall be liable for compensation to any employee injured while in the employ of any of the subcontractors of the principal contractor, intermediate contractor or subcontractor and engaged upon the subject matter of the contract to the same extent as the immediate employer.
(b) Any principal contractor, intermediate contractor or subcontractor who pays compensation under subsection (a) may recover the amount paid from any person who, independently of this section, would have been liable to pay compensation to the injured employee, or from any intermediate contractor.
(c) Every claim for compensation under this section shall be in the first instance presented to and instituted against the immediate employer, but the proceedings shall not constitute a waiver of the employee’s rights to recover compensation under this chapter from the principal contractor or intermediate contractor; provided, that the collection of full compensation from one (1) employer shall bar recovery by the employee against any others, nor shall the employee collect from all a total compensation in excess of the amount for which any of the contractors is liable.
(d) This section applies only in cases where the injury occurred on, in, or about the premises on which the principal contractor has undertaken to execute work or that are otherwise under the principal contractor’s control or management.
….

A court may consider a company to be a principal contractor under section 50-6-113(a) if: (1) the company undertakes work for an entity other than itself; (2) the company retains the right of control over the conduct of the work and the subcontractor’s employees; or (3) the work performed by a subcontractor’s employees is part of the company’s regular business or the same type of work usually performed by the company’s employees. Lindsey, 275 S.W.3d at 421. The trial court held that the evidence was insufficient at the summary judgment stage to show that KPS worked for an entity other than itself; that it controlled the conduct of Osborne or other Starrun drivers; or that Osborne performed the same type of work usually performed by KPS employees, that is, building refrigerator panels and preparing them for placement on trucks.

*4 As to the first prong of Lindsey, we conclude, as did the trial court, that Osborne presented no evidence that KPS undertook work for an entity other than itself. KPS submitted the affidavit of Kevin Bennett, stating that KPS manufactured refrigerator panels that it then sold to its customers, mainly grocery stores and wholesale clubs, and that KPS was not in the business of transporting items by trucks. Osborne did not dispute these facts. Nothing in the record suggests that KPS worked for any other entity. We are unpersuaded by Osborne’s contention that KPS’s loading of its products on carriers’ trucks amounts to undertaking work for another entity.

As to the second prong – the right of control – we conclude that the evidence does not show that KPS retained the right to control Osborne’s conduct or that of other employees of Starrun. A company may be deemed a principal contractor if it retains the right to control (1) the subcontractor’s employees, (2) the manner in which the job is performed, and (3) the materials to be used. Dotson v. Bowater, Inc., No. 1:08-CV-191, 2009 WL 3584325, at *5 (E.D. Tenn. Oct. 26, 2009) (citing Lindsey, 275 S.W.3d at 421). Here, the evidence fails to establish that KPS retained control in all three aspects.

First, the record shows that KPS did not have control over Starrun’s employees. The relevant inquiry here is not whether KPS controlled how the work was done, but by whom the work was done. Dotson, 2009 WL 3584325, at *7. KPS did not hire or pay Starrun for the job; Meadow Lark Agency did. Starrun in turn assigned the job to Osborne, its employee. Also, KPS did not train Osborne or any of Starrun’s drivers, set their schedule, or have the authority to fire them.

Second, KPS did not control the manner in which Osborne performed the job. It “provided no instruction” to Osborne on how to tarp the load. See Lindsey, 275 S.W.3d at 421. KPS conducted a final inspection immediately after loading the refrigerator panels onto the truck and before the tarping of the load. Nor did KPS choose the route to be used by Osborne in delivering the panels to its customer. Osborne points to a KPS employee telling him to move his truck away from the loading dock before he had completed tarping the load. This fact alone is not evidence of control. The KPS employee could have asked the same of any customer picking up KPS products. KPS exercised control over its premises, not over Osborne’s conduct. As the trial court aptly found, those instructions were merely “limited to the orderly movement of the trucks in and out of its loading bays.”

Last, KPS did not control the materials used in the job. “A company controls the materials to be used when it provides those materials.” Dotson, 2009 WL 3584325, at *7. The record shows that KPS did not supply Starrun with the truck, tarp, bungee cords, or any other equipment necessary for the transport of its refrigerator panels to customers.

Although KPS was in control of the loading process, as argued by Osborne, he was not involved in that process. A KPS employee was solely responsible for loading the refrigerator panels on Osborne’s truck. KPS’s sole interaction with Osborne consisted of giving him the “green light” to back up his truck into the loading dock, loading the refrigerators panels by forklift onto the truck, and asking him to move the truck out so that other trucks could access the loading dock. Based on these undisputed facts, we hold that KPS retained no right of control over Osborne’s work conduct.

Osborne’s reliance on the 1985 cases4 of Stratton v. United Inter-Mountain Telephone Company, 695 S.W.2d 947 (Tenn. 1985) and Carver v. Sparta Electric System, 690 S.W.2d 218 (Tenn. 1985) is misplaced. He cites these two cases – without providing any argument – for the proposition that manufacturers at the end of the supply chain, like KPS, can be statutory employers. In Stratton, an employee of a construction company hired by a telephone company to work on its utility poles was injured while working on one of the utility poles. 695 S.W.2d at 948. The employee sued the telephone company in tort, asserting that the construction company for which he worked was an independent contractor. Id. Finding that the telephone company had “control over the materials to be used, the employees to be used on the job and the general manner in which the job was to be performed,” the court concluded that the telephone company was the employee’s statutory employer. Id. at 953. Notably, the affidavit of a manager of the telephone company stated that all of the work assigned to the construction company was work usually done by the telephone company and that the work being performed by the employee when he was injured was work usually performed by employees of the telephone company. Id. at 949. The facts here are different. KPS did not contract directly with Starrun; it contracted with Meadow Lark Agency. KPS did not control the “materials” used by Starrun, other than requiring that a flatbed truck be used for transport of its refrigerator panels. KPS did not select which Starrun employees would perform the transport; it did not even select Starrun as a carrier. Unlike the facts in Stratton, the evidence here indicates that the work performed by Osborne (tarping the load) was not part of the regular duties of KPS employees.

*5 In Carver, a tree service company contracted with a utility company to trim branches and limbs around power lines. 690 S.W.2d at 219. An employee of the tree service company was severely burned while working on a power line, and the trial court ordered the utility company to pay for workers’ compensation benefits. Id. The Court, finding “abundant evidence that the right to control existed,” affirmed the trial court’s ruling. Id. at 220. The Court noted that the utility company assigned tasks each morning to the tree service company; that it could order the tree service company to stop work and go to a different location; that the tree service company was not free to accept other employment if it interfered with its work for the utility company; and that the utility company could force the tree service company to fire the employee. Id. Such a degree of “pervasive” control is not present here. KPS had no direct contract with Starrun and had no control over the choice of carrier or truck driver for any particular load. KPS had no authority to fire Osborne or to set his schedule.

Osborne emphasizes in this appeal the third prong of Lindsey. He contends that he was performing the same type of work usually performed by KPS employees. We disagree. Osborne was employed by Starrun, a trucking company; KPS was in the business of manufacturing refrigerator panels. Osborne did not participate in the manufacturing process. KPS used forklift operators to load its refrigerator panels onto carriers’ trucks for transport. Osborne’s involvement with loading the panels onto his truck was limited to backing the truck to the loading dock. As he put it, “all I was doing was hauler through Starrun to drive the truck to haul for KPS.” In short, nothing in the record shows that Osborne’s work on the day of his injury was the type of work usually performed by KPS’s employees.

Osborne next asserts that KPS’s loading process included tarping the load. He argues that the trial court erred by construing KPS’s regular business – building panels and placing them on trucks – too narrowly. We are unconvinced. There is no evidence that KPS was in the business of tarping loads or that its employees tarped any of the loads. To the contrary, the undisputed testimony of several witnesses, including Osborne, was that KPS employees did not tarp the panels after loading them on trucks for transport. Although a KPS forklift operator – at Osborne’s request – placed a tarp on top of the refrigerator panels, Starrun had provided the tarp and Osborne brought it to KPS’s facility on the day of his injury. Osborne later explained, “No, [the forklift operator] didn’t put it over the load, now, sir. He put it on top of the load, and I rolled it out and put it over the load myself.” O’Dell explained that KPS’s involvement in the loading process ended with loading the panels onto the trucks. According to Bennett, KPS did its final inspection of the loads before tarping and that drivers, not KPS employees, were responsible for tarping the loads. Osborne agreed that it was his duty to put the tarp over the load. Bennett’s testimony is also consistent with that of driver Fillers, who testified that he operated a KPS tarping machine after Osborne showed him how to use it and that he had to finish tarping his load outside. Even though KPS owned tarping machines, the undisputed testimony was that drivers, not KPS employees, used the tarping machine. Based on the witnesses’ testimony, we cannot conclude that the fact that KPS owned tarping machines and that one of its forklift operators, upon request, placed a tarp on a load is sufficient evidence that tarping was part of KPS’s regular business, a task usually performed by its employees, or that KPS had control over the tarping process.

Osborne relies on Fayette Janitorial Services v. Kellogg USA, Inc., No. W2011-01759-COA-R3-CV, 2013 WL 428647, at *1 (Tenn. Ct. App. Feb. 4, 2013) to support his argument. In Fayette, a cereal manufacturer asserted that it was immune from a tort lawsuit brought by a janitor because it was the janitor’s statutory employer under section 50-6-133. 2013 WL 428647, at *1. The issue on appeal was whether the work being performed by the janitor’s employer was part of the manufacturer’s regular business or the same type of work usually performed by the manufacturer’s employees. Id. at *5. The work at issue involved a 28-day cleaning cycle of all production equipment during shutdown of the manufacturing plant, which had remained the same for over twenty years. Id. at *9. Notably, the manufacturer’s own employees performed the cleaning for many years before the manufacturer hired the janitor’s employer to do the work. Id. at *10. Finding that the work performed during the cleaning cycle was done on a regular and continual basis and was of vital importance to the manufacturer’s ongoing business operation, the Court of Appeals concluded that the manufacturer was the janitor’s statutory employer. Id. at *11. Unlike Fayette, the record here contains no evidence that KPS employees tarped refrigerator panels at any time or that tarping was of vital importance for KPS’s manufacturing business.

*6 Osborne’s reliance on Patterson v. Bristol Timber Company, 649 S.E.2d 795 (Ga. Ct. App. 2007), is likewise misplaced. In Patterson, a truck driver brought a tort lawsuit against a logging company after suffering injuries while picking up a load of wood chips. Id. at 797. As in Fayette, the issue before the court was whether the logging company was the driver’s statutory employer. Id. at 801. The driver argued that the transport of finished goods was not part of the business of the logging company. Id. Finding that the logging company’s supply contract with its customer “included the delivery of … wood chips,” the appellate court held that the company was a principal contractor and statutory employer of the driver.5 Id. at 802. This case differs from Patterson because the uncontested evidence shows that KPS’s customers had the option to arrange for transport of the refrigerator panels. The record contains no copy of the agreement between KPS and its customer to show otherwise. In addition, in Patterson, the logging company contracted directly with the driver’s immediate employer, while KPS arranged transport of its product through broker Meadow Lark Agency.

Osborne urges the Court to hold that the Workers’ Compensation Act’s goal of shifting the burden of work-related injuries from workers, their families, and society to employers entitles him to receive workers’ compensation benefits from KPS. But Osborne’s request requires more than an equitable construction of the statute, see Martin v. Lear Corp., 90 S.W.3d 626, 629 (Tenn. 2002); it requires us to rewrite it. We decline to do so.

Having determined that the evidence presented by Osborne was insufficient to establish his claim that KPS was his statutory employer, we hold that KPS is entitled to judgment as a matter of law and that it is not liable to Osborne for workers’ compensation benefits.

III.
We affirm the decision of the Court of Workers’ Compensation Claims granting summary judgment to KPS Global and remand this case to the Court of Workers’ Compensation Claims for any further proceedings. We tax the costs of this appeal to Darry Osborne and his surety, for which execution may issue if necessary.

PER CURIAM

JUDGMENT ORDER
This case is before the Court upon the entire record, including the order of referral to the Special Workers’ Compensation Appeals Panel, and the Panel’s Memorandum Opinion setting forth its findings of fact and conclusions of law, which are incorporated herein by reference.

Whereupon, it appears to the Court that the Memorandum Opinion of the Panel should be accepted and approved; and

It is, therefore, ordered that the Panel’s findings of fact and conclusions of law are adopted and affirmed, and the decision of the Panel is made the judgment of the Court.

Costs are assessed to Darry Osborne and his surety, for which execution may issue if necessary.

It is so ORDERED.

All Citations
Slip Copy, 2018 WL 5292264

Footnotes

1
The parties also refer to KPS as Kysor Panel Systems, LLC.

2
Osborne also filed claims for workers’ compensation benefits against his employer, Starrun, Inc., and Meadow Lark Agency. Those claims are not at issue in this appeal.

3
Mr. Bennett was shipping supervisor for KPS at the time of Osborne’s accident.

4
These two cases pre-date the Lindsey opinion.

5
The applicable Georgia statute provides, in part: “A principal, intermediate, or subcontractor shall be liable for compensation to any employee injured while in the employ of any of his subcontractors engaged upon the subject matter of the contract to the same extent as the immediate employer.” Ga. Code Ann. § 34-9-8.