United States District Court for the Northern District of Alabama, Northwestern Division
May 16, 2022, Decided; May 16, 2022, Filed
Civil Action Number 3:22-cv-00401-AKK
Reporter
2022 U.S. Dist. LEXIS 87650 *; 2022 WL 1541293
LEO F. CHENEVERT, Plaintiff, v. CONSTELLIUM MUSCLE SHOALS, LLC, Defendant.
Core Terms
workers’ compensation, motion to strike, state court, pleaded
Counsel: [*1] For Leo F Chenevert, Plaintiff: G Rick Hall, LEAD ATTORNEY, Douglas B Hargett, HALL TANNER & HARGETT PC, Tuscumbia, AL; J Michael Tanner, HALL, TANNER & HARGETT, PC, Florence, AL.
For Constellium Muscle Shoals LLC, Defendant: Turner B Williams, LEAD ATTORNEY, BURR & FORMAN LLP, Birmingham, AL; Al Foster Teel, BURR FORMAN LLP, Birmingham, AL; Madeline E. Hughes, Burr & Forman, LLP, Birmingham, AL.
Judges: ABDUL K. KALLON, UNITED STATES DISTRICT JUDGE.
Opinion by: ABDUL K. KALLON
Opinion
MEMORANDUM OPINION
This matter arises on Leo F. Chenevert’s motion to remand, doc. 10, and Constellium Muscle Shoals, LLC’s related motion to strike a claim in Chenevert’s complaint, doc. 13. In short, Chenevert seeks remand of his case based on a newly pleaded workers’ compensation-based claim, which he contends strips this court of jurisdiction, and Constellium asks the court to strike this claim as improperly added. The motions are briefed, docs. 14; 15; 16, and ripe for resolution. For the reasons that follow, Chenevert’s is due to be granted, and Constellium’s is due to be denied.
I.
Federal courts exercise limited subject matter jurisdiction, Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994), and can hear cases involving state law between diverse parties if the amount in controversy [*2] exceeds $75,000, 28 U.S.C. § 1332. If a complaint originally filed in state court meets these jurisdictional requirements, a defendant generally may remove it to federal court. 28 U.S.C. § 1446(b); Roe v. Michelin N. Am., Inc., 613 F.3d 1058, 1060 (11th Cir. 2010). However, federal law circumscribes certain cases as categorically “nonremovable.” See28 U.S.C. § 1445. Relevant here, § 1445 deems nonremovable “[a] civil action in any State court arising under the workmen’s compensation laws of such State.” Id.§ 1445(c). Addition of a workers’ compensation claim can accordingly eliminate the basis for federal jurisdiction even after a defendant removes a case. See Hutcherson v. Flowers Baking Co. of Opelika, LLC, No. Civ.A. 3:04CV924-C, 2005 WL 1421148, at *3 (M.D. Ala. June 16, 2005).
Also relevant here, Federal Rule of Civil Procedure 12(f) permits the court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” FED. R. CIV. P. 12(f). “The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters.” Hutchings v. Fed. Ins. Co., No. 6:08-cv-305-Orl-19KRS, 2008 U.S. Dist. LEXIS 75334, 2008 WL 4186994, at *2 (M.D. Fla. Sept. 8, 2008). However, “[i]t is not intended to ‘procure the dismissal of all or part of a complaint.'” Id. “Likewise, a motion to strike is a drastic remedy and is disfavored by the courts,” and “[it] should be granted only if ‘the matter sought to be omitted has no possible relationship to the controversy, may confuse the issues, or otherwise prejudice a party.'” Schmidt v. Life Ins. Co. of N. Am., 289 F.R.D. 357, 358 (M.D. Fla. 2012) (quoting [*3] Reyher v. Trans World Airlines, 881 F. Supp. 574, 576 (M.D. Fla. 1995)).
II.
This lawsuit stems from injuries Chenevert, a truck driver, allegedly suffered while on Constellium’s aluminum manufacturing facility in Colbert County, Alabama. See docs. 1-1; 9. Constellium allegedly hired Chenevert to transport products from its location in Muscle Shoals, Alabama, to Oklahoma. Id. Chenevert alleged that he fell and injured himself essentially due to faulty instructions Constellium provided, an unsafe or ill-maintained work area, and a defective catwalk that Constellium designed and manufactured for which it did not supply adequate warnings. See doc. 1-1 at 13-16. Chenevert originally pleaded three claims against four Constellium entities in Alabama state court under theories of negligence, wantonness, and the Alabama Extended Manufacturers Liability Doctrine. See id.
Constellium subsequently removed the case to this court on grounds of diversity jurisdiction. Doc. 1. Soon after, it filed a motion to dismiss and an answer. Docs. 3; 4. Constellium asserted as affirmative defenses “the special employer doctrine,” that the exclusivity and immunity provisions of Alabama workers’ compensation law barred Chenevert’s claims, and that Chenevert “ha[d] elected workers’ [*4] compensation as his sole remedy.” Doc. 4 at 6-7.
Thereafter, Chenevert voluntarily dismissed his claims against three of the defendants and amended his complaint against the remaining defendant, Constellium Muscle Shoals, LLC. Docs. 8; 9. Specifically, Chenevert added a claim for workers’ compensation benefits “in the alternative,” purporting that Constellium’s answer “allege[d] affirmative defenses predicated upon [his] status as its special employee . . . , which would mean [Constellium] owes [Chenevert] for the [workers’ compensation] benefits . . . , as well as being precluded from asserting certain defenses.” Doc. 9 at 9-10. Simultaneously, Chenevert moved to remand the case under 28 U.S.C. § 1445(c) based on the workers’ compensation claim. See doc. 10. Constellium opposes removal, see doc. 14, and has moved to strike the workers’ compensation-law claim from the complaint, doc. 13.
III.
In a nutshell, Chenevert maintains that his amended complaint, which explicitly cites an “alternative” theory of liability under Alabama workers’ compensation law, strips this court of jurisdiction. Doc. 10. For its part, Constellium argues that Chenevert added the workers’ compensation claim solely to defeat federal [*5] jurisdiction and that he cannot plead a claim that “is mutually exclusive of his tort claims.” Docs. 13; 14. As a result, Constellium asks the court to strike the workers’ compensation claim and to retain jurisdiction over the rest of the complaint. See doc. 13.
A.
The rights and remedies granted to employees under Alabama’s workers’ compensation law “exclude all other rights and remedies of the employee . . . at common law, by statute, or otherwise on account of injury, loss of services, or death.” Ala. Code § 25-5-53. And, except under “very limited” exceptions, this law shields an employer from “most causes of action sounding in tort that are connected or related to a workers’ compensation claim.” See Crean v. Michelin Tire Corp., 889 F. Supp. 460, 463 (M.D. Ala. 1995) (citing Gibson v. S. Guar. Ins. Co., 623 So. 2d 1065, 1066 (Ala. 1993)). In particular, “the only causes of action recognizable in tort as exceptions to workers’ compensation being an exclusive remedy are fraud and the tort of outrageous conduct.” Id. at 465.
Chenevert’s claims sound essentially in tort, and he does not plead any fraudulent or outrageous conduct by Constellium. See generally doc. 9. Accordingly, Alabama’s workers’ compensation law could preclude Chenevert from pinning tort liability on Constellium in the manner he seeks. See Crean, 889 F. Supp. at 463, 465. This, in turn, might affect Chenevert’s [*6] ability to plead a workers’ compensation claim as an “alternative” to his negligence, wantonness, and AEMLD claims. Indeed, Constellium basically contends that Chenevert cannot have it both ways, and it also argues that Chenevert’s workers’ compensation claim strictly serves as a vehicle to assert contradictory allegations.
But this court need not resolve the thorny issue of the mutuality or exclusivity of Chenevert’s possible rights and remedies. Chenevert’s work injury-based claims clearly implicate Alabama workers’ compensation law, and federal law precludes the removal of cases arising under state workers’ compensation law,1see28 U.S.C. § 1445. True, Chenevert may not be able to assert tort claims against Constellium, and he even acknowledges that the contentions in his original complaint—which pleaded only tort claims—may have involved Alabama’s workers’ compensation law, too. See doc. 10 at 6. He may even have added an explicit workers’ compensation claim to require remand. Still, this would not change that the court lacks jurisdiction to “delve into an area of state law which is statutorily ‘off limits.'” See Hutcherson, 2005 WL 1421148, at *2, *2 n.3 (“[The] amendment is most likely for the purpose of destroying diversity. But, the [*7] Hensgens . . . factors2 which include whether a motion to amend to add a party is for that purpose are not applicable when the amendment concerns addition of a claim rather than a party.”). For these reasons, and because “all doubts about jurisdiction should be resolved in favor of remand to state court,” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999), Chenevert’s motion is due to be granted.
B.
These reasons and others also counsel against striking the workers’ compensation claim from the amended complaint. For one, claims related to Chenevert’s alleged work injuries may necessarily involve or arise under Alabama workers’ compensation law, as his amended complaint contemplates. In this respect, Chenevert’s claim does not constitute “redundant, immaterial, impertinent, or scandalous matter,” seeFED. R. CIV. P. 12(f), and granting Constellium’s motion would not streamline or “clean up” the pleadings, see Hutchings, 2008 U.S. Dist. LEXIS 75334, 2008 WL 4186994, at *2. Rather, Constellium’s motion impermissibly seeks to “‘procure the dismissal of . . . part of [the] complaint.'” See id. Constellium otherwise fails to justify why the court should grant this “drastic” and “disfavored” remedy. See Schmidt, 289 F.R.D. at 358. Constellium’s motion is due to be denied, and Constellium can and must litigate these issues in state court. [*8]
IV.
In summary, Chenevert’s motion to remand, doc. 10, is due to be granted because his complaint necessarily implicates Alabama’s workers’ compensation law, stripping this court of jurisdiction. Constellium’s motion to strike, doc. 13, is due to be denied. A separate order follows.
DONE the 16th day of May, 2022.
/s/ Abdul K. Kallon
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
ORDER
For the reasons expressed in the accompanying Memorandum Opinion, Leo F. Chenevert’s motion to remand, doc. 10, is GRANTED. Constellium Muscle Shoals, LLC’s motion to strike, doc. 13, is DENIED. This action is REMANDED to the Circuit Court of Colbert County, Alabama. The clerk is DIRECTED to take the appropriate steps to effectuate the remand.
DONE the 16th day of May, 2022.
/s/ Abdul K. Kallon
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE
End of Document
1 Constellium insists that § 1445 does not divest this court of jurisdiction because an action cannot “arise under” workers’ compensation law merely because of a defendant’s affirmative defenses. Doc. 14 at 5-7 (citing 28 U.S.C. § 1445). And Chenevert does cite Constellium’s affirmative defenses as supporting his newly pleaded workers’ compensation claim. See doc. 9 at 10. However, Constellium’s contention overlooks that Chenevert seeks remand on the basis of his amended pleadings, which include a workers’ compensation claim, see doc. 10, and the court’s inquiry focuses on whether his pleadings—not Constellium’s defenses—arise under Alabama’s workers’ compensation law.
2 See Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987) (instructing courts to consider “the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether plaintiff has been dilatory in asking for amendment, whether plaintiff will be significantly injured if amendment is not allowed, and any other factors bearing on the equities” to determine whether to allow the addition of a nondiverse party that would destroy diversity jurisdiction).
CHRISTOPHER RYAN CUNNINGHAM, APPELLANT v. KROGER LIMITED PARTNERSHIP I, APPELLEE
Notice: PLEASE REFER TO THE KENTUCKY RULES REGARDING FINALITY OF OPINIONS.
TO BE PUBLISHED. [UNLESS OTHERWISE ORDERED BY THE KENTUCKY SUPREME COURT, OPINIONS DESIGNATED “TO BE PUBLISHED” BY THE COURT OF APPEALS ARE NOT TO BE PUBLISHED IF DISCRETIONARY REVIEW IS PENDING, IF DISCRETIONARY REVIEW IS GRANTED, OR IF ORDERED NOT TO BE PUBLISHED BY THE COURT WHEN DENYING THE MOTION FOR DISCRETIONARY REVIEW OR GRANTING WITHDRAWAL OF THE MOTION.]
Prior History: [*1] APPEAL FROM BOYLE CIRCUIT COURT. HONORABLE DARREN W. PECKLER, JUDGE. ACTION NO. 19-CI-00347.
HOLDINGS: [1]-The trial court granted summary judgment to the grocery store limited liability company as an up-the-ladder employer who was immune from suit under Ky. Rev. Stat. Ann. § 342.610(2)(b) of the Workers’ Compensation Act because, although the grocery store was not a signatory to the contract between the delivery company and the dairy producer, when the dairy producer contracted with the delivery company, it did so as a representative and for the benefit of the grocery store. The contract between the delivery company and the dairy producer facilitated the delivery of milk to the grocery store and were linked at the corporate level by their relations to the overall company, and the contract with the delivery company was in furtherance of their joint business interests of selling dairy products to the public.
In reviewing a grant of summary judgment, an appellate court’s inquiry focuses on whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law. Ky. R. Civ. P. 56.03. The trial court must view the record in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor. On the other hand, a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial. An appellate court need not defer to the trial court’s decision on summary judgment and will review the issue de novo because only legal questions and no factual findings are involved.
Kentucky’s Workers’ Compensation Act contains an exclusive liability provision, which states that, if an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee. Ky. Rev. Stat. Ann. § 342.690(1). Consequently, the injured worker is not entitled to tort damages from the employer or its employees for work-related injuries. For purposes of invoking this immunity, the term “employer” includes contractors as defined in the Act.
If a defendant qualifies as a contractor, it has no liability in tort to an injured employee of a subcontractor. In other words, tort immunity under Kentucky’s Workers’ Compensation Act extends up the ladder from the subcontractor that employs an injured person to the entities that contracted with the subcontractor, so long as the injured person’s employer has workers’ compensation coverage, and the up the ladder entities contracted to have work performed of a kind which is a regular or recurrent part of the work of their business.
A defendant seeking to assert exclusive remedy immunity must both plead and prove the affirmative defense. Even when the underlying facts are undisputed, a conclusion that a defendant is entitled to judgment as a matter of law must be supported with substantial evidence that a defendant was the injured worker’s statutory employer under a correct interpretation of Ky. Rev. Stat. Ann. § 342.610(2)(b).
Regarding tort immunity under Kentucky’s Workers’ Compensation Act, what is required is a showing that the defendant is effectively functioning as the contractor even if the evidence would not establish a binding contract for purposes of a breach of contract action, for instance. The term “contract” is construed broadly in this context to ensure that workers’ compensation coverage is provided allowing injured workers to recover benefits quickly without having to show fault.
Persons or entities who engage another to perform a part of the work which is a recurrent part of their business, trade, or occupation are considered contractors under Kentucky’s Workers’ Compensation Act even if they never perform that type of work with their own employees.
Under Kentucky’s Workers’ Compensation Act, the purpose of Ky. Rev. Stat. Ann. § 342.610(2)(b) is not to shield owners or contractors from potential tort liability but to assure that contractors and subcontractors provide workers’ compensation coverage. In order to achieve this goal, precedent demands a highly fact-specific approach to assessing statutory immunity. This entails looking beyond formal corporate structures to the actual functional interaction of the parties.
Counsel: BRIEFS FOR APPELLANT: Albert B. McQueen, Jr., Lexington, Kentucky.
BRIEF FOR APPELLEE: Angela M. Call, Allyson S. Cave, Campbellsville, Kentucky.
Judges: BEFORE: CLAYTON, CHIEF JUDGE; CETRULO AND GOODWINE, JUDGES. ALL CONCUR.
Opinion by: CLAYTON
Opinion
OPINION AFFIRMING
CLAYTON, CHIEF JUDGE: Christopher Ryan Cunningham appeals from a Boyle Circuit Court order granting summary judgment to Kroger Limited Partnership I (“KLP I”). KLP I owns and operates a Kroger grocery store in Danville, Kentucky. Cunningham, a truck driver employed by Penske Logistics, LLC, was injured while making a delivery to the store. At issue is whether, under the Kentucky Workers’ Compensation Act, KLP I is immune from suit as an up-the-ladder employer. Having reviewed the record, the appellant’s arguments, and the applicable law, we affirm.
In 2014, Penske entered into a Carrier Services Agreement (“Agreement”) with Kroger Limited Partnership II (“KLP II”). The latter entity is described in the Agreement as “an Ohio limited partnership on behalf of Winchester Farms Dairy, a manufacturing facility[.]” Under the terms of the Agreement, Penske agreed to [*2] accept KLP II’s “freight tendered to it by third parties for delivery to [KLP II’s] facilities and to the facilities of all divisions, subsidiaries or affiliates of [KLP II], whether owned or leased.” Penske further agreed to “load, unload (if applicable) and deliver the freight promptly and efficiently and strictly in accordance with the terms of [the] Agreement.”
According to the affidavit of Erik B. Lutson, an insured litigation paralegal in the law department of The Kroger Company, KLP II is a subsidiary of The Kroger Company, which in turn is a limited partner of KLP I.
According to the affidavits of Greg Dean, the store manager of KLP I, the Danville store received approximately four Kroger warehouse deliveries of retail merchandise per day, six days per week, and two warehouse deliveries of merchandise one day per week. Of these deliveries, approximately four came from Winchester Farms Dairy. When the store needed more dairy products, Dean would enter an order through the store’s computer assisted ordering system which submitted an order directly to Winchester Farms Dairy. When the truck with the order arrived at the store, KLP I employees would meet the driver at the back door, [*3] aid in unloading the truck, and direct the driver in the delivery of the goods.
In his deposition, Cunningham testified that he delivered goods to the Save A Lot distribution center “a couple of times,” but the majority of his work for Penske consisted of delivering milk from KLP II to Kroger grocery stores.
On September 24, 2018, Cunningham was injured when a dock door fell on him while he was delivering dairy products from KLP II to the Danville Kroger. Cunningham filed a workers’ compensation claim against Penske, and received medical expenses of $30,334.61, temporary total disability benefits of $29,482.42, and a lump sum payment of $33,000.
Cunningham filed suit against KLP I, alleging negligence and seeking damages for medical expenses, lost wages, and pain and suffering. Following the exchange of written discovery and the taking of Cunningham’s deposition, the trial court granted summary judgment to KLP I as an up-the-ladder employer who was immune from suit under the Workers’ Compensation Act. This appeal by Cunningham followed.
In reviewing a grant of summary judgment, our inquiry focuses on “whether the trial court correctly found that there were no genuine issues as to any material [*4] fact and that the moving party was entitled to judgment as a matter of law.” Scifres v. Kraft, 916 S.W.2d 779, 781, 43 1 Ky. L. Summary 17 (Ky. App. 1996); Kentucky Rules of Civil Procedure (“CR”) 56.03. The trial court must view the record “in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). On the other hand, “a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial.” Id. at 482. “An appellate court need not defer to the trial court’s decision on summary judgment and will review the issue de novo because only legal questions and no factual findings are involved.” Hallahan v. The Courier-Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).
Kentucky’s Workers’ Compensation Act contains an exclusive liability provision, which states that “[i]f an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee[.]” Kentucky Revised Statutes (“KRS”) 342.690(1). Consequently, “[t]he injured worker is not entitled to tort damages from the employer or its employees for work-related injuries.” Beaver v. Oakley, 279 S.W.3d 527, 530 (Ky. 2009).
For purposes of invoking this immunity, the term “employer” includes “contractors” as defined [*5] in the Act. It states: “A person who contracts with another . . . [t]o have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.” KRS 342.610(2)(b).
Thus, “[i]f a defendant qualifies as a contractor, ‘it has no liability in tort to an injured employee of a subcontractor.’” Cabrera v. JBS USA, LLC, 568 S.W.3d 865, 869 (Ky. App. 2019) (quoting Fireman’s Fund Ins. Co. v. Sherman & Fletcher, 705 S.W.2d 459, 461 (Ky. 1986)). “In other words, tort immunity under the Act extends ‘up the ladder’ from the subcontractor that employs an injured person to the entities that contracted with the subcontractor, so long as the injured person’s employer has workers’ compensation coverage, and the up the ladder entities contracted ‘to have work performed of a kind which is a regular or recurrent part of the work’ of their business.” Id. (citation omitted).
A defendant seeking to assert exclusive remedy immunity “must both plead and prove the affirmative defense. Even when the underlying facts are undisputed, a conclusion that a defendant is entitled to judgment as a matter of law must be supported with substantial evidence that a defendant was the injured worker’s statutory [*6] employer under a correct interpretation of KRS 342.610(2)(b).” General Elec. Co. v. Cain, 236 S.W.3d 579, 585 (Ky. 2007), as corrected (Aug. 30, 2007), as modified on denial of reh’g (Nov. 21, 2007).
Cunningham argues that KLP I is not entitled to up-the-ladder immunity because it is a distinct legal entity from KLP II, and they operate distinct businesses. He concedes that KLP II, the dairy manufacturer, is likely entitled to “up-the-ladder immunity” as a direct contractor with Penske and hence with Cunningham. By contrast, he contends, KLP I is not an “up-the-ladder” employer because it was not a party to the contract between Penske and KLP II, nor was Penske hired to perform work for KLP I. Affording immunity to KLP I is, in his view, an unwarranted horizontal expansion of immunity to encompass a sibling entity, as opposed to a parent.
In granting summary judgment to KLP I, the trial court relied on Cabrera, supra, in which this Court addressed the meaning of two key elements of KRS 342.610(2)(b): (1) what constitutes a contract and (2) what constitutes a regular or recurrent part of the work, for purposes of invoking up-the-ladder immunity.
Cabrera was injured while performing sanitation services at a pork processing facility jointly operated by JBS and Swift Pork. Cabrera’s direct employer [*7] was Packers Sanitation Services, which had a written contract with JBS to perform the sanitation services at the facility. Swift was the owner of the pork processing facility and a wholly-owned subsidiary of JBS. It was not a signatory to the contract with Packers. Swift and JBS shared the same chief executive officer, board of directors, and corporate headquarters. Cabrera, 568 S.W.3d at 871.
Cabrera argued that Swift was not entitled to immunity because it never employed him directly and was not a party to the contract with his employer, Packers Sanitation. The Court rejected these arguments, because the Workers’ Compensation Act “does not demand evidence of formal written contracts between a defendant [Swift] and the plaintiff’s direct employer [Packers] for the defendant to have up-the-ladder immunity[.]” Id. at 870 (quoting Beaver, 279 S.W.3d at 534). injured workers to recover benefits quickly without having to show fault.” Id. (quoting Beaver, 279 S.W.3d at 535).
The Court held that what was necessary to demonstrate that Swift was effectively functioning as a contractor was “that when JBS contracted with Packers, it did so as a representative and for the benefit of Swift Pork” and that Swift’s “omission from that contract was merely a facet of the financial arrangement between Swift and JBS.” Id. at 870-71.
Applying this test, the Court concluded that JBS was acting as Swift Pork’s representative and for Swift Pork’s benefit when it entered into the Packers contract, because it benefitted the joint business operations of JBS and Swift Pork, and JBS was effectively representing Swift Pork’s interests by hiring Packers to clean the pork processing facility they jointly operated. Id. at 871.
As to the other element of KRS 342.610(2)(b), which requires a showing that the work contracted for was a regular or recurrent part of the business, Cabrera argued that, notwithstanding Packers Sanitation’s contract with JBS, JBS was not an up-the-ladder employer because there was no evidence that JBS employees were trained to perform or ever did perform sanitation services at the pork processing facility. The [*9] Court disagreed, stating:
whether JBS employees ever performed this type of work with its own employees or had employees skilled enough or trained to do it is not dispositive of this issue. Persons or entities who engage another to perform a part of the work which is a recurrent part of their business, trade, or occupation are considered “contractors” under the Act even if they never perform that type of work with their own employees.
Cabrera, 568 S.W.2d at 869-70.
The Court concluded that JBS was an up-the-ladder employer because the sanitation services Cabrera was performing were mandated by federal law for meat processing facilities and were consequently a recurrent and regular part of JBS’s business. Id. at 870.
If we apply these principles to the case before us, we conclude that the trial court correctly granted summary judgment to KLP I.
First, although KLP I was not a signatory to the contract between Penske and KLP II, when KLP II contracted with Penske, it did so as a representative and for the benefit of KLP I. The contract between Penske and the dairy producer facilitated the delivery of milk to the Kroger grocery store, as evidenced by the regular deliveries to the store and the store manager’s ability to order more [*10] products via the computer assisted ordering system between KLP I and KLP II. KLP I and KLP II, like Swift and JBS, were linked at the corporate level by their relations to The Kroger Company, and the contract with Penske was in furtherance of their joint business interests of selling dairy products to the public.
Cunningham disputes this conclusion, relying on Becht v. Owens Corning Fiberglas Corporation, 196 F.3d 650, 652 (6th Cir. 1999), which distinguished between subsidiaries and divisions for purposes of up-the-ladder immunity. In Becht, the claimant was injured while working for OCSC and it was disputed whether OCSC was a subsidiary or a division of Owens-Corning. The Sixth Circuit Court of Appeals explained that “if OCSC, the entity that employed Becht, is a subsidiary, rather than a division, of Owens-Corning, then Owens-Corning would not be immune from tort liability based on the immunity of the subsidiary. Conversely, if OCSC is a division of Owens-Corning, then Owens-Corning would be immune from suit based on the workers’ compensation exclusive remedy provision.” Id. at 654 (citation omitted).
In drawing this distinction, Becht relied on an earlier opinion, Boggs v. Blue Diamond Coal Company, 590 F.2d 655, 663 (6th Cir. 1979), which held that there is no contractual relationship between a principal and subsidiary, and consequently no up-the-ladder [*11] immunity. The opinion states: “[T]he ‘functional relationship’ between a parent and a subsidiary is not a contractual relationship. The expectations of the parties are not based on mutual promises, consideration or consent, for one party owns and has custody of the other party. The relationship between parent and subsidiary is based upon the status of the parties and is more like the relationship between parent and child, warden and prisoner, and other similar relationships. The relationship is not based upon the bargaining power of the parties.” Id. at 661.
This view of the parent and subsidiary relationship has been modified by the more flexible approach adopted in our recent case law. As we have previously discussed, in Cabrera, this Court held that Swift, a wholly-owned subsidiary of JBS, did have up-the-ladder immunity even though Swift was not a signatory to the JBS-Packers contract.
Second, the work being performed by Penske/Cunningham was a regular and recurrent part of KLP I’s business as a retail grocery store; deliveries were made on a recurrent basis in order to keep the grocery store stocked with milk and KLP I’s own employees routinely engaged in receiving and unloading the deliveries made [*12] by Cunningham. On the basis of the evidence in the record, the delivery and unloading of dairy products was a regular and recurrent part of the business of the retail grocery store.
Cunningham disputes this conclusion, relying on Olmstead v. Shakespeare, 354 S.C. 421, 581 S.E.2d 483 (S.C. 2003), in which a manufacturer of fiberglass poles hired a common carrier to ship the finished product to a customer in another state. The driver was injured loading the poles onto the truck at the manufacturer’s warehouse. Under South Carolina law, the manufacturer was entitled to up-the-ladder immunity upon a finding that the common carrier “engaged in activity that is part of [the owner’s] trade, business, or occupation.” Id. at 485. The South Carolina Supreme Court held “the fact that it was important to [the manufacturer] to deliver its finished product to its customer in order to consummate a sale does not render the delivery of its products an important part of its business for purposes of statutory employment.” Id. at 485-86. The Court cautioned that the transportation of goods by a common carrier alone, without something more, does not qualify as “part of [the owner’s] trade, business, or occupation[.]” Id. at 486.
Olmstead is not binding precedent in Kentucky and, in any event, is distinguishable, [*13] as Cunningham’s case involves more than the transportation of goods by a common carrier. KLP I and KLP II had an ongoing business relationship involving the recurrent and regular ordering and delivery of grocery products by Penske, to the mutual benefit of KLP I and KLP II.
Cunningham’s situation is directly analogous to that of the delivery truck driver in Black v. Dixie Consumer Products LLC, 835 F.3d 579 (6th Cir. 2016). Black was a trucker employed by Western Express, which had a contract to deliver raw paper to Dixie, a manufacturer of paper cups and plates. Black was injured during the unloading process at the factory. Dixie sought immunity on the grounds that Black’s work was not a customary, usual, or normal part of Dixie’s business, was not work that Dixie repeated with regularity, or work that Dixie or similar businesses normally performed or expected to perform with employees. Id. at 585.
The Sixth Circuit Court of Appeals disagreed. It observed that the delivery of raw paper materials to Dixie occurred on a regular or recurrent basis, with Dixie receiving as many as fifty truck shipments of these materials during a typical week. Id. “Unless Dixie entered the business of producing raw paper . . . , it necessarily needed to receive and unload regular [*14] deliveries of raw paper.” Id. at 585-86. Further, the evidence showed that Dixie was responsible for unloading the product out of the truck and other evidence was offered that similar manufacturers utilize private fleets of trucks to make similar deliveries. “Even though Dixie may never perform that particular job with [its] own employees, [it] is still a contractor if the job is one that is usually a regular or recurrent part of [its] trade or occupation.” Id. at 586 (citing Fireman’s Fund, 705 S.W.2d at 462) (internal quotation marks omitted).
It is undisputed that KLP I received regular shipments of dairy products from KLP II which KLP I was incapable of producing itself and which had to be received and unloaded in order to conduct its retail grocery business. The evidence was also undisputed that KLP I’s own employees actually directed and assisted in the unloading of the deliveries. Penske’s deliveries were an integral part of the business of running the grocery store and indisputably meet the standard of KRS 342.610(2)(b).
Cunningham also raises significant policy concerns, arguing that the immunity provisions of the Workers’ Compensation Act should be narrowly construed as they are in derogation of common law rights. He contends that, but for the corporate [*15] kinship existing between KLP I and KLP II, the present case would be indistinguishable from a traditional third-party tort claim, such as that in Wallingford v. Kroger Company, 761 S.W.2d 621 (Ky. App. 1988), which involved a delivery truck driver for Coca Cola who slipped and fell on an icy ramp at a Kroger store. The case addressed whether he was an invitee for purposes of tort liability and whether Kroger owed him a legal duty of care. No mention is made of a workers’ compensation immunity defense for Kroger. But if Wallingford had been an employee of a carrier which had a contract with a corporate relative of the Kroger store, to perform the kind of work which was a regular or recurrent part of the business, Kroger may well have pled the defense of statutory immunity.
Cunningham argues that defendants are improperly using complex corporate structures to evade tort liability and are engaging in defensive piercing of the corporate veil to shield up-the-ladder entities. fact-specific approach to assessing statutory immunity. This entails looking beyond formal corporate structures to the actual functional interaction of the parties. The trial court appropriately adopted this method.
For the foregoing reasons, the summary judgment of the Boyle Circuit Court is affirmed.
