RICKY REED V LINDA SUSAN YACKELL
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Michigan Supreme Court
Lansing, Michigan
Chief Justice:
Opinion
Justices:
Clifford W. Taylor
Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED JULY 28, 2005
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v
No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
BEFORE THE ENTIRE BENCH
TAYLOR, C.J.
We granted leave in this case to determine whether
plaintiff, Ricky Reed, who was fired from defendant Mr.
Food, Inc., but continued to assist with deliveries on a
periodic basis, was an employee of Mr. Food within the
meaning
of
MCL
418.161(1)(l)
and
(n)
of
the
Worker’s
Disability Compensation Act (WDCA)1 and, thus, prohibited
from
maintaining
a
tort
action
for
employment-related
personal injury in the circuit court against Mr. Food, its
owner, and its delivery supervisor.
We determine that Reed
was an employee of Mr. Food under MCL 418.161(1)(l) at the
time he was injured because he was in the service of Mr.
Food under a contract for hire.
We therefore affirm the
decision of the Court of Appeals in part.
However, we
further determine that Reed was an employee of Mr. Food
under MCL 418.161(1)(n) at the time he was injured because
he was performing a service as a deliveryman for Mr. Food
in
the
course
of
its
business
and
did
not
maintain
a
separate business offering that service, hold himself out
to and render that service to the public, or qualify as an
employer subject to the WDCA.
We therefore reverse the
decision of the Court of Appeals in part and remand this
case to the circuit court for entry of a directed verdict
in
defendants’
transferred
to
favor.
the
Jurisdiction
Bureau
of
is
thereafter
Worker’s
Disability
Compensation.
FACTS AND PROCEDURAL HISTORY
Defendant Gerald Michael Herskovitz is the owner of
defendant Mr. Food, Inc., which is a retail marketer of
1
MCL 418.101 et seq.
2
meat products.
Defendant Buddy Lee Hadley is an employee
of Mr. Food and is in charge of its meat deliveries.
1997,
Hadley
Hadley
had
suggested
known
Herskovitz did so.
that
for
Herskovitz
approximately
hire
In
whom
years,
ten
Reed,
and
Herskovitz was not pleased with Reed’s
performance, however, and fired Reed after a period of only
five or six months in December 1997.
After
being
fired
by
Herskovitz,
Reed
primarily
supported himself by painting his relatives’ homes.
But,
Reed’s association with Mr. Food did not end completely
after
he
was
fired,
and
he
supplemented
occasionally helping Hadley with deliveries.
Hadley
testified
that,
on
approximately
his
income
by
Specifically,
three
to
five
occasions after Reed was fired near the end of 1997, he
would hire Reed to help with his deliveries for the day,
for which Reed would be paid between $35 and $40 in cash.
Although Herskovitz authorized Hadley to obtain help with
his deliveries on these days, he testified that he did not
know that it was Reed that Hadley actually hired.
On
May
7,
1998,
during
one
of
these
days
that
deliveries were being made, Reed was riding in a cargo van
owned by Mr. Food that was being driven by Hadley.
van
approached
an
intersection,
a
car
driven
by
As the
Linda
Yackell did not stop at a red light because her brakes
malfunctioned.
Hadley, who was looking down at paperwork,
3
did not see Yackell’s car in time and hit her car.
Reed
suffered a closed head injury as a result of the accident.
On December 10, 1998, Reed filed a complaint in the
circuit court, alleging negligence by the drivers, Hadley
and
Yackell,
liability
by
Herskovitz
pursuant
to
the
owner’s liability statute, MCL 257.401, and liability by
Mr. Food under the theory of respondeat superior.
Hadley,
Herskovitz, and Mr. Food (defendants)2 as relevant to this
appeal,
defended
because
Reed
was
by
asserting
an
employee
that
the
suit
of
Mr.
Food
was
barred
under
MCL
418.161(1)(l) and (n)3 and, thus, his exclusive remedy was
2
Yackell is not a party to the proceedings in this
Court.
Therefore, we will hereinafter use the term
“defendants” in reference to Herskovitz, Hadley, and Mr.
Food collectively.
3
MCL 418.161 provides:
(1) As used in this act, “employee” means:
* * *
(l) Every person in the service of another,
under any contract of hire, express or implied,
including aliens . . . .
* * *
(n)
Every person performing service in the
course of the trade, business, profession, or
occupation of an employer at the time of the
injury, if the person in relation to this service
does not maintain a separate business, does not
hold himself or herself out to and render service
to the public, and is not an employer subject to
this act.
4
under
the
WDCA.4
During
trial,
defendants
moved
for
a
directed verdict on this basis. Reed countered that he was
not an employee, but was rather an independent contractor
of day labor.
The trial court denied defendants’ motion.
At the end of trial, the jury returned a unanimous verdict
in
Reed’s
favor
and
awarded
him
$1,256,320,
allocating
sixty percent of the fault for the accident to Yackell and
forty
percent
collectively.
to
Herskovitz,
Hadley,
and
Mr.
Food
A judgment in the amount of $502,528 was
subsequently entered against Hadley, Herskovitz, and Mr.
Food.
Defendants
thereafter
moved
for
judgment
notwith-
standing the verdict (JNOV), again asserting that Reed was
an employee at the time of the accident.
The trial court
again denied defendants’ motion, stating that Reed was not
an employee of Mr. Food at the time of the accident but was
instead an independent contractor that held himself out to
the public to perform general labor.
4
MCL 418.131(1) provides that “[t]he right to the
recovery of benefits as provided in this act shall be the
employee's exclusive remedy against the employer for a
personal injury or occupational disease . . . .”
5
Defendants
affirmed
in
an
appealed
to
unpublished
the
Court
of
in
lieu
of
granting
which
Defendants
decision.5
sought leave to appeal in this Court.
7.302(G)(1),
Appeals,
then
Pursuant to MCR
leave
to
appeal,
we
vacated the decision of the Court of Appeals and remanded
this case to the circuit court with instructions that it
determine,
either
on
additional
evidentiary
the
existing
hearings,
record
whether
Reed
or
after
was
employee of Mr. Food at the time of the accident.
an
The
trial court was also to submit findings of fact to this
Court regarding whether Reed was in the service of Mr. Food
under either an express or implied contract for hire as set
forth in MCL 418.161(1)(l) and explained in our then-recent
decision in Hoste v Shanty Creek Mgt, Inc, 459 Mich 561;
592 NW2d 360 (1999).
Further, in order to determine if he
was outside the definition of employee in MCL 418.161(1)
(n), the trial court was to determine whether Reed both
maintained a separate business and held himself out to the
public as having such a business.6
On remand, the circuit court issued a written order
and findings of fact, based on the existing record, stating
5
Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued February 14, 2003 (Docket No.
236588), vacated 469 Mich 960 (2003).
6
469 Mich 960 (2003).
6
that Reed was not an employee of Mr. Food at the time of
the accident.
With respect to MCL 418.161(1)(l) and Hoste,
the trial court determined that Reed was not performing a
service for Mr. Food under either an express or implied
contract for hire.
In reaching this conclusion, the trial
court focused on the fact that Herskovitz had fired Reed
before the accident, that Herskovitz had testified at trial
that he did not know that Reed was helping Hadley at the
time
of
the
accident,
and
that
no
evidence
had
been
introduced that income taxes had been withheld from Reed or
that he had ever claimed employee status.
reasoned
that
these
facts
negated
the
The trial court
possibility
that
either an express or implied contract for hire had been
formed because both parties were not aware of its existence
and had not agreed to its terms.
Finally, the trial court
determined that Reed was not an employee under a contract
“for hire,” reasoning that he did not receive a regular
income from Mr. Food but, instead, received only $35 to $40
on three to five occasions.
did
not
equate
to
The court concluded that this
“real,
palpable,
and
substantial
consideration” that was intended as wages7 because, spread
over the entire period of about five or six months when the
7
Hoste, supra at 576.
7
occasional employment took place, it
amounted to less than
$1 per day.
In considering the questions under MCL 418.161(1)(n),
the
trial
court
held
that
Reed
did
have
a
qualifying
separate business because he was a house painter performing
day labor.
The court apparently concluded that there was a
sufficient holding of himself out for this service to meet
the requirements of MCL 418.161(1)(n).
But, the court did
not elaborate on the evidence it found to establish that.
After receiving the trial court’s findings of fact, we
remanded
this
case
to
the
Court
of
Appeals
for
reconsideration of whether Reed was an employee within the
meaning of MCL 418.161(1)(l) and (n) and, if necessary, of
additional issues the Court of Appeals had addressed in its
earlier decision.8
On remand, in an unpublished decision that echoed the
previously vacated one, the Court of Appeals affirmed the
trial court’s determination that Reed was not an employee
of Mr. Food at the time of the accident.9
Unlike the
circuit court, the Court of Appeals determined that Reed
was
an
8
employee
under
MCL
418.161(1)(l)
because
he
was
469 Mich 1051 (2004).
9
Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued June 8, 2004 (Docket No. 236588).
8
under a contract for hire.
Yet, because he had, in the
view of the Court of Appeals, a separate business in which
he held himself out for the performance of the same service
he was performing for Mr. Food, he was removed from the
definition
of
employee
by
virtue
of
MCL
418.161(1)(n).
Interestingly, while expressly acknowledging that in Hoste
we held that the common-law “economic realities test” for
determining
whether
a
worker
is
an
employee
or
an
independent contractor was superseded to the extent that it
was inconsistent with MCL 418.161(1)(n),10 the Court then
expressly
focused
on
those
same
superseded
common-law
factors (such as how Reed was paid, whether taxes were
withheld,
whether
Mr.
Food,
Herskovitz,
and
Hadley
had
control of Reed’s duties, and whether the services Reed
performed were an integral part of Mr. Food’s business) in
making its holding regarding whether Reed was an employee.
At no point was an effort undertaken to reconcile this
approach
with
consideration
the
of
holding
these
no
in
Hoste
longer
precluding
recognized
the
common-law
“economic realities” factors.
Unsurprisingly, defendants again filed an application
with
this
Court
for
leave
to
appeal,
and
we
granted
defendants’ application limited to the issue whether Reed
10
Hoste, supra at 572.
9
was an employee within the meaning of MCL 418.161(1)(l) and
(n) at the time of the accident.11
STANDARD OF REVIEW
Defendants’
contention
is
that
the
trial
court
erroneously denied their motions for a directed verdict and
JNOV.
We review a trial court’s denial of both motions de
novo.
Sniecinski v Blue Cross & Blue Shield of Michigan,
469 Mich 124, 131; 666 NW2d 186 (2003).
In doing so, we
“‘review the evidence and all legitimate inferences in the
light
most
favorable
to
the
nonmoving
party.’”
Id.,
quoting Wilkinson v Lee, 463 Mich 388, 391; 617 NW2d 305
(2000).
Only if the evidence, when viewed in this light,
fails to establish a claim as a matter of law should a
motion for a directed verdict or JNOV be granted.
This
case
also
involves
the
Id.
interpretation
of
statutes, which is a question of law that is also reviewed
de
novo
by
this
Court.
Hoste,
supra
at
569.
Our
fundamental obligation when interpreting statutes is “to
ascertain
the
legislative
intent
that
may
reasonably
inferred from the words expressed in the statute.”
be
Koontz
v Ameritech Services, Inc, 466 Mich 304, 312; 645 NW2d 34
(2002).
unambiguous,
judicial
construction is neither required nor permitted.
In other
11
If
the
statute
471 Mich 957 (2005).
10
is
words, “[b]ecause the proper role of the judiciary is to
interpret
and
authority
to
statute.”
not
write
Id.
venture
the
beyond
law,
the
courts
simply
unambiguous
text
lack
of
a
DISCUSSION
A.
As
we
have
Principles of the WDCA
discussed
frequently
in
the
past,
by
enacting Michigan’s Worker’s Disability Compensation Act,
the
Legislature
replaced
common-law
liability
for
negligence in the workplace, and its related defenses, with
a
comprehensive,
statutory
compensation
scheme
that
requires employers to provide compensation to employees for
injuries arising out of and in the course of employment
without regard to fault.
MCL 418.301; Hoste, supra at 570;
Clark v United Technologies Automotive, Inc, 459 Mich 681,
686-687; 594 NW2d 447 (1999); Farrell v Dearborn Mfg Co,
416 Mich 267, 274-275; 330 NW2d 397 (1982).
In exchange
for this almost automatic entitlement to compensation, the
WDCA limits the amount of compensation that an employee may
collect and, moreover, prohibits the employee from bringing
a
tort
action
against
circumstances.12
This
the
employer
principle
is
except
in
expressed
limited
in
MCL
418.131(1), which provides, “The right to the recovery of
12
Hoste, supra; Clark, supra; Farrell, supra.
11
benefits as provided in this act shall be the employee's
exclusive remedy against the employer for a personal injury
or occupational disease.”
As we have explained:
Th[is] language expresses a fundamental
tenet of workers’ compensation statutes that if
an injury falls within the coverage of the
compensation law, such compensation shall be the
employee’s only remedy against the employer or
the employer’s insurance carrier. The underlying
rationale is that the employer, by agreeing to
assume automatic responsibility for all such
injuries,
protects
itself
from
potentially
excessive damage awards rendered against it and
that the employee is assured of receiving payment
for his injuries. [Farrell, supra at 274.]
Accordingly, the threshold question in this case is
whether Reed is an “employee” under any of the definitions
in MCL 418.161 of the WDCA and, therefore, has traded his
right to bring a tort action for the assured payment of
benefits without regard to fault.
Hoste, supra at 570-571.
As in Hoste, several of the definitions set forth in MCL
418.161
do
resolution
not
of
apply
this
in
issue
this
case
requires
and,
us
subsections 161(1)(l) and 161(1)(n).13
to
therefore,
focus
only
the
on
As we explained in
Hoste, these subsections “must be read together as separate
and
necessary
status.”
qualifications
Hoste, supra at 573.
13
in
establishing
employee
In other words, our first
At the time of the plaintiff’s injuries in Hoste,
the definitions now found in subsections 161(1)(l) and
161(1)(n) were found in former subsections 161(1)(b) and
161(1)(d), respectively. Hoste, supra at 566 n 2.
12
task is to determine whether Reed was an employee under the
definition set forth in subsection 161(1)(l).
If he was,
we must then determine whether he meets the requirements of
subsection 161(1)(n).
B.
Id.
Analysis of MCL 418.161(1)(l)
Subsection 161(1)(l) requires us to determine whether
Reed was in the service of Mr. Food under any express or
implied “contract of hire.”
Because it is undisputed that
Reed was in the service of Mr. Food at the time of the
accident, our determination of this issue requires a twopronged analysis focusing first on whether Reed was in that
service
pursuant
to
an
express
or
implied
contractual
relationship and, second, as explained in Hoste, supra at
573-577, whether that contractual relationship was one “of
hire.”
With regard to the first inquiry, we agree with the
Court of Appeals conclusion that the facts in this case are
at
least
service
sufficient
of
contractual
Mr.
to
Food
establish
pursuant
relationship.
“‘A
to
that
an
contract
Reed
was
implied
implied
in
the
in
fact
in
fact
arises when services are performed by one who at the time
expects compensation from another who expects at the time
to pay therefor.’”
In re Spenger Estate, 341 Mich 491,
493; 67 NW2d 730 (1954), quoting In re Pierson’s Estate,
282 Mich 411, 415; 276 NW 498 (1937).
13
As the Court of
Appeals noted, Reed was expecting to be compensated for the
services that he performed that day, just as he had been
several times before.
Moreover, Herskovitz, having told
Hadley to obtain the help he needed to make his deliveries
that day, expected to compensate whomever Hadley recruited,
just as he had done in the past.
The defendants argue that
the failure of Herskovitz to know exactly who Hadley would
hire is relevant to whether there was an implied in fact
contract with Reed.
This is not the case.
All that is
required to establish a contract with Reed is that Hadley
had
authority
to
hire.14
Hadley
incontestably
had
that
authority.
Accordingly, having determined that the services Reed
was performing for Mr. Food were pursuant to an express or
implied
contractual
relationship,
our
next
inquiry
whether that contractual relationship was “of hire.”
explained
in
Hoste,
supra
at
576,
the
is
As we
linchpin
to
determining whether a contract is “of hire” is whether the
14
See Central Wholesale Co v Sefa, 351 Mich 17, 25; 87
NW2d 94 (1957), quoting 2 CJS, Agency, § 96, pp 1210-1211:
“Whenever the principal, by statements or
conduct, places the agent in a position where he
appears with reasonable certainty to be acting
for
the
principal,
or
without
interference
suffers the agent to assume such a position, and
thereby justifies those dealing with the agent in
believing that he is acting within his mandate,
an apparent authority results . . . .”
14
compensation paid for the service rendered was not merely a
gratuity
but,
rather,
“intended
as
wages,
i.e.,
real,
palpable and substantial consideration as would be expected
to induce a reasonable person to give up the valuable right
of a possible claim against the employer in a tort action
and as would be expected to be understood as such by the
employer.”
In the present case, the $35 to $40 that Reed received
for the approximately eight hours of services he rendered
satisfies
the
requirement
we
set
forth
in
Hoste.
In
finding otherwise, the circuit court did not dispute that
the wages were real, palpable, and substantial on an hourly
basis but, instead, calculated them by averaging them over
the
entire
five-
to
six-month
period
of
the
occasional
employment to conclude that the wages were less than one
dollar
a
approach
parties’
day.
to
this
actual
This
is
issue
a
puzzling
of
and
calculation
contracted
for
rate
even
that
of
arbitrary
ignores
the
per
diem
compensation and replaces it with an approach not taken by
the parties.
In fact, it seems to be without justification
other than it effectively serves to reduce the compensation
rate by a high multiple.
In contrast, when the neutrally
derived approach we are adopting is used, examining the
actual agreement to determine the unit of pay, it is clear
15
that
this
compensation
was
indeed
real,
palpable,
and
substantial when measured against the services performed.
Here,
Reed
provided
This was a service that did not require any
particular
level
the
showed
only
boxes,15
testimony
that
while
they
even
at
education,
trial
or
concerning
consisted
such
deliver
of
products.
skill,
Hadley
hours
manual
of
helping
eight
unskilled,
Indeed,
labor
approximately
of
minimal
experience.
Reed’s
carrying
tasks
as
meat
and
duties
moving
handling
the
paperwork, arranging the delivery schedule, and driving the
delivery truck were handled by Hadley.
For these eight
hours of unskilled, manual labor delivering meat, Reed was
paid approximately $35 to $40.
Because this was roughly
equivalent to the minimum wage rate at the time, it is
confounding that a court could conclude that this was not a
“real” or “substantial” wage and that it was, instead, as
it has to be under the Hoste test, a mere gratuity.
reject,
with
some
impatience,
such
a
We
counterintuitive
conclusion.
15
Herskovitz testified that Reed’s duties were
“[n]othing major. It’s to get a box or bring it up or take
this out. It’s that kind of work.” Hadley testified that,
in between deliveries, he would have his helpers “go [to
the] back [of the delivery truck] and set more stuff up at
the door, or if it’s up to the front, move it this way or
whatever at the time.”
16
It is also appropriate to point out that the circuit
court’s ad hoc approach of averaging over the entire period
of occasional employment, even though there was no such
agreement
between
the
parties,
would,
were
it
the
law,
cause most any occasional worker’s wage to be insubstantial
under Hoste, thus making worker’s compensation protections
for, say, all persons working episodically on a part-time
basis unavailable.
The facile answer to this, no doubt, is
that
will
such
workers
probably will not.
have
a
tort
remedy.
But,
they
These injured people will be, simply,
injured without a remedy.
History shows no less.
In fact,
the leaders of this state a century ago were painfully
familiar
with
illusory
solution
remedy.
As
worker’s
because
the
crushing
of
they
of
the
leaving
made
compensation
inequity
workers
clear
law,
fellow
in
this
servant
created
with
passing
tort
as
this
a
tort
only
our
remedy
rule,
by
original
was
well
hollow
as
the
difficulty of the worker’s burden of demonstrating, among
other
things,
contributory
employer
negligence
Worker’s
Compensation
Governor
Chase
S.
negligence
on
the
Commission
Osborn
to
and
worker’s
an
part.
appointed
draft
our
absence
in
first
of
As
the
1912
by
“Workmen’s
Compensation” law concluded, after examining data regarding
the average compensation paid and the wage loss sustained,
on average, injured workers did not receive compensation
17
proportionate
negligence
to
their
based
injuries
system.
under
According
the
common-law,
the
commission,
to
“[t]his low average was, of course, brought about by the
large
number
of
accidents
to
which,
there
being
no
negligence on the part of the employer, there was no legal
liability
to
pay
damages.”16
Moreover,
the
commission
concluded that, even in cases where injured workers did
procure recovery in the courts, the compensation received
was inadequate because of the expense of litigation and
attorney
fees,
and
because
of
the
“great
delay”
that
generally occurred between the time of the injury and the
final settlement of the action.
Indeed, the commission’s
examination
were
of
the
cases
that
actually
litigated
revealed that “the damages for injuries similar in effect
and
extent
were
widely
variant
in
amount
and
were
on
average less than the compensation proposed under suggested
compensation acts.”17
It is the case then that our courts,
rather than straining to devise some too clever reading of
the
parties’
allowing
(which
of
agreement
tort
formula
claims
that
by
invariably
has
a
will
16
as
its
particular
be
end
game
injured
devastating
the
worker
to
yet
Report of the Employer’s Liability and Workmen’s
Compensation Commission of the State of Michigan, p 16
(1911) (Report).
17
Id., pp 16-23.
18
unknown injured workers who, under the new formula, will be
unable to secure worker’s compensation), should simply look
to the parties’ actual contract to determine the nature of
what was actually agreed on and rule accordingly.
All of
which is to say that we should recall the venerable axiom
that hard cases make bad law and not fall into the practice
of allowing them to do so.
Therefore, we conclude that Reed was an employee of
Mr. Food at the time of his injuries within the meaning of
subsection 161(1)(l) because the service he performed was
pursuant to an expressed or implied contract of hire and
the compensation was real and substantial.
It was a wage.
Accordingly, our next task is to determine whether Reed
meets the requirements of subsection 161(1)(n).
C.
Subsection
Analysis of MCL 418.161(1)(n)
161(1)(n)
provides
that
every
person
performing a service in the course of an employer’s trade,
business, profession, or occupation is an employee of that
employer.
However, the statute continues by excluding from
this group any such person who: (1) maintains his or her
own business in relation to the service he or she provides
the
employer,
(2)
holds
himself
or
herself
out
to
the
public to render the same service that he or she performed
for the employer, and (3) is himself or herself an employer
subject to the WDCA.
In other words, subsection 161(1)(n)
19
sets forth three criteria for determining whether a person
performing services for an employer qualifies as what is
commonly called an “independent contractor” rather than an
employee.
As we explained in Hoste, these three statutory
criteria
have
superseded
economic
realities
test
the
for
former
common-law-based
determining
whether
an
individual is an independent contractor to the extent that
they differ from the test.
Hoste, supra at 572.18
In the present case, it is undisputed that Mr. Food,
or Herskovitz, is an employer subject to the WDCA and that
Reed was performing a service in the course of Mr. Food’s
business.
the
We thus turn to the three criteria required for
exception
relation
to
in
the
subsection
service
he
161(1)(n):
provided
whether
for
Mr.
Reed,
Food,
in
(1)
maintained a separate business offering the same service,
18
As we have explained, the Court of Appeals ignored
our statement in Hoste, supra at 572, that the economic
realities test cannot be used to supersede subsection
161(1)(n) by adding factors to the statute that the
Legislature did not see fit to incorporate, and based its
analysis on such factors from older cases discussing the
economic realities test.
These were things such as how
Reed was paid and whether taxes were withheld, whether
Herskovitz and Hadley had control over Reed’s duties, and
whether Reed’s services were an integral part of Mr. Food’s
business. The Legislature did not see fit to include such
factors in subsection 161(1)(n) and, therefore, the Court
of Appeals reliance on them was error.
This means then
that the prelegislation cases were superseded by the
legislation and are thus without authority as law on these
issues.
20
(2) held himself out to and rendered the same service to
the public, and (3) is an employer subject to the WDCA.
Reed’s argument, adopted by the Court of Appeals, is
that he is an independent contractor because he maintained
a separate business and held himself out to the public as a
day
laborer.
Even
assuming
that
Reed
had
a
separate
business and held it out to the public, these facts do not
establish
enough
to
meet
subsection 161(1)(n).
the
statutory
requirement
of
The first requirement is that the
service held out and provided by the separate business be
“this service,” i.e., the same service that he performed
for the employer.
It is not enough under the statute that
he has any business and holds it out.
The reason is that
such a reading fails to give effect to all the words in the
statute.
give
This we cannot do because we are bound by oath to
meaning
statute.
to
every
word,
phrase,
and
clause
in
a
Said conversely, we cannot render parts of the
statute surplusage and nugatory.
State Farm Fire & Cas Co
v Old Republic Ins Co, 466 Mich 142, 146; 644 NW2d 715
(2002).
Yet, it is this the plaintiff requests, and this
we cannot grant.
Therefore, contrary to the conclusions of the trial
court and the Court of Appeals, the “service” performed by
the person cannot be placed in such broad and undefined
classifications
as
general
labor.
21
Rather,
it
must
be
classified
according
to
the
most
relevant
aspects
identifiable to the duties performed in the course of the
employer’s
trade,
business,
profession,
occupation.19
or
Thus, for example, if the service that the person performs
for
the
employer
is
roofing,
and,
thus,
be
contractor
to
be
an
ineligible
independent
for
worker’s
compensation, the person must maintain a separate roofing
business,
which
roofing
business
he
holds
herself out to the public as performing.
himself
or
Accordingly, in
this case where the most Reed can point to is that he was a
house painter at times, the tests to take him out of the
worker’s compensation system are not met.
We would again caution that the contrary reading of
this requirement, as engaged in by the Court of Appeals and
the
trial
court,
would
inescapably
mean
that
any
moonlighting worker, say an industrial worker at General
Motors,
Ford,
or
DaimlerChrysler,
who
has
a
janitorial
service, lawn care business, a Mary Kay distributorship, or
even serves as a compensated choir director at her church,
would be without worker’s compensation when injured at her
day job.
This is not what the words of the Legislature
allow, and to twist them into saying it is shortsighted in
the extreme.
19
Cf. Michael H v Gerald D, 491 US 110, 127 n 6; 109 S
Ct 2333; 105 L Ed 2d 91 (1989).
22
Accordingly,
independent
we
conclude
contractor
and
that
is
Reed
subject
is
not
an
to
the
worker’s
the
Workers’
compensation system.
SUBJECT-MATTER JURISDICTION
As
a
final
matter,
we
note
that
Compensation Section of the State Bar of Michigan has filed
a provocative amicus brief.
It argues that this Court’s
decision in Sewell v Clearing Machine Corp, 419 Mich 56;
347 NW2d 447 (1984), holding that the circuit court shares
concurrent
jurisdiction
with
the
worker’s
compensation
adjudicatory system to determine, in the first instance,
whether
a
person
was
an
employee
person’s injury, is in error.
1963,
art
effectively
jurisdiction
6,
1320
§
divest
on
the
this
and
the
time
of
the
Amicus argues that Const
MCL
circuit
issue
at
418.841(1),21
court
and,
improperly before us on appeal.
of
thus,
in
tandem,
subject-matter
this
case
is
Instead, amicus argues,
20
Const 1963, art 6, § 13 provides that “[t]he
circuit court shall have original jurisdiction in all
matters not prohibited by law . . . .”
21
MCL 418.841(1) provides:
Any
dispute
or
controversy
concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis added.]
23
the worker’s compensation system has exclusive jurisdiction
to
determine
this
question.
Neither
party
raised
or
briefed this jurisdictional issue but were asked at oral
argument to address it.
Justice
Corrigan
has
persuasively
argued
in
dissent that Sewell was indeed wrongly decided.
we decline to overrule Sewell on this record.
her
However,
Both Justice
Corrigan and amicus curiae are appropriately critical of
the unseemly atmospherics surrounding the Sewell decision:
it was decided peremptorily without plenary consideration,
briefing, or argument.22
Sewell,
we
believe
accordingly
Appreciative of that criticism of
it
decline
prudent
to
to
overrule
not
replicate
Sewell
in
it
the
and
same
peremptory fashion that it was adopted.
As
we
lightly
have
made
overrule
Detroit,
462
clear
in
the
precedent.”23
Mich
439,
464;
past,
do
not
in
Robinson
v
307
(2000),
we
Indeed,
613
“[w]e
NW2d
discussed several factors to consider before overruling a
prior
decision.
considerations
Rather
mentioned
than
in
address
Robinson,
the
the
various
amicus
only
argues that Sewell was wrongly decided, and the parties do
not
even
22
address
that.
We
believe
this
is
an
Sewell, supra at 65 (Levin, J., concurring).
23
Pohutski v City of Allen Park, 465 Mich 675, 693;
641 NW2d 219 (2002).
24
unsatisfactory predicate for overruling Sewell, especially
when it is debatable whether Sewell was wrongly decided.
As plaintiff hurriedly pointed out at oral argument in this
case, the relevant language (“all questions arising under
this act shall be determined by the bureau or a worker’s
compensation magistrate”) may mean that, before deciding
any “questions arising under this act,” it is necessary to
determine if the cause of action is in tort or worker’s
compensation.
It is only after that is determined, and if
it is determined that it is indeed a worker’s compensation
matter, that the bureau’s jurisdiction is exclusive.
While
Justice Corrigan makes a compelling case that this rebuttal
argument to the amicus will be found unconvincing upon full
consideration, that is not entirely clear at this point.
Moreover, even if one assumes that Justice Corrigan and
amicus
curiae’s
stronger
assertion
argument,
we
regarding
have
had
no
jurisdiction
briefing
is
the
concerning
whether the other stare decisis considerations discussed in
Robinson are satisfied in the present case.
Further, while all courts must upon challenge, or even
sua
sponte,
confirm
that
subject-matter
jurisdiction
exists,24 that does not mean that once having done so, as we
24
Bowie v Arder, 441 Mich 23; 490 NW2d 568 (1992); Fox
v Univ of Michigan Bd of Regents, 375 Mich 238, 242-243;
134 NW2d 146 (1965); In re Estate of Fraser, 288 Mich 392,
(continued…)
25
did in Sewell, that a court must repeatedly reconsider it
de
novo.
Subsequent
courts
can
rely
on
the
earlier
determination that has the force of stare decisis behind
it.
It is that situation that we are in and until a record
exists that is full and developed and causes us to question
our earlier holding, pursuant to the Robinson tests, we see
no justification at present to disturb
the Sewell dual
jurisdiction holding.
Finally, given the interest this issue of jurisdiction
has generated on the Court, we have no doubt it will be
presented
to
occasion,
us
again
presumably
in
all
the
near
parties
future.
will
have
On
that
a
full
opportunity to brief and argue this issue, and it may at
that time be appropriate to reconsider Sewell.
CONCLUSION
We conclude that Reed was an “employee” of Mr. Food as
the Legislature has unambiguously defined that term in MCL
418. 161(1)(l) and (n).
Accordingly, we reverse in part
the judgment of the Court of Appeals and remand this case
to the circuit court for entry of a directed verdict in
defendants’
favor.
Jurisdiction
over
this
case
is
thereafter transferred to the Bureau of Worker’s Disability
(…continued)
394; 285 NW 1 (1939); Ward v Hunter Machinery Co, 263 Mich
445, 449; 248 NW 864 (1933).
26
Compensation.
Should Reed desire to pursue a claim for
benefits under the WDCA, he shall present an appropriate
claim for compensation to the bureau no later than thirty
days
after
the
date
this
opinion
is
issued.
For
the
purposes of MCL 418.381(1),25 the bureau shall treat Reed’s
claim for benefits as having been filed on December 10,
1998, the date he filed his complaint in the circuit court.
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
CAVANAGH and KELLY, JJ.
We concur in the result only.
Michael F. Cavanagh
Marilyn Kelly
25
This statute provides:
A proceeding for compensation for an injury
under this act shall not be maintained unless a
claim for compensation for the injury, which
claim may be either oral or in writing, has been
made to the employer or a written claim has been
made to the bureau on forms prescribed by the
director, within 2 years after the occurrence of
the injury.
27
S T A T E
M I C H I G A N
O F
SUPREME COURT
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v
No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
WEAVER, J. (dissenting).
I dissent from the lead opinion's determination that
plaintiff
is
an
“employee”
within
the
meaning
of
the
Worker’s Disability Compensation Act (WDCA), MCL 418.101 et
seq.
the
Instead of resolving this issue, I would first direct
parties
raised
in
to
brief
the
Compensation
Law
the
amicus
Section
jurisdictional
brief
of
the
filed
State
issue
by
the
Bar
of
that
was
Workers’
Michigan
concerning whether the circuit court had jurisdiction to
determine
whether
plaintiff
was
an
employee
meaning of the WDCA.
Elizabeth A. Weaver
within
the
S T A T E
M I C H I G A N
O F
SUPREME COURT
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v
No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
CORRIGAN, J. (dissenting).
I
respectfully
dissent
from
the
lead
opinion’s
determination that plaintiff is an “employee” within the
meaning of the Worker’s Disability Compensation Act (WDCA),
MCL
418.101
opinion’s
et
seq.
analysis
of
Although
this
I
agree
substantive
with
issue,
the
and
lead
would
also conclude that plaintiff was Mr. Food's employee at the
time
of
his
accident,
I
believe
that
address the question of our jurisdiction.1
1
we
should
first
It appears that
MCL 418.161(1)(n) of the WDCA controls this question.
the
Worker’s
Compensation
Bureau
(WCB)2
has
exclusive
jurisdiction over consideration of plaintiff’s employment
status.
the
I would specifically direct the parties to brief
important
jurisdictional
question
presented
in
the
amicus brief of the Workers’ Compensation Law Section of
the State Bar of Michigan.3
I am persuaded that Sewell v Clearing Machine Corp,
419 Mich 56; 347 NW2d 447 (1984), was wrongly decided.
It
held that the WCB and the circuit court share jurisdiction
to
determine
a
worker’s
employment
status.
Sewell’s
assumption of jurisdiction shared with the WCB violated the
plain language of MCL 418.161 without even so much as an
analytic
nod
to
the
jurisdiction in the WDCA.
authority
that
had
statutory
scheme
conferring
Sewell overruled longstanding
correctly
implemented
the
statute,
including Szydlowski v Gen Motors Corp, 397 Mich 356; 245
2
The Worker’s Compensation Bureau was created by MCL
418.201.
Pursuant to Executive Order No. 2003-18, MCL
445.2011, effective December 7, 2003, that agency is now
the Workers’ Compensation Agency.
3
Contrary to the lead opinion’s assertion, I do not
advocate overruling Sewell in a “peremptory fashion.” Ante
at 24.
I would direct briefing on the jurisdictional
issue.
2
NW2d 26 (1976).4
scheme
Moreover, it contradicted the legislative
established
to
determine
disputes
involving
the
award of worker’s compensation benefits.
We
should
review
the
fundamental
question
of
our
jurisdiction as it affects not only the proper exercise of
judicial authority in this case, but in the myriad cases
involving the exclusive remedy provision. I believe that
the parallel universe that Sewell created is illegitimate.
It offends the separation of powers and should be ended.
Because of the major jurisprudential significance of
the jurisdictional issue, I would follow the same approach
that we employed in Lapeer Co Clerk v Lapeer Circuit Court,
469 Mich 146; 665 NW2d 452 (2003), and Lapeer Co Clerk v
Lapeer Circuit Judges, 465 Mich 559; 640 NW2d 567 (2002).
I would sever and resolve the jurisdictional problem before
tackling any remaining issues.
4
See Jesionowski v Allied Products Corp, 329 Mich 209; 45
NW 2d 39 (1950); Dershowitz v Ford Motor Co, 327 Mich 386;
41 NW2d 900 (1950); Morris v Ford Motor Co, 320 Mich 372;
31 NW2d 89 (1948); Munson v Christie, 270 Mich 94; 258 NW
415 (1935); Houghtaling v Chapman, 119 Mich App 828; 327
NW2d 375 (1982); Buschbacher v Great Lakes Steel Corp, 114
Mich App 833; 319 NW2d 691 (1982); Dixon v Sype, 92 Mich
App 144; 284 NW2d 514 (1979); Herman v Theis, 10 Mich App
684; 160 NW2d 365 (1968).
3
FACTS AND PROCEDURAL HISTORY
I.
In summer 1997, plaintiff was hired as a full-time
delivery person by defendant Mr. Food, Inc.
with
plaintiff’s
performance,
Mr.
Unsatisfied
Food
plaintiff’s employment in December 1997.
terminated
Between December
1997 and May 7, 1998, defendant Hadley, an employee of Mr.
Food, hired plaintiff to assist him in deliveries on an asneeded basis.
Defendant Herskovitz, the owner of Mr. Food,
paid plaintiff about $35 to $40 a day in cash on five to
seven occasions.
including
house
Plaintiff also worked at various jobs,
painting
and
general
labor,
during
this
four-month period.
On May 7, 1998, plaintiff was a passenger in defendant
Mr. Food’s delivery truck, assisting defendant Hadley as he
had on earlier occasions.
Plaintiff expected to be paid
for his services in cash that day.
The truck was struck by
defendant Yackell’s vehicle when it did not stop at a red
light.5
Plaintiff was seriously injured as a consequence of
the accident.
Plaintiff
filed
suit,
alleging
that
Yackell
was
negligent in failing to stop at the red light, and that Mr.
Food
was
5
vicariously
liable
for
defendant
Hadley’s
Defendant Yackell is not a party to this appeal.
4
negligence in failing to avoid the collision.
Defendants
properly raised and preserved their claim that the worker’s
compensation exclusive remedy provision barred plaintiff’s
cause
of
action,
as
the
Sewell
regime
provided.
For
example, the joint pretrial order reflects that whether the
exclusive remedy provision precluded plaintiff’s claim was
an issue of law to be litigated.
statement
raised
the
Even plaintiff’s opening
applicability
of
the
WDCA’s
exclusivity provision:
On that day, Ricky Reed received a telephone
call from Buddy Hadley, and asked him to workunder-the-table for $40, as he had done several
times since being let go from Mr. Food. And Mr.
Herskovitz would pay him $40 to help Mr. Hadley
deliver meat on his route in a big freezer truck.
The evidence is going to show that not only
had Mr. Herskovitz paid him in the past, but he
[was] going to pay him to assist Mr. Hadley on
this case.
At the close of plaintiff’s proofs, Mr. Food moved for
a directed verdict, arguing again that plaintiff was an
employee of Mr. Food at the time of the accident, so that
the WDCA was plaintiff’s exclusive remedy.
The circuit court denied the
motion.
MCL 418.131(1).
Following a jury
verdict in plaintiff’s favor, Mr. Food moved for judgment
notwithstanding
the
verdict
(JNOV)
under
MCR
2.610(1),
reiterating its argument that plaintiff’s exclusive remedy
5
under worker’s compensation precluded plaintiff’s claim.6
The circuit court again denied that motion.
The Court of Appeals affirmed the trial court’s denial
of Mr. Food’s motions for a directed verdict and JNOV.7 It
held that, although plaintiff was under an implied contract
of hire with Mr. Food, he was an independent contractor at
the
time
compensation
of
the
accident
benefits
were
and,
not
therefore,
plaintiff’s
worker’s
exclusive
remedy.
Mr. Food sought leave to appeal in this Court.
In
lieu of granting leave, this Court vacated the Court of
Appeals opinion and remanded the case to the circuit court
to determine whether plaintiff was an employee within the
6
The motion for JNOV stated:
1.
. . . Plaintiff’s own testimony
established that he was an employee of Mr. Food,
and the exclusive remedy provision of the Workers
Disability Compensation Act (WDCA) deprives the
court of subject matter jurisdiction . . . .
2. Plaintiff meets the statutory definition
of “employee” in the WDCA because part-time
workers are employees, and Plaintiff Reed was
“performing service in the course of the . . .
business . . . of an employer at the time of the
injury.[”]
7
Unpublished opinion per curiam of the Court
Appeals, issued February 14, 2003 (Docket No. 236588).
6
of
meaning
of
MCL
418.161(l)(l)
and
(n).8
On
remand,
the
circuit court held that plaintiff was not an employee, but
an independent contractor, because he maintained a separate
business
as
a
day
laborer
public as a day laborer.
and
held
himself
out
to
the
This Court then remanded the case
to the Court of Appeals to reconsider whether plaintiff was
an employee within the meaning of MCL 418.161(1)(l) and (n)
in light of the circuit court’s findings of fact.9
The
Court of Appeals affirmed.10
This Court granted the application of defendants Mr.
Food
and
Hadley
for
leave
to
appeal
on
the
issue
of
plaintiff’s employment status on the date of the accident.11
On April 12, 2005, the Workers’ Compensation Law Section
filed
an
amicus
brief
squarely
raising
the
Sewell
jurisdictional issue for the first time. Neither plaintiff
nor defendants answered the amicus brief.
II.
The
issue
of
STANDARD OF REVIEW
subject-matter
jurisdiction
turns
on
questions of statutory and court rule interpretation and
8
469 Mich 960 (2003).
9
469 Mich 1051 (2004).
10
Unpublished opinion per curiam of the
Appeals, issued June 8, 2004 (Docket No. 236588).
11
471 Mich 957 (2005).
7
Court
of
thus presents a question of law.
supra at 566.
Lapeer Circuit Judges,
This Court reviews questions of law de novo.
Id.; Cain v Waste Mgt, Inc (After Remand), 472 Mich 236;
697 NW2d 130 (2005).
implications
This case also has
regarding
the
legitimate
constitutional
scope
of
judicial
power, which is also subject to review de novo.
Warda v
Flushing City Council, 472 Mich 326; 696 NW2d 671 (2005).
III. DISCUSSION & ANALYSIS
A.
Subject-Matter Jurisdiction
Subject-matter jurisdiction may be raised at any time
by the parties, or sua sponte by a court. Nat'l Wildlife
Federation v Cleveland Cliffs Iron Co, 471 Mich 608, 630;
684
NW2d
800
(2004);
MCR
2.116(D)(3).
Subject-matter
jurisdiction involves the power of a court to hear and
determine
a
cause
or
matter.
Langdon
v
Wayne
Circuit
Judges, 76 Mich 358, 367; 43 NW 310 (1889). Since subjectmatter jurisdiction is the foundation for a court to hear
and decide a claim, it may be considered by the court on
its own at any time.
In re Estate of Fraser, 288 Mich 392,
394; 285 NW 1 (1939).
In Joy v Two-Bit Corp, 287 Mich 244, 253-254; 283 NW
45 (1938), this Court defined subject-matter jurisdiction
as
8
“the right of the court to exercise judicial
power over that class of cases; not the
particular case before it, but rather the
abstract power to try a case of the kind or
character of the one pending; and not whether the
particular case is one that presents a cause of
action, or under the particular facts is triable
before the court in which it is pending, because
of some inherent facts which exist and may be
developed during the trial.” [Citation omitted.]
Subject-matter jurisdiction is conferred on the court
by the authority that created the court.
Detroit v Rabaut,
389 Mich 329, 331; 206 NW2d 625 (1973).
Const 1963, art 6,
§ 1 created the current judicial system in Michigan; it
provides for one Supreme Court, the Court of Appeals, one
circuit court of general jurisdiction, one probate court,
and “courts of limited jurisdiction that the legislature
may establish . . . .”
Const 1963, art 6, § 4 provides that this Court has
“general superintending control over all courts; power to
issue, hear and determine prerogative and remedial writs;
and
appellate
jurisdiction
supreme
court.”
review
and
necessarily
pass
This
on
assumes
as
provided
Court’s
appellate
decisions
that
by
the
of
lower
rules
of
the
jurisdiction
the
lower
courts
to
courts
properly
exercised subject-matter jurisdiction over the case.
If a
lower court improperly exercised jurisdiction over a matter
delegated
to
another
governmental
9
branch,
this
Court
is
devoid of appellate jurisdiction over the subject matter of
the case because the Constitution provides no basis for
this
Court
to
exercise
department of government.
a
power
delegated
to
another
On the contrary, Const 1963, art
3, § 2 specifically provides that “[n]o person exercising
powers
of
one
branch
shall
exercise
powers
properly
belonging to another branch except as expressly provided in
this constitution.”
As this Court explained in Bowie v Arder, 441 Mich 23,
56; 490 NW2d 568 (1992):
When
a
court
lacks
subject
matter
jurisdiction to hear and determine a claim, any
action it takes, other than to dismiss the
action, is void. Further, a court must take
notice of the limits of its authority, and should
on
its
own
motion
recognize
its
lack
of
jurisdiction and dismiss the action at any stage
in the proceedings. [Citation omitted.]
The specific threshold jurisdictional issue here is
whether the Legislature has exclusively delegated to the
WCB the power to decide the application of the WDCA to the
class of cases that includes plaintiff’s case.
If that is
so, then this Court and the lower courts are divested of
subject-matter
jurisdiction
to
determine
a
plaintiff’s
employment status for WDCA purposes, and this Court has no
choice but to dismiss this case.
Proper resolution of this
jurisdictional question is critical because it determines
10
whether a jury or a specialized agency will hear and decide
the claim.
The WDCA actually prohibits a circuit court
from exercising subject-matter jurisdiction to decide any
questions arising under the WDCA by assigning jurisdiction
to the WCB or a worker’s compensation magistrate.
MCL
418.841(1).
B.
Worker’s Disability Compensation Act
The predecessor to the WDCA, known as the “Workmen’s
Compensation Act,” was enacted in 1912 during a special
legislative
session.
Cain,
supra
at
247-248.12
The
worker’s compensation system assures employees that they
will receive compensation for employment-related injuries,
without
regard
benefits.
In
liability,
in
fault,
exchange
employees
compensation
except
to
they
may
limited
are
through
for
worker’s
“this
limited
collect
from
circumstances,
almost
in
the
their
may
compensation
not
automatic
amount
employer,
bring
a
of
and,
tort
action against the employer.” Clark v United Technologies
Automotive, Inc, 459 Mich 681, 687; 594 NW2d 447 (1999);
MCL 418.131(1).
Worker’s compensation is thus an injured
12
1975 PA 279 changed the title of the act from the
“Workmen's Compensation Act of 1969” to the “Worker's
Disability Compensation Act of 1969” to reflect its
applicability to workers of either sex.
11
worker’s “exclusive remedy” for a qualifying work-related
injury.
Id.
MCL 418.301(1) of the WDCA provides, in relevant part:
An employee, who receives a personal injury
arising out of and in the course of employment by
an employer who is subject to this act at the
time of the injury, shall be paid compensation as
provided in this act.
Thus,
worker’s
compensation
benefits
are
available
under the WDCA when (1) an employment relationship exists,
and (2) a personal injury arose out of, and in the course
of, that employment.
The term “employee” for WDCA purposes is defined in
MCL 418.161(1).
That section controls employment status
determinations regarding government workers (§ 161[1][a]),
foreign nationals (§ 161[1][b]), public safety personnel
(§§
161[1][c]
161[1][d]
and
161[1][g]),
and
[e]),
public
[f]),
volunteer
volunteer
health
civil
volunteers
fire
fighters
defense
(§§
(§§
workers
161[1][h]
(§
and
[i]), emergency rescue workers (§ 161[1][j], peace officers
(§
161[1][k]),
trainee
program
workers
under
participants
contract
(§
(§
161[1][m]),
161[1][l]),
and
even
independent contractors (§ 161[1][n[).13
13
The question the majority addresses is thus first
assigned to the WCB.
12
The only apparent exception that confers jurisdiction
on the circuit court is found in MCL 418.131(1):
The right to the recovery of benefits as
provided in this act shall be the employee’s
exclusive remedy against the employer for a
personal injury or occupational disease. The only
exception
to
this
exclusive
remedy
is
an
intentional tort.
An intentional tort shall
exist only when an employee is injured as a
result of a deliberate act of the employer and
the employer specifically intended an injury.
Here, plaintiff has not presented an intentional tort
claim.
The fundamental question presented here is whether
the circuit court has jurisdiction over a case after a
party has raised the question whether the claim sounds in
worker’s compensation rather than tort.
C. The WDCA and the Circuit Court Subject-Matter
Jurisdiction
MCL 418.841(1) of the WDCA provides:
Any
dispute
or
controversy
concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis supplied.]
The
WDCA
sets
up
comprehensive
procedures
resolving disputes “arising under” the act.
MCL
418.847(1)
apply
for
magistrate.
a
provides
that
hearing
before
a
“party
a
in
worker’s
for
For example,
interest”
may
compensation
MCL 418.847(2) provides that a magistrate must
file a written order and “a concise written opinion stating
13
his or her reasoning for the order including any findings
of fact and conclusions of law.”
MCL 418.859a and 418.861a establish the procedures a
party
must
follow
in
order
decision within the WCB.
to
appeal
a
magistrate’s
MCL 418.859a provides that “a
claim for review of a case for which an application under
section
847
is
filed
.
appellate commission.”
.
.
shall
be
filed
with
the
MCL 418.861a(1) provides that any
claim for review filed pursuant to § 859a “shall be heard
and decided by the appellate commission [WCAC].”
that
process,
the
WCAC
may
“remand
[the]
During
matter
to
a
worker’s compensation magistrate for purposes of supplying
a complete record if it is determined that the record is
insufficient for purposes of review.”
MCL 418.861a(12)
Judicial review of magistrate and WCAC decisions is
circumscribed under the WDCA.
MCL 418.861 provides:
The findings of fact made by the board
acting within its powers, in the absence of
fraud, shall be conclusive. The court of appeals
and the supreme court shall have power to review
questions of law involved in any final order of
the board, if application is made by the
aggrieved party within 30 days after such order
by any method permissible under the rules of the
courts of the laws of this state.
MCL 418.861a(14) similarly provides:
The findings of fact made by the commission
acting within its powers, in the absence of
fraud, shall be conclusive. The court of appeals
14
and the supreme court shall have the power to
review questions of law involved with any final
order of the commission, if application is made
by the aggrieved party within 30 days after the
order by any method permissible under the
Michigan court rules.
Significantly, the WDCA sets up no substantive right
to or procedural mechanism for circuit court resolution or
review of legal or factual questions regarding application
of the WDCA.
On the contrary, as noted earlier, in MCL
418.841, the Legislature directed that “[a]ny dispute or
controversy concerning compensation or other benefits shall
be submitted to the bureau and all questions arising under
this act shall be determined by the bureau or a worker’s
compensation magistrate . . . .”
(Emphasis supplied.)
Where, as here, the employment status of an injured
plaintiff is in dispute, the issue is whether that dispute
is
one
“arising
under”
the
WDCA.
If
the
dispute
over
employment status is not one “arising under” the WDCA, then
MCL
418.841
exercising
Conversely,
does
not
preclude
jurisdiction
if
the
a
over
dispute
over
circuit
that
court
from
determination.
employment
status
is
a
question “arising under” the WDCA, then a circuit court
lacks
subject-matter
jurisdiction
over
those
initial
determinations by virtue of the Legislature’s direction in
MCL
418.841(1)
that
“all”
15
such
questions
“shall
be
determined
by
the
magistrate
.
.
Legislature’s
bureau
.
use
or
.”
of
a
worker’s
(Emphasis
the
word
compensation
supplied.)
“shall”
in
a
The
statute
“indicates a mandatory and imperative directive”
Burton v
Reed
NW2d
City
Hosp
Corp,
471
Mich
745,
752;
discussed,
the
criteria
691
424
(2005).
As
already
employment
status
are
comprehensively
for
set
controlled by, MCL 418.161(1) of the WDCA.
determining
forth
in,
and
The question of
employee status falls within the category of “all questions
arising under” the act.
Because the Legislature directed
that all questions concerning the meaning and application
of every provision in the WDCA are to be decided by the WCB
or
a
magistrate,
and
any
dispute
regarding
whether
an
injured party is an “employee” is necessarily one “arising
under”
the
WDCA,
the
WCB
is
the
designated
forum
to
determine that question.
Const 1963, art 6, § 13 provides that “[t]he circuit
court shall have original jurisdiction in all matters not
prohibited by law . . . .”
of
MCL
418.841(1),
it
(Emphasis supplied.)
appears
that
the
By virtue
Legislature
“prohibited by law” the exercise of original jurisdiction
in the circuit court.
party’s
employment
Therefore, jurisdiction regarding a
status
rests
16
in
the
first
instance
exclusively
with
the
WCB
or
a
magistrate.
As
noted
earlier, because the circuit court lacked jurisdiction over
the subject matter, the Court of Appeals and this Court
lack
subject-matter
jurisdiction
to
review
that
circuit
court decision.
D. Sewell v Clearing Machine Corp, 419 Mich 56; 347 NW2d
447 (1984)
Despite the clear and unambiguous directive set forth
in MCL 418.841, Sewell, supra, overrode the statute and
declared that the courts and the WCB shared jurisdiction.
The Sewell Court held that
the bureau has exclusive jurisdiction to decide
whether injuries suffered by an employee were in
the course of employment. The courts, however,
retain the power to decide the more fundamental
issue whether the plaintiff is an employee (or
fellow employee) of the defendant.
[Sewell,
supra at 62 (emphasis supplied).]
There
power.
is
no
Indeed,
authority
the
cited
judiciary
for
is
this
assertion
powerless
to
of
modify
unambiguous statutory language in order to inject its own
policy preferences. Rory v Continental Ins Co, 473 Mich
____; ___ NW2d ___ (2005).
Nonetheless, Sewell dictated
that courts and the WCB would effectively share the power
to decide whether an injured party is an “employee” within
the meaning of the WDCA.
The WCB, however, would retain
17
exclusive jurisdiction over determining whether an injury
occurred in the course of employment.
Although
analysis
of
Sewell
that
cited
section’s
MCL
418.841,
sweeping
it
provided
directive
that
no
“all
questions arising under [the] act shall be determined by
the” WCB.
Indeed, the opinion is devoid of any analysis of
any WDCA provisions whatsoever.
Moreover,
the
perfunctory
decision
in
Sewell
swept
away almost fifty years of precedent in which this Court
and the Court of Appeals had consistently held that courts
lack
jurisdiction
to
determine
employment
status.
Szydlowski, supra; Jesionowski v Allied Products Corp, 329
Mich 209; 45 NW2d 39 (1950); Dershowitz v Ford Motor Co,
327 Mich 386; 41 NW2d 900 (1950); Morris v Ford Motor Co,
320 Mich 372; 31 NW2d 89 (1948);
Munson v Christie, 270
Mich 94; 258 NW 415 (1935); Houghtaling v Chapman, 119 Mich
App 828; 327 NW2d 375 (1982); Buschbacher v Great Lakes
Steel Corp, 114 Mich App 833; 319 NW2d 691 (1982); Dixon v
Sype, 92 Mich App 144; 284 NW2d 514 (1979); Herman v Theis,
10 Mich App 684; 160 NW2d 365 (1968).
Sewell wholly disregarded this extensive body of case
law, stating:
Taken
alone,
those
general
statements
suggest that the bureau’s jurisdiction takes
precedence over that of the circuit court
18
whenever there is an issue concerning the
applicability
of
the
Worker’s
Disability
Compensation Act. The rule is not so broad,
however. [Sewell, supra at 62.]
Again, the Court cited no authority for that proposition.
It
is
hard
established
to
by
imagine
the
a
broader
Legislature
covering “all questions.”
legislative
power
breathtaking.
in
This
in
rule
Sewell
the
the
one
i.e.,
one
usurpation
of
WDCA,
Court’s
is
than
nothing
short
of
This Court has stood firm against just such
usurpations
of
legislative
power
by
this
branch
of
government.
Warda, supra; Halloran v Bhan, 470 Mich 572,
576; 683 NW2d 129 (2004); Lapeer Circuit Judges, supra;
Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 63; 642 NW2d
663 (2000); Massey v Mandell, 462 Mich 375, 379-380; 614
NW2d 70 (2000); DiBenedetto v West Shore Hosp, 461 Mich
394,
402;
605
NW2d
300
(2000);
Omne
Financial,
Inc
v
Shacks, Inc, 460 Mich 305, 311; 596 NW2d 591 (1999).
I
Sewell.
fully
agree
He
fundamental”
explanation,
with
pointed
test
or
was
Justice
out
that
Levin’s
the
“proffered
justification”
and
statement
majority’s
without
that
it
in
“more
analysis,
“offers
no
guidance for the resolution of future cases and does not
satisfactorily explain the result reached . . . .”
65.
Id. at
He argued that “[t]he issue whether [defendant] was
19
[plaintiff’s] employer is no more ‘fundamental’ than the
issue whether [plaintiff’s] injuries were suffered in the
course of employment.”
In
announcing
a
Id. at 70.
shared
jurisdiction
paradigm
when
determining whether the WDCA applies to a claim, Sewell
overruled Szydlowski, supra. In Szydlowski, we held that
“a plaintiff’s remedy against an employer based
on an injury allegedly arising out of an
employment relationship properly belongs within
the workmen's compensation department for initial
determination as to jurisdiction and liability.”
[Szydlowski, supra at 359, quoting Herman, supra
at 691 (emphasis supplied).]
This
procedures
statutorily
Court
for
explained
workmen’s
established.
in
Szydlowski
compensation
[Herman]
cases
properly
that
have
“the
been
cautions
us
against a shortcut or circumvention of those procedures.”
Szydlowski, supra at 359.
The WDCA scheme is a complete
departure from the common law and equity jurisprudence, as
this Court recognized in Andrejwski v Wolverine Coal Co,
182 Mich 298, 302-303; 148 NW 684 (1914):
The act in question, like all similar acts,
provides for compensation, and not for damages,
and in its consideration and construction all of
the rules of law and procedure, which apply to
recover damages for
negligently causing injury
or
death,
are
in
these
cases
no
longer
applicable, and there is substituted a new code
of procedure fixed and determined by the act in
question. [Emphasis supplied.]
20
The shared jurisdiction paradigm established in Sewell
not only contradicts the plain language of the WDCA, but it
also does violence to the legislative scheme.
E. Prudential Problems with Sewell
As
discussed
contradicted
questions
within
the
arising
the
in
the
clear
legislative
under”
worker’s
previous
the
directive
WDCA
compensation
section,
are
to
jurisdiction
concerns,
quite
paradigm
apart
implicates
from
the
it
fails
to
accord
the
proper
is
a
But Sewell’s
other
absence
authority to negate the legislative scheme.
“all
addressed
That
sufficient basis to overturn the decision.14
shared
that
be
system.
Sewell
prudential
of
judicial
Specifically,
deference
to
agency
expertise, and thwarts the goal of consistent and uniform
decisions by the WCB.
1.
This
agencies
Court
possess
addressing
authority.”
Agency Expertise
has
acknowledged
“superior
recurring
that
knowledge
issues
within
administrative
and
the
expertise
scope
of
in
their
Travelers Ins Co v Detroit Edison Co, 465 Mich
185, 200; 631 NW2d 733 (2001).
In Mudel v Great Atlantic
& Pacific Tea Co, 462 Mich 691, 702 n 5; 614 NW2d 607
14
See Robinson v Detroit, 462 Mich 439, 473; 613 NW2d
307 (2000) (Corrigan, J., concurring).
21
(2000), this Court explained that the Legislature created a
“two-tier reviewing process, which delegates to the WCAC
the
role
of
ultimate
factfinder,
while
limiting
the
judiciary to the role of guardian of procedural fairness.”
Mudel correctly recognized that
administrative
agencies
possess
expertise
in
particular areas of specialization. Because the
judiciary has neither the expertise nor the
resources to engage in a fact-intensive review of
the entire administrative record, that type of
detailed review is generally delegated to the
administrative body. In the particular context of
worker’s compensation cases, a highly technical
area of law, the judiciary lacks the expertise
necessary
to
reach
well-grounded
factual
conclusions . . . .
The judiciary is not more
qualified
to
reach
well-grounded
factual
conclusions in this arena than the administrative
specialists.
Therefore,
the
Legislature
has
decided that factual determinations are properly
made at the administrative level, as opposed to
the judicial level. [Id.]
The
rationale
underlying
this
Court’s
decision
in
Sewell is that resolving the legal question regarding a
plaintiff’s employment status is not an issue that requires
agency expertise.
understanding.
same
facts
The instant case, however, belies that
Here,
three
three
different
employment status.
courts
ways
in
have
interpreted
deciding
the
plaintiff’s
The trial court held that plaintiff was
not under a “contract of hire” at the time of the accident.
The
Court
contract
of
of
Appeals
hire,
held
but
that
that
22
plaintiff
he
was
an
was
under
a
independent
contractor.
Here,
the
lead
opinion
concludes
that
plaintiff was under a contract of hire and was not acting
as an independent contractor.
This
case
itself
reflects
that
the
legal
question
regarding the employment status of an injured party for
WDCA purposes can be a complicated and highly fact-driven
question.
For
that
reason,
employment
status
is
best
determined first by the administrative agency legislatively
charged with applying the WDCA.
Even if the Legislature had not clearly directed that
all questions regarding application of the WDCA be answered
within
the
worker’s
compensation
approach simply works best.
system,
the
pre-Sewell
Allowing the agency to decide
first which tribunal has jurisdiction over a claim in which
the
WDCA
is
tribunals.
implicated
maximizes
the
strengths
of
both
The WCB may apply its expertise to resolve
issues of fact in the employment context, while courts, of
course,
retain
appellate
review
of
WCB
decisions
and
resolve questions of law.
2. Uniformity and Consistency
The goal of consistent and uniform administrative
decision-making is similarly thwarted where multiple forums
may decide the same factual question.
Travelers, supra at 199:
23
As we stated in
“[U]niformity
and
consistency
in
the
regulation of business entrusted to a particular
agency are secured, and the limited functions of
review by the judiciary are more rationally
exercised, by preliminary resort for ascertaining
and interpreting the circumstances underlying
legal issues to agencies that are better equipped
than courts by specialization, by insight gained
through
experience,
and
by
more
flexible
procedure.” [Citation omitted.]
Resort to the WCB in the first instance ensures that
employment status issues will be resolved in a consistent
manner.
Moreover, the shared jurisdiction approach established
by Sewell suffers from an unconvincing rationale and lack
of clarity in application.
As Justice Levin aptly opined,
there is little reason to assume that employment status
determinations
questions
are
involved
any
in
“more
fundamental”
determining
whether
than
a
plaintiff’s
claim sounds in worker’s compensation or tort.
supra at 70 (Levin, J., concurring).
other
Sewell,
Thus, Sewell’s “more
fundamental” rationale for concurrent jurisdiction appears
both unprincipled and groundless.
F.
Szydlowski’s Approach
This Court’s opinion in Szydlowski provides the more
textually
faithful
when
WDCA
the
jurisdictional
is
approach
to
implicated.
inquiry
in
the
24
determining
jurisdiction
Contrary
Sewell,
first
to
instance
should
the
be
referred to the WCB upon petition by either party in a
court action.
In addition to being more textually faithful to the
WDCA,
this
approach
would
avoid
lengthy,
duplicative
litigation by providing a definite jurisdictional starting
point.
court,
Consider this case:
the
Court
of
for seven years, the circuit
Appeals,
and
now
this
Court
have
grappled with defining and applying the WDCA’s terms of art
to the facts of this case.
The forum legislatively charged
with determining all questions arising under the WDCA is
the WCB, not the courts. That forum is where this class of
cases belongs.
I agree that this Court should not lightly overrule
precedent.15
As this Court discussed recently in People v
Davis, 472 Mich 156,
168 n 19; 695 NW2d 45 (2005),
the doctrine of stare decisis is not applied
mechanically to prevent the Court from overruling
previous decisions that are erroneous. We may
overrule a prior decision when we are certain
that it was wrongly decided and “‘less injury
will result from overruling than from following
it.’” People v Moore, 470 Mich 56, 69 n 17; 679
NW2d 41 (2004), quoting McEvoy v Sault Ste Marie,
136 Mich 172, 178; 98 NW 1006 (1904).
Sewell’s shared jurisdiction approach is not at all
faithful to the plain text of the WDCA.
15
Ante at 24.
25
The doctrine of
stare
decisis
directive.
should
not
prevail
over
a
legislative
As I noted in Robinson v Detroit, 462 Mich 439,
472-473; 613 NW2d 307 (2000):
I agree that too rapid change in the law
threatens judicial legitimacy, as it threatens
the stability of any institution. But the act of
correcting past rulings that usurp power properly
belonging to the legislative branch does not
threaten
legitimacy.
Rather,
it
restores
legitimacy. Simply put, our duty to act within
our
constitutional
grant
of
authority
is
paramount. If a prior decision of this Court
reflects an abuse of judicial power at the
expense of legislative authority, a failure to
recognize and correct that excess, even if done
in the name of stare decisis, would perpetuate an
unacceptable abuse of judicial power. [Corrigan,
J., concurring.]
IV.
In
Sewell’s
sum,
Conclusion
assumption
of
circuit
court
jurisdiction over determining employment status contradicts
the plain language of the WDCA.
status
is
a
fact-driven
Determining employment
undertaking
interpretation and application of the WDCA.
should
be
determined
first
by
the
forum
requiring
Such questions
legislatively
charged with interpreting and applying the act.
For the
foregoing reasons, I conclude that the circuit court and
the Court of Appeals lack subject-matter jurisdiction over
this
matter.
Although
I
agree
that
the
jurisdictional
issue was posed at a very late stage, I would nonetheless
direct
the
parties
to
brief
26
this
jurisprudentially
significant problem of jurisdiction and submit the case on
this narrow question.
Maura D. Corrigan
27
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