Edson v. State

Edson v. State (2001-446); 175 Vt. 330; 830 A.2d 671

2003 VT 32

[Filed 28-Mar-2003)


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2003 VT 32

                                No. 2001-446

       	
  Leslie Edson	                                 Supreme Court

                                                 On Appeal from
       v.	                                 Washington Superior Court


  State of Vermont	                         June Term, 2002


  Matthew I. Katz, J.

  David R. Edwards and Pamela A. Stonier, Law Clerk (On the Brief),
    Burlington, for Plaintiff-Appellant.

  William Sorrell, Attorney General, and Joseph L. Winn, Assistant Attorney
    General, Montpelier, for Defendant-Appellee.


  PRESENT:  Amestoy, C.J., Dooley, Morse (FN1), Johnson and Skoglund, JJ.

       ¶  1.  AMESTOY, C.J.   Plaintiff Leslie Edson, who was injured while
  working for a trucking firm that had a contract to load and deliver
  merchandise for the Vermont Department of Liquor Control, appeals the
  superior court's determination that the State was plaintiff's "statutory
  employer" within the meaning of 21 V.S.A. § 601(3) and therefore immune
  from plaintiff's tort suit under 21 V.S.A. § 622 (right to workers'
  compensation benefits excludes all other rights and remedies against
  employer).  We affirm.
   
       ¶  2.  Plaintiff worked for Jerry Nelson, owner of J.E. Nelson
  Trucking.  Nelson entered into a delivery contract with the Department of
  Liquor Control, which has the statutory duty to "[s]upervise the opening
  and operation of local agencies for the sale and distribution of spirituous
  liquors."  7 V.S.A. § 104(2).  The contract required Nelson to deliver
  liquor from the liquor control warehouse in Montpelier to various liquor
  outlets throughout the state.  The contract also required Nelson to provide
  personnel during the day to load and move trailers at the Montpelier
  warehouse.  Plaintiff performed these loading duties for Nelson.

       ¶  3.  In August 1995, plaintiff was injured in a trailer owned by
  Nelson and parked at the State's warehouse loading dock.  His hand was
  crushed between a conveyor belt and a roller that extended into the
  trailer.  Because of his injury, plaintiff was out of work for
  approximately five weeks.  Pursuant to his contract with the State, Nelson
  provided workers' compensation benefits to plaintiff, including a full
  salary during his absence and payments for all medical bills related to the
  accident.  In November 1997, plaintiff filed a third-party negligence claim
  against the State based on the accident.
   
       ¶  4.  In July 1998, the State filed a motion for summary judgment,
  asserting that because it was plaintiff's "statutory employer" within the
  meaning of § 601(3), plaintiff could not file a third-party tort action
  against the Department pursuant to 21 V.S.A. § 624(a) (receipt of worker's
  compensation benefits does not preclude action against liable third party). 
  After initially denying the State's motion, the superior court bifurcated
  the case and ordered a bench trial to determine if the State was
  plaintiff's statutory employer.  Following the November 2000 bench trial,
  the court found that plaintiff's job loading trucks was conducted in
  accordance with the warehouse's specifications, designed to provide for
  efficient delivery of liquor to multiple destinations, and that plaintiff's
  work schedule was largely determined by state employees at the warehouse. 
  Based on these and other findings, the court ruled that the State was
  plaintiff's statutory employer and, therefore, immune from further tort
  liability.

       ¶  5.  Plaintiff appeals, arguing that the evidence does not support
  either the court's findings or its ultimate conclusion that the State is
  plaintiff's statutory employer.  In making these arguments, plaintiff
  focuses primarily on the degree to which the State's warehouse supervisor
  had the authority to control plaintiff's work.  Our review of the evidence
  reveals sufficient support for the court's findings, but, for the reasons
  explained below, we focus on the language of § 601(3) and our prior case
  law construing that provision rather than on the degree of control that the
  State had over plaintiff's work.  See Welch v. Home Two, Inc., 172 Vt. 632,
  633, 783 A.2d 419, 421 (2001) (mem.)  (statutory provisions are
  all-embracing in determining whether employee-employer relationship is
  covered by Workers' Compensation Act).

       ¶  6.  Section 601(3) defines the word "Employer" to include "the
  owner or lessee of premises or other person who is virtually the proprietor
  or operator of the business there carried on, but who, by reason of there
  being an independent contractor or for any other reason, is not the direct
  employer of the workers there employed."  As we stated in King v. Snide,
  144 Vt. 395, 400, 479 A.2d 752, 754 (1984), § 601(3) "creates a statutory
  relationship of employer and employee, where no such relationship existed
  at common law."  The statute was intended to impose liability for worker's
  compensation benefits upon business owners who hire independent contractors
  to carry out some phase of their business.  Id. at 401, 479 A.2d  at 754. 
  The idea was to prevent business owners or general contractors from
  attempting to avoid liability for workers' compensation benefits by hiring
  independent contractors to do what they would otherwise have done
  themselves through their direct employees.  Id.
   
       ¶  7.  Hence, the critical inquiry in determining whether an employer
  is a "statutory employer" under § 601(3) is whether the type of work being
  carried out by the independent contractor is the type of work that could
  have been carried out by the owner's employees as part of the regular
  course of the business.  Id.  Put another way, the question is whether the
  work that the owner contracted for "is a part of, or process in, the trade,
  business or occupation of the owner."  Id.  This inquiry, which is driven
  by the statutory definition of "employer" contained in § 601(3), has
  informed and controlled our prior decisions on the subject.  For example,
  in Packett v. Moretown Creamery Co., 91 Vt. 97, 99, 101-02, 99 A. 638,
  638-40 (1917), we concluded that the owner of a creamery business was not
  the statutory employer of an employee injured while working for an
  independent contractor hired by the creamery owner to construct a building
  at the creamery.
   
       ¶  8.  On the other hand, we came to the opposite conclusion in
  O'Boyle v. Parker-Young Co., 95 Vt. 58, 112 A. 385 (1921), a case highly
  analogous to the present one.  The defendant in O'Boyle, a manufacturer of
  wood products, hired an independent contractor to haul its lumber and load
  it on railroad cars for shipment.  An employee of the independent
  contractor died from injuries sustained while working for the independent
  contractor.  This Court acknowledged that the employee had been entirely
  under the control of the independent contractor, but concluded that this
  fact was not determinative as to whether the defendant manufacturer was the
  deceased employee's statutory employer.  Id. at 60, 112 A.  at 386; see
  Welch, 172 Vt. at 634, 783 A.2d  at 421 (inquiry in "lent-employee"
  situation is different from inquiry when statutory employment relationship
  exists).  After stating that the "true test" was whether the work being
  done by the injured employee pertained to the defendant's business, we
  concluded that the employee had been employed for the purpose of carrying
  on the defendant's business within the meaning of the similarly worded
  statutory predecessor to § 601(3).  O'Boyle, 95 Vt. at 61-62, 112 A. at
  386-87; cf. Pullig v. Shreveport Packing Co., 342 So. 2d 1217, 1218 (La.
  App. Ct. 1977) (workers' compensation was exclusive remedy of independent
  contractor's employee, who was injured while performing unloading work that
  was essential to principal's business).  

       ¶  9.  In the present case, it is plain that plaintiff was injured
  while engaged in the State's business of distributing liquor to its local
  agencies.  See 7 V.S.A. § 104(2) (commissioner shall supervise operation of
  local agencies for sale and "distribution" of spiritous liquors); see
  Johnson v. Jefferson Nat'l Bank, 422 S.E.2d 778, 780 n.1 (Va. 1992)
  (determining whether employee is engaged in business of public entity
  requires examination of nature of business mandated or authorized by
  legislative authority).  While we recognize that the State's relationship
  to Nelson Trucking in this case is not identical to the general
  contractor-subcontractor context at a construction site, nothing in §
  601(3) or any of the other provisions of the Workers' Compensation Act
  suggest that the State should be precluded from obtaining the status of
  statutory employer in this case.
   
       ¶  10.  Nor does it make a difference that Nelson Trucking provided
  workers' compensation benefits to plaintiff pursuant to its contract with
  the State.  We need not consider the State's contention that the cost
  incurred by Nelson Trucking in providing those benefits was built into the
  hourly rate that the State paid to Nelson.  As we stated in Welch, 172 Vt.
  at 635, 783 A.2d  at 422, it is the statutory employer's potential
  liability, not its actual payment of workers' compensation benefits, that
  makes the employer immune from an injured employee's third-party tort suit. 
  See A. Larson & L. Larson, Larson's Workers' Compensation Law §
  111.04[1][b], at 111-23 (2002) (noting marked trend toward granting
  immunity from injured employees' third-party tort suit to general
  contractors who are secondarily liable for workers' compensation benefits,
  even though compensation was actually paid by subcontractor); cf. Hyon-Su
  v. Maeda Pacific Corp., 905 F.2d 302, 305-06 (9th Cir. 1990) (immunity from
  tort suit applies to general contractor even where subcontractor has
  provided workers' compensation benefits to injured employee, given that
  statute does not expressly limit statutory employers' exclusive liability
  to situations where subcontractor has failed to procure workers'
  compensation insurance).

       ¶  11.  The underlying rationale for making workers' compensation
  benefits exclusive with respect to statutory employers is that since the
  employer is "in effect, made the employer for the purposes of the
  compensation statute, it is obvious that it should enjoy the regular
  immunity of an employer from third-party suit when the facts are such that
  it could be made liable for compensation."  Larson, supra § 111.04[1][a],
  at 111-22.  Plaintiff provides no persuasive basis for distinguishing his
  argument from that advanced in Welch, 172 Vt. at 632-33, 783 A.2d  at
  419-20, where we recently concluded that the plaintiff's claim was
  essentially an attempt to preserve the option of collecting workers'
  compensation benefits from the subcontractor and, at the same time, suing
  the general contractor for negligence.  Under the facts of the instant
  case, the State was plaintiff's statutory employer within the meaning of §
  601(3) and is therefore immune from plaintiff's negligence claim.

       Affirmed.


                                       FOR THE COURT:



                                       _______________________________________
                                       Chief Justice


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                                  Footnotes


FN1.  Justice Morse sat for oral argument but did not participate in this
  decision.