Candido v. Polymers, Inc.

Candido v. Polymers, Inc.  (95-590); 166 Vt. 15; 687 A.2d 476

[Filed 08-Nov-1996]


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.


                                 No. 95-590


Tammy Candido                                     Supreme Court

                                                  On Appeal from
    v.                                            Addison Superior Court

Polymers, Inc.                                    June Term, 1996


Matthew I. Katz, J.

James A. Dumont and Sandra M. Lee of Keiner & Dumont, P.C., Middlebury, for
  plaintiff-appellant

Susan J. Flynn and Karen McAndrew of Dinse, Erdmann, Knapp & McAndrew, P.C.,
  Burlington, for defendant-appellee


PRESENT:  Gibson, Dooley, Morse and Johnson, JJ., and Martin, Super. J.,
          Specially Assigned

       GIBSON, J.   Plaintiff Tammy Candido appeals from an order of the
  Addison Superior Court granting summary judgment in favor of defendant
  Polymers, Inc. on Candido's negligence claims.  Candido contends that the
  court erred in finding her, a worker hired through a temporary employment
  agency, Polymers's borrowed servant, and that her common-law claims are
  therefore barred under the employer-immunity provision of the Workers'
  Compensation Act, 21 V.S.A. § 622.  We affirm, but on the basis that
  Polymers qualifies as Candido's "employer" and Candido qualifies as
  Polymers's "employee" under the statutory language.

       Polymers is a manufacturer of commercial brush fibers.  In March 1992,
  Candido inquired about employment opportunities at Polymers's factory in
  Middlebury and was told to submit an application to TAD Technical Services
  Corp. (TAD), an employment agency that had a contract with Polymers to
  provide temporary workers.  Candido submitted an application to TAD, which
  hired her and assigned her to work at Polymers's Middlebury plant.

       The contract between Polymers and TAD provided that TAD would "[a]ct
  as `The

 

  Employer' for hiring and employing temporary workers," but that Polymers
  reserved the right to disapprove applicants recommended by TAD.  Under the
  contract, TAD established the pay rate of temporary workers and completed
  "all wage and hour documents as the temporary workers will be on [TAD's]
  payroll."  TAD also provided temporary workers with hazard communication
  training using Polymers's "Hazard Communication Program."  Polymers's role
  under the contract was to "[p]rovide TAD with a pool of recommended
  applicants and notify them of temporary employment needs."  Polymers
  established work schedules, provided job and safety training, supervised
  the temporary workers, and could request replacement of an unsatisfactory
  worker.

       According to the deposition testimony of Martin Thompson, who signed
  the contract on behalf of Polymers, Polymers did not pay workers'
  compensation insurance premiums for temporary workers, but instead required
  during contract negotiations that TAD provide liability coverage and
  workers' compensation coverage for temporary workers.  Thompson further
  stated his belief that the "upcharge" that Polymers paid to TAD included
  the cost of workers' compensation coverage provided by TAD to temporary
  workers.

       On April 25, 1993, while working at Polymers's plant, Candido cut her
  knee and suffered temporary total loss and permanent partial loss of use of
  her leg.  Candido sought and obtained workers' compensation benefits from
  TAD and then commenced a tort action in superior court against Polymers and
  the supervisor who had overseen her training and work.

       Polymers moved for summary judgment, arguing that, as Candido's
  employer under both the statutory definition of "employer" in Vermont's
  Workers' Compensation Act, 21 V.S.A. § 601(3), and the "borrowed servant"
  doctrine, it was entitled to the employer-immunity provisions of 21 V.S.A.
  § 622.  The superior court found that Candido was Polymers's "borrowed
  servant" and granted summary judgment in favor of Polymers.

       We review a grant of summary judgment using the same standard as the
  superior court. Madden v. Omega Optical, Inc., 7 Vt. L.W. 187, 187 (1996). 
  Summary judgment is

 

  appropriate "if the pleadings, depositions, answers to interrogatories, and
  admissions on file, together with the affidavits, if any, show that there
  is no genuine issue as to any material fact and that any party is entitled
  to a judgment as a matter of law."  V.R.C.P. 56(c)(3).  In determining
  whether a genuine issue of material fact exists, we take as true the facts
  as alleged by the nonmoving party, Andrew v. State, 7 Vt. L.W. 178, 179
  (1996), and give the nonmoving party the benefit of all reasonable doubts
  and inferences.  Wilcox v. Village of Manchester Zoning Bd. of Adjustment,
  159 Vt. 193, 196, 616 A.2d 1137, 1138 (1992).

       The parties dispute whether Polymers was Candido's employer for
  workers' compensation purposes.  We agree with the superior court that
  summary judgment for Polymers was appropriate in this case, but employ
  different reasoning.  See Ross v. Times Mirror, Inc., ___ Vt. ___, ___, 665 A.2d 580, 583 (1995) (Supreme Court not bound by reasoning used by trial
  court to grant summary judgment).  The superior court determined that
  Candido was Polymers's "borrowed servant" and was thus barred from seeking
  recovery in tort.  We conclude that Polymers is immune from tort liability
  because it falls within the statutory definition of "employer," and that
  Candido was Polymers's "employee" under Vermont's Workers' Compensation
  Act, 21 V.S.A. § 601(3), (14).

       In interpreting statutes, our goal is to effect the intent of the
  Legislature, which we attempt to discern by looking to the language of the
  statute, along with its purpose, effects, and consequences.  Estate of
  Frant v. Haystack Group, Inc., 162 Vt. 11, 14, 641 A.2d 765, 767 (1994). 
  The Act defines "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.

  21 V.S.A. § 601(3) (emphasis added).  This language specifically and
  unambiguously covers multiple-employer business situations:  where "for any
  . . . reason" an employee working for a business has an indirect, as well
  as a direct, employer.  See King v. Lowell, 160 Vt. 614, 614,

 

  648 A.2d 822, 823 (1993) (mem.) (general contractor and subcontractor both
  primarily liable for workers' compensation payments to worker directly
  employed by subcontractor); Morrisseau v. Legac, 123 Vt. 70, 78, 181 A.2d 53, 59 (1962) (same).  Under the statutory language, "employer" includes
  the exact relationship that existed between Candido and Polymers. Polymers
  owns the premises and carries on the business where Candido worked. 
  Polymers's management supervised Candido's work and had the power to
  replace her if her work proved unsatisfactory.  But because of the contract
  between Polymers and TAD, Candido received her pay and benefits through
  TAD, not Polymers.  Thus, although TAD was Candido's direct employer,
  Polymers also qualifies as her employer under the statute.

       Polymers's role as a statutory employer is supported by the purpose
  for which workers' compensation acts were originally enacted.  The
  exclusive remedy of workers' compensation payments is part of the quid pro
  quo in which the sacrifices and gains of employers and employees are
  balanced.  2A A. Larson, Workmen's Compensation Law § 65.11, at 12-1, 12-12
  (1996).  An injured employee is provided "expeditious and certain payments"
  without having to prove fault.  St. Paul Fire & Marine Ins. Co. v. Surdam,
  156 Vt. 585, 589-90, 595 A.2d 264, 266 (1991).  In return, the worker gives
  up the right to sue the employer.  Libercent v. Aldrich, 149 Vt. 76, 80,
  539 A.2d 981, 983 (1987).  Allowing an employee with more than one employer
  to collect workers' compensation benefits from the first employer and then
  turn around and sue the second in negligence frustrates this policy. 
  Candido seeks to live in the best of both worlds:  having collected
  benefits for her injuries from TAD without having to show employer fault,
  she now seeks the right to pursue a separate, potentially larger jury award
  from her second employer.  If allowed, employers such as Polymers would be
  subject to double liability -- ultimate responsibility for paying benefits
  under the Act through the second employer, while remaining exposed to the
  threat of common-law negligence suits.  See Ryan v. New Bedford Cordage
  Co., 421 F. Supp. 794, 799-800 (D. Vt. 1976) (employees allowed to sue
  general contractor although general contractor could have been responsible
  for workers' compensation

 

  payments if subcontractor had not already paid).  We will not interpret the
  statute in a manner that undermines the balance between expeditious,
  automatic payments to employees in return for limited liability for
  employers.

       Having found that Polymers qualifies as Candido's employer under the
  statute, Polymers is immune from Candido's attempted common-law negligence
  suit under the Act's employer-immunity provision.  21 V.S.A. § 622. 
  Because Candido collected workers' compensation benefits from her direct
  employer, TAD, we do not reach the limits to which multiple employers may
  contract among themselves to limit liability.  But contrary to Candido's
  implication, an employer cannot completely avoid liability.  Unlike other
  states' workers' compensation acts, Vermont's statute is mandatory.  Once
  an employer-employee relationship is found, "[a]n employer shall not be
  relieved in whole or in part from liability created by the provisions of
  [the Act] by any contract, rule, . . . or device whatsoever."  21 V.S.A. §
  625; see Falconer v. Cameron, 151 Vt. 530, 533, 561 A.2d 1357, 1359 (1989)
  (employer trucking company could not avoid liability under the Act by
  executing "lease agreement" with driver and characterizing driver as
  independent contractor).

       Candido contends, however, that there is a genuine issue of material
  fact as to whether Polymers falls within the statutory definition of
  "employer" based on the "borrowed servant" doctrine, which requires that an
  employer be found a "special employer" before liability is limited.  See 1B
  Larson, supra § 48.12, at 8-440 (employee loses right to sue special
  employer for negligence).  She asserts that the evidence fails to
  demonstrate there was a contract of hire between Candido and Polymers
  sufficient to make Polymers her "borrowing" or "special" employer.  We find
  decisions from other states using the borrowed-servant doctrine to
  distinguish general and special employers to be of limited value to our
  disposition.

       Vermont's Workers' Compensation Act, unlike the workers' compensation
  acts in most of the states whose decisions have been offered for our
  guidance, defines "employer" in terms that bring Polymers plainly within
  its scope.  Compare 21 V.S.A. § 601(3) and Ill. Comp. Stat.

 

  Ann. ch. 820, § 305/1(a)(2) (Smith-Hurd 1993) (defining "employer" as
  anyone "who has any person in service or under any contract for hire,
  express or implied, oral or written") with Ala. Code § 25-5-1(4) (1992)
  (defining "Employer" as "[e]very person who employs another to perform a
  service for hire and pays wages directly to the person") (emphasis added)
  and N.H. Rev. Stat. Ann. § 281-A:2, VIII(a) (Supp. 1995) (defining private
  "Employer" as anyone "who employs one or more persons").

       Those states whose statutes do not unambiguously address the
  multiple-employer situation have required more extensive analysis of who
  qualifies as an employer.  Thus, the Alabama Supreme Court, when asked to
  determine whether a temporary employer was entitled to tort immunity,
  determined first that the workers' compensation act "'does not strictly
  cover the loaned or dual employee.'"  Pettaway v. Mobile Paint Mfg. Co.,
  467 So. 2d 228, 229 (Ala. 1985) (quoting Craig v. Decatur Petroleum
  Haulers, Inc., 340 So. 2d 1127, 1130 (Ala. Civ. App. 1976).  The court then
  used the "special employer" doctrine to judicially expand the workers'
  compensation statute.  Id. at 229-30.  Under similar circumstances, the New
  Hampshire Supreme Court determined first that the question "is [not]
  answered by the workers' compensation statute."  LaVallie v. Simplex Wire &
  Cable Co., 609 A.2d 1216, 1217 (N.H. 1992).  The court then applied the
  "borrowed-servant rule" to find an employer-employee relationship subject
  to common-law immunity.  Id. at 1218-19.

       By contrast, the Appellate Court of Illinois, which, like Vermont, has
  a more comprehensive definition of "employer," held that "[w]hether
  characterized as a borrowing or joint employer, we are convinced that
  defendant was within the general definition of an employer under the
  Workmen's Compensation Act" when asked to apply employer immunity in a
  temporary employment context.  Freeman v. Augustine's, Inc., 360 N.E.2d 1245, 1247 (Ill. App. Ct. 1977).  In the end, whether decided under the
  borrowed-servant doctrine or through statutory language, the majority of
  cases have held that a worker becomes the employee of the special employer
  where the general employer is in the business of furnishing workers.  1B

 

  Larson, supra § 48.12, at 8-515, 8-524, 8-528, 8-532; see 21 V.S.A. § 709
  (statute shall be interpreted "to effect its general purpose to make
  uniform the law of those states which enact it").

       Because we find that Polymers was Candido's employer under the statute
  and therefore immune from common-law liability under § 622, Candido's
  argument that Polymers is subject to liability as a third party under § 624
  is without merit.  Section 624 specifically allows an employee to pursue
  additional remedies only against a "person other than the employer."  21
  V.S.A. § 624(a) (emphasis added).

       Having found that Polymers qualifies as Candido's statutory employer,
  we also find that Candido qualifies as Polymers's "employee" under the
  statute.  Under Vermont's statute, an employee is any "person who has
  entered into the employment of, or works under contract of service . . .
  with, an employer."  Id. § 601(14).  Before a temporary employee can be
  said to have "entered into the employment of" the employer, there must be a
  contract for hire, express or implied, between the employer and
  employee.(FN1)  Mercier v. Holmes, 119 Vt. 368, 372, 375, 125 A.2d 790, 793,
  795 (1956).  In turn, for there to be a contract for hire, there must be
  informed consent by the employee to the employment relationship.  Id. at
  373, 375, 125 A.2d  at 794, 795.  The most important consideration in
  finding implied consent is whether the employee submitted to the employer's
  direction and control.  See id. at 374-75, 125 A.2d  at 794; Whitehead v.
  Safway Steel Prods., Inc., 497 A.2d 803, 812 (Md. 1985); Antheunisse v.
  Tiffany & Co., 551 A.2d 1006, 1008 (N.J. Super. Ct. App. Div. 1988).

       There is no question that there was no direct contract of service
  between Candido and
    
 

  Polymers.  But we do find that Candido "entered into the employment of"
  Polymers.  Candido clearly accepted Polymers's direction and control.  She
  originally applied for employment directly with Polymers, and applied with
  TAD only after being told that TAD was on contract with Polymers to provide
  workers.  Polymers established work schedules and provided job and safety
  training.  Most importantly, Polymers directly supervised TAD workers
  alongside workers hired directly by Polymers.  Polymers's supervisors
  confirmed the hours worked by TAD employees and requested replacement of
  problem workers, if necessary.

       Having found that Polymers falls within the statutory definition of
  employer and that Candido qualifies as Polymers's statutory employee, we do
  not see that there exists a genuine issue of material fact precluding entry
  of summary judgment in Polymers's favor.

       Affirmed.


                              FOR THE COURT:



                              _______________________________________
                              Associate Justice



--------------------------------------------------------------------------------
                                 Footnotes


FN1.    When determining whether an employer-employee relationship
  exists under the borrowed- servant doctrine, analysis of two additional
  steps is required.  The party must show that the work being done was
  essentially that of the special employer and that the special employer had
  the right to control the details of the work.  Mercier, 119 Vt. at 375, 125 A.2d  at 795; 1B Larson, supra § 48.00, at 8-434.  Because we resolve this
  case through the statutory language, we do not address these factors.