Steve Black v. Dixie Consumer Products LLC , 516 F. App'x 412 ( 2013 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 13a0198n.06
No. 10-5498 FILED
Feb 22, 2013
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
)
STEVE BLACK, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
Plaintiff-Appellant, ) COURT FOR THE WESTERN
) DISTRICT OF KENTUCKY
v. )
)
DIXIE CONSUMER PRODUCTS LLC; )
GEORGIA-PACIFIC CONSUMER PRODUCT )
HOLDINGS LLC, )
)
Defendants-Appellees. )
Before: ROGERS, COOK, and WHITE, Circuit Judges.
HELENE N. WHITE, Circuit Judge. Appellant Steve Black (“Black”) appeals the district
court’s grant of summary judgment in favor of Dixie Consumer Products (Dixie) and Georgia-
Pacific Consumer Product Holdings (Georgia-Pacific). We REVERSE and REMAND for further
proceedings consistent with this opinion.
I.
On July 11, 2008, Black sustained an injury while working on the premises of a Dixie plant
in Bowling Green, Kentucky. Black was a truck driver for Western Express, Inc. (Western), a
commercial carrier that had contracted for shipping services with Georgia-Pacific, Dixie’s parent
corporation, to provide transportation services for Georgia-Pacific and its subsidiaries. Black’s work
included only the transportation of materials; loading and unloading the materials off the trucks was
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not one of his job duties. On the day of the injury, Black was transporting a shipment of rolled raw
paper material from another Georgia-Pacific subsidiary to Dixie, where it would be used to produce
paper plates. While Black was on the loading dock, a Dixie employee operating a fork lift/tow motor
ran over Black’s left foot, ultimately resulting in a below-the-knee amputation of his leg.
Following the injury, Black successfully pursued a workers’ compensation claim against
Western. Subsequently, in October of 2008, Black filed a tort lawsuit against Dixie and Georgia-
Pacific. Dixie and Georgia-Pacific denied liability for Black’s injuries, and, in the alternative,
asserted as a complete affirmative defense the exclusive remedy sections of the Kentucky Workers’
Compensation Act (KWCA). Under the KWCA, “a person who contracts with another . . . to have
work performed of a kind which is a regular or recurrent part of the work of the trade, business,
occupation, or profession of such person” is a “contractor” immune from liability for the injuries
incurred by a contracted employee while preforming work-related duties, if the employee is
otherwise able to secure workers’ compensation benefits from their direct employer. KRS
§ 342.610(2). Dixie and Georgia-Pacific argue that they are “contractors” within the provisions and
definitions of the Act and therefore immune from tort liability with respect to Black’s work-related
injuries.
After minimal discovery, the parties filed cross-motions for summary judgment on this issue.
In its motion for summary judgment, Dixie and Georgia-Pacific argued that they were contractors
of Black under the KWCA because shipping services were essential to Dixie’s business and Dixie
regularly received shipments such as the one Black transported on the day of his injury. Dixie and
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Georgia-Pacific claimed that, as contractors, they were immune from tort liability because Black had
already received workers’ compensation from his direct employer, Western.
In his motion for partial summary judgment, Black argued that the classification of Dixie as
an “employer” for the purposes of the KWCA is preempted by the Federal Motor Carrier Safety Act
(“FMCSA”), which defines “employer” as “a person engaged in a business affecting interstate
commerce that owns or leases a commercial motor vehicle in connection with that business, or
assigns an employee to operate it.” 49 U.S.C. § 31132(3)(A). Further, Black argued that because
Dixie cannot show that shipping or transportation of goods was part of the “work” that Dixie itself
performs, it is not a “contractor” under the KWCA. Lastly, Black contended Dixie was not a
contractor because it was not a party to the agreement between Western and Georgia-Pacific.
The district court agreed with Dixie and Georgia-Pacific. Specifically, the court held that
there was no conflict between the FCMSA and KWCA, such that the FCMSA would preempt a
finding that Georgia-Pacific and Dixie were immune from tort liability as “employers” under the
KWCA. The court also determined that the carriage agreement between Western and Georgia-
Pacific qualified Georgia-Pacific as a “contractor” under the KWCA. With respect to Dixie, the
court stated that the definition of “contractor” under the KWCA does not require a formal written
contract or a typical contractor/subcontractor relationship between the parties and the fact that Dixie
“functioned as a contractor as a practical matter” was sufficient. Finally, the court noted that
Kentucky courts “have routinely found that transportation and distribution of materials is a ‘regular
and recurrent’ part of business operations.” PID# 261. On that basis, the court found that
transportation of raw paper materials to Dixie is a regular and recurrent part of Dixie’s business
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operations and Black’s complaint is therefore barred by the exclusive remedy of the KWCA. Black
appeals.
II. STANDARD OF REVIEW
This Court reviews a district court’s grant of summary judgment de novo. Spears v. Ruth,
589 F.3d 249, 253 (6th Cir. 2009). Summary judgment is appropriate where, in light of the entire
record, there is no genuine issue as to any material fact and the moving party is entitled to judgment
as a matter of law. Cummings v. City of Akron, 418 F.3d 676, 682 (6th Cir. 2005). We are required
to “view all the facts and the inferences drawn therefrom in the light most favorable to the
nonmoving party.” Id. (citations and internal quotations omitted).
A federal court sitting in diversity must apply the substantive law of the state in which it is
situated. Erie R. Co. v. Tompkins, 304 U.S. 64, 73 (1938). Here, the tort claims asserted by Black
are analyzed under Kentucky law. Under Kentucky law, the question whether Dixie is a statutory
employer is a mixed question of law and fact that must be ascertained by the court, rather than by
a jury. See General Elec. Co. v. Cain, 236 S.W.3d 579, 589 (Ky. 2007).
III. ANALYSIS
A. Exclusive Remedy Provision of the KWCA
We first address whether Georgia-Pacific and Dixie are contractors under the KWCA.
Section 342.690(1) of the KWCA provides:
If an employer secures payment of compensation as required by this chapter, the
liability of such employer under this chapter shall be exclusive and in place of all
other liability of such employer to the employee . . . on account of such injury or
death. For purposes of this section, the term “employer” shall include a “contractor”
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covered by subsection (2) of KRS 342.610, whether or not the subcontractor has in
fact, secured the payment of compensation.
KRS § 342.690 (emphasis added). KRS § 342.610(2) provides in relevant part that “a person who
contracts with another . . . [t]o have work performed of a kind which is a regular or recurrent part
of the work of the trade, business, occupation, or profession of such person . . . shall for the purposes
of this section be deemed a contractor, and such other person a subcontractor.” If Georgia-Pacific
and Dixie are “contractors” under § 342.610(2), they are immune from tort liability because Black
was able to secure workers’ compensation benefits from Western.
As the parties pleading the exclusive remedy affirmative defense, Georgia-Pacific and Dixie
bear the burden of proof. General Elec. Co., 236 S.W.3d at 585, 590. Because Georgia-Pacific and
Dixie have separate and distinct legal rights with respect to Black, we will consider each appellee’s
affirmative defense under the statute separately.
1. Dixie as “contractor” under the KWCA
Black first argues that there was no contractor/subcontractor relationship established between
Dixie and Western under the carriage agreement. Rather, Black argues that the agreement
established an arms-length contractual relationship between Georgia-Pacific and Western, and Dixie,
as a wholly independent subsidiary of Georgia-Pacific, is not a party to the contract and thus is not
a “contractor” under § 342.610(2).
As noted by the district court, the issue whether a formal contract is required to establish the
contractor relationship was considered by the Kentucky Supreme Court in Beaver v. Oakley, 279
S.W.3d 527 (Ky. 2009). In Beaver, the court squarely held that § 342.610 “does not demand
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evidence of formal written contracts between a defendant and the plaintiff’s direct employer for the
defendant to have up-the-ladder immunity but, rather, shows that contracts might be found in this
context when the facts show that the defendant is effectively functioning as the contractor.” Id. at
534. Thus, under Kentucky law, the absence of a formal written contract between the parties is not
dispositive.
Black further argues that because the carriage agreement between Western and Geogia-
Pacific refers to Western as an “independent contractor,”1 and any rights held by Dixie under the
contract can be no greater than the rights of the contracting party, Georgia-Pacific, Dixie and
Western cannot fall within the contractor/subcontractor relationship under § 342.610. However, the
Kentucky Supreme Court has held that the relevant inquiry under the KWCA is not whether the
injured worker is an employee or independent contractor, but rather whether “the task the
independent contractor is hired to perform” is a “regular or recurrent part of the work of the trade,
business, occupation, or profession” of the premises owner. Cain, 236 S.W.3d at 588. Therefore,
any express contractual provision describing Western as an “independent contractor” has no bearing
on whether Dixie and Georgia-Pacific are contractors within the meaning of § 342.610(2).
Turning to the substantive consideration whether Dixie is a “contractor” under the KWCA,
we note at the outset that Black does not substantially challenge the district court’s conclusion that
deliveries of raw paper materials to Dixie occurred on a regular or recurrent basis. Considering the
1
The Contract Carriage Agreement states, “[i]t is expressly understood and agreed that the
business of [Western], its agents, servants and employees, is in all respects separate and distinct from
[Georgia-Pacific], and that [Western], and its agents, servants and employees, are with respect to
[Georgia-Pacific], independent contractors.” PID# 112.
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record evidence that Dixie received as many as fifty truck shipments of rolled paper raw materials
during a typical week, there appears to be no material question on this issue. Instead, Black
primarily argues that Dixie fails to show that Western was performing work that was a regular or
recurring part of the work of Dixie’s “trade, business, occupation, or profession.”
In support, Black relies on the Kentucky Supreme Court’s holding in Cain that “work” under
§ 342.610 is that which a “business or similar businesses would normally perform or be expected
to perform with employees.” Cain, 236 S.W.3d at 588. Black claims that because Dixie concedes
that it engages none of its own employees in the commercial transportation of raw materials to its
production facility, Western’s shipment of such materials is not a “part of the work” of Dixie’s
business. Further, Black argues that the transportation of raw paper supplies from a third party mill
to Dixie’s production facility is not a part of the “work” of Dixie’s business, which involves the
production of finished paper goods.
In Cain, the Kentucky Supreme Court considered whether employees who were injured while
performing work for their direct employers on premises owned by the various businesses named as
defendants were precluded from pursuing tort actions against those defendants by the exclusive
remedy provision of § 342.610. Panels of the Kentucky Court of Appeals had reached different
results in cases involving various circumstances, holding some defendants to be contractors and
denying others that status. The Kentucky Supreme Court reversed with respect to several of the
defendants who had been determined to be contractors, concluding that although the employees
performed work for the defendants at regular or recurrent intervals, the employees did not perform
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work that was of the kind performed by the defendants or other similar businesses in the defendants’
industry. The Kentucky Supreme Court explained:
Work of a kind that is a “regular or recurrent part of the work of the trade, business,
occupation, or profession” of an owner does not mean work that is beneficial or
incidental to the owner’s business or that is necessary to enable the owner to continue
in business, improve or expand its business, or remain or become more competitive
in the market . . . It is work that is customary, usual, or normal to the particular
business (including work assumed by contract or required by law) or work that the
business repeats with some degree of regularity, and it is of a kind that the business
or similar businesses would normally perform or be expected to perform with
employees.
....
The test is relative, not absolute. Factors relevant to the “work of the . . . business,”
include its nature, size, and scope as well as whether it is equipped with the skilled
manpower and tools to handle the task the independent contractor is hired to perform.
Cain, 236 S.W.3d at 588 (emphasis added).
Prior to Cain, the Kentucky Supreme Court held in Fireman’s Fund Ins. Co. v. Sherman &
Fletcher that “[e]ven though [a contractor] may never perform that particular job with his own
employees, he is still a contractor if the job is one that is usually a regular or recurrent part of his
trade or occupation.” 705 S.W.2d 459, 462 (Ky. 1986).
Under Fireman’s Fund Ins. Co. and Cain, whether the work performed by the contracted
employee at the time of his or her injury is normally performed by the contractor’s regular employees
is not dispositive. Rather, that is simply one factor to consider in the “regular or recurrent” analysis.
Other relevant factors include the “nature, size, and scope” of the business, whether the business is
equipped with the tools and manpower to perform the contracted-for work, and whether “similar
businesses would normally expect or be expected to handle such projects with employees.” Cain,
236 S.W.3d at 588.
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In the present case, the district court did not analyze the Cain factors before concluding that
the work Black performed at the time of his injury was a regular or recurrent part of Dixie’s business.
Instead, the district court found that the frequency and volume of raw paper shipments received by
Dixie demonstrated that such deliveries were “integral to the work[] performed at the Dixie plant.”
Yet, the Kentucky Supreme Court explained in Cain that “work” under the KWCA does not mean
“work that is beneficial or incidental to the owner’s business or that is necessary to enable the owner
to continue in business.” 236 S.W.3d at 588. Thus, even though Dixie needed raw paper materials
to be transported and delivered in order to perform its work, that is not a sufficient basis to find that
such deliveries were a “part of” Dixie’s work. Under Cain, in order to find that the transportation
of raw paper materials between a supplier and Dixie is a “part of” Dixie’s work, Dixie must
demonstrate both that this type of transportation is a “customary, usual, or normal” part of Dixie’s
business or “work that [Dixie] repeats with some degree of regularity” and that it is work that Dixie
or similar businesses would normally perform or be expected to perform with employees.
Regardless whether Dixie has satisfied the first prong of the Cain standard, it has not produced any
evidence to show that it meets the second prong. The record demonstrates that Dixie owned no
commercial vehicles and employed no drivers for the purpose of interstate transport of raw materials.
And there is no evidence demonstrating that businesses in the similar “trade, business, occupation
or profession” as Dixie normally use their own employees to transport raw materials from their
suppliers to their facilities.2 Because Dixie has not established that the work Black performed at the
2
The record is also unclear about whether Dixie or Georgia-Pacific was responsible for
arranging the transportation of raw materials to Dixie’s Bowling Green Plant.
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time of his injury was a “regular or recurrent” part of its work, it was not entitled to judgment as a
matter of law.3
2. Georgia-Pacific as “contractor” under the KWCA
In considering whether Georgia-Pacific is a statutory employer under § 342.610(2), this court
must walk though the same analysis. At the outset, for the reasons previously noted, we reject
Black’s argument that Georgia-Pacific and Western’s negotiated relationship as “independent
agents” should bar Georgia-Pacific’s claim that it is a contractor under the KWCA.
At the time of Black’s accident, Georgia-Pacific had an active contract with Western to
provide shipping services for Dixie and its subsidiaries. The district court cited language in the
carriage agreement that Georgia-Pacific, “in the usual and ordinary conduct of its business requires
transportation by motor carriers of its products, materials, and equipment,” PID# 108, to find that
the hauling of raw paper product pursuant to that agreement is a “regular or recurrent part of
Georgia-Pacific’s business.” PID# 262.
This contractual language is not dispositive. Rather, we must consider whether the work
performed by Black, on behalf of Western, is “part of the work of the trade, business, occupation,
or profession” of Georgia-Pacific. There is little evidence in the record concerning Georgia-Pacific’s
3
In support of its conclusion that Dixie is a contractor under the KWCA, the district court
also cited other district court cases, as well as a case from the Kentucky Court of Appeals, which
stand for the proposition that “transportation . . . of materials are a regular or recurrent part of
business operations.” However, with one exception, all of the cases cited by the district court pre-
date Cain. The sole post-Cain case cited by the district court, Dean v. Dow Corning Corp., 2009
WL 995469 (E.D. Ky. April 4, 2009), does not mention Cain or consider any of the relevant factors
discussed in Cain in its analysis. Accordingly, we do not find the reasoning of this case persuasive.
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primary business function, the degree of control Georgia-Pacific assumed in ordering shipments of
raw paper supplies for Dixie, or whether Georgia-Pacific’s own employees were regularly or
recurrently engaged in the work of transporting raw materials from the paper mill or other production
facilities to Dixie or other Georgia-Pacific subsidiaries. Although Western regularly transported
materials between Georgia-Pacific subsidiaries, and from third parties to various subsidiaries, there
is no evidence in the record that indicates whether transportation of raw materials between a parent
and its subsidiary, or between subsidiaries, is the type of work that Georgia-Pacific or a similar
business would be expected to perform with its own employees. Accordingly, Georgia-Pacific has
not met its burden of demonstrating that it is a “contractor” under the KWCA.
B. Preemption by the Motor Carrier Safety Act
Black also asserts that the provisions defining “employer” within the Federal Motor Carrier
Safety Act (FMCSA) preempt the classification of Georgia-Pacific and Dixie as statutory employers
under the KWCA.
The FMCSA states that the primary purpose of the legislation is:
(1) to promote the safe operation of commercial motor vehicles; (2) to minimize
dangers to the health of operators of commercial motor vehicles and other employees
whose employment directly affects motor carrier safety; and (3) to ensure increased
compliance with traffic laws and with the commercial motor vehicle safety and
health regulations and standards prescribed and orders issued under this chapter.
49 U.S.C. § 31131(a). The statute provides, inter alia, that an “employer” is “a person engaged in
a business affecting interstate commerce that owns or leases a commercial motor vehicle in
connection with that business, or assigns an employee to operate it,” 49 U.S.C. § 31132(3)(A), and
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continues to enumerate various duties of employers with respect to the safety of motor vehicles and
their operators.
When considering federal preemption of state law, this court must begin “with the traditional
presumption . . . that Congress did not intend to displace state law . . . unless that was the clear and
manifest purpose of Congress.” Interstate Towing Ass’n, Inc. v. City of Cincinnati, 6 F.3d 1154,
1161 (6th Cir. 1993) (citations and internal quotations omitted). “In no field has [this] deference to
state regulation been greater than that of highway safety regulation.” Id. at 1162. Further,
preemption of state authority occurs only in limited cases: (1) where Congress preempts state law
in express terms; (2) when Congress creates a regulatory scheme “so pervasive as to make reasonable
the inference that Congress left no room to supplement it”; or (3) where “state law is preempted to
the extent that it actually conflicts with federal law.” Pac. Gas & Elec. Co. v. State Energy Res.
Conservation & Dev. Comm'n, 461 U.S. 190, 203-04 (1983).
Here, the FMCSA did not expressly preempt the Kentucky workers’ compensation statute,
and Black does not allege any actual conflict between the federal and state laws. Rather, Black
claims that the FMCSA is a “comprehensive scheme for the regulation of commercial motor vehicle
safety,” which was intended to “fully occupy the parameters of motor carrier employment.”
However, Black’s argument is without merit. First, there is no indication that Congress
intended the FMCSA to preempt state workers’ compensation statutes where the purposes of the two
statutes are clearly distinct. The primary purpose of the KWCA is to ensure that workers’
compensation benefits are available to injured employees and thus requires contractors to assume
responsibility for the provision of workers’ compensation benefits where the subcontractor has
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otherwise failed to do so. In contrast, the FMCSA was enacted specifically to promote the safety of
commercial motor vehicles and their operators and accordingly sets forth detailed safety and health
standards for those operators. There is simply no indication that the FMCSA, a statute intended to
promote commercial motor vehicle safety, should preempt state legislation regarding the provision
of workers’ compensation benefits.
Black further argues that Georgia-Pacific and Dixie should be required to comply with the
FMCSA before they may be considered “employers” under the KWCA. However, there is no
indication that a classification of Georgia-Pacific or Dixie as an “employer” under the FMCSA
should have any bearing on its classification, if any, under the KWCA, or that Congress intended the
FMCSA to define “employer” for the purposes of workers’ compensation laws. The fact that Dixie
and Georgia-Pacific can be classified as employers for the purpose of one statute, but not the other,
is of no consequence.
C. Choice of Law Provision
Finally, Black argues that the district court erred in applying the exclusive remedy provision
under Kentucky statutory law, because the contract carriage agreement clearly states, “[t]his
agreement shall be interpreted in accordance with the laws of the state of Delaware, without giving
effect to the conflict of law rules thereof.” PID# 114. Black argues that the district court should
have applied Delaware law to the question whether an employer/employee relationship existed
between Black and Georgia-Pacific/Dixie, and that under Delaware law, which has no counterpart
to § 342.610, Black would be able to pursue tort claims against Dixie and Georgia-Pacific.
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Black’s choice-of-law argument was raised for the first time in his Rule 59(e) motion to
vacate the summary judgment order. It is well settled that Rule 59(e) motions are not appropriate
to “raise arguments which could, and should, have been raised before judgment issued. Thus, the
district court was not obliged to consider this argument and, because it did not, we have no ruling
to review. Any further argument on this issue must take place on remand.
IV.
For the foregoing reasons, we REVERSE and REMAND for proceedings consistent with
this opinion.
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