Mendoza v. Ron Dickson Corp. ( 2023 )

692
This is a nonprecedential memorandum opinion
pursuant to ORAP 10.30 and may not be cited
except as provided in ORAP 10.30(1).
Argued and submitted May 10, affirmed August 30, 2023
In the Matter of the Nonsubjectivity Determination of
Alejandro Mendoza, Claimant.
Alejandro MENDOZA,
Petitioner,
v.
RON DICKSON CORPORATION
and Department of Consumer and Business Services,
Workers’ Compensation Division,
Respondents.
Workers’ Compensation Board
2100004SD; A178587
Martie McQuain argued the cause for petitioner. Also on
the briefs was Moore & McQuain.
Matthew L. Williams argued the cause for respondent
Ron Dickson Corporation. Also on the brief were William H.
Replogle and Tolleson Conratt & Replogle, LLP.
Denise G. Fjordbeck, Assistant Attorney General, waived
appearance for respondent Department of Consumer and
Business Services.
Before Powers, Presiding Judge, and Hellman, Judge,
and Armstrong, Senior Judge.
POWERS, P. J.
Affirmed.
Hellman, J., dissenting.
Nonprecedential Memo Op: 327 Or App 692 (2023) 693
POWERS, P. J.
Claimant petitions for judicial review of a final
order of the Director of the Department of Consumer and
Business Services. In that order, the director affirmed the
Workers’ Compensation Division’s nonsubjectivity determi-
nation that claimant was not a subject worker of Ron Dickson
Corporation (RDC) and that RDC was not a subject employer.1
In the first assignment of error, claimant argues that the
director’s determination that RDC did not remunerate
claimant for his services and that, therefore, claimant was
not a worker of RDC lacked substantial evidence and rea-
son. In the second assignment of error, claimant contends
that the director subsequently erred in failing to consider
whether claimant was subject to RDC’s direction and con-
trol. After reviewing the record, we conclude that the direc-
tor’s determination that RDC did not remunerate claimant
for his services was supported by substantial evidence and
reason. That conclusion obviates the need to address claim-
ant’s second assignment of error. Accordingly, we affirm.
Because the parties are familiar with the factual
and procedural background, we do not provide an in-depth
recitation for this nonprecedential memorandum opinion.
We review an agency’s findings of fact for substantial evi-
dence and reason. See ORS 183.482(8)(c) (providing that
“[s]ubstantial evidence exists to support a finding of fact
when the record, viewed as a whole, would permit a reason-
able person to make that finding”). In reviewing for sub-
stantial reason, we determine whether the director provided
a rational explanation of how the factual findings lead to the
legal conclusions. See Arms v. SAIF, 268 Or App 761, 767, 343
P3d 659 (2015) (so stating); see also Drew v. PSRB, 322 Or
491, 500, 909 P2d 1211 (1996) (explaining that agencies “are
required to demonstrate in their opinions the reasoning that
leads the agency from the facts that it has found to the conclu-
sions that it draws from those facts” (emphasis omitted)).
1
In their briefs, the parties refer to the order on review as the order of the
Workers’ Compensation Division. The order on review, however, was issued by an
administrative law judge in the Hearings Division of the Workers’ Compensation
Board and is consequently “deemed to be a final order of the director.” ORS
656.740(5)(a). For that reason, we refer to the order on review as being that of
“the director” rather than that of “the division.”
694 Mendoza v. Ron Dickson Corp.
Having reviewed the record, we conclude that
substantial evidence and reason support the director’s
order that found that RDC did not remunerate claimant.
Although there is evidence in the record that can be viewed
to support claimant’s contention, that is not how our stan-
dard of review applies. Rather, under ORS 183.482(8)(c), we
affirm the director’s order where the record, viewed as a
whole, would permit a reasonable person to make that find-
ing. Unlike the dissenting opinion, we conclude that there
is evidence in the record that supports the director’s factual
finding that RDC did not remunerate claimant. Accordingly,
claimant was not a “worker” of RDC as that term was
defined by ORS 656.005(30) (2019).2 Finally, our conclusion
on claimant’s first assignment of error obviates the need to
address whether claimant was subject to RDC’s direction
and control.
Affirmed.
HELLMAN, J., dissenting.
I respectfully dissent. In my view, the director
committed legal error and its decision is not supported by
substantial evidence or substantial reason. Because the
evidence establishes as a matter of law that Ron Dickson
Corporation (RDC) provided remuneration to claimant,
I would reverse and remand for the director to determine
whether the second part of ORS 656.005(30) (2019) has been
met in this case.
The undisputed facts are drawn from the record.
RDC is a construction and consultation business operated
by Ron Dickson who acts as the business’ president and sec-
retary. Dickson generally operates independently, but occa-
sionally uses a temp agency to staff the workers he needs
2
ORS 656.005(30) (2019) has since been amended and, as a result, that pro-
vision is now numbered as ORS 656.005(28)(a). Or Laws 2021, ch 257, § 1. As
the director’s order accurately observes, however, the substantive law in effect
at the time of the injury governs. See ORS 656.202(2) (providing that “payment
of benefits for injuries or deaths under this chapter shall be continued as autho-
rized, and in the amounts provided for, by the law in force at the time the injury
giving rise to the right to compensation occurred”). The statute in effect at the
time of claimant’s injury provided, in part, “ ‘[w]orker’ means any person, * * *
who engages to furnish services for a remuneration, subject to the direction and
control of an employer.” ORS 656.005(30) (2019).
Nonprecedential Memo Op: 327 Or App 692 (2023) 695
for his projects. Dickson was hired by Jeremy Bittermann
to provide consulting and supervision services for retrofit-
ting the foundation of Bittermann’s house. Dickson was to
perform those services while Bittermann was working out-
side of Oregon. Bittermann provided Dickson with a list of
projects that needed to be completed, as well as a $10,000
check and $5,000 in cash to pay for labor for the project,
and Dickson’s $60.00 per hour compensation. He also gave
Dickson access to a credit card to pay for supplies. Dickson
deposited the $10,000 check in the RDC bank account and
put the $5,000 cash in a safe.
Dickson determined the number of people he needed
for the job and hired claimant and two other men to complete
the retrofit. He agreed to pay claimant $20 per hour and
the other two workers $30 per hour. Dickson set claimant’s
schedule and compensation rate, told claimant what work
needed to be done, and showed claimant how to accomplish
that work. Claimant used Bittermann’s tools while on the
job site, although he understood them to have been provided
by Dickson. Dickson kept Bittermann informed about the
progress of the work by emailing him every few days. He
paid claimant with checks from the RDC bank account and
cash from the safe.
While working on site, claimant injured his back
lifting a cabinet. Claimant texted Dickson to inform him of
the injury. When claimant did not return to work, Dickson
considered him terminated from the project. At that point,
Dickson texted Bittermann to tell him that he was looking
to borrow money to pay claimant’s final wages.
Claimant filed a workers’ compensation claim nam-
ing RDC as his employer. The Department of Consumer and
Business Services (DCBS) conducted an investigation which
involved interviewing Bittermann, Dickson, and claim-
ant. The DCBS investigator concluded that RDC was not a
subject employer under the workers’ compensation statute
because Dickson was acting as Bittermann’s agent and it
was Bittermann, as principal, who had the right to direct
and control claimant. Claimant appealed that decision to
the Workers’ Compensation Board and, after holding a hear-
ing, the director issued an order concluding that RDC was
696 Mendoza v. Ron Dickson Corp.
not a subject employer under ORS 656.005(30) (2019) (defin-
ing “worker”). Specifically, the director concluded that:
“In the present case, the evidence establishes that
Mr. Bittermann, not RDC, provided the compensation that
was used to pay claimant’s wages. None of the money paid
to claimant came from any source besides Mr. Bittermann.
The fact that Mr. Dickson deposited the $10,000.00 check
Mr. Bittermann provided to him to use to pay wages into
the RDC account, and that some of claimant’s pay was then
paid by a check drawn on this account, does not mean that
RDC agreed to pay remuneration to claimant. Mr. Dickson
was not acting in his capacity as President and Secretary of
RDC when he supervised the demolition work and when the
remuneration was provided; he was acting as an agent and
‘pass-through’ for Mr. Bittermann, while Mr. Bittermann
was out of the country on a photography assignment.
“In summary, the alleged employer, RDC, did not ‘remu-
nerate’ claimant. Because the first component of the defini-
tion of ‘worker’ set forth in ORS 656.005(30) [(2019)] has not
been established, claimant cannot be considered a ‘worker.’
There consequently is no need to address the ‘right to con-
trol’ and ‘nature of the work’ tests that would determine
whether the second component of the ORS 656.005(30)
[(2019)] definition would be met.”
We review the director’s legal conclusions for errors
of law and its factual findings for substantial evidence in
the record. SAIF v. Harrison, 299 Or App 104, 105, 448
P3d 662 (2019) (citing ORS 183.482(8)(a), (c)); NAES Corp v.
SCI 3.2 Inc., 303 Or App 684, 687, 465 P3d 246, rev den,
366 Or 826 (2020). “Substantial evidence supports a finding
when the record, viewed as a whole, permits a reasonable
person to make the finding.” Garcia v. Boise Cascade Corp.,
309 Or 292, 295, 787 P2d 884 (1990). “An order is supported
by substantial reason when it ‘articulate[s] a rational con-
nection between the facts and the legal conclusions it draws
from them.’ ” SAIF v. Coria, 371 Or 1, 12, 528 P3d 785 (2023)
(citing Jenkins v. Board of Parole, 356 Or 186, 195-96, 335
P3d 828 (2014)); see also Arms v. SAIF, 268 Or App 761,
767, 343 P3d 659 (2015) (noting that in a substantial reason
review “we determine whether the board provided a rational
explanation of how its factual findings lead to the legal con-
clusions on which the order is based”).
Nonprecedential Memo Op: 327 Or App 692 (2023) 697
First, the director committed legal error when
it based its decision on the source of the money instead of
the act of remuneration. The statute in effect at the time of
claimant’s injury provided, in part, “ ‘[w]orker’ means any
person, * * * who engages to furnish services for a remunera-
tion, subject to the direction and control of an employer * * *.”
ORS 656.005(30) (2019). The statute contains no language
regarding the initial source of the money that eventually
becomes the remuneration in any given situation. Rather,
the statute focuses on the agreement between the person
doing the work and the entity providing the remuneration.
In my view, the correct analysis under ORS 656.005(30)
(2019) leads to a conclusion that claimant engaged to fur-
nish services for remuneration from RDC. I reach that con-
clusion as follows.
The undisputed facts establish that Bittermann
hired Dickson to oversee and complete a project at his house.
As a matter of law, then, Dickson was operating as a con-
tractor for Bittermann. A contractor is
“[a] person that, for compensation or with the intent to
sell, arranges or undertakes or offers to undertake or sub-
mits a bid to construct, alter, repair, add to, subtract from,
improve, inspect, move, wreck or demolish, for another,
a building, highway, road, railroad, excavation or other
structure, project, development or improvement attached
to real estate or to do any part thereof.”
ORS 701.005(5); Randall v. Ocean View Construction Co.,
196 Or App 153, 159, 100 P3d 1088 (2004). As a contractor,
Dickson was a legally significant break in the link between
Bittermann and claimant for purposes of determining
employment. By hiring Dickson, Bittermann was not hir-
ing or paying any workers directly. Instead, Dickson, the
contractor, found and hired the people to do the work for the
construction project. Moreover, Dickson used RDC’s busi-
ness account—the business account of a construction com-
pany—to issue checks to the people who actually did the
work. Those facts establish that RDC provided remunera-
tion to claimant and was thus his employer.
The director’s findings to the contrary are not sup-
ported by substantial evidence. For example, the director
698 Mendoza v. Ron Dickson Corp.
found that “the evidence establishes that Mr. Bittermann,
not RDC, provided the compensation that was used to pay
claimant’s wages.” But no reasonable person could make
that finding on the record before the director. That is
because once Dickson deposited the money into RDC’s busi-
ness account the money ceased to be Bittermann’s money or
Dickson’s personal money. It became RDC’s money. And the
undisputed evidence showed that RDC issued claimant’s
checks. Relatedly, the director’s finding that the evidence
“does not mean that RDC agreed to pay remuneration to
claimant” is also unsupported by the record. What more evi-
dence of an agreement is needed beyond the fact that RDC,
in fact, paid remuneration to claimant when the check was
issued from RDC’s business account? In my view, none.
In addition, no reasonable person could find that
when claimant was paid from the RDC bank account, he was
somehow paid by Bittermann, personally, as the homeowner.
How can that be? There was no evidence that Bittermann
had any control over RDC’s bank account, and in any event,
how could a business account function as a personal pay-
ment mechanism? Similarly, the finding that “Dickson was
not acting in his capacity as President and Secretary of
RDC * * * when the remuneration was provided” is also not
supported by substantial evidence. Under what authority,
then, did Dickson sign the RDC business account check?
The underlying problem with those findings is that
they required the director to implicitly find, and approve
of, Dickson using RDC’s business account for personal pur-
poses, either his own, or Bittermann’s. While it may not
technically be illegal to use a business account for personal
purposes, it is certainly questionable. Imputing such ques-
tionable actions to Dickson is not reasonable factfinding in
this context.
To be sure, Dickson testified that he did not believe
he was acting in his role as RDC’s president during the scope
of this process. To me, that evidence is irrelevant in this
case. Whatever informal understanding existed between
Bittermann and Dickson about their respective roles in this
process plays no role in the legal analysis of whether claim-
ant was remunerated by RDC. Dickson’s subjective intent
Nonprecedential Memo Op: 327 Or App 692 (2023) 699
surrounding his actions does not control the legal analysis.
Chelius v. Employment Dept., 258 Or App 72, 79, 308 P3d
290 (2013). Here, the director’s decision impermissibly ele-
vates the subjective understanding that Dickson had about
his arrangement with Bittermann over the objective facts in
the record.
In addition, the director’s conclusion that Dickson
was Bittermann’s agent and acted as a “pass-through” is not
supported by substantial reason. Determining an agency
relationship is a complex question of both law and fact which
requires consideration of several factors, including the exis-
tence of consent, either express, implied, or apparent, and
the scope of such consent. See, e.g., Eads v. Borman, 351 Or
729, 735-36, 277 P3d 503 (2012) (summarizing basic tests
for an agency relationship). Nowhere in the director’s opin-
ion is there any recognition of the legal test for an agency
relationship, let alone the required fact-finding or analysis
that could lead the director to conclude that there was an
agency relationship between Bittermann and Dickson. In
addition, the director gives no explanation as to where it
finds support for the concept of agency or a “pass-through”
in the law as it relates to workers’ compensation, which is
an area of law in which statutes and regulations have sup-
planted most of the common law rules. Conclusions without
any legal or factual explanation are not supported by sub-
stantial reason.
In sum, the director committed legal error when it
relied on the source of the money instead of the act of remu-
neration to conclude that RDC was not a subject employer
under the workers’ compensation statute. Further, neither
substantial evidence nor substantial reason supports the
director’s decision. Instead, as a matter of law, this record
establishes that RDC remunerated claimant. For those rea-
sons, I would reverse and remand for the director to deter-
mine whether the second part of ORS 656.005(30) (2019) has
been met in this case.