Avila v. Northrup King Co.

JACOBSON, Presiding Judge,

dissenting.

The majority finds no material issue of disputed fact in holding that Northrup was Avila’s “special employer,” thus affording to Northrup the statutory immunity from common law negligence liability to its “employees.”

Let me first deal with the policy considerations that the majority contends support the result it reaches. The first is that, because of the agreement between EMCO and Northrup, Northrup indirectly paid the cost of Avila’s workers’ compensation coverage and, “[t]hus, Avila’s suit against Northrup is essentially a suit against the entity that indirectly paid his worker’s compensation premiums.” Op. at 506, 880 P.2d at 725. However, this is a non sequitur. In order for Northrup to obtain EMCO services, it was required to pay insurance coverage for EMCO’s employees, not its own. As between the principals, the shared cost of performance does not indicate a policy reason for depriving Avila of his statutory right to maintain his common law negligence action. In any event, if Avila is successful, the workers’ compensation carrier is entitled to reimbursement for all sums expended, A.R.S. § 23-1023(C), thus making whole the entity that “paid his worker’s compensation premiums.”

The second policy consideration, i.e., exclusivity of workers’ compensation as a remedy, is absolutely correct—if Northrup was Avila’s employer; if not, A.R.S. § 23-1023(A) gives Avila the public policy stated reason for pursuing his action—that is, his injuries were caused by the negligence of a third party. There is nothing in the workers’ compensation scheme that affords protection to a stranger for negligent infliction of injuries. Thus, the inquiry must focus on this determination.

The majority correctly sets forth the law in relation to lent employees or “special employers.” I zero in on the first of the findings that is necessary in order for special employers to become liable for workers’ compensation:

(a) the employee has made a contract of hire, express or implied, with the special employer____

Word v. Motorola, Inc., 135 Ariz. 517, 520, 662 P.2d 1024, 1027 (1983) (emphasis added).

The law, again as correctly cited by the majority, is that where an employer obtains workers from a labor contractor, that employer assumes the status of a special employer and, with that status, immunity from civil suit. See op. at 502, 880 P.2d at 722. These cases recognize the relationship that the employee holds with the labor contractor. In its inception, the employee knows that the labor contractor does not itself perform the tasks for which the employment was undertaken, but rather those tasks are going to be performed for another. Thus, by performing the tasks for another, the employee is assumed to have agreed to a contract of hire with that third party.

However, these are assumptions that should not be entered into lightly. As Larson points out, the first question to be asked in the “lent employee” situation is: “Did he make a contract of hire with the special employer? If this question cannot be answered ‘yes,’ the investigation is closed, and there is no need to go on into tests of relative control and the like.” Larson then explains the importance of this threshold inquiry:

This must necessarily be so, since the employee loses certain rights along with those he gains when he strikes up a new employment relation. Most important of all, he loses the right to sue the special employer at common law for negligence; and when the question has been presented in this form, the courts have usually been vigilant in insisting upon a showing of a deliberate and informed consent by the employee before employment relation will be held a bar to common-law suit.

IB Arthur Larson, Workmen’s Compensation Law, § 48.11-12 (1993).

It is at this juncture that I part company with the majority—not on its understanding of the law, but on its understanding of the facts. The majority concludes that the “undisputed evidence establishes that EMCO is in the business of providing temporary labor to farmers and growers in the Yuma area.” Op. at 503, 880 P.2d at 723. This is true. However, the majority’s conclusion that “[u]nder these facts, no reasonable juror could conclude that EMCO is not a labor contractor,” op. at 503, 880 P.2d at 723, in the sense that “labor contractor” is used in Nation, Lindsey, and Word, may or may not be true.

What the facts show here is that EMCO is more than simply a labor contractor that supplies labor to farmers. Rather, it is in the business of contract harvesting: it moves onto the farmer’s land, with crews, supervisors, equipment including toilets, water, ice, buses, tractors, and hoes, and performs all preharvesting and farming work. In this normal operation, its employees are never considered to be “lent employees” because they are at all times under the direct control and supervision of EMCO. This was generally how Avila’s employment with EMCO was conducted.

What makes this case difficult from the special employers’ standpoint is Northrup’s contract with EMCO. Northrup is a grower in Yuma that maintains an experimental seed plot. Because of the limited size of this operation it does not need the full services of EMCO, including its supervisory personnel, at all times. Rather, the oral contract between EMCO and Northrup provided that, if less than fifteen laborers were needed by Northrup to perform a specific task, EMCO would not supply supervisory personnel; instead, Northrup’s field hand would be available for temporary supervision. However, if the task required by Northrup entailed more than fifteen laborers, EMCO would provide its own supervision.

On the day Avila was injured, he was part of a crew of less than fifteen laborers and therefore was under the direction of a Northrup employee. However, his modus operandi for that day was the one he usually followed since his employment by EMCO. He reported to his supervisor at EMCO who directed him to report, with one other laborer, to Northrup. There he was given direction by a Northrup employee as to the tasks to be performed.

There is no question that Avila was not aware of the contractual agreement between his general employer, EMCO and Northrup, nor did he specifically enter into a contract of hire with Northrup, always thinking of himself an EMCO employee.

It is true as pointed out by the majority that the “consent to hire” requirement maybe satisfied by the circumstances under which the employee undertakes the direction and control of the special employer, and that “lent employees” are not limited to “labor contractor” cases. However, given the circumstances of Avila's employment with EMCO, EMCO’s general harvesting business and the special nature of the contractual relationship with Northrup, a conclusive inference of a new hire cannot be inferred merely by Avila’s showing up at Northrup's field and following the direction of Northrup’s employee. This was exactly what he was told to do by his general employer, EMCO.

It is important to keep in mind Larson’s observation that an analysis of the “lent employee” problem begins by acknowledging that an existing employment relationship exists, and that it is presumed that this existing employment relationship continues.

To overcome this presumption, it is not unreasonable to insist upon a clear demonstration that a new temporary employer has been substituted for the old, which demonstration should include a showing that a contract was made between the special employer and the employee.

Larson, supra, at § 48.14.

In my opinion, not only has a clear demonstration not been made that Avila entered into a new contract of hire with Northrup, but a serious factual dispute exists as to this issue. I would reverse to allow a trier of fact to resolve this dilemma.