Pioneer Pipe v. Stephen Swain, Brayman Construction

No. 15-0397 - Pioneer Pipe, Inc. v. Stephen Swain, Prayman Construction, and J&J
General Maintenance, Inc.
FILED
September 19, 2016
released at 3:00 p.m.
RORY L. PERRY, II CLERK
SUPREME COURT OF APPEALS
Davis, Justice, dissenting: OF WEST VIRGINIA
This was a very simple case in which the majority opinion has confused the law
and facts, by injecting irrelevant issues to reach a result that denies the Petitioner (hereinafter
referred to as “Pioneer Pipe”), and all other employers in future cases, fundamental due
process. In this case, the majority has determined that the Insurance Commissioner can,
without authorization, create and impose a policy that denied Pioneer Pipe its statutory due
process right to challenge the decision to not apportion charges for the claimant’s hearing
loss claim among all of his former employers. For the reasons set out below, I dissent.
The Majority Opinion Violated Pioneer Pipe’s
Constitutional Right to Due Process
I will begin by making a few basic constitutional observations that the majority
opinion has pretended do not exist. It has long been recognized that “a corporation is a
‘person’ within the meaning of the . . . due process of law clause[.]” Grosjean v. Am. Press
Co., 297 U.S. 233, 244, 56 S. Ct. 444, 447, 80 L. Ed. 660 (1936). See Coleman & Williams,
Ltd. v. Wisconsin Dep’t of Workforce Dev., 401 F. Supp. 2d 938, 943 (E.D. Wis. 2005)
(“With respect to the Due Process Clause, the Court has long considered the property
interests of corporations to be entitled to constitutional protection.”); Trapper Brown Constr.
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Co., Inc. v. Electromech, Inc., 358 F. Supp. 105, 106 (D.N.H. 1973) (“Plaintiff corporation
may claim the protection of the Fourteenth Amendment[.]”). It has been noted that “[t]o
prove both its substantive and procedural due process claims, [a corporation] must prove that
it was deprived of a constitutionally protected property . . . interest.” SDDS, Inc. v. State of
S.D., 843 F. Supp. 546, 553 (D.S.D. 1994), rev’d on other grounds, 47 F.3d 263 (8th Cir.
1995).
To establish a procedural due process claim, a corporation must establish three
elements: (1) a constitutionally protected interest; (2) a deprivation of that interest within the
meaning of the due process clause; and (3) the government did not afford it adequate
procedural rights prior to depriving the corporation of its protected interest. See Med. Corp.,
Inc. v. City of Lima, 296 F.3d 404, 409 (6th Cir. 2002). Moreover, in order “[t]o prevail on
a substantive due process claim, a plaintiff must demonstrate that an arbitrary and capricious
act deprived them of a protected property interest.” County Concrete Corp. v. Town of
Roxbury, 442 F.3d 159, 165 (3d Cir. 2006). The Supreme Court has made clear that property
interests are not created by the constitution, itself, but rather by “existing rules or
understandings that stem from an independent source such as state law-rules or
understandings that secure certain benefits and that support claims of entitlement to those
benefits.” Board of Regents v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709, 33 L. Ed. 2d
548 (1972).
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In the instant proceeding, Pioneer Pipe was granted a statutory right that
protected its property from being arbitrarily and capriciously taken by the Insurance
Commissioner. Through the enactment of W. Va. Code § 23-4-6b(g) (2009) (Repl. Vol.
2010), the Legislature outlined the procedure by which multiple employers of an employee
could be held liable under the workers’ compensation statutes for the employee’s hearing
loss. The statutory provision states:
An application for benefits alleging a noise-induced
hearing loss shall set forth the name of the employer or
employers and the time worked for each. The Insurance
Commissioner may allocate to and divide any charges resulting
from the claim among the employers with whom the claimant
sustained exposure to hazardous noise for as much as sixty days
during the period of three years immediately preceding the date
of last exposure. The allocation is based upon the time of
exposure with each employer. In determining the allocation, the
Insurance Commissioner shall consider all the time of
employment by each employer during which the claimant was
exposed and not just the time within the three-year period under
the same allocation as is applied in occupational
pneumoconiosis cases.
W. Va. Code § 23-4-6b(g).
The above statute is not complicated. It is not ambiguous in its application to
this case. The statute provides that an employee filing a claim for hearing loss must list the
names of all employers for whom he or she has worked. The statute then grants the
Insurance Commissioner the authority to apportion or allocate the liability for the hearing
loss between the employers, or make a fact-specific determination that only one employer
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will be held liable. The statute also clearly shows that, for any employer to be charged for
the hearing loss, it must be shown that the employer exposed the employee “to hazardous
noise for as much as sixty days during the period of three years immediately preceding the
date of last exposure.” W. Va. Code § 23-4-6b(g).
Despite the plain statutory language, the Insurance Commissioner arbitrarily
adopted its own policy. The policy states that it will never “consider” allocation of charges
among employers as is clearly required by the statute. Under the existing policy, the
Insurance Commissioner arbitrarily picks an employer from among those listed by the
employee and imposes all charges on that employer–regardless of the employee’s length of
exposure while working for that employer. As a result of this policy, no employer can
challenge the basis for being singled out as the exclusive chargeable employer. The majority
opinion has determined that since the statute grants the Insurance Commissioner the
discretion to consider allocation on a case-by-case basis, the Insurance Commissioner had
the authority to adopt a policy that would never consider allocation of charges in any multiple
employer hearing loss claim. There is no rule of statutory construction which states that,
when a statute grants a government agency discretion to act, the agency may unilaterally
create a policy that provides that it will never exercise its statutory discretion. Such an
unbridled rule of statutory construction would wreak havoc in all areas of the law where an
agency is given discretion to act.
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Had the Legislature envisioned such a rule of statutory construction, the
Legislature simply could have drafted the statute to say that, even though multiple employers
may be charged for a hearing loss claim, the Insurance Commissioner “shall” only hold one
employer chargeable in all cases. That is not what the statute says. The Insurance
Commissioner and the majority opinion have interpreted the statute in that manner, through
a new rule of statutory construction that is dangerous and nonsensical.
A plain reading of the statute illustrates that the Insurance Commissioner must
make an independent determination in each hearing loss claim as to whether to allocate
charges among multiple employers. The reason for this case-by-case determination is that
it protects the due process right of an employer to judicially challenge the decision not to
allocate charges among multiple employers as well as the right to challenge the sixty-day
exposure requirement. These statutory due process rights afford an employer the basis for
challenging the charging decision, on the grounds of an abuse of discretion and as being
arbitrary and capricious. The Insurance Commissioner’s unauthorized policy has stripped
Pioneer Pipe of this statutory right to challenge the decision of chargeability for the subject
hearing loss claim.
Pioneer Pipe has sustained three injuries because of the unlawful policy
imposed by the Insurance Commissioner. First, Pioneer Pipe has been denied its right to
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have the Insurance Commissioner make an individual determination of allocation on the
merits, so that Pioneer Pipe could appeal the decision on the grounds of an abuse of
discretion. Second, under the current policy, Pioneer Pipe has been wrongfully prohibited
from having other employers share in the “costs” of a hearing loss claim. Third, under the
policy, Pioneer Pipe has been prohibited from showing that it should not be a part of the case
at all, because the claimant worked only forty hours for Pioneer Pipe, not sixty days as
required by the statute.
In the final analysis, the Insurance Commissioner’s policy of never allowing
allocation should have been stricken as violating Pioneer Pipe’s due process rights. This case
should have then been reversed, and the matter sent back to the Commissioner to comply
with W. Va. Code § 23-4-6b(g) to determine whether Pioneer Pipe is a chargeable employer
and whether allocation should be allowed. If, on remand, the Insurance Commissioner found
that Pioneer Pipe was a chargeable employer and that allocation of charges would not be
permitted, the Insurance Commissioner should have entered an order setting forth the reasons
for its determination. Pioneer Pipe then could have exercised its right to challenge the
Insurance Commissioner’s case specific findings.
Based upon the foregoing, I dissent.
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