Title: Araguz v. State ex rel. Workers' Safety & Comp. Div.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

IN THE MATTER OF THE WORKERS' COMPENSATION CLAIM OF TIMOTHY ARAGUZ v. STATE OF WYOMING, ex rel., WYOMING WORKERS' SAFETY AND COMPENSATION DIVISION, and WAL MART STORES, INC.; IN THE MATTER OF THE WORKERS' COMPENSATION CLAIM OF JAMES ELDER v. STATE OF WYOMING, ex rel., WYOMING WORKERS' SAFETY AND COMPENSATION DIVISION and WAL MART STORES, INC.2011 WY 148Case Number: S-11-0029, S-11-0030Decided: 10/28/2011NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so correction may be made before final publication in the permanent volume.
OCTOBER 
TERM, A.D. 2011
 
IN 
THE MATTER OF THE WORKERS’ COMPENSATION CLAIM OF TIMOTHY ARAGUZ,Appellant 
(Petitioner),v.STATE OF WYOMING, ex rel., WYOMING WORKERS’ 
SAFETY AND COMPENSATION DIVISION, and WAL-MART STORES, INC.,Appellees 
(Respondents).IN THE MATTER OF THE WORKERS’ COMPENSATION CLAIM OF JAMES 
ELDER,Appellant (Petitioner),v.STATE OF WYOMING, ex rel., 
WYOMING WORKERS’ SAFETY AND COMPENSATION DIVISION and WAL-MART STORES, 
INC.,Appellees (Respondents).
 
 
W.R.A.P. 
12.09(b) Certification from the District Court of Laramie 
County
The 
Honorable Thomas T.C. Campbell, Judge
 
Representing 
Appellants:
Robert 
A. Nicholas, Nicholas & Crank, P.C., Cheyenne, 
Wyoming.
 
Representing 
Appellee Wyoming Workers’ Safety & Compensation 
Division:
Gregory 
A. Phillips, Wyoming Attorney General; John W. Renneisen, Deputy Attorney 
General; James Michael Causey, Senior Assistant Attorney General; Michael J. 
Finn, Senior Assistant Attorney General.
 
Representing 
Appellee Wal-Mart Stores, Inc.:
John 
A. Sundahl, Sundahl, Powers, Kapp & Martin, LLC, Cheyenne, 
Wyoming.
 
Before 
KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, 
JJ.
 
VOIGT, 
Justice.
 
[¶1]      The appellants, 
Timothy Araguz and James Elder, were injured in separate incidents while working 
at the Wal-Mart Distribution Center (Distribution Center).  After receiving compensation through the 
Wal-Mart Plan, Wal-Mart’s private workers’ compensation fund, the appellants 
filed for benefits under the Wyoming Worker’s Compensation Act (the Act).  The Wyoming Workers’ Safety and 
Compensation Division (Division) denied their request and the Office of 
Administrative Hearings (OAH) confirmed that denial.  This Court finds that Wal-Mart was not 
engaged in extrahazardous employment as defined by the legislature and therefore 
the appellants were not entitled to workers’ compensation benefits.  For that reason we will 
affirm.
 
ISSUE
 
[¶2]      In granting 
summary judgment, did the OAH correctly rule that the appellants’ claims were 
not covered by the Wyoming Worker’s Compensation Act?
 
FACTS
 
[¶3]      In Wyoming, 
Wal-Mart employs 5,340 workers through the operation of ten Wal-Mart 
Supercenters, two Sam’s Clubs, and one Distribution Center.  Six hundred of those employees work at 
the Distribution Center.  Wal-Mart’s 
revenue is generated from retail operations conducted through the Supercenters 
and Sam’s Clubs.
 
[¶4]      The Distribution 
Center located west of Cheyenne is approximately one million square feet and 
supplies groceries to North Dakota, South Dakota, Montana, Colorado, and 
Wyoming.  Between 130 and 140 
semi-trucks arrive each day with perishable and nonperishable grocery items that 
will be warehoused at the facility pending delivery to the Wal-Mart Supercenters 
and Sam’s Clubs throughout the five-state area.  No goods are sold directly from the 
Distribution Center.  The purpose of 
the Distribution Center is to serve the needs of the retail 
stores.
 
[¶5]      The Wyoming 
Constitution requires that all businesses engaged in “extrahazardous 
employments” contribute to a state workers’ compensation fund administered by 
the legislature.  Wyo. Const. art. 
10, § 4(c).  For purposes of 
determining whether a business is required to participate in the workers’ 
compensation fund, the Department of Employment assigns an industry 
classification code to every Wyoming business based on the employer’s primary 
business and the definitions set out by the North American Industry 
Classification System (NAICS).  The 
legislature has enumerated certain of these classifications as “extrahazardous 
employment.”  Wyo. Stat. Ann. § 
27-14-108 (LexisNexis 2011).  
Wal-Mart had been assigned code 452910, indicating “Warehouse Clubs and 
Supercenters.”  Because such 
classification was not defined by Wyoming statute as “extrahazardous,” Wal-Mart 
was not required to participate in the state fund.
 
[¶6]      Appellant Timothy 
Araguz was employed as a Reserve Stock Replenishment Driver (RSR Driver) at the 
Distribution Center.  The RSR Driver 
operates a forklift to move pallets of groceries from the loading dock to tiered 
storage racks up to 20 feet above ground level.  Araguz injured his back and shoulder 
while throwing pallets in the course of his employment.
 
[¶7]      Appellant James 
Elder was employed as a Yard Driver at the Distribution Center.  The Yard Driver hooks up trailers that 
have been detached from the semi-trucks to his yard tractor which he then drives 
to the warehouse dock for unloading.  
Elder was blown off an icy yard tractor as he was attaching a trailer to 
the yard tractor.  His fall caused 
injuries to his back, hip, shoulder and ankle.
 
[¶8]      Although Wal-Mart 
is not required to contribute to the Wyoming workers’ compensation fund, 
Wal-Mart does maintain its own privately funded workers’ compensation fund, the 
Wal-Mart Plan, for the benefit of its employees who are injured on the job.  Both claimants reported their injuries 
to their respective supervisors and submitted injury reports in accordance with 
the requirements of the Wal-Mart Plan.
 
[¶9]      Despite the fact 
that the appellants received benefits from Wal-Mart under the Wal-Mart Plan, 
both later filed a Report of Injury pursuant to the Act.  In both cases the Division issued a 
Final Determination Regarding Compensability denying payment of benefits to the 
appellants because they were “not employed in an occupation requiring 
coverage.”  In response to the 
denials, the appellants requested a contested case hearing and the Division 
referred the request to the OAH.
 
[¶10]   Prior to the hearing, the Division 
filed a motion for summary judgment asserting, inter alia, that the appellants were not 
covered by the Act.  In response, 
the appellants filed a cross-motion for partial summary judgment arguing that 
the Division was required to assess the Distribution Center as an establishment 
separate from Wal-Mart’s retail centers with a primary function of warehousing 
(an extrahazardous classification) and, therefore, that the appellants were 
covered by the Act.  The OAH, 
agreeing with the Division and Wal-Mart, found that there were no genuine issues 
of material fact and that the Division’s and Wal-Mart’s motions for summary 
judgment should be granted.  The 
district court certified to this Court the question of whether the appellants 
should be classified as engaged in extrahazardous 
employment.
 
STANDARD 
OF REVIEW
 
[¶11]   “As always, we review an agency’s 
conclusions of law de novo, and we 
will affirm an agency’s legal conclusion only if it is in accordance with 
the law.”  Dale v. S & S Builders, LLC, 2008 WY 
84, ¶ 26, 188 P.3d 554, 561-62 (Wyo. 2008) (internal citations and quotations 
omitted).
 
[¶12]   Review of administrative agency 
action granting summary judgment in workers’ compensation cases will be governed 
by W.R.C.P. 56(c).  Chavez v. Mem’l Hosp. of Sweetwater 
Cnty., 2006 WY 82, ¶ 6, 138 P.3d 185, 188 (Wyo. 2006).
 
The 
judgment sought shall be rendered forthwith 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 the moving party is entitled to a judgment as a matter of 
law.
 
W.R.C.P. 
56(c).  “The record is reviewed . . 
. from the vantage point most favorable to the party who opposed the motion, and 
this Court will give that party the benefit of all favorable inferences that may 
fairly be drawn from the record.”  
Chavez, 2006 WY 82, ¶ 6, 
138 P.3d  at 188. 
 
DISCUSSION
 
[¶13]   On appeal, the appellants contend 
that the State’s failure to provide benefits is unconstitutional and improper as 
a matter of law.  Their 
constitutional argument is based on Wyo. Const. art. 10, § 4(c), which states, 
in part: “As to all extrahazardous employments the legislature shall provide by 
law for the accumulation and maintenance of a fund or funds out of which shall 
be paid compensation as may be fixed by law according to proper classifications 
to each person injured in such employment . . . .”  Citing that provision, the appellants 
argue that “the Wyoming Constitution requires that all workers who are required 
by their employer to perform extrahazardous work be covered by the . . . 
Act.”  This constitutional mandate 
has been violated, the appellants claim, by the Division’s promulgation of rules 
that deny coverage to workers injured while performing extrahazardous work who 
are employed by an entity whose “primary business” is not classified as 
extrahazardous.  Specifically, the 
appellants assert that “[a]s applied, the Rule creates arbitrary and disparate 
outcomes for maimed workers performing extrahazardous work for their employers. 
. . .  Workers who perform the same 
extrahazardous work should be covered by the Act equally.”
 
[¶14]   We will not address the appellants’ 
constitutional argument as this appeal is not an appropriate avenue for 
resolution of such an issue.  Williams v. Wyo. Workers’ Safety & Comp. 
Div., 2009 WY 57, ¶ 18, 205 P.3d 1024, 1032-33 (Wyo. 2009); Shryack v. Carr Constr. Co. (In re Worker’s 
Comp. Claim of Shryack), 3 P.3d 850, 856-57 (Wyo. 2000); Riedel v. Anderson (In re Conflicting Lease 
Applications), 972 P.2d 586, 587-88 (Wyo. 1999).  “The proper avenue for challenging the 
constitutionality of a statute is an independent action for declaratory judgment 
pursuant to W.R.A.P. 12.12.”  Williams, 2009 WY 57, ¶ 18, 205 P.3d  at 1032.  W.R.A.P. 12.12 
provides as follows:
 
The 
relief, review, or redress available in suits for injunction against agency 
action or enforcement, in actions for recovery of money, in actions for a 
declaratory judgment based on agency action or inaction, in actions seeking any 
common law writ to compel, review or restrain agency action shall be available 
by independent action notwithstanding any petition for 
review.
 
This 
rule is rooted in the fact that administrative agencies do not have the 
authority to make decisions regarding the constitutionality of a statute, so an 
appeal of an agency decision necessarily cannot address constitutionality.  Torres v. State ex rel. Wyo. Workers’ Safety 
& Comp. Div., 2004 WY 92, ¶ 8, 95 P.3d 794, 796 (Wyo. 
2004).
 
[¶15]   We turn to the appellants’ second 
argument.  The appellants claim the 
Division incorrectly applied Wyo. Stat. Ann. § 27-14-108 (the statute outlining 
which employment is deemed extrahazardous) to Wal-Mart.  Specifically, the appellants assert that 
the Division’s application of Wyo. Stat. Ann. § 27-14-108 is contrary to article 
10, section 4, because article 10, section 4 requires that the classification be 
“proper.”  The appellants then 
suggest that the “proper” classification should be based on the activities of 
the employees, rather than the employer’s primary 
business.
 
[¶16]   As noted above, Wyo. Const. art. 
10, § 4(c) requires establishment of a mandatory fund providing for compensation 
to workers injured in “extrahazardous employments.”  See supra ¶ 5.  Pursuant to article 10, section 4(c), 
the legislature enacted Chapter 14, entitled Worker’s Compensation, within Title 
27, Labor and Employment.  This 
chapter provides, in part, that the director of the Department of Employment 
“may adopt rules and regulations for administration of this act.”  Wyo. Stat. Ann. § 27-14-802(a) 
(LexisNexis 2011).
 
[¶17]   Operating under this authority, the 
Division promulgated the following rule relating to the classification of 
Wyoming businesses:
 
(a)  Classification Procedures.  The Division will assign an industrial 
classification or classifications pursuant to the North American Industry 
Classification System (NAICS) codes provided by the Federal Bureau of Labor 
Statistics . . . .  The industrial 
classification(s) assigned will be that which best describes the primary business of the employer. 
 Businesses conducted at one or more 
locations which normally prevail in the primary industrial classification will 
not be assigned separate classifications for supporting operations, with 
certain specific standard exceptions for clerical office occupations, inside 
sales occupations, outside sales occupations, or temporary help 
occupations.
 
Wyo. 
Rules & Regulations, Dep’t of Employment Workers’ Comp. Div., Ch. 2 § 4(a) 
(2011) 
(emphasis added).  Despite the 
Division’s adoption of the NAICS coding system, the emphasized language 
specifies that similarities with the NAICS system are limited to the coding 
scheme.  NAICS provides that a 
company “may consist of more than one establishment” and that designation 
of an establishment to an industry classification will be based on the 
primary activity of the establishment.  
North American Industry Classification System, U.S. Census Bureau 
(2007).  The rules promulgated by 
the Division, however, base such classification on the “primary business” of the 
employer and specifically indicate that separate operations “will not be 
assigned separate classifications.”  
Wyo. Rules & Regulations, Dep’t of Employment Workers’ Comp. Div., 
Ch. 2 § 4(a) (2011).  This language 
does not take into account the responsibilities and activities of the individual 
employee.  In fact, such duties are 
specifically excluded by statute from the determination of the “primary 
business.”  The list of 
extrahazardous industries is preceded by language providing explicitly that such 
designation will be made “[r]egardless of individual occupation.”  Wyo. Stat. Ann. § 27-14-108(a)(ii) 
LexisNexis 2011).  Indeed, when 
applying this rule and statute, we have said:  “[D]eterminations of whether an employee 
is or is not engaged in extra-hazardous employment are made by reference to the 
employer’s business.”  Baskin v. State ex rel. Worker’s Comp. 
Div., 722 P.2d 151, 154 (Wyo. 1986), overruled in part on other grounds by 
Torres, 2004 WY 92, ¶ 7, 95 P.3d  at 796.  Additionally, “if the employer does not 
engage in extrahazardous activities, then whether the individual employee’s 
activities are hazardous in nature is not material[.]”  Gonzales v. Grass Valley Mobile Home 
Park, 933 P.2d 484, 487 (Wyo. 1997), overruled in part on other grounds by 
Torres, 2004 WY 92, ¶ 7, 95 P.3d  at 796 (quoting Baskin, 722 P.2d at 154); see also Randell v. Wyo. State Treasurer ex rel. Wyo. 
Workers’ Comp. Div., 671 P.2d 303, 308 (Wyo. 1983).  Therefore, it is irrelevant that the 
appellants, pursuing the same responsibilities, may be covered by the Act under 
different employment; the assessment is based on the activities of the employer, 
not the employee.
 
[¶18]   In all likelihood, the code 
assigned the Distribution Center would have been different from the code for 
Wal-Mart’s retail outlets under a pure NAICS classification system.  However, the Division does not implement 
the NAICS methods for classifying Wyoming businesses.  The Distribution Center is a supporting 
operation to Wal-Mart’s retail activities which are pursued through Sam’s Clubs 
and Supercenters.  For that reason, 
the Distribution Center is not designated a NAICS classification independent 
from that assigned to the Wal-Mart retail stores.  The Division appropriately assigned to 
Wal-Mart a classification based on its primary business within the state of 
Wyoming.  This determination was 
proper based on the location of Wal-Mart’s employees and revenue streams within 
Wyoming.  It is of no consequence 
that individual employees may have been performing extrahazardous 
activities.  This method, although 
not used by NAICS, is in proper keeping with Wyoming statute, the rules and 
regulations promulgated by the Division, case law, and the Wyoming 
Constitution.  Because Wal-Mart’s 
Wyoming operations are primarily retail and the vast majority of its employees 
are employed at the retail stores, Wal-Mart, and by extension the Distribution 
Center, was properly classified under the Warehouse Clubs and Supercenters 
rubric.  The legislature has made a 
determination that this classification will not be considered extrahazardous and 
Wal-Mart did not elect to contribute to the state fund.  The appellants are therefore ineligible 
for workers’ compensation benefits.1
 
CONCLUSION
 
[¶19]   Wal-Mart’s Wyoming operations were 
properly assigned code 452910 Warehouse Clubs and Supercenters based on its 
primary business.  The Distribution 
Center is not entitled to its own classification separate from Wal-Mart’s retail 
stores.  This coding is not 
enumerated by the legislature as extrahazardous.  Claimants’ responsibilities, regardless 
of whether or not extrahazardous, do not alter Wal-Mart’s primary business 
activities.  Because Wal-Mart is not 
engaged in extrahazardous business activities and did not elect to contribute to 
the state workers’ compensation fund, the appellants are not entitled to 
benefits.
FOOTNOTES
1The Court notes that 
appellant Elder also raised the issue that OAH inappropriately granted summary 
judgment to Wal-Mart on the basis that the one-year statute of limitations had 
expired before Elder had filed for compensation with the Division.  We need not address this issue; even if 
summary judgment were inappropriate, appellant Elder would still lose on the 
merits of the case and would not be granted benefits from the state 
fund.