Source: https://law.justia.com/cases/california/court-of-appeal/3d/42/916.html
Timestamp: 2019-04-25 07:03:34+00:00

Document:
Dolgin, Kully & Jameson, David A. Dolgin and Bruce I. Cornblum for Plaintiff and Appellant.
Robert E. Cartwright, Edward I. Pollock, William H. Lally, Arne Werchick, Stephen I. Zetterberg, Robert G. Beloud, Ned Good, David B. Baum, Elmer Low and Leonard Sacks as Amici Curiae on behalf of Plaintiff and Appellant.
Leonard & Thomas for Intervener and Appellant.
Although the contract names Tidewater Oil Company as one of the parties, it was stipulated that Phillips Petroleum is the successor of Tidewater and that the contract is binding on Phillips. We shall refer to Phillips as a party without further reference to Tidewater. Plant Maintenance is in the business of supplying manpower to oil refineries and other industries. Plaintiff had been an employee of Plant Maintenance for several years before the accident, but he had worked at the Avon refinery of Phillips for about a year, or perhaps as much as two years, according to his testimony. The terms of the contract are such as obviously to be designed to designate workmen as employees of Plant Maintenance only and to prevent Phillips from being considered a special employer. Thus, the contract provides that Plant Maintenance is not the agent of Phillips but is an independent contractor; that Plant Maintenance maintains complete control over its employees; that this is so even "as an aid to Contractor [Plant Maintenance]," [42 Cal. App. 3d 919] some of the employees may work solely or partially under the direction or supervision of Phillips; such direction or supervision shall be for contractor's benefit and account; that contractor shall constantly superintend said work by its own superintendent and instructions given superintendent shall be deemed to have been given to the contractor; and that all the employees shall be deemed to be employees of contractor for all purposes, notwithstanding any finding that their work is wholly or partially under the direction or supervision of Phillips.
Although a conclusion that Martin was a special employee of Phillips [42 Cal. App. 3d 920] cannot be squared with the terms of the written contract, it does, as we view the totality of the circumstances, comport with the law and the decisions. The workman is assured of recovery for an industrial injury from both employers, and although in this particular case the general employer's carrier has paid the benefits, the special employer was likewise liable. The true relationship between the parties, rather than the professed one, should be held to establish the rights and duties of the parties. Although the Legislature has recognized, as a practical matter, the respective liabilities of insurance carriers in a general-special employer situation, by providing in Insurance Code section 11663 that the insurer of the general employer is liable for the entire cost of compensation unless the special employer had the employee on his payroll at the time of injury, the section does not purport to abrogate the rule of liability of full employers. (Argonaut Ins. Exch. v. Ind. Acc. Com., 154 Cal. App. 2d 703 [316 P.2d 759]; McFarland v. Voorheis-Trindle Co., 52 Cal. 2d 698 [343 P.2d 923].) Thus the employee has the benefit of having the special employer as an additional party responsible for any industrial injury which he suffers on that employer's job. If there be serious and willful misconduct on the part of the special employer (which creates a liability which cannot be insured against), no doubt he has the right to an increased award against the special employer under Labor Code section 4553.
Although Phillips did not expressly make a contract of employment with Martin, Martin's consent may be inferred from his acceptance of the special employer's control and direction. (1A Larson's Workmen's Compensation Law, § 48.10.) The long term during which Martin did the work of Phillips confirms this inference. Martin did not know of the contract between Plant Maintenance and Phillips, and knew that he was on the payroll of the former, but it is evident that he knew the general situation because [42 Cal. App. 3d 921] he testified, "when I was hired out I was hired out to work at Shell and then I came to Phillips and I stayed."
 An analysis of the various elements which, taken as a whole, determine the relationship of Martin to Phillips convinces us that Martin was a special employee.
1. Payroll. Martin was on the payroll of Plant Maintenance. Withholding of taxes and social security contributions was handled by Plant Maintenance. This is relatively unimportant. No doubt the service rendered was of value to Phillips, but it has nothing to do with the duties performed by the employee.
3. Nature of the work. Martin had two categories of employment: laborer and brick mason. Just before the accident, he had been using a jack hammer, which he was permitted to do by union rules in his capacity as brick mason. The relatively unskilled nature of the services which would make them readily subject to control by Phillips' foreman also tends to show special employment. (Oxford v. Signal Oil & Gas Co., supra, at p. 408; Housewright v. Pacific Far East Line, Inc., 229 Cal. App. 2d 259, 266 [40 Cal. Rptr. 208].) As said above, the work properly performed was of benefit to Phillips, and only in a general way unrelated to the performance of the details of the task was it of use to Plant Maintenance.
4. Work tools. Basically, all of the tools, including hard hats, and in particular the jack hammer which plaintiff had been using, were supplied by Phillips, another indication of special employment.
5. Badges. Plant Maintenance employees were issued badges, which they did not always wear, to distinguish them from employees on the Phillips payroll. This factor may have some slight bearing against the proposition of special employment, but there is nothing in the record to show of what practical use the badges were in the performance of the required tasks.
6. Check-in and assignments. Plant Maintenance kept a foreman of its own on the refinery premises, but all he did was to check-in the Plant Maintenance employees as they appeared and to hand them their day's assignments, which the foreman in turn had received from Phillips. Plant [42 Cal. App. 3d 922] Maintenance's foreman had nothing to do with the details or quality of the work.
7. Right to terminate. The right to terminate employment is a significant factor in showing the right of control. Although Phillips did not have the right to fire Plant Maintenance men and did not attempt to do so, it was testified by Plant Maintenance's officer that on request of Phillips to terminate an employee, "we got him out." A Phillips foreman testified that he knew of no instance where Plant Maintenance refused to remove an employee from the job at Phillips' request. Indeed, it would seem unlikely that Plant Maintenance, if it hoped for a renewal of the contract, would insist that an unsatisfactory employee be retained on the Phillips job. It is the right to terminate the special employment relationship and not the right to discharge the employee outright that is important. (Oxford v. Signal Oil & Gas Co., supra, 12 Cal.App.3d at p. 410; Sehrt v. Howard, supra, 187 Cal.App.2d at p. 743.) If grievances by a union were presented, the arbitration was conducted with Plant Maintenance as a party. But this result naturally flows from its capacity as general employer and does not have much significance in determining the relationship of Martin to Phillips.
9. Belief of the parties. As in the Oxford case, Phillips' only representative to testify knew that he could not discharge employees, but he also believed that he had the right to terminate their special employment by merely notifying Plant Maintenance. He understood that he had the right to control the specifics of the work. Although Martin knew nothing of the contract between Plant Maintenance and Phillips, and knew that he was on the former's payroll, he was aware of course that his day by day and hour by hour work was under the direction of Phillips.
In conclusion, we are of the opinion that the correct criterion is not what sort of arrangement two parties, one of them truly a general employer and the other a special employer, may describe on paper, but what [42 Cal. App. 3d 923] actually is the nature of the transactions and relationship between them and with an employee.
Appellant Martin, an employee of Plant Maintenance, filed a complaint alleging that he sustained personal injuries as the result of Phillips' negligence while working on its property. Phillips denied negligence and, as a special defense, alleged that at the time of the accident Martin was the special employee of Phillips. The majority of this court affirmed the trial court's judgment that Martin was a special employee of Phillips and as such was barred from maintaining an action for damages for personal injuries. The burden of proving the affirmative defense of "special employment" was, of course, upon Phillips who asserted it.
The majority in arriving at their opinion that a special employment relationship existed did so on the basis that (1) the contract establishing the rights and duties of Phillips and Plant Maintenance does not control the question of Phillips' relationship to Martin and, in fact, is evidence that their independence is fictitious; (2) the totality of circumstances, particularly the control Phillips exercised over Plant Maintenance employees, showed a special employment relationship; and (3) the contract between Plant Maintenance and Phillips did not estop Phillips from asserting the defense of special employment.
I am in agreement with the majority that Phillips was not estopped by the provisions of the contract between Phillips and Plant Maintenance to assert the defense of the special employment relationship between Phillips and Martin. It is my position that Phillips could assert that defense but failed to sustain its burden of proving it.
The majority's disparagement of the contract between Plant Maintenance and Phillips is, in my opinion, illogical, suggesting, as it seems to, [42 Cal. App. 3d 924] that the very attempt to be specific and inclusive is evidence of sham. fn. 1 I agree that the work of Plant Maintenance employees while at the Phillips plant was for the benefit of Phillips, but that fact is irrelevant to the issue of the existence of a special employment. All independent contractors, maintenance firms performing janitorial services for a third party or any other, benefit the recipient of those services. That is exactly what they are paid for. Just as obviously, Plant Maintenance receives a benefit since it is by their work that Plant Maintenance fulfills its obligations. There is nothing suspect in the provision that any supervision by Phillips' foremen would be for the benefit of Plant Maintenance. Plant Maintenance had the obligation of furnishing supervision of its employees and, if Phillips undertook this work, it would relieve Plant Maintenance of a portion of its obligation. There could be a multitude of reasons why this arrangement might be the most economical or efficient. No evidence has been offered [42 Cal. App. 3d 925] that the parties' attempt to cover all contingencies was anything other than an effort to clarify their relationship, certainly a goal of most contracts.
The majority recognizes that a conclusion that Martin was a special employee of Phillips "cannot be squared with the terms of the contract" between Phillips and Plant Maintenance. The majority asserts, however, that the "true relationship" of the parties must establish their rights and duties, thus suggesting that the parties did not, in fact, adhere to the terms of their agreement. The only specific, however, to which the majority points to substantiate this assertion is the supervision and control of Plant Maintenance employees by Phillips.
Furthermore, under the Plant Maintenance-Phillips agreement, Phillips was acting for Plant Maintenance when it furnished any of the supervision which was the obligation of Plant Maintenance. The contract provided with specificity for Plant Maintenance supervision and assistant supervisors and the amount of salary Plant Maintenance was to pay those supervisors. The parties recognized that where necessary or economical, Phillips might supervise work but any such supervision was to be for Plant Maintenance's benefit. By the terms of the contract, a legally enforceable duty was imposed upon Plant Maintenance to supervise, control and direct the activities of its employees on the Phillips premises.
Plant Maintenance furnished a fluctuating number of employees each day to Phillips, normally between 15 and 40, although the number could be raised "on a turnaround situation" to 200 or 300. The fact that appellant Martin had worked for Phillips for at least a year is not important in determining the relationship. That fact attests only to his satisfactory performance. Martin shares the same relationship with Phillips as did the other Plant Maintenance employees assigned to Phillips. The accident could as easily have happened to a man assigned for a single day to Phillips.
I conclude that Phillips did not carry its burden of demonstrating that it actually exercised the control and supervision of an employer over Plant Maintenance's employees, which, contrary to the terms of its contract, specifically did not give Phillips the right to exercise such control except when the supervision was "for Contractor's [Plant Maintenance] benefit."
In summary, I would hold that no special employment relationship existed between Martin and Phillips; therefore, Martin's rights as to workmen's compensation benefits as against Plant Maintenance and his personal injury claim against Phillips are both protected. Also, such conclusion preserves the right of Plant Maintenance and Phillips to enter into a contract, legal in both its contents and objectives, without infringement by courts or otherwise. I would reverse the judgment and remand the matter for trial for determination of the merits of Martin's claim for personal injuries.
"First: Except as otherwise specified, Contractor agrees to furnish all necessary labor, supervision, mechanics, materials, tools, implements and appliances, and to do and perform such maintenance jobs and work at Tidewater's Avon Refinery, Amorco Terminal, or Port Costa County, California (hereinafter designated as job site) as may be required by Tidewater from time to time under written orders as hereinafter specified. Contractor shall supply a minimum of fifteen (15) employees including supervisory and clerical personnel who shall be familiar with Tidewater's mechanical requirements and shall be immediately available to direct and assist any size crew that Tidewater may request in accordance with the provisions provided elsewhere in this agreement.
"Seventh: Contractor shall constantly superintend said work by its duly authorized superintendent, who shall be deemed for all purposes the representative of Contractor, and instructions or information given him shall be deemed to have been given Contractor. Additional supervisory personnel shall be furnished as requested by Tidewater.
"Ninth: Contractor agrees to protect Tidewater, its lands and other property, from and against all liens or claims of lien filed or made in connection with the work done hereunder, and agrees to cause any such lien which may be filed or made to be immediately released and discharged of record.
"Contractor agrees promptly to pay for all labor supplied or performed on said work and for all materials furnished in connection with said work, except materials furnished by Tidewater.
FN 2. The majority of this court cite Oxford v. Signal Gas & Oil Co. (1970) 12 Cal. App. 3d 403 [90 Cal. Rptr. 700], which shares a basic factual similarity to the case at hand. In the Oxford case, the court concluded that there was a dual employment relationship which rendered both companies liable under the Workmen's Compensation Act and excluded the injured employee from pursuing a claim for personal injuries against the special employer who, it was claimed, negligently caused the injury. The basic similarity consists of the fact that the injured worker in Oxford was the general employee of a company which furnished employees on a regular basis to an oil company. There is no evidence related in the opinion of physical separation of the employees or of the specificity of the contract in which the two companies defined the relationship of each with the furnished employees. In Oxford the contract made no provision for any possible supervision by the company contracting for the service of the employees. I consider it questionable that the oil company in Oxford established the existence of a special employment relationship as a matter of law. In any event, however, Oxford is not controlling. The question of special employment depends upon the facts peculiar to each case.
FN 3. If Phillips' management was dissatisfied with a worker, Phillips was required to report its complaint to Plant Maintenance's supervisor who then decided on the disposition of that employee, such disposition could result in either reassignment of that employee or dismissal. Employee grievances were processed by the terms of a union bargaining agreement between Plant Maintenance, as the employer, and the union. Phillips had its own union contract for its employees which did not include the employees of Plant Maintenance.

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