Opinion ID: 2658292
Heading Depth: 1
Heading Rank: 1

Heading: background facts and law

Text: Konecranes (also known as Crane Pro) is a crane manufacturing and service company that had a crane-servicing contract with IP. On August 28, 2009, 34-year-old Stephen Dohoney, a Konecranes employee, was fatally electrocuted while performing electrical work on IP’s “house crane” during a regularly scheduled plant shutdown at IP’s mill in Henderson, Kentucky. According to the August 28, 2009 “List of work to be performed by Crane Pro[/Konecranes] on shutdown,” Dohoney and a fellow Konecranes employee were to perform four tasks during the 16-hour plant shutdown: 1. Replace wiring on limit switches on Crane hooks; 2. Annual Preventative Maintenance on the house crane Pull and inspect the motor coupling on #1 and #3 crane hooks Remove rope guides and lube [V]isual inspection of the rope drums [V]isual inspection of the crane rails and wheels [C]ondition of the brake assy (sic) and check and measure air gap 3. [R]eplace disconnect on the smaller crane in the Maint[.] shop; 4. [R]epair of the pendant on the smaller hydrapulper crane In order to rewire the limit switch, Dohoney positioned himself on the “bridge,” a narrow walkway atop the house crane. While replacing the wiring, he cut a 100-limit switch cord that, unbeknownst to him, was still “live.” Apparently the disconnects were broken. Dohoney was electrocuted and found hanging in the air, attached to his fall-arrest harness. Dohoney’s widow, Tamara Dohoney (“Mrs. Dohoney”), received workers’ compensation benefits through Konecranes and filed this wrongful-death action against IP alleging various negligence claims under Kentucky law. IP sought and was granted summary judgment on the basis that it is entitled to “up–the–ladder” immunity under the Kentucky Workers’ Compensation 2 Act (KWCA), Ky. Rev. Stat. § 342.690, because IP was Dohoney’s statutory employer and Konecranes carried workers’ compensation insurance.
The Exclusive Remedy provision of the KWCA, Ky. Rev. Stat. § 342.690(1), provides: If an employer secures payment of compensation as required by this chapter, the liability of such employer under this chapter shall be exclusive and in place of all other liability of such employer to the employee. . . . For purposes of this section, the term “employer” shall include a “contractor” covered by subsection (2) of KRS § 342.610, whether or not the subcontractor has in fact, secured the payment of compensation. Ky. Rev. Stat. § 342.610(2) provides in pertinent part: A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter . . . . A person who contracts with another: .... (b) To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person . . . shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.
The Kentucky Supreme Court discussed the proper application of these statutory provisions in General Electric Co. v. Cain, 236 S.W.3d 579 (Ky. 2007), where it considered whether employees who were injured while performing work for their direct employers on premises owned by various businesses named as defendants were precluded from pursuing tort actions against those defendants. Work of a kind that is a “regular or recurrent part of the work of the trade, business, occupation, or profession” of an owner does not mean work that is beneficial or incidental to the owner’s business or that is necessary to enable the owner to continue in business, improve or expand its business, or remain or become more competitive in the market. It is work that is customary, usual, or normal to the particular business (including work assumed by contract or required 3 by law) or work that the business repeats with some degree of regularity, and it is of a kind that the business or similar businesses would normally perform or be expected to perform with employees. The test is relative, not absolute. Factors relevant to the “work of the . . . business,” include its nature, size, and scope as well as whether it is equipped with the skilled manpower and tools to handle the task the independent contractor is hired to perform. Employees of contractors hired to perform major or specialized demolition, construction, or renovation projects generally are not a premises owner’s statutory employees unless the owner or the owners of similar businesses would normally expect or be expected to handle such projects with employees. Employees of contractors hired to perform routine repairs or maintenance that the owner or owners of similar businesses would normally be expected to handle with employees generally are viewed as being statutory employees. Whether a project is customized to the premises owner's needs is irrelevant. When characterizing a project as being routine repair or maintenance versus a capital improvement, a relevant consideration is whether the premises owner capitalized and depreciated its cost for tax purposes or deducted its cost as a business expense. Capitalized costs tend to indicate that the business was not the injured worker’s statutory employer, while expensed costs tend to indicate that the owner was the statutory employer. This factor is not conclusive, however, because even projects performed entirely with a premises owner’s workforce may be capitalized depending on their character. It is irrelevant when a contractor’s employees are used to supplement the premises owner’s workforce. Stated simply, KRS 342.610(2)(b) refers to work that is customary, usual, normal, or performed repeatedly and that the business or a similar business would perform or be expected to perform with employees. Cain, 236 S.W.3d at 588–89. Looking to dictionary definitions, Cain defined “recurrent” as “occurring or appearing again or repeatedly,” which would apply to, e.g., routine maintenance; and defined “regular” work as a “customary, usual or normal part of the premise owner’s ‘trade, business, occupation, or profession,’ including work assumed by contract or required by law.” Cain, 236 S.W.3d at 586 (citing Webster’s New College Dictionary 934 (1995)). Neither term requires regularity or recurrence with the precision of a clock or calendar. Cain, 236 S.W.3d at 586 (citing Daniels v. Louisville Gas & Elec. Co., 933 S.W.2d 821, 824 (Ky. Ct. App. 1996)). 4 In Cain, the plaintiffs or their decedents worked in multiple locations where they were possibly exposed to asbestos, and the court applied its test to each work location. In remanding plaintiff Rehm’s claim against Reynolds Metals Company, the Cain court found that although Reynolds’s manufacturing process was highly mechanized and consisted of numerous conveyors, machines, and other equipment, and their installation, removal, and maintenance were regular and necessary parts of Reynolds’s operations, there was no evidence that Reynolds employees performed or were expected to perform the type of work Rehm was engaged in: although there was substantial evidence that it was normal for Reynolds employees to repair and maintain the plant’s machinery and equipment, there was no substantial evidence that they would perform a six-week project to remove, replace, and install machinery, piping and other equipment or repair cranes. Cain, 236 S.W.3d at 604. The Cain court also reviewed Rehm’s work at Goodrich, found that although Goodrich employees worked on some capital projects and some major repairs, the evidence failed to show that a project such as Rehm described [removing and replacing machinery, pumps, motors and pipes] was “work of a kind that the company would normally expect or be expected to perform with employees rather than outside contractors” and thus remanded. Id at 600. And, in evaluating Rehm’s work at American Standard, the court found that although there was evidence that Rehm “performed work that was regular or recurrent at American Standard,” there was not substantial evidence that “all of the work he performed was of a kind that American Standard or similar businesses would normally perform or be expected to perform with employees.” There was testimony that Rehm and his co-employees performed “certain ‘specialized projects’ and work that American Standard’s maintenance staff was unable to handle” and “lacked the capacity to perform,” and “nothing indicated that [American Standard employees] or employees 5 of a similar business would normally” perform the work Rehm was performing while exposed to asbestos. Accordingly, the court remanded the case against American Standard. Id. at 593–94. Finally, in reviewing Rehm’s work at General Electric’s Appliance Park site, the court explained that although a contractor performs a high volume of work, it does not necessarily follow that every kind of work that the contractor performs is regular or recurrent: Although evidence that a contractor performs a high volume of work for a business for a number of years shows that the contractor works regularly or recurrently for that business, it does not show that every kind of work that the contractor performed was regular or recurrent. Nor does it show that the business or similar businesses would normally be expected to use employees for every kind of work that the contractor performed. Cain, 236 S.W.3d at 599.
The district court noted that Kentucky courts and the Sixth Circuit have consistently held that “routine repairs and maintenance projects are a ‘regular or recurrent’ part of business operations” and observed: In the present case, Konecranes installed three cranes at the Mill in 1995 to facilitate the manufacture of paper products. The sixty-ton bridge crane is used daily to transport thirty-ton rolls of paper sixty feet down from the second level to the ground floor of the Mill and across the facility to complete the manufacturing process. No other crane at the Mill has the capacity to move the thirty-ton rolls of paper. James Hunt, International Paper Reliability Engineer, testified that the regular repair and maintenance of the 60-ton crane is an essential part of the Mill’s business. From 1995 through August 2009, each of the Mill owners had a service contract with Konecranes to complete monthly crane inspections and crane repairs. Specifically, International Paper had a contract with Konecranes to provide crane and hoist services for the 2009 calendar year. From July 2002 through the date of the accident, Konecranes employees serviced the Mill cranes over 150 times. At the time of the accident, Dohoney was replacing the limit switch wiring on the 60-ton crane pursuant to the service contract. Clearly, the periodic maintenance and repair of the cranes are integral to the work performed at the Mill. 6 Estate of Dohoney ex rel. Dohoney v. International Paper Co., No: 4:10CV-00030-JHM, 2011 WL 2935115, at  (W.D. KY. July 18, 2011). From there, the district court concluded that there was no genuine issue of material fact “that the periodic maintenance and repair of the cranes by Konecranes employees are a regular or recurrent part of International Paper’s business.” Id at .