Opinion ID: 821085
Heading Depth: 3
Heading Rank: 1

Heading: Dixie as “contractor” under the KWCA

Text: Black first argues that there was no contractor/subcontractor relationship established between Dixie and Western under the carriage agreement. Rather, Black argues that the agreement established an arms-length contractual relationship between Georgia-Pacific and Western, and Dixie, as a wholly independent subsidiary of Georgia-Pacific, is not a party to the contract and thus is not a “contractor” under § 342.610(2). As noted by the district court, the issue whether a formal contract is required to establish the contractor relationship was considered by the Kentucky Supreme Court in Beaver v. Oakley, 279 S.W.3d 527 (Ky. 2009). In Beaver, the court squarely held that § 342.610 “does not demand -5- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. evidence of formal written contracts between a defendant and the plaintiff’s direct employer for the defendant to have up-the-ladder immunity but, rather, shows that contracts might be found in this context when the facts show that the defendant is effectively functioning as the contractor.” Id. at 534. Thus, under Kentucky law, the absence of a formal written contract between the parties is not dispositive. Black further argues that because the carriage agreement between Western and GeogiaPacific refers to Western as an “independent contractor,”1 and any rights held by Dixie under the contract can be no greater than the rights of the contracting party, Georgia-Pacific, Dixie and Western cannot fall within the contractor/subcontractor relationship under § 342.610. However, the Kentucky Supreme Court has held that the relevant inquiry under the KWCA is not whether the injured worker is an employee or independent contractor, but rather whether “the task the independent contractor is hired to perform” is a “regular or recurrent part of the work of the trade, business, occupation, or profession” of the premises owner. Cain, 236 S.W.3d at 588. Therefore, any express contractual provision describing Western as an “independent contractor” has no bearing on whether Dixie and Georgia-Pacific are contractors within the meaning of § 342.610(2). Turning to the substantive consideration whether Dixie is a “contractor” under the KWCA, we note at the outset that Black does not substantially challenge the district court’s conclusion that deliveries of raw paper materials to Dixie occurred on a regular or recurrent basis. Considering the 1 The Contract Carriage Agreement states, “[i]t is expressly understood and agreed that the business of [Western], its agents, servants and employees, is in all respects separate and distinct from [Georgia-Pacific], and that [Western], and its agents, servants and employees, are with respect to [Georgia-Pacific], independent contractors.” PID# 112. -6- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. record evidence that Dixie received as many as fifty truck shipments of rolled paper raw materials during a typical week, there appears to be no material question on this issue. Instead, Black primarily argues that Dixie fails to show that Western was performing work that was a regular or recurring part of the work of Dixie’s “trade, business, occupation, or profession.” In support, Black relies on the Kentucky Supreme Court’s holding in Cain that “work” under § 342.610 is that which a “business or similar businesses would normally perform or be expected to perform with employees.” Cain, 236 S.W.3d at 588. Black claims that because Dixie concedes that it engages none of its own employees in the commercial transportation of raw materials to its production facility, Western’s shipment of such materials is not a “part of the work” of Dixie’s business. Further, Black argues that the transportation of raw paper supplies from a third party mill to Dixie’s production facility is not a part of the “work” of Dixie’s business, which involves the production of finished paper goods. In Cain, the Kentucky Supreme Court considered whether employees who were injured while performing work for their direct employers on premises owned by the various businesses named as defendants were precluded from pursuing tort actions against those defendants by the exclusive remedy provision of § 342.610. Panels of the Kentucky Court of Appeals had reached different results in cases involving various circumstances, holding some defendants to be contractors and denying others that status. The Kentucky Supreme Court reversed with respect to several of the defendants who had been determined to be contractors, concluding that although the employees performed work for the defendants at regular or recurrent intervals, the employees did not perform -7- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. work that was of the kind performed by the defendants or other similar businesses in the defendants’ industry. The Kentucky Supreme Court explained: 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 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. Cain, 236 S.W.3d at 588 (emphasis added). Prior to Cain, the Kentucky Supreme Court held in Fireman’s Fund Ins. Co. v. Sherman & Fletcher that “[e]ven though [a contractor] may never perform that particular job with his own employees, he is still a contractor if the job is one that is usually a regular or recurrent part of his trade or occupation.” 705 S.W.2d 459, 462 (Ky. 1986). Under Fireman’s Fund Ins. Co. and Cain, whether the work performed by the contracted employee at the time of his or her injury is normally performed by the contractor’s regular employees is not dispositive. Rather, that is simply one factor to consider in the “regular or recurrent” analysis. Other relevant factors include the “nature, size, and scope” of the business, whether the business is equipped with the tools and manpower to perform the contracted-for work, and whether “similar businesses would normally expect or be expected to handle such projects with employees.” Cain, 236 S.W.3d at 588. -8- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. In the present case, the district court did not analyze the Cain factors before concluding that the work Black performed at the time of his injury was a regular or recurrent part of Dixie’s business. Instead, the district court found that the frequency and volume of raw paper shipments received by Dixie demonstrated that such deliveries were “integral to the work[] performed at the Dixie plant.” Yet, the Kentucky Supreme Court explained in Cain that “work” under the KWCA 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.” 236 S.W.3d at 588. Thus, even though Dixie needed raw paper materials to be transported and delivered in order to perform its work, that is not a sufficient basis to find that such deliveries were a “part of” Dixie’s work. Under Cain, in order to find that the transportation of raw paper materials between a supplier and Dixie is a “part of” Dixie’s work, Dixie must demonstrate both that this type of transportation is a “customary, usual, or normal” part of Dixie’s business or “work that [Dixie] repeats with some degree of regularity” and that it is work that Dixie or similar businesses would normally perform or be expected to perform with employees. Regardless whether Dixie has satisfied the first prong of the Cain standard, it has not produced any evidence to show that it meets the second prong. The record demonstrates that Dixie owned no commercial vehicles and employed no drivers for the purpose of interstate transport of raw materials. And there is no evidence demonstrating that businesses in the similar “trade, business, occupation or profession” as Dixie normally use their own employees to transport raw materials from their suppliers to their facilities.2 Because Dixie has not established that the work Black performed at the 2 The record is also unclear about whether Dixie or Georgia-Pacific was responsible for arranging the transportation of raw materials to Dixie’s Bowling Green Plant. -9- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. time of his injury was a “regular or recurrent” part of its work, it was not entitled to judgment as a matter of law.3 2. Georgia-Pacific as “contractor” under the KWCA In considering whether Georgia-Pacific is a statutory employer under § 342.610(2), this court must walk though the same analysis. At the outset, for the reasons previously noted, we reject Black’s argument that Georgia-Pacific and Western’s negotiated relationship as “independent agents” should bar Georgia-Pacific’s claim that it is a contractor under the KWCA. At the time of Black’s accident, Georgia-Pacific had an active contract with Western to provide shipping services for Dixie and its subsidiaries. The district court cited language in the carriage agreement that Georgia-Pacific, “in the usual and ordinary conduct of its business requires transportation by motor carriers of its products, materials, and equipment,” PID# 108, to find that the hauling of raw paper product pursuant to that agreement is a “regular or recurrent part of Georgia-Pacific’s business.” PID# 262. This contractual language is not dispositive. Rather, we must consider whether the work performed by Black, on behalf of Western, is “part of the work of the trade, business, occupation, or profession” of Georgia-Pacific. There is little evidence in the record concerning Georgia-Pacific’s 3 In support of its conclusion that Dixie is a contractor under the KWCA, the district court also cited other district court cases, as well as a case from the Kentucky Court of Appeals, which stand for the proposition that “transportation . . . of materials are a regular or recurrent part of business operations.” However, with one exception, all of the cases cited by the district court predate Cain. The sole post-Cain case cited by the district court, Dean v. Dow Corning Corp., 2009 WL 995469 (E.D. Ky. April 4, 2009), does not mention Cain or consider any of the relevant factors discussed in Cain in its analysis. Accordingly, we do not find the reasoning of this case persuasive. -10- No. 10-5498 Black v. Dixie Consumer Products LLC, et al. primary business function, the degree of control Georgia-Pacific assumed in ordering shipments of raw paper supplies for Dixie, or whether Georgia-Pacific’s own employees were regularly or recurrently engaged in the work of transporting raw materials from the paper mill or other production facilities to Dixie or other Georgia-Pacific subsidiaries. Although Western regularly transported materials between Georgia-Pacific subsidiaries, and from third parties to various subsidiaries, there is no evidence in the record that indicates whether transportation of raw materials between a parent and its subsidiary, or between subsidiaries, is the type of work that Georgia-Pacific or a similar business would be expected to perform with its own employees. Accordingly, Georgia-Pacific has not met its burden of demonstrating that it is a “contractor” under the KWCA.