Opinion ID: 836042
Heading Depth: 2
Heading Rank: 3

Heading: Application of the Right to Control Test

Text: With those legal principles in mind, we turn once again to the undisputed facts that were before the trial court on the motion for summary judgment in this case. The dealership agreement described the relationship between Stockert and defendant. As noted above, the agreement recited that Stockert was an independent contractor, not an employee of defendant; that defendant had no control over Stockert's mode of doing business; and that Stockert and defendant had no authority to bind each other contractually. Although terms such as those in a dealer or distributor agreement are not dispositive of whether the dealer is an independent contractor, they are evidence of such a relationship. Jenkins, 245 Or. at 384-85, 421 P.2d 971. In any event, we see no inference that a jury could draw from the dealership agreement in favor of plaintiff's position that defendant had a right to control Stockert. Further, we do not think, based on the other facts in the record, that a jury reasonably could infer that Stockert and defendant operated in a manner inconsistent with the terms of their agreement. Frank testified that defendant exercised no control over the manner in which Stockert conducted his business, other than the requirement that Stockert not sell competing products. Stockert was free to conduct his business as he saw fit. There is no evidence that defendant visited Stockert or his customers or decided how often Stockert worked. Defendant did not control the prices that Stockert charged, the quantity of products he sold, the manner of sales, or the customers to whom he sold. Stockert was permitted to, and did, sell noncompeting products that he purchased from wholesalers other than defendant. Neither could a jury draw inferences in favor of plaintiff's position from the means by which Stockert earned money from the sale of the products. Stockert received no wages, commissions, reimbursements, guarantees, or payments from defendant. His income consisted solely of the difference between the amounts that he collected from his customers and his expenses, which included the cost of products that he purchased from defendant and other wholesalers. Stockert paid all his own expenses, including insurance, took all risk of loss on his sales, and received all benefit of any gain. Plaintiff points to other facts. She notes that defendant was the exclusive supplier of meat and fish products to Stockert and supplied him with a refrigeration unit and promotional literature; that Stockert did not hold himself out as a separate enterprise; that Stockert did not possess special skills; and that Stockert worked for defendant for over four years. She argues that those facts and the reasonable inferences that a jury could draw from them, viewed in the light most favorable to plaintiff, would allow a reasonable jury to conclude that defendant had a sufficient right to control the manner in which Stockert conducted his sales to give rise to vicarious liability. We disagree. Those facts provide an insufficient basis to conclude that, with respect to the physical conduct in the performance of the services [Stockert was] subject to [defendant's] control or right to control. Restatement (Second) of Agency, § 220(1) (1958). Given the undisputed facts regarding the financial arrangement between Stockert and defendant, and the level of control that Stockert exercised over the manner in which he undertook to the sell the products, we conclude that the facts and inferences support only the conclusion that defendant did not have a sufficient right to control Stockert such that he could be considered an employee. The dissent contends that a jury could find that some of the ten nonexclusive factors identified in the Restatement (Second) of Agency, section 220, are present and provide sufficient evidence to allow the jury to conclude that Stockert was an employee of defendant. See Kowaleski, 235 Or. at 460-61, 385 P.2d 611 (discussing relevance of Restatement factors in determining control); Schaff, 334 Or. at 110-111, 45 P.3d at 945-946 (De Muniz, J., dissenting) (setting out Restatement factors). That conclusion is inconsistent with this court's decisions, which emphasize that control over performance remains the principal test, Jenkins, 245 Or. at 387, 421 P.2d 971, and which hold that the absence of control may be found, as a matter of law, despite evidence of one or more of the subsidiary factors identified in the Restatement, see id. at 384-87, 421 P.2d 971 (describing evidence consistent with several Restatement factors, but holding no right to control as matter of law). The dissent's conclusion also is inconsistent with this court's decision in Jenkins, the facts of which are strikingly similar to this case. As noted, Jenkins involved a traveling salesman for a furnace-cleaning company. 245 Or. 382, 421 P.2d 971. Like Stockert, he signed a contract as an independent contractor that required him to purchase automobile insurance and prohibited him from contracting on behalf of the company. The contract also prohibited the salesman from employing others or advertising, although, like Stockert, he was free to sell other noncompeting products. The company provided the salesman with an order book necessary to perform the work. The relationship could be terminated at will, and the salesman was free to work at a time and in a manner in which he saw fit. Id. at 384-86, 421 P.2d 971. This court concluded that the foregoing facts and the inferences a jury could draw from them were insufficient to support the conclusion that the company had a right to control the salesman and, thus, that the salesman was not an employee. Id. at 387, 421 P.2d 971. The facts and inferences that plaintiff and the dissent claim are sufficient to support a conclusion that defendant had a right to control Stockert are, in our view, not materially different from those in Jenkins. For example, plaintiff argues that the facts and inferences support the conclusion that defendant was Stockert's employee because [t]here can be little question that neither Mr. Stockert, nor the dealers in general, actually have a distinct occupation or business. They all work from their homes, and Mr. Stockert made no pretense of holding himself out as a separate enterprise. He had no cards, no advertisements, no yellow page listing, no place of business, and no worker[s'] compensation insurance. We fail to see how those facts are distinguishable from the facts in Jenkins, in which the salesman worked door to door or used a telephone, and did no advertising of any kind. 245 Or. at 384, 421 P.2d 971. Similarly, plaintiff argues that the fact that the relationship between Stockert and defendant was terminable at will is consistent with an employer/employee relationship and, thus, could support a conclusion that such a relationship existed. Again, we fail to see the significance of that fact in light of Jenkins, where the relationship between the salesman and the furnace-cleaning company also was terminable at will. Id. at 385, 421 P.2d 971. Indeed, to the extent that the cases are distinguishable, the facts in this case show that defendant had even less right to control its salesmen than did the defendant in Jenkins. First, the defendant in Jenkins reserved the right to reject, for any reason, any order its salesmen had negotiated and to refuse to pay commissions on those orders. 245 Or. at 384, 421 P.2d 971. In this case, because of the nature of the relationship namely, Stockert purchased the products that he solddefendant lacked similar control over the transactions between Stockert and his customers. Second, the defendant in Jenkins informed its salesmen that they were expected to make 10 to 12 sales a month. Id. at 385-86, 421 P.2d 971. No similar expectations were placed on Stockert. It is undisputed that defendant had no requirement that dealers devote even a minimum number of hours to selling products purchased from defendant. Finally, the defendant in Jenkins paid its salesmen on commission and on a piece-work basis, a practice that is at least consistent with an employer/employee relationship. Id. at 384, 421 P.2d 971. Here, defendant did not pay Stockert by commission or otherwise, but simply sold products to him for resale. The difference in compensation arrangements further demonstrates that defendant had less of a right to control Stockert's performance than the defendant in Jenkins had over the performance of its salesmen. [6] Neither plaintiff nor the dissent suggests that Jenkins was decided incorrectly. Indeed, plaintiff does not cite Jenkins in any of her briefing to this court, much less attempt to distinguish it. In light of both the factual similarities between Jenkins and this case and, as noted above, the relevant differences, we conclude that the same disposition is warranted here. The trial court properly concluded, as a matter of law, that Stockert was not an employee of defendant. Accordingly, the trial court correctly granted defendant's motion for summary judgment. The decision of the Court of Appeals and the judgment of the circuit court are affirmed. DE MUNIZ, J., dissenting. In Rubalcaba v. Nagaki Farms, Inc., 333 Or. 614, 43 P.3d 1106 (2002), this court held that, as a matter of law, an individual who owned and maintained his own truck, and who, along with other owner-drivers, occasionally hauled onions for a farmer to the processor, was a worker and the farmer a subject employer under the workers' compensation statutes. That conclusion was based on this court's application of the judicially created right to control and nature of the work tests. I joined the opinion in Rubalcaba, because I concluded that this court's cases applying the right to control and nature of the work tests compelled that result. I am not willing, however, to do the conceptual about face that the majority does here, to conclude that plaintiff is not entitled to have a jury apply essentially the same considerations in deciding whether, for purposes of vicarious liability, there was a master-servant relationship between defendant and Stockert. This case is only at the summary judgment stage. Thus, a jury must be permitted to decide whether there was a master-servant relationship between defendant and Stockert, sufficient to impose vicarious liability, unless we can declare that, on this record,  viewed in a manner most favorable to the [plaintiff], no objectively reasonable juror could return a verdict for the [plaintiff]   . ORCP 47 C (emphasis added). The majority acknowledges the following: In cases in which the facts or reasonable inferences support a conclusion that there is an employer-employee relationship, this court allows the jury to render a verdict as to the individuals's employment statusalthough a conclusion of lawby way of resolving those conflicting facts or inferences on the basis of proper instructions. Schaff v. Ray's Land & Sea Food, Inc., 334 Or. 94, 101, 45 P.3d 940 (2002). However, having acknowledged the jury's role in deciding whether vicarious liability should be imposed, the majority proceeds to ignore it. For the reasons that follow, I respectfully dissent. This court frequently [has] said or assumed that the existence of a master-servant relationship is to be determined according to whether the master had the right to control the conduct of the alleged servant. Peeples v. Kawasaki Heavy Indust., Ltd., 288 Or. 143, 146, 603 P.2d 765 (1979). The majority follows that approach, concluding that, for purposes of vicarious liability, the right to control test is the only test that should be applied. Schaff, 334 Or. at 100-01, 45 P.3d at 939. As I point out below, that conclusion is dubious because, in earlier tort cases, this court has indicated that a jury may consider factors similar to those identified in the nature of the work test in deciding whether to impose vicarious liability. Nevertheless, even assuming that the court should use only the right to control test to determine whether the record presents a dispute as to a material fact, the majority errs in its application of that test. There is evidence in the record, which I list below, that would permit a juror reasonably to infer that defendant had the right to control the performance of Stockert's work. First, defendant had the right to terminate the employment relationship at any time without contractual liability. In Rubalcaba, this court emphasized that an  employer's power to terminate [is] particularly strong evidence of the right to control, because the `effect of [the power to terminate] possessed by the company required respondent to conduct this operation at all times as it might please the logging company and its manager.'  Rubalcaba, 333 Or. at 620, 43 P.3d 1106 (citing Bowser v. State Indus. Accident Comm., 182 Or. 42, 56, 185 P.2d 891 (1947)) (emphasis added). Although that same reasoning should apply here, the majority accords no weight at all in this case to the right to discharge. Second, defendant had economic control over Stockert by requiring Stockert to purchase his entire meat and fish requirements from defendant. Defendant supplied the products to Stockert on credit, which Stockert settled with defendant on a 30-day basis. As security for the financial arrangement, the contract required Stockert to prepay $1,000 to defendant. Third, defendant provided the most important equipment necessary to perform Stockert's work by furnishing Stockert with a $5,000 refrigeration unit with the name Land and Sea Food Co. on its side. Finally, defendant supplied Stockert with brochures describing the products, and defendant trained salesmen, like Stockert, by taking them on sales calls and advising them of effective selling techniques and suggested prices. A jury, considering those factors, reasonably could conclude that defendant exercised a degree of control over the manner in which Stockert performed his work, sufficient to justify the imposition of vicarious liability. [1] That is all that ORCP 47 requires at this stage of the proceedings. The majority incorrectly concludes otherwise and deprives plaintiff of the jury trial to which she is entitled. There is, however, more to this issue than the majority acknowledges. In the past, this court has commented that, in determining the existence of a master-servant relationship for purposes of vicarious liability, a jury may consider the various factors outlined in Restatement (Second) of Agency, section 220 (1958). See Wallowa Valley Stages v. Oregonian, 235 Or. 594, 386 P.2d 430 (1963) (so stating). Section 220 provides: (1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control. (2) In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered: (a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by time or by the job; (h) whether or not the work is a part of the regular business of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; and (j) whether the principal is or is not in business. (Footnote omitted.) In Wallowa Valley Stages, this court, referring to the factors identified in section 220 of the Restatement, stated: If the foregoing considerations are used in the trial of jury cases, the trial court ultimately has to tell the jurors, at least in a general way, how to apply to the case at hand their affirmative or negative answers to the Restatement tests. They must arrive at a general verdict based upon their decision that the actor in a given case was, or was not, a servant. Thus, the trial courts understandably rely strongly upon the element of control, or the right to control, and in their instructions relate to the general concept of control such other suggestions, like those found in § 220 of the Restatement, as they may see fit to use.  235 Or. at 599, 386 P.2d 430 (emphasis added). As applicable to this case, Wallowa Valley Stages clearly established that, in determining whether the relationship between defendant and Stockert is of a nature sufficient to justify the imposition of vicarious liability, a jury is entitled to consider, and may give some weight to, the factors outlined in section 220 of the Restatement. The factors outlined in section 220 of the Restatement closely parallel the nature of work test that this court applied in Rubalcaba to hold as a matter of law that the claimant was a worker and that the farmer was a subject employer. See also Woody v. Waibel, 276 Or. 189, 554 P.2d 492 (1976) (identifying and applying the nature of the work test factors). Here, a jury could find that a number of the factors identified in the Restatement are present and, when considered along with the primary right to control factors, are sufficient to impose vicarious liability. Evidence conforming to the Restatement factors include the following: Defendant is a corporation that sells meat and fish products. The sale of defendant's products to the public is accomplished by salesmen, like Stockert, who sell to customers in certain geographic areas. Stockert was not engaged in a distinct occupation, as usually is the case with independent contractors. The skill used in selling meat and fish products is typical of a route salesman, and that relationship usually is one of master-servant. Stockert had no independent business listing in the yellow pages of the telephone directory, did no advertising, and used business cards identifying himself as Adam Stockert, a representative of Land & Sea Food Co.  (Emphasis added.) Stockert had no employees of his own. At the time of Stockert's death, the relationship had existed for four years. Stockert carried commercial auto insurance in the amount of $300,000, endorsed to show defendant as an additional insured. In Wallowa Valley Stages, a jury had determined that Badgett, who distributed Oregonian newspapers in eastern Oregon, was an employee of the Oregonian for purposes of vicarious liability. On appeal to this court, the Oregonian contended that, as a matter of law, Badgett was an independent contractor and the jury should not have been permitted to decide the issue. In affirming the judgment against the Oregonian, the court stated: We do not hold that the amount of supervision exercised in the case at bar was sufficient to constitute Badgett an employee as a matter of law. Neither can we hold that Badgett was an independent contractor as a matter of law. We hold that there was evidence from which the jury could draw its own inferences on the matter.  235 Or. at 602, 386 P.2d 430 (emphasis added). Conceptually, this case is indistinguishable from cases like Wallowa Valley Stages. The evidence of control and the evidence consistent with the factors identified in the Restatement are not, as a matter of law, sufficient one way or the other to define the relationship between defendant and Stockert. However, the record does contain evidence that is sufficient for a jury to decide whether the relationship is of the type that justifies the imposition of vicarious liability. That is all that is required under this court's cases. DURHAM and RIGGS, JJ., join in this dissenting opinion.