Court Opinion

ID: 5135854
Source: CourtListenerOpinion
Date Created: 2021-12-17 15:06:06.111773+00
Date Added: 2024-06-11T08:23:51.530046
License: Public Domain

RENDERED: DECEMBER 10, 2021; 10:00 A.M.
                      TO BE PUBLISHED

            Commonwealth of Kentucky
                    Court of Appeals

                      NO. 2020-CA-0942-WC

AIG                                                   APPELLANT

              PETITION FOR REVIEW OF A DECISION
v.          OF THE WORKERS’ COMPENSATION BOARD
                    ACTION NO. WC-19-00222

DAOUD OUFAFA; TAXI, LLC D/B/A
TAXI 7 (AKA TAXICAB);
UNINSURED EMPLOYERS’ FUND;
HONORABLE W. GREG HARVEY,
ADMINISTRATIVE LAW JUDGE;
AND WORKERS’ COMPENSATION
BOARD                                                 APPELLEES

AND                   NO. 2020-CA-0946-WC

TAXI, LLC D/B/A TAXI 7 (AKA                           APPELLANT
TAXICAB)

              PETITION FOR REVIEW OF A DECISION
v.          OF THE WORKERS’ COMPENSATION BOARD
                    ACTION NO. WC-19-00222
DAOUD OUFAFA; AIG; UNINSURED
EMPLOYERS’ FUND; HONORABLE
W. GREG HARVEY,
ADMINISTRATIVE LAW JUDGE;
AND WORKERS’ COMPENSATION
BOARD                                                                  APPELLEES

                                OPINION
                        REVERSING AND REMANDING

                                     ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; ACREE AND LAMBERT, JUDGES.

ACREE, JUDGE: Taxi, LLC d/b/a Taxi 7 (Taxi 7) and AIG separately petition

this Court for review of the July 2, 2020, opinion of the Workers’ Compensation

Board (the Board) reversing in part, vacating in part, and remanding the decision of

the Administrative Law Judge (the ALJ) and the order dismissing AIG and the

Uninsured Employers’ Fund (the UEF) as parties to the claim. The sole issue on

appeal is whether the Board properly reversed the ALJ’s determination that Taxi 7

was a taxicab leasing company rather than a taxicab company that employed

Daoud Oufafa as a driver. We reverse the Board and remand with instructions to

reinstate the ALJ’s determination.

             Daoud Oufafa, the claimant before the Board, moved from Morocco

to the United States in 2011. He is married with two children and has a high

school education. After working various jobs, including as a vehicle valet, Oufafa

heard from a friend that Taxi 7 was seeking qualified persons to drive its taxicabs.

                                          -2-
               Taxi 7’s business involves leasing taxicabs and related services

including dispatch and credit card processing services to individuals, corporations,

partnerships, and other entities.1 In addition to owning the taxicabs it leases, it

owned trademarks, brands, colors, and permits issued by government authority.

               Oufafa went to Taxi 7’s office and met with its representative,

Michael Cregan. He provided his license to Cregan and later had a drug test

performed at Cregan’s request. Cregan then presented Oufafa with two documents

to consider.

               The first, dated February 5, 2016, was titled “TAXI, LLC COMPANY

CAR DRIVER AGREEMENT” and provided that Oufafa would make a weekly

lease payment of $405.00, and a separate $30.00 per week payment for vehicle

insurance. Oufafa’s lease payments were consideration in exchange for Taxi 7’s

providing a fully equipped taxicab,2 dispatch services and credit card processing

services, its branding, and its goodwill. The Agreement also allowed Oufafa to

sublease the taxicab and related services with Taxi 7’s prior approval. (Agreement

¶ 1.16.)

1
 The form agreement Taxi 7 uses includes provision for leasing to “a corporation, partnership or
other legal entity . . . .” (Agreement, ¶ 9.8.)
2
  Pursuant to the Agreement, the leased taxicab was to be “in good working order, equipped with
a taximeter, communication device, camera, credit card processing device and any other
equipment as required by any state, county or local ordinance regulating taxicabs.” (Agreement,
¶ 1.3.)

                                              -3-
             The Agreement required Oufafa to represent and warrant to Taxi 7

that he had “executed a statement which confirms that I am an independent

businessperson” and that is the second document Oufafa signed.

             Bearing the same date as the Agreement, this document is titled

“Status as a Self-Employed Businessperson.” It is a one-page document with

redundancies that emphasize the nature of the relationship between Oufafa and

Taxi 7. The first half of the page says, in pertinent part:

                    I acknowledge and agree that there is no employer-
             employee, principal-agent, or master-servant relationship,
             either expressed or implied between [Taxi 7] and myself
             as a result of my operation of my TAXICAB. I am a self-
             employed businessperson free from interference or control
             on the part of [Taxi 7] in the manner or means of operation
             of the TAXICAB or the business that I conduct with the
             TAXICAB. I shall exercise complete discretion in lawful
             operation of the TAXICAB, and I shall determine the
             hours I work, the area I service, the methods, the details
             and means of performing any and all taxicab services I
             may decide to provide in my taxicab business, as follows:

             ▪    My earnings . . . are mine alone. I shall not share my
                  fares with [Taxi 7], and I shall not account to [Taxi 7]
                  for any fares collected from passengers in the
                  operation of my business. [Taxi 7] shall do no more
                  than make available referrals of prospective
                  passengers received through telephone call service or
                  radio dispatch service.

             ▪    [Taxi 7] does not require me (i) to remain at any
                  specified place; (ii) to answer calls or report [my]
                  location . . . ; or (iii) to work any fixed hours. I am
                  free to decide if and when to work . . . and when and
                  if to lease the TAXICAB to others.

                                          -4-
            ▪    [Taxi 7] does not restrict in any manner . . . [where] I
                 may operate . . . or . . . my use of the TAXICAB for
                 any lawful purpose. Any right to control exists solely
                 with the passenger who is hiring the TAXICAB at my
                 discretion.

            ▪    I may market my taxicab business independent of
                 [Taxi 7] and advertise my services in my own name.
                 . . . I may, if I wish, modify the TAXICAB . . . . [Taxi
                 7] will relay to me orders received . . . from customers
                 specifically requesting my services.

            The next part of this “Status” document is in boldface type. Its focus

is Oufafa’s obligation as an independent business owner to comply with laws:

            I acknowledge and agree that, as a self-employed
            businessperson, free from authority and control of
            [Taxi 7]:

            ▪    I am not an employee for purposes of worker’s
                 compensation     coverage,     State     Disability
                 Insurance, the Federal Insurance Contributions
                 Act (FICA), the Social Security Act, and State and
                 Federal tax withholding at the source.

            ▪    [Taxi 7] will not withhold FICA or state and
                 federal income taxes on any payments I may
                 receive, and I am fully and solely responsible for
                 paying any and all federal and state income taxes
                 and self-employment taxes due as a result of any
                 payments I receive.

            ▪    It is my responsibility to acquire a business license
                 for the area(s) in which I intend to operate.

            As a further expression of his understanding of his status as a self-

employed individual, Oufafa wrote the following in his own handwriting: “I am

                                        -5-
self-employed for all purposes, including workers compensation and

unemployment. Whether or not I drive the rented TAXICAB, I am not an

employee of company.”

             Oufafa began driving for Taxi 7 a few days later. On January 5, 2018,

while in the process of transporting passengers in his taxicab, Oufafa sustained a

gunshot wound to his back that left him paralyzed from the waist down. Oufafa

filed an Application for Resolution of Injury Claim seeking benefits for his

injuries, alleging that he had been injured in the course and scope of his

employment for Taxi 7. After the Department of Workers’ Claims certified that

Taxi 7 was uninsured, the UEF was joined as a defendant. The UEF denied the

claim was compensable. Taxi 7 also denied the claim.

             Michael Cregan testified by deposition that he was the general

manager for Taxi 7, which had opened in Louisville in August 2015. He had

previously worked in another Taxi 7 located in Nashville, Tennessee. The

businesses were owned by the same ownership group, NBRS Management

Services. Cregan described Taxi 7 and NBRS Management Services as the same

entity.

             Consistent with the Agreement, Cregan stated that Taxi 7 processed

credit card transactions for Oufafa. Any funds were first credited to Oufafa’s lease

payment, and the remaining funds were wired to Oufafa or stayed in his Taxi 7

                                         -6-
account. Taxi 7 issued Oufafa a copy of Internal Revenue Service (IRS) Form

1099K each year stating how much revenue Oufafa generated by his customers’

credit and debit card payments. Cregan described the drivers for Taxi 7 as

independent contractors.

            Based upon Cregan’s deposition testimony that Taxi 7 and NBRS

Management Services were the same entity, separate counsel entered an

appearance for AIG to protect its interests. AIG provided the policy of insurance

for ADP Total Source, Inc. (ADP), which was a Professional Employer

Organization that provided workers’ compensation coverage for the companies

falling under its umbrella. ADP’s claims were handled by a third-party

administrator, Helsman. However, NBRS Management Services, not Taxi 7, was

included in the endorsement for covered companies under ADP’s policy with AIG.

The ALJ conducted a teleconference with the parties to discuss the newly raised

issues. The ALJ treated AIG’s motion as a motion to intervene, which was granted

for the purpose of determining the coverage question – whether Taxi 7 was insured

or was the beneficiary of workers’ compensation coverage for Oufafa’s injuries.

The ALJ also reopened proof to allow the parties to submit evidence on the

question of whether coverage existed. AIG subsequently entered a denial of

Oufafa’s claim.

                                        -7-
            Michael Solomon testified by telephonic deposition. He was the

President of NBRS Management Services, which he described as providing

employees for the management of its group of taxicab companies throughout the

eastern part of the United States. NBRS Management Services had workers’

compensation insurance with ADP. Cregan was an employee of NBRS

Management Services and worked as the manager of Taxi 7 on-site in Louisville.

He was not an employee of Taxi 7; rather, that was the location where he worked

as Taxi 7 did not have any employees.

            Solomon testified that he considered himself to be an expert in the

area of taxi companies and explained how they are typically set up:

                   I would say 99.9 percent of all taxi cab companies
            in the U.S. are operated on an independent contractor basis
            where the drivers secure or bring their own vehicle and
            they are several models one or the other to the taxi
            company [sic]. They pay for the opportunity to work
            under their what they call their colors, their brands. They
            are independent contractors. What they collect in the
            vehicle belongs to them. They pay a fee either by week or
            by month or by day or by shift. There’s a multitude of
            ways that works. In our case our drivers pay by week as a
            courtesy but they’re signing a month-long contract that
            auto renews if either party doesn’t make a change to that
            before the end of the month. There is a small handful of
            companies including the City of Las Vegas that the drivers
            are actually employees of the company but, like I say, 99
            percent of all their jurisdictions in the U.S. is done the way
            as I previously stated as independent contractors renting a
            car or bringing their own car and renting our services, our
            dispatch, our brands, our permits, and that’s pretty much
            the way they operate.

                                         -8-
Because Taxi 7 did not have any employees, Solomon stated that it did not require

workers’ compensation coverage. Later, Solomon testified that NBRS USA

Holdings owned Taxi 7, not NBRS Management Services, and that NBRS

Management Services and Taxi 7 were not the same company. He described

Oufafa as a customer of Taxi 7 and an independent contractor. Solomon pointed

out that Oufafa filled out paperwork that stated he was an independent contractor

and Taxi 7 filed Form 1099K with the IRS stating independent contractor earnings

for Oufafa. He did agree that the drivers were an integral part of the business.

             The ALJ held a benefit review conference on December 2, 2018, and

entered an order thereafter indicating that the matter had been bifurcated to first

determine the contested issues of whether Oufafa had an employment relationship

with Taxi 7 and, if so, whether there was coverage for his claim. A final hearing

was held immediately after the conference.

             At the hearing, the ALJ heard additional testimony from Oufafa and

Cregan. Oufafa testified that he gave his tax records to a tax “officer” to complete

and file his tax forms. Cregan also testified he did not understand anything about

the U.S. tax law. He stated that he was an employee of NBRS Management

Services where he worked as the general manager over day-to-day operations at

Taxi 7. He described the company as a taxi company that leases vehicles. He said

he managed Taxi 7’s leasing operations. Cregan said it was a standard practice in

                                          -9-
Louisville for taxi companies to lease cabs to independent contractors, who then

operated as a business. He also testified that the City of Louisville sets the

maximum taxi rate as well as how the taxis are to operate and look. The only

requirements to drive with Taxi 7 are a driver’s license, a background check, a

drug test, and a permit from the City of Louisville. Taxi 7 held the certificate of

operation. By the time of the hearing, Cregan stated that Taxi 7 had merged with

Yellow Cab.

              The parties filed briefs addressing the salient issues, after which the

ALJ entered an opinion and order on January 31, 2020, in which he determined

that Oufafa was an independent contractor. Pertinent to the issue before this Court,

the ALJ made several findings. First, the ALJ addressed the nature of Oufafa’s

work as it related to Taxi 7’s business:

                     Taxi 7 leased the taxicab and equipment to Oufafa.
              It also provid[ed] the certificate of operation that allowed
              Oufafa to drive a cab and the dispatch service that notified
              Oufafa of the overwhelming majority of potential
              customers in the city. However, Oufafa did not work a set
              schedule and could accept or reject pick-[ups] as he saw
              fit. In fact, he could park the cab for as long as he wanted
              provided he paid the lease as it came due. [Taxi 7] alleges
              it is a taxicab leasing company whose customer is the
              driver. It submits the driver’s customer is the passenger.

                     As a regulated industry, the city of Louisville also
              exercised control over the appearance of the cab, did
              routine inspections and required Oufafa to be permitted to
              drive. Taxi 7 did not actually transport people, it provided
              Oufafa the means to do so. The ALJ agrees with

                                           -10-
             Solomon’s testimony that the structure of the business is
             driven by costs considerations on both sides – both from
             the owner of the cabs and the driver. Each has reasons to
             desire the relationship to be other than that of employee-
             employer.

                     The obvious cost driver for the owner of the cab
             fleet is worker’s compensation insurance. By setting up a
             relationship that is that of independent contractor with the
             drivers, the owner of the vehicles and certificate enables
             itself to generate revenue through lease payments rather
             than direct fare-splitting. It also does not have employees.
             Similarly, the driver retains the autonomy of setting his
             own schedule, avoiding withholdings, working in areas
             and at times he desires and to have some control over the
             amount of fares he generates with a set cost of the cab. In
             other words, once the driver has the lease payment
             covered, all the earnings over and above that amount are
             his and his alone.

                    In the absence of drivers, a taxi leasing company
             would have no market for leasing the cabs it owns and
             outfits. Consistent with Solomon’s testimony, the ALJ
             finds Oufafa’s work as a taxi cab driver was an integral
             part of Taxi LLC’s business of leasing cabs to operators
             and this factor weighs in favor of an employer/employee
             relationship.

             Next, the ALJ addressed the extent of control exercised over Oufafa

by Taxi 7:

                    The fact that Oufafa retained autonomy in his
             schedule, had the ability [to] accept and reject any dispatch
             calls causes the ALJ to find that Taxi 7 did not exercise
             significant control over . . . Oufafa. The ALJ is aware
             there is a distinction between the right to control and the
             extent of control. Once Oufafa decided to enter into the
             lease, Taxi 7 did not have the right to control his every day

                                         -11-
            work and did not do so. It did have the right to control the
            equipment it owned and to monitor [its] use.

The ALJ found this factor weighed in favor of finding that Oufafa was an

independent contractor.

            Later, the ALJ addressed whether Oufafa was engaged in a distinct

occupation or business:

                   This issue is very closely aligned with the analysis
            above. Defendant argues that it was in the business of
            leasing cabs while [Oufafa] was in the business of
            transporting customers. Unlike the integral part of the
            business analysis performed above, the question of
            whether or not Oufafa’s work was distinct is different. He
            drove a cab. The alleged employer is Taxi 7 who provides
            the capital equipment, certificate of operation and dispatch
            services. It does not also transport passengers. It leases
            vehicles and provides information but does not drive.
            Oufafa is in the business of driving passengers. He could
            perform that work for Uber or Lyft or for another cab
            company. His work is distinct from leasing cabs and
            performing dispatch services.

                  The undersigned is persuaded Oufafa was engaged
            in a distinct occupation or business as a cab driver.
            Although that business is an integral part of Taxi 7’s
            business of leasing taxi cabs it is still distinct.

                   The ALJ believes Oufafa was engaged in a distinct
            occupation or business but that his work was an integral
            part of Taxi 7’s business. Because his work was distinct,
            this factor supports a finding Oufafa was an independent
            contractor.

After completing his analysis of the factors, the ALJ concluded:

                                       -12-
       As the parties can see from the above analysis, this
claim presents a very difficult set of facts and law. The
ALJ has evaluated the factors required by the Courts in
both [Ratliff v. Redmon, 396 S.W.2d 320 (Ky. 1965),] and
[Chambers v. Wooten’s IGA Foodliner, 436 S.W.2d 265
(Ky. 1969).] The predominant factors are split. The
remaining Ratliff factors weigh slightly in favor of a
finding of independent contractor. This is a unique
situation where Oufafa’s employment is an integral part of
Taxi 7’s business but he plays a distinct role. The Taxi 7
business model is that of a leasing company. It has priced
the lease of the cabs and allowed the driver to make
whatever profit he can. It has also left the amount of work
and schedule up to the driver.

....

       Taxi 7 leased the cab and Oufafa was the driver.
Oufafa paid Taxi 7 the lease amounts while the city
dictated the maximum fare Oufafa could charge. Taxi 7
had no way, in this particular relationship, to pass on the
costs of the injuries to passengers in Oufafa’s cab. This is
not a situation where a product is being sold. This is a
service provided by Oufafa with capital equipment
provided by Taxi 7.

       This is a claim where great empathy exists for
Oufafa’s plight. The undersigned is obligated, however,
to apply the law to the facts presented. In doing so, the
ALJ finds the factors evaluated lead to the finding that
Oufafa was an independent contractor. He signed an
agreement to drive a cab as an independent contractor and
did so for approximately three years. His tax returns
reflect he identified himself as a self-employed taxicab
driver. Taxi 7 provided him with a cab and services to
help him procure passengers. It did not control his day to
day work activities and he had autonomy.

                           -13-
Accordingly, the ALJ dismissed the claim against Taxi 7 based upon its finding

that Oufafa was an independent contractor and deemed the remaining issues to be

moot.

             AIG filed a petition for reconsideration seeking clarification that it

and the UEF were also dismissed from the claim, which the ALJ granted by order

entered February 21, 2020. The opinion and order was amended to reflect that

AIG and the UEF were both dismissed.

             Oufafa also filed a petition for reconsideration, in which he pointed

out numerous errors of fact and law. This included an argument that Taxi 7 was

not merely a taxicab leasing company based upon its representations that it was a

taxi transportation service when it obtained the certification of operation from the

City of Louisville. The ALJ rejected this argument, noting that he had focused on

the conduct of the parties with each other. The ALJ ultimately denied Oufafa’s

petition.

             Oufafa appealed the ALJ’s decisions to the Board, which entered its

opinion on July 2, 2020. The Board ruled that the ALJ incorrectly concluded that

Taxi 7 was a taxicab leasing company rather than a taxicab company and that this

“tainted the entirety of his analysis.” The Board continued:

             Unquestionably, a proper understanding of the nature of
             the alleged employer’s regular business is essential before
             undertaking an analysis under Ratliff, Chambers, and
             [Kelly Mountain Lumber v. Meade, Nos. 2007-SC-

                                         -14-
             000507-WC and 2007-SC-000526-WC, 2008 WL
             3890701 (Ky. Aug. 21, 2008).] As we previously pointed
             out, the Court in [Husman Snack Foods v. Dillon, 591
             S.W.2d 701 (Ky. App. 1979),] stated, “the treatment of the
             claimant’s work in relation to the regular business of the
             employer as the dominant factor in the decision of whether
             the claimant is an employee, fulfills the theory of risk
             spreading embodied in compensation.” Dillon at 703.
             (Emphasis added). In other words, before the ALJ can
             accurately determine if his delineation of a worker as an
             “employee” or “independent contractor” satisfies the
             theory of risk spreading which is essential to the workers’
             compensation system, he must have an accurate
             understanding of the claimant’s work in relation to the
             regular business of the employer.

The Board held that the evidence from both Cregan and Solomon compelled a

finding that Taxi 7 was a taxicab company, not a taxi leasing company.

             Accordingly, the Board reversed the ALJ’s determination that Taxi 7

was a taxicab leasing company, vacated his finding that Oufafa was an independent

contractor and the order dismissing AIG and the UEF as parties, and remanded the

claim to the ALJ for “an amended opinion finding Taxi 7 is a taxicab company”

along with a renewed analysis of the factors set forth in Ratliff, Chambers, and

Meade. The Board directed the ALJ to “look to the nature of the work Oufafa

performed in relation to the regular business of Taxi 7 as a taxicab company” when

he re-analyzed the control factor.

             Finally, the Board addressed what weight should be given to the

language in the Agreement and the Status as a Self-Employed Businessperson

                                        -15-
document. The Board disagreed with the ALJ’s finding that these documents

manifested the intent of the parties, stating that “depending on the facts of the

given case, a claimant labeled by an employer as an independent contractor in a

contract of hire may, in reality, be no more ‘independent’ than any other at-will

employee in Kentucky.” These consolidated petitions for review by AIG and Taxi

7 (collectively, the appellants) now follow.

             On appeal, Taxi 7 argues that the Board erroneously made its own

findings of fact and in doing so usurped the function of the ALJ, that the ALJ’s

finding that Taxi 7 leases taxicabs is supported by substantial evidence or was

harmless error, and that the Board’s direction on remand related to the control

factor was contrary to the law. AIG argues that the evidence presented to the ALJ

does not compel a finding in Oufafa’s favor by the Board and that the Board

improperly substituted its judgment for that of the ALJ.

             This Court’s standard of review in workers’ compensation appeals is

well-settled in the Commonwealth. “The function of further review of the [Board]

in the Court of Appeals is to correct the Board only where the Court perceives the

Board has overlooked or misconstrued controlling statutes or precedent, or

committed an error in assessing the evidence so flagrant as to cause gross

injustice.” Western Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992).

As to the Board’s review, Kentucky Revised Statute (KRS) 342.285(2) provides:

                                         -16-
             No new or additional evidence may be introduced before
             the board except as to the fraud or misconduct of some
             person engaged in the administration of this chapter and
             affecting the order, ruling, or award, but the board shall
             otherwise hear the appeal upon the record as certified by
             the administrative law judge and shall dispose of the
             appeal in summary manner. The board shall not substitute
             its judgment for that of the administrative law judge as to
             the weight of evidence on questions of fact, its review
             being limited to determining whether or not:

                   (a) The administrative law judge acted
                   without or in excess of his powers;

                   (b) The order, decision, or award was
                   procured by fraud;

                   (c) The order, decision, or award is not in
                   conformity to the provisions of this chapter;

                   (d) The order, decision, or award is clearly
                   erroneous on the basis of the reliable,
                   probative, and material evidence contained in
                   the whole record; or

                   (e) The order, decision, or award is arbitrary
                   or capricious or characterized by abuse of
                   discretion or clearly unwarranted exercise of
                   discretion.

             In Kentucky, “[t]he claimant in a workman’s compensation case has

the burden of proof and the risk of persuading the board in his favor.” Snawder v.

Stice, 576 S.W.2d 276, 279 (Ky. App. 1979) (citations omitted). “When the

decision of the fact-finder favors the person with the burden of proof, his only

burden on appeal is to show that there was some evidence of substance to support

                                        -17-
the finding, meaning evidence which would permit a fact-finder to reasonably find

as it did.” Special Fund v. Francis, 708 S.W.2d 641, 643 (Ky. 1986). However,

“[i]f the board finds against a claimant who had the burden of proof and the risk of

persuasion, the court upon review is confined to determining whether or not the

total evidence was so strong as to compel a finding in claimant’s favor.” Snawder,

576 S.W.2d at 280 (citations omitted). The Francis Court went on to explain:

                     If the fact-finder finds against the person with the
             burden of proof, his burden on appeal is infinitely greater.
             It is of no avail in such a case to show that there was some
             evidence of substance which would have justified a
             finding in his favor. He must show that the evidence was
             such that the finding against him was unreasonable
             because the finding cannot be labeled “clearly erroneous”
             if it reasonably could have been made.

                   Thus, we have simply defined the term “clearly
             erroneous” in cases where the finding is against the person
             with the burden of proof. We hold that a finding which
             can reasonably be made is, perforce, not clearly erroneous.
             A finding which is unreasonable under the evidence
             presented is “clearly erroneous” and, perforce, would
             “compel” a different finding.

708 S.W.2d at 643. Furthermore, “[t]he ALJ, as the finder of fact, and not the

reviewing court, has the sole authority to determine the quality, character, and

substance of the evidence.” Square D Co. v. Tipton, 862 S.W.2d 308, 309 (Ky.

1993) (citing Paramount Foods, Inc. v. Burkhardt, 695 S.W.2d 418 (Ky. 1985)).

             We disagree with the Board that the evidence of record compels a

finding for Oufafa that Taxi 7 was a taxicab company that employed him.

                                        -18-
However, we agree with the Board’s emphasis on “the intertwined association

between an analysis of the control factor and an analysis of the nature of the

claimant’s work in relation to the regular business of the employer.” The Board

instructed the ALJ to “look to the nature of the work Oufafa performed in relation

to the regular business of Taxi 7” and, consistent with Meade, supra, directed “the

control factor to be analyzed by looking to the nature of the work that the injured

worker performed in relation to the regular business of the employer.” Meade,

2008 WL 3890701, at *4. This record allows the Court to do that without the

ALJ’s input.

               The Board identifies “the claimant’s work in relation to the regular

business of the employer as the dominant factor in the decision of whether the

claimant is an employee . . . .” Dillon, 591 S.W.2d at 703 (emphasis added). But

what do we mean by “work”?

               “‘Work’ means providing services to another in return for

remuneration on a regular and sustained basis in a competitive economy[.]” KRS

342.0011(34) (emphasis added). According to this record, Taxi 7 did not

remunerate Oufafa at all. He received remuneration from one source–his

independent customers. What Oufafa charged was a matter negotiated between

Oufafa and his customers, provided the fare satisfied the applicable regulatory

                                          -19-
authority–Taxi 7 had no say, and no stake in what Oufafa charged or received as

remuneration.

             To be clear, Oufafa received remuneration two ways. He was paid

directly from his customers when they paid in cash. When a customer paid by

debit or credit card, Taxi 7 processed the payment as part of the leasing services

Oufafa purchased with his weekly $405 payment. Taxi 7 never supplemented any

of Oufafa’s customers’ credit or debit card payments, nor did Taxi 7 add to

Oufafa’s income in any way. To the contrary, Taxi 7 sometimes retained a portion

of Oufafa’s customers’ debit and credit card payments to apply against his weekly

lease payment.

             The IRS Form 1099K Taxi 7 provided to Oufafa is not proof of

remuneration by an employer to an employee. The form, entitled “Payment Card

and Third[-]Party Network Transactions,” is required for compliance with 26

United States Code Annotated (U.S.C.A.) § 6050W. That statute requires a

“payment settlement entity”–Taxi 7 in this case–to report to the Internal Revenue

Service “any payment card transaction and any third[-]party network transaction”

made to “each participating payee to whom one or more payments in settlement of

reportable payment transactions are made” and, in this case, that “participating

payee” would be Oufafa. 26 U.S.C.A. § 6050W(a)-(d). When Oufafa received his

copy of the Form 1099K that Taxi 7 sent to the IRS, he was required by law to

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report the same amount on his federal income tax return. And, in fact, he did so

using a Schedule C (Form 1040), “Profit and Loss From Business (Sole

Proprietorship).” (Oufafa brief, Appendix G.) The Form 1099K is evidence that

Taxi 7 was a payment settlement entity, but not proof Taxi 7 was Oufafa’s

employer.

             Oufafa never performed “work” for Taxi 7 as that term is defined in

KRS Chapter 342. Remuneration by the employer, a primary characteristic of the

relation between an employee and an employer, simply cannot be found in the

relationship between Oufafa’s work and the regular business of Taxi 7. We reach

the same conclusion if we shift our focus to the other side of that relationship, the

regular business of Taxi 7.

             Taxi 7 derives its revenue by leasing equipment and services for a set

weekly fee. Its income is unaffected by how much or how little its lessees work.

To rephrase that concept, Taxi 7’s income is not generated by the labor performed

by taxicab drivers, but by how many lease contracts it services. That is a proper

understanding of this alleged employer’s regular business. It does not support a

finding that Taxi 7 was Oufafa’s employer.

             The independency of Oufafa’s business and Taxi 7’s business is not

lessened because there is an interrelationship. We even agree with the Board’s

premise that “an independent contractor in a contract of hire may, in reality, be no

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more ‘independent’ than any other at-will employee in Kentucky.” However, this

record does not contain evidence supporting that premise to such a degree as to

compel a finding of an employee-employer relationship. That is not to say no

evidence exists. But if we were to unbundle what Taxi 7 leases, separating credit

card processing services from vehicle leasing for example, we could easily see that

the former is ubiquitous in the retail industry and the latter available at every

airport without even a thought that an employee-employer relationship is involved.

             The Agreement and Status document between the parties has some

bearing on the foregoing analysis of Oufafa’s remuneration. The Board’s

instruction to the ALJ on remand that less weight should be afforded those

documents would not have yielded an analysis that compelled a finding for Oufafa

on the question of his employment status. The documents do tell us that Oufafa

understood his relationship with Taxi 7 and that these documents informed him of

his obligation to comply with the law applicable to independent contractors.

             The bottom line for this Court is that Oufafa controlled his own

compensation. If he chose not to work, it would lower his income while also

reducing the risk that he would suffer a workplace injury. That he should bear

these associated risks is in keeping with the “theory of risk spreading embodied in

compensation.” Dillon, 591 S.W.2d at 703.

                                         -22-
             We are not unsympathetic to Oufafa’s circumstances. We can all

agree he is a victim. But we must repeat the ALJ’s sentiment that “[a]lthough it

gives the undersigned no pleasure to do so[,] the analysis dictates the result and

Oufafa’s claim for benefits” must fail.

             CLAYTON, CHIEF JUDGE, CONCURS.

        LAMBERT, JUDGE, DISSENTS AND DOES NOT FILE
SEPARATE OPINION.

BRIEF FOR                                   BRIEF FOR APPELLEE DAOUD
APPELLANT/APPELLEE AIG:                     OUFAFA:

Ronald J. Pohl                              Andrew C. Weeks
Carolyn A. Allen                            Louisville, Kentucky
Lexington, Kentucky

BRIEF FOR
APPELLANT/APPELLEE TAXI,
LLC D/B/A TAXI 7:

Kyle L. Johnson
Louisville, Kentucky

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