Court Opinion

ID: 9964030
Source: CourtListenerOpinion
Date Created: 2024-04-26 19:14:12.827146+00
Date Added: 2024-06-11T08:25:08.492694
License: Public Domain

04/26/2024
                  IN THE COURT OF APPEALS OF TENNESSEE
                              AT NASHVILLE
                                      January 4, 2024 Session

        BRIAN COBLENTZ ET AL. v. TRACTOR SUPPLY COMPANY

                     Appeal from the Circuit Court for Lincoln County
                        No. 2013-CV-85 M. Wyatt Burk, Judge
                        ___________________________________

                               No. M2023-00249-COA-R3-CV
                           ___________________________________

JEFFREY USMAN, J., dissenting.

       The majority opinion thoughtfully applies existing Tennessee caselaw, concluding
that Tractor Supply Company is Mr. Coblentz’s statutory employer. This precludes Mr.
Coblentz from maintaining his premises liability suit against Tractor Supply due to the
exclusive remedy provision of Tennessee’s Workers’ Compensation Law. My respectful
disagreement with the majority’s opinion is based upon (1) my view that existing
Tennessee caselaw does not appear to have grappled with vendor-vendee relationships
when determining statutory employer status, and (2) that the failure to address such
circumstances creates an inconsistency with Tennessee’s Workers’ Compensation Law.

       The issue before this court is whether Stanley National is a subcontractor of Tractor
Supply. Mr. Coblentz argues that Stanley National is not a subcontractor; therefore,
Tractor Supply is not a principal contractor. Tractor Supply insists that it is a principal
contractor and that Stanley National is its subcontractor. Reading through the parties’
briefing of this matter, it seems as if both sides are trying to push a square peg through a
round hole. The reason for the improper fit and the reason it matters that vendor-vendee
relationships have not been fully grappled with in Tennessee caselaw become clearer when
one considers Larson’s on Workers Compensation, a leading treatise in the field.1 Relevant

        1
           See, e.g., Fisher v. Halliburton, 667 F.3d 602, 615 (5th Cir. 2012) (describing Larson’s “[a]s a
leading workers’ compensation treatise”); Brittingham v. St. Michael’s Rectory, 788 A.2d 519, 523 (Del.
2002) (characterizing Larson’s as “the leading authoritative treatise on the subject”); Howard Univ. Hosp.
v. D.C. Dep’t of Emp’t Servs., 267 A.3d 1068, 1073 (D.C. 2022) (indicating that Larson’s is “[t]he leading
treatise in this area”); Kawakami v. City & Cnty. of Honolulu Bd. of Water Supply, 100 Haw. 285, 289, 59
P.3d 920, 924 (2002) (stating of Larson’s that it is “the leading treatise on worker’s compensation”); Sharp
v. Thomas Bros. Plumbing, 510 P.3d 1136, 1147 (Idaho 2022) (noting of Larson’s that it is “a leading
treatise in the field of workers’ compensation”); Smith v. Goodyear Tire & Rubber Co., 636 N.W.2d 884,
888 (Neb. Ct. App. 2001) (stating of Larson’s that it is “the leading treatise in the area”); Gore v.
Myrtle/Mueller, 653 S.E.2d 400, 407 (2007) (describing Larson’s as “a leading treatise”).
to the circumstances of the present case, Larson’s notes that the statutory employer test
“presupposes” that the relationship between the injured employee’s immediate employer
and the company sued in tort is not of a type that falls outside the parameters of a principal-
subcontractor relationship and includes as some examples of such excluded relationships
“if the relation was that of buyer to vendor, lessee to lessor, or if the claimant was not an
employee but an employer, partner, or joint venturer.” 10 Larson’s Workers’
Compensation Law § 111.04[d] (emphasis added). If the presuppositions do not fit the
circumstances of a given case, then Larson’s states that “the general contractor is of course
in no different position from any third party liable to suit.” Id. Thus, backstage before one
arrives at the primary test for determining subcontractor status, there is, under workers’
compensation law in general, a presupposition being made that the purported subcontractor
is not a vendor. In this case, the parties agree, however, that is precisely what Stanley
National is in relation to Tractor Supply – a product vendor.

       Under existing Tennessee caselaw, it is unclear, though, whether vendor status
matters. As the majority notes, Tennessee’s Workers Compensation Law provides that

       [a] principal contractor, intermediate contractor or subcontractor shall be
       liable for compensation to any employee injured while in the employ of any
       of the subcontractors of the principal contractor, intermediate contractor or
       subcontractor and engaged upon the subject matter of the contract to the same
       extent as the immediate employer.

Tenn. Code Ann. § 50-6-113(a). There is, as the majority indicates, a trade-off under
Tennessee law for principal contractors, who become secondarily liable for workers’
compensation for the employees of their subcontractors and who in turn gain immunity
from tort liability. If Stanley National is Tractor Supply’s subcontractor, then Tractor
Supply benefits in the present case by avoiding being subject to Mr. Coblentz’s premises
liability claim.

       This protection against being subject to liability is especially significant because
Tennessee Law preserves the rights of workers to seek both workers’ compensation from
their employers and tort damages from tortfeasors who are not their employers. Under
Tennessee Code Annotated section 50-6-112(a),

       When the injury or death for which compensation is payable under this
       chapter was caused under circumstances creating a legal liability against
       some person other than the employer to pay damages, the injured worker, or
       the injured worker’s dependents, shall have the right to take compensation
       under this chapter, and the injured worker, or those to whom the injured
       worker’s right of action survives at law, may pursue the injured worker’s or
       their remedy by proper action in a court of competent jurisdiction against the
       other person.
                                            -2-
Tenn. Code Ann. § 50-6-112(a). Relatedly, Tennessee law also provides rights to the
employers in connection with their employees’ workers’ compensation in the event of a
recovery against the tortfeasor. Tenn. Code Ann. § 50-6-112(c).2

        Perhaps the closest analog to the circumstances of the present case are those cases
involving the sale and delivery of goods which have been considered in multiple states in
determining statutory employer status. In accord with the understanding set forth in
Larson’s regarding vendors, the Kansas Supreme Court concluded nearly fifty years ago
“that a sale and delivery of merchandise is not . . . a contractual relationship” that converts
the selling/delivering business entity into a subcontractor. Bendure v. Great Lakes Pipe
Line Co., 433 P.2d 558, 563-64 (1967). The Kansas Supreme Court added that its
conclusion that such a relationship does not create a statutory employer status aligned with
what it described as the general rule that workers’ compensation “does not apply where the
transaction between the immediate employer and the person sought to be held liable as his
employer is that of purchase and sale.” Id. (quoting 99 C.J.S. Workmen’s Compensation
§ 107).3

       2
           Tennessee Code Annotated section 50-6-112(c) provides as follows:

       (c)(1) In the event of a recovery against the third person by the worker, or by those to whom
       the worker’s right of action survives, by judgment, settlement or otherwise, and the
       employer’s maximum liability for workers’ compensation under this chapter has been fully
       or partially paid and discharged, the employer shall have a subrogation lien against the
       recovery, and the employer may intervene in any action to protect and enforce the lien.

       (2) In the event the net recovery by the worker, or by those to whom the worker’s right of
       action survives, exceeds the amount paid by the employer, and the employer has not, at the
       time, paid and discharged the employer’s full maximum liability for workers’
       compensation under this chapter, the employer shall be entitled to a credit on the
       employer’s future liability, as it accrues, to the extent the net recovery collected exceeds
       the amount paid by the employer.

       (3) In the event the worker, or those to whom the worker’s right of action survives, effects
       a recovery, and collection of that recovery, from the other person, by judgment, settlement
       or otherwise, without intervention by the employer, the employer shall nevertheless be
       entitled to a credit on the employer’s future liability for workers’ compensation, as it
       accrues under this chapter, to the extent of the net recovery.
       3
          The present version of the Corpus Juris Secundum Workers’ Compensation treatise has moved
the relevant section and now provides as follows:

               The workers’ compensation act does not apply where the transaction between the
       immediate employer and the person sought to be held liable as its employer is that of
       purchase and sale. Under some statutory provisions, however, when a contract to sell is
       accompanied by an undertaking by either party to render substantial services in connection
       with the goods sold, that party is a contractor within the meaning of the compensation act.
                                                  -3-
        Judicial decisions interpreting various state workers’ compensation statutes before
and shortly after the Bendure case are generally in accordance with this understanding.
See, e.g., Brothers v. Dierks Lumber & Coal Co., 232 S.W.2d 646, 650 (Ark. 1950)
(concluding that contracts relating to the sale of goods do not make “either the buyer or
seller, or both, a ‘contractor’” within the principal-subcontractor parameters for creating
statutory employer status under Arkansas’ workers’ compensation law); Broussard v.
Heebe’s Bakery, Inc., 268 So. 2d 656, 660 (La. 1972) (quoting 99 C.J.S. Workmen’s
Compensation § 107)4 (“The compensation act does not apply where the transaction
between the immediate employer and the person sought to be held liable as his employer
is that of purchase and sale, or where some other relation besides that of principal and
contractor exists between them.”); Hooks v. Wayne Cnty. Road Comm’rs, 76 N.W. 2d 9,
12 (Mich. 1956) (declining to extend worker’s compensation liability based on finding that
the injured worker’s immediate employer enjoyed “a vendor-purchaser relation” with the
board); Heider v. Stoughton, 150 Neb. 741, 744, 35 N.W.2d 814, 815 (1949) (“[T]he
defendant got the lumber removed from its yard, but that result naturally would follow
from every sale of merchandise, and thus would be of no controlling importance. It cannot
be logically concluded that [Nebraska Workers’ Compensation Law] should have any
application to the relation of a bona fide vendor and vendee.”).

     Though there are exceptions,5 this general rule continues to hold decades later. For
example, the Oklahoma Supreme Court reasoned as follows:

       If we were to expand the term to include the relationship of buyer and seller
       of a commodity or material, we would violate fundamental rules of
       construction which require that words have the same meaning as that
       attributed to them in ordinary and usual parlance. Whatever activities might
       render someone an independent contractor, acting as a mere vendor is not
       one of them. We do not believe the Legislature intended § 11 to apply when
       the relationship between the injured worker’s immediate employer and the
       entity sought to be held liable in tort as a “statutory employer” is that of
       vendor/vendee.

Hammock v. United States, 78 P.3d 93, 97-98 (Okla. 2003) (footnotes omitted). The Idaho
Supreme Court similarly adopted “the general rule” that, where the relationship between

       A compensation act is likewise not applicable where some other relation, besides that of
       principal and contractor, exists between the parties.

99 C.J.S. Workers’ Compensation § 241 (2024).
       4
           See infra n. 3.
       5
           Humphrey v. Whole Foods Mkt. Rocky Mtn./S.W. L.P., 250 P.3d 706, 710 (Colo. App. 2010).
                                                 -4-
the employers involves the sale and delivery of goods, the relationship does not qualify as
a statutory employer relationship even where some ancillary services are performed. See
Kelly v. TRC Fabrication, LLC, 487 P.3d 723, 728-29 (Idaho 2021). In doing so, the Idaho
Supreme Court recognized two limited exceptions: “when the contract to sell is
accompanied by an undertaking to render substantial services in connection with the goods
sold, or where the transaction is a mere device or subterfuge to avoid liability under the
state’s worker's compensation laws.” Id. at 729.

        This “substantial services” limitation has roots that reach back to the
aforementioned foundational cases. For example, the Kansas Supreme Court stated that
“[t]he rule stated is subject to the exception that when the contract to sell is accompanied
by an undertaking by either party to render substantial services in connection with the
goods sold, that party is a contractor within the meaning of the statute.” Bendure, 433 P.2d
at 564. Similarily, the Arkansas Supreme Court concluded that “when the contract to sell
is accompanied by an undertaking by either party to render substantial services in
connection with the goods sold, that party is a ‘contractor’ within the meaning of the
section.” Brothers, 232 S.W.2d at 650.

      Two South Carolina appellate decisions offer illuminating examples of how courts
address such matters: Meyer v. Piggly Wiggly Number 24, 500 S.E.2d 190 (S.C. Ct. App.
1998) and Hancock v. Wal-Mart Stores, Inc., 584 S.E.2d 398 (S.C. Ct. App. 2003).
Turning first to Meyer,

       [John] Meyer worked as a route salesman for Derst [Baking Company], a
       wholesale bakery that distributes baked goods. As a route salesman, he
       delivered the baked goods to major grocery chains, convenience stores, and
       various fast-food restaurants. In addition to unloading the goods and
       stocking the shelves, Meyer’s responsibilities included keeping the Derst
       display full and clean, and removing out-of-date and damaged product from
       the shelves.

       Piggly Wiggly is a typical retail grocery store operated for the purpose of
       selling groceries and other household items to consumers. . . .

       On December 7, 1992, Meyer stopped at Piggly Wiggly to make a delivery.
       He proceeded directly to the Derst display and began to straighten it up.
       While walking through the store on his way back to his truck, he slipped and
       fell. The fall injured his head, shoulders, and lower back. Meyer received
       workers’ compensation benefits from his immediate employer, Derst, and
       brought this tort action against Piggly Wiggly.

Meyer, 500 S.E.2d at 191. In its analysis, the Meyer Court delineated the general
parameters of South Carolina’s primary test for determining principal-subcontractor
                                      -5-
contractor status for purposes of being a statutory employer, referencing a test resembling
Tennessee’s approach. Id. at 192.

       Ultimately, the Meyer Court concluded that the framework did not matter, though,
because the relationship between Derst Bakery Company and Piggly Wiggly “was one of
vendor-vendee” rather than principal-subcontractor and therefore the case was carved out
of the general test. Id. at 193. The Court reasoned that

       . . . Derst’s agreement with Piggly Wiggly was for the sale and delivery of a
       commodity. Derst was not Piggly Wiggly’s subcontractor within the
       contemplation of that term as used in the statute. . . . Meyer’s work stocking
       the shelves and maintaining the Derst display was incidental to the primary
       purpose of the arrangement between Derst and Piggly Wiggly, which was to
       provide baked goods for retail sale. Because Derst was a vendor rather than
       a subcontractor, section 42-1-4006 does not apply and Meyer, therefore, is
       not Piggly Wiggly’s statutory employee.

Id.; aff’d Meyer v. Piggly Wiggly No. 24, Inc., 527 S.E.2d 761 (S.C. 2000).

      On the same continuum but at the opposite end of the spectrum is Hancock v. Wal-
Mart Stores, Inc.7 Therein,

       Richard Hancock was injured while working for his employer on Wal-Mart’s
       premises. Hancock filed suit in the circuit court, alleging his injuries were
       the result of Wal-Mart’s negligence. . . .

       Tru-Wheels, Inc., one of Wal-Mart’s vendors, employed Hancock. Tru-
       Wheels provided Wal-Mart with individuals to assemble and set up Wal–-
       Mart merchandise in the store. Hancock assembled merchandise exclusively
       for Wal-Mart. On a typical day, Hancock would report to the Wal-Mart
       manager and receive instructions about which items to assemble. Hancock
       assembled the items on the Wal-Mart premises and would report any
       6
           South Carolina Code Annotated section 42-1-400 (1985) provided as follows:

       When any person, in this section and §§ 42-1-420 and 42-1-430 referred to as “owner,”
       undertakes to perform or execute any work which is a part of his trade, business or
       occupation and contracts with any other person (in this section and §§ 42-1-420 to 42-1-
       450 referred to as “subcontractor”) for the execution or performance by or under such
       subcontractor of the whole or any part of the work undertaken by such owner, the owner
       shall be liable to pay to any workman employed in the work any compensation under this
       Title which he would have been liable to pay if the workman had been immediately
       employed by him.
       7
           584 S.E.2d 398 (S.C. Ct. App. 2003).
                                                  -6-
       problems to the applicable Wal-Mart department manager. Hancock was
       injured when, in the course of assembling riding lawnmowers, a Wal-Mart
       employee ran over his foot with a forklift.

       Hancock filed suit in the circuit court, alleging his injuries were the result of
       Wal-Mart’s negligence. Wal-Mart filed a motion for summary judgment,
       arguing Hancock was a statutory employee and thus had workers’
       compensation as his exclusive remedy.

Id. at 399. The South Carolina Court of Appeals concluded that this relationship was not
truly a vendor-vendee relationship, despite Mr. Hancock invoking Meyer and labeling it as
such. Id. at 401. The court instead applied South Carolina’s general framework for
principal-subcontractor analysis and concluded that Hancock qualified as a statutory
employee of Wal-Mart. Id.

        Tennessee is certainly free to diverge from the general approach of its sister states.
However, it is not clear why Tennessee’s Workers’ Compensation Law would operate
differently than the statutes at issue in the aforementioned cases in dealing with vendor-
vendee relationships. The very concept of “employer” under Tennessee’s Workers’
Compensation Law is defined in relation to paying for services: “‘Employer’ includes any
individual, firm, association or corporation, the receiver or trustee of the individual, firm,
association or corporation, or the legal representative of a deceased employer, using the
services of not less than five (5) persons for pay . . . .” Tenn. Code Ann. § 50-6-102(11)
(emphasis added); accord Kelly, 487 P.3d at 727-28 (analyzing similar language under the
Idaho Workers’ Compensation Act in arriving at the conclusion that vendor-vendee
relationships fall outside the scope of Idaho’s principal-subcontractor provision). It is
critical to Tractor Supply being classified as a statutory employer that it is a “principal
contractor” and that Stanley National is its “subcontractor.” See Tenn. Code Ann. § 50-6-
113(a).

        The subcontractor language of the Tennessee Code was adopted into Tennessee law
in 1919. 1919 Pub. Acts, ch. 123, § 15. From its roots, stretching long before 1919, the
definition of subcontractor has been connected with performing work. Tracing the
definition and usage of the word to the end of the 1700s with a continuation of that same
meaning to the present, the Oxford English Dictionary defines a subcontractor as “[a]
person who or company which undertakes work under a subcontract, or (more generally)
undertakes work on a particular part of a larger project.”8 The Oxford English Dictionary’s
multiple definitions of subcontract as a verb similarly emphasize work being performed:9
       8
         Subcontractor, Oxford English Dictionary,
https://www.oed.com/dictionary/subcontractor_n?tab=meaning_and_use#20038073.
       9
         Subcontract, Oxford English Dictionary,
https://www.oed.com/dictionary/subcontract_v?tab=meaning_and_use#20037971. There is a fifth
                                              -7-
One, “[t]o employ a person or company under a subcontract to undertake (all or part of the
work specified in an original contract); to commission (work) from a subcontractor.
Frequently with out in later use. Also in extended use: to delegate (work, a responsibility,
etc.).”10 Two, “[t]o employ a person or company under a subcontract; to make a
subcontract with a third party; to grant a subcontract for.”11 Three, “[t]o undertake work
as a subcontractor; to agree a subcontract with a person or company; to undertake a
subcontract for work.”12 Four, “[t]o undertake or produce (work) under a subcontract.”13
Merriam-Webster Dictionary similarly traces the modern definition of the verb
“subcontract” to before 1919 and aligns subcontract with the concept of work, defining the
verb as follows: One, “to let out or undertake work under a subcontract.” Two, “to engage
a third party to perform under a subcontract all or part of (work included in an original
contract)—sometimes used with out.” Three, “to undertake (work) under a subcontract.”14

       The conventional understanding of a subcontract when used as a noun relates a
contract with a third party to perform part or all of an existing obligation of the principal
contractor to another, but that understanding does not conventionally fit with a vendor
providing goods to a retailer. Defining subcontract as a noun, the Oxford English
Dictionary and Merriam-Webster Dictionary note that a subcontract exists where a party
to an original contract in turn contracts with a third party to undertake responsibilities under
the original contract which could include providing work or materials.15 Relatedly, tracing
the definition to the late 1700s, Merriam-Webster Dictionary defines subcontractor as “an
individual or business firm contracting to perform part or all of another’s contract.”16
Similarly, Webster’s 1909 New International Dictionary, the most proximate edition of
Webster’s in time to the 1919 adoption of the subcontractor language that is presently

definition of subcontract as a verb that is obsolete and related marriage: “To cause (a person) to become
betrothed for a second time.” Id.
        10
             Id.
        11
             Id.
        12
             Id.
        13
             Id.
        14
          Subcontract, Merriam-Webster Dictionary, https://www.merriam-
webster.com/dictionary/subcontract.
        15
          Subcontract, Oxford English Dictionary,
https://www.oed.com/dictionary/subcontract_n?tab=meaning_and_use; Subcontract, Merriam-Webster
Dictionary, https://www.merriam-webster.com/dictionary/subcontract.
        16
          Subcontractor, Merriam-Webster Dictionary, https://www.merriam-
webster.com/dictionary/subcontractor.

                                                   -8-
codified in Tennessee Code Annotated section 50-6-113(a), defines subcontractor as “[o]ne
who contracts with a contractor to perform part or all of the latter’s contract” with
subcontract as a noun defined as “a contract under, or subordinate to, a previous contract.”17
The contract here, however, is not for Stanley National, as a third party, to satisfy Tractor
Supply’s existing contractual obligations, whether they be for work or materials, under an
original contract with another party. There is no other contract that Stanley National is
contracting to perform all or part of. Instead, the only contract is the 2010 vendor
agreement between Stanley National and Tractor Supply.

       Turning to the 1910 Second Edition of Black’s Law Dictionary, which is the edition
published closest to 1919, it similarly defines subcontract and subcontractor in relation to
work being performed.18 It provides as follows:

       A contract subordinate to another contract made or intended to be made
       between the contracting parties on one part or some of them and a stranger.
       1 II. Bl. 37 45. Where a person has contracted for the performance of certain
       work (e.g.. to build a house) and he in turn engages a third party to perform
       the whole or a part of that which is included in the original contract (e.g. to
       do the carpenter work.) his agreement with such third person is called a
       “subcontract” and such person is called a “subcontractor.”19

In other words, the subcontracting is for the performance of work. Id. Even if considered
in relation to contracts intended to be made, it is not clear how Tractor Supply and Stanley
National’s contract is subordinate to another contract. An expansive reading of this
definition would threaten to convert every contract from product suppliers to retailers into
principal and subcontractor agreements.

       These dictionary definitions, which were applicable in 1919 when the General
Assembly adopted the subcontractor measure and remain so, pose challenges to treating a
vendor of goods to a retailer as a subcontractor. Also problematic, this court nearly eighty
years ago, in addressing the principal-subcontractor language of the Tennessee Code in the
context of a statutory employer application, indicated that “[t]he gist of this section is [a]
relationship either ascending or descending or both.” Int’l Harvester Co. v. Sartain, 222
S.W.2d 854, 863 (Tenn. Ct. App. 1948). It is not clear how the relationship between

       17
             Subcontractor, Webster’s New International Dictionary 2066 (1909), available at
https://archive.org/details/webstersnewinter00unse_0/page/2066/mode/2up; Subcontract, Webster’s New
International             Dictionary           2066           (1909),         available           at
https://archive.org/details/webstersnewinter00unse_0/page/2066/mode/2up.
       18
               Subcontract,    Black’s    Law   Dictionary   (2d    ed.    1910),    available    at
https://dictionary.thelaw.com/subcontract/.
       19
            Id.
                                                -9-
Stanley National and Tractor Supply fits within this paradigm as an ascending, descending,
or both an ascending and descending relationship. A concept of subcontractor sufficiently
broad to reach the supplying of products for retail sale creates complexities in identifying
precisely who is the subcontractor and who is the principal.

        In the present case, the parties characterized themselves in their contractual
agreement not as a principal and subcontractor but instead expressly identified Stanley
National as a vendor. Their briefing before this court continues to include references to
Stanley National as a vendor. In Tractor Supply’s brief on appeal, it writes that it operates
a “retail store” in Fayetteville, Tennessee, and that “Stanley National Hardware . . . is a
vendor that sells products” at the Fayetteville store. Mr. Coblentz agrees, referring to
Tractor Supply’s Fayetteville storefront as just one of approximately 145 “hardware stores
. . . and large hardware suppliers/distributors” he visits as part of his duties at Stanley
National. As Mr. Coblentz’s counsel noted “Stanley National provides the product and the
defendant places that product in the store for sale. . . . Stanley National has the product and
supply chain personnel, and Tractor Supply has the storefronts and the employees.”

        Stanley National’s role in its relationship with Tractor Supply of a product vendor
is reflected in Stanley National and Tractor Supply’s 2010 Vendor Agreement. That
document is entitled “Vendor Agreement” and expressly identifies Stanley National as a
vendor. Even more importantly, the terms of the agreement also indicate that the substance
of the contract between Stanley National and Tractor Supply is that of an agreement for
the sale of goods. As a few of the many examples that pervade the contract, Section Six
of the agreement, concerning “Vendor Quotes,” states that “Vendor shall identify all goods
it is offering to TSC together with a quote for each in response to a Request for Quote
(“RFO”) issued by a TSC Buyer. Such quote shall contain information including but not
limited to: description of the goods, price, whether the price includes freight and minimum
quantities (the “Quote”).” Section Eight clarifies that the Vendor, Stanley National, retains
“the right, at its discretion, to change or supplement the goods offered for sale to TSC,
provided that Vendor provides written notice of any such change . . .” (Emphasis added).
Section Nine concerns the logistics of shipping perishable goods. Section Ten outlines
purchase orders and the process for canceling purchase orders “at any time before the
shipment of the goods.” Section Fifteen explains how to deal with returned goods, and
Section Twenty outlines the parties’ mutual expectations regarding the shipment of Stanley
National goods. Section Seventeen—pertaining to the physical display of Stanley National
goods that allegedly malfunctioned and caused Mr. Coblentz’s injuries—indicates that
Stanley National may have such a display and that it will contain “only Vendor’s goods.”

       That parties label their agreement in terms of vendor rather than a principal-
subcontractor relationship does not make it so. See Harness v. Bechtel Jacobs Co., LLC,
No. E2006-00194-COA-R3-CV, 2007 WL 10447, at *3 (Tenn. Ct. App. Jan. 3, 2007). The
agreement between Stanley National and Tractor Supply, however, goes far beyond simply
labeling Stanley National as a vendor. In both substance and form, it appears that Stanley
                                          - 10 -
National in its relationship with Tractor Supply is operating as a product vendor.

         Existing Tennessee caselaw does not appear to have addressed vendor status in
connection with the principal-subcontractor relationship for purposes of determining
statutory employer status. The majority has applied existing Tennessee caselaw, and I find
no fault in the majority’s thoughtful analysis of existing caselaw. In my view, however,
there is a gap in Tennessee’s existing caselaw located right around Larson’s presupposition
regarding vendors. To address this gap, I would invite briefing from the parties to address
whether, under the statutory measures that compose Tennessee’s Workers’ Compensation
Law, a vendor-to-retailer relationship falls within the parameters of the principal-
subcontractor relationship or whether it is presupposed that it is excluded. Additionally, I
would invite the parties to address, assuming that such a presupposition exists under
Tennessee’s statutory scheme, at what point a contractual relationship as to the sale and
delivery of goods become sufficiently imbued with services so as to create a potential
principal-subcontractor relationship.20 If Tennessee’s Workers’ Compensation Law
includes the presupposition of its sister states with regard to vendors, this case should be
remanded for the parties to have an opportunity to present their case under the appropriate
standard.

        Applying existing caselaw without integrating the limitation as to vendors threatens
to make many more employers liable for workers’ compensation of employees who are not
their direct employees while reducing the protections of such employees against negligence
by employers who are not their direct employer. Maybe the employers or employees would
take the bitter with the sweet, but I am concerned that the statutory measures of Tennessee’s

        20
            Courts have taken different approaches in line drawing as to where the vendor-vendee
presupposition exclusion ends and the relationship becomes amenable to being considered a principal-
subcontractor relationship. Virginia courts appear to have adopted a restrictive approach looking at any
activities that are not the delivery of the goods. Burch v. Hechinger Co., 563 S.E.2d 745, 747-48 (Va.
2002). Alternatively, multiple jurisdictions appear to draw the line in connection with providing
“substantial services in connection with the goods sold.” See, e.g., Brothers, 232 S.W.2d at 650 (Arkansas);
Gray Bldg. Sys. v. Trine, 391 S.E.2d 764, 765 (Ga. 1990); Kelly, 487 P.3d at 729 (Idaho); Bendure, 433
P.2d at 564 (Kansas); Broussard, 268 So. 2d at 660 (Louisiana).

         In a different context, addressing whether the common law or Uniform Commercial Code applies
to breach of contract actions that involve hybrid contacts for goods and services, Tennessee courts have
applied the predominant purpose test. Audio Visual Artistry v. Tanzer, 403 S.W.3d 789, 798-99 (Tenn. Ct.
App. 2012) (citing Pass v. Shelby Aviation, No. W1999-00018-COA-R9-CV, 2000 WL 388775 (Tenn. Ct.
App. April 13, 2000)). The predominant purpose test requires a reviewing court to examine (1) “the
language of the contract,” (2) “the nature of the business of the supplier of goods and services,” (3) “the
reason the parties entered into the contract,” and (4) “the amounts paid for the rendition of services and
goods, respectively.” Id. at 799. In concluding that the relationship fell outside the reach of principal-
subcontractor relationship and instead remained a vendor-vendee relationship (between the supplier and
retailer), the South Carolina Court of Appeals emphasized “the primary purpose of the arrangement between
Derst and Piggly Wiggly . . . was to provide baked goods for retail sale” with the services “incidental” to
this primary purpose. Meyer, 500 S.E.2d at 193.
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Workers’ Compensation Law are being stretched too far, resulting in pushing the square
peg, vendors of goods to retailers, into the round hole of existing caselaw. I respectfully
dissent.

                                                   _________________________________
                                                   JEFFREY USMAN, JUDGE

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