89 Hawai'i 411, Potter v. Hawaii Newspaper Agency
| Decision Date | 19 February 1999 |
| Docket Number | No. 21261,21261 |
| Citation | 89 Hawaii 411,974 P.2d 51 |
| Parties | 89 Hawai'i 411 Shawn POTTER, Claimant-Appellant, v. HAWAII NEWSPAPER AGENCY, Employer-Appellee, Self-Insured, and Travelers Insurance Company, Insurance Adjuster-Appellee. |
| Court | Hawaii Supreme Court |
Roy K.S. Chang and Harvey M. Demetrakopoulos (of Shim & Chang) on the briefs, for the claimant-appellant Shawn Potter.
James N. Duca and Robert C. Kessner (of Kessner Duca Umebayashi Bain & Matsunaga), on the briefs for the employer-appellee Hawaii Newspaper Agency and Travelers Insurance Company.
Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA, and RAMIL, JJ.
This case arises from an accident that occurred when the fourteen-year-old claimant-appellant, Shawn Potter, was struck by an automobile while he was riding a moped. Potter was a "newspaper dealer" for the employer-appellee Hawaii Newspaper Agency (the HNA) at the time, pursuant to an "independent contractor agreement." The moped was owned by an HNA employee, Shawn Toyozaki, who was Potter's district manager. Potter subsequently filed a civil lawsuit against the driver of the automobile, Toyozaki, and the HNA. Six months after the lawsuit was filed, the HNA filed a "WC-1 Employer's Report of Industrial Injury" with the Department of Labor and Industrial Relations, alleging that Potter was an HNA employee and "claimant" for workers' compensation benefits. When Potter's parents notified the Director of the Department of Labor and Industrial Relations (the Director) that they did not wish to pursue the claim, the Director denied it, as well as the HNA's subsequent request for reconsideration.
The HNA then appealed the Director's decision to the Labor and Industrial Relations Appeals Board (LIRAB), which ruled that Potter was an HNA employee for purposes of Hawai'i Revised Statutes (HRS) ch. 386 (the Workers' Compensation Law). Potter filed an application to reopen the case and/or motion for clarification, alleging that the LIRAB lacked jurisdiction to hear the On appeal, Potter argues that the LIRAB: (1) lacked jurisdiction to hear the appeal because (a) no lawful claim for benefits was ever made, inasmuch as HNA was not authorized to file a claim on Potter's behalf, and (b) only an aggrieved party can appeal a decision of the Director, and the HNA was not aggrieved, inasmuch as it was not ordered to pay benefits to Potter; (2) erred as a matter of law when it concluded that (a) Potter was a "claimant" seeking workers' compensation benefits, (b) Potter was an "employee" of the HNA on the date of his injury, (c) the work arrangement between Potter and the HNA constituted a "contract for hire," (d) the "control test" must be applied to determine whether an employer-employee relationship existed, even if the injured worker has not sought workers' compensation benefits, (e) any contract for hire that might have existed between Potter and the HNA was void or voidable, inasmuch as (i) Potter was a minor, and/or (ii) contracts to perform illegal acts are void as a matter of public policy; (3) erred as a matter of law when it issued its order vacating the decision of the Director; and (4) erred as a matter of law when it denied Potter's application to reopen and motion for clarification. Because no lawful claim for benefits was made, we hold that the Director lacked the statutory authority to act in this matter and that the LIRAB had no jurisdiction to hear the HNA's appeal. Accordingly, we reverse the LIRAB's order.
[89 Hawai'i 414] appeal. When the LIRAB denied Potter's application, the present appeal ensued.
On November 21, 1992, at approximately 10:20 p.m., Potter was operating a moped on Winam Avenue, in the City and County of Honolulu, when he was struck by an automobile that ran a stop sign at the Herbert Street intersection. He was fourteen years old at the time of the accident. As a result of the accident, Potter suffered severe head injuries, a ruptured spleen, and a fractured femur. Upon his discharge from the Rehabilitation Hospital of the Pacific in May 1993, Potter was confined to a wheelchair and required assistance with activities of daily living. Potter has claimed that he incurred medical expenses exceeding $307,000.00.
The moped Potter was riding when the accident occurred belonged to Toyozaki, who was one of the HNA's district managers. Potter was a "newspaper dealer" in Toyozaki's assigned district. In order to become a dealer for the HNA, Potter and his parents had executed a "Statement of Intention," which recited that Potter would "operate [his] own retail distribution and delivery business as an independent contractor." The HNA's relationships with its newspaper dealers were governed by the terms of the "Newspaper Dealers Agreement," which provided, inter alia, that:
[t]his Agreement ... is made in reference to Dealer's Statement of Intention to enter into the retail distribution and delivery business as an independent contractor by purchasing newspapers from the Company at such wholesale prices as may be established by the Company from time to time in order to resell such newspapers through the Dealer's distribution or delivery service....
....
Company will furnish a statement of account every four weeks to Dealer payable in accordance with Company's billing terms and procedures, as well as a final statement of account upon termination of the Agreement....
... Dealer shall assume full control over and responsibility for such newspapers and the operations of his or her distribution and delivery business, including the delivery of such newspapers to dealer's customers and the collection of payment from dealer's customers.
Company neither reserves, nor will it exercise, any control over the method or manner by which Dealer delivers, distributes or resells newspapers purchased by Dealer from Company. Dealer, as an independent contractor, has sole control over the method or manner by which his newspapers are delivered, distributed or sold, including, but not limited to, the equipment used, the means of transportation used, the time and place of delivery of the newspapers Accordingly, the Dealer agrees to accept full and exclusive responsibility for his own acts and those of his employees, agents, and subordinates and to indemnify and hold the Company harmless from and reimburse it for any liabilities, claims, demands, costs, and expenses incident to any claim, loss, damage, or injury of any kind to any person or property because of or due to any act or conduct of Dealer or any of Dealer's employees, agents, or other subordinates.
[89 Hawai'i 415] to his customers, the time and method of payment arranged with his customers, the method of arranging the newspaper for final delivery to the customer, and whether and on what terms to hire employees, agents or other subordinates. Moreover, Dealer recognizes his responsibility.
As "independent contractors," HNA's newspaper dealers did not receive any employee benefits. The dealers did not receive an hourly wage, but, rather, purchased newspapers at wholesale from the HNA, which they resold to their customers at a profit. The HNA did not take responsibility for withholding income tax or Social Security payments on the dealers' behalf.
Notwithstanding the HNA's averments that its dealers had "sole control" over the equipment that they used to deliver their newspapers, Toyozaki owned several mopeds that he made available to the dealers working within his district. When the dealers were loaned the mopeds to use when making their deliveries, they were also permitted to take them home and use them at other times as well. Toyozaki was aware that Potter and some of his other dealers were not old enough to operate the mopeds legally and that they possessed no licenses to drive them. As explained by another carrier:
....
And then they contacted Shawn Toyozaki to come pick us up. The officer said he didn't want us using it, in case something happens. So Shawn came[,] picked us up, put the mopeds in the van.
And then we went down Kapahulu. Because Shawn Toyozaki knew that the cop couldn't come down that side. So ... I guess he knew...
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