Couch v. United States

• Decision Date: 05 September 2012
• Docket Number: No. 12–1107.,12–1107.
• Citation: 694 F.3d 852
• Parties: Alyce COUCH, independent administrator of the estate of Billy Couch, deceased, Plaintiff–Appellant, v. UNITED STATES of America, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

694 F.3d 852

Alyce COUCH, independent administrator of the estate of Billy Couch, deceased, Plaintiff–Appellant,

v.UNITED STATES of America, Defendant–Appellee.

No. 12–1107.

United States Court of Appeals, Seventh Circuit.

Argued June 7, 2012.

Decided Sept. 5, 2012.

Michael W. Rathsack (argued), Attorney, Chicago, IL, for Plaintiff–Appellant.

Amanda A. Berndt (argued), Attorney, Office of the United States Attorney, Chicago, IL, for Defendant–Appellee.

Before MANION, KANNE, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

This case presents a recurring issue under the Federal Tort Claims Act and Illinois law, and one that has divided federal district courts in Illinois. The question is whether a driver employed by a private trucking company with a “Highway Contract Route” or “HCR” contract with the U.S. Postal Service is also a “borrowed employee” of the Postal Service for purposes of the Federal Tort Claims Act and the Illinois Workers Compensation Act (IWCA). We conclude that the answer is no. The private trucking company does not merely “lend employees” to the Postal Service but provides mail transportation and delivery services. The company trains, equips, pays, and supervises its own employees using its own equipment to provide these services. We therefore reverse the district court's grant of judgment for the government in this case. Our decision is consistent with decisions in many cases in which injured persons have sued the Postal Service for injuries caused by the negligence of HCR drivers. In those cases the Postal Service has successfully argued that the HCR drivers are independent contractors rather than borrowed employees for whose negligence the Postal Service could be held liable.

I. Factual and Procedural Background

The relevant facts are undisputed. In 2008, Billy Couch was employed as a truck driver by B & B Trucking, a private company that has HCR contracts with the Postal Service. While Couch was making a delivery to a Postal Service facility in Elk Grove, Illinois, a U.S. Postal Service employee ran over his foot with a forklift. Two years later, Couch died, allegedly as a result of complications from the injury. For purposes of this appeal, we must assume that the Postal Service employee was negligent and that the negligence caused Couch's injury and later death.

B & B Trucking provided its drivers with workers' compensation insurance, which covered Couch's medical expenses. After her husband died, plaintiff Alyce Couch brought this action against the United States under the Federal Tort Claims Act (FTCA), which provides a cause of action for personal injuries negligently caused by federal employees acting within the scope of their employment. 28 U.S.C. § 1346(b)(1). Under the FTCA, the United States is liable to the same extent as a private entity under the law of the state where the allegedly tortious act occurred—in this case, Illinois. 28 U.S.C. § 2674.

Without addressing the merits, the United States moved for summary judgment on the theory that Couch was a “borrowed employee” whom the Postal Service had borrowed from B & B Trucking. If he was a borrowed employee of the Postal Service, then workers' compensation would provide Couch's only remedy against both the borrowing and lending employers, and the tort case would have to be dismissed. For reasons we detail below, the borrowed employee question here turns on the nature and terms of the HCR contract between the Postal Service and B & B Trucking.

Through HCR contracts, the Postal Service has outsourced to private companies certain mail delivery services that were once performed by its own employees. B & B Trucking is one such HCR contractor. B & B Trucking also works for FedEx and other private carriers, but it derives at least 90 percent of its revenue from its contracts with the Postal Service.

B & B Trucking owns its own delivery trucks for local, regional, and long-haul mail transportation. It also screens, hires, trains, supervises, and pays its own drivers to transport mail between Postal Service facilities. B & B Trucking also employs dispatchers, custodians, mechanics, and administrative staff, but the vast majority of its 275 employees are drivers. Under an HCR contract, B & B Trucking drivers need not wear uniforms, but they must display a badge that identifies them as a “Non Postal Service Contractor Employee.” The Postal Service does not train or manage the contractor employees in any way, but it does conduct background checks, and the HCR contract bars B & B Trucking from employing “any individual who ... lack[s] sufficient ability to perform properly the required duties, [is] not a reliable and trustworthy person of good moral character,” or is “barred by law or Postal Service regulations from performing such duties.” B & B Trucking conducts a two- to three-day mandatory general training program for its drivers. Drivers communicate via their onboard truck computers with B & B Trucking's dispatcher, who in turn radios the Postal Service when necessary. The Postal Service requires contractor drivers to have cell phones in case the Postal Service or the driver needs to “initiate two-way communications” directly.

When bidding for an HCR contract, B & B Trucking provides an estimate of the number of employees it would require and the associated costs of the transportation services. Once the contract is performed, the Postal Service reimburses B & B Trucking for those costs. The contract at issue in this case was labeled one “For mail service,” with the “type of service” described as “Transportation.” The contract did not specify the number of B & B Trucking drivers required to perform, only the number and types of vehicles. About 60 percent of the estimated cost was allocated to wages and employee benefits. These labor costs included a line-item estimate for workers' compensation insurance, which B & B Trucking purchased and for which the Postal Service reimbursed it.

As required under the IWCA, B & B Trucking's workers' compensation insurance paid Couch's medical bills. After Couch died, his widow filed this action against the United States for negligence, seeking damages that included pain and suffering, lost wages, and loss of consortium. After answering, the United States moved for summary judgment on the ground that workers' compensation provided the exclusive remedy available for the decedent's on-the-job injuries because the Postal Service was his borrowing employer for the purposes of the IWCA.

The district court relied on our decisions in Luna v. United States, 454 F.3d 631 (7th Cir.2006), and Belluomini v. United States, 64 F.3d 299 (7th Cir.1995), and framed the key issue as follows: whether the Postal Service was a borrowing employer depended on whether B & B was a “loaning employer” under the IWCA, and that question turned on whether “a substantial part of” B & B's “business is ... furnishing employees to do jobs for governmental and private” employers. Couch v. United States, No. 11 C 2536, 2011 WL 6318943, at *4–5 (N.D.Ill. Dec. 14, 2011). The district court said yes, reasoning that because its drivers perform work typically done by the Postal Service itself (namely, delivering mail), B & B Trucking “furnished” its employees to do the work of the Postal Service and other employers. The district court acknowledged its disagreement with Jorden v. United States, Nos. 09 C 6814 & 10 C 3144, 2011 WL 4808165 (N.D.Ill. Oct. 11, 2011), a parallel case in which Judge Feinerman concluded that the United States was not a borrowing employer under the IWCA because HCR contractors provide mail delivery services rather than lend employees for the Postal Service's use. This appeal followed.

II. Discussion

We review the entry of summary judgment de novo, construing all facts and drawing all inferences in the light reasonably most favorable to the non-moving party, who in this case is Mrs. Couch. See Miller v. Herman, 600 F.3d 726, 733 (7th Cir.2010). Summary judgment is appropriate where the evidence before the court indicates “that there is no genuine issue as to any material fact” and that the moving party is entitled to judgment as a matter of law. Id.; see Fed.R.Civ.P. 56(c).

A. The Federal Tort Claims Act and Workers' Compensation

The FTCA is a limited waiver of the United States' sovereign immunity. Dolan v. U.S. Postal Service, 546 U.S. 481, 484, 126 S.Ct. 1252, 163 L.Ed.2d 1079 (2006). It is the exclusive remedy for any tort claim resulting from the negligence of a government employee acting within the scope of employment. See 28 U.S.C. § 2679(b)(1). The key provision of the FTCA specifies that “the United States shall be liable ... to tort claims in the same manner and to the same extent as a private individual under like circumstances.” 28 U.S.C. § 2674; United States v. Muniz, 374 U.S. 150, 153, 83 S.Ct. 1850, 10 L.Ed.2d 805 (1963). In Illinois, where the Postal Service's alleged negligence occurred, “the IWCA is the exclusive remedy for workers injured on the job; covered employers cannot be sued for accidental workplace injuries.” Luna, 454 F.3d at 634. This rule reflects the policy trade-off at the heart of workers' compensation: employees recover modest compensation for workplace injuries regardless of fault; employers are spared the risk of larger damages verdicts; and the costs of litigation should be reduced. See Lawrence M. Friedman & Jack Ladinsky, Social Change and the Law of Industrial Accidents, 67 Colum. L.Rev. 50, 69–72 (1967).

The IWCA addresses the possibility that an employee might have more than one employer, such as when an employment agency or staffing service hires employees and then contracts with other companies who need temporary workers. When a covered employer “borrows” such an employee from a covered “loaning” employer and the employee is injured, both employers are responsible for providing workers' compensation benefits. 820 ILCS 305/1(a)(4). Absent a contrary...