Ex parte Dunlop Tire Corp.

• Decision Date: 29 August 1997
• Citation: 706 So.2d 729
• Parties: Ex parte DUNLOP TIRE CORPORATION. (Re Eddie SANDERS v. DUNLOP TIRE CORPORATION. DUNLOP TIRE CORPORATION v. Alton Ray PITTS). 1951184, 1960105.
• Court: Alabama Supreme Court

Page 729

706 So.2d 729

Ex parte DUNLOP TIRE CORPORATION.

(Re Eddie SANDERS v. DUNLOP TIRE CORPORATION.

DUNLOP TIRE CORPORATION v. Alton Ray PITTS).

1951184, 1960105.

Supreme Court of Alabama.

Aug. 29, 1997.

John O. Cates and Evelyn R. Maiben of Wilmer & Shepard, P.A., Huntsville, for petitioner (1960105).

Thomas R. Robinson and Jeffrey T. Kelly of Lanier Ford Shaver & Payne, P.C., Huntsville, for petitioner (1951184).

J. Zach Higgs, Jr., of Higgs & Emerson, Huntsville, for Eddie Sanders.

Jay E. Emersom, Jr., of Higgs & Emerson, Huntsville, for Alton Ray Pitts.

John J. Coleman III and Gregory C. Cook of Balch & Bingham, Birmingham, for amicus curiae Business Council of Alabama, in support of petitioner.

ALMON, Justice.

This Court granted these two petitions for the writ of certiorari to decide, as a matter of first impression, whether the Court of Civil Appeals correctly interpreted and applied Ala.Code 1975, § 25-5-57(c)(1). That Code section provides:

"(c) Setoff for other recovery. In calculating the amount of workers' compensation due:

"(1) The employer may reduce or accept an assignment from an employee of the amount of benefits paid pursuant to a disability plan, retirement plan, or other plan providing for sick pay by the amount of compensation paid, if and only if the employer provided the benefits or paid for the plan or plans providing the benefits deducted."

In both Sanders v. Dunlop Tire Corp., the subject of the petition in case number 1951184, and Dunlop Tire Corp. v. Pitts, the subject of the petition in case number 1960105, the Court of Civil Appeals held that Dunlop did not provide or pay for the disability plan benefits because they were fringe benefits of Sanders's and Pitts's employment and that, therefore, Dunlop was not entitled to set those benefits off against the awards of compensation.

Section 25-5-57(c) was added by Act No. 92-537, 1992 Ala. Acts p. 1082. Section 17 of that Act amended § 25-5-57, including the addition of § 25-5-57(c); there was no previously existing provision for "setoff for other recovery."

We recognize that § 25-5-57(c)(1) actually states that "[t]he employer may reduce ... the amount of benefits paid pursuant to a disability plan ... by the amount of compensation paid." However, it is clear that the legislature intended to say that the employer may reduce the amount of workers' compensation by the amount of disability benefits paid pursuant to a plan provided or paid for by the employer. Section § 25-5-57(c) pertains to "calculating the amount of workers' compensation due." The end of § 25-5- 57(c)(1) refers to "the plan or plans providing the benefits deducted;" this phrase, in context, can mean only that the amount of benefits paid under employer-provided disability or retirement plans is to be deducted from workers' compensation benefits that would otherwise be payable. Section 25-5-57(c)(2) provides for the forfeiture of "all [workers'] compensation paid for any period to which is attributed any award of back pay." Section 25-5-57(c)(3) provides for a setoff against workers' compensation for any salary paid "during the benefit period." Thus, all three of these provisions are clearly intended to provide for reduction of workers' compensation benefits by a setoff of the amount of the specified other payments to the employee. The fact that § 25-5-57(c)(1) literally states that it provides for a reduction of disability or retirement plan benefits is a self-correcting error of drafting, probably caused by the awkward attempt to provide in the same sentence for the employer to "accept an assignment from an employee of the amount of benefits paid pursuant to a disability plan." We read § 25-5-57(c)(1), therefore, as allowing an employer to reduce the amount of workers' compensation benefits due by the amount of benefits paid or payable under a qualifying disability, retirement, or sick pay plan.

The question before us, therefore, is whether Dunlop "provided the benefits or paid for the plan or plans providing the benefits deducted."

At the trial of Sanders's claim, Dunlop's attorney examined Rick Ledsinger, Dunlop's labor relations manager:

"Q. Mr. Ledsinger, are you familiar with the medical disability retirement plan or program in effect at Dunlop to which Mr. Sanders applied and got an award?

"A. Yes, I'm familiar with it.

"Q. Does this enable employees to medically retire from Dunlop?

"A. Yes, it does.

"Q. Who pays for this program?

"A. It's company paid."

Sanders's attorney cross-examined Mr. Ledsinger, as follows:

"Q. Is the medical disability retirement included as part of the fringe benefits to which you have testified?

"A. Yes, it is.

"Q. What company pays the medical disability; is that Dunlop?

"A. It's Dunlop, yes, sir.

"Q. And Royal Insurance Company pays the workmen's comp?

"A. Worker's comp, yes."

Dunlop introduced exhibits showing the cost of the benefits it provides its employees. The cost per hour of the "sickness and accident disability premium" was $0.144 in 1993. This was grouped in a category of "voluntary or negotiated payments"; that category includes other insurance and pension benefits that, together with the disability premium, cost $3.354 per hour in 1993 and $3.037 per hour in 1992.

In Ex parte Murray, 490 So.2d 1238 (Ala.1986), this Court interpreted the following sentence, which is the last sentence of Ala.Code 1975, § 25-5-57(b): "Whatever allowances of any character made to an employee in lieu of wages are specified as part of the wage contract shall be deemed a part of his or her earnings." This Court held that fringe benefits, such as the premiums and pension benefits discussed above, "are includable in the computation of the employee's average weekly wage," 490 So.2d at 1241, for purposes of calculating workers' compensation benefits due.

In deciding Sanders's appeal, the Court of Civil Appeals cited Murray and held that "Sanders paid for the medical disability retirement plan by accepting the fringe benefits in lieu of additional wages of $3.03 and $3.54 [sic] per hour." Sanders v. Dunlop Tire Corp., 706 So.2d 716 (Ala.Civ.App.1996). However, the fact that fringe benefits are part of an employee's earnings for purposes of § 25-5-57(b), as held in Murray, does not answer the question whether "the employer provided the benefits or paid for the plan or plans providing the benefits" for purposes of § 25-5-57(c)(1).

Section 25-5-57(c)(3) provides instructive language that is part of the 1992 amendment to the Workers' Compensation Law that also added § 25-5-57(c)(1):

"If an employer continues the salary of an injured employee during the benefit period or pays similar compensation during the benefit period, the employer shall be allowed a setoff in weeks against the compensation owed under this article. For the purposes of this section, voluntary contributions to a Section 125-cafeteria plan for a disability or sick pay program shall not be considered as being provided by the employer."

Ala.Code 1975, § 25-5-57(c)(3) (emphasis added). There is no contention here that the medical disability plan from which Sanders and Pitts are receiving benefits is a § 125 cafeteria plan. See 26 U.S.C. § 125. The specification that contributions to a § 125 cafeteria plan are not to be considered to be "provided by the employer" implies that other similar types of benefits are to be considered to be provided by the employer, even if they are part of the employee's wages and other benefits. This implication may be expressed as a corollary of the "expressio unius est exclusio alterius " rule of statutory construction ¹: the express exclusion of cafeteria plans from the category of offsetting benefits is the implied inclusion of other disability, retirement, or sick pay plans.

Even aside from the comparison to § 25-5-57(c)(3), we are persuaded by Dunlop's argument that the construction advocated by Sanders and Pitts would render § 25-5-57(c)(1) virtually inoperative. The plaintiffs argue that their position applies only to fringe benefits that are negotiated as part of a collective bargaining agreement, as is the case with the disability plan provided by Dunlop to its employees. Pitts offered the testimony of Max Wright, the union benefits representative at Dunlop, who gave evidence that the Dunlop employees gave up cost-of-living adjustments in exchange for increased pension benefits. He testified that, therefore, he considered that the employees paid for the disability plan, because it was one of the benefits that were increased in return for giving up the cost-of-living adjustment. However, the failure to take the cost-of-living adjustment is equivalent to accepting the disability plan in lieu of a raise in wages, and is not reasonably to be considered as a situation in which the employee pays for the disability plan. The following exchange between the court and Wright shows how the circuit court viewed the matter:

"The Court: The question in my mind is whether the employee provides anything. One way to look at it is that the employee provides the work and that the employer provides the pay, including the benefits. I guess another way that you look at it is that as to the pension plan when you give up your cost of living increases you are giving up some of what would have been wages to fund a fringe benefit; is that right?

"The Witness: Yes, sir.

"The Court: But in any event, this isn't a situation where you take out part of what your wife makes or part from savings or something and add to something that your employer is giving you for your work for a pension plan contribution; is that right?

"The Witness: Yes, sir."

We agree with the circuit court's view that the employee does not "pay for" the plan simply by virtue of the fact that it is provided as part of his or her compensation.

We see no reason why fringe benefits that are provided to nonunion employees should not be treated the same as fringe...