Farrell v. Dearborn Mfg. Co.

• Decision Date: 23 December 1982
• Docket Number: Docket Nos. 63267,64575,M,Nos. 1-4,64873 and 65119,s. 1-4
• Citation: 330 N.W.2d 397,416 Mich. 267
• Parties: Thomas FARRELL, Plaintiff-Appellee, v. DEARBORN MANUFACTURING COMPANY, Defendant-Appellant. Jane MARFUTA, Plaintiff-Appellant, v. H.L. BLACHFORD MANUFACTURING CO., Defendant-Appellee. John Rogers KELLOGG and Winnifred R. Kellogg, Plaintiffs-Appellants, v. The HOCKEY CLUB OF SAGINAW, INC., a Michigan corporation, and Reginald Fleming, jointly and severally, Defendants-Appellees. Ricky WOOTEN, Plaintiff-Appellant, v. SENNETT STEEL COMPANY, a Michigan corporation, Defendant-Appellee, and Cincinnati Inc., a foreign corporation, Defendant. ay Term 1981. Calendar416 Mich. 267, 330 N.W.2d 397
• Court: Michigan Supreme Court

Page 397

330 N.W.2d 397

Thomas FARRELL, Plaintiff-Appellee, v.DEARBORN MANUFACTURING COMPANY, Defendant-Appellant.

Jane MARFUTA, Plaintiff-Appellant, v.H.L. BLACHFORD MANUFACTURING CO., Defendant-Appellee.

John Rogers KELLOGG and Winnifred R. Kellogg,Plaintiffs-Appellants, v.The HOCKEY CLUB OF SAGINAW, INC., a Michigan corporation, and Reginald Fleming, jointly and severally,

Defendants-Appellees.

Ricky WOOTEN, Plaintiff-Appellant, v.SENNETT STEEL COMPANY, a Michigan corporation,

Defendant-Appellee,

and

Cincinnati Inc., a foreign corporation, Defendant.

Docket Nos. 63267, 64575, 64873 and 65119, May Term 1981.

Calendar Nos. 1-4.

416 Mich. 267, 330 N.W.2d 397

Supreme Court of Michigan.

Argued May 5, 1981.

Decided Dec. 23, 1982.

Cockrel, Cooper, Spearman & King by Anthony J. Vigliotti, David J. Cooper, Detroit, for plaintiff-appellee in No. 63267.

Harvey, Kruse, Westen & Milan, P.C. by Richard A. Harve, Gary A. Maximiuk, Detroit, for defendant-appellant in No. 63267.

Gary W. Parker, Ann Arbor, for intervening plaintiff.

Ripple, Chambers & Steiner, P.C. by Courtney E. Morgan, Jr., Detroit, for plaintiff-appellant in No. 64575.

Dice, Sweeney, Sullivan & Feikens, P.C. by Jon Feikens, Detroit, for defendants-appellees in No. 64575.

Dykema, Gossett, Spencer, Goodnow & Trigg, James P. Feeney, Frank Nizio, Detroit, for plaintiffs-appellants in No. 65119.

Martin, Bacon & Martin, P.C., James N. Martin, Robert Patrick George, Mount Clemens, for defendants-appellees in No. 65119.

Lopatin, Miller, Freedman, Bluestone, Erlich & Rosen, by Steven G. Silverman, Detroit, for plaintiff-appellant in No. 64873.

Law Offices of J.R. Zanetti, Jr. by J.R. Zanetti, Jr., Birmingham, for defendant-appellee in No. 64873.

FITZGERALD, Chief Justice.

Four cases were consolidated on appeal to this Court, all questioning the application of the exclusive remedy provision of the Worker's Disability Compensation Act.Three cases involve a labor broker situation in which temporary employment is provided to a business customer; one presents an unusual employment relationship of hockey teams and the sports league to which they all belong.To facilitate our analysis, we will deal with the labor broker cases together and separately address the hockey case.

I

Thomas Farrell was sent to work at Dearborn Manufacturing Company by State Labor, Inc. State Labor, Inc., is a labor broker, a company engaged in the business of furnishing employees to others.While operating a press at Dearborn Manufacturing, Mr. Farrell suffered a severe injury to his right hand.He applied for and received workers' compensation benefits from State Labor's insurance carrier.The present action was brought by Mr. Farrell against Dearborn Manufacturing as a third-party tortfeasor for negligence in the rebuilding and modifying of the press and for strict liability in tort.¹Defendant filed a motion for summary judgment on the ground that it was not a third-party tortfeasor, but was in fact Mr. Farrell's employer and therefore immune from liability because of the exclusive remedy provision of the workers' compensation act.This motion was denied.Defendant's application for leave to appeal was denied by the Court of Appeals.This Court, after remanding the case to the lower court so that the trial judge could explain why the motion for summary judgment was denied, granted leave to appeal.

Jane Marfuta was employed by Kelly Services, Inc., a labor broker.She was sent to the H.L. Blachford Company to work a diecutting roller press.While on the job, an accident occurred, resulting in the loss of one finger.Plaintiff received workers' compensation benefits and thereafter began the present action alleging negligence of multiple defendants.While this action was pending, plaintiff amended her complaint to add the Blachford Company as a defendant.Settlements were eventually reached with the other parties.Blachford moved for summary or accelerated judgment on the grounds that it was plaintiff's employer within the meaning of the workers' compensation law and that the exclusive remedy provision barred the present action.This motion was granted.The Court of Appeals affirmed in an unpublished per curiam opinion.

Ricky Wooten was employed by Employers Temporary Service and was sent, by it, to work at the Sennett Steel Company.He suffered a severe injury to his right thumb while working on a steel shear.Wooten received workers' compensation benefits from ETS's insurance carrier.He filed this action against Sennett Steel and Cincinnati Inc., the manufacturer of the shear.DefendantSennett Steel moved for summary judgment, alleging that plaintiff's only remedy was under the workers' compensation law.This motion was granted by the trial court and the judgment affirmed by the Court of Appeals.

PlaintiffJohn Kellogg, a linesman for the International Hockey League, was allegedly injured when Reginald Fleming, a player for The Hockey Club of Saginaw, Inc.("Saginaw Gears"), hit him with his hockey stick and pushed him into the goal cage's steel bars.Kellogg brought suit against the hockey team and Fleming.The Hockey Club filed a motion for summary judgment on the ground that the claim was barred by the exclusive remedy provision of the workers' compensation act.This motion was denied by the trial judge, but the judgment was reversed by the Court of Appeals in an unpublished per curiam opinion.

II

The exclusive remedy provision provides that "[t]he right to the recovery benefits as provided in this act shall be the employee's exclusive remedy against the employer".M.C.L. Sec. 418.131;M.S.A. Sec. 17.237(131).The language expresses a fundamental tenet of workers' compensation statutes that if an injury falls within the coverage of the compensation law, such compensation shall be the employee's only remedy against the employer or the employer's insurance carrier.The underlying rationale is that the employer, by agreeing to assume automatic responsibility for all such injuries, protects itself from potentially excessive damage awards rendered against it and that the employee is assured of receiving payment for his injuries.In this scheme, statutory compensation has been substituted for common-law liability for negligence and its related defenses.Smith v. Pontiac Motor Car Co., 277 Mich. 652, 270 N.W. 172(1936);Jones v. Bouza, 381 Mich. 299, 160 N.W.2d 881(1968).Accordingly, it has consistently been held that if an employee receives a personal injury arising out of and in the course of his employment, the right to benefits as provided by the statute shall be that employee's only remedy against his employer.

It is argued that in the labor broker situation, the exclusive remedy provision should not automatically preclude a cause of action against the company or owner of the premises at which the injury took place because the conditions of liability as expressed in the statute do not exist.

It is necessary, therefore, to examine the roles of the labor broker and its customers to determine which is to be considered the employer for purposes of the exclusive remedy provision.

The labor brokers in three of these cases were engaged in the business of supplying personnel on a temporary basis to commercial and industrial companies.The customers of a labor broker typically call in their employment needs on a daily basis, and workers are sent by the broker to fill these needs.After arriving at the place of business, the worker is subject to the control and authority of the customer and the customer's supervisory personnel.The customer has the power to discharge the employee from the daily work assignment and can refuse to accept a worker sent by the broker.The customer does not pay the employee directly.Rather, the labor broker pays the employee and includes as part of its charge to the customer amounts to cover its expenses for compensation premiums, social security and other taxes.

The issue of whether employment exists for purposes of the workers' compensation law has been frequently addressed by our courts.The standard to be used is the economic reality test, a broad approach which, in the oftquoted language of Justice Talbot Smith, looks to the totality of the circumstances surrounding the performed work.

"Control is a factor, as is payment of wages, hiring and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one."Schulte v. American Box Board Co., 358 Mich. 21, 33, 99 N.W.2d 367(1959).

See, also, Tata v. Muskovitz, 354 Mich. 695, 94 N.W.2d 71(1959);Askew v. Macomber, 398 Mich. 212, 247 N.W.2d 288(1976);McKissic v. Bodine, 42 Mich.App. 203, 201 N.W.2d 333(1972);Nichol v. Billot, 406 Mich. 284, 279 N.W.2d 761(1979);Solakis v. Roberts, 395 Mich. 13, 233 N.W.2d 1(1975);Allossery v. Employers Temporary Service, Inc., 88 Mich.App. 496, 277 N.W.2d 340(1979).

The economic reality test looks to the employment situation in relation to the statutory scheme of workers' compensation law with the goal of preserving and securing the rights and privileges of all parties.No one factor is controlling.

In Renfroe v. Higgins Rack Coating & Manufacturing Co., Inc., 17 Mich.App. 259, 266, 169 N.W.2d 326(1969), the Court of Appeals addressed this specific issue and held that the employee's exclusive remedy was under the workers' compensation laws.Looking at the triangular relationship of the parties, the Court reasoned that for the labor broker (ETS)

"economic reality is based on the fact that a profit can be made by efficiently matching workers with temporary work needs.ETS maintained control of the workers by its practice of daily reassignment and daily payment at its offices.It also maintained the formalities of employment by handling all paper work and payments incident to the employment."

The customer received a worker...