Kowalski v. Shell Oil Co.

• Decision Date: 19 January 1979
• Docket Number: S.F. 23858
• Citation: 23 Cal.3d 168,588 P.2d 811,151 Cal.Rptr. 671
• Court: California Supreme Court
• Parties: , 588 P.2d 811 Thomas L. KOWALSKI, Plaintiff and Appellant, v. SHELL OIL COMPANY, Defendant and Respondent.

Page 671

151 Cal.Rptr. 671

23 Cal.3d 168, 588 P.2d 811

Thomas L. KOWALSKI, Plaintiff and Appellant, v. SHELL OIL COMPANY, Defendant and Respondent.

S.F. 23858.

Supreme Court of California, In Bank.

Jan. 19, 1979.

As Modified on Denial of Rehearing Feb. 28, 1979.

Patrick M. Hyde, Hyde, Lucke & Brewer, Walnut Creek, Harry A. Allen and William B. Boone, Santa Rosa, for plaintiff and appellant.

Robert E. Cartwright, San Francisco, Edward I. Pollock, Los Angeles, Leroy Hersh, San Francisco, Stephen I. Zetterberg, Claremont, Robert G. Beloud, Upland, Arne Werchick, San Francisco, William P. Camusi, Los Angeles, Ralph Drayton, Sacramento and Leonard Sacks, Enano, as amici curiae on behalf of plaintiff and appellant.

David O. Larson, Moore, Rode, Clifford, Wolfe & Larson, Oakland and Cyril Viadro, San Francisco, for defendant and respondent.

BIRD, Chief Justice.

Plaintiff, Thomas L. Kowalski, appeals from a judgment entered in favor of defendant, Shell Oil Company, in an action for personal injuries. Following trial, the jury returned a verdict in favor of plaintiff but the trial court granted Shell's motion for judgment notwithstanding the verdict. This court must decide whether there was substantial evidence to support the jury's finding that plaintiff was not Shell Oil Company's special employee.

I

On May 21, 1969, the C. Norman Peterson Company (Peterson) and Shell entered into a contract whereby Peterson agreed to perform maintenance work at Shell's refinery in Martinez. The agreement, set forth in a Shell purchase order, provided in pertinent part:

"This order, including instructions and conditions on the reverse side hereof, shall constitute an agreement to cover the furnishing by you (Peterson) of all necessary tools and equipment, materials, labor and supervision (and including the costs of workmen's compensation and/or employer's liability insurance and all payroll taxes on such labor) to perform work as follows:

" . . .

"It is Shell's intent to establish a 'general and special employment relationship' whereby the contractor (Peterson) remains the general employer of its employees and Shell becomes their special employer . . . .

"1. Performance: Contractor shall diligently and carefully perform all work required hereunder in a good and workmanlike manner, shall furnish all labor, supervision, machinery, materials, equipment and supplies necessary therefor and, if permitted to subcontract, shall be fully responsible for all work and services performed by subcontractors. Contractor shall conduct all operations in Contractor's own name as an independent contractor and not in the name of, or as agent for, Shell.

" . . ."

The purchase order was modified as follows:

"Applicable only with respect to contractor's performance of subject order within the State of California (but not to such performance elsewhere), the work contract conditions on the reverse side of subject order are revised as follows in order to clarify the employment relationship in the event Shell personnel exercise supervisory control over the manner and means in which contract employees perform their work in conjunction with this order:

"1. Change the last sentence of section 1 (performance) to read as follows:

" 'Contractor shall conduct all operations in contractor's own name and not in the name of, or as an agent for, Shell. The parties hereto hereby create a general and special employment relationship with respect to all labor furnished hereunder and Shell, as the special employer, hereby is given the right to fully control the details and means of doing the work hereby contracted for.'

" . . ."

On November 12, 1973, Kowalski, a Peterson employee, was working on building a scaffold inside a large heater at the refinery with a crew of Peterson carpenters. While he was operating a radial saw furnished by Shell, Kowalski's hand was amputated.

On February 1, 1974, Kowalski filed a complaint against Shell and other defendants seeking damages for personal injuries. Shell denied the allegations in the complaint and asserted that Kowalski was its special employee so that his exclusive remedy was under the workers' compensation law.

The evidence presented at trial on the issue of special employment ¹ showed that Shell closed down the various sections of the refinery on a rotating basis in order to make repairs and inspect all equipment and machinery. Each section of the refinery required such maintenance every one to two years. Each shutdown lasted from four to six weeks, with a shutdown beginning somewhere at the plant about once every six months. Shell regularly used Peterson to perform these maintenance operations.

Approximately two weeks before a shutdown, Peterson's general superintendent would move into the refinery and "through him we (Shell) make our wants known to Peterson." Prior to a shutdown, Shell would also prepare detailed lists of tasks to be performed by Peterson. These lists were then given to various Shell foremen, who would in turn convey the information to Peterson foremen. If Peterson employees were doing something which did not meet with Shell's approval, Shell would stop them and redirect their work. Shell could also request Peterson to remove an employee whose work Shell found unsatisfactory.

However, all Peterson employees were supervised directly by Peterson foremen. Peterson provided all the tools and equipment its employees used except for the saw Kowalski was using when he was injured. Peterson also provided its employees with hard hats and badges with the Peterson insignia. Peterson employees were authorized to enter the refinery through only one of the five or six entrances available to Shell employees.

At the time of the accident, Kowalski was on Peterson's payroll. He had been employed by Peterson for approximately two and a half months as a laborer and had worked at the refinery on a previous shutdown as well as on the present shutdown. ² He was assigned to the Peterson carpentry crew and was under the direct supervision of Peterson's carpenter foreman. When he was injured, Kowalski was following the carpenter foreman's express orders. He was unaware of the contract between Shell and Peterson.

Peterson's carpenter foreman testified that Shell employees never directed him or the members of his crew as to the details of their work. Rather, Shell's involvement with his crew was limited to informing him of the location and size of scaffolds that were needed. Shell's carpenter foreman testified that he had no control over and never directed Kowalski as to the details of his work. ³ He also stated that he did not know of any Shell employee who had the right to direct Kowalski in the performance of his duties. The manager of Shell's safety department testified that "We didn't have no control over his (Kowalski's) work." Peterson's assistant superintendent also testified that Shell did not direct the details of Kowalski's work. There was no evidence presented to show that any Shell employee had directed the details of Kowalski's work.

The jury returned a special verdict, finding that Kowalski was Not Shell's special employee, that his damages were $500,000, and that he had been 15 percent negligent. ⁴ However, the court granted Shell's motion for a judgment notwithstanding the verdict on the sole ground that Kowalski was Shell's special employee. ⁵ This appeal followed.

II

The possibility of dual employment is well recognized in the case law. "Where an employer sends an employee to do work for another person, and both have the right to exercise certain powers of control over the employee, that employee may be held to have two employers his original or 'general' employer and a second, the 'special' employer." (Miller v. Long Beach Oil Dev. Co. (1959) 167 Cal.App.2d 546, 549, 334 P.2d 695, 697.) In Industrial Ind. Exch. v. Ind. Acc. Com. (1945) 26 Cal.2d 130, 134-135, 156 P.2d 926, 928, this court stated that "an employee may at the same time be under a general and a special employer, and where, either by the terms of a contract or during the course of its performance, the employee of an independent contractor comes under the control and direction of the other party to the contract, a dual employment relationship is held to exist. (Citations.)"

If general and special employment exist, "the injured workman can look to both employers for (workers') compensation benefits. (Citations.) If workmen's compensation is available, it constitutes, with an exception not pertinent here, the workman's sole remedy against the employer. (Lab.Code, § 3601.) ( ⁶ ) Thus where there is dual employment the workman is barred from maintaining an action for damages against either employer." (McFarland v. Voorheis-Trindle Co. (1959) 52 Cal.2d 698, 702, 343 P.2d 923, 925; Martin v. Phillips Petroleum Co. (1974) 42 Cal.App.3d 916, 918, 117 Cal.Rptr. 269; Oxford v. Signal Oil & Gas Co. (1970) 12 Cal.App.3d 403, 407-408, 90 Cal.Rptr. 700; Miller v. Long Beach Oil Dev. Co., supra, 167 Cal.App.2d at p. 549, 334 P.2d 695.)

In determining whether a special employment relationship exists, the primary consideration is whether the special employer has " '(t)he right to control and direct the activities of the alleged employee or the manner and method in which the work is performed, whether exercised or not . . . .' " (McFarland v. Voorheis-Trindle Co., supra, 52 Cal.2d at p. 704, 343 P.2d at p. 697.) However, "(w)hether the right to control existed or was exercised is generally a question of fact to be resolved from the reasonable inferences to be drawn from the circumstances shown. (Citations.) And the existence or nonexistence of the special employment relationship barring the injured employee's action at law is generally a question reserved for the trier of fact." (Miller v. Long Beach Oil Dev. Co., supra, 167 Cal.App.2d at p. 550, 334 P.2d at p. 697.)

In the present case, if there was substantial evidence to...