Penn v. Virginia Intern. Terminals, Inc.

• Decision Date: 26 May 1993
• Docket Number: No. 2:92cv685.,2:92cv685.
• Citation: 819 F. Supp. 514
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Timothy L. PENN, Plaintiff, v. VIRGINIA INTERNATIONAL TERMINALS, INC., et al., Defendants and Third-Party Plaintiffs, v. Perry H. ANDERSON, Defendant and Third-Party Defendant.

819 F. Supp. 514

Timothy L. PENN, Plaintiff, v. VIRGINIA INTERNATIONAL TERMINALS, INC., et al., Defendants and Third-Party Plaintiffs, v. Perry H. ANDERSON, Defendant and Third-Party Defendant.

No. 2:92cv685.

United States District Court, E.D. Virginia, Norfolk Division.

April 12, 1993.

Order Denying Reconsideration or Certification May 26, 1993.

Charles A. Huffman, III, Huffman & Huffman, Newport News, Thomas B. Shuttleworth, Lawrence H. Woodward, Jr., Shuttleworth, Ruloff, Giordano & Kahle, Virginia Beach, VA, for Timothy L. Penn.

John M. Ryan, F. Nash Bilisoly, Thomas J. Duff, Vandeventer, Black, Meredith & Martin, Norfolk, VA, for Virginia International Terminals, Inc., Grady Bowen and William B. Wright.

Robert W. Hardy, Robert A. Rapaport, Knight, Dudley, Dezern & Clarke, Norfolk, VA, for Perry H. Anderson.

ORDER

PRINCE, United States Magistrate Judge.

Motions to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) were filed by defendant and third-party-defendant, Perry H. Anderson ("Anderson"), and a Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 was filed by defendants and third-party-plaintiffs, Virginia International Terminals, Inc. ("VIT"), William B. Wright ("Wright") and Grady Bowen ("Bowen"). An Order was filed on February 12, 1993, designating the undersigned United States Magistrate Judge to hear the motions and make recommendations for their dispositions. Thereafter, the parties consented to have a magistrate judge conduct all further proceedings in the case, including the trial, and order the entry of final judgment, pursuant to 28 U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. All parties filed affidavits and other evidence to support or oppose the motions. Therefore, all of the motions will be treated as though filed pursuant to Federal Rule of Civil Procedure 56(b). They are now ready for decision.

Nature of the Case

This case presents yet another in the seemingly endless variety of actions by trucking companies and truck owner-drivers to determine whether a driver is an employee, statutory employee, statutory co-employee or independent contractor for workers' compensation benefit purposes. See generally McCall v. Bowater, Inc., 717 F.Supp. 1153 (W.D.Va.1989); Hamilton Trucking v. Springer, 10 Va.App. 710, 396 S.E.2d 379 (1990); Intermodal Services, Inc. v. Smith, 234 Va. 596, 364 S.E.2d 221 (1988); Smith v. Horn, 232 Va. 302, 351 S.E.2d 14 (1986); Stover v. Ratliff, 221 Va. 509, 272 S.E.2d 40 (1980).

The material facts are undisputed, although there is much dispute as to how those facts should be interpreted. The parties have agreed that all issues should be decided under Virginia Law. Virginia law provides that "whether there exists a relationship of master and servant, rather than one of independent contractor or subcontractor, is a question of law and not of fact." Stover v. Ratliff, 221 Va. 509, 511, 272 S.E.2d 40, 42 (1980). Accordingly, the Court will resolve this issue.

Facts

Mediterranean Shipping Company ("Medline") is in the trade, business and occupation of transporting freight or cargo as a common carrier between points in the United States and overseas destinations.¹ Medline, through its agent, Containership, contracted with Envirex, Inc., another non-party, for the transportation of cargo from Wisconsin to Belgium. To partially perform this undertaking, Medline contracted with Anderson Trucking Service, Inc. ("ATS")² to transport the cargo from Wisconsin to Newport News, Virginia, the situs of VIT's terminal. Medline also contracted with VIT to receive the cargo from ATS, to handle it at the terminal, and to check it aboard the vessel RAFAELA S, which was operated by Medline and would be berthed at VIT's terminal. To perform the loading on board the vessel, Medline contracted with ITO Corporation of Virginia ("ITO"), a stevedore. Neither RAFAELAS nor ITO are parties to this action. Containership acted as agent for Medline in executing these contracts. The cargo subsequently was carried from Newport News to Belgium where it was delivered.

ATS transported the cargo from Wisconsin to Newport News through the use of two tractors and trailers. One of the tractors was owned and driven by plaintiff, Penn, and the other was owned and driven by defendant/third-party defendant, Anderson. The trailers were owned or leased by ATS. After both tractor-trailer units arrived at VIT's terminal in Newport News on November 29, 1990, an accident occurred and Penn was injured. He filed this complaint against VIT and its employees, Wright and Bowen, alleging that their negligence caused the accident. VIT, Wright and Bowen filed a third-party complaint against Anderson alleging that his negligence caused or contributed to the accident. Penn then amended his complaint and added Anderson as a direct defendant. The defendants' motions raise the same issue: they maintain that they are immune from Penn's common law negligence claims. The basis for their alleged immunity is the Virginia Workers' Compensation Act, Code of Virginia §§ 65.2-100 et seq. ("VWCA"). VIT contends that Penn is its statutory-employee; Wright, Bowen and Anderson contend that Penn is their statutory co-employee. Penn maintains that he was at all times an independent contractor who is not covered by the VWCA.

The facts that are determinative of Penn's relationship to the defendants are those facts that determine his relationship to ATS. In fact, Penn and Anderson are related to ATS in the same way. ATS is an interstate for hire common carrier operating under a Certificate of Public Convenience and Necessity issued by the Interstate Commerce Commission ("ICC").³ It transports goods for hire both interstate and internationally. In performing its transportation business, ATS uses its own tractors and employees and contracts with owner-operators like Penn and Anderson. Half of ATS' transportation business is done using its own tractors and employees.

The interstate trucking business is pervasively regulated by the ICC. The regulations provide the authority to perform authorized transportation in equipment not owned by the carrier, but only under conditions contained in 49 C.F.R. § 1057.11, which includes the condition that a written lease grant the use of the equipment and that the lease meet the requirements contained in 49 C.F.R. § 1057.12. The latter section provides that the "written lease required under § 1057.11(a) shall contain the following provisions," which are here quoted or paraphrased:

(a) The lease shall be made between the authorized carrier and the equipment owner.

(b) The duration of the lease shall be specified.

(c)(1) "The lease shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease. The lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease."

(4) "Nothing in the provisions required by paragraph (c)(1) of this section is intended to affect whether the lessor or driver provided by the lessor is an independent contractor or an employee of the authorized carrier lessee."

(d) Compensation is to be specified.

(e) "The lease shall clearly specify" certain responsibilities, including "the cost of fuel, fuel taxes, empty mileage, permits of all types, tolls, ferries, detention and accessorial services, base plates and licenses, and any unused portions of such items.... The authorized carrier lessee shall assume the risks and costs of fines ... for improperly permitted overdimension and overweight loads...."

(f) "The paperwork required before the lessor can receive payment is limited to log books required by the Department of Transportation and those documents necessary for the authorized carrier to secure payment from the shipper."

(g) Freight documentation is specified.

(h) "The lease shall clearly specify all items that may be initially paid for by the authorized carrier, but ultimately deducted from the lessor's compensation at the time of payment or settlement, ..."

(i) The lease shall specify that the lessor is not required to rent or purchase equipment from the carrier.

(j)(1) The lease shall provide for insurance coverage responsibilities.

(2) A provision is required if the lessor purchases equipment insurance from or through the carrier.

(3) A provision is required before deductions may be made by carrier for cargo damage.

(k) Provisions are required if escrow funds are required.

(l) Signing and maintenance of lease copies is provided.

(m) Special provisions.

49 C.F.R. § 1057.12.

Anderson and ATS entered into an Equipment Operating Contract on June 15, 1989.⁴ (Plaintiff's Brief In Opposition To Defendants' Motion For Summary Judgment, Ex.H. (Docket Entry # 53.)) Penn and ATS entered into an identical contract on September 21, 1989.⁵ (Id., Exhibit A.) Penn's contract provided that it would continue until September 21, 1992. The contract included the following provisions, which are here quoted or paraphrased:

The parties are identified as ATS and Penn. Penn is described as a sole proprietor.⁶

The preamble to the agreement identifies the characterization of the parties and the equipment covered by the lease.

1. In this paragraph, "Penn agrees to furnish and to operate the above described Equipment together with drivers and all other necessary labor and to transport ... such commodities as ATS may from time to time make available to Penn." It is also provided that ATS will make every reasonable effort to make cargoes available for transport so that Penn can keep his equipment in regular use. No guarantees are made, however.

2. This paragraph describes compensation which would be due Penn.⁷

3. This paragraph states that the agreement is intended to create a relationship of independent contractors and not one between employer-employee. Neither

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