Stone v. Pinkerton Farms, Inc.

• Decision Date: 06 August 1984
• Docket Number: No. 83-3087,83-3087
• Citation: 741 F.2d 941
• Parties: James R. STONE and Myra E. Stone, Plaintiffs-Appellants, v. PINKERTON FARMS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 941

741 F.2d 941

James R. STONE and Myra E. Stone, Plaintiffs-Appellants, v. PINKERTON FARMS, INC., Defendant-Appellee.

No. 83-3087.

United States Court of Appeals, Seventh Circuit.

Argued May 11, 1984.

Decided Aug. 6, 1984.

Michael S. Miller, Mendelson, Kennedy, Miller, Muller & Hall, Indianapolis, Ind., for plaintiffs-appellants.

William P. Wooden, Wooden, McLaughlin & Sterner, Indianapolis, Ind., for defendant-appellee.

Before FLAUM, Circuit Judge, PELL, Senior Circuit Judge, and KELLAM, Senior District Judge. ^*

FLAUM, Circuit Judge.

Plaintiffs-appellants, James R. Stone and Myra E. Stone, appeal from the grant of summary judgment in favor of the defendant, Pinkerton Farms, Inc. For the following reasons, we affirm the grant of summary judgment.

I.

This diversity action arises from a trucking accident in which Michael Leist, driving his tractor and trailer, rear-ended a tractor and trailer being driven by James Stone. Both trucks were proceeding in the same direction on the highway. Stone was traveling at 50-55 miles per hour; Leist obviously was driving at a quicker pace. Stone was, and still remains, severely impaired due to the injuries sustained during the impact.

Leist, at the time of the accident, was driving his own tractor and trailer. He was hauling soybeans for Pinkerton Farms (hereinafter "PFI"), from PFI's grain elevator to Central Soya in Indianapolis. The status of Leist in relationship to PFI is the issue presented for review in this case. The Stones assert that Leist was an employee of PFI and that the accident occurred during the course of his employment thereby making PFI liable for Stone's negligently inflicted injuries. In the alternative, assuming Leist was only an independent contractor, the Stones assert that PFI is liable to them for employing an incompetent driver. PFI asserts that Leist was an independent contractor and that they exercised due care in hiring him.

The Stones brought suit against Leist, Leist's father, and, subsequently, amended the complaint to include PFI as a defendant. Leist's father was dismissed as a defendant. Leist thereafter filed for bankruptcy and all claims against him were discharged. PFI moved for summary judgment on both theories of liability. The district court granted the defendant's motion for summary judgment. Plaintiffs appeal.

II.

In reviewing a grant of summary judgment, this court must determine, in viewing the reasonable inferences to be drawn from the underlying facts in the light most favorable to the non-moving party, whether "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Rule 56, Federal Rules of Civil Procedure; Korf v. Ball State University, 726 F.2d 1222 (7th Cir.1984). In reviewing the grant of summary judgment in favor of PFI, we will raise facts as relevant to the discussion of the applicable Indiana law.

A.

The test for determining whether a master-servant relationship, or, more appropriately, an employer-employee relationship, exists is whether the alleged employer has the right to control the conduct of the alleged employee "at the time the negligent act occurred." Gibbs v. Miller, 152 Ind.App. 326, 283 N.E.2d 592, 595 (1972). The "right to control" refers to the right and not to actual exercise of control in any particular circumstance. Id. 283 N.E.2d at 595. Indiana courts look to the following several factors in determining whether the employer has the right to control thereby making a person an employee: (1) right to discharge; (2) mode of payment; (3) supplying of tools by the employer; (4) belief by the parties in the existence of a master-servant relationship; (5) control over the means used or result reached; (6) length of employment; and (7) establishing of work boundaries. Id. at 595. We will consider these factors in relation to the circumstances presented in this case.

The parties, in essence, do not disagree on the relevant facts, but do disagree as to the inferences to be drawn from those facts. We look to those facts drawing reasonable inferences in the light most favorable to the Stones.

Due to the nature of the work, it is difficult to determine whether PFI had the right to discharge Leist, or whether it merely had the right to refuse to contract with Leist further (see plaintiffs-appellants' brief pp. 16-17). Each haul appears to be arranged on a day-to-day basis, with PFI calling Leist to haul whenever it needed a driver. It is clear that PFI could have refused to allow Leist to haul further loads. Furthermore, Leist could refuse to haul for PFI on any given occasion and he did, at times, refuse. PFI returned to him as a driver even after these refusals. PFI certainly could not stop or "discharge" Leist in the middle of a haul once Leist left the loading area and this fact leads to no inference for either party. The right to terminate a contract or discharge Leist in the middle of a haul would be the same no matter what the parties' actual relationship was. The fact that either party could contract or refuse to contract leads, however, to the conclusion that Leist was an independent contractor.

In looking at the method of payment, plaintiffs assert that Leist was paid in the same manner as PFI's other drivers: on the basis of the number of bushels (or pounds of livestock) actually delivered. The affidavit of James O. Pinkerton indicates that the PFI employee-drivers were paid only twenty-five percent (25%) of the same rate as Leist. The two other PFI drivers were on the PFI payroll all year; Leist was not on the PFI payroll. Leist and the drivers were paid at different times; Leist billed PFI and the other drivers merely submitted slips indicating where they had been and what their mileage was and automatically received payments (Pinkerton deposition pp. 40-41). PFI did not deduct federal or state taxes or F.I.C.A. payments from Leist's pay checks whereas PFI did withhold such payments from the other two drivers (first Pinkerton affidavit; Pinkerton deposition p. 29). PFI paid for workmen's compensation insurance for the two PFI drivers and not for Leist (Pinkerton deposition p. 20; first Pinkerton affidavit). Leist was required to pay for the PFI fuel he used when driving his own equipment and payment for fuel was sometimes deducted from his pay check; the two PFI drivers were not required to pay for their own fuel (first Pinkerton affidavit; Pinkerton deposition p. 29). Although Leist and the drivers were paid loosely according to the same rate schedule, it is clear that the differences in method of payment are indicative of the fact that Leist was an independent contractor.

Plaintiffs assert that the fact that Leist's rate of compensation was set by PFI rather than through negotiation supports the inference that Leist was an employee rather than an independent contractor. We disagree. This fact is indicative of the unequal bargaining power between the two parties. Leist was an independent trucker who did not have enough bargaining power after several months of hauling for PFI to set his own rates, such as a larger trucking firm might have. This factor is not dispositive of PFI's and Leist's relationship.

Leist owned his own tractor and trailer, which he was driving at the time of the accident. When driving for PFI, Leist did, at times, drive PFI equipment. His equipment was not designed to carry some of the products PFI wanted hauled, consequently, on certain occasions he used some or only PFI equipment. Whether or not a driver uses his own equipment may be relevant but is not dispositive of the question of employee status. See Wilson v. Kauffman, 156 Ind.App. 307, 296 N.E.2d 432 (1973); Universal Carloading & Distributing Co., Inc. v. McCall, 107 Ind.App. 479, 25 N.E.2d 253 (1940). In the instant case, however, Leist was driving his own equipment at the time of the accident. The fact that he could have been driving PFI equipment is of no consequence. In Gibbs v. Miller, 283 N.E.2d at 595, the court found that the existence of a master-servant relationship depends on the "... conduct of the alleged servant at the time the negligent act occurred." Leist was driving his own equipment at the time of the accident and this factor is preeminent in determining the existence or non-existence of an employer-employee relationship in the instant case. We conclude that the inference to be drawn from this fact is that Leist was an independent contractor.

The belief of the parties supports the conclusion that Leist was an independent contractor. While it is true that there was no formal written agreement between the parties, both PFI and Leist understood Leist to be an independent contractor. This is corroborated by the fact that Leist could refuse to haul any given load and, in fact, did refuse to haul on occasion. The existence of a principal-independent contractor relationship is also supported by the fact that PFI did not withhold taxes or pay for any of Leist's insurance. Leist did haul for others, and while it is true that he received most of his income from PFI, PFI did not preclude him from working for others. In Wilson v. Kauffman, 296 N.E.2d at 432, the court, in finding the existence of an employer-employee relationship, relied heavily on the fact that the drivers worked full-time for the company, the company paid the drivers' insurance premiums, and that the drivers could not work for other companies at the same time. These factors are not present in the instant case. Both PFI and Leist considered their relationship to be that of two independently contracting parties. An employer-employee relationship may be found even though the parties define their relationship as one of principal-independent contractor if enough of the indicia of a master-servant relationship are present. Wilson v. Kauffman. Where, as here, the parties define their relationship as that of an independent contractor-principal, and the...