Vail v. S/L Servs., Inc.

• Decision Date: 10 January 2017
• Docket Number: Case No. 4:14-cv-008
• Parties: Dawn Vail, individually and as Trustee for North Dakota Workforce Safety & Insurance, Plaintiff, v. S/L Services, Inc., Defendant.
• Court: U.S. District Court — District of North Dakota

Dawn Vail, individually and as Trustee for

North Dakota Workforce Safety & Insurance, Plaintiff, v. S/L Services, Inc., Defendant.

Case No. 4:14-cv-008

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NORTH DAKOTA

January 10, 2017

REQUEST FOR ANSWERS TO CERTIFIED QUESTIONS AND ORDER FOR TRANSMITTAL TO THE NORTH DAKOTA SUPREME COURT

I. CERTIFIED QUESTIONS

Pursuant to N.D. R. App. P. 47, the United States District Court for the District of North Dakota respectfully requests that the North Dakota Supreme Court answer the following questions that have arisen in this action between plaintiff Dawn Vail ("Vail") and defendant S/L Services, Inc. (S/L Services):

1. In this case, where Vail was an employee as a matter of law at all times she worked for S/L Services but S/L Services (a) treated Vail on its payroll and otherwise as an independent contractor prior to her workplace injury, (b) thereafter opposed Vail's claim for workers' compensation benefits on the basis that she was not an employee, and (c) omitted Vail's wages from its premium payroll report in August 2013 (even after being told by WSI in July 2013 that it needed to include Vail as an employee) may (a), (b), and/or (c), either independently or in combination with one another, serve as a failure "to secure coverage for employees" for purposes of N.D.C.C. § 65-04-33(2) if done willfully within the meaning of that section, even if S/L Services later paid a premium that included consideration of Vail's wages for the period in which she was injured after WSI demanded it do so?

2. In this case, where Vail was an employee as a matter of law at all times she worked for S/L Services but S/L Services (a) treated Vail on its payroll and otherwise as an independent contractor prior to her workplace injury, (b) thereafter opposed Vail's claim for workers' compensation benefits on the basis that she was not an employee, and (c) omitted Vail's wages from its premium payroll report in August 2013 (even after being told by WSI in July 2013 that it needed to include Vail as an employee) may (a), (b), and/or (c), either independently or in combination with one another, serve as a misrepresentation of the "amount of payroll upon which a premium under this title is based" for purposes of N.D.C.C. § 65-04-33(2) if done willfully within the meaning of that section, even if WSI calculated the premium for the period during which Vail was injured using Vail's wages and S/L Services paid that premium?

3. In this case, where S/L Services failed to include in its wage report for the August 2012 - August 2013 premium period the wages of some six or seven welder's helpers who were similarly situated to Vail and whose wages were not included in WSI's calculation and billing for that premium period, but were later included in a subsequent billing by WSI following a 2014 audit and paid by S/L Services at that time, can the failure on the part of S/L Services to include the wages of these other welder's helpers in the August 2012 - August 2013 wage report constitute a violation of § 65-04-33(2), if it was done willfully within the meaning of that section, and can Vail rely upon that alone to support a claim that S/L Services has lost its immunity from a common law suit for damages for her workplace injury?

4. In order to prove a violation of § 65-04-33(2), is Vail required to demonstrate that S/L Services knew at the time it engaged in the conduct that Vail claims amounts to a violation that she or any of the other workers similarly situated were employees as a matter of law and entitled to workers' compensation coverage?

5. In proving a violation of § 65-04-33(2), can Vail satisfy the statute's scienter requirement if she proves that S/L Services acted in reckless disregard of the fact that she and any other workers similarly situated were employees as a matter of law and entitled to worker's compensation coverage at the time it engaged in the prohibited conduct?

6. In proving a violation of § 65-04-33(2), can Vail satisfy its scienter requirement by proving only that S/L Services intentionally, and not inadvertently, committed an act prohibited by the statute and not prove any other state-of-mind, including that S/L Services had knowledge of the relevant obligations imposed on an employer under the worker's compensation laws, that S/L Services knew that Vail was an employee as a matter of law, that S/L Services intended to deceive WSI or otherwise violate the law, or that S/L Services acted in reckless disregard of the law's requirements or that Vail was an employee as a matter of law?

7. Can S/L Services avoid a finding of a violation of § 65-04-33(2) if it can be demonstrated that, at the time it engaged in the conduct that is alleged to have constituted a violation, it believed in good faith that Vail or other similarly situated workers were not employers as a matter of law, even though that belief was mistaken?

II. STATEMENT OF FACTS

Except to the extent indicated otherwise, the following facts should be taken as true for the purposes of the certified questions.

S/L Services, a Montana based company, submitted an "Application for Insurance" to WSI on August 23, 2012. (Doc. No. 9-2). Prior to submitting its application, S/L Services did not have North Dakota workers' compensation coverage for the work it was doing within the state, relying instead upon extra-territorial coverage from the State of Montana. In the application, S/L Services estimated that in the next 12 months it would have 42 employees and total taxable wages of $976,500.00. (Id.).

On August 28, 2012, WSI issued S/L Services a "Premium Billing Statement" charging an estimated premium for the period from August 23, 2012 to August 31, 2013 that was based upon the number of employees that S/L Services reported and their estimated wages. (Doc. No. 9-3, p. 2). S/L Services paid the premium by check dated September 4, 2012. (Id. at p. 3). On September 10, 2012, WSI issued S/L Services a "Certificate of Premium Payment" with an expiration date of November 14, 2013. (Doc. No. 9-6).

Within days of S/L services having paid its initial premium, Vail came to work for S/L Services as a welder's helper. Initially, she worked with welder Steve Basse. After several months she was paired with welder Tell Cook, although on occasion she did other work as assigned. (Doc. No. 40-4).

Vail worked for S/L Services for the better part of eight months up to the time that she suffered a workplace injury on May 25, 2013. During that time, Vail worked every week, exceptfor the last two weeks of December 2012 and for the month of January 2013. In most weeks, Vail logged over 40 hours per week and in some weeks more than 70 hours. (Doc. No. 37-10).

During the entire time that Vail worked for S/L Services, she was treated as an independent contractor. She was paid a flat amount per hour for the hours she worked with no withholdings for federal income tax and social security. Before she started work, S/L Services required that she complete a form W-9 and, for the 2012 tax year, S/L Services reported to the IRS the compensation paid her using Form 1099, Schedule 2.¹ (Doc. No. 15-9). Finally, Vail was not paid overtime for the many weeks she worked in excess of 40 hours as required by North Dakota's wage and hour laws for employees. (Doc. No. 37-10).²

After suffering her on-the-job injury on May 25, 2012, Vail filed a claim with WSI in late May for compensation for her injuries. (Doc . No 52-1, p.2). After Vail filed her claim, WSI required that S/L Services complete a form that asked for certain information about Vail's employment, including her dates of employment, her hourly wage, and whether her work was full time, part time, or seasonal. In addition, the form asked whether S/L Services was contesting the claim, and, if so, what the basis for contesting it was. In response to that question, S/L Services wrote: "Dawn Vail is a subcontractor not an S/L Services Inc. employee." (Doc. No. 15-8).

Because of this response, WSI required that S/L Services complete a "Worker Relationship Questionnaire," which WSI stated would be used in helping to determine whether Vail was an employee or an independent contractor. S/L Services completed the form and the answers that it gave were consistent with its position that Vail was not an employee. (Doc. Nos. 37-6).³

Notwithstanding S/L Services' objection to Vail's claim, WSI, in a "Notice of Decision Establishing Employee Status and Accepting Claim and Awarding Benefits" dated July 10, 2013, advised that it "ha[d] determined S L Services Inc. is an employer of Dawn Vail and any similarly situated workers and awarded Vail benefits." (Doc. No. 15-4). The notice further ordered pursuant to N.D.C.C. § 65-04-33 that S/L Services was required to "submit all wages for all employees including Dawn Vail, and any similarly situated employees, to WSI for the previous six (6) years." (Id.). Finally, the notice advised that S/L Services had 30 days in which to seek reconsideration of the order and that, if reconsideration was not sought, the decision establishing Vail as an employee and the award of benefits would become final. (Id.).

The thirty days in which S/L Services had to seek review of WSI's determination that Vail was an employee and entitled to benefits ended on or about August 9, 2013. S/L Services has presented no evidence that it sought review of that determination during this 30-day period or obtained an extension to do so.

On August 22, 2013, S/L Services submitted its "Employer Payroll Report" for the period from August 23, 2012 to August 31, 2013. (Docket No. 9-4). To complete the report, S/L Services was required to provide the name, classification, and payroll information of each of its employees.Despite the outstanding order from WSI that S/L Services provide the payroll information for Vail and others similarly situated, S/L Services did not include in the payroll report Vail's wages or the wages of some six or...