Watts v. Montana Rail Link, Inc.
Decision Date | 08 February 1999 |
Docket Number | No. 94-039,94-039 |
Citation | 975 P.2d 283 |
Parties | Robert R. WATTS, Danial K. Newman, Paul F. Nardella, Dennis A. Thorson, Danna Parrow, and Jack Lowe, Plaintiffs and Appellants, v. MONTANA RAIL LINK, INC., a Montana corporation, and Livingston Rebuild Center, Inc., a Montana corporation, Defendants and Respondents. |
Court | Montana Supreme Court |
Monte D. Beck (argued) and John J. Richardson (argued), Beck & Richardson; Bozeman, Montana, For Appellants.
Ronald B. MacDonald (argued) and Darla J. Keck; Datsopoulos, MacDonald & Lind, P.C.; Missoula, Montana, for Montana Rail Link.
Jon T. Dyre (argued); Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P.; Billings, Montana; and Kenneth D. Tolliver (argued); Wright, Tolliver & Guthals, P.C.; Billings, Montana, for Livingston Rebuild Center.
¶1 Plaintiffs filed complaints in the District Court for the Sixth Judicial District in Park County in which they named the Livingston Rebuild Center, Inc. (LRC), and Montana Rail Link, Inc. (MRL), as defendants and sought damages pursuant to the Federal Employers Liability Act (FELA) found at 45 U.S.C. §§ 51 to 60. They allege that they were injured during the course of their employment while nominally employed by LRC, but that LRC was actually the servant of MRL, which engaged in the business of common carrier by railroad in interstate commerce. The plaintiffs sought damages from the defendants, MRL and LRC for their injuries. The defendants denied the material allegations of the plaintiffs' complaint and alleged, among other affirmative defenses, that the plaintiffs could not recover FELA benefits against LRC because it is not a railroad, and that they could not recover FELA benefits against MRL because they were not employed by MRL. Pursuant to the motion of MRL, these cases were consolidated for the sole purpose of determining whether the plaintiffs were covered by FELA. Following a nonjury trial, the District Court found that they were not employed by MRL and entered judgment for the defendants. Plaintiffs appeal from the judgment of the District Court. We reverse that judgment.
¶2 The issue on appeal is whether the District Court erred when it held that plaintiffs were not employed by a common carrier by railroad for purposes of coverage by the Federal Employers Liability Act found at 45 U.S.C. §§ 51 to 60.
¶3 The District Court found that MRL exercised no unusual control over LRC's employees and that LRC's relationship with MRL was an arms-length relationship typical of its business with its other customers. On that basis, the court concluded that MRL did not control LRC's employees and, therefore, that they were not subservants of a company that was, in turn, a servant of the railroad, and were not entitled to claim benefits pursuant to FELA. We review a district court's findings of fact to determine whether they are clearly erroneous. See Interstate Prod. Credit Ass'n v. DeSaye(1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287. We review a district court's conclusions of law to determine whether they are correct. See Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686; see also Kreger v. Francis (1995), 271 Mont. 444, 447, 898 P.2d 672, 674; Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603-04.
¶4 We have adopted a three-part test to determine whether a finding is clearly erroneous.
First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence we will determine if the trial court has misapprehended the effect of the evidence. Third, if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still find that "[A] finding is 'clearly erroneous' when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed."
Interstate Prod. Credit Ass'n, 250 Mont. at 323, 820 P.2d at 1287 (citations omitted).
¶5 In Kelley v. Southern Pacific Co. (1974), 419 U.S. 318, 95 S.Ct. 472, 42 L.Ed.2d 498, the U.S. Supreme Court established the standard for determining whether a person nominally employed by an entity that is not a railroad is, in fact, an employee of a railroad for purposes of coverage by FELA. In that case, the petitioner, Eugene C. Kelley, was technically employed by Pacific Motor Trucking Company, a wholly owned subsidiary of the Southern Pacific Company. His employment involved unloading automobiles from Southern Pacific's flat cars, and during the performance of his duties he fell from the top of one of the railroad's cars and was injured. He filed suit against the railroad in which he alleged that he was employed by the railroad within the meaning of FELA. The federal district court agreed on the basis of the trucking company's agency relationship with the railroad. However, the circuit court of appeals reversed on the basis that an agency relationship was insufficient and that the federal district court had not found that Kelley was directly employed by Southern Pacific Company.
¶6 On appeal, the Supreme Court agreed that a simple agency relationship between the trucking company and the railroad was insufficient to bring Kelley within the coverage of the Act. It pointed out that pursuant to 45 U.S.C. § 51, coverage of the Act is extended to persons employed by a common carrier by railroad and injured by the negligence of the railroad, its officers, agents, or employees. It held, however, that an employment relationship could be established based on common law principles without regard to Southern Pacific's denial that it was Kelley's employer. The court stated:
Under common-law principles, there are basically three methods by which a plaintiff can establish his 'employment' with a rail carrier for FELA purposes even while he is nominally employed by another. First, the employee could be serving as the borrowed servant of the railroad at the time of his injury. See Restatement (Second) of Agency § 227; Linstead v. Chesapeake & Ohio R. Co., 276 U.S. 28, 48 S.Ct. 241, 72 L.Ed. 453 (1928). Second, he could be deemed to be acting for two masters simultaneously. See Restatement § 226; Williams v. Pennsylvania R. Co., 313 F.2d 203, 209 (C.A.2 1963). Finally, he could be a subservant of a company that was in turn a servant of the railroad. See Restatement § 5(2); Schroeder v. Pennsylvania R. Co., 397 F.2d 452 (C.A.7 1968).
Kelley, 419 U.S. at 324, 95 S.Ct. at 476, 42 L.Ed.2d at 506.
¶7 The Supreme Court held that since the district court had failed to make findings based on the correct test for FELA coverage, the case should be remanded to the district court for further findings consistent with the Supreme Court's decision.
¶8 In Warrington v. Elgin, Joliet & Eastern Railway Co. (7th Cir.1990), 901 F.2d 88, the Seventh Circuit Court of Appeals discussed the type of proof necessary to establish an employment relationship and, therefore, entitlement to FELA benefits based on the third method recognized in the Kelley case. That court stated:
In order to prevail under this method, Warrington must demonstrate that USS was acting as a servant of EJ & E [the railroad] at the time of the accident. Section 220(1) of the Restatement (Second) of Agency defines a servant as "a person [or entity] employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other's control or right to control." See also Kelley, 419 U.S. at 326, 95 S.Ct. at 477; Vanskike v. ACF Industries, Inc., 665 F.2d 188, 198-99 (8th Cir.1981). Section 220(2) of the Restatement lists various indicia of control which, among others, are instructive in determining servant status. Although these factors are directed at determining whether a particular bilateral arrangement is properly characterized as a master-servant or independent contractor relationship, they are also useful in analyzing a three-party relationship between two employers and an employee. Kelley, 419 U.S. at 324, 95 S.Ct. at 476.
Warrington, 901 F.2d at 90 (footnote omitted). 1
¶9 Among those factors typically considered for purposes of determining whether a master-servant relationship exists, the most significant is the degree of control that the alleged master exercises over the work of that person or entity who is alleged to be its servant. See Tarboro v. Reading Co. (3d Cir.1968), 396 F.2d 941, 943; Clifford v. United States (D.S.D.1970), 308 F.Supp. 957, 958; Bond v. Cartwright Little League, Inc. (1975), 112 Ariz. 9, 536 P.2d 697, 702; Miller v. Component Homes (Iowa 1984), 356 N.W.2d 213, 217; Molloy v. Massachusetts Mortg. Corp. (Mass.App.Ct.1998), 1998 WL 15938 1; Kilgore Group, Inc. v. South Carolina Employment Sec. Comm'n (1993), 313 S.C. 65, 437 S.E.2d 48, 49; Felts v. Richland County (1991), 303 S.C. 354, 400 S.E.2d 781, 782.
¶10 For example, in Kottmeyer v. Consolidated Rail Corp. (1981), 98 Ill.App.3d 365, 53 Ill.Dec. 710, 424 N.E.2d 345, the plaintiff sued Consolidated Rail Corporation for benefits pursuant to FELA, even though at the time of his injury he was employed by Pennsylvania Truck Lines, Inc., a wholly owned subsidiary of the defendant railroad. Employees of the subsidiary corporation loaded and unloaded trailers from the defendant's flatbed cars. Following a jury trial, a verdict was returned finding that the plaintiff was, in fact, employed by the railroad and awarding him damages pursuant to FELA. On appeal, the railroad contended that there was insufficient evidence to establish that the plaintiff was its employee. However, the Appellate Court for the State of Illinois...
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