Barrow et al v. Temper Fabricators, LLC
Filing
81
ORDER DENYING 70 Plaintiffs' "Request for Relief Pursuant to Rule 56(f) Regarding Defendant's Waiver of All Immunity Under the Illinois Workers' Compensation Statute." The parties shall work together to craft appropriate jury instructions on the borrowed employee issue. Signed by Judge Nancy J. Rosenstengel on 04/13/15. (mah)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
JOHN BARROW, IV and
KIMBERLEE BARROW,
Plaintiffs,
vs.
TEMPER FABRICATORS, LLC,
Defendant.
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Case No. 13-CV-563 -NJR-PMF
MEMORANDUM AND ORDER
ROSENSTENGEL, District Judge:
Pending before the Court is Plaintiffs’ “Request for Relief Pursuant to Rule 56(f)
Regarding Defendant’s Waiver of All Immunity Under the Illinois Workers’
Compensation Statute” (Doc. 70). Plaintiffs request this Court grant affirmative relief
pursuant to Federal Rule of Civil Procedure 56(f), including granting summary
judgment in favor of Plaintiffs and prohibiting Defendant Temper Fabricators, LLC
(“Temper”) from asserting any defense under the Illinois Workers’ Compensation Act
at the upcoming jury trial. Temper filed a response brief on February 3, 2015 (Doc. 72).
For the reasons set forth below, Plaintiffs’ Request is denied.
Factual and Procedural Background
On May 12, 2011, Plaintiff John Barrow was injured while working in the
Peabody Energy Willow Lake Mine (“Willow Lake Mine”) located in Equality, Illinois.
Barrow was employed by Big Ridge, Inc., a subsidiary and affiliate of Peabody
Investment Corporation (“Peabody”). On that day, Barrow allegedly tripped over
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hydraulic hoses that had been transferred by Johnny Whitfield, Sr. and Ralph Vandiver,
both of whom were Temper employees.
Barrow pursued a workers’ compensation claim against Peabody for his injuries
and reached a settlement on June 17, 2013. On June 13, 2013, Plaintiffs filed this action
seeking damages from Temper as a result of the May 12, 2011, incident. In the Amended
Complaint (Doc. 40, Ex. 1), Plaintiffs make claims for: (1) negligence related to the
placement of the hydraulic hoses Barrow tripped over, (2) breach of contract under the
Master Performance Agreement between Peabody and Temper, and (3) loss of
consortium on behalf of Kimberlee Barrow.
On December 15, 2014, Temper filed two motions for summary judgment (Docs.
48 and 51). In its Motion for Summary Judgment as to Count II, Breach of Contract
(Doc. 48), Temper sought dismissal of Plaintiffs’ breach of contract claim asserting that
the Master Performance Agreement between Temper and Peabody did not intend to
provide Barrow, as a third party beneficiary, a direct benefit or a right to sue. In
Temper’s Motion for Summary Judgment as to All Claims (Doc. 51), Temper asserted
that it was a loaning employer under the Illinois Workers’ Compensation Act and was
entitled to immunity from suit by operation of the Act’s exclusivity provisions.
The Motion for Summary Judgment as to Count II, Breach of Contract, was
granted on the record during the January 26, 2015, hearing (Doc. 69), and the Court
subsequently issued an Order (Doc. 73). The Motion for Summary Judgment as to All
Claims (Doc. 51) was denied on the record during the January 26 hearing (Doc. 69).
Following the hearing, Plaintiffs filed their Request for Relief Pursuant to Rule 56(f)
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Regarding Defendant’s Waiver of All Immunity Under the Illinois Workers’
Compensation Statute (Doc. 70). On February 3, 2015, Temper filed a Response (Doc.
72).
Legal Standard for a Rule 56(f) Judgment Independent of the Motion
When there are no issues of material fact in dispute, a district judge may grant
summary judgment in favor of the non-moving party or may grant summary judgment
even though no party has moved for summary judgment. See Hunger v. Leininger, 15
F.3d 664, 669 (7th Cir. 1994). The court may enter summary judgment sua sponte, as long
as the losing party is given notice and an opportunity to come forward with its
evidence. See Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986); Goldstein v. Fid. and Guar. Ins. Underwriters, Inc., 86 F.3d 749, 750 (7th Cir. 1996). If
the court entertains the prospect of entering summary judgment against the
unsuccessful movant, then the court must grant the unsuccessful movant all of the
favorable factual inferences that it has just given to the movant’s opponent. See R.J.
Corman Derailment Servs., LLC v. Int’l Union of Operating Engrs., Local Union 150, AFL–
CIO, 335 F.3d 643, 647–48 (7th Cir. 2003). Only if the court can say that no finder of fact
could reasonably rule in the unsuccessful movant’s favor may the court properly enter
summary judgment against that movant. E.g., O’Leary v. Accretive Health, Inc., 657 F.3d
625, 630 (7th Cir. 2011).
Analysis
A. Waiver of Immunity Under the Illinois Workers’ Compensation Act
Plaintiffs contend that Temper expressly waived all immunity potentially
available to it under the Illinois Workers’ Compensation Act (“IWCA”) in the Master
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Performance Agreement (“MPA”). Specifically, Plaintiffs argue that through the waiver
in the MPA, Temper agreed to be bound to compensate and hold harmless Peabody’s
employees, such as Barrow, in instances of negligence by Temper employees (See Doc.
64).
Pursuant to the statutory scheme implemented by the IWCA, the employee
relinquishes his common law rights to sue his employer in tort, but recovery for injuries
arising out of and in the course of his employment become automatic without regard to
any fault on his part. McNamee v. Federated Equip. & Supply Co., 181 Ill. 2d 415, 421, 692
N.E.2d 1157, 1160 (1998). The employer gives up the right to plead the numerous
common law defenses to the employee’s claim in exchange for limited liability. Id. “This
trade-off between employer and employee promoted the fundamental purpose of the
Act, which was to afford protection to employees by providing them with prompt and
equitable compensation for their injuries.” Id., quoting Mitsuuchi v. City of Chicago, 125
Ill.2d 489, 494, 532 N.E.2d 830 (1988).
An injured employee also may have a cause of action against a third-party to the
employment relationship whose negligence allegedly caused or contributed to the
employee’s injuries. See Braye v. Archer–Daniels–Midland Co., 175 Ill.2d 201, 207, 676
N.E.2d 1295, 1300 (1997). The IWCA does not limit the employee’s recovery from a third
party. Id. Although the employee is barred from bringing a civil suit directly against his
employer, the third-party non-employer may file a third-party suit against the employer
for contribution toward the employee’s damages. Id.; see also 740 ILCS 100/1 et seq.
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The concept of contribution contemplates that each party whose fault
contributed to an injury should pay its pro rata share of the common liability. 740 ILCS
100/2, 3. In Kotecki v. Cyclops Welding Corp., the Illinois Supreme Court established the
concept of limiting a third-party employer defendant’s liability in contribution claims to
its statutory liability under the IWCA. Kotecki v. Cyclops Welding Corp., 146 Ill.2d 155,
164–65, 585 N.E.2d 1023, 1027-28 (1991). This allowed non-employer defendants to
recover limited contribution from the employer and also extended the limited liability
protection of the IWCA to contribution claims. Id. The “cap” afforded employers in
Kotecki is not an automatic defense. Rather, it is an affirmative defense that must be
pleaded in answer and proven. Id.
An employer may contractually waive the cap on its contribution liability,
resulting in the employer becoming liable for its full pro rata share of contribution.
Braye, 175 Ill.2d at 210, 676 N.E.2d at 1300; Estate of Willis v. Kiferbaum Const. Corp., 357
Ill.App.3d 1002, 1005-06, 830 N.E.2d 636, 641 (2005). “In essence, a party who agrees to
waive Kotecki as an affirmative defense voluntarily assumes contribution liability in
excess of the limitations provided under the Compensation Act.” Id.
Plaintiffs point to paragraph 9 of the MPA as evidence that Temper intended to
waive all protections that could be afforded to it as to Peabody or Peabody’s employees
pursuant to the MPA. According to Plaintiffs, this waiver prohibits Temper from
asserting any defense based on the IWCA at trial. Paragraph 9, titled Indemnity,
provides:
Contractor shall indemnify and hold harmless Owner, its parents,
subsidiaries, affiliates and related companies, and their officers, directors,
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agents, representatives and employees, and each of their respective
successors and assigns (the “Indemnified Parties”) against any and all
suits, losses, damages, liabilities, costs and expenses including reasonable
attorneys’ fees and other costs of defending any action) (“Losses”) which
such parties may sustain or incur (i) in connection with a breach of any
representation, warranty, or undertaking made by Contractor in this
Contract, or (ii) in connection with the performance, design, development,
sale, use, or delivery of the goods or services (as applicable), whether the
claim be based upon a theory of breach of contract or warranty,
negligence, strict liability, other tort, infringement or any other legal
theory, except to the extent caused by the negligence of the Owner or
other Indemnified Party, or (iii) as a result of any suit, claim or demand
under any environmental, transportation, health, safety, or other laws,
rules, regulations or requirements caused by or resulting from the goods
or services or any acts or omissions of Contractor in the performance of
this Contract. If Contractor’s performance requires Contractor, its
employees, agents or representatives to perform services on the property
of Owner or its agents, Contractor will indemnify and hold harmless the
Indemnified Party against all Losses for injury or damage to person or
property arising out of such performance, except to the extent caused by
the Owner or its agent. Contractor agrees that it will, when requested and
given reasonable notice of the pendency of any such suits, claims or
demands, assume the defense of the indemnified Party against any such
suits, claims or demand. Additionally, Contractor expressly and
specifically waives all immunity that may be afforded to Contractor under
the workers’ compensation laws of any state or jurisdiction to the extent
permitted by law.
(See Doc. 53-1). Plaintiffs particularly emphasize the last sentence of paragraph 9 as
direct evidence of Temper’s waiver of rights under the IWCA. But the Court finds
Plaintiffs’ analysis regarding the Indemnity provision is misguided.
The waiver anticipated in paragraph 9 of the MPA is not a waiver of the
affirmative defenses available to Temper in this lawsuit. Rather, the language in
paragraph 9 is Temper’s acquiescence to unlimited liability by waiving the Kotecki
limitation as to contribution claims in any potential third-party lawsuit brought by
Peabody. See Braye, 175 Ill.2d at 210, 676 N.E.2d 1295; Willis, 357 Ill.App.3d at 1007, 830
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N.E.2d at 642 (clause stating that indemnification obligation “shall not be limited in any
way by any limitation on the amount or type of damages, compensation or benefits
payable by or for the subcontractor under workers’ compensation act” constituted a
waiver of Kotecki cap as to contribution claim).
In Braye, cited by Plaintiffs in support of their waiver argument, an employee
sued his employer for injuries he sustained while working, and the employer filed a
third-party complaint seeking contribution from the owner of the premises where the
employee had been working. Braye, 175 Ill.2d at 203-04, 676 N.E.2d at 1297. The
purchase agreement between the employer and the third party had a provision in
which the employer waived its Kotecki limit. Id. Likewise, the waiver provision in
paragraph 9 would be triggered by Peabody in a third-party contribution action against
Temper. Based on the waiver language in paragraph 9, Peabody would be able to seek
unlimited contribution asserting that Temper waived its Kotecki cap limits. The Court
finds Paragraph 9 is inapplicable in the instant case.
B. The Borrowed Servant Affirmative Defense
Plaintiffs also request the Court affirmatively rule that Temper’s employees do
not qualify as “borrowed employees” of Peabody. The IWCA provides for the scenario
where an employee might have more than one employer. When a covered employer
“borrows” an employee from a covered “loaning” employer, and the employee is
injured, both employers are responsible for providing workers’ compensation benefits.
Couch v. United States, 694 F.3d 852, 856 (7th Cir. 2012), citing 820 ILCS 305/1(a)(4). Both
employers are thus jointly and severally liable to the injured employee. Id. Further, both
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employers enjoy immunity from tort liability under the IWCA. Id.; see also Belluomini v.
United States, 64 F.3d 299, 302 (7th Cir. 1995); Luna v. United States, 454 F.3d 631, 634 (7th
Cir. 2006).
The Seventh Circuit has articulated two separate tests for identifying a borrowed
employment relationship for purposes of the IWCA. The first test, based on common
law principles of the borrowed servant doctrine and respondeat superior, focuses on the
degree of control exercised by the putative borrowing employer. Couch, 694 F.3d at 857.
In applying the common law control test, Illinois courts consider “the character of the
supervision of the work done, the manner of direction of the employee, the right to
discharge, the manner of hiring, and the mode of payment.” Chaney v. Yetter Mfg. Co.,
315 Ill.App.3d 823, 248 Ill.Dec. 737, 734 N.E.2d 1028, 1031 (2000).
The second test incorporates language from the IWCA. Under the statutory test,
“(1) a substantial portion of the alleged loaning employer’s business must consist of
furnishing employees to do the work of other employers; (2) the loaning employer must
pay the employee’s wages even though that employee is working for another employer;
and (3) the borrowing employer must be operating under the [IWCA].” Belluomini, 64
F.3d at 302.
Whether an injured worker is a borrowed employee is “generally a question of
fact,” but “when the unrebutted evidence is capable of only one interpretation,” a court
“must make the determination as a matter of law.” Couch, 694 F.3d at 857, citing A.J.
Johnson Paving Co. v. Indus. Comm’n, 82 Ill.2d 341, 45 Ill.Dec. 126, 412 N.E.2d 477, 481
(1980); Kawaguchi v. Gainer, 361 Ill.App.3d 229, 296 Ill.Dec. 401, 835 N.E.2d 435, 445
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(2005). The Court has already denied Temper’s Motion for Summary Judgment
regarding this issue. Although they did not file a motion for summary judgment,
Plaintiffs now ask, pursuant to Federal Rule of Civil Procedure 56(f), that the Court
prohibit Temper from asserting a borrowed servant defense at trial. On the basis of the
current record before the Court, however, neither party has carried out its burden of
showing entitlement to judgment as a matter of law on the borrowed servant issue. As
stated at the January 26 hearing, questions of fact preclude summary judgment on this
issue. Accordingly, Plaintiffs’ Rule 56(f) request must be denied.
Conclusion
For the reasons set forth above, Plaintiffs’ “Request for Relief Pursuant to Rule
56(f)” (Doc. 70) is DENIED. The parties shall work together to craft appropriate jury
instructions on the borrowed employee issue.
IT IS SO ORDERED.
DATED: April 13, 2015
s/ Nancy J. Rosenstengel
NANCY J. ROSENSTENGEL
United States District Judge
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