Hill v. Phoenix Paper Wickliffe LLC

Filing 37

MEMORANDUM OPINION & ORDER: The Court grants the Defendant's motion for summary judgment (DN 23 ) in accordance with the attached opinion and order. cc: counsel (JM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
ROBERT HILL

PLAINTIFF

v.

No. 5:22-cv-171-BJB

PHOENIX PAPER WICKLIFFE LLC

DEFENDANT
***

MEMORANDUM OPINION & ORDER
Robert Hill tripped and hurt his ankle while working at Phoenix Paper’s
Wickliffe mill. So he sued Phoenix for negligence. Phoenix moved for summary
judgment, arguing that Kentucky law makes workers’ compensation—not the tort
system—the exclusive remedy for injured workers like Hill. The Court agrees and
grants Phoenix’s motion.
I.

The Undisputed Record

Phoenix Paper operates a mill in Wickliffe, Kentucky. To make paper, Phoenix
requires “regular and recurrent” deliveries of raw material—chiefly lumber. Brown
Affidavit (DN 23-3) ¶ 7; Hill Depo. (DN 23-2) at 52:9–12. It contracted with the Kevin
B. Smith logging company to deliver that wood. Brown Affidavit ¶ 8. The PhoenixSmith contract stated that Smith was an “independent contractor providing services”
to Phoenix and that Smith’s employees were not to “be deemed” Phoenix’s employees
“for any purpose.” Transportation Services Agreement (DN 28-3) ¶¶ 4, 13(h). The
contract also required Smith to maintain workers’ compensation insurance, which it
did. Id. ¶ 7; Hill Depo. at 21:12–14. Phoenix, for its part, had its own workers’
compensation policy covering its own employees as well as those of its subcontractors.
Brown Affidavit ¶ 9.
Robert Hill drove trucks for Smith’s logging outfit, which assigned Hill to
deliver lumber to the Wickliffe mill. Hill Depo. at 21:4–5; 52:3–8. Hill lived near the
mill, served as Smith’s only Kentucky-based driver, and often delivered wood to the
mill. Id. at 52:3–12. Twice, while making those deliveries, Hill twisted his ankle
when he stepped in a hole in the pavement in the mill’s parking lot. Brown Affidavit
¶ 4; Summary Judgment Br. (DN 23-1) at 1–2; Summary Judgment Response (DN
27) at 1–2. Those missteps injured Hill badly enough that he required surgery to
repair his ankle. Hill Depo. at 66:3–4; Summary Judgment Br. at 3. Despite his
awareness of both Phoenix’s and Smith’s workers’ compensation policies, Hill never
filed a claim. Hill Depo. at 21:6–8.
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Instead, he sued Phoenix in Ballard (County) Circuit Court, arguing that
Phoenix negligently failed to mitigate the “dangerous condition” created by the
pockmarked paper-mill pavement. Complaint (DN 1-1) at 2. Phoenix removed the
case (DN 1) and quickly filed this motion for summary judgment. According to
Phoenix, Kentucky law makes workers’ compensation the “exclusive remedy” for
injured workers like Hill—rendering Phoenix immune from his tort suit. Answer (DN
1-2) at 2.
II.

The Kentucky Workers’ Compensation Act Bars Hill’s Tort Suit

The Kentucky Workers’ Compensation Act governs most workplace injuries in
the Commonwealth.
The KWCA requires employers to maintain workers’
compensation insurance to cover employees who’ve been injured on the job—
regardless of fault. Phil Hollenbach Co. v. Hollenbach, 204 S.W. 152, 156 (Ky. 1918).
The legislative scheme pairs no-fault coverage with remedial exclusivity: As long as
an “employer” complies with its obligation to “secur[e] payment of compensation”
through insurance, the employer’s liability “shall be exclusive and in place of all other
liability … to the employee.” K.R.S. § 342.690(1). This match of burden and benefit
“lie[s] at the heart of the trade-off built into any workers’ compensation system.”
Black v. Dixie Consumer Products, Co., 835 F.3d 579, 586 (6th Cir. 2016).
The KWCA’s remedial exclusivity extends beyond the employee’s direct
employer to include outsourcing and contracting arrangements. See Labor Ready,
Inc. v. Johnston, 289 S.W.3d 200, 205–06 (Ky. 2009). Specifically, when one firm
(dubbed the “contractor,” K.R.S. § 342.610(2)) engages another firm (the
“subcontractor,” id.) to perform a job or service that “is a regular or recurrent part” of
the contractor’s work, the subcontractor’s remedial exclusivity extends “up the
ladder” to shield the contractor from tort liability as well, see § 342.690(1); Reichwein
v. Jackson Purchase Energy Co., 397 S.W.3d 413, 417 (Ky. Ct. App. 2012). The KWCA
accomplishes this extension by defining a “contractor” under § 342.610(2) as an
“employer” under § 342.690(1). So contractors that carry workers’ compensation
coverage and benefit indirectly from the labors of others, just like employers or
“subcontractors” that benefit directly, enjoy “exclusive” protection “in place of all
other liability” from claims asserted outside the workers’ compensation system.
The effect here is to route any claim Hill may have against Smith (the
subcontractor) or Phoenix (the contractor) into the exclusive workers’ compensation
system. The KWCA treats both as “employers” and extends the immunity it provides
Smith “up the ladder” to Phoenix so long as Phoenix both carried a workers’
compensation policy and hired Smith to perform a “regular or recurrent” aspect of
Phoenix’s work.
Does Phoenix check each of those boxes?
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As to the first, Phoenix submitted an affidavit stating that, on the dates of
Hill’s injuries, Phoenix had an effective workers’ compensation policy “for its
employees and the employees of its subcontractors.” Brown Affidavit ¶ 9. Hill neither
disputes that statement’s accuracy nor argues that Phoenix’s policy was somehow
deficient. See Marquez-Warner v. Campus Crest at Louisville, No. 3:15-cv-172, 2018
WL 1522356, at *2 (W.D. Ky. Mar. 28, 2018) (accepting workers’ compensation
coverage as undisputed despite lack of official Department of Workers’ Claims
certificate in the record); Correct Care Sol’ns, LLC v. Tigue, Nos. 2016-CA-1576/2016CA-1684, 2018 WL 6600236, at *2 (Ky. Ct. App. Dec. 14, 2018) (similar).
As to the second, Hill again doesn’t dispute that his lumber deliveries were a
“regular or recurrent part” of Phoenix’s business. See Brown Affidavit ¶ 8; Hill Depo.
at 52:9–12. Sixth Circuit precedent strongly suggests he couldn’t dispute this even if
he tried: “the transportation and delivery of raw paper materials,” that court has
held, is a regular and recurrent aspect of a paper factory’s business. See Black, 835
F.3d 579, 584–86 (6th Cir. 2016). And more generally, state and federal courts
throughout the Commonwealth have held that shipments of inputs and inventory up
and down the supply chain are a regular and recurrent aspect of a merchant’s or
producer’s business. See Houser v. Kohl’s Inc., No. 5:22-cv-108, 2023 WL 1072008, at
*3–4 (W.D. Ky. Jan. 27, 2023) (collecting cases).
The undisputed record therefore indicates that Phoenix both “secured payment
of compensation” and hired Hill—via Smith Trucking—to perform a “regular or
recurrent” aspect of its business. So the KWCA immunizes Phoenix from the tort
claims Hill attempts to assert in this lawsuit.
Hill’s sole response argues that Phoenix and Smith contracted around the
KWCA’s exclusive-remedy provision. The contract defines Smith as “an independent
contractor” of Phoenix. See Response at 2; Transportation Services Agreement
¶ 13(h). And it specifies that a Smith employee, like Hill, could not “be deemed an
employee … of [Phoenix] for any purpose.” Response at 4; Transportation Services
Agreement ¶ 4. According to Hill, because the contract defines Smith as an
“independent contractor,” Smith can’t be a “subcontractor” under the KWCA. And
because Smith can’t be a “subcontractor,” the argument runs, Phoenix “cannot be
either an employer or contractor” supplied with remedial exclusivity under the
KWCA. Response at 1.
This response fails for several reasons.
First, the independent-contractor relationship between Smith and Phoenix is
entirely consistent with the contractor/subcontractor arrangement contemplated by
the KWCA and discussed above. Phoenix’s agreement to deal with Smith as an
independent contractor—as opposed to trading on some other non-contractual basis—
fits with a statutory scheme designed for contractors and subcontractors. Contrary
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to Hill’s suggestion, the portion of the contract describing Smith as an independent
contract makes it easier, not harder, to apply the KWCA to this set of facts.
Second, that Smith and Phoenix specified that Hill wasn’t a Phoenix employee
is irrelevant to whether Phoenix is a “contractor” under the statute. Given the upthe-ladder scheme discussed above, the KWCA’s workers’ compensation system
doesn’t depend on deeming Hill an employee; it suffices that the statute deems
Phoenix an employer. See §§ 342.610(2), 342.690(1).
Third, courts throughout the Commonwealth have rejected Hill’s argument
and variants of it. “[A]ny express contractual provision describing [a subcontractor]
as an ‘independent contractor’ has no bearing on whether” the contracting firm is “a
contracto[r] within the meaning of § 342.610(2).” Black v. Dixie Consumer Products
Co., 516 F. App’x 412, 415 (6th Cir. 2013). The same applies to Smith and Phoenix.
And as to Hill, “an injured worker’s status as an independent contractor is irrelevant
to the ‘up the ladder’ defense.” Settles v. Wal-Mart Stores, Inc., No. 14-64, 2015 WL
2152907, at *4 (E.D. Ky. May 7, 2015). The terms used in a private contract,
Kentucky courts have recognized, don’t necessarily control the statutory scheme.
“Many forms of oral and written agreements,” according to the Kentucky Supreme
Court, “have been used to create the shadow of [an] independent contractor.” Brewer
v. Millich, 276 S.W.2d 12, 15 (Ky. 1955). Yet a reviewing court “should look to the
substance” of the relationship “rather than the shadow.” Id. Given that instruction,
the Sixth Circuit has noted that “the relevant inquiry under the KWCA is not whether
the injured worker is an employee or independent contractor.” Black, 516 F. App’x at
415. Rather, the question is “whether ‘the task the independent contractor is hired
to perform’ is a ‘regular or recurrent part of the work of the trade, business,
occupation, or profession’ of the premises owner.” Id. (quoting General Electric Co. v.
Cain, 236 S.W.3d 579, 605 (Ky. 2007)).
The substantive relationship between Phoenix, Smith, and Hill fits
comfortably within this statutory text and doctrinal precedent. The KWCA treats
Phoenix and Smith as contractor and subcontractor, respectively, both of whom enjoy
the remedial exclusivity of an “employer.” The parties’ contractual labels, which are
in fact consistent with this statutory taxonomy, wouldn’t override it even if they
weren’t. See, e.g., Black, 516 F. App’x at 415. So Hill’s argument fails either way you
look at it.

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ORDER
The Court grants Phoenix Paper Wickliffe LLC’s motion for summary
judgment, DN 23, and will enter final judgment in its favor in a subsequent order, see
FED. R. CIV. P. 58.

September 26, 2024

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