CLAYTON v. UNITED STATES OF AMERICA et al
Filing
53
OPINION. Signed by Chief Judge Jerome B. Simandle on 5/16/2012. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
THERESA CLAYTON, individually,
and as Administratrix Ad
Prosequendum of the Estate of
Steven Clayton, deceased,
Civil Action
No. 10-3127 (JBS/KMW)
Plaintiff,
OPINION
v.
UNITED STATES OF AMERICA, ET
AL.,
Defendants.
APPEARANCES:
Jason A. Daria, Esq.
John M Dodig, Esq.
FELDMAN, SHEPARD,
WOHLEGELERTNER & TANNER
1845 Walnut Street
25th Floor
Philadelphia, PA 19103
Counsel for Plaintiff
Paul J. Fishman, United States
Attorney
By: Paul A. Blaine,
Assistant U.S. Attorney
OFFICE OF THE UNITED STATES
ATTORNEY
Camden Federal Bldg. & U.S.
Courthouse
401 Market Street
4th Floor
Camden, NJ 08101
Counsel for Defendant
United States of America
Nicholas J. Sansone, Esq.
NAULTY, SCARICAMAZZA &
MCDEVITT, LLC
Greentree Commons
9003-a Lincoln Drive West
Marlton, NJ 08053
Counsel for Defendant
NorthStar Technology
Corporation
Dana Charles Argeris, Esq.
MARSHALL DENNEHEY WARNER
COLEMAN & GOGGIN
220 Lake Drive East
Suite 300
Cherry Hill, NJ 08002
Counsel for Defendant
Eastern Construction &
Electric, Inc.
Stephen A. Rudolph, Esq.
MONTE & RUDOLPH, PA
800 the Plaza
Po Box 255
Sea Girt, NJ 08750
Counsel for Meridian
Management Corporation
SIMANDLE, Chief Judge:
I.
INTRODUCTION
This case involves the tragic death of Steven Clayton, who
was working at the Fort Hamilton military facility in Brooklyn,
New York.
Theresa Clayton, as the wife of the deceased and
administrator of his estate, seeks compensation from the United
States, NorthStar Technology Corporation, Eastern Construction &
Electric, Inc., and Meridian Management Corporation for their
respective roles in the accident.
Defendants NorthStar and
Eastern have moved for partial summary judgment on the question
of whether Clayton was acting as an employee for one or both
entities under the relevant workers’ compensation laws.
Items 31 & 32.]
[Docket
A finding that Clayton was an employee may
provide a defense to Plaintiff’s claims because the relevant
statutes foreclose employer tort liability for most workplace
accidents.
Law § 11.
See N.J. Stat. Ann. § 34:15-8; N.Y. Workers’ Comp.
Eastern’s motion is unopposed, and there is good cause
to grant it.1
Therefore, the principal issue on these motions is
whether the undisputed facts show that Clayton was an employee of
NorthStar.
As explained in today’s Opinion, NorthStar is not
entitled to partial summary judgment on that issue.
1
NorthStar did file a “Response,” contesting some facts
relevant to NorthStar’s status as an employer, which the Court
has duly considered in preparing today’s Opinion and Order.
2
II.
BACKGROUND
On June 21, 2008, an accident on a project to replace
electrical power poles caused the electrocution death of Steven
Clayton.
Two companies with whom Clayton was involved in the
project – NorthStar Technology Corporation and Eastern
Construction & Electric, Inc. – both claim him as an employee.
It is undisputed that Clayton was an employee of the
subcontractor, Eastern, but less clear whether Clayton was also
an employee of the prime contractor, NorthStar.
In 2006, NorthStar entered into a service contract with the
United States Government.
Pursuant to the contract, the
Government ordered the replacement of a number of electrical
power poles at the Fort Hamilton military facility in Brooklyn,
New York.
NorthStar's employees had no ability to perform
electrical work, so on November 30, 2007, NorthStar subcontracted
with Eastern to have Eastern replace the poles.
Pl.’s Ex. D
(“Subcontract Agreement”).
The individuals employed by Eastern for the project in many
ways had an ordinary independent contractor relationship with
NorthStar.
Eastern selected the workers who would be assigned to
the project from the ranks of its employees.
Clayton was
assigned to supervise the project, and he was joined by another
electrician, John Deitz, and a laborer, Charles Miller.
personnel were regularly present at the project.
3
No other
The Subcontract
Agreement states that "This Subcontract shall not constitute a
joint venture, partnership or other form of business arrangement
and each party shall act as an independent contractor without
authority to bind the other party.”
Id. at 4.
NorthStar, as the prime contractor, ensured that the end
results of the work were achieved to the satisfaction of its
client, the federal government.
Eastern was responsible for
controlling the worksite and actually directing the manner of the
work being performed, including overseeing Clayton.
Bolanos Dep.
at 46:5-47:20, 229:10-230:21; Silverthorne Dep. at 54:1-21.2
No
one at NorthStar gave any of the workers instruction, direction,
or supervision.
If there was a some problem related to the
quality of the work being done, such issues would be handled by
Eastern.
Silverthorne Dep. 134:19-23.
Eastern paid for the
travel and lodging expenses of the workers and for the trailer on
the jobsite.
Eastern also provided all of the materials and
equipment used.
In the wake of the accident, NorthStar disclaimed any
responsibility as an employer.
Sharon McLaughlin, attorney for
NorthStar, wrote to the Occupational Safety and Health
2
The Subcontract Agreement apparently empowered Narendra
Mohan, the Proposal Manager and Business Manager of NorthStar who
has no electrical expertise, to “exercise technical direction of
the Project on behalf of” NorthStar, Pl.’s Ex. D at 3. But it is
unclear exactly what is meant by this and NorthStar does not
point to this provision as empowering control over Clayton’s
work.
4
Administration that: “NorthStar is not the employer in this case,
and does not have control over the jobsite at Fort Hamilton.”
Pl.’s Ex. F.
McLaughlin prepared affidavits from Norendra Mohan,
the Proposal Manager and Business Manager of NorthStar, and
Frances Chiang, President and CEO of NorthStar, swearing that
NorthStar had no involvement with the project beyond paying the
labor costs directly to the subcontractors.
Def. Eastern’s Ex. M
¶¶ 8-12 & Ex. N ¶¶ 7-10 (“NorthStar’s only involvement in the
project was covering the labor costs, as specified in the
contract with Eastern . . . All direction of the employees came
from Luis Bolanos, the president of Eastern.”).
Nevertheless, Clayton’s arrangement with NorthStar has some
indicia of an employment relationship.
Principally, although the
reason for the agreement is disputed, NorthStar and Eastern
agreed that NorthStar would pay Eastern’s workers directly.3
NorthStar sent Clayton’s checks to Eastern’s office and Eastern
personnel then distributed the checks to Clayton.4
Clayton
completed a NorthStar Application for Employment and a Form W-4
3
Luis Bolanos, President of Eastern, testified that this
arrangement was made to make it appear that NorthStar was
satisfying its requirement to directly employ a certain
percentage of workers, Bolanos Dep. 151:10-23, while NorthStar
claims that this was done for the convenience of the workers.
4
Clayton and his colleagues were paid according to the
federal law for personnel working on these types of projects, and
NorthStar instructed the employees on how to accurately document
and submit their time sheets.
5
for NorthStar.
He certified to NorthStar's Human Resource
department that he was not subject to an income withholding Court
Order requiring NorthStar to withhold wages for the payment of
child support, was in NorthStar's accounting system as an
employee, and was sent other employee-related paperwork,
including a W-9 Form.
NorthStar may also have had the power to terminate Clayton,
though it is unclear.
power.
Nothing in the subcontract specifies this
Frances Chiang, President and CEO of NorthStar testified
that NorthStar had the ability to terminate Clayton if he was not
doing the job correctly, and Silverthorne made similar comments.
Chiang Dep. at 146:4-18; Silverthorne Dep. at 55:10-20.
But
Chiang went on to qualify that statement by stating that
NorthStar had the ability to demand that Eastern provide another
worker to fill the role.
Chiang Dep. at 146:4-18.
Plaintiff filed suit in this Court claiming among other
things that NorthStar and Eastern are liable for negligence,
reckless and intentional conduct, and wrongful death.
On these
motions for partial summary judgment, Defendants NorthStar and
Eastern move for summary judgment that Steven Clayton was their
employee under the applicable worker compensation statutes of New
York and New Jersey.
See N.J. Stat. Ann. § 34:15-8; N.Y.
Workers’ Comp. Law § 11.
Plaintiff does not oppose Eastern’s
motion, but opposes NorthStar’s motion, arguing that Clayton was
6
only a contractor for NorthStar, not an employee.
III. DISCUSSION
A.
Standard of Review
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
P. 56(a).
Fed. R. Civ.
A dispute is “genuine” if “the evidence is such that a
reasonable jury could return a verdict for the non-moving party.”
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A
fact is "material" only if it might affect the outcome of the
suit under the applicable rule of law.
Id.
Disputes over
irrelevant or unnecessary facts will not preclude a grant of
summary judgment.
Id.
The Court will view any evidence in favor
of the nonmoving party and extend any reasonable favorable
inferences to be drawn from that evidence to that party.
Cromartie, 526 U.S. 541, 552 (1999).
Hunt v.
See also Scott v. Harris,
550 U.S. 372, 378 (2007) (The district court must “view the facts
and draw reasonable inferences in the light most favorable to the
party opposing the summary judgment motion.”).
B.
Analysis
Clayton was a New Jersey resident and Eastern is a New
Jersey-based employer, but the accident occurred in Brooklyn, New
York.
These facts have the potential to create a choice-of-law
7
problem if Plaintiff were empowered to pursue relief under the
statute of her choosing and in the event that the statutes
treated Steven Clayton’s employment status differently.
But on
this motion, for the following reasons, the Court finds that
NorthStar is not entitled to summary judgment on these facts with
respect to either statute’s coverage of Clayton, so no further
choice of law analysis is necessary.5
1.
New Jersey
The parties focus their briefing on New Jersey law as the
broader of the two statutes with respect to who is considered an
employee.
New Jersey courts “apply an extremely liberal
interpretation to fact situations in order to effectuate the
purpose of the Workmen's Compensation Act to protect workers for
injuries arising out of their employment.”
Rutherford v. Modern
Transp. Co., 320 A.2d 522, 525 (N.J. Sup. Ct. L. Div. 1974).
This liberal construction is applied “not only when the injured
person seeks its protection, but when he attempts to have himself
excluded from the coverage of the act.”
Sloan v. Luyando, 701
A.2d 1275, 1279 (N.J. Sup. Ct. App. Div. 1997).
5
The
The Court finds good cause to award partial summary
judgment to Eastern, because it is undisputed that Plaintiff was
an employee of Eastern under both New Jersey and New York law.
Eastern controlled and supervised Clayton, had the power to hire
and terminate him, provided the equipment for his work, and
otherwise acted as Clayton’s general employer.
8
determination that an individual is an employee is based on the
circumstances, not the description given to the relationship by
the parties.
See Rutherford, 320 A.2d at 526-27; Brower v.
Rossmy, 164 A.2d 754, 759 (N.J. Sup. Ct. App. Div. 1960).
That Clayton was an employee of Eastern does not mean
Clayton was not also an employee of NorthStar.
Under New Jersey
law, “an employee may have two employers for purposes of the
worker’s compensation scheme - a primary employer and a ‘special’
employer.”
See Roma v. United States, 344 F.3d 352, 364 (3d Cir.
2003) (citing Blessing v. T. Shriver & Co., 228 A.2d 711, 713
(N.J. Sup. Ct. App. Div. 1967)).
To determine whether a worker is a special employee of a
company, New Jersey courts apply a multi-prong test, including
whether: (1) the employee has made a contract of hire, express or
implied, with the special employer; (2) the work being done is
essentially that of the special employer; (3) the special
employer has the right to control the details of the work; (4)
the special employer pays the employees wages; and (5) the
special employer has the power to hire, discharge or recall the
employee.
See Blessing, 228 A.2d at 713.
Though some authority
considers the factors equally important, the New Jersey Supreme
Court has subsequently emphasized the first three prongs in the
special employment context, and declared that the third is the
most important.
Roma, 344 F.3d at 364-365 (citing Volb v. G.E.
9
Capital Corp., 651 A.2d 1002, 1005 (N.J. 1995).
On the first factor, whether Clayton had a contract of hire
with NorthStar, the evidence is mixed.
NorthStar does not
identify any written contract hiring Clayton and setting forth
the terms of his employment.
It is undisputed that Clayton was
selected to perform the subcontracted work by Eastern, not
NorthStar.
Clayton did fill out an application for employment
with NorthStar.
Def.’s Ex. R.
But under the circumstances,
including the other paperwork apparently incident to the parties’
peculiar payroll arrangement, multiple reasonable inferences
could be drawn from that document about whether NorthStar
intended to and did in fact contract to hire Clayton as an
employee.
The undisputed facts do not amount to an implied contract
either.
In the case relied upon by NorthStar, a worker was hired
out to other companies under terms of employment set by those
companies, the worker could refuse the job without any
consequences, and the worker accepted the contract by proceeding
under the company’s direction and control.
See Antheunisse v.
Tiffany & Co., Inc., 551 A.2d 1006, 1008 (N.J. Sup. Ct. App. Div.
1988).
None of those factors is established as beyond factual
dispute on this motion, and indeed the contrary appears to be
true: there is no evidence that NorthStar set the terms of
Clayton’s employment; it appears unlikely that Clayton could
10
refuse Eastern’s decision to use him at the project without
consequences for his employment with Eastern; and NorthStar never
exercised any direction or control.6
On the second factor, whether the work being done is
essentially that of the special employer, NorthStar contends that
since the work was ultimately done to complete NorthStar’s
obligations to the federal government under the prime contract,
the second factor is satisfied.
But this mistaken view of the
law would suggest that all subcontractors are employees.
Generally, “[i]f the servant is expected only to give results
called for by the temporary employer and to use the
instrumentality as the servant would expect his general employer
would desire, the original service continues.”
Murin v. Frapaul
Construction Co., 573 A.2d 989, 993 (N.J. Sup. Ct. App. Div.
1990).
“[A]bsent evidence to the contrary, there is an inference
that the employee remains in his general employment so long as,
by the service rendered another, he is performing the business
entrusted to him by the general employer.”
Id.; see also
Antheunisse, 551 A.2d at 1008 (finding that worker was employee
6
In its reply brief, NorthStar contends that Clayton
manifested assent to an implied hiring contract by complying with
the directions set forth in the Statement of Work. But the
Statement of Work is part of the Subcontract Agreement, and
contains three sentences directing the subcontractor to “do all
that is necessary or incidental to the accomplishment of
satisfactory and timely performance of this Subcontract.” Pl.’s
Ex. D. This is not the kind of submission to direction and
control discussed in the precedent.
11
of temporary employer when the duties were “definitely part of
[the temporary employer's] regular business,” rather than the
work typically performed by the temporary agency).
The fact that NorthStar does not perform electrical work,
but Eastern does regularly perform electrical work, further cuts
against the notion that the work in this case is properly
characterized as work typically performed by the temporary
agency, or is something other than the work Clayton was hired by
Eastern to do.
See Brogna v. United States, CIV. 05-4839 GEB,
2007 WL 2572377, at *7 (D.N.J. Sept. 4, 2007) (“Defendant has
offered no evidence showing that it is engaged in the business of
shipping freight, whether ammunition or other materials, and
therefore fails to satisfy the second factor.”).
The third and most important factor, control, weighs heavily
against finding an employment relationship in this case.
Beyond
conclusory labels of Clayton as working for NorthStar, there is
no evidence in the record that NorthStar retained the right to
control or direct Clayton’s work.
Retaining the right to control
the end result of the project is not sufficient; what is required
is the right to direct control over the manner of work.
Compare
Murin, 573 A.2d at 994 (“The right to control the end result is
distinguished from the method of arriving at it, and falls short
of showing employment”) with Kelly v. Geriatric and Med. Servs.,
Inc., 671 A.2d 631, 636 (N.J. Sup. Ct. App. Div. 1996) (holding
12
that defendant hospital had the right to control the plaintiff
because “her work duties and job performances were assigned,
directed and overseen by [the defendant], the defendant had “day
to day control” of the plaintiff, and the defendant had the
“right to direct the on-site work assignments”).
NorthStar explicitly disclaimed being the employer or having
any control over the jobsite.
See Pl.’s Ex. F (McLaughlin Letter
to OSHA); Def. Eastern’s Ex. M ¶¶ 8-12 & Ex. N ¶¶ 7-10
(“NorthStar’s only involvement in the project was covering the
labor costs, as specified in the contract with Eastern . . . All
direction of the employees came from Luis Bolanos, the president
of Eastern.”).
NorthStar attempts to explain the McLaughlin
letter and accompanying affidavits by citing Chiang’s subsequent
explanation of her affidavit in which she explains that she was
using “employer” in a sense unique to OSHA, but both the letter
itself and Chiang’s testimony make clear that each was using the
word in the sense of control over the worker and direction of the
work.
Chiang Dep. at 149:10-20.
Although NorthStar relies on the testimony of David
Silverthorne, NorthStar’s Contract Administrator, to demonstrate
control, that testimony is far from clear as to NorthStar’s role.
Silverthorne testifies that any problem with the quality of
Clayton’s work would be taken up with Eastern, but that “if it
was something that was – should be handled as an employer, then I
13
would take that directly to Mr. Clayton, as our employee,” and
that “If there was an issue with Mr. Clayton in regard to
something that needed to be employer/employee, if I terminated
Mr. Clayton, then we would go back to Eastern to replace, because
we would utilize his knowledge to ensure that we replaced and/or
he put an Eastern employee on that project.”
134:23-135:18.
Silverthorne Dep.
Silverthorne never specifies the kind of issue
that Silverthorne would consider within NorthStar’s purview, but
he seems to exclude issues related to the actual performance of
the work.
Beyond the fact that Silverthorne labels the
relationship as employer-employee, this testimony offers little
insight into NorthStar’s right to control or direct Clayton’s
work.
The fourth factor, regarding NorthStar’s payment of
Clayton’s wages along with the various indicia of employment
related to wages (W-4 forms, disclaiming of child support
liability, etc.), is both less probative generally than the other
factors and less probative in this particular case because of the
nature of the payroll arrangement.
In this case, there is
evidence that the payroll arrangement was made not as incident to
a normal employment relationship, but because NorthStar was
either attempting to satisfy a federal requirement or attempting
to satisfy Eastern’s desire for convenience and speed of
payments.
In either case, the manner of payment is not
14
especially probative with respect to whether NorthStar was acting
as Clayton’s employer for the purpose of the workers’
compensation statute.
See Santos v. Standard Havens, Inc., 541
A.2d 708, 712 (1988) (“[T]he element of who pays the employee
shrinks into comparative insignificance in lent-employee
problems, because the net result is almost invariably that the
special employer ultimately pays for the services received and
the employee ultimately gets his wages.”) (quoting Larson,
Workmen's Compensation Law § 48.30 (1986); cf. Rutherford, 320
A.2d at 525 (noting that “legal formalities” such as “taxes,
reports, etc.” are of no great significance).
Finally, as to NorthStar’s power to hire, discharge or
recall Clayton, the reasonable inferences to be drawn from the
evidence are conflicting.
There is no evidence that NorthStar
had the power to select Clayton for the job.
And NorthStar’s
power to terminate Clayton independently from its role in
ensuring that the subcontracting work is achieving the proper end
result is unclear; it rests on two NorthStar employees’ somewhat
vague testimony that NorthStar had the power to fire Clayton if
the work was done improperly, with one of those employees
characterizing this power as NorthStar having the ability to
demand that Eastern provide another worker to fill the role.
Chiang Dep. at 146:4-18; Silverthorne Dep. at 55:10-20.
In sum, the most important factor in the determination of an
15
employment relationship is the right to control the manner of
work, and there is no evidence that NorthStar had this right.
The other factors are either disputed, contain mixed evidence, or
are otherwise not sufficiently probative to warrant summary
judgment on this issue in light of the evidence on the control
factor.
Despite New Jersey’s very broad definition of an
employee, NorthStar has not demonstrated that the undisputed
facts entitled NorthStar to summary judgment as to Clayton’s
employee status under New Jersey law.
2.
New York
The Court reaches the same result when applying New York
law.
New York courts consider essentially the same factors as
New Jersey courts.
See Cipollone v. Aramark Healthcare Support
Services, LLC, 10 CV 175 RML, 2012 WL 683578 (E.D.N.Y. Mar. 2,
2012) (holding that assessment of employment relationship
includes who controls and directs the manner, details, and
ultimate result of the employee's work; who is responsible for
the payment of wages and the furnishing of equipment; who has the
right to discharge the employee; and whether the work being
performed was in furtherance of the special employer's or the
general employer's business) (citations omitted).
NorthStar is even more clearly not entitled to summary
judgment under New York law because of that state’s emphasis on
both the special employer’s control over the manner of work and
16
the general employer’s surrender of control.
Under New York law,
“General employment is presumed to continue . . . except upon a
clear demonstration of surrender of control by the general
employer and assumption of control by the special employer.”
Thompson v. Grumman Aerospace Corp., 585 N.E.2d 355, 357 (1991).
“Only where the defendant is able to demonstrate conclusively
that it has assumed exclusive control over ‘the manner, details
and ultimate result of the employee's work’ is summary
adjudication of special employment status and consequent
dismissal of an action proper.”
Bellamy v. Columbia Univ., 851
N.Y.S.2d 406, 408 (N.Y. Sup. Ct. App. Div. 2008).
See also
Montalbano v. Kurt Weiss Florist, Inc., 767 N.Y.S.2d 113 (N.Y.
Sup. Ct. App. Div. 2003); Jaynes v. County of Chemung, 707
N.Y.S.2d 516 (N.Y. Sup. Ct. App. Div. 2000).
NorthStar has
neither demonstrated that it had the right to exercise such
control, nor that Eastern surrendered it.
IV.
CONCLUSION
NorthStar is not entitled to partial summary judgment that
Steven Clayton was NorthStar’s employee because NorthStar has not
shown that the undisputed facts demonstrate that NorthStar had
the right to control or direct the decedent’s work, and the other
evidence of an employment relationship is also either disputed or
insufficient to overcome that critical flaw.
17
NorthStar’s motion
will therefore be denied.
Conversely, Eastern is entitled to
partial summary judgment as to the decedent being Eastern’s
employee.
Clayton’s status as Eastern’s employee is rightly
undisputed, given that Eastern controlled and supervised Clayton,
had the power to hire and terminate him, provided the equipment
for his work, and otherwise acted as Clayton’s general employer.
Finally, although the consequence of granting Eastern’s motion
may ultimately be the dismissal of claims against Eastern, such
consequences are not the subject of today’s motion.
As there are
potentially exceptions to the relevant exclusive remedy
provisions, the Court makes no holding regarding the consequences
of this decision for partial summary judgment beyond the holding
that the decedent was an employee of Eastern.
The accompanying
Order will be entered.
May 16, 2012
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
18
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