Adecco USA, Inc. v. Columbia Forest Products, Inc.

Filing 38

OPINION AND ORDER granting 18 Motion for Summary Judgment filed by Columbia Forest Products, Inc.; denying 28 Motion for Summary Judgment filed by Adecco USA, Inc. This case is dismissed. Signed by Judge William K. Sessions III on 7/8/2016. (jam)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT

ADECCO USA, INC,
Plaintiff,
v.
COLUMBIA FOREST PRODUCTS, INC.
Defendant.

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Case No. 2:15-cv-25

Opinion and Order
Plaintiff Adecco USA, Inc. (“Adecco”) brings the present
action against Defendant Columbia Forest Products, Inc. (“CFP”)
alleging a single count of breach of contract.

As indicated in

its Complaint, Adecco seeks indemnification from CFP for
expenses incurred as a result of an ongoing workers’
compensation claim.

CFP argues that indemnification is

unwarranted.
Currently pending before the Court are the parties’ crossmotions for summary judgment.

For the reasons explained below,

the Court denies Adecco’s request for summary judgment (ECF No.
28) and grants the request of CFP (ECF No. 18).
therefore dismissed.

This case is

BACKGROUND
Adecco is a national temporary staffing agency with an
office in St. Albans, Vermont.

CFP is a national manufacturer

of plywood and veneer with a facility in Newport, Vermont.
Since May 2011, Adecco has placed over 150 workers in CFP’s
Newport facility pursuant to a series of nearly identical
contracts.
Under the contract at issue, the parties agreed that
“Adecco will recruit, interview, select and hire assigned
employees (‘Associates’) who, in Adecco’s judgment, possess the
qualifications [CFP] request[s].”

ECF No. 18-3 at 2.

The

parties further agreed that “Adecco shall report and pay the
employer’s share of state and federal taxes, workers’
compensation, FICA, and unemployment insurance for compensation
paid to them and will submit required tax withholdings.”
No. 18-3 at 1.

ECF

As of May 2011, the parties’ contract required

CFP to compensate Adecco at a rate of 48% above what Adecco paid
its associates.

Adecco increased the mark-up to 48.75% in

January 2012, and to 49.75% in December 2012.

Adecco addressed

the December 2012 increase in a letter to CFP, explaining that
the “changes are primarally [sic] related to the rise in State
Unemployment Insurance (SUI), Federal Unemployment Tax (FUTA),
as well as State Worker’s Compensation legislative changes, and
rising Worker’s Compensation Costs.”
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ECF No. 18-4 at 18.

In addition to the above-cited provisions, the contract
between Adecco and CFP contains a “customer responsibilities”
clause.

In relevant part, that clause states as follows:

You [CFP] are responsible for the supervision and
safety of Associates while on your premises including
compliance with federal and state laws, including
OSHA. You agree to bear the risks of allowing
Associates to handle cash (including electronic
transactions), checks, keys, credit cards,
merchandise, negotiable instruments, or confidential
information or to be permitted to travel or operate
motor vehicles or equipment, and you shall defend and
hold harmless Adecco from these risks.
ECF No. 18-3 at 2.
In February 2014, Adecco associate Andre Fortin suffered a
significant injury while operating a wood chipper at CFP’s
Newport facility.

Both CFP and the Vermont Department of Labor

(VOSHA) conducted investigations into the accident.

CFP

reported that the root causes of the accident included
“insufficient engineering,” “insufficient purchasing,” and
“inadequate work standards,” ECF No. 28-3 at 4, and VOSHA issued
CFP a citation for multiple violations of the VOSHA Code.

CFP

later settled the VOSHA citation by agreeing (1) not to contest
one machine guarding violation;1 (2) to pay a $5,000 fine; and
(3) to implement specified abatement measures related to the

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Specifically, the uncontested violation provides that “[t]he in-running nip
point, where the 3 inch in diameter idler roller and 24 inch wide conveyor
belt interact on the Acrowood Veneer Chipper 5317, was not provided with a
guard to prevent employees from being caught in the in-running nip points
parts” in violation of 29 CFR 1910.212(a)(1). ECF No. 28-7 at 6.

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wood chipper.

Since the time of the accident, Adecco has paid

extensive workers’ compensation benefits to Mr. Fortin.
On February 3, 2015, Adecco filed the present action
seeking reimbursement from CFP for the cost of Mr. Fortin’s
workers’ compensation benefits.

According to Adecco, CFP

breached the contract at issue by failing to properly supervise
Mr. Fortin; failing to provide him with a safe working
environment; failing to comply with federal and state safety
regulations; and unilaterally assigning him to the high-risk
position of Waste Tender without Adecco’s prior authorization.
CFP contests Adecco’s claims, and both parties have filed
motions for summary judgment.
DISCUSSION
I.

Legal Standard
It is well settled that summary judgment may be granted

only when “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.”

Fed. R. Civ. P. 56(a).

A genuine dispute of

material fact exists “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Anderson

Accordingly,

when ruling on a motion for summary judgment, courts must
examine the evidence in the light most favorable to the
nonmoving party, Sheppard v. Beerman, 317 F.3d 351, 354 (2d Cir.
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2003), and “resolve all ambiguities and draw all permissible
inferences in favor of the party against whom summary judgment
is sought,” Sec. Ins. Co. of Hartford v. Old Dominion Freight
Line Inc., 391 F.3d 77, 83 (2d Cir. 2004).
The same legal standard applies where, as here, the parties
have filed cross-motions for summary judgment.

Morales v.

Quintel Entertainment, Inc., 249 F.3d 115, 121 (2d Cir. 2001).
That is, “each party’s motion must be examined on its own
merits, and in each case, all reasonable inferences must be
drawn against the party whose motion is under consideration.”
Id.
II.

Analysis
This case presents the Court with a single question,

namely, whether the contract at issue contains an
indemnification provision requiring CFP to reimburse Adecco for
Mr. Fortin’s workers’ compensation benefits.

In its argument

for indemnification, Adecco relies on the first sentence of the
customer responsibilities clause, which provides that “[y]ou
[CFP] are responsible for the supervision and safety of
Associates while on your premises including compliance with
federal and state laws, including OSHA.”

ECF No. 18-3 at 2.

That language, Adecco contends, unambiguously demonstrates the
parties’ intent to impose an indemnity obligation on CFP.

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CFP disputes Adecco’s interpretation of the contract.
According to CFP, the customer responsibilities clause does not
constitute an express indemnification agreement, as required by
Vermont law.

CFP further submits that the contract itself

allocates the responsibility of purchasing workers’ compensation
insurance to Adecco.

For both of those reasons, CFP urges the

Court to grant summary judgment in its favor.
Under Vermont law, which the parties agree governs the
present dispute, “a contract is interpreted foremost to give
effect to the parties’ intent, which is reflected in the
contractual language, if that language is clear.”

B & C Mgmt.

Vt., Inc. v. John, 122 A.3d 511, 514 (Vt. 2015) (internal
citation omitted).

The determination of whether contractual

language is clear or ambiguous is a matter of law to be decided
by the court.

John A. Russell Corp. v. Bohlig, 739 A.2d 1212,

1216 (Vt. 1999).

“If the court concludes the writing is

unambiguous, it must declare the interpretation as a matter of
law.”

Id. (internal citation omitted).

If the court determines

that the writing is ambiguous, however, “the question of what
the parties intended becomes a question of fact for the
factfinder to resolve.”

Dep’t of Corr. v. Matrix Health Sys.,

P.C., 950 A.2d 1201, 1205 (Vt. 2008) (internal citation
omitted).

“A provision in a contract is ambiguous only to the

extent that reasonable people could differ as to its
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interpretation.”

Isbrandtsen v. North Branch Corp., 556 A.2d

81, 83 (Vt. 1988).
Here, contrary to Adecco’s assertion, the language of the
customer responsibilities clause plainly fails to establish a
right to indemnity.

Vermont law provides for contractual

indemnification only where there is “an express agreement or
undertaking by one party to indemnify the other.”

City of

Burlington v. Arthur J. Gallagher & Co., 788 A.2d 18, 21 (Vt.
2001) (internal citation omitted).

For two reasons, no

reasonable person could find that the customer responsibilities
clause constitutes such an express agreement.
First, the sentence at issue does not contain the word
“indemnify” or any variant thereof, nor does it contain the
phrase “defend and hold harmless.”

See, e.g., State v. Prison

Health Servs., Inc., 88 A.3d 414, 418-19 (Vt. 2013) (indicating
that “the contract’s indemnification provision stated that [the
defendant] would ‘indemnify, defend and hold harmless [the
plaintiff] . . . .’”).

Rather, the sentence merely provides

that CFP will be “responsible for the supervision and safety” of
Adecco’s associates.

ECF No. 18-3 at 2.

The clause does not

proceed to clarify the parties’ intent with respect to that
language, and the Court is aware of no precedent or other
authority holding that the use of the word “responsible” alone
creates a duty to indemnify.

Accordingly, the relevant language
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is far too vague to constitute an express indemnification
agreement.
Second, when read as a whole, the customer responsibilities
clause demonstrates that the parties did not intend to create a
duty to indemnify with respect to liability stemming from the
supervision and safety of Adecco’s associates.

The second

sentence of the customer responsibilities clause provides that:
You [CFP] agree to bear the risks of allowing
Associates to handle cash (including electronic
transactions), checks, keys, credit cards,
merchandise, negotiable instruments, or confidential
information or to be permitted to travel or operate
motor vehicles or equipment, and you shall defend and
hold harmless Adecco from these risks.
ECF No. 18-3 at 2.

The parties’ use of the phrase “defend and

hold harmless” in reference to the aforementioned risks
indicates that they knew how to craft an express indemnification
agreement.

Consequently, the fact that they chose not to

include that phrase in the preceding sentence further suggests
that they did not intend for CFP to indemnify Adecco for costs
related to its associates’ supervision and safety.
In light of the vague language used by the parties, as well
as the parties’ demonstrated ability to draft an express
indemnification agreement elsewhere in the contract, the Court
finds that no reasonable person could interpret the first
sentence of the customer responsibilities clause to create a
duty to indemnify.

Accordingly, the Court finds as a matter of
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law that the contractual language at issue unambiguously fails
to protect Adecco from liability arising from the supervision
and safety of its associates.2
Although Adecco relies exclusively on its claim for
contractual indemnification, it bears mentioning that implied
indemnity is similarly inappropriate in the case at bar.
“Indemnity is available where (1) an express agreement or
undertaking by one party to indemnify the other exists or (2)
circumstances require the law to imply such an undertaking.”
City of Burlington, 788 A.2d at 21 (internal citation omitted).
The second form, known as implied indemnity, “is a right
accruing to a party who, without active fault, has been
compelled by some legal obligation, such as a finding of
vicarious liability, to pay damages occasioned by the negligence
of another.”

Id. (internal quotation omitted).

“In such cases,

indemnity is implied for equitable reasons where it is fair to
shift the loss resulting from the negligence from one party to
the more responsible party.”

Id. (internal citation omitted).

In the present case, as CFP notes, the parties agreed that
CFP would compensate Adecco at a higher rate than that at which
Adecco paid its associates.

The mark-up paid by CFP served to

cover both Adecco’s profit and its expenses, including workers’

2

Alternatively, even if the Court were to hold that the first sentence of the
customer responsibilities clause is ambiguous, it would conclude that no
reasonable juror could find that the sentence creates a duty to indemnify for
the same reasons expressed above.

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compensation.

See ECF No. 18-4 at 18.

In addition, the

parties’ contract explicitly provides that “Adecco shall report
and pay the employer’s share of . . . workers’
compensation . . . [in exchange] for compensation paid to
them . . . .”

ECF No. 18-3 at 1.

Because the parties’

contractual arrangement essentially required CFP to pay for
workers’ compensation insurance as part of the mark-up it paid
to Adecco, there is no viable equitable argument that it would
now be fair to shift the cost of Mr. Fortin’s workers’
compensation benefits to CFP.

Accordingly, Adecco cannot

succeed on a theory of implied indemnification.
Finally, as a matter of public policy, the Court briefly
notes that Adecco is in a position to insulate itself from the
type of expense incurred in this case through the purchase of
workers’ compensation insurance.

Adecco’s decision to buy a

comprehensive insurance policy, a limited insurance policy, or
no insurance policy at all is entirely its own.

As a result, in

the absence of an express agreement instructing otherwise, there
is little logic in allowing Adecco to recover from CFP the costs
to which it has knowingly exposed itself.

For that added

reason, Adecco’s claim cannot prevail.
In sum, the Court finds that the first sentence of the
customer responsibilities clause unambiguously fails to
establish an express indemnification agreement, as required by
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Vermont law.

The Court further finds that there are no

equitable grounds for shifting the cost of Mr. Fortin’s workers’
compensation benefits to CFP.

Thus, because the undisputed

facts establish that Adecco is entitled to neither contractual
nor implied indemnity, the Court denies Adecco’s motion for
summary judgment and grants the summary judgment motion of CFP.
CONCLUSION
The Court denies Adecco’s motion for summary judgment (ECF
No. 28) and grants the summary judgment motion of CFP (ECF No.
18).

The present case is therefore dismissed.
Dated at Burlington, in the District of Vermont, this 8th

day of July, 2016.
/s/ William K. Sessions III
William K. Sessions III
District Court Judge

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