CORRECTED: OCTOBER 1, 2019 RENDERED: SEPTEMBER 26, 2019 TO BE PUBLISHED
2019-SC-000212-WC U U L_
TRYON TRUCKING, INC. APPELLANT
ON APPEAL FROM COURT OF APPEALS V. CASE NO. 2018-CA-001076-WC WORKER’S COMPENSATION BOARD NO. 14-WC-00873
RANDY MEDLIN, APPELLEES HON. BRENT E. DYE, ADMINISTRATIVE LAW JUDGE, WORKERS’ COMPENSATION BOARD, DAVID O. GRIFFITH, DAVID O. GRIFFITH, d/b/a DAVID GRIFFITH TRUCKING, ORLA L. SMITH d/b/a O.L. SMITH TRUCKING, COMMONWEALTH OF KENTUCKY, UNINSURED EMPLOYERS FUND and MIKRON INDUSTRIES
OPINION OF THE COURT BY JUSTICE BUCKINGHAM
AFFIRMING
Tryon Trucking, Inc., appeals from an opinion of the Court of Appeals
affirming a Workers’ Compensation Board (Board) opinion that affirmed in part,
vacated in part, and remanded the opinion and order of the Administrative Law
Judge (ALJ) for further findings of fact concerning whether Tryon was, pursuant to KRS1 342.610(2), an up-the-ladder employer of Randy Medlin, who
suffered a work-related injury while driving a tractor-trailer truck leased by
Tryon from David O. Griffith.
Tryon contends that the portion of the ALJ’s opinion and order finding
that Tryon was not an “up-the-ladder” employer pursuant to KRS 342.610(2)
was based on substantial evidence and, accordingly, pursuant to the applicable
standards of review, the Board erred when it remanded the decision to the ALJ
with a request for further findings of fact rather than affirming the ALJ’s
decision.
Because we agree with the Board and conclude that the ALJ’s
determination that Tryon was not an up-the-ladder employer of Medlin was
based upon a misconstruction of Uninsured Employers' Fund v. Ritchie, No.
2012-SC-00746-WC, 2014 WL 1118201 (Ky. Mar. 20, 2014), we affirm the
Board and Court of Appeals’ decisions to remand the case to the ALJ for a
reexamination based upon a correct construction of that decision.
I. FACTUAL AND PROCEDURAL BACKGROUND
On July 25, 2013, Medlin suffered multiple serious work-related injuries
in a motor vehicle accident while driving a tractor-trailer truck leased by Tryon,
including an injury which required amputation of his left leg below the knee,
hearing loss, and numerous laceration injuries. At the time of the accident,
Medlin was operating a truck owned by David O. Griffith, who was determined
by the ALJ to be Medlin’s employer at the time of the accident.1
1 Kentucky Revised Statutes. 2 Griffith, whose business is located in Corbin, Kentucky, owned several
tractor-trailer trucks that he leased to Tryon pursuant to a 2013, “Equipment
and Service Agreement Between Independent Contractor (David O. Griffith) and
Carrier (Tryon).”
On this occasion Griffith had leased the truck to Tryon and had hired
Medlin, whom he often used as a driver, to drive a cargo of windows owned by
Mikron Industries, Inc., to Texas. Griffith believed he had hired Medlin as an
independent contractor and that, therefore, Medlin was not his employee. It is
now uncontested that Griffith was Medlin’s employer at the time of the
accident.
Tryon, a Pennsylvania company, is a company whose business model is
to contract with businesses needing cargo moved by truck (such as Mikron),
then contract to lease semi-trucks from trucking operators (such as Griffith),
and then coordinate the transportation of the cargo in the trucks it leases.
Thus, Tryon is both a transportation broker that locates cargo in need of
hauling and a carrier, though its carrier operations are not performed through
its own trucks and employees but rather by the equipment and employees of
third-party trucking firms.
The end result is that Tryon is the intersection between those who need
cargos hauled and trucking operators looking for loads to haul. Under this
model Tryon has a contract with both of those parties. In contrast to other
business models, Tryon does not simply bring the cargo owner and trucking
company together for those two third-parties to contract between themselves to
complete the haul; rather, Tryon further intellects itself into the process by
leasing the equipment that will accomplish the hauling job. 3 As a result of his work-related accident, Medlin filed a claim for benefits
with the Department of Workers’ Claims. In his claim Medlin alleged that his
employers at that time of the accident were David O. Griffith d/b/a David
Griffith Trucking; David E. Griffith d/b/a David Griffith Trucking; O.L. Smith
Trucking; and Tryon2. When it became apparent that there might not be
workers’ compensation coverage available through any of these entities, Medlin
added the Uninsured Employers’ Fund (UEF) as a party. Medlin later added
Mikron, the owner of the cargo that Medlin was transporting, as an alleged
employer. Each alleged employer contended that Medlin was either not its
employee at the time of the accident or that he was driving as an independent
contractor.
Medlin’s case was initially assigned to ALJ Otto Wolff. At the outset of
the proceedings, Tiyon filed a motion requesting that ALJ Wolff resolve whether
any of the defendants were Medlin’s employer before the claim proceeded any
further. On January 11, 2016, ALJ Wolff entered an “Interlocutory Opinion
and Order” addressing Medlin’s employment status concerning the potential
employers named in the litigation. In the order ALJ Wolff found that
Medlin was an employee and not an independent contractor on the day of the
accident; that David O. Griffith was Medlin’s employer and did not have
workers’ compensation insurance coverage when the accident occurred; and
that the facts did not support a finding that either Tryon or Mikron was a
statutory “up-the-ladder” employer under KRS 342.610(2).
2 Based upon the issues before us, David Griffith Trucking, David E. Griffith, and O.L. Smith Trucking have no further relevance to our review. 4 In his decision ALJ Wolff cited extensively to this Court’s unpublished
opinion in Uninsured Employers’Fund v. Ritchie, No. 2012-SC-00746-WC, 2014
WL 1118201 (Ky. Mar. 20, 2014),3 in support of his conclusion that neither
Tryon nor Mikron had up-the-ladder responsibility as an employer. ALJ Wolff
stated that “[t]he facts and working relationships in this claim are almost
identical to the facts and working relationships addressed in [Ritchie]”
(emphasis added). It is ALJ Wolff’s extensive reliance on this decision and his
finding that the two cases are “almost identical,” and the Board’s disagreement
with his interpretation of the case and its conclusion that the cases are not
“almost identical,” that resulted in the Board’s remand for additional findings
of fact and discussion by ALJ Wolff’s successor, ALJ Brent Dye.
ALJ Wolff further found that Griffith was liable for payment of
Medlin’s workers’ compensation benefits and that if Griffith either did not pay
the benefits or filed bankruptcy, then the UEF would be liable to pay Medlin’s
benefits.
Following ALJ Wolff's analysis and resolution of Medlin’s employment
status, the proceeding was assigned to ALJ Brent Dye. ALJ Dye conducted a
hearing on the merits of Medlin’s entitlement to benefits under the Workers’
Compensation Act and issued an opinion, award, and order on October 30,
2017. In that opinion, among other things, ALJ Dye determined that, pursuant
to Bowerman v. Black Equipment Co., 297 S.W.3d 858, 867 (Ky. App. 2009),
there was no new evidence, fraud, or mistake that would require him to modify
3 ALJ Wolff stated in his decision that” [t]his unpublished opinion is cited and reviewed for guidance not authority.” See Kentucky Rules of Civil Procedure (CR) 76.28(4)(c). 5 ALJ Wolffs findings concerning the lack of any up-the-ladder liability on the
part of Tryon or Mikron. Thus, ALJ Dye adopted ALJ Wolffs analysis of those
issues.
Upon the UEF’s appeal to the Board, the Board issued an opinion on
June 22, 2018, affirming in part, vacating in part, and remanding certain
issues back to the ALJ to make further findings of fact. Regarding the alleged
up-the-ladder liability of Tryon, the Board concluded that there were significant
differences between the Ritchie case and the current case that had not been
examined by either of the ALJs. More specifically, the Board determined that
ALJ Wolffs statement that “[t]he facts and working relationships in this claim
are almost identical to the facts and working relationships” in Ritchie was “a
mistake of fact with respect to Tryon that compels a second look by ALJ Dye.”
The Board vacated the portions of ALJ Wolffs January 11, 2016 order
and Judge Dye’s October 30, 2017 order that had found Tryon was not an up-
the-ladder contractor and had dismissed Tryon as a party from the case. The
Board directed ALJ Dye on remand to “fully address the distinctions between
Ritchie and the case sub judice with respect to Tryon in the context of a
renewed analysis of Tryon’s up-the-ladder liability pursuant to KRS
342.610(2).”
With regard to the alleged up-the-ladder liability of Mikron, the owner of
the cargo, the Board affirmed the earlier ALJ decisions and found that
substantial evidence existed to support the conclusion that Mikron was not an
up-the-ladder employer under the facts presented in this case. The Board cited
the similarities between the facts in Ritchie and this case regarding Mikron.
6 Tryon and the UEF appealed the Board’s decision to the Court of
Appeals. Upon appeal Tryon argued that the Board erred by disturbing the
portion of the ALJ’s opinion and order finding that Tryon was not an “up-the-
ladder” employer pursuant to Kentucky KRS 342.610(2). Tryon asserted that
the ALJ’s opinion and order was based on substantial evidence and,
accordingly, the Board erred when it remanded the decision to the ALJ with a
request for further findings of fact rather than affirming that decision. UEF
argued that the Board erred in affirming the portion of the ALJ’s opinion
finding that Mikron was not an “up-the-ladder” employer pursuant to KRS
342.610(2), alleging that Mikron was able to impermissibly avoid up-the-ladder
responsibility under the statute by electing to subcontract their delivery
responsibilities.
The Court of Appeals upheld the Board’s decision. This appeal by Tryon
followed. The UEF has not further challenged the status of Mikron in this
proceeding.
II. STANDARD OF REVIEW
The well-established standard of review for the appellate courts of a
workers’ compensation decision “is to correct the [Workers’ Compensation]
Board only where the Court perceives the Board has overlooked or
misconstrued controlling statutes or precedent, or committed an error in
assessing the evidence so flagrant as to cause gross injustice.” B.g., Western
Baptist Hosp. v. Kelly, 827 S.W.2d 685, 687-88 (Ky. 1992); Butler’s Fleet Serv.
v. Martin, 173 S.W.3d 628, 631 (Ky. App. 2005); Wal-Mart v. Soothers, 152
S.W.3d 242, 245 (Ky. App. 2004). See also Special Fund v. Francis, 708 S.W.2d
641, 643 (Ky. 1986) (if the fact-finder finds in favor of the person having the 7 burden of proof, the burden of appeal is only to show that there was some
substantial evidence to support the decision); cf. Gray v. Trimmaster, 173
S.W.3d 236, 241 (Ky. 2005) (if the ALJ finds against the party having the
burden of proof, the appellant must “show that the ALJ misapplied the law or
that the evidence in her favor was so overwhelming that it compelled a
favorable finding”).
In upholding the Board’s decision to remand the case for additional
findings and analysis concerning the Ritchie case, the Court of Appeals stated
as follows:
In this case, Tryon has failed to persuade us how the Board has committed reversible error in concluding that further factual findings and analysis were required. While the ALJ is the finder of fact and the Board is prohibited from substituting its judgment for that of the ALJ regarding the weight of the evidence on questions of fact, this Court has plainly stated that “the Workers’ Compensation Board has the absolute discretion to request further findings of fact from an ALJ.” Campbell v. Hauler’s Inc., 320 S.W.3d 707, 708 (Ky. App. 2010).
Tryon Trucking, Inc. v. Medlin, 2019 WL 1422910, at *3 (Ky. App. 2019).
We disagree with the Campbell holding and therefore the Court of
Appeals’ citation to it in this case, insofar is it states that the “Board has the
absolute discretion to request further findings of fact from an ALJ.” Id. at 708
(emphasis added). If the ALJ has made all necessary findings to resolve the
issue at hand and the Board has erred in remanding for additional, unneeded
findings that would be of no additional value in resolving the issues in the case
if for no other reason than judicial economy alone, that decision, just as any
other, is subject to review and reversal by the appellate courts.
Therefore, while we agree that the Board should have wide latitude and
deference in whether to remand a particular issue to the ALJ for additional 8 findings and analysis, we overrule Campbell to the extent it confers the Board
with “absolute discretion” to do so. Rather, like any other issue in a workers’
compensation proceeding, the appellate courts may review the Board’s decision
to remand to the ALJ for error, taking into consideration, however, the Board’s
wide discretion to do so.
Thus, we do not in this case summarily affirm the Court of Appeals
based upon the holding in the Campbell case. Rather, as always, we assess the
Board’s decision to remand based upon whether it has “overlooked or
misconstrued controlling statutes or precedent, or committed an error in
assessing the evidence so flagrant as to cause gross injustice.” Western Baptist
Hosp. v. Kelly, 827 S.W.2d at 687-88.
III. THE BOARD PROPERLY REMANDED THE CASE TO THE ALJ FOR ADDITIONAL FINDINGS CONCERNING THE APPLICATION OF RITCHIE
Applying the standards described above, Tryon contends that the ALJ’s
opinion was based on substantial evidence and, accordingly, should have been
affirmed by the Board and that the Board exceeded its authority by vacating
and remanding to the ALJ for further findings of fact.
Tryon also contends that pursuant to the standards contained in
Western Baptist Hosp. v. Kelly, supra., and the up-the-ladder standards as
stated in General Electric Company v. Cain, 226 S.W.3d 579 (Ky. 2007), there
has been no substantive determination that incorrect binding legal precedent
was utilized by the ALJ or any indication that any error was made by the ALJ.
Further, Tryon contends that the ALJ correctly found there was no persuasive
proof that Tryon would use, or be expected to use, its employees to actually
9 transport products. Tryon therefore asserts it was not an “up-the-ladder”
statutory employer.
The applicable statute regarding up-the-ladder employers is KRS
342.610(2), which states the following:
A contractor who subcontracts all or any part of a contract and his or her carrier shall be liable for the payment of compensation to the employees of the subcontractor unless the subcontractor primarily liable for the payment of such compensation has secured the payment of compensation as provided for in this chapter. Any contractor or his or her carrier who shall become liable for such compensation may recover the amount of such compensation paid and necessary expenses from the subcontractor primarily liable therefor. A person who contracts with another:
To have work performed of a kind which is a regular or recurrent part of the work of the trade, business, occupation, or profession of such person shall for the purposes of this section be deemed a contractor, and such other person a subcontractor.
Therefore, to be liable for Medlin’s work injuries as an up-the-ladder
employer, KRS 342.610(2) requires that Tryon must have contracted with
Medlin’s employer, Griffith, to have work performed of a kind which “is a
regular or recurrent part” of Tryon’s trade or business. See id.
In Cain we defined the phrase “regular or recurrent” as follows:
Work of a kind that is a “regular or recurrent part of the work of the trade, business, occupation, or profession” of an owner does not mean work that is beneficial or incidental to the owner’s business or that is necessary to enable the owner to continue in business, improve or expand its business, or remain or become more competitive in the market. It is work that is customary, usual, or normal to the particular business (including work assumed by contract or required by law) or work that the business repeats with some degree of regularity, and it is of a kind that the business or similar businesses would normally perform or be expected to perform with employees.
Cain, 236 S.W.3d at 588 (internal citations omitted).
10 At the center of the dispute is the proper interpretation of the Ritchie
case and how the counterparts and business models in that case match up
with the interplay between Tryon, Griffith, and Mikron in this case.
In Ritchie, the injured employee, Ritchie (the counterpart to Medlin), was
employed as. a truck driver for United, Inc. (the counterpart to Griffith). While
hauling a load of goods cross country, Ritchie was injured in an accident. The
goods Ritchie was transporting at the time of the accident included a sign
manufactured by Image Point (the counterpart to Mikron). Id. at *1.
Image Point had contracted with Interchez (the counterpart to'Tryon) to
arrange for delivery of the sign. Like Tryon, Interchez did not itself own any
trucks or other transportation modes. Instead, like Tryon, it found
independent shipping companies to haul cargo on behalf of its clients. Id.
Unlike Tryon, however, Interchez did not lease the trucks of the carriers who
won the bidding procedure. The distinction between the two cases appears to
revolve around this single point.
Ritchie filed for workers’ compensation benefits as an employee of
United. As Griffith did here, United argued that Ritchie was actually an
independent contractor, that therefore it did not carry workers’ compensation
coverage for him, and that the UEF was properly a defendant to the action. Id.
In Ritchie the ALJ found that United was Ritchie’s employer and that
Ritchie was entitled to workers' compensation benefits. The Board issued a
decision affirming Ritchie’s workers’ compensation award, but it reversed the
ALJ’s determination that Image Point and Interchez were up-the-ladder
employers.
11 The Court of Appeals affirmed the Board. Upon review concerning
Interchez, we held as follows:
[T]here is also no evidence that Interchez was ever equipped with the skilled manpower or tools to actually ship products. Interchez is only a conduit to connect manufacturers with shipping companies. We agree with the Court of Appeals that Interchez and Image Point are not Ritchie's up-the-ladder employers.
Id. at 3.
As relevant here, the most significant part of our Ritchie analysis is our
conclusion that “there is also no evidence that Interchez was ever equipped
with the skilled manpower or tools to actually ship products. Interchez is only
a conduit to connect manufacturers with shipping companies.”
The similarities between Tryon and Interchez is undercut in that
“Interchez is only a conduit to connect manufacturers with shipping
companies.” (emphasis added). In the case of Tryon, however, that is not so
clear. Tryon, rather than being only a conduit to connect manufacturers and
shipping companies, also leases the tractor-trailer that hauls the cargo, thus
deviating from the business model followed by Interchez. The distinction
between the two cases is further explained by the Board:
In the case sub judice, Mikron, like Image Point, is a manufacturer of goods. As held by the Supreme Court in Ritchie, “while shipping was regular and recurring, there is no evidence that Image Point, or a similar business, would use or be expected to use its own employees to perform that task.” Id. Withrow, Mikron’s designated representative, testified Mikron does not own trucks, and all of its shipping is outsourced. As substantial evidence supports ALJ WolfFs interlocutory determination, adopted by ALJ Dye, that Mikron was not an up-the-ladder employer of Medlin at the time of his accident, we affirm.
That said, there are several distinctions between Ritchie and the case sub judice with respect to Tryon that were not considered by ALJ Wolff or ALJ Dye. While this Board is not a fact-finding
12 tribunal, we feel compelled to address the most significant distinctions.
In Ritchie. Interchez acted as “a conduit to connect manufacturers with shipping companies.” Id. It served “as an electronic and telephonic switchboard for the posting, coordination, scheduling and exchange of information regarding the timetables for an availability of potential hauls.” Id. at 2. In the case sub judice, the testimony of Smith and David E. establish they, collectively acting as Tryon’s agent, were the ones to coordinate and dispatch hauls. They acted as a “broker” between customers such as Mikron and the motor carrier Tryon.
In Ritchie, “there is no evidence Interchez leased, owned or operated any trucks for us in transportation or was physically responsible for the shipping and delivery of products.” Id. In the case sub judice, the deposition testimony of Rother, David E., and David O. indicate Tryon leased trucks. The lease agreement for the truck Medlin drove at the time of his accident is in the record.
ALJ Wolff described the business models of Tryon and Interchez as being
“almost identical.” While there are similarities, there is also the significant
difference described above. Therefore, the purpose of the Board’s decision was
to remand the case and have the ALJ, as the fact-finder in the case, reconsider
its ruling based upon the correct premise that while substantially similar, the
two business models are not, as originally portrayed, “almost identical,” and
rule in the first instance whether that factual difference produces a different
result in the ALJ’s up-the-ladder analysis.
As noted by the Board, the ALJ failed to analyze the significant
factual difference that exists between the two cases. In Ritchie it was clear that
Interchez had not “leased, owned or operated any trucks for use in
transportation or was physically responsible for the actual shipping and
delivery of goods and merchandise other than through contacting a broker,”
while the evidence in the present case indicates that Tryon had leased the
semi-truck involved in the accident at issue. See Ritchie at *2. 13 These factual differences between Tryon and Interchez are significant
and therefore central to the analysis of the contested issue of whether Tryon
met the “regular or recurrent” statutory requirement under KRS 342.610(2).
The ALJ’s failure to acknowledge this factual difference could reasonably have
led the Board to believe that the ALJ had the mistaken belief that the facts in
Ritchie are more closely aligned to the facts in this case than they actually are.
As previously stated, our reviewing function is to correct the Board only
where we find it has “committed an error in assessing the evidence so flagrant
as to cause gross injustice.” Kelly, 827 S.W.2d at 688. Here, because of the
factual error present in the original ALJ analysis, we find no such error by the
Board. We affirm the Court of Appeals’ affirmance of the Board’s opinion and
order remanding the case to the ALJ for additional findings of fact reconciling
the proof in this proceeding with Ritchie.
III. CONCLUSION
For the foregoing reasons, the opinion of the Court of Appeals is affirmed.
All sitting. All concur.
COUNSEL FOR APPELLANT:
Kelley Diane Gray POHL & AUBREY, P.S.C.
COUNSEL FOR APPELLEE, RANDY MEDLIN:
John F. Kelley, Jr. William & Towe Law Group, PLLC
COUNSEL FOR APPELLEE, WORKERS’ COMPENSATION BOARD:
Michael W. Alvey
COUNSEL FOR APPELLEE, DAVID O. GRIFFITH and DAVID O. GRIFFITH 14 d/b/a DAVID GRIFFITH TRUCKING:
James A. Ridings Hamm, Milby & Ridings, PLLC
COUNSEL FOR APPELLEE, ORLA L. SMITH d/b/a O.L. SMITH TRUCKING:
David Howard
COUNSEL FOR APPELLEE, COMMONWEALTH OF KENTUCKY, UNINSURED EMPLOYERS’ FUND:
Charles Davis Batson Assistant Attorney General
COUNSEL FOR APPELLEE, MIKRON INDUSTRIES:
Kimberly K. Van Der Heiden Van Der Heiden Law Firm, PLLC
Hon. Brent E. Dye, Administrative Law Judge Not Represented by Counsel
15 2019-SC-000212-WC
ON APPEAL FROM COURT OF APPEALS V. CASE NO. 2018-CA-001076-WC WORKER’S COMPENSATION BOARD NO. 14-WC-00873
RANDY MEDLIN, APPELLEES HON. BRENT E. DYE, ADMINISTRATIVE LAW JUDGE, WORKERS’ COMPENSATION BOARD, DAVID O. GRIFFITH, DAVID O. GRIFFITH, d/b/a DAVID GRIFFITH TRUCKING, ORLA L. SMITH d/b/a O.L. SMITH TRACKING, COMMONWEALTH OF KENTUCKY, UNINSURED EMPLOYERS FUND and MIKRON INDUSTRIES
ORDER CORRECTING
The Opinion of the Court rendered on September 26, 2019 is corrected
on its face by substitution of the attached Opinion in lieu of the original
Opinion. Said correction does not affect the holding of the original Opinion of the