Uninsured Employers' Fund v. Tyson Farms

Uninsured Employers’ Fund v. Tyson Farms, Inc., et al. Case No. 1057, September Term, 2018 Opinion by J. Wright WORKERS’ COMPENSATION – NATURE AND GROUNDS OF EMPLOYER’S LIABILITY – IN GENERAL – In a case where a party is employed by a landowner to manage his property, the landowner’s status as an employer may be coextensive with another person or entity, if such person or entity exercises an appropriate degree of control over the party. Relevant to the determination of co-employment is the degree of control exercised by the landowner over the employee relative to that of the other person or entity. Where, as here, a landowner exercises minimal control over an employee, and a separate person or entity maintains substantial control over the day-to-day functions of that employee, that other person or entity may be properly determined to be a co- employer, and consequently falls subject to the level of legal responsibility commensurate with that designation. Circuit Court for Worcester County Case No. 23-C-16-0233 REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1057 September Term, 2018 ______________________________________ UNINSURED EMPLOYERS’ FUND v. TYSON FARMS, INC., et al. ______________________________________ *Wright, Gould, Harrell, Glenn T., Jr., (Senior Judge, Specially Assigned) JJ. ______________________________________ Opinion by Wright, J. Dissenting Opinion by Gould, J. ______________________________________ Filed: November 22, 2019 *Wright, J., now retired, participated in the hearing and conference of this case while an active member of the Court; after being recalled Pursuant to Maryland Uniform Electronic Legal Materials Act pursuant to Maryland Constitution, Article IV, (§§ 10-1601 et seq. of the State Government Article) this document is authentic.

Section 3A, he also participated in the decision 2019-11-22 11:16-05:00 and adoption of this Opinion. Suzanne C. Johnson, Clerk On April 15, 2014, Mauro Jimenez Garcia suffered an “occupational disease disablement” to his lungs, arising out of his work raising chickens on a farm owned by Dai K. Nguyen. The chickens on Mr. Nguyen’s farm were raised for, and owned by, Tyson Farms, Inc. (“Tyson”), appellee. Mr. Garcia filed a claim against Mr. Nguyen under the Workers’ Compensation Act1 on June 27, 2014.

The Uninsured Employers’ Fund (“UEF”),2 appellant, was made a party to the claim when it became clear that Mr. Nguyen did not possess workers’ compensation insurance. Mr. Garcia and UEF then impleaded Tyson into the claim. After a hearing on March 3, 2016, the Workers’ Compensation Commission (“Commission”) declared that Mr. Garcia’s injuries arose out of the course of his employment, and that both Mr. Nguyen and Tyson were co-employers of Mr. Garcia at the time of his injuries. Tyson appealed the Commission’s decision to the Circuit Court for Worcester County.

A two-day jury trial took place on June 19 and 20, 2018; the sole issue for the jury was whether Tyson was a co-employer of Mr. Garcia. After the presentation of evidence, UEF and Tyson made motions for judgment. The circuit court denied both motions. The jury, after being instructed in the applicable law (without objection), returned a verdict 1 The Workers’ Compensation Act is contained in Md. Code (1991, 2016 Repl.

Vol.), Labor & Employment Article (“LE”) §§ 9-101 to 9-1201. 2 The purpose of the UEF, “pursuant to [LE] § 9-1002 of the [Workers’ Compensation] Act, is . . . benevolent and remedial, that being to protect injured workers whose employers failed, either willfully or negligently, to carry workers’ compensation insurance for them.” W.M. Schlosser Co. v. Uninsured Employers’ Fund, 414 Md. 95 , 210-11 (2010) (quotations and citations omitted). finding that Tyson was not a co-employer at the time of Mr. Garcia’s injuries. UEF challenged the circuit court’s ruling on its motion for judgment and presents a single question for our review, which we have reworded as follows:3 1. Did the circuit court err in denying UEF’s motion for judgment? For the reasons presented below, we answer this question in the affirmative and reverse the circuit court’s judgment.

BACKGROUND The Farm & Mr. Garcia’s Hiring Tyson, the largest chicken producer in the country, does not own a single chicken farm. Rather, the company contracts with individual farmers to raise its chickens; the farmers own and operate the farms, while chickens are raised by the farmer according to Tyson’s guidelines and best practices. In 2009, Mr. Garcia was hired to work at a chicken farm where Tyson’s chickens were being raised. The farm was owned by Terry Ung at the time.

When Mr. Garcia was first hired, he performed routine maintenance, such as removing dead chickens, cutting the grass, and changing the lights. When Mr. Ung became ill toward the end of 2009, 3 UEF presented its question to the Court as follows: 1. Was it error for the circuit court to deny the UEF’s motion for judgment when the uncontroverted evidence established [that] Tyson exerted sufficient control over Mr. Garcia’s performance of his job to make Tyson Mr. Garcia’s employer as a matter of law? 2 Mr. Garcia began managing the farm. Upon Mr. Ung’s death at the end of 2009, his wife, Lee Ung, became the owner of the farm.

Because Mrs. Ung was unfamiliar with raising chickens, Tyson representatives taught Mr. Garcia how to operate the farm. During this period, Tyson employees came to the farm between two and four times a week “to teach Mr. Garcia how to maintain the farm and raise the chickens.” According to Mr. Garcia, “[the Tyson’s employees] taught [him] everything. They showed [him] how the system worked, how to check the water levels, the feeding, temperature, fans, how [all of the systems] would work properly, [and] how to turn them on and off automatically.” In addition to assuming day-to-day responsibility for the chickens, Mr. Garcia also began residing at the farm after Mr. Ung passed away, as Tyson required someone to be present 24 hours a day, 7 days a week, to ensure proper operation of the farm. Mrs. Ung sold the farm to Dai K. Nguyen in 2013.

Mr. Nguyen, who lived and worked in northern Virginia, did not know how to operate a chicken farm either and purchased the farm as an investment. Thus, Mr. Nguyen contracted with Tyson to raise its chickens on the farm in June of 2013 as an “absentee owner.” Tyson will generally contract with an absentee owner if someone is on the farm 24 hours a day, 7 days a week, to respond to any emergencies that may arise with the chickens. Based on Mr. Nguyen’s status, “Tyson and Mr. Nguyen agreed that the contract would only be approved if [Mr. Nguyen] agreed to keep Mr. Garcia on as the resident manager of the farm.” Broiler Production Contract 3 Mr. Nguyen and Tyson entered into a “Broiler Production Contract”4 (“the Contract”). Under the Contract, Tyson was required to: (1) “[R]etain title and ownership to chickens, feed, and medication[,] . . . [and] determine the amount, type, frequency, and time of delivery to and pick-up from [Mr. Nguyen] of chickens, feed, and medication[;]”5 (2) “[P]rovide veterinary services and technical advice” to assist in raising the chickens; and (3) “[C]omply with all applicable federal, state, and local statutes, rules, regulations, and ordinances in performance of [the] Contract.” In return, Mr. Nguyen was obligated to: (1) “[F]urnish labor, materials, and utilities necessary for” raising the chickens and, when necessary, “seek [Tyson’s] technical advice[;]” (2) “[M]aintain biosecure housing for [Tyson’s] chickens, feed, and medication[;]” (3) “[I]mplement [Tyson’s] recommended best animal management practices, including recommendations regarding lighting, brooding, watering, ventilation, and bedding[;]” and (4) “[C]omply with all applicable federal, state, and local statutes, rules, regulations, and ordinances in performance of [the] Contract[.]” The Contract also gave Tyson the unilateral right to terminate the relationship upon default by Mr. Nguyen.

Under the termination clause, a “default” occurs upon: Failure to comply with any provision of [the] Contract, including but not limited to compliance with all applicable environmental and litter 4 Tyson refers to the chickens that are raised for meat as “broilers.” The term does not refer to the manner in which the chickens are cooked. 5 During the duration of the Contract, signs bearing the Tyson logo were placed at the farm. A Tyson employee testified at trial that the signs were there (1) so that delivery drivers would “be able to find the locations,” and (2) to alert others that the farm was a “biosecure environment.” 4 management laws, rules, regulations, and ordinances, and all requirements and programs contained in the attached Schedules.6 In the event of a default, Tyson had the right to “take immediate possession of [their] chickens, feed, and medication without further notice[.]” Tyson was further permitted to “utilize [Mr. Nguyen’s facilities] . . . to complete the production of [the chickens] at [Mr. Nguyen’s] expense.” The Contract also included various addenda that set out how chickens were to be raised on the farm. As an example, one 18-page document titled “Broiler Growing Guide,” gave detailed instructions for raising a flock of chickens. These instructions began at the stage of preparing the facilities for a new flock through the chickens’ seven- week life cycle, giving specific instructions on how to manage the flock’s temperature, ventilation, water, food, and light exposure for each week.

The guide also included requirements for the operation of various equipment and procedures involved in raising the chickens. According to Ronald Watkins, a Senior Manager of Live Production at Tyson, if failure to comply with “programs [such as those in the Broiler Growing Guide] leads to animal welfare issues or poor performance,” such a failure could result in the termination of the Contract. Tyson’s Oversight of the Farm Tyson engaged in a continual oversight process to verify that the farm was being operated in compliance with the Contract. To ensure that conditions were adequate for 6 In addition to the above, the Contract contained three other scenarios that give rise to a default.

As those scenarios are not relevant to this case, they will not be discussed here. 5 chickens to be placed on the farm, Tyson employees completed a 25-item “Broiler Placement Checklist” before each flock of chickens was placed. The checklist was reviewed with Mr. Garcia, as he was the “resident manager of the farm.” Tyson also had the right to visit the farm during the lifecycle of each flock of chickens to “evaluate animal [health] and welfare, and [to] provide any technical advice based on the current conditions of the farm[.]” Tyson employees visited the farm one to three times a week to assess the chickens’ well-being. During these visits, Tyson employees completed a series of forms and checklists to evaluate the flock’s quality of life. The “Flock Visitation Summary,” for example, was completed at least weekly throughout the flock’s life cycle and included various metrics to evaluate the chickens’ feed, water, temperature, ventilation, and lighting.

As Mr. Garcia lived and worked on the farm 24 hours a day, 7 days a week, Tyson would speak directly to him if anything needed to be adjusted. Mr. Garcia then carried out any necessary adjustments throughout the flock’s lifecycle. Mr. Garcia’s Injury and Subsequent Litigation Mr. Garcia was found to be occupationally disabled on April 15, 2014; he suffered from hypersensitivity pneumonitis and interstitial disease. On June 27, 2014, Mr. Garcia filed a claim against Mr. Nguyen under the Workers’ Compensation Act.

After it became clear that Mr. Nguyen did not have Workers’ Compensation insurance, UEF was added as a party. Mr. Garcia and UEF then impleaded Tyson into the claim. A hearing before the Commission took place on March 3, 2016. As Mr. Garcia states in his brief, “[t]here [was] no dispute that Mr. Nguyen was an employer of Mr. 6 Garcia at the time of [Mr. Garcia’s] date of disablement for his occupational disease.” Rather, the key issue was whether Tyson was also an employer of Mr. Garcia at the time he became disabled.

After the hearing, the Commission declared: (1) that Mr. Garcia’s occupational disease “[arose] out of and in the course of employment;” (2) that “[Mr.] Nguyen . . . and Tyson . . . were co-employers at the time of the aforesaid occupational disease[;]” and (3) that Mr. Nguyen and Tyson were liable to Mr. Garcia for his injuries. Tyson appealed the Commission’s findings to the circuit court on March 26, 2016, and challenged the Commission’s determination that it was a co-employer of Mr. Garcia. After all the evidence was presented in the two-day jury trial that followed, both the UEF and Tyson made motions for judgment on the issue of Tyson’s status as a co-employer. The circuit court rejected both motions and sent the matter to the jury; the jury returned a verdict that Tyson was not a co-employer of Mr. Garcia at the time he sustained his injuries.

UEF subsequently filed this appeal. STANDARD OF REVIEW Any party “aggrieved by a decision of the [Workers’ Compensation] Commission” may seek judicial review of that decision in the circuit court. Md. Code (1991, 2016 Repl. Vol.), Labor & Employment Article (“LE”) § 9-737.

On appeal to the circuit court, the “decision of the Commission is presumed to be prima facie correct[,] . . . and the party challenging the decision has the burden of proof.” LE § 9-745(b). “On a motion of any party . . . , the court shall submit to a jury any question of fact involved in the case.” LE § 9-745(d). This Court has explained the standard for reviewing a circuit court’s decision on a motion for judgment as follows: 7 Pursuant to Md. Rule 2-519(a), a party may move for judgment on any or all of the issues in any action at the close of the evidence offered by an opposing party, and in a jury trial at the close of all of the evidence. The moving party shall state with particularity all reasons why the motion should be granted. The trial judge must consider the evidence, including the inferences reasonably and logically drawn therefrom, in the light most favorable to the party against whom the motion is made.

If there is any evidence, no matter how slight, legally sufficient to generate a jury question, the motion must be denied. We review a trial court’s grant of a motion for judgment under the same analysis used by the trial court. In other words, we assume the truth of all credible evidence on the issue, and all fairly debatable inferences therefrom, in the light most favorable to the party against whom the motion is made. Barrett v. Nwaba, 165 Md. App. 281, 289-90 (2005) (emphasis in original) (cleaned up).7 DISCUSSION The sole issue on appeal is whether the circuit court erred in rejecting UEF’s motion for judgment.

In Whitehead v. Safway Steel Products, Inc., 304 Md. 67, 76 (1985), the Court of Appeals explained the process for “distinguishing questions of law from matters of fact in the employment field.” It stated that “whenever evidence in a labor case is disputed, and differing inferences from the evidence are possible, a jury must determine the underlying employment issues.” Id. (emphasis in original). On the other hand, “where the evidence on an issue is uncontradicted, ordinarily a court may 7 The Court of Appeals recently explained the recent increase in use of “cleaned up” as a parenthetical. The parenthetical “signals that the current author has sought to improve readability by removing extraneous, non-substantive clutter (such as brackets, quotations marks, ellipses, footnote signals, internal citations, or made un-bracketed changes to capitalization) without altering the substance of the quotation.” Lopez v. State, 458 Md. 164 , 195 n.13 (2018). 8 decide the issue as one of law.” Id.8 Furthermore, “[i]t is well established that ‘where the essential terms and manner of employment are undisputed, the issue as to the relation between the parties and the nature of the employment is one for the [c]ourt.’” Elms v. Renewal by Andersen, 439 Md. 381, 394-95 (2014) (quoting McElroy Truck Lines, Inc. v. Pohopek, 375 Md. 574 , 585 n.6 (2003)).

Bearing those standards in mind, our task is to determine whether the evidence related to Tyson’s status as a co-employer was disputed and gave rise to “differing inferences” or whether the evidence was “uncontradicted.” If the former is the case, then the circuit court properly denied UEF’s motion for judgment and sent the question to the jury; if the latter is true, then the court erred in failing to treat the issue as a matter of law. UEF contends that “the inescapable conclusion is that [Mr.] Garcia submitted to [Tyson’s] control in the course of employment and [that] therefore Tyson was his employer for these purposes as a matter of law.” To support their argument, UEF points to Tyson’s: (1) training of Mr. Garcia; (2) sending a representative to review farm operations one to three times a week; (3) informing “Mr. Garcia of the tasks that needed to be done[;]” and (4) having the right to take control of its chickens and terminate the contract upon failure to comply with the conditions in the Contract. In response, Tyson avers that its “minimal contact” with Mr. Garcia did not establish an “employment” relationship. Tyson specifically argues that Mr. Nguyen, the 8 In Whitehead, 304 Md. at 76 , the Court went on to explain that “[w]hile the trial court should take some pains to ensure that conflicting inferences are not possible on the presented evidence, something more than conjecture of a party is necessary to establish that ‘conflicting inferences’ are possible in a given case.” (cleaned up). 9 owner of the farm, was an independent contractor for Tyson, and that “[t]he fact that Tyson had the right to inspect its flock . . . does not mean that they were in ‘control’ of [Mr. Nguyen’s] employee,” such that an employment relationship can be said to have existed.

Tyson further supports its argument by noting the ability of Mr. Nguyen alone to hire, pay, and terminate Mr. Garcia, as well as the right to terminate the contract at will. The Court of Appeals has established five criteria “[t]o determine whether the employer-employee relationship exists[.]” Mackall v. Zayre Corp., 293 Md. 221, 230 (1982). Those factors include: “(1) the power to select and hire the employee, (2) the payment of wages, (3) the power to discharge, (4) the power to control the employee’s conduct, and (5) whether the work is part of the regular business of the employer.” Id. The Court of Appeals explained the relationship between the factors as follows: Of the five factors, the factor of control stands out as the most important.

We have said, for example, that whether the employer has the right to control and direct the employee in the performance of the work and in the manner in which the work is to be done is the ‘decisive,” or ‘controlling’ test. We have also recognized, in speaking to