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Vaughan v. Sears Logistics Services, Inc.

United States District Court, Fourth Circuit

June 26, 2013

Jonathan Vaughan, Plaintiff,
v.
Sears Logistics Services, Inc., Defendant

MEMORANDUM OPINION

Norman K. Moon United States District Judge

As explained further herein, Defendant was a statutory employer of Plaintiff, and under the exclusivity provisions of the Virginia Workers’ Compensation Act (the “Act”), Defendant is not susceptible to Plaintiff’s tort claims. Accordingly, pursuant to Federal Rule of Civil Procedure 12(b)(1), I will grant Defendant’s motion to dismiss for lack of jurisdiction.[1]

I.

As a preliminary matter, I must address Plaintiff’s argument that Defendant’s motion should be deemed withdrawn pursuant to this Court’s Local Rules. Local Civil Rule 11(b) provides, in pertinent part, that

[t]he moving party is responsible either to set a motion for hearing or to advise the Court that all parties agree to submission of the motion without a hearing. The non-moving party also may arrange for a hearing. All hearings are to be at a date and time obtained from and scheduled by the Court. Unless otherwise ordered, a motion is deemed withdrawn if the movant does not set it for hearing (or arrange to submit it without a hearing) within 60 days after the date on which the motion is filed.

W.D. Va. Civ. R. 11(b) (emphasis added).

Plaintiff points out that the motion was filed on December 7, 2012, and that, under Local Rule 11(b), Defendant had until February 5, 2013, to set the matter for a hearing. According to Plaintiff’s counsel, Defendant’s counsel failed to timely set the matter for a hearing, and the motion should be deemed withdrawn.

However, the record contains ample documentation showing that Defendant’s counsel attempted to schedule a hearing, but that Plaintiff’s counsel failed to cooperate with Defendant’s counsel, who made numerous attempts to contact Plaintiff’s counsel in order to set the matter for a mutually acceptable date chosen from a number of available dates Defendant’s counsel had obtained from the Clerk of the Court. See docket no. 15.[2] Moreover, this Court’s Local Civil Rules were adopted in accordance with Rule 83(a) of the Federal Rules of Civil Procedure, and “[i]t is . . . entirely contrary to the spirit of the Federal Rules of Civil Procedure for decisions on the merits to be avoided on the basis of such mere technicalities.” Foman v. Davis, 371 U.S. 178, 181 (1962); see also W.D. Va. Standing Order No. 2010-2 (March 9, 2010) (adopting Local Rules in accordance with, inter alia, Fed.R.Civ.P. 83(a)); Michael v. Sentara Health Sys., 939 F.Supp. 1220, 1225 n. 3 (E.D. Va. 1996) (“the application of the local rules is within the discretion of the Court”).

Accordingly, I will not deem the instant motion withdrawn.

II.

The complaint states the following, in pertinent part (paragraph numbering omitted; emphases added; otherwise verbatim):

The plaintiff is a citizen of the Commonwealth of Virginia. The defendant is a corporation incorporated under the laws of the State of Delaware with its principal place of business in Hoffman Estates, Illinois. The amount in controversy, without interest and costs, exceeds the sum or value specified by 28 U.S.C. § 1332.
Jonathan Vaughan is a resident of Lynchburg, Virginia.
Sears Logistics Services, Inc. is a corporation doing business in Virginia with a registered agent for service of process.
On or about October 1, 2009, Plaintiff, Jonathan Vaughan, picked up a trailer from the defendant, Sears Logistics Services, Inc. (Hereinafter “Sears Logistics”) at one of its locations in Middleton, Pennsylvania. Sears Logistics had the exclusive and sole duty to load the trailer in a safe and proper manner. Plaintiff, Jonathan Vaughan, fixed the trailer to the truck he was operating and drove it to Westminster, Maryland.
On October 2, 2009, Jonathan Vaughan, delivered the trailer to Sears Auto Center in Westminster, Maryland. After the Sears Auto Center’s manager clipped the seal on the trailer, Vaughan, opened the door to the trailer. When he did so about half of a row of tires loaded into the truck came crashing out and struck Vaughan in the shoulder causing severe, painful, and permanent injuries.
The defendant, and its employees and agents were negligent in the following ways:
(a) They failed to properly secure the load in a safe and proper manner so that when the trailer door was opened the person opening it would not be injured;
(b) They failed to warn Vaughan that the trailer was dangerously loaded so that he could protect himself when the door was opened;
(c) They loaded the trailer improperly on the safety plate thereby overloading the trailer and illegally exposing Vaughan and others to injury;
(d) They were negligent in other ways discovery shall reveal.

As a result of the aforesaid negligence and illegal acts, Plaintiff, Jonathan Vaughan, was severely, painfully, and permanently injured causing great pain, suffering, inconvenience, medical, surgical, and physical therapy care, both in the past and in the future, loss of income, loss of earning capacity, and permanent disability and impairment.

Plaintiff “moves the Court for judgment . . . in the amount of $500, 000 plus costs and for all other relief law or equity may seem met.”

III.

A.

The plaintiff bears the burden of establishing the existence of subject-matter jurisdiction when challenged under Rule 12(b)(1). See Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). In considering a challenge to its subject-matter jurisdiction, a district court may look beyond the pleadings without converting the proceeding to a motion for summary judgment.[3] Id. “The moving party should prevail only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.” Id. (citation omitted).[4]

Defendant now moves for dismissal for lack of jurisdiction pursuant to Rule 12(b)(1) on the ground that Defendant is a statutory employer of Plaintiff, and Defendant is therefore immune from this suit because the sole jurisdiction for Plaintiff’s claims arising out of the stated injuries resides with the Virginia Workers’ Compensation Commission (from which Plaintiff has accepted an award). Whether an individual is a statutory employee is a jurisdictional matter presenting a mixed question of law and fact that must be determined according to the facts of each case. Burch v. Hechinger Co., 264 Va. 165, 169 (2002). Applying the body of relevant case law to the facts of this case, I conclude that Plaintiff was Defendant’s statutory employee when his injuries occurred.

As the parties acknowledged at the hearing on the instant motion, the material facts are not in dispute. The only dispute is whether Plaintiff’s negligence claims against Defendant are barred by the exclusivity provision of the Virginia Workers’ Compensation Act. Plaintiff’s opposition to Defendant’s motion contends that he “is not the statutory employee of Sears Logistics Services, Inc., ” and he quotes Napper v. ABM Janitorial Services Mid-Atlantic, Inc., 284 Va. 55 (2012), for the proposition that

The remedies afforded the employee under the [A]ct are exclusive of all his former remedies within the field of the particular business, but the [A]ct does not extend to accidents caused by strangers to the business. If the employee is performing the duties of his employer and is injured by a stranger to the business, the compensation prescribed by the act is available to him, but that does not relieve the stranger of his full liability for the loss. . . .

Id. at 62 (quotations omitted). However, as discussed below, the undisputed facts lead me to conclude that Plaintiff was not “injured by a stranger to the business, ” and Defendant was Plaintiff’s statutory employer when Plaintiff was injured. Id. (quotations omitted).

B.

Defendant has submitted the following documents in support of its motion to dismiss: a stipulated order issued by the Virginia Workers’ Compensation Commission (the “VWCC”) on September 21, 2011; an amended stipulated order issued by the VWCC on September 26, 2011; the April 13, 2012, affidavit of Chantell Loser, the “On-Site Manager for Swift Transportation Company of Arizona, LLC at the Middletown, Pennsylvania location”; and the affidavit, dated March 14, 2012, of Joe Bacinski, “the Loss Prevention Manager for Sears Logistics Services, Inc. at the Middletown, Pennsylvania location.” The amended stipulated order issued by the VWCC on September 26, 2011, states, in relevant part:[5]

COME NOW the Claimant, Employer and Insurer, by counsel, and stipulate to the following facts in this matter with respect to the claimant’s Request for Hearing filed July 19, 2010:
1. On October 2, 2009, the Claimant sustained a compensable foreign injury, per section 65.2-508 of the Code of Virginia, to his right shoulder. Claimant’s pre-injury average weekly wage is $1, 286.54.
2. The Claimant has been paid various periods of compensation awarded by the Pennsylvania Bureau of Workers’ Compensation.
3. Since June 14, 2010, the claimant has been employed by the Employer in a light-duty job earning $290 pe week.
4. The Claimant is currently receiving temporary partial disability compensation in the weekly amount of $664.36 pursuant to a Pennsylvania award entered July 19, 2010.
5. On July 19, 2010, the Claimant filed a Request for Hearing, whereby he seeks an Award of temporary total disability compensation from October 2, 2009 and a lifetime award of medical benefits for his injury.
6. The Claimant is entitled to an Award for the following periods of compensation:
a. Temporary total disability compensation in the weekly amount of $857.70 for the period of October 2, 2009 through October 25, 2009; b. Temporary partial disability compensation in the weekly amount of $664.36 for the period of October 26, 2009 through March 28, 2010; c. Temporary total disability compensation in the weekly amount of $857.70 for the period of March 29, 2010 through June 13, 2010; and d. Temporary partial disability compensation in the weekly amount of $664.36 commencing June 14, 20010 and continuing until circumstances warrant a change.
7. Pursuant to section 65.2-603 of the Code of Virginia, the Claimant is entitled to a lifetime Award of reasonable and necessary medical expenses incurred for treatment of his compensable right shoulder injury.
8. In accordance with section 65.2-508(B) of the Code of Virginia, the Employer and Insurer are entitled to an offset against any Virginia award in connection with the October 2, 2009 accident for compensation paid pursuant to Pennsylvania law for the same accident, and such compensation paid in Pennsylvania shall count toward the maximum amount of compensation available to the Claimant under Virginia law.
9. The parties agree that the claimant’s compensation under Pennsylvania law should be terminated and an Award of compensation under Virginia law should be entered; accordingly the parties shall execute and file with the Pennsylvania Bureau of Workers’ Compensation whatever documents are necessary to terminate the Claimant’s current Pennsylvania award of compensation as of May 15, 2011.
10. As of May 16, 2011, payment by the Employer and Insurer of temporary partial disability compensation to the Claimant at the weekly amount of $644.36 shall commence and shall continue until circumstances warrant a change.
11. Claimant’s counsel is entitled to $1, 081.42 for fees and expenses in connection with his representation of the Claimant, to be deducted from the claimant’s compensation. To the extent accrued compensation is insufficient to deduct such fees and expenses, this amount shall be collectible directly from the Claimant.
WHEREFORE, it appearing proper to do so, the foregoing stipulations of the parties are adopted by the Commission, and an Award consistent with the stipulations stated above is hereby entered.[6]
The affidavit of Chantell Loser, the “On-Site Manager for Swift Transportation Company of Arizona, LLC at the Middletown, Pennsylvania location, ” dated April 13, 2012, provides the following statement, in pertinent part:
3. Jonathan Vaughan began his employment as a Tractor trailer driver with Swift Transportation Company of Arizona, LLC on March 21, 2003 and remains an employee as of the date of this affidavit.
4. From April 2, 2009 to April 2, 2010 Swift Transportation Company of Arizona, LLC transported two thousand one hundred ninety-nine (2, 199) loads of Sears automotive products into and out of the Sears Logistics Terminal at Middletown, Pennsylvania.
5. From April 2, 2009 to October 2, 2009 Jonathan Vaughan drove thirty-eight (38) loads of Sears automotive products into and out of the Sears Logistics Terminal at Middletown, Pennsylvania.
* * *
7. During the period of April 2, 2009 to April 2, 2010, Swift Transportation Company of Arizona, LLC was contracted with Sears Logistic Services, Inc. to transport merchandise from the Sears Logistics Middletown Pennsylvania terminal to Sears Auto Center locations.
8. On October 1, 2009 Jonathan Vaughan, as a truck driver in the scope of his employment with Swift Transportation Company of Arizona, LLC and pursuant to the contract to do so, departed the Sears Logistics location in Middletown, Pennsylvania pulling Trailer number 083902 containing merchandise to be delivered to Sears Auto Center locations in Westminster, Maryland; Gaithersburg, Maryland; Silver Spring, Maryland; Bethesda, Maryland; and Dulles, Virginia.
9. Swift Transportation Company of Arizona, LLC is a transportation company with the trade, business, or occupation of transporting goods from one location to another.
* * *
11. On October 1, 2009 and October 2, 2009, Jonathan Vaughan was a truck driver and drove Sears automotive parts from Middletown, Pennsylvania to Sears Auto Center locations in Westminster, Maryland; Gaithersburg, Maryland; Silver Spring, Maryland; Bethesda, Maryland; and Dulles, Virginia.
The affidavit of Joe Bacinski, “the Loss Prevention Manager for Sears Logistics Services, Inc. at the Middletown, Pennsylvania location, ” dated March 14, 2012, states as follows, in relevant part:
3. Sears Logistics Service, Inc. is a company with the trade, business, or occupation of transporting goods from warehouses to Sears Retail Stores and Sears Auto Centers.
4. During the period of April 2, 2009 to April 2, 2010, Swift Transportation Company of Arizona, LLC was contracted with Sears Logistic Services, Inc. to transport merchandise from the Sears Logistics Middletown Pennsylvania terminal to Sears Auto Center locations.
5. From April 2, 2009 to April 2, 2010 Swift Transportation Company of Arizona, LLC transported two thousand one hundred ninety-nine (2, 199) loads of Sears automotive products into and out of the Sears Logistics Terminal at Middletown, Pennsylvania.
6. From April 2, 2009 to October 2, 2009 Jonathan Vaughan, as an employee of Swift Transportation Company of Arizona, LLC, transported thirty-eight (38) loads of Sears automotive products into and out of the Sears Logistics Terminal at Middletown, Pennsylvania.
7. On October 1, 2009 Jonathan Vaughan, in the scope of his employment with Swift Transportation Company of Arizona, LLC and pursuant to the contract to do so, departed the Sears Logistics location in Middletown, Pennsylvania transporting Trailer number 083902 containing merchandise to be delivered to Sears Auto Center locations in Westminster, Maryland; Gaithersburg, Maryland; Silver Spring, Maryland; Bethesda, Maryland; and Dulles, Virginia.

C.

In support of his response in opposition to the motion to dismiss, Plaintiff has submitted his own affidavit, dated April 19, 2013. In support of his affidavit, Plaintiff has attached a printed screenshot of a Web-page, http://slslogistics.com/aboutUs.html, dated April 18, 2013.[7]

The Web-page is titled “About Us, ” and it states as follows:

Since 1939, Sears Logistics Services, Inc. (SLS) has become a supplier of best-in-class supply chain solutions. Headquartered in Hoffman Estates, IL(USA), SLS maintains partnerships across North America, Europe and Asia. With 49 facilities across the United States (capacity over 46.5 million square feet), SLS is one of the largest purchasers of worldwide transportation with the capacity and capability to move any type of product. SLS has the ability to provide end-to-end supply chain solutions that are integrated and synchronized to address unique challenges.
To meet customer freight needs, SLS provides access to transportation providers worldwide, including contract motor carriers, rail carriers, air freight carriers, and ocean carriers. With a performance-driven culture and proven track record of success, SLS has built a strong reputation as an industry leader.

See http://slslogistics.com/aboutUs.html (last accessed June 19, 2013). The “About Us” Web-page includes the following section subtitled “Service Offerings”:

Broad and inclusive service offerings ensure that customers win by delivering great logistics solutions at the right cost. SLS expertise can be broken down into the following areas:

Warehousing
eCommerce Fulfillment
Network Consulting
Facility Design
Project Management
Freight Management
Inbound/Outbound Network Optimization
Freight Cost Reduction
Freight Consolidation/Deconsolidation Services
Global Transportation Network Design
Global Sourcing Solutions
Labor Performance Analysis
Reverse Logistics

Plaintiff’s affidavit states that he “was a truck driver for Swift Transportation Company of Arizona, LLC, ” with which he “began employment . . . in March 2003, ” and provides the following statements (paragraph numbering omitted):

Swift Transportation is engaged solely in driving trucks. Swift never engages in the loading of trucks, which is a completely separate business from the driving of trucks. Sears Logistics Services, Inc. is not engaged in the business of driving trucks and to my knowledge they do not own any trucks. Sears Logistics Services, Inc. as shown by its website, is not engaged in the business of truck driving. As shown by its website, a page of which is attached hereto as Exhibit A, Sears Logistics Services, Inc. is engaged in the business of “Warehousing, eCommerce Fulfillment, Network Consulting, Facility Design, Project Management, Freight Management, Inbound/Outbound Network Optimization, Freight Cost Reduction, Freight Consolidation/Deconsolidation Services, Global Transportation Network Design, Global Sourcing Solutions, Labor Performance Analysis, and Reverse Logistics.” Truck driving is not a business Sears Logistics Services, Inc. holds itself out to the public as performing.
During my employment with Swift Transportation I am aware of employees of Sears Logistics Services, Inc. bringing suit successfully against Swift Transportation and its employees for alleged negligence in the performance of Swift Transportation’s truck driving. I am doing further research on this, as is my lawyer. In any event, I do not thing Sears Logistics Services, Inc. employees could successfully sue Swift Transportation if Swift Transportation is in the same trade or business as Sears Logistics Services, Inc.
To my knowledge Swift Transportation is a complete stranger to the business of Sears Logistics Services, Inc. Swift Transportation does not load any trailers and Swift Transportation employees are not allowed inside Sears Logistics Services, Inc.’s warehouses where the loading of the trailers occurs. Sears Logistics Services, Inc.’s employees seal every trailer and Sears Logistics Services, Inc.’s employees break the seal on every trailer. Swift Transportation truck drivers do not have any part in this, which is a separate business altogether.

IV.

If Plaintiff was a statutory employee of Defendant under the Act, then this court lacks subject-matter jurisdiction by operation of the Act’s exclusivity provision. This provision of the Act is subtitled “Employee’s rights under Act exclude all others, ” and it provides, in part, that

[t]he rights and remedies herein granted to an employee when his employer and he have accepted the provisions of this title respectively to pay and accept compensation on account of injury or death by accident shall exclude all other rights and remedies of such employee, his personal representative, parents, dependents or next of kin, at common law or otherwise, on account of such injury, loss of service or death.

Va. Code § 65.2-307(A). The exclusion applies to both actual and statutory employees. Va. Code § 65.2-302(A). The sole exception to the exclusivity provision is that a plaintiff may maintain an action against an “other party.” Va. Code § 65.2-309; Clean Sweep Professional v. Talley, 267 Va. 210, 213 (2004). An “other party” is someone who is a “stranger to the trade, occupation, or business in which the employee was engaged when he was injured.” Id.; see also Feitig v. Chalkley, 185 Va. 96, 104 (1946) (explaining that “‘other party, ’ . . . refers exclusively to those persons who are strangers to the employment and the work” (emphasis added)).

Section 65.2-302(A) of the Code of Virginia provides as follows:

When any person (referred to in this section as “owner”) undertakes to perform or execute any work which is a part of his trade, business or occupation and contracts with any other person (referred to in this section as “subcontractor”) for the execution or performance by or under such subcontractor of the whole or any part of the work undertaken by such owner, the owner shall be liable to pay to any worker employed in the work any compensation under this title which he would have been liable to pay if the worker had been immediately employed by him.

(Emphasis added.) According to Plaintiff’s own exhibit, the “trade, business or occupation” of Defendant – Sears Logistics – is, inter alia, “Warehousing” and “Freight Management.” Defendant describes its business as “the trade, business, or occupation of transporting goods from warehouses to Sears Retail Stores and Sears Auto Centers.” See docket no. 4, affidavit of Joe Bacinski. At the time of Plaintiff’s injury, Plaintiff’s direct employer – Swift Transportation – “was contracted with [Defendant] to transport merchandise from [Defendant’s] Middletown Pennsylvania terminal” to Sears Auto Centers and Sears retail stores. See docket no. 4, affidavit of Loser. Part of Defendant’s logistics business is warehousing and freight management, and the delivery of Defendant’s freight from its logistics terminal (or warehouse) to its retail and Auto Center locations is a warehousing and freight management operation of which Swift Transportation was an integral part; in other words, the hauling of Defendant’s freight is “‘obviously a subcontracted fraction of a main concern.’”[8] Shell Oil Co. v. Leftwich, 212 Va. 715, 722 (1972) (the “[n]ormally carried on through employees” test does not apply “where the work is obviously a subcontracted fraction of a main concern”) (quoting 1A Arthur Larson, The Law of Workmen’s Compensation, § 49.12, 872-73). Under the facts of this case, it is “obvious” that the hauling and delivery of freight is essential to the business of freight management, i.e., it is “a subcontracted fraction of a main concern.” Id. The hauling of Defendant’s freight cannot be excised from its business of freight management.[9]

On October 1, 2009, Plaintiff went to the Sears Logistics terminal in Middletown, Pennsylanvia, “picked up a trailer, ” “fixed the trailer to the truck he was operating, ” and then “drove it to Westminster, Maryland.” The trailer bore a load of automotive products to be delivered to a number of Sears Auto Centers. He previously had transported more than thirty loads of Sears automotive products into and out of the Sears Logistics terminal at Middletown, Pennsylvania.. On October 2, 2009, at a Sears Auto Center in Westminster, Maryland, apparently the first of his scheduled deliveries off of the trailer he was hauling that day, “the Sears Auto Center’s manager clipped the seal on the trailer, ” Plaintiff “opened the door to the trailer, ” and “about half of a row of tires loaded into the truck came crashing out and struck” Plaintiff. (It is not clear whether it was part of Plaintiff’s job to open the door, but it is clear that Plaintiff was not completed with his delivery obligations.) Upon these facts, it seems obvious that Plaintiff and Swift Transportation were engaged in the business of hauling freight for Defendant, that Defendant was in the business of managing that freight, and that Plaintiff’s injuries were not caused by an “other party” who was a “stranger” to the business of hauling freight. Plaintiff’s own affidavit acknowledges that Defendant “is engaged in the business of, ” inter alia, “Warehousing, ” “Freight Management, ” “Freight Cost Reduction, ” and “Freight Consolidation/Deconsolidation Services, ” and that Defendant contracted with Swift Transportation – Plaintiff’s direct employer – to accomplish Defendant’s freight management and warehousing services.

On similar facts, the United States Court of Appeals for the Fourth Circuit has held that transporting goods to a distribution center constitutes an activity that is an essential part of a grocery business. See Hayden v. The Kroger Co., 17 F.3d 74, 77 (4th Cir.1994). If transportation is essential to the grocery business, it is even more obviously essential to the business of warehousing and freight management.[10] The Supreme Court of Virginia has also held that transportation can be an essential element of a business. In Conlin v. Turner’s Express, Inc., 229 Va. 557, 559 (1985), the Court determined that the transportation of machinery and parts between Ford plants was an essential component of Ford’s business, and thus the motor carrier was not an “other party” against whom a tort action could lie.[11] See also Floyd v. Mitchell, 203 Va. 269, 273 (1962) (holding that a pipe manufacturer’s business included the shipping of the pipe to customers).[12]

In conclusion, when Plaintiff suffered his injury, he was engaged in Defendant’s usual “trade, business or occupation, ” and therefore his claims against Defendant fall within the scope of the Virginia Workers’ Compensation Act. Pursuant to the exclusivity provision of § 65.2-307, his sole relief is that which he has obtained under the Act. Accordingly, this court lacks subject-matter jurisdiction and will dismiss the case pursuant to Rule 12(b)(1).

V.

For the stated reasons, Defendant’s motion to dismiss for lack of jurisdiction will be granted. An appropriate order accompanies this memorandum opinion.


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