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Harris v. Freight Handlers Inc.

United States District Court, W.D. Virginia, Abingdon Division

November 8, 2019

KEVIN HARRIS, Plaintiff,

          Richard N. Shapiro, Shapiro & Appleton, P.C., Virginia Beach, Virginia, for Plaintiff; Nathan H. Schnetzler, Sean C. Workowski, and Katie M. DeCoster, Frith Anderson Peake, Roanoke, Virginia, for Defendants.


          James P. Jones United States District Judge

         In this civil case invoking the court's diversity jurisdiction, the plaintiff, who suffered a workplace injury, asserts a state law negligence claim against a freight unloading company that employed the person who injured him. The defendant argues that the exclusivity provision of the Virginia Workers' Compensation Act (“VWCA” or “Act”) bars the plaintiff's claim because the unloading company was not an “other party” under the Act. I find that the Act's exclusivity provision does not affect this court's subject matter jurisdiction, and I will treat the defendant's dispositive motion as a Motion for Summary Judgment under Federal Rule of Civil Procedure 56. For the reasons that follow, I conclude that the plaintiff's claim is not barred by the Act, and I will deny the defendant's motion.


         The facts in this case are largely uncontested. The following facts are taken from the summary judgment record and, unless otherwise noted, are undisputed.

         Shane Matney, who was operating a forklift, backed over plaintiff Kevin Harris's lower leg at the K-VA-T Food Stores Inc. (“KVAT”) distribution facility in Abingdon, Virginia. Matney was an employee of defendant FHI, LLC (“FHI”), [1]a contractor that unloaded deliveries to the warehouse, and Harris was employed by KVAT as a receiver, also known as a checker.

         KVAT operates approximately 150 Food City and Super Dollar stores in Virginia, Kentucky, Tennessee, and Georgia. The majority of the products sold at those stores are initially delivered to the KVAT distribution center in Abingdon, Virginia, where they are stored and shipped to individual stores on KVAT trucks. At the time of the accident at issue in this case, a Freight Unloading Agreement (“Agreement”) governed the relationship between FHI and KVAT. FHI was to provide employees, under its exclusive direction and control, to perform FHI's duties under the Agreement. Reid Durst, an FHI executive, testified that FHI was in the professional unloading industry and that was its core business.

         FHI employees unload trucks of third-party shippers making deliveries to the KVAT distribution center. FHI provides these services at the warehouses of numerous other grocery chains in addition to KVAT. The drivers of the trucks decide whether to use FHI's services. They have the option of unloading the trucks themselves, and if they choose to do that, KVAT will provide them a pallet jack to use. KVAT will not allow truck drivers to use its forklifts because it cannot verify the drivers' certifications. Before KVAT entered into the Agreement with FHI, KVAT allowed its employees who were off-duty to unload incoming deliveries as so-called lumpers, which are essentially independent contractors that drivers or shippers pay to unload trailers. Thus, before the Agreement was in effect, KVAT employees were doing the work that is now performed by FHI, but not while they were on-duty for or being paid by KVAT.

         The forklifts and other equipment that FHI employees used to unload trailers are owned by KVAT. Under the Agreement, FHI pays KVAT a rental fee to use the unloading equipment as well as for office space at the distribution center and use of breakrooms, parking areas, and telecommunications systems. The rental fee is not a flat rate, but rather is a percentage (approximately one third) of the amount collected by FHI from shippers for the unloading services it provides at the distribution center.

         Melvin L. Chancey, II, FHI's Vice President of Operations, testified at the company's Rule 30(b)(6) deposition that FHI supervises its own employees in their unloading of trucks “at the direction of the Food City Management.” Defs.' Mem. Supp. Ex.1, FHI 30(b)(6) Dep. 10, ECF No. 35-1.[2] The order in which pallets are unloaded is decided by FHI supervisors, not KVAT. FHI has the exclusive right to select and hire employees and determine the terms and conditions of their employment. FHI trains its employees who work in the distribution center. The Agreement states that FHI will supervise operators of unloading equipment (such as forklifts) to ensure compliance with federal safety regulations. FHI provides training materials to its employees. Matney's job description was written by FHI. FHI has its own proprietary computer system to which KVAT does not have access.

         The Agreement states that FHI shall be responsible for loss and damage claims caused by the willful, reckless, or negligent acts of FHI employees. FHI also agreed to carry liability and workers compensation insurance for the activities covered by the Agreement. The Agreement states that KVAT gives FHI exclusive rights to provide unloading services to carriers hauling freight to the distribution center. In other words, FHI has the exclusive right to unload inbound deliveries.

         FHI unloads a majority of KVAT's own trucks making deliveries to the facility, but there are occasions when KVAT, in its discretion, has its employees unload KVAT's trucks. One witness testified that FHI unloads 95% of the deliveries to the distribution center. When a vendor truck comes to the facility, an FHI lead employee talks to the driver and gives the driver a rate for unloading the truck. The FHI lead then assigns the unloading to an FHI handler. After FHI has unloaded the truck and a KVAT receiver has checked the load and verified that all the expected freight is present and in good condition, an FHI employee tells the driver the final price for unloading. An FHI employee can process credit card payments from drivers at the facility, immediately after unloading is complete. KVAT is not involved in this payment processing. The methods and manner of unloading the trailers are determined by FHI, not KVAT. FHI does not collect fees for unloading from the driver until a KVAT receiver has checked and accepted the product.

         FHI's primary duty at the distribution facility is to unload inbound deliveries from third-party shippers. Freight handlers like Matney use forklifts and power jacks to remove products from trailers. After the accident at issue, FHI conducted an investigation. FHI supervisor John Sawyer terminated Matney because he had violated various FHI safety rules, including not looking in the direction of travel, not wearing a seatbelt while operating the forklift, and wearing a hooded sweatshirt with the hood up. KVAT played no role in Matney's termination and does not play a role in terminating any of FHI's employees.

         Most of the trucks being unloaded are vendor or manufacturer trucks, not KVAT trucks. Exceptions are so-called backhauls, in which KVAT trucks bring a shipper's trailer containing merchandise into the distribution facility on the way back from making a delivery to one of KVAT's stores, and transfers, where KVAT trucks move products from one KVAT location to another. In addition to the incoming deliveries, FHI unloads most of the backhauls. KVAT does not own the incoming product until it has been counted and received, after delivery and unloading. Thus, at the time FHI is unloading the trailers, KVAT does not yet own the merchandise. Chancey considers the unloading services FHI provides to be the last step of the delivery process.[3] When a load comes into the warehouse, a KVAT receiver determines whether it is an inbound vendor load or a backhaul or transfer.

         The purchase order issued by KVAT and given to an FHI handler details how many cases should be on a pallet layer and how many layers high will fit on KVAT's warehouse racks. These specifications are known as the tie-high. The FHI handler uses this information from the tie-high sheet attached to the purchase order to ensure each item is at the right tie-high. If the receiver saw that the count or tie-high was wrong, the receiver would notify the FHI lead and the lead would ask a handler to fix it. The receiver also checks pallet quality and notifies the FHI handler if the pallet seems unsafe or if any of the product is damaged. Often when unloading and stacking items, in order to meet the tie-high requirements, the FHI handler must take apart pallets and arrange the products into new pallet configurations. If the product came to the warehouse on an unacceptable pallet, the KVAT receiver takes up the issue with the shipper, but if the FHI handler placed the product on an unacceptable pallet, the receiver asks the handler to fix it.

         Shane Estep, KVAT's corporate designee under Rule 30(b)(6), testified that KVAT does not consider incoming items to be KVAT's property until after they have been unloaded and stacked by FHI, inspected and accepted by a KVAT receiver, and a KVAT location label sticker has been placed on the plastic wrap around the individual pallets. “It's not [KVAT] property until that checker says it is, that it meets our ...

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