Reed v. Yackell
Reed v. Yackell
Dissenting Opinion
I dissent from the lead opinion’s determination that plaintiff is an “employee” within the meaning of the Worker’s Disability Compensation Act (WDCA), MCL 418.101 et seq. Instead of resolving this issue, I would first direct the parties to brief the jurisdictional issue that was raised in the amicus brief filed by the Workers’ Compensation Law Section of the State Bar of Michigan concerning whether the circuit court had jurisdiction to determine whether plaintiff was an employee within the meaning of the WDCA.
Opinion of the Court
We granted leave in this case to determine whether plaintiff, Ricky Reed, who was fired from defendant Mr. Food, Inc., but continued to assist with deliveries on a periodic basis, was an employee of Mr. Food within the meaning of MCL 418.161(1)(Z) and (n) of the Worker’s Disability Compensation Act (WDCA)
FACTS AND PROCEDURAL HISTORY
Defendant Gerald Michael Herskovitz is the owner of defendant Mr. Food, Inc., which is a retail marketer of meat products. Defendant Buddy Lee Hadley is an employee of Mr. Food and is in charge of its meat deliveries. In 1997, Hadley suggested that Herskovitz hire Reed, whom Hadley had known for approximately ten years, and Herskovitz did so. Herskovitz was not pleased with Reed’s performance, however, and fired Reed after a period of only five or six months in December 1997.
After being fired by Herskovitz, Reed primarily supported himself by painting his relatives’ homes. But, Reed’s association with Mr. Food did not end completely after he was fired, and he supplemented his income by occasionally helping Hadley with deliveries. Specifically, Hadley testified that, on approximately three to five occasions after Reed was fired near the end of 1997, he would hire Reed to help with his deliveries for the day,, for which Reed would be paid between $35 and $40 in cash. Although Herskovitz authorized Hadley to obtain help with his deliveries on these days, he testified that he did not know that it was Reed that Hadley actually hired.
On May 7, 1998, during one of these days that deliveries were being made, Reed was riding in a cargo van owned by Mr. Food that was being driven by Hadley. As the van approached an intersection, a car driven by Linda Yackell did not stop at a red light because her brakes malfunctioned. Hadley, who was looking down at
On December 10, 1998, Reed filed a complaint in the circuit court, alleging negligence by the drivers, Hadley and Yackell, liability by Herskovitz pursuant to the owner’s liability statute, MCL 257.401, and liability by Mr. Food under the theory of > respondeat superior. Hadley, Herskovitz, and Mr. Food (defendants)
Defendants thereafter moved for judgment notwithstanding the verdict (JNOV), again asserting that Reed was an employee at the time of the accident. The trial court again denied defendants’ motion, stating that Reed was not an employee of Mr. Food at the time of the accident but was instead an independent contractor that held himself out to the public to perform general labor.
Defendants appealed to the Court of Appeals, which affirmed in an unpublished decision.
On remand, the circuit court issued a written order and findings of fact, based on the existing record, stating that Reed was not an employee of Mr. Food at the time of the accident. With respect to MCL 418.161(1)(Z) and Hoste, the trial court determined that Reed was not performing a service for Mr. Food under either an express or implied contract for hire. In reaching this conclusion, the trial court focused on the fact that Herskovitz had fired Reed before the accident, that Herskovitz had testified at trial that he did not know that Reed was helping Hadley at the time of the accident, and that no evidence had been introduced that income taxes had been withheld from Reed or that he had ever claimed employee status. The trial court reasoned that these facts negated the possibility that either an express or implied contract for hire had been formed because both parties were not aware of its existence and had not agreed to its terms. Finally, the trial court determined that Reed was not an employee under a contract “for hire,” reasoning that he did not receive a regular income from Mr. Food but, instead, received only $35 to $40 on three to five occasions. The court concluded that this did not equate to “real, palpable, and substantial consideration” that was intended as wages
In considering the questions under MCL 418.161(l)(n), the trial court held that Reed did have a qualifying separate business because he was a house
After receiving the trial court’s findings of fact, we remanded this case to the Court of Appeals for reconsideration of whether Reed was an employee within the meaning of MCL 418.161(1)(Z) and (n) and, if necessary, of additional issues the Court of Appeals had addressed in its earlier decision.
On remand, in an unpublished decision that echoed the previously vacated one, the Court of Appeals affirmed the trial court’s determination that Reed was not an employee of Mr. Food at the time of the accident.
Unsurprisingly, defendants again filed an application with this Court for leave to appeal, and we granted defendants’ application limited to the issue whether Reed' was an employee within the meaning of MCL 418.161(1)(Z) and (n) at the time of the accident.
STANDARD OP REVIEW
Defendants’ contention is that the trial court erroneously denied their motions for a directed verdict and JNOV We review a trial court’s denial of both motions de novo. Sniecinski v Blue Cross & Blue Shield of Michigan, 469 Mich 124, 131; 666 NW2d 186 (2003). In doing so, we “ ‘review the evidence and all legitimate inferences in the light most favorable to the nonmoving party.’ ” Id., quoting Wilkinson v Lee, 463 Mich 388, 391; 617 NW2d 305 (2000). Only if the evidence, when viewed in this light, fails to establish a claim as a matter of law should a motion for a directed verdict or JNOV be granted. Id.
This case also involves the interpretation of statutes, which is a question of law that is also reviewed dé novo by this Court. Hoste, supra at 569. Our fundamental obligation when interpreting statutes is “to ascertain the legislative intent that may reasonably be inferred from the words expressed in the statute.” Koontz v
DISCUSSION
A. PRINCIPLES OP THE WDCA
As we have discussed frequently in the past, by enacting Michigan’s Worker’s Disability Compensation Act, the Legislature replaced common-law liability for negligence in the workplace, and its related defenses, with a comprehensive, statutory compensation scheme that requires employers to provide compensation to employees for injuries arising out of and in the course of employment without regard to fault. MCL 418.301; Hoste, supra at 570; Clark v United Technologies Automotive, Inc, 459 Mich 681, 686-687; 594 NW2d 447 (1999); Farrell v Dearborn Mfg Co, 416 Mich 267, 274-275; 330 NW2d 397 (1982). In exchange for this almost automatic entitlement to compensation, the WDCA limits the amount of compensation that an employee may collect and, moreover, prohibits the employee from bringing a tort action against the employer except in limited circumstances.
*530 Th[is] language expresses a fundamental tenet of workers’ compensation statutes that if an injury falls within the coverage of the compensation law, such compensation shall be the employee’s only remedy against the employer or the employer’s insurance carrier. The underlying rationale is that the employer, by agreeing to assume automatic responsibility for all such injuries, protects itself from potentially excessive damage awards rendered against it and that the employee is assured of receiving payment for his injuries. [Farrell, supra at 274.]
Accordingly, the threshold question in this case is whether Reed is an “employee” under any of the definitions in MCL 418.161 of the WDCA and, therefore, has traded his right to bring a tort action for the assured payment of benefits without regard to fault. Hoste, supra at 570-571. As in Hoste, several of the definitions set forth in MCL 418.161 do not apply in this case and, therefore, the resolution of this issue requires us to focus only on subsections 161(1)(Z) and 161(l)(n).
B. ANALYSIS OF MCL 418.161(1)®
Subsection 161(1) (Z) requires us to determine whether Reed was in the service of Mr. Food under any express or implied “contract of hire.” Because it is undisputed that Reed was in the service of Mr. Food at
With regard to the first inquiry, we agree with the Court of Appeals conclusion that the facts in this case are at least sufficient to establish that Reed was in the service of Mr. Pood pursuant to an implied in fact contractual relationship. “ ‘A contract implied in fact arises when services are performed by one who at the time expects compensation from another who expects at the time to pay therefor.’ ” In re Spenger Estate, 341 Mich 491, 493; 67 NW2d 730 (1954), quoting In re Pierson’s Estate, 282 Mich 411, 415; 276 NW 498 (1937). As the Court of Appeals noted, Reed was expecting to be compensated for the services that he performed that day, just as he had been several times before. Moreover, Herskovitz, having told Hadley to obtain the help he needed to make his deliveries that day, expected to compensate whomever Hadley recruited, just as he had done in the past. The defendants argue that the failure of Herskovitz to know exactly who Hadley would hire is relevant to whether there was an implied in fact contract with Reed. This is not the case. All that is required to establish a contract with Reed is that Hadley had authority to hire.
In the present case, the $35 to $40 that Reed received for the approximately eight hours of services he rendered satisfies the requirement we set forth in Hoste. In finding otherwise, the circuit court did not dispute that the wages were real, palpable, and substantial on an hourly basis but, instead, calculated them by averaging them over the entire five- to six-month period of the occasional employment to conclude that the wages were less than one dollar a day. This is a puzzling and even arbitrary approach to this issue of calculation that ignores the parties’ actual contracted for rate of per diem compensation and replaces it with an approach not taken by the parties. In fact, it seems to be without justification other than it effectively serves to reduce the compensation rate by a high multiple. In contrast, when the neutrally derived approach we are adopting is used, examining the actual agreement to determine the unit of pay, it is clear that this compensation was indeed real, palpable, and substantial when measured against the services performed.
Here, Reed provided approximately eight hours of unskilled, manual labor helping Hadley deliver meat
It is also appropriate to point out that the circuit court’s ad hoc approach of averaging over the entire period of occasional employment, even though there was no such agreement between the parties, would, were it the law, cause most any occasional worker’s wage to be insubstantial under Hoste, thus making worker’s compensation protections for, say, all persons working episodically on a part-time basis unavailable. The facile answer to this, no doubt, is that such workers will have a tort remedy. But, they probably will not. These injured people will be, simply, injured without a remedy. History shows no less. In fact, the leaders of this state a century ago were painfully familiar with the crushing inequity created by this illusory solution of leaving workers with only a tort remedy. As they made
Therefore, we conclude that Reed was an employee of Mr. Food at the time of his injuries within the meaning of subsection 161(1)(Z) because the service he performed was pursuant to an expressed or implied contract of hire and the compensation was real and substantial. It was a wage. Accordingly, our next task is to determine whether Reed meets the requirements of subsection 161(l)(n).
C. ANALYSIS OF MCL 418.161(l)(n)
Subsection 161(l)(n) provides that every person performing a service in the course of an employer’s trade, business, profession, or occupation is an employee of that employer. However, the statute continues by excluding from this group any such person who: (1) maintains his or her own business in relation to the service he or she provides the employer, (2) holds himself or herself out to the public to render the same service that he or she performed for the employer, and (3) is himself or herself an employer subject to the WDCA. In other words, subsection 161(l)(n) sets forth three criteria for determining whether a person performing services for an employer qualifies as what is commonly called an “independent contractor” rather than an employee. As we explained in Hoste, these three statutory criteria have superseded the former common-law-based economic realities test for determining
In the present case, it is undisputed that Mr. Food, or Herskovitz, is an employer subject to the WDCA and that Reed was performing a service in the course of Mr. Food’s business. We thus turn to the three criteria required for the exception in subsection 161(l)(n): whether Reed, in relation to the service he provided for Mr. Food, (1) maintained a separate business offering the same service, (2) held himself out to and rendered the same service to the public, and (3) is an employer subject to the WDCA.
Reed’s argument, adopted by the Court of Appeals, is that he is an independent contractor because he maintained a separate business and held himself out to the public as a day laborer. Even assuming that Reed had a separate business and held it out to the public, these facts do not establish enough to meet the statutory requirement of subsection 161(l)(n). The first requirement is that the service held out and provided by the separate business be “this service,” i.e., the same service that he performed for the employer. It is not enough under the statute that he has any business and holds it out. The reason is that such a reading fails to
Therefore, contrary to the conclusions of the trial court and the Court of Appeals, the “service” performed by the person cannot be placed in such broad and undefined classifications as general labor. Rather, it must be classified according to the most relevant aspects identifiable to the duties performed in the course of the employer’s trade, business, profession, or occupation.
We would again caution that the contrary reading of this requirement, as engaged in by the Court of Appeals and the trial court, would inescapably mean that any moonlighting worker, say an industrial worker at General Motors, Ford, or DaimlerChrysler, who has a janitorial service, lawn care business, a Mary Kay distributorship, or even serves as a compensated choir director at her church, would be without worker’s compensation
Accordingly, we conclude that Reed is not an independent contractor and is subject to the worker’s compensation system.
SUBJECT-MATTER JURISDICTION
As a final matter, we note that the Workers’ Compensation Section of the State Bar of Michigan has filed a provocative amicus brief. It argues that this Court’s decision in Sewell v Clearing Machine Corp, 419 Mich 56; 347 NW2d 447 (1984), holding that the circuit court shares concurrent jurisdiction with the worker’s compensation adjudicatory system to determine, in the first instance, whether a person was an employee at the time of the person’s injury, is in error. Amicus argues that Const 1963, art 6, § 13
Justice CORRIGAN has persuasively argued in her dissent that Sewell was indeed wrongly decided. How
As we have made clear in the past, “[w]e do not lightly overrule precedent.”
Further, while all courts must upon challenge, or even sua sponte, confirm that subject-matter jurisdiction exists,
Finally, given the interest this issue of jurisdiction has generated on the Court, we have no doubt it will be presented to us again in the near future. On that occasion, presumably all parties will have a full opportunity to brief and argue this issue, and it may at that time be appropriate to reconsider Sewell.
CONCLUSION
We conclude that Reed was an “employee” of Mr. Food as the Legislature has unambiguously defined that term in MCL 418. 161(1)(Z) and (n). Accordingly, we reverse in part the judgment of the Court of Appeals and remand this case to the circuit court for entry of a directed verdict in defendants’ favor. Jurisdiction over this case is thereafter transferred to the Bureau of
MCL 418.101 et seq.
Yackell is not a party to the proceedings in this Court. Therefore, we will hereinafter use the term “defendants” in reference to Herskovitz, Hadley, and Mr. Food collectively.
MCL 418.161 provides:
(1) As used in this act, “employee” means:
(l) Every person in the service of another, under any contract of hire, express or implied, including aliens ....
(n) Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, if the person in relation to this service does not maintain a separate business, does not hold himself or herself out to and render service to the public, and is not an employer subject to this act.
MCL 418.131(1) provides that “[t]he right to the recovery of benefits as provided in this act shall be the employee’s exclusive remedy against the employer for a personal injury or occupational disease ... .”
Reed v Yackell, unpublished opinion per curiam of the Court of Appeals, issued February 14, 2003 (Docket No. 236588), vacated 469 Mich 960 (2003).
469 Mich 960 (2003).
469 Mich 1051 (2004).
Reed v Yackell, unpublished opinion per curiam of the Court of Appeals, issued June 8, 2004 (Docket No. 236588).
471 Mich 957 (2005).
At the time of the plaintiffs injuries in Hoste, the definitions now found in subsections 161(1)(l) and 161(l)(n) were found in former subsections 161(l)(b) and 161(l)(d), respectively. Hoste, supra at 566 n 2.
See Central Wholesale Co v Sefa, 351 Mich 17, 25; 87 NW2d 94 (1957), quoting 2 CJS, Agency, § 96, pp 1210-1211:
“Whenever the principal, by statements or conduct, places the agent in a position where he appears with reasonable certainty to be acting for the principal, or without interference suffers the agent to assume such a position, and thereby justifies those dealing with the agent in believing that he is acting within his mandate, an apparent authority results ...
Herskovitz testified that Reed’s duties were “[n]othing major. It’s to get a box or bring it up or take this out. It’s that kind of work.” Hadley testified that, in between deliveries, he would have his helpers “go [to the] back [of the delivery truck] and set more stuff up at the door, or if it’s up to the front, move it this way or whatever at the time.”
Report of the Employer’s Liability and Workmen’s Compensation Commission of the State of Michigan, p 16 (1911) (Report).
Id., pp 16-23.
As we have explained, the Court of Appeals ignored our statement in Hoste, supra at 572, that the economic realities test cannot be used to supersede subsection 161(l)(n) by adding factors to the statute that the Legislature did not see fit to incorporate, and based its analysis on such factors from older cases discussing the economic realities test. These were things such as how Reed was paid and whether taxes were withheld, whether Herskovitz and Hadley had control over Reed’s duties, and whether Reed’s services were an integral part of Mr. Food’s business. The Legislature did not see fit to include such factors in subsection 161(l)(n) and, therefore, the Court of Appeals reliance on them was error. This means then that the prelegislation cases were superseded by the legislation and are thus without authority as law on these issues.
Cf. Michael H v Gerald D, 491 US 110, 127 n 6; 109 S Ct 2333; 105 L Ed 2d 91 (1989).
Const 1963, art 6, § 13 provides that “[t]he circuit court shall have original jurisdiction in all matters not prohibited by law... .”
MCL 418.841(1) provides:
Any dispute or controversy concerning compensation or other benefits shall be submitted to the bureau and all questions arising under this act shall be determined by the bureau or a worker’s compensation magistrate, as applicable. [Emphasis added.]
Sewell, supra at 65 (Levin, J., concurring).
Pohutshi v City of Allen Park, 465 Mich 675, 693; 641 NW2d 219 (2002).
Bowie v Arder, 441 Mich 23; 490 NW2d 568 (1992); Fox v Univ of Michigan Bd of Regents, 375 Mich 238, 242-243; 134 NW2d 146 (1965); In re Estate of Fraser, 288 Mich 392, 394; 285 NW 1 (1939); Ward v Hunter Machinery Co, 263 Mich 445, 449; 248 NW 864 (1933).
This statute provides:
A proceeding for compensation for an injury under this act shall not be maintained unless a claim for compensation for the injury, which claim may be either oral or in writing, has been made to the employer or a written claim has been made to the bureau on forms prescribed by the director, within 2 years after the occurrence of the injury.
Dissenting Opinion
(dissenting). I respectfully dissent from the lead opinion’s determination that plaintiff is an “employee” within the meaning of the Worker’s Disability Compensation Act (WDCA), MCL 418.101 et seq.
I am persuaded that Sewell v Clearing Machine Corp, 419 Mich 56; 347 NW2d 447 (1984), was wrongly decided. It held that the WCB and the circuit court share jurisdiction to determine a worker’s employment status. Sewell’s assumption of jurisdiction shared with the WCB violated the plain language of MCL 418.161 without even so much as an analytic nod to the statutory scheme conferring jurisdiction in the WDCA. Sewell overruled longstanding authority that had correctly implemented the statute, including Szydlowski v Gen Motors Corp, 397 Mich 356; 245 NW2d 26 (1976).
We should review the fundamental question of our jurisdiction as it affects not only the proper exercise of judicial authority in this case, but in the myriad cases involving the exclusive remedy provision. I believe that the parallel universe that Sewell created is illegitimate. It offends the separation of powers and should be ended.
Because of the major jurisprudential significance of the jurisdictional issue, I would follow the same approach that we employed in Lapeer Co Clerk v Lapeer Circuit Court, 469 Mich 146; 665 NW2d 452 (2003), and Lapeer Co Clerk v Lapeer Circuit Judges, 465 Mich 559; 640 NW2d 567 (2002). I would sever and resolve the jurisdictional problem before tackling any remaining issues.
I. FACTS AND PROCEDURAL HISTORY
In summer 1997, plaintiff was hired as a full-time delivery person by defendant Mr. Food, Inc. Unsatisfied with plaintiffs performance, Mr. Food terminated plaintiffs employment in December 1997. Between December 1997 and May 7, 1998, defendant Hadley, an employee of Mr. Food, hired plaintiff to assist him in deliveries on an as-needed basis. Defendant Herskovitz, the owner of Mr. Food, paid plaintiff about $35 to $40 a day in cash on five to seven occasions. Plaintiff also worked at various jobs, including house painting and general labor, during this four-month period.
On May 7, 1998, plaintiff was a passenger in defendant Mr. Food’s delivery truck, assisting defendant
Plaintiff filed suit, alleging that Yackell was negligent in failing to stop at the red light, and that Mr. Food was vicariously liable for defendant Hadley’s negligence in failing to avoid the collision. Defendants properly raised and preserved their claim that the worker’s compensation exclusive remedy provision barred plaintiffs cause of action, as the Sewell regime provided. For example, the joint pretrial order reflects that whether the exclusive remedy provision precluded plaintiffs claim was an issue of law to be litigated. Even plaintiffs opening statement raised the applicability of the WDCA’s exclusivity provision:
On that day, Ricky Reed received a telephone call from Buddy Hadley, and asked him to work-under-the-table for $40, as he had done several times since being let go from Mr. Food. And Mr. Herskovitz would pay him $40 to help Mr. Hadley deliver meat on his route in a big freezer truck.
The evidence is going to show that not only had Mr. Herskovitz paid him in the past, but he [was] going to pay him to assist Mr. Hadley on this case.
At the close of plaintiffs proofs, Mr. Food moved for a directed verdict, arguing again that plaintiff was an employee of Mr. Food at the time of the accident, so that the WDCA was plaintiffs exclusive remedy. MCL 418.131(1). The circuit court denied the motion. Following a jury verdict in plaintiffs favor, Mr. Food moved for judgment notwithstanding the verdict (JNOV) under MCR 2.610(1), reiterating its argument that plaintiffs
The Court of Appeals affirmed the trial court’s denial of Mr. Food’s motions for a directed verdict and JNOV
Mr. Food sought leave to appeal in this Court. In lieu of granting leave, this Court vacated the Court of Appeals opinion and remanded the case to the circuit court to determine whether plaintiff was an employee within the meaning of MCL 418.161(1) (Z) and (n).
This Court granted the application of defendants Mr. Food and Hadley for leave to appeal on the issue of plaintiff’s employment status on the date of the accident.
II. STANDARD OF REVIEW
The issue of subject-matter jurisdiction turns on questions of statutory and court rule interpretation and thus presents a question of law. Lapeer Circuit Judges, supra at 566. This Court reviews questions of law de novo. Id.; Cain v Waste Mgt, Inc (After Remand), 472 Mich 236; 697 NW2d 130 (2005). This case also has constitutional implications regarding the legitimate scope of judicial power, which is also subject to review de novo. Warda v Flushing City Council, 472 Mich 326; 696 NW2d 671 (2005).
III. DISCUSSION & ANALYSIS
A. SUBJECT-MATTER JURISDICTION
Subject-matter jurisdiction may be raised at any time by the parties, or sua sponte by a court. Nat’l Wildlife Federation v Cleveland Cliffs Iron Co, 471 Mich 608, 630; 684 NW2d 800 (2004); MCR 2.116(D)(3). Subject-matter jurisdiction involves the power of a court to hear
In Joy v Two-Bit Corp, 287 Mich 244, 253-254; 283 NW 45 (1938), this Court defined subject-matter jurisdiction as
“the right of the court to exercise judicial power over that class of cases; not the particular case before it, but rather the abstract power to try a case of the kind or character of the one pending; and not whether the particular case is one that presents a cause of action, or under the particular facts is triable before the court in which it is pending, because of some inherent facts which exist and may be developed during the trial.” [Citation omitted.]
Subject-matter jurisdiction is conferred on the court by the authority that created the court. Detroit v Rabaut, 389 Mich 329, 331; 206 NW2d 625 (1973). Const 1963, art 6, § 1 created the current judicial system in Michigan; it provides for one Supreme Court, the Court of Appeals, one circuit court of general jurisdiction, one probate court, and “courts of limited jurisdiction that the legislature may establish ....”
Const 1963, art 6, § 4 provides that this Court has “general superintending control over all courts; power to issue, hear and determine prerogative and remedial writs; and appellate jurisdiction as provided by rules of the supreme court.” This Court’s appellate jurisdiction to review and pass on decisions of the lower courts necessarily assumes that the lower courts properly exercised subject-matter jurisdiction over the case. If a lower court improperly exercised jurisdiction over a matter delegated to another governmental branch, this
As this Court explained in Bowie v Arder, 441 Mich 23, 56; 490 NW2d 568 (1992):
When a court lacks subject matter jurisdiction to hear and determine a claim, any action it takes, other than to dismiss the action, is void. Further, a court must take notice of the limits of its authority, and should on its own motion recognize its lack of jurisdiction and dismiss the action at any stage in the proceedings. [Citation omitted.]
The specific threshold jurisdictional issue here is whether the Legislature has exclusively delegated to the WCB the power to decide the application of the WDCA to the class of cases that includes plaintiffs case. If that is so, then this Court and the lower courts are divested of subject-matter jurisdiction to determine a plaintiffs employment status for WDCA purposes, and this Court has no choice but to dismiss this case. Proper resolution of this jurisdictional question is critical because it determines whether a jury or a specialized agency will hear and decide the claim. The WDCA actually prohibits a circuit court from exercising subject-matter jurisdiction to decide any questions arising under the WDCA by assigning jurisdiction to the WCB or a worker’s compensation magistrate. MCL 418.841(1).
B. WORKER’S DISABILITY COMPENSATION ACT
The predecessor to the WDCA, known as the “Workmen’s Compensation Act,” was enacted in 1912 during
MCL 418.301(1) of the WDCA provides, in relevant part:
An employee, who receives a personal injury arising out of and in the course of employment by an employer who is subject to this act at the time of the injury, shall be paid compensation as provided in this act.
Thus, worker’s compensation benefits are available under the WDCA when (1) an employment relationship exists, and (2) a personal injury arose out of, and in the course of, that employment.
The term “employee” for WDCA purposes is defined in MCL 418.161(1). That section controls employment status determinations regarding government workers (§ 161[l][a]), foreign nationals (§ 161[l][b]), public safety personnel (§§ 161[l][c] and [f]), volunteer fire fighters (§§ 161[l][d] and [e]), volunteer civil defense workers (§ 161[l][g]), public health volunteers (§§ 161[l][h] and [i]), emergency rescue workers (§
The only apparent exception that confers jurisdiction on the circuit court is found in MCL 418.131(1):
The right to the recovery of benefits as provided in this act shall be the employee’s exclusive remedy against the employer for a personal injury or occupational disease. The only exception to this exclusive remedy is an intentional tort. An intentional tort shall exist only when an employee is injured as a result of a deliberate act of the employer and the employer specifically intended an injury.
Here, plaintiff has not presented an intentional tort claim. The fundamental question presented here is whether the circuit court has jurisdiction over a case after a party has raised the question whether the claim sounds in worker’s compensation rather than tort.
C. THE WDCA AND THE CIRCUIT COURT SUBJECT-MATTER JURISDICTION
MCL 418.841(1) of the WDCA provides:
Any dispute or controversy concerning compensation or other benefits shall be submitted to the bureau and all questions arising under this act shall be determined by the bureau or a worker’s compensation magistrate, as applicable. [Emphasis supplied.]
The WDCA sets up comprehensive procedures for resolving disputes “arising under” the act. For example, MCL 418.847(1) provides that a “party in interest” may apply for a hearing before a worker’s compensation magistrate. MCL 418.847(2) provides that a magistrate
MCL 418.859a and 418.861a establish the procedures a party must follow in order to appeal a magistrate’s decision within the WCB. MCL 418.859a provides that “a claim for review of a case for which an application under section 847 is filed... shall be filed with the appellate commission.” MCL 418.861a(l) provides that any claim for review filed pursuant to § 859a “shall be heard and decided by the appellate commission [WCAC].” During that process, the WCAC may “remand [the] matter to a worker’s compensation magistrate for purposes of supplying a complete record if it is determined that the record is insufficient for purposes of review.” MCL 418.861a(12).
Judicial review of magistrate and WCAC decisions is circumscribed under the WDCA. MCL 418.861 provides:
The findings of fact made by the hoard acting within its powers, in the absence of fraud, shall be conclusive. The court of appeals and the supreme court shall have power to review questions of law involved in any final order of the board, if application is made by the aggrieved party within 30 days after such order by any method permissible under the rules of the courts of the laws of this state.
MCL 418.861a(14) similarly provides:
The findings of fact made by the commission acting within its powers, in the absence of fraud, shall be conclusive. The court of appeals and the supreme court shall have the power to review questions of law involved with any final order of the commission, if application is made by the aggrieved party within 30 days after the order by any method permissible under the Michigan court rules.
Where, as here, the employment status of an injured plaintiff is in dispute, the issue is whether that dispute is one “arising under” the WDCA. If the dispute over employment status is not one “arising under” the WDCA, then MCL 418.841 does not preclude a circuit court from exercising jurisdiction over that determination. Conversely, if the dispute over employment status is a question “arising under” the WDCA, then a circuit court lacks subject-matter jurisdiction over those initial determinations by virtue of the Legislature’s direction in MCL 418.841(1) that “all” such questions “shall be determined by the bureau or a worker’s compensation magistrate ....” (Emphasis supplied.) The Legislature’s use of the word “shall” in a statute “indicates a mandatory and imperative directive” Burton v Reed City Hosp Corp, 471 Mich 745, 752; 691 NW2d 424 (2005).
As already discussed, the criteria for determining employment status are comprehensively set forth in, and controlled by, MCL 418.161(1) of the WDCA. The question of employee status falls within the category of “all questions arising under” the act. Because the Legislature directed that all questions concerning the meaning and application of every provision in the WDCA are to be decided by the WCB or a magistrate,
Const 1963, art 6, § 13 provides that “[t]he circuit court shall have original jurisdiction in all matters not prohibited by law . . . .” (Emphasis supplied.) By virtue of MCL 418.841(1), it appears that the Legislature “prohibited by law” the exercise of original jurisdiction in the circuit court. Therefore, jurisdiction regarding a party’s employment status rests in the first instance exclusively with the WCB or a magistrate. As noted earlier, because the circuit court lacked jurisdiction over the subject matter, the Court of Appeals and this Court lack subject-matter jurisdiction to review that circuit court decision.
D. SEWELL v CLEARING MACHINE CORP, 419 MICH 56; 347 NW2D 447 (1984)
Despite the clear and unambiguous directive set forth in MCL 418.841, Sewell, supra, overrode the statute and declared that the courts and the WCB shared jurisdiction. The Sewell Court held that
the bureau has exclusive jurisdiction to decide whether injuries suffered by an employee were in the course of employment. The courts, however, retain the power to decide the more fundamental issue whether the plaintiff is an employee (or fellow employee) of the defendant. [Sewell, supra at 62 (emphasis supplied).]
There is no authority cited for this assertion of power. Indeed, the judiciary is powerless to modify unambiguous statutory language in order to inject its own policy preferences. Rory v Continental Ins Co, 473 Mich 457; 703 NW2d 23 (2005). Nonetheless, Sewell dictated that courts and the WCB would effectively
Although Sewell cited MCL 418.841, it provided no analysis of that section’s sweeping directive that “all questions arising under [the] act shall be determined by the” WCB. Indeed, the opinion is devoid of any analysis of any WDCA provisions whatsoever.
Moreover, the perfunctory decision in Sewell swept away almost fifty years of precedent in which this Court and the Court of Appeals had consistently held that courts lack jurisdiction to determine employment status. Szydlowski, supra; Jesionowski v Allied Products Corp, 329 Mich 209; 45 NW2d 39 (1950); Dershowitz v Ford Motor Co, 327 Mich 386; 41 NW2d 900 (1950); Morris v Ford Motor Co, 320 Mich 372; 31 NW2d 89 (1948); Munson v Christie, 270 Mich 94; 258 NW 415 (1935); Houghtaling v Chapman, 119 Mich App 828; 327 NW2d 375 (1982); Buschbacher v Great Lakes Steel Corp, 114 Mich App 833; 319 NW2d 691 (1982); Dixon v Sype, 92 Mich App 144; 284 NW2d 514 (1979); Herman v Theis, 10 Mich App 684; 160 NW2d 365 (1968).
Sewell wholly disregarded this extensive body of case law, stating:
Taken alone, those general statements suggest that the bureau’s jurisdiction takes precedence over that of the circuit court whenever there is an issue concerning the applicability of the Worker’s Disability Compensation Act. The rule is not so broad, however. [Sewell, supra at 62.]
Again, the Court cited no authority for that proposition. It is hard to imagine a broader rule than the one established by the Legislature in the WDCA, i.e., one
I fully agree with Justice Levin’s statement in Sewell. He pointed out that the majority’s “more fundamental” test was “proffered without analysis, explanation, or justification” and that it “offers no guidance for the resolution of future cases and does not satisfactorily explain the result reached....” Id. at 65. He argued that “[t]he issue whether [defendant] was [plaintiffs] employer is no more ‘fundamental’ than the issue whether [plaintiffs] injuries were suffered in the course of employment.” Id. at 70.
In announcing a shared jurisdiction paradigm when determining whether the WDCA applies to a claim, Sewell overruled Szydlowski, supra. In Szydlowski, we held that
“a plaintiffs remedy against an employer based on an injury allegedly arising out of an employment relationship properly belongs within the workmen’s compensation department for initial determination as to jurisdiction and liability.’’ [Szydlowski, supra at 359, quoting Herman, supra at 691 (emphasis supplied).]
This Court explained in Szydlowski that “the procedures for workmen’s compensation cases have been statutorily established. [Herman] properly cautions us
The act in question, like all similar acts, provides for compensation, and not for damages, and in its consideration and construction all of the rules of law and procedure, which apply to recover damages for negligently causing injury or death, are in these cases no longer applicable, and there is substituted a new code of procedure fixed and determined by the act in question. [Emphasis supplied.]
The shared jurisdiction paradigm established in Sewell not only contradicts the plain language of the WDCA, but it also does violence to the legislative scheme.
E. PRUDENTIAL PROBLEMS WITH SEWELL
As discussed in the previous section, Sewell contradicted the clear legislative directive that “all questions arising under” the WDCA are to be addressed within the worker’s compensation system. That is a sufficient basis to overturn the decision.
1. AGENCY EXPERTISE
This Court has acknowledged that administrative agencies possess “superior knowledge and expertise in
administrative agencies possess expertise in particular areas of specialization. Because the judiciary has neither the expertise nor the resources to engage in a fact-intensive review of the entire administrative record, that type of detailed review is generally delegated to the administrative body. In the particular context of worker’s compensation cases, a highly technical area of law, the judiciary lacks the expertise necessary to reach well-grounded factual conclusions .... The judiciary is not more qualified to reach well-grounded factual conclusions in this arena than the administrative specialists. Therefore, the Legislature has decided that factual determinations are properly made at the administrative level, as opposed to the judicial level. [Id.]
The rationale underlying this Court’s decision in Sewell is that resolving the legal question regarding a plaintiffs employment status is not an issue that requires agency expertise. The instant case, however, belies that understanding. Here, three courts have interpreted the same facts three different ways in deciding plaintiffs employment status. The trial court held that plaintiff was not under a “contract of hire” at the time of the accident. The Court of Appeals held that plaintiff was under a contract of hire, but that he was an independent contractor. Here, the lead opinion concludes that plaintiff was under a contract of hire and was not acting as an independent contractor.
Even if the Legislature had not clearly directed that all questions regarding application of the WDCA be answered within the worker’s compensation system, the pre-Sewell approach simply works best. Allowing the agency to decide first which tribunal has jurisdiction over a claim in which the WDCA is implicated maximizes the strengths of both tribunals. The WCB may apply its expertise to resolve issues of fact in the employment context, while courts, of course, retain appellate review of WCB decisions and resolve questions of law.
2. UNIFORMITY AND CONSISTENCY
The goal of consistent and uniform administrative decision-making is similarly thwarted where multiple forums may decide the same factual question. As we stated in Travelers, supra at 199:
“[UJniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure.” [Citation omitted.]
Resort to the WCB in the first instance ensures that employment status issues will be resolved in a consistent manner.
*559 Moreover, the shared jurisdiction approach established by Sewell suffers from an unconvincing rationale and lack of clarity in application. As Justice LEVIN aptly opined, there is little reason to assume that employment status determinations are any “more fundamental” than other questions involved in determining whether a plaintiffs claim sounds in worker’s compensation or tort. Sewell, supra at 70 (LEVIN, J., concurring). Thus, Sewell’s “more fundamental” rationale for concurrent jurisdiction appears both unprincipled and groundless.
F. SZYDLOWSKI’S APPROACH
This Court’s opinion in Szydlowski provides the more textually faithful approach to determining jurisdiction when the WDCA is implicated. Contrary to Sewell, the jurisdictional inquiry in the first instance should be referred to the WCB upon petition by either party in a court action.
In addition to being more textually faithful to the WDCA, this approach would avoid lengthy, duplicative litigation by providing a definite jurisdictional starting point. Consider this case: for seven years, the circuit court, the Court of Appeals, and now this Court have grappled with defining and applying the WDCA’s terms of art to the facts of this case. The forum legislatively charged with determining all questions arising under the WDCA is the WCB, not the courts. That forum is where this class of cases belongs.
I agree that this Court should not lightly overrule precedent.
the doctrine of stare decisis is not applied mechanically to*560 prevent the Court from overruling previous decisions that are erroneous. We may overrule a prior decision when we are certain that it was wrongly decided and “ ‘less injury will result from overruling than from following it.’ ” People v Moore, 470 Mich 56, 69 n 17; 679 NW2d 41 (2004), quoting McEvoy v Sault Ste Marie, 136 Mich 172, 178; 98 NW 1006 (1904).
Sewell’s shared jurisdiction approach is not at all faithful to the plain text of the WDCA. The doctrine of stare decisis should not prevail over a legislative directive. As I noted in Robinson v Detroit, 462 Mich 439, 472-473; 613 NW2d 307 (2000):
I agree that too rapid change in the law threatens judicial legitimacy, as it threatens the stability of any institution. But the act of correcting past rulings that usurp power properly belonging to the legislative branch does not threaten legitimacy. Rather, it restores legitimacy. Simply put, our duty to act within our constitutional grant of authority is paramount. If a prior decision of this Court reflects an abuse of judicial power at the expense of legislative authority, a failure to recognize and correct that excess, even if done in the name of stare decisis, would perpetuate an unacceptable abuse of judicial power. [CORRIGAN, J., concurring.]
IV CONCLUSION
In sum, Sewell’s assumption of circuit court jurisdiction over determining employment status contradicts the plain language of the WDCA. Determining employment status is a fact-driven undertaking requiring interpretation and application of the WDCA. Such questions should be determined first by the forum legislatively charged with interpreting and applying the act. For the foregoing reasons, I conclude that the circuit court and the Court of Appeals lack subject-matter jurisdiction over this matter. Although I agree that the
MCL 418.161(l)(n) of the WDCA controls this question.
The Worker’s Compensation Bureau was created by MCL 418.201. Pursuant to Executive Order No. 2003-18, MCL 445.2011, effective December 7, 2003, that agency is now the Workers’ Compensation Agency.
Contrary to the lead opinion’s assertion, I do not advocate overruling Sewell in a “peremptory fashion.” Ante at 539.1 would direct briefing on the jurisdictional issue.
.See Jesionowski v Allied Products Corp, 329 Mich 209; 45 NW2d 39 (1950); Dershowitz v Ford Motor Co, 327 Mich 386; 41 NW2d 900 (1950); Morris v Ford Motor Co, 320 Mich 372; 31 NW2d 89 (1948); Munson v Christie, 270 Mich 94; 258 NW 415 (1935); Houghtaling v Chapman, 119 Mich App 828; 327 NW2d 375 (1982); Buschbacher v Great Lakes Steel
Defendant Yackell is not a party to this appeal.
The motion for JNOV stated:
1. . . . Plaintiffs own testimony established that he was an employee of Mr. Food, and the exclusive remedy provision of the Workers Disability Compensation Act (WDCA) deprives the court of subject matter jurisdiction ....
2. Plaintiff meets the statutory definition of “employee” in the WDCA because part-time workers are employees, and Plaintiff Reed was “performing service in the course of the ... business ... of an employer at the time of the injury.!”]
Unpublished opinion per curiam of the Court of Appeals, issued February 14, 2003 (Docket No. 236588).
469 Mich 960 (2003).
469 Mich 1051 (2004).
Unpublished opinion per curiam of the Court of Appeals, issued June 8, 2004 (Docket No. 236588).
471 Mich 957 (2005).
1975 PA 279 changed the title of the act from the “Workmen’s Compensation Act of 1969” to the “Worker’s Disability Compensation Act of 1969” to reflect its applicability to workers of either sex.
The question the majority addresses is thus first assigned to the WCB.
See Robinson v Detroit, 462 Mich 439, 473; 613 NW2d 307 (2000) (Corrigan, J., concurring).
Ante at 539.
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