When are an independent contractor’s actions within the scope of a specialized repair?

Independent Contractor

D & D Tire v. Ouellette (Nev. Supreme Ct. – July 2, 2015)

In Nevada, employers and coemployees of a person injured in the course of employment are immune from liability for the injury under the exclusive remedy provision of the workers’ compensation statutes. Additionally, some subcontractors and independent contractors are accorded the same status as employers or coemployees of the injured employee and are thus immune from liability. However, a subcontractor or independent contractor is not considered to be a statutory employee when it is performing a major or specialized repair that the injured worker’s employer is not equipped to handle with its own work force.

The issue is when is an independent contractor’s actions within the scope of a major or specialized repair so as to prevent it from claiming immunity as a statutory employer or coemployee.

Ouellette was employed by Allied Nevada Gold Corporation (Allied) to perform tire service work, including the installation, removal, repair, and replacement of tires on various pieces of mining equipment. Purcell Tire & Rubber Company was a commercial tire retailer. Among other things, it provided tire changing and repair services to mining companies.

As part of his job, Ouellette drove and operated a tire changing boom truck owned by Purcell and leased to Allied. When a problem developed with the boom truck’s power take off unit (PTO), Purcell contacted an independent repair company, Dakota Diesel, who sent repairman Durick to make specialized repairs to the PTO. Purcell, as owner of the truck, also sent Wintle, a tire technician for Purcell with responsibilities similar to those of Ouellette, to assist with the repairs.

After the initial repairs were completed, Wintle and Durick filled the truck with hydraulic oil. Wintle then got into the truck to move it to another area before testing the PTO. While backing up the truck, Wintle struck and pinned Ouellette against a dumpster, causing Ouellette to suffer a shoulder injury.

Ouellette filed a personal injury claim against Purcell. At trial, Purcell moved for a judgment as a matter of law on the grounds that it was a statutory employee of Allied and was thus immune from liability under the Nevada Industrial Insurance Act (NIIA). The district court denied Purcell’s motion. Purcell also requested a mere happening jury instruction, which the district court declined to give. The jury returned a verdict in favor of Ouellette. Purcell then renewed its motion for judgment as a matter of law on the grounds that it was a statutory employee of Allied. Alternatively, it moved for a new trial, arguing that the district court’s error in refusing to give Purcell’s mere happening jury instruction materially affected its substantial rights. The district court denied Purcell’s motion. Purcell appealed

Purcell argued that the district court erred in denying its motion for judgment as a matter of law because Purcell was a statutory employee of Allied at the time of Ouellette’s injury and would thus be immune from liability for the injury under the NIIA. Purcell also argued that the district court abused its discretion by refusing to give a mere happening jury instruction.

Ouellette argued that the district court did not err in denying Purcell’s motion for judgment as a matter of law because Purcell was performing a specialized repair at the time of Ouellette’s injury and thus was not a statutory employee of Allied. Ouellette also argued that the district court did not err in refusing to give Purcell’s proffered jury instruction because it misstated Nevada law and was adequately covered by other instructions given to the jury.

An independent contractor is not immune from liability when performing specialized repairs

In Nevada, employers and coemployees of a person injured in the course of employment are immune from liability under the NIIA. Additionally, the NIIA is uniquely different from industrial insurance acts of some states in that sub-contractors and independent contractors are accorded
the same status as employees and are immune from liability.

However, the Nevada Supreme Court explained that not all types of subcontractors and independent contractors are considered to be statutory employees under NRS 616A.210. A subcontractor or independent contractor is not a statutory employee if it is not in the same trade, business, profession or occupation as the employer of the injured worker.

The Meers test is used to determined whether independent contractors are employees under NIIA. See Meers v. Haughton Elevator, 101 Nev. 283, 701 P.2d 1006 (1985). The “normal work” test, first articulated in Meers, guides courts as to whether a subcontractor or independent contractor is considered to be in the same trade, business, profession, or occupation as the employer of an injured worker. The Meers normal work test is:

not one of whether the subcontractor’s activity is useful, necessary, or even absolutely indispensable to the statutory employer’s business, since, after all, this could be said of practically any repair, construction or transportation service. The test (except in cases where the work is obviously a subcontracted fraction of a main contract) is whether that indispensable activity is, in that business, normally carried on through employees rather than independent contractors.

With regard to subcontracted maintenance activities, the general rule is that major repairs, or specialized repairs of the sort which the employer is not equipped to handle with his own force, are held to be outside his regular business.

Purcell conceded that the job of repairing the truck’s PTO would be considered a specialized repair under Meers. However, it argued that Dakota Diesel performed the specialized repair, while Wintle was merely there to monitor the repair process. Purcell further argued that even if Wintle was performing a specialized repair on the day of Ouellette’s injury, Wintle was not performing a specialized repair at the time Ouellette was actually injured.

In making its argument, Purcell contended that the focus of the normal work test is on the work being performed at the time the injury occurred. Therefore, because Wintle was moving the tire changing boom truck at the time of Ouellette’s injury, which was work normally performed by employees of Allied, Purcell argued that Wintle was not performing a specialized repair at the time of Ouellette’s injury. In support of its argument, Purcell relied on State Industrial Insurance System v. Ortega Concrete Pumping, Inc., 113 Nev. 1359, 951 P.2d 1033 (1997), which held that under the normal work test, the relevant factual inquiry is whether the contractor who caused the accident was in the same trade, business, profession or occupation as the injured employee at the time of the accident. Purcell also relied on Employers Insurance Company of Nevada v. United States, 322 F. Supp. 2d 116 (D. Nev. 2004), which held that a principal contractor was immune under the NIIA as the statutory employee of the subcontractor because the work that the subcontractor was performing at the time of his injury was normally carried out by the principal contractor.

The Court rejected Purcell’s narrow interpretation of the Meers normal work test. Purcell effectively argued that the relevant inquiry under Meers is whether, at the exact moment of an employee’s injury, the activity being performed by the subcontractor or independent contractor was normally performed by the injured worker’s employer. The Court believed that Purcell misstated the holdings of Ortega and Employers Insurance Company. In Ortega, the Court found the district court’s failure to apply the Meers test was error, and the Court reversed and remanded so that it could apply the proper analysis. Because the Ortega court did not actually apply the Meers normal work test, its holding was inapposite to the current case. And in Employers Insurance Company, the district court examined whether the defendant was the statutory employer at the time of the accident by examining the circumstances surrounding the employment, not the acts at the exact moment of the injury. Thus, the Court believed that nothing in the reasoning of either case supported Purcell’s contention.

Furthermore, the Court explained that Purcell’s narrow interpretation could readily create absurd results. Under Purcell’s reasoning, the status of a worker performing specialized repairs would change from moment-to-moment depending on whether that particular task is normally performed by employees of the primary contractor. For instance, repairing an engine valve on a vehicle might be considered a specialized repair, but checking the oil level afterwards would not be if the primary contractor’s employees normally check the oil level of the vehicles they are driving. Thus, the status of the work that an independent contractor is performing could repeatedly alternate between a specialized repair and something else during the same overall repair.

In rejecting Purcell’s narrow interpretation of Meers, the Court held that in order to determine whether a subcontractor or independent contractor was engaged in a specialized repair under the Meers test, and therefore whether that subcontractor or independent contractor is liable for any injuries caused to workers during the course of that specialized repair, the court must consider the subcontractor or independent contractor’s activity leading to a worker’s injury within the context of their other actions, both before and after the injury, and not in isolation. In this case, the Court held that Wintle’s presence at the mine for the purpose of a specialized repair was sufficient to establish that he was not acting as an employee of Allied at the time of the injury.

The Court explained that Wintle was at the mine on the day of Ouellette’s injury because the truck’s PTO required specialized repair. Purcell sent Wintle to the site specifically to accompany Durick, who was hired to make those specialized repairs. Even if Wintle’s only purpose at the mine that day was to monitor the repair process of the truck, as Purcell claimed, Wintle was nonetheless there for the sole purpose of the specialized repair. Wintle would not have been at the mine that day but for the specialized repair. Because Wintle was at the mine on the day of Ouellette’s injury for the purpose of a specialized repair, the Court held that there was sufficient evidence for the jury to find that Wintle and Purcell were performing a specialized repair under Meers at the time of Ouellette’s injury, and were therefore not statutory employees of Allied under NRS 616B.603 and NRS 616A.210.

Even under Purcell’s narrow interpretation of Meers, the Court held that, when looked at in context, Wintle would still have been acting in furtherance of the specialized repair at the time of Ouellette’s injury and thus be considered to be performing a specialized repair under Meers. Wintle arrived at the mine with Durick, the Dakota Diesel repairman Purcell had engaged to perform the specialized repair work. Both Durick and Wintle testified that Wintle actively assisted Durick in the specialized repair. Wintle testified that he was going out to assist and facilitate Durick in repairs to the 508 boom truck. After Durick and Wintle performed the initial repairs, they got to a point where they needed hydraulic oil and drove the truck from the tire pad to the shop where the hydraulic oil was kept. After filling the truck with hydraulic oil, Durick testified that he and Wintle were next going to take pressure checks and were going to operate the crane to make sure it was operating and functioning properly. Ouellette testified that this was to see if the repairs were successful. Wintle then asked Durick if he wanted to do the pressure checks and the function checks right there, but Durick wanted to first move the truck to the tire pad because the shop area was congested. Wintle then got into the truck to move it to the tire pad, a move that led to Ouellette’s injury.

Thus, the Court reasoned that while employees of Allied may usually drive the truck and fill it with hydraulic oil, in the context of Wintle’s other actions, it was clear that in this case he was acting in furtherance of the overall specialized repair at the time of Ouellette’s injury. Therefore, even had evidence not been presented that Wintle was at the mine solely for the purpose of the specialized repair, there was sufficient evidence demonstrating that Wintle was still in the process of performing a specialized repair at the time of Ouellette’s accident. Accordingly, Purcell was not a statutory employee of Allied under NRS 616B.603 and NRS 616A.210, and the Court held that the district court did not err in denying Purcell’s motion for judgment as a matter of law regarding NRS 616B.612’s application.

Mere happening jury instruction

At trial, the district court rejected the following jury instruction offered by Purcell:

The mere fact that there was an accident or other event where someone was injured is not in and of itself a sufficient basis for negligence.

The instruction was based on Gunlock v. New Frontier Hotel Corporation, 78 Nev. 182, P.2d 682 (1962), which held, in relevant part, that the mere fact that there was an accident or other event and someone was injured is not of itself sufficient to predicate liability. Negligence is never presumed but must be established by substantial evidence.

The Court explained that while Purcell’s proffered jury instruction accurately reflected the first part of the Gunlock mere happening instruction, it omitted the second part, stating that negligence is never presumed but must be established by substantial evidence. Therefore, Purcell’s proffered jury instruction, by itself, was an inaccurate statement of Nevada law. However, in civil cases, if an instruction is not technically correct, the instruction should be examined in the context of all instructions given to the jury in deciding whether the jury was sufficiently and fairly instructed.

The Court explained that the statement that negligence is never presumed was merely a restatement of the first part of the Gunlock reasoning and the concept that negligence must be established by substantial evidence was adequately covered by other jury instructions stating the burden of proof for a claim of negligence. Thus, when taken as a whole with the other jury instructions given by the court, the Court found that Purcell’s proposed jury instruction would have sufficiently and fairly instructed the jury on Gunlock’s holding.

Because there was sufficient evidence demonstrating that Wintle was present at the mine for the purpose of a specialized repair and acting in furtherance of the specialized repair when he caused Ouellette’s injury, the Court held that Purcell was not immune from liability for Ouellette’s injury under NRS 616B.612. Thus, the district court did not err in denying Purcell’s motion for judgment as a matter of law. Furthermore, the Court held that the district court did not abuse its discretion in refusing to give an incomplete mere happening jury instruction because to do so would have been duplicative.

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