Filed: May 03, 2010
Latest Update: Feb. 21, 2020
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 10a0272n.06 Nos. 09-5182 & 09-5183 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT WILLIAM HARRIS ASHER, et al., ) FILED ) May 03, 2010 Plaintiffs, ) LEONARD GREEN, Clerk ) ATLAS MATERIAL HANDLING, INC., a California ) Corporation, ) ) Defendant/Third Party Plaintiff-Appellant, ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v. ) COURT FOR THE EASTERN ) DISTRICT OF KENTUCKY RACK CONVEYOR INSTALLATION, INC., ) ) Third Party Defendant-Appelle
Summary: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 10a0272n.06 Nos. 09-5182 & 09-5183 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT WILLIAM HARRIS ASHER, et al., ) FILED ) May 03, 2010 Plaintiffs, ) LEONARD GREEN, Clerk ) ATLAS MATERIAL HANDLING, INC., a California ) Corporation, ) ) Defendant/Third Party Plaintiff-Appellant, ) ON APPEAL FROM THE ) UNITED STATES DISTRICT v. ) COURT FOR THE EASTERN ) DISTRICT OF KENTUCKY RACK CONVEYOR INSTALLATION, INC., ) ) Third Party Defendant-Appellee..
More
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 10a0272n.06
Nos. 09-5182 & 09-5183
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
WILLIAM HARRIS ASHER, et al., ) FILED
) May 03, 2010
Plaintiffs, ) LEONARD GREEN, Clerk
)
ATLAS MATERIAL HANDLING, INC., a California )
Corporation, )
)
Defendant/Third Party Plaintiff-Appellant, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE EASTERN
) DISTRICT OF KENTUCKY
RACK CONVEYOR INSTALLATION, INC., )
)
Third Party Defendant-Appellee, )
)
and )
)
UNARCO MATERIAL HANDLING, INC., a )
Tennessee Corporation, )
)
Intervening Plaintiff/Defendant-Appellant, )
)
v. )
)
RACK CONVEYOR INSTALLATION, INC., )
)
Third Party Defendant-Appellee. )
)
)
BEFORE: KENNEDY, COLE, and GRIFFIN, Circuit Judges.
GRIFFIN, Circuit Judge.
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
In this diversity action, plaintiffs, who are past and present Wal-Mart employees and their
spouses, sued defendant Unarco Material Handling, Inc. (“Unarco”), and its subcontractor, defendant
Atlas Material Handling, Inc. (“Atlas”), alleging injuries caused by exposure to carbon monoxide
gas in the enclosed freezer section of a Wal-Mart Distribution Center during a two-week period in
November and December 2005. Thereafter, Atlas filed a third-party complaint for common law
indemnity or apportionment of liability against its subcontractor, Rack Conveyor Installation, Inc.
(“RCI”), alleging that RCI was responsible for the release of the carbon monoxide. Unarco asserted
crossclaims for contractual and/or common law indemnity against Atlas and RCI.
In this consolidated appeal, Unarco and Atlas appeal the following adverse rulings by the
district court: (1) its Federal Rule of Civil Procedure 12(b)(6) dismissal of Unarco’s crossclaims
against RCI, based upon its holding that RCI is not Unarco’s “coparty” under Federal Rule of Civil
Procedure 13(g), and (2) its summary judgment dismissal of Atlas’s third-party complaint against
RCI, stemming from its holding that RCI’s employees were Atlas’s “loaned servants” under
Kentucky law. We hold that Unarco’s appeal is, pursuant to its stipulation, moot because the appeal
was contingent upon our reversal of the district court’s statute of limitations dismissal of the claims
of certain untimely plaintiffs in related case no. 09-5158, and we recently affirmed that ruling. See
Asher v. Unarco Material Handling, Inc., 596 F.3d 313 (6th Cir. 2010). Regarding Atlas’s appeal,
we hold that the district court erred in ruling that RCI’s employees were Atlas’s “loaned servants”
as a matter of law, and we therefore reverse the district court’s grant of summary judgment to RCI
and remand for further proceedings.
-2-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
I.
The district court accurately set forth the relevant background:
The Plaintiffs initially filed this action in Laurel Circuit Court on November 21,
2006, claiming damages as the result of an alleged discharge of carbon monoxide in
the freezer section of the Wal-Mart Distribution Center in London, Kentucky
(“Distribution Center”). According to the Plaintiffs, Defendants Unarco and [Atlas]
caused the discharge in the course of repairing and installing rack systems and
equipment. The Defendants jointly removed the action to this Court on
December 18, 2006, on the basis of diversity jurisdiction.
Subsequently, on February 16, 2007, Atlas filed a motion for leave to file a
Third-Party Complaint against RCI, claiming that RCI actually performed the repairs
and installation at the Distribution Center on behalf of Atlas. The Court granted
Atlas’ motion, and the Third-Party Complaint was filed in the record on February 23,
2007. Thereafter, on July 17, 2007, the Court also granted the Plaintiffs’ motion for
leave to file an Amended Complaint.
On July 27, 2007, Unarco filed an Answer to the Amended Complaint and asserted
crossclaims against Defendant Atlas and Third-Party Defendant RCI. Unarco claims
that RCI actually performed the rack installation work in the Distribution Center, and
that Atlas and RCI acted negligently in failing to report or remedy the allegedly
defective generators used to perform the work. Accordingly, Unarco claims that it
is entitled to contractual and/or common law indemnity from Atlas and RCI for the
Plaintiffs’ claims against Unarco.
Thereafter, on September 14, 2007, RCI moved to dismiss Unarco’s crossclaim
against it under Federal Rule of Civil Procedure 12(b)(6). In support of its motion,
RCI asserts that “[a]n original defendant can not bring a crossclaim against a
third-party defendant it did not join[.]” More specifically, RCI asserts that it is not
a “co-party” of Unarco under Rule 13(g). In response, Unarco contends that there is
conflicting authority regarding the definition of a co-party . . . .
(Internal citations omitted; second alteration in original.)
Finding no guidance from our court, which “has not addressed whether an original defendant
-3-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
can file a cross-claim against a third-party defendant under Rule 13(g) or Rule 14(a)”1 of the Federal
Rules of Civil Procedure, and surveying conflicting authority on the issue, the district court found
persuasive the authorities holding that “an original defendant is limited by the language of Rule 13(g)
and can only bring crossclaims against co-parties.” “Co-parties,” according to the district court, are
those sharing “like status[.]” (Internal quotation marks omitted.) The district court concluded that
“Unarco and RCI do not share ‘like status,’ as RCI has not been sued by the Plaintiffs and is merely
a third-party defendant to the action, while Unarco is an original defendant and a co-party of
Third-Party Plaintiff Atlas.” Therefore, the district court dismissed Unarco’s crossclaims against
RCI for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal
Rules of Civil Procedure, but it clarified that the dismissal was without prejudice to permit Unarco
1
Rule 13(g) provides:
(g) Crossclaim Against a Coparty. A pleading may state as a crossclaim any claim
by one party against a coparty if the claim arises out of the transaction or occurrence
that is the subject matter of the original action or of a counterclaim, or if the claim
relates to any property that is the subject matter of the original action. The
crossclaim may include a claim that the coparty is or may be liable to the
cross-claimant for all or part of a claim asserted in the action against the
cross-claimant.
Rule 14 provides, in relevant part:
(a) When a Defending Party May Bring in a Third Party.
(1) Timing of the Summons and Complaint. A defending party may, as
third-party plaintiff, serve a summons and complaint on a nonparty who is or
may be liable to it for all or part of the claim against it. But the third-party
plaintiff must, by motion, obtain the court’s leave if it files the third-party
complaint more than 14 days after serving its original answer.
-4-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
to re-file its crossclaims against RCI in a separate action for indemnity.
Thereafter, the district court entered the second order that is the subject of this consolidated
appeal. That order granted RCI’s motion for summary judgment against Atlas and denied Atlas’s
cross-motion for partial summary judgment against RCI, thereby dismissing Atlas’s claims for
common law indemnity or apportionment of liability against RCI. The district court ruled that,
although RCI’s employees performed the rack repair work which led to the release of the injury-
causing carbon monoxide at the Distribution Center, RCI was not liable to Atlas under Kentucky law
because “Atlas retained the right to control the work done at the location in issue” and “RCI’s
employees acted as loaned servants to Atlas[.]” In so holding, the district court rejected Atlas’s
arguments that (1) disputed issues of material fact precluded summary judgment in RCI’s favor, and
(2) RCI performed the work at the Distribution Center as an independent contractor.
Approximately two weeks later, the district court granted summary judgment in favor of
Unarco and Atlas against certain plaintiffs (the “untimely plaintiffs”) whose claims it held were
barred by the applicable statute of limitations. Subsequently, Unarco and Atlas reached settlement
agreements with the remaining, timely plaintiffs, and the district court dismissed the timely
plaintiffs’ claims with prejudice pursuant to the parties’ January 2009 stipulations of dismissal. The
untimely plaintiffs unsuccessfully appealed the district court’s dismissal of their claims to this court
in related case no. 09-5158. See Asher v. Unarco Material Handling, Inc., 596 F.3d 313 (6th Cir.
2010).
Unarco timely appeals the district court’s Rule 12(b)(6) dismissal of its crossclaims against
-5-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
RCI, but it stipulated during briefing and at oral argument that its present appeal should proceed only
if we reversed the district court’s dismissal of the untimely plaintiffs’ claims in case no. 09-5158.
Atlas timely appeals the district court’s summary judgment dismissal of its third-party complaint
against RCI.2
II.
Unarco argues that the district court erred in dismissing its crossclaims against RCI. In the
alternative, Unarco asserts that, “even if [its] pleading against RCI did not qualify as a cross-claim
pursuant to Rule 13(g), the proper remedy was for the District Court to reclassify [the] pleading as
a counterclaim rather than dismissing it for failure to state a claim, the harshest of all remedies.”
We hold that Unarco’s appeal is moot. Unarco stipulated that its present appeal should
proceed only if we reversed the district court’s dismissal of the untimely plaintiffs’ claims in case
no. 09-5158. Because we recently affirmed the district court’s ruling in that case, see 596 F.3d 313,
we do not consider the issue raised by Unarco in the present appeal.
III.
Atlas argues that the district court erred in granting summary judgment in favor of RCI,
Atlas’s subcontractor, on Atlas’s third-party claim for common law indemnity or apportionment of
liability against RCI. The district court held that RCI’s workers, who performed the work causing
the release of carbon monoxide at the Distribution Center, were “loaned servants” under Atlas’s
2
The consolidated appeals are brought pursuant to Rule 54(b) of the Federal Rules of Civil
Procedure.
-6-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
control and, therefore, RCI was not liable to Atlas for their alleged negligence. Atlas contends that
the district court erred in ruling that RCI’s workers were, as a matter of law, Atlas’s loaned servants.
A.
We review de novo a district court’s grant of summary judgment. Longaberger Co. v. Kolt,
586 F.3d 459, 465 (6th Cir. 2009). Summary judgment is proper “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to any material
fact and that the movant is entitled to judgment as a matter of law.” FED . R. CIV . P. 56(c)(2). The
moving party has the burden of proving the absence of genuine issues of material fact and its
entitlement to judgment as a matter of law. Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986).
When determining whether the movant has met this burden, we must view the evidence in the light
most favorable to the nonmoving party. Smith Wholesale Co., Inc. v. R.J. Reynolds Tobacco Co.,
477 F.3d 854, 861 (6th Cir. 2007).
B.
Under Kentucky law,
a servant may be loaned or hired by his master for some special purpose so as to
become, as to that service, the servant of the party to whom he is loaned or hired, and
this is true even though the servant is selected, paid, and may be discharged by the
original employer.
Bowen v. Gradison Constr. Co., 32 S.W.2d 1014, 1016 (Ky. 1930). In contrast to a “loaned
servant,”
[a]n “independent contractor” is one who is doing his own work in his own way
. . . that is, he must have some particular task he has a right to complete and an
obligation to complete, and he must be subject to no control in the details of its
-7-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
doing.
Id. at 1017.
In determining whether a worker is a loaned servant/employee or an independent contractor,
[i]t is impossible to lay down a rule by which the status of men working and
contracting together can be definitely defined in all cases as employees or
independent contractors. Each case must depend on its own facts, and ordinarily no
one feature of the relation is determinative, but all must be considered together.
Ordinarily the question is one of fact. The principal consideration in determining the
question is the right to control the manner of doing the work. Generally speaking,
it may be stated that, if the employee is under the control of the employer, he is a
servant or employee and not an independent contractor, but, if in the performance of
the work he is not under the control of the employer, he is an independent contractor.
However, it is not the actual exercise of the right by interfering with the work but the
right to control which constitutes the test.
Id. at 1019 (citation and internal quotation marks omitted).
The district court held:
[I]t is clear that Atlas, not RCI, had the ultimate right to control the work done at the
Distribution Center. In viewing the facts in the light most favorable to Atlas, it is
undisputed that Atlas controlled the scope of the work, provided the rack repair kits
to perform the work, directed RCI to use particular machinery including the propane
generators, generally trained RCI’s employees in how to perform the work, instructed
RCI’s employees to identify themselves as Atlas’ employees, and requested daily
productivity reports from RCI’s crew leader.
Although acknowledging that Atlas did not always control RCI’s workers, the district court
concluded that “Atlas had the right to control the work, regardless of whether [it] exercised that
right.” According to the district court: “[T]he work being done was Atlas’ work, Atlas had the
power to direct how the work was done, and Atlas provided the materials and general methods for
doing the work.” In rejecting Atlas’s contention that RCI was an independent contractor under these
-8-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
circumstances, the district court stated that, “[w]hile certain facts indicate that RCI did not always
follow Atlas’ instructions and made some independent decisions (such as when to allow employees
to take a day off and what welding method to use), these few instances do not detract from the
Court’s conclusion that Atlas had the right to control RCI’s employees.”
C.
We hold that the district court erred in ruling that RCI’s workers were Atlas’s loaned servants
as a matter of law. The district court’s conclusion was based upon erroneous findings of fact and
its failure to construe the evidence of record in the light most favorable to Atlas.
By way of background, Wal-Mart hired Unarco to repair, replace, and install storage racks
that had become damaged and deformed over time after coming into contact with forklifts and other
heavy equipment. Unarco subcontracted the rack repair work to Atlas, which, in turn, subcontracted
it to RCI.
The district court’s finding that “Atlas does not dispute that it controlled the scope of the
work” is contradicted by the evidence of record. It is undisputed that Unarco, not Atlas, determined
the nature and extent of the repairs required at the Distribution Center. RCI’s cross-motion for
summary judgment concedes that Unarco contracted with Atlas “to perform the work to be
performed by Unarco under its contract with Wal-Mart” and that RCI merely “provide[d] the labor
necessary to perform the rack repairs and installations . . . .”
Also inaccurate when viewed in the light most favorable to Atlas is the district court’s finding
that Atlas undisputedly “provided the rack repair kits to perform the work” to RCI. In fact, RCI
-9-
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
acknowledges that “Unarco . . . provided the materials for the welding work that was to be done,
including the rack repair kits and drawings specifying how the repairs were to be made.”
In addition, the district court erroneously implied that Atlas undisputedly made the decision
requiring RCI “to use . . . the propane generators” that caused the release of the carbon monoxide.
Although Atlas concedes that its national account sales manager for products and product manager
for rack repair services, David Onorato, told RCI in an email that “the job is in a Freezer. . . .
[d]efinitely have to use a propane welder[,]” RCI’s own witnesses acknowledged that the directive
came from Wal-Mart, which “demanded” the use of propane-powered generators because it does not
permit gasoline-powered generators in food storage facilities like the London Distribution Center.
Regarding RCI’s claim that Onorato told two of its employees to operate the generators
inside the Distribution Center while performing the work, the evidence reveals a factual dispute.
Onorato denies that he made the alleged communication, and RCI’s crew supervisor at the
Distribution Center, Willie Islas, concedes that, in view of Wal-Mart’s approximately 90,000 square
foot freezer, “it was almost impossible to leave . . . those generators outside and run welding cables
for longer than 500 feet.” Other evidence suggests it was accepted industry practice to place the
generators inside a facility the size of the Distribution Center and close to the work area. Moreover,
Wal-Mart was aware that the propane generators were being used inside, had no policy at that time
prohibiting their use indoors, and did not perceive them to be a hazard.
Nor does the record support the district court’s finding that Atlas required RCI to use other
“particular machinery[.]” As discussed previously, RCI admits that Unarco supplied the rack repair
- 10 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
kits. RCI also concedes that it maintained a list of standard tools and equipment for use during rack
repair work, and it independently selected and provided its crew with the hand and power tools,
welding equipment, and rented generators needed for the job. Apart from the factual dispute
regarding whether Atlas instructed RCI to use propane-powered generators, RCI does not allege that
Atlas furnished it with tools or equipment or required that it use particular equipment.
Although the district court noted correctly that Atlas “generally trained RCI’s employees in
how to perform the work,” it cites no authority, and we know of none, that a business’s prior training
or mentoring of another business is, in itself, sufficient to create a master-servant relationship
between them indefinitely. A master-servant inference arising from the training provided to RCI is
particularly questionable on these facts for several reasons. First, it had been more than a year since
RCI crews last worked alongside Atlas employees to learn the rack repair work, and RCI had
successfully performed such work alone on several occasions. Atlas’s training of RCI employees
was part of its process of “discontinu[ing] the practice of using direct Atlas employees to install and
repair racks[,]” which, in the past decade, had generated only five percent or less of Atlas’s revenue.3
Since 2004, Atlas was “using subcontracted labor exclusively for rack repair projects[.]” By
contrast, RCI derived seventy percent of its revenue from rack repair work. Rather than predestining
a ruling that Atlas controlled or desired to control RCI’s employees in the performance of their work
as a matter of law, this evidence supports the opposite inference as well – Atlas sought to quit the
rack repair business entirely, transfer that portion of its business to RCI, and, to do so, it trained RCI
3
Atlas’s sale of wire mesh storage products accounted for 95% of its revenue.
- 11 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
to work independently and without Atlas’s supervision.
Moreover, the training Atlas provided to RCI was limited. RCI’s employees were
experienced in, and did not require training or instruction in, the use of the welding equipment,
portaband saws, hand tools, and generators needed to repair and install racks. Before forming RCI
in 2003, RCI’s president and co-owner, Walt Thompson, had substantial experience in “conveyor,
dismantle, installs, new rack, used rack, so it kind of ran the whole gamut.” Likewise, Islas was
previously “in charge of [a] warehouse” and had worked with warehouse assembly systems,
installing and repairing them. Islas concedes that Unarco’s rack repair kits came with detailed
instructions and drawings, and Atlas did not deviate from the instructions when training RCI.
According to Islas, “The only thing that the Atlas crew explained to us is how to use the hydraulic
jack, the new piece of equipment that we were going to use,” and training on the hydraulic jack took
only “a couple of days.”4
Further, Atlas never trained RCI to perform rack repair work or installation in a freezer
facility like the Distribution Center; rather, its training was confined to ambient temperature
warehouses. Nor did Atlas provide instructions to RCI about working with generators indoors.
Most significantly, the district court’s conclusion that Atlas, as a matter of law, controlled
or “had the ultimate right to control” RCI’s employees and the manner in which they performed their
work is simply unsupported by the evidence of record. In this regard, it is clear that RCI determined
4
The 20-ton Easy Lift hydraulic jack can lift up to 40,000 pounds and was used to hold the
upper levels of the rack system in place while the support struts were repaired.
- 12 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
the number of employees to send to the Distribution Center, and it selected all crew members,
including the welders and crew supervisor Islas. Islas “supervised the RCI workers[] [and] direct[ed]
the work performed by them[] on a daily basis[.]” When asked in his deposition, “[W]ho’s in charge
of the crew?” RCI co-owner Walt Thompson responded unambiguously, “The supervisor.”
Walt Thompson’s wife and RCI co-owner, Sheri Thompson, testified that RCI instructs its
employees on “[t]he specifics of the job” to be completed and that, before beginning work at a
particular site, RCI’s supervisors “inform the crew as to any hazards, dangers or anything the crew
should be aware of[.]” If a problem occurred at the job site, Islas was required to report it to RCI’s
home office. RCI’s control over its workers was exemplified when the London crew experienced
difficulties with the rented generators expelling their dipsticks. Islas consulted with RCI co-owner
John McDermott in RCI’s home office about the matter, but he neither informed nor sought guidance
from Atlas.
If an RCI employee was injured on the job, Islas had to inform RCI and Wal-Mart, but not
Atlas. Sheri Thompson agreed that if “there is an incident where an RCI employee claims some type
of injury . . . or . . . some physical problem on the job, RCI doesn’t rely upon Atlas to investigate
that injury”; rather “RCI would take its own steps to try to find out what was going on . . . .” When
RCI crew members experienced symptoms of headache and fatigue at the Distribution Center, it was
Islas, not Atlas, who made the decision to give them the day off, and Islas only informed Onorato
because Islas considered himself to be a “professional” whose duty was to notify Onorato of delays
in the project’s completion.
- 13 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
Also indicative of RCI’s autonomy is its selection of the welding technique used at the
Distribution Center. Although Atlas trained RCI using the metal inert gas, or “MIG,” welding
method, RCI made the independent decision to use the “arc” welding procedure, which purportedly
requires “different technique, equipment and skills” than the MIG type. (Internal quotation marks
omitted.)
In stark contrast to RCI, Atlas had no personnel at the job site. Onorato was the only Atlas
employee who maintained “direct communications” with RCI at the Distribution Center, and he did
so from a remote location while lacking “personal expertise [in] installing or repairing racks.”
Onorato swore in his affidavit that “RCI had total control over the manner in which RCI
accomplished the final result[,]” and neither Atlas, nor Onorato specifically, had the authority to
terminate RCI employees. Although the district court observed correctly, and Atlas concedes, that
Islas was required to advise Onorato of its progress daily, Onorato stated that he “never instructed
RCI to complete specific tasks at a specific time[.]” RCI cites no authority that mere communication
between contractors about the progress of work that is of mutual interest demonstrates control as a
matter of law – on these facts, it may more accurately suggest cooperation, as well as preoccupation
with results, rather than methods.
The district court deemed it crucial to the loaned servant inquiry that Onorato instructed RCI
crew members to hold themselves out as Atlas employees. Although Atlas admits this fact, RCI and
the district court fail to support their view that it relegated RCI employees to “loaned servant” status
- 14 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
as a matter of law. Notably, RCI does not expressly argue theories of apparent authority or estoppel,5
even though it implies them, and the district court did not base its ruling on either. Moreover, it
remains that “[t]he principle consideration in determining the question [of whether a special
employment relationship exists] is the right to control the manner of doing the work[,]” Bowen, 32
S.W.2d at 1019, not simply whether the parties “believe they are creating” a master-servant
relationship, Ky. Unemployment Ins. Comm’n v. Landmark Cmty. Newspapers of Ky., Inc.,
91
S.W.3d 575, 579-80 (Ky. 2002) (quoting Restatement (2d) of Agency § 220(e)(2)), or how third
parties might have perceived RCI crew members’ business affiliation, see United Eng’rs & Constrs.,
Inc. v. Branham,
550 S.W.2d 540, 543 (Ky. 1977) (“[I]n determining whether one is an agent or
servant or an independent contractor, substance prevails over form, and . . . the main dispositive
criterion is whether it is understood that the alleged principal or master has the right to control the
details of the work.”). It is undisputed that Atlas and RCI agreed to represent themselves as a single
business – Atlas – so that both companies would not compete for Unarco’s business. There is no
evidence suggesting that this form over substance business arrangement granted Atlas control over
the manner in which RCI completed its work.
Finally, in holding that RCI’s employees were Atlas’s loaned servants as a matter of law, the
5
In any event, apparent authority would support an agency, not necessarily a master-servant,
relationship. See Kelley v. S. Pac. Co., 419 U.S. 318, 325 (1974) (“[A] finding of agency is not
tantamount to a finding of a master-servant relationship.”). Moreover, while Kentucky has applied
estoppel to prevent one from denying an agency relationship, see CSX Transp., Inc. v. First Nat’l
Bank,
14 S.W.3d 563, 568-69 (Ky. Ct. App. 1999), neither the district court nor RCI cite authority
invoking the estoppel doctrine in the master-servant context.
- 15 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
district court relied erroneously upon two cases, Tindall v. Perry, 283 S.W.2d 700 (Ky. 1955) and
Decker v. Glasscock Trucking Serv., Inc.,
397 S.W.2d 773 (Ky. 1965). Both cases held that a
master-servant relationship existed, but they did so because the purported special employer was
physically present or controlled, or had the right to control, the details of the alleged loaned servant’s
work. See
Tindall, 283 S.W.2d at 701 (holding that nominal employer “relinquished whatever
control or right of control [it] may have had with respect to that day’s activity” because it neither
“undertook to, [n]or had the right to direct[,]” its employee, and the special employer’s “foreman-in-
charge” was physically present, “instructed” the employee, and had “immediate, ultimate and
residual control” over him) (internal quotation marks omitted);
Decker, 397 S.W.2d at 775 (finding
a master-servant relationship where the alleged master “had the right to control the [servant’s]
trucks[,] . . . could work a truck or not work it on a particular day[,] . . . could designate when and
where each load of material was to be transported[,] . . . could direct the route over which it was to
be hauled[,] . . . could begin or terminate the movement of a truck at any time[,] . . . furnished the
gasoline and the spare parts, at cost, which was later deducted, . . . paid [the servant] on the basis of
so much per ton per mile [,] . . . and [i]n truth, [the servant’s] truck driver was working regularly for
[the master] under continuing instructions in the performance of daily work that was an integral part
of [the master’s] business.”). Tindall and Decker are clearly distinguishable from the present case.
Atlas had no presence at the job site, and no Atlas employee directed the manner and details of the
rack repair work.
The present case more closely resembles Ambrosius Indus., Inc. v. Adams, 293 S.W.2d 230
- 16 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
(Ky. 1956). There, Holloway bought a concrete mixing plant from Watson. Watson sent its
employee, Adams, to the plant to help with some assembly. Holloway also rented a crane and two
crewmen from Ambrosius to lift various plant structures into position. Adams was injured while
assisting employees of Ambrosius and Holloway with certain crane operations. The court considered
whether the Ambrosius employees were functioning as loaned servants of plant owner Holloway at
the time of Adams’s injury. Holding that the issue presented a question for a jury, the court held:
The argument of the Ambrosius Company is predicated almost entirely on the
assumption that because the Holloway Company was in general charge of the
erection of the cement mixing plant, that company had the right of control over all
details of the work. We think that under the evidence there was a jury question as
to whether the parties contemplated that the Holloway Company would have any
right to control the details of the work of the crane. A fair conclusion from the
evidence would be that the Holloway Company had no right to control the manner
of operating the crane, or the mechanical assembling of the plant, but had control
only as to coordinating these separate activities to achieve the ultimate result desired.
Id. at 237.
Like Ambrosius Indus., Inc., a reasonable inference in the present case is that Atlas’s role was
merely to coordinate the repair project between Wal-Mart, Unarco, and RCI, not to control, or have
the right to control, the manner in which RCI repaired and installed the racks. Because the master-
servant inquiry is “[o]rdinarily . . . one of fact[,]” Bowen, 32 S.W.2d at 1019 (citation and internal
quotation marks omitted), and we believe that general rule to be applicable on these facts, we hold
that the district court erred in deciding the issue as a matter of law.
IV.
For these reasons, we (1) dismiss Unarco’s appeal as moot and (2) reverse the district court’s
- 17 -
Nos. 09-5182 & 09-5183
Asher, et al. v. Rack Conveyor Installation, Inc., et al.
grant of summary judgment to RCI and remand for further proceedings consistent with this opinion.
- 18 -
