In this workers' compensation case, plaintiff appeals as on leave granted
For more than 25 years, plaintiff worked as a painter on the Mackinac Bridge. Throughout that time, he worked for various employers. In May 2005, plaintiff was working for Allstate Painting Company, Inc. While at work on May 6 and 9, 2005, plaintiff injured his right knee. Allstate did not have workers' compensation insurance.
Although plaintiff was apparently aware that his employer lacked workers' compensation insurance at the time, he nonetheless filed a petition seeking benefits from Allstate. Allstate did not appear in the action. On May 26, 2006, the magistrate granted plaintiff an open award of benefits. Allstate did not appeal the magistrate's decision. However, plaintiff was unable to collect under the magistrate's award.
Plaintiff thereafter filed the instant action seeking benefits from American Painting and the Authority pursuant to § 171 of the Worker's Disability Compensation Act (WDCA),
Defendants requested, among other things, that the magistrate dismiss plaintiff's § 171 claim against them because res judicata barred plaintiff's second action. In response, plaintiff argued that res judicata did not bar his second action because no mandatory joinder of parties exists in workers' compensation cases, because defendants had not been parties to the first action, and because defendants were not in privity with Allstate.
The magistrate acknowledged that a plaintiff is not generally required to bring all possible workers' compensation claims in one single action. Nevertheless, she noted that a broad application of res judicata would bar certain workers' compensation claims that a plaintiff could have brought, but did not bring, in the first action. The magistrate concluded that plaintiff could have brought his § 171 claim against defendants in the earlier action:
Plaintiff appealed the magistrate's dismissal of his claim to the WCAC, which affirmed in a 2-1 decision. The WCAC majority agreed with the magistrate's determination
In his arguments to the WCAC, plaintiff relied on Viele v. DCMA, 167 Mich.App. 571, 423 N.W.2d 270 (1988), modified in part on other grounds 431 Mich. 898, 432 N.W.2d 171 (1988), in which this Court ruled that res judicata did not bar the plaintiff's claim against his alleged statutory employers even though his direct employer had already been ordered to pay benefits after a separate hearing. However, the WCAC majority distinguished the facts of the present case from those presented in Viele:
WCAC Commissioner Glaser dissented, concluding that plaintiff's subsequent § 171 claim against defendants was not identical to the claim raised against Allstate in the first action:
Commissioner Glaser also disputed the WCAC majority's determination that Viele was distinguishable:
Plaintiff filed an application for leave to appeal the decision of the WCAC, which this Court initially denied. Our Supreme Court then remanded the matter to this Court for consideration as on leave granted.
Appellate review of WCAC decisions is limited. Rakestraw v. Gen. Dynamics Land Sys., Inc., 469 Mich. 220, 224, 666 N.W.2d 199 (2003). "In the absence of fraud, we must consider the WCAC's findings of fact conclusive if there is any competent evidence in the record to support them." Id.; see also MCL 418.861a(14).
On the other hand, questions of law in workers' compensation cases are reviewed de novo. MCL 418.861; MCL 418.861a(14); DiBenedetto v. West Shore Hosp., 461 Mich. 394, 401-402, 605 N.W.2d 300 (2000). We review de novo as a question of law whether res judicata applies in a given case. Ditmore v. Michalik, 244 Mich.App. 569, 574, 625 N.W.2d 462 (2001). Questions of statutory interpretation are also reviewed de novo on appeal. Brackett v. Focus Hope, Inc., 482 Mich. 269, 275, 753 N.W.2d 207 (2008); Rakestraw, 469 Mich. at 224, 666 N.W.2d 199.
Much of the actual dispute in this case arises out of the parties' varying interpretations of this Court's opinion in Viele. In Viele, 167 Mich.App. at 574, 423 N.W.2d 270, the plaintiff filed separate petitions for workers' compensation benefits against his direct employer and his alleged statutory employers. However, "[f]or reasons unclear from the record," the plaintiff's claim against his direct employer and his claim against his alleged statutory employers were not consolidated, and the case initially proceeded to trial against the direct employer only. Id. at 574-575, 423 N.W.2d 270. Following trial, the direct employer was ordered to pay benefits. Id. at 575, 423 N.W.2d 270. Shortly thereafter, the direct employer filed for bankruptcy. Id.
On appeal, this Court held that the WCAB had erred by ruling that res judicata barred the subsequent proceedings on plaintiff's § 171 claim. Id. at 578-579, 423 N.W.2d 270. This Court reviewed the relevant text of § 171, which discusses the relationship between a statutory employer and a direct employer. Id. at 580, 423 N.W.2d 270. On the basis of the statutory text, the Viele Court held that a "statutory employer is in privity with the direct employer and may properly invoke the doctrine of res judicata defensively to bar the relitigation of claims which could have been raised in the prior action between the disabled person and the direct employer, but were not." Id. at 580, 423 N.W.2d 270. However, despite the fact that the plaintiff's statutory employers were in privity with the plaintiff's direct employer, the Viele Court went on to explain:
Turning to the present case, plaintiff argues that this Court's opinion in Viele is directly on point and should control the outcome of this appeal. Plaintiff maintains that the specific reasons underlying the bifurcation of the plaintiff's claims in Viele were unimportant to the outcome. Instead, plaintiff contends, the Viele Court held as a matter of law that an injured employee is entitled to proceed separately against his or her direct employer and his or her alleged statutory employers and that an injured employee necessarily cannot raise a § 171 claim in an action brought against the direct employer only. Plaintiff also notes the WCAC's longstanding recognition that there is no mandatory joinder of parties in workers' compensation proceedings. On the basis of Viele, and given the absence of a mandatory party-joinder rule in workers' compensation cases, plaintiff argues that he was fully entitled to sue his direct employer first, reserving for a later action any additional claim that he may have had against his alleged statutory employers under § 171. He further contends that, like the
Defendants respond by contending that the Viele opinion is distinguishable from the case at bar for several reasons. First, they point out that unlike plaintiff's § 171 claim in the instant case, which was not filed until after a decision had already been rendered with respect to plaintiff's claim against Allstate, the plaintiff's § 171 claim in Viele had been filed before the plaintiff's claim against his direct employer was litigated. Further, defendants suggest that the plaintiff's claim against his direct and alleged statutory employers in Viele were not consolidated because the Bureau of Workers' Disability Compensation (Bureau)
While some of this Court's holdings in Viele are unmistakable, others are not so clear. For example, as noted previously, the Viele Court observed that the plaintiff's § 171 claim in that case was "not a claim which plaintiff could have raised in his prior action against [the direct employer]." Viele, 167 Mich.App. at 581, 423 N.W.2d 270. The parties do not agree concerning what, exactly, the Viele Court meant by this statement. As explained earlier, plaintiff interprets this statement as a broad holding that injured employees are entitled to proceed separately against their direct and statutory employers and that such employees necessarily cannot raise a § 171 claim in an action brought against their direct employers only. On the other hand, defendants argue that the essential rationale for this statement—i.e., the reason why the Viele Court stated that the plaintiff in that case could not have raised his § 171 claim in the first action against his direct employer—was that the Bureau had bifurcated the claims in Viele contrary to the plaintiff's wishes. Defendants find support for their argument in the WCAC majority's opinion in this case, which stated that "[t]he reason the [Viele] plaintiff could not have `raised' the statutory employment issue in the first trial was because the Bureau bifurcated the issues by insisting on separate trials." Bennett, 2008 Mich. ACO 163 at 9.
The obvious problem with defendants' argument (and the WCAC majority's statement) concerning this issue is that the Viele Court's opinion contained absolutely no language to suggest that the Bureau mandated the bifurcation of the plaintiff's claims in that case. Indeed, the Viele Court specifically observed that it was "unclear from the record" why the plaintiff's § 171 claim against his alleged statutory employers had not been consolidated with
The language of Viele's footnote 2 belies defendants' argument as well. In footnote 2, the Viele Court clearly held that an injured worker is entitled to sue his or her direct employer, alleged statutory employer, or both, and that the decision to sue one of these entities instead of the other is within the sole discretion of the injured worker. Id. at 579-580 n. 2, 423 N.W.2d 270. Specifically, the Court noted that even though a plaintiff is entitled to only "one award of compensation benefits for his disability under the WDCA," "[w]hether [a] plaintiff proceeds against his direct employer or the statutory employer, if any, has been viewed as being at the option of the disabled employee." Id. The Viele Court further suggested that a judgment against a plaintiff's direct employer generally does not bar or terminate that plaintiff's subsequent claim against his or her potential statutory employer, which is liable for the same injury. Id., citing 2 Restatement Judgments, 2d, § 49, p. 34. Thus, through the language of footnote 2, the Viele Court appears to have implicitly held that an injured employee may sue his or her direct employer first, and may reserve for a subsequent proceeding any additional claim that he or she may have against his or her alleged statutory employers under § 171. Whatever truth there may be to the proposition that the Bureau insisted on bifurcating the plaintiff's claims in Viele, it simply does not appear that the Viele Court considered this to have been decisive to the outcome of that case.
Given the language of footnote 2, we are inclined to adopt plaintiff's broad reading of Viele. It strikes us that the Viele Court endorsed plaintiff's view, holding that an injured employee is entitled to proceed separately against his or her direct and statutory employers and that an award of benefits against a plaintiff's direct employer does not bar that plaintiff from asserting a § 171 claim against his or her statutory employer in a subsequent action. See Viele, 167 Mich.App. at 580 n. 2, 423 N.W.2d 270. There is simply no other reasonable way to read the text of footnote 2. Nevertheless, for the reasons that follow, we need not definitively decide which interpretation of Viele is correct. As we will explain, there exist compelling reasons, wholly apart from this Court's opinion in Viele, to conclude that the doctrine of res judicata does not bar plaintiff's § 171 claim against defendants in this case.
It is true, of course, that res judicata (also known as claim preclusion) applies in workers' compensation proceedings. Gose, 409 Mich. at 159, 294 N.W.2d 165; Banks v. LAB Lansing Body Assembly, 271 Mich.App. 227, 229, 720 N.W.2d 756 (2006).
To be sure, the "broad application" of res judicata applicable in Michigan workers' compensation cases bars not only "a second
It is equally true, however, that res judicata is a "judicially created" doctrine, Pierson Sand & Gravel, Inc. v. Keeler Brass Co., 460 Mich. 372, 380, 596 N.W.2d 153 (1999), and must not be applied when its application would subvert the intent of the Legislature, Riley v. Northland Geriatric Ctr. (After Remand), 431 Mich. 632, 642, 433 N.W.2d 787 (1988) (opinion by GRIFFIN, J.); Juncaj v. C & H Indus., 161 Mich.App. 724, 734, 411 N.W.2d 839 (1987), vacated on other grounds 432 Mich. 1219, 434 N.W.2d 644 (1989); see also Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1568 (C.A.Fed., 1996) (observing that "an administrative agency decision, issued pursuant to a statute, cannot have preclusive effect when [the Legislature], either expressly or impliedly, indicated that it intended otherwise").
We conclude that application of res judicata to bar plaintiff's subsequent action in the present case would subvert the intent of the Legislature because it would effectively read a rule of mandatory party joinder into the text of § 171. The WCAC has consistently recognized that the WDCA does not require the joinder of parties in workers' compensation proceedings. See, e.g., Woodard v. Sebro Plastics, Inc, 2002 ACO 263; Hubbard v. Laidlaw Transit Co, 2000 ACO 406. We agree with the WCAC's determination that the WDCA generally does not require the joinder of parties, especially in the context of the statutory employment provision of § 171.
Our primary responsibility when interpreting a statute such as § 171 is to ascertain and give effect to the intent of the Legislature. Frankenmuth Mut. Ins. Co. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998). The best evidence of the Legislature's intent is the language of the statute. Neal v. Wilkes, 470 Mich. 661, 665, 685 N.W.2d 648 (2004). Section 171 contains no language mandating the joinder of parties. But it is clear that the Legislature could have included such language had it wanted to. For example, in several other statutes the Legislature has expressly mandated the joinder of parties as defendants. See, e.g., MCL 500.3172(3)(d) (mandating the joinder of certain parties as defendants in "assigned claims" litigation under the no-fault act); MCL 560.224a(1) (mandating the joinder of various parties as defendants in actions to revise or vacate recorded plats under the Land Division Act); MCL 600.3810(2) (mandating the joinder of chattel mortgagees, assignees, and lienholders as defendants in nuisance-abatement actions brought against vehicle owners under chapter 38 of the Revised Judicature Act). Although none of these statutory provisions is contained in the WDCA, these examples make clear that the Legislature knows how to enact a statute requiring the joinder of parties when it so desires. See Risk v. Lincoln Charter Twp. Bd. of Trustees, 279 Mich.App. 389, 403-404, 760 N.W.2d 510 (2008).
Even more persuasive, the Legislature has on occasion provided mechanisms for compelling the joinder of parties in certain sections of the WDCA itself. Specifically, the Legislature has provided that when a vocationally disabled worker is employed under the provisions of chapter 9 of the WDCA
As the aforementioned statutory provisions demonstrate, the Legislature knows how to (1) require the joinder of parties outright and (2) prescribe methods by which one party may compel the joinder of other parties. Section 171 contains neither type of provision. Had the Legislature wanted to require the joinder of direct and statutory employers in a single action, it easily could have done so by including language to that effect in the text of § 171. See Potter v. McLeary, 484 Mich. 397, 422 n. 30, 774 N.W.2d 1 (2009) (observing, albeit in an unrelated context, that "[i]f the Legislature wanted such a requirement, it could have easily included it"). However, it did not. Accordingly, we conclude that the Legislature intended to allow an injured employee to bring separate actions against his or her direct employer and statutory employer without joining all potentially liable parties as defendants in one single proceeding.
Res judicata and party joinder are naturally distinct concepts. However, the ideas underlying these two concepts are, at least to some extent, interrelated. See 2 Restatement Judgments, 2d, § 51, comment c, pp. 51-52. For instance, it has been suggested that one of the essential purposes underlying a rule of mandatory party joinder is to ensure that any ensuing judgment will have res judicata effect. Patterson Enterprises, Inc. v. Bridgestone/Firestone, Inc., 812 F.Supp. 1152, 1155 (D.Kan., 1993). Similarly, application of the doctrine of res judicata can work to create a de facto rule of compulsory party joinder. See United States v. Lacey, 982 F.2d 410, 412 (C.A.10, 1992); Drug Purchase, Inc. v. Dubroff, 485 F.Supp. 887, 890 (S.D.N.Y., 1980); see also Day v. Kerkorian, 61 Mass.App. 804, 812, 814 N.E.2d 745 (2004). This is because a plaintiff who sues one party will be required to join as defendants all other parties sharing the same interest in the litigation in order to avoid the res judicata bar. Lacey, 982 F.2d at 412.
This is precisely what has happened here. Given the particular contractual relationship between statutory employers and direct employers, it is beyond dispute
For reasons already explained, we have concluded that the Legislature intended to allow an injured employee to bring separate workers' compensation actions against his or her direct employer and statutory employer without joining all potentially liable parties in one proceeding. Application of the judicially created doctrine of res judicata in a case like this would impermissibly subvert this legislative intent. Riley, 431 Mich. at 642, 433 N.W.2d 787 (opinion by GRIFFIN, J.); Juncaj, 161 Mich.App. at 734, 411 N.W.2d 839. Consequently, we hold that the magistrate and the WCAC erred by applying res judicata to bar this subsequent action against plaintiff's alleged statutory employers under § 171. We reverse the decision of the WCAC and remand this matter to the magistrate with instructions to reinstate plaintiff's § 171 claim against American Painting and the Authority.
We wish to address briefly defendants' suggestion that because plaintiff knew Allstate was uninsured, it was somehow improper or unreasonable for him to proceed initially against Allstate only. As plaintiff's counsel pointed out at oral argument before this Court, plaintiff apparently believed that although Allstate was uninsured, it would still have sufficient assets to pay any resulting award of workers' compensation benefits. However unreasonable this belief might seem with the benefit of hindsight, it is clear that plaintiff was nevertheless entitled to proceed against his uninsured direct employer without joining defendants in the first action. It is true that employers who are subject to the WDCA must either purchase workers' compensation insurance from an authorized insurer or operate as a self-insurer. MCL 418.611(1); see also Wyrybkowski v. Cobra Pre-Hung Doors, Inc., 66 Mich.App. 555, 557, 239 N.W.2d 660 (1976). However, the WDCA does not prohibit an injured worker from bringing a workers' compensation claim against an employer who is not insured and has not complied with MCL 418.611. The Legislature has specifically provided that an injured employee may present an order awarding workers' compensation benefits to the circuit court, that the circuit court "shall render judgment in accordance with the order unless proof of payment is made," and that the court's judgment "shall have the same effect as though rendered in an action tried and determined in the court and shall be entered and docketed with like effect." MCL 418.863.
We also wish to address defendants' prediction that our decision will result in severe prejudice on remand because plaintiff will now be able to invoke the doctrine of res judicata offensively against them. We do not share defendants' concerns. An injured employee may not invoke the doctrine of res judicata offensively against his or her statutory employers in a subsequent proceeding if those statutory employers did not have adequate notice of the previous proceeding against the direct employer. Viele, 167 Mich.App. at 582, 423 N.W.2d 270; see also 2 Restatement Judgments, 2d, § 83(2)(a), p. 266. Unlike the uncertain language from Viele discussed earlier, the Viele Court's holding on this issue was clear. Because American Painting and the Authority did not have adequate notice of plaintiff's previous action against Allstate, their concern is unfounded.
Lastly, we turn to American Painting's remaining argument that it does not qualify as plaintiff's statutory employer under § 171 because it did not have the requisite contractual relationship with Allstate. Whether an entity such as American Painting constitutes a "principal" within the meaning of § 171 is a question of law. Woody v. American Tank Co., 49 Mich.App. 217, 230, 211 N.W.2d 666 (1973). Because this legal issue was not addressed or decided by the WCAC, we lack the authority to consider it on appeal. MCL 418.861a(14); Calovecchi v. Michigan, 461 Mich. 616, 626, 611 N.W.2d 300 (2000).
The magistrate and the WCAC erred by determining, contrary to the intent of the
Reversed and remanded to the magistrate for reinstatement of plaintiff's claim against defendants consistent with this opinion. We do not retain jurisdiction. As the prevailing party, plaintiff may tax costs pursuant to MCR 7.219.