Court: Court of Civil Appeals of Alabama; August 8, 2014; Alabama; State Appellate Court
Dolores Owen, both individually and as the personal representative of Patricia Owen's estate, appeals a summary judgment from the Morgan Circuit Court favoring Tennessee Valley Printing Company, Inc. (TVPC). The case stems from an incident on August 31, 2011, when Felton Leon Johnson, while delivering newspapers for TVPC, struck Patricia Owen, leading to her injuries and subsequent death. Initially filed on September 8, 2011, Owen's complaint was amended to include claims against Johnson, TVPC, Decatur Ventures, LTD, and fictitious defendants. TVPC's summary judgment motion, filed on January 30, 2012, contended that Johnson was an independent contractor, not an employee, and that Leon was merely assisting Johnson, absolving TVPC of liability. Owen countered on February 25, 2013, asserting that Johnson was an employee and Leon acted as her subagent. After further submissions and a reply from TVPC, the trial court granted summary judgment in favor of TVPC on April 15, 2013, dismissing all claims. Owen's postjudgment motion was denied, and she appealed to the Alabama Supreme Court, which transferred the case to this court.
Key facts include Mike McKillip's affidavit stating that TVPC employs independent contractors for newspaper deliveries, detailing the nature of their contracts. Johnson, who had a long-standing agreement with TVPC for both single-copy and home delivery routes, confirmed her independent contractor status, emphasizing her control over the delivery operations and the hiring of helpers. The contract stipulated that Johnson managed her business independently, having the right to determine operational methods and bear associated costs.
Johnson was responsible for providing Workers' Compensation and Unemployment Insurance as mandated by law for all personnel involved in her delivery operations. If she failed to deliver her route and did not provide a suitable substitute, she would incur a daily fee of $50 for City routes and $75 for State routes. To qualify as an independent contractor, applicants must submit an application demonstrating vehicle ownership, a valid Alabama driver’s license, and minimum required automobile insurance. Johnson's application, which included details of her vehicles and designated Leon as her substitute driver, was submitted as evidence.
Johnson often employed non-family substitute drivers but sometimes relied on Leon and her son. She acknowledged her obligation to ensure deliveries were made, regardless of circumstances. Her contract stipulated that newspapers must be delivered in a complete and satisfactory manner by 6:00 a.m. daily, recognizing the perishable nature of newspapers. It prohibited unauthorized advertising on the newspapers and required prior approval for any additional material. Penalties were established for customer complaints, with a $1.00 charge for each complaint up to ten, and $2.00 for each complaint thereafter.
Johnson stated that TVPC did not verify her deliveries, relying solely on customer complaints for awareness of missed deliveries. If she failed to deliver, a TVPC employee would make the delivery, incurring a $5.00 charge per newspaper delivered. There were no penalties for late deliveries on her single-copy route, and Johnson's primary motivation for prompt delivery was to boost sales. She typically arrived at the loading dock between 1:00 a.m. and 1:30 a.m. to collect newspapers, receiving notifications of late arrivals from a TVPC district manager. Johnson was responsible for preparing the newspapers for delivery, especially on Sundays when additional binding was required. Leon confirmed that if the delivery truck was late, he would wait at the loading dock.
McKillip's deposition outlined the arrangement between TVPC and independent contractors for newspaper distribution, indicating that newspapers are sold to contractors at varying wholesale prices, with Johnson's prices set at $0.40 for daily and $1.00 for Sunday editions. TVPC recommends retail prices of $0.50 and $1.25, respectively, but contractors can adjust these prices independently; however, Johnson claimed she had no input in price setting. McKillip noted that Johnson's profit comes from the difference between her selling price and her wholesale price, with her bearing all operational costs, including transportation and rental of newspaper racks at $0.50 per week. Johnson also purchased delivery bags for the home-delivery route.
TVPC recently implemented a gas-allowance program to assist contractors when gas prices exceed $3.50 per gallon, which Johnson acknowledged as her only financial support from TVPC. McKillip highlighted that Johnson must pay for newspapers regardless of sales success, though TVPC reimburses her for unsold papers. Johnson assumes the risk of theft from her racks and does not report her profits to TVPC.
Payments made to TVPC by customers can only be credited to the contractors’ accounts without endorsement. Johnson noted that most customers pay TVPC directly, though a few pay her directly. Both McKillip and Johnson confirmed that TVPC does not provide insurance for independent contractors nor deducts taxes from their payments, treating them as independent entities rather than employees, with 1099 forms issued instead of W-2 forms. Additionally, McKillip stated that there are no incentive programs for contractors, although Johnson mentioned having heard of occasional bonuses and promotions that provided her with extra earnings.
McKillip's affidavit asserts that TVPC did not exert control over how Mrs. Johnson executed her duties under her contracts, lacking any training or operational manuals for independent contractors. The only governing document is the contract itself. Training is minimal, consisting mainly of route familiarization through ride-alongs, maps, customer lists, or audiotapes from previous contractors. Independent contractors are not mandated to follow specific routes or quantities for newspaper distribution. Johnson confirmed she received no formal training or manuals but was shown the route by a TVPC employee and had access to customer lists. She could enter parking lots from various directions and often restocked her vehicle from home due to space constraints. Leon, another contractor, had no formal training aside from guidance from Johnson. A 'Training Check List' dated May 17, 2007, was introduced, showing some operational phrases but lacking context. It is undisputed that TVPC does not provide vehicle signage, business cards, or clothing with branding, though they once provided gloves with a logo. Johnson mentioned occasionally using a light on her vehicle for deliveries, which was not a TVPC requirement. McKillip noted that Johnson had the discretion to relocate newspaper racks as needed.
Johnson was bound by a single-copy-route contract that required her to exert her best efforts to grow the number of paid subscribers in her designated area. Testimony from McKillip indicated that independent contractors could retain or transfer new subscribers acquired outside their territory, and district managers at The Decatur Daily ensured the delivery of newspapers but did not supervise or reprimand independent contractors. Johnson identified Laura Behand as her supervisor, describing her as a liaison between the independent contractors and The Decatur Daily, with the authority to direct her work, including route changes. Johnson noted that while she was sometimes advised to use vehicle flashers during deliveries, the decision was generally left to her discretion. She mentioned that repeated missed deadlines could lead to route reassignment. Monthly 'lead sheets' provided by TVPC included important operational information for independent contractors. After an accident involving Leon, Behand arranged for a substitute to cover Johnson’s route. Leon referred to Behand as Johnson’s supervisor but later acknowledged uncertainty about the specifics of their working relationship, asserting that Johnson worked for herself rather than The Decatur Daily. The job description for TVPC’s district managers emphasized their role in managing independent contractors and ensuring service quality. Johnson's contract allowed her to engage in other business activities, provided they did not conflict with her obligations under the contract; however, she chose not to deliver for other newspapers. She confirmed that TVPC did not classify her as an employee for tax purposes, instead categorizing her as a direct seller, and acknowledged that she did not receive employee benefits from TVPC.
The single-copy-route contract stipulates that Johnson is neither an agent nor an employee of TVPC, prohibiting her from hiring or contracting on TVPC's behalf and barring the use of any of TVPC's trademarks or logos. Johnson is also restricted from using her relationship with TVPC to open bank accounts, and TVPC assumes no liability for any losses or damages arising from her actions. Johnson agrees to indemnify TVPC for any injuries or damages involving herself or her agents. Testimony from McKillip indicates that independent contractors, unlike employees, are not subject to drug testing, and there are no specific procedures for reporting accidents involving them. The contract can be terminated by either party with 28 days' notice or immediately by TVPC for any reason; routes can only be reduced for underperformance. The standard of review for summary judgment is de novo, requiring the court to assess if there are genuine issues of material fact and if the movant is entitled to judgment as a matter of law. In the appeal, Owen contends that the trial court wrongly granted summary judgment in favor of TVPC, arguing there is a genuine issue about Johnson's status as either an independent contractor or an employee, referencing relevant Alabama case law.
The supreme court established criteria for determining whether an individual is classified as an independent contractor or an employee/agent, emphasizing that the question of agency is generally factual and should be resolved by a jury. The critical test for agency involves the right of control—both in terms of how tasks are performed and the outcomes achieved. An agency relationship demands that the principal retains the authority to dictate not only the tasks but also the means of execution. It is clarified that mere supervision or inspection by an employer does not create an agency relationship, particularly if the purpose is only to ensure compliance with plans and specifications.
The court found that the lower court erroneously identified Ott as an independent contractor based on evidence showing Commercial Dispatch's extensive control over Ott's work, including supervision and specific delivery instructions. In contrast, the current case involving Johnson highlighted her autonomy in deciding her delivery schedule and methods, with no oversight from TVPC. Johnson's discretion in her route execution and the absence of any verification by TVPC regarding her deliveries further supported her status as an independent contractor.
Moreover, the court pointed out that features distinguishing Ott's relationship with Commercial Dispatch—such as non-compete agreements, optional insurance offerings, and specific delivery instructions—were not present in Johnson's case. Lastly, it was noted that the Brown decision was influenced by the previous 'scintilla' rule, which prevents summary judgment if any evidence supports the nonmovant's position.
Commercial Dispatch needed to demonstrate the absence of an agency relationship to obtain summary judgment. Under the current 'substantial evidence' rule, Owen must provide substantial evidence of an agency relationship to counter TVPC's summary judgment motion. The case differs from Brown and is also compared to Jenkins v. Gadsden Times Publishing Corp., where the court ruled that Connie Chambers was an independent contractor based on her relationship with the Gadsden Times. Jenkins argued that various factors indicated she was an employee, such as being directed on her delivery route, taking instructions from a supervisor, and being paid a set salary. However, the court found that there was substantial, albeit conflicting, evidence regarding her independence.
In the current case involving Johnson, despite some evidence of a structured route and oversight from a district manager, key indicators of an agency relationship found in Jenkins were absent. Johnson was contractually required to solicit customers, TVPC did not instruct her on handling customer complaints, and she was not permitted to endorse checks made out to TVPC. Additionally, TVPC did not provide insurance, set salaries, or dictate the specifics of her delivery route. Given that Owen presented even less evidence of an agency relationship than in Jenkins, the case is deemed distinguishable from both Jenkins and Brown.
In Atchison v. Boone Newspapers, Inc., 981 So.2d 427 (Ala.Civ.App.2007), the court upheld a summary judgment determining that Linda Atchison, a newspaper delivery person, was classified as an independent contractor for workers' compensation purposes. Boone Newspapers, Inc. presented evidence supporting their motion for summary judgment, including the 'Independent Contractor Distribution Agreement Home Subscriber Delivery,' which explicitly designated Atchison as a self-employed independent contractor responsible for delivering The Clanton Advertiser. Key provisions of the contract included Atchison's rights to control delivery methods, select necessary equipment, incur all related expenses, hire employees, and conduct other business activities, including delivering other newspapers. Atchison was required to deliver the newspapers by 6:30 a.m. and manage subscriber complaints with discretion.
A second contract, 'Independent Contractor Distribution Agreement TMC Delivery,' mirrored the first but pertained to The Clanton Advertiser Extra, with different payment terms. Boone Newspapers submitted a 1099-Misc tax form showing Atchison was compensated as a non-employee without payroll tax deductions. Additional documentation included checks payable to Atchison and an affidavit from Michael R. Kelly, president of Clanton Newspapers, asserting Atchison's independent contractor status and lack of control over her delivery methods. The court found this evidence sufficient to affirm her classification as an independent contractor.
Clanton Newspapers, Inc. compensated Atchison for the difference between the wholesale newspaper prices and subscriber charges, specifically 10 cents per copy for The Clanton Advertiser and 8 cents for The Clanton Advertiser Extra. Atchison also received hardship allowances of $250 in August 2004 and $300 in September and October 2004 due to delivery difficulties. The case of Atchison is deemed analogous to the current matter, despite Owen's attempt to distinguish it based on its classification as a workers’ compensation case. The legal standards for determining independent contractor status versus employee status are consistent across both personal injury and workers' compensation contexts.
Owen's arguments that Atchison is different due to a lack of opposing evidence are countered by the assertion that even under favorable considerations for Owen, there is insufficient evidence to classify Johnson as an employee of TVPC. Key points include: Johnson and TVPC's mutual agreement on her status as an independent contractor, her autonomy over delivery methods, and the absence of employee benefits or salary. Although Johnson claimed supervision by Behand, the determination of independent contractor status is not dependent on party characterizations or minimal oversight rights.
Owens referenced factors from the Restatement (Second) of Agency and external case law to support her position, but the court found adequate binding authority for resolution without needing to rely on these persuasive sources. Finally, it was concluded that the trial court correctly applied the summary judgment standard, affirming that Johnson was not an employee of TVPC, which led to the proper summary judgment in favor of TVPC. A separate "Training Check List" related to the home-delivery route was also introduced.
