Thomas Sager v. Innovative Lighting, L.L.C. D/B/A Hawkeye Molding, Inc.

IN THE COURT OF APPEALS OF IOWA

No. 15-0783
Filed May 25, 2016

THOMAS SAGER,
Plaintiff-Appellant,

vs.

INNOVATIVE LIGHTING, L.L.C. d/b/a HAWKEYE MOLDING, INC.,
Defendant-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Monroe County, E. Richard

Meadows Jr., Judge.

An injured plaintiff appeals the district court’s decision granting summary

judgment to the defendant on the question of immunity under Iowa Code section

85.20 (2013). REVERSED AND REMANDED.

George W. Appleby and James W. Carney of Carney and Appleby, Des

Moines, for appellant.

Nicholas T. Maxwell and Michael J. Moreland of Harrison, Moreland,

Webber & Simplot, P.C., Ottumwa, for appellee.

Heard by Vogel, P.J., and Doyle and Bower, JJ.
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VOGEL, Presiding Judge.

Thomas Sager appeals the district court’s decision, granting Innovative

Lighting, L.L.C. d/b/a Hawkeye Molding, Inc.’s (Hawkeye’s) motion for summary

judgment and denying Sager’s cross-motion for summary judgment. The fighting

issue between the parties is whether Sager is considered to be an employee of

Hawkeye. If Sager is an employee, he is precluded from suing Hawkeye for

common law negligence for the injury he suffered while working at Hawkeye’s

facility. See Iowa Code § 85.20 (2013). The district court ruled in favor of

Hawkeye, and Sager appeals, claiming there was no implied or express contract

of employment between himself and Hawkeye. Upon our review, we conclude

the record does not support a conclusion as to whether Sager was, or was not,

an employee of Hawkeye as a matter of law. We therefore reverse the district

court’s summary judgment ruling and remand the matter for further proceedings.

I. Background Facts and Proceedings.

Hawkeye operates a facility in Albia, Iowa, which makes products by

melting material into molds. Hawkeye employs “operators” through a staffing

agency, Jacobson Staffing, to gather and package the products from the

machines. Hawkeye does not directly employ its operators, but it refers all

parties interested in such positions to Jacobson.

The contract between Jacobson and Hawkeye provides the worker is “an

employee of Jacobson Staffing Company.” However, the contract assigns to

Hawkeye the “responsibility to provide supervision for Jacobson’s employee’s

work on your premises or wherever you assign the employee.” Hawkeye can

reject a Jacobson worker if Hawkeye is not satisfied with that person’s work
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performance. Hawkeye provides all direct supervisory control over the Jacobson

workers while they are at Hawkeye’s facility.

The Jacobson workers use all the same facilities as permanent Hawkeye

employees, though Jacobson workers do not wear clothing with Hawkeye’s

insignia. When Hawkeye provides lunch for its workers, it provides lunch for both

permanent employees and temporary workers. It also provides all workers with a

holiday gift in December.

Jacobson workers submit the hours they worked to Hawkeye in the same

manner as permanent Hawkeye employees. Hawkeye then provides the hours

to Jacobson, which issues the paychecks to the Jacobson workers. Hawkeye

pays Jacobson based on the number of hours the temporary employees work

plus a 45% markup. From the percentage markup Jacobson collects its fee and

provides the administrative functions of employment such as unemployment

insurance; workers’ compensation coverage; medical, dental, and vision

insurance; and tax withholdings, for the temporary workers.

Sager moved back to Iowa in late March 2012 and his cousin, Todd

Leavitt, referred Sager to Jacobson so that Sager could start work at the

Hawkeye factory. Sager, along with his cousin, applied to Jacobson, and both

were placed at the Hawkeye factory in April. At the time Sager applied, the job at

Hawkeye was the only work he was offered by Jacobson. Sager was trained and

supervised by Hawkeye employees, who showed Sager the machine he would

be working on each day.

On May 30, 2012, Sager was injured when hot plastic came out of a

machine and landed on the back of his right hand. Sager made a workers’
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compensation claim against Jacobson’s workers’ compensation carrier and

received a settlement. Hawkeye did not file a first report of injury or refer the

injury to its workers’ compensation carrier or Iowa OSHA. Sager returned to

Hawkeye for work after the injury, but he later decided to leave, saying he was

leaving for a better paying job, that he “love[d] working at Hawkeye” but he “just

had a kid so have to have more money.” After he resigned his position at

Hawkeye, Sager did return to Jacobson and was placed in positions for other

customers of Jacobson.

On March 25, 2014, Sager’s attorney sent a letter to Hawkeye stating

Sager was “an employee of Hawkeye via a staffing company (Jacobson

Staffing).” The letter mentioned Sager’s hand injury and asked for the

manufacturer of the injection molding machine that injured Sager. It also asked

for the names of Sager’s supervisors who were responsible for maintaining a

safe working environment. The letter mentioned Sager was in the process of

resolving his workers’ compensation claim but that under Iowa law he could bring

a third party claim against a manufacturer or a co-employee for gross negligence.

Hawkeye’s director of human resources responded to the letter on April 2,

2014, in which she asserted Sager was not a Hawkeye employee on the date of

the injury but instead was an employee of Jacobson. The letter informed Sager’s

counsel that all workers’ compensation claims should be directed at Jacobson

and its insurer. The letter informed Sager’s attorney of Sager’s supervisor the

day of the accident, a Hawkeye employee, and also the manufacturer of the

machine that injured Sager.
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Sager, in an affidavit filed as part of the summary judgment motions,

asserted he was never informed he was an employee of Hawkeye or a “joint

employee” of both Jacobson and Hawkeye. He claimed he never received an

employee manual from Hawkeye or wore any clothing with Hawkeye’s label. He

claimed his “boss” was a Jacobson employee, and he reported to that person

regarding his work. He claimed he never filled out a Hawkeye application or

received any kind of performance review from Hawkeye.

Sager filed suit against Hawkeye on May 21, 2014, alleging Hawkeye was

negligent in several ways, which caused Sager’s injury. Hawkeye filed an

answer denying that it was negligent and asserting Sager’s claim was barred or

reduced by comparative fault. Hawkeye then filed for summary judgement on

October 24, 2014, asserting it was immune from liability under Iowa Code section

85.20. Sager resisted Hawkeye’s motion and filed a cross-motion for summary

judgment, arguing the undisputed facts established he was not an employee of

Hawkeye as a matter of law. Hawkeye filed a resistance to the cross-motion for

summary judgment, and the court held an unreported hearing on the motions on

January 30, 2015. In its ruling in favor of Hawkeye, the district court concluded,

“[T]he parties’ acts and deeds indicate they did intend to enter an employment

relationship.” The court found “only one reasonable inference can be drawn”

from the undisputed facts of the case and that conclusion was that Sager and

Hawkeye “intended to enter into an employment relationship.”

Sager appeals.
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II. Scope and Standard of Review.

Our appellate court reviews the district court’s summary judgment decision

for correction of errors at law. Pitts v. Farm Bureau Life Ins. Co., 818 N.W.2d 91,

96 (Iowa 2012). When determining whether summary judgment is proper, “we

examine the record in the light most favorable to the nonmoving party,” and we

draw “every legitimate inference that can be reasonably deduced from the

evidence.” City of Postville v. Upper Explorerland Reg’l Planning Comm’n, 834

N.W.2d 1, 6 (Iowa 2013) (citations omitted). “The district court properly grants

summary judgment when the moving party demonstrates there is no genuine

issue of material fact and that he or she is entitled to judgment as a matter of

law.” Boelman v. Grinnell Mut. Reins. Co., 826 N.W.2d 494, 501 (Iowa 2013). If

the only conflict in the record concerns “the legal consequences of undisputed

facts,” then the case is properly resolved on summary judgment. Pitts, 818

N.W.2d at 96 (citation omitted). However, “[e]ven if facts are undisputed,

summary judgment is not proper if reasonable minds could draw from them

different inferences and reach different conclusions.” Goodpaster v. Schwan’s

Home Serv., Inc., 849 N.W.2d 1, 6 (Iowa 2014) (citation omitted).

III. Implied Contract of Employment.

Iowa Code section 85.20 provides an employee’s exclusive right and

remedy against the employee’s employer for injuries sustained on the job is

workers’ compensation benefits. However, “an employee may have more than

one employer.” Caterpillar Tractor Co. v. Shook, 313 N.W.2d 503, 506 (Iowa

1981). “[T]he threshold determination in deciding whether a worker falls into the

workers’ compensation scheme is whether the worker entered into a contract of
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hire, express or implied.” Parson v. Procter & Gamble Mfg. Co., 514 N.W.2d

891, 893 (Iowa 1994); see also Iowa Code § 85.61(11) (defining “worker” or

“employee,” in part, as “a person who has entered into the employment of, or

works under contract of service, express or implied, or apprenticeship, for an

employer”).

There is no assertion in this case that Sager and Hawkeye had an express

employment contract. Thus, the question is whether it can be determined as a

matter of law that Hawkeye did or did not have an implied employment contract

with Sager, which would make this issue ripe for summary judgment, or whether

reasonable minds could draw different conclusions from the facts, such that the

issue should be submitted to a factfinder, not decided as a matter of law. It is

ordinarily a question of fact as to whether a contract of hire exists, and there is a

presumption that the general employer, in this case Jacobson, “continues as the

sole employer.” Parson, 514 N.W.2d at 893–94.

When determining whether an implied contract for employment exists, we

“look for evidence of the employee’s consent to an employment relationship with

the alleged special employer.” Id. at 894. In a borrowed-servant situation, our

“primary focus is on the intent of the parties.” Iowa Mut. Ins. Co. v. McCarthy,

572 N.W.2d 537, 542 (Iowa 1997). We may also consider five factors as an aid

to determining whether there is a contractual relationship. Id. Those factors are:

(1) the right of selection, or to employ at will, (2) responsibility for
payment of wages by the employer, (3) the right to discharge or
terminate the relationship, (4) the right to control the work, and
(5) the identity of the employer as the authority in charge of the
work or for whose benefit it is performed.
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Id. (quoting Shook, 313 N.W.2d at 505). But, these factors are of secondary

consideration to the contract requirement. As the Parson court noted, “To rely on

the five factor test as the sole indicator of whether an implied contract for hire

existed renders the worker’s intent irrelevant, contrary to our requirement that

both parties consent to the employment relationship.” 514 N.W.2d at 895 n.2.

Thus, our focus remains whether the parties had an informed and deliberate

intent to enter into an employment relationship. Id. at 895.

In granting Hawkeye’s motion for summary judgment the district court

focused on the five factors, noting:

[Hawkeye] had the right of selection, or to employ at will.
[Hawkeye] was free to reject any employee sent to them by
contacting Jacobson within 48 hours of the assignment. Second,
. . . while Jacobson was responsible for directly paying [Sager’s]
wages, Jacobson was being paid by [Hawkeye] based upon the
number of hours that [Sager] had worked. Third, [Hawkeye] had
the right to terminate an employee. [Hawkeye] only needed to alert
Jacobson that an employee was unsatisfactory, and Jacobson
would replace that employee as quickly as possible. Fourth,
[Hawkeye] had exclusive control over [Sager] at work. While the
Jacobson-[Hawkeye] contract limited an employee’s job
responsibility to those stated in writing, [Hawkeye] had complete
control as to which specific tasks an employee would undertake, as
well as the manner of doing so. [Hawkeye] showed [Sager] the
machines he would be working on and [Hawkeye] provided
[Sager’s] on-the-job training. [Sager’s] supervisors at work were
Clovie Coffman and Todd House, permanent employees of
[Hawkeye]. Also, Jacobson had no managers or supervisors on-
site in [Hawkeye’s] plant. Finally, the work [Sager] was performing
was being performed for [Hawkeye’s] benefit. . . . Jacobson
received a contractual benefit, but it was [Hawkeye’s] business
purpose that was furthered by [Sager’s] work.

The district court likened this case to Jones v. Sheller-Globe Corp., 487

N.W.2d 88, 91 (Iowa Ct. App. 1992), where our court determined as a matter of

law that the temporary worker was an employee of both the labor broker and the
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labor broker’s customer. The Jones court found the labor broker’s customer had

the right to accept or reject any temporary employee, but yet had no say in

whether that worker remained employed by the labor broker. 487 N.W.2d at 91.

While the broker had the responsibility to pay the worker, the customer paid the

broker based on the number of hours the employees worked. Id. The customer

could discharge the worker from the daily work assignment by requesting the

broker remove the employee. Id. The customer maintained full authority to

control the work while the employee was at the job site, and the actual work

performed was for the benefit of the customer. Id. The Jones court went on to

further explain that, by virtue of going to work for a broker, the worker “knew or

should have known when he signed up . . . that he would not actually be working

for [the broker], but would be working for [the customer].” Id. at 92.

The district court then went on to distinguish this case from Parson. See

514 N.W.2d at 894–97. In Parson the court focused on the written contract

between the labor broker and the customer, which provided the labor broker was

an independent contractor and the customer “undertakes no obligation of any

sort to [the broker’s] employees.” Id. at 894. The contract further provided the

broker “shall select, engage, and discharge its employees, agents, or servants,

and otherwise direct and control their services.” Id. The Parson court concluded

this language indicated the customer “intended not to enter into an employment

contract with the [broker’s] workers.” Id.

The court went on to determine the worker’s understanding was also that

no employment relationship existed. Id. at 895. The broker had an on-site

supervisor who testified he never considered himself to be an employee of the
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customer and that other workers from the broker shared his view. Id. The

supervisor noted how the temporary workers were denied the same treatment as

other employees of the customer, such as being denied the ability to join the

company labor association or play on the company softball team. Id. In addition,

the broker’s workers were paid less, and required to use separate break rooms,

entrances, driveways, parking places, and gates. Id. at 892. The workers wore

badges that were different from the customer’s employees, and they were not

allowed to use the cafeteria or locker room. Id.

The Parson court also analyzed the five-factor test, despite the fact it

considered its use unnecessary. Id. at 895. The broker had the primary right to

select and assign the employees to work for the broker’s customers. Id. at 896.

In addition, the customer generally accepted any worker that the broker sent. Id.

The broker, not the customer, determined the wages the workers received while

working on the customer’s premises, and the broker was responsible for the time

cards, paychecks, and tax forms. Id. While the customer could request a worker

be reassigned, the broker had primary authority to terminate the worker. Id. The

broker had an on-site supervisor, who would daily check the workers in and out

of the customer’s plant, and the contract between the broker and customer stated

the broker would direct and control the workers’ services. Id. Finally, the court

concluded the work that was performed benefited both the broker and the

customer. Id. Using these factors to aid in its determination of the parties’ intent,

the Parson court concluded a genuine issue of material fact existed as to

whether the injured worker entered into an employment relationship with the

broker’s customer. Id. at 897.
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With respect to Hawkeye’s intent to enter into an employment contract in

this case, the facts show the contract signed by Hawkeye and Jacobson referred

to the workers as employees of Jacobson but assigned the responsibility for

supervision to Hawkeye. However, the contract language between Jacobson

and Hawkeye has little effect on illuminating Hawkeye’s intent because the

contract was drafted by Jacobson, not Hawkeye. Individuals interested in

operator positions with Hawkeye were sent to Jacobson for application and

screening. Hawkeye could reject workers but could not terminate them from

Jacobson. All workers at the Hawkeye plant were treated the same with the

exception that permanent employees could wear clothing with the Hawkeye

name.

All employees submitted their work hours to Hawkeye in the same way,

but Hawkeye provided the hours of Jacobson workers to Jacobson, which then

issued the paychecks for those workers. Hawkeye paid a 45% premium on the

Jacobson workers in exchange for Jacobson handling the administrative

functions of employment.

With respect to Sager’s intent, Sager’s affidavit asserts it was his

understanding that he was going to be solely the employee of Jacobson.

However, his deposition testimony provided that his cousin referred him to

Jacobson so that he could get a job with Hawkeye, specifically. See Fletcher v.

Apache Hose & Belting Co., 519 N.W.2d 839, 840–41 (Iowa Ct. App. 1994)

(noting the worker was sent to the employment agency by the agency’s customer

and the worker specifically requested a placement at the customer which showed

a deliberate and informed intent to enter into an employment relationship with the
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customer). Sager was trained and supervised while at the Hawkeye facility by

Hawkeye employees, but he stated he considered his “boss” to be a Jacobson

employee. Sager’s own attorney referred to him as an “employee of Hawkeye

Molding via a staffing company.” In addition, the attorney sought the names of

supervisors at Hawkeye so that Sager could maintain a third party action against

“co-employees for gross negligence.”

However, in response to Sager’s attorney’s letter, the Hawkeye human

resources director stated Sager “was not employed by Hawkeye Molding or

Innovative Lighting on May 30, 2012, nor has he been employed by either

company since that time.” The letter stated Sager was an employee of Jacobson

and all workers’ compensation claims should be directed to Jacobson and its

workers’ compensation carrier.

Upon our review of the record, we cannot say as a matter of law that

Sager and Hawkeye had an informed and deliberate intent to enter into an

employment relationship. See Parson, 514 N.W.2d at 895. While the facts are

largely undisputed, the inferences that can be drawn from those facts are not.

See Goodpaster, 849 N.W.2d at 6 (“Even if facts are undisputed, summary

judgment is not proper if reasonable minds could draw from them different

inferences and reach different conclusions.”(citation omitted)). Because the

record does not support a conclusion as to whether Sager was, or was not, an

employee of Hawkeye as a matter of law, we reverse the district court’s summary

judgment ruling and remand the matter to the district court for further

proceedings.

REVERSED AND REMANDED.