Certiorari Denied, March 4, 2010, No. 32,218
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2010-NMCA-029
Filing Date: January 11, 2010
Docket No. 28,774
MONICA ELOISE KORBA, individually and as Personal
Representative of the Estate of BRANDY ROSE KORBA,
deceased, and as Next Friend for BRYCE AARON KORBA, a
minor; RUBY GERANDT, individually and as Personal
Representative of the Estate of ALICIA GERANDT,
deceased; RICHARD HOOKE; and STEVEN ROUSE,
Plaintiffs-Appellants,
v.
ATLANTIC CIRCULATION, INC., a Delaware
Corporation; JAIME R. MILLER; MICHELLE R.
SANCHEZ; DOES 1-20 inclusive; DOE MANAGERS
1-5 inclusive; and DOE CORPORATIONS 1-5 inclusive,
Defendants-Appellees.
APPEAL FROM THE DISTRICT COURT OF SAN JUAN COUNTY
John A. Dean, Jr., District Judge
The Branch Law Firm
Turner W. Branch
Albuquerque, NM
for Appellants
Gerding & O’Loughlin, P.C.
Michael T. O’Loughlin
Farmington, NM
for Appellees
OPINION
1
VIGIL, Judge.
{1} This is a personal injury case in which Atlantic Circulation, Inc., a magazine
subscription processing company, obtained summary judgment on the basis that magazine
sales managers and salespersons were not its employees. Plaintiffs appeal, and we affirm.
BACKGROUND
{2} Sales managers and salespersons who process sales subscriptions through Atlantic
Circulation were riding in a 1992 Chevrolet Suburban overloaded with fifteen people when
a rear tire blew out, resulting in a single-vehicle accident. The vehicle was driven by Jaime
Miller and owned by Michelle Sanchez. Two persons, Brandy Korba and Alicia Gerandt
were killed, and two others, Richard Hooke and Steven Rouse, were injured. Korba and her
estate, Gerandt and her estate, Hooke, and Rouse are Plaintiffs and allege a variety of claims
based upon the accident. The liability of Atlantic Circulation hinges on whether it was the
employer of Miller, Sanchez, Korba, Gerandt, Hooke, or Rouse at the time of the accident.
{3} Atlantic Circulation moved for summary judgment on the basis that it was not the
employer of Miller, Sanchez, Korba, Gerandt, Hooke, or Rouse. The district court granted
summary judgment and dismissed the complaint with prejudice. Plaintiffs appeal.
STANDARD OF REVIEW
{4} Summary judgment is proper “if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment
as a matter of law.” Rule 1-056(C) NMRA. Whether this standard is satisfied presents a
question of law, which we review de novo. Self v. United Parcel Serv., Inc.,
1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. As the movant, Atlantic Circulation
was required to make a prima facie showing that it was entitled to summary judgment. See
Savinsky v. Bromley Group, Ltd., 106 N.M. 175, 176, 740 P.2d 1159, 1161 (Ct. App. 1987)
(noting that the defendant satisfied its burden to obtain summary judgment by establishing
it did not have the ability to control the work of the alleged employee). Once Atlantic
Circulation satisfied its burden, the burden shifted to Plaintiffs to establish the existence of
a genuine issue of material fact. Ciup v. Chevron U.S.A., Inc., 1996-NMSC-062, ¶ 7, 122
N.M. 537, 928 P.2d 263 (“[T]he opponent must come forward and establish with admissible
evidence that a genuine issue of fact exists.”).
DISCUSSION
A. Distinguishing an Employee From an Independent Contractor
{5} New Mexico courts have utilized the right to control test to determine whether an
employer-employee or independent contractor relationship exists. Celaya v. Hall, 2004-
NMSC-005, ¶ 11, 135 N.M. 115, 85 P.3d 239. The test focuses on “whether the principal
2
exercised sufficient control over the agent to hold the principal liable for the acts of the
agent.” Id. ¶ 12. Recognizing that the right to control test is more complex and “demands
a more nuanced approach, than simply determining the degree of control over the details or
methods of the work[,]” our Supreme Court has adopted the method used by the Restatement
(Second) of Agency § 220(a)-(j) (1958) to distinguish an employee from an independent
contractor. Celaya, 2004-NMSC-005, ¶ 14.
{6} The Restatement approach continues to consider the degree of control exercised by
the principal over the details of the agent’s work, but this factor is not exclusive. Id. ¶ 15.
The analysis also requires an assessment of other factors which include: “1) the type of
occupation and whether it is usually performed without supervision; 2) the skill required for
the occupation; 3) whether the employer supplies the instrumentalities or tools for the person
doing the work; 4) the length of time the person is employed; 5) the method of payment,
whether by time or job; 6) whether the work is part of the regular business of the employer;
7) whether the parties intended to create an employment relationship; and 8) whether the
principal is engaged in business.” Id. A complete analysis may require the court to evaluate
“the circumstances unique to the particular case.” Id. In the court’s consideration of the
Restatement factors,
“[N]o particular factor should receive greater weight than any other, except when the
facts so indicate, nor should the existence or absence of a particular factor be
decisive. Rather, the totality of the circumstances should be considered in
determining whether the employer has the right to exercise essential control over the
work or workers of a particular contractor.”
Id. (alteration in original) (quoting Harger v. Structural Servs., Inc., 121 N.M. 657, 667, 916
P.2d 1324, 1334 (1996)).
B. The Undisputed Material Facts
{7} The material facts establishing the relationships of sales managers and salespersons
with Atlantic Circulation are undisputed. Atlantic Circulation is a processing center for
direct sales of magazine subscriptions. Atlantic Circulation’s practice is to enter into
independent contractor agreements with sales managers throughout the country. Sales
managers in turn each hire their own sales crews—salespersons who sell magazine
subscriptions to consumers. It is also the practice for sales managers to enter into a separate
independent contractor agreement with salespersons, called an “Agreement for Subscription
Solicitation Services.”
{8} Atlantic Circulation has independent contractor agreements with sales managers
Korba and Sanchez. There is no agreement in the record for Miller, who was the driver. He
is a defendant, but was never served. However, Hooke, who was a salesperson and a
passenger in the van, testified that Miller was also a sales manager, and his testimony is not
disputed. Each sales manager operates his or her crew as a separate company, with a
different name. Korba’s sales company was called Korba Sales, and Sanchez’s sales
company was called either Power Sales, Inc., or Strictly Business, Inc. The independent
3
contractor agreement between Atlantic Circulation and the sales managers expressly states,
“[Atlantic Circulation] desires to engage Contractor as an independent contractor to perform
certain solicitation for magazine and book subscriptions and Contractor desires to perform
the solicitation as an independent contractor under the terms and conditions set forth herein.”
The agreement further provides, “The parties intend this Agreement to create an independent
contractor relationship and not an employer-employee relationship. Nothing in this
agreement shall be interpreted or construed to create an employer-employee relationship.”
{9} Plaintiffs rely upon Chevron Oil Co. v. Sutton to argue that the independent
contractor agreements are not dispositive of the issue of whether there is an employee-
employer relationship. 85 N.M. 679, 681, 515 P.2d 1283, 1285 (1973) (“[T]he manner in
which the parties designate a relationship is not controlling.”). While we agree that the
agreements on their own do not establish that the sales managers were independent
contractors, the agreements are persuasive under our totality of the circumstances analysis.
See Restatement (Second) of Agency § 220(2)(i) (listing one factor as “whether or not the
parties believe they are creating the relation of master and servant”); see also In re Comp.
of Henn, 654 P.2d 1129, 1131 (Or. Ct. App. 1982) (“While the fact that either or both of the
parties considered their relationship to be that of independent contractor is not controlling,
a plain statement that the parties intend the relationship of independent contractor and not
employe[e] is not always to be disregarded.” (citation omitted)). The contractual agreements
between Atlantic Circulation and the sales managers, as well as the salespersons, are highly
indicative of the parties’ state of mind concerning the nature of their relationship.
{10} According to Atlantic Circulation, sales managers are paid through a credit/debit
system which keeps a running track of commissions due and money owed by the sales
managers. Ongoing expenses may be paid through the use of a card similar to a credit or
debit card, but those expenses are deducted from the sales manager’s running account with
Atlantic Circulation. Atlantic Circulation produced Korba’s credit and expense sheet which
contains a record of the credits and debits to her account while as a sales manager. To the
extent that Plaintiffs rely upon Hooke’s testimony to establish a material fact concerning the
method of compensation, Hooke himself testified that he had no personal knowledge of the
“com card” and that the managers never told him anything. See Rule 1-056(E) (“Supporting
and opposing affidavits shall be made on personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is competent
to testify to the matters stated therein.”).
{11} Plaintiffs also argue summary judgment is inappropriate because they claim there is
a dispute over whether Atlantic Circulation paid for the maintenance and repairs to the
vehicle, as well as other expenses sales managers incurred. Assuming Atlantic Circulation
paid for the repairs to the vehicle and for other expenses, this does not establish that Atlantic
Circulation exercised a right of control over the details of the sales managers’ tasks.
Plaintiffs have failed to present any evidence that Atlantic Circulation determined where the
sales teams traveled, when vehicles repairs were to be made, what expenses were to be
incurred, or any other indication that Atlantic Circulation had exercised a right to control the
details of the sales teams work.
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{12} Sales managers are free to hire and fire as many or as few salespersons as they wish.
Sales managers also determine where and when to solicit subscriptions. Atlantic Circulation
does not determine work hours or work areas for the sales crews. There are no production
quotas required of the sales managers, nor are they required to sell magazine subscriptions
only for Atlantic Circulation. Atlantic Circulation does not withhold state and local taxes
from the sales managers.
{13} Gerandt, Hooke, and Rouse were salespersons. While there is a written agreement
between Reagan and Hooke in the record, Hooke disputes its authenticity, and Atlantic
Circulation conceded that the agreement was not signed by him for purposes of the summary
judgment motion. However, there is no dispute that Hooke was a salesperson. In the
“Subscription Solicitation Services” agreements, sales managers are identified as the “Sales
Company,” and these agreements also expressly state that the salesperson is an independent
contractor and not an employee of the “Sales Company.” The Sales manager agrees to
provide the salesperson with information concerning the necessary procedures for magazine
subscription processing, the forms to be used and to make the forms, price lists, and other
printed material available to the salespersons.
{14} When soliciting magazine subscriptions, salespersons display a laminated
identification card to potential customers with the name of the salesperson, the name of
Atlantic Circulation, the words, “magazine sales subscription,” and information about the
salespersons’ participation in a contest to sell magazines. Plaintiffs rely on Singer v. Star,
510 So. 2d 637 (Fla. Dist. Ct. App. 1987), to argue this is a material fact requiring reversal.
However, Singer is not applicable. First, summary judgment was improperly granted in that
case because discovery was outstanding. Id. at 639. Secondly, the plaintiffs in that case
were relying on a theory of apparent authority to hold a newspaper company liable for the
acts of one of its salespersons, and Plaintiffs successfully contended certain evidence, which
included identification badges issued to minors by the newspaper company who were selling
its newspapers, precluded summary judgment on this theory of liability. Id. at 640-41.
Apparent authority as a theory of liability is not an issue in this case.
{15} If a customer pays for a magazine subscription by check, the customer makes the
check payable to Atlantic Circulation. Salespersons give customers a receipt in the name
of Atlantic Circulation, and customer service calls are directed to Atlantic Circulation.
Customers are also given Atlantic Circulation’s web site address by salespersons so they can
verify the salesperson’s connection with Atlantic Circulation, and how many subscriptions
that salesperson sold. If a salesperson is away from his or her home state while selling
magazine subscriptions and wants to go home, Atlantic Circulation arranges for a bus ticket,
but the sales managers pay for the ticket. In the context of this case, these facts are
insufficient to create a genuine issue of material fact on the question of whether Atlantic
Circulation had an employee-employer relationship with the sales crews. These procedures
are not “control” in the sense that Atlantic Circulation directed the operation of the sales
crews. Instead, they are incidental requirements necessary to the relationship between a
magazine subscription processing company and independently operating magazine
subscription solicitors.
5
C. Analysis of the Material Facts
{16} We apply the Restatement approach as described in Celaya to determine whether
Atlantic Circulation established a prima facie showing that it was entitled to summary
judgment and whether Plaintiffs then produced admissible evidence that a genuine issue of
material fact exists on whether Atlantic Circulation was the employer of Miller, Sanchez,
Korba, Gerandt, Hooke, or Rouse at the time of the accident. We consider the degree of
control exercised by Atlantic Circulation over the details of the work performed by the
managers and salespersons, and also assess what the summary judgment record shows as to
the other factors set forth in Section 220(a)-(j) of the Restatement (Second) of Agency.
Celaya, 2004-NMSC-005, ¶ 15.
{17} As to the sales managers, Korba, Sanchez, and Miller, there is no issue of material
fact for a jury to decide. The sales managers enter into independent contractor agreements
with Atlantic Circulation, and each operates his or her crew as a separate company to sell
magazine subscriptions to consumers. Sales managers are free to hire and fire their
salespersons, and they determine where and when to solicit subscriptions. The sales
managers have no production quotas, and they are not required to sell only for Atlantic
Circulation. Sales managers are paid through a credit/debit system which keeps a running
track of commissions due and money owed by the sales managers, and Atlantic Circulation
does not withhold state and local taxes from sales managers.
{18} We find Bond v. Harrel, 108 N.W.2d 552 (Wis. 1961) persuasive. In this case, the
question presented was whether the manager of a magazine salesperson’s crew was an
employee or independent contractor of a magazine subscription processing company when
his automobile was involved in a motor vehicle accident, which resulted in the death of the
plaintiff’s decedent. Id. at 553. The magazine subscription processing company contended
it was entitled to summary judgment on grounds that the sales manager was an independent
contractor and not its employee. Id. The court used a right to control test and concluded the
sales manager was an independent contractor. Id. at 555. As in the case before us, the
magazine subscription processing company operated through solicitation crews and
salespersons. Id. at 554. The sales crews were free to travel where they wished to make
their house-to-house solicitations. Id. Crew managers were designated as independent
contractors who hire and make their own contract for compensation with salespersons. Id.
Crew managers had no quota, they were paid on a commission basis, and they paid their
salespersons out of their commissions. Id. The company furnished the receipt forms, report
forms to be used, envelopes, and sales materials which were to be used by the sales manager
and his crew. Id. The sales manager was also furnished with a field manager credential
which authorized him and the members of his crew as representatives of the company. Id.
The company had no sales meeting or training program. Id. The company did not provide
cars or means of transportation, it did not pay any expenses, and it did not withhold taxes.
Id.
{19} We also conclude that as to the salespersons, Gerandt, Hooke, and Rouse, there is no
issue of material fact for a jury to decide. Salespersons are hired and fired by their sales
managers independent of Atlantic Circulation. Their employment agreement is with the
6
sales company operated by their respective sales managers, and not Atlantic Circulation.
Atlantic Circulation does not determine work hours or areas for sales crews—these are
decisions which are made exclusively by the sales managers. In addition, the sales managers
tell the sales crews what the procedures are for processing magazine subscriptions, and they
provide their sales crews with the forms, price lists, and other necessary printed material.
{20} Our Supreme Court has previously addressed whether a salesperson is an employee
or independent contractor within the context of our unemployment compensation statute.
Solar Age Mfg., Inc. v. Employment Sec. Dep’t, 103 N.M. 780, 714 P.2d 584 (1986). See
NMSA 1978, § 51-1-42(F)(5) (2007) (defining “employment” to qualify for unemployment
benefits). In deciding the issue, the court used the right to control test without considering
the additional Section 220(a)-(j) Restatement factors. Solar Age Mfg., Inc., 103 N.M. at 781-
82, 714 P.2d at 585-86. We therefore consider this decision persuasive, while
acknowledging it is not controlling. In Solar Age, the salesperson was free to operate in any
location, he chose his own hours, he was not restricted on the manner of how the sale was
presented, he was allowed to advertise on his own, he was allowed to sell other products
from other wholesalers, including competitors, he was paid on a commission basis, he had
no quotas, sales were completed with Solar Age invoices, and checks were made payable to
Solar Age. Id. Because the salesperson “was free from control or direction over the
performance of his job as a salesperson,” the Supreme Court concluded that the salesman
was not an employee, but an independent contractor. Id. at 783-84, 714 P.2d at 587-88.
{21} Significantly, in deciding Solar Age our Supreme Court specifically considered In
re Compensation of Henn and found it to be persuasive. Solar Age Mfg., Inc., 103 N.M. at
782, 714 P.2d at 586. In re Compensation of Henn concluded that a traveling magazine
salesperson, under circumstances very similar to the case now before us, was an independent
contractor and not an employee. 654 P.2d at 1130-31. The salesperson sold magazine
subscriptions as an “authorized representative,” and had a “Representatives’ Agreement”
with the company in which she was designated as an independent contractor. Id. at 1129
(internal quotation marks omitted). The company provided a training session for its
salespersons and supplied invoices and other materials. Id. at 1130. The plaintiff used her
own vehicle when selling subscriptions, no particular working hours were specified, she was
paid on a commission basis, no income taxes were deducted from commissions, and the
salesperson was free to engage in other employment. Id. at 1129-30. Utilizing a right to
control test, these facts were sufficient for the court to conclude that the salesperson was an
independent contractor. Id. at 1130-31.
{22} In Indiana Insurance Co. v. American Community Services, Inc., the Indiana Court
of Appeals decided a nearly identical case. 768 N.E.2d 929 (Ind. Ct. App. 2002). A
processor of magazine subscriptions had independent contractor agreements with sales
managers, who in turn had independent contractor agreements with their salespersons. Id.
at 930. A van owned by a husband-wife crew manager was carrying a sales crew when it
was involved in a single-vehicle accident, and one of the salespersons was killed. Id. The
court considered the factors set forth in Restatement (Second) of Agency § 220(a)-(j), and
concluded that the magazine salesperson was an independent contractor and not an employee
of the magazine subscription company. Indiana Ins. Co., 768 N.E.2d at 937. It held,
7
“[g]iven the weight of such important factors as [the company]’s limited control and
supervision, the intent of the contracting parties, and the existence of multiple layers of
independent contracts between [the company], its crew managers, and salespeople, we find
that . . . [the salesperson] was not an employee.” Id. at 939.
{23} We therefore conclude that based on the record before us, Plaintiffs have not raised
a genuine issue of material fact as to Atlantic Circulation’s right to exercise essential control
over the work of the sales managers or salespersons such that a jury could find an employee-
employer relationship. The undisputed facts show the following. Sales managers enter into
independent contractor agreements with Atlantic Circulation, the terms of which expressly
define the relationship. There is no evidence that Atlantic Circulation controls the details
of how sales managers operate daily. Atlantic Circulation does not determine where sales
crews operate, how long they operate in one location, or how many hours they work.
Atlantic Circulation provides no supervision or direction and sales crews operate
autonomously. The salespersons are expressly hired by each sales manager to work for that
sales manager, and the details of the salesperson’s work is directed and controlled by the
sales manager of each crew, not Atlantic Circulation. Thus, Plaintiffs have not provided any
material facts that would allow a jury to find that Atlantic Circulation had an employee-
employer relationship with Miller, Sanchez, Korba, Gerandt, Hooke, or Rouse at the time
of the accident.
CONCLUSION
{24} We affirm the district court order granting Defendant Atlantic Circulation summary
judgment and dismissing the complaint with prejudice.
{25} IT IS SO ORDERED.
____________________________________
MICHAEL E. VIGIL, Judge
WE CONCUR:
____________________________________
CELIA FOY CASTILLO, Judge
____________________________________
LINDA M. VANZI, Judge
Topic Index for Korba v. Atlantic Circulation, Inc., No. 28,774
AE APPEAL AND ERROR
AE-SR Standard of Review
CP CIVIL PROCEDURE
CP-SJ Summary Judgment
8
EL EMPLOYMENT LAW
EL-DE Duties of Employee and Employer
EL-EE Employer-Employee Relationship
EL-IC Independent Contractor
NG NEGLIGENCE
NG-AG Agency
NG-WG Wrongful Death
9