Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Opinion Clifford W. Taylor Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Maura D. Corrigan
Robert P. Young, Jr.
Stephen J. Markman
FILED JULY 28, 2005
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
BEFORE THE ENTIRE BENCH
TAYLOR, C.J.
We granted leave in this case to determine whether
plaintiff, Ricky Reed, who was fired from defendant Mr.
Food, Inc., but continued to assist with deliveries on a
periodic basis, was an employee of Mr. Food within the
meaning of MCL 418.161(1)(l) and (n) of the Worker’s
Disability Compensation Act (WDCA)1 and, thus, prohibited
from maintaining a tort action for employment-related
personal injury in the circuit court against Mr. Food, its
owner, and its delivery supervisor. We determine that Reed
was an employee of Mr. Food under MCL 418.161(1)(l) at the
time he was injured because he was in the service of Mr.
Food under a contract for hire. We therefore affirm the
decision of the Court of Appeals in part. However, we
further determine that Reed was an employee of Mr. Food
under MCL 418.161(1)(n) at the time he was injured because
he was performing a service as a deliveryman for Mr. Food
in the course of its business and did not maintain a
separate business offering that service, hold himself out
to and render that service to the public, or qualify as an
employer subject to the WDCA. We therefore reverse the
decision of the Court of Appeals in part and remand this
case to the circuit court for entry of a directed verdict
in defendants’ favor. Jurisdiction is thereafter
transferred to the Bureau of Worker’s Disability
Compensation.
FACTS AND PROCEDURAL HISTORY
Defendant Gerald Michael Herskovitz is the owner of
defendant Mr. Food, Inc., which is a retail marketer of
1
MCL 418.101 et seq.
2
meat products. Defendant Buddy Lee Hadley is an employee
of Mr. Food and is in charge of its meat deliveries. In
1997, Hadley suggested that Herskovitz hire Reed, whom
Hadley had known for approximately ten years, and
Herskovitz did so. Herskovitz was not pleased with Reed’s
performance, however, and fired Reed after a period of only
five or six months in December 1997.
After being fired by Herskovitz, Reed primarily
supported himself by painting his relatives’ homes. But,
Reed’s association with Mr. Food did not end completely
after he was fired, and he supplemented his income by
occasionally helping Hadley with deliveries. Specifically,
Hadley testified that, on approximately three to five
occasions after Reed was fired near the end of 1997, he
would hire Reed to help with his deliveries for the day,
for which Reed would be paid between $35 and $40 in cash.
Although Herskovitz authorized Hadley to obtain help with
his deliveries on these days, he testified that he did not
know that it was Reed that Hadley actually hired.
On May 7, 1998, during one of these days that
deliveries were being made, Reed was riding in a cargo van
owned by Mr. Food that was being driven by Hadley. As the
van approached an intersection, a car driven by Linda
Yackell did not stop at a red light because her brakes
malfunctioned. Hadley, who was looking down at paperwork,
3
did not see Yackell’s car in time and hit her car. Reed
suffered a closed head injury as a result of the accident.
On December 10, 1998, Reed filed a complaint in the
circuit court, alleging negligence by the drivers, Hadley
and Yackell, liability by Herskovitz pursuant to the
owner’s liability statute, MCL 257.401, and liability by
Mr. Food under the theory of respondeat superior. Hadley,
Herskovitz, and Mr. Food (defendants)2 as relevant to this
appeal, defended by asserting that the suit was barred
because Reed was an employee of Mr. Food under MCL
418.161(1)(l) and (n)3 and, thus, his exclusive remedy was
2
Yackell is not a party to the proceedings in this
Court. Therefore, we will hereinafter use the term
“defendants” in reference to Herskovitz, Hadley, and Mr.
Food collectively.
3
MCL 418.161 provides:
(1) As used in this act, “employee” means:
* * *
(l) Every person in the service of another,
under any contract of hire, express or implied,
including aliens . . . .
* * *
(n) Every person performing service in the
course of the trade, business, profession, or
occupation of an employer at the time of the
injury, if the person in relation to this service
does not maintain a separate business, does not
hold himself or herself out to and render service
to the public, and is not an employer subject to
this act.
4
under the WDCA.4 During trial, defendants moved for a
directed verdict on this basis. Reed countered that he was
not an employee, but was rather an independent contractor
of day labor. The trial court denied defendants’ motion.
At the end of trial, the jury returned a unanimous verdict
in Reed’s favor and awarded him $1,256,320, allocating
sixty percent of the fault for the accident to Yackell and
forty percent to Herskovitz, Hadley, and Mr. Food
collectively. A judgment in the amount of $502,528 was
subsequently entered against Hadley, Herskovitz, and Mr.
Food.
Defendants thereafter moved for judgment notwith-
standing the verdict (JNOV), again asserting that Reed was
an employee at the time of the accident. The trial court
again denied defendants’ motion, stating that Reed was not
an employee of Mr. Food at the time of the accident but was
instead an independent contractor that held himself out to
the public to perform general labor.
4
MCL 418.131(1) provides that “[t]he right to the
recovery of benefits as provided in this act shall be the
employee's exclusive remedy against the employer for a
personal injury or occupational disease . . . .”
5
Defendants appealed to the Court of Appeals, which
affirmed in an unpublished decision.5 Defendants then
sought leave to appeal in this Court. Pursuant to MCR
7.302(G)(1), in lieu of granting leave to appeal, we
vacated the decision of the Court of Appeals and remanded
this case to the circuit court with instructions that it
determine, either on the existing record or after
additional evidentiary hearings, whether Reed was an
employee of Mr. Food at the time of the accident. The
trial court was also to submit findings of fact to this
Court regarding whether Reed was in the service of Mr. Food
under either an express or implied contract for hire as set
forth in MCL 418.161(1)(l) and explained in our then-recent
decision in Hoste v Shanty Creek Mgt, Inc, 459 Mich 561;
592 NW2d 360 (1999). Further, in order to determine if he
was outside the definition of employee in MCL 418.161(1)
(n), the trial court was to determine whether Reed both
maintained a separate business and held himself out to the
public as having such a business.6
On remand, the circuit court issued a written order
and findings of fact, based on the existing record, stating
5
Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued February 14, 2003 (Docket No.
236588), vacated 469 Mich 960 (2003).
6
469 Mich 960 (2003).
6
that Reed was not an employee of Mr. Food at the time of
the accident. With respect to MCL 418.161(1)(l) and Hoste,
the trial court determined that Reed was not performing a
service for Mr. Food under either an express or implied
contract for hire. In reaching this conclusion, the trial
court focused on the fact that Herskovitz had fired Reed
before the accident, that Herskovitz had testified at trial
that he did not know that Reed was helping Hadley at the
time of the accident, and that no evidence had been
introduced that income taxes had been withheld from Reed or
that he had ever claimed employee status. The trial court
reasoned that these facts negated the possibility that
either an express or implied contract for hire had been
formed because both parties were not aware of its existence
and had not agreed to its terms. Finally, the trial court
determined that Reed was not an employee under a contract
“for hire,” reasoning that he did not receive a regular
income from Mr. Food but, instead, received only $35 to $40
on three to five occasions. The court concluded that this
did not equate to “real, palpable, and substantial
consideration” that was intended as wages7 because, spread
over the entire period of about five or six months when the
7
Hoste, supra at 576.
7
occasional employment took place, it amounted to less than
$1 per day.
In considering the questions under MCL 418.161(1)(n),
the trial court held that Reed did have a qualifying
separate business because he was a house painter performing
day labor. The court apparently concluded that there was a
sufficient holding of himself out for this service to meet
the requirements of MCL 418.161(1)(n). But, the court did
not elaborate on the evidence it found to establish that.
After receiving the trial court’s findings of fact, we
remanded this case to the Court of Appeals for
reconsideration of whether Reed was an employee within the
meaning of MCL 418.161(1)(l) and (n) and, if necessary, of
additional issues the Court of Appeals had addressed in its
earlier decision.8
On remand, in an unpublished decision that echoed the
previously vacated one, the Court of Appeals affirmed the
trial court’s determination that Reed was not an employee
of Mr. Food at the time of the accident.9 Unlike the
circuit court, the Court of Appeals determined that Reed
was an employee under MCL 418.161(1)(l) because he was
8
469 Mich 1051 (2004).
9
Reed v Yackell, unpublished opinion per curiam of the
Court of Appeals, issued June 8, 2004 (Docket No. 236588).
8
under a contract for hire. Yet, because he had, in the
view of the Court of Appeals, a separate business in which
he held himself out for the performance of the same service
he was performing for Mr. Food, he was removed from the
definition of employee by virtue of MCL 418.161(1)(n).
Interestingly, while expressly acknowledging that in Hoste
we held that the common-law “economic realities test” for
determining whether a worker is an employee or an
independent contractor was superseded to the extent that it
was inconsistent with MCL 418.161(1)(n),10 the Court then
expressly focused on those same superseded common-law
factors (such as how Reed was paid, whether taxes were
withheld, whether Mr. Food, Herskovitz, and Hadley had
control of Reed’s duties, and whether the services Reed
performed were an integral part of Mr. Food’s business) in
making its holding regarding whether Reed was an employee.
At no point was an effort undertaken to reconcile this
approach with the holding in Hoste precluding the
consideration of these no longer recognized common-law
“economic realities” factors.
Unsurprisingly, defendants again filed an application
with this Court for leave to appeal, and we granted
defendants’ application limited to the issue whether Reed
10
Hoste, supra at 572.
9
was an employee within the meaning of MCL 418.161(1)(l) and
(n) at the time of the accident.11
STANDARD OF REVIEW
Defendants’ contention is that the trial court
erroneously denied their motions for a directed verdict and
JNOV. We review a trial court’s denial of both motions de
novo. Sniecinski v Blue Cross & Blue Shield of Michigan,
469 Mich 124, 131; 666 NW2d 186 (2003). In doing so, we
“‘review the evidence and all legitimate inferences in the
light most favorable to the nonmoving party.’” Id.,
quoting Wilkinson v Lee, 463 Mich 388, 391; 617 NW2d 305
(2000). Only if the evidence, when viewed in this light,
fails to establish a claim as a matter of law should a
motion for a directed verdict or JNOV be granted. Id.
This case also involves the interpretation of
statutes, which is a question of law that is also reviewed
de novo by this Court. Hoste, supra at 569. Our
fundamental obligation when interpreting statutes is “to
ascertain the legislative intent that may reasonably be
inferred from the words expressed in the statute.” Koontz
v Ameritech Services, Inc, 466 Mich 304, 312; 645 NW2d 34
(2002). If the statute is unambiguous, judicial
construction is neither required nor permitted. In other
11
471 Mich 957 (2005).
10
words, “[b]ecause the proper role of the judiciary is to
interpret and not write the law, courts simply lack
authority to venture beyond the unambiguous text of a
statute.” Id.
DISCUSSION
A. Principles of the WDCA
As we have discussed frequently in the past, by
enacting Michigan’s Worker’s Disability Compensation Act,
the Legislature replaced common-law liability for
negligence in the workplace, and its related defenses, with
a comprehensive, statutory compensation scheme that
requires employers to provide compensation to employees for
injuries arising out of and in the course of employment
without regard to fault. MCL 418.301; Hoste, supra at 570;
Clark v United Technologies Automotive, Inc, 459 Mich 681,
686-687; 594 NW2d 447 (1999); Farrell v Dearborn Mfg Co,
416 Mich 267, 274-275; 330 NW2d 397 (1982). In exchange
for this almost automatic entitlement to compensation, the
WDCA limits the amount of compensation that an employee may
collect and, moreover, prohibits the employee from bringing
a tort action against the employer except in limited
circumstances.12 This principle is expressed in MCL
418.131(1), which provides, “The right to the recovery of
12
Hoste, supra; Clark, supra; Farrell, supra.
11
benefits as provided in this act shall be the employee's
exclusive remedy against the employer for a personal injury
or occupational disease.” As we have explained:
Th[is] language expresses a fundamental
tenet of workers’ compensation statutes that if
an injury falls within the coverage of the
compensation law, such compensation shall be the
employee’s only remedy against the employer or
the employer’s insurance carrier. The underlying
rationale is that the employer, by agreeing to
assume automatic responsibility for all such
injuries, protects itself from potentially
excessive damage awards rendered against it and
that the employee is assured of receiving payment
for his injuries. [Farrell, supra at 274.]
Accordingly, the threshold question in this case is
whether Reed is an “employee” under any of the definitions
in MCL 418.161 of the WDCA and, therefore, has traded his
right to bring a tort action for the assured payment of
benefits without regard to fault. Hoste, supra at 570-571.
As in Hoste, several of the definitions set forth in MCL
418.161 do not apply in this case and, therefore, the
resolution of this issue requires us to focus only on
subsections 161(1)(l) and 161(1)(n).13 As we explained in
Hoste, these subsections “must be read together as separate
and necessary qualifications in establishing employee
status.” Hoste, supra at 573. In other words, our first
13
At the time of the plaintiff’s injuries in Hoste,
the definitions now found in subsections 161(1)(l) and
161(1)(n) were found in former subsections 161(1)(b) and
161(1)(d), respectively. Hoste, supra at 566 n 2.
12
task is to determine whether Reed was an employee under the
definition set forth in subsection 161(1)(l). If he was,
we must then determine whether he meets the requirements of
subsection 161(1)(n). Id.
B. Analysis of MCL 418.161(1)(l)
Subsection 161(1)(l) requires us to determine whether
Reed was in the service of Mr. Food under any express or
implied “contract of hire.” Because it is undisputed that
Reed was in the service of Mr. Food at the time of the
accident, our determination of this issue requires a two-
pronged analysis focusing first on whether Reed was in that
service pursuant to an express or implied contractual
relationship and, second, as explained in Hoste, supra at
573-577, whether that contractual relationship was one “of
hire.”
With regard to the first inquiry, we agree with the
Court of Appeals conclusion that the facts in this case are
at least sufficient to establish that Reed was in the
service of Mr. Food pursuant to an implied in fact
contractual relationship. “‘A contract implied in fact
arises when services are performed by one who at the time
expects compensation from another who expects at the time
to pay therefor.’” In re Spenger Estate, 341 Mich 491,
493; 67 NW2d 730 (1954), quoting In re Pierson’s Estate,
282 Mich 411, 415; 276 NW 498 (1937). As the Court of
13
Appeals noted, Reed was expecting to be compensated for the
services that he performed that day, just as he had been
several times before. Moreover, Herskovitz, having told
Hadley to obtain the help he needed to make his deliveries
that day, expected to compensate whomever Hadley recruited,
just as he had done in the past. The defendants argue that
the failure of Herskovitz to know exactly who Hadley would
hire is relevant to whether there was an implied in fact
contract with Reed. This is not the case. All that is
required to establish a contract with Reed is that Hadley
had authority to hire.14 Hadley incontestably had that
authority.
Accordingly, having determined that the services Reed
was performing for Mr. Food were pursuant to an express or
implied contractual relationship, our next inquiry is
whether that contractual relationship was “of hire.” As we
explained in Hoste, supra at 576, the linchpin to
determining whether a contract is “of hire” is whether the
14
See Central Wholesale Co v Sefa, 351 Mich 17, 25; 87
NW2d 94 (1957), quoting 2 CJS, Agency, § 96, pp 1210-1211:
“Whenever the principal, by statements or
conduct, places the agent in a position where he
appears with reasonable certainty to be acting
for the principal, or without interference
suffers the agent to assume such a position, and
thereby justifies those dealing with the agent in
believing that he is acting within his mandate,
an apparent authority results . . . .”
14
compensation paid for the service rendered was not merely a
gratuity but, rather, “intended as wages, i.e., real,
palpable and substantial consideration as would be expected
to induce a reasonable person to give up the valuable right
of a possible claim against the employer in a tort action
and as would be expected to be understood as such by the
employer.”
In the present case, the $35 to $40 that Reed received
for the approximately eight hours of services he rendered
satisfies the requirement we set forth in Hoste. In
finding otherwise, the circuit court did not dispute that
the wages were real, palpable, and substantial on an hourly
basis but, instead, calculated them by averaging them over
the entire five- to six-month period of the occasional
employment to conclude that the wages were less than one
dollar a day. This is a puzzling and even arbitrary
approach to this issue of calculation that ignores the
parties’ actual contracted for rate of per diem
compensation and replaces it with an approach not taken by
the parties. In fact, it seems to be without justification
other than it effectively serves to reduce the compensation
rate by a high multiple. In contrast, when the neutrally
derived approach we are adopting is used, examining the
actual agreement to determine the unit of pay, it is clear
15
that this compensation was indeed real, palpable, and
substantial when measured against the services performed.
Here, Reed provided approximately eight hours of
unskilled, manual labor helping Hadley deliver meat
products. This was a service that did not require any
particular level of skill, education, or experience.
Indeed, the testimony at trial concerning Reed’s duties
showed only that they consisted of carrying and moving
boxes,15 while even such minimal tasks as handling the
paperwork, arranging the delivery schedule, and driving the
delivery truck were handled by Hadley. For these eight
hours of unskilled, manual labor delivering meat, Reed was
paid approximately $35 to $40. Because this was roughly
equivalent to the minimum wage rate at the time, it is
confounding that a court could conclude that this was not a
“real” or “substantial” wage and that it was, instead, as
it has to be under the Hoste test, a mere gratuity. We
reject, with some impatience, such a counterintuitive
conclusion.
15
Herskovitz testified that Reed’s duties were
“[n]othing major. It’s to get a box or bring it up or take
this out. It’s that kind of work.” Hadley testified that,
in between deliveries, he would have his helpers “go [to
the] back [of the delivery truck] and set more stuff up at
the door, or if it’s up to the front, move it this way or
whatever at the time.”
16
It is also appropriate to point out that the circuit
court’s ad hoc approach of averaging over the entire period
of occasional employment, even though there was no such
agreement between the parties, would, were it the law,
cause most any occasional worker’s wage to be insubstantial
under Hoste, thus making worker’s compensation protections
for, say, all persons working episodically on a part-time
basis unavailable. The facile answer to this, no doubt, is
that such workers will have a tort remedy. But, they
probably will not. These injured people will be, simply,
injured without a remedy. History shows no less. In fact,
the leaders of this state a century ago were painfully
familiar with the crushing inequity created by this
illusory solution of leaving workers with only a tort
remedy. As they made clear in passing our original
worker’s compensation law, this tort remedy was hollow
because of the fellow servant rule, as well as the
difficulty of the worker’s burden of demonstrating, among
other things, employer negligence and an absence of
contributory negligence on the worker’s part. As the
Worker’s Compensation Commission appointed in 1912 by
Governor Chase S. Osborn to draft our first “Workmen’s
Compensation” law concluded, after examining data regarding
the average compensation paid and the wage loss sustained,
on average, injured workers did not receive compensation
17
proportionate to their injuries under the common-law,
negligence based system. According to the commission,
“[t]his low average was, of course, brought about by the
large number of accidents to which, there being no
negligence on the part of the employer, there was no legal
liability to pay damages.”16 Moreover, the commission
concluded that, even in cases where injured workers did
procure recovery in the courts, the compensation received
was inadequate because of the expense of litigation and
attorney fees, and because of the “great delay” that
generally occurred between the time of the injury and the
final settlement of the action. Indeed, the commission’s
examination of the cases that were actually litigated
revealed that “the damages for injuries similar in effect
and extent were widely variant in amount and were on
average less than the compensation proposed under suggested
compensation acts.”17 It is the case then that our courts,
rather than straining to devise some too clever reading of
the parties’ agreement that has as its end game the
allowing of tort claims by a particular injured worker
(which formula invariably will be devastating to yet
16
Report of the Employer’s Liability and Workmen’s
Compensation Commission of the State of Michigan, p 16
(1911) (Report).
17
Id., pp 16-23.
18
unknown injured workers who, under the new formula, will be
unable to secure worker’s compensation), should simply look
to the parties’ actual contract to determine the nature of
what was actually agreed on and rule accordingly. All of
which is to say that we should recall the venerable axiom
that hard cases make bad law and not fall into the practice
of allowing them to do so.
Therefore, we conclude that Reed was an employee of
Mr. Food at the time of his injuries within the meaning of
subsection 161(1)(l) because the service he performed was
pursuant to an expressed or implied contract of hire and
the compensation was real and substantial. It was a wage.
Accordingly, our next task is to determine whether Reed
meets the requirements of subsection 161(1)(n).
C. Analysis of MCL 418.161(1)(n)
Subsection 161(1)(n) provides that every person
performing a service in the course of an employer’s trade,
business, profession, or occupation is an employee of that
employer. However, the statute continues by excluding from
this group any such person who: (1) maintains his or her
own business in relation to the service he or she provides
the employer, (2) holds himself or herself out to the
public to render the same service that he or she performed
for the employer, and (3) is himself or herself an employer
subject to the WDCA. In other words, subsection 161(1)(n)
19
sets forth three criteria for determining whether a person
performing services for an employer qualifies as what is
commonly called an “independent contractor” rather than an
employee. As we explained in Hoste, these three statutory
criteria have superseded the former common-law-based
economic realities test for determining whether an
individual is an independent contractor to the extent that
they differ from the test. Hoste, supra at 572.18
In the present case, it is undisputed that Mr. Food,
or Herskovitz, is an employer subject to the WDCA and that
Reed was performing a service in the course of Mr. Food’s
business. We thus turn to the three criteria required for
the exception in subsection 161(1)(n): whether Reed, in
relation to the service he provided for Mr. Food, (1)
maintained a separate business offering the same service,
18
As we have explained, the Court of Appeals ignored
our statement in Hoste, supra at 572, that the economic
realities test cannot be used to supersede subsection
161(1)(n) by adding factors to the statute that the
Legislature did not see fit to incorporate, and based its
analysis on such factors from older cases discussing the
economic realities test. These were things such as how
Reed was paid and whether taxes were withheld, whether
Herskovitz and Hadley had control over Reed’s duties, and
whether Reed’s services were an integral part of Mr. Food’s
business. The Legislature did not see fit to include such
factors in subsection 161(1)(n) and, therefore, the Court
of Appeals reliance on them was error. This means then
that the prelegislation cases were superseded by the
legislation and are thus without authority as law on these
issues.
20
(2) held himself out to and rendered the same service to
the public, and (3) is an employer subject to the WDCA.
Reed’s argument, adopted by the Court of Appeals, is
that he is an independent contractor because he maintained
a separate business and held himself out to the public as a
day laborer. Even assuming that Reed had a separate
business and held it out to the public, these facts do not
establish enough to meet the statutory requirement of
subsection 161(1)(n). The first requirement is that the
service held out and provided by the separate business be
“this service,” i.e., the same service that he performed
for the employer. It is not enough under the statute that
he has any business and holds it out. The reason is that
such a reading fails to give effect to all the words in the
statute. This we cannot do because we are bound by oath to
give meaning to every word, phrase, and clause in a
statute. Said conversely, we cannot render parts of the
statute surplusage and nugatory. State Farm Fire & Cas Co
v Old Republic Ins Co, 466 Mich 142, 146; 644 NW2d 715
(2002). Yet, it is this the plaintiff requests, and this
we cannot grant.
Therefore, contrary to the conclusions of the trial
court and the Court of Appeals, the “service” performed by
the person cannot be placed in such broad and undefined
classifications as general labor. Rather, it must be
21
classified according to the most relevant aspects
identifiable to the duties performed in the course of the
employer’s trade, business, profession, or occupation.19
Thus, for example, if the service that the person performs
for the employer is roofing, to be an independent
contractor and, thus, be ineligible for worker’s
compensation, the person must maintain a separate roofing
business, which roofing business he holds himself or
herself out to the public as performing. Accordingly, in
this case where the most Reed can point to is that he was a
house painter at times, the tests to take him out of the
worker’s compensation system are not met.
We would again caution that the contrary reading of
this requirement, as engaged in by the Court of Appeals and
the trial court, would inescapably mean that any
moonlighting worker, say an industrial worker at General
Motors, Ford, or DaimlerChrysler, who has a janitorial
service, lawn care business, a Mary Kay distributorship, or
even serves as a compensated choir director at her church,
would be without worker’s compensation when injured at her
day job. This is not what the words of the Legislature
allow, and to twist them into saying it is shortsighted in
the extreme.
19
Cf. Michael H v Gerald D, 491 US 110, 127 n 6; 109 S
Ct 2333; 105 L Ed 2d 91 (1989).
22
Accordingly, we conclude that Reed is not an
independent contractor and is subject to the worker’s
compensation system.
SUBJECT-MATTER JURISDICTION
As a final matter, we note that the Workers’
Compensation Section of the State Bar of Michigan has filed
a provocative amicus brief. It argues that this Court’s
decision in Sewell v Clearing Machine Corp, 419 Mich 56;
347 NW2d 447 (1984), holding that the circuit court shares
concurrent jurisdiction with the worker’s compensation
adjudicatory system to determine, in the first instance,
whether a person was an employee at the time of the
person’s injury, is in error. Amicus argues that Const
1963, art 6, § 1320 and MCL 418.841(1),21 in tandem,
effectively divest the circuit court of subject-matter
jurisdiction on this issue and, thus, this case is
improperly before us on appeal. Instead, amicus argues,
20
Const 1963, art 6, § 13 provides that “[t]he
circuit court shall have original jurisdiction in all
matters not prohibited by law . . . .”
21
MCL 418.841(1) provides:
Any dispute or controversy concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis added.]
23
the worker’s compensation system has exclusive jurisdiction
to determine this question. Neither party raised or
briefed this jurisdictional issue but were asked at oral
argument to address it.
Justice Corrigan has persuasively argued in her
dissent that Sewell was indeed wrongly decided. However,
we decline to overrule Sewell on this record. Both Justice
Corrigan and amicus curiae are appropriately critical of
the unseemly atmospherics surrounding the Sewell decision:
it was decided peremptorily without plenary consideration,
briefing, or argument.22 Appreciative of that criticism of
Sewell, we believe it prudent to not replicate it and
accordingly decline to overrule Sewell in the same
peremptory fashion that it was adopted.
As we have made clear in the past, “[w]e do not
lightly overrule precedent.”23 Indeed, in Robinson v
Detroit, 462 Mich 439, 464; 613 NW2d 307 (2000), we
discussed several factors to consider before overruling a
prior decision. Rather than address the various
considerations mentioned in Robinson, the amicus only
argues that Sewell was wrongly decided, and the parties do
not even address that. We believe this is an
22
Sewell, supra at 65 (Levin, J., concurring).
23
Pohutski v City of Allen Park, 465 Mich 675, 693;
641 NW2d 219 (2002).
24
unsatisfactory predicate for overruling Sewell, especially
when it is debatable whether Sewell was wrongly decided.
As plaintiff hurriedly pointed out at oral argument in this
case, the relevant language (“all questions arising under
this act shall be determined by the bureau or a worker’s
compensation magistrate”) may mean that, before deciding
any “questions arising under this act,” it is necessary to
determine if the cause of action is in tort or worker’s
compensation. It is only after that is determined, and if
it is determined that it is indeed a worker’s compensation
matter, that the bureau’s jurisdiction is exclusive. While
Justice Corrigan makes a compelling case that this rebuttal
argument to the amicus will be found unconvincing upon full
consideration, that is not entirely clear at this point.
Moreover, even if one assumes that Justice Corrigan and
amicus curiae’s assertion regarding jurisdiction is the
stronger argument, we have had no briefing concerning
whether the other stare decisis considerations discussed in
Robinson are satisfied in the present case.
Further, while all courts must upon challenge, or even
sua sponte, confirm that subject-matter jurisdiction
exists,24 that does not mean that once having done so, as we
24
Bowie v Arder, 441 Mich 23; 490 NW2d 568 (1992); Fox
v Univ of Michigan Bd of Regents, 375 Mich 238, 242-243;
134 NW2d 146 (1965); In re Estate of Fraser, 288 Mich 392,
(continued…)
25
did in Sewell, that a court must repeatedly reconsider it
de novo. Subsequent courts can rely on the earlier
determination that has the force of stare decisis behind
it. It is that situation that we are in and until a record
exists that is full and developed and causes us to question
our earlier holding, pursuant to the Robinson tests, we see
no justification at present to disturb the Sewell dual
jurisdiction holding.
Finally, given the interest this issue of jurisdiction
has generated on the Court, we have no doubt it will be
presented to us again in the near future. On that
occasion, presumably all parties will have a full
opportunity to brief and argue this issue, and it may at
that time be appropriate to reconsider Sewell.
CONCLUSION
We conclude that Reed was an “employee” of Mr. Food as
the Legislature has unambiguously defined that term in MCL
418. 161(1)(l) and (n). Accordingly, we reverse in part
the judgment of the Court of Appeals and remand this case
to the circuit court for entry of a directed verdict in
defendants’ favor. Jurisdiction over this case is
thereafter transferred to the Bureau of Worker’s Disability
(…continued)
394; 285 NW 1 (1939); Ward v Hunter Machinery Co, 263 Mich
445, 449; 248 NW 864 (1933).
26
Compensation. Should Reed desire to pursue a claim for
benefits under the WDCA, he shall present an appropriate
claim for compensation to the bureau no later than thirty
days after the date this opinion is issued. For the
purposes of MCL 418.381(1),25 the bureau shall treat Reed’s
claim for benefits as having been filed on December 10,
1998, the date he filed his complaint in the circuit court.
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
CAVANAGH and KELLY, JJ.
We concur in the result only.
Michael F. Cavanagh
Marilyn Kelly
25
This statute provides:
A proceeding for compensation for an injury
under this act shall not be maintained unless a
claim for compensation for the injury, which
claim may be either oral or in writing, has been
made to the employer or a written claim has been
made to the bureau on forms prescribed by the
director, within 2 years after the occurrence of
the injury.
27
S T A T E O F M I C H I G A N
SUPREME COURT
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
WEAVER, J. (dissenting).
I dissent from the lead opinion's determination that
plaintiff is an “employee” within the meaning of the
Worker’s Disability Compensation Act (WDCA), MCL 418.101 et
seq. Instead of resolving this issue, I would first direct
the parties to brief the jurisdictional issue that was
raised in the amicus brief filed by the Workers’
Compensation Law Section of the State Bar of Michigan
concerning whether the circuit court had jurisdiction to
determine whether plaintiff was an employee within the
meaning of the WDCA.
Elizabeth A. Weaver
S T A T E O F M I C H I G A N
SUPREME COURT
RICKY REED,
Plaintiff-Counter-Defendant-Appellee,
v
No. 126534
LINDA SUSAN YACKELL,
Defendant and Cross-Defendant.
and
BUDDY LEE HADLEY, GERALD MICHAEL
HERSKOVITZ and MR. FOOD, INC.,
Defendants, Counter-Plaintiffs,
Cross-Plaintiffs-Appellants.
_______________________________
CORRIGAN, J. (dissenting).
I respectfully dissent from the lead opinion’s
determination that plaintiff is an “employee” within the
meaning of the Worker’s Disability Compensation Act (WDCA),
MCL 418.101 et seq. Although I agree with the lead
opinion’s analysis of this substantive issue, and would
also conclude that plaintiff was Mr. Food's employee at the
time of his accident, I believe that we should first
address the question of our jurisdiction.1 It appears that
1
MCL 418.161(1)(n) of the WDCA controls this question.
the Worker’s Compensation Bureau (WCB)2 has exclusive
jurisdiction over consideration of plaintiff’s employment
status. I would specifically direct the parties to brief
the important jurisdictional question presented in the
amicus brief of the Workers’ Compensation Law Section of
the State Bar of Michigan.3
I am persuaded that Sewell v Clearing Machine Corp,
419 Mich 56; 347 NW2d 447 (1984), was wrongly decided. It
held that the WCB and the circuit court share jurisdiction
to determine a worker’s employment status. Sewell’s
assumption of jurisdiction shared with the WCB violated the
plain language of MCL 418.161 without even so much as an
analytic nod to the statutory scheme conferring
jurisdiction in the WDCA. Sewell overruled longstanding
authority that had correctly implemented the statute,
including Szydlowski v Gen Motors Corp, 397 Mich 356; 245
2
The Worker’s Compensation Bureau was created by MCL
418.201. Pursuant to Executive Order No. 2003-18, MCL
445.2011, effective December 7, 2003, that agency is now
the Workers’ Compensation Agency.
3
Contrary to the lead opinion’s assertion, I do not
advocate overruling Sewell in a “peremptory fashion.” Ante
at 24. I would direct briefing on the jurisdictional
issue.
2
NW2d 26 (1976).4 Moreover, it contradicted the legislative
scheme established to determine disputes involving the
award of worker’s compensation benefits.
We should review the fundamental question of our
jurisdiction as it affects not only the proper exercise of
judicial authority in this case, but in the myriad cases
involving the exclusive remedy provision. I believe that
the parallel universe that Sewell created is illegitimate.
It offends the separation of powers and should be ended.
Because of the major jurisprudential significance of
the jurisdictional issue, I would follow the same approach
that we employed in Lapeer Co Clerk v Lapeer Circuit Court,
469 Mich 146; 665 NW2d 452 (2003), and Lapeer Co Clerk v
Lapeer Circuit Judges, 465 Mich 559; 640 NW2d 567 (2002).
I would sever and resolve the jurisdictional problem before
tackling any remaining issues.
4
See Jesionowski v Allied Products Corp, 329 Mich 209; 45
NW 2d 39 (1950); Dershowitz v Ford Motor Co, 327 Mich 386;
41 NW2d 900 (1950); Morris v Ford Motor Co, 320 Mich 372;
31 NW2d 89 (1948); Munson v Christie, 270 Mich 94; 258 NW
415 (1935); Houghtaling v Chapman, 119 Mich App 828; 327
NW2d 375 (1982); Buschbacher v Great Lakes Steel Corp, 114
Mich App 833; 319 NW2d 691 (1982); Dixon v Sype, 92 Mich
App 144; 284 NW2d 514 (1979); Herman v Theis, 10 Mich App
684; 160 NW2d 365 (1968).
3
I. FACTS AND PROCEDURAL HISTORY
In summer 1997, plaintiff was hired as a full-time
delivery person by defendant Mr. Food, Inc. Unsatisfied
with plaintiff’s performance, Mr. Food terminated
plaintiff’s employment in December 1997. Between December
1997 and May 7, 1998, defendant Hadley, an employee of Mr.
Food, hired plaintiff to assist him in deliveries on an as-
needed basis. Defendant Herskovitz, the owner of Mr. Food,
paid plaintiff about $35 to $40 a day in cash on five to
seven occasions. Plaintiff also worked at various jobs,
including house painting and general labor, during this
four-month period.
On May 7, 1998, plaintiff was a passenger in defendant
Mr. Food’s delivery truck, assisting defendant Hadley as he
had on earlier occasions. Plaintiff expected to be paid
for his services in cash that day. The truck was struck by
defendant Yackell’s vehicle when it did not stop at a red
light.5 Plaintiff was seriously injured as a consequence of
the accident.
Plaintiff filed suit, alleging that Yackell was
negligent in failing to stop at the red light, and that Mr.
Food was vicariously liable for defendant Hadley’s
5
Defendant Yackell is not a party to this appeal.
4
negligence in failing to avoid the collision. Defendants
properly raised and preserved their claim that the worker’s
compensation exclusive remedy provision barred plaintiff’s
cause of action, as the Sewell regime provided. For
example, the joint pretrial order reflects that whether the
exclusive remedy provision precluded plaintiff’s claim was
an issue of law to be litigated. Even plaintiff’s opening
statement raised the applicability of the WDCA’s
exclusivity provision:
On that day, Ricky Reed received a telephone
call from Buddy Hadley, and asked him to work-
under-the-table for $40, as he had done several
times since being let go from Mr. Food. And Mr.
Herskovitz would pay him $40 to help Mr. Hadley
deliver meat on his route in a big freezer truck.
The evidence is going to show that not only
had Mr. Herskovitz paid him in the past, but he
[was] going to pay him to assist Mr. Hadley on
this case.
At the close of plaintiff’s proofs, Mr. Food moved for
a directed verdict, arguing again that plaintiff was an
employee of Mr. Food at the time of the accident, so that
the WDCA was plaintiff’s exclusive remedy. MCL 418.131(1).
The circuit court denied the motion. Following a jury
verdict in plaintiff’s favor, Mr. Food moved for judgment
notwithstanding the verdict (JNOV) under MCR 2.610(1),
reiterating its argument that plaintiff’s exclusive remedy
5
under worker’s compensation precluded plaintiff’s claim.6
The circuit court again denied that motion.
The Court of Appeals affirmed the trial court’s denial
of Mr. Food’s motions for a directed verdict and JNOV.7 It
held that, although plaintiff was under an implied contract
of hire with Mr. Food, he was an independent contractor at
the time of the accident and, therefore, worker’s
compensation benefits were not plaintiff’s exclusive
remedy.
Mr. Food sought leave to appeal in this Court. In
lieu of granting leave, this Court vacated the Court of
Appeals opinion and remanded the case to the circuit court
to determine whether plaintiff was an employee within the
6
The motion for JNOV stated:
1. . . . Plaintiff’s own testimony
established that he was an employee of Mr. Food,
and the exclusive remedy provision of the Workers
Disability Compensation Act (WDCA) deprives the
court of subject matter jurisdiction . . . .
2. Plaintiff meets the statutory definition
of “employee” in the WDCA because part-time
workers are employees, and Plaintiff Reed was
“performing service in the course of the . . .
business . . . of an employer at the time of the
injury.[”]
7
Unpublished opinion per curiam of the Court of
Appeals, issued February 14, 2003 (Docket No. 236588).
6
meaning of MCL 418.161(l)(l) and (n).8 On remand, the
circuit court held that plaintiff was not an employee, but
an independent contractor, because he maintained a separate
business as a day laborer and held himself out to the
public as a day laborer. This Court then remanded the case
to the Court of Appeals to reconsider whether plaintiff was
an employee within the meaning of MCL 418.161(1)(l) and (n)
in light of the circuit court’s findings of fact.9 The
Court of Appeals affirmed.10
This Court granted the application of defendants Mr.
Food and Hadley for leave to appeal on the issue of
plaintiff’s employment status on the date of the accident.11
On April 12, 2005, the Workers’ Compensation Law Section
filed an amicus brief squarely raising the Sewell
jurisdictional issue for the first time. Neither plaintiff
nor defendants answered the amicus brief.
II. STANDARD OF REVIEW
The issue of subject-matter jurisdiction turns on
questions of statutory and court rule interpretation and
8
469 Mich 960 (2003).
9
469 Mich 1051 (2004).
10
Unpublished opinion per curiam of the Court of
Appeals, issued June 8, 2004 (Docket No. 236588).
11
471 Mich 957 (2005).
7
thus presents a question of law. Lapeer Circuit Judges,
supra at 566. This Court reviews questions of law de novo.
Id.; Cain v Waste Mgt, Inc (After Remand), 472 Mich 236;
697 NW2d 130 (2005). This case also has constitutional
implications regarding the legitimate scope of judicial
power, which is also subject to review de novo. Warda v
Flushing City Council, 472 Mich 326; 696 NW2d 671 (2005).
III. DISCUSSION & ANALYSIS
A. Subject-Matter Jurisdiction
Subject-matter jurisdiction may be raised at any time
by the parties, or sua sponte by a court. Nat'l Wildlife
Federation v Cleveland Cliffs Iron Co, 471 Mich 608, 630;
684 NW2d 800 (2004); MCR 2.116(D)(3). Subject-matter
jurisdiction involves the power of a court to hear and
determine a cause or matter. Langdon v Wayne Circuit
Judges, 76 Mich 358, 367; 43 NW 310 (1889). Since subject-
matter jurisdiction is the foundation for a court to hear
and decide a claim, it may be considered by the court on
its own at any time. In re Estate of Fraser, 288 Mich 392,
394; 285 NW 1 (1939).
In Joy v Two-Bit Corp, 287 Mich 244, 253-254; 283 NW
45 (1938), this Court defined subject-matter jurisdiction
as
8
“the right of the court to exercise judicial
power over that class of cases; not the
particular case before it, but rather the
abstract power to try a case of the kind or
character of the one pending; and not whether the
particular case is one that presents a cause of
action, or under the particular facts is triable
before the court in which it is pending, because
of some inherent facts which exist and may be
developed during the trial.” [Citation omitted.]
Subject-matter jurisdiction is conferred on the court
by the authority that created the court. Detroit v Rabaut,
389 Mich 329, 331; 206 NW2d 625 (1973). Const 1963, art 6,
§ 1 created the current judicial system in Michigan; it
provides for one Supreme Court, the Court of Appeals, one
circuit court of general jurisdiction, one probate court,
and “courts of limited jurisdiction that the legislature
may establish . . . .”
Const 1963, art 6, § 4 provides that this Court has
“general superintending control over all courts; power to
issue, hear and determine prerogative and remedial writs;
and appellate jurisdiction as provided by rules of the
supreme court.” This Court’s appellate jurisdiction to
review and pass on decisions of the lower courts
necessarily assumes that the lower courts properly
exercised subject-matter jurisdiction over the case. If a
lower court improperly exercised jurisdiction over a matter
delegated to another governmental branch, this Court is
9
devoid of appellate jurisdiction over the subject matter of
the case because the Constitution provides no basis for
this Court to exercise a power delegated to another
department of government. On the contrary, Const 1963, art
3, § 2 specifically provides that “[n]o person exercising
powers of one branch shall exercise powers properly
belonging to another branch except as expressly provided in
this constitution.”
As this Court explained in Bowie v Arder, 441 Mich 23,
56; 490 NW2d 568 (1992):
When a court lacks subject matter
jurisdiction to hear and determine a claim, any
action it takes, other than to dismiss the
action, is void. Further, a court must take
notice of the limits of its authority, and should
on its own motion recognize its lack of
jurisdiction and dismiss the action at any stage
in the proceedings. [Citation omitted.]
The specific threshold jurisdictional issue here is
whether the Legislature has exclusively delegated to the
WCB the power to decide the application of the WDCA to the
class of cases that includes plaintiff’s case. If that is
so, then this Court and the lower courts are divested of
subject-matter jurisdiction to determine a plaintiff’s
employment status for WDCA purposes, and this Court has no
choice but to dismiss this case. Proper resolution of this
jurisdictional question is critical because it determines
10
whether a jury or a specialized agency will hear and decide
the claim. The WDCA actually prohibits a circuit court
from exercising subject-matter jurisdiction to decide any
questions arising under the WDCA by assigning jurisdiction
to the WCB or a worker’s compensation magistrate. MCL
418.841(1).
B. Worker’s Disability Compensation Act
The predecessor to the WDCA, known as the “Workmen’s
Compensation Act,” was enacted in 1912 during a special
legislative session. Cain, supra at 247-248.12 The
worker’s compensation system assures employees that they
will receive compensation for employment-related injuries,
without regard to fault, through worker’s compensation
benefits. In exchange for “this almost automatic
liability, employees are limited in the amount of
compensation they may collect from their employer, and,
except in limited circumstances, may not bring a tort
action against the employer.” Clark v United Technologies
Automotive, Inc, 459 Mich 681, 687; 594 NW2d 447 (1999);
MCL 418.131(1). Worker’s compensation is thus an injured
12
1975 PA 279 changed the title of the act from the
“Workmen's Compensation Act of 1969” to the “Worker's
Disability Compensation Act of 1969” to reflect its
applicability to workers of either sex.
11
worker’s “exclusive remedy” for a qualifying work-related
injury. Id.
MCL 418.301(1) of the WDCA provides, in relevant part:
An employee, who receives a personal injury
arising out of and in the course of employment by
an employer who is subject to this act at the
time of the injury, shall be paid compensation as
provided in this act.
Thus, worker’s compensation benefits are available
under the WDCA when (1) an employment relationship exists,
and (2) a personal injury arose out of, and in the course
of, that employment.
The term “employee” for WDCA purposes is defined in
MCL 418.161(1). That section controls employment status
determinations regarding government workers (§ 161[1][a]),
foreign nationals (§ 161[1][b]), public safety personnel
(§§ 161[1][c] and [f]), volunteer fire fighters (§§
161[1][d] and [e]), volunteer civil defense workers (§
161[1][g]), public health volunteers (§§ 161[1][h] and
[i]), emergency rescue workers (§ 161[1][j], peace officers
(§ 161[1][k]), workers under contract (§ 161[1][l]),
trainee program participants (§ 161[1][m]), and even
independent contractors (§ 161[1][n[).13
13
The question the majority addresses is thus first
assigned to the WCB.
12
The only apparent exception that confers jurisdiction
on the circuit court is found in MCL 418.131(1):
The right to the recovery of benefits as
provided in this act shall be the employee’s
exclusive remedy against the employer for a
personal injury or occupational disease. The only
exception to this exclusive remedy is an
intentional tort. An intentional tort shall
exist only when an employee is injured as a
result of a deliberate act of the employer and
the employer specifically intended an injury.
Here, plaintiff has not presented an intentional tort
claim. The fundamental question presented here is whether
the circuit court has jurisdiction over a case after a
party has raised the question whether the claim sounds in
worker’s compensation rather than tort.
C. The WDCA and the Circuit Court Subject-Matter
Jurisdiction
MCL 418.841(1) of the WDCA provides:
Any dispute or controversy concerning
compensation or other benefits shall be submitted
to the bureau and all questions arising under
this act shall be determined by the bureau or a
worker's compensation magistrate, as applicable.
[Emphasis supplied.]
The WDCA sets up comprehensive procedures for
resolving disputes “arising under” the act. For example,
MCL 418.847(1) provides that a “party in interest” may
apply for a hearing before a worker’s compensation
magistrate. MCL 418.847(2) provides that a magistrate must
file a written order and “a concise written opinion stating
13
his or her reasoning for the order including any findings
of fact and conclusions of law.”
MCL 418.859a and 418.861a establish the procedures a
party must follow in order to appeal a magistrate’s
decision within the WCB. MCL 418.859a provides that “a
claim for review of a case for which an application under
section 847 is filed . . . shall be filed with the
appellate commission.” MCL 418.861a(1) provides that any
claim for review filed pursuant to § 859a “shall be heard
and decided by the appellate commission [WCAC].” During
that process, the WCAC may “remand [the] matter to a
worker’s compensation magistrate for purposes of supplying
a complete record if it is determined that the record is
insufficient for purposes of review.” MCL 418.861a(12)
Judicial review of magistrate and WCAC decisions is
circumscribed under the WDCA. MCL 418.861 provides:
The findings of fact made by the board
acting within its powers, in the absence of
fraud, shall be conclusive. The court of appeals
and the supreme court shall have power to review
questions of law involved in any final order of
the board, if application is made by the
aggrieved party within 30 days after such order
by any method permissible under the rules of the
courts of the laws of this state.
MCL 418.861a(14) similarly provides:
The findings of fact made by the commission
acting within its powers, in the absence of
fraud, shall be conclusive. The court of appeals
14
and the supreme court shall have the power to
review questions of law involved with any final
order of the commission, if application is made
by the aggrieved party within 30 days after the
order by any method permissible under the
Michigan court rules.
Significantly, the WDCA sets up no substantive right
to or procedural mechanism for circuit court resolution or
review of legal or factual questions regarding application
of the WDCA. On the contrary, as noted earlier, in MCL
418.841, the Legislature directed that “[a]ny dispute or
controversy concerning compensation or other benefits shall
be submitted to the bureau and all questions arising under
this act shall be determined by the bureau or a worker’s
compensation magistrate . . . .” (Emphasis supplied.)
Where, as here, the employment status of an injured
plaintiff is in dispute, the issue is whether that dispute
is one “arising under” the WDCA. If the dispute over
employment status is not one “arising under” the WDCA, then
MCL 418.841 does not preclude a circuit court from
exercising jurisdiction over that determination.
Conversely, if the dispute over employment status is a
question “arising under” the WDCA, then a circuit court
lacks subject-matter jurisdiction over those initial
determinations by virtue of the Legislature’s direction in
MCL 418.841(1) that “all” such questions “shall be
15
determined by the bureau or a worker’s compensation
magistrate . . . .” (Emphasis supplied.) The
Legislature’s use of the word “shall” in a statute
“indicates a mandatory and imperative directive” Burton v
Reed City Hosp Corp, 471 Mich 745, 752; 691 NW2d 424
(2005).
As already discussed, the criteria for determining
employment status are comprehensively set forth in, and
controlled by, MCL 418.161(1) of the WDCA. The question of
employee status falls within the category of “all questions
arising under” the act. Because the Legislature directed
that all questions concerning the meaning and application
of every provision in the WDCA are to be decided by the WCB
or a magistrate, and any dispute regarding whether an
injured party is an “employee” is necessarily one “arising
under” the WDCA, the WCB is the designated forum to
determine that question.
Const 1963, art 6, § 13 provides that “[t]he circuit
court shall have original jurisdiction in all matters not
prohibited by law . . . .” (Emphasis supplied.) By virtue
of MCL 418.841(1), it appears that the Legislature
“prohibited by law” the exercise of original jurisdiction
in the circuit court. Therefore, jurisdiction regarding a
party’s employment status rests in the first instance
16
exclusively with the WCB or a magistrate. As noted
earlier, because the circuit court lacked jurisdiction over
the subject matter, the Court of Appeals and this Court
lack subject-matter jurisdiction to review that circuit
court decision.
D. Sewell v Clearing Machine Corp, 419 Mich 56; 347 NW2d
447 (1984)
Despite the clear and unambiguous directive set forth
in MCL 418.841, Sewell, supra, overrode the statute and
declared that the courts and the WCB shared jurisdiction.
The Sewell Court held that
the bureau has exclusive jurisdiction to decide
whether injuries suffered by an employee were in
the course of employment. The courts, however,
retain the power to decide the more fundamental
issue whether the plaintiff is an employee (or
fellow employee) of the defendant. [Sewell,
supra at 62 (emphasis supplied).]
There is no authority cited for this assertion of
power. Indeed, the judiciary is powerless to modify
unambiguous statutory language in order to inject its own
policy preferences. Rory v Continental Ins Co, 473 Mich
____; ___ NW2d ___ (2005). Nonetheless, Sewell dictated
that courts and the WCB would effectively share the power
to decide whether an injured party is an “employee” within
the meaning of the WDCA. The WCB, however, would retain
17
exclusive jurisdiction over determining whether an injury
occurred in the course of employment.
Although Sewell cited MCL 418.841, it provided no
analysis of that section’s sweeping directive that “all
questions arising under [the] act shall be determined by
the” WCB. Indeed, the opinion is devoid of any analysis of
any WDCA provisions whatsoever.
Moreover, the perfunctory decision in Sewell swept
away almost fifty years of precedent in which this Court
and the Court of Appeals had consistently held that courts
lack jurisdiction to determine employment status.
Szydlowski, supra; Jesionowski v Allied Products Corp, 329
Mich 209; 45 NW2d 39 (1950); Dershowitz v Ford Motor Co,
327 Mich 386; 41 NW2d 900 (1950); Morris v Ford Motor Co,
320 Mich 372; 31 NW2d 89 (1948); Munson v Christie, 270
Mich 94; 258 NW 415 (1935); Houghtaling v Chapman, 119 Mich
App 828; 327 NW2d 375 (1982); Buschbacher v Great Lakes
Steel Corp, 114 Mich App 833; 319 NW2d 691 (1982); Dixon v
Sype, 92 Mich App 144; 284 NW2d 514 (1979); Herman v Theis,
10 Mich App 684; 160 NW2d 365 (1968).
Sewell wholly disregarded this extensive body of case
law, stating:
Taken alone, those general statements
suggest that the bureau’s jurisdiction takes
precedence over that of the circuit court
18
whenever there is an issue concerning the
applicability of the Worker’s Disability
Compensation Act. The rule is not so broad,
however. [Sewell, supra at 62.]
Again, the Court cited no authority for that proposition.
It is hard to imagine a broader rule than the one
established by the Legislature in the WDCA, i.e., one
covering “all questions.” This Court’s usurpation of
legislative power in Sewell is nothing short of
breathtaking. This Court has stood firm against just such
usurpations of legislative power by this branch of
government. Warda, supra; Halloran v Bhan, 470 Mich 572,
576; 683 NW2d 129 (2004); Lapeer Circuit Judges, supra;
Roberts v Mecosta Co Gen Hosp, 466 Mich 57, 63; 642 NW2d
663 (2000); Massey v Mandell, 462 Mich 375, 379-380; 614
NW2d 70 (2000); DiBenedetto v West Shore Hosp, 461 Mich
394, 402; 605 NW2d 300 (2000); Omne Financial, Inc v
Shacks, Inc, 460 Mich 305, 311; 596 NW2d 591 (1999).
I fully agree with Justice Levin’s statement in
Sewell. He pointed out that the majority’s “more
fundamental” test was “proffered without analysis,
explanation, or justification” and that it “offers no
guidance for the resolution of future cases and does not
satisfactorily explain the result reached . . . .” Id. at
65. He argued that “[t]he issue whether [defendant] was
19
[plaintiff’s] employer is no more ‘fundamental’ than the
issue whether [plaintiff’s] injuries were suffered in the
course of employment.” Id. at 70.
In announcing a shared jurisdiction paradigm when
determining whether the WDCA applies to a claim, Sewell
overruled Szydlowski, supra. In Szydlowski, we held that
“a plaintiff’s remedy against an employer based
on an injury allegedly arising out of an
employment relationship properly belongs within
the workmen's compensation department for initial
determination as to jurisdiction and liability.”
[Szydlowski, supra at 359, quoting Herman, supra
at 691 (emphasis supplied).]
This Court explained in Szydlowski that “the
procedures for workmen’s compensation cases have been
statutorily established. [Herman] properly cautions us
against a shortcut or circumvention of those procedures.”
Szydlowski, supra at 359. The WDCA scheme is a complete
departure from the common law and equity jurisprudence, as
this Court recognized in Andrejwski v Wolverine Coal Co,
182 Mich 298, 302-303; 148 NW 684 (1914):
The act in question, like all similar acts,
provides for compensation, and not for damages,
and in its consideration and construction all of
the rules of law and procedure, which apply to
recover damages for negligently causing injury
or death, are in these cases no longer
applicable, and there is substituted a new code
of procedure fixed and determined by the act in
question. [Emphasis supplied.]
20
The shared jurisdiction paradigm established in Sewell
not only contradicts the plain language of the WDCA, but it
also does violence to the legislative scheme.
E. Prudential Problems with Sewell
As discussed in the previous section, Sewell
contradicted the clear legislative directive that “all
questions arising under” the WDCA are to be addressed
within the worker’s compensation system. That is a
sufficient basis to overturn the decision.14 But Sewell’s
shared jurisdiction paradigm implicates other prudential
concerns, quite apart from the absence of judicial
authority to negate the legislative scheme. Specifically,
it fails to accord the proper deference to agency
expertise, and thwarts the goal of consistent and uniform
decisions by the WCB.
1. Agency Expertise
This Court has acknowledged that administrative
agencies possess “superior knowledge and expertise in
addressing recurring issues within the scope of their
authority.” Travelers Ins Co v Detroit Edison Co, 465 Mich
185, 200; 631 NW2d 733 (2001). In Mudel v Great Atlantic
& Pacific Tea Co, 462 Mich 691, 702 n 5; 614 NW2d 607
14
See Robinson v Detroit, 462 Mich 439, 473; 613 NW2d
307 (2000) (Corrigan, J., concurring).
21
(2000), this Court explained that the Legislature created a
“two-tier reviewing process, which delegates to the WCAC
the role of ultimate factfinder, while limiting the
judiciary to the role of guardian of procedural fairness.”
Mudel correctly recognized that
administrative agencies possess expertise in
particular areas of specialization. Because the
judiciary has neither the expertise nor the
resources to engage in a fact-intensive review of
the entire administrative record, that type of
detailed review is generally delegated to the
administrative body. In the particular context of
worker’s compensation cases, a highly technical
area of law, the judiciary lacks the expertise
necessary to reach well-grounded factual
conclusions . . . . The judiciary is not more
qualified to reach well-grounded factual
conclusions in this arena than the administrative
specialists. Therefore, the Legislature has
decided that factual determinations are properly
made at the administrative level, as opposed to
the judicial level. [Id.]
The rationale underlying this Court’s decision in
Sewell is that resolving the legal question regarding a
plaintiff’s employment status is not an issue that requires
agency expertise. The instant case, however, belies that
understanding. Here, three courts have interpreted the
same facts three different ways in deciding plaintiff’s
employment status. The trial court held that plaintiff was
not under a “contract of hire” at the time of the accident.
The Court of Appeals held that plaintiff was under a
contract of hire, but that he was an independent
22
contractor. Here, the lead opinion concludes that
plaintiff was under a contract of hire and was not acting
as an independent contractor.
This case itself reflects that the legal question
regarding the employment status of an injured party for
WDCA purposes can be a complicated and highly fact-driven
question. For that reason, employment status is best
determined first by the administrative agency legislatively
charged with applying the WDCA.
Even if the Legislature had not clearly directed that
all questions regarding application of the WDCA be answered
within the worker’s compensation system, the pre-Sewell
approach simply works best. Allowing the agency to decide
first which tribunal has jurisdiction over a claim in which
the WDCA is implicated maximizes the strengths of both
tribunals. The WCB may apply its expertise to resolve
issues of fact in the employment context, while courts, of
course, retain appellate review of WCB decisions and
resolve questions of law.
2. Uniformity and Consistency
The goal of consistent and uniform administrative
decision-making is similarly thwarted where multiple forums
may decide the same factual question. As we stated in
Travelers, supra at 199:
23
“[U]niformity and consistency in the
regulation of business entrusted to a particular
agency are secured, and the limited functions of
review by the judiciary are more rationally
exercised, by preliminary resort for ascertaining
and interpreting the circumstances underlying
legal issues to agencies that are better equipped
than courts by specialization, by insight gained
through experience, and by more flexible
procedure.” [Citation omitted.]
Resort to the WCB in the first instance ensures that
employment status issues will be resolved in a consistent
manner.
Moreover, the shared jurisdiction approach established
by Sewell suffers from an unconvincing rationale and lack
of clarity in application. As Justice Levin aptly opined,
there is little reason to assume that employment status
determinations are any “more fundamental” than other
questions involved in determining whether a plaintiff’s
claim sounds in worker’s compensation or tort. Sewell,
supra at 70 (Levin, J., concurring). Thus, Sewell’s “more
fundamental” rationale for concurrent jurisdiction appears
both unprincipled and groundless.
F. Szydlowski’s Approach
This Court’s opinion in Szydlowski provides the more
textually faithful approach to determining jurisdiction
when the WDCA is implicated. Contrary to Sewell, the
jurisdictional inquiry in the first instance should be
24
referred to the WCB upon petition by either party in a
court action.
In addition to being more textually faithful to the
WDCA, this approach would avoid lengthy, duplicative
litigation by providing a definite jurisdictional starting
point. Consider this case: for seven years, the circuit
court, the Court of Appeals, and now this Court have
grappled with defining and applying the WDCA’s terms of art
to the facts of this case. The forum legislatively charged
with determining all questions arising under the WDCA is
the WCB, not the courts. That forum is where this class of
cases belongs.
I agree that this Court should not lightly overrule
precedent.15 As this Court discussed recently in People v
Davis, 472 Mich 156, 168 n 19; 695 NW2d 45 (2005),
the doctrine of stare decisis is not applied
mechanically to prevent the Court from overruling
previous decisions that are erroneous. We may
overrule a prior decision when we are certain
that it was wrongly decided and “‘less injury
will result from overruling than from following
it.’” People v Moore, 470 Mich 56, 69 n 17; 679
NW2d 41 (2004), quoting McEvoy v Sault Ste Marie,
136 Mich 172, 178; 98 NW 1006 (1904).
Sewell’s shared jurisdiction approach is not at all
faithful to the plain text of the WDCA. The doctrine of
15
Ante at 24.
25
stare decisis should not prevail over a legislative
directive. As I noted in Robinson v Detroit, 462 Mich 439,
472-473; 613 NW2d 307 (2000):
I agree that too rapid change in the law
threatens judicial legitimacy, as it threatens
the stability of any institution. But the act of
correcting past rulings that usurp power properly
belonging to the legislative branch does not
threaten legitimacy. Rather, it restores
legitimacy. Simply put, our duty to act within
our constitutional grant of authority is
paramount. If a prior decision of this Court
reflects an abuse of judicial power at the
expense of legislative authority, a failure to
recognize and correct that excess, even if done
in the name of stare decisis, would perpetuate an
unacceptable abuse of judicial power. [Corrigan,
J., concurring.]
IV. Conclusion
In sum, Sewell’s assumption of circuit court
jurisdiction over determining employment status contradicts
the plain language of the WDCA. Determining employment
status is a fact-driven undertaking requiring
interpretation and application of the WDCA. Such questions
should be determined first by the forum legislatively
charged with interpreting and applying the act. For the
foregoing reasons, I conclude that the circuit court and
the Court of Appeals lack subject-matter jurisdiction over
this matter. Although I agree that the jurisdictional
issue was posed at a very late stage, I would nonetheless
direct the parties to brief this jurisprudentially
26
significant problem of jurisdiction and submit the case on
this narrow question.
Maura D. Corrigan
27