CP# 95-39096 Demir v. Karadeniz Texaco
DEPARTMENT OF LABOR
DIVISION OF WORKERS' COMPENSATION
CAMDEN DISTRICT OFFICE
KARADENIZ TEXACO, TEXACO INC.
|Case No.: C.P.# 1995-39096; 1997-16843; 1997-39322
SMITH, GOLDSTEIN & MAGRAM, P.C.
415 High Street, Box 603
Burlington, N.J. 08016
BY: Edward J. Magram, Esq.
ATTORNEY FOR PETITIONER
202 Carnegie Center
Princeton, N.J. 08543-5226
BY: Craig W. Summers, Esq.
ATTORNEY FOR RESPONDENT, STAR ENTERPRISES
AND/OR TEXACO, INC.
UNINSURED EMPLOYERS’ FUND
P.O. Box 399
Trenton, N.J. 08625
BY: Thomas W. Daly, Esq.
The facts of this case are undisputed. The petitioner, Erdal Demir, was in the employ of Karadeniz Texaco in Lawnside New Jersey on June 25, 1995. On the date aforesaid, petitioner was assaulted arising out of and in the course of his employment with Karadeniz Texaco and the employer had timely notice. It has been established to the satisfaction of this court that Karadeniz Texaco was a trade name for Adlem Yildiz, Mr. Yildiz was the lessee of the gas station owned by Star Enterprises, a New York general partnership. and Mr. Yildiz failed to secure workers’ compensation insurance. A motion to join the Uninsured Employer’s Fund was filed as well as claim petitions against Texaco and Star Enterprises. The parties have agreed to bifurcate the case on the issue of liability of the respective parties. Both Texaco and Star are insured for workers’ compensation by C.N.A.. Star is in charge of the retail operations of Texaco.
The Lease and Sales Agreement (R-1) sets forth the terms, conditions and responsibilities of the Yildiz (lessee) and Star Enterprise (lessor). This agreement is a comprehensive and specific compilation of the responsibility of the parties. Included in the agreement are specific days and hours of operation, minimum quantities of Texaco products to be purchased by lessee, prohibition against the sale of products not authorized by lessor, prohibition against the display of signs or logos not lessor approved and numerous other specific details of the daily operations of the lessee. Star/Texaco required lessor to maintain general liability insurance to indemnify lessor as well as Worker’s Compensation Insurance.
The fact that Texaco/Star may regard Yildiz as an independent contractor does not make him one. The existence of an employment relationship is determined by the totality of the circumstances, not by the description given by the parties. Caicco v. Toto Brothers, Inc. , 62 N.J. 305, 311 (1973). The employer-employee relationship by the statutory definition rests on service, construed by judicial definition to mean controllable service. Where actual control or right of control of the work performance decisions have applied the secondary test for servant. Where the evidence shows that a person to whom a service is rendered has a right to control the performance of the person who renders the service, the relationship of employer and employee is essentially established. The facts here demonstrate almost total control of the daily operations of the gas station. Mr. Yildiz has no more independence than a manager for Star/Texaco. The relationship of Yildiz to Star/Texaco is similar to the relationships between “owner operators” and the trucking companies who control their day-to-day activities. Tofani v LoBiondo Brothers Motor Express, Inc. 83 N.J. Super 480 (App. Div. 1964), Aff’d per curium 205 A.2d 736 (1964). In Tofani the court adopted the theory and reasoning of Professor Larson found in Sec. 43.10 of his treatise on workers’ compensation law, The Law of Workers’ Compensation (1961). With respect to the four indicia of control, the Court held:
Of the four factors evidencing the right to control, any single one is virtually proof of the employment relation; while contrary evidence as to any one fact is at best only mildly persuasive evidence of contractorship and sometimes is of no force at all. Independent contractorship then is established usually only by a convincing accumulation of these and other tests, while employment can, if necessary, often be solidly proved on the strength of one of the for items, direct evidence of control, method of payment, furnishing of equipment and right to fire. Page 398 (emphasis added)
The Court in Tofani felt the more modern test is the relative nature of the work test. This test asks two questions. (1) Is the worker economically dependent upon the business he serves? (2) Does his work constitute an integral part of the regular and continuing functioning of the business?
Yildiz meets the test of control based upon the Sale/Lease agreement. More importantly, the relative nature of the work is the exclusive sale of Texaco products in time, manner and volume dictated by Star/Texaco and the sale of the product to the motoring consumer constitutes a regular and continuing function of the business of Star/Texaco. Rossnagle v Capra and Shell Oil Co. 127 N.J. Super 507 (App. Div. 1973) Aff’d 64 N.J. 549 (1974).
Respondent, Star/Texaco, argues that the lease/sales agreement contains language “This agreement shall not be deemed to reserve, give or grant to Seller (Star Enterprises) any right to manage or control the day-to-day business of Purchaser (Yildiz) and/or the retail outlet it operates, and neither Purchaser not its employees nor agents shall be agents or employees of Seller for any reason or for any purpose whatsoever. Purchaser is and at all times be an independent business entity that is free to select its customers, purchase and sell products from sources other than Seller, set its own selling prices in terms of sale, and generally conduct business as it determines.” This is however a legal determination and not one made by decree or agreement. Tofani supra.
The Appellate Division dealt with the issue raised by the respondent in Rossnagle citing Professor Larson:
“Resolution of the question of petitioner's relationship with respondent Shell is not without difficulty. Some guidance may be found in 1A Larson, Workmen's Compensation Law, § 44.35, p. 686:”
[A]lthough the filling-station cases are among the most complex and evenly balanced, an analysis will show that the most reliable test that recurs in the decisions is the distinction between operators who have no lease and are subject to being "fired" on short notice, and operators who either have a lease or are secure in their contractual right to continue in the business for a specified time.
Professor Larson further states at p. 685-686:
In the filling-station cases, a close tie may be observed between the termination test and the furnishing-of-equipment test. If the operator occupies the premises only as a licensee from day to day, subject to cancellation of the arrangement on brief notice, he is like the truck driver to whom an expensive truck belonging to the employer has been entrusted. * * * On the other hand, if he occupies the premises under a bona fide lease of substantial length, and (which is the normal corollary) if the agreement cannot be cancelled at will, the premises, in the possessory sense, become his own. His duty to maintain them becomes that of a lessee rather than an employee, [***17] and the certainty that the contract will run a definite time enables the lessee to build up a business of his own with some assurance.
Star’s lease to Yildiz was for a three-year term. However paragraph 14 of the lease gives great latitude to the lessor to terminate the contract. Sub section (j) of paragraph 14 grants the lessor the right of termination where “…lessee fails to comply with the hours of operation”. This further demonstrates the control of the lessor over the operation of lessor. Further, three years without any guaranty of renewal does not give lessor full opportunity to develop a client base for future income growth. Sub section (d) of paragraph 14 grants the right of termination to the lessor where the lessee fails to comply with any applicable law, which may include the failure to maintain workers’ compensation insurance.
Although the court in Rossnagle dealt with the lessor and not an injured employee hired by the lessor, it is a logical extension that one operating the station has the implied consent of the lessee to hire subordinates. While there are no reported decisions in this jurisdiction, the issue is well established in other jurisdictions. Bieluczyk v. Crown Petroleum Corporation et al, 134 Conn. 461 (Sup. Ct. of Errors 1948), Ceradsky v. Mid-America Dairymen, Inc, 583 S.W. 2d 193 (Miss. Ct. of App. 1979), Continental Oil Company et al. v. Sirhall et al. 122 Colo. 332 (1950).
In each of the above-cited cases, a middle person contracting with the defendant/respondent hired the injured worker. All three courts applied the right to control test and the relative nature of the work test to provide coverage to the injured worker. The ultimate social philosophy behind compensation liability is belief in the wisdom of providing, in the most efficient, most dignified, and most certain form, financial and medical benefits for the victims of work-connected injuries which an enlightened community would feel obliged to provide in any case in some less satisfactory form, and of allocating the burden of these payments to the most appropriate source of payment, the consumer of the product. The business of Texaco/Star is the refining and distribution of oil products. Yildiz is merely completing the mission of
Texaco/Star and Demir is the statutory employee of Texaco/Star.
I direct the petitioner’s attorney to prepare an Order consistent with the above findings.
January 17, 2003
HONORABLE RICHARD E. HICKEY, III, A.S.J.W.C.