40 F.4th 398
6th Cir.2022Background
- In June 2014 Ryan Marshall, a truck driver at Dura‑Bond’s plant, suffered catastrophic injuries while unloading pipes. He had driven a truck leased from Sam Russell and operated under Motor Express’s motor‑carrier license.
- A Pennsylvania workers’ compensation agency found Sam Russell Trucking to be Marshall’s immediate employer and Motor Express a "statutory employer;" neither Motor Express nor Russell had obtained workers’ compensation insurance for Marshall.
- Because Motor Express lacked workers’ compensation coverage, Marshall sued Motor Express in tort; Motor Express settled the tort suit for $2.4 million and sought indemnity from its commercial general liability insurer, RLI (which did not issue workers’ compensation coverage).
- RLI denied coverage relying on (1) a "Workers’ Compensation and Similar Laws" exclusion for any obligation "under" a workers’ compensation law and (2) an "Employer’s Liability" exclusion for injury to an "employee" (the policy excludes "temporary workers" from the employee definition).
- The district court held the workers’ compensation exclusion inapplicable; the case went to trial on employee/temporary‑worker issues and a jury found Marshall was a "temporary worker," entitling Motor Express to coverage; the court entered judgment for $2 million.
- RLI appealed, arguing (a) the workers’ compensation exclusion covers Motor Express’s tort settlement, (b) Marshall was an "employee" under the policy (so the employer exclusion applies), and (c) various jury‑instruction and evidentiary errors warranted reversal.
Issues
| Issue | Plaintiff's Argument (Motor Express) | Defendant's Argument (RLI) | Held |
|---|---|---|---|
| Scope of "under a workers’ compensation law" exclusion | Settlement arose under common‑law tort (not "under" WC law); exclusion does not reach tort settlement | Statute allowed the tort because insurerless employer lost immunity; settlement therefore is effectively "under" WC law | "Under" means "pursuant to / by reason of" the statute; settlement flowed from common‑law tort, so the WC exclusion does not apply (narrow reading also avoids rendering separate failure‑to‑comply exclusion superfluous). |
| Whether Marshall was an "employee" under the policy (and thus barred by employer exclusion) | Policy's undefined "employee" incorporates common‑law control test; even if employee generally, Marshall is excluded as a "temporary worker" furnished to meet short‑term workload | Agency finding of statutory employer makes Marshall an "employee"; temporary‑worker carveout should not defeat exclusion or its purpose | Jury found Marshall a "temporary worker," placing him outside the employee exclusion; RLI failed to renew a Rule 50(b) motion, so sufficiency challenge is forfeited. |
| Preclusion effect of Pennsylvania workers’ compensation agency finding | Agency decision concerned statutory‑employer question under WC law and is not identical to the insurance issue about whether Marshall was "furnished" short‑term; no issue preclusion | Agency’s statutory‑employer determination should preclude a contrary insurance finding | Pennsylvania preclusion rules apply; issues are distinct (contractor/subcontractor statutory inquiry vs. contract‑term "furnished"/"short‑term" issue), so no preclusion. |
| Trial management: jury instructions and excluded evidence | Instructions and evidentiary rulings were proper or any errors harmless; excluded WC proceedings material was prejudicial but properly excluded as confusing | Court misallocated legal questions to jurors (ambiguity), misstated burdens/definitions, and improperly excluded evidence (agency findings, federal reg definition, prior pleadings) | Any instructional errors were harmless in context; evidentiary exclusions were within the district court’s discretion and did not affect substantial rights given jury’s temporary‑worker verdict. |
Key Cases Cited
- Kucana v. Holder, 558 U.S. 233 (interpretation of the contextual meanings of the word "under")
- National Ass'n of Manufacturers v. Department of Defense, 138 S. Ct. 617 (use of context to fix meaning of a chameleon word like "under")
- Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm, 652 N.E.2d 684 (Ohio 1995) (insurer‑policy terms are interpreted by ordinary meaning; courts decide ambiguity)
- Sunoco, Inc. (R & M) v. Toledo Edison Co., 953 N.E.2d 285 (Ohio 2011) (avoid readings that render contract terms superfluous)
- Ward v. United Foundries, Inc., 951 N.E.2d 770 (Ohio 2011) (subjective intent of insurer not controlling; drafters can plainly draft broader exclusions)
- Neal‑Pettit v. Lahman, 928 N.E.2d 421 (Ohio 2010) (burden rests on insurer to prove policy exclusion applies)
- Bowman v. Sunoco, Inc., 65 A.3d 901 (Pa. 2013) (employer's failure to secure workers’ compensation insurance removes statutory immunity and permits common‑law tort suits)