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Larry Ogier, Jr., Plaintiff-Appellee, v. Stewart Brothers, Inc., Defendant-Appellant, LandAir Transport, Inc., and Administrator, Bureau of Workers' Compensation, Defendants-Appellees. Alvin P. Whittington, Plaintiff-Appellee,
vs.
Stewart Brothers, Inc., Defendant-Appellant, LandAir Transport, Inc., and Administrator, Bureau of Workers' Compensation, Defendants-Appellees.
 
Case:
No. 96APE12-1732, No. 96APE12-1733
 
Location:
COURT OF APPEALS OF OHIO, TENTH APPELLATE DISTRICT, FRANKLIN COUNTY
 
Date:
August 5, 1997, Rendered
 
Attorneys:
James C. Ayers Law Office, and Jeffrey M. Decile, for plaintiffs-appellees.
McCorkle & Minnillo, and Christopher J. Minnillo, for appellant.
Vorys, Sater, Seymour & Pease, and Robert E. Tait, for appellee LandAir Transport, Inc.
Betty D. Montgomery, Attorney General, and Dennis L. Hufstader, for appellee
Bureau of Workers' Compensation.
 
Court:
BOWMAN, J. YOUNG and BRYANT, JJ., concur.
 
Author:
The Hon. Justice Bowman
 

These are appeals from the trial court's decision adopting the findings of fact and some, but not all, of the conclusions of law of the magistrate's decision. The trial court agreed with the magistrate that appellees, Larry Ogier and Alvin P. Whittington ("appellees") were employees, not independent contractors, and were eligible to participate in the workers' compensation system. However, the trial court disagreed with the magistrate's finding that appellee, LandAir Transport, Inc., was their employer. Instead, the trial court determined that, based on an agreement between LandAir and appellant, Stewart Brothers, Inc. ("Stewart"), Stewart was the employer of appellees and, thus, Stewart was responsible for their workers' compensation benefits.

Stewart now brings this appeal asserting the following assignment of error:

"THE TRIAL COURT CORRECTLY ADOPTED THE MAGISTRATE'S FINDINGS OF FACT WHICH ESTABLISHED THAT APPELLEE LANDAIR TRANSPORT, INC. WAS THE EMPLOYER OF APPELLEES LARRY R. OGIER, JR. AND ALVIN P. WHITTINGTON AT THE TIME THEY SUSTAINED INJURIES DURING THE SCOPE OF THEIR EMPLOYMENT, BUT COMMITTED ERROR BY REJECTING THE MAGISTRATE'S CONCLUSION THAT LANDAIR WAS THE EMPLOYER UNDER WORKER'S [sic] COMPENSATION LAW AND SUBSTITUTING ITS OWN INCORRECT CONCLUSION THAT APPELLANT WAS THE EMPLOYER."

The findings of fact made by the magistrate are not in dispute. n1 Those facts show that Stewart leased tractor/trucks to motor carriers on a permanent lease basis. LandAir possessed authorization from the Interstate Commerce Commission to haul freight interstate. LandAir had two classes of drivers: owner/operators and company drivers. Owner/operators were paid a flat rate; were responsible for paying their own on-the-road expenses such as tolls, license fees and vehicle repairs; were not eligible for company benefits; traveled defined routes to specific destinations and were not provided company uniforms. Company drivers operated company vehicles; received benefits such as vacation and insurance; were given credit cards to be used at participating locations; did not have to pay tolls, license fees, vehicle repairs or motel accommodations; and were given uniforms.

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n1 In its objections to the magistrate's decision, LandAir stated that, "with several notable exceptions, the 'Findings of Fact' contained in the Magistrate's Decision are accurate." Civ.R. 53(E)(3)(b) provides that "any objection to a finding of fact shall be supported by a transcript of all the evidence submitted to the magistrate relevant to that fact or an affidavit of that evidence if a transcript is not available." The record does not show that Landair provided a copy of the transcript and, therefore, any objections to the findings of fact have been waived.

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Ogier submitted an employment application to LandAir on December 27, 1990, and, on January 10, 1991, he was hired as a driver. Ogier referred Whittington to LandAir and, on November 11, 1991, Whittington submitted his application to LandAir. He was hired as a driver on November 16, 1991. Upon receipt of appellees' applications, LandAir's Safety Director conducted tests, including drug screening, driving, physical examination and a written test, to determine if appellees were qualified to be interstate drivers.

Appellees were co-drivers and operated a tractor owned by Stewart to haul LandAir's freight from Columbus, Ohio to Los Angeles, California. Appellees traveled from Columbus to Los Angeles weekly and, on occasion, made designated stops en route. When a delivery needed to be made, LandAir's dispatcher would contact appellees and instruct them on the freight they were to haul, whether stops were to be made en route, the shortest route to travel and the expected arrival time.

Once appellees were dispatched by LandAir, they would pick up a Stewart tractor/truck and inspect it. After the inspection, they would pick up the trailer of LandAir's freight and inspect the trailer. Appellees would take the shortest route to Los Angeles as designated by LandAir. Any departures from that route required prior approval by LandAir. Appellees were also required to call LandAir's dispatcher every day before ten o'clock a.m. to report their location.

As lead driver, Ogier was responsible for preparing a driving trip report, which included an account of the expenses, mileage and road taxes, and an inspection trip report which described the condition of the truck and daily driving logs. These reports were submitted to LandAir; however, the driving report was also submitted to Stewart. Whittington had to prepare his own daily driving logs. If there was a problem with the driving logs, LandAir notified appellees. Appellees were required to report any tickets received for traffic violations to LandAir. They were also required to report mechanical breakdowns first to LandAir and then to Stewart. LandAir provided appellees with fuel cards which were used for fuel and for cash to pay tolls and other on-the-road expenses. Appellees were paid by the mile at a fixed rate of pay.

LandAir would issue checks, which included lease payments and payments for appellees' services as drivers, to Stewart. Stewart would cash LandAir's checks and issue its own checks to appellees as payment for their driving services. On August 1, 1992, LandAir and Stewart entered into a lease service agreement which provided that LandAir would use tractor/trucks owned by Stewart to haul LandAir's freight.

On December 21, 1992, appellees were en route to Los Angeles from Columbus with Whittington driving the Stewart owned tractor/truck hauling LandAir's freight when they were involved in an accident. Whittington contacted LandAir immediately following the accident and LandAir handled the clean-up from the accident. As a result of injuries sustained in the accident, appellees filed claims with the Industrial Commission of Ohio ("commission"). The commission issued an order finding that appellees were entitled to participate in the workers' compensation fund and that LandAir was the responsible employer. LandAir filed notices of appeal appealing the orders of the commission and appellees filed complaints. The cases were subsequently consolidated.

In reaching her conclusions of law, the magistrate relied on Bostic v. Connor (1988), 37 Ohio St. 3d 144, 524 N.E.2d 881, and found that LandAir controlled the details and quality of appellees' work. The magistrate noted that, although LandAir and Stewart entered into an agreement, "the manner in which Ogier and Whittington performed the work was established prior to the execution of the contract and continued in the same manner after the contract was executed." As such, the magistrate concluded that, because LandAir controlled the manner and means of appellees performing their work, an employer-employee relationship existed between LandAir and appellees.

The trial court, in ruling on LandAir's objections to the magistrate's decision, stated:

"The Court agrees with the Conclusion of Law as found by the Magistrate regarding the issue of whether the [appellees] were employees as opposed to independent contractors. However, the Court does not agree with the Magistrate's legal conclusion that the [appellees] were employees of LandAir *** .

"The Court does not dispute the Magistrate's Findings of Fact and hereby adopts those Findings *** ."

The court then weighed the Bostic factors, giving more weight to some, such as who had the responsibility to hire and fire, and less to others, such as who owned the vehicle. The court based the weight it assigned to the various factors on the purpose of the workers' compensation system and legal construction.

In reaching its conclusions, the trial court stated:

"In her Findings of Fact, the Magistrate found several of the Bostic factors existed on the LandAir side of the scale and several on the Stewart side. The Court agrees with her findings except the Court believes that the oral testimony and the contract between LandAir and Stewart support a finding that, for purposes of the issue of who was the employer, Stewart had the right to and did exercise the hiring and disciplinary duties regarding the [appellee] [sic]. Not LandAir as found by the Magistrate. ***

"The Court has reviewed all factual matters and has determined that without the Agreement of the parties to have Stewart responsible for the Workers' Compensation benefits, the balancing of the Bostic, supra, factors would come out even. However, when you put paragraph 11 of the Agreement on the scale, the balance tips heavily toward Stewart as the employer for purposes of the Workers' Compensation benefits paid to the [appellees]

" *** The Court hereby finds that the [appellees] were employees of Stewart at the time of the accident."

The August 1, 1992 agreement between Stewart and LandAir, on which the court based its decision, provides:

"5. During the operation of said equipment, it shall be driven by [Stewart] or someone selected by [Stewart]. [Stewart] shall select only experienced drivers who fully meet all requirements *** . [Stewart] shall be responsible for payment of all driver physicals. When [Stewart] is not driving the equipment himself, [LandAir] shall be notified in advance of the designated driver. The sole right to hire, discipline, and discharge drivers chosen by [Stewart] shall be vested in [Stewart].

"11. [Stewart] assumes full responsibility for the payment of all State and Federal Unemployment taxes, insurance, social security, income tax withholding, and worker's [sic] compensation. None of the said taxes or insurance shall be paid by [LandAir] for the benefit of [Stewart] or any such driver. Upon hire of one or more drivers, and annually thereafter, [Stewart] shall satisfy and will provide to [LandAir] proof of worker's [sic] compensation insurance prior to the beginning of operations. [Stewart] agrees to comply with all rules and regulations promulgated by the Internal Revenue Service and that it will, upon request, furnish [LandAir] with a copy of all records necessary to prove that [Stewart] has complied with all rules and regulations promulgated by the Internal Revenue Service."

Other pertinent sections of the agreement also state:

"3. *** In the event of mechanical breakdown under dispatch, [Stewart] agrees to immediately notify [LandAir] and to indemnify [LandAir] for the cost of any substituted service necessary to keep appropriate deliveries.

"4. [Stewart] agrees that, in maintaining the equipment, he [sic] will bear the expense of all fuel used and all fuel taxes and state and federal highway use taxes thereon. ***

"12. [Stewart] assumes full responsibility for the payment of all licenses, detention, and accessorial services, tolls, ferries, permits, and base plates

"14. [LandAir] agrees to employ dispatchers who will assign freight to [Stewart] on as fair a basis as practicable, consistent with its service obligation to its customers. *** [Stewart] agrees to call Central Dispatcher each work day prior to 10:00 a.m. eastern time or at a time otherwise instructed to ensure efficient dispatch.

"15. [LandAir] agrees to issue general instructions which shall be made available to [Stewart] or his driver concerning the manner in which freight must be transported *** . These instructions shall be carried out by [Stewart] or his [sic] driver.

"20. It is expressly agreed that the relationship herein established is that of independent contractor and that neither [Stewart], nor one driving or otherwise working for him [sic] shall be construed by the parties hereto or by others as an employee of [LandAir]."

Both the magistrate and the trial court correctly relied on Bostic, which states that the determination of who has the right to control an individual must be made by examining the individual facts of each case including: who controls the details and quality of the work; who controls the hours that are worked; who selects the materials, tools and personnel used in performing the work; who selects the routes that are traveled; the length of employment; the type of business involved; the method of payment; and any pertinent agreements or contracts. However, the trial court incorrectly weighed the aforementioned factors by assigning some of the factors more significance, or weight, than others. Nothing in Bostic requires that the various factors be given weight so that one factor is more significant than another. Rather, each factor is to be weighed with the key factor being who controls the manner or means of doing the work. See Gillum v. Indus. Comm. (1943), 141 Ohio St. 373, 48 N.E.2d 234; Campbell v. Central Terminal Warehouse (1978), 56 Ohio St. 2d 173, 383 N.E.2d 135.

In State ex rel. Stanadyne, Inc. v. Indus. Comm. (1984), 12 Ohio St. 3d 199, 466 N.E.2d 171, Stanadyne entered into an agreement with Shippers Interstate Services, Inc., which required Shippers to provide qualified drivers to Stanadyne, pay the drivers, carry workers' compensation insurance and be responsible for labor relations. In return, Stanadyne was to pay Shippers for the drivers' services and was at liberty to direct the drivers to various destinations and to select their routes. Shippers hired a man who was immediately assigned to Stanadyne and began driving for it. Six days after commencing work, the man was fatally injured while on his third assignment.

The administrator of the man's estate filed a claim with the industrial commission for death benefits, since the fatal accident occurred while in the course and scope of the man's employment with Stanadyne. Ultimately, Stanadyne brought an action in mandamus in the appellate court arguing, among other things, that the man had been employed by Shippers, not Stanadyne. The court found that Stanadyne's argument was an attempt to place form over substance.

The court stated that, even though Shippers hired the truck drivers, paid their wages and withheld applicable taxes, reserved the right to fire any driver and was responsible for labor negotiations with the drivers' unions, the right to control the manner or means of performing the work rested with Stanadyne. Specifically, Stanadyne controlled the drivers' routes, destinations, the type of truck driven and the goods to be transported. The court stated that Shippers could best be described as an employment agency which supplied qualified drivers to Stanadyne. The court also noted its prior position under similar situations has been that the customer of the employment agency who exercises day-to-day control over the employee will be considered to be the employer for workers' compensation purposes. See Campbell.

In this case, the evidence shows that LandAir exercised day-to-day control over appellees. Appellees applied for employment with LandAir and LandAir administered various tests to determine whether or not appellees were qualified for employment. LandAir dispatched appellees and instructed them when to make deliveries, the load to be hauled, the route to take to the destination and the time by which they must arrive at the destination. Any deviations in the stops made or the route taken had to be approved by LandAir. In addition to providing the trailer and freight to be hauled, LandAir required appellees to check in daily by ten o'clock a.m. and to maintain driving logs. Appellees were also supplied toll cards by LandAir which was a benefit LandAir only provided for its company drivers.

Regardless of these practices, the agreement between LandAir and Stewart allocated to Stewart some of the responsibilities that LandAir assumed. For example, Stewart was to select the drivers who were going to be supplied to LandAir and Stewart was to be responsible for the payment of all physicals. In reality, LandAir hired appellees and administered their physicals. The record is void of evidence showing who paid for the physicals. In addition, if a mechanical breakdown occurred, Stewart was to immediately notify LandAir and to indemnify LandAir for any substituted service to maintain the delivery; however, in this case, when appellees had an accident, they personally notified LandAir then Stewart, and LandAir cleaned up the accident scene. There is no evidence in the record that Stewart indemnified LandAir for the clean-up or any substituted delivery service.

The agreement also provides that Stewart will be responsible for all fuel expenses and taxes thereon, as well as tolls; yet, LandAir provided appellees with fuel cards to be used for fuel, tolls and other on-the-road expenses. Per the agreement, it was Stewart who was to call LandAir every day at ten o'clock a.m.; however, the evidence shows that appellees were required by LandAir to make that phone call. Finally, the agreement provides that LandAir agreed to issue general instructions concerning the manner in which freight must be transported; however, the evidence shows that LandAir's instructions were explicit and were required to be carried out by appellees.

All of this demonstrates that LandAir, not Stewart, controlled the manner or means by which appellees did their work, even though the agreement executed by LandAir and Stewart provides to the contrary. It also should be noted that the agreement was executed in August 1992, a significant time after Ogier was hired by LandAir in January 1991 and Whittington was hired by LandAir in November 1991. The trial court, in reaching its decision, placed much emphasis on the terms of the agreement between the parties; however, the trial court's reliance on the agreement conflicts with the findings of fact that it adopted. Thus, the trial court's conclusions of law, finding that Stewart was the employer in part because it was required to pay the workers' compensation premiums, are not supported by the findings of fact it adopted, which demonstrate that LandAir controlled the means in which appellees performed their work.

Thus, this court finds that the trial court erred in reaching the conclusions of law that it did because the conclusions were not supported by the findings of fact that it adopted. See State ex rel. Duncan v. Chippewa Twp. Trustees (1995), 73 Ohio St. 3d 728, 654 N.E.2d 1254. Accordingly, the trial court erred in finding that Stewart was appellees' employer for workers' compensation purposes and Stewart's assignment of error is well-taken. The judgment of the trial court is reversed and this cause is remanded for further proceedings consistent with this decision.

Judgment reversed and cause remanded.

YOUNG and BRYANT, JJ., concur.