Byrd v. Blue Ridge Rural Electric Cooperative, Inc.

Mr. Justice Whittaker,

concurring in part and dissenting in part.

In 1936 the South Carolina Legislature passed an Act known as “The South Carolina Workmen’s Compensation Law.” S. C. Code, 1952, Tit. 72. It created a new, complete, detailed and exclusive plan for the compensa *541 tion by an “employer” of his “employee” 1 for bodily injuries sustained by the latter which arise “by accident out of and in the course of the employment,” whether with or without fault of the employer. § 72-14. The Act also prescribes the measure and nature of the remedy, 2 which “shall exclude all other rights and remedies of such employee . . . against his employer, at common law or otherwise, on account of such injury” (§ 72-121), and vests exclusive jurisdiction in the South Carolina Industrial Commission over all claims falling within the purview of the Act (§ 72-66), subject to review by appeal to the State’s courts upon “errors of law.” § 72-356.

Section 72-111 expands the definition of the terms “employee” and “employer” (note 1) by providing, in substance, that when an “ ‘owner’ ” of premises “undertakes to perform or execute any work which is a part oj his trade, business or occupation and contracts with any other person [called “subcontractor”] for the execution or performance by or under such subcontractor oj the whole or any part oj the work undertaken by such owner, the owner shall be liable to pay to any workman employed in the work any compensation under this Title which he would have been liable to pay ij the workman had been immediately employed by him.” (Emphasis supplied.) Employees of such subcontractors are commonly called “statutory employees” of the “owner.”

Petitioner, a lineman employed by a “subcontractor” who had contracted to build more than 25 miles of new transmission lines and to convert from single-phase to double-phase more than 87 miles of existing transmission lines and to construct two substations and a breaker station for the “owner,” was severely injured by an acci *542 dent which arose out of and in the course of that employment. Subsequent to his injury he sought and received the full benefits provided by the South Carolina Workmen's Compensation Law.

Diversity existing, petitioner then brought this common-law suit in a Federal District Court in South Carolina against the "owner,” the respondent here, for damages for his bodily injury, which, he alleged, had resulted from the “owner’s” negligence. The respondent-“owner” answered setting up, among other defenses, the affirmative claim that petitioner’s injury arose by accident out of and in the course of his employment, as a lineman, by the subcontractor while executing the contracted work “which [was] a part of [the owner’s] trade, business or occupation.” It urged, in consequence, that petitioner was its “statutory employee” and that, therefore, his exclusive remedy was under the South Carolina Workmen’s Compensation Law, and that exclusive jurisdiction of the subject matter of his claim was vested in the State’s Industrial Commission and, hence, the federal court lacked jurisdiction over the subject matter of this common-law suit.

At the trial petitioner adduced evidence upon the issue of negligence and rested his case in chief. Thereupon respondent, in support of its affirmative defense, adduced evidence tending to show (1) that its charter, issued under the Rural Electric Cooperative Act of South Carolina (S. C. Code, 1952, § 12-1025), authorized it to construct and operate electric generating plants and transmission lines essential to its business of generating and distributing electricity; (2) that it had (before the Second World War) constructed substations with its own direct employees and facilities, although the six substations which it was operating at the time petitioner was injured had been built by contractors, and that when *543 petitioner was injured it did not have in its direct employ any person capable of constructing a substation; 3 (3) that it regularly employed a crew of 16 men — 8 linemen and 8 groundmen — two-thirds of whose time was spent in constructing new transmission lines and extensions, and that such was “a part of [its] trade, business [and] occupation.” This evidence stood undisputed when respondent rested its case.

At the close of respondent’s evidence petitioner moved to strike respondent’s affirmative jurisdictional defense, and all evidence adduced in support of it. Respondent made known to the court that when petitioner had rested it wished to move for a directed verdict in its favor. Thereupon the colloquy between the court and counsel, which is set forth in substance in Mr. Justice Frankfurter’s dissenting opinion, occurred. The District Court sustained petitioner’s motion and struck respondent’s affirmative jurisdictional defense and its supporting evidence from the record. His declared basis for that action was that the phrase in § 72-111 “a part of his trade, business or occupation” related only to work being performed by the “owner” “for somebody else.” There *544 after, the district judge heard arguments upon and overruled respondent's motion for a directed verdict, 4 and submitted the case to the jury which returned a verdict for petitioner.

On appeal, the Court of Appeals found that the district judge’s construction of § 72-111 was not supportable under controlling South Carolina decisions. It further found that respondent’s evidence disclosed that respondent “was not only in the business of supplying electricity to rural communities, but [was] also in the business of constructing the lines and substations necessary for the distribution of the product,” and that the contracted work was of like nature and, hence, was “a part of [respondent’s] trade, business or occupation,” within the meaning of § 72-111, and, therefore, petitioner was respondent’s statutory employee, and, hence, the court was without jurisdiction over the subject matter of the claim. Upon this basis, it reversed the judgment of the District Court with directions to enter judgment for respondent. 238 F. 2d 346 .

This Court now vacates the judgment of the Court of Appeals and remands the case to it for decision of questions not reached in its prior opinion, with directions, if not made unnecessary by its decision of such questions, to remand the case to the District Court for a new trial upon such issues as the Court of Appeals may direct.

I agree with and join in that much of the Court’s opinion. I do so because — although, as found by the *545 Court of Appeals, respondent’s evidence was ample, prima facie, to sustain its affirmative jurisdictional defense— petitioner had not waived his right to adduce evidence in rebuttal upon that issue, in other words had not “rested,” at the time the district judge erroneously struck respondent’s jurisdictional defense and supporting evidence from the record. In these circumstances, I believe that the judgment of the Court of Appeals, insofar as it directed the District Court to enter judgment for respondent, would deprive petitioner of his legal right, which he had not waived, to adduce evidence which he claims to have and desires to offer in rebuttal of respondent’s prima facie established jurisdictional defense. The procedural situation then existing was not legally different from a case in which a defendant, without resting, moves, at the close of the plaintiff’s case, for a directed verdict in its favor which the court erroneously sustains, and, on appeal, is reversed for that error. It could not fairly be contended, in those circumstances, that the appellate court might properly direct the trial court to enter judgment for the plaintiff and thus deprive the defendant, who had not rested, of his right to offer evidence in defense of plaintiff’s case. Rule 50, Fed. Rules Civ. Proc. It is urged by respondent that, from the colloquy between the district judge and counsel, which, as stated, is set forth in substance in Mr. Justice Frankfurter’s dissenting opinion, it appears that petitioner had “rested,” and thus had waived his right to adduce rebuttal evidence upon the issue of respondent’s jurisdictional defense, before the district judge sustained his motion to strike that defense and the supporting evidence. But my analysis of the record convinces me that petitioner, in fact, never did so. For this reason I believe that so much of the judgment of the Court of Appeals as directed the District Court to enter judgment for respondent deprives petitioner of his right to adduce rebuttal evidence upon the *546 issue of respondent’s prima facie established jurisdictional defense, and, therefore, cannot stand.

But the Court’s opinion proceeds to discuss and determine the question whether, upon remand to the District Court, if such becomes necessary, the jurisdictional issue is to be determined by the judge or by the jury — a question which, to my mind, is premature, not now properly before us, and is one we need not and should not now reach for or decide. The Court, although premising its conclusion “upon the assumption that the outcome of the litigation may be substantially affected by whether the issue of immunity 5 is decided by a judge or a jury,” holds that the issue is to be determined by a jury — not by the judge. I cannot agree to this conclusion for the following reasons.

As earlier shown, the South Carolina Workmen’s Compensation Law creates a new, complete, detailed and exclusive bundle of rights respecting the compensation by an “employer” of his “employee” for bodily injuries sustained by the latter which arise by accident out of and in the course of the employment, regardless of fault, and vests exclusive jurisdiction in the State’s Industrial Commission over all such claims, subject to review by appeal in the South Carolina courts only upon “errors of law.” Consonant with § 72-66, which vests exclusive jurisdiction over such claims in the Commission, and with § 72-356, which allows judicial review only upon “errors of law,” the Supreme Court of the State has uniformly held that the question, in cases like the present, whether *547 jurisdiction over such claims is vested in the Industrial Commission or in the courts presents a question of law for determination by the court, not a jury. In Adams v. Davison-Paxon Co., 230 S. C. 532, 96 S. E. 2d 566 (1957), which appears to be the last case by the Supreme Court of the State on the question, plaintiff, an employee of a concessionaire operating the millinery department in defendant’s store, was injured, she claimed by negligence, while using a stairway in the store. She brought a common-law suit for damages against the owner of the store. The latter defended upon the ground, among others, that the operation of the millinery department, though under a contract with the concessionaire, plaintiff’s employer, was “a part of [its] trade, business or occupation,” that the plaintiff was therefore its statutory employee under § 72-111 and exclusive jurisdiction over the subject matter of plaintiff’s claim was vested in the Industrial Commission, and that the court was without jurisdiction over the subject matter in her common-law suit. It seems that the trial court submitted this issue, along with others, to the jury which returned a verdict for plaintiff. On appeal the Supreme Court of the State reversed, saying:

“It has been consistently held that whether the claim of an injured workman is within the jurisdiction of the Industrial Commission is a matter of law for decision by the Court, which includes the finding of the facts which relate to jurisdiction. Knight v. Shepherd, 191 S. C. 452, 4 S. E. (2d) 906 ; Tedars v. Savannah River Veneer Company, 202 S. C. 363, 25 S. E. (2d), 235 , 147 A. L. R. 914; McDowell v. Stilley Plywood Co., 210 S. C. 173, 41 S. E. (2d) 872 ; Miles v. West Virginia Pulp & Paper Co., 212 S. C. 424, 48 S. E. (2d) 26 ; Watson v. Wannamaker & Wells, Inc., 212 S. C. 506, 48 S. E. (2d) 447 ; Gordon v. Hollywood-Beaufort Package Corp., 213 S. C. 438, *548 49 S. E. (2d) 718 ; Holland v. Georgia Hardwood Lbr. Co., 214 S. C. 195, 51 S. E. (2d) 744 ; Younginer v. J. A. Jones Const. Co., 215 S. C. 135, 54 S. E. (2d) 545 ; Horton v. Baruch, 217 S. C. 48, 59 S. E. (2d) 545 .

“Thus the trial court should have in this case resolved the conflicts in the evidence and determined the fact of whether Emporium [the concessionaire] was performing a part of the ‘trade, business or occupation’ of the department store-appellant and, therefore, whether respondent’s remedy is exclusively under the Workmen’s Compensation Law.” 230 S. C., at 543, 96 S. E. 2d, at 571 . (Emphasis supplied.)

It thus seems to be settled under the South Carolina Workmen’s Compensation Law, and the decisions of the highest court of that State construing it, that the question whether exclusive jurisdiction, in cases like this, is vested in its Industrial Commission or in its courts of general jurisdiction is one for decision by the court, not by a jury. The Federal District Court, in this diversity case, is bound to follow the substantive South Carolina law that would be applied if the trial were to be held in a South Carolina court, in which State the Federal District Court sits. Erie R. Co. v. Tompkins, 304 U. S. 64 . A Federal District Court sitting in South Carolina may not legally reach a substantially different result than would have been reached upon a trial of the same case “in a State court a block away.” Guaranty Trust Co. v. York, 326 U. S. 99, 109 .

The Court’s opinion states: “Concededly the nature of the tribunal which tries issues may be important in the enforcement of the parcel of rights making up a cause of action or defense, and bear significantly upon achievement of uniform enforcement of the right. It may well be that in the instant personal-injury case the outcome *549 would be substantially affected by whether the issue of immunity is decided by a judge or a jury.” And the Court premises its conclusion “upon the assumption that the outcome of the litigation may be substantially affected by whether the issue of immunity is decided by a judge or a jury.” Upon that premise, the Court’s conclusion, to my mind, is contrary to our cases. “Here [as in Guaranty Trust Co. v. York, supra] we are dealing with a right to recover derived not from the United States but from one of the States. When, because the plaintiff happens to be a non-resident, such a right is enforceable in a federal as well as in a State court, the forms and mode of enforcing the right may at times, naturally enough, vary because the two judicial systems are not identic. But since a federal court adjudicating a State-created right solely because of the diversity of citizenship of the parties is for that purpose, in effect, only another court of the State, it cannot afford recovery if the right to recover is made unavailable by the State nor can it substantially affect the enforcement of the right as given by the State.” Guaranty Trust Co. v. York, supra, at 108-109 . (Emphasis supplied.)

The words “substantive” and “procedural” are mere conceptual labels and in no sense talismanic. To call a legal question by one or the other of those terms does not resolve the question otherwise than as a purely authoritarian performance. When a question though denominated “procedural” is nevertheless so “substantive” as materially to affect the result of a trial, federal courts, in enforcing state-created rights, are not free to disregard it, on the ground that it is “procedural,” for such would be to allow, upon mere nomenclature, a different result in a state court from that allowable in a federal court though both are, in effect, courts of the State and “sitting side by side.” Klaxon Co. v. Stentor Co., 313 U. S. 487, 496 . “The federal court enforces the state-created right *550 by rules of procedure which it has acquired from the Federal Government and which therefore are not identical with those of the state courts. Yet, in spite of that difference in procedure, the federal court enforcing a state-created right in a diversity case is, as we said in Guaranty Trust Co. v. York, 326 U. S. 99, 108 , in substance 'only another court of the State.’ The federal court therefore may not ‘substantially affect the enforcement of the right as given by the State.’ Id., 109 .” Bernhardt v. Polygraphic Co., 350 U. S. 198, 202-203 . (Emphasis supplied.) “Where local law qualifies or abridges [the right], the federal court must follow suit. Otherwise there is a different measure of the cause of action in one court than in the other, and the principle of Erie R. Co. v. Tompkins is transgressed.” Ragan v. Merchants Transfer Co., 337 U. S. 530, 533 . “It is therefore immaterial whether [state-created rights] are characterized either as ‘substantive’ or ‘procedural’ in State court opinions in any use of those terms unrelated to the specific issue before us. Erie R. Co. v. Tompkins was not an endeavor to formulate scientific legal terminology. It expressed a policy that touches vitally the proper distribution of judicial power between State and federal courts. In essence, the intent of that decision was to insure that, in all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court. The nub of the policy that underlies Erie R. Co. v. Tompkins is that for the same transaction the accident of a suit by a non-resident litigant in a federal court instead of in a State court a block away should not lead to a substantially different result. And so, putting to one side abstractions regarding ‘substance’ and ‘procedure,’ we have held that in diversity cases the federal *551 courts must follow the law of the State . . . Guaranty Trust Go. v. York, supra, at 109 . (Emphasis supplied.)

Inasmuch as the law of South Carolina, as construed by its highest court, requires its courts — not juries — to determine whether jurisdiction over the subject matter of cases like this is vested in its Industrial Commission, and inasmuch as the Court’s opinion concedes “that in the. instant personal-injury case the outcome would be substantially affected by whether the issue of immunity is decided by a judge or a jury,” it follows that in this diversity case the jurisdictional issue must be determined by the judge — not by the jury. Insofar as the Court holds that the question of jurisdiction should be determined by the jury, I think the Court departs from its 'past decisions. I therefore respectfully dissent from part II of the opinion of the Court.

The terms “employee” and “employer” are conventionally defined in §§ 72-11 and 72-12.

S. C. Code, 1952, e. 4, §§ 72-151 to 72-165.

As I see it, the evidence referred to in “(1)” is only collaterally material, and that referred to in “(2)” is wholly immaterial, to the issue of whether petitioner was respondent’s statutory employee at the time of the injury, because that question, under the South Carolina Workmen’s Compensation Law, does not depend upon what particular trade, business or occupation the “owner” lawfully might pursue, or lawfully might have pursued in the past. Rather, it depends upon what work he is engaged in at the time of the injury — i. e., whether the contracted work “is a part of [the owner’s] trade, business or occupation.” The statute thus speaks in the present tense, and, hence, the relevant inquiry here is limited to whether the work being done by petitioner for the “owner” at the time of the injury was a part of the trade, business, or occupation of the “owner” at that time.

The Court’s opinion and Mr. Justice Frankfurter’s dissent comment upon the fact that the district judge stated to respondent’s counsel that he would “allow” him to include in his motion for a directed verdict the affirmative jurisdictional defense which had just been stricken. To my mind this is wholly without significance, for the district judge was without power to control what points and arguments respondent's counsel might urge in support of his motion for a directed verdict.

Here, as at other places in its opinion, the Court treats with the South Carolina Workmen’s Compensation Law as an “immunity” of the employer from liability. To me, the question is not one of immunity. Rather, it is which of two tribunals — the Industrial Commission or the court of general jurisdiction — has jurisdiction, to the exclusion of the other, over the subject matter of the action, and, hence, the power to award relief upon it.