Brian Coblentz v. Tractor Supply Company (Dissenting)

04/26/2024

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

January 4, 2024 Session

BRIAN COBLENTZ ET AL. v. TRACTOR SUPPLY COMPANY

Appeal from the Circuit Court for Lincoln County

No. 2013-CV-85 M. Wyatt Burk, Judge

___________________________________

No. M2023-00249-COA-R3-CV

___________________________________

JEFFREY USMAN, J., dissenting.

The majority opinion thoughtfully applies existing Tennessee caselaw, concluding

that Tractor Supply Company is Mr. Coblentz’s statutory employer. This precludes Mr.

Coblentz from maintaining his premises liability suit against Tractor Supply due to the

exclusive remedy provision of Tennessee’s Workers’ Compensation Law. My respectful

disagreement with the majority’s opinion is based upon (1) my view that existing

Tennessee caselaw does not appear to have grappled with vendor-vendee relationships

when determining statutory employer status, and (2) that the failure to address such

circumstances creates an inconsistency with Tennessee’s Workers’ Compensation Law.

The issue before this court is whether Stanley National is a subcontractor of Tractor

Supply. Mr. Coblentz argues that Stanley National is not a subcontractor; therefore,

Tractor Supply is not a principal contractor. Tractor Supply insists that it is a principal

contractor and that Stanley National is its subcontractor. Reading through the parties’

briefing of this matter, it seems as if both sides are trying to push a square peg through a

round hole. The reason for the improper fit and the reason it matters that vendor-vendee

relationships have not been fully grappled with in Tennessee caselaw become clearer when

one considers Larson’s on Workers Compensation, a leading treatise in the field.1 Relevant

1

See, e.g., Fisher v. Halliburton, 667 F.3d 602, 615 (5th Cir. 2012) (describing Larson’s “[a]s a

leading workers’ compensation treatise”); Brittingham v. St. Michael’s Rectory, 788 A.2d 519, 523 (Del.

2002) (characterizing Larson’s as “the leading authoritative treatise on the subject”); Howard Univ. Hosp.

v. D.C. Dep’t of Emp’t Servs., 267 A.3d 1068, 1073 (D.C. 2022) (indicating that Larson’s is “[t]he leading

treatise in this area”); Kawakami v. City & Cnty. of Honolulu Bd. of Water Supply, 100 Haw. 285, 289, 59

P.3d 920, 924 (2002) (stating of Larson’s that it is “the leading treatise on worker’s compensation”); Sharp

v. Thomas Bros. Plumbing, 510 P.3d 1136, 1147 (Idaho 2022) (noting of Larson’s that it is “a leading

treatise in the field of workers’ compensation”); Smith v. Goodyear Tire & Rubber Co., 636 N.W.2d 884,

888 (Neb. Ct. App. 2001) (stating of Larson’s that it is “the leading treatise in the area”); Gore v.

Myrtle/Mueller, 653 S.E.2d 400, 407 (2007) (describing Larson’s as “a leading treatise”).

to the circumstances of the present case, Larson’s notes that the statutory employer test

“presupposes” that the relationship between the injured employee’s immediate employer

and the company sued in tort is not of a type that falls outside the parameters of a principal-

subcontractor relationship and includes as some examples of such excluded relationships

“if the relation was that of buyer to vendor, lessee to lessor, or if the claimant was not an

employee but an employer, partner, or joint venturer.” 10 Larson’s Workers’

Compensation Law § 111.04[d] (emphasis added). If the presuppositions do not fit the

circumstances of a given case, then Larson’s states that “the general contractor is of course

in no different position from any third party liable to suit.” Id. Thus, backstage before one

arrives at the primary test for determining subcontractor status, there is, under workers’

compensation law in general, a presupposition being made that the purported subcontractor

is not a vendor. In this case, the parties agree, however, that is precisely what Stanley

National is in relation to Tractor Supply – a product vendor.

Under existing Tennessee caselaw, it is unclear, though, whether vendor status

matters. As the majority notes, Tennessee’s Workers Compensation Law provides that

[a] principal contractor, intermediate contractor or subcontractor shall be

liable for compensation to any employee injured while in the employ of any

of the subcontractors of the principal contractor, intermediate contractor or

subcontractor and engaged upon the subject matter of the contract to the same

extent as the immediate employer.

Tenn. Code Ann. § 50-6-113(a). There is, as the majority indicates, a trade-off under

Tennessee law for principal contractors, who become secondarily liable for workers’

compensation for the employees of their subcontractors and who in turn gain immunity

from tort liability. If Stanley National is Tractor Supply’s subcontractor, then Tractor

Supply benefits in the present case by avoiding being subject to Mr. Coblentz’s premises

liability claim.

This protection against being subject to liability is especially significant because

Tennessee Law preserves the rights of workers to seek both workers’ compensation from

their employers and tort damages from tortfeasors who are not their employers. Under

Tennessee Code Annotated section 50-6-112(a),

When the injury or death for which compensation is payable under this

chapter was caused under circumstances creating a legal liability against

some person other than the employer to pay damages, the injured worker, or

the injured worker’s dependents, shall have the right to take compensation

under this chapter, and the injured worker, or those to whom the injured

worker’s right of action survives at law, may pursue the injured worker’s or

their remedy by proper action in a court of competent jurisdiction against the

other person.

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Tenn. Code Ann. § 50-6-112(a). Relatedly, Tennessee law also provides rights to the

employers in connection with their employees’ workers’ compensation in the event of a

recovery against the tortfeasor. Tenn. Code Ann. § 50-6-112(c).2

Perhaps the closest analog to the circumstances of the present case are those cases

involving the sale and delivery of goods which have been considered in multiple states in

determining statutory employer status. In accord with the understanding set forth in

Larson’s regarding vendors, the Kansas Supreme Court concluded nearly fifty years ago

“that a sale and delivery of merchandise is not . . . a contractual relationship” that converts

the selling/delivering business entity into a subcontractor. Bendure v. Great Lakes Pipe

Line Co., 433 P.2d 558, 563-64 (1967). The Kansas Supreme Court added that its

conclusion that such a relationship does not create a statutory employer status aligned with

what it described as the general rule that workers’ compensation “does not apply where the

transaction between the immediate employer and the person sought to be held liable as his

employer is that of purchase and sale.” Id. (quoting 99 C.J.S. Workmen’s Compensation

§ 107).3

2

Tennessee Code Annotated section 50-6-112(c) provides as follows:

(c)(1) In the event of a recovery against the third person by the worker, or by those to whom

the worker’s right of action survives, by judgment, settlement or otherwise, and the

employer’s maximum liability for workers’ compensation under this chapter has been fully

or partially paid and discharged, the employer shall have a subrogation lien against the

recovery, and the employer may intervene in any action to protect and enforce the lien.

(2) In the event the net recovery by the worker, or by those to whom the worker’s right of

action survives, exceeds the amount paid by the employer, and the employer has not, at the

time, paid and discharged the employer’s full maximum liability for workers’

compensation under this chapter, the employer shall be entitled to a credit on the

employer’s future liability, as it accrues, to the extent the net recovery collected exceeds

the amount paid by the employer.

(3) In the event the worker, or those to whom the worker’s right of action survives, effects

a recovery, and collection of that recovery, from the other person, by judgment, settlement

or otherwise, without intervention by the employer, the employer shall nevertheless be

entitled to a credit on the employer’s future liability for workers’ compensation, as it

accrues under this chapter, to the extent of the net recovery.

3

The present version of the Corpus Juris Secundum Workers’ Compensation treatise has moved

the relevant section and now provides as follows:

The workers’ compensation act does not apply where the transaction between the

immediate employer and the person sought to be held liable as its employer is that of

purchase and sale. Under some statutory provisions, however, when a contract to sell is

accompanied by an undertaking by either party to render substantial services in connection

with the goods sold, that party is a contractor within the meaning of the compensation act.

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Judicial decisions interpreting various state workers’ compensation statutes before

and shortly after the Bendure case are generally in accordance with this understanding.

See, e.g., Brothers v. Dierks Lumber & Coal Co., 232 S.W.2d 646, 650 (Ark. 1950)

(concluding that contracts relating to the sale of goods do not make “either the buyer or

seller, or both, a ‘contractor’” within the principal-subcontractor parameters for creating

statutory employer status under Arkansas’ workers’ compensation law); Broussard v.

Heebe’s Bakery, Inc., 268 So. 2d 656, 660 (La. 1972) (quoting 99 C.J.S. Workmen’s

Compensation § 107)4 (“The compensation act does not apply where the transaction

between the immediate employer and the person sought to be held liable as his employer

is that of purchase and sale, or where some other relation besides that of principal and

contractor exists between them.”); Hooks v. Wayne Cnty. Road Comm’rs, 76 N.W. 2d 9,

12 (Mich. 1956) (declining to extend worker’s compensation liability based on finding that

the injured worker’s immediate employer enjoyed “a vendor-purchaser relation” with the

board); Heider v. Stoughton, 150 Neb. 741, 744, 35 N.W.2d 814, 815 (1949) (“[T]he

defendant got the lumber removed from its yard, but that result naturally would follow

from every sale of merchandise, and thus would be of no controlling importance. It cannot

be logically concluded that [Nebraska Workers’ Compensation Law] should have any

application to the relation of a bona fide vendor and vendee.”).

Though there are exceptions,5 this general rule continues to hold decades later. For

example, the Oklahoma Supreme Court reasoned as follows:

If we were to expand the term to include the relationship of buyer and seller

of a commodity or material, we would violate fundamental rules of

construction which require that words have the same meaning as that

attributed to them in ordinary and usual parlance. Whatever activities might

render someone an independent contractor, acting as a mere vendor is not

one of them. We do not believe the Legislature intended § 11 to apply when

the relationship between the injured worker’s immediate employer and the

entity sought to be held liable in tort as a “statutory employer” is that of

vendor/vendee.

Hammock v. United States, 78 P.3d 93, 97-98 (Okla. 2003) (footnotes omitted). The Idaho

Supreme Court similarly adopted “the general rule” that, where the relationship between

A compensation act is likewise not applicable where some other relation, besides that of

principal and contractor, exists between the parties.

99 C.J.S. Workers’ Compensation § 241 (2024).

4

See infra n. 3.

5

Humphrey v. Whole Foods Mkt. Rocky Mtn./S.W. L.P., 250 P.3d 706, 710 (Colo. App. 2010).

-4-

the employers involves the sale and delivery of goods, the relationship does not qualify as

a statutory employer relationship even where some ancillary services are performed. See

Kelly v. TRC Fabrication, LLC, 487 P.3d 723, 728-29 (Idaho 2021). In doing so, the Idaho

Supreme Court recognized two limited exceptions: “when the contract to sell is

accompanied by an undertaking to render substantial services in connection with the goods

sold, or where the transaction is a mere device or subterfuge to avoid liability under the

state’s worker's compensation laws.” Id. at 729.

This “substantial services” limitation has roots that reach back to the

aforementioned foundational cases. For example, the Kansas Supreme Court stated that

“[t]he rule stated is subject to the exception that when the contract to sell is accompanied

by an undertaking by either party to render substantial services in connection with the

goods sold, that party is a contractor within the meaning of the statute.” Bendure, 433 P.2d

at 564. Similarily, the Arkansas Supreme Court concluded that “when the contract to sell

is accompanied by an undertaking by either party to render substantial services in

connection with the goods sold, that party is a ‘contractor’ within the meaning of the

section.” Brothers, 232 S.W.2d at 650.

Two South Carolina appellate decisions offer illuminating examples of how courts

address such matters: Meyer v. Piggly Wiggly Number 24, 500 S.E.2d 190 (S.C. Ct. App.

1998) and Hancock v. Wal-Mart Stores, Inc., 584 S.E.2d 398 (S.C. Ct. App. 2003).

Turning first to Meyer,

[John] Meyer worked as a route salesman for Derst [Baking Company], a

wholesale bakery that distributes baked goods. As a route salesman, he

delivered the baked goods to major grocery chains, convenience stores, and

various fast-food restaurants. In addition to unloading the goods and

stocking the shelves, Meyer’s responsibilities included keeping the Derst

display full and clean, and removing out-of-date and damaged product from

the shelves.

Piggly Wiggly is a typical retail grocery store operated for the purpose of

selling groceries and other household items to consumers. . . .

On December 7, 1992, Meyer stopped at Piggly Wiggly to make a delivery.

He proceeded directly to the Derst display and began to straighten it up.

While walking through the store on his way back to his truck, he slipped and

fell. The fall injured his head, shoulders, and lower back. Meyer received

workers’ compensation benefits from his immediate employer, Derst, and

brought this tort action against Piggly Wiggly.

Meyer, 500 S.E.2d at 191. In its analysis, the Meyer Court delineated the general

parameters of South Carolina’s primary test for determining principal-subcontractor

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contractor status for purposes of being a statutory employer, referencing a test resembling

Tennessee’s approach. Id. at 192.

Ultimately, the Meyer Court concluded that the framework did not matter, though,

because the relationship between Derst Bakery Company and Piggly Wiggly “was one of

vendor-vendee” rather than principal-subcontractor and therefore the case was carved out

of the general test. Id. at 193. The Court reasoned that

. . . Derst’s agreement with Piggly Wiggly was for the sale and delivery of a

commodity. Derst was not Piggly Wiggly’s subcontractor within the

contemplation of that term as used in the statute. . . . Meyer’s work stocking

the shelves and maintaining the Derst display was incidental to the primary

purpose of the arrangement between Derst and Piggly Wiggly, which was to

provide baked goods for retail sale. Because Derst was a vendor rather than

a subcontractor, section 42-1-4006 does not apply and Meyer, therefore, is

not Piggly Wiggly’s statutory employee.

Id.; aff’d Meyer v. Piggly Wiggly No. 24, Inc., 527 S.E.2d 761 (S.C. 2000).

On the same continuum but at the opposite end of the spectrum is Hancock v. Wal-

Mart Stores, Inc.7 Therein,

Richard Hancock was injured while working for his employer on Wal-Mart’s

premises. Hancock filed suit in the circuit court, alleging his injuries were

the result of Wal-Mart’s negligence. . . .

Tru-Wheels, Inc., one of Wal-Mart’s vendors, employed Hancock. Tru-

Wheels provided Wal-Mart with individuals to assemble and set up Wal–-

Mart merchandise in the store. Hancock assembled merchandise exclusively

for Wal-Mart. On a typical day, Hancock would report to the Wal-Mart

manager and receive instructions about which items to assemble. Hancock

assembled the items on the Wal-Mart premises and would report any

6

South Carolina Code Annotated section 42-1-400 (1985) provided as follows:

When any person, in this section and §§ 42-1-420 and 42-1-430 referred to as “owner,”

undertakes to perform or execute any work which is a part of his trade, business or

occupation and contracts with any other person (in this section and §§ 42-1-420 to 42-1-

450 referred to as “subcontractor”) for the execution or performance by or under such

subcontractor of the whole or any part of 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 if the workman had been immediately

employed by him.

7

584 S.E.2d 398 (S.C. Ct. App. 2003).

-6-

problems to the applicable Wal-Mart department manager. Hancock was

injured when, in the course of assembling riding lawnmowers, a Wal-Mart

employee ran over his foot with a forklift.

Hancock filed suit in the circuit court, alleging his injuries were the result of

Wal-Mart’s negligence. Wal-Mart filed a motion for summary judgment,

arguing Hancock was a statutory employee and thus had workers’

compensation as his exclusive remedy.

Id. at 399. The South Carolina Court of Appeals concluded that this relationship was not

truly a vendor-vendee relationship, despite Mr. Hancock invoking Meyer and labeling it as

such. Id. at 401. The court instead applied South Carolina’s general framework for

principal-subcontractor analysis and concluded that Hancock qualified as a statutory

employee of Wal-Mart. Id.

Tennessee is certainly free to diverge from the general approach of its sister states.

However, it is not clear why Tennessee’s Workers’ Compensation Law would operate

differently than the statutes at issue in the aforementioned cases in dealing with vendor-

vendee relationships. The very concept of “employer” under Tennessee’s Workers’

Compensation Law is defined in relation to paying for services: “‘Employer’ includes any

individual, firm, association or corporation, the receiver or trustee of the individual, firm,

association or corporation, or the legal representative of a deceased employer, using the

services of not less than five (5) persons for pay . . . .” Tenn. Code Ann. § 50-6-102(11)

(emphasis added); accord Kelly, 487 P.3d at 727-28 (analyzing similar language under the

Idaho Workers’ Compensation Act in arriving at the conclusion that vendor-vendee

relationships fall outside the scope of Idaho’s principal-subcontractor provision). It is

critical to Tractor Supply being classified as a statutory employer that it is a “principal

contractor” and that Stanley National is its “subcontractor.” See Tenn. Code Ann. § 50-6-

113(a).

The subcontractor language of the Tennessee Code was adopted into Tennessee law

in 1919. 1919 Pub. Acts, ch. 123, § 15. From its roots, stretching long before 1919, the

definition of subcontractor has been connected with performing work. Tracing the

definition and usage of the word to the end of the 1700s with a continuation of that same

meaning to the present, the Oxford English Dictionary defines a subcontractor as “[a]

person who or company which undertakes work under a subcontract, or (more generally)

undertakes work on a particular part of a larger project.”8 The Oxford English Dictionary’s

multiple definitions of subcontract as a verb similarly emphasize work being performed:9

8

Subcontractor, Oxford English Dictionary,

https://www.oed.com/dictionary/subcontractor_n?tab=meaning_and_use#20038073.

9

Subcontract, Oxford English Dictionary,

https://www.oed.com/dictionary/subcontract_v?tab=meaning_and_use#20037971. There is a fifth

-7-

One, “[t]o employ a person or company under a subcontract to undertake (all or part of the

work specified in an original contract); to commission (work) from a subcontractor.

Frequently with out in later use. Also in extended use: to delegate (work, a responsibility,

etc.).”10 Two, “[t]o employ a person or company under a subcontract; to make a

subcontract with a third party; to grant a subcontract for.”11 Three, “[t]o undertake work

as a subcontractor; to agree a subcontract with a person or company; to undertake a

subcontract for work.”12 Four, “[t]o undertake or produce (work) under a subcontract.”13

Merriam-Webster Dictionary similarly traces the modern definition of the verb

“subcontract” to before 1919 and aligns subcontract with the concept of work, defining the

verb as follows: One, “to let out or undertake work under a subcontract.” Two, “to engage

a third party to perform under a subcontract all or part of (work included in an original

contract)—sometimes used with out.” Three, “to undertake (work) under a subcontract.”14

The conventional understanding of a subcontract when used as a noun relates a

contract with a third party to perform part or all of an existing obligation of the principal

contractor to another, but that understanding does not conventionally fit with a vendor

providing goods to a retailer. Defining subcontract as a noun, the Oxford English

Dictionary and Merriam-Webster Dictionary note that a subcontract exists where a party

to an original contract in turn contracts with a third party to undertake responsibilities under

the original contract which could include providing work or materials.15 Relatedly, tracing

the definition to the late 1700s, Merriam-Webster Dictionary defines subcontractor as “an

individual or business firm contracting to perform part or all of another’s contract.”16

Similarly, Webster’s 1909 New International Dictionary, the most proximate edition of

Webster’s in time to the 1919 adoption of the subcontractor language that is presently

definition of subcontract as a verb that is obsolete and related marriage: “To cause (a person) to become

betrothed for a second time.” Id.

10

Id.

11

Id.

12

Id.

13

Id.

14

Subcontract, Merriam-Webster Dictionary, https://www.merriam-

webster.com/dictionary/subcontract.

15

Subcontract, Oxford English Dictionary,

https://www.oed.com/dictionary/subcontract_n?tab=meaning_and_use; Subcontract, Merriam-Webster

Dictionary, https://www.merriam-webster.com/dictionary/subcontract.

16

Subcontractor, Merriam-Webster Dictionary, https://www.merriam-

webster.com/dictionary/subcontractor.

-8-

codified in Tennessee Code Annotated section 50-6-113(a), defines subcontractor as “[o]ne

who contracts with a contractor to perform part or all of the latter’s contract” with

subcontract as a noun defined as “a contract under, or subordinate to, a previous contract.”17

The contract here, however, is not for Stanley National, as a third party, to satisfy Tractor

Supply’s existing contractual obligations, whether they be for work or materials, under an

original contract with another party. There is no other contract that Stanley National is

contracting to perform all or part of. Instead, the only contract is the 2010 vendor

agreement between Stanley National and Tractor Supply.

Turning to the 1910 Second Edition of Black’s Law Dictionary, which is the edition

published closest to 1919, it similarly defines subcontract and subcontractor in relation to

work being performed.18 It provides as follows:

A contract subordinate to another contract made or intended to be made

between the contracting parties on one part or some of them and a stranger.

1 II. Bl. 37 45. Where a person has contracted for the performance of certain

work (e.g.. to build a house) and he in turn engages a third party to perform

the whole or a part of that which is included in the original contract (e.g. to

do the carpenter work.) his agreement with such third person is called a

“subcontract” and such person is called a “subcontractor.”19

In other words, the subcontracting is for the performance of work. Id. Even if considered

in relation to contracts intended to be made, it is not clear how Tractor Supply and Stanley

National’s contract is subordinate to another contract. An expansive reading of this

definition would threaten to convert every contract from product suppliers to retailers into

principal and subcontractor agreements.

These dictionary definitions, which were applicable in 1919 when the General

Assembly adopted the subcontractor measure and remain so, pose challenges to treating a

vendor of goods to a retailer as a subcontractor. Also problematic, this court nearly eighty

years ago, in addressing the principal-subcontractor language of the Tennessee Code in the

context of a statutory employer application, indicated that “[t]he gist of this section is [a]

relationship either ascending or descending or both.” Int’l Harvester Co. v. Sartain, 222

S.W.2d 854, 863 (Tenn. Ct. App. 1948). It is not clear how the relationship between

17

Subcontractor, Webster’s New International Dictionary 2066 (1909), available at

https://archive.org/details/webstersnewinter00unse_0/page/2066/mode/2up; Subcontract, Webster’s New

International Dictionary 2066 (1909), available at

https://archive.org/details/webstersnewinter00unse_0/page/2066/mode/2up.

18

Subcontract, Black’s Law Dictionary (2d ed. 1910), available at

https://dictionary.thelaw.com/subcontract/.

19

Id.

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Stanley National and Tractor Supply fits within this paradigm as an ascending, descending,

or both an ascending and descending relationship. A concept of subcontractor sufficiently

broad to reach the supplying of products for retail sale creates complexities in identifying

precisely who is the subcontractor and who is the principal.

In the present case, the parties characterized themselves in their contractual

agreement not as a principal and subcontractor but instead expressly identified Stanley

National as a vendor. Their briefing before this court continues to include references to

Stanley National as a vendor. In Tractor Supply’s brief on appeal, it writes that it operates

a “retail store” in Fayetteville, Tennessee, and that “Stanley National Hardware . . . is a

vendor that sells products” at the Fayetteville store. Mr. Coblentz agrees, referring to

Tractor Supply’s Fayetteville storefront as just one of approximately 145 “hardware stores

. . . and large hardware suppliers/distributors” he visits as part of his duties at Stanley

National. As Mr. Coblentz’s counsel noted “Stanley National provides the product and the

defendant places that product in the store for sale. . . . Stanley National has the product and

supply chain personnel, and Tractor Supply has the storefronts and the employees.”

Stanley National’s role in its relationship with Tractor Supply of a product vendor

is reflected in Stanley National and Tractor Supply’s 2010 Vendor Agreement. That

document is entitled “Vendor Agreement” and expressly identifies Stanley National as a

vendor. Even more importantly, the terms of the agreement also indicate that the substance

of the contract between Stanley National and Tractor Supply is that of an agreement for

the sale of goods. As a few of the many examples that pervade the contract, Section Six

of the agreement, concerning “Vendor Quotes,” states that “Vendor shall identify all goods

it is offering to TSC together with a quote for each in response to a Request for Quote

(“RFO”) issued by a TSC Buyer. Such quote shall contain information including but not

limited to: description of the goods, price, whether the price includes freight and minimum

quantities (the “Quote”).” Section Eight clarifies that the Vendor, Stanley National, retains

“the right, at its discretion, to change or supplement the goods offered for sale to TSC,

provided that Vendor provides written notice of any such change . . .” (Emphasis added).

Section Nine concerns the logistics of shipping perishable goods. Section Ten outlines

purchase orders and the process for canceling purchase orders “at any time before the

shipment of the goods.” Section Fifteen explains how to deal with returned goods, and

Section Twenty outlines the parties’ mutual expectations regarding the shipment of Stanley

National goods. Section Seventeen—pertaining to the physical display of Stanley National

goods that allegedly malfunctioned and caused Mr. Coblentz’s injuries—indicates that

Stanley National may have such a display and that it will contain “only Vendor’s goods.”

That parties label their agreement in terms of vendor rather than a principal-

subcontractor relationship does not make it so. See Harness v. Bechtel Jacobs Co., LLC,

No. E2006-00194-COA-R3-CV, 2007 WL 10447, at *3 (Tenn. Ct. App. Jan. 3, 2007). The

agreement between Stanley National and Tractor Supply, however, goes far beyond simply

labeling Stanley National as a vendor. In both substance and form, it appears that Stanley

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National in its relationship with Tractor Supply is operating as a product vendor.

Existing Tennessee caselaw does not appear to have addressed vendor status in

connection with the principal-subcontractor relationship for purposes of determining

statutory employer status. The majority has applied existing Tennessee caselaw, and I find

no fault in the majority’s thoughtful analysis of existing caselaw. In my view, however,

there is a gap in Tennessee’s existing caselaw located right around Larson’s presupposition

regarding vendors. To address this gap, I would invite briefing from the parties to address

whether, under the statutory measures that compose Tennessee’s Workers’ Compensation

Law, a vendor-to-retailer relationship falls within the parameters of the principal-

subcontractor relationship or whether it is presupposed that it is excluded. Additionally, I

would invite the parties to address, assuming that such a presupposition exists under

Tennessee’s statutory scheme, at what point a contractual relationship as to the sale and

delivery of goods become sufficiently imbued with services so as to create a potential

principal-subcontractor relationship.20 If Tennessee’s Workers’ Compensation Law

includes the presupposition of its sister states with regard to vendors, this case should be

remanded for the parties to have an opportunity to present their case under the appropriate

standard.

Applying existing caselaw without integrating the limitation as to vendors threatens

to make many more employers liable for workers’ compensation of employees who are not

their direct employees while reducing the protections of such employees against negligence

by employers who are not their direct employer. Maybe the employers or employees would

take the bitter with the sweet, but I am concerned that the statutory measures of Tennessee’s

20

Courts have taken different approaches in line drawing as to where the vendor-vendee

presupposition exclusion ends and the relationship becomes amenable to being considered a principal-

subcontractor relationship. Virginia courts appear to have adopted a restrictive approach looking at any

activities that are not the delivery of the goods. Burch v. Hechinger Co., 563 S.E.2d 745, 747-48 (Va.

2002). Alternatively, multiple jurisdictions appear to draw the line in connection with providing

“substantial services in connection with the goods sold.” See, e.g., Brothers, 232 S.W.2d at 650 (Arkansas);

Gray Bldg. Sys. v. Trine, 391 S.E.2d 764, 765 (Ga. 1990); Kelly, 487 P.3d at 729 (Idaho); Bendure, 433

P.2d at 564 (Kansas); Broussard, 268 So. 2d at 660 (Louisiana).

In a different context, addressing whether the common law or Uniform Commercial Code applies

to breach of contract actions that involve hybrid contacts for goods and services, Tennessee courts have

applied the predominant purpose test. Audio Visual Artistry v. Tanzer, 403 S.W.3d 789, 798-99 (Tenn. Ct.

App. 2012) (citing Pass v. Shelby Aviation, No. W1999-00018-COA-R9-CV, 2000 WL 388775 (Tenn. Ct.

App. April 13, 2000)). The predominant purpose test requires a reviewing court to examine (1) “the

language of the contract,” (2) “the nature of the business of the supplier of goods and services,” (3) “the

reason the parties entered into the contract,” and (4) “the amounts paid for the rendition of services and

goods, respectively.” Id. at 799. In concluding that the relationship fell outside the reach of principal-

subcontractor relationship and instead remained a vendor-vendee relationship (between the supplier and

retailer), the South Carolina Court of Appeals emphasized “the primary purpose of the arrangement between

Derst and Piggly Wiggly . . . was to provide baked goods for retail sale” with the services “incidental” to

this primary purpose. Meyer, 500 S.E.2d at 193.

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Workers’ Compensation Law are being stretched too far, resulting in pushing the square

peg, vendors of goods to retailers, into the round hole of existing caselaw. I respectfully

dissent.

_________________________________

JEFFREY USMAN, JUDGE

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