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stating that the purpose of the control test "is to define and delimit the circumstances under which a master should be held liable for the acts committed by a servant that injure a third party."
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No. 214537.
March 6, 2001 at 9:05 a.m. Updated April 27, 2001.
Appeal from Wayne Circuit Court, LC No. 91-101922-CL.
Feikens, Stevens, Kennedy, Hurley Galbraith, P.C. (by Michael B. Barey), for the plaintiff.
Deborah N. Gertsen and Willie E. McGlory and Kienbaum Opperwall Hardy Pelton, P.L.C. (by Elizabeth Hardy), for the defendant.
Before: Markey, P.J., and Murphy and Collins, JJ.
Plaintiff appeals as of right from the trial court's order granting summary disposition, pursuant to MCR 2.116(C)(10), in favor of defendant Ford Motor Company. We reverse and remand.
The original plaintiff in this matter was Michelle Ashker. According to plaintiff's motion for substitution of party, she died on April 26, 1999, eight months after the court entered the order presently being appealed.
In January of 1991, Michelle Ashker initiated this action alleging civil conspiracy, violation of the Elliott-Larsen Civil Rights Act ("CRA"), MCL 37.2101 et seq., intentional interference with economic advantage, intentional infliction of emotional distress, breach of contract, and intentional interference with a contractual relationship. The lawsuit named as defendants Ford Motor Company, Ford Motor Credit Company (FMCC) and ten individual defendants. Ashker entered into a consent judgment with FMCC and the individual defendants following mediation, and only defendant Ford remained. In August 1995, the trial court dismissed the suit against defendant. Ashker appealed to this Court, which affirmed in part and reversed in part in Ashker v Ford Motor Co, unpublished opinion per curiam of the Court of Appeals, issued January 21, 1997 (Docket No. 188647) ( Ashker I).
In Ashker I, this Court affirmed the dismissal of plaintiff's civil conspiracy, intentional infliction of emotional distress and interference with a contractual relationship claims, but reversed the dismissal of the CRA claim. With respect to the CRA claim, this Court held that the proper test to determine whether defendant was Ashker's employer was the economic reality test:
Ashker did not appeal the dismissal of the intentional interference with economic advantage or breach of contract claims.
The circuit court erred in granting summary disposition to defendant regarding plaintiff's CRA claim. The economic reality test is the proper test to determine whether defendant Ford was plaintiff's employer. See McCarthy v State Farm Insurance, 170 Mich. App. 451, 455; 428 N.W.2d 692 (1988). The factors to be considered in applying the economic reality test are (1) control; (2) payment of wages; (3) hiring and firing; and (4) responsibility for the maintenance of discipline. Wells v Firestone Co, 421 Mich. 641, 648; 364 N.W.2d 670 (1984).
Under this test, this Court held that there was a genuine issue of material fact regarding whether defendant was an employer of Ashker. Accordingly, this Court remanded for further proceedings regarding the CRA claim.
Defendant again moved for summary disposition in July 1998, this time arguing that this Court's decision in Norris v State Farm Fire Casualty Co, 229 Mich. App. 231; 581 N.W.2d 746 (1998), changed the law and that the control test should now be used to determine whether defendant was Ashker's employer. Defendant contended that Norris expressly overruled McCarthy, supra, and adopted the control test in all but worker's compensation cases. Defendant argued that, under the control test, there was no genuine question of material fact that it was not Ashker's employer. The trial court agreed with defendant's arguments and entered summary disposition in its favor.
Plaintiff now contends that the Norris panel misinterpreted the McCarthy decision and that under the facts of this case the economic reality test is still the appropriate test to determine whether defendant was Ashker's employer for the purposes of this CRA claim. Plaintiff argues that the law of the case doctrine accordingly applies, thus the trial court is precluded from reconsidering whether there is a genuine issue of fact regarding whether plaintiff was Ford's employee. We agree.
The law of the case doctrine holds that a ruling by an appellate court on a particular issue binds the appellate court and all lower tribunals with respect to that issue. Driver v Hanley (After Remand), 226 Mich. App. 558, 565; 575 N.W.2d 31 (1997). Thus, a question of law decided by an appellate court will not be decided differently on remand or in a subsequent appeal in the same case. Id. The primary purpose of the doctrine is to maintain consistency and avoid reconsideration of matters once decided during the course of a single continuing lawsuit. Bennett v Bennett, 197 Mich. App. 497, 499-500; 496 N.W.2d 353 (1992). However, the doctrine does not preclude reconsideration of a question if there has been an intervening change of law. Freeman v DEC International, Inc, 212 Mich. App. 34, 38; 536 N.W.2d 815 (1995). For this exception to apply, the change of law must occur after the initial decision of the appellate court. Id. Whether law of the case applies is a question of law subject to de novo review. Kalamazoo v Dep't of Corrections, 229 Mich. App. 132, 135; 580 N.W.2d 475 (1998).
At issue here, is whether Norris represents an intervening change of law that precludes application of the law of the case doctrine. We find that it is not and does not. Although the panel in Norris specifically overruled McCarthy while holding that the appropriate test for respondeat superior liability is the control test, Norris, supra at 238-239, the panel actually misinterpreted McCarthy by failing to recognize that the earlier decision addressed two separate issues. Norris, in fact, merely reiterated the second of two holdings reached in McCarthy and thus the two decisions are fully consistent.
McCarthy first addressed whether the defendant State Farm was the plaintiff's employer and second, whether, in the alternative, the defendant State Farm could be held liable for actions of its agent under the theory of respondeat superior. In addressing the first issue McCarthy applied the economic reality test, 170 Mich. App. at 455-456, and in addressing the second it applied the control test. Id. at 457-458. In Norris, by contrast, it appears that the plaintiff asserted claims against the defendants State Farm pursuant to a theory of respondeat superior liability only. 229 Mich. App. at 238. No allegation of direct liability is discussed. Norris concluded that for all but worker's compensation cases it is well established that the correct standard to assess respondeat superior liability is the control test, not the economic reality test. Id. at 239. However, because McCarthy also held that the control test applies to assess respondeat superior liability, Norris does not constitute an intervening change in the law. Accordingly, the law of the case doctrine is applicable and the trial court should not have reconsidered the issue.
Norris seemingly viewed McCarthy as an identically structured case involving only a respondeat superior theory. It was on this premise that Norris held that McCarthy was wrongly decided, ruling that the earlier panel had erred in applying the economic realities test to a respondeat superior scenario. Given the facts of both cases, which each included three apparently identically positioned parties — an employee, an independent insurance broker exclusively selling State Farm policies, and State Farm — it is plausible that both cases could have been analyzed under the framework addressed in Norris. Nevertheless, the claims presented in the two cases did differ, and rightly or wrongly McCarthy did not focus solely on the theory of respondeat superior. To the extent it was appropriate to view the relationship between the parties in McCarthy in a framework other than respondeat superior, the panel's reasoning with regard to the issue of direct liability was appropriate and is still good law.
Although the doctrine is applicable regardless of the correctness of this Court's decision in Ashker I, see Reeves v Cincinnati, Inc (After Remand), 208 Mich. App. 556, 559; 528 N.W.2d 787 (1995); Bennett, supra at 500, we additionally find that the Ashker I panel appropriately utilized the economic reality test. In Chilingirian v City of Fraser, 194 Mich. App. 65, 69; 486 N.W.2d 347 (1992), this Court noted:
The "control test" has been limited to those situations where respondeat superior has been alleged and the vicarious liability of a master is involved. The control test has been abandoned as the exclusive criterion by which the existence of an employee-employer relationship, for the purpose of remedial social legislation, is determined. Because vicarious liability of a master is not alleged herein, we find the control test to be inappropriate. The test to be employed is one of economic reality. [Citations omitted].
Here, it is not clear that Ashker sought only to hold defendant vicariously liable for the acts of a servant or an agent. Rather, it appears that she sought to hold defendant liable for its own actions concerning its investigation, or lack thereof, of her workplace complaints of ethnic harassment. Before consideration of defendant's original motion for summary disposition Ashker supported this theory of liability with evidence regarding defendant's involvement in investigation of her complaints and defendant's oversight and review of FMCC's termination process. Regardless of whether sufficient evidence to prevail will ultimately be presented, Ashker did not merely assert liability on the part of defendant for the actions of an agent, FMCC.
To the extent, therefore, that this case presents a question of direct liability on the part of defendant, the Ashker I panel correctly held the economic reality test applicable. The control test is irrelevant because its purpose is to define and delimit the circumstances under which a master should be held liable for the acts committed by a servant that injure a third party. Nichol v Billot, 406 Mich. 284, 297; 279 N.W.2d 761 (1979).
Given our resolution of these questions, we need not address plaintiff's additional argument that under the control test there is a material question of fact as to whether defendant had control over Ashker.
Reversed and remanded. We do not retain jurisdiction.