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Burley v. U.S. Foods - Workers' Compensation Jurisdiction

The North Carolina Supreme Court broke new ground in the area of Workers' Compensation with its recent decision in Burley v. U.S. Foods, Inc., 776 S.E.2d 832 (2015).  Burley addressed whether, under G.S. 97-36(i), the Industrial Commission has jurisdiction over a compensation claim stemming from an out of state injury when the employee's employment contract was originally made out of state and subsequently modified within North Carolina.  Id. at 833.  The North Carolina Supreme Court held that the Commission does not have jurisdiction in such instances.  Id.  Under Burley an employment contract will not be considered made in North Carolina for the purposes of G.S. 97-36(i) when a business undergoes a merger that transfers the supervision of an out of state employee to a North Carolina office, and such a transfer results in no changes to the employees job titles or responsibilities.  Id. at 836.  This is true even if such a transfer is also accompanied by a change in the employee's daily routine or a change in the employee's method or amount of compensation.  Id.

                  The North Carolina Supreme Court's decision was the culmination of litigation that began when the plaintiff, a South Carolina truck driver, filed a compensation claim in North Carolina in 2011 for an injury suffered while making a delivery to a restaurant in Evans, Georgia in 2009.  Id. at 833.  The injured plaintiff, Mr. Burley, was a South Carolina resident who had worked for his employer U.S. Foods, Inc. since May of 2000.  Id.  U.S. Foods transferred Mr. Burley's supervision to Charlotte as a result of a merger the company underwent in 2002.   Id.  After its merger and reorganization the company offered Mr. Burly the choice between taking a severance package or agreeing to new employment terms.  Id.  Mr. Burley agreed to the new terms and continued living in South Carolina and working as a truck driver for U.S. Foods.  Id.  Under the old terms of his job Mr. Burley would pick up his goods at a dropyard in South Carolina, make deliveries to health care facilities, convenience stores, and restaurants along a route that took him to South Carolina and Georgia.  Id. at 837.  He was payment for his work during this time was based on an hourly weight-based commission system in which he earned $400 to $500 dollars a week.  Id  After the merger Mr. Burley would pick up his deliveries in Georgia and deliver goods primarily to chain restaurants in Georgia and South Carolina.  Id.  Mr. Burley's post-merger compensation method was also changed from to a component based system in which he earned significantly more money, up to $1400 per week.  Id.

                  For the majority the new terms of the modified contract were not enough to merit considering the contract employment as having been made in North Carolina because it was an "internal transfer of supervision, which essentially allowed [Burley] to continue working for U.S. Foods in the same capacity throughout the merger."  Id. at 836.  For Judge Hudson, though, such a change "was no mere modification, as when an employee accepts a modest pay increase in exchange for taking on modest new responsibilities."  Id. at 837.  Instead, Judge Hudson argued "the break from the old employment arrangement, paired with significant changes in how plaintiff's employment would proceed [post-merger], warrants treating this arrangement as a new contract" which was made in North Carolina .  Id.

                  One of the significant impacts of this holding is that it may prevent numerous Workers' Compensation claims by litigants who feel they may qualify for a Workers' Compensation claim based on a contract modification that occurred within the state, and who feel that North Carolina's Workers' Compensation laws are more favorable than the state in which there injury occurred.  As an amicus brief filed by the North Carolina Association of Defense Attorneys pointed out, there is significant incentive for some plaintiffs to file claims similar to Burleys.  Brief of Amicus Curiae North Carolina Association of Defense Attorneys at 13-14, Burley v. U.S. Foods, Inc., 776 S.E.2d 832 (Sept. 25, 2015) No. COA13-860

For example, when Mr. Burley filed his N.C. Workers' Compensation claim he qualified for and was receiving benefits under the Georgia's Workers' Compensation Act.  Id. at 13.  Under Ga. Code. Ann § 34-9-261 the maximum Burley could receive in indemnity compensation for his injury is $200,000 payable over a maximum of 400 weeks.  Id . at 14.  By filing a North Carolina claim Mr. Burley stood to gain quite a bit more money.  Id. at 14.  In fact, the parties stipulated that had Mr. Burley's claim been allowed in North Carolina, then he would have received $816 per week in indemnity compensation for the remainder of his life.  Id. at 14.  Given Mr. Burley's estimated life expectancy this would have increased Mr. Burley's total compensation to an estimated $1.5 million in indemnity compensation.  Id. at 14.  While these calculations may not hold true for every similarly situated plaintiff to Mr. Burley, it does go to show that there can be a significant monetary incentive for a plaintiff to file a North Carolina Workers' Compensation claim when she has reason to believe the claim comes within the ambit of G.S. 97-36(i).

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