Carpenter v. RAPID CITY RED DOGS, LLC

#24584-a-JKM

2008 SD 40

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

CHAD CARPENTER, Plaintiff and Appellant,

v.

RAPID CITY RED DOGS, LLC, Defendant

and

THE NATIONAL INDOOR FOOTBALL
LEAGUE, Defendant and Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA

* * * *

HONORABLE THOMAS L. TRIMBLE
Judge

* * * *

MICHAEL J. SIMPSON of
Julius & Simpson, LLP Attorneys for plaintiff
Rapid City, South Dakota and appellant.

DENNIS W. FINCH of
Finch Bettmann Maks & Hogue, PC Attorneys for defendant
Rapid City, South Dakota and appellee NIFL.

* * * *
ARGUED ON MARCH 27, 2008

OPINION FILED 06/04/08
#24584

MEIERHENRY, Justice

[¶1.] Chad Carpenter signed a contract to play indoor football for the Rapid

City Red Dogs, a member of the National Indoor Football League (League). While

playing for the Red Dogs in a regular season league game, Carpenter suffered a

wedge compression fracture in his neck. The injury prevented Carpenter from

working four weeks and cost him $5,461.95 in medical bills.

[¶2.] At the time of Carpenter’s injury, neither the Red Dogs nor the League

was insured under the workers’ compensation laws of South Dakota. Carpenter

sued both the Red Dogs and the League for workers’ compensation benefits under

SDCL 62-3-11. The circuit court entered a default judgment against the Red Dogs,

but granted the League’s motion for summary judgment exempting it from liability

for Carpenter’s injuries.

[¶3.] Carpenter appeals the circuit court’s grant of summary judgment to

the League. The issue on appeal is whether the League is a joint employer with the

Red Dogs and therefore equally responsible for workers’ compensation coverage for

Carpenter.

DECISION

[¶4.] As part of the summary judgment proceedings, the parties submitted a

joint statement of undisputed facts. Since there was no issue of material fact, the

circuit court determined as a matter of law that only the Red Dogs, not the League,

was obligated to provide workers’ compensation coverage. On appeal, we review the

circuit court’s application of the law de novo. Thornton v. City of Rapid City, 2005

SD 15, ¶4, 692 NW2d 525, 528-29 (citations omitted).

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[¶5.] It is uncontested that Carpenter was employed by the Red Dogs and

that the Red Dogs had no workers’ compensation coverage for its employees.

Carpenter claims that he was also an employee of the League. He contends that the

Red Dogs and the League were joint employers. The circuit court rejected this

contention. It relied upon a provision in the employment contract that expressly

designated that the Red Dogs would be responsible for workers’ compensation

coverage. Carpenter claims the circuit court erroneously relied on the contract

provision, because SDCL 62-3-18 unequivocally prohibits employers from

contracting away their statutory obligation to provide workers’ compensation

insurance.

[¶6.] We agree that the law does not allow a “contract or agreement, express

or implied, . . . in any manner [to] operate to relieve any employer in whole or in

part of any obligation created by [the workers’ compensation statutes].” SDCL 62-3-

18. Nevertheless, the circuit court did not err in granting the League summary

judgment. A de novo review of the entire contract along with the undisputed

material facts supports the League’s claim that Carpenter was not its employee.

[¶7.] In order for a person to be entitled to workers’ compensation benefits,

an employer-employee relationship must exist. Woodcock v. City of Lake Preston,

2005 SD 95, ¶10, 704 NW2d 32, 34; Egemo v. Flores, 470 NW2d 817 (SD 1991).

“[A]lthough the existence of an employer/employee relationship is normally a

question of fact, where clear, the relationship may be determined by the court.”

Goodman v. Sioux Steel Co., 475 NW2d 563, 565 (SD 1991). Generally, we construe

workers’ compensation statutes liberally to find coverage. Id.

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[¶8.] South Dakota law defines an employer as: “[A]ny individual, firm,

association, limited liability company, or corporation . . . using the service of another

for pay.” SDCL 62-1-2 (emphasis added). An employee is defined as: “[E]very

person, including a minor, in the services of another under any contract of

employment, express or implied . . . .” SDCL 62-1-3 (emphasis added). Although the

statute requires service for pay, actual monetary payment is not required.

Nevertheless, the employer must supply some form of “valuable consideration” to

the employee for his/her services. See Schumacher v. Schumacher, 67 SD 46, 288

NW 796, 798 (1939) (stating that “‘Pay’ here means compensation, and whether

respondent received his compensation for services in money or other valuable

consideration is immaterial”). See also Woodcock, 2005 SD 95, ¶13, 704 NW2d at 35

(noting that gratuitous employees are not covered under the workers’ compensation

statutes).

[¶9.] The contract that Carpenter signed unequivocally provided that it was

between Carpenter and the Red Dogs:

THIS CONTRACT is between Chad Carpender (sic), hereafter
“Player” and The Rapid City Red Dogs L.L.C., hereinafter “Club”
as a member of the National Indoor Football League (“League”).
In consideration of the promises made by each to the other,
[Carpenter] and [the Red Dogs] agree as follows: . . . [the Red
Dogs] employ [Carpenter] as a skilled football player.
[Carpenter] accepts such employment. [Carpenter] agrees to
provide his best effort and loyalty to [the Red Dogs]. . . . If the
state in which [the Red Dogs] operates requires state
Workman’s Compensation Insurance, [the Red Dogs] will
provide the coverage for [Carpenter].

Another contract provision specified that the Red Dogs would pay Carpenter

“weekly for each League game the sum of weekly expense allowance and $200.00

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per game while on active roster for the team.” Clearly, compensation for regular

season games derived exclusively from the Red Dogs.

[¶10.] Additionally, only the Red Dogs could terminate Carpenter’s

employment without cause. 1 The contract provided that:

TERMINATION. The [Red Dogs] may terminate this contract
without cause. If in the sole judgment of the [Red Dogs],
[Carpenter’s] service will not be necessary for [the Red Dogs] to
field a professional football squad [the Red Dogs] may terminate
[Carpenter’s] contract. [Carpenter] understands that he is
competing with other players for a position on the roster of said
[Red Dogs]. At any time and in the sole judgment of the [Red
Dogs], said [Red Dogs] may terminate this contract if [Red Dogs]
determines that [Carpenter’s] skill or performance has been
unsatisfactory as compared with that of other players competing
for roster positions, in which event all earned but unpaid salary
[Carpenter] has earned or is otherwise entitled to shall be due
and payable. . . .

[¶11.] In contrast, the contract does not specifically provide for Carpenter to

receive any compensation from the League for his services. 2 Although Carpenter

could be required to make publicity and promotional appearance “on behalf of

official League or [the Red Dogs] corporate sponsors or suppliers, or the League and

[the Red Dogs],” he was to “receive the appearance fee from [the] sponsor.” The

contract also called for Carpenter “to grant and assign” his name and/or likeness to

1. Although the League had the authority to terminate Carpenter’s contract for
player misconduct, this disciplinary authority demonstrates the League’s role
as a licensing/regulatory entity rather than Carpenter’s employer.

2. The contract provision entitled EMPLOYMENT AND SERVICES includes
the following:
If invited, [Carpenter] will practice for and play in any and all
all-star football games sponsored by the League. [Carpenter]
will receive compensation if playing in All-Star game.
The terms of the contract do not specify whether the compensation for the all-
star games is paid to Carpenter by the Red Dogs or the League.
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the “League, [the Red Dogs] and any League-designated entity” for “advertisement,

promotion or sale of trading cards or any other commercial product or entity.” He

was required to waive any claim to revenues except he could “receive compensation

for playing cards, still photographs, motion pictures and videos.” Even if we were to

assume that the League would have compensated Carpenter - either directly or

through the Red Dogs - had he been chosen to participate in the all-star games, all

of his compensation for regular season games unquestionably came from the Red

Dogs. Since Carpenter was injured during a regular season game, the Red Dogs,

not the League, was paying Carpenter for his service. Thus, the League does not

meet the definition of employer under SDCL 62-1-2 because the League was not

“using the service of [Carpenter] for pay.”

[¶12.] Carpenter cites Gulbrandson v. Town of Midland as authority for his

joint employment argument. 72 SD 461, 36 NW2d 655 (1949). Contrary to his

position, the right to seek payment was central to finding joint employment in

Gulbrandson. Id. at 657 (requiring an employment contract agreeing to service for

pay). In Gulbrandson, Charles Schofield, the acting town marshal, also served in

the capacity as deputy sheriff for the county. Schofield sought Gulbrandson’s help

in apprehending robbers. While under Schofield’s direction, the robbers shot and

killed Gulbrandson. Gulbrandson’s family sued both the town and the county for

benefits related to his death. We determined that Gulbrandson was under the

direction of both the town and the county and could have been compensated for

services from either entity. Id. at 658.

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[¶13.] Carpenter contends that because of the League’s control over the

game, the Red Dogs and the players; the League had an express and/or implied

contract of employment with Carpenter. Carpenter relies on certain league

regulations and contract provisions in support of his express and implied contract

argument. 3

[¶14.] Even recognizing that the League had the authority to regulate and

control certain aspects of Carpenter’s services in regular season games and that it

benefited from Carpenter’s performance, Carpenter had no right to seek payment

from the League and the League had no obligation to pay for or to provide other

valuable consideration for Carpenter’s services in regular season games.

Consequently, the League was not a joint employer of Carpenter for purposes of

workers’ compensation coverage.

[¶15.] Affirmed.

3. Carpenter cites to the following league regulations and contract provisions:
The contract was printed on League letterhead, with three lines designated
for signatures of the player, team representative and the CEO of the League
(only the team representative and Carpenter actually signed the contract);
the League was the sole arbiter of disputes between the Red Dogs and
Carpenter; the League mandated certain apparel (but did not supply the
apparel); incentive based contracts between the player and club required the
League’s approval; the League set the rules and regulations for league games;
both the League and the Red Dogs were empowered to release players from
their contract in order to sign with another professional football league; the
League was permitted to use the player’s name and likeness and pictures for
publicity and promotion of the League, the Red Dogs or any of its other
member clubs; both the League and the Red Dogs were empowered to direct
the player to make personal appearances on behalf of the League or the Red
Dogs corporate sponsors or suppliers; the League was permitted to use the
players name and/or likeness in connection with advertising, promotion or
sale of trading cards or any other commercial product or entity; and the
League could fine, discipline or terminate player’s contract for misconduct
such as betting on league games, drug use, etc.
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[¶16.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and

ZINTER, Justices, concur.

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