Larsen v. D B Feedyards, Inc: the Supreme Court of Nebraska's Attempt to Apply the Farm or Ranch Laborer Exemption of Nebraska Revised Statutes Section 48-106(2) Sticks Out Like a Sore Thumb

• Publication year: 2022

37 Creighton L. Rev. 161. LARSEN v. D B FEEDYARDS, INC: THE SUPREME COURT OF NEBRASKA'S ATTEMPT TO APPLY THE FARM OR RANCH LABORER EXEMPTION OF NEBRASKA REVISED STATUTES SECTION 48-106(2) STICKS OUT LIKE A SORE THUMB

Creighton Law Review

Vol. 37

INTRODUCTION

The concept of workers' compensation far predates the modern American system of workers' compensation.(fn1) Antiquated civilizations, such as the early Germanics, made primitive reference to the concept of workers' compensation.(fn2) At the end of the nineteenth century, increasing industrial injuries and minimal remedies for employees sparked the need for action in the United States.(fn3) As a consequence, many states enacted workers' compensation legislation.(fn4)

The Nebraska State Legislature enacted the Nebraska Workers' Compensation Act ("Act") in 1913 to provide coverage for injured employees who were not willfully negligent when injured.(fn5) Generally, the Nebraska Workers' Compensation Act applied to every governmental agency, every resident employer, and every nonresident employer doing work in Nebraska.(fn6) At least one noteworthy exception to this general workers' compensation coverage was the exclusion of "employers of farm or ranch labor."(fn7) According to the 1913 Act, workers' compensation law did not cover farm or ranch labor because it was not a hazardous occupation.(fn8) Given the typical duties associated with farm or ranch labor, commentators have questioned the rationale behind such an exclusion.(fn9)

However, several other theories existed to support the rationale behind the exclusion of farm or ranch labor.(fn10) Some commentators maintained that early political opposition forced state legislatures to exclude agricultural labor from workers' compensation.(fn11) Many commentators also maintained the administration involved in workers' compensation was too complicated for farmers.(fn12) Others maintained farmers, unlike other employers, could not pass along the expense of workers' compensation coverage directly to the consumer.(fn13) In any case, some commentators still criticized each of the above theories potentially justifying the exclusion of agricultural or "farm or ranch labor" from workers' compensation.(fn14)

Regardless of criticism, thirteen states continue to exempt agricultural and farm or ranch labor in some fashion.(fn15) In Nebraska, the legislature did not define the term "farm or ranch labor" as used in section 48-106(2) of the Nebraska Revised Statutes.(fn16) Prior to 2003, Nebraska courts had to determine the applicability of the exception on their own.(fn17) Such determinations led to confusion among farm laborers, their employers, and ultimately the Nebraska courts.(fn18)

Recently, in Larsen v. D B Feedyards, Inc.,(fn19) the Supreme Court of Nebraska examined Nebraska's exemption of employers of farm or ranch labor to workers' compensation coverage.(fn20) After comparing the facts in Larsen to previous Nebraska cases, the supreme court determined a professional roper on a cattle feedlot was not a farm or ranch laborer.(fn21) The court noted that in Nebraska, workers' compensation coverage hinges on the status of the employer, rather than the laborer.(fn22) The court further noted employers such as D B Feedyards, Inc., ("DB") "may engage in two separate businesses, one subject to workers' compensation law and one exempt from that law."(fn23) Two justices dissented from the majority opinion in Larsen.(fn24) In his dissent, Justice Kenneth Stephan found it impossible to distinguish DB's operations that were exclusively agricultural and those operations that were exclusively commercial.(fn25) Also dissenting, Justice John Gerrard noted the majority failed to conduct the required individual inquiry into the facts of the case.(fn26) The dissenting justices concluded by urging the Nebraska Legislature to clarify the oddities of Nebraska's farm or ranch laborer exemption.(fn27)

This Note will first review the facts and holding of Larsen.(fn28) Next, this Note will examine the language of the Nebraska Workers' Compensation Act and its recent amendment regarding the exemption of "employers of farm or ranch labor."(fn29) This Note will then review cases cited by the Larsen court, as well as statutes and decisions from other jurisdictions addressing issues similar to those in Larsen(fn30). Next, this Note will argue the Larsen court incorrectly interpreted the language of Nebraska's farm or ranch laborer exemption and erroneously analogized the facts in Larsen to distinguishable Nebraska cases.(fn31) This Note will further illustrate the irrationality of the decision in Larsen by comparing it to more logical decisions from other jurisdictions.(fn32) Finally, this Note will review the Nebraska Legislature's recent amendments to Nebraska Revised Statutes section 48-106(2) and highlight how these changes support the contention the decision in Larsen was incorrect.(fn33)

FACTS AND HOLDING

In Larsen v. D B Feedyards, Inc.,(fn34) D B Feedyards, Inc. ("DB") was a family farm corporation located near the town of Craig, Nebraska.(fn35) Daryl and Shirley Bromm, along with their son Rodney (the "Bromms"), began operating DB in 1973.(fn36) DB originally began its operation as a feedlot for livestock owned by the Bromms.(fn37) As of July 2002, the feedlot area including offices, scales and the Bromms' residence, encompassed 160 acres.(fn38) In addition to its feedlot area, DB also owned and farmed 440 acres of farmland.(fn39) The Bromms used crops from the farmland to feed cattle in the feedyards and manure from the feedyards to fertilize their crops.(fn40) To assist in farming and feedyard operations, DB owned various farm equipment including a combine, two payloaders, several tractors, and two trucks.(fn41)

Within the last twelve to fifteen years, DB began feeding livestock belonging to other persons or entities, in addition to those owned by the Bromms.(fn42) For these additional cattle, DB charged a fixed daily amount per head of cattle it fed.(fn43) On average, DB fed 5,000 cattle in its feedlot, with anywhere from one-half to three-fourths of these cattle belonging to other persons or entities.(fn44) Though DB did not formally advertise its feedyard, it did occasionally solicit customers and distribute calendars and baseball caps with the DB name to its current customers.(fn45)

DB received separate revenue for its feedyard, and also filed a separate corporate income tax return every year.(fn46) DB's gross reve-nue from July 1, 1999, through July 1, 2000, exceeded $5,000,000.(fn47) DB also employed three employees, including Lyle Larsen ("Larsen"), who was a professional roper.(fn48) DB hired Larsen to perform general farm or ranch labor, including treating and sorting sick cattle in its feedyard.(fn49) On November 13, 1999, Larsen suffered an injury to his right thumb while attempting to rope a steer, which the Bromms did not own.(fn50)

On March 8, 2000, Larsen petitioned the Nebraska Workers' Compensation Court requesting benefits for his thumb injury.(fn51) Answering the petition, DB contended it employed Larsen as a "farm or ranch laborer" and thus Nebraska Revised Statutes section 48-106(2), exempted Larsen from coverage of the Nebraska Workers' Compensation Act ("Act").(fn52) Under the parties' joint stipulation, the court bifurcated the case to allow the trial judge to first determine whether DB employed Larsen as a "farm or ranch laborer," and thus fell under the exemption of section 48-106(2).(fn53)

On January 22, 2001, the Workers' Compensation Court entered an order resolving this issue in Larsen's favor.(fn54) The court noted, at the time Larsen injured his thumb, DB was operating as a commercial business "separate and distinct from farming and ranching."(fn55) In addition, the court noted the sheer size of DB's feedyard operation indi-cated DB was a commercial enterprise and not an "old fashioned farm and ranch operation."(fn56) The court further noted whether a job was performed on a farm or ranch was not dispositive.(fn57) The court reasoned even if an employee performed a job commonly done on a farm or ranch, when the employer dominantly offered commercial services for others, the employer did not employ "farm or ranch laborers" within the meaning of section 48-106(2).(fn58) In turn, the court noted Larsen was not a farm or ranch laborer and thus was a covered employee under the Act.(fn59)

After the Workers' Compensation Court's ruling, DB appealed the decision to a three-judge review panel for the Workers' Compensation Court, which affirmed the decision without an opinion.(fn60) DB then appealed the order of the review panel to the Nebraska Court of Appeals and filed a petition to bypass.(fn61) Subsequently, the Nebraska Supreme Court granted the motion to bypass and heard the case on July 26, 2002.(fn62) DB argued on appeal that the trial judge and the Workers' Compensation review panel erred in determining DB was not an excepted employer of "farm or ranch laborers" within the meaning of section 48-106(2).(fn63) Therefore, DB contended the trial court erred in determining the Nebraska Workers' Compensation Act covered Larsen.(fn64)

In a per curiam opinion, the Supreme Court of Nebraska affirmed the decision of both the Workers' Compensation Court and the Workers' Compensation Court review panel, concluding the Act covered Larsen.(fn65) In...