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Delta Logistics, Inc. v. Employment Department Tax Section

Supreme Court of Oregon

September 14, 2017

DELTA LOGISTICS, INC., Respondent on Review,
v.
EMPLOYMENT DEPARTMENT TAX SECTION, Petitioner on Review.

          Argued and submitted May 11, 2017

         On review from the Court of Appeals ED 2014UIT00047; CA A158021 [*]

          Dustin Buehler, Assistant Attorney General, Salem, argued the cause and fled the briefs for petitioner on review. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Brad S. Daniels, Stoel Rives LLP, Portland, argued the cause and fled the brief for respondent on review.

          Seann Colgan, Corr Cronin Michelson Baumgardner Fogg & Moore, LLP, Seattle, fled the brief for amicus curiae Oregon Trucking Association.

          Lori Worthington Hurl, Betts, Patterson & Mines, Seattle, fled the brief for amici curiae American Trucking Associations, Inc., and Truck Renting and Leasing Association.

          Before Balmer, Chief Justice, and Kistler, Walters, Landau, Nakamoto, and Duncan, Justices, and Linder, Senior Justice Pro Tempore. [**]

         [361 Or. 822] Case Summary:

         The state Employment Department Tax Section assessed Delta Logistics, Inc., a forhire carrier, unemployment insurance taxes on funds that Delta paid to individuals who owned, operated, furnished and maintained trucks that they leased to Delta for its goods-transportation business. Delta contested the assessment of unemployment insurance taxes, asserting that ORS 657.047(1)(b) exempted these particular truck owners from unemployment benefits and, by extension, Delta from unemployment insurance taxes on the funds that it paid to the truck owners. A requirement of the exemption under ORS 657.047(1)(b) is that the truck owners "personally" operate, furnish, and maintain the trucks that they lease to businesses like Delta. The Employment Department maintained, however, that because the truck owners that Delta was paying had hired employees to assist them in operating, furnishing, and maintaining the trucks, the truck owners were not "personally" carrying on such activities. An administrative law judge issued an order upholding the assessment. The Court of Appeals reversed.

         Held:

         ORS 657.047(1)(b)'s exemption extends to truck owners who employ individuals to help them operate, furnish, and maintain the trucks.

         The decision of the Court of Appeals is affrmed, and the order of the administrative law judge is reversed.

         [361 Or. 823] KISTLER, J.

         ORS 657.047(1)(b) creates an exemption from the unemployment benefit laws for truck owners that both lease their trucks to for-hire carriers and "personally operat[e], furnis[h] and maintai[n]" the leased trucks. On review, the Employment Department argues that, to come within that exemption, the owner must be the only person who operates the truck. In the department's view, if the owner hires another person to help him or her operate the truck, the owner does not "personally operat[e]" the truck, and the exemption does not apply. The Court of Appeals disagreed, reasoning that ORS 657.047(2) makes clear that the exemption includes owners who hire employees to help operate their trucks. Delta Logistics, Inc. v. Employment Dept. Tax Section, 279 Or.App. 498, 513-14, 379 P.3d 783 (2016). Having allowed the department's petition for review, we affirm the Court of Appeals decision.

         Delta Logistics, Inc., is a "for-hire carrier" that is licensed by the federal government to transport goods interstate. Id. at 500. Delta does not own any trucks. Id. at 502. Rather, it leases trucks from 40 owner-operators, who operate, furnish, and maintain the trucks.[1] Id. Some of those owner-operators are the only persons who operate the leased trucks. Id. Others hire employees to help them. Id. The department assessed Delta unemployment insurance taxes on the funds that Delta paid the owner-operators. The department contended that the owner-operators did not come within the exemption in ORS 657.047(1)(b) because the leases that the owner-operators entered into with Delta were not "leases" within the meaning of that subsection. An administrative law judge (ALJ) from the Office of Administrative Hearings agreed and issued a final order upholding the assessment.

         [361 Or. 824] Delta petitioned the Court of Appeals for review of the ALJ's order. In the Court of Appeals, the department argued, as it had before the ALJ, that the exemption did not apply because the owner-operators' leases were not leases within the meaning of ORS 657.047(1)(b). The department argued alternatively that the phrase "personally operates" in ORS 657.047(1)(b) requires that the owner be the only person who operates the leased truck. In the department's view, if the owner hires another person to help operate the truck, the exemption does not apply.

         The Court of Appeals was not persuaded by either of the department's arguments. It concluded that the leases between the owner-operators and Delta qualified as leases within the meaning of ORS 657.047(1)(b). Delta Logistics, 279 Or.App. at 511-12. It also rejected the department's alternative argument. Relying on ORS 657.047(2), the court explained that, contrary to the department's position, that subsection specifically recognizes that another person can assist the owner in operating the leased truck. Id. at 513-14. The department petitioned for review but only on the latter issue. It contended that the Court of Appeals had read the word "personally" out of the statute and that, properly interpreted, the exemption in ORS 657.047(1)(b) applies only to owner-operators who are the sole persons who operate their trucks. We allowed the department's petition to consider that issue.

         ORS chapter 657 specifies the work for which employers must pay unemployment insurance taxes. Although the definitions in that chapter are somewhat circular, generally, an employer must pay unemployment insurance taxes on wages paid to employees who are engaged in employment. See Broadway Cab LLC v. Employment Dept., 358 Or. 431, 433, 364 P.3d 338 (2015) (discussing statutorily defined terms). Often, litigation under ORS chapter 657 turns on whether a worker is an employee or an independent contractor, for whom no unemployment taxes are owed. See id. at 442-47 (analyzing that issue). ORS chapter 657 also provides, however, that unemployment insurance taxes are owed only on persons engaged in "employment, " and ORS chapter 657 contains a series of exemptions that begin with [361 Or. 825] the phrase, "'employment' does not include." Those exemptions describe categories of exempt work, which range from being a caddy at a golf course in an authorized training program to working on a fishing boat in return for a share of the catch to officiating nonprofessional sporting events. See ORS 657.043 to ORS 657.094 (setting out various categories of work that do not constitute "employment" for which unemployment insurance taxes must be paid).

         This case concerns one exemption from employment. ORS 657.047 provides, in part:

"(1) As used in this chapter, 'employment' does not include:
"(a) Transportation by motor vehicle of logs, poles and piling by any person who both furnishes and maintains the vehicle used in such transportation; or
"(b) Transportation performed by motor vehicle for a for-hire carrier by any person that leases their equipment to a for-hire carrier and that personally operates, furnishes and maintains the equipment and provides service thereto.
"(2) For the purposes of this chapter, services performed in the operation of a motor vehicle specified in subsection (1) of this section shall be deemed to be performed for the person furnishing and maintaining the motor vehicle."

         Subsection (1) identifies two types of transportation services that are exempt from the unemployment benefit laws. One involves transportation by motor vehicle of certain types of goods (logs, poles, and piling) by certain persons (those who "furnish and maintain" the vehicle). ORS 657.047(1)(a). The other involves transportation by motor vehicle for for-hire carriers by a certain class of persons (persons who lease their equipment to a for-hire carrier and "personally operat[e], furnis[h], and maintai[n] the equipment"). ORS 657.047(1)(b).

         The department does not dispute that a person who "furnishes and maintains" motor vehicles to carry logs, poles, and piling will come within the exemption in subsection (1)(a) even though that person owns more than one vehicle and hires other persons to help operate them. That [361 Or. 826] much follows from subsection (2), which recognizes that, in providing the transportation services described in subsection (1), one person may operate a motor vehicle that another person furnishes and maintains. The department argues, however, that the exemption for transportation services in subsection (1)(b) applies only when the person that owns the leased motor vehicle is also the sole person that operates it. That follows, the department argues, from the legislature's use of the word "personally." Delta responds that, when "personally" is viewed in light of the other terms used in ORS 657.047 and the legislative history of ORS 657.047(1)(b), it becomes clear that the legislature did not intend "personally" to require that the person that leases a motor vehicle to a for-hire carrier be the only person that operates, furnishes, and maintains it.

         The issue, as the parties frame it on review, turns on what the word "personally" means in ORS 657.047(1)(b). In analyzing that issue, we begin with the terms that the legislature used and, when the legislature has not defined those terms, their ordinary meaning as found in the dictionary. See State v. Gaines, 346 Or. 160, 171-72, 206 P.3d 1042 (2009) (explaining that we look to the text, context, and legislative history of a statute to determine its meaning). We recognize, however, that dictionaries "do not tell us what words mean, only what words can mean, depending on their context and the particular manner in which they are used." State v. Cloutier, 351 Or. 68, 96, 261 P.3d 1234 (2011) (emphasis in original).

         For the most part, the parties agree on the appropriate definition of "personally." "Personally" is an adverb that means "in a personal manner, " Webster's Third New Int'l Dictionary 1687 (unabridged ed 2002), and the most ...


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