This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Barbara J. Nash,



Kmart Corporation,


Filed July 8, 1997

Reversed and remanded.

Parker, Judge

Ramsey County District Court

File No. C2957953

Joseph A. Rymanowski, Jr., P. O. Box 16608, St. Paul, MN 55116 (for appellant)

Lisa M. Lamm, Austin & Abrams, P.A., 700 Northstar West, 625 Marquette Avenue, Minneapolis, MN 55402 (for respondent)

Considered and decided by Harten, Presiding Judge, Parker, Judge, and Davies, Judge.



Appellant Barbara Nash claims that the district court erred by entering judgment for respondent Kmart and dismissing her negligence claims. The district court found that Nash's employer, PCA, and Kmart were engaged in a common enterprise and therefore, as a matter of law, her remedy was limited to her receipt of workers' compensation. We reverse and remand.


Nash's employer, PCA, leased space from Kmart to operate a photo studio. Nash had to travel through the Kmart store to reach her place of employment. On February 4, 1993, Nash was injured when she slipped on water she asserts was negligently left on the floor by Kmart employees.

PCA had an exclusive license agreement to operate photo studios in Kmart stores. As its license fee, PCA paid a percentage of gross receipts to Kmart. PCA was responsible for providing, paying, and supervising its own employees. The photo studio was a self-enclosed area, walled off on three sides, with a counter in front of it. Unlike the rest of the Kmart store, it was carpeted. Only PCA employees were permitted in the area to operate the photo equipment. PCA employees did not perform any of the duties of Kmart employees, nor did Kmart employees operate PCA's photo equipment. PCA had a separate cash register to receive payment from its customers. PCA employees were required to follow Kmart store policies, including its dress code, policies for customer service, cash handling, and operating hours.

As a result of her injuries, Nash received workers' compensation from PCA's insurer. Nash filed a "third-party" complaint seeking damages for Kmart's negligence. Kmart moved for summary judgment, claiming that Kmart and PCA were involved in a common enterprise and that Nash's receipt of workers' compensation barred her negligence claim against Kmart. The district court entered judgment in favor of Kmart, and this appeal followed.


On appeal from summary judgment, a reviewing court answers two questions: (1) whether there are any genuine issues of material fact to be determined; and (2) whether the district court erred in its application of the law. O'Malley v. Ulland Bros., 549 N.W.2d 889, 892 (Minn. 1996). Facts must be viewed in favor of the party against whom judgment was granted. Id. A fact is material if its resolution will affect the outcome of the case. Id. The application of a statute to a set of undisputed facts is a question of law, not binding on an appellate court. Id.

Under Minn. Stat. § 176.061, subds. 1, 4 (1996), an injured employee must choose between receiving workers' compensation benefits from the employer and an action against a third party when the employer and the third party are engaged in a common enterprise. A common enterprise exists if all of the following three factors are met:

(1) The employers must be engaged on the same project;

(2) The employees must be working together (common activity); and

(3) In such fashion that they are subject to the same or similar hazards.

O'Malley, 540 N.W.2d at 894 (quoting McCourtie v. United States Steel Corp., 253 Minn. 501, 506, 93 N.W.2d 552, 556 (1958)). Based on the record at this stage of the proceeding, Kmart has not established the requisite common enterprise factors.

Courts focus on the functions shared by employees and the employers' commercial relationship to determine if employers are engaged in the same project. Id. at 895. Although PCA and Kmart had a commercial relationship to provide photo services to customers entering the Kmart store, they and their employees did not share functions. Nash serviced PCA customers in the PCA area of the store. Kmart employees did not enter the PCA area to service customers seeking photo services from PCA. PCA employees did not provide retail services to Kmart customers in other areas of the Kmart store. The district court's finding that the employers and employees were involved in the same project of providing retail sales to Kmart customers is too general and does not establish the degree of shared function required. See, e.g., id. (same project where employers and employees shared equipment, assisted in hauling for each other, coodinated work flow by sending messages through each other, prepared road services for each other by blading or watering, and assisted each other in extricating stuck vehicles); Higgins v. Northwestern Bell Telephone Co., 400 N.W.2d 192 (Minn. App. 1987) (same project where both employers installed, maintained, and modified Northwestern Bell's telephone switching equipment), review denied (Minn. Mar. 25, 1987).

To apply the second factor, whether employees were working together on a common activity, requires that the activities of the employees be more than "overlapping minimally"; they must be "interdependent." O'Malley, 549 N.W.2d at 895. Again, the district court applied this standard too generally when it found that Kmart and PCA employees worked together:

Kmart and PCA employees work together in the same space, the store. Their work is an integral part of the same enterprise, the operation of a modern department store providing retail customers with a variety of goods and services within one physical location. The work of the employees is coo[rdinated] * * * as far as store hours, dress codes, cash management, and store rules. Their work overlapped in the sense that the work of all retail salespersons within a department store overlaps.

This finding does not establish the degree of interdependence required. See, e.g., id. (employees engaged in activities together, exchanging equipment and seeking advice from supervisors of both employers); Alberts v. United Stockyards Corp., 413 N.W.2d 628, 630 (Minn. App. 1987) (employees of both employers worked with livestock). Unlike the situation in O'Malley, Nash reported her absence to Kmart supervisors only if unable to contact a PCA supervisor. The operation of photo equipment requires particular skills, and Kmart employees did not engage in that activity, nor did Nash seek the advice of Kmart employees or supervisors on how to operate her photo equipment. Unlike the employees in Alberts, only Nash handled the photo equipment; Kmart employees did not.

We also conclude that fact issues preclude a finding that Nash and Kmart employees shared the same or similar risks. Nash contends that she was required to wear more formal shoes for her job than were Kmart employees. She further contends that because she wore a dressier, hard-soled shoe, she was exposed to a greater hazard of slipping and falling than were Kmart employees, who were allowed to wear rubber-soled, tennis-type shoes. Kmart contends that both Nash and Kmart employees were subject to the same dress code. Kmart concedes, however, that how the dress code was enforced against Kmart employees is not clear from the record. Whether Kmart employees were allowed to wear tennis shoes while Nash was not creates an issue of material fact as to the similarity of the hazards the employee groups were subjected to. See O'Malley, 549 N.W.2d at 897 (hazards need not be identical, but must be sufficiently similar to satisfy this factor). In addition to the hazards of puddles and spills on uncarpeted Kmart floors, PCA employees did not encounter customer shopping carts or supply carts in their enclosed, carpeted photo studio area. These contested material facts preclude the entry of summary judgment.

Reversed and remanded.