Weakening The Exclusive Remedy Bar Of The Workers’ Compensation Act

Product manufacturers may have some company when sued by people injured by products at work. Recent New Jersey Supreme Court decisions have created a significant opening in what had hitherto been considered to be the nearly impregnable statutory bar of the Workers’ Compensation Act prohibiting civil lawsuit claims and recoveries against employers by injured employees. Products liability cases arising from injuries at work may take on a different flavor if actions by the employer have contributed to the accident.

History and Background

For many years, certainly since the New Jersey Supreme Court’s decision in 1985 in Millison v. DuPont, product liability lawyers on both sides of the caption have felt confident advising clients and others that a lawsuit by an injured employee against his employer was almost certainly fruitless and usually not even worth pursuing. When an employer was sued, most often it was for discovery purposes only and at some point in the lawsuit, after such discovery had been supplied, the employer was either voluntarily dismissed or invariably obtained summary judgment on a terse motion citing the exclusive remedy provisions of the Workers’ Compensation Act.

The Act states that an injured employee’s exclusive remedy against his employer for damages is through a claim filed in the Division of Workers’ Compensation. Tort suits against employers for negligence were barred. The one exception to the exclusive remedy provision, sometimes called the Workers’ Compensation bar, was for instances of intentional wrongdoing by the employer.

A reading of Millison by lawyers and courts called upon to interpret that 1985 decision was that only the most egregious circumstances where an actual subjective intent by the employer to injure the employee was present would allow a direct action by the employee against the employer to proceed.

No reported intentional tort theory by an employee against an employer went anywhere until the 1998 Appellate Division decision in Mabee v. Borden. Dismissed by many as limited to egregious facts, and not granting damages, just a right to further discovery before summary judgment would be considered, Mabee was considered interesting, perhaps a sign of things to come, but more a crack in the wall than a true change.

Significant change came in 2002 with the New Jersey Supreme Court’s decision in Laidlow v. Marlton Machinery Company. In that case, the employer deliberately removed a safety device from a dangerous machine and a worker suffered partial amputations to four fingers on his dominant hand. The worker sued his employer alleging an intentional tort, recognizing that suits against one’s employer for mere negligence are barred by the Workers’ Compensation Act. The employer filed a motion for summary judgment arguing that it did not intend to hurt the worker by interfering with the guard’s operation and therefore its conduct did not rise to the level of an intentional act. The Supreme Court denied the employer summary judgment, indicating that the worker presented enough facts to raise a factual issue for a jury to decide.

In reaching its decision, the New Jersey Supreme Court reaffirmed and clarified in great detail its 1985 decision in Millison. The top court clarified that “intentional” did not mean an employer had a subjective desire to harm a worker, but rather was satisfied where an employer knew the consequences of its acts would be substantially certain to result in harm. In so doing, it was made clear that willful employer misconduct would not go undeterred. In addition to looking at the conduct of the employer, a court must also consider whether the injury and circumstances surrounding it were plainly outside the grant of immunity afforded to employers under the Workers’ Compensation Act. Tort suits against employers will only reach a jury if both prongs are satisfied.

With Laidlow, the circumstances under which a party could pursue an intentional wrongdoing claim against an employer widened dramatically. Three subsequent New Jersey Supreme Court decisions a year later in May of 2003 - Tomeo, Mull and Crippen - affirmed and further broadened the scope and ramifications of a drastically new interpretation of this longstanding Workers’ Compensation bar provision. (See Recent Decisions on page 3 for a summary of each case.)

The New Rules

When an employee sues an employer for an intentional tort and the employer moves for summary judgment based on the Workers’ Compensation bar, the trial court must make two separate inquiries. The first is whether, when viewed in a light most favorable to the employee, the evidence could lead a jury to conclude that the employer acted with knowledge that it was substantially certain that a worker would suffer injury. If that question is answered affirmatively, the trial court must then determine whether, if the employee’s allegations are proved, they constitute a simple fact of industrial life or are outside the purview of the conditions the State Legislature could have intended to immunize under the Workers’ Compensation bar.

Resolving whether this second “context” prong is met is solely a judicial function. If the substantial certainty standard presents a jury question and if the court concludes that the employee’s allegations, if proved, would meet the context prong, then the employer’s motion for summary judgment will be denied. The injured worker would then be permitted to present his claims against the employer to a jury.

Even after a jury returns a verdict in the employee’s favor regarding substantial certainty of injury (prong 1), an employer can apply to the trial court for reconsideration of the context issue based on the difference between the facts actually established at trial and what plaintiff alleged would be proven at the time of the summary judgment motion.

The new rules are still not easily satisfied by injured workers, but the hurdle has been lowered.

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Since the proofs at trial may not track the employee’s allegations, the employer may, even after a jury returns a verdict in the employee’s favor regarding substantial certainty, apply to the trial court for reconsideration of the context issue based on the difference between the facts actually established at trial and what plaintiff alleged would be proven. With that possibility in mind, where the evidence is in conflict regarding the allegations relied on by the trial court for its preliminary context evaluation, the court will secure from the jury a resolution of those conflicts by way of a carefully crafted jury verdict form.

Coming Up Next

This is how the Supreme Court has rearranged long standing rules of the game. It is a whole new ball game, one in which employers, long in the spectator stands, now unwillingly and unhappily find themselves in the game. Those employers as well as the long-term players - plaintiffs and product manufacturers/distributors - will need to adjust.

For example, product manufacturers have long been held to the standard of experts in the field of their product. Knowledge of the product’s dangers - constructively if not actually - was charged to be within their knowledge as a matter of law at the time of manufacture and distribution of the product. In assessing design defect, the knowledge of the dangers of the product possessed by the likely group of users of the product is a factor to be considered by the trier of fact (jury) in assessing defect. Under Laidlow, the employer’s knowledge of the danger of a product or situation is part of the proofs to be made by plaintiff in proving the conduct and, to a lesser extent, context part of his case. Will the jury be able to follow all of this, even with limiting instructions to be given as such testimony is presented, and when the jury charge is given at the end of the case?

Further, will the comparative negligence of the injured worker now be a factor? Traditionally, the plaintiff’s own negligence was a factor to be considered by the jury in ordinary personal injury cases. However, the comparative negligence of the plaintiff was not available to the product manufacturer as a defense in an industrial workplace accident, pursuant to Suter v. Santangelo. Should that modifying rule still apply in cases where the injured worker is suing his own employer in tort?

Plaintiff’s conduct can be considered in assessing the context prong of the employer intentional tort case as well as an intervening superseding cause that affects the substantial certainty of injury of the conduct text. In Tomeo, the Supreme Court used this analysis to find that the intentional bypassing of the deadman switch was not what created the substantial certainty of harm but rather it was the plaintiff’s insertion of his hand into the chute of the snow blower when he “knew or should have known” that the propellers were operating. The Court accepted this as an intervening superseding cause, which should exonerate the snow blower manufacturer on a causal basis.

The Supreme Court ruled in Tomeo that the principles of the “obvious danger/consumer expectation” test encompassed in the Products Liability Act at N.J.S.A. 2A:58C-3a(2) should apply when a consumer product is involved in an intentional tort case. Therefore, in a consumer product used in the workplace, “even if the employer disengaged the safety lever, that conduct cannot satisfy the intentional wrongdoing standard.”

An interesting proof problem develops. Plaintiffs formerly would strive hard to show that a certain alteration or modification of a product was made so frequently by product owners that manufacturers either knew or should have known of this reasonably foreseeable use or misuse and therefore designed the product with that possibility in mind. If proven “too much”, that is, that employers routinely would alter or modify the product and the danger was well-known, the plaintiff may be making a case against the employer on an intentional tort theory but on the other hand creating a superseding intervening cause defense for the manufacturer. Thus, there are some potential drawbacks - or at least new considerations - for the plaintiff in having two defendants to pursue in a tort case.

OSHA investigations and OSHA citations have assumed greater prominence given these recent decisions. Frequently one of the first on the scene, and more capable and interested in focusing on the issues most pertinent to these claims than most other first responders, OSHA’s safety investigation usually provides photos and/or videotape, statements, and a good technical analysis of machine and employer operations surrounding the accident. OSHA may also provide citations to the employers with admissions and pleas, items which in the past may not have been significant but now may prove useful, despite any evidentiary protection given to such proceedings by statute. Will violation of OSHA’s intentional act standard translate into satisfaction of the intentional tort conduct test, at least to some extent? Will OSHA subpoenas provide evidence of employer knowledge of past accidents and close calls?

Under an intentional tort theory, the focus will be on the conduct of the employer, with the product itself more in the background. In a products case, the focus is on the product itself, with the conduct of the manufacturer more in the background. While the actions of the employee may not provide a comparative negligence defense, it may constitute a product liability defense of intervening superseding cause.

Other Issues To Consider

Relations between an employer and his insurer have already become more interesting. Part of many workers compensation insurance polices was a catch all portion of other employers liability outside of workers comp. At least up to this point, these intentional tort cases are following within that coverage. Should or will the carrier decline to cover for intentional acts? Will it initiate a declaratory judgment against the insured? Will the limits of the other liability portion of the comp policy hold or be sufficient and is there a good faith obligation to protect the insured from this type of claim to require the carrier to tender the policy limits in appropriate situations? How long before conduct giving rise to this type of claim is excluded by contractual language in the policies at renewal time? Will conflict arise between employers and their comp carriers, necessitating a greater role of personal counsel for the employer to compel and protect coverage?

How does this new exposure affect the liability of workers comp loss prevention and safety audit efforts? Are those audits a potential defense for employers in these cases or a potential source of contribution for them from carriers making those efforts?

With the employer now potentially in the mix at verdict, counsel and parties need to reconsider the Joint Tortfeasors Contribution Act ramifications. New Jersey’s deep pockets rule was modified years ago to one basing verdict responsibility on a sliding scale built on liability percentages. A 60% loser takes all, a less than 20% loser is responsible for only his own. Can a case be “steered” as easily as it used to be to maximize recovery (or avoid it)? Has the empty chair defense been affected in any way?

Will there be an increased pressure for manufacturers to shift responsibility to employers through increased post-sale efforts to clearly make the employers aware of product dangers, demonstrably so for purposes of a later intentional tort claim? And in doing so, how does one recognize and address New Jersey’s shift toward employer liability in these circumstances, an isolated event or the signal of a national sea change? Worth noting and addressing or premature and limited in impact?

What will the relationship be between employer counsel and products liability counsel? In the past, employers were immune and basically did not have much of a relationship other than the supply of discovery and then a dismissal. Now that they’re in, and may potentially be adverse and at odds with other defendants, is it adversarial, to the possible benefit of a plaintiff watching with glee from the sidelines as the defendants fight not about liability but allocation of it among themselves?

A number of factors already seem to exist which favor the upholding of an intentional tort claim. They include prior accidents, prior close calls, prior employee complaints, prior OSHA violations and/or citations, deception or frustration of OSHA or other safety efforts, supervisor’s knowledge of danger, seriousness of the injury likely to be involved, likelihood of an injury occurring, employer involvement in safety bypass or defeating and industrial workplace settings with products which are the focus and essence of the workplace’s activity as opposed to peripheral equipment or projects.

Plaintiffs and manufacturers will both likely benefit in the long run. Safety will become a higher priority for most New Jersey employers, given their new exposure. How it will all play out is beyond this article’s scope but something you can be assured you will be seeing addressed in future issues, as well as in court. Stay tuned - it’s only beginning.

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