Drawing the Line on Horizontal Immunity

In a recent ruling, Florida’s Second District Court of Appeals reversed and remanded a Circuit Court decision regarding the application and scope of “horizontal immunity” in the context of workers’ compensation. Herida v. John Beach & Assoc., Inc. and Gross, 44 Fla. L. Weekly D1892a (Fla. 2d DCA 2019). Specifically, the Court delved into the extent into which the immunity should be statutorily applied in the instance of negligence regarding contractors and subcontractors working at the same construction site. It did this by examining the legislature’s intent, as depicted in the applicable statute, and by referring to prior rulings regarding the interpretation of that statute.

Pursuant to Florida Statute § 440.10, horizontal immunity is afforded when three factors are met: (1) the subcontractor secured workers’ compensation insurance for its employees or the general contractor has secured insurance on the subcontractor’s behalf; (2) all employees of the contractor and subcontractors are providing services on the same project or contract work; and (3) the subcontractor’s own gross negligence is not the major contributing cause of the injury. Thus, when the employee of one subcontractor, or an employee of the contractor, brings a claim against another subcontractor or its employee, and when all three of the above factors are met, horizontal immunity is afforded to defendants.

In the instant case, a residential developer which intended to develop its own land hired both a roadwork company and a surveying company. A roadwork employee brought a negligence cause of action against the surveying company and against its employee, alleging that the surveying employee negligently backed a truck into him while performing work. The lower court found that statutory horizontal immunity was afforded to the surveying company and its employee against the negligence claims of the roadwork employee. The Appellate Court reviewed whether horizontal immunity should have been afforded. The Court hinged its decision on analyzing what the legislature intended by the word “contractor,” as utilized in § 440.10(b), which outlines horizontal immunity. 

Florida statute § 440.10(b) states in part, “In case a contractor sublets any part or parts of his or her contract work to a subcontractor or subcontractors, all of the employees of such contractor and subcontractor or subcontractors engaged on such contract work shall be deemed to be employed in one and the same business or establishment [ . . .].”

Thus, the Appellate Court clarified that in order for a party to be afforded the statutory protection of horizontal immunity, the contractor must be performing work pursuant to a contract. In the instant case, the residential developer owned the land and hired the roadwork company and surveying company for its own benefit, and not pursuant to a contract. Although it’s very plausible that the residential developer may have been a general contractor, it is nonetheless not a contractor for purposes of § 440.10(b). For a party to be considered a contractor under § 440.10(b), the party’s “‘primary obligation in performing a job or providing a service must arise out of a contract.’” Id (quoting Sotomayor v. Huntington Broward Assocs. L.P., 697 So. 2d 1006, 1007 (Fla. 4th DCA 1997) quoting Gator Freightways, Inc. v. Roberts, 550 So. 2d 1117,1119 (Fla. 1989)).

In the instant case, the Appellate Court determined that because the residential developer was not a contractor for purposes of § 440.10(b) horizontal immunity should not be afforded to the surveying company and its employee. Therefore, the injured roadwork employee would not be barred from bringing a negligence cause of action against the surveying company and its employee. This ruling is defining in the realm of personal injury and negligence claims. With year-round construction in Florida, injuries occur often on work sites. Determining whether horizontal immunity is afforded to a party early on, can save tremendous time and resources and even lead to early resolution or denial of claims.

Stuck Between a “Substantial Need” and “Equivalent Materials” Investigation of a Claim and the Work-Product Privilege

In the recent unpublished matter of Caroline Paladino, et al. v. Auetto Enterprises, Inc., the New Jersey Appellate Division reviewed the standard for evaluating the work-product privilege in the context of an investigation conducted by an insurance carrier post-accident but pre-suit.  The Court noted that there is a “multi-party, fact-specific” test.  The Court stated “[t]he first inquiry is whether the materials were prepared or collected in anticipation of litigation or trial by another party or that party's representative.  If so, to obtain the materials, a party must satisfy a two-part standard.  The party seeking the materials must (1) show a substantial need for the discovery, and (2) demonstrate that he or she is unable, without undue hardship, to obtain the substantial equivalent of the materials.”

 In Paladino, plaintiff injured herself at a catering facility and the facility notified their general liability carrier of the accident.  The carrier instructed an investigator to photograph the accident scene and obtain statements from plaintiff and representatives of the defendant.  The investigator additionally created a sketch of the area and obtained recorded oral statements from three employees.

 Thereafter, plaintiff filed suit and in response to interrogatories, defendant disclosed the above-noted materials but declined to produce them.  Plaintiff filed a motion to compel the production of said materials with the exception of a hand-drawn diagram.  In an oral opinion, the trial court ordered the defendant to produce the photographs and recorded statements that were secured by the investigator. These materials were created before plaintiff’s complaint was filed and defense counsel had been assigned. The trial court reasoned that the insurer “may have” had interests apart from protecting its insured’s rights.

 The Appellate Division reversed the lower court’s decision holding that the record is insufficient to determine whether plaintiff showed a substantial need for the discovery and whether she was unable, without undue hardship, to obtain the substantial equivalent of the photographs or statements.  Specifically, the Court noted that in Paladino, there was a video of the accident and plaintiff’s attorney was allowed to secure photographs of the area in question.  The Appellate Division noted that on remand, the trial court will need to “make a determination whether there is any showing that there was a change to the staircase that plaintiff was not able to capture in the photographs that her counsel took [.]”

 The Appellate Division further noted that the trial court will also need to analyze the witness statements.  The Court noted that witness statements will always satisfy the first part of the standard or show “substantial need.”  The Court noted that if the witnesses recall the facts within their statements then Plaintiff may not be able to meet the second part of the standard.  In contrast, if the witnesses cannot recall the circumstances of the accident, then plaintiff may be able to meet the second part of the standard.

From a defense perspective, Paladino underscores the need for quick attorney involvement of the investigation of claims to preserve any applicable claims of privilege.   Further, Paladino exemplifies the importance of well-prepared witnesses at the time of depositions which could untimely serve as the “substantial equivalent” of a recorded statement.

Plaintiff Found to be Special Employee of Multiple Entities

The New Jersey Workers’ Compensation Act requires employers to insure workers by providing employees with medical treatment, and temporary/permanent disability payments for job-related injuries or illnesses.  In exchange for benefits, employees are subject to a workers’ compensation bar, which precludes them from suing their employer in court for economic loss and “pain and suffering” damages caused by work related injuries.  The workers’ compensation bar extends to “special employees” of an employer. 

 In order to determine whether a special employer-employee relationship exits, the Appellate Division outlined a five-prong analysis in Kelly v. Geriatric and Medical Service, Inc., 287 N.J. Super 567 App. Div 1996.  Specifically, the court must consider whether (1) the employee has made a contract of hire, express or implied, with the special employer; (2) the work being done by the employee is essentially that of the special employer; (3) the special employer has the right to control the details of the work; (4) the special employer pays the employee’s wages; and (5) whether the special employer had the power to hire, discharge or recall the special employee.  No single factor is dispositive, and not all factors must be met in order to establish a special employment relationship.  However, it has been found that the third factor is the most significant factor.  It has yet to be determined by the Appellate Division as to how many “special employers” an individual may have at one time. 

 On July 26, 2019, Callahan & Fusco, LLC moved for summary judgment on behalf of both Hankook Tire America Corp. and Kann Enterprises, Inc., in the Superior Court, Middlesex County, before the Honorable Andrea Carter, J.S.C., in the matter of Ramos v. Infante, et al., MID-L-001544-17.  In Ramos, the plaintiff was assigned for temporary employment with Kann by a separate staffing agency – an entity which ultimately provided plaintiff with workers’ compensation benefits to the plaintiff.  

 We argued that an implied contract for hire existed between the plaintiff and both Kann and Hankook, as the plaintiff testified during his deposition that he voluntarily presented at the Hankook warehouse on a daily basis to perform his work, an argument which had been previously upheld in by the Appellate Division in Antheunisse v. Tiffany & Co., Inc., 229 N.J. Super. 399 (App. Div. 1988).  We argued that the second prong was met as the work being performed by plaintiff was that of Kann and Hankook as Kann’s work was that of a staffing agency to place individuals in support roles for Hankook, and plaintiff was ultimately performing required labor for Hankook inside of the warehouse.  Most importantly, we showed though plaintiff’s own deposition testimony that his direct supervisor at the warehouse was a Hankook supervisor, and that he would be required to take directions from a Kann employee while working.  Plaintiff’s work schedule was controlled by a Hankook manager, and his daily instructions were provided by a Hankook supervisor.  As for the fourth prong, we argued that there was indirect payment made to plaintiff which streamed from Hankook and Kann, and then ultimately went to his employer who paid him.  Finally, based upon deposition testimony of the defendants, it was clear that if the plaintiff was no longer wanted to work at the Hankook warehouse, either Kann or Hankook could make the request to remove plaintiff and his employment at the warehouse would be terminated.                   

 We successfully argued that both Hankook and Kann met the five-prong test set out in Kelly, and Judge Carter granted our motion for summary judgment on behalf of both defendants — essentially extending the special employer designation to both Hankook and Kann.  It is yet to be seen whether the plaintiff will appeal the decision.  But for the meantime, an argument can be made that multiple parties can be classified as an individual’s special employer at the same time.       

The Role Of Proposals For Settlement In Florida Cases Involving Commercial Auto Policies and Vicarious Liability

Florida Statutes Section 768.79(1) allows attorneys’ fees and costs to be awarded against a defendant when a plaintiff files a demand for judgment or “proposal for settlement” which is not accepted by the defendant and the plaintiff recovers a judgment in an amount at least 25% greater than the offer. Florida statute does not explicitly discuss the complexities that arise in multiparty lawsuits. However, it uses the terms “a plaintiff,” “the plaintiff,” “a defendant,” and “the defendant” in a manner that would allow a plaintiff to make an offer to a specific defendant. Section 768.79(2) describes the content of an offer and requires that the offer “[n]ame the party making it and the party to whom it is being made.”  Further, nothing in the statute or corresponding Rule of Civil Procedure 1.442 requires that a proposal settle all claims between all parties, or even all claims between the party to the proposal.

Consider the following fact pattern:

[P]laintiff files suit against trucking company and insured driver for injuries sustained when insured driver caused an auto accident in the course and scope of her employment.  Plaintiff files a two-count complaint, one count against insured driver for negligence, and one count against trucking company for vicarious liability for insured driver’s negligence.  Plaintiff serves a proposal for settlement to insured driver in the amount of $200,000, in exchange for a dismissal with prejudice against insured driver, only.  Insured driver rejects the proposal, and Plaintiff obtains a net judgment in the amount of $875,000 at trial against both defendants. 

The above fact pattern is derived from a Florida case, McGregor v. Molnar.  In McGregor, the trial judge denied Plaintiff’s motion for attorneys’ fees and costs finding that the proposal for settlement was not made in good faith.  The reasons the trial court gave for this finding were that the offer was not intended to conclude the litigation because all claims against the trucking company remained, and further stated that if Plaintiff’s offer was accepted, it would merely provide funds for Plaintiff to proceed with the litigation against trucking company.

On appeal, the trial court’s order was reversed.  The Second District Court of Appeals cited an earlier decision, Hess v. Walton, involving a medical malpractice case against a physician and a vicariously liable entity.  In that decision, the Court suggested that, absent allegations of bad faith, there may be valid, strategic reasons for an offeror to submit differentiated offers to separate parties:

“It forces one defendant to settle.  The plaintiff obtains money that can be used to further prosecute the lawsuit or which can be safeguarded from the risk of a future judgment if the defendants obtain the right to a judgment for their fees.  The plaintiff can eliminate the defendant for whom the jury may have sympathy, or the defendant who may be on the brink of bankruptcy.  If more than one lawyer is involved, the plaintiff can remove the defendant with the best lawyer.”  Hess at 1051.

Insurers and counsel defending cases like the above fact pattern should be wary. Proposals for settlement to one of multiple defendants insured by a single carrier should be carefully considered as the above scenario presents the possibility for a Plaintiff to recover an extensive award for attorneys’ fees, even after achieving a less than ideal result on the underlying claim.  To attempt and combat this strategy, defense counsel should strongly consider serving a “best dollar” counter proposal.  Such a counter proposal should be served no later than 45 days prior to the first day of the trial docket on which the case is set for trial pursuant to Rule 1.442.

Can Auto-Pilot Change The Look Of The Auto Insurance Market?

Though the future of self-driving insurance aspects is mostly unknown, the advent of crash avoidance technology may soon mean less claims for driver negligence and more products liability claims aimed at manufacturers for computer flaws. 
 
The Federal Government has made it clear that self-driving vehicles are the next level in safety.  Jeffrey Zients, director of the Economic Council, recently gave the agency approval by stating that “[W]e envision in the future, you can take your hands off the wheel, and your commute becomes restful or productive instead of frustrating and exhausting,” and added that highly automated vehicles “will save, time, money and lives.”
 
If humans are no longer driving vehicles, do they need insurance policies? And, if so, what would the limits of those policies be? For now, self-driving automakers require drivers to maintain attentiveness at all times to ensure that they are able to take over control of the vehicle should any problems arise.  However, this requirement may be quickly dissipating.  In December of 2016, Michigan passed legislation that would lift this requirement and added that in the event of an accident, the “driving system or any remote or expert-controlled assist activity” shall be the “driver” for the purposes of determining whether or not the vehicle is conforming to local laws.  Furthermore, the law requires that the manufacturer assumes liability for each incident in which the automated system is at fault.  For now, the Michigan statute is aimed at producers like Google, that are placing fleets of self-driving vehicles on the road.  As more data comes in and more driverless cars are put on the roads, these laws and new policies should start to take a more generalized and permanent shape nation-wide.  Until then carriers should keep an eye on this quickly evolving sector. 
 

Clear Law on New Jersey Choice of Law

The New Jersey Supreme Court recently issued an opinion clarifying New Jersey’s choice of law rules for determining the applicable statute of limitations in tort actions.  In McCarrell v. Hoffman-La Roche, plaintiff, an Alabama resident, filed a products-liability action against defendants Hoffmann-La Roche alleging defendants’ failed to adequately warn of their drug’s potential side effects.  Plaintiff was prescribed and took the medication in Alabama, and was treated for medication’s side effects in Alabama.  Defendants were both New Jersey corporations, who designed, manufactured, labeled, and distributed the medication in New Jersey. 
 
Plaintiff timely filed the products-liability action under New Jersey’s statute of limitations, but not under Alabama’s statute of limitations.  Defendants argued that under the Supreme Court’s prior decision in P.V. ex rel. T.V. v. Camp Jaycee, the Second Restatement’s most-significant-relationship test was the proper analytical tool for deciding choice-of-law issues, and that in this instance, Alabama had the most significant relationship to the litigation, and therefore Alabama’s statute of limitations rule should apply.
 
The Supreme Court disagreed.  While the Camp Jaycee decision remains good law, the Court relied upon the most-significant-relationship test in Sections 145 and 146 of the Restatement, which only applies to resolve conflicts of substantive law in tort actions, not choice-of-law for statutes of limitations issues.  This is because “the essential purpose of substantive tort law is to provide a remedy to a party who has been wronged, whereas the essential purpose of a statute of limitations is to encourage litigants to file timely claims and to bar the litigation of stale claims.” Instead, for statute of limitations issues, Section 142 of the Restatement applies, which dictates that “the statute of limitations of the forum state generally applies whenever the state has a substantial interest in the maintenance of the claim.”  It is only if the forum state has “no substantial interest” in the maintenance of the claim does a court consider whether the claim would be barred under the statute of limitations of a state having a more significant relationship to the litigation.  In this instance, as New Jersey “has a substantial interest in deterring its manufacturers from developing, making and distributing unsafe products, including inadequately labeled prescription drugs,” therefore New Jersey’s statute of limitations applied, and the plaintiff could proceed.