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James Q. Shirley
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Business Litigation
Personal Injury

Why Two Recent Supreme Court Decisions Could Increase the Litigation Burden on Employers of Injured Employees

Wednesday, October 08, 2008

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Workers injured on the job are typically not permitted to pursue lawsuits against their employer outside of the workers' compensation process. However, they may commence a lawsuit outside of that process, in court, against parties other than their employer, if such third parties are liable for the workers' injuries. Often an injured worker has an incentive to pursue third-party actions in court because the damages recoverable in such an action include full wage recovery and damages for pain and suffering and loss of enjoyment of life, none of which are compensable in a workers' compensation proceeding.

A typical example of such a third-party action is where an employee is injured working on defective machinery at the employer's business. Although defendant manufacturers named in such third-party product liability actions have traditionally been able, in appropriate circumstances, to defend on the basis that the employer modified the allegedly defective machine or removed safety guards, two recent Supreme Court decisions now permit juries to allocate a percentage of fault to employers not only on the basis that they have modified equipment but also if the employer has engaged in any other workplace conduct contributing to the employee's injury. Although the employer is protected from having to pay for its contributing conduct because of the statutory workers' compensation bar, considerably more attention will be devoted to employer conduct during the discovery phase and trial of such cases since the two new Supreme Court decisions.

In Nilsson v. Bierman, 150 N.H. 393 (2003), the Supreme Court held that in determining a defendant's fault, the court may also consider the fault of former parties that settled out of the case. Nilsson served as a stepping stone to a more recent decision, DeBenedetto v. CDL Consulting Engineers, Inc., 153 N.H. 793 (2006), in which the Supreme Court took the next step and held that persons or companies that had never been parties to the case could have fault allocated to them. As a result of these decisions, courts may now allocate fault away from the defendant to nonparties who were never part of the case. This allocation is important to a defendant manufacturer, as allocating fault to the other parties, including the employer, may reduce the manufacturer's overall liability.

Because of Nilsson and DeBenedetto, a defending manufacturer's motivation to blame an employer for the worker's injury goes beyond the usual desire to diminish one's own fault by pointing to the contributing fault of another. The additional motivation is rooted in how the two recent decisions relate to RSA 507:7-e, the New Hampshire law that provides that joint liability attaches to all defendants who are found to be 50% or more at fault, but several liability attaches to defendants who are less than 50% at fault. The difference between the two liability schemes is critical. If a defendant is jointly liable, it can be required to pay the entire amount of damages, even where it is less than 100% at fault. In contrast, a defendant who is severally liable need only pay the damages proportionate to its percentage of fault. For example, if the court finds a defendant 51% at fault, joint liability applies, and it will be liable for 51% of the damages and may also be liable for the remaining 49% as well. On the other hand, if a defendant is found 49% at fault, several liabilities applies, and that defendant can only be held liable for 49% of the damages. Nilsson and DeBenedetto have given an important tool to every defending manufacturer trying to allocate at least 51% of fault to third parties (and thus avoid joint liability) - they can now point the finger at an employer otherwise immune from liability.

This article has focused on only one scenario where it would be beneficial to a third party to blame the employer for the worker's injuries - i.e., in a products liability lawsuit. However, there are other types of third party lawsuits in which an employer's contributory conduct may come into play. For instance, if an outside vendor (for instance a car manufacturer or maintenance company) caused vehicular injuries to a worker, and that worker filed suit against the vendor, it may be to the vendor's advantage to blame the worker's employer for inadequate employee training, unsafe unloading practices, failure to provide proper safety equipment, and so forth.

Even though there are many permutations of Nilsson and DeBenedetto, one thing is clear: there will be a more intensive focus on employer conduct during discovery in suits brought by injured workers against third parties. Employers should be prepared for this shift, as it will inevitably increase their involvement, and the level of scrutiny of their conduct, in this type of litigation.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.