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LOWERING THE BAR

By: William A. Dreier and M. Karen Thompson

The workers’ compensation law in N.J.S.A. 34:15-8 bars a worker’s tort claims against his or her employer. The bar is comprehensive in that it protects both the employer and a fellow employee, and even bars third-party claims for contribution or indemnification, often leaving a product manufacturer as the sole responsible party.

The ultimate in such a claim is exemplified by Stephenson v. R.A. Jones & Co., Inc., 103 N.J. 194 (1986) , where a jury found a manufacturer 5 percent responsible on the basis of a defective design, but the employer 95 percent responsible for failure to install a guard supplied after the sale by the manufacturer of the machine. By application of the workers’ compensation bar, not only was the manufacturer required to pay the entire damage award, but by virtue of its compensation lien, the employer was repaid the workers’ compensation it had paid to the plaintiff.

Similarly, where the employer removes a safety guard on a machine or knowingly violates an Occupational Safety and Health Administration regulation, it now does so with tort impunity. Whether the guard is removed or the employer intentionally fails to install a necessary guard, or the employer directs an employee to work in some other obviously unsafe environment, there is only one avenue an employee may pursue to defeat the workers’ compensation bar. This is to assert that the injury was the result of an “intentional wrong” committed by the employer or co-employee. N.J.S.A. 34:15-8.

This article will explore the present state of the law concerning this intentional wrong exception and suggest an appropriate balance between an employee’s or third-party claimant’s right to fair compensation or contribution and the employer’s legitimate reliance on the workers’ compensation defense.

The present law is exemplified by Millison v. E.I. duPont de Nemours & Co. , 101 N.J. 161 (1985) . In Millison, the plaintiff’s co-employees, the company physicians, participated with management to conceal from affected workers that they had contracted asbestos-related diseases. The physicians sent the untreated workers back to work, where their initial illnesses were aggravated. (On remand, the jury found for the plaintiffs, with punitive damages, a decision affirmed on appeal).

The Millison court very narrowly construed the phrase “intentional wrong,” equating it with direct or circumstantial proof of a subjective desire to injure the employee. Citing Dean Prosser, the Court ruled out proof of mere wanton or reckless conduct as sufficient. Millison required that a “substantial certainty” standard be met, also describing it as a standard of “virtual certainty.”

The dissent in Millison took no issue with the standard but found that it had been met by the facts of the case. The dissent agreed that the mere toleration of workplace conditions expected to result in a certain number of injuries or illnesses would fall short of the intentional wrong standard. Neither the majority nor the dissent focused on an employer’s active participation in the creation of the danger. In effect, the Millison rule requires proof in excess of that which would qualify the employer’s conduct for the imposition of punitive damages under N.J.S.A. 2A:15-5.12 (actual malice or willful and wanton disregard of persons who foreseeably might be harmed).

We suggest the Millison standard should be reconsidered and relaxed. Where the employer has intentionally created the dangerous condition, and where this conduct is egregious, creating a high probability of a serious injury to an employee, the employee should not be required to meet, or should be deemed to meet, the current substantial certainty standard (even if that standard is retained).

The employer should not be permitted by deliberate conduct to play fast and loose with the health or safety of employees, with the assurance that the limited remedies of the Workers’ Compensation Act will shield it from what otherwise would be tort responsibility for such egregious acts. A standard should be set somewhat below the punitive damage threshold (with its “clear and convincing” proof requirements) so that not every safety device removal or violation of an OSHA regulation automatically qualifies for a punitive award.

Simple negligence, of course, would be far too low a standard. No one should expect that every workers’ compensation case involving a missing safety device or every OSHA violation would warrant a Superior Court tort claim against the employer.

An example of conduct that well could qualify for inclusion within the legislative definition of intentional wrong was described in dictum in Calderon v. Bollegraaf, 285 N.J. Super. 623 (App. Div. 1995). There, the employee was working on a two-story baling machine in which huge spikes were dropped through the material to be baled, carrying with them steel cable to provide the banding. From time to time, the cable would tangle at the bottom of the machine and had to be serviced by an employee reaching in through a grate.

The manufacturer had properly provided an interlock on the grate so that when it was opened and the employee reached into the machine, it would shut down until the grate was again closed. The employer, however, took an acetylene torch and removed the grate, except for a small piece of metal that rendered the interlock inactive. The employer further prohibited stopping the machine to service it, threatening to fire any employee who did so. Instead, in the 20-second interval between the descent of the spikes, the employee was required to reach into the machine, untangle the cable and pull out his arm.

As if this were not enough, the employer would walk back and forth along the line of baling machines and, using a bullhorn, exhort the workers to work faster and keep the cable untangled. A clock over the machine counted the 20-second intervals. Unfortunately, either the clock was inaccurate or the plaintiff was unable to withdraw his arm in time, and his arm was severed by the descending spike.

In Calderon, there was no assertion of an avoidance of the workers’ compensation bar. The court stated in dictum, however, that this type of case showed clearly that the employer’s conduct was not deserving of the protection of the workers’ compensation statute:

Severe inequities are visited on workers by the actions of their employers in removing, disconnecting, refusing to install, or otherwise thwarting safety devices that are provided to protect the users of industrial machinery. Such employees are generally left to the inadequate remedies of workers’ compensation, virtually sacrificed on the altar of production quotas with no downside risk to the employer.

This dictum in Calderon was quoted in Mabee v. Borden, Inc., 316 N.J. Super. 218 (App. Div. 1998), where the court determined that because of the binding effect of Millison, the removal of the safety device would not automatically present a prima facie case of intentional wrong, despite expert testimony that such removal created a virtual certainty that employee injuries would occur.

There, the manufacturer intended that the safety device, an interlock, would be removed or bypassed only for the servicing of the machine. In fact, the employer used the bypass 95 percent of the time. Further, to minimize a holdup in production, the employer encouraged the employees to clean the machine without shutting it down.

As a result, an employee’s hand became entangled in the moving parts of the machine when she tried to clean it. The court concluded that the Legislature evinced no intent to protect employers who deliberately alter available safety devices because of a profit motive or production concerns. See, generally, Dreier, Keefe and Katz, New Jersey Product Liability & Toxic Torts Law 21:1-2 (Gann 2002).

The Appellate Division in Laidlow v. Hariton Machinery Co., Inc., 335 N.J. Super. 330 (App. Div. 2000), now on appeal concerning the issues raised in the dissent, also felt itself bound by the restrictive language of Millison. It therefore rejected the analysis in Calderon and narrowly construed the decision in Mabee.

In Laidlow, the employer, over a period of 12 years, had incapacitated a safety guard from a rolling mill and only activated it when there was to be an OSHA inspection. The guard was not used because its presence slowed down the mill operation. The plaintiff had asked that the guard be used but was told that its absence was not a problem. He seriously injured his fingers and hand in the unguarded in-running rip point.

From the Laidlow court’s construction of Millison, it concluded “that plaintiff failed to meet the threshold standard of ‘substantial certainty’ under the statute.” It further stated that this conclusion

should not be construed as condoning [the employer’s] conduct in using the safety device only in anticipation of OSHA inspections and removing the device after those inspections. Such conduct is unquestionably reprehensible, and certainly suggests a knowing violation of OSHA regulations. However, it does not rise to the level of creating a ‘substantial certainty’ that an injury would occur absent the safety guard.

This application of the Millison standard was also recently followed in Kaczorowska v. National Envelope Corp., 342 N.J. Super. 580 (App. Div. 2001) and Crippen v. Central Jersey Concrete Pipe Co., 342 N.J. Super. 65 (App. Div. 2001).

Any rule should recognize that guards often must be removed from time to time for servicing, and specially trained personnel are usually used for this purpose. But even the usual worker may have to use a machine in “inch mode” from time to time, without a guard in place to correct problems.

Likewise, guards are often removed for special uses of the machine, and it has been recognized in many cases that other types of guards, or on some occasions the removal of all guards, may be necessary to work with odd-shaped material or the like. See, e.g., the discussion in Seeley v. Cincinnati Shaper Co., 256 N.J. Super 1 (App. Div. 1992). If, in fact, no guard is feasible, appropriate warnings and training should, of course, be given.

The employer’s removal of a safety device should, therefore, not automatically constitute an intentional wrong, as there may be valid reasons to do so. But, if there is a showing that this removal subjected employees to a substantial probability of a serious injury, such a removal could be considered prima facie proof of such a wrong.

At that point, the burden could shift to the employer to demonstrate that (1) there was no substantial probability that some employee would be injured as a result of the unguarded machine, (2) that the guard interfered with a reasonable use of the machine and that alternative protection, warnings or training were provided, (3) that the removal was temporary and was required to service the machine or (4) that there was some other legitimate reason to run the machine without the device.

Of course, adequate warnings and training must be provided by the employer. The issue could then be presented in that posture to the fact finder.

New Jersey has long recognized that safety devices are needed to prevent injuries to an inattentive worker, because not every worker can be on his or her guard every moment of the working day, and substantial dangers must thus be minimized wherever possible. Tirrell v. Navistar Int’l, Inc., 248 N.J. Super. 390 (App. Div.). The mere fact that an accident did not happen for a number of years because workers were attentive does not mean that a potential serious injury from the unguarded machine was not substantially certain, if this is to be the continuing standard.

These issues, although phrased in terms of the employer and the injured worker, are often raised in suits against the manufacturer of the machine. In many of these actions, it becomes evident that the manufacturer, as in the Stephenson case cited above, is only peripherally liable. The culture of the product liability plaintiffs’ bar, faced with the inadequate remedy of workers’ compensation, has been to draw such manufacturers into protracted litigation where it is evident that the real culprit is the employer.

There are other ways to treat this issue that are beyond the scope of this article. See Dreier, “Injuries To Production Workers: Reform of the Workers’ Compensation Product Liability Interface,” 48 Rutgers L. Rev. 813 (1996) . The real question in these cases is whether the manufacturer through its self-insured retention or its liability insurer or the employer’s liability or workers’ compensation insurer should bear the responsibility for these losses.

There should still be a heightened intentional wrong threshold for a plaintiff (or a third party such as the equipment manufacturer by way of cross-claim or third-party complaint) to surmount. But tort liability should follow the employer’s intentional action of subjecting the eventual injured employee to the risk of serious bodily harm.

This should not run afoul of the statutory standard of intentional wrong. Although rejected in Millison, the threshold test of wanton behavior – egregious behavior creating a foreseeable substantial risk of serious bodily injury, proven by a preponderance of the evidence – can provide a clear test to guide a court or jury in its review of the employer’s intentional removal or failure to install a safety guard or an intentional violation of an OSHA regulation. This is a less onerous standard than that for punitive damages.

If the employer’s conduct is accompanied by malice or willful and wanton behavior, and is proven by clear and convincing evidence, then punitive damages might also be available under the Punitive Damages Act. The employer who wishes to retain the workers’ compensation protection can easily do so by leaving in place, or installing, the guards provided by the manufacturer or providing other effective safety devices, warnings or training, as noted above.

The Supreme Court in its review of Laidlow will have an opportunity to revisit these problems and provide the first definitive statement in this area since 1985. The product liability and workers’ compensation bar look to this decision with anticipation.

This article is reprinted with permission from the December 3, 2001 issue of the New Jersey Law Journal. ©2001 NLP IP Company.