Laidlow progeny offer analysis of the new standard to circumvent the workers' compensation bar
By Ronald Grayzel
Three decisions expounding on the rights of injured workers to sue their employers for intentional misconduct were the highlight of the Supreme Court term for 2002-2003.
Although the opinions will probably be an impetus to an increase in the filing of claims, there are still many questions that have to be answered before one can conclude that the new cause of action is viable.
Justice Barry Albin published his first tort opinion, eloquently laying out his views on the relative role of judges and juries in deciding cases. The decision confirms the high expectations of trial lawyers that the new justice would bring to the bench a refreshing world view forged by years of experience toiling in the field.
In addition, a number of cases were decided that modified existing legal standards cases involving Title 59, premises liability, agency and charitable immunity.
When the term began, lawyers hoped that the Supreme Court would tackle the verbal threshold under AICRA by granting certification in James. The denial of the petition for certification was a great disappointment to the Bar. It is very clear that the Court will have to deal with this issue in the future.
Last term the Court dramatically expanded the right of injured employees to sue their employers for intentional misconduct. Laidlow v. Hariton Mach. Co. Inc., 170 N.J. 602 (2002). To circumvent the compensation bar, the plaintiff does not have to prove that the employer had a subjective intent to cause her injury, but that it engaged in actions that were substantially certain to cause harm.
The plaintiff makes out a prima facie case when she can show that: the employer removed a safety device from industrial equipment to speed the production process; the employer deliberately deceived OSHA by placing the guard on during inspections and subsequently removing it; and there were prior complaints and close calls involving other workers with the same machine.
The lack of prior injuries on the same piece of production equipment does not foreclose a claim. Each case is to be resolved on the totality of the facts contained in the record.
Laidlow generated shock and wonder because it gave workers a right to sue their employers for a relatively common industrial event involving an employer's decision to remove safety guards from a machine when precedent had provided an ironclad bar against pursuing cases like this. The Laidlow Court attempted to assuage concerns about an increase in the number of claims by emphasizing that no case would pass muster unless judicial gatekeepers first made independent determinations as to "whether the injury and the circumstance surrounding it were part and parcel of everyday industrial life or plainly outside the legislative grant of immunity."
This context prong must be applied to the facts of each case by judges in a defendant's summary judgment motions, in an employer's applications for dismissal during trial at the close of the plaintiff's case and when all the evidence is in, and in post-trial motions after a verdict in the plaintiff's favor.
This year the Court decided three more cases on this burgeoning tort: Crippen v. Central Jersey Concrete Pipe Co., 176 N.J. 397 (2003), Mull v. Zeta Consumer Products, 176 N.J. 385 (2003) and Tomeo v. Thomas Whitesell Constr. Co., Inc., 176 N.J. 366 (2003).
These cases came up the pipeline from a recalcitrant Appellate Division that was not willing to wander beyond the strict boundaries of the factual scenario in Laidlow to obliterate the workers' compensation bar. The Laidlow progeny offer two additional examples of cases that meet the new standard and one that does not.
When analyzing these cases, it is important to remember that the records in Crippen and Mull were based on summary judgment applications where the courts gave the plaintiff the benefit of all favorable inferences; the defendants did not have the opportunity to attack the factual underpinnings supporting the plaintiff's legal contentions. The cases also raise many questions about the long-term viability of these causes of action that will be the subject matter of intense litigation in the future.
Mull was a factory worker injured on an industrial machine that had been altered by the employer to defeat the guarding system on the point of operation where she was injured. The plain-tiff's expert opined that the alterations made an injury virtually certain to occur. The aggravating factors that caused the trial court to deny the defendant's summary judgment motion included:
The Appellate Division reversed the trial court's decision on interlocutory appeal before the law changed, and refused to budge after the case was remanded to reconsider after Laidlow because it believed that the absence of any proof that the employer deceived or misled OSHA precluded a finding of intentional misconduct.
The Supreme Court disagreed and reversed. On behalf of the majority, Justice Peter Verniero concluded that the aggravating factors in the record were very similar to the facts in Laidlow and that the employer's lack of deception of OSHA did not preclude a finding of legal responsibility. The justices believed that the facts satisfied both prongs of the Laidlow test.
In a concurring opinion, Justice James Zazzali would have gone further than his colleagues and posited a rebuttable presumption that an employer violated the conduct prong when it disabled or knowingly tolerated the disabling of a safety device. Under this proposed rule, the employer would have the burden of coming forward at trial with evidence to disprove that the conduct was substantially certain to cause injury.
In a separate concurring opinion, Albin wanted to go even further, proposing to "adopt a clear and precise rule that an employer's willful and knowing disengagement or removal of a safety device, the purpose of which is to protect an employee from death or serious bodily injury, constitutes an intentional wrong," and also violates the context prong.
Crippen is a classic example of bad facts revolutionizing the law. The plaintiff was a laborer in a factory toiling under conditions reminiscent of the industrial revolution. Part of the plain-tiff's job assignment was to activate a control on a machine by standing on a six-foot unsecured ladder perched on a 10-inch wooden plank right over a hopper filled with 17 feet of sand and gravel without fall protection. Crippen fell into the hopper and suffocated. The body was discovered buried in the sand when a co-worker released the material from the chute of the hopper.
Discovery revealed an OSHA citation issued to the employer 16 months before the accident requiring that it abate a number of dangerous conditions, including the failure to safeguard the workstation where the plaintiff was fatally injured. Although the employer promised to fix the problem, this did not happen.
The plaintiff deposed the defendant's safety manager, who conceded that he was aware that the dangerous condition was substantially certain to cause injury or death. The plaintiff's expert opined that the plaintiff was killed because of the defendant's failure to safeguard the industrial operation and that the corrections ordered by OSHA would have prevented the fatal accident.
The trial court and the Appellate Division decided that a dismissal was appropriate because they believed that the plaintiff had only shown that the defendant knew of the dangerous work conditions and that an injury was possible but not virtually certain to occur.
The Supreme Court reversed after looking at the totality of the circumstances, finding that the following aggravating factors not only created a jury question on the employer's intentional misconduct, but also would satisfy the context prong if proven:
The complete trial record in Tomeo gave the majority of the Court a golden opportunity to highlight a scenario that did not meet Laidlow standards. The plaintiff was a sprinkler fitter instructed by his employer to depart from his customary job duties and clear snow from around a building using a snow blower. A dead man's control that deactivates the blades when the operator lets go of the handle had been bypassed. There was no proof as to how this happened. The plaintiff was given only brief instructions on how to operate the machine. When the worker placed his hands in the chute to remove some snow, he suffered a serious hand injury. If the safety device had not been disengaged, the accident would not have happened.
The plaintiff prevailed at trial and won a significant compensatory award. The defendant made unsuccessful attempts to dismiss the case on summary judgment - at the close of the plain-tiff's case, at the end of the entire case and in post-trial motions.
The defendant argued that the proofs fell short of the mark because there was: no expert testimony to support the plaintiff's allegations; no evidence of prior incidents or injuries; no testimony that the defendant was aware that the safety had been deactivated; and no evidence that plaintiff was forced to hurry through his job. The Appellate Division judges were persuaded by appellant's arguments and took the plaintiff's verdict away.
The Supreme Court also applied the context prong and found no plain-tiff's proofs wanting because there was no evidence or expert testimony demonstrating that the defendant knew there was a virtual certainty than an employee would be injured while using the snow blower.
The majority of justices believed that the evidence supported only a conclusion that the defendant's conduct was grossly negligent, not intentional. The majority opinion went off on a frolic and detour, discussing irrelevant principles of product liability law to support its observations that the snow blower was a consumer product that had warnings printed on it admonishing operators not to put their hands near the blades.
This had dubious relevance since there were no facts to suggest that the plaintiff had ever read the warnings. The opinion goes on to state that the context prong was also not satisfied because the plaintiff encountered an obvious danger. This foray off the beaten path adds nothing to the analysis required by Laidlow.
While this trilogy does not clearly articulate a line of demarcation between a case that meets the Laidlow standards and one that does not, there are constellations of factors that will propel a plaintiff toward the finish line.
The Court clearly embraces the sentiment that the new tort is required to address the plight of factory workers compelled to toil in dangerous conditions. Expert testimony is essential to delineate what the dangerous condition is and why the failure to eliminate it caused the accident. The Court is curiously impressed with an expert's conclusion that the danger is "substantially certain" to cause injury.
It is imperative to adduce evidence demonstrating the employer had actual knowledge of the risk to the workers. The "evil employer" image can be fashioned in a number of different ways, including prior similar mishaps, OSHA citations and admissions of management. If the decisions not to provide safety were motivated by speeding up production and/or a desire to avoid the costs of a solution, this will impress the jurist.
These decisions have excited scholars and commentators hungry for material in the increasingly mundane field of tort. The real question for trial lawyers is: What is the practical impact of these decisions in the real world down in the trial courts?
Does flinging the theoretical gates wide open to employees suing their employer mean that there will be a huge increase in the numbers of cases and a rise in liability costs for industry? A careful survey of the landscape should give pause to trial lawyers before they join the stampeding herd.
Two of the cases came up the pipeline as appellate reviews of summary judgment orders where the plaintiff's factual contentions were accepted as gospel. The principles of law were applied liberally to allegations that have not yet been challenged in the adversarial system. The entire record consists of deposition testimony and documentary evidence that may never see the light of day in a trial.
You can put anything you want in an appendix to a summary judgment motion, but that does not mean a jury will hear it. OSHA citations and reports are inadmissible hearsay. Millison v. E.I. du Pont de Nemour and Co., 226 N.J. Super. 572, 593 (App. Div. 1998). The federal employees who performed these inspections and authored the reports cannot be compelled to testify. Reynolds Metals Co., v. Crowther, 572 F. Supp. 288 (D. Mass. 1982); Baker v. The United States of America, Department of Labor, 31 F. Supp. 2d. 985 (S.D. Fla. 1998).
How are plaintiffs going to get the evidence about OSHA in front of the jury? The procedural obstacle to admission of prior incidents and injuries is formidable. You need to do a lot more than reference a report about a prior accident to get it into evidence, especially if it happened in a different manner.
How many experienced trial judges will allow an engineering expert to offer speculative testimony that something was "substantially likely to occur." It is already clear that the appellate courts are going to have to refashion the rules if the factors believed to be important to sustain these causes of action are going to get into evidence.
A more immediate concern is that an employer's intentional misconduct is not covered by insurance. A typical Employer's Liability Insurance Policy approved by the Rating Bureau excludes coverage of intentional misconduct. There is rock-solid appellate precedent holding that these policies do not indemnify employers for Millison cases. New Jersey Mfrs. Ins. Co. v. The Joseph Oat Corp., 287 N.J. Super. 190 (App. Div. 1995).
A fierce battle between employers and their carriers about coverage in this litigation is already underway in declaratory judgment actions throughout the state. These cases are not likely to arise in the plants of sophisticated Fortune 500 companies with smart managers, teams of lawyers and deep pockets. And the small- and medium-sized industrial operations where these accidents occur are not going to have the resources to defend, settle and pay judgments. This is an enormous deterrence to litigation growth.
Millison was a case that spawned many law review articles and no cases. History is likely to repeat itself and the Laidlow rocket may ultimately fall back to earth with a dull thud.
Let the Jury Decide
A guiding principle of the civil justice system is the right of parties to resolve their disputes before a jury of their peers. Although judicial guardians pay lip service to this article of faith, many have trampled on this fundamental right by imposing their own views in cases on the fast track to dismissal.
The mandate in Brill to try cases on the papers in summary judgment motions has created a brigade of judicial activists ready, willing and able to dispose of cases on the merits on "motion Fridays" to avoid plenary trials. It has become a routine procedure in some vicinages for judges to dismiss cases under the net opinion rule after reviewing expert reports without ever holding a hearing.
AICRA cases epitomize this trend. Judges regularly decide the facts on the papers in summary judgment motions by finding medical facts and making judgments on the impact on a plaintiff's life without ever hearing a word of testimony.
Busy appellate courts have aided and abetted this process with routine per curiam approvals of speedy justice, and the Supreme Court has not intervened forcibly enough to maintain the traditional standards of review. This is partially a consequence of the fact that the Court has not had a jurist who toiled in the fields as a trial lawyer and who has a full appreciation of the adversarial system of justice.
This is about to change. The arrival of Albin has brought someone to the Court who was a trial lawyer and who fully embraces traditional values. In Parks v. Rogers, 176 N.J. 491 (2003), the Court's newest justice wasted no time in forcefully advocating a return to the bedrock principles of our system of justice.
The issue in Parks was the legal responsibility of a homeowner for the safety of a social guest. On first blush, it would seem unusual for the Court to take a case to review accepted principles of common law that are universally recognized around the country.
The duties that homeowners have regarding social guests have long been codified in the Restatement Second of Torts, Sec. 342 (1965), which provides that a possessor of land is subject to liability for physical harm caused to social guests if: (a) the possessor knows or has reason to know of the condition and should realize that it involves an unreasonable risk of harm to such social guests, and should expect that they will not discover or realize the danger, and (b) the possessor fails to exercise reasonable care to make the condition safe, or to warn the social guests of the condition and the risk involved, and (c) the social guests do not know or have reason to know of the condition and the risk involved.
The judicial architects of this legal structure were concerned with striking a fair balance between an injured guest's right to recover without imposing unreasonable burdens on homeowners. The beauty of the law is the flexibility it gives fact-finders to make the right value judgments depending on the evidence adduced at trial.
The traditional common law judges who pronounced these legal standards were careful to emphasize that a jury should resolve them. Mistretta v. Alessi, 45 N.J. Super. 176, 182 (App. Div. 1957); Berger v. Shapiro, 52 N.J. Super. 94, 102 (App. Div. 1958).
In the decades since the law was settled, social-guest cases have been routinely tried to verdict and only rarely been resolved by summary judgments. This reflects the fact that a legitimate resolution of these fact patterns requires a consideration of all of the evidence and a weighing of the testimony at trial, after which juries can make the appropriate value judgments after listening to the explanation of the law by the trial judge.
In the modern era of Judge Roy Bean, some activist judges have been willing to make these decisions on their own, dismissing cases on summary judgment that did not meet their individualized criteria for meritorious claims. It is this deviation from traditional judicial practice that propelled the Parks decision.
The folly of departing from the careful instructions of Mistretta and Berger to leave decisions about negligence to juries is graphically illustrated in the procedural history of Parks. The plaintiff accompanied her boyfriend to his parent's shore house for a first-time visit with friends late in the evening after a concert. She ascended the outside stairway without incident. The plaintiff later descended the stairs in the dark to retrieve her overnight bag from the car. When the plaintiff reached the bottom of the staircase, she lost her balance and was unable to grab the handrail because it did not extend to the last tread.
The record did not reveal whether the plaintiff knew anything about the handrail problem from her former trip up the stairs. There was nothing presented to the fact-finder about whether or not there was a source of artificial lighting available for the stairs. The defendant owners were aware of the limited dimensions of the handrail and the lighting conditions, but did not admit knowledge of its potential danger to their guest. The plaintiff contended that defendants were legally responsible for her injuries because the stairway was unsafe.
The trial court granted summary judgment to the defendant on the grounds that they did not have actual knowledge of the dangerous condition of the stairway. The fact that it is not a legal requirement for a plaintiff to demonstrate that a defendant had actual knowledge of the danger in a social guest case did not dissuade the judge from rushing to judgment.
The Appellate Division could not approve the dismissal based on this erroneous interpretation of the law but, instead of reversing the lower court decision, it ventured out on a limb, scanning the record to find a different reason to justify the dismissal of the plaintiff's claim. The appellate judges decided that the plaintiff could not recover because she was aware that it was dark on the stairs and that she must have been aware of the inadequate length of the railing from her former sojourn up the stairs.
The Court granted the plaintiff's petition for certification and Albin had his first opportunity to expound on the traditional philosophy of judicial decision- making. The initial focus was on the 40-year-old legal precedent that should have guided the lower courts' decision, and then an exposition on how the trial court had failed to apply the correct legal principles to the case before it:
Plaintiff was only required to show that, once defendants knew or had reason to know of the defective condition of the handrail, defendants should have recognized it posed an unreasonable risk of danger to a guest and, therefore, should have disclosed or removed the danger.
The crux of the Albin's criticism of the Appellate Division was the flawed process it engaged in to make its finding of fact that the plaintiff was aware of the danger she confronted as she went down the stairs. Holding nothing back, Albin pointedly wrote that the "Appellate Division resolved a dispute on the merits that should have been decided by a jury."
The newly anointed justice, a veteran of many battles in the trial courts, took a careful, realistic look at the entire record below and found no hard facts to support the appellate findings of fact. The judges seized on two snippets from the plaintiff's deposition where she testified that she had called out to her friends as she was going down the stairs that "it was really dark," and then that she recalled thinking to herself before the fall: "where is the banister?"
To Albin's experienced eyes, you cannot erect a dismissal on such a weak foundation. Quoting from that classic opinion, Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 74 (1954), that the "plaintiff was entitled to submit her case to a jury unless defendants sustained their burden of showing clearly the absence of a genuine issue of material fact," Albin found the appellate decision to be lacking in substance. Albin observed that a jury listening to this testimony could just as easily come to a different conclusion:
“Viewing the evidence in the light most favorable to plaintiff, a reasonable trier of fact could conclude that defendants ... who owned the beach house before, during, and after the installation of the stairway, as well as their son, ... knew of the inadequate length of the handrail, and that they knew the defective condition posed an unreasonable risk of injury to a social guest unfamiliar with the premises. Plaintiff visited the beach house for the first time on the evening of the accident. She did not know that the handrail did not extend the full length of the stairway because she ascended and descended the stairs in darkness ... defendant knew or had reason to know of the defective handrail and yet he failed to provide lighting or a warning to plaintiff. ... With genuine issue of material fact in dispute, the jury must decide whether the handrail was an inadequate length, whether defendants knew or had reason to know of the handrail's condition, whether that condition posed an unreasonable risk of harm, and whether plaintiff should have observed where the handrail ended through the reasonable use of her faculties.”
This is an old-fashioned prescription for the resolution of any dispute, including a residential fall down case. The idea that a case with these facts should be dismissed on the papers by an appellate court based upon two small excerpts of a plaintiff's discovery deposition is a concept that is foreign to a jurist who has a classical view of the relative roles of a judge and jury.
Discovery depositions are only an opportunity for lawyers to explore claims and defenses. What the parties know and when they knew it can only be assessed after the witness has had a complete direct and cross-examination. You cannot make judgments on the value and credibility of testimony without hearing it under oath at trial.
Totally missing from the opinion is any suggestion as to how the case should turn out. The philosophy underlying this opinion is that the lawyers on both sides should be afforded the opportunity to present their clients' positions at trial and that the jury will get the decision right. What a breath of fresh air this opinion is.
Brooks unleashed a 20th century terminator that obliterated legitimate claims filed by plaintiffs against public entities. The Supreme Court rectified its mistake by softening the threshold for recovering damages for pain and suffering against public entities when there is proof of an objective permanent injury and a permanent loss of a bodily function that is substantial. The Court specifically structured its decisions to allow plaintiffs with moderately severe injuries to recover damages as long as there was solid, objective proof of the injury and evidence of an impact on the plaintiff's activities. Gilhooley v. County of Union, 164 N.J. 533 (2000); Kahrar v. Borough of Wallington, 171 N.J. 3 (2002).
The Court lowered the crossbar even further in Knowles v. Mantua Soccer Ass'n., 176 N.J. 324 (2003), by permitting a plaintiff to recover compensatory damages from a public entity for pain and suffering from conventional injuries, including a herniated lumbar disc, lumbar radiculopathy and soft tissue injuries to the spine.
The objective support for the diagnoses included a lumbar MRI and a positive EMG. Physical complaints were neck and back pain and numbness, and tingling in the leg and buttocks. Lifestyle impact was inability to sit or stand for more than 30 minutes, or walk for more than a quarter of a mile without pain. The plaintiff also testified that he cannot referee soccer games, play baseball, bowl or perform household chores, and that he loses sleep constantly.
The public entity obtained summary judgment because the trial court did not believe that the plaintiff's injuries and complaints met the Title 59 threshold. The decision was affirmed on appeal. This case is a vivid example of the debris that littered the landscape in the wake of the havoc wrought by Brooks.
Knowles, a farewell opinion by Justice James Coleman Jr., eviscerates any residual destructive force of the Brooks threshold. Objective evidence of a serious injury - a herniated lumbar disc - was substantiated by an MRI and a positive EMG. The Court also found that the litany of complaints and consequences presented by the plaintiff satisfied the second prong of the Brooks test, a "permanent loss of a bodily function that is substantial."
What is really striking about Knowles is that it mimics the verbal threshold analysis promulgated in Oswin v. Shaw, 129 N.J. 290 (1992), for automobile litigation. While Coleman used Title 59 vocabulary, he looked for and identified objective evidence of a serious injury and then measured the subjective impact on the plaintiff's lifestyle.
There is a bittersweet irony to the use of verbal threshold methodology in Title 59 cases. The Appellate Division opinion in Brooks had recommended that the courts use the verbal threshold analysis in Title 59 cases because of the similarity of the statutes. The appellate judges used the Oswin test in Brooks and concluded that the trial court had erred in dismissing the plaintiff's claim. This proposal was a reasonable solution for deciding cases under the Title 59 threshold because of the extensive case law applying the test. The Supreme Court brushed the suggestion aside, holding that a more stringent standard was required. If only the Court had listened.
The justices have now seen the wisdom of the original formulation recommended by the intermediate appellate court in Brooks without saying so. After six years of grueling litigation, the courts are open for business again in Title 59 cases.
As the strictures on Title 59 have loosened, the courts have simultaneously tightened up the verbal threshold in automobile cases, requiring the plaintiff to prove that the injuries have produced an adverse serious impact on the plaintiff's activities of daily life. James v. Torres, 354 N.J. Super. 586 (App.Div. 2002). The appellate court grafted this requirement onto the threshold in automobile negligence cases even though AICRA does not explicitly provide for it.
If you review every word of the statute, there is not one single mention of making serious impact a part of the new automobile insurance law. As any legislative insider will tell you, the thrust of AICRA was to reduce costs by controlling PIP. The trade-off was to allow for recovery in cases involving permanent injuries that a treating physician would certify to.
In interpreting AICRA to include a serious impact requirement, the Appellate Division ignored a century of jurisprudence instructing courts that when the language of a statute is plain and clearly reveals its meaning, the Court's sole function is to enforce the statute according to its terms. The Supreme Court missed an opportunity to correct this miscarriage of justice when it denied certification in James v. Torres, 175 N.J. 547 (2003).
Now that the courts have come full cycle and are using a verbal threshold analysis to resolve Title 59 cases, plaintiffs' counsel, running to court with the Knowles decision in hand to oppose verbal threshold motions in automobile cases, are arguing that if the "more stringent" Title 59 standard is allowing a plaintiff to proceed to verdict in a herniated disc case, how can you dismiss similar cases under AICRA?
In a brilliant trial court opinion by Judge J.M. Sabatino, Lehr v. Bloom, Superior Court Law Division Mercer County, L-315-02 (June 26, 2003) (unreported), he undertook a comprehensive review of the two different thresholds and concluded that they are functionally equivalent. Noting that the limitation of recovery to permanent injuries in AICRA now makes the statutory requirements virtually identical to Title 59, Sabatino eloquently points out that the conflicting interpretations of the verbal threshold standard is making life difficult for courts that are inundated with summary judgment motions. This effort to synthesize these legal principles into a workable blueprint is a clear signal to the Supreme Court that it is time to grab the bull by the horns and correct the miscarriage of justice that occurred in James.
The New Jersey State Bar Association's Ad Hoc Committee on Arbitration issued a report confirming what trial lawyers already knew: the compulsory arbitrations required by the Rules of Court and the Legislature are a colossal waste of time and resources. Approximately 75 percent of the awards are rejected and the system loses money. A large proportion of the revenue stream that supports the program is the money generated by appeals, so failure fuels the system.
The arbitration programs have their own rigid rules and regulations that require you to appear on the appointed time and place without any real regard for whether or not the case is ready, and most parties simply go through the motions because adjournments are impossible to obtain. Do you think that the overwhelming evidence marshaled by the Ad Hoc Committee will motivate the Court and the Legislature to terminate the program? Of course not; arbitration is here to stay.
The worst feature of the arbitration program is that it has spawned decisions that harm litigants and lawyers. If you fail to file your request for appeal on time, your client is stuck with the result in the absence of "extraordinary circumstances." The client's remedy for this draconian penalty is a malpractice claim against the lawyer.
This flawed system has kept the appellate courts busy refining its definition of extraordinary circumstances to trap busy lawyers with untoward consequences. See Hartsfield v. Fantini, 149 N.J. 611, 619 (1997)(an attorney's mistake cannot give rise to extraordinary circumstances capable of relaxing the 30-day limitations period for filing a demand for trial de novo); Martinelli v. Farm-Rite, Inc., 345 N.J. Super. 306 (App. Div. 2001)(malfunction in computer system does not establish extraordinary circumstance required to extend time for filing of rejection of arbitrator's award); Flagg v. Township of Hazlet, 321 N.J. Super 256 (App. Div. 1999)(delay by governmental entity in getting out the mail on time does not constitute extraordinary circumstances).
This term, our Supreme Court had the opportunity to waste its valuable time reviewing another decision by the lower courts to penalize a lawyer for failing to file a timely appeal of an arbitration award of a contract action. See R. 4:21A-1.
The "bad boy" in Americas Pride Constr. v. Farry, 175 N.J. 60 (2002), did not show up at the arbitration hearing because he believed it would be postponed to allow one of the parties to obtain new counsel. When the arbitration office telephoned the lawyer to tell him that the hearing was going ahead in his absence, he decided not to attend and also to file a request for a trial de novo if necessary. An unfavorable decision was rendered against the missing party, but it was not served on the absentee lawyer.
The first time counsel became aware that the award had been entered was when he received the motion to confirm the award after the 30-day period to file an appeal had elapsed. After the order was entered, the lawyer immediately filed a motion for reconsideration on the grounds that he was unaware of the existence of the award. The lower courts held that the lawyer's lack of diligence and his failure to inquire about the status of the hearing did not constitute extraordinary circumstances, and he was out of luck.
The Supreme Court reversed, holding that the time periods to file a trial de novo do not begin to run until the arbitrator has filed the written award with the civil division manager and the parties receive a copy of it. The procedural history of this case vividly illustrates why the arbitration system has outlived its usefulness. Appellate Division Judge Virginia Long wrote that "the primary function of the law is justice and when a principle of law no longer serves justice, it should be discarded." Parker v. St. Stephen's Urban Dev. Corp., Inc., 243 N.J. Super. 317 (App. Div. 1990).
If the AOC bureaucracy and the Legislature insist on maintaining an ADR system that provides no benefit to the public or the Bar, it should at least abide by the principle of "do no harm." Revise the rule so that a party who misses a deadline to file an appeal can make amends by paying a late fee. The bureaucrats would relish the idea of collecting enhanced fees. This would be an attractive solution to the arbitration bureaucracy, which can put the wasted money to work preserving its dysfunctional system.
When will courts relax the technical requirements of the rules or a statute because of extraordinary circumstances? An attorney's catastrophic illness and death did not move the lower courts to enable a plaintiff to take a dismissal without prejudice for failing to file a technically correct affidavit of merit within the 60-day deadline in a medical malpractice case. Tischler v. Watts, Docket No. A-77, 2003 N.J. LEXIS 858.
After the plaintiff's attorney filed the complaint, she secured an affidavit of merit from a New York physician and served it on defense counsel within a month of the filing of the answer. The expert had previously provided counsel with a C.V. containing an impressive list of credentials, including board certification.
Unbeknownst to the plaintiff's counsel, or her successor, the medical expert had lost his professional license. The plaintiff's counsel sent the expert a proposed affidavit that the expert carefully revised, omitting any reference to the current status of his licensure. The revised document was also defective because it was neither sworn nor certified to.
Approximately four to six weeks later, the plaintiff's counsel was diagnosed with advanced lung cancer and she underwent radiation and chemotherapy treatments. Counsel died about three months later. In the meantime, the critically ill attorney had arranged for an attorney friend to take over her files and the substitutions of attorney were accomplished about 60 days after the attorney's death.
The defendant physician filed an application to dismiss the plaintiff's complaint with prejudice on the grounds that the affidavit was faulty in form and substance. Counsel's attempts to reach the physician and cure the defect in the affidavit were fruitless. After the application was filed, the successor attorney discovered the fraud perpetrated by the medical expert, advised the court of the problem and asked only that he be granted additional time to obtain a new affidavit or that the dismissal be without prejudice.
The trial court and the Appellate Division granted the defendant's application and dismissed the case with prejudice. In a per curiam opinion, the appellate court upheld the dismissal on the grounds that extraordinary circumstances "do not include inadvertent error by an attorney" in failing to recognize the defects in the document.
Fortunately, this was way over the line for the justices, who issued their own per curiam opinion reversing the decision below. The Court had no trouble finding that a party should not be penalized because her attorney was suffering from a debilitating illness that prevented her from discovering and rectifying the problem earlier. The anonymous author of the opinion correctly notes "if there ever were a case in which extraordinary circumstances justified a failure to comply with procedural requirements, this is it."
Mode of Operation
A plaintiff in a supermarket fall-down case has a daunting task proving that a defendant had actual or constructive notice of a dangerous condition. It is impossible to pinpoint the moment when the produce fell on the supermarket floor or to establish how long it was there. The mode-of-operation doctrine was created by the New Jersey Supreme Court to allow plaintiffs to make out a prima facie case where the risk of injury is implicit in the way in which a business is conducted without the traditional proofs on notice. Wollerman v. Grand Union Stores, Inc., 47 N.J. 426 (1966).
The celebrated Mary Wollerman slipped and fell on a string bean on the floor of the vegetable section in the defendant's supermarket and was unable to show how the produce got on the floor or how long it had been there. The omission led the trial court to dismiss the claim at the close of the plaintiff's case and the decision was affirmed on appeal. The Supreme Court formulated the mode-of-operation inference to assist plaintiffs in overcoming this hurdle:
Where a substantial risk of injury is implicit in the manner in which a business is conducted, and on the total scene it is fairly probable that the operator is responsible either in creating the hazard or permitting it to arise or to continue, it would be unjust to saddle the plaintiff with the burden of isolating the precise failure. The situation being peculiarly in the defendant's hands, it is fair to call upon the defendant to explain, if he wishes to avoid an inference by the trier of the facts, that the fault probably was his.
This practical solution allowed plaintiffs to proceed to verdict in cases without proof of notice, as long as a plaintiff could identify the foreign substance that caused the fall as a byproduct of the defendant's self-service business. The inference of notice can be counteracted by a defendant by laying out the routine procedures for inspecting and cleaning the store. Model Jury Charge, 5.24 (b) (11) places the doctrine in context for the decision-makers:
A proprietor of business premises has the duty to provide a reasonably safe place for her customers. If you find that a hazardous condition was likely to arise from the particular manner in which defendant's business was conducted and that defendant's employees probably were responsible either in creating such hazardous condition or permitting it to arise or to continue, defendant is liable to plaintiff if defendant failed to exercise reasonable care to prevent such hazardous condition from arising or failure to exercise reasonable care to discover and correct such hazardous condition. In these circumstances defendant would be liable even if defendant and her employees did not have actual or constructive knowledge of the particular unsafe condition which caused the accident and injury.
The doctrine has worked well and the courts have applied it to a wide variety of fact patterns in different retail environments. See Ryder v. Ocean County Mall, 340 N.J. Super. 504 (App. Div. 2001)(fall on residuals of drinks in a common area of a mall where there is a food court); Craggan v. Ikea, USA, 332 N.J. Super. 52 (App. Div. 2000)(fall on strings in receiving area used to package products in self-service furniture store); and Znoski v. Shop-Rite Supermarkets, Inc., 122 N.J. Super. 243 (App. Div. 1973)(golf bag stacked on display counter strikes plaintiff).
Over 35 years later, Katherine Nisivoccia slipped and fell on a grape in the vicinity of the checkout counter in the defendant's supermarket. Nisivoccia v. Glass Gardens, Inc., 175 N.J. 559 (2003). There was no proof of how the grape got on the floor or how long it had been there.
Testimony at trial revealed that fruit was sold in open bins in the produce section so customers could place their selections in vented plastic bags to transport by shopping cart to the checkout counter. The trial court refused to give the plaintiff the benefit of the mode-of-operation inference because the grape was not on the floor in the produce area and/or in the actual checkout counter area. The plaintiff's case was dismissed at the close of evidence due to the absence of any proof on notice. The decision was affirmed on appeal.
The Supreme Court granted the plaintiff's petition for certification and reversed. The justices believed that the mode-of-operation doctrine applied to the general vicinity around the checkout counters and that the trial court had drawn the boundaries of the area too narrowly. The Court sent their clerks out to observe how real people behave in supermarkets, and judicially noticed that checking out included the handling of the goods by the customer and the employee, and (believe it or not) that grapes can be expected to roll.
The problem with this decision is that for the first time, the location of the fall is identified as a factor to be considered in determining whether or not to apply the mode-of-operation doctrine. The focus in the prior decisions has always been on characteristics of the self-service operation and its potential for creating risk. Justice Virginia Long filed a separate concurring opinion to emphasize that the location of the accident should not be a part of the picture:
Here the 'mode of operation' that created the hazard was the use of open-topped slitted bags to package produce that was likely to fall onto the floor if the bags were handled or if they spilled accidentally anywhere in the supermarket. Thus, the outer limits of the 'checkout' area and the mobility of the grapes are essentially irrelevant. This case no more turns on grapes and the checkout area than Wollerman turned on lettuce and the produce department. Both stand for a principle: that when a substantial risk of injury is inherent in the method of operation of a business, the plaintiff is relieved of coming forward with proof of actual or constructive notice of the dangerous condition.
The Wollerman formulation is a brilliant action plan that has resolved fall down cases for over three decades. It worked in this case as well. After the remand, the case was retried and there was a defense verdict. Verdict Search, Vol. 1 Issue 5 (May 2003). It would be unfortunate if the careless use of language in the majority opinion unsettles the law by injecting geography into the constellation of factors that bear on whether or not the courts apply the mode-of-operation doctrine.
In an era of rapidly escalating costs for liability insurance, tortfeasors frequently do not have adequate coverage. In big cases, the most important question is: What is the coverage?
Plaintiffs are fighting hard to expand the concept of vicarious responsibility to hold deep-pocketed corporations accountable for the negligence of their personnel, while defendants have become increasing sophisticated in designing strategies for distancing themselves from responsibility for the torts associated with their operations.
Under the doctrine of respondeat superior, an entity has legal responsibility for the commission of a tort if a master- servant relationship existed and the negligence occurred in the scope of the servant's employment.
Defining the parameters of the scope of employment in the new global economy has become a challenge for the courts. The Restatement of Agency states that vicarious responsibility lies if the actions of the servant are "of the kind he is employed to perform; it occurs substantially within the authorized time and space limits and it is actuated, at least in part, by a purpose to service the master." The purpose of the formula is "to delineate generally which unauthorized acts of the servant can be charged to the master."
The plaintiff in Carter v. Reynolds, 175 N.J. 402 (2003) was seriously injured in a motor vehicle accident with an employee of a corporate defendant driving home from a business appointment. The driver had a small liability policy, and to obtain reasonable compensation for her injuries, the plaintiff needed to hold the employer responsible.
The company required its employee to use her own vehicle for work and she was reimbursed for mileage and expenses. The defendant was not paid wages for the time spent driving home. The conceptual obstacle in the path to the deep pocket was the established rule that an employee who is going to or coming from his or her place of employment is not considered to be acting within the scope of employment. This principle is derived from the "going and coming" rule in workers' compensation cases that makes commuting accidents noncompensable.
The "Dual Purpose Doctrine" applies the following exceptions: (1) when the employee is engaged in a special errand or mission on the employer's behalf; (2) when the employer requires the employee to drive his or her personal vehicle to work so that the vehicle may be used for work-related tasks; or (3) when the employee is on call. Mannes v. Healey, 306 N.J. Super. 351, 353-354 (App. Div. 1997).
Carter defeated the employer's summary judgment application and prevailed on appeal by persuading the lower courts that the required vehicle exception applied. Carter, 345 N.J. Super. 67, 77 (2001) The Supreme Court granted leave to appeal.
The Court agreed with the lower courts that the required vehicle exception applied because the employee was required to use her vehicle for approximately one-third of her work hours visiting with clients and was returning from a customer call when the accident occurred.
Long's majority opinion was careful to emphasize that ordinary commuting is beyond the scope of employment. Justice Jaynee LaVecchia cautioned in her concurring opinion that the decision "should not stand for the proposition that every invocation of the required vehicle exception shall subject an employer to liability for an automobile accident occurring during an employee's commutation." The Court rejected the plaintiff's argument that she was on a "special mission" because she was not performing an act outside the ordinary confines of her job description at the behest of the employer.
The justices set limits to the liberal application of agency principles in O'Toole v. Carr, 175 N.J. 421 (2003), where a plaintiff attempted to hold a law firm liable for a motor vehicle accident involving one of the partners on his way to municipal court where he served as a part-time judge. The lawyer had only $100,000 in liability coverage, but the firm had a policy with $1 million limits. The lawyer's car lease was paid for from proceeds from his earnings, but it was not under the firm name. None of the income from the governmental position went into the law firm corporate accounts.
The motion judge bucked precedent and imposed vicarious liability on the law firm "because there is a sufficient nexus and a sufficient benefit to that firm from that activity which inures to the benefit of all partners in that firm." The Appellate Division opinion refused to condone the trial court's mad dash over the conventional boundaries of the law after finding that agency did not exist because the commutation to the judgeship did not serve any purpose of the law firm and the driver was not on a special errand or mission involving firm business. The court noted that "Canon 2 instructs that a judge should not lend the prestige of office to advance the private interests of others."
The Supreme Court rebuffed the appellant's petition to adopt the "enterprise theory of liability," promulgated by the California courts, which uses a broader test that "inquires whether in the context of the particular enterprise, the employee's conduct was so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer's business." Henderson v. Adia Servs. Inc., 227 Cal. Rptr. 745, 747-48 (1986).
The vast expanse of the enterprise theory of liability is reflected in Potter v. Shaw, No. 991255, 2001 WL 914203 at *3 (Mass. Super. May 29, 2001)(applying California law), where the employer was found liable for the negligence of its employees who were involved in a car accident while sightseeing on a day off during a business trip. The California court found that sightseeing was not so unusual or startling that it would be unfair to include the accident among the other costs of the master's business. The broad reach of the California doctrine was beyond the pale for our High Court.
Protection of Children
The New Jersey Supreme Court is totally committed to protecting the health and safety of students in the public schools system, and in Frugis v. Bracigliano, Docket No. A-156, 2003 N.J. LEXIS 860, the justices issued a clarion call to school boards to implement whatever procedures are required to protect children from sexual abuse.
The plaintiffs were two elementary school students who were subjected to physical and emotional abuse from the principal, who engaged in a pattern of abusive behavior with many other students that was never properly addressed by school officials. Although the telltale signs of a problem were evident to school employees, no formal investigations were undertaken, and no preventative precautions were taken.
The complaint included intentional tort counts against the principal, but he failed to file an answer and a default judgment was entered. The plaintiffs sought compensation for psychiatric injuries caused by the abuse due to the failure of the Board of Education and its administrators to properly supervise the principal. The trial judge directed a verdict against the school board and refused the defendant's request to require the jury to apportion fault with the criminal who abused the plaintiffs. The jury returned significant money damage awards against the board.
The Appellate Division reversed the judgments, holding that the trial court erred in directing a verdict against the board and for failing to allow the jury to apportion the verdict between the tortfeasors. 351 N.J. Super. at 351.
The Supreme Court reinstated the verdicts against the board but remanded for a new trial on the issue of apportionment with the principal. The Court found the evidence of negligence against the board to be overwhelming. The justices were clearly unhappy with the prospect of allowing a fact-finder to reduce the responsibility of the public entity with their finger pointing at their employee, but their hands were tied by N.J.S.A. 59:9-3.1, which requires apportionment amongst parties in tort claims cases.
To ensure that the next jury understands the heightened duty of care that schools have for the safety of students, the justices specifically outlined the content of the jury charge:
Does anyone have any doubt about the direction the jury will head after receiving their marching orders? Due to the use of "such powerful instructions" and "their potential of creating prejudice to school boards," the Court directed that the case be trifurcated, with an initial determination of fault, a second decision on damages and then a final decision on apportionment.
One wonders why anyone would counsel the defendant school board to try this case in the first place and then proceed to present it to this Supreme Court on appeal. Has the defendant ever heard about settlement? That is an option when you make a mistake or harm someone. The facts are a stain on the district, and the published decision will now make events a permanent part of legal history. The only greater folly would be to try it again.
The trial court refused to allow the plaintiffs to proceed with a claim for lost earnings because there was no proof of the probability of a loss.
While the courts allow flexibility to present a claim for loss of future earnings in profoundly injured young children, more is required when the plaintiffs appear as parties, as these two did at age 18. Both students went on to higher education and showed great signs of future promise. The Supreme Court agreed with the trial court that a few lines of testimony from the forensic psychiatrist about the likely impact of the injury on future vocations was insufficient to present the claim to a jury.
Equity - The Discovery Doctrine
Medical malpractice cases are the most difficult ones for plaintiffs' counsel to prepare. Experts have to review voluminous records and execute affidavits of merit before the cases swing into gear. The conduct of every actor in a complicated multi party case may not be evaluated before the statute of limitations runs.
Sophisticated defense counsel exploit this weakness by constructing empty-chair defenses or filing third-party complaints against new physicians after a plaintiff is foreclosed from doing so by the limitations period. In Mancuso v. Neckles ex rel. Neckles, 163 N.J. 26 (2000), and Gallagher v. Burdette-Tomlin Mem. Hosp., 163 N.J. 38 (2000), the Supreme Court extended the discovery doctrine to toll the statute of limitations against physicians whose culpability is established by expert opinion after the lawsuit is filed.
In Mancuso and Gallagher the claims against the new physicians were put into play by defendants in active cases where the statute of limitations for the plaintiffs had elapsed. The new defendants' passionate arguments that the plaintiffs had an adequate opportunity to investigate the claims long before the statute elapsed were not persuasive to the Supreme Court, which did not want to leave plaintiffs vulnerable to losing a case because their lawyers had been outmaneuvered.
As long as a plaintiff could demonstrate that he had made reasonable efforts to have experts review the matter and that there was no prejudice to the new defendant, he would be permitted to proceed.
By a bare 4-3 majority, Guichardo v. Philip Rubinfeld, M.D. et als, 177 N.J. 45 (2003), beams the discovery doctrine to the farthest reaches of the universe by tolling the statute of limitations until the plaintiff obtains an affirmative expert report on the new defendant after the lawsuit is filed and the statute of limitations has elapsed.
The plaintiff was rendered a quadriplegic from complications of surgery in September of 1992. As problems developed, the plaintiff was hospitalized again a couple of weeks later under the care of a different physician. The surgeon from the first hospitalization later told the patient during her second admission that no one had done anything wrong, but he wished that he had been called earlier because "things would have been done a lot faster."
Plaintiff's counsel obtained the first expert report in August of 1994, which identified the physicians involved in the first surgery as the culpable ones. Suit was filed against these defendants in September of 1994. Plaintiff's counsel consulted with two other experts in December of 1994 and April of 1995 about whether or not the subsequent treating physicians committed malpractice and received negative opinions.
The plaintiff went to the well again in July of 1995 for a fourth expert, who gave her an affirmative opinion about the subsequent treating physician. The plaintiff amended her complaint in March of 1996 to include the new physician almost three and a half years after the surgery. The trial court would not apply the discovery rule and granted the new defendant's summary judgment in 1997 because the claim was time barred. One of the original defendants then brought a third-party complaint against the subsequent treating physician.
After Mancuso and Gallagher were decided by the Supreme Court, the plaintiff filed an application in the trial court for reconsideration of the 1997 ruling, and the order was vacated. Using the framework provided by the new cases, the trial court held that the plaintiff did not become aware of her cause of action until she received the opinion from the fourth expert and that her reliance on the other experts' negative opinions was reasonable.
The Appellate Division granted leave to appeal and decided that the discovery doctrine did not save the plaintiff's case because she had sufficient knowledge of facts inculpating the defendant from her conversation with her treating surgeon during the second hospitalization. The Supreme Court granted the plaintiff's application for leave to appeal and reversed.
The majority believed that the facts of this case came within a "sub-category" of the "knowledge of fault" cases, "which included actions brought by plaintiffs who know they have been injured and that the injury was the fault of another, but do not know that a third party was also responsible for their plight." In this scenario "the accrual clock does not begin ticking against