Step Down Law Changes

Governor Jon S. Corzine has signed a bill, supported by both the New Jersey State Bar Association and the Association of Trial Lawyers of America-New Jersey, banning “step-down” clauses in commercial auto insurance policies. The clauses, in effect sanctioned by the New Jersey Supreme Court’s 2005 decision Pinto v. New Jersey Manufacturers Insurance Co., said drivers not specifically listed in a commercial policy would be limited to the uninsured and under-insured motorist benefits in their personal policies, not the policy of the company for which they were driving. The practice was argued as unfair to both the business paying premiums for full coverage and to new employees who, through no fault of their own, weren’t listed on the policy. The bill, S-1666, was passed unanimously by both houses of the legislature and was sponsored by Senator Nicholas P. Scutari (D-Union), a trial lawyer whose practice includes personal injury.

Failure to Preserve Evidence may increase exposure in workplace injury cases

Upon the occurrence of a workplace injury involving industrial machinery or equipment, it is often the case that an employee will sue the manufacturer of the machine as a companion to his/her Workers’ Compensation petition. At the same time, the employer might seek to effectuate changes in order to make the culpable machine safer for employee operation. However, before any such changes are made, careful consideration must be given to the potential for a claim for “spoliation evidence” against the employer. This can have significant consequences either in connection with pending litigation against an employer or to the extent that it may give rise to an independent cause of action in tort. The following provides a brief summary of the state of the law in this area, along with some general guidelines which may prove useful in reducing liability exposure.

In Gilleski v. Community Medical Center, 336 N.J.Super. 646 (App. Div. 2001), the plaintiff sustained injuries while in a hospital x-ray room when a chair collapsed. After the accident, the defendant-hospital disposed of the chair to the detriment of the plaintiff’s claim against the manufacturer. However, it was found by the court that there was no duty to preserve evidence. The record was clear that the defendant did not accept responsibility for the evidence with knowledge of a potential or pending lawsuit. While hospital staff received calls from the plaintiff complaining of the incident, there was no request that the chair be preserved, nor was there any indication that a lawsuit was forthcoming against the hospital or the manufacturer of the chair. The defendant did not receive notice of a potential suit until fourteen months after the incident occurred, when it received a letter from the plaintiff’s attorney. However, no mention was made of a potential claim against the manufacturer of the chair, nor did the attorney request that the defendant preserve the chair for purposes of a third-party action. Accordingly, the court determined that no liability for the chair’s disposal should attach.

Similarly, in Allis Chalmers Corporation Product Liability Trust v. Liberty Mutual Insurance Company, 305 N.J.Super. 550 (App. Div. 1997), an employee was killed on the job while operating a forklift. The decedent’s wife subsequently instituted a Workers’ Compensation petition along with a products liability action against the manufacturer of the forklift. At the outset , the Workers’ Compensation carrier along with the plaintiff’s products liability counsel agreed to split the cost of inspecting the forklift. Thereafter, the employer offered to sell the forklift to the Workers’ Compensation carrier to preserve it for the pending lawsuit. The employer further advised that if the forklift was not purchased, it would be “scrapped.” The Workers’ Compensation carrier refused to purchase the forklift and did not advise the employer to preserve the forklift. Following settlement of the products liability action, the manufacturer of the forklift brought an action against the Workers’ Compensation carrier for spoliation of evidence under both fraudulent concealment and negligence theories. The carrier successfully moved for summary judgment, with the court declining to impose a duty on the carrier to affirmatively obtain ownership and control of the forklift for the defense of the manufacturer.

Conversely, in Callahan v. Stanley Works, 306 N.J.Super. 488, 498 (Law Div. 1997) the plaintiff, a Home Depot employee, was injured while moving a pallet of storm doors with a forklift truck. The doors tipped off the forklift and struck the plaintiff. Immediately after the accident, Home Depot voluntarily took steps to preserve the pallet in connection with investigating the inevitable Workers’ Compensation claim. However, at some point, the pallet was destroyed. The plaintiff subsequently sued the distributor of the doors and added Home Depot to the lawsuit, claiming that it lost or destroyed the pallet which was the “instrument of the injury.” In light of the fact that Home Depot attempted to preserve the pallet and also asserted a lien on any damages recovered by the plaintiff in the third-party action, the court concluded that there was a duty to preserve the evidence, and reasoned that “a jury could find that Home Depot should have foreseen that the evidence was material to a potential civil action.”

Conclusions: Practical Applications

Where an employer makes post-accident modifications/repairs, absent knowledge of an impending suit concerning a given piece of machinery or an agreement to preserve the same, a claim for negligent spoliation should not be feared. Consequently, it becomes of great importance to document when any modifications/repairs are made in comparison to when notice of suit is received. Additionally, it is ill-advised to enter into any agreement wherein an employer promises to preserve a given piece of evidence for purposes of contemplated or pending litigation. Equally important, upon receipt of a request to preserve evidence from a prospective litigant whether it be a plaintiff or defendant, an employer should promptly reply in writing that it takes no responsibility for evidence preservation so as to obviate any potential claim that the employer’s silence equated to acquiescence to the request. Finally, upon receipt of a formal or informal notice that a lawsuit is forthcoming, it is best to forward written notice to all potential litigants prior to making any modifications/repairs and affording an opportunity to inspect the implicated machinery in the presence of counsel.

Contributed by: Jared DuVoisin and Joseph K. Cobuzio

Death benefits applicable to pending cases

In Cruz v. Central Jersey Landscaping, Inc., decided by the New Jersey Appellate Division on May 14, 2007, the majority found that amendments to N.J.S.A. 34:15-13 (which went into law effective January 14, 2004 setting a uniform 70% of the decedent’s wages as the death benefit amount in dependency cases regardless of the number of dependents) applied to pending workers’ compensation cases including claims where the worker’s death was prior to January 14, 2004.

New case law on Temporary Disability benefits

On March 30, 2007 the Appellate Division decided Ventura v. Reliable Wood Products, A-4554-05T1 (Mar. 30, 2007)(Not Approved for Publication). The cases presented a novel issue: an undocumented worker alleged that his daily weekly wages were $500 per week. The employer alleged that his wage was $6.15 per hour.

On November 22, 2005, the very first day he worked for the respondent, the claimant was injured (his right foot was amputated). The petitioner was loitering in the Bravo Supermarket parking lot in Orange, looking for work when he was approached by three employee of Reliable. The claimant reported to work at the Reliable premises.

According to the petitioner, he was to be paid “$100 per day” to cut wood with a power saw. According to the employer’s representative, the claimant was told (in the Supermarket parking lot) to get into a van. The claimant was allegedly told that he would find out his daily wage when he got to the worksite.

The Judge of Compensation found the issue to be “primarily one of credibility.” Finding that the respondent’s witnesses were “less than credible” due to conflicting testimony, the Judge found that the wage was $100 per day.

The decision of the Judge of Compensation was upheld by the Appellate Division. In light of the fact that the employer was unable to produce documentation of the wage to be paid, and in light of the lack of credibility of the respondent’s witnesses, the Appellate Division gave credit to the decision of the judge of compensation who was able to gauge the demeanor of the witnesses.

Jurisdiction of claims

On April 11, 2007 in Kibler v. Roxbury Bd. of Educ., the New Jersey Appellate Division affirmed the decision of a Superior Court trial judge, holding that a plaintiff injured at work as a result of an altercation between two students was barred from pursuing a civil action for damages against the students. The appellate court held that there was no “genuine issue of material fact” as to whether the teacher’s injuries came within the purview of conditions the New Jersey Legislature intended to exempt from the exclusive remedy provisions of Workers’ Compensation Act. The plaintiff’s exclusive remedy is with the Division of Workers’ Compensation for her work-related accident

Defending Employers