Employer faces trial over indemnity, intentional tort claims

Although employers are generally immune from liability suits by injured employees, many states allow exceptions based on contractual indemnification agreements, or based on the intentional nature of the employer's conduct.

Case name: Stamp Tech, Inc. v. Lydall/Thermal Acoustical, Inc., No. 2007-494 (Vt. 09/04/09).

Ruling: In a 3-2 split decision, the Vermont Supreme Court ruled that an injured worker could proceed with his lawsuit against his employer on both his indemnification and intentional tort claims. The court sent the case back to the lower court for a trial.

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What it means: Although employers are generally immune from liability suits by injured employees, many states allow exceptions based on contractual indemnification agreements, or based on the intentional nature of the employer's conduct. Factual disputes regarding fault for the accident and the scope of the indemnity agreement may prevent the employer from avoiding a trial on these claims.

Summary: A manufacturer hired a company to install soft safety guards on a press machine. A worker later crushed his arm while using the press. The manufacturer said the accident was the worker's fault because he had removed hard guards from the press. The worker sued the installer for his injuries and settled for a stipulated judgment of $750,000. The worker asserted that he could collect the judgment from his employer because its contract with the installer contained an indemnification agreement. The employer objected, arguing that the judgment was collusive because the installer had a complete defense to the suit: that the worker had caused the accident by removing the hard guards. The trial court said the judgment was collusive and dismissed the case. The Vermont Supreme Court reversed, noting there were too many facts in dispute to resolve without a trial.

First, there was a dispute as to whether hard guards had been installed on the press and, if so, who had removed them. Another question was whether the installer had properly installed its soft guards. A third was whether the settlement between the worker and the installer was in good faith. The court sent the case back for a trial.

The employee also asserted an intentional tort claim against the manufacturer. He accused it of removing the hard guards, making his use of the press "certain to result in injury." Traditionally, Vermont has required evidence of an employer's specific intent to injure a worker to avoid the workers' compensation exclusive remedy bar. More recently, the court has considered the more lenient "substantial certainty" standard. This exception holds employers liable if they engage in conduct "with knowledge that it is substantially certain to cause injury or death."

The court concluded there were factual disputes regarding both theories of liability and sent this claim back for trial as well.

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October 19, 2009

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