N.J. Top Court Upholds $861K Award for Worker with Crushed, Amputated Foot

Newark, NJ (WorkersCompensation.com) -- When workers sue someone after getting hurt on the job, tricky legal questions sometimes pop up, particularly if it's unclear who employed whom in a negligence context.

Such was the case in Pantano v. New York Shipping Association, 2023 WL 3805911 (N.J. 06/05/23), where the Supreme Court of New Jersey ultimately decided that state law allowed the jury to decide that the "borrowed employee" doctrine did not apply and that a worker was due $861,000 after his foot was crushed and subsequently amputated after an accident on the job.

A mechanic was injured at work while attempting to move a heavy piece of industrial equipment called a "genset," which the mechanic had knocked on its side. Another worker tried to help the mechanic get the genset back into position with a forklift. In the process, a chain slipped, causing the genset to crush the mechanic's left foot. After several unsuccessful surgeries, the mechanic's left was amputated.

The mechanic collected workers' compensation benefits, and he and his wife also brought a personal injury lawsuit against a company that was related to the mechanic's employer, owned by the same owner, and jointly leased and occupied a large shipping yard with the mechanic's owner. The legal theory that the mechanic and his wife pursued was that this company employed the other worker and, therefore, it was vicariously liable for the other worker's negligence.

The company argued that it was not the other worker's employer and so was not vicariously liable. Instead, the company argued that the other worker was a "borrowed servant" or "special employee" working for the mechanic's employer at the time of the accident.

Following a trial, the judge vacated the jury's verdict and ruled in the company's favor. On appeal, the Appellate Division reversed and reinstated the jury verdict, which awarded the mechanic damages for pain and suffering, lost wages, and loss of consortium to the tune of $861,000.

In short, the appeals court ruled there was enough evidence for a jury to have found that the company retained sufficient control of the other worker especially because the company paid for the other worker's forklift training after the accident. 

The company appealed to the Supreme Court of New Jersey, which identified the issue in the case as whether an employer's vicarious liability under the borrowed-employee doctrine is a question of law to be decided by the court or, conversely, a question of fact reserved for the jury.

Workers' Comp 101: In Galvao v. G.R. Robert Const. Co., 846 A.2d 1215 (N.J. 2004), the Supreme Court of New Jersey adopted a two-part test for determining whether a general employer may be held liable for the alleged negligence of its special employee loaned to a special employer. Under the "Galvao test," the first inquiry is whether the general employer controlled the special employee. The court described "control" as "the right to direct the manner in which the business shall be done, as well as the result to be accomplished, or in other words, not only what shall be done, but how it shall be done.” If the employer did not exercise this level of control, the second inquiry kicks in. Under part 2, the question is whether the special employee furthered the business of the general employer, which happens if the work being done by the special employee is within the general contemplation of the general employer.

Under New Jersey law, an employer is generally responsible for harm suffered by third parties through any negligent work-related acts of its employees. In some situations, an employer, known as a “general employer,” loans one of its workers to another employer, known as a “special employer,” for defined tasks or purposes. When such arrangements are created and the loaned or “borrowed” worker negligently injures someone, questions arise regarding whether the general employer is vicariously liable for that negligence, whether the special employer is liable, or whether both employers are liable.

In the mechanic's case, the Supreme Court of New Jersey found that history indicated that "a jury, not a judge, presumptively must evaluate whether a negligent worker who causes an accident was or wasn't a 'borrowed employee' of the special employer."

Why? Old, but good, law supported such a conclusion, as follows:

(1) Pederson v. Edward Shoe Corp., 104 N.J.L. 566 (N.J. 1928) -- A jury, rather than a judge, properly decided the question of whether a coal delivery boy who caused an accident to a passerby when delivering coal to a shoe cobbler's shop “lost his identity” as the coal company's worker and became a borrowed employee and agent of the cobbler. 

(2) Younkers v. Ocean County, 130 N.J.L. 607 (N.J. 1943) -- When there are “conflicting inferences” that could be drawn from the evidence about whether a worker had the status of a borrowed employee, “submitting the case to the jury was correct.”

(3) Larocca v. American Chain & Cable, 13 N.J. 1 (N.J. 1953) -- When “the posture of the evidence” made the employment relationship “not determinable as a matter of law,” the trial court “should have submitted [the] question to the jury.”

(4) Gibilterra v. Rosemawr Homes, Inc., 19 N.J. 166 (N.J. 1955) -- The borrowed-employee question “is a question for jury determination on the proofs.”

"This pre-Galvao tradition of presumptively deeming borrowed-employee disputes as questions of fact for a jury makes sense," the court wrote. "Factual disputes about control and business advantage can readily turn on the assessment of the credibility of competing witnesses. Juries are well-suited to making those assessments, as they are for a host of other factual disputes entrusted to them at trial."

Thus, the Supreme Court of New Jersey upheld the judgment of the Appellate Division, and awarded final judgment in favor of the mechanic.

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