By: Jeffrey S. Bell, Esq. and Andrew W. Miller, Esq.
In an opinion approved for publication on August 10, 2015, the Appellate Division in Estate of D’Avila v. Hugo Neu Schnitzer East (A-4439-11T2, A-4705-11T2, A-4713-11T2) held that under certain circumstances involving both a Workers’ Compensation bar and contractual indemnification claims against the plaintiff’s employer, extensive and complex claims among many parties, and an unusually lengthy trial, it is appropriate to try both liability and indemnification issues simultaneously before a jury, and to permit the employer’s counsel to participate in all aspects of the trial. However, the jury must be carefully charged and the verdict sheet must contain certain safeguards, as explained by the court at length.
Plaintiff’s decedent, an employee of a subcontractor on a construction site involving installation of a 700-foot metal shredder at Defendant Hugo Neu’s property, was struck on the head by an unsecured metal ladder and became paralyzed. During the course of his ensuing hospitalization, the decedent allegedly received negligent medical treatment resulting in oxygen deprivation, causing him brain damage. He passed away three years later.
During the course of Trial, which included contractual indemnification claims against the decedent’s employer, the trial court permitted counsel for the decedent’s employer to present evidence and arguments at trial, but due to the exclusive remedy provision within the Workers’ Compensation statute, N.J.S.A. 34:15-8, the court did not allow the jury to consider allocating any percentage of fault to the employer on the verdict sheet. The resulting multi-million-dollar verdict was allocated between the owner, the installation contractor, and one of the defendant medical providers. Among the issues presented on appeal was the question of “whether, and to what extent, an injured worker’s employer may participate in a jury trial of an underlying tort action, in a situation where the factual determinations could trigger the employer’s duty to indemnify a defendant in the tort case.”
In analyzing this issue, the Appellate Division first noted that the Workers’ Compensation Act (“WCA”), N.J.S.A. 34:15-1 to -142, “represents the bargain that was struck between employers and employees concerning workplace injuries, whereby employers shoulder the expense of workers’ injuries arising out of the performance of work duties.” Basil v. Wolf, 193 N.J. 38, 53 (2007). As part of this “bargain,” the WCA directs that an employee, or an employee’s surviving relatives, may not sue an employer for negligence that caused injury or death to the employee; Workers’ Compensation is the exclusive remedy absent proof of an intentional wrong. However, case law establishes that the WCA does not preclude an injured employee from pursuing claims against third-party tortfeasors.
Consistent with the WCA’s exclusive-remedy regime, the defendants in this matter were precluded from seeking contribution from the decedent’s employer under the Joint Tortfeasors Contribution Law because the employer could not, by virtue of the WCA, be a “joint tortfeasor,” and therefore a jury could not be asked to apportion fault to the decedent’s employer even though that may seem like “a more equitable manner of presenting th[e] matter to the jury.” Jarrett v. Duncan Thecker Assocs., 175 N.J. Super. 109, 115 (Law Div. 1980). However:
[I]ndemnification of a third party by an employer pursuant to an express contract does not disturb the delicate balance struck by the Legislature in the WCA. Nothing in the WCA precludes an employer from assuming a contractual duty to indemnify a third party through an express agreement.
Accordingly, it was permissible for Hugo Neu, the site owner, to seek indemnification from the decedent’s employer pursuant to their contract. However, the Appellate Division noted that the reported cases had not been unanimous as to whether the employer should be permitted to participate in the jury trial and, if so, whether and how the employer’s negligence should be addressed in the jury charge and in the verdict sheet.
After examining various potential approaches, the Court concluded that the best practice in a context involving complex and extensive claims and an unusually lengthy trial was to try the negligence and contractual indemnification issues simultaneously before the jury. After presentation of evidence, the judge should then issue carefully-crafted jury instructions addressing the critical factual issues for decision by the jury. The verdict form will likewise have to be carefully crafted so that the jury addresses the question of the employer’s potential fault only when absolutely necessary. “For example, the jury must be instructed that they should only consider the employer’s negligence if they first determine that the conduct of the defendant seeking indemnity is not the sole cause of the accident.” However, the Appellate Division was careful to note that the jury should not receive an “ultimate outcome” instruction divulging that the plaintiff cannot recover any damages from the employer, as this would likely lead to confusion and speculation on the part of jurors.
After the verdict is issued, the trial judge is to mold it so that the plaintiff’s damages are not reduced by the employer’s percentage share of fault, if any, but instead the non-employer defendants bear the full measure of liability to the plaintiff. “Thus, for example, if the jury finds defendant ‘A’ 60% at fault, another defendant ‘B’ 20% at fault, and the plaintiff’s employer, defendant ‘C,” 20% at fault, with no comparative fault accorded to plaintiff, the employer’s 20% share must be divided among the other defendants in a molded judgment that assigns a 75% share to defendant ‘A’ and 25% to defendant ‘B.’”
The court then made some closing observations. First, this holding is limited to the participation of counsel representing the parties on contractual indemnification issues, but does not apply to insurance issues or coverage counsel. Second, parties are free to stipulation to a different process, provided that the trial judge in his or her discretion finds such a proposed alternative sensible. Finally, the court noted that “the need for a combined tort/contractual indemnification trial may prove to be infrequent” due to motion practice and settlement with some parties, but expressed hope that “the direction that we have provided here will be useful in those future situations when they do arise.”
Overall, in this decision, the Appellate Division provided much-needed clarity and certainty in how claims of this sort will be handled by trial courts. This guidance will permit employers involved in such cases to more confidently assess their ability to control the presentation of evidence at Trial; will allow third parties bringing contractual indemnification claims against employers to more predictably determine how a finding of liability will be molded by the court after a verdict is rendered.
 Jeffrey S. Bell, Esq. is a Shareholder in GRSLB&G’s Litigation Department. He defends a wide variety of clients in various civil actions brought forth in New Jersey State and Federal Courts. Jeff can be reached at firstname.lastname@example.org.
 Andrew W. Miller, Esq. is an Associate in GRSLB&G’s Litigation Department. He defends a wide variety of clients in various civil actions brought forth in New Jersey State and Federal Courts. Drew can be reached at email@example.com