Stephenson v. R.A. Jones & Co., Inc.

• Decision Date: 08 July 1986
• Citation: 103 N.J. 194,510 A.2d 1161
• Parties: Rocky Lee STEPHENSON, Plaintiff-Respondent, v. R.A. JONES & CO., INC., a foreign corporation, Defendant and Third-Party Plaintiff-Appellant, v. SUNSHINE BISCUITS, INC., Third-Party Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 194

103 N.J. 194

510 A.2d 1161

Rocky Lee STEPHENSON, Plaintiff-Respondent, v. R.A. JONES & CO., INC., a foreign corporation, Defendant and Third-Party Plaintiff-Appellant, v. SUNSHINE BISCUITS, INC., Third-Party Defendant-Respondent.

Supreme Court of New Jersey.

Argued Nov. 18, 1985.

Decided July 8, 1986.

Richard A. Tanner, for defendant and third-party plaintiff-appellant (Haggerty & Donohue, attorneys).

Clarkson S. Fisher, Jr., for third-party defendant-respondent Sunshine Biscuits, Inc. (Evans, Koelzer, Osborne & Kreizman, attorneys).

Benjamin D. Leibowitz, for plaintiff-respondent Rocky Lee Stephenson (Baer and Arbeiter, attorneys).

Frank L. Bate, submitted a brief on behalf of amicus curiae, Packaging Machinery Mfrs. Institute (Shanley & Fisher, attorneys).

The opinion of the Court was delivered by

POLLOCK, J.

Like the companion case, Ramos v. Browning-Ferris Industries, Inc. of South Jersey, Inc., 103 N.J. 177, 510 A.2d 1152 (1986), this case requires us to consider the interaction between the exclusive-remedy provisions of the Workers' Compensation Act and an employer's liability to a third-party tortfeasor for injuries to an employee.

Plaintiff, Rocky Lee Stephenson (now O'Briant), was seriously injured in the course of her employment with Sunshine Biscuits, Inc. (Sunshine), while operating a cartoning machine manufactured by R.A. Jones & Co., Inc. (Jones). She recovered workers' compensation against Sunshine and instituted this suit against Jones. Jones answered the complaint and filed a third-party complaint against Sunshine, seeking contribution or implied indemnification. The Law Division granted Sunshine's motion for summary judgment dismissing the third-party complaint, and the Appellate Division affirmed in an unreported opinion.

We granted certification, 101 N.J. 238, 501 A.2d 914 (1985), and now affirm the judgment of the Appellate Division.

For the reasons set forth in Ramos, we find that Jones has no claim for contribution or indemnity against Sunshine that can override the exclusive-remedy provision of the Workers' Compensation Act.

"I-

In 1970, Jones manufactured and sold to Sunshine several cartoners, machines that fold and assemble pre-cut cardboard into boxes, while also loading the boxes with food products. Sunshine purchased the subject cartoner for use in its Dayton, Ohio plant, and in 1973 moved the cartoner to its plant in Sayreville, New Jersey.

In 1974, after receiving reports of injuries caused by the rotating flap-separator pin on the cartoner, Jones immediately designed a guard called a ball-detent unit. By December 1974, Jones wrote letters to all cartoner owners advising them of the prior accidents and that it would send them the new guard. Jones sent twelve guards to Sunshine, including three for the machines in Sayreville, but made no other efforts at that time to ensure that the guards were installed. Although Jones offered evidence of shipment of the guards to the Sayreville plant, it could not prove that Sunshine received them. Sunshine installed the new guards at its other plants, but not at its Sayreville plant.

Between 1974 and 1980, Jones's representative made regular maintenance visits to the Sayreville plant. It was not until May 1980, however, that a Jones representative noticed that the ball-detent units had not been installed. Although Jones promptly wrote a letter urging Sunshine to install the guards, Jones did not itself offer to install them. At no time did Sunshine deny Jones access to the plant or prevent Jones from installing the guards.

In July 1980, O'Briant, who was wearing an elastic bandage for a wrist sprain she sustained when she slipped earlier in the day, was working with the cartoner. The cartoner jammed, and O'Briant's bandage became caught in the machine. Her hand was drawn into the machine and severely injured.

After recovering a workers' compensation award, O'Briant sued Jones for negligence, strict liability, and breach of warranty. Jones filed a third-party complaint against Sunshine and its workers' compensation carrier, Continental Insurance Company, for contribution or implied indemnity based on Sunshine's persistent failure to install the guards. Relying on the exclusive-remedy provisions of the workers' compensation law, Sunshine moved to dismiss the third-party complaint. The trial court granted Sunshine's motion for summary judgment, and Jones dismissed the claim against Continental.

O'Briant's claim against Jones proceeded to trial, and the court ruled as a matter of law that Jones had a duty to install the ball detent unit, that it had breached its duty, and that the breach was a proximate cause of the accident. Jones has not challenged that ruling on appeal. See Michalko v. Cooke Color & Chemical Corp., 91 N.J. 386, 400, 451 A.2d 179 (1982) (machine builder cannot escape liability by relying on owner-employer to install safety devices).

The jury awarded O'Briant damages of $100,000. At Jones's request, the court then submitted a special interrogatory to the jury asking it to apportion the relative negligence of Jones and Sunshine under the Comparative Negligence Act, N.J.S.A. 2A:15-5.1 to -5.3. The jury found that Jones was 5 percent negligent and Sunshine 95 percent negligent.

In an unpublished opinion, the Appellate Division affirmed the trial court's denial of contribution or indemnification. The court found that the exclusive-remedy provisions of the Workers' Compensation Act barred Jones's demand for contribution. Furthermore, the court found no special relationship existed between Jones and Sunshine, and that even if such a relationship existed, Jones, which had been found to be at fault, was not entitled to indemnification. The Appellate Division also rejected Jones's contention, which was not raised before the Law Division, that the failure to grant contribution or indemnification would constitute a violation of substantive due process. See Arcell v. Ashland Chem. Co., Inc., 152 N.J.Super. 471, 378 A.2d 53 (Law Div.1977).

"II-

As explained in Ramos, supra, 103 N.J. at 183-185, 510 A.2d 1155, an employer is not liable in tort to an injured employee and cannot be considered a joint tortfeasor. Therefore, Sunshine is not obligated to Jones under the Joint Tortfeasors Contribution Law, N.J.S.A. 2A:53A-3, or the Comparative Negligence Act, N.J.S.A. 2A:15-5.3.

Recognizing that Sunshine had not expressly agreed to indemnify it, Jones limits its claim to one for implied indemnification. This claim likewise fails both because the jury found Jones to be at fault, albeit only to the extent of 5%, and because Jones's relationship to Sunshine as a vendor will not support a claim for implied indemnity. See Ramos, supra, 103 N.J. at 188-191, 510 A.2d 1158-1159. Given the jury's finding that Jones's negligence is less than that of Sunshine, the effect of the legislative scheme may seem harsh. But we cannot distinguish in principle between a third-party tortfeasor that is 5 percent negligent and one that is 95 percent negligent. In both instances, the tortfeasor is liable in tort to the injured worker because of his wrongful conduct. By comparison, the Workers' Compensation Act provides the exclusive remedy against an employer whose concurring negligence contributes to the injury of an employee. To permit the third-party tortfeasor to recover indemnification from the employer would subvert the immunity granted to the employer by the Act. Ramos, supra, 103 N.J. at 189-190, 510 A.2d 1158-1159.

The dissent concludes that Jones's claim for indemnification from Sunshine should not have been dismissed as a matter of law, but should have been submitted to the jury. In reaching that conclusion, the dissent proceeds from a flawed analysis of the facts and law. The factual predicate of the dissent is the characterization of Sunshine as an employer that persistently frustrated Jones's efforts to correct the defects in its cartoner 103 N.J. 201, 510 A.2d 1164. Nothing in the record justifies that characterization. Assuming that Jones sent the unit to the Sayreville plant, Sunshine's failure to install the unit does not bespeak frustration of Jones's efforts to correct the defects in its machines. It may bespeak negligence on the part of Sunshine, but that is the kind of conduct that is immunized by the Workers' Compensation Act.

The flaw in the dissent's legal analysis is the notion that even a manufacturer that is primarily liable in tort to an employee may recover indemnification from the employer as long as a special relationship exists between the third party and the employer. A special relationship alone, however, is not sufficient to require an employer to indemnify a third-party manufacturer. To recover indemnification from an employer, a third party must be secondarily or vicariously liable, not personally at fault. Arcell v. Ashland Chem. Co., Inc., supra, 152 N.J.Super. at 489, 378 A.2d 53. Thus, an employer may have an implied duty to indemnify a third party "when a special legal relationship exists between the employer and the third party, and the liability of the third party is vicarious." Ramos, supra, 103 N.J. at 189, 510 A.2d 1158. A manufacturer that knows its machines are defective has a duty to employees of the purchaser to correct the defect and may not rely on the purchaser-employer to make the necessary correction. Michalko v. Cooke Color & Chem. Corp., supra, 91 N.J. at 400, 451 A.2d 179. Knowing that its machines were injuring workers at other locations, Jones merely sent Sunshine a letter and a guard. Jones was legally obligated to do more to discharge its duty to the workers who used its machines. By not appealing the judgment that the defect in its machine was a proximate cause of the accident, Jones is bound by the finding that it is primarily liable for Stephenson's injuries. The argument that the dissent espouses, that the employer should indemnify the manufacturer of a defective...