(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued January 5, 1994 -- Decided January 24, 1995
STEIN, J., writing for a majority of the Court.
On July 17, 1989, Ronald Lee backed a dump truck over Charles Volb, causing Volb's death. The
accident occurred at a construction site of J.H. Reid General Contractors, Inc. (J.H. Reid). Volb was
employed by J.H. Reid. Lee was employed by T.D.E., an affiliate of J.H. Reid.
The same four principals own both J.H. Reid and T.D.E. In creating those separate entities, J.H.
Reid was engaged in a form of "double-breasting," a practice common to the construction industry that refers
to the creation of two distinct operating entities, one union and one non-union.
Linda Volb (Volb) filed a workers' compensation claim as administratrix of her deceased husband's
estate. The court of compensation entered an award against J.H. Reid. Volb also filed a tort action against
both Lee and T.D.E. Following the completion of discovery, Lee moved for summary judgment, pursuant to
the fellow-employee immunity of the Workers' Compensation Act (Act). The trial court granted that
motion, basing its decision on J.H. Reid's control of Lee's activities on the day of the accident. The trial
court later entered summary judgment in favor of J. H. Reid, without opinion. The court apparently
assumed that both Lee, as Volb's co-worker, and T.D.E., as Lee's employer, were immunized from tort
liability under the Act.
On appeal, the Appellate Division affirmed the decision of the trial court in an unreported opinion.
The Supreme Court granted Volb's petition for certification.
HELD: Because Volb was neither a regular T.D.E. employee nor a special T.D.E. employee, the employer
immunity of the Workers' Compensation Act does not directly bar the Volb estate's tort action
against T.D.E. The Act also does not indirectly bar the Volb estate's suit against T.D.E. because
Lee's fellow-employee immunity does not extend to his employer, T.D.E.
1. The most important factor in determining a special employee's status is whether the borrowing
employer had the right to control the special employee's work. In this case, a regular employee of J.H. Reid
directly supervised the job site. Thus, because J.H. Reid controlled Lee's work, Lee was a special employee
of J.H. Reid, the borrowing employer. (pp. 4-7)
2. The fellow-employee immunity provided by the Act bars a suit by a regular employee of the
borrowing employer against the special employee. Therefore, the Act prohibits the Volb estate's suit against
Lee because Volb was a regular employee of J.H. Reid and Lee was a special employee of J.H. Reid. That
determination, however, does not lead to the conclusion that Lee's employer, T.D.E., also is entitled to the
same statutory immunity from tort liability. (pp. 7-9)
3. The Act does not indirectly bar Volb's suit by deriving immunity for T.D.E. from Lee's fellow-employee immunity. A review of the legislative purpose of the fellow-employee rule demonstrates that it does not extend Lee's fellow-employee immunity to T.D.E. T.D.E. has not paid workers' compensation benefits to Volb's estate; therefore, imposing vicarious liability on T.D.E. for the negligent act Lee committed while acting within the scope of his employment is not unfair. In addition, imposing liability will
not undermine T.D.E.'s right to choose workers' compensation as an exclusive remedy for its employees'
work-related injuries, again because Volb was never an employee of T.D.E. Moreover, out-of-state
authorities uniformly hold that the immunity of a special employee to a tort action brought by an employee
of the special employer does not inure to the benefit of the general employer. And those cases are entirely
consistent with general agency principles familiar to NJ case law. (pp. 9-14)
4. T.D.E. also is not entitled to tort immunity based solely on its affiliate relationship with J.H. Reid.
In suits brought by an injured employee against corporations that are parents, subsidiaries, or affiliates of the
injured employee's employer, the general rule has been to deny workers' compensation immunity on the
ground that the separate corporate identity of affiliated corporations should not be disregarded. Only two
New Jersey cases have addressed this question and, in both cases, the court denied immunity. Furthermore,
the clear weight of authority throughout the country supports the view that corporations affiliated by stock
ownership and common management with a worker's employer are not entitled to the tort immunity
specifically accorded by statute to the employer only. It is assumed that companies that choose such a
structure anticipate the risk of intra-corporate tort liability and, therefore, purchase liability insurance to
offset that risk. Thus, there is no justification for extending J.H. Reid's Workers' Compensation Act
immunity to directly bar Volb's tort action against T.D.E. (pp. 14-21)
5. Because the trial court's decision was based on a motion for summary judgment, it is uncertain
whether or to what extent the court considered principles of respondeat superior liability in granting the
motion in favor of T.D.E. Thus, on remand, the trial court may address that issue prior to trial. The Court
cited pertinent authority to guide the trial court but specifically noted that it expresses no view on whether
T.D.E. is liable under the doctrine of respondeat superior or whether Lee, at the time of the accident, was
furthering the interest of his general employer (T.D.E.) to the extent considered sufficient by some courts to
justify the imposition of liability on the general employer. Nor does the Court express any view on whether
J.H. Reid's control of Lee at the time of the accident is itself sufficient to resolve the issue of T.D.E.'s
liability. (pp. 21-29)
The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the Law
Division for further proceedings consistent with this opinion.
POLLOCK, J., dissenting, is of the view that Volb cannot maintain a tort action against Lee or
T.D.E. J.H. Reid, Lee's special employer, had exclusive control over Lee when he backed the truck over
Volb whereas Lee's general employer, T.D.E., had not provided the truck or retained any control over Lee.
Therefore, T.D.E. cannot be liable to Volb for Lee's alleged negligence. In addition, Justice Pollock sees no
need for a remand to reconsider the issue of respondeat superior. The record demonstrates that the courts
below fully understood that they were deciding that T.D.E. was not liable under respondeat superior. Those
courts reached their decision under the only theory of respondeat superior that makes sense in this case-
whether J.H. Reid exclusively controlled Lee at the time of the accident.
CHIEF JUSTICE WILENTZ and JUSTICE HANDLER join in JUSTICE STEIN's opinion.
JUSTICE POLLOCK has filed a separate dissenting opinion, in which JUSTICE GARIBALDI joins.
JUSTICES O'HERN and COLEMAN did not participate.
SUPREME COURT OF NEW JERSEY
A-
66 September Term 1993
LINDA VOLB, Administratrix of the
Estate of CHARLES VOLB, Deceased,
and LINDA VOLB, individually and
as Guardian ad litem for MATTHEW
VOLB, CHARLES VOLB, and ERIKA
VOLB, minors,
Plaintiffs-Appellants,
v.
G.E. CAPITAL CORPORATION, J.H.
REID CONSTRUCTION COMPANY, J.H.
REID individually and t/a J.H.
REID CONSTRUCTION COMPANY, ABC
COMPANY (a fictitious corporation)
and JOHN DOES (fictitious persons),
Individually and t/a ABC COMPANY
(a fictitous corporation),
Defendants,
and
RONALD LEE and T.D.E. SERVICES, INC.,
Defendants-Respondents.
Argued January 5, 1994 -- Decided January 24, 1995
On certification to the Superior Court,
Appellate Division.
Eric Ludwig argued the cause for appellants
(Stark & Stark, attorneys; Mr. Ludwig, of
counsel; Jodi F. Mindnich, on the briefs).
Gary L. Jakob argued the cause for
respondents (Montano, Summers, Mullen,
Manuel, Owens & Gregorio, attorneys).
The opinion of the Court was delivered by
STEIN, J.
The critical issue in this appeal concerns the immunity from
tort liability of a general employer, T.D.E., for the alleged
negligence of its employee, Ronald Lee, which occurred while the
employee functioned as a special employee of J. H. Reid General
Contractors, Inc. (J. H. Reid). The decedent, Charles Volb, was
an employee of J. H. Reid at the time of the accident, and his
widow, as administratrix, sought and recovered a workers'
compensation award against J. H. Reid. The administratrix also
instituted this tort action. The Law Division granted motions
for summary judgment in favor of Lee and T.D.E., apparently on
the assumption that both Lee, as Volb's co-worker, and T.D.E., as
Lee's employer, were immunized from tort liability under the
Workers' Compensation Act, N.J.S.A. 34:15-1 to -128. The
Appellate Division affirmed in an unreported opinion. We reverse
the summary judgment in favor of T.D.E., and hold that T.D.E. is
not entitled to Workers' Compensation Act immunity from tort
liability. We are unable definitively to ascertain whether or to
what extent the Law Division's grant of summary judgment in favor
of T.D.E. also may have been predicated on principles of
respondeat superior liability. Accordingly, we remand the matter
to the Law Division for consideration of that issue.
On July 17, 1989, defendant Ronald Lee backed a dump truck over Charles Volb, causing Volb's death. The accident occurred at a construction site of J.H. Reid. Volb was employed by J.H.
Reid; however, Lee was employed by T.D.E., an affiliate of J.H.
Reid.
The same four principals own both J.H. Reid and T.D.E. They
also own another affiliate of J.H. Reid called J.H. Reid General
Construction Co., Inc., which is not involved in this case. The
record informs us only generally that T.D.E. and J.H. Reid
General Construction were organized because of J.H. Reid's labor
union relationships. Testimony elicited at depositions revealed
that T.D.E's function was to employ workers from certain unions
to perform construction work for J. H. Reid. Similarly, the
function of J.H. Reid General Construction was to employ workers
from other unions to perform construction work for J. H. Reid.
We infer, however, from the generalized description of the two
affiliates and their purpose that J.H. Reid was engaged in a form
of the practice common to the construction industry known as
"double breasting." ("Double breasting refers to the creation of
two distinct operating entities, one governed by a collective
bargaining agreement and one totally unencumbered by such an
agreement. The single most universal characteristic of any
double-breasted operation is common ownership of both the
unionized and nonunionized companies by a central business
entity." Joseph H. Bucci and Brian P. Kirwin, Double Breasting
in the Construction Industry, 10 Constr. Lawyer 1 (Jan. 1990)).
Because J.H. Reid's affiliates each hired workers from different
unions, the inference is permissible that differences in J.H.
Reid's relationships with various unions -- building-trade and
non-building-trade unions, for example -- dictated the use of
separate corporate entities to avoid conflicts that otherwise
might arise.
Linda Volb filed a workers' compensation claim as
administratrix of her deceased husband's estate. The
compensation court entered an award against J.H. Reid. However,
Mrs. Volb also filed this tort claim against Lee and T.D.E.See footnote 1
Lee moved for summary judgment following the completion of
discovery. In an oral opinion the trial court granted Lee's
motion, basing its decision on J.H. Reid's control of Lee's
activities on the day in question. The trial court later entered
summary judgment in favor of T.D.E., without opinion. The
Appellate Division in an unreported opinion affirmed both trial
court judgments substantially for the reasons stated to support
the grant of summary judgment in favor of Lee. We granted
plaintiff's petition for certification,
134 N.J. 478 (1993).
To the extent that the lower courts sustained the grant of summary judgment to T.D.E. on the basis of an employer's statutory immunity under the Workers' Compensation Act, that determination cannot be sustained. Although the lower courts' treatment of the immunity question was abbreviated, the opinions below imply that T.D.E.'s immunity was based on the premise that Lee, as the special employee of J.H. Reid, was statutorily immune from tort liability and that that immunity necessarily encompassed his employer, T.D.E. An alternative theory of tort immunity not addressed by the lower courts might be based on a contention that the statutory immunity of J.H. Reid, Volb's employer, should be expanded to include J.H. Reid's subsidiary and affiliate companies. Neither theory of immunity, however, finds support in the case law.
We first address whether T.D.E. is entitled to tort immunity based on Lee's status as a special employee of J.H. Reid. New Jersey has developed its special-employee doctrine by adopting the three-prong test recommended by Professor Larson for establishing a special-employment relationship:
Whether the common law [tort] action is precluded [by the borrowed-employee doctrine] is * * * dependent upon a determination that the borrower of an employee is, in fact, a special employer. Professor Larson * * * lays down a three-pronged test in order to establish employment within the terms of the [Workers' Compensation] [A]ct:
"When a general employer lends an
employee to a special employer, the special
employer becomes liable for workmen's
compensation only if:
(a) The employee has made a contract of
hire, express or implied, with the special
employer;
(b) The work being done is essentially
that of the special employer; and
(c) The special employer has the right
to control the details of the work.
When all three of the above conditions
are satisfied in relation to both employers,
both employers are liable for workmen's
compensation."
There is no uniform agreement as to a
predominant factor. The sheer weight of
authority is undoubtedly on the side of
"control." * * * The federal authorities
* * * are uniform that the "ultimate test is:
Whose is the work being done? * * * In
determining whose work is being done, the
question of the power to control the work is
of great importance * * *."
[Blessing v. T. Shriver & Co.,
94 N.J. Super. 426, 430-31 (App. Div. 1967) (citations and
footnote omitted) (last two omissions in
original) (quoting 1A Arthur Larson,
Workmen's Compensation § 48.00, at 710
(1966), and Jones v. George F. Getty Oil Co.,
92 F.2d 255, 263 (10th Cir. 1937), cert.
denied sub nom. Associated Indemnity Corp. v.
George F. Getty Oil Co.,
303 U.S. 644,
58 S.
Ct. 644,
82 L. Ed. 1106 (1938)).]
Because the most important factor in determining a special
employee's status is whether the borrowing employer had the right
to control the special employee's work, the trial court plainly
was correct in concluding that Lee was a special employee of J.H.
Reid. It based that finding on the fact that a regular employee
of J.H. Reid directly supervised the job site on which Lee ran
over Volb. Indeed, that supervisor was the person who told Lee
to back the dump truck down the detour road on which Volb was
checking grades. Because J.H. Reid, as the borrowing employer,
controlled Lee's work, Lee was a special employee of J.H. Reid.
Lee's status as a special employee of J.H. Reid compels the
conclusion that Volb's estate cannot sue Lee. By definition, a
special employee is an employee of the borrowing employer. As a
result, the fellow-employee immunity provided by the Workers'
Compensation Act bars a suit by a regular employee of the
borrowing employer against the special employee. N.J.S.A. 34:15-8 provides in pertinent part that
[i]f an injury or death is compensable under
[the Workers' Compensation Act], a person
shall not be liable to anyone at common law
or otherwise on account of such injury or
death for any act or omission occurring while
such person was in the same employ as the
person injured or killed, except for
intentional wrong.
In short, co-workers cannot sue one another for negligence in the
workplace. Thus, the Workers' Compensation Act prohibits the
Volb estate's suit against Lee because Volb was a regular
employee of J.H. Reid and Lee was a special employee of J.H.
Reid.
The determination that Lee is immune from suit by Volb's
estate, however, does not establish that Lee's employer, T.D.E.,
also is entitled to statutory immunity from tort liability. In
sustaining the grant of summary judgment in favor of Lee and
T.D.E., the lower courts both relied on Antheunisse v. Tiffany &
Co.,
229 N.J. Super. 399 (App. Div. 1988), certif. denied,
115 N.J. 59 (1989), and Santos v. Standard Havens, Inc.,
225 N.J. Super. 16 (App. Div. 1988). Those cases involved plaintiffs
who had been loaned by their general employers to perform
services for the respective defendants, and set forth the
principles that establish a special employment relationship. In
each case the court determined that the plaintiff, who had
received workers compensation benefits from his general employer,
had functioned as a special employee of the defendant, thereby
entitling the defendants to Workers' Compensation Act immunity.
229 N.J. Super. at 405; 225 N.J. Super. at 22. Those decisions
would be controlling if the issue before us concerned the
immunity of J.H. Reid to a tort claim asserted by Lee, its
special employee, but they do not resolve T.D.E.'s immunity
concerning the tort claim asserted by Volb's administratrix
against it, inasmuch as Volb had no employment relationship with
T.D.E.
The Workers' Compensation Act does not bar either directly
or indirectly the Volb estate's suit against T.D.E. T.D.E.
cannot assert as a defense that Volb's exclusive remedy is
workers' compensation, because Volb was neither a regular T.D.E.
employee nor a special T.D.E. employee. As a result, the
employer immunity of N.J.S.A. 34:15-8 does not prohibit directly
the Volb estate's suit against T.D.E.
The Act also does not indirectly bar plaintiff's suit by
deriving immunity for T.D.E. from Lee's fellow-employee immunity.
That the statute immunizes Lee from liability for torts committed
against special co-workers such as Volb does not mean that the
statute similarly immunizes Lee's employer from such liability.
The Appellate Division has described the legislative purpose of
the fellow-employee tort immunity provided under the Workers'
Compensation Act:
The continued subsistence of a cause of
action in tort against a fellow-employee has
come under considerable public criticism in
recent years. It has frequently resulted in
burdening the employer indirectly with
common-law damages superimposed upon his
workmen's compensation liability by reason of
either a legal, moral or practical obligation
to indemnify the sued director, officer or
supervisory employee, or with the expense of
carrying insurance to cover the personal
liability of such supervisory personnel.
Recognizing that such consequences conflict
with the general scheme of the Workmen's
Compensation Act, the Legislature * * *
amended the act (R. S. 34:15-8) expressly to
preclude a right of recovery on account of a
compensable injury or death at common law or
otherwise against a fellow-employee except in
cases of intentional wrong.
[Miller v. Muscarelle,
67 N.J. Super. 305,
321, certif. denied,
36 N.J. 140 (1961)
(citations omitted).]
That legislative policy does not extend Lee's fellow-employee immunity to T.D.E. T.D.E. has not paid workers' compensation benefits to Volb's estate, because T.D.E. did not employ Volb. Thus, imposing vicarious liability on T.D.E. for the negligent act Lee committed while acting within the scope of his employment by T.D.E. is not unfair, because any resulting tort judgment will be the only sum paid by T.D.E. to Volb's family. Such liability also will not undermine T.D.E.'s right to
choose workers' compensation as an exclusive remedy for its
employees' work-related injuries, again because Volb was never an
employee of T.D.E.
Although the precise question appears to be one of first
impression in this state, the out-of-state authorities uniformly
hold that the immunity of a special employee to a tort action
brought by an employee of the special employer does not inure to
the benefit of the general employer. For example, in Campbell v.
Harris-Seybold Press Co., 141 Cal. Rptr. 55 (Ct. App. 1977), the
plaintiff, a press operator employed by a printing company,
allegedly sustained serious injuries because of the negligence of
the defendant, Adam, who had been assigned by the other
defendant, Harris-Seybold Press Co. (Harris-Seybold), to assist
the plaintiff and his employer in the restoration of a printing
press. The jury was instructed that if it determined that Adam
was a special employee of plaintiff's employer, both Adam and
Harris-Seybold were immune from tort liability. The trial court
entered a judgment for both defendants based on a jury finding
that Adam had been the special employee of plaintiff's employer.
The Court of Appeal reversed, concluding that its employee's
immunity did not extend to Harris-Seybold:
But, Harris contends, if its liability stems from the operation of respondeat superior, then if Adam is immune, Harris must likewise be immune. While negligence and immunity may, of course, reside in the same party simultaneously, it does not necessarily follow that a principal must enjoy the immunity of his agent. * * * In the instant
case, assuming that section 3601 precludes
plaintiff from maintaining an action against
Adam, Harris could not avail itself of Adam's
defense under section 3601 to escape
liability because that defense does not go to
the merits of plaintiff's cause of action.
The defense of section 3601 being personal to
Adam, it would not inure to the benefit of
Harris. In short, while Adam's negligence
may be imputed to Harris, Adam's status as a
special employee of World would not immunize
Harris. Thus, if the elements of respondeat
superior are satisfied, Harris may be
adjudged liable for Adam's negligent conduct.
The soundness of this result is
buttressed by the rationale underlying the
doctrine of respondeat superior that the
employer's liability includes risks created
by or inherent in the enterprise because it
rather than the injured party is best able to
spread the risk of loss. If Harris were
permitted to invoke the immunity of Adam, it
would escape responsibility for the risks
incident to the conduct of its business
without at the same time conferring any
reciprocal benefit to the workers'
compensation scheme. Such a result is
neither fair nor necessary.
[141 Cal. Rptr. at 58-59 (citations omitted).]
In Marsh v. Tilley Steel Co., 606 P.2d 355 (1980), the Supreme Court of California confronted the identical issue in the context of a tort claim asserted by an employee of a general concrete contractor, who sustained injuries when the defendant's employee, on loan to the plaintiff's employer, negligently operated a truck-mounted crane. The Court acknowledged that on remand a jury could find "dual employment" status, which would result in the imposition of liability on the defendant for its employee's negligence. The Court, however, rejected the defendant's contention that if its employee was determined to be
the special employee of the plaintiff's employer, the defendant
would also be entitled to the benefit of its employee's workers'
compensation law immunity. Relying on the reasoning of Campbell,
supra,
141 Cal. Rptr. 55, the court concluded that the employee's
immunity was personal and did not absolve defendant from tort
liability:
The reasoning of Campbell is sound.
Where the tortfeasor is not the plaintiff's
employer or coemployee, the statutes by
necessary implication reserve for plaintiff
his tortious remedy against defendant.
Moreover, general respondeat superior
principles seek to place the cost of work-related negligence on those enterprises the
actions of which have produced the negligence
risk. This policy would be defeated by
extending to an employer the benefit of a
technical defense reserved solely for the
employee. As Campbell noted, a defendant has
no workers' compensation responsibility to a
plaintiff who is not its employee.
Accordingly, defendant's argument would
relieve defendant from its normal respondeat
superior liability, while at the same time
giving no accompanying benefit to the
workers' compensation system.
See also Bright v. Cargill, Inc., 837 P.2d 348, 368 (Kan. 1992) ("LSI had no workers compensation liability for Bright's injuries and should not be shielded from common-law liability. If Nanny is deemed to be the employee of Cargill, the immunity granted to Nanny . . . is personal to Nanny and does not immunize LSI from its vicarious liability for Nanny's negligence."); Kenyon v. Second Precinct Lounge, 442 N.W.2d 696, 701 (Mich. Ct. App. 1989) ("[T]he immunity granted by the workers' compensation act is personal and does not purport to grant derivative immunity to
general employers in the position of ETS. * * * To grant ETS
derivative immunity would effectively shield it from all
liability * * * without obtaining any accompanying benefit to the
workers' compensation system."); accord Cuffe v. Sanders Constr.
Co.,
748 P.2d 328, 332 n.9 (Alaska 1988); Kral v. Patrico's
Transit Mixing Co.,
448 N.W.2d 790, 793-94 (Mich. Ct. App. 1989).
Although the precise question has not been addressed
directly in this state, the uniform holding of the out-of-state
cases is entirely consistent with general agency principles
familiar to our case law. Thus, "a principal `may be liable for
an act as to which the agent has a personal immunity from suit.'"
Gardner v. Rosecliff Realty Co.,
41 N.J. Super. 1, 7 (App. Div.
1956) (quoting Restatement of Agency § 217(2) (1933)). As
section 217(b) of the Restatement (Second) of Agency (1957)
currently puts it, "The principal has no defense because of the
fact that * * * the agent had an immunity from civil liability as
to the act." One treatise has explained that "[i]n the case of
the immunity, liability has been cut off (against the servant) in
a situation where it would ordinarily be afforded under general
tort principles, for a reason that simply does not apply to the
master." 2 Fowler V. Harper and Fleming James, Jr., The Law of
Torts § 26.17, at 1426 (1956). In short, the Workers'
Compensation Act does not indirectly bar the Volb estate's suit
against T.D.E., because Lee's fellow-employee immunity does not
extend to his employer.
The case law persuasively demonstrates that T.D.E. cannot claim tort immunity derivatively on the basis of its employee Lee's Workers' Compensation Act immunity. Nor is T.D.E. entitled to tort immunity based solely on its affiliate relationship with J.H. Reid, Volb's employer. As noted supra at ___ (slip op. at 3), the stockholders of J.H. Reid also owned the stock of two affiliated corporations, J.H. Reid Construction Co., Inc. and T.D.E. Nevertheless, in suits brought by an injured employee against corporations that are parents, subsidiaries, or affiliates of the plaintiff's employer, the general rule consistently applied by federal and state courts has been to deny workers' compensation immunity on the ground that the separate corporate identity of affiliated corporations should not be disregarded. Boggs v. Blue Diamond Coal Co., 590 F.2d 655 (6th Cir.), cert. denied, 444 U.S. 836, 100 S. Ct. 71, 62 L. Ed.2d 47 (1979), is characteristic of the cases that have denied immunity. The widows of coal miners killed when methane gas exploded in a mine operated by the Scotia Coal Company, a wholly-owned subsidiary of the defendant, Blue Diamond Coal Co. (Blue Diamond), instituted a wrongful-death action against Blue Diamond based on alleged acts of negligence separate from the subsidiary's conduct. Blue Diamond successfully moved for summary judgment, claiming immunity under the Kentucky Workmen's Compensation Act on the ground that it and the operating subsidiary should be regarded as a single or joint "employer"
because they were engaged in the production of coal as part of an
integrated business. Reversing, the Court of Appeals held that
under Kentucky law a parent is not immune from tort liability to
its subsidiary's employees for its own negligence even though the
employees are entitled to receive workers' compensation benefits
from the subsidiary. The Court of Appeals reasoned that
[t]hese cases are based on the traditional
view that a business enterprise has a range
of choice in controlling its own corporate
structure. But reciprocal obligations arise
as a result of the choice it makes. The
owners may take advantage of the benefits of
dividing the business into separate corporate
parts, but principles of reciprocity require
that courts also recognize the separate
identities of the enterprises when sued by an
injured employee.
As the Supreme Court of Wyoming observed in Fiscus v. Atlantic Richfield Co., 742 P.2d 198 (1987), "When faced with similar issues involving parent and subsidiary corporations, a majority of courts have refused to disturb the corporate distinction between parent and subsidiary." Id. at 201. See, e.g., First Nat'l Bank of Camden v. Tracor, Inc., 851 F.2d 212, 214 (8th Cir. 1988); Dorden v. C.H. Heist Corp., 743 F.2d 1135, 1139 (5th Cir. 1984); Love v. Flour Mills of Am., 647 F.2d 1058, 1062 (10th Cir. 1981); Lane v. Kingsport Armature & Elec., 676 F. Supp. 108, 111 (D. Va. 1988); Gaines v. Excel Indus., Inc., 667 F. Supp. 569, 574-77 (M.D. Tenn. 1987); Peterson v. Trailways, Inc., 555 F. Supp. 827, 832-33 (D. Colo. 1983); Stoddard v. Ling-Temco-Vought, Inc., 513 F. Supp. 314, 325-26 (C.D. Ca. 1980); In re Johns-Manville/Asbestosis Cases, 511 F. Supp. 1229, 1234 (N.D. Ill. 1981); McDaniel v. Johns-Manville Sales Corp., 487 F. Supp. 714, 716 (N.D. Ill. 1978); Choate v. Landis Tool Co., 486 F. Supp. 774, 780-81 (E.D. Mich. 1980); O'Brien v. Grumman Corp., 475 F. Supp. 284, 292 (S.D.N.Y. 1979); Latham v. Technar, Inc., 390 F. Supp. 1031, 1037-38 (E.D. Tenn. 1974); Shields v. County of San Diego, 202 Cal. Rptr. 30, 35-36, (Ct. App. 1984); Gigax v. Ralston Purina Co., 186 Cal. Rptr. 395, 401-05 (Ct. App. 1982); Gulfstream Land & Dev. Corp. v. Wilkenson, 420 So 2d 587, 589-90 (Fla. 1982); Searcy v. Paul, 478 N.E.2d 1275, 1279 (Mass. App. Ct. 1985); Bernardo v. Melville Indus. Assocs., 538 N.Y.S.2d 833, 834-35 (App. Div. 1989); Buchner v. Pines Hotel, Inc., 448 N.Y.S.2d 870, 871-72 (App. Div. 1982), aff'd, 448 N.E.2d 1347 (N.Y. 1983); Samaras v. GATX Leasing Corp., 428 N.Y.S.2d 48, 49 (App. Div. 1980); Hearn v. Petra Int'l Corp., 710 P.2d 769, 770-71 (Okla. Ct. App. 1985); Kiehl v. Action Mfg. Co., 535 A.2d 571, 574-75 (Pa. 1987).
The contrary view adopted by a minority of courts is that if the employer subsidiary corporation is effectively the alter ego of the parent to the extent that the companies constitute a single, indistinguishable economic entity, the corporate parent may be immunized from a claim of tort liability asserted by the subsidiary's employee. See, e.g., Harvey v. Fine Prods. Co., 275 S.E.2d 732, 733 (Ga. Ct. App. 1980); Nichols v. Uniroyal, Inc., 399 So.2d 751, 752-53 (La. Ct. App. 1981); Coco v. Winston Indus., Inc., 330 So.2d 649, 653-55 (La. Ct. App.), modified on
other grounds,
341 So. 332 (La. 1976); Wells v. Firestone Tire &
Rubber Co.,
364 N.W.2d 670, 674-75 (Mich. 1984); Verhaar v.
Consumers Power Co.,
446 N.W.2d 299, 300-01 (Mich. Ct. App.
1989); Andriacchi v. Cleveland Cliffs Iron Co.,
436 N.W.2d 707,
709-11 (Mich. Ct. App. 1989); Rasnick v. Pittston Co.,
379 S.E.2d 353, 354-56 (Va. 1989).
The cases uniformly deny immunity, however, if the employee
seeks to recover in tort against a subsidiary or corporate
affiliate of the employer, as distinguished from the employer's
parent. See 2A Larson, Workmen's Compensation Law, §72.40 at 14-228.30 (1990 ed.). For example, in Wodogaza v. H & R Terminals,
Inc.,
411 N.W.2d 848 (Mich. Ct. App. 1987), the plaintiff, an
employee of Preston Trucking Company, sustained injuries when a
forklift he was operating turned over because of the conduct of a
co-worker who was driving a tractor. The tractor was owned by S
& P Equipment, Inc., and the accident occurred on premises owned
by H & R Terminals, Inc., both wholly-owned subsidiaries of
plaintiff's employer. The plaintiff recovered workers'
compensation benefits from his employer and subsequently sued
both subsidiaries in tort, alleging that H & R had negligently
maintained its premises and that S & P was statutorily liable as
the owner of the tractor that had caused the plaintiff's
injuries. Reversing the trial court's grant of summary judgment
based on workers' compensation immunity, the Michigan Court of
Appeals observed:
Most significantly, the subsidiaries in this
case are seeking to shield themselves from
tort liability without having assumed any
concomitant liability for the payment of
workers' compensation benefits. Defendants
have never accepted any responsibility for
the work-related injuries of their parent's
employees. Second, as noted by the majority
in Wells, the general principle in Michigan
is that separate corporate identities will be
respected, and thus corporate veils will be
pierced only to prevent fraud or injustice.
In the present case, defendants point to no
injustice resulting from our recognition of
their nonemployer status, as determined under
an economic reality test analysis. Liability
alone constitutes no such injustice. Indeed,
if negligence on the part of one or both of
the nonemployer subsidiaries in this case
brought about plaintiff's injuries, injustice
would result by failing to permit plaintiff
to seek compensation against the proper tort-feasor or tortfeasors.
The holding in Wodogaza reflects the view of virtually all
the courts that have considered whether a subsidiary or affiliate
corporation is immune from a tort claim asserted by the employee
of a parent or affiliate corporation. See, e.g., Joyce v. Super
Fresh Food Markets, Inc.,
815 F.2d 943, 946-49 (3d Cir. 1987);
Monroe v. Monsanto Co.,
531 F. Supp. 426, 431-33 (D.S.C. 1982);
Thomas v. Hycon, Inc.,
244 F. Supp. 151, 154-56 (D.D.C. 1965);
Graber v. Franchise Servs., Inc.,
680 P.2d 1345, 1346-47 (Colo.
Ct. App. 1984); Nutt v. Pierce Waste Oil Serv., Inc.,
445 N.E.2d 928, 929-31 (Ill. App. Ct. 1983); Smith v. Cotton's Fleet Serv.,
Inc.,
500 So.2d 759, 761-63 (La. 1987); Dolan v. Kent Research &
Mfg. Co.,
491 A.2d 1226, 1231-32 (Md. Ct. Spec. App.), cert.
denied,
498 A.2d 1185 (Md. 1985); Belen v. Dawson,
217 N.W.2d 910, 911-12 (Mich. Ct. App. 1974).
Only two New Jersey cases have addressed the question of
workers' compensation immunity based solely on corporate
affiliation, and in both cases the courts denied immunity. In
Vernon v. Supermarket Services Corp.,
250 N.J. Super. 8 (App.
Div. 1991), the plaintiff, an employee of Supermarket
Distribution Services (SDS), allegedly was injured because of the
negligence of employees of Supermarket Services Corporation
(SSC). Both SDS and SSC were wholly-owned subsidiaries of the
Great Atlantic & Pacific Tea Company (A & P). After the
plaintiff had filed a workers' compensation claim against A & P
and had received an award, he instituted a tort action against
SSC based on the negligence of its employees. The Law Division
granted summary judgment to SSC, concluding that as A & P's
subsidiary it was entitled to Workers' Compensation Act immunity.
Reversing, the Appellate Division concluded:
The facades created by incorporation
cannot be transgressed to allow sister
corporate subsidiaries of the same corporate
parent to enjoy the N.J.S.A. 34:15-8 immunity
vested in only one of the subsidiaries. Each
corporation is a separate entity. The
respective incorporators chose the
corporation as a form for doing business.
Those incorporators or their successors,
while entitled to the benefits that flow from
incorporation, must also accept the burdens
that flow from the use of the corporate
structure. One of the burdens to be accepted
is that a corporation may not share the
immunity N.J.S.A. 34:15-8 provides to a
sister subsidiary corporation.
Similarly, in Mingin v. Continental Can Co., 171 N.J. Super. 148 (Law Div. 1979), the plaintiff sustained injuries while
operating a machine manufactured by Urbana Tool and Die Company
(Urbana). After receiving worker's compensation benefits from
his employer, Crest Container Corporation, the plaintiff sued
Urbana and Continental Can Company, the parent of both Crest and
Urbana. Both defendants sought summary judgment, contending that
they were entitled to Workers' Compensation Act immunity on the
basis of their affiliation with the plaintiff's employer.
Relying on Boggs, supra,
590 F.2d 655, the Law Division concluded
that the defendants' separate corporate identities should not be
disregarded and that workers' compensation immunity did not bar
the plaintiff's cause of action. 171 N.J. Super. at 150-52.
The clear weight of authority throughout the country
supports the view that corporations affiliated by stock ownership
and common management with a worker's employer are not entitled
to the tort immunity specifically accorded by statute to the
employer only. Intuition might suggest that a broader immunity
would be consistent with the underlying objectives of workers'
compensation legislation, and the Legislature is at liberty to
enact a more comprehensive, enterprise-based immunity.
Nevertheless, we have no doubt that companies that elect for
sound business considerations to operate their enterprise by
using multiple affiliated corporations anticipate the risk of
intra-corporate tort liability and therefore purchase liability
insurance to offset that risk. Presumably, the decision to
operate through interlocking corporations reflects the pragmatic
determination that the specific advantages derived from the
multi-corporate enterprise outweigh the risk of tort liability
that that form of enterprise entails. Neither legislative
history, precedent, nor public policy suggests that this Court
should second-guess the reasonableness of such a business
decision. Accordingly, in the context of the inter-corporate
relationship between J.H. Reid and T.D.E., no justification
exists for extending J.H. Reid's Workers' Compensation Act
immunity to insulate T.D.E. from plaintiff's tort action.
Because T.D.E. is not entitled to Workers' Compensation Act immunity, the question remains whether T.D.E. may be held liable in tort under the doctrine of respondeat superior in the event of a jury determination that Lee's negligence was a proximate cause of Volb's death. As noted supra at ___ (slip op. at 2), we are uncertain whether or to what extent the trial court considered principles of respondeat superior liability in granting summary judgment in favor of T.D.E. T.D.E.'s motion for summary judgment was granted on briefs without argument, and no opinion was rendered by the trial court. On remand, the trial court may address that issue prior to trial. We leave to the sound discretion of the trial court whether to grant applications by the parties for additional discovery, if necessary, concerning the specific business reasons for the separate incorporation of T.D.E. and J.H. Reid Construction Company, and the functions performed by those companies in relation to the business of J. H.
Reid. We imply no view on the issue of T.D.E.'s liability under
respondeat superior, but for the guidance of the trial court we
review the pertinent authorities.
Courts throughout the country are divided over the standard
to be applied in determining respondeat superior liability of a
general employer that is based on the alleged negligence of an
employee loaned to a special employer. The traditional "borrowed
servant" doctrine determines respondeat superior liability on the
basis of whether the general or special employer "controlled" the
loaned employee. See, e.g., Coleman v. Steel City Crane Rentals,
Inc.,
475 So.2d 498 (Ala. 1985), cert. denied sub nom. Illinois
Cent. Gulf R.R. v. Coleman,
476 U.S. 1104,
106 S. Ct. 1946,
90 L. Ed.2d 356 (1986); Hoffman v. Wells,
397 S.E.2d 696 (Ga.
1990); Nakagawa v. Apana,
477 P.2d 611 (Haw. 1970); Mainella v.
Staff Builders Indus. Servs., Inc.,
608 A.2d 1141 (R.I. 1992);
see also DePratt v. Sergio,
306 N.W.2d 62, 64 (Wis. 1981) ("[T]he
borrowed servant rule is premised on the concept that the master
who has control over the servant and derives benefit from the
servant should be exclusively liable for the negligent acts of
the loaned servant."). However, the "control" test for
determining respondeat superior liability in borrowed servant
cases has been criticized. See, e.g., Harper & James, supra, §
26.11, at 1398 n.14 ("The tests currently in vogue turn on the
question of control of the borrowed servant and [on] whose
business is being done by him. The trouble with these tests is
that commonly both employers have a measure of control and the
business of both is being done."); Note, Borrowed Servants and
the Theory of Enterprise Liability, 76 Yale L.J. 807, 811 (1967)
("As applied, the control test makes little sense either for the
borrowed servant problem or for respondeat superior.").
Some courts have adopted a dual-liability approach,
reflecting the view that because the borrowed servant is engaged
in the business of both the general and special employers, both
employers could be liable to third parties injured by the
borrowed employee's negligence. See Vance Trucking Co. v. Canal
Ins. Co.,
249 F. Supp. 33, 38 (D.S.C. 1966), aff'd,
395 F.2d 391
(4th Cir.), cert. denied,
393 U.S. 845,
89 S. Ct. 129,
21 L. Ed.2d 116 (1968); Kastner v. Toombs,
611 P.2d 62, 65-66
(Alaska 1980); Marsh, supra,
606 P.2d 355, 360 (Cal. 1980);
Bright, supra,
837 P.2d 348, 362-64 (Kan. 1992); City of Somerset
v. Hart,
549 S.W.2d 814, 816-17 (Ky. 1977); LeJeune v. Allstate
Ins. Co.,
365 So.2d 471, 479-82 (La. 1978); Keitz v. National
Paving & Contracting Co.,
136 A.2d 229, 231 (Md. 1957); Kenyon,
supra,
442 N.W.2d 696, 702 (Mich. Ct. App. 1989); Brickner v.
Normandy Osteopathic Hosp., Inc.,
746 S.W.2d 108, 113 (Mo. Ct.
App. 1988); Gordon v. S.M. Byers Motor Car Co.,
164 A. 334, 336
(Pa. 1932). Other authorities also have endorsed the dual-liability approach. See Floyd R. Mechem, Outlines of the Law of
Agency, § 458 (4th ed. 1952) (describing dual-liability approach
as "simple and practical"); Restatement (Second) of Agency § 227
cmt. b. (1957) ("In the absence of evidence to the contrary,
there is an inference that the actor remains in his general
employment so long as, by the service rendered another, he is
performing the business entrusted to him by the general
employer.").
Although this Court has not recently addressed the standard
for determining respondeat superior liability in borrowed-servant
cases, some New Jersey cases have imposed liability on the
general employer because the loaned employee was furthering the
general employer's business interests when the tort occurred.
See Viggiano v. William C. Reppenhagen, Inc.,
55 N.J. Super. 114,
118-20 (App. Div. 1959). The development of New Jersey's
borrowed servant doctrine can be traced from Younkers v. County
of Ocean,
130 N.J.L. 607 (E. & A. 1943). The plaintiff, a
laborer employed by the Borough of Pine Beach, was injured by a
road grader owned by Ocean County and operated by one of the
County's employees. Pine Beach had rented the road grader, paid
the operator based on his hourly-wage rate, and supervised the
work. On appeal from a judgment entered on a jury verdict
against Ocean County, the Court of Errors and Appeals concluded
that the evidence raised a jury question whether the operator of
the road grader had been Ocean County's employee for purposes of
respondeat superior liability:
"In the absence of evidence to the contrary,
there is an inference that the actor remains
in his general employment so long as, by the
service rendered another, he is performing
the business entrusted to him by the general
employer. There is no inference that because
the general employer has permitted a division
of control, he has surrendered it."
[130 N.J.L. at 610 (quoting Restatement of
Agency § 227, cmt. (b) (1933)).]
In Devone v. Newark Tidewater Terminal, Inc.,
14 N.J. Super. 401 (App. Div. 1951), the plaintiff's employer had rented an
engine, engineer, and crew from defendant to move freight cars,
and the plaintiff allegedly sustained injuries due to the
negligence of the crew engineer. Reversing a jury verdict for
the defendant, the Appellate Division majority applied the
traditional "control" test for determining liability, but found
error in the trial court's failure to instruct the jury that the
defendant remained liable for the engineer's negligence unless
the plaintiff's employer controlled the manner in which the
engineer operated the engine. 14 N.J. Super. at 406.
Concurring, former Justice (then Judge) Schettino criticized the
"control" test, advocated the principle of dual liability, and
asserted that the general employer should be liable whenever "the
employee's negligence [was] committed while he was acting in
furtherance of his general employer's interests." Id. at 414.
In Justice Schettino's view:
[I]f the causative act was within the service
which the general employer agreed to furnish,
he is responsible with respect to that act,
no matter who directed its performance and
without regard to the concurrent liability
which may exist on the part of the one who
issued the immediate order that the act be
done.
This Court last considered the question of respondeat superior liability based on a borrowed-servant relationship in
Larocca v. American Chain & Cable Co.,
13 N.J. 1 (1953). The
plaintiff's employer rented from the defendant Ench a crane and
its operator to raise roof trusses into position, and the
plaintiff was injured in the course of the operation of the
crane. The trial court granted Ench's motion to dismiss on the
basis of a lack of evidence demonstrating that the crane operator
had been Ench's employee at the time of the accident, Ench having
argued that the crane operator was controlled by the plaintiff's
employer. Affirming the Appellate Division's reinstatement of
the plaintiff's cause of action against Ench, this Court
reaffirmed the principle endorsed by the Court of Errors and
Appeals in Younkers, supra, that "'"there is an inference that
the actor remains in his general employment so long as, by the
service rendered another, he is performing the business entrusted
to him by the general employer."'" 13 N.J. at 6 (quoting
Younkers, supra, 130 N.J.L. at 610 (quoting Restatement of Agency
§ 227 cmt. (b) (1933))).
A leading case in New Jersey's borrowed-servant
jurisprudence is Viggiano, supra,
55 N.J. Super. 114, which
involved a claim for personal injuries caused by the negligence
of the driver of a dump truck that had been leased by the
plaintiff's employer in connection with the construction of a
utility plant. The trial court dismissed the action against the
dump-truck driver's general employer on the ground that the
evidence would not have sustained a jury determination that the
general employer controlled the driver's actions at the time of
the accident. Reversing, the Appellate Division adopted the
reasoning of former Justice Schettino in Devone, supra, holding
that the general employer remained liable if the loaned employee
was furthering its interests at the time of the tort:
As pointed out by Judge Schettino, the
special employer (rentee of the equipment and
operator) may . . . make himself solely
liable by directing the employee to do an act
beyond the service contracted for. (14
N.J. Super., at 415). But as long as the
work being done is within the general
contemplation of the supplier of the
equipment and operator, its performance is
furthering the interest of the general
employer in the sense that it is carrying out
the latter's contractual obligation. This is
not less so because the operator is following
directions of the so-called special employer
in respect to work details. That such
direction would or might occur is in the
contemplation of the contracting parties.
See also Martin v. Perth Amboy Gen. Hosp.,
104 N.J. Super. 335,
348 (App. Div. 1969) (adopting dual liability principle in
reliance on concurring opinion in Devone, supra, and holding both
surgeon and hospital liable for nurses' negligence in mis-counting laparotomy pads during abdominal surgery); J.L. Querner
Truck Lines, Inc. v. Safeway Truck Lines, Inc.,
65 N.J. Super. 554, 561 (App. Div.) (relying on Viggiano, supra, and holding
that "in determining liability to third persons on the basis of
respondeat superior the control exercised by the special employer
is not dispositive. The crucial issue is whether the employee
was furthering the interests of his general employer."), aff'd,
35 N.J. 564 (1961).
In Cross v. Robert E. Lamb, Inc.,
60 N.J. Super. 53 (App.
Div.), certif. denied,
32 N.J. 350 (1960), the plaintiff, an
employee of the plumbing and heating subcontractor on an office
building project, sustained injuries when an outdoor hoist was
negligently operated by an employee of the general contractor.
At the time of the injury, the hoist was being used to lift a
large iron pipe required in connection with the plumbing
subcontract. The general contractor appealed from a judgment on
a jury verdict against it, contending that the hoist operator was
the special employee of the plumbing subcontractor at the time of
the accident. In affirming the liability judgment against the
general contractor, Judge Conford observed:
The law relating to the subject matter
of the present discussion has taken
definitive shape since the concurring opinion
of Judge (now Justice) Schettino in Devone v.
Newark Tidewater Terminal, Inc.,
14 N.J. Super. 401, 406-419 (App. Div. 1951),
the philosophy of which was recently followed
by us in Viggiano v. William C. Reppenhagen,
Inc.,
55 N.J. Super. 114, 118-119 (App. Div.
1950). * * *
* * * *
* * * Notwithstanding Lamb's letting Truskey have the use of its equipment and West's services in operating it for a fixed hourly charge, the work West was doing in lifting pipe on the cable was nevertheless within Lamb's general contemplation, and this none the less because the work required West to follow signals or directions of the Truskey people. See Larocca v. American Chain and Cable Co., 13 N.J. 1, 7 (1953). In doing that work West was furthering the interest of his general employer, Lamb, in that the purpose of letting out the equipment was being fulfilled. * * * Therefore, under the cases cited, Lamb remained liable for the
results of West's negligence whether or not
Truskey might have been concurrently
negligent, a circumstance of no relevance
insofar as plaintiff's action against Lamb is
concerned (plaintiff was not suing Truskey).
As noted, we imply no view on whether T.D.E. is liable under
the doctrine of respondeat superior for the alleged negligence of
its employee Lee committed while under the control of J.H. Reid.
Although acknowledging T.D.E.'s status as a separate corporate
entity that performed a material function for the benefit of J.H.
Reid's construction business, we also express no view on whether
Lee, at the time of the accident, was furthering the interest of
his general employer to the extent considered sufficient by some
courts to justify the imposition of liability on the general
employer. Nor do we express any view on whether J.H. Reid's
control of Lee at the time of the accident is itself sufficient
to resolve the issue of T.D.E.'s liability.
Judgment reversed. The cause is remanded to the Law
Division for further proceedings consistent with this opinion.
Chief Justice Wilentz and Justice Handler join in this
opinion. Justice Pollock has filed a separate dissenting
opinion, in which Justice Garibaldi joins. Justices O'Hern and
Coleman did not participate.
SUPREME COURT OF NEW JERSEY
A-
66 September Term 1993
LINDA VOLB, ADMINISTRATRIX OF
THE ESTATE OF CHARLES VOLB,
INDIVIDUALLY AND AS GUARDIAN AD
LITEM FOR MATTHEW VOLB, CHARLES
VOLB, AND ERIKA VOLB, MINORS,
Plaintiffs-Appellants,
v.
G.E. CAPITAL CORPORATION, J.H.
REID CONSTRUCTION COMPANY, J.H.
REID, INDIVIDUALLY AND T/A J.H.
REID CONSTRUCTION COMPANY, ABC
COMPANY (A FICTITIOUS CORPORATION)
AND JOHN DOES (FICTITIOUS PERSONS),
INDIVIDUALLY AND T/A ABC COMPANY
(A FICTITIOUS CORPORATION),
Defendants,
and
RONALD LEE AND T.D.E. SERVICES,
INC.,
Defendants-Respondents.
POLLOCK, J., dissenting.
In an unreported opinion, the Appellate Division affirmed
the judgment of the Law Division granting summary judgment
dismissing the individual and representative claims of plaintiff
Linda Volb against defendant T.D.E. Services, Inc. (T.D.E.) and
Ronald Lee. I would affirm.
The case arises out of a fatal accident at a construction site on the New Jersey Turnpike. On the date of the accident, J.H. Reid General Contractors, Inc. (Reid) was the general employer of Charles Volb and the special employer of Ronald Lee. Both Lee and Volb were under the exclusive control of Frank Perelko, a Reid supervisor, who had the right to direct their work and to fire them.
The most important factor in determining a special
employer's status is whether the borrowing employer had the right
to control the special employee's work. Indeed, the majority
acknowledges that "the trial court plainly was correct in
concluding that Lee was a special employee of [Reid] . . . ."
Ante at ___ (slip op. at 6). It further acknowledges that "Lee's
status as a special employee of [Reid] compels the conclusion
that Volb's estate cannot sue Lee." Ante at ___ (slip op. at 7).
I agree that plaintiff may not sue Lee. Unlike the majority,
however, I believe that neither may plaintiff sue T.D.E.
To facilitate the hiring of union workers, Reid created T.D.E. and a second subsidiary that is not a party to this action. Reid owned all the stock of both subsidiaries. The four principals of Reid also were the principals of each of the subsidiaries. Apparently, the two subsidiaries hire workers from different unions to work on Reid's construction jobs. Each subsidiary issues paychecks, and Reid delivers them to the
workers. In effect, T.D.E. provides a payroll service for Reid.
According to Lee, Reid had hired him from the union hall of
Teamsters Local 676 to work on the construction site at Exit 7 of
the New Jersey Turnpike. The accident occurred when Perelko
directed Lee to unload a dump truck that G.E. Capital Corporation
had leased to Reid. While Lee was backing up the truck, it
struck and killed Volb.
Plaintiff Linda Volb, as Volb's widow, recovered workers'
compensation benefits from Reid. As administratrix of her
husband's estate, she then sued various defendants, including Lee
and his general employer, T.D.E. The Law Division granted
motions for summary judgment by Lee and T.D.E. The Appellate
Division affirmed. Before us for review is the judgment in favor
of T.D.E.
The issue is whether plaintiff may maintain this
wrongful-death action against T.D.E. Traditionally, an
employer's liability for the negligent acts of a borrowed
employee has depended on whether the employer had retained the
right to control the employee's activities that injured another.
Murin v. Frapaul Constr. Co.,
240 N.J. Super. 600, 607-10 (App.
Div. 1990).
The lower courts correctly concluded that Reid, Lee's
special employer, had exclusive control over Lee when he backed
the truck over the decedent. Lee's general employer, T.D.E., had
neither provided the truck nor retained any control over Lee.
The lower courts ruled, therefore, that T.D.E. was not liable for
Lee's alleged negligence.
On the facts of this case, that straightforward result
comports with both the purpose of tort law and common sense. If
the underlying purpose of tort law is to make the workplace safe,
the responsibility for worker safety belongs to Reid, which
provided the truck and exclusively controlled it, the driver, and
the site. Plaintiff has already recovered workers' compensation
benefits against her decedent's employer, Reid. To impose tort
liability on T.D.E distorts reality. T.D.E. exists so Reid can
bid for union work. Realistically, T.D.E. never could have
controlled Lee and did not control him at the time of the
accident.
Several principles counsel against permitting plaintiff to maintain a wrongful-death action against T.D.E. First, suits against employers for injuries caused by the negligent acts of loaned employees should depend on the retention of the right to control the activity that caused the injuries. Without the right to control, the employer cannot control the risk of injury.
Also, to impose liability on an employer who cannot avoid the ri