by Beth A. Jenson Prouty, Joseph M. Nemo, and Paul J. Rocheford
In the November 27, 2019, decision of Fish v. Ramler Trucking Inc., the Minnesota Supreme Court affirmed the Court of Appeals, concluding that a third-party tortfeasor (“tortfeasor”) is responsible for fault allocated to an employer for a workplace injury. The Court concluded that Minnesota’s joint and several liability statute, Minn. Stat. § 604.02, only applies when there are two or more severally liable parties. Because an employer is immune from tort liability under the Workers’ Compensation Act, and thus is not a person “severally liable,” the statute does not apply to reduce the tortfeasor’s liability by an employer’s fault.
In Fish, the plaintiff employee was injured on the job. He collected workers’ compensation benefits, and brought a lawsuit against Ramler Trucking, a tortfeasor, whom he alleged contributed to his injuries. The jury awarded Fish damages of $454,913.04, and apportioned fault 75% to the employer, 20% to Ramler, and 5% to Fish. The district court found that, after collateral source offsets, Ramler was only liable for its 20% share of fault (which the district court calculated to be $55,782.72) because it was not jointly and severally liable (more than 50% at fault) under Minn. Stat. § 604.02.
The Minnesota Supreme Court, affirming the Court of Appeals, concluded that Ramler was liable for the combined fault of both Ramler and the employer, and thus was required to pay the full amount of the jury verdict, subject to appropriate collateral source offsets and less the 5% of fault allocated to Fish. Both Ramler’s Lambertson contribution claim against the employer and the employer’s subrogation claim against Ramler had been settled before trial.
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In 2003, the legislature amended Minnesota’s joint and several liability statute, Minn. Stat. § 604.02, to provide that when two or more persons are severally liable for a plaintiff’s damages, each person’s contributions are limited in proportion to their own fault except under four enumerated circumstances, one of which is that if a person is more than 50% at fault that person is jointly and severally liable for the whole award. Following this amendment, litigants questioned whether the percentage of fault allocated to the employer in a workplace injury claim was reallocated to the tortfeasor, as it historically had been, or whether the employer’s percentage of fault reduced the plaintiff employee’s damages even though the employee could not recover the damages from the employer. Fish concludes the 2003 amendments to Minn. Stat. § 604.02 do not change the treatment of fault allocated to an employer. A tortfeasor is liable for the fault allocated to an employer because there is no “several” liability between the two and that is required to trigger application of Minn. Stat. § 604.02.
A tortfeasor faced with potential liability for an employer’s fault is not left without a remedy. The tortfeasor can join the employer as a third-party defendant in the lawsuit brought by the employee, even though the employee cannot generally sue the employer for tort damages due to the exclusive remedy of workers’ compensation. The tortfeasor can then seek reimbursement through contribution from the employer in proportion to the employer’s assessed level of fault, subject to a statutory cap on that liability, which limits the employer’s contribution to its net subrogation recovery under Minn. Stat. § 176.061, Subd. 6 (a Lambertson claim). See Minn. Stat. § 176.061, Subd. 11. Alternatively, the employer added as a third-party defendant can waive its right of subrogation in order to dissolve any liability to the tortfeasor (“waive and walk”). The tortfeasor can then request a collateral source offset of damages awarded based on duplicative workers’ compensation benefits paid for that same damage. While this framework allows for partial recovery by a tortfeasor against an employer, it does create situations where the tortfeasor is required to pay for the employer’s fault to the extent the employer’s liability exceeds the tortfeasor’s right of contribution against the employer or the collateral source offset.
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The interplay between employer liability and a third-party tortfeasor’s liability is complex. The members of Arthur Chapman’s General Liability and Subrogation Group stand ready to answer your questions.
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