Minnesota Supreme Court holds Minn. Stat. § 604.02, subd. 1 does not apply in workplace injury cases to limit a third-party tortfeasor’s liability

Late last year, the Minnesota Supreme Court held in Fish v. Ramler Trucking, Inc., 935 N.W.2d 738 (2019) that Minn. Stat. § 604.02, subd. 1 does not apply in workplace injury cases in which a third-party tortfeasor and an employer are both found to be at fault for an employee’s injuries.  Like it or not, the unanimous decision resolves a key unanswered question that has been hotly debated since the supreme court applied the current version of Section 604.02, subd. 1 for the first time in Staab v. Diocese of St. Cloud, 813 N.W.2d 68, 80 (Minn. 2012).  We previously wrote about the lower court decisions and issues before the supreme court here.

As predicted, the supreme court focused on the opening clause of Section 604.02, subd. 1 and whether a jury’s allocation of fault between a third-party tortfeasor and an employer means there are “two or more persons [who] are severally liable” so as to trigger application of the statute.  Based on the case law and relevant statutes at the intersection of the workers’ compensation and tort systems, the supreme court determined that statute does not apply in such cases because an employer and third party are not commonly liable, either jointly or severally, in tort. 

The supreme court reasoned that its recognition of a third party’s limited common-law equitable right to contribution from an at-fault employer in Lambertson v. Cincinnati Welding Corp., 312 Minn. 114, 257 N.W.2d 679 (1977), created an exception to but did not do away with the doctrine of common liability.  In other words, the court read its decision in Lambertson narrowly and refused to extend the reasoning therein to its application of Section 604.02, subd.1.  Instead, the court reaffirmed that common liability does not exist between a third party an employer because of the Workers’ Compensation Act’s exclusivity provision as it held nearly sixty years ago in Hendrickson v. Minnesota Power & Light Co., 104 N.W.2d 843 (Minn. 1960), overruled in part on other grounds by Tolbert v. Gerber Indus., Inc., 255 N.W.2d 362 (Minn. 1977), and held:

Because an employer immune from tort liability under the Workers’ Compensation Act is not a person “severally liable” under Minn. Stat. § 604.02, subd. 1 (2018), a third-party tortfeasor’s liability to an injured employee for a workplace injury is not reduced by the employer’s fault.

In further support of its decision, the supreme court observed that neither Staab, which was not a workplace injury case, nor the current version of Section 604.02, subd. 1 addresses the lack of common liability in such cases to warrant a different result.  Finally, the supreme court wondered whether applying the statute to limit a third-party tortfeasor’s liability in workplace injury cases would result in employers becoming “jointly and severally liable” under the statute despite the Workers’ Compensation Act’s tort immunity for employers.  “That cannot be what the Legislature intended when it amended section 604.02,” the supreme court concluded.

In my opinion, there are three main takeaways from the supreme court’s decision in Fish

First, the outcome highlights the risks inherent in revising the language of an existing statutory provision rather than fully replacing the provision.  While the Legislature no doubt did not intend to impact an employer’s tort immunity when it amended Section 604.02, subd. 1 in 2003, it is undisputed that that the Legislature did intend to limit the tort liability of minimally at-fault tortfeasors, and there is no indication that it only intended the limitation to apply in nonworkplace injury cases.  If we assume the Legislature intended to limit a minimally at-fault tortfeasor’s liability in nonworkplace and workplace injury cases alike, which would clearly be more consistent with the intent of the Workers’ Compensation Act and fairer result, the supreme court has now determined that the amendments did not have the desired effect.  And one of the main reasons for the disconnect is the Legislature’s decision to utilize and only slightly modify the existing language of the statute rather than replacing it entirely. 

When it amended Section 604.02, subd.1, the Legislature simply substituted the word “severally” for the word “jointly,” making several rather than joint and several liability the default rule in Minnesota, and outlined four situations (exceptions) in which a person would nevertheless remain jointly and severally liable despite the reform.  But by maintaining the opening clause, “[w]hen two or more persons are severally liable,” the Legislature set the stage for the supreme court’s decision in Fish that the statute does not limit a minimally at-fault tortfeasor’s liability in workplace injury cases even if that is what the Legislature intended.  Had the Legislature fully replaced or at least more clearly revised Section 604.02, subd. 1, Fish may very well have come out differently. 

Second, the supreme court’s decision in Fish creates an injustice for third-party tortfeasors similar to the injustice created by the court’s decision in Hendrickson such than an extension of the court’s reasoning in Lambertson may be warranted to the apportionment of damages under Section 604.02, subd. 1.  Specifically, there may be an argument in light of the outcome in Fish that an employer’s fault should be considered for purposes of applying Section 604.02, subd. 1 despite the absence of common/several liability between a third-party tortfeasor and at-fault employer in much the same way it was considered to allow for a right of contribution in Lambertson

While there are some clear differences between Lambertson and Fish that would have to be considered, it is no secret that third-party tortfeasors will be treated differently depending on whether they injure an employee or nonemployee under the court’s decision in Fish.  In nonworkplace injury cases, a minimally at-fault tortfeasor will only be liable for its percentage of fault, while a tortfeasor that happens to injury a person in the course and scope of their employment for an at-fault employer will not be able to avail itself of the protections of Section 604.02, subd. 1.  As pointed out in our prior post, this is not only inconsistent with the specific intent of the Workers’ Compensation Act but also fundamentally unfair. 

Since the third-party tortfeasor in Fish did not advocate an extension of Lambertson and the supreme court did not specifically consider whether such an extension might be warranted, the issue may be ripe for further litigation.

Finally, it is important to note that even though the supreme court has now decided that Section 604.02, subd. 1 cannot be applied in workplace injury cases to limit a third-party tortfeasor’s liability, Minn. Stat. § 604.01, subd. 1 still does.  Section 604.01, subd. 1 provides:

Contributory fault does not bar recovery in an action by any person or the person's legal representative to recover damages for fault resulting in death, in injury to person or property, or in economic loss, if the contributory fault was not greater than the fault of the person against whom recovery is sought, but any damages allowed must be diminished in proportion to the amount of fault attributable to the person recovering.

And, in Cambern v. Sioux Tools, Inc., 323 N.W.2d 795, 798-800 (Minn. 1982), the supreme court applied Section 604.01, subd. 1 to bar an employee from recovering from a third-party tortfeasor that was found to be less at fault than the employee even though the only other at-fault party was the employer.  In other words, the supreme court refused to aggregate the fault of a third-party tortfeasor and at-fault employer for purposes of Minn. Stat. § 604.01, subd. 1 and instead compared the fault of the employee and third-party tortfeasor to determine whether the employee was entitled to recover. 

As we observed in the Amicus Brief we submitted on behalf of The Minnesota Defense Lawyers Association in Fish, the supreme court’s decision to consider an employer’s fault for purposes of Section 604.01, subd. 1 but not Section 604.02, subd. 1 is inconsistent and arguably puts nominally at-fault third-party tortfeasors in a catch-22.  They can either go to trial to try to establish that their percentage of fault is less than the employee’s percentage of fault and avoid liability under Cambern or overpay to settle the case and assume the risks and limitations of recovering from an at-fault employer under Lambertson and Minn. Stat. 176.061, subd. 11.  Under the court’s decision, employees have no incentive to settle with nominally at-fault third-party tortfeasors according to their estimated percentages of fault and instead have all the incentive to pursue a full recovery and leave the third party to sort it out from there.  On the other hand, nominally at-fault third-party tortfeasors are left to either assume the liability of the at-fault employer or roll the dice and hope to benefit from the protections of section 604.01, subd. 1.

Now that the supreme court has addressed the applicability of Minn. Stat. § 604.02, subd. 1 in workplace injury cases to limit a third-party tortfeasor’s liability, please contact me or one of the other attorneys in OLWK’s Employer Liability and Workers’ Compensation Subrogation Practice Groups if you have questions regarding the court’s decision, my main takeaways from the decision, or any other employer liability or workers’ compensation subrogation issues.