Acker v. Ray Angelini, Inc.

259 F.Supp.3d 305

Matthew ACKER, Plaintiff,

v.RAY ANGELINI, INC. and AJA Skies the Limit, Inc., Defendants,

v.DDM Steel Construction, LLC, Frank Lubisky d/b/a Union Roofing, and Union Roofing Contractors, Inc., d/b/a Union Roofing, Third Party Defendants.

CIVIL ACTION No. 14–0019

United States District Court, E.D. Pennsylvania.

Signed August 16, 2016

Richard T. Kupersmith, Anthony John Nardozzi, James M. Alexander, Damien Zillas, Haggerty, Goldberg, Schleifer & Kupersmith, P.C., Philadelphia, PA, for Plaintiff.

John F. Kent, George F. Dale, Kent & McBride, P.C., Philadelphia, PA, Thomas D. Summerville, Snyder & Barrett, for Defendants.

Robyn Farrell McGrath, Sweeney & Sheehan, P.C., Bryan P. Werley, Zarwin Baum, Katelyn Taylor Czarnik, Zarwin Baum Devito Kaplan Schaer & Toddy PC, Philadelphia, PA, for Third Party Defendants.

MEMORANDUM

McHugh, United States District Judge

This is a straightforward case arising out of a construction site accident, brought by a Pennsylvania worker who was injured on a public works project in New Jersey. The general contractor responsible for the project is a New Jersey corporation, and the roofing firm that employed Plaintiff was retained under a subcontract specifically calling for the application of New Jersey law. Despite this Jersey nexus, these two parties now seek to cross back over the Delaware River and win summary judgment through the application of Pennsylvania law, claiming employer immunity. Because I conclude that New Jersey law applies, both Motions will be denied.

I. Facts

The controlling issue is choice of law, and for that reason, the material facts involve the domicile of the parties, the relationship between them, and their respective relationships with the interested states. Defendant Ray Angelini, Inc. (RAI) is a New Jersey Corporation that contracted with the County of Salem, New Jersey to act as the general contractor for the construction of a county office complex. RAI then subcontracted with "Union Roofing,"¹ a Pennsylvania corporation, to provide labor, materials, tools, and equipment to complete the roofing portions of the project.² Plaintiff Matthew Acker, a Pennsylvania citizen, was an employee of Union Roofing. While working on the project in March 2012, Acker fell through decking on the roof and sustained serious injuries. He received benefits under the Pennsylvania workers' compensation statute through Union Roofing, his direct employer, and its workers compensation insurer. He also filed suit against RAI, as general contractor, and one of the subcontractors involved in construction of the roof decking. RAI in turn joined Plaintiff's employer under an indemnity clause in its subcontract. Both RAI and Union Roofing claim immunity as Plaintiff's employer under Pennsylvania law—RAI as a "statutory employer" and Union Roofing as a direct employer.

II. Discussion

A. Controlling Standard

These Motions are governed by the well-established test set forth in Federal Rule of Civil Procedure 56(a), as amplified by Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Because no material fact is in dispute, the issues are purely ones of law.

B. RAI's Motion for Summary Judgment—Statutory Employer Defense

RAI moves for summary judgment on the ground that it was Plaintiff's "statutory employer" and is therefore entitled to immunity from tort claims for work-related injuries under Pennsylvania's Workers' Compensation Act. A statutory employer is one who has secondary liability for payment of compensation to an injured worker if the direct employer does not meet its obligation under Pennsylvania law to do so, and who therefore enjoys a concomitant immunity from liability in tort. 77 Pa. Stat. § 462; Patton v. Worthington Assocs., Inc. , 625 Pa. 1, 4–5, 89 A.3d 643, 645 (2014). Plaintiff does not contest that RAI would meet Pennsylvania's legal definition of a statutory employer, but he argues that the matter is controlled by New Jersey law, which does not confer immunity on a statutory employer on facts such as these.³

A federal court exercising diversity jurisdiction must apply the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Pennsylvania uses a two-part⁴ test when determining which state's laws apply in a conflict of laws problem. First, a court must determine if there is an "actual or real conflict between the potentially applicable laws," such that the application of each state's respective substantive law produces a contrary result. Hammersmith v. TIG Ins. Co. , 480 F.3d 220, 230 (3d Cir. 2007). In the first instance, the question is whether the laws of the competing jurisdictions would treat the matter differently.

Facially, a conflict exists in this case. Under Pennsylvania law, because a general contractor stands behind an injured worker's direct employer with a contingent responsibility to provide benefits, the general contractor is entitled to immunity from suit by the injured worker as the "statutory employer" even where it is not actually called upon to provide compensation. Patton , 625 Pa. at 4–5, 89 A.3d at 645 ; 77 Pa. Stat. § 462. New Jersey has made a different policy choice. Unless the general contractor is in fact required to step into the shoes of a subcontracting employer and pay benefits, an injured worker retains the right to sue the general contractor for a full measure of third-party damages. Wilson v. Faull , 27 N.J. 105, 141 A.2d 768, 772–73 (1958) ; N.J. Stat. Ann. § 34:15–40.

But as my colleague Judge Baylson (sitting by designation) pointed out in Hammersmith , there is some confusion about what constitutes a "true" conflict under Pennsylvania law. Hammersmith , 480 F.3d at 229. Even where differences exist, a closer reading of Pennsylvania law, and one that is more faithful to its seminal choice of law cases, Griffith v. United Air Lines, Inc. , 416 Pa. 1, 203 A.2d 796 (1964), and Cipolla v. Shaposka , 439 Pa. 563, 267 A.2d 854 (1970), requires a court to further classify the conflict by inquiring whether the interests of one jurisdiction would be frustrated by application of the other state's law. Id. at 230. Although Pennsylvania and New Jersey would approach the issue differently, I see no true conflict in this case because there is no policy interest of Pennsylvania that would be frustrated by the application of New Jersey law. Pennsylvania undeniably has an interest in seeing that one of its injured citizens is compensated. That interest is fundamental under Pennsylvania law, embodied in Article III, Section 18 of its Constitution, which provides that except for the specific purpose of establishing a system of workers' compensation, the legislature may not limit damages. Pennsylvania would have no interest in limiting the liability of a New Jersey corporation for an accident that happened in New Jersey, the consequences of which are borne by a Pennsylvania citizen in Pennsylvania. Moreover, the Pennsylvania Workers' Compensation Act creates a right of subrogation on the part of an employer responsible for payment of benefits. 77 Pa. Cons. Stat. § 671.

Pennsylvania would have no interest in limiting the ability of a Pennsylvania employer to enforce that right of subrogation against a New Jersey corporation for an accident that happened in New Jersey. Granted, as discussed below, on the particular facts of this case, if RAI lacks immunity as statutory employer, its liability might flow back to Plaintiff's employer by operation of contract. But that specific outcome here would not frustrate any public policy of Pennsylvania, because its Workers' Compensation Act specifically permits a direct employer to waive immunity by signing an indemnity agreement, 77 Pa. Cons. Stat. § 481(b), as Union Roofing did here.

RAI argues that it had a contingent liability to pay benefits under the Pennsylvania statute, thereby entitling it to the protection of Pennsylvania law. But it cites no authority for the proposition that Pennsylvania could somehow force a New Jersey general contractor to pay benefits under the Pennsylvania statute for an accident that happened in New Jersey. More to the point, in considering the contingent exposure of general contractors obligated to serve as secondary guarantors of compensation, New Jersey did not find that burden sufficient to justify a grant of immunity. See Boehm v. Witte , 95 N.J.Super. 359, 231 A.2d 240, 245 (N.J. Super. Ct. Law Div. 1967).

Even if I assume a true conflict and proceed to the next step in the analysis, a weighing of the interests of the two states, New Jersey has the most significant relationship to this dispute. This analysis requires more than a mere counting of contacts; it requires a qualitative analysis of the policies and interests underlying each state's approach to the issue. Hammersmith , 480 F.3d at 231. New Jersey's interest in regulating the conduct of contractors performing public works projects within its borders is self-evident. In an analogous case, Le–Jeune v. Bliss–Salem, Inc. , 85 F.3d 1069 (3d Cir. 1996), the Court of Appeals applied Pennsylvania choice of law principles to a case brought by a Pennsylvanian for injuries suffered at a Delaware work site and held that Delaware law applied. Although the site of an accident is no longer controlling, where it is not fortuitous, and where the negligent conduct at issue occurred within a state, that state's interest in "regulating purposeful economic activity within its borders" would be impaired by application of another state's law. Id. at 1072.

Such regulation is particularly important in the context of industries such as construction, which bring with them an inherent risk of injury. Although this case does not involve a fatality, according to statistics maintained by the Occupational Safety and Health Administration (OSHA), in 2014, 20.5% of private industry fatalities were in construction, and of these...