Barclay Damon
Barclay Damon

Legal Alert

Second Circuit Certifies Workers’ Compensation Derivative Liability Question to New York Court of Appeals

When an employee is a passenger in a vehicle, and is injured by a co-employee driver’s negligence, the co-employee is protected from liability by New York Workers’ Compensation Law. However, if that vehicle is owned by someone who does not have an employment relationship to the passenger or driver, is he protected as well? The Second Circuit was presented with this precise legal issue in Isabella v. Koubek, No. 12-2905-cv, 2013 U.S. App. LEXIS 16683 (2d Cir. 2013). The Second Circuit found that the issue was not yet addressed by New York Law and certified the question to the New York Court of Appeals. On September 12, 2013, the Court of Appeals accepted the question and the case is currently being briefed.

In Isabella, Plaintiff Matthew Isabella, was a passenger in a car owned by Michael Koubek and driven by Roberta Oldenborg, Koubek’s wife. Oldenborg was driving Koubek’s car back from a business meeting and was involved in an accident with another car driven by Doris Hallock. Isabella, who was a co-worker of Oldenborg, was injured in the accident. The injury occurred in the course of employment and therefore, Isabella was precluded from suing Oldenborg by New York Workers’ Compensation Law.

Subsequently, Isabella filed a suit against Doris Hallock and Peter Hallock. Peter Hallock owned the car driven by Doris. Isabella claimed that Doris Hallock’s negligence was the proximate cause of Isabella’s injuries. In response, the Hallocks filed a third-party complaint against Koubek. Koubek moved for summary judgment, arguing that his wife’s immunity under Section 29(6) of New York Workers’ Compensation Law prevented him from being liable.

The district court denied Koubek’s motion for summary judgment. In making its decision, the district court relied on Clamp v. Estate of Hales, 807 N.Y.S.2d 512 (Sup. Ct. 2005), which held that even though a negligent driver of a car enjoyed statutory immunity under Worker’s Compensation Law Section 29(6), a defendant in Hallocks’ position could sue the owner of the car under New York Vehicle and Traffic Law Section 388.

The issue on appeal to the Second Circuit was whether “Section 388 permits a defendant to proceed with a tort action for contribution against the car owner, even when a direct cause of action by defendant against the driver would be prohibited by [Workers’ Compensation Law].”

The Second Circuit reviewed cases from the New York Court of Appeals and intermediate New York State Courts and found that they suggest that Workers’ Compensation Law bars such a suit against the car owner when the car is driven by a co-worker in the course of employment. The Second Circuit found that in Rauch v. Jones, 4 N.Y.2d 592 (1958), the Court of Appeals held that Section 29(6) prevented plaintiff from suing the owner of a car where, at the time of the accident, the owner had no employment relationship with the plaintiff but the vehicle was operated by the plaintiff’s co-employee in the course of his employment. The Second Circuit also reviewed Kenny v. Bacolo, 61 N.Y.2d 642 (1983), a subsequent New York Court of Appeals case. In Kenny, the court appeared to have precluded derivative liability against a car owner in a contribution action because direct liability against the driver was statutorily prohibited.

The Second Circuit noted that although these Court of Appeals cases, and other intermediate state court cases, suggested that Koubek should be prevented from being held liable under Section 29(6), the more recent decision of Clamp, suggested otherwise. Further, the court reviewed a Court of Appeals case, Tikhonova v. Ford Motor Company, 4 N.Y.3d 621 (2005), which suggested that derivative liability may arise from the negligence of an immune party under certain circumstances, depending on the statutory scheme giving rise to the immunity.

The Second Circuit found that the Court of Appeals had not ruled on this specific legal issue and certified the following question to the New York Court of Appeals:

Whether a defendant may pursue a third-party contribution claim under New York Vehicle and Traffic Law §388 against the owner of a vehicle, where the vehicle driver’s negligence was a substantial factor in causing the plaintiff’s injuries, but the driver is protected from suit by the exclusive remedy provisions of New York Workers’ Compensation Law §29(6)?

The Court of Appeals’ response to this legal question will help determine the extent of protection a vehicle owner has under New York Workers’ Compensation Law when the driver of the vehicle has an employment relationship to the plaintiff.

If you require further information regarding this legal alert, please contact Thomas B. Cronmiller, Chair of the Torts & Products Liability Defense Practice Area at (585) 295-4424 or tcronmiller@hblaw.com.