Defending property owners in toxic and hazardous substances-related premises liability litigation.

• Author: Cohen, Roy Alan

PREMISES LIABILITY cases for property owners and operators have increased exponentially over the last ten years as a result of a developing trend in toxic tort litigation. While these types of cases involve a broad range of hazardous substance exposures, asbestos litigation enjoys the most prominent role based on the sheer numbers of plaintiffs seeking pools of available resources and insurance coverage.

Premises liability claims are most often filed by three categories of plaintiffs:

(A) Employees of the owner who attempt to circumvent the workers' compensation bar to recovery;

(B) Employees of outside contractors hired by either the owner or other contractors; or

(C) Household members who never worked at the facility but claim exposure to hazardous substances brought into their home on the clothing of an employee or contractor working at the facility.

This article reviews the liability theories, the legal standards applicable to direct employees, outside contractors, and non-employee bystanders in household exposure cases, and provides some perspectives on the defense of these claims with an emphasis on cases from jurisdictions with some of the more comprehensive decisions on the subject.

1. Claims by Employees Against The Employer/Property Owner

   In many states, employees are barred from bringing suit against their employer for personal injury based on the exclusive remedy provisions contained in most state workers' compensation statutes. The New Jersey Workers' Compensation Act, (1) (the "Act") reflects the policy and objectives of the typical state workers' compensation system, constituting the usual trade-off whereby employees relinquish their right to pursue common-law remedies in exchange for automatic entitlement to certain benefits whenever they sustain injury arising in the course of their employment. (2)

   As in most states, an exception to the bar exists where plaintiff is able to demonstrate that the employer committed an "intentional wrong" that resulted in the employee's injury or death. (3) States vary on the definition of an intentional act sufficient to circumvent the bar, and the often cited and misinterpreted New Jersey Supreme Court decision, Millison v. E.I. du Pont de Nemours & Co., is such a case. Plaintiffs were former employees who were screened for asbestos-related disease and alleged that DuPont intentionally concealed the results which confirmed that they were suffering from an asbestos-related disease. Discovery revealed that the plaintiffs had routine work physicals and chest x-rays that reflected asbestos-related lung disease, and that the plant physician did not reveal this information to the employees.

   In determining whether the employer's conduct rises to the level of an "intentional wrong," the Court held that an employee could prove that an employer committed an intentional wrong not only by demonstrating that the employer subjectively intended to injure him, but also by proving that the employer knew that an injury was "substantially certain" to result in view of all the facts and circumstances. In applying this "substantial certainty" test, the Court held that the act of examining the plaintiffs, discovering the asbestos-related disease, and then returning them to the workplace without warning that the disease could be aggravated by further exposure was sufficient to deny the employer's motion for summary judgment. The Millison decision is often cited for various propositions; however, many such claims are misplaced. It is important to note that the Court recognized that the knowing exposure of an employers' workers to potentially hazardous substances is not the type of conduct alone that would permit a civil suit against the employer. Rather, the actionable conduct is the affirmative knowledge of the x-ray results, concealing those results from the workers, and then returning them to their same job that gives rise to a permissible claim. (4)

   The New Jersey Supreme Court further refined the definition of "intentional wrong" in Laidlow v. Hariton Mach. Co., (5) a product liability suit in which plaintiff claimed that an employer's removal or alteration of a safety device qualified as an intentional wrong. The "Millison-Laidlow standard," now the standard by which New Jersey courts assess the intentional wrong exception to the workers' compensation bar, is a two-pronged test to determine if the alleged conduct constitutes an intentional wrong. The first prong, or "conduct prong," requires the employee to prove that the employer acted with knowledge that an injury was substantially or "virtually" certain to occur. The second prong, or "context prong," requires the employee to prove that the injury and the surrounding circumstances were not commonplace in the industry nor "part and parcel of the hazards of everyday industrial life." (6)

   Further refining the concepts, in Crippen v. Central Jersey Concrete Pipe Co., (7) the Appellate Division ruled that the plaintiff satisfied the conduct and context prongs by showing that the employer failed to correct numerous OSHA violations regarding safety training, which it knew were substantially certain to cause injury or death to its employees. Plaintiff was walking on a plank without railings over a sand hopper when he fell in and suffocated. OSHA had previously cited the company for this violation and also discovered that the employer had deceived OSHA by reporting that they were addressing the violations when, in fact, they did nothing to abate the hazardous condition.

   The court ruled that both the conduct and context prongs were satisfied under the circumstances and employers' argument that there had been no prior accidents on the plank was insufficient to preclude a finding of intentional conduct. Crippen is a good example of the difficulty in proving the intentional wrong exception as the court notes that even with knowledge of multiple serious OSHA violations, the employer would likely have been immune from suit except for the fact that they had intentionally and systematically concealed information from OSHA.

   At this point in the evolution of the new standard, some employers interpreted the decisions as placing the emphasis on deception and concealment. However, in Mull v. Zeta Consumer Prod., (8) the Court clarified that its review and the ultimate decision would be based on a review of all facts. Plaintiff was injured while trying to remove debris that jammed a machine on which the employer had disengaged a safety device. The employer was aware of the potentially dangerous consequences and had been cited for various OSHA violations including one involving a similar injury. The Court found that the facts satisfied the "conduct" prong by showing that other employees had complained about the dangerous condition and the presence of OSHA violations based on the lack of effective safety procedures. The employee argued that there was no deception toward OSHA but the court concluded that although "deception was a prominent factor in its [Laidlow] analysis no one fact compelled the holding ... [and] the decision was based on the totality of the facts." (9)

   While some jurisdictions (like New York) follow a similar statutory and interpretive schemes to New Jersey, (10) jurisdictions like West Virginia and Texas have created less stringent exceptions to the workers' compensation bar to suit and allow employees to sue employers based on proof of the employer's gross negligence or reckless conduct. (11)

   Presently, there is no bright line rule interpreting what type of conduct will permit an employee to proceed with a common law negligence claim against his or her employer. In those jurisdictions that require "intentional conduct," the conduct standard is very high, and, so far, the courts have allowed these claims to proceed only under limited circumstances where the employer has actual knowledge that their actions will almost certainly result in the injury or death of an employee. The courts have clearly analyzed the application on a case-by-case basis, and in most instances, employers must proceed through the discovery process in that most courts will provide the plaintiff an opportunity to develop facts to support the claim.

2. Claims by Employees of Outside Contractors Against A Property Owner

   More recently, the new wave of claims against property owners have been filed by employees of independent contractors who were retained by the owner or other contractors to perform repairs, remodeling, construction, or similar operations on their premises. In almost all jurisdictions, an employee of an independent contractor is considered a "business invitee" for the purposes of a liability analysis. It is well-established law that business invitees enjoy the highest standard of care under tort law, and premises owners generally have an obligation to use reasonable care to make the premises safe, including the responsibility to make reasonable inspections of the premises, discover and repair obvious defects and at least warn of latent defects that can cause injury. The specific standard of care imposed on a property owner will depend on the origin of the alleged dangerous condition.

   In cases where the plaintiff alleges injury due to a dangerous condition that allegedly existed on the property before his arrival and arose outside of his work activity, the property owner in most jurisdictions will be held to a standard of care based on general negligence principles. In this type of case, the employer's actual or constructive knowledge of the condition and the "foreseeablity" of injury to plaintiff are the critical issues. In...