Glass v. Stahl Specialty Company: Reconciling Third Party's Contribution Rights With Employer's Immunity Under Workers' Compensation

• Publication year: 1983

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 6, No. 2SPRING 1983

Glass v. Stahl Specialty Company: Reconciling Third Party's Contribution Rights with Employer's Immunity under Workers' Compensation

Karin Nyrop(fn*)

Courts and legislatures nationwide have consistently failed to reconcile the conflict between the workers' compensation employer immunity provision and a third party's right of contribution. This conflict intensified in Washington when the Legislature enacted the Tort Reform and Product Liability Act(fn1) containing a provision establishing a right of contribution among jointly and severally liable tortfeasors.(fn2) Faced with the overlap between the new law and workers' compensation, the Washington Supreme Court, in Glass v. Stahl Specialty Co.,(fn3) held that an employer's immunity from tort actions brought by its employees(fn4) prohibits contribution by an employer who is jointly and severally liable. Although the Glass court decision is consistent with the majority view, its reaffirmation of the no contribution rule fails to consider the tension between the policies and interests. Consequently, the Glass decision perpetuates a rule that forces a third party tortfeasor sued by an injured employee to shoulder the entire liability regardless of the employer's fault.

This note argues that the correct resolution of the tension between the employer's immunity and the third party's right of contribution requires balancing the interests of all parties. The employer has an interest in retaining the workers' compensation law's exclusive no-fault recovery system;(fn5) the third party tortfeasor seeks to avoid shouldering the entire liability of another at-fault tortfeasor capable of contribution. At the same time, the employee has a right to full and speedy compensation, and the state has an interest in maintaining the financial stability of its accident fund.(fn6) This note explores the policies and legal arguments supporting the majority view of no contribution and the minority views of full and partial contribution and concludes that, contrary to the opinion of many courts, these interests can be balanced and the tort and workers' compensation systems reconciled by allowing a limited form of contribution.

Because Washington courts have failed to resolve the conflict between the workers' compensation system and the doctrine of contribution, this note suggests that the legislature should amend Washington's workers' compensation law. The Industrial Insurance Department's(fn7) lien and subrogation rights should be limited when the employer is at fault.(fn8) If the employee has been compensated by workers' compensatory his judgment against the third party tortfeasor should be diminished by this amount, or the amount calculated from the employer's percentage of fault, whichever is less, with the Department retaining a lien on the difference between the percentage of fault and the amount of compensation paid. If no payment has been made or future payments are available, the third party tortfeasor should pay the employee in full and be assigned the employee's compensation rights. In addition, employers' premiums should be modified and base rates increased to reflect their cost experience. Although these revisions will place heavier burdens on the employers than workers' compensation currently imposes, these changes reconcile the tort and workers' compensation systems by distributing the burdens of workplace injuries in an equitable, efficient and balanced fashion.

I. The Case

James Glass's right hand was injured by an aluminum die case molding machine, manufactured by Stahl Specialty Company (Stahl). At the time of his injury, Glass was operating the machine in the course and scope of his employment with Morel Foundry Corporation (Morel). After receiving workers' compensation benefits, Glass brought a products liability action against Stahl alleging negligence and strict liability as theories of recovery. Stahl then impleaded Morel on a theory of contribution under the 1981 contribution statute.(fn9) Morel's motion for dismissal was denied, but on appeal,(fn10) the Washington Supreme Court held that the trial court erred in failing to dismiss Morel from the case. The court found that the new contribution statute does not apply when the joint tortfeasor is an employer.

Adhering to the view taken prior to the passage of the contribution statute,(fn11) the court reasoned that the Industrial Insurance Act(fn12) had abolished judicial jurisdiction over civil actions for personal injuries between employers and employees.(fn13) Therefore, the court proscribed impleading of employers under the new contribution statute as a device to permit the court to "assume jurisdiction over this immunized area of tort law."(fn14) The court found that the contribution statute, creating a right of contribution only when two or more persons are jointly and severally liable(fn15) to a single plaintiff, did not change existing law pertaining to employers. Under the Industrial Insurance Act, when an employee is injured on the job, the employer is immune from suit by the employee.(fn16) Therefore, the court reasoned that the requisite joint and several liability is missing. Without joint and several liability a right of contribution cannot arise. In addition, the court determined that sound principles of statutory construction and the legislative history of the Tort Reform and Products Liability Act contradicted any argument that the legislature intended to alter existing case law.(fn17)

Although Glass comports with the majority view,(fn18) the decision fails to penetrate the overlapping legislative schemes to reach the underlying issues. The court acknowledged the unfairness of saddling one wrongdoer with all the damages when the other wrongdoer is an employer but nevertheless refused to weigh the public policy implications that result, preferring to leave the issue to the legislature. Concededly, the legislature may be in a better position to harmonize the two statutory schemes,(fn19) but the court's summary dismissal of policy considerations leaves little to guide future application of the new right of contribution statute. Thus, the court unnecessarily perpetuates the unfair no contribution rule without illuminating the purpose and policies underlying the rule. The way other courts have dealt with this issue can provide helpful analysis in evaluating the Washington court's decision. It is important, however, to review the policies that underlie the rule.

II. Analysis of Policies

Workers' compensation is a no-fault system(fn20) designed to overcome the hardships imposed by the common law upon an employee who is suing his employer for a workplace injury. Washington's workers' compensation statute is not an employer's liability act; it is an industrial insurance statute.(fn21) The employee looks to a fund fed by various employers rather than to the employer for the scheduled mandatory compensation. An employer cannot exempt himself from the burdens of the Act.(fn22) In exchange for paying premiums to the Industrial Insurance Fund, the employer expects the fund to assume financial responsibility for compensating injured workers. To create this limited liability, employers and employees compromised.(fn23) The employer gave up all common law defenses and agreed to pay for insurance that would cover all claims by the employee even when the employer was not at fault. The employee sacrificed his common law cause of action against the employer, accepting compensation far below that which he might have won in court on the assurance that he would receive the small sum without having to fight for it.(fn24) By compromising these rights, workers' compensation provides injured workers with immediate relief and places the burden of accidents on the industry involved rather than on other public assistance programs. It eliminates expensive and burdensome litigation, promotes safety in the workplace, reduces friction between the worker and the employer, and results in more harmonious industrial relations than were possible previously.(fn25)

The merit of this compromise, made 60 years ago, needs revaluation today. Since the introduction of workers' compensation, many of the defenses given up by the employer in exchange for immunity from litigation have also been abolished in the tort system.(fn26) Thus, the employer's quid pro quo has been partially abrogated. Furthermore, one study suggests that workers' compensation currently provides inadequate benefits.(fn27) Despite these inefficiencies and inequities, however, the National Commission on State Workers' Compensation Laws rejected a return to civil damages.(fn28) Arguably, workers' compensation still provides desired employee relief and employer security, but its perceived failings suggest a need to reform and limit the system. Its recognized benefits compel no more than preservation of its basic structure and integrity.

In contrast to no-fault workers' compensation, tort law is a fault system(fn29) designed to compensate an injured party for injuries caused by others. The Legislature restructured Washington's tort law in 1981 by enacting the Tort Reform and Product Liability Act.(fn30) The basic tenet behind the Tort Reform Act (the Act) is the creation of a fairer and more equitable apportionment of liability among parties at fault.(fn31) The...