June 24, 2013

Connecticut: The Hard Edge of Exclusive Remedy

Connecticut is one of the highest cost states in the country, rising to #2 in the 2012 Oregon survey and a consistent source of pain to the state's employers. So we might expect that it would prove flexible to the point of surrender in the contentious area of exclusive remedy. Not so. The state Supreme Court recently barred a factory worker from accessing tort liability in a case involving what appeared to be extreme employer misconduct.

Rajanikant Patel worked the night shift as a machine operator for Flexo Converters, a manufacturer of paper bags. He was injured while trying to remove a bag that was jammed in the machine he was operating. He claimed that the machine guard had been removed and that his supervisor ordered him to reach in and remove the bag. Patel further claimed that the supervisor would not allow him to shut off the machine and threatened to fire him if he fell short of his quota of 90 bags per minute. [I will think of Patel every time I am asked the inevitable question, "Paper or plastic?"] Patel did as he was ordered and suffered the consequences, although the court ruling does not specify the extent of his injuries.

Comp or Tort?
To pierce comp's exclusive remedy shield, Patel must prove two distinct things: that his employer acted in full knowledge that he would be injured in carrying out the task and that his supervisor acted as an alter ego of the corporation. On the first point, the defense denied Patel's version of the event, claiming that there was no substantial certainty that removing the stuck bag would injure Patel. On the second, and in this case more compelling point, there was no evidence that Patel's supervisor was an "alter ego" of the corporation.

Here is the court's summary of the alter ego issue, part of its approval of a lower court's summary judgment in favor of Flexo:

In Jett v. Dunlap, supra, 179 Conn. 219, this court announced a narrow exception to the exclusivity of the act for intentional torts committed by an employer or a fellow employee ''identified as the alter ego of the corporation . . . .'' The court expressly declined, however, to extend the exception to a supervisory employee's intentional torts. The court reasoned that ''[t]he correct distinction to be drawn . . . is between a supervisory employee and a person who can be characterized as the alter ego of the corporation. If the assailant is of such rank in the corporation that he may be deemed the alter ego of the corporation under the standards governing disregard of the corporate entity, then attribution of corporate responsibility for the actor's conduct is appropriate. It is inappropriate where the actor is merely a foreman or supervisor.''
The alter ego test is stringent. The supervisory employee alleged to have intentionally injured the plaintiff must be the employer's alter ego under the ''standards governing disregard of the corporate entity''; Jett v. Dunlap, supra, 179 Conn. 219; a test corresponding to the requirements for piercing the corporate veil. ''The concept of piercing the corporate veil is equitable in nature. . . . No hard and fast rule . . . as to the conditions under which the entity may be disregarded can be stated as they vary according to the circumstances of each case.'' (Citations omitted; internal quotation marks omitted.) Naples v. Keystone Building & Development Corp., 295 Conn. 214, 233, 990 A.2d 326 (2010). The standard requires that the corporation, functionally speaking, have no separate existence from the alter ego who controls and dominates the corporation's affairs.

Connecticut has set a high standard for piercing the comp shield of exclusive remedy. This is not necessarily a bad thing, but it does raise a potential issue of fairness. Would the exclusion include egregious and potentially criminal acts by a supervisor: for example, a supervisor orders an employee to ignore standard safety procedures, using the threat of termination, and the employee is severely injured or even killed as a result. According to this ruling, as long as a "mere" supervisor directed the employee, and as long as the supervisor was not explicitly directed by company owners, the latter cannot be held accountable. Comp remains the only remedy for the injured worker.

Accountability in the Gray Zone
There may be enough ambiguity in Patel's situation to justify the retention of the comp shield, but it is not difficult to imagine a situation where exclusive remedy shields a company from what should be the core responsibility of providing a workplace free from unusual risk of injury.

Patel may have been injured due to the wilful intent of his supervisor, but the court has ruled that his only recourse is comp. In Connecticut, "exclusive remedy" comes with a hard edge that basically cuts one way, in the direction of the state's hard-pressed employers.

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This page contains a single entry by Jon Coppelman published on June 24, 2013 9:54 AM.

News roundup: Health wonks, aging issues, apps, ACA, women & more items of note was the previous entry in this blog.

Walking down the grain ... and the fines is the next entry in this blog.

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