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Arcell v. Ashland Chemical Co.

Decided: July 14, 1977.

CHARLES ARCELL ET AL., PLAINTIFFS,
v.
ASHLAND CHEMICAL CO., INC., ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANTS. GEORGE WARBECK ET AL., PLAINTIFFS, V. ASHLAND CHEMICAL CO., INC., ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANTS. ALBERT MURPH ET AL., PLAINTIFFS, V. ASHLAND CHEMICAL CO., INC., ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANTS. CHARLES ARCELL ET AL., PLAINTIFFS, V. COLGATE PALMOLIVE CORP. ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANTS. ELEANOR M. BERGER, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF EDWARD BERGER DECEASED, PLAINTIFF, V. DEWEY & ALMY CHEMICAL DIVISION, W.R. GRACE CO. ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANTS. EDWARD WILCZEK ET AL., PLAINTIFFS, V. UNION CARBIDE CORP. ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., THIRD-PARTY DEFENDANT. VERA DIANA ET AL., PLAINTIFFS, V. UNION CARBIDE CORP. ET AL., DEFENDANTS AND THIRD-PARTY PLAINTIFFS, V. AMERICAN CAN COMPANY ET AL., DEFENDANTS



Tarleton, J.s.c.

Tarleton

In these seven products liability cases, third-party defendant and fourth-party plaintiff American Can has renewed its motion for dismissal of the third-party complaints and has moved for dismissal of fourth-party defendant DuPont's counterclaim for express indemnification.

Plaintiffs are present or former employees of American Can who worked at various New Jersey locations between 1969 and 1975. They name as defendants various manufacturers or suppliers of chemicals delivered to American Can for use in its manufacturing operation, and the Manufacturing Chemists Association (MCA), a company engaged in standardizing labeling requirements for chemicals intended for industrial use. The complaints are based upon negligence, strict liability and breach of warranty. Plaintiffs allege that they were exposed to poisonous fumes and vapors causing severe personal injuries or death for which they seek damages.

In Arcell*fn1 703 plaintiffs sue 32 defendants; in Kurela/Warbeck 136 plaintiffs sue 32 defendants; in Berger plaintiff sues 32 defendants; in Diana 59 plaintiffs sue 32 defendants, and in Wilczek 52 plaintiffs sue 32 defendants.

Diana and Wilczek have been stayed until further order of the court. American Can is a third-party defendant in the seven cases and has fourth-partied DuPont seeking indemnification and contribution.

In a letter opinion of January 14, 1976 American Can's original motion to dismiss the third-party complaints under R. 4:6-2(e) in the Arcell and Kurela/Warbeck actions was denied without prejudice pending completion of discovery. Orders were entered on January 23, 1976; American Can's motions for leave to appeal were denied by the Appellate Division on March 30, 1976 and the Supreme Court on May 18, 1976. American Can renews its motion to dismiss the third-party complaints, relying on recent decisional authority that it contends precludes its continued participation as a third-party defendant for contribution or indemnification. It also seeks to dismiss DuPont's counterclaim for express indemnification.

The third-party complaints seek contribution under the New Jersey Joint Tortfeasors Act, N.J.S.A. 2A:53A-1, and the Comparative Negligence Act, N.J.S.A. 2A:15-1; common law indemnification; a declaration that the Joint Tortfeasors Act, the Comparative Negligence Act and the exclusive remedy provision of the Workers' Compensation Act, N.J.S.A. 34:15-8, are unconstitutional; and orders under R. 4:18-1(c) permitting inspection of American Can's plants, the production of documents, use of interrogatories, requests for admissions and depositions. DuPont seeks express indemnification based upon language appearing in its invoices of products shipped to American Can.

In resisting American Can's motions defendants marshall the following arguments: American Can breached a duty owed them to use the chemicals in accordance with the warnings and instructions supplied to it in light of its detailed knowledge of the particular environment in which the chemicals were to be used; the products furnished were mixed and combined by American Can for particular commercial and industrial processes in a manner not reasonably

foreseeable by defendants; American Can did not independently test and analyze the properties and characteristics of the supplied chemical combinations and did not implement appropriate precautions and safeguards; American Can was aware of the hazards associated with the use of the chemicals supplied from its own experience, from its own environmental tests and from tests conducted by state and federal agencies; American Can negotiated with representatives of plaintiffs' union and representatives of various government organizations to allow it to ignore or delay implementation of health and safety measures.

Defendants further rely upon the existence of a "special legal relationship" to claim indemnification and cite prematurity and incomplete discovery as additional reasons mandating denial of American Can's renewed motion.

CONTRIBUTION

Defendants project three arguments in support of their contribution claim against American Can. First, they argue that Farren v. New Jersey Turnpike Auth. , 31 N.J. Super. 356 (App. Div. 1954), has been impliedly overruled by the Comparative Negligence Act. If their contribution argument should fail, defendants urge that American Can remain in the case on the authority of Connar v. West Shore Equipment of Milwaukee , 68 Wis. 2d 42, 227 N.W. 2d 660 (Sup. Ct. 1975). Lastly, they seek the benefit of the " Murray Credit" doctrine as reported in Murray v. United States , 132 U.S. App. D.C. 91, 405 F.2d 1361 (D.C. Cir. 1968).

Farren held that a tortfeasor may not obtain contribution from an employer subject to the Workers' Compensation Act. Since an employer covered by the Compensation Act is not liable in tort to its employee, the employer is not a "joint tortfeasor" within the meaning of the Contribution Act. Farren, supra , 31 N.J. Super. at 360-361. Public policy as expressed in the Workers' Compensation Act supports this view, for to allow a third party to obtain

contribution from an employer would effectively hold the employer liable to the employee for negligence which is expressly prohibited by the Workers' Compensation Act. Adler's Quality Bakery Inc. v. Gasteria, Inc. , 32 N.J. 55, 75 (1960). While the wisdom of this rule has been questioned, see, e.g. , Mitchell, "Products Liability, Workmen's Compensation and the Industrial Accident," 14 Duquesne L. Rev. 349 (1976), it is the law of our State, and this court is obliged to follow Farren. Franco v. Davis , 51 N.J. 237, 238 (1968).

To support their position that Farren has been impliedly overruled by the adoption of the Comparative Negligence Act, defendants cite N.J.S.A. 2A:15-5.3, which provides in pertinent part:

Since the Comparative Negligence Act neither directly refers to the Contribution Act nor expressly adopts that act's definition of "joint tortfeasor," defendants contend that by adopting N.J.S.A. 2A:15-5.3 the Legislature intended to overrule Farren and allow a third party to obtain "comparative contribution" from an employer. I disagree.

It is firmly established that statutes in pari materia must be construed with reference to each other because "it is assumed that whenever the Legislature enacts a provision it has in mind previous statutes relating to the same subject matter." 2A Sutherland, Statutes and Statutory Construction (4 ed. Sands, 1972), § 51.02 at 290. While this rule of construction is usually applied when statutes were enacted or became effective at the same time, it may be appropriately applied when the statutes were adopted at different times and make no reference to each other. Mimkon v. Ford , 66 N.J. 426, 434 (1975). The essential inquiry is whether

the statutes have the same purpose or object. State v. DiCarlo , 67 N.J. 321, 325 (1975).

The purpose of the Contribution Act is to achieve a "sharing of the common responsibility according to equity and natural justice." Sattelberger v. Telep , 14 N.J. 353, 367-368 (1954). The same purpose is evident in N.J.S.A. 2A:15-5.3. The only difference is that the Comparative Negligence Act modified the Contribution Act by making the quantum of contribution dependent upon the percentage of negligence rather than the number of defendants. See Iavicoli, No. Fault and Comparative Negligence in New Jersey , 182-183 (1973).

I conclude that the term "joint tortfeasor" in the Comparative Negligence Act should be construed in light of the definition provided in the Contribution Act and as interpreted by Farren. Since there is nothing in the Comparative Negligence Act to indicate a legislative intent to change the meaning of "joint tortfeasor" as it appears in the Contribution Act and as interpreted by Farren , I find no justification for ascribing a different meaning to that term. Cf., General Electric Corp. v. E. Fred Sulzer & Co. , 86 N.J. Super. 520, 532 (Law Div. 1965), aff'd 92 N.J. Super. 210 (App. Div. 1966). Rogers v. Spady , 147 N.J. Super. 274 (App. Div. 1977) does not require otherwise. It held that a defendant found 100% negligent was not entitled to a pro tanto reduction under the Comparative Negligence Act where a codefendant who had settled was found 0% negligent. For these reasons I reject defendants' claims for contribution.

Additionally, I find no sound reason to keep American Can in these cases as a third-party defendant. The Comparative Negligence Act does not require it and none of the cases cited by defendants so hold. In Connar, supra , the Supreme Court of Wisconsin held that the employer's negligence must be considered by a jury under that state's Comparative Negligence Act to properly determine the percentage of defendant's negligence. Also see Payne v. Bilco Co. , 54 Wis. 2d 424,

195 N.W. 2d 641 (Sup. Ct. 1972); Heldt v. Nicholson Mfg. Co. , 72 Wis. 2d 110, 240 N.W. 2d 154 (Sup. Ct. 1976). However, the employer was not a party in any of these cases. In Heldt the court even commented that the employer "had not been joined as a defendant and could not be, for its only liability to the employee, Heldt, was for workmen's compensation." 240 N.W. 2d at 157.

I therefore conclude there is no merit to defendants' contention that American Can must remain in the case to determine the percentage of negligence attributable to it, assuming without deciding that the Connar rule should be adopted in New Jersey.

Defendants' final argument in this area is that the Worker's Compensation Act represents nothing more than a settlement between the employee and employer, see Holt v. Ferdon Equipment Co. , 72 F.R.D. 564, 571-572 (D.N.J. 1976), and should be "treated like any other settlement between an injured party and a joint wrongdoer." Defendants assert they are entitled to a pro rata reduction of their liability if American Can should be found negligent.

This view, known as the " Murray Credit," was adopted by the court in Murray v. United States, supra. Also see Dawson v. Contractors Transport Corp. , 151 U.S. App. D.C. 401, 467 F.2d 727 (D.C. Cir. 1972); Marant v. Farrell Lines , 550 F.2d 142 (3 Cir. 1977). It has been characterized as "one more way of trying to find a compromise between the evenly balanced interests of the third party, the employer, and the employee." 2 Larson, Workmen's Compensation Law , § 76.22 at 14-315 (1976). The " Murray Credit" has not gone without criticism. 2 Larson, op. cit. , § 76.22 at 14-316; also see Lucas v. Brinknes Schiffahrts Ges. , 379 F. Supp. 759, 764 (E.D. Pa. 1974).

I find there are significant differences between these two situations. In those states where the worker's compensation act is mandatory an employee, unlike a settling tortfeasor, does not have any choice in accepting the "settlement" embodied in the workmen's compensation act. In this situation

the employee's recovery against the third party is not reduced by the employee's own conscious decision made with full knowledge of the consequences; it is mandated by law. See 2 Larson, supra , § 76.22 at 14-317. This distinction may be of lesser significance in New Jersey where the worker's compensation provisions are "elective." Nevertheless, we cannot overlook that every employment contract is "presumed to have been made with reference to the provisions" of the Worker's Compensation Act in the absence of an "express statement in writing prior to any accident" which demonstrates a contrary intent. N.J.S.A. 34:15-9.

Consequently, the compensation scheme enters by operation of law into every contract of hiring made in New Jersey unless there is an affirmative rejection in accordance with the statute. Gotkin v. Weinberg , 2 N.J. 305, 308 (1949); Estelle v. Red Bank Bd. of Ed. , 14 N.J. 256, 260 (1954); Rivera v. Green Giant Co. , 93 N.J. Super. 6, 11 (App. Div. 1966), aff'd o.b. 50 N.J. 284 (1967). Therefore, the parties "by mere inaction" agree to to the payment of compensation and it is clear that the adoption of the compensation scheme does not necessarily depend on the mutual assent of the parties. The "reality of consent is not an indispensable element, although it may exist in the individual case, for [the statute] is applicable even though the parties did not know of the existence of the statute, or, knowing, did not in fact have it in view." Miller v. Nat'l Chair Co. , 127 N.J.L. 414, 418 (Sup. Ct. 1941), aff'd o.b. 129 N.J.L. 98 (E. & A. 1942); Dunleavy v. Tietjen & Lang Dry Docks , 17 N.J. Super. 76, 81 (Cty. Ct. 1951), aff'd o.b. 20 N.J. Super. 486 (App. Div. 1952).

Accordingly, the "settlement" which arises from the Workers' Compensation Act differs from a settlement arrived at between an injured party and a tortfeasor. The practical effect is that the employee is held to compensation payments even though he may never have contemplated it at the time that he entered into the contract of employment.

There is another difference of greater significance. The employer or its insurance carrier's reimbursement rights will often further reduce the injured employee's recovery. Thus an employee-plaintiff's recovery may be less than that of an ordinary plaintiff who settles with a joint tortfeasor. 2 Larson, op. cit. , § 76.22 at 14-318 to 14-319. The effect of the " Murray Credit," then, is not to equitably adjust the rights of the parties involved in an employment-related injury on the contrary, it merely shifts any inequity in the present system from the shoulders of the third-party tortfeasor to those of the injured employee. This was precisely why the Ninth Circuit rejected the " Murray Credit" in Dodge v. Mitsui Shintaki Ginko K. K. Toyko , 528 F.2d 669 (1975), cert. den. 425 U.S. 944, 96 S. Ct. 1685, 48 L. Ed. 2d 188 (1976), and Shellman v. United States Lines Inc. , 528 F.2d 675 (1975), cert. den. 425 U.S. 936, 96 S. Ct. 1668, 48 L. Ed. 2d 177 (1976). See also, Turner v. Excavation Construction, Inc. , 324 F. Supp. 704 (D.D.C. 1971).

A more persuasive argument could be presented for adoption of the " Murray Credit" if an employer found to be negligent was not entitled to reimbursement. This result, however, would run counter to Schweizer v. Elox Div. of Colt Industries , 70 N.J. 280 (1976). See Turner v. Excavation Construction, Inc., supra.

In view of the foregoing, I conclude that the " Murray Credit" does not represent the New Jersey view and its adoption would impermissibly undercut the Workers' Compensation Act and Schweizer.

IMPLIED INDEMNIFICATION

In New Jersey, as in the majority of jurisdictions, a third party is not entitled to implied indemnification from an employer. Public Service Elec. & Gas Co. v. Waldroup , 38 N.J. Super. 419 (App. Div. 1955); Slattery v. Marra Bros. , 186 F.2d 134 (2 Cir. 1951); Bertone v. Turco Products, Inc. , 252 F.2d 726 (3 Cir. 1958); see generally, 2

Larson, op. cit. , §§ 76.42-76.44. One recognized exception to this rule appears where there is a "special legal relationship." Hagen v. Koerner , 64 N.J. Super. 580 (App. Div. 1960); Ruvolo v. U.S. Steel , 133 N.J. Super. 362 (Law Div. 1975) (Ruvolo I); but see, Ruvolo v. U.S. Steel , 139 N.J. Super. 578 (Law Div. 1976) (Ruvolo II).

The rationale for this rule is that in the absence of a special legal relationship a claim for implied indemnification is necessarily based on the theory that both parties are jointly liable for the injury, with the employer's negligence being greater in degree or more culpable than that of the third party. However, recovery on such a theory is contrary to the exclusivity provision of the Workers' Compensation Act since it would amount to holding the employer liable to the employee on account of the employer's negligence. See Public Service Electric & Gas Co. v. Waldroup , 38 N.J. Super. at 437; 2 Larson, op. cit. , § 76.44. By virtue of the immunity furnished the employer under the Workers' Compensation Act, an employer is not jointly liable with the third party to the employee. As a consequence, a third party is barred from indemnification where the claim is based upon the employer's joint liability to the employee. Slattery v. Marra Bros, supra , 186 F.2d at 139; Public Service Electric & Gas Co., supra.

Moreover, since Slattery and Waldroup were decided the so-called "active-passive" rule has been rejected in New Jersey as a basis for implied indemnification. Adler's Quality Bakery Inc. v. Gasteria, Inc., supra , 32 N.J. at 81. To recover on this theory the indemnitee's liability must be secondary and not primary; that is, it must be imputed, vicarious or constructive, and a party must be without personal fault before indemnity will lie. Id. at ...


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