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Deborah Mingay and Gary Mingay v. Rad Data Communications


September 25, 2012


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-2452-09.

Per curiam.


Argued September 10, 2012

Before Judges Espinosa and Guadagno.

Plaintiff Deborah Mingay was injured while on her way to work, when she slipped and fell on ice in the parking lot of her office at 900 Corporate Drive in Mahwah. This commercial property was owned by defendant RAD Data Communications, Inc. (RAD Data). Deborah*fn1 was employed by Radbit Computers, Inc. (Radbit), who leased office space in the complex from RAD Data. Following her accident, Deborah collected workers' compensation benefits from her employer.

Deborah and her husband Gary filed a complaint against RAD Data and Borst Landscape & Design, the company responsible for maintaining the premises. Deborah alleged negligence while Gary claimed loss of consortium. RAD Data filed an answer asserting that Deborah had received workers' compensation benefits from her employer and asserted the defense that her complaint is barred by the immunity provisions of N.J.S.A. 34:15-8. Following the completion of discovery, plaintiff moved for summary judgment to strike defendant's immunity defense while RAD Data cross-moved for summary judgment dismissing the complaint.

After oral argument, the trial court granted summary judgment to RAD Data on the grounds that RAD Data and Radbit were "joint employers" of Deborah. Since she had received workers' compensation benefits, her claim was barred by the immunity provision.

On appeal, plaintiffs argue that Deborah was not employed by RAD Data and the trial court misapplied the law. We agree and reverse.

In reviewing a grant of summary judgment, we employ the same standards as the motion court, and ask if "the moving party has demonstrated there were no genuine disputes as to material facts." Whitfield v. Bonanno Real Estate Grp., 419 N.J. Super. 547, 551 (App. Div. 2011). The trial court's conclusions of law, however, are reviewed de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Summary judgment is appropriate if the evidence presented "show[s] that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c).

In this case, the facts were essentially undisputed and the trial court's decision was based upon the legal conclusions drawn from those facts. We owe no deference to the judge's interpretation of the law. Manalapan, supra, 140 N.J. at 378.

The Workers' Compensation Act (the WCA) provides that "[w]hen personal injury is caused to an employee by accident arising out of and in the course of his employment, . . . he shall receive compensation . . . from his employer." N.J.S.A. 34:15-1. "When employer and employee . . . by agreement . . . accept the provisions of [the WCA,] compensation for personal injuries to . . . such employee . . . shall be made by the employer without regard to the negligence of the employer."

N.J.S.A. 34:15-7. This statutory scheme is "designed to establish a no fault system of compensation for workers who are injured or contract a disease in the course of employment." Brock v. Pub. Serv. Elec. & Gas Co., 325 N.J. Super. 582, 588 (App. Div. 1999), certif. denied, 163 N.J. 77 (2000). This scheme "is remedial social legislation and should be given liberal construction in order that its beneficent purposes may be accomplished." Torres v. Trenton Times Newspaper, 64 N.J. 458, 461 (1974).

Participating in this scheme is elective and by agreeing to participate, "the parties . . . [surrender] their rights to any other method, form or amount of compensation." N.J.S.A. 34:15-8. The employer and co-employees of the injured worker are immunized "except for intentional wrong[s]." Ibid. The quid pro quo for the employees is that they "receive assurance of relatively swift and certain compensation payments, but . . . relinquish their rights to pursue a potentially larger recovery in a common-law action." Millison v. E.I. du Pont de Nemours & Co., 101 N.J. 161, 174. "[The WCA] seeks to protect injured workers from becoming mired in costly and protracted litigation that could delay payment of their claims." Crippen v. Cent. Jersey Concrete Pipe Co., 176 N.J. 397, 411 (2003) (Verniero,

J., concurring).

As to the employer, there is an assumption of absolute

liability but, in return, the employer receives the benefit of "immunity from common-law suit, even though he be negligent, and is left with a limited and determined liability in all cases of work-connected injury." Dudley v. Victor Lynn Lines, Inc., 32 N.J. 479, 489 (1960).

Our courts "have developed a doctrine that recognizes that under workers' compensation, an employee can 'have two employers, both of whom may be liable in compensation. However, recovery against one bars the employee from maintaining a tort action against the other for the same injury.'" Walrond v. Cnty. of Somerset, 382 N.J. Super. 227, 234 (App. Div. 2006) (quoting Antheunisse v. Tiffany & Co., 229 N.J. Super. 399, 402 (App. Div. 1988), certif. denied, 115 N.J. 59 (1989)). The "special employee" doctrine developed primarily from situations in which "a temporary employment agency lends one of its employees . . . to a client of the agency." See id. at 234-35.

In determining whether a special employment relationship existed here, the trial court applied the five-prong test of Blessing v. T. Shriver & Co., 94 N.J. Super. 426, 430 (App. Div. 1967):

(1) the employee has made a contract of hire, express or implied, with the special employer;

(2) the work being done by the employee is essentially that of the special employer;

(3) the special employer has the right to control the details of the work;

(4) the special employer pays the lent employee's wages; and

(5) the special employer has the power to hire, discharge or recall the employee.

Applying these factors, the trial court concluded that Deborah was a "special employee" of Radbit, and RAD Data was her general employer.

In Kelly v. Geriatric & Med. Servs., Inc., 287 N.J. Super. 567, 571-72 (App. Div.), aff'd o.b., 147 N.J. 42 (1996), we re-affirmed the five-prong test announced in Blessing. We note that both Blessing and Kelly involved a temporary employment agency or an employee leasing company. The plaintiff in Blessing was a security guard who was transferred from one locale to another, while Kelly involved a nurse who was dispatched by her employer to health care facilities to work on a temporary basis. The application of the Kelly/Blessing test to cases of permanent employment is limited.

As to the first prong, the trial court found:

Plaintiff's signed employment application was submitted to RAD Data; Plaintiff executed a confidentiality agreement between herself and RAD Data and Radbit; Plaintiff received RAD Data's non-harassment policy.

Further, Plaintiff authorized RAD Data to deposit her salary to her personal checking account; Plaintiff's benefits were procured through RAD Data; Plaintiff received training provided for by RAD Data;

Plaintiff's W-2 form lists RAD Data as her employer; and Plaintiff's slip and fall accident was reported to RAD Data's Worker's Compensation Carrier, which had acquired the applicable policy for her compensation coverage.

Deborah filled out an application on a RAD Data form but her "New Hire Form" indicates that she was employed by Radbit. Radbit had only three employees and no human resources department. Radbit contracted with RAD Data to provide administrative services for which Radbit paid an administrative fee. This explains why many of the documents cited by the trial court bear the RAD Data logo. Similarly, although Deborah's payroll and benefits forms list RAD Data, it is not disputed that the cost of her salary and benefits were charged to Radbit through a series of intercorporate adjustments. None of Deborah's salary or benefits were paid for by RAD Data.

As to the second prong, the trial court concluded that "[p]laintiff's work at Radbit is related to the work of RAD Data." The second prong, however, requires more. The work being done by the employee must be "essentially that of the special employer." Kelly, supra, 287 N.J. Super. 571-72. RAD Data is a New Jersey corporation that distributes telecommunications equipment, manufactured by its parent company in Israel, to purchasers in the United States. Radbit is a New York corporation that procures computers manufactured in the United States for the Israeli Ministry of Defense. Radbit's contract with the United States federal government provides funding for the purchases but requires the computers be manufactured in the United States. RAD Data, which buys and sells foreign goods, could not comply with the terms of this contract. Thus, Radbit was created for this "niche" line of business. Deborah's work as a bookkeeper for Radbit, was not "essentially" the work of RAD Data.

As to the third prong, the trial court found that "RAD Data controlled or directed Plaintiff's work." This conclusion was based on the deposition of Zuriel Weinstein, Radbit's Vice President of Operations and Deborah's immediate supervisor at the time of her accident. Weinstein testified that he has been employed by RAD Data for twenty-one years and took on his current title with Radbit in 1998. He described Deborah's duties at Radbit as "[p]roviding bookkeeping, accounting, monthly, quarterly, semiannually [sic] and annual reports, P & L, and doing - providing - actually placing orders with vendors, trucking the orders and shipping them." When Weinstein was asked if Deborah performed these duties "for any other companies other than Radbit", he responded "No, only for Radbit." Weinstein identified his immediate supervisor as Alon Benzur, the CEO of BYNET, an Israeli company.

Based primarily on this testimony, the trial court found that Radbit was a "special employer or joint employer of the Plaintiff." Although the trial court cited Volb v. G.E. Capital Corp., 139 N.J. 110 (1995), its reliance on that case is misplaced.

In Volb, the same four principals owned three corporations, one of which, J.H. Reid, employed the plaintiff and another of which, T.D.E., plaintiff sued for alleged negligence. Id. at 114-115. T.D.E.'s function was to employ workers to perform work for J.H. Reid. Id. at 114. The Court held, however, that statutory immunity did not extend to T.D.E. Id. at 118. The Court noted that T.D.E. did not pay "workers' compensation benefits to [the plaintiff]'s estate, because T.D.E. did not employ [the plaintiff]." Ibid. The Court further noted that its decision would not "undermine T.D.E.'s right to choose workers' compensation as an exclusive remedy for its employees' work-related injuries, again because [the plaintiff] was never an employee of T.D.E." Id. at 119. The Court indicated that New Jersey was aligned with the majority view on this issue:

"[t]he clear weight of authority throughout the country supports the view that corporations affiliated by stock ownership and common management with a worker's employer are not entitled to the tort immunity specifically accorded by statute to the employer only." [Id. at 126.]

The deposition of Paul L. Sweeney provides insight into the relationship between RAD Data and Radbit. Sweeney testified that he is employed by RAD Data Communications which is a wholly owned subsidiary of RAD Data Communications Limited. Yehuda and Zohar Zisepel own 88% of Limited while Yehuda Zisepel owns 100% of Radbit. Sweeney identified at least eight other interlocking entities that are "commonly owned by [the Zisepels] or controlled by [them] . . . ." Sweeney referred to all of these entities as "RAD companies." This is precisely the type of affiliated corporate organization the Volb Court referred to when it explained:

[C]ompanies that elect for sound business considerations to operate their enterprise by using multiple affiliated corporations anticipate the risk of intra-corporate tort liability and therefore purchase liability insurance to offset that risk. Presumably, the decision to operate through interlocking corporations reflects the pragmatic determination that the specific advantages derived from the multi-corporate enterprise outweigh the risk of tort liability that that form of enterprise entails. [Ibid.]

The trial court's finding under the forth prong that "RAD Data paid for Plaintiff's wages and benefits," finds no support in the record and is directly contradicted by Weinstein's testimony that Radbit reimbursed RAD Data for all of these expenses.

Under the fifth prong, the trial court found that "RAD Data had the power to hire, rehire, or discharge Plaintiff." While none of the five factors is dispositive, the right to control is deemed "the most important factor in determining a special employee's status . . . ." Id. at 116. If Deborah was subject to termination by RAD Data, it was only in her capacity as an employee of Radbit. She was under the direct supervision of Weinstein, who was acting in his capacity as Vice President of Operations of Radbit when he directed her day-to-day activities. The fact that Weinstein may have contemporaneously held a position with RAD Data when he was supervising Deborah is immaterial.

The facts here are similar to those in Lyon v. Barrett, 89 N.J. 294 (1982). In Lyon, the defendant owned a building and rented office space to his professional law corporation and other tenants. Id. at 298. Plaintiff sustained injuries in the building while employed as a legal secretary of defendant's law corporation. Ibid. Plaintiff sued defendant in his capacity as the landlord of the building. Ibid. The Court framed the issue as "whether an employee who has recovered a workers' compensation award against a corporate employer may maintain such a negligence action for the same injuries against the individual who is the sole shareholder of the corporation," ibid., and it answered in the affirmative. The Court held that "[a] professional corporation and its sole owner are separate entities and the immunity of the workers' compensation laws that shields the corporation from tort liability to employees does not extend to the owner of the corporation." Id. at 304. Like the secretary in Lyon, Deborah worked exclusively for Radbit.

Clearly, in the context of the inter-corporate relationship between RAD Data and Radbit, no justification exists for extending Radbit's workers' compensation immunity to insulate RAD Data from plaintiff's tort action.

Reversed and remanded.

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