Third Party Claims
How To Handle A Third-Party Claim
Douglas B. Abrams
Every year thousands of workers are crippled or killed in workplace accidents. This tragedy repeats itself daily across the United States. Almost every injury could be avoided by the exercise of appropriate care by employers, manufacturers, repairers, or others similarly responsible for establishing workplace safety.
For the victims of these catastrophes, workers’ compensation benefits often provide incomplete and, therefore, inadequate compensation. In this context, third-party litigation generally presents the only reasonable alternative for these victims to obtain full and appropriate compensation. The reality of the situation for workers in this Country is both stark and inexcusable. Innumerable workers’ lives are daily placed in jeopardy. This exploitation continues because few companies place a priority upon safety and because workers remain dependent upon jobs to support their families. This exploitation does not receive the attention it deserves. The fact is that the disparity in economic standing between workers and their managers explains a great deal about the disregard for workers’ safety. If one tours various textile plants, it is quite telling that few vice-presidents are missing fingers or hands.
Over the past decade, the federal government has retreated from safety concerns which it previously espoused. Similarly, many states have eroded workers’ protections. For the foreseeable future, the primary source of worker protection will derive from private litigation on behalf of these victims. This paper will attempt to provide an overview into identifying sources of recovery and will discuss the handling of third-party claims.
II. RECOGNIZING POTENTIAL DEFENDANTS IN THIRD-PARTY CLAIMS
A. ESTABLISHING A THEORY FOR RECOVERY
The most critical step in handling third-party litigation is the initial analysis of potential defendants. At this stage, the lawyer should consider outlining every entity or person whose conduct contributed to the accident. Charting this list of activity focuses the inquiry and provides a guide for further investigation. Any person whose conduct could have prevented the occurrence of the accident should be identified. As will be discussed in detail, in a typical workplace disaster, the worker will be injured by some type of machine, chemical, or other product. Thus, the persons whose conduct should be analyzed include:
(1) manufacturers, both actual and apparent;
(2) distributors or suppliers;
(4) repairers or modifiers;
(5) insurance investigators;
(6) parent or subsidiary corporations;
Each of the above entities may be legally responsible to the victim. Therefore, the initial inquiry becomes how did the injury occur and how could the injury have been avoided. The most common answer to this question is that by the exercise of reasonable care, the manufacturer could have prevented the incident from occurring. Machines, products, or chemicals must be manufactured in such a manner that ordinary people can use them without being crippled or killed. The perils of workplace injuries are well-known and well-recognized. For example, each year thousands of workers are injured by unguarded machines. However, the need for proper guarding and interlocking of machines has been recognized since the early 1900’s. See Blake, Industrial Safety, Chapter 17, pp. 175-184 (1943). The manufacturer has responsibility for properly designing machines with guards and interlocks. Virtually without exception, manufacturers across the United States are held at minimum to a standard as follows:
When human life is at stake, the rule of due care and diligence requires that, without regard to difficulties of expense, every precaution must be taken reasonably to assure the safety of any person lawfully coming into immediate proximity of a dangerous agency or device. Been v. Lummus Co., 173 P.2d 34, 36 (Cal, 1946).
The installer of a machine which lacks proper guarding also must bear responsibility for putting such a product into operation. Corprew v. Geigy Chemical, 271 N.C. 485, 157 S.E.2D 98 (1957). Any person who later repairs or modifies the machine and permits the hazardous condition to continue is also liable for the victim’s injuries.
This principle is an application of the general rule that if an individual has in fact knowledge, skill, or even intelligence superior to that of the ordinary man, the law will demand of him conduct consistent with it. Prosser, Handbook of the Law of Torts, (4th Ed. 1971), 32, p. 161.
B. THE MANUFACTURER’S LIABILITY
Direct claims against the manufacturer are the most common form of third-party litigation. At the outset, the victim’s lawyer should closely examine the precise basis for liability. In many instances, the knowledge by the manufacturer necessary to have prevented the injury will have been present for over one hundred years. Again, with regard to the failure to guard, these engineering principles were identified during the beginnings of the Industrial Revolution.
Throughout the United States, and in fact throughout Western industrialized nations, people have recognized that the failure to properly guard industrial machinery WILL CAUSE SEVERE INJURIES. See Heinrich, Industrial Accident Prevention: A Scientific Approach (1941). Heinrich’s treatise contains the following assertion: “In these days of advanced engineering practice there are few machines or mechanical processes which cannot be made almost wholly safe.” (Emphasis Added). England adopted legislation for guarding before the turn of this century. See Annual Report of the Chief Inspector of Factories and Workshops for the Year 1898.
After the passage of more than fifty years, MacPherson v. Buick Motor Co., 111 NE 1059 (1916), which discarded the general rule of non-liability by holding that “inherently dangerous” articles included any article which would be dangerous to human safety if negligently made, is now all but universally accepted by the American courts. Thus, it is recognized that:
. . . what is involved is merely the ordinary duty of reasonable care imposed upon the manufacturer, as to any product which is can reasonably expect to be dangerous if it is negligent in its manufacture or sale. 2 Restatement Torts 2d (1965) 395, comment a.
The law of products liability has concerned itself with various stages of the manufacturing process. Most of the initial development of the MacPherson principle occurred in instances where the injured person claimed the article in question had been carelessly assembled, inadequately inspected or inadequately tested. An additional, and perhaps even more common concern, has centered upon the sale of the product, and the adequacy of warnings and directions for use provided for the user.
As Dean Prosser has written in his treatise:
There is no doubt whatever that the manufacturer is under a duty to use reasonable care to design a product that is reasonably safe for its intended use, and for other uses which are foreseeably probable. The question turns on what is reasonable care and what is reasonable safety.
Prosser, Handbook of the Law of Torts (4th ed. 1971), 99, p. 659
One is required to exercise ordinary care in designing a product so that it is reasonably safe for the purpose for which it is intended. 1 Frumer & Friedman, Products Liability, 7.01(1) (1980). In all circumstances the designer/manufacturer/supplier of a product has a duty to provide adequate safety devices on its product where use of the product or a misuse reasonably to be anticipated will create a foreseeable and unreasonable risk of injury.
The law in this respect is stated succinctly in Corprew v. Geigy Chemical, 271 N.C. 485, 157 S.E.2D 98 (1957). In Corprew, the Court approved the language from C.J.S. as follows:
As a general rule a manufacturer is under a duty to make an article carefully where its nature is such that it is reasonably certain to place life and limb in peril where negligently made, and he is liable to a third person for an injury resulting from a failure to perform this duty.
C.J.S. 65 NEGLIGENCE � 100(3) at 1094-1099. This approach has been accepted throughout the United States. For example in Byrnes v. Economic Machinery Co., 41 Mich.App. 192 (1972), the Court aptly characterized the basis for a manufacturer’s liability as follows:
A manufacturer has a duty to use reasonable care in designing his product to guard against an unreasonable and foreseeable risk. Gossett v. Chrysler Corp., 359 F.2d 84 (CA 6, 1966); Farr v. Wheeler Manufacturing Corp., 24 Mich.App. 379 (1970); Harper & James, The Law of Torts (1956), 28.5, pp. 1543, 1545. This may even include misuse which may be reasonably anticipated.
See also: Graham v. Joseph T Ryerson & Sons, 96 Mich.App. 480,
292 N.W.2d 704 (1980); Krentz v. Union Carbide Corp., 365 F.2d 113, 119 (6th Cir., 1966).
A clear articulation of this view appears in Casey v. Gifford Wood Company, 61 Mich.App. 208, 217 (1973), where the Court explained:
If the injury is reasonably foreseeable, it is for the jury to determine whether, as a practical matter, a safety device should have been a product component.
and in Coger v. Mackinaw Products Company, 48 Mich.App. 112, 113 (1973):
When designing a product, the manufacturer is under a duty to use reasonable care to guard against unreasonable for foreseeable risks. Byrnes, supra at 201. Where an injury is reasonably foreseeable, it is for the jury to determine whether as a practical matter a safety device should have been put on the product by the manufacturer. Jennings v. Tamaker Corp., 42 Mich.App. 310; 201 N.W.2d 654 (1972), leave to appeal denied, 388 Mich 784 (1972).
The manufacturer’s duty may also be that arising under 2 Restatement of Torts 2d, (1965), 398:
Section 398. Chattel Made Under Dangerous Plan or Design
A manufacturer of a chattel made under a plan or design which makes it dangerous for the uses for which it is manufactured is subject to liability to others whom he should expect to use the chattel or to be endangered by its probable use for physical harm caused by his failure to exercise reasonable care in the adoption of a safe plan or design.
Other cases throughout the United States discuss this responsibility of manufacturers. The duty of the supplier to provide safety devices as an integral part of the product is well stated in Bexiga v. Havir Manufacturing Corp., 60 N.J. 402 (1962):
Where a manufacturer places into the channels of trade a finished product which can be put to use and which should be provided with safety devices because without such it creates an unreasonable risk of harm, and where such safety devices can feasibly be installed by the manufacture, the fact that he expects that someone else will install such devices should not immunize him. The public interest in assuring that safety devices are installed demands more from the manufacturer than to permit him to leave such a critical phase of its manufacturing process to the haphazard conduct of the ultimate purchaser. The only way to be certain that such devices will be installed on all machines – which clearly the public interest requires – is to place the duty on the manufacturer where it is feasible for him to do so.
See also, Finnegan v. Havir Manufacturing Corp., 60 N.J. 413 (1962).
In Prentiss v. Kirtz, 54 Ohio App.2d 56, 58 (1977), the Ohio Court of Appeals held:
A manufacturer has a legal duty to build a product which is reasonably fit and safe for the purpose for which it is intended. See, e.g., Ward v. Hobart Mfg. Co., (CA 5, 1971), 450 F.2d 1176; Gossett v. Chrysler Corp. (CA 6, 1966), 359 F.2d 84; Farr v. Wheeler Mfg. Corp., (1970), 24 Mich.App. 379,189 N.W.2d 311. Measured by this general principle of law, a jury issue of defective design was presented by the evidence.
Where a textile or industrial machine, including a grinding machine, a machine with rollers, or a press, in its operation, requires the operator to have his hands near the cutting or grinding process, where a single start-button system creates risk of injury to the operator by being accidentally bumped, and a different design or other protective devices can avoid such risk or harm, the manufacturer is liable to the operator injured as a proximate result of its failure to exercise reasonable care by adopting such defective design. See, Wells v. Web Machinery Co., (1974), 20 Ill App.2d 454, 315 N.E.2d 301; Bexiga v. Havir Mfg. Co. (1972), 60 N.J. 413, 290 A.2d 286; Prosser of Torts (4th ed. 1971), 645-647, 398 (1964); Annotation, 76 ALR.2d 91; cf. Larson v. DeVilbiss Co. (CA 7, 1871), 454 F.2d 461.
As previously discussed, the manufacturer must keep abreast of scientific advances and is under a duty to ascertain the nature of his product. As stated in Frumer & Friedman, supra, 8.01:
In this scientific age the manufacturer has or should have superior knowledge of his product. More and more complicated products with potentiality for harm if not properly used are being sold to relatively inexperienced laymen.
Only if manufacturers fulfilled this responsibility are they in a position to adequately warn the consumer of the nature and extent of the danger involved in the anticipated use of its product, e.g., Starr v. Kopper Co., Inc., 398 S.W.2d 827 (Tex, 1965) at 830-31:
The obligation of such manufacturer…is to exercise reasonable care to discover the dangerous propensities of the product and to warn those whom he should expect to use it.
See also, 2 Restatement of Torts, Second, � 392. In any duty-to-warn case, to properly judge the adequacy of the warning actually given, evidence which attempts to show what the manufacturer knew or should have known about the nature and extent of the danger, as well as evidence of the nature and danger itself, is relevant.
An important distinction exists between the duty to warn and the duty to provide proper instructions. Davis v. Siloo Incorporated, 47 N.C.App. 237, 267 S.E.2d 354 (1980), cert. denied, 301 N.C. 234, 283 S.E.2d 131 (1980). The following statement, found in Post v. American Cleaning Equipment Corp., 437 S.W.2d 516, 521 (Ky, 1969), posits an important distinction:
There is substantial authority that the manufacturer must give both adequate directions for use and adequate warning of potential danger. Directions and warnings serve different purposes.
The engineering profession has long recognized that many products, absent instructions for proper use, can easily pose serious and unnecessary risk to users. In this connection, it is important to emphasize that since instructions serve different purposes than warnings, “instructions which are not particularly emphasized do not amount to a warning at all”. McLaughlin v. Mine Safety Appliance Co., 11 N.Y.2d 73, 181 N.E. 430, 434 (1962).
The duty to warn serves two separate, independent and distinct functions: the first alerts the user to the existence of a danger of serious injury or death; the second reminds one who has some consciousness of the existence of the danger to take the appropriate cautionary action to avoid the danger. The distinction between the functions of warnings has been implicit in cases throughout the United States. At other times, this distinction is expressly discussed. Swaney v. Peden Steel Co., 259 N.C. 531, 131 S.E.2d 601 (1963); Corprew v. Geigy Chemical, 271 N.C. 485, 157 S.E.2d 98 (1957). These concepts were explicitly discussed by the Michigan Court of Appeals in Graham v. Joseph T. Ryerson & Co., 96 Mich.App. 480, 489 (1980) when the Court wrote:
Consciousness of a vague danger, without appreciation of the seriousness of the consequences, may require the manufacturer to provide warning; presentation of credible evidence results in a jury question Hardy v. Proctor & Gamble Manufacturing Co., 209 F.2d 124 (Ca 5, 1954), Hopkins v. E. I. duPont deNemours & Co., 199 F.2d 930 (CA 3, 1952), West v. Broderick & Bascom Rope Co., 197 N.W.2d 124 (1973), Simonetti v. Rinshed-Mason Co., 41 Mich.App. 446; 200 N.W.2d 354 (1972), lv den 388 Mich 784 (1972).
Under safe engineering practices, “[t]he fact that a person had notice at one time of a danger or defect in a product does not relieve the manufacturer of his duty to warn in every case.” Gronlie v. Positive Safety Mfg. Co., 50 Mich 109; 212 N.W.2d 756, 759 (1973).
In summary, the criteria for determining the adequacy of a warning for ultimate purchasers or users hinges upon an evaluation of the following factors:
a. Signal Word;
These principles apply to the overall manufacturer, as well as the manufacturer of the component part in question. Furthermore, Courts throughout the United States recognize that workers are entitled to a safe working environment.
C. THE LIABILITY OF A REPAIRER OR MODIFIER
Any entity which designs or manufacturers or modifies a product must follow recognized safety engineering principles. Designing machinery is a complex task and requires the application of recognized safety principles. A modifier is not excused from these requirements. Lack of knowledge as to these principles is inexcusable. Perhaps the most basic safety principle is that any risk of serious injury or death is unreasonable and totally unacceptable if reasonable accident prevention methods could have been taken to eliminate it. Competent designers, and design engineers, have recognized for years that safety begins “on the drawing board” and continues throughout the development of the product.
As George Peters, engineer and certified safety professional says in his book, Product Liability and Safety, (1971), p. 76:
The design safety or system safety aspect of product design is concerned not only with add-on safety features, protective guards, and conformance to safety codes, but with the basic or inherent safety of the product or process as well. This is why safety should not be a cursory or sporadic endeavor, but should start when the basic design concepts are originated and continue as a systematic activity throughout detail design, development modification, testing, fabrication, storage, delivery, use, maintenance, repair and product disposal.
According to the National Safety Council’s Accident Prevention Manual for Industrial Operations (Chapter 4):
The ultimate goal is to design environments and equipment and to set up job procedures so that employee exposure to injury will be either eliminated or controlled as completely as possible during manufacture, and so that the product can be used by the purchaser.
Modern industry knows how to engineer the hazards out of jobs. However, on too many jobs, accidents occur because either insufficient effort or none at all has been put forth to determine the hazards involved.
* * *
The basic measures for preventing accidental injury, in order of effectiveness and preference, are:
1. Eliminate the hazard from the machine, method, material, or plant structure.
2. Control the hazard by enclosing or guarding it at its source.
3. Train personnel to be aware of the hazard and to follow safe job procedures to avoid it.
4. Prescribe personal protection equipment for personnel to shield them against the hazard.
* * *
The most efficient time to engineer hazards out of the plant, product, process, or job is prior to building, or remodeling, while a product is being designed, before a job is started. Every effort, therefore, should be made to find and remove potential hazards at the blueprint or planning state.
If the hazard can be eliminated, none of the other steps need be taken. If all possibilities have been exhausted and the hazard is still not removed, then every effort should be made to enclose, or guard the hazard at its source so that exposure to injury is controlled. In some cases, this measure can be just as effective as elimination of the hazard, but it is usually second best.
The degree of the hazard dictates the extent to which the designer, manufacturer and distributor should attempt to eliminate the hazard. As Jan B. Peterson said in a article entitled “How Can Design Engineers Design For Safety?”, Safety Maintenance (April, 1969):
Failure modes may be classified according to the degree of hazard involved. This may involve ranking of hazards in the order of “most critical” to “least critical.” Wherever a critical or catastrophic hazard has been identified, it should receive special attention. Once identified, potential failure may be rendered less probable and less critical through redesign, or by the use of fail-safe design features.
The U. S. Army has recognized for years that the identification and elimination of hazards is a basic part of design engineering. In an article entitled “Testing For Safety,” National Safety News, (February, 1969), David V. MacCollum, a professional safety engineer for the U.S. Army, and a Past President of the American Society of Safety Engineers, stated:
Safety starts with a special safety subtest in the written plan or tests to assure that all hazards are identified. These test findings are analyzed by safety engineers who define the hazard in terms of measurable risk and outline methods to eliminate the danger.
When a third-party modifies or alters a product and renders the product defective, the third-party became legally responsible. See Hamel v. Young Spring & Wire Corporation, 12 N.C.App. 199, 182 S.E.2d 839, cert. denied, 279 N.C. 511, 183 S.E.2d 687 (1971)(Negligence by third-party who negligently modified hydraulic lift amounted to intervening negligence). Courts have consistently recognized that the failure by a third-party in the handling or modification of a product serves as an independent basis for liability. See Gwyn v. Lucky City Motors, Inc., 252 N.C. 123, 113 S.E.2d 302 (1960). Entities other than manufacturers may be held liable for injuries caused by the product. See Olympic Products v. Roof Systems, Inc., 88 N.C.App. 315, 363 S.E.2d 367 (1988)(The law imposes upon everyone who enters upon an active course of conduct the positive duty to exercise ordinary care). Courts base this liability upon the duty imposed upon a party when the party engages in a course of conduct from which some injury to others is foreseeable. For example, as the Olympic Court asserted:
The law imposes upon every person who enters upon an active course of conduct the positive duty to exercise ordinary care to protect others from harm. . . .” Council v. Dickerson’s, Inc., 233 N.C. 472, 474, 64 S.E.2d 551, 553 (1951). A duty of care may arise out of a contractual relationship, “the theory being that accompanying every contract is a common-law duty to perform with ordinary care the thing agreed to be done, and that a negligent performance constitutes a tort as well as a breach of contract.” Pinnix, 242 N.C. at 362, 87 S.E.2d at 898. The contract creates “the state of things which furnishes the occasion for the tort.” Council, 233 N.C. at 474, 64 S.E.2d at 552.
Olympic Products v. Roof Systems, Inc., 88 N.C.App. 315, 363 S.E.2d 367, 370, (1988). The duty to protect third parties from harm arises under circumstances where the party is in a position that “anyone of ordinary sense who thinks will at once recognize that if he does not use ordinary care and skill in his own conduct with regard to those circumstances, he will cause danger of injury to the person or property of another.” Olympic Products v. Roof Systems, Inc., 88 N.C.App. 315, 363 S.E.2d 367, 372, (1988)(Citations omitted). This duty to use reasonable care commensurate with the nature of the hazard involved “is not created by contract but stems from the primary obligation resting upon civilized human beings not to cause injury to another through disregard of his safety.” Rulane Gas Company v. Montgomery Ward & Company, 231 N.C. 270, 274 (1949). The Rulane Court also noted that the “general rule is that one who authorizes the use of a potentially dangerous instrumentality in such a manner or under such circumstances that it is likely to produce injury is held responsible for the natural and probable consequences of his act to any person injured who is not himself at fault.” Rulane Gas Company v. Montgomery Ward & Company, 231 N.C. 270, 274 (1949)(Emphasis Added).
Certainly the hazards to users of the machine are identical whether the machine was installed, redesigned and modified by the manufacturer or a third party. The user of the machine or product does not have fewer safety rights because more than one entity has violated those rights. The hazard of the machine to the user existed due to the improper redesign and modification.
For all entities which redesign or modify a machine, the law imposes upon those who participate in bringing a finished product to a consumer or user, the duty to provide products which are reasonably safe for foreseeable uses. Ziglar v. E.I. DuPont, 53 N.C.App. 147, 280 S.E.2d 510, 515 (1981), cert. denied, 304 N.C. 393, 285 S.E.2d 838 (1981). The elementary requirement of extreme diligence in the manufacture, installation, and repair of dangerous instrumentalities applies throughout the United States. Virtually without exception, manufacturers, installers and modifiers across the United States are held at minimum to a standard as follows:
When human life is at stake, the rule of due care and diligence requires that, without regard to difficulties of expense, every precaution must be taken reasonably to assure the safety of any person lawfully coming into immediate proximity of a dangerous agency or device.
Been v. Lummus Co., 173 pp. 2d 34, 36 (Cal, 1946).
A redesigner or modifier of a machine has the same duty as a manufacturer to engage in pre-operation testing of the safety and suitability of the products. Swaney v. Peden Steel Co., 259 N.C. 531, 131 S.E.2d 601 (1963); Corprew v. Geigy Chemical, 271 N.C. 485, 157 S.E.2d 98 (1957). See Livesley v. Continental Motors Corp., 331 Mich 434; 49 N.W.2d 365 (1955); Ebers v. General Chemical Co., 310 Mich 261; 17 N.W.2d 176 (1945). See also, Selmo v. Banateno, 28 Mich.App. 217; 184 N.W.2d 367 (1970).
As previously indicated, the redesigner or modifier must keep abreast of scientific advances and is under a duty to ascertain the nature of his product. As stated in Frumer & Frumer, supra, 8.01:
In this scientific age the manufacturer has or should have superior knowledge of his product. More and more complicated products with potentiality for harm if not properly used are being sold to relatively inexperienced laymen. But the manufacturer may hesitate to warn, for fear of scaring the customer away…(cases cited).
Anyone who engages in a special field of activity will and should be held to possess the knowledge and skill of an expert in that field and must keep “reasonably abreast…of techniques and devices used by practical men in his trade”. See, 2 Harper & James, 28.4, cited with approval in Wright v. Carter Products, Inc., 244 F.2d 53 (2d Cir, 1957); Martin v. Bengui, Inc., (N.J. 1957) 126 A.2d 626; Braun v. Roux Distrib. Co., 312 S.W.3d 758 (Mo 1958); Guffie v. Strayer, 350 F.2d 378 (3d Cir 1965).
Likewise, in Guffie, supra, where an injured workman alleged that a manufacturer-designer of a concrete batching plant was negligent in its design of a protective roof, the Court held that:
While a manufacturer is not required to be clairvoyant, he is rightly held to the standard of an expert in regard to his own product.
This principle is an application of the general rule that if an individual has in fact knowledge, skill, or even intelligence superior to that of the ordinary man, the law will demand of him conduct consistent with it. Prosser, Handbook of the Law of Torts, (4th Ed. 1971), 32, p. 161.
In Pile Welding Supply Co., Inc. v. Gas Atmospheres, Inc., 201 F.Supp. 191 (ND Ohio 1961), Judge McNamee of that Court specifically recognized this axiom when he wrote:
A person who undertakes to manufacture an instrumentality for use by others will be held to an expert’s knowledge of the acts, materials and processes relating to his product
Accord, Powell v. E. W. Bliss, 346 F.Supp. 819, 824 (WD Mich, 1972).
D. THE LIABILITY OF A PARENT CORPORATION
A parent corporation may be liable for its negligence in supervising a subsidiary corporation. Phillips v. Stowe Mills, Inc., 5 N.C.App. 150, 167 S.E.2d 817 (1969). See First National Bank of Camden v. Tracor, Inc., 851 F.2d 212 (8th Cir. 1988)(parent corporation will be liable for independent negligence); Boggs v. Blue Diamond Coal Co., 590 F.2d 655 (6th Cir. 1979), cert. denied 444 U.S. 836, 100 S.Ct. 71, 62 L.Ed.2d 47 (1979)(a parent corporation is not immune from tort liability to its subsidiary’s employees for its own independent acts of negligence).
A parent corporation may impose its own rules and regulations upon the subsidiary. Also, the parent corporation may actually have furnished the dangerous product or chemical to the subsidiary. Additionally, the employees of the parent corporation may have caused the incident. At this stage, investigation is essential. Hopefully, the investigation can occur before the claim is filed.
E. THE LIABILITY OF AN EMPLOYER
Perhaps the most disgraceful aspect of worker safety has been the disregard of workers’ safety rights by their own employers. Courts throughout the United States are presently engaged in protecting workers from the wanton negligence and gross indifference of some employers. These Courts have rejected the contention that employers should be immunized from legal responsibility no matter how egregious the misconduct by the employer. Under the emerging view, when an employer’s conduct is substantially certain to cause injury to an employee, the employer will not have workers’ compensation immunity. Woodson v. Rowland. Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991)(workers’ compensation immunity does not apply where employer acts with substantial certainty that injury will result). See Also Bazley v. Tortorich, 397 So.2d 475 (La.); VerBouwens v. Hamm Wood Products, 334 N.W.2d 874 (S.D.); Pawlak v. Redox Corp., 182 Mich. App. 758, 453 N.W.2d 304 (1990). The essence of liability for an employer, as Woodson cogently states is “when an employer intentionally engages in misconduct knowing it is substantially certain to cause serious injury or death to employees by that misconduct that employee, or the personal representative of the estate in case of death, may pursue a civil action against the employer.” Woodson, 407 S.E.2d at 229.
A frequent area of employer recklessness arises from the knowing and intentional failure to guard machinery. The need to guard machinery has been known since the mid-1860’s. Volumes of treatises, articles and cases exist which establish the absolute requirement of guarding. A partial bibliography is attached as Exhibit # 1 to this paper with respect to early recognition of the need to guard machinery. Statutes have been passed in other countries requiring guarding. See British Standards which are enclosed in the appendix.
OSHA regulations have been enacted throughout the United States incorporating guarding requirements. OSHA has clearly defined requirements for guarding. See OSHA section 1910.212. The time has long passed when employers could argue that they were unfamiliar with the requirement that machines be properly guarded.
The knowing violation of OSHA regulations intended to prevent the very injury from which a Plaintiff complains should be held to constitute “substantial certainty of injury” as a matter of law. See Woodson, 407 S.E.2d at 229. The entire purpose of OSHA was to provide a mechanism for preventing injuries from known and recognized workplace hazards. A review of the purpose for OSHA is contained in the body of the Statute enacting the statute. OSHA was enacted to fulfill the right of workers to a safe and healthful working environment. As this trend develops, Courts should expressly hold that when an employer intentionally engages in OSHA violations of specific safety regulations designed to prevent well-recognized types of injuries that the employer engages as a matter of law in misconduct which has substantial certainty to cause injury. A decision to the contrary would result in situations in which employers could knowingly violate these critical OSHA safety regulations and retain complete immunity from their misconduct.
In situations where an OSHA violation is knowingly done, the employers cannot suggest that they were unaware that a hazard with substantial certainty of injury. However, at minimum such a knowing OSHA violation must constitute some evidence of misconduct with a substantial certainty to cause injury, even if the issue is left for the jury’s resolution.
The employer may also be liable under the doctrine of dual capacity. Although some Courts have hesitated to apply this principle of law, the principle is both cogent and just. Under the doctrine of dual capacity, the employee is not barred from seeking compensation from the employer, where liability arises from the “Dual Capacity” of the employer. For example, if an employee of Ford Motor Company were operating a Ford Vehicle while on a company errand and were to be injured by the negligent design of a Ford Pinto, under the “Dual Capacity” Doctrine, the employee would have a valid claim for both Workers’ Compensation and Products Liability.
In the case of Tscheiller v. National Weaving Company, the North Carolina Supreme Court addressed the liability of a Defendant Corporation for serving food which was unfit for human consumption. Tscheiller v. National Weaving Company, 214 N.C. 449 (1938). The Tscheiller Court appeared to establish “Dual Capacity” when the Court stated that “While it is alleged that the corporate defendant was engaged in the textile manufacturing business and also in the business of selling sandwiches and cold drinks it is not made to appear in the complaint that sandwiches and cold drinks were offered for sale to THE GENERAL PUBLIC“. Tscheiller, 214 N.C. AT 453 [Emphasis Added]. The Tscheiller Court further noted that “The risk incident to the purchase thereof by employees was not COMMON TO THE PUBLIC, BUT WAS PECULIAR TO THE EMPLOYEES OF THE COMPANY.” Tscheiller, 214 N.C. AT 453 [Emphasis Added]. Accordingly, the Tscheiller Court appears to establish a test for “Dual Capacity” in which (1) the risk must not be peculiar to the employee, but must be a risk essentially common the general public or (2) the defective product must be sold to the general public.
An analysis of the doctrine of dual capacity requires that the doctrine be applied to situations where an employer unskilled in manufacturing seeks to modify or redesign a machine or product and requires employees to use the machine or product. An analysis of safety engineering concepts requires that employers be held responsible in their status of manufacturer when they manufacture machinery for their workers’ usages. Safety engineering principles do not distinguish the needs of appropriate engineering as between a commercial manufacturer and a backyard mechanic. The dangers and hazards of the machine or product exist based upon the design and function of the machine or product. Any user of the machine or product is entitled to have either the commercial manufacturer or the backyard mechanic follow recognized safety engineering principles during design or modification to the machine or product. In fact, in the context of the workplace, the workers have less actual opportunity to choose whether or not to use a particular product than do consumers. Particularly where the employer acts as manufacturer employees face a terrible dilemma in determining whether to object to the machine.
The Doctrine of “Dual Capacity” results from two basic principles. The first principle is the legal premise that duties arise based upon the status of the parties. The second principle derives from the safety engineering concept that machinery must be subjected to and designed with a hazards analysis in mind.
With respect to the status of the parties, an employee contracting to work with an employer is subjected to the balancing between more certain recoveries for an injury and reduced damages. Woodson, 407 S.E.2d at 227. See Also Walker v. Mid-States Terminal, Inc., 17 Ohio App.3d 19, 477 N.E.2d 1160 (1984). However, the employee does not agree to be subjected to injuries which result not from the employer-employee relationship, but from some different status.
By way of analogy, the worker in a textile mill may contract to the risk of back injury from carrying cloth; but the worker does not consent to having an employer attempt brain surgery on the worker. See D’Angona v. County of Los Angeles, 27 Cal.3d 661, 166 Cal. Rptr. 177, 613 P.2d 238 (1980). Similarly, designing or modifying machinery requires the same safety engineering whether the modifications or design are undertaken by a manufacturer or by an employer. In fact, the modification or redesign by an employer may be outrageous where the employer has never designed machinery, has never undertaken any safety engineering review of its modification, and knows that it has never before designed machinery. In the case of brain surgery by lay persons, the untrained lay persons know that they lack the expertise to perform brain surgery, but nonetheless proceed. Lay persons untrained in safety engineering know that they lack the expertise to design complex industrial or textile machinery. In each of these two situations, workers would be injured not as a result of an employer/employee relationship, but as a result of (1) doctor/patient or (2) manufacturer/user relationship.
No logical reason exists for holding an employer-manufacturer to a lesser standard than any other manufacturer or modifier. In fact, unless the doctrine of dual capacity is applied, employers have less reasons than an ordinary manufacturer to exercise diligence in design or modification of machinery. The manufacturer will be constructing more than one machine and therefore may face extended liabilities for a defective product. The manufacturer seeking products liability insurance on a voluntary basis will be required to face premiums based upon the history of safety of its company and of its industry. However, under the Workers’ Compensation Act, the employer’s Workers’ Compensation Rates are not affected directly by its history of safety. The entire pool of Insureds/Employers are negatively affected when employers untrained and unfamiliar with safety engineering modify machinery and cripple, maim or kill employees.
Thus, the dangers inherent in a machine mandate that an employer be required to meet the same duty of care as a distant manufacturer. This duty of care is well-recognized and has been discussed in detail in this paper.
The criticism of applying the doctrine of dual capacity to employers who also manufacture products rests upon the expressed, and illogical, assertion that the application of the dual capacity doctrine will weaken the workers’ compensation system. See Generally, 2A A. Larson, The Law of Workmen’s Compensation section 72.82 (1990). Professor Larson’s distaste for the dual capacity is not premised upon a rational review of the impact of such a rule on the Workers’ Compensation system. First, the design, manufacture, or modification of a product is an intentional act. Thus, employers, through employees or other officials, realize this conduct is occurring. Design, manufacture, or modification is required by safety engineering principles to be a thoughtful and conscious act. Therefore, employers have the opportunity to conduct themselves in conformity with the standard of care. Second, the workers’ compensation system, including commercial workers’ compensation insurers, must bear the economic burden of compensating injured workers. Recognition of the employers’ responsibility as a manufacturer, designer, or modifier, will lessen the economic impact upon the workers’ compensation system. Third, making employers directly responsible for machinery which they design, manufacture, or modify will reduce the number of workplace injuries and will serve to decrease the number of persons receiving workers’ compensation benefits. Fourth, the number of untrained employers who design, manufacture or modify machinery is not sufficiently large that these claims will adversely effect the workers’ compensation system. Fifth, recognition of the dual capacity doctrine will decrease any economic incentive that employers might have to ignore sound safety engineering. If, as the tragic epidemic of workplace injuries suggests, employers presently perceive an economic benefit to unsafe acts, employers who follow safe workplace practices will be at an economic disadvantage. Recognition of the dual capacity doctrine will penalize the unsafe employer rather than the safety-conscious employer. Finally, the application of dual capacity will help to ensure workers’ with a safe workplace. Workers’ compensation may provide minimum levels of compensation, but dual capacity would serve to help prevent the occurrence of injuries in the first instance. In reality, both employers and workers benefit when preventive safety engineering stops workers from being hurt. Courts throughout the Country, including decisions such as Pleasant and Woodson, recognize that application of tort principles function to deter unsafe practices. The sad history of workplace injuries demonstrates conclusively that workers’ compensation systems cannot adequately provide incentives for employers to avoid known hazards in the workplace. A review of the statistics on workplace injuries show that the vast majority of those persons working around hazardous machinery are the least paid. Therefore, the lowest paid and often the lowest educated workers are at the greatest risk of injury. Perhaps this tragic situation reflects the attitude of some employers toward their workers. Courts should neither tolerate nor condone this cavalier attitude toward workers’ safety rights. Workers are entitled to a system of justice which provides them with adequate protection from being killed or crippled at work. The dual capacity doctrine provides this type of protection.
F. THE LIABILITY OF A CO-EMPLOYEE
Many states have held a co-employee liable for the wanton negligence of a co-employee. Pleasant v.Johnson, 310 N.C. 710, 325 S.E.2d 244, 248 (quoting Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971)). Notably, the wantonly negligent co-employee could be an officer of a corporation. The wilful violation of a known applicable safety rule or regulation constitutes wanton misconduct. Robinson v. Seaboard Railroad. Robinson v. Seaboard System Railroad, ___ N.C.App. ___, 361 S.E.2d 909, 914-15 (1987). Accordingly, where an officer knowingly removes necessary machine guards, the wanton misconduct standard would be met.
The same type of wanton misconduct which supports punitive damages obviates workers’ compensation immunity for co-workers. Siders v. Gibbs, 39 N.C.App. 183, 249 S.E.2d 858 (1978); Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971). Wanton misconduct is defined as conduct done needlessly, manifesting a reckless disregard or indifference to the rights of others. Siders v. Gibbs, 39 N.C.App. 183, 249 S.E.2d 858 (1978); Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971). According to the Court in Pleasant v. Johnson, wanton conduct is an “act manifesting a reckless disregard for the rights and safety of others”. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244, 248 (quoting Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971)). The Pleasant Court also defined the term “reckless” as a synonym for “wanton.” Pleasant, 325 S.E.2d at 248. See also, Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971). The essence of wanton misconduct is that the conduct by a defendant demonstrates a disregard for the rights and safety of others. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244, 248 (1985). Based upon the conduct itself, the law infers that the actor has demonstrated reckless indifference to the rights and safety of others. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244 (1985). In the situation or reckless or wanton misconduct the law holds that “constructive” intent, rather than “actual” intent is present. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244 (1985). Thus, wanton misconduct is a variation of negligence. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244 (1985). Wanton misconduct is distinguishable from ordinary negligence because the act itself is intended. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244 (1985). Wanton misconduct is further distinguished from intentional injury, such as a purposeful assault, in that there is no specific intention by the actor to injure a particular person. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244 (1985).
In Pleasant v. Johnson, the Court defined wanton conduct. Wanton conduct, the Court said is an “act manifesting a reckless disregard for the rights and safety of others”. Pleasant v. Johnson, 310 N.C. 710, 325 S.E.2d 244, 248 (quoting Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971)). The Court also defined the term “reckless” as a synonym for “wanton”. Pleasant, 325 S.E.2d at 248. See also, Brewer v. Harris, 279 N.C. 288, 182 S.E.2d 345 (1971).
G. LIABILITY UNDER DANGEROUS INSTRUMENTALITY RULE AND THE PRINCIPLE OF INDEPENDENT NEGLIGENCE BY A CONTRACTOR OR OWNER
Two important and interrelated areas of third-party liability are liability for non-delegable duties of an owner or contractor and the independent negligence of the owner or contractor. Many states recognize the principle of liability under the dangerous instrumentality rule. Under this concept, a party may not escape liability by delegating responsibility for a dangerous activity to a subcontractor. See Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991)(contractor may be liable under non-delegable duty principle). In the situation of independent negligence by the property owner or the contractor, the liability for the property owner or the contractor arises from the negligence performance of their duties and not from respondeat superior. See Greer v. Callahan Construction Company, 190 N.C. 632, 130 S.E. 739 (1925). The Greer Court recognized that a contractor or owner has a duty toward the employees of a subcontractor and is liable for the breach of that duty. Green v. Callahan Construction Company, 190 N.C. 632, 130 S.E. 739 (1925). The Greer Court discussed the basis for this principle by asserting:
The rule exempting an owner or contractor from liability for the negligence of an independent contractor to a stranger or third person does not necessarily exempt such owner or contractor from liability to the servant or employee of an independent contractor who is injured while engaged in work for the ultimate benefit of such owner or contractor. There is a relationship between the owner or contractor and the servant or employee of the independent contractor which may impose upon the former duties which the law does not impose upon him with respect to strangers or third persons. The law would not be just to itself or to those who have a right to rely upon it for protection, if an owner or contractor could, in all cases, by committing the work in which he is interested to an independent contractor, secure absolute exemption from all liability to those who by their labor and methods and under circumstances contemplated when the original contract was made, contribute to its full performance.
Greer v. Callahan Construction Company, 190 N.C. 632, 636, 130 S.E. 739 (1925)(Emphasis Added). As explained by the North Carolina Supreme Court in Greer v. Callahan Construction Company, “Defendant [contractor] owed to the plaintiff [employee of subcontractor] the duties arising out of the relationship, and is liable to plaintiff for damages resulting from injuries caused by breach of such duties.” Greer v. Callahan Construction Company, 190 N.C. 632, 638, 130 S.E. 739 (1925). This principle was also discussed in Embler v. Lumber Company. Embler v. Lumber Company, 167 N.C. 457, 93 S.E. 740 (1914)(Owner is liable to employees of subcontractor where owner became involved in modifications to the product). In Embler v. Lumber Company, the owner of a Lumber Company provided blueprints to the subcontractor and then later directed that certain modifications be made to the blueprints. The lawsuit involved a wrongful death lawsuit resulting from the death of the subcontractor’s employees. The Embler Court upheld a verdict against the owner for the death of the subcontractor’s employees. Embler v. Lumber Company. Embler v. Lumber Company, 167 N.C. 457, 93 S.E. 740 (1914). In the Embler case, the owner directed that modifications be made to the design of a dry-kiln. Embler v. Lumber Company, 167 N.C. 457, 93 S.E. 740 (1914). The Embler Court held that if an owner of a building deals with contractors, with reference to the manner of doing the work, in such a way that “doing any particular act they are obeying the directions of the owner, if the act is negligent and damage ensues, he is liable . . .” Embler v. Lumber Company, 167 N.C. 457, 463, 93 S.E. 740 (1914). The Embler Court reasoned that in such a case, the owner or contractor has a “duty to see that what is done under his special orders is not negligently done . . .” Embler v. Lumber Company, 167 N.C. 457, 463, 93 S.E. 740 (1914). The Embler Court placed the responsibility of harm upon the person who creates the modification; and asserted:
The act of the defendant in interfering with the work and causing the substitution of brick for cement, which had been specified as the proper material, brings it under the condemnation of the law just stated. . . . But the case is still stronger against it, for by thus reserving, and actually assuming, control and causing to be done this negligent act, the injury is directly traceable to it, and the law refers the injury to the wrongful act or tort of the defendant as the direct, efficient, and proximate cause thereof:
Embler v. Lumber Company, 167 N.C. 457, 463, 93 S.E. 740 (1914)(Emphasis Added). Liability in this circumstance arises from the direct actions of the owner or contractor. The proprietor or contractor “may make himself liable by retaining the right to direct and control the time and manner of executing the work or by interfering with the contractor and assuming control of the work, or some part of it, so that the relation of master and servant arises, or so that an injury ensues which is traceable to his interference.” Embler v. Lumber Company, 167 N.C. 457, 463, 93 S.E. 740 (1914)(Emphasis Added). An “employer, of course, cannot authorize a dangerous piece of work to be done, or work the doing of which according to the contract of employment will necessarily or probably be dangerous and injurious to others, for this would be to participate in the commission of the tort, or to authorize the doing of it.” Embler v. Lumber Company, 167 N.C. 457, 462, 93 S.E. 740 (1914)(Emphasis Added). The Contractor or owner is liable for injuries to the employee of a subcontractor resulting from a latent defect in the instrumentality used or worked upon by the employee. Casey v. Byrd, 259 N.C. 721, 131 S.E.2d 375. In Casey v. Byrd, then Justice Sharp recognized the rule that one who supplies an instrumentality upon which the employee of the subcontractor will work has the duty to provide an instrumentality which is free of defects. Casey v. Byrd, 259 N.C. 721, 131 S.E.2d 375.
In Odum v. Oil Company, the North Carolina Supreme Court upheld a verdict rendered against an owner who supplied a scaffold which collapsed, injuring the Plaintiff. Odum v. Oil Company, 213 N.C. 478 (1938)(Plaintiff injured while using a scaffold pursuant to instructions of the Defendant). In considering the liability of the Defendant, the Court noted that the Plaintiff was injured while following the instructions of the Defendant. Odum v. Oil Company, 213 N.C. 478 (1938).
This concept arises even in circumstances where the owner exercises no direct supervision over the work of the independent contractor. See Evans v. Lumber Company, 174 N.C. 31, 33, 93 S.E. 430 (1917). Under this principle, an owner has a nondelegable duty to insure that proper precautions are taken when an activity involves hazardous activities. Dietz v. Jackson, 57 N.C.App. 275, 291 S.E.2d 282 (1982)(owner/contractor is liable for negligence of subcontractor where activity involved has potential for hazards). In Dietz, the North Carolina Court of Appeals discussed the difference between liability arising from direct negligence and liability arising from the vicarious liability of an owner/contractor. Dietz v. Jackson, 57 N.C.App. 275, 291 S.E.2d 282, 285 (1982). This rule imposes liability upon the owner/contractor for the negligent acts of another performing an “activity which would result in harmful consequences unless proper precautions” are taken. Dietz v. Jackson, 57 N.C.App. 275, 291 S.E.2d 282, 285 (1982). Such cases arise from the fact that the owner/contractor has a nondelegable duty; and is liable even where the owner/contractor has himself done “everything which could reasonably be required of him”. Dietz v. Jackson, 57 N.C.App. 275, 291 S.E.2d 282, 285 (1982)(Citing Hendricks v. Leslie Fay, Inc., 273 N.C. 59, 62, 159 S.E.2d 362, 366 (1968)). Accordingly, liability in such cases arise from “vicarious liability.” Dietz v. Jackson, 57 N.C.App. 275, 291 S.E.2d 282, 285 (1982)(Citing Hendricks v. Leslie Fay, Inc., 273 N.C. 59, 62, 159 S.E.2d 362, 366 (1968)). In the case of Evans v. Rockingham Homes, Inc., the North Carolina Supreme Court analyzed those factors which would render an activity inherently dangerous. Evans v. Rockingham Homes, Inc., 220 N.C. 253, 17 S.E.2d 125 (1941)(Inherently dangerous activity is an activity which could result in recognizable danger unless precautions are taken). According to the Evans decision:
It is not essential, to come under the rule, that the work should involve a major hazard. It is sufficient if there is a recognizable and substantial danger inherent in the work, as distinguished from a danger collaterally created by the independent negligence of the contractor, which latter might take place on a job itself involving no inherent danger.
Evans v. Rockingham Homes, Inc., 220 N.C. 253, 17 S.E.2d 125 (1941)(Emphasis Added). The basis for liability in such situations arises from the fact that certain duties “are nondelegable, and liability cannot be avoided on the grounds that their performance was entrusted to an independent contractor.” Page v. Sloan, 281 N.C. 697, 190 S.E.2d 189 (1972)(Citations Omitted).
Some situations may comprise a dangerous instrumentality as a matter of law. For example, North Carolina has held for many years that electrical contracting invokes the dangerous instrumentality rule. Peters v. Carolina Cotton and Wollen Mills, Inc., 199 N.C. 753, 155 S.E. 867 (1930)(Electricity is most dangerous power known to man and invokes the dangerous instrumentality rule). In Woodson v. Rowland, the North Carolina Supreme Court cited Peters as authority for the rule that electrical contracting will invoke the obligations of the dangerous instrumentality rule. Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991).
These two principles impose liability upon contractors, owners, and other subcontractors. Importantly, in the case of non-delegable duty, this liability results from imputed liability or respondeat superior. This liability can include liability imposed through the negligence of the injured worker’s employer. Similarly, the liability may result from the contractor’s independent negligence. In order to meet the requirements of this rule, the Plaintiff must demonstrate that the activity was hazardous and dangerous in itself. In some situations the activity will be extrahazardous as a matter of law, and in other circumstances the jury will make its determination. See Woodson v. Rowland, 329 N.C. 330, 407 S.E.2d 222 (1991). Where the activity is extrahazardous as a matter of law, the pleadings of a third-party defendant may establish negligence by the subcontractor and therefore, establish the third-party defendant’s liability as a matter of law. The determination of whether an activity is extrahazardous may also be established by expert testimony.
III. INVESTIGATION AND PREPARATION OF A THIRD-PARTY CASE
A. CHECK-LIST FOR PRELIMINARY INVESTIGATION
The preliminary investigation of the case should begin with consideration of the following factors, among others:
1. Knowledge by the client of the product before its purchase or use.
2. The Plaintiff’s use of the product prior to the incident.
3. The Plaintiff’s reliance on any advertisements or literature before the purchase.
4. Whether the Plaintiff was aware of any representations or statements as to the product’s use or quality contained in the product’s labeling or on its package.
5. The purchase history of the product [who, where, what, when, and how was the product acquired]
6.Whether a number of competing products were available, and why the Plaintiff selected the particular product.
7.Whether the intended use of the product was disclosed to the seller.
8.An exact description of the package and the product itself.
9.Whether the product itself and a facsimile product are available.
10.The make, model and serial number of the product.
11.Whether the original container, including packaging is still available.
12.A description of the use of the product after the injury and its present condition.
13.Photographs or printed representations of the product.
14.The path of distribution of the product from the date of its manufacture to the date of the incident.
15.The use of the product by any prior or subsequent owners.
B. SOURCES OF INFORMATION CONCERNING DEFECTIVE PRODUCTS
Sources of information concerning defective products include:
1.The American Trial Lawyers Association (ATLA), 1050 31st Street, N.W., Washington, D.C. 20007
2. The Consumer Products Safety Commission, 5401 Westbard Avenue, Washington, D.C. 20207.
3.The National Highway Traffic Safety Commission, 400 Seventh Street, S.W. Washington, D.C. 20590
4.The National Safety Council, 444 N. Michigan Avenue, Chicago, Illinois 60611 (312-527-4800).
The State and Federal OSHA programs often have extensive information concerning specific products. These OSHA libraries should be consulted when investigating a potential third-party case. The ATLA Exchange is perhaps the most useful source of information available with respect to other similar incidents and initial collection of product information. The ATLA Exchange is consistently the most cost efficient process for beginning the investigation into a third-party claim.
C. INSPECTION AT THE SCENE AND INITIAL INVESTIGATION
In third-party cases, inspection of the scene may be complicated by the workers’ compensation carrier’s concern over potential exposure. However, the workers’ compensation carrier often will have a very detailed inspection of the scene and investigation into the case. Similarly, OSHA investigations, both state and federal, provide extensive information. Similarly, many Courts will permit an OSHA investigator to testify as an expert witness.
D. CONSULTING AND RETAINING THE QUALIFIED EXPERT WITNESS
Retaining a truly qualified expert is essential to the success in third-party cases. Often the workers’ compensation carrier will retain an engineer to reconstruct the incident. OSHA investigators may also serve as helpful consultants. However, the primary source of expert testimony comes from consulting engineers, whether primarily employed as professors or as private consulting engineers. In-house engineers for the employer may also serve as qualified experts. Accordingly, an early decision needs to be made whether the employer or co-employees will be potential defendants in the case. If the employer or co-employees are not responsible, the workers’ compensation carrier will often be a valuable resource.
E. NOTIFYING POTENTIAL DEFENDANTS OF THE CLAIM AND REQUESTING THAT THE PRODUCT, MACHINE, OR CHEMICAL BE PRESERVED
At an early stage in the investigation, the potential defendants should be notified of the potential claim and of the need to preserve evidence. This notification will preserve rights based upon breach of implied warranty and will preclude a defendant from willfully destroying evidence related to the case. litigation. The Uniform Commercial Code section 2-607 contains a provision with respect to notice for breach of warranties in claims for violations of the Uniform Commercial Code, including breach of warranties. See Maybank v. Kresge Co., 302 N.C. 129, 273 S.E.2D 681 (1981). The notice should be sent by registered/certified mail and should contain language essentially as follows:
PLEASE TAKE NOTICE that our law firm has been retained by Mr. Samuel King for damages sustained by him on July 1, 1985, as a result of a defective lawnmower manufactured by your company. Mr. King received severe injuries to his leg. Mr. King’s claim for damages include breach of implied warranties, breach of express warranties, negligence and wanton misconduct, among other claims. The breach of warranty includes the fact that the lawnmower self-engaged from neutral to a forward position and ran over Mr. King. This machine was purchased on June 12, 1985. This notice is given pursuant to law.
F. ESTABLISHING THE STANDARD OF CARE
The essential steps in establishing the third-party claim are to examine and understand the appropriate standard of care for each entity whose actions could have prevented the injury. Governmental standards and regulations are an important resource for establishing this standard of care. OSHA regulations are generally recognized as establishing minimum standards of care for manufacturers, repairers, or installers of products or machinery. Moreover, OSHA publications often further explain safety requirements. Similarly, ANSI standards frequently discuss minimum recognized industry standards.
Industry Association Publications or pamphlets may also provide essential information in defining the standard of care. Additionally, a manufacturer’s advertising history demonstrates the Defendants’ knowledge concerning a product.
The use of safety standards and codes in the engineering and design of products for use in an industrial environment, like evidence of custom and usage in an industry, may be admissible upon a number of issues. First, voluntarily adopted safety codes are admissible to prove the Defendant violated those codes; and that such a violation constitutes negligence. Wilson v. Lowe’s Asheboro Hardware, Inc., 259 N.C. 660, 131 S.E.2D 501 (1963). The voluntary adoption of a safety code as the guide to be followed for protection of the public is at least some evidence that a reasonably prudent person would adhere to the requirements of the Code. Wilson v. Lowe’s Asheboro Hardward, Inc., 259 N.C. 660, 666, 131 S.E.2D 501 (1963). See Also Stone v. Proctor, 259 N.C. 633, 131 S.E.2D 297 (1963). In many cases involving industrial or agricultural accidents, previous ANSI standards and Textile Safety Codes may be acknowledged by the defendants. These standards are further admissible under the Federal Rules of Evidence, and its variations as adopted by the States. Rule 803(18) of the Federal Rules of Evidence provides an exception to the hearsay rule for “learned treatises”. Rule 803(18) provides:
Learned Treatises. To the extent called to the attention of an expert witness upon cross-examination or relied by him in direct examination, statements contained in published treatises, periodicals on a subject of history, medicine, or other science or art, established as a reliable authority by the testimony or admission of the witness or by other expert testimony or by judicial notice. If admitted, the statements may be read into evidence but may not be received as exhibits.
This rule makes the statements contained in the treatises substantive evidence. See Commentary to the Federal Rules of Evidence, Rule 803(18). In Johnson v. William C. Ellis & Sons Iron Works, 609 F.2d 820 (5th Cir, 1970) (on rehearing) the Fifth Circuit thoroughly analyzed the impact of the Federal Rules of Evidence on the question and emphasized the following points, 609 F.2d at 822-823:
We have held that safety codes and standards are admissible when they are prepared by organizations formed for the chief purpose of promoting safety because they are inherently trustworthy and because of the expense and difficulty involved in assembling at trial those who have compiled such codes.
Frazier v. Continental Oil Co., 5 Cir. 1978, 568 F.2d. 378, 382; Muncie Aviation Corp. v. Party Doll Fleet, Inc., 5 Cir. 1975, 519 F.2d. 1178, 1183; accord, David v. Fox River Tractor Co., 10 Cir. 1975, 518 F.2d. 481; Wallner v. Kitchens of Sara Lee, Inc., 7 Cir. 1969, 419 F.2d. 1028; Boston and Maine Railroad v. Talbert, 1 Cir. 1966, 360 F.2d. 286. These rulings remain the law of the circuit for they determine the effect that safety codes and like publications meet the criteria of Part 24. Our prior decisions concerning such materials were not overturned by the adoption of the Federal Rules of Evidence, for there is nothing in the Rules that conflicts with them; indeed our opinion in Frazier v. Continental Oil Co., 5th Cir., 1978, 568 F.2d. 378, was released subsequent to the adoption of the Federal Rules of Evidence and parts of that opinion relied on the Rules. See, Id., at 383.
The Federal Rules of Evidence establish a clear procedure for the admission of this type of evidence. See generally, Abbot, 58 A.L.R.2d. 148 (1974); Comment, Admissibility of Safety Codes, Rules and Standards in Negligence Cases, 47 Tenn. L. Rev. 581, 587 (1970). See also, Shears v. Pardonnet, 80 Mich.App. 358, 364, 263 N.W.2d 30 (1977) (judgment reversed on failure of trial court to permit safety standards into evidence and cases cited thereat).
An important basis for the admission of these treatises, articles, or pamphlets for substantive purposes is to establish the knowledge of the Defendant concerning the dangers of a certain product. See Wilson v. Lowe’s Asheboro Hardware, Inc., 259 N.C. 660, 131 S.E.2D 501 (1963). This use of such treatises, standards, articles or pamphlets has been acknowledged in cases throughout the United States. See Grubaugh v. City of St. Johns, 82 Mich.App. 282, 289, 266 N.W.2d 791 (1978) (Manual of Uniform Traffic Control Devices Admissible); Sparks v. Ferro Equipment Co., 28 Mich.App. 285, 288, 194 N.W.2d 220 (1970) (held, publications of Machinery Dealers National Association admissible in punch case for cross-examination of defendant’s employee). See also: Palmer v. Pacific Indemnity Co., 74 Mich.App. 259, 267-268, 254 N.W.2d 52 (1977) (held, admissible of insurance pamphlets and other documents introduced to support expert witness testimony as to customary practices among Michigan insurance agents not an abuse of discretion); Weiss v. Ford Motor Co., 64 Mich.App. 519,527,236 N.W.2d 124 (1974) (held, union campaign circular admissible to show “awareness of and acquiescence in” the motivation of another to act in deprivation of plaintiff’s civil rights); Coger v. Mackinaw Products Co., 48 Mich.App. 113,210 N.W.2d 124 (1973) (USA B.11 Code; USDOL Labor Bulletin, No. 197 admitted). Cf. Thompson v. Essex Wire Co., 27 Mich.App. 516, 183 N.W.2d 818 (1970).
The necessary predicate for admissibility is:
1.proof of existence of the document prior to the date of the occurrence;
2.proof of general use among the class of persons interested in the matters which they contain;
3. proof of availability;
See also: Depree v. Nutone, Inc., 422 F.2d 534 (6th Cir., 1970).
The absence of knowledge concerning safety principles within many industries is almost beyond belief. Accordingly, some of the best evidence developed in a case comes from the absence of knowledge by the Defendant’s personnel. For example, at a textile plant, the personnel responsible for maintaining textile machinery may be entirely unaware of OSHA regulations. Even the in-house engineers may have only cursory knowledge of safety. These witnesses can demonstrate the complete lack of information the decision makes had concerning safety.
G. PROOF OF SIMILAR OCCURRENCES
The occurrence of other similar incidents is admissible for a number of purposes. This evidence may be the most probative of any information submitted to the jury. As a general rule, evidence of other similar incidents is admissible to prove the dangerous condition of the product, to rebut an argument that the failure of the product as described was “impossible”, and to show notice by the Defendant. See McCormick, Evidence, 4th ed., p. 476; Dockery v. World of Mirth Shows, Inc., 264 N.C. 406, 142 S.E.2d 29 (1965). Often Defendants attempt to refuse information concerning SUBSEQUENT incidents on the basis that such later incidents are irrelevant. This contention was considered and rejected by the North Carolina Supreme Court in Tennessee Carolina Transportation, Incorporated v. Strick Corporation. See Tennessee Carolina Transportation, Incorporated v. Strick, 286 N.C. 235, 210 S.E.2d 181 (1974). In Strick, the Defendant sought to introduce hardness tests taken some six years after the products’ manufacture. The North Carolina Supreme Court held that the Court committed prejudicial error in excluding this testimony. Strick, 286 N.C. at ___, 210 S.E.2d at 185. In rejecting the argument that time restrictions would apply as a matter of law, the Strick Court asserted “While this [six year period] is a significant lapse of time, we think the hardness of metal is such a constant, immutable characteristic that such a lapse of time is greatly diminished in significance, and that the tests were improperly excluded.” Strick, 286 N.C. at ___, 210 S.E.2d at 185. Accordingly, in the preparation of third-party cases for the Plaintiff, obtaining information concerning prior and subsequent incidents has great significance.
The actual proof of prior and subsequent incidents can be accomplished through a combination of (1) Request for Production; (2) Request for Admissions, and (3) depositions. With respect to depositions, use of 30(b)(4) and 30(b)(6) depositions may be of great assistance in establishing the knowledge of the Defendant concerning the prior and subsequent events. The attorney should have the Defendant describe in detail the investigation into the facts of each incident by the Defendant and the steps taken by the Defendant to prevent future incidents. Almost invariably, the only investigation by the Defendant will be conducted by legal counsel in connection with defense of the case. This evidence then establishes that the Defendant is solely interested in avoiding responsibility rather than using scientific inquiry to analyze its product.
IV. STRATEGY DECISIONS IN HANDLING THIRD-PARTY CASES
A. PROVING THE CASE THROUGH THE DEFENDANTS’ ENGINEERS AND EMPLOYEES
Almost invariably the liability of Defendants in third-party cases is established through the testimony of the Defendants’ engineers and employees. These depositions should be taken early in the litigation and should be taken whenever possible by videotape. Depositions should begin with the officers of the Defendant or the owner and proceed down the hierarchy of ownership and control. These witnesses will commonly overstate their commitment to safety. At these depositions, the deponents should be compelled to concede the applicability of governmental and industry rules and regulations. If the officers are unfamiliar with OSHA or ANSI standards, they will demonstrate to the jury the absence of commitment of safety.
For example, in a chemical exposure case the President of the Company who applied the solvent may be asked to identify all OSHA and ANSI regulations concerning the use of hazardous chemicals. This officer will identify Material Safety Data Sheets and will have a difficult contradicting the warnings contained on the MSDS. Thus, the President will establish the standard of care. Specifically, the President must concede that the chemical must be applied in conformity with MSDS instructions and that the failure to do so would be negligence. The case is then converted from a technical case on chemical exposure to a single factual issue — was the chemical applied properly. In fact, the Plaintiff would be entitled to a preemptory instruction that if the jury found to its satisfaction that the chemical was not applied in accordance with the MSDS statement, then the Plaintiff would be entitled to a verdict. Portions of this type of deposition are attached to the Appendix as Exhibit # 2.
In failure to guard cases, this procedure would result in the President being asked to concede that the need for proper guarding has been known for over one hundred years. Similarly, in-house or retained experts must also concede that these engineering principles apply. OSHA and National Safety Code publications will illustrate similar machines being properly guarded. These witnesses should then be asked to concede that it would be feasible to similarly guard the machine in question. A portion of a similar type deposition in a guarding case is attached to the Appendix as Exhibit # 3.
After the Officers are deposed, a corporate deposition, including requests for production, pursuant to Rule 30(b)(4) and Rule 30(b)(6) of the Federal Rules of Civil Procedure should be filed. A sample of such a Notice of Deposition is included in the Appendix as Exhibit # 4. The request for production is quite significant. Each following witness will be asked to concede the applicability of the documents produced. Tragically, safety is a low priority for most companies. The Defendants seldom properly train or instruct their employees. Many employees will be informed of applicable safety regulations for the first time at these depositions.
B. PROVING THE CASE THROUGH OTHER VICTIMS OF THE PRODUCT
The fact that others have been maimed or killed by the same or similar product, machine, or chemical is admissible for a number of purposes, including substantive evidence of liability. See Maybank v. Kresge Co., 302 N.C. 129, 273 S.E.2D 681 (1981).
In cases involving other instances of malfunction by the same or similar product, the deposition of other injured persons should be considered. Often these victims are scattered beyond the 100 mile rule of Rule 32 of the Rules of Civil Procedure. These deponents are quite helpful because the jury will understand that the likelihood of an event having occurred is greatly increased by repeated reports of similar occurrences.
The evidence of other occurrences directly establishes both liability and proximate cause. Prior incidents will prove notice, but subsequent incidents are admissible to prove the defect and to prove that the defect was a proximate cause of the incident.
C. CHALLENGING THE DEFENDANT’S CASE
Cross-examining the Defendant’s expert is perhaps the most difficult part of the Plaintiff’s case. The jury is torn between desiring a blood bath between the Plaintiff’s attorney and the Defendant’s expert; and wanting the Plaintiff’s attorney to maintain proper respect for the expert. Preparation in advance for the cross-examination cannot be over-emphasized. Hopefully prior depositions of the expert will be obtained. One method for ensuring that the expert not engage in frolic’s of fancy is to ask questions directly tied to a deposition. For example, the expert might be asked, “Do you still agree with the statement you made previously at your deposition that ‘failures of the type reported by the Plaintiff are impossible in the physical world.'” Despite the risks involved in cross-examination, an appropriate method is to compel the Defendant’s expert to admit that if the product performed in the manner reported by the Plaintiff, then the product would be unreasonably dangerous and defective. This method of inquiry has the effect of altering the jury’s inquiry into a simple fact question. If the jury believes the Plaintiff and the Plaintiff’s witnesses as to the incident, the Plaintiff will prevail; however, if the Plaintiff is disbelieved, the Plaintiff will lose.
D. OBTAINING A PREEMPTORY INSTRUCTION ON LIABILITY
From the Plaintiff’s perspective, obtaining a preemptory instruction on liability constitutes an almost ideal situation. Certain malfunctions constitute defects as a matter of law. See Maybank v. Kresge Company, ___ N.C.App. ___, 266 S.E.2d 409, 412 (1980), affirmed and modified, ___ N.C. ___, 273 S.E.2d 681 (1981)(exploding flashcube breaches implied warranty of merchantability as a matter of law). Specifically with regard to breaches of implied warranties of merchantability the malfunction of the product in a obvious manner may constitute a defect as a matter of law; and therefore, the Plaintiff would be entitled to a preemptory instruction essentially as follows:
“I instruct you that a flashcube which explodes during ordinary use is not reasonable fit for the ordinary uses for which it was intended and as a matter of law breaches the implied warranty of merchantability. Therefore, unless the Defendant has persuaded you by the preponderance of the evidence that the defect was the result of abuse or modification by the user after the sale of the flashcube, then you should answer this issue against the Defendant and for the Plaintiff.”
Workers and farmers face the tremendous risk of devastating injury or death as they work at their jobs. Their safety rights have not been adequately protected by the legal system. Increasingly, these victims are dependent upon Plaintiffs’ Trial Attorneys to vindicate their safety rights. Third-party litigation will remain an essential means to ensuring adequate compensation for injured workers or farmers.
Partial Bibliography regarding early recognition of the need to guard machinery1
Portions of deposition in chemical exposure case, Dial v. Cape Fear Construction Company 2
Portions of deposition in failure to guard cases, Stamey v. Fiber Controls Corporation and Sousa v. James Mackie and Sons 3
Notice of Deposition pursuant to Rule 30(b)(4) and Rule 30(b)(6), Evans v. Pella 4
Failure Mode and Effect Analysis, by John J. Hollenback, Jr., Society of Automotive Engineers, September 12-15, 1977 5
Industrial Safety, edited by Blake 6
OSHA – 1910.212 7
British Standards 8
Direct Exam of Chuck Manning 9
 Much of the material contained in this paper is derived directly and indirectly from the work of Mr. Harry Philo and Ms. Linda Atkinson. Much of the research is taken from briefs filed by Mr. Philo and Ms. Atkinson in other products liability cases, specifically including the trial brief in Hoose v. Frank Hamacheck Machine Company, Inc. The author is grateful for their dedication to the safety rights of workers and farmers throughout the country.
 For an excellent discussion of this problem see Philo, Preventable Injury and Disease in America, published by ATLA