The adjudication of workers’ compensation claims involves one final arbitrator of fact and law, a compensation judge. In a civil action, a judge decides the applicable law, and the jury decides the factual issues. The NJ Supreme Court recently reiterated the jury’s role in the process when it reviewed a matter determining the status of a borrowed employee.
SUMMARY
Application of the Galvao multi-factor test -- which can involve matters of disputed fact and witness credibility -- is presumptively for a jury to determine. The court should not resolve the borrowed-employee issue unless the evidence concerning the factors is so one-sided that it warrants judgment in a moving party’s favor as a matter of law. Because the evidence concerning the Galvao factors was not sufficiently one-sided, the trial court incorrectly granted the defendant’s Rule 4:40-1 motion. It deemed the worker who caused the accident a borrowed employee of the plaintiff’s employer.
SABATINO, P.J.A.D. (temporarily assigned), writing for a unanimous Court.
This personal injury case involves the application of the multi-factor test announced in Galvao v. G.R. Robert Construction Co., 179 N.J. 462, 471-73 (2004), for evaluating whether a worker who negligently caused a plaintiff’s job site injury was a so-called “borrowed employee” of the plaintiff’s employer. The Court considers whether an employer’s vicarious liability under the borrowed-employee doctrine, as guided by the Galvao factors, is a question of law to be decided by the court or, conversely, a question of fact reserved for the jury.
FACTS
In November 2013, plaintiff Philip Pantano, a mechanic employed by Container Services of New Jersey (CSNJ), was injured at work while attempting to move a heavy piece of industrial equipment. Lawrence Giamella, who was also working on the site that day, tried to help plaintiff move the equipment with a forklift; plaintiff’s foot was crushed in the process. Plaintiff collected workers’ compensation benefits from his employer, CSNJ. He and his wife also brought a personal injury action against numerous defendants, including Marine Transport, Inc. (MT). MT and CSNJ are related companies owned by the same person. The core of the parties’ dispute concerns which entity or entities employed the negligent worker, Giamella, at the time of the accident: MT, CSNJ, or both companies.
THE TRIAL COURT
The trial court granted summary judgment in favor of CSNJ because of the statutory bar established by N.J.S.A. 34:15-8. MT also moved for summary judgment, arguing that it was not Giamella’s employer and was therefore not vicariously liable for his negligence. Although Giamella was on MT’s payroll, MT raised the affirmative defense that he was a “borrowed servant” or “special employee” working for CSNJ at the time of the accident, applying the multi-factor test set forth in Galvao. The pretrial judge denied MT’s motion.
At the close of plaintiff’s case, MT moved for judgment pursuant to Rule 4:40-1, founded on the same borrowed-employee theory it had raised earlier in its summary judgment motion. The trial judge did not rule on the motion, reserving judgment for after the jury verdict.
The jury awarded plaintiff damages for pain and suffering, lost wages, and loss of consortium. Pursuant to an agreement reached by counsel, the jury was asked to presume that MT was vicariously liable and was not asked to resolve the borrowed-employee question. Instead, counsel assented to have the court resolve the borrowed-employee argument through MT’s yet-to-be-decided Rule 4:40-1 motion. In essence, the agreement contemplated that if the court ruled in MT’s favor on the motion and found that Giamella was, in fact, a borrowed employee working for CSNJ, then MT would not be liable for a jury award. Conversely, if the court denied MT’s motion, MT would be liable for the award under the parties’ agreement.
The trial judge vacated the verdict and awarded judgment to MT, concluding that Giamella was a borrowed employee working for CSNJ when the accident occurred. The Appellate Division reversed, vacated the directed verdict, and reinstated the jury verdict in the plaintiff’s favor. The Court granted MT’s petition for certification limited to whether the court or the jury should determine the borrowed-employee issue. 252 N.J. 244 (2022).
HELD: Application of the Galvao multi-factor test -- which can involve disputed facts and witness credibility -- is presumptively for a jury to determine. The court itself should not resolve the borrowed-employee issue unless the evidence concerning the factors is so one-sided that it warrants judgment in a moving party’s favor as a matter of law. Because the evidence concerning the Galvao factors was not sufficiently one-sided, the trial court incorrectly granted the defendant’s Rule 4:40-1 motion. It deemed the worker who caused the accident a borrowed employee of the plaintiff’s own employer.
1. An employer is generally responsible for the harm suffered by third parties through any negligent work-related acts of its employees. In some situations, an employer, known as a “general employer,” loans one of its workers to another employer, known as a “special employer,” for defined tasks or purposes. When such arrangements are created, and the loaned or “borrowed” worker negligently injures someone, questions arise regarding whether the general employer is vicariously liable for that negligence, whether the special employer is liable, or whether both employers are liable. Galvao fused two historical tests for resolving the liability issue in borrowed-employee cases -- the “control test” and the “business furtherance test.”
CONTROL TEST
Under the hybrid Galvao test, “control” is the threshold inquiry. There are four methods by which a party can demonstrate control: through direct evidence of on-spot control, or by showing that an employer has “broad” control based on (1) the “method of payment”; (2) who “furnishes the equipment”; or (3) the “right of termination.” 179 N.J. at 472. “The retention of either on-spot or broad, control by a general employer would satisfy this first prong.” Ibid. (emphasis added).
BUSINESS-FURTHERANCE TEST
If (and only if) the general employer is found to have control, the analysis moves onto the “business-furtherance prong.” Ibid. A worker is furthering the general employer’s business if the work is within the general contemplation of the general employer and the general employer derives an economic benefit by loaning its employee. Id. at 472-73. Galvao also provided guidance for when a worker may be serving as a dual employee of both the general and special employers.
THE JURY'S ROLE
2. The independent strands of case law before Galvao using either the control test or the business furtherance test plainly signified that a jury, not a judge, presumptively must evaluate whether a negligent worker who causes an accident was or wasn’t a “borrowed employee” of the special employer. The Court reviews relevant case law and observes that the pre-Galvao tradition of presumptively deeming borrowed- employee disputes as questions of fact for a jury makes sense. Factual disputes about control and business advantage can readily turn on the assessment of the credibility of competing witnesses. Juries are well-suited to making those assessments, as they are for a host of other factual disputes entrusted to them at trial. The Court finds that nothing in Galvao did or should change that traditional allocation of the jury’s role in borrowed-employee disputes, although it notes that the court may decide the issue without a jury upon a summary judgment motion or on a Rule 4:40-1 motion if the proofs at trial on the issue are sufficiently one-sided. The Court thus reaffirms that the traditional role of the jury as the finder of fact in resolving borrowed-employee questions was unaltered by Galvao. The jury, not the trial judge, presumptively applies Galvao’s hybrid multi-part test, subject to possible motion practice before trial under Rule 4:46-2 and at trial under Rule 4:40-1. The Court recommends that the Model Civil Jury Charges Committee consider whether a specific model charge, with perhaps a recommended verdict form, should be developed to assist jurors in applying the Galvao factors.
3. Applying those principles and viewing the trial record in the light most favorable to the plaintiff as the non-moving party, the Court explains why the evidence pertinent to the Galvao factors, at the very least, pointed in both directions. It was improper for the trial court to decide a Rule 4:40-1 motion in MT’s favor with such a mixed record, and the motion should have been denied. Ordinarily, that would mean that the borrowed-employee issue should be presented to the jury to resolve. However, because both sides made clear in light of their agreement that they did not desire a remand to the trial court for a new jury trial on the agency issues, the consequence of the denial of the Rule 4:40-1 motion is to reinstate the jury’s verdict and to hold MT vicariously liable for the molded damages award.
AFFIRMED
CHIEF JUSTICE RABNER and JUSTICES PATTERSON, SOLOMON, PIERRE-LOUIS, and WAINER APTER join in JUDGE SABATINO’s opinion. JUSTICE FASCIALE did not participate.
Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman 1.973.696.7900 jon@gelmans.com has been representing injured workers and their families who have suffered occupational accidents and illnesses.
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Updated: June 8, 2023
