Conley v. Brown Corp. of Waverly, Inc.

696 N.E.2d 1035, 82 Ohio St. 3d 470

Opinions

Douglas, J.

The case at bar presents us with an excellent opportunity to revisit the holdings in Taylor, 36 Ohio St.3d 149, 522 N.E.2d 464, and to expressly overrule Taylor as an anomaly of Ohio law. For the reasons that follow, we reverse the judgment of the court of appeals, vacate the judgment of the trial court, and remand this cause to the trial court for further proceedings.

In Taylor, Luke Scargill and Bobby Lee Taylor were employees of a metal manufacturing concern known as Alumax, Inc. Scargill was injured and Taylor was killed as a result of an explosion that occurred while aluminum scrap was being fed into a crusher machine at Alumax. Scargill and the administrator of Taylor’s estate filed suit against Academy Iron & Metal Company (“Academy Iron”), the supplier of the aluminum scrap. The plaintiffs sought recovery against Academy Iron for products liability. Academy Iron then filed a third-party complaint against Alumax, alleging that Scargill’s personal injuries and Taylor’s death had been caused by the intentional tortious acts of the employer. The third-party complaint sought indemnification from Alumax to Academy Iron for any damages for which Academy Iron was found to be liable in the underlying actions of Scargill and Taylor.

Alumax moved to dismiss the third-party complaint for failure to state a claim. Academy Iron later sought leave to file an amended third-party complaint to add a claim for contribution. The amended third-party complaint was filed along with the motion for leave to amend. Thereafter, the trial court dismissed Academy Iron’s third-party complaint, apparently holding that Academy Iron had no standing to bring an action against Alumax due to the immunity provided to complying employers under R.C. Chapter 4123, Ohio’s Workers’ Compensation Act. The dismissal of the third-party complaint (in which Academy Iron had asserted only a right to indemnification) implicitly disposed of the claim for contribution that Academy Iron had attempted to assert in its amended third-party complaint.

Academy Iron settled the claims in the underlying actions by Scargill and the administrator of Taylor’s estate, but appealed the dismissal of the third-party complaint. On appeal, the court of appeals in Taylor affirmed the judgment of the trial court, finding that the third-party complaint was precluded by former R.C. 4121.80. Upon further appeal, this court, by a divided (five-to-two) vote, affirmed the judgment of the court of appeals.

At the outset of this court’s decision in Taylor, the Taylor majority noted that, pursuant to Section 35, Article II of the Ohio Constitution and R.C. 4123.74, employers who comply with Ohio’s workers’ compensation laws are immune from damages for employee injuries that arise in the course of the employment. Id. at 150-152, 522 N.E.2d at 466-467. The majority observed that “[a]s these provisions [i.e., Section 35, Article II and former R.C. 4123.74] explicate, the General Assembly, in carrying out its constitutional mandate and adopting a workers’ compensation law, provided complying employers with immunity from damages for employee injuries that arise in the course of employment.” Id. at 152, 522 N.E.2d at 467. The Taylor majority also noted that an employer is not immune from damages for employee injuries caused by the intentional tortious conduct of the employer, since such conduct falls outside the scope of employment and workers’ compensation law. Id., citing Blankenship v. Cincinnati Milacron Chemicals, Inc. (1982), 69 Ohio St.2d 608, 23 O.O.3d 504, 433 N.E.2d 572. However, following a brief discussion of the holding in Blankenship, the court in Taylor found that Academy Iron, which the court labeled a “third-party tortfeasor,” lacked standing to pursue the third-party complaint for indemnification. Id. at 152-153, 522 N.E.2d at 467-468.

The Taylor court reached its conclusion on the issue of standing based on a single statement in Blankenship that “ ‘an employee may resort to a civil suit for damages.’ ” (Emphasis added.) Taylor at 152, 522 N.E.2d at 467, quoting Blankenship at 613, 23 O.O.3d at 508, 433 N.E.2d at 576. Specifically, the Taylor majority interpreted that statement as barring suit by anyone other than the employee or the employee’s legal representative. Id. at 152, 522 N.E.2d at 468. Thus, the court in Taylor concluded that third-party tortfeasors have no standing to bring a civil suit against an employer “alleging that the employer committed intentional torts leading to an employee’s work-related death, disease, or injury.” Id. at 153, 522 N.E.2d at 468. The Taylor court also attempted to bolster its conclusion in this regard based on the immunity granted to complying employers under Ohio’s workers’ compensation law. Id. at 150-153, 522 N.E.2d at 466-468. Additionally, the court went on to hold that Academy Iron could not recover from Alumax on any theory of implied or equitable indemnification, since Alumax had never expressly waived immunity from suit stemming from Section 35, Article II of the Ohio Constitution and R.C. 4123.74. Id. at 153-154, 522 N.E.2d at 468-470. Therefore, the court in Taylor held, at paragraphs one through three of the syllabus:

“1. Only an employee or his legal representative, not a third-party tortfeasor, may bring a civil suit against an employer alleging that the employer committed an intentional tort leading to an employee’s work-related death, disease, or injury. (Blankenship v. Cincinnati Milacron Chemicals, Inc. [1982], 69 Ohio St.2d 608, 614, 23 O.O.3d 504, 508, 433 N.E.2d 572, 577, certiorari denied [1982], 459 U.S. 857, 103 S.Ct. 127, 74 L.Ed.2d 110, followed.)

“2. A third-party tortfeasor has no standing to bring an indemnification claim against an employer, who is acting in compliance with the Ohio workers’ compensation law, for damages suffered by an employee in the course of or arising out of his employment.

“3. Relief from common-law liability under the Workers’ Compensation Act extends to eases in which a third-party tortfeasor, having paid damages to an employee or his estate, seeks indemnity from the employer on the ground that the liability of the employer is primary or active and the liability of the third-party tortfeasor is secondary or passive.”

The dissent in Taylor pointed out an array of problems and inconsistencies with the rationale and holdings of the majority opinion in that case. Taylor, 36 Ohio St.3d at 155-163, 522 N.E.2d at 470-477 (Douglas, J., dissenting). The dissent noted, among other things, that the majority in Taylor had misused a statement from Blankenship to reach a conclusion that was absolutely inconsistent with the underpinnings of Blankenship and its progeny. Taylor at 157-158, 522 N.E.2d at 472-473. The Taylor dissent took issue with the majority’s reliance on the immunity provided to complying employers under Ohio’s Workers’ Compensation Act, and suggested that it should now be clear “that intentional misconduct by an employer which results in an injury to his employee is outside the scope of the Workers’ Compensation Act and that the employer in such cases is not entitled to the protections afforded by the Act.” Id. at 157-158, 522 N.E.2d at 472. Likewise, the dissent in Taylor noted that “[i]f the conduct of [Alumax] was indeed intentional, an assumption that the majority acknowledges must be made, then the protections of the workers’ compensation system have no relevance whatsoever.” Id. at 158, 522 N.E.2d at 472. The dissent concluded that Academy Iron’s amended third-party complaint had stated a claim for contribution under former R.C. 2307.31, as well as a claim for indemnity. Id. at 157-159, 522 N.E.2d at 471-473. Additionally, the dissent in Taylor went on to address the constitutionality of former R.C. 4121.80 (an issue not decided by the Taylor majority), and concluded that the statute represented an invalid exercise of legislative authority. Id. at 161-162, 522 N.E.2d at 475-476.

The following passage from the Taylor dissent dealt with issues concerning former R.C. 4121.80, but the passage adequately summarizes the rationale of the entire dissent that employers have no immunity or special protection from civil liability for employee injuries that are caused, in whole or in part, by the intentional tortious conduct of the employer:

“Injuries resulting from an employer’s intentional torts, even though committed at the workplace, are utterly outside the scope of the purposes intended to be achieved by Section 35 [Article II of the Ohio Constitution] and by the [Workers’ Compensation Act]. Such injuries are totally unrelated to the fact of employment. When an employer intentionally harms his employee, that act effects a complete breach of the employment relationship, and for purposes of the legal remedy for such an injury, the two parties are not employer and employee, but intentional tortfeasor and victim. If the victim brings an intentional tort suit against the tortfeasor, it is a tort action like any other. The employer has forfeited his status as such and all the attendant protections fall away.” (Emphasis sic.) Id., 36 Ohio St.3d at 162, 522 N.E.2d at 476 (Douglas, J., dissenting).

In Brady, 61 Ohio St.3d 624, 576 N.E.2d 722, this court adopted the rationale of the above-quoted passage from the Taylor dissent in holding that former R.C. 4121.80 was, in fact, unconstitutional. Brady at 634, 576 N.E.2d at 729, quoting Taylor at 162, 522 N.E.2d at 476 (Douglas, J., dissenting). Brady recognized that employer intentional torts “will always take place outside” the employment relationship. Brady at 634, 576 N.E.2d at 729. Brady does not, however, expressly or impliedly overrule Taylor. The constitutionality of former R.C. 4121.80 was not addressed by the Taylor majority, and Brady did not address the issue whether a third-party tortfeasor has standing to bring an action against an employer for intentionally tortious conduct that injures an employee. Nevertheless, Brady does effectively repudiate the rationale of Taylor, insofar as Taylor was predicated on the theory that workers’ compensation statutes can insulate an employer from common-law liability for damages caused by the employer’s intentional tortious conduct in the workplace. Specifically, Brady, like the dissent in Taylor, recognizes that an intentional tort committed by an employer against an employee necessarily occurs outside the scope of the employment relationship and, thus, outside the realm of any protections afforded to complying employers by Ohio’s workers’ compensation law. Brady at paragraph one of the syllabus.

To apply Taylor in the case at bar would preclude Nationwide, as subrogee of the rights of a “third-party tortfeasor,” or as assignee of the Conleys’ claims, from maintaining suit against Brown for Brown’s alleged activity in having committed an intentional tort in the workplace and having caused or contributed to the injuries sustained by David Conley. This is so, of course, because Taylor holds, among other things, that “[o]nly an employee or his legal representative, not a third-party tortfeasor, may bring a civil suit against an employer alleging that the employer committed an intentional tort leading to an employee’s work-related death, disease, or injury.” Id., 36 Ohio St.3d 149, 522 N.E.2d 464, at paragraph one of the syllabus. Nationwide is neither the “employee” nor the employee’s “legal representative” within the meaning of Taylor. Rather, Nationwide is a “third-party tortfeasor,” insofar as Nationwide stands in the place of Rexcon as subrogee of Rexcon’s rights against Brown. Furthermore, according to the holdings and rationale of Taylor, Nationwide would have no standing to maintain claims against Brown because of the immunity conferred upon complying employers under Ohio’s Workers’ Compensation Act.

However, upon a careful review of Taylor, the dissent in Taylor, and our decision in Brady, it is now absolutely clear to us that Brady and the dissent in Taylor are consistent with Ohio law and the case of Blankenship and its progeny, whereas the majority opinion in Taylor is not. We find that Taylor was bad law when it was first decided, and that it remains bad law today. The rationale in Taylor for finding a lack of standing for “third-party tortfeasors” is, as the court of appeals’ majority recognized, “less than convincing.” Employer immunity under Ohio’s Workers’ Compensation Act has no relevance whatsoever where, as here, the employer has allegedly committed an intentional tort against an employee. Because employer intentional torts “will always take place outside” the employment relationship (Brady, 61 Ohio St.3d at 634, 576 N.E.2d at 729), workers’ compensation law has no connection with suits alleging an employer intentional tort. We can perceive of no legitimate reason why Brown, simply because it is an employer, should be absolved from civil liability to Nationwide if, in fact, an intentional tort was committed. An employer who commits an intentional tort against an employee in the workplace is to be treated the same as other persons or entities that may be called upon to answer for the injurious consequences of their own tortious conduct.

Accordingly, in keeping with the rationale of Blankenship, 69 Ohio St.2d 608, 23 O.O.3d 504, 433 N.E.2d 572, and its progeny, we now hold that an employer is not immune from civil liability for employee injuries, disease, or death caused by the employer’s intentional tortious conduct in the workplace, since such conduct necessarily occurs outside the employment relationship. Additionally, we hold that a suit against an employer alleging that the employer committed an intentional tort leading to an employee’s injury, disease, or death may be maintained by the employee or his or her legal representative, an assignee of the right of action against the employer, or any other person or entity with a statutory or common-law right to recover against the employer, including a third-party tortfeasor with a statutory or common-law claim for contribution or for indemnification, or the subrogee of the third-party tortfeasor’s rights or claims. Taylor is therefore overruled.

In the case at bar, Nationwide’s status as subrogee of Rexcon’s rights, and as assignee of the Conleys’ claims, clearly provides the basis for Nationwide’s interest and standing to maintain suit against Brown for all or part of the proceeds that have been paid by Nationwide to the Conleys on behalf of Rexcon. Nationwide, as assignee of the Conleys’ causes of action for intentional tort, is entitled to assert claims for full recovery against Brown and, also, as subrogee of Rexcon’s right, if any, to indemnification, including implied or equitable indemnification of the type at issue in Taylor, 36 Ohio St.3d 149, 522 N.E.2d 464.

Moreover, insofar as Nationwide’s complaint was based on an asserted right to contribution, we find that former R.C. 2307.31 and 2307.32(C) (now R.C. 2307.32 and 2307.33[C]) provided a clear basis for Nationwide’s interest and standing to maintain its claims against Brown. Former R.C. 2307.31(A) provided, in part:

“[WJhere two or more persons are jointly and severally liable in tort for the same injury to person or property or for the same wrongful death, there is a right of contribution among them even though judgment has not been recovered against all or any of them. The right of contribution exists only in favor of a tortfeasor who has paid more than his proportionate share of the common liability, and his total recovery is limited to the amount paid by him in excess of his proportionate share. No tortfeasor is compelled to make contribution beyond his own proportionate share of the common liability. There is no right of contribution in favor of any tortfeasor who intentionally has caused or intentionally has contributed to the injury or loss to person or property or the wrongful death.”

Former R.C. 2307.31(B) provided that a tortfeasor who entered into a settlement with a claimant was not entitled to recover contribution from another tortfeasor whose liability was not extinguished by the settlement. Former R.C. 2307.31(C) permitted a liability insurer that discharged the obligation of a tortfeasor to be subrogated to the tortfeasor’s right of contribution “to the extent of the amount it has paid in excess of the tortfeasor’s proportionate share of the common liability.” Former R.C. 2307.31(G) and 2307.32(C) permitted enforcement of the right to contribution by separate action.

Here, Nationwide settled with the Conleys on behalf of Rexcon. The Conleys assigned claims to Nationwide as part of the settlement. The covenant obtained by Nationwide in connection with the settlement may be viewed as having extinguished Brown’s liability, if any, to the Conleys. Nationwide may therefore be entitled to contribution from Brown to the extent of the amount Nationwide has allegedly paid in excess of Rexcon’s proportionate share of the common liability of Brown and Rexcon.

Nevertheless, Brown protests that Taylor has the effect of advancing important public policy interests and that Taylor should be preserved to bar claims such as those advanced by Nationwide. Specifically, Brown argues that “[i]n its decision in Taylor, supra, this Court determined that employer intentional tort claims are personal to the employee. If the employee chooses not to pursue such a claim, no one else can do so. That decision provides an important check on fiivolous lawsuits mounted by opportunists and, thus, satisfies policy concerns raised by the availability of an employer intentional tort theory.” However, the solution to such “frivolous” lawsuits is in the use of a Civ.R. 56 summary judgment motion challenging the merits of the claims or, perhaps, through the use of Civ.R. 11. The appropriate solution is not (and cannot be) to bar the courthouse door to possibly meritorious claims of intentional tort.

Brown also argues that Taylor is consistent with the wishes of the General Assembly “to rein in, not expand, employer intentional tort as a theory of recovery by injured workers beyond the workers’ compensation system.” Brown’s argument concerning the desires of the General Assembly is apparently based on R.C. 2745.01 and former R.C. 4121.80. However, former R.C. 4121.80 was struck down in Brady, 61 Ohio St.3d 624, 576 N.E.2d 722, paragraph two of the syllabus, as an invalid exercise of legislative authority.³ Additionally, as Brown readily concedes, R.C. 2745.01, which became effective November 1, 1995, is not applicable in this case and, thus, we refrain from any further comment concerning that statute or the expression of legislative intent accompanying the enactment.

Accordingly, for the foregoing reasons, we reverse the judgment of the court of appeals, vacate the judgment of the trial court, and we remand this cause to the trial court for further proceedings.

Judgment reversed and cause remanded.

Resnick, F.E. Sweeney, Pfeifer and Cook, JJ., concur. Moyer, C.J., and Lundberg Stratton, J., concur in the judgment and syllabus only.

3 . We note, in passing, that the Court of Appeals for the Third Appellate District recently determined that R.C. 2745.01 is unconstitutional. Johnson v. BP Chemicals, Inc. (Nov. 18, 1997), Allen App. No. 1-97-32, unreported, 1997 WL 729098, discretionary appeal and cross-appeal allowed (1998), 81 Ohio St.3d 1500, 691 N.E.2d 1061.