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Jury Should Decide ‘Borrowed Employee’ Liability, New Jersey High Court Affirms

Jun 01, 2023Jun 01, 2023

The New Jersey Supreme Court has affirmed that whether an employer is vicariously liable under the borrowed-employee doctrine is a question of fact that should be decided by the jury, not the judge, unless the evidence is obviously one-sided.

The high court ruled in a personal injury case where it said the evidence was "mixed" and the trial judge wrongly vacated the jury verdict.

The case involved application of a multi-factor test announced in the 2004 opinion in Galvao v. G.R. Robert Construction Co. for evaluating whether a worker who negligently caused a plaintiff's jobsite injury is a so-called "borrowed employee" of the plaintiff's own employer.

The high court was asked to considered 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, a question of fact reserved for the jury. The court found that nothing in the Galvao test alters the traditional role of the jury as a finder of fact in resolving borrowed-employee questions, stating:

"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."

A personal injury case was brought by Philip Pantano, a mechanic employed by Container Services of New Jersey (CSNJ), who 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. Pantano's foot was crushed in the process.

Pantano 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., which is owned by the same person who owns CSNJ.

The core of the parties’ dispute concerned which entity or entities employed the negligent worker, Giamella, at the time of the accident: MT, CSNJ, or both companies.

The trial court granted summary judgment in favor of CSNJ.

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 trial judge did not rule on the MT motion at first, reserving judgment for after the jury verdict.

Under 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 the mechanism of MT's yet-to-be-decided motion.

This 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, then MT would be liable for the award.

The jury awarded Pantano damages for pain and suffering, lost wages, and loss of consortium. The trial judge then vacated the jury 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 plaintiff's favor.

The state Supreme Court granted MT's petition for certification limited to whether the court or the jury should determine the borrowed- employee issue.

The Supreme Court opinion, which was 6-0 with one judge not participating, held that 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 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," the court stated.

Because the evidence in the Pantano case concerning the Galvao factors pointed in both directions and was not sufficiently one-sided, it was improper for the trial court to decide in MT's favor with such a mixed evidence record.

Borrowed Employee

According to the court, an employer is generally responsible for 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.

According to the court, Galvao fused two historical tests for resolving the liability issue in borrowed-employee cases — the "control test" and the "business furtherance 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." If (and only if) the general employer is found to have control, the analysis moves onto the "business-furtherance" prong. A worker is furthering the general employer's business if the work being done is within the general contemplation of the general employer and the general employer derives an economic benefit by loaning its employee. Galvao also provided guidance for when a worker may be serving as a dual employee of both the general and special employers.

Case law before Galvao 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. Galvao did not change this tradition, the high court affirmed.

Since due to the parties’ agreement a new trial was not requested, the Pantano jury verdict is reinstated and MT is held vicariously liable for the damages.

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