Opinion
Case No. 1:00cv139.
December 8, 2004
ORDER
This matter is before the Court on the Joint Motion for Summary Judgment filed by Union Pacific Railroad Company ("Union Pacific") and Loram Maintenance of Way, Inc. ("Loram") against plaintiff Doug Ward ("Ward"). Union Pacific and Loram jointly contend that Minnesota law applies in this case and that Ward is barred from bringing a negligence action against a third party. Minnesota law prohibits such an action after an employee has received workers' compensation benefits under its statutory scheme if the employer and the third party defendant were engaged in a "common enterprise." Ward asserts that Utah law applies to this case, and he is therefore allowed to bring this tort action against a third party in addition to receiving worker's compensation benefits. Ward asserts in the alternative that even if Minnesota law applies, Union Pacific and Loram did not engage in a "common enterprise."
ANALYSIS
The parties do not dispute that a federal court must apply the choice of law rules of the forum state in a diversity case. Because Utah is the forum state, its choice of law rules apply in determining the choice of law issues raised in the joint motion of Union Pacific and Loram. While the Utah Supreme Court has not directly addressed the choice of law issue now before the Court, it let stand a Utah Court of Appeals decision which adopted a hybrid choice of law analysis. Accordingly, this Court, in applying Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), adopts the analysis set forth by the Utah Court of Appeals.
In Shaw v. Layton Construction Co., 872 P.2d 1059 (Utah Ct.App. 1994), the court held that the Utah worker's compensation law applied in that case under a hybrid analysis of the competing states' interests and the reasonable expectations of the parties. The Shaw court identified three approaches to resolve workers' compensation choice of law problems:
In Shaw, a Utah resident was injured while working for a Utah company on a project in Nevada. The worker applied for and received workers' compensation benefits in Utah and then brought a negligence action against the general contractor, a Utah corporation, and another subcontractor, also a Utah corporation. The trial court had granted dismissal and summary judgment in favor of the general contractor and subcontractor, respectively, and ruled that Nevada worker's compensation law applied, which precluded the worker from bringing a tort claim against a third party.
(1) application of the law of the place of the employment relation; (2) an interest analysis, which seeks to determine which state has the greatest interest in having its law applied; or (3) a hybrid of the first two approaches which focuses on the relationship of the parties, their expectations, and the interests of the states whose law might be applied.Id. at 1063-64.
In rejecting the first two alternatives in favor of the hybrid approach, the court recognized the greater interest of Utah as the home state of the worker and defendant corporations, that the employment relationship was founded in Utah, and that the parties would reasonably expect Utah workers' compensation law to apply.
In Littlefield v. Mobil Exploration and Producing, North America, Inc., 988 F. Supp. 1403 (D. Utah 1996), then-Chief United States District Judge Sam adopted the Shaw hybrid analysis. In that case, the court held that Colorado workers' compensation law applied in determining the rights of a plaintiff to file negligence claims.
In Littlefield, a Colorado resident was injured at a leased oil well site in Utah. The well site was being leased by a Nevada corporation who, through a series of subcontracts, hired the worker's Colorado employer. After the injury, the worker received benefits under the Colorado workers' compensation system, and he filed tort liability claims against the lessee corporation and its parent company.
The court held that Colorado workers' compensation law applied because Colorado had the greatest state interest — the worker was a resident of Colorado and was hired in Colorado — and the reasonable expectations of the parties indicated that Colorado law would apply — the employment contracts were established in Colorado, the plaintiff applied for and received workers' compensation benefits in Colorado, and the plaintiff's work days typically began in Colorado.
The facts in Shaw, as well as in Littlefield, are distinguishable from the facts in the case at bar. However, the hybrid analysis applies to the case at bar and this Court adopts it in deciding whether the Utah or the Minnesota workers' compensation law should apply in this case.
1. State Interests
The Utah Court of Appeals in Shaw noted that "the natural focus of state workers' compensation law is on the injured worker and his or her employer, not the geographical location of the worksite or injury." Shaw, 872 P.2d at 1064. Because Ward is a resident of Wyoming, neither Utah nor Minnesota has an interest in protecting him as a resident. However, Utah has a general interest in allowing all workers injured within the state, even non-residents like Ward, to pursue negligence claims in addition to receiving workers' compensation benefits. Utah also has an interest in deterring future accidents of this type, which a negligence suit may facilitate.
Minnesota has an interest in protecting its corporations from the potential effects of negligence actions when an injured worker has already received workers' compensation benefits under its statutory provisions. However, Minnesota's interest in limiting recovery to benefits received under its workers' compensation plan is protected by section 34A-2-106(5) of the Utah code, which requires a claimant who is successful in a negligence action against a third party to first disburse any recovery obtained in repayment for benefits received. Only after the entity is so reimbursed, in this case the State of Minnesota, could a party realize any further recovery.
Ward is suing Union Pacific for negligence, but Loram may be contractually liable for any liability Union Pacific incurs in Ward's action.
It is manifest that both Utah and Minnesota have substantial interests in applying their laws to this case, but it does not appear that the interest of either state is more compelling than the other.
2. Expectations of the Parties
The expectations of the parties suggest that Utah law should be applied in this case. Loram is a Minnesota corporation which does business throughout the country, including Utah, where the accident occurred. Loram's employment agreement with Ward evidences a willingness to submit itself to any jurisdiction, and the agreement does not contain a forum selection clause.
Paragraph 8 provides that "[i]n the event of countervailing laws in any jurisdiction in which the terms of this Agreement are contested, this Agreement shall be construed as if such provision is not contained in this Agreement."
The contract between Union Pacific and Loram also lacks specificity as to state selection in a provision that requires Loram to procure:
Worker's Compensation insurance covering the Contractor's statutory liability as under the worker's compensation laws of the state(s) affected by this Agreement, and Employer's liability. If such insurance will not cover the liability of Contractor in states that require participation in state worker's compensation fund, Contractor shall comply with the laws of such states.
Union Pacific is a Delaware corporation with its headquarters in Nebraska and offices in Utah. Union Pacific is also a large landowner in Utah and accepts Utah as one of a few jurisdictions for suits against it. Additionally, in support of its motion for summary judgment against Loram, Union Pacific previously argued that Utah law is appropriate for interpretation of its contract with Loram because Ward was working in Utah and Union Pacific has more contacts with Utah than any other state.
Ward is a resident of Wyoming and his employment offer was in Wyoming. However, Ward's expectation concerning where to file his workers' compensation claim is clearly shown by his attempted submission of a Utah workers' compensation form for benefits under Utah law after being injured in Utah.
Loram instructed Ward to file his workers' compensation claim with their insurance carrier in Minnesota, and thereafter applied for workers' compensation benefits on Ward's behalf in Minnesota.
This Court finds and rules that as between Minnesota and Utah, Utah is the state where the parties could most reasonably have expected Ward's workers' compensation claim to be filed. Ward and Union Pacific clearly expected that Utah workers' compensation law would be applied in the event of Ward's injury. Loram, by its contractual arrangements, also was willing to submit such to any state, including Utah. Accordingly, this Court finds and rules that the reasonable expectations of the parties to this lawsuit were that Utah law would govern in the matter of workers' compensation benefits. This balances the scales in favor of Utah law given that the state interests do not weigh in favor of Minnesota and that they do not weigh against Utah.
Because the Court determines that Utah law applies in this case, it need not determine whether Union Pacific and Loram engaged in a "common enterprise" under Minnesota law.
Based upon the foregoing, it is hereby
ORDERED that the Joint Motion for Summary Judgment filed by Union Pacific and Loram is DENIED.