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Problem 3. Work Injuries—The Contract Specifications Defense to Products Liability Claims, and Indemnification from the Employer Arguably Immunized by Worker Compensation Law
  • 1 Betty Carter v. Bruce Springsteen Press Co. v. Midori Lighting Products, Inc.

    1
    Betty Carter v. Bruce Springsteen Press Co. v. Midori Lighting Products, Inc.
    2

    Betty Carter worked at a factory in Everett, Massachusetts until two years ago. Her employer was Midori Lighting Products, Inc. and is a Delaware corporation with its principal place of business in Massachusetts. The factory manufactured airport lighting transformers. At her job, Carter operated a large punch press machine. She was instructed by her employer to place a folded strip of rubber into the slot of a machine, then to place on top of it a cable transformer, and finally to place a second folded strip of rubber above the transformer. She would then press a button to cause the two pieces of rubber to be heated up, pressed by the machine toward the transformer by the moving cylinders and finally wrapped around the transformer. Because the top folded strip sometimes popped out of the machine, her employer instructed her to hold the strip in place with her hand while the cylinders pressed it downward and to remove her hand when the strip could no longer fall out. Ordinarily, machines of this type had a safety shield to prevent the operator from having her hands close to the slot while the machine was operating, but because of the supposed need to hold the rubber in place until it could not fall out, the employer failed to equip the machine with a safety shield.

    3

    The manufacturer is Bruce Springsteen Press Co., located in Portland, Maine. Springsteen normally sold its machines with a safety shield attached and a warning to the customer not to remove the shield except to clean the machine, and then to do so with the machine unplugged from the power source. Midori had heard about Springsteen’s work from other satisfied customers and had called up Springsteen in Maine from Midori’s offices in Massachusetts to order a machine. The Midori manager who ordered the machine told Springsteen that Midori wanted the machine without a safety shield because Midori had some extra safety shields it had removed from several old machines that no longer functioned and would install the safety shield itself back in Everett, Massachusetts. Springsteen informed Midori that it was dangerous to operate the machine without a shield and insisted on getting Midori’s request in writing. The manager sent Springsteen a letter stating:

    4

    “I want you to leave off the safety shield from the press. I have a shield here from an old machine that I can put on myself. As we discussed on the phone, your catalogue lists the safety shield at $300, so the sale price should be reduced by that amount."

    5

    When the manufacturer Springsteen shipped the punch press machine to the employer Midori in Everett, Massachusetts, it included a contract of sale that specifically stated in bold red print:

    6

    “This product is constructed in accord with the buyer’s specifications. The buyer assumes responsibility for equipping the product with a safety shield to protect the operator. The seller disclaims any liability for harm caused by the failure of the buyer to install a safety device.”

    7

    While operating the machine according to her employer’s instructions, Carter’s hand was caught in the machine and was amputated. She brought a workers’ compensation claim against her employer, but the recovery was limited. She also filed for Social Security disability payments. Finally, she sued the manufacturer of the machine, Springsteen, in tort in Massachusetts state trial court, alleging that the machine was defectively designed because of the absence of a safety shield and that Massachusetts strict products liability law applied. Defendant Springsteen argued that Maine products liability law applied. In addition, Springsteen sued Midori as a third-party defendant, claiming that if Springsteen were liable to Carter, Midori had a contractual obligation to reimburse Springsteen for the amount of the liability since Midori was either fully or partially responsible for the injury.

    8

    The trial judge found that under Massachusetts law, a manufacturer like Springsteen could be held liable to Carter if Carter could demonstrate (as she almost certainly could) that the machine was defective (unreasonably dangerous) without a safety shield. However, under Maine law, Springsteen has an absolute defense to such a claim based on the contract specifications; construction of a product in accord with the buyer’s contractual specifications relieves the manufacturer of liability for any injuries caused by the product, even if those injuries occur to a third party. In contrast, this defense is not available under Massachusetts law; the disclaimer is void as against public policy and the manufacturer is obligated to refuse to sell a product that is unreasonably dangerous without a safety device regardless of the customer’s specifications to the contrary. Under the Massachusetts rule of law, the manufacturer has a duty not to sell an unreasonably dangerous product, no matter what the customer says, in order to protect third parties who may use the product in the future.

    9

    In addition, under Massachusetts law, a manufacturer of a product that injures a worker on the job may not implead the employer as a tort defendant to obtain contribution from the employer even if the employer is partially or even primarily responsible for the harm caused to the plaintiff. Massachusetts workers’ compensation law not only immunizes employers from tort lawsuits by employees injured on the job, but prohibits employees from suing employers indirectly by suing product manufacturers who implead the employer as a third-party defendant. In contrast, under Maine law, employers can be sued by the product manufacturers if the employer’s negligence contributed to the harm to the employee who has successfully sued the product manufacturer.

    10

    The trial must decide two issues.

    11

    1. Does Massachusetts or Maine product liability law apply to Carter’s claim against defendant Springsteen? Does Carter have the right under Massachusetts law to try to prove that the machine was defective when it was shipped by Springsteen or does the Maine contract specifications defense apply to grant Springsteen immunity from liability?

    12

    2. Does Massachusetts or Maine law apply to the cross-claim by Springsteen against third-party defendant Midori? Is Midori immune from liability under Massachusetts workers compensation law or is Midori potentially liable to Springsteen under Maine law?

    13

    π = Carter

    14

    ∆/3π = Springsteen

    15

    3∆ = Midori

    16

     

  • 2 Michalko v. Cooke Color & Chem. Corp.

    1
    91 N.J. 386 (1982)
    2
    451 A.2d 179
    3
    ELEANOR J. MICHALKO AND PAUL MICHALKO, HER HUSBAND, PLAINTIFFS-APPELLANTS,
    v.
    COOKE COLOR AND CHEMICAL CORP. A/K/A COOKE DIVISION OF REICHOLD CHEMICALS CORP., SQUARE D COMPANY, AND E DISTRIBUTION COMPANY (FICTITIOUS NAME), DEFENDANTS, AND CUBBY MANUFACTURING COMPANY, DEFENDANT-RESPONDENT.
    4

    The Supreme Court of New Jersey.

    5
    Argued February 22, 1982.
    6
    Decided August 16, 1982.
    7

    [390] Douglas S. Brierley argued the cause for appellants (Schenck, Price, Smith & King, attorneys; William R. Albrecht, of counsel).

    8

    Donald S. McCord, Jr. argued the cause for respondent (O'Donnell, McCord & Leslie, attorneys).

    9
    The opinion of the Court was delivered by HANDLER, J.
    10

    This case presents the question whether an independent contractor that rebuilds part of a machine according to the specifications of the owner can be held strictly liable for injuries sustained by a foreseeable user of the machine when the contractor failed to make the machine safe or to warn of the dangers inherent in its use. The courts below found that such a contractor could not be held strictly liable. We now reverse.

    11
    I
    12

    Since 1972, plaintiff Eleanor J. Michalko worked as a "molder" for Elastimold in Hackettstown, making airport lighting transformers. Her job consisted of operating a 35-ton vertical transfer or transformer press, soldering wires to coils or cable transformers, and then placing the coils with two small rubber strips in a stationary mold or die positioned on two clamps. The clamps would then be shut by pushing a button on the electric control panel to the right of the operator's station. Once the clamps were closed, rubber strips about five to seven inches long were heated and folded into the injection cavities above and below the stationary die. Upon pressing the injection button on the control panel, the rubber was injected around the coil, and the rams and cylinders would approach the stationary die from the top and bottom. Because the folded rubber sometimes fell [391] out of the machine, plaintiff had been instructed by her employer to hold the rubber in place with her left hand while she pushed the button with her right. On the evening of December 10, 1973, plaintiff was working on press # 7, observing the normal production procedures and following her employer's instructions. She held the rubber in the cavity with her left hand as usual, as she pressed the injection button with her right. Her left hand got caught between the stationary die and the bottom injection cavity and was amputated. There were no safety devices on the transfer press to prevent the injury.

    13

    Elastimold owned four such transfer presses, three of which were originally built by Elastimold's parent company. These were known as presses # 6, 7 and 8. The fourth machine, press # 9, was built by the defendant, Cubby Manufacturing Company (hereinafter "Cubby"), in 1968 in accordance with Elastimold's plans and specifications. Cubby workers had done approximately two dozen jobs for Elastimold since the mid-1960's and had knowledge of the type of work that the transfer presses performed in the manufacturing process.

    14

    In 1969 the engineering department at Elastimold drew up plans to rebuild and redesign the three older presses. Elastimold sent Cubby a purchase order, containing a clause requiring Cubby to conform to Elastimold's drawings and specifications. Cubby picked up the machines from Elastimold's plant and transported them to Cubby's shop in Fairfield, New Jersey. The only item left behind at Elastimold after Cubby removed the presses was the old hydraulic system, which was then scrapped. Cubby disassembled each machine. Three of four horizontal plates for the press frame and supporting ties or strain rods from each of the three presses were remachined and reused. Cubby installed eight hydraulic cylinders with accompanying valves, seals, and other paraphernalia. It manufactured a manifold and other parts, and it modified the length of the rams or pistons.

    15

    [392] Cubby was aware of the types of safety devices that could be used on the transfer presses. However, it had a policy of not questioning the absence of safety guards when it was not building a complete machine. Cubby knew that assembly drawings usually showed the machine as a finished product ready to operate and that, in this case, the drawings furnished to it by Elastimold did not indicate any safety devices. Even though Cubby's personnel had visited Elastimold and seen the presses operating without safety devices, Cubby assumed that Elastimold would install safety devices itself. It is undisputed that Cubby knew the transfer presses were dangerous without safety devices.

    16

    The work performed by Cubby conformed to Elastimold's specifications, which, as noted, did not include provision for a safety device. Moreover, Cubby failed to warn Elastimold or otherwise to convey or affix warnings to foreseeable users that the press was dangerous without a safety device. When the presses were shipped back to Elastimold, they were not operational since Elastimold had decided to install the electrical and hydraulic systems, including the electrical control panel itself. These systems served to give power to the press to make it function. Neither Cubby nor Elastimold installed any safety devices on the presses.[1]

    17

    [393] Plaintiffs Eleanor Michalko and Paul Michalko filed this action against Cubby, Square D Co., the alleged manufacturer of the control panel, and Cooke Color and Chemical Corp., the supplier of the rubber inserted in the machine. The complaint alleged negligence, strict liability and breach of express and implied warranties on the part of the defendants. Plaintiffs voluntarily dismissed the action against all of the defendants but Cubby.

    18

    At the close of the evidence at trial, the trial court dismissed the action against Cubby with prejudice. The trial judge ruled that (1) there was no "sale;" (2) the addition of the hydraulic and electrical systems constituted a "substantial change" in the product, relieving Cubby of liability; (3) Cubby did not design the machine but produced it according to the exact specifications of the employer; (4) it was impractical to install a safety device since different uses of the machine required different devices; and (5) an independent contractor has no duty to warn a knowledgeable buyer that a machine is dangerously designed. The Appellate Division affirmed for substantially the reasons expressed by the trial court. We granted plaintiffs' petition for certification. 88 N.J. 476 (1981).

    19
    II
    20

    The major issue in this case is whether an independent contractor that undertakes to rebuild part of a machine in accordance with the specifications of the owner has a legal duty to foreseeable users of the machine to make the machine safe or to warn of the dangers inherent in its use.

    21

    [394] Under New Jersey law, manufacturers, as well as all subsequent parties in the chain of distribution, are strictly liable for damages caused by defectively designed products. Employees have been allowed to sue the manufacturers of such machines which have injured them during the course of their employment when those instrumentalities lacked either safety devices or adequate warnings. See, e.g., Freund v. Cellofilm Properties, 87 N.J. 229 (1981); Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150 (1979); Cepeda v. Cumberland Engineering Co., 76 N.J. 152 (1978); Finnegan v. Havir Mfg. Co., 60 N.J. 413 (1972); Bexiga v. Havir Mfg. Co., 60 N.J. 402 (1972). See also Beshada v. Johns-Manville Corp., 90 N.J. 191 (1982); Jakubowski v. Minnesota Mining and Manufacturing, 42 N.J. 177 (1964).

    22

    The elements of a prima facie case of strict liability for design defects are proof that (1) the product design was defective; (2) the defect existed when the product was distributed by and under the control of defendant; and (3) the defect caused injury to a reasonably foreseeable user. Suter, 81 N.J. at 170, 176; Scanlon v. General Motors Corp., 65 N.J. 582, 590-91 (1974). See Santor v. A & M Karagheusian, Inc., 44 N.J. 52, 66-67 (1965).

    23

    In a design defect case, the plaintiff has to show that the product design "is not reasonably fit, suitable and safe for its intended or reasonably foreseeable purposes ..." Beshada, 90 N.J. at 199, quoting Suter, 81 N.J. at 169. The determination of whether strict liability applies is made by balancing the magnitude of the risk created by the dangerous condition against the social utility attained by putting the product on the market. Beshada, 90 N.J. at 199-200. Strict liability attaches if the product's utility is outweighed by the magnitude of the risk involved in its use. Freund, 87 N.J. at 238 n. 1; Cepeda, 76 N.J. at 172.

    24

    The focus in a strict liability case is upon the product itself. Beshada, 90 N.J. at 200; Freund, 87 N.J. at 238. Knowledge [395] of a product's dangerous characteristics is imputed to the defendant. Beshada, 90 N.J. at 200; Cepeda, 76 N.J. at 174-80. It is not necessary to prove that defendant knew or should have known of the harmful attributes of its product while the product was under its control in order to charge it with that knowledge. Beshada, 90 N.J. at 200; Freund, 87 N.J. at 242-43. Once the product is deemed dangerous, the defendant's lack of fault is irrelevant. See generally Wade, "On the Nature of Strict Tort Liability for Products," 44 Miss.L.J. 825, 834-35 (1973).

    25

    These principles apply with similar force to one engaged in rebuilding machines or manufacturing component parts. Under these principles, when it is feasible for the rebuilder of machinery or the manufacturer of component parts to incorporate a safety device and it fails to do so, the rebuilt machine or component part will be deemed to be a defective product when delivered by the manufacturer to its owner. Further, the fact that the product was built according to the plans and specifications of the owner does not constitute a defense to a claim based on strict liability for the manufacture of a defective product when the injuries are suffered by an innocent foreseeable user of the product.

    26

    In this case, defendant does not contest the fact that the rebuilt press was a defectively designed product. Rather, it claims that since it was hired to rebuild part of the press to the owner's specifications, it never exerted enough control over the product to be legally responsible for injuries resulting from design defects. See Scanlon v. General Motors Corp., 65 N.J. at 591. Cf. Menacho v. Adamson United Co., 420 F. Supp. 128, 139 (D.N.J. 1976) (as between an original manufacturer and a subsequent rebuilder of a product, liability should be imposed for a defect commensurate with the degree of product control).

    27

    We reject this argument. Defendant's lack of responsibility under its contract for the design of the machine is not [396] relevant. Consequently, its adherence to or reliance upon the owner's plans, even though required by its contract, is equally irrelevant. "It is not necessary to show that defendant created the defect. What is important is that the defect did in fact exist when the product was distributed by and was under the control of the defendant." Suter, 81 N.J. at 170. See also Lenherr v. NRM Corp., 504 F. Supp. 165, 174-75 (D.Kan. 1980); Abdul-Warith v. Arthur G. McKee & Co., 488 F. Supp. 306, 310-11 (E.D.Pa. 1980), aff'd, 642 F.2d 440 (3 Cir.1981); Greco v. Buccioni Engineering Co., 283 F. Supp. 978, 980 (W.D.Pa. 1967), aff'd, 407 F.2d 87 (3 Cir.1969); Union Supply Co. v. Pust, 38 Colo. App. 435, 561 P.2d 355 (Colo.Ct.App. 1976), modified, 196 Colo. 162, 583 P.2d 276 (Colo. 1978).

    28

    Defendant relies upon Sanner v. Ford Motor Co., 144 N.J. Super. 1 (Law Div. 1976), aff'd, 154 N.J. Super. 407 (App.Div. 1977), certif. den., 75 N.J. 616 (1978), in which it was held that a defendant which built a jeep in conformity with contractual specifications supplied by the government was not liable to a plaintiff injured in the jeep because the vehicle lacked seat belts. In Sanner, the Law Division held that defendant's duty was limited to complying with the specifications in the contract. 144 N.J. Super. at 6-7. The Appellate Division further held that since the government had specifically decided not to include seat belts in the jeep, the manufacturer had no duty to install them. 154 N.J. Super. at 410. Sanner is distinguishable. Both the Law Division and the Appellate Division rested their holdings on the "conscious, intentional determination by the United States Government that the installation of seat belts would be incompatible with the intended use of the vehicle." 154 N.J. Super. at 410; 144 N.J. Super. at 6. In this case, however, there was sufficient evidence in the record for the jury to determine that safety devices existed which were compatible with the intended use of the transfer press rebuilt by defendant. Thus, we do not read the Sanner decision as standing for the proposition that a [397] manufacturer is relieved of liability when it produces a machine according to the design specifications of the buyer.[2]

    29

    Defendant also claims that it is not liable under the test enunciated in Verge v. Ford Motor Co., 581 F.2d 384 (3 Cir.1978). However, that case did not actually address the liability that can be imposed upon the rebuilder of a machine or the manufacturer of a component part of a machine that is defectively designed where there was evidence that the defect existed in the product built by the particular defendant. Defendant cites Verge for the proposition that trade custom is a determinative factor relating to responsibility for providing safety devices. In this case, both parties spent a great deal of time at trial trying to demonstrate whether or not defendant complied with the custom of the trade. It appears from the record that the trade custom applicable to defendant was not only not to install a safety device but also not to give a warning. Thus, defendant's conduct was consistent with trade custom. We have repeatedly stated, however, that in this context trade custom is not dispositive of compliance with a legal duty. Finnegan v. Havir Mfg. Co., 60 N.J. 413, 422 (1972). A manufacturer may have a duty to install safety devices regardless of whether it was the custom of the trade for the ultimate purchaser to install them. Bexiga v. Havir Mfg. Co., 60 N.J. 402, 406-11 (1972). Cf. Mott v. Callahan Arms Machine Company, 174 N.J. Super. 202, 207-09 (App.Div. 1980) (court held that jury question was presented as to "practicality" or feasibility of manufacturer of component part of machine to install a safety device; while citing Verge, the court recognized the authority of Bexiga that trade custom or practice was not determinative as to a duty [398] upon such a manufacturer to provide safety devices). It is for the Court to determine whether a legal duty will be imposed. In Freund, we held that the existence of a duty to make a product safe or to give adequate warning "must be said to attach without regard to prevailing industry standards." 87 N.J. at 242-43. See Ortiz v. Farrell, 171 N.J. Super. 109, 115 (Law Div. 1979).

    30

    In terms of the basic elements of strict liability for design defects, the evidence adduced at the trial relating to the product built by Cubby is indicative of liability. As already noted, there is no genuine dispute as to the existence of a defect, the lack of a safety device and its origination with the fabrication of the machine components by Cubby. Furthermore, Cubby did exert actual control over the part of the press in which a safety device could have been incorporated. It completely disassembled the press in its own shop, modified existing parts, added new parts, and rebuilt the machine. It is undeniable that the failure to include a safety device in the portion of the machine made by Cubby constituted a defect created while the machine was under its control.

    31

    In effect, defendant's position that it did not have control over the press is based upon notions of freedom of contract and the sanctity of contractual obligations. If defendant's argument prevailed, it would leave the determination as to the safety of the product and investment allocation in safety to the private marketplace.

    32

    What is even more significant in this case, however, is that plaintiff, an innocent machine operator, was grievously injured because of a private commercial decision not to install a safety device. Unquestionably, it is in the public interest to motivate individuals in the context of commercial enterprise to invest in safety. Beshada, 90 N.J. at 207. While the commercial market may not always generate a safety stimulus, courts can contribute to that end. A court's ruling on whether to impose a legal duty implicates policy considerations relating to the allocation of costs due to accidents. Beshada, 90 N.J. at 205.

    33

    [399] Furthermore, a result in this case that imposes responsibility — and a continuing incentive — for product safety upon one in defendant's position is not unfair. The question of Cubby's liability for work done at Elastimold's request and under Elastimold's directions is a matter that could have been addressed in the explicit terms of the private contract between the parties. See Cartel Capital Corp. v. Fireco of New Jersey, 81 N.J. 548, 565-67 (1980). In any event, as between plaintiff, an innocent user of the machine, and Cubby, which rebuilt and remade part of the product without a needed safety device, it is incontestably fairer to impose the cost of the accident on the latter.

    34

    Defendant further contends that it cannot be held liable because it did not manufacture a finished product. The transfer press was not complete after Cubby rebuilt it and Elastimold still had to add the electrical and hydraulic systems to make the press operational. Consequently, defendant asserts, the work performed by Elastimold constituted a "substantial change" of the machine after it had been delivered by Cubby. The trial court agreed and ruled that Cubby was not liable because the transfer press underwent a substantial change by Elastimold.

    35

    The general rule is that the manufacturer of a component part of a product may be held strictly liable for injuries caused by a defect in that part if the particular part did not undergo substantial change after leaving the manufacturer's hands. See, e.g., States Steamship Co. v. Stone Manganese Marine Ltd., 371 F. Supp. 500, 501 (D.N.J. 1973); Greco, 283 F. Supp. at 985: Pust, 583 P.2d at 281-82; Suvada v. White Motor Co., 32 Ill.2d 612, 210 N.E.2d 182, 188 (1965); Dunson v. S.A. Allen, Inc., 355 So.2d 77, 78-79 (Miss. 1978); Burbage v. Boiler Engineering and Supply Co., 433 Pa. 319, 249 A.2d 563, 566 (1969).

    36

    In this case the trial court was mistaken in ruling that the work performed by Elastimold in order to render the press functional constituted a substantial change affecting the portions of the machine that had been rebuilt by Cubby. As noted, Cubby rebuilt the entire machine except for the hydraulic and [400] electrical systems. The defect in the machine part fabricated by Cubby — the lack of a safety device exposing a moving component which could result in injury to a machine operator — was untouched and remained unaffected by Elastimold's subsequent work upon the machine.

    37

    Even though not a substantial change of the machine components manufactured by Cubby, Elastimold's subsequent work in completing the machine is a relevant circumstance. It is a factor that relates to the element of proximate cause, rather than to the basic duty to furnish a safe product, the breach of which triggers strict liability. Even a significant subsequent alteration of a manufactured product will not relieve the manufacturer of liability unless the change itself creates the defect that constitutes the proximate cause of the injury. States Steamship, 371 F. Supp. at 505. Thus, if the defect which, singly or in combination, caused the injury existed before, as well as after, the change, the manufacturer is not relieved of liability, regardless of how much the product has been changed. Id.; Ortiz v. Farrell Co., 171 N.J. Super. 109 (Law Div. 1979). Here, as already noted, the subsequent work undertaken by Elastimold did not alter the defective product made by Cubby.

    38

    Furthermore, the fact that the parties, Cubby and Elastimold, understood that Elastimold would furnish a particular safety device, which the latter then failed to do, also relates to proximate cause. Elastimold's failure in this regard arguably constituted a causal act which contributed to plaintiff's ultimate injury. However, such a combination of causes leading to this industrial accident would not relieve Cubby of liability.[3] See Freund, 87 N.J. at 245-48. Moreover, Elastimold's subsequent breach of duty would not constitute a defense as a matter of law to plaintiff's strict liability claim against Cubby. See Finnegan, [401] 60 N.J. at 423; Bexiga, 60 N.J. at 410. Consequently, the trial court was in error in concluding that Cubby was not liable as a matter of law because Cubby expected Elastimold to provide a particular safety device, although several were available, and it was "impractical" or inconvenient for Cubby to furnish the safety device.

    39

    Cubby makes the additional argument that it cannot be held strictly liable for the defective design of a product because it did not actually sell the machine to Elastimold. We have imposed strict liability in situations involving a combination of sales and services.[4] Newmark v. Gimbel's Incorporated, 54 N.J. 585, 593-95 (1969); See Magrine v. Krasnica, 94 N.J. Super. 228 (Law Div. 1967), aff'd sub nom., Magrine v. Spector, 100 N.J. Super. 223 (App.Div. 1968), aff'd 53 N.J. 259 (1969). See also Abdul-Warith, 488 F. Supp. at 310-11; Lemley v. J & B Tire Co., 426 F. Supp. 1378, 1379 (W.D.Pa. 1977). Moreover, we have clearly rejected the requirement that a technical sale occur before strict liability will be imposed. See Cintrone v. Hertz Truck Leasing & Rental Service, 45 N.J. 434, 452 (1965) (liability imposed even though product was leased rather than sold). Thus, defendant's argument that strict liability cannot be applied in the absence of a "sale" is unavailing.

    40
    III
    41

    The next issue in this case is whether an independent contractor has a duty to warn of the dangers of a machine built to the design specifications of the buyer.

    42

    [402] This Court has held that a defendant may be held strictly liable for injuries caused by a product which was defectively designed in that it did not contain an adequate warning of the product's dangers. Beshada, 90 N.J. at 208-209; Freund, 87 N.J. at 239-41. At the core of our strict liability cases is the requirement that "the risk from the product be reduced to the greatest extent possible without hindering its utility." Beshada, 90 N.J. at 201. "[I]t is not reasonably safe if the same product could have been made or marketed more safely." Id. at 201. A duty to warn of dangers inherent in a product's use arises "because a warning could make [the product] safer at virtually no added cost and without limiting its utility." Id. at 201-202, citing Freund, 87 N.J. at 242.

    43

    Since a strict liability standard applies, it is not necessary for plaintiff to show that the manufacturer knew or had reason to know that the product was unreasonably dangerous. Beshada, 90 N.J. at 201-202. Moreover, the duty to provide an adequate warning attaches without regard to prevailing industry standards. Freund, 87 N.J. at 242-43.

    44

    Defendant argues that even if it had given a warning, there was no proof that Elastimold would have installed a safety device. Implicated in that argument, however, is the issue of proximate cause. The question whether the failure to warn proximately caused plaintiff's injury is a factual dispute that the jury should decide. A reasonable jury could find that the inclusion of a warning by Cubby would have increased the chances that Elastimold would have added a safety device or taken other measures, such as affixing suitable warnings or giving specific cautionary instructions for the benefit of the operators of the machine to reduce the risk of danger.

    45

    Moreover, a proper warning could have been directed to the foreseeable users of the dangerous machine. Such a warning by defendant could have served to put Elastimold's employees on notice of the inherent dangers in using the machine without a safety device. This might have reduced the risk of injury. [403] Thus, we have held that in some circumstances a manufacturer may have a duty to attach a suitable warning to the machine itself to caution the operator about the danger of using it without a protective device. Bexiga, 60 N.J. at 412.

    46

    Hence, a manufacturer is under a duty to warn owners and foreseeable users of the dangers of using a particular machine if, without such a warning, the machine is not reasonably safe. A manufacturer which does not caution against the dangers inherent in the use of its product should be held strictly liable for injuries resulting from the absence of such warnings.[5]

    47
    IV
    48

    In conclusion, we hold that an independent contractor who undertakes to rebuild part of a machine in accordance with the specifications of the owner can be held strictly liable for breach of its legal duty to the machine's foreseeable users to make the machine safe or to warn of the dangers inherent in its use.

    49

    Accordingly, we reverse the judgment of the Appellate Division and remand the case for further proceedings in conformity with this opinion.

    50

    For reversal and remandment — Chief Justice WILENTZ and Justices PASHMAN, SCHREIBER, HANDLER and O'HERN — 5.

    51

    OPPOSED — None.

    52

    [1]In 1969 a number of safety devices might have been used on the transfer press, including gates to keep the operator's hands from entering the machine during operation, a cage mechanism that kept the operator away from the exposed moving parts, and a pilot valve, which would require pressing two buttons rather than one for the press to function, keeping both hands of the operator outside the point of access. For example, press # 9 had the control panel far removed from the cylinder so that it would be quite difficult to keep one's hand on the rubber strips while pressing the button to start the machine.

    53

    The type of safety device which was best for a particular machine would vary with the product made on it and the means of using the press. For this reason, manufacturers and vendors would sometimes sell presses to users without safety devices when they did not know the particular work the press would be doing.

    54

    Plaintiffs' expert, Professor Henry Ortiz, testified that the transfer press was not safe for use without some form of safety device. He stated that it was the custom of the trade in 1969 for the manufacturer of a complete press to warn the buyer of the need for a safety device but that such a warning was customarily given only when the manufacturer produced a complete press. If the manufacturer did not install the hydraulic system, it had not made a complete press, and the failure to give a warning in that instance did not deviate from the custom of the trade. In this case, it was Elastimold, not Cubby, that installed the hydraulic system.

    55

    [2] Sanner is also distinguishable because the contracting party in that case was a governmental entity immune from liability. The Law Division noted that "[t]o impose liability on a governmental contractor who strictly complies with the plans and specifications provided to it by the Army in a situation such as this would seriously impair the government's ability to formulate policy...." 144 N.J. Super. at 9. No governmental entity is involved in this case.

    56

    [3] We need not in this case decide the issue whether under certain circumstances the subsequent failure by an owner of a machine to provide a particular safety device could constitute a supervening and independent proximate cause of an accident resulting from the lack of such a device.

    57

    [4] The arguments for imposing strict liability on the providers of services are three-fold. First, the risk of harm from defective repair services is great, and customers rely on the expertise of the providers of services as much as they rely on the expertise of the providers of products. Second, there is no reason to believe that providers of services are any less able to spread the cost of accidents than suppliers of products. Third, imposing strict liability would induce providers of services to invest in safety, leading to greater protection for their customers and reduced accident costs. See Newmark v. Gimbel's Incorporated, 54 N.J. 585, 600 (1969); Raritan Trucking Corp. v. Aero Commander, Inc., 458 F.2d 1106, 1113-14 (3 Cir.1972) (applying New Jersey law).

    58

    [5] Strict liability against Cubby is urged by plaintiffs on grounds of both the failure to warn and the failure to make the product safe. Since it is conceded that Cubby did not provide any warnings to either the owner or the operators of the machine, we need not consider whether such warnings, if given, would otherwise constitute a factual or legal defense to the claim of strict liability based upon Cubby's failure to manufacture or rebuild a safe machine.

  • 3 Robinson v. Reed-Prentice

    1
    49 N.Y.2d 471 (1980)
    2
    Gerald Robinson, Respondent,
    v.
    Reed-Prentice Division of Package Machinery Company, Appellant and Third-Party Plaintiff. Plastic Jewel Parts Company, Inc., Third-Party Defendant-Appellant.
    3

    Court of Appeals of the State of New York.

    4
    Argued January 8, 1980.
    5
    Decided February 14, 1980.
    6

    William F. McNulty, Walter A. Donnelly and Anthony J. McNulty for appellant and third-party plaintiff.

    7

    Steven B. Prystowsky for third-party defendant-appellant.

    8

    Richard E. Shandell for respondent.

    9

    Judges JASEN, GABRIELLI, JONES, WACHTLER and MEYER concur with Chief Judge COOKE; Judge FUCHSBERG dissents and votes to affirm in a separate opinion.

    10
    [475] Chief Judge COOKE.
    11

    We hold that a manufacturer of a product may not be cast in damages, either on a strict products liability or negligence cause of action, where, after the product leaves the possession and control of the manufacturer, there is a subsequent modification which substantially alters the product and is the proximate cause of plaintiff's injuries.

    12

    Plaintiff Gerald Robinson, then 17, was employed as a plastic molding machine operator by third-party defendant Plastic Jewel Parts Co. A recent arrival to New York from [476] South Carolina where he had been an itinerant farm worker, Robinson had been employed by Plastic Jewel for approximately three weeks. On October 15, 1971, plaintiff suffered severe injuries when his hand was caught between the molds of a plastic molding machine manufactured by defendant Reed-Prentice and sold to Plastic Jewel in 1965, some six and one-half years prior to the accident.

    13

    Plaintiff commenced this action against Reed-Prentice which impleaded third-party defendant Plastic Jewel. At the close of proof, causes of action in strict products liability and negligence in the design and manufacture of the machine were submitted to the jury. A sizeable general verdict was returned in favor of plaintiff, the jury apportioning 40% of the liability against Reed-Prentice, the remainder against Plastic Jewel. On appeal, the Appellate Division reversed and ordered a new trial limited to the issue of damages unless plaintiff stipulated to a reduced verdict. Plaintiff so stipulated and the judgment, as amended and reduced, was affirmed. This court then granted Reed-Prentice and Plastic Jewel leave to appeal (CPLR 5602, subd [a], par 1, cl [ii]). We now reverse.

    14

    The plastic injection molding machine is designed to melt pelletized plastic inside a heating chamber. From the heating chamber, the liquefied plastic is forced into the mold area by means of a plunger. The mold area itself is composed of two rectangular platens on which the plastic molds are attached. One of the platens moves horizontally to open and close the mold; the other remains stationary. When the operating cycle is begun, hydraulic pressure causes the movable platen to be brought up against the stationary platen, thus forming a completed mold into which the heated plastic is pumped. After the plastic is cured, the movable platen returns to its original position, thereby permitting the operator to manually remove the finished product from its mold.

    15

    To protect the operator from the mold area, Reed-Prentice equipped the machine with a safety gate mounted on rollers and connecting interlocks in conformity with the State Industrial Code (12 NYCRR 19.34). Completely covering the mold area, the metal safety gate contained a Plexiglas window allowing the operator to monitor the molding process. Since the gate shielded the mold area, access to the platens was impossible while the machine was operating. Only when the molding sequence was completed could the operator roll the safety gate to the open position, allowing him to reach into [477] the mold area to remove the finished product. The interlocks were connected to electrical switches which activated the hydraulic pump. When the safety gate was closed, the interlocks complete a circuit that activates the hydraulic pump, thereby causing the movable platen to close upon its stationary counterpart. When the safety gate was opened, however, this essential circuit would not be completed and hence the machine would not be activated.

    16

    After the machine was delivered by Reed-Prentice, Plastic Jewel discovered that its design did not comport with its production requirements. Plastic Jewel purchased the machine in order to mold beads directly onto a nylon cord. The cord was stored in spools at the back of the machine and fed through the mold where the beads were molded around it. After each molding cycle, the beads were pulled out of the mold and the nylon cord was reset in the mold for the next cycle. To allow the beads to be molded on a continuous line, Plastic Jewel determined that it was necessary to cut a hole of approximately 6 by 14 inches in the Plexiglas portion of the safety gate. The machine, as designed, contracted for and delivered, made no provision for such an aperture. At the end of each cycle, the now corded beads would be pulled through the opening in the gate, the nylon cord would be restrung, and the next cycle would be started by opening and then closing the safety gate without breaking the continuous line of beads. While modification of the safety gate served Plastic Jewel's production needs, it also destroyed the practical utility of the safety features incorporated into the design of the machine for it permitted access into the molding area while the interlocking circuits were completed. Although the record is unclear on this point, plaintiff's hand somehow went through the opening cut into the safety gate and was drawn into the molding area while the interlocks were engaged. The machine went through the molding cycle, causing plaintiff serious injury.

    17

    The record contains evidence that Reed-Prentice knew, or should have known, the particular safety gate designed for the machine made it impossible to manufacture beads on strings. During the period immediately prior to the purchase of the machine, Reed-Prentice representatives visited the Plastic Jewel plant and observed two identical machines with holes cut in the Plexiglas portion of their safety gates. At that meeting, Plastic Jewel's plant manager discussed the problem with a Reed-Prentice salesman and asked whether a safety [478] gate compatible with its product needs could be designed. Moreover, a letter sent by Reed-Prentice to Plastic Jewel establishes that the manufacturer knew precisely what its customer was doing to the safety gate and refused to modify its design. However, the letter pointed out that the purchaser had "completely flaunted the safeties built into this machine by removing part of the safety window", and that it had not "held up your end of the purchase when you use the machine differently from its design" and the manufacturer stated "[a]s concerns changes, we will make none in our safety setup or design of safety gates". At trial, plaintiff's expert indicated that there were two modifications to the safety gate which could have been made that would have made it possible to mold beads on a string without rendering the machine unreasonably dangerous. Neither of these modifications were made, or even contemplated, by Reed-Prentice.

    18

    Defendants maintain that a manufacturer may not be held to answer in damages where the purchaser of its product deliberately destroys the functional utility of that product's safety features and, as a result of that intentional act, a third party is injured. Once a product which is not defective is injected into the stream of commerce, they argue, the responsibility of the manufacturer is at an end. Thus, having delivered to Plastic Jewel a plastic injection molding machine which was free from defect and in conformity with State promulgated safety regulations, Reed-Prentice fully discharged any legal duty it may have owed to Plastic Jewel and its employees. Plaintiff asserts that a manufacturer's duty is tempered by principles of foreseeability. Thus, if a manufacturer knows or has reason to know that its product would be used in an unreasonably dangerous manner, for example by cutting a hole in a legally required safety guard, it may not evade responsibility by simply maintaining that the product was safe at the time of sale.

    19

    A cause of action in strict products liability lies where a manufacturer places on the market a product which has a defect that causes injury (Codling v Paglia, 32 N.Y.2d 330, 342). As the law has developed thus far, a defect in a product may consist of one of three elements: mistake in manufacturing (Victorson v Bock Laundry Mach. Co., 37 N.Y.2d 395; Codling v Paglia, supra), improper design (Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 N.Y.2d 376; Bolm v Triumph Corp., 33 N.Y.2d 151), or by the inadequacy or absence of warnings for [479] the use of the product (Torrogrossa v Towmotor Co., 44 N.Y.2d 709). Plaintiff maintains that the safety gate of the molding machine was improperly designed for its intended purpose.

    20

    Where a product presents an unreasonable risk of harm, notwithstanding that it was meticulously made according to detailed plans and specifications, it is said to be defectively designed. This rule, however, is tempered by the realization that some products, for example knives, must by their very nature be dangerous in order to be functional. Thus, a defectively designed product is one which, at the time it leaves the seller's hands, is in a condition not reasonably contemplated by the ultimate consumer and is unreasonably dangerous for its intended use; that is one whose utility does not outweigh the danger inherent in its introduction into the stream of commerce (Restatement, Torts 2d, § 402A). Design defects, then, unlike manufacturing defects, involve products made in the precise manner intended by the manufacturer (2 Frumer & Friedman, Products Liability, § 16A [4] [f] [iv]). Since no product may be completely accident proof, the ultimate question in determining whether an article is defectively designed involves a balancing of the likelihood of harm against the burden of taking precaution against that harm (Micallef v Miehle Co., supra, p 386; 2 Harper and James, Torts, § 28.4).

    21

    But no manufacturer may be automatically held liable for all accidents caused or occasioned by the use of its product (see Wade, A Conspectus of Manufacturers' Liability for Products, 10 Ind L Rev 755, 768). While the manufacturer is under a nondelegable duty to design and produce a product that is not defective, that responsibility is gauged as of the time the product leaves the manufacturer's hands (Restatement, Torts 2d, § 402A, Comments g, p; Hanlon v Cyril Bath Co., 541 F.2d 343, 345; Santiago v Package Mach. Co., 123 Ill App 2d 305, 312; Temple v Wean United, 50 Ohio St 2d 317, 322-323). Substantial modifications of a product from its original condition by a third party which render a safe product defective are not the responsibility of the manufacturer (Keet v Service Mach. Co., 472 F.2d 138, 140; Hardy v Hull Corp., 446 F.2d 34, 35-36; Coleman v Verson Allsteel Press Co., 64 Ill App 3d 974; Ariz Rev Stat Ann, § 12-683, subd 2; RI Gen Laws, § 9-1-32; Proposed Uniform Product Liability Act, § 112, subd [D], 44 Fed Reg 62737).

    22

    At the time Reed-Prentice sold the molding machine, it was not defective. Had the machine been left intact, the safety [480] gate and connecting interlocks would have rendered this tragic industrial accident an impossibility. On closer analysis, then, plaintiff does not seek to premise liability on any defect in the design or manufacture of the machine but on the independent, and presumably foreseeable, act of Plastic Jewel in destroying the functional utility of the safety gate. Principles of foreseeability, however, are inapposite where a third party affirmatively abuses a product by consciously bypassing built-in safety features. While it may be foreseeable that an employer will abuse a product to meet its own self-imposed production needs, responsibility for that willful choice may not fall on the manufacturer. Absent any showing that there was some defect in the design of the safety gate at the time the machine left the practical control of Reed-Prentice (and there has been none here), Reed-Prentice may not be cast in damages for strict products liability.

    23

    Nor does the record disclose any basis for a finding of negligence on the part of Reed-Prentice in the design of the machine. Well settled it is that a manufacturer is under a duty to use reasonable care in designing his product when "used in the manner for which the product was intended * * * as well as an unintended yet reasonably foreseeable use" (Micallef v Miehle, supra, pp 385-386). Many products may safely and reasonably be used for purposes other than the one for which they were specifically designed. For example, the manufacturer of a screwdriver must foresee that a consumer will use his product to pry open the lid of a can and is thus under a corresponding duty to design the shank of the product with sufficient strength to accomplish that task. In such a situation, the manufacturer is in a superior position to anticipate the reasonable use to which his product may be put and is obliged to assure that no harm will befall those who use the product in such a manner. It is the manufacturer who must bear the responsibility if its purposeful design choice presents an unreasonable danger to users. A cause of action in negligence will lie where it can be shown that a manufacturer was responsible for a defect that caused injury, and that the manufacturer could have foreseen the injury. Control of the instrumentality at the time of the accident in such a case is irrelevant since the defect arose while the product was in the possession of the manufacturer.

    24

    The manufacturer's duty, however, does not extend to designing a product that is impossible to abuse or one whose [481] safety features may not be circumvented. A manufacturer need not incorporate safety features into its product so as to guarantee that no harm will come to every user no matter how careless or even reckless (cf. Aetna Ins. Co. v Loveland Gas & Elec. Co., 369 F.2d 648; Drazen v Otis Elevator Co., 96 RI 114). Nor must he trace his product through every link in the chain of distribution to insure that users will not adapt the product to suit their own unique purposes. The duty of a manufacturer, therefore, is not an open-ended one. It extends to the design and manufacture of a finished product which is safe at the time of sale. Material alterations at the hands of a third party which work a substantial change in the condition in which the product was sold by destroying the functional utility of a key safety feature, however foreseeable that modification may have been, are not within the ambit of a manufacturer's responsibility. Acceptance of plaintiff's concept of duty would expand the scope of a manufacturer's duty beyond all reasonable bounds and would be tantamount to imposing absolute liability on manufacturers for all product-related injuries (see Henderson, Judicial Review of Manufacturers' Conscious Design Choices: The Limits of Adjudication, 73 Col L Rev 1531).

    25

    Unfortunately, as this case bears out, it may often be that an injured party, because of the exclusivity of workers' compensation, is barred from commencing an action against the one who exposes him to unreasonable peril by affirmatively rendering a safe product dangerous. However, that an employee may have no remedy in tort against his employer gives the courts no license to thrust upon a third-party manufacturer a duty to insure that its product will not be abused or that its safety features will be callously altered by a purchaser (cf. McLaughlin v Mine Safety Appliances Co., 11 N.Y.2d 62, 71-72). Where the product is marketed in a condition safe for the purposes for which it is intended or could reasonably be intended, the manufacturer has satisfied its duty.

    26

    Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be reversed, with costs, and the complaint and third-party complaint dismissed.

    27
    FUCHSBERG, J. (dissenting).
    28

    The majority opinion appears to proceed on the assumption that the plaintiff's suit was based essentially on a strict products liability theory alone and, unwilling to carry the promise of Codling and Micaleff to its [482] logical fruition, would deny plaintiff a recovery on that theory.[1] Doing so, however, it ignores the fact that the "first cause of action" — the one pleaded first and charged first — rested on traditional common-law negligence theories, two of which at least were firmly supported by the proof and could well serve as solid foundations for the jury's verdict.

    29

    Indeed, the proof was overwhelming that, to the knowledge of Reed-Prentice, the safety device on the machine it was selling to Plastic Jewel would be rendered completely ineffective before the machine was ever put to use. For, as sold, there was no way in which it could turn out Plastic Jewel's product unless the hazardous hole was cut into the safety gate.

    30

    This was not the first such machine Plastic Jewel had purchased from Reed-Prentice. It was the fourth. Each of the first three had been altered in the identical fashion. Before the purchase of the fateful one, Reed-Prentice's representative had visited the Plastic Jewel plant, where he observed the machines operating, each with the gaping hole in plain sight. In fact, the contract of sale was negotiated in Plastic Jewel's factory in full view of the altered, earlier-purchased machines. Conclusively on this point, in a letter to Plastic Jewel, Reed-Prentice had made admissions that the majority recognizes "establishes that the manufacturer knew precisely what its customer was doing to the safety gate". But that did not inhibit it from making the sale, at its price of $28,000 per machine.

    31

    Moreover, pathos was added by proof that Plastic Jewel had made frequent but unavailing entreaties of the manufacturer and its sales and service personnel seeking some modification of the machine that would eliminate the need for piercing the safety gate. As expert testimony revealed, the machine could easily have been made safe for the anticipated use by either of at least two simple modifications. One, at a cost of only $200, would be the installation of "dual hand controls", which [483] would cause the machine to stop unless both of the operator's hands were safely occupied pressing buttons spaced widely apart. The second, at a cost of $400 to $500, would, by conversion of the horizontal gate to a vertical one, allow for the extrusion of the product without a dangerously wide aperture.

    32

    This array of facts proved the allegations that Reed-Prentice had been negligent "in selling and distributing a machine which [it] knew or should have known to be dangerous, defective and unsafe" as well as "in failing to affix proper and adequate warnings of the dangers". The law of negligence therefore required no extension to permit a finding of liability: "[t]he risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation" is right on target (Palsgraf v Long Is. R. R. Co., 248 N.Y. 338, 344). Put another way, "[t]he parameters of the manufacturer's duties may be said to be whatever is foreseeable by application of due care" (Rheingold, Expanding Liability of the Product Supplier: A Primer, 2 Hofstra L Rev 521, 538).

    33

    Under these standards, it cannot be gainsaid that the risk of injury in this case was substantial and even omnipresent as long as the safety gates were known to have been rendered useless. The injury that occurred was then surely foreseeable, and, indeed, was precisely that which the safety gate itself was to have anticipated. That the accident would result in part from the purchaser's misuse was but a factor to be weighed in ascertaining whether the harm was foreseeable and, hence, whether, given its resources and expertise, the manufacturer acted in a reasonably prudent fashion (see Finnegan v Havir Mfg. Corp., 60 NJ 413, 423; Thompson v Package Mach. Co., 22 Cal App 3d 188, 196; Byrnes v Economic Mach. Co., 41 Mich App 192; Noel, Manufacturer's Negligence of Design or Directions for Use of a Product, 42 Tenn L Rev 11, 50, 64).

    34

    So stated, the manufacturer's conduct may be considered culpable on either of the two negligence theories proposed by plaintiff:

    35

    The first theory sounds in "negligent entrustment".[2] Liability [484] on this basis is cast upon one who places in another's hands an instrumentality capable of doing serious harm if misused while knowing or having strong reason to believe that it will be misused to the detriment of others (Restatement, Torts 2d, § 302B, Comment e [E]; see § 390, Comment b; cf. Hogan v Comac Sales, 245 App Div 216, 218-219, affd 271 N.Y. 562; Faller v A. Drive Auto Leasing System, 47 AD2d 530). The principle is hardly new. The situation that typically furnishes its classic illustration is that in which the defendant gives a loaded gun to a young boy who negligently points it at the plaintiff and discharges it (Dixon v Bell, 5 M & S 198 [1816]). Closer to the case today and relying on this same theory is Fredericks v General Motors Corp. (48 Mich App 580), which held that a manufacturer could be liable for injuries suffered by an employee of a small tool and die shop when the manufacturer had reason to know in advance of its entrustment of a die set to the plaintiff's employer that the latter would use it in an unsafe manner.

    36

    In each of these instances the duty of reasonable care is breached when one passively permits a danger to be created by supplying the product to a probably negligent user; the negligence or misuse by the user is considered to be but a foreseeable intervening cause of the injury (see 2 Harper and James, Torts, § 28.2, p 1539; Prosser, Torts [4th ed], § 44, pp 272-275). By the same reasoning, then, Reed-Prentice may properly be held liable in negligence for conveying the molding machine to Plastic Jewel; the rationale applies more forcefully, in fact, because Reed-Prentice had the strongest reason to know of its customer's intended misuse of the machine (see Smith v Hobart Mfg. Co., 302 F.2d 570, 573-575; Anderson v Bushong Pontiac Co., 404 Pa 382).

    37

    The second theory propounded by plaintiff is that Reed-Prentice was negligent in failing to warn foreseeable users of the machine such as the plaintiff of the danger posed by the aperture in the safety gate. The underlying premise for liability has been stated as follows: "[O]ne who supplies a chattel for another to use for any purpose is subject to liability for physical harm caused by his failure to exercise reasonable care to give those whom he may expect to use the chattel any information as to the character and condition of the chattel which he possesses, and which he should recognize as necessary to enable them to realize the danger of using it" (Restatement, [485] Torts 2d, § 388, Comment b; see 37 ATLA LJ 107, esp pp 113-116).

    38

    Certainly, Plastic Jewel's misuse of the safety gate does nothing to diminish Reed-Prentice's responsibility. Because the misuse was an open and notorious one, the manufacturer knew when it sold the machine that it could not be used for the purchaser's purpose unless it was modified. Furthermore, it knew exactly how the machine had to be used by employees of Plastic Jewel. For this reason, it does not matter that Plastic Jewel's misuse may have been in violation of State law (see Suchomajcz v Hummel Chem. Co., 524 F.2d 19 [liability imposed on manufacturer of a component part for injuries sustained by remote users under the theory of negligent failure to warn where it supplied chemicals to fabricator of firecracker assembly kits which it knew were being sold in violation of Federal injunction]).

    39

    Nor, under the circumstances, could Reed-Prentice rest on the assumption that Plastic Jewel would convey adequate warnings to the users of the machine (see Shell Oil Co. v Gutierrez, 119 Ariz 426; First Nat. Bank v Nor-Am Agric. Prods., 88 NM 74; Dougherty v Hooker Chem Corp., 540 F.2d 174). The employer's consistent choice of expediency over safety having already been made crystal clear, it would have been pure pollyanna to presume that the necessary safety information would filter down to those who had to work on the machine (see Restatement, Torts 2d, § 388, Comment n; 2 Harper and James, Torts, § 28.7, pp 1548-1549; cf. Bexiga v Havir Mfg. Corp., 60 NJ 402, 410-411).

    40

    Cognizant of both the danger and the continued necessity for Plastic Jewel to cut through the safety gate, and given the long-standing and on-going service relationship between manufacturer and purchaser, it turns logic and common sense upside down to say that Reed-Prentice was absolved of any duty to warn employees of the danger to which they were exposed. Nor was Reed-Prentice to be relieved of its duty to use reasonable care in bringing home the danger to users simply because the danger might appear to be an obvious one. Users of such a machine may well be unappreciative of the risk, thinking perhaps, as plaintiff's expert attested, that the mere presence of a safety gate, even one altered to create a hole, was adequate protection, or that there were other safety devices to prevent hands from getting caught in the machine. Surely the exact nature of the risk and its more subtle [486] aspects, including the possibility of the user's being drawn into the machine, could well remain unperceived to the inexperienced 17-year-old plaintiff. Precisely because of such considerations, the perception of the danger by the user has generally been thought to be a jury question (Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 N.Y.2d 376; Bolm v Triumph Corp., 33 N.Y.2d 151; Codling v Paglia, 32 N.Y.2d 330; Meyer v Gehl Co., 36 N.Y.2d 760, 763 [dissenting opn]; Merced v Auto Pak Co., 533 F.2d 71; Noel, Manufacturer's Negligence of Design or Directions for Use of a Product, 42 Tenn L Rev 11, 58, 64). The issue was therefore properly submitted at trial.[3]

    41

    In sum, to premise liability on either a theory of negligent entrustment or negligent failure to warn is not to depart from recognized principles. And, contrary to the alarums sounded by the defendant and third-party defendant, the application of these precepts to the case here certainly cannot be said to forebode a limitless expansion of a manufacturer's liability for product-related injuries. While, admittedly, a manufacturer is under no obligation to design "a product that is impossible to abuse or one whose safety features may not be circumvented" (pp 480-481), to uphold a jury finding that the manufacturer was negligent in the case before us would herald no such absurdly burdensome standard. Rather, liability may be reasonably circumscribed within the ambit of foreseeability, and the attachment of liability is even clearer in this instance because the manufacturer not only could have foreseen the misuse of its product but actually knew of its occurrence.

    42

    Under these circumstances, the majority's dismissal of the complaint simply cannot be justified by that calculus for legal responsibility long professed by this court. For, "'a balancing of the likelihood of the harm, and the gravity of the harm if it happens, against the burden of the precaution which would be effective to avoid the harm'" would lead, inexorably in my opinion, to a finding of negligence (Micallef v Miehle Co., supra, p 386, quoting 2 Harper and James, Torts, § 28.4; [487] United States v Carroll Towing Co., 159 F.2d 169, 173 [HAND, J.]).

    43

    Because I conclude that the jury's verdict was supportable on at least the negligence grounds that were submitted to it, at the very least, upon the court's reversal of the order of the Appellate Division, a new trial should be ordered (see Clark v Board of Educ., 304 N.Y. 488, 490; Phillipson v Ninno, 233 N.Y. 223, 226).

    44

    Judgment appealed from and order of the Appellate Division brought up for review reversed, etc.

    45

    [1] The test of the manufacturer's liability is whether the use to which the product was put was the intended one or one which by the exercise of due care was reasonably foreseeable. The anticipatable uses, therefore, will dictate the standards of safety to which the product must conform. This suggests that when the manufacturer has actual notice that the product is to be used for a specific purpose somewhat different from its general use, the manufacturer may be held responsible for taking particular safety precautions appropriate for the product's known use, a matter the further exploration of which, in light of the determination reached by the majority, I leave for another day.

    46

    [2] Epitomizing the court's instruction in this regard was the exception taken by the defendant's counsel to the charge that the defendant might be found negligent, if the jury were to find that "the defendant sold the machine, reasonably certain to be dangerous if put to its intended use or could be modified so as to become dangerous, and the defendant knew it".

    47

    [3] The court's charge accurately reflected these principles: "even if the defendant complied with the [State] regulations [concerning the safety gate] completely, you may still find the defendant negligent if you find that one, it knew or had reason to anticipate that the plaintiff's employer would modify or alter the machine to increase one of the risks of harm which the safety device was designed to prevent, and did not give adequate warning of the dangers of such alteration or did not otherwise prevent, if it could reasonably have done so, such alterations from being made after the machine left its factory and its hand."

  • 4 Lopez v. Precision Papers, Inc

    1
    501 N.Y.S.2d 798
    2
    67 N.Y.2d 871, 492 N.E.2d 1214,
    Prod.Liab.Rep. (CCH) P 11,011
    3
    Pablo LOPEZ et al., Respondents,
    v.
    PRECISION PAPERS, INC., et al., Defendants,
    and
    Clark Equipment Co., Inc., Appellant.
    (And Third- and Fourth-Party Actions.)
    4
    Court of Appeals of New York.
    5
    March 18, 1986.
    6

    [799] Herbert Rubin, Michael Hoenig, David B. Hamm, New York City, and Jack E. Toliver for appellant.

    7

    Cheryl Eisberg Moin, Emilio Nunez, Harry H. Lipsig, Jay W. Dankner and Pamela Anagnos Liapakis, New York City, for respondents.

    8
    OPINION OF THE COURT
    9
    MEMORANDUM.
    10

    The order of the Appellate Division, 107 A.D.2d 667, 484 N.Y.S.2d 585, should be affirmed, with costs.

    11

    The record presents triable issues of fact concerning whether the forklift, as marketed with an attached but removable overhead safety guard, was "not reasonably safe" (Voss v. Black & Decker Mfg. Co., 59 N.Y.2d 102, 108, 463 N.Y.S.2d 398, 450 N.E.2d 204) for the uses intended or reasonably anticipated by the manufacturer (see, Micallef v. Miehle Co., 39 N.Y.2d 376, 385-386, 384 N.Y.S.2d 115, 348 N.E.2d 571).

    12

    As correctly noted by the Appellate Division in denying defendant's motion for summary judgment (CPLR 3212), this court's holding in Robinson v. Reed-Prentice Div., 49 N.Y.2d 471, 426 N.Y.S.2d 717, 403 N.E.2d 440 does not compel a different result. In contrast with the detaching of the removable safety guard in this case, Robinson involved "[m]aterial alterations [i.e., cutting a 6-inch by 14-inch access hole in the safety gate of a plastic molding machine] which work[ed] a substantial change in the condition in which the product was sold by destroying the functional utility of a key safety feature" (49 N.Y.2d, at p. 481, 426 N.Y.S.2d 717, 403 N.E.2d 440). There is evidence in this record that the forklift was purposefully manufactured to permit its use without the safety guard.

    13
    WACHTLER, C.J., and MEYER, SIMONS, KAYE, ALEXANDER and HANCOCK, JJ., concur.
    14
    TITONE, J., taking no part.
    15

    Order affirmed, with costs, in a memorandum. Question certified answered in the affirmative.

  • 5 Szatkowski v. Turner & Harrison Inc.

    1
    184 A.D.2d 504 (1992)
    2
    Stanley J. Szatkowski, Appellant,
    v.
    Turner & Harrison, Inc., Respondent, et al., Defendants. (And a Third-Party Action.)
    3

    Appellate Division of the Supreme Court of the State of New York, Second Department.

    4
    June 1, 1992
    5
    Lawrence, J. P., Eiber, O'Brien and Copertino, JJ., concur.
    6

    Ordered that the amended judgment is affirmed insofar as appealed from, with costs to the respondent payable by the appellant.

    7

    The plaintiff was injured while working on an assembly line at an automobile plant when he fell into a tank of caustic material while trying to get masking paper off a moving vehicle. Approximately 10 months prior to the accident, the respondent had constructed and installed an unmasking enclosure at the exit end of a lacquer spray booth, pursuant to the plans and specifications provided by General Motors Corporation (hereafter GM).

    8

    The plaintiff commenced this action, inter alia, alleging that the respondent was negligent for creating and/or failing to warn of a dangerous condition. The Supreme Court, Westchester County, granted the respondent's motion for summary judgment, holding that the respondent was not liable, since it constructed the booth pursuant to GM's design specifications [505] and the injury occurred beyond the area in which the respondent's work occurred. We agree.

    9

    The plaintiff's injury occurred six to eight feet beyond the area in which the respondent had worked, and the plaintiff failed to show that his injury occurred as a consequence of or in connection with the respondent's actions (see, Brown v Two Exch. Plaza Partners, 146 AD2d 129).

    10

    In any event, a contractor is not responsible for injuries resulting from a defective plan or design if it diligently complies with the specifications furnished to it by the owner (MacKnight Flintic Stone Co. v Mayor of N. Y., 160 N.Y. 72; County of Westchester v Welton Becket Assocs., 102 AD2d 34, affd 66 N.Y.2d 642). Here, there is no evidence in the record that the respondent did not diligently comply with the specifications furnished to it by GM (Board of Educ. v Mars Assocs., 133 AD2d 800).

  • 6 Yu v. Neenah Foundry Co.

    1
    164 Ill. App.3d 975 (1987)
    2
    518 N.E.2d 635
    3
    WHA JA YU, Adm'r of the Estate of Samuel P. Yu, Deceased, Plaintiff-Appellant,
    v.
    THE NEENAH FOUNDRY COMPANY, Defendant-Appellee.
    4
    No. 86-3388.
    5

    Illinois Appellate Court — First District (5th Division).

    6
    Opinion filed December 18, 1987.
    7

    Motherway & Glenn, P.C., of Chicago (Mark Edward McNabola, of counsel), for appellant.

    8

    [976] Cassiday, Schade & Gloor, of Chicago (William J. Furey, Michael J. Gallagher, and Susan E. Seiwert, of counsel), for appellee.

    9

    Judgment affirmed.

    10
    JUSTICE MURRAY delivered the opinion of the court:
    11

    This is an appeal by plaintiff, Wha Ja Yu, administrator of the estate of Samuel P. Yu, deceased, from an order of the circuit court of Cook County granting summary judgment in favor of defendant, the Neenah Foundry Company, in a products liability action. Plaintiff seeks reversal of the order granting summary judgment based upon his contention that a question of fact existed concerning whether a "catch basin inlet" or sewer grate, manufactured by defendant, was so obviously defective and dangerous that a competent manufacturer and seller of such catch basin would have refrained from following the plans and specifications submitted to it by the Illinois Department of Transportation. For the reasons set forth below, we affirm.

    12

    The facts disclosed by the pleadings are as follows. On June 17, 1983, plaintiff's decedent, Samuel Yu (Yu), was riding a bicycle in the curb lane eastbound on 127th Street about 600 feet west of its intersection with Pulaski Road in the village of Alsip. Plaintiff alleged, contrary to defendant's position, that Yu's bicycle wheel went into the catch basin inlet or sewer grate, which apparently was rectangular in shape with north-south slotted, parallel bars distanced a few inches apart with open spaces in between. The entry of the wheel in the opening of the grate caused Yu to fall off his bicycle into the eastbound lane of 127th Street. Yu was subsequently run over by a tractor trailer being operated by persons other than defendant. As a result, Yu died on June 18, 1983.

    13

    On July 25, 1983, Yu's administrator filed a tort action against defendant and others seeking damages based upon the June 17 occurrence. Defendant filed a motion for summary judgment and, on October 29, 1986, the trial court entered an order granting the motion but ordering that the cause continue as to all other defendants. This appeal followed.

    14

    • 1-3 Summary judgment should be granted where "`the pleadings, depositions and admissions on file, together with the supporting affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" (Wright v. Adonis Compania Naviera, S.A. (1978), 59 Ill. App.3d 108, 110, 376 N.E.2d 4, quoting Heidelberger v. Jewel Cos. (1974), 57 Ill.2d 87, 92, 312 N.E.2d 601; Ill. Rev. Stat. 1985, ch. 110, par 2-1005(c).) Evidence is to be construed strictly against the [977] moving party and liberally in favor of the opponent. (Clausen v. Ed Fanning Chevrolet, Inc. (1972), 8 Ill. App.3d 1053, 291 N.E.2d 202.) The right to summary judgment must be clear beyond question and an order granting summary judgment must be reversed if a reviewing court determines that a material question of fact does exist. (Wright v. Adonis Compania Naviera, S.A. (1978), 59 Ill. App.3d 108, 376 N.E.2d 4.) "[A]lthough a complaint * * * may purport to raise issues of material fact, if such issues are not further supported by evidential facts through affidavits or other evidence, summary judgment is appropriate; if the party moving for summary judgment supplies facts which, if not contradicted, would entitle such a party to judgment as a matter of law, the opposing party cannot rely on his or her complaint * * * alone to raise genuine issues of material fact." Kimbrough v. Jewel Cos. (1981), 92 Ill. App.3d 813, 819, 416 N.E.2d 328.

    15

    • 4 We further observe that the law is well settled with respect to the duty of manufacturers who are independent contractors and merely manufacture a product in accordance with the plans and specifications of a third party. As a general rule, a manufacturer or independent contractor such as defendant owes no duty to third persons to judge the plans and specifications which he merely contracts to follow. If a manufacturer carefully carries out or follows specifications provided him by others whom he is supplying, he is justified in relying on their adequacy without fear of tort liability. (Hunt v. Blasius (1978), 74 Ill.2d 203, 384 N.E.2d 368.) An exception to this rule arises where the plans and specifications are so obviously dangerous that no competent contractor would follow them. Hunt, 74 Ill.2d 203, 384 N.E.2d 368.

    16

    In the instant case, plaintiff argues that the plans and specifications were so obviously dangerous to the bicycle riding public that no competent contractor should have relied on them. In support thereof, plaintiff points to the following:

    17
    (1) Defendant issued a warning in 1973 or 1974 concerning use of the catch basins where bicyclists rode;
    18
    (2) A list of a number of cases filed against defendant by bicyclists prior to the filing of plaintiff's action; and
    19
    (3) The opportunity of defendant to use alternative catch basin designs.
    20

    • 5 Contrary to plaintiff's argument, we find the above facts insufficient to support his claim that defendant owed decedent a duty. The type of catch basin at issue was designed by the Illinois Department of Transportation engineers and was also approved for use by the Federal Highway Administration for use in interstate highways. [978] The subject catch basin was in use and accepted by the Cook County Department of Highways in 1967 and continued to be required by the State on its roadways until 1973 or 1974. On the other hand, plaintiff has not shown how the specifications were obviously dangerous to the point that defendant would have been justified in refusing to follow them, and particularly he has not shown that any competent contractor refused or would have refused to do so in 1967. Moreover, he has failed to counter testimony that the specifications were appropriate, were in widespread use at the time, and were mandated by the county and State. "While a plaintiff is not normally required to prove his case at the summary judgment stage, he must present some evidentiary facts to support the elements of his claim." (Ralston v. Casanova (1984), 129 Ill. App.3d 1050, 1059, 473 N.E.2d 444.) Plaintiff thus has failed to present any evidentiary basis for his claim that his cause of action falls within the exception set forth in Hunt. In other words, plaintiff has failed to show that defendant owed decedent a duty to refuse to follow the specifications and plans of the catch basin submitted to it by the Department of Transportation.

    21

    For the foregoing reasons, therefore, we find that the trial court properly granted summary judgment to defendant.

    22

    Affirmed.

    23
    SULLIVAN, P.J., and PINCHAM, J., concur.
  • 7 Vickrey v. Caterpillar Tractor Co.

    1
    146 Ill. App.3d 1023 (1986)
    2
    497 N.E.2d 814
    3
    BARBARA L. VICKREY, Adm'r of the Estate of Scott W. Vickrey, Deceased, Plaintiff,
    v.
    CATERPILLAR TRACTOR COMPANY, Defendant and Third-Party Plaintiff-Appellant (Bangert Brothers Road Builders, Inc., Third-Party Defendant-Appellee).
    4
    No. 4-86-0096.
    5

    Illinois Appellate Court — Fourth District.

    6
    Opinion filed August 28, 1986.
    7

    Heyl, Royster, Voelker & Allen, of Springfield (Frederick P. Velde and Daniel R. Simmons, of counsel), for appellant.

    8

    David B. Stutsman, James C. Cook, and David R. Jones, all of Walker & Williams, P.C., of Belleville, for appellee.

    9

    Judgment affirmed.

    10
    [1024] PRESIDING JUSTICE McCULLOUGH delivered the opinion of the court:
    11

    Caterpillar Tractor Company (Caterpillar) appeals the trial court's dismissal of its third-party complaint against Bangert Brothers Road Builders, Inc. (Bangert). Caterpillar argues that the trial court erroneously decided that the substantive law of Missouri applied to the third-party complaint. We disagree and affirm.

    12

    The relevant facts are undisputed. On November 25, 1980, while Scott Vickrey was working at Lambert International Airport in St. Louis County, Missouri, he sustained fatal injuries. Vickrey was standing in the bucket of a front-end wheel loader which had been manufactured by Caterpillar and sold to Bangert. The sale had taken place in Missouri. The bucket rose suddenly, crushing Vickrey against a steel beam which he had been sandblasting. Vickrey's widow recovered workers' compensation benefits pursuant to the Missouri statutes from Bangert.

    13

    Subsequently, she filed a products liability action in Madison County, Illinois, against Caterpillar alleging that the product was in an unreasonably dangerous condition when sold to Bangert. Caterpillar filed a third-party complaint against Bangert pursuant to "An Act in relation to contribution among joint tortfeasors" (Contribution Act) (Ill. Rev. Stat. 1985, ch. 70, par. 302(a)) and a motion for change of venue. Charles Blixt, Caterpillar's attorney, in an affidavit attached to the venue motion, stated that Caterpillar was incorporated in California, had its principal place of business in Peoria County, Illinois, and did not transact business in Madison County. The trial court denied the venue motion but allowed Caterpillar to file its third-party complaint.

    14

    The third-party complaint alleged Bangert's negligence contributed to the decedent's injuries and death. If Caterpillar were found liable, Bangert should be responsible for the portion of the damages attributable to its negligence. Bangert moved to dismiss the third-party complaint, alleging that Missouri law applied in the instant case.

    15

    The circuit court of Madison County denied Bangert's motion to dismiss. Bangert filed a motion for reconsideration of the denial. Meanwhile, Caterpillar appealed the denial of its venue motion. The appellate court reversed the Madison County circuit court's denial of the venue motion. (Vickrey v. Caterpillar Tractor Co. (1985), 131 Ill. App.3d 1175 (order under Supreme Court Rule 23).) Thereafter, the cause was transferred to Macon County.

    16

    The Macon County circuit court granted Bangert's motion for reconsideration and after a hearing, allowed the motion to dismiss the [1025] third-party complaint, finding that Missouri had the most significant contacts with the action. The court also found no just reason to delay enforcement or appeal. 103 Ill.2d R. 304.

    17

    Under Missouri law, an employer who pays workers' compensation benefits is released from all other liability to its employee and to other persons. (Mo. Ann. Stat. sec. 287.120(1) (Vernon Supp. 1986); State ex rel. Maryland Heights Concrete Contractors, Inc. v. Ferriss (Mo. 1979), 588 S.W.2d 489; Osburg v. Gammon (Mo. App. 1986), 704 S.W.2d 268.) Although Missouri has adopted concepts of comparative fault and contribution among joint tortfeasors (Gustafson v. Benda (Mo. 1983), 661 S.W.2d 11), adoption of these principles has not changed the application of the employer immunity. (Sweet v. Herman Brothers, Inc. (Mo. App. 1985), 688 S.W.2d 31.) The right to contribution in Missouri is premised upon "actionable" negligence. Since the negligence of an employer who pays workers' compensation by virtue of the statute, is not "actionable," it is not responsible for contribution. Sweet v. Herman Brothers, Inc. (Mo. App. 1985), 688 S.W.2d 31.

    18

    Illinois, however, allows a third party, potentially liable to an injured employee, to maintain a contribution action against the employer. (Doyle v. Rhodes (1984), 101 Ill.2d 1, 461 N.E.2d 382.) In Doyle, the court addressed whether the statutory immunity provided an employer by sections 5(a) and 11 of the Workers' Compensation Act (Ill. Rev. Stat. 1985, ch. 48, pars. 138.5(a), 138.11) bars a contribution action against the employer by a third party who was partially responsible for the injury. The court acknowledged that in many jurisdictions workers' compensation actions preclude third-party claims. However, the Illinois employer-immunity right under workers' compensation is an affirmative defense. Therefore, the employer is still "subject to liability" in tort for purposes of the Contribution Act. See also Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill.2d 1, 374 N.E.2d 437, cert. denied (1978), 436 U.S. 946, 56 L.Ed.2d 787, 98 S.Ct. 2849.

    19

    However, if the employee has filed an action against the third party, the third party must bring his contribution claim as a third-party claim in the original action. Laue v. Leifheit (1984), 105 Ill.2d 191, 473 N.E.2d 939.

    20

    • 1 In resolving a conflict-of-law question, Illinois courts apply the local law of the place of the injury unless Illinois has a more significant relationship with the occurrence and with the parties. If Illinois has the more significant relationship with the occurrence and the parties, the law of Illinois should apply. Ingersoll v. Klein (1970), 46 Ill.2d 42, 262 N.E.2d 593; Mech v. Pullman Standard (1984), 136 Ill. App.3d 939, [1026] 484 N.E.2d 776.

    21

    • 2 Ingersoll followed the choice-of-law principles set out in the Restatement (Second) of Conflict of Laws. The Restatement provides that contacts should be weighed according to their importance to the specific issue presented by the action. Contacts which should be evaluated include: (1) the place where the injury occurred; (2) the place where the conduct causing the injury occurred; (3) the domicile or place of business of the parties; and (4) the place where the relationship between the parties is centered. (Restatement (Second) of Conflict of Laws sec. 145 (1971).) The relative significance of contacts in a multistate tort action is evaluated in light of the underlying policy factors important to the tort area. These include: the needs of the forum; the relevant policies of the forum and the other jurisdictions; and the ease of determination of the relative laws. (Restatement (Second) of Conflict of Laws sec. 6 (1971).) The comments to section 173 of the Restatement note that in contribution cases the local law of the place where the conduct causing an injury occurred will usually be applied. Restatement (Second) of Conflict of Laws sec. 173 (1971).

    22

    In evaluating a choice-of-law question, then, Illinois courts follow a tripartite procedure. First, the courts isolate the issues involved. Second, the courts identify the relevant policies embraced in the conflict. Third, the courts examine the contacts and determine which jurisdiction has the superior interest in having its policy applied. Mitchell v. United Asbestos Corp. (1981), 100 Ill. App.3d 485, 426 N.E.2d 350.

    23

    As noted earlier, the issue here is whether the Missouri or Illinois law governing the interaction of workers' compensation statutes and contribution principles should apply. Application of Missouri law would bar the third-party action in the instant case. In Ferriss, the Missouri court adopted the reasoning of Seaboard Coast Line R.R. Co. v. Smith (Fla. 1978), 359 So.2d 427, in discussing the policy behind workers' compensation liability and immunity from contribution actions. Since workers' compensation replaced common law liability with strict liability to the employee, the Missouri court felt equity did not require contribution from the employer. Imposing noncontractual contribution would deprive the employer of the benefit of the statute. However, it still would be absolutely liable to its employees. (State ex rel. Maryland Heights Concrete Contractors, Inc. v. Ferriss (Mo. 1979), 588 S.W.2d 489, 491.) Therefore, Missouri policy balances the conflict between equitable principles of contribution and immunity as provided in its workers' compensation statutes in favor of protecting employers under the workers' compensation system.

    24

    [1027] Illinois policy resolves the competing statutory interests in favor of contribution between its domiciliaries who jointly contribute to an employee's injuries. (Doyle v. Rhodes (1984), 101 Ill.2d 1, 461 N.E.2d 382; Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill.2d 1, 374 N.E.2d 437.) It views the workers' compensation statute as an affirmative defense which the employer may raise in an employee action. Therefore, the employer is still subject to suit for purposes of contribution actions. (Doyle v. Rhodes (1984), 101 Ill.2d 1, 461 N.E.2d 382.) Thus, in balancing the competing equities and statutes, Illinois policy favors contribution.

    25

    Bangert is a Missouri corporation, with its principal place of business in Missouri. It purchased the wheel loader from a Caterpillar dealership in Fenton, Missouri. The accident took place in Missouri. Decedent entered into his employment contract in Missouri and performed his work entirely in Missouri. Subsequently, workers' compensation benefits were paid on behalf of Bangert to decedent's widow under Missouri's workers' compensation statute. Decedent and his widow were domiciled in Illinois at the time of the accident. Caterpillar is an Illinois domiciliary.

    26

    • 3 Caterpillar argues that the Illinois policy favoring contribution would be subverted if Missouri law applied and that Illinois has the more substantial contacts with the litigation. Bangert argues Missouri's interests are stronger. Initially, we note that the entire litigation must be considered in assessing which forum has the more significant contacts with the litigation. (Mech v. Pullman Standard (1984), 136 Ill. App.3d 939, 484 N.E.2d 776.) Here, the only contacts Illinois has with the litigation are that it is the domicile of the original plaintiff, decedent's widow, and Caterpillar's principal place of business. All other contacts revolve around Missouri. The Missouri workers' compensation system and its policy of providing immunity from further suit would be gravely undermined by application of Illinois law in the instant case. The Illinois policy would not be similarly affected since an Illinois employer was not partially responsible for decedent's injuries nor did decedent recover benefits pursuant to the Illinois workers' compensation statutes. The trial court properly found Missouri substantive law applied.

    27

    We note that Caterpillar was subject to a products liability action in Missouri as well as in Illinois.

    28

    The decision in Kabak v. Thor Power Tool Co. (1969), 106 Ill. App.2d 190, 245 N.E.2d 596, an indemnity action, supports the above conclusion. Plaintiff, an Ohio domiciliary, filed an action in Illinois to recover damages for injuries which he sustained when an emery wheel [1028] shattered as he was operating a grinding machine. The grinding machine belonged to his employer, an Ohio corporation. Defendant, an Illinois corporation, manufactured and sold the machine to plaintiff's employer. Defendant appealed the dismissal of its third-party indemnity complaint against plaintiff's employer. The plaintiff had recovered benefits under Ohio's workers' compensation statute. The Ohio statute relieved the employer from further liability.

    29

    The appellate court noted that the third-party action had to be considered in light of the tort that gave rise to it. It then found Ohio law applied. The injury occurred in Ohio, the employee worked in Ohio, the employer was an Ohio corporation, the equipment was situated and sold in Ohio, the employer's alleged negligence occurred in Ohio, the employee received benefits under Ohio's laws, and the manufacturer should have realized that it was subject to suit in other States when it placed the machinery in the stream of commerce. These same considerations apply in the instant case. See also Mech v. Pullman Standard (1984), 136 Ill. App.3d 939, 484 N.E.2d 776; Elston v. Industrial Lift Truck Co. (1966), 420 Pa. 97, 216 A.2d 318.

    30

    For the above reasons, we affirm the trial court.

    31

    Affirmed.

    32
    WEBBER and SPITZ, JJ., concur.
  • 8 Cooney v. Osgood Mach.

    1
    81 N.Y.2d 66 (1993)
    2
    Dennis J. Cooney, Plaintiff,
    v.
    Osgood Machinery, Inc., Defendant and Third-Party Plaintiff-Appellant. Paul Mueller Company, Third-Party Defendant-Respondent; Hill Acme Company, Third-Party Defendant-Appellant, et al., Third-Party Defendants.
    3

    Court of Appeals of the State of New York.

    4
    Argued February 18, 1993.
    5
    Decided March 25, 1993.
    6

    Smith, Murphy & Schoepperle, Buffalo (Victor Alan Oliveri and Bonnie T. Hager of counsel), for defendant and third-party plaintiff-appellant.

    7

    Bouvier, O'Connor, Buffalo (Chris G. Trapp of counsel), for third-party defendant-appellant.

    8

    Hurwitz & Fine, P. C., Buffalo (Sheldon Hurwitz of counsel), for third-party defendant-respondent.

    9

    Judges SIMONS, TITONE, HANCOCK, JR., BELLACOSA and SMITH concur.

    10
    [69] Chief Judge KAYE.
    11

    The issue on this appeal is whether a Missouri statute barring contribution claims against an employer — which conflicts with New York law permitting such claims — should be given effect in a third-party action pending here. Applying relevant choice of law principles, we conclude that the Missouri workers' compensation statute should be given effect, and therefore affirm the dismissal of the third-party complaint seeking contribution against a Missouri employer.

    12
    I.
    13

    The facts relevant to this appeal are essentially undisputed. In 1957 or 1958, Kling Brothers, Inc. (succeeded in interest by third-party defendant Hill Acme Co.) manufactured a 16-foot wide "Pyramid Form Bending Roll," a machine to shape large pieces of metal. The device was sold in 1958 to a Buffalo company, American Standard Inc., through a New York sales agent, defendant Osgood Machinery, Inc., which assisted American in the setup and initial operation of the machine. American closed its Buffalo plant around 1961, and the history of the bending roll is obscured until 1969, when Crouse Company — which obtained the equipment in some unknown [70] manner — sold the machine to Paul Mueller Co., a Missouri domiciliary.

    14

    Mueller installed the bending roll in its Springfield, Missouri, plant and subsequently modified it by adding a foot switch. In October 1978, plaintiff Dennis J. Cooney, a Missouri resident working at the Missouri plant, was injured while cleaning the machine. The machine was running at the time — a piece of wood having been wedged in the foot switch — and Cooney was unable to reach the switch to stop the machine and avoid injury.

    15

    In Missouri, Cooney filed for and received workers' compensation benefits. Because under Missouri law an employer providing such benefits "shall be released from all other liability * * * whatsoever, whether to the employee or any other person" (Mo Rev Stat § 287.120 [1]), he could not additionally sue his employer, Mueller, in tort. Cooney did, however, bring a products liability action against Osgood — the machine's initial sales agent — in Supreme Court, Erie County. (Missouri apparently would not have had personal jurisdiction over Osgood.)

    16

    Seeking contribution from parties it deems more culpable in the event it is found liable to Cooney, Osgood brought a third-party action against Mueller, American Standard, and Hill Acme. Mueller invoked the Missouri statute shielding employers from both direct claims by employees and contribution claims by others, and moved for summary judgment dismissing Osgood's third-party complaint. In light of the conflict between the Missouri statute and New York law permitting contribution claims against employers, Supreme Court undertook a choice of law analysis and concluded that New York law should apply. The Appellate Division unanimously reversed and dismissed the third-party complaint as well as all cross claims against Mueller. We now affirm.

    17
    II.
    18

    An inevitable consequence of a mobile society, where people and goods routinely cross State and national borders, is that disputes may implicate the interests of several jurisdictions having conflicting laws. Choice of law principles become relevant, however, only when a State can, consistent with the Full Faith and Credit and Due Process Clauses of the Constitution (US Const, art IV, § 1; 14th Amend, § 1), choose between the conflicting laws. A State may lack sufficient nexus with a case [71] so that choice of its law is arbitrary or fundamentally unfair (Phillips Petroleum Co. v Shultz, 472 US 797, 818; Allstate Ins. Co. v Hague, 449 US 302, 312-313; Schultz v Boy Scouts, 65 N.Y.2d 189, 202-203, n 4). Mueller argues that New York's connection with the case is so tenuous that a decision to apply New York contribution law would be unconstitutional.

    19

    In Hague, the Supreme Court upheld the Minnesota high court's decision to interpret an automobile insurance policy under Minnesota law instead of under contrary Wisconsin precedent. The policy was issued to a Wisconsin domiciliary, who was a passenger on a motorcycle operated by a Wisconsin resident when he was struck and killed — in Wisconsin — by an automobile driven by another Wisconsin resident. Nevertheless, the Supreme Court plurality found that three contacts with Minnesota, in the aggregate, were sufficient to generate an adequate Minnesota interest in the case: the decedent was employed in Minnesota; his wife, the appointed representative of the estate, subsequently moved to Minnesota; and the insurance company was at all times present and doing business in Minnesota (449 US, at 313-319).

    20

    Similarly, New York's contacts with the present case are, in the aggregate, sufficient to satisfy the constitutional threshold. Osgood has alleged that Mueller has a substantial presence in this State, and there is indication in the record that Mueller does business in New York.[1] Additionally, Osgood, which seeks contribution under New York law, is a domiciliary of this State. Finally, Osgood's alleged tortious conduct with respect to the machine arose in New York, where the machine was ordered, operated for several years, and eventually shipped out of State.

    21

    We conclude, therefore, that this State has sufficient interest in the litigation so that if we chose to apply New York law on the contribution issue, that decision would not run afoul of the Federal Constitution. Accordingly, we turn to a choice of law analysis.

    22
    III.
    23

    The traditional approach to choice of law problems arising in tort was simply to apply lex loci delicti, the law of the place [72] of the tort, to all substantive issues in the case (see, e.g., Poplar v Bourjois, 298 N.Y. 62, 66; Restatement of Conflict of Laws §§ 377-390). The theoretical underpinning of that rule was the vested rights doctrine: the right to recover in tort is created by, and exists solely to the extent of, the law of the jurisdiction where the injury occurred (Babcock v Jackson, 12 N.Y.2d 473, 477-478).

    24

    Although the vested rights doctrine did have the salutary characteristics of predictability and ease of application, it failed to accord any significance to the policies underlying the conflicting laws of other jurisdictions (see, Babcock, 12 NY2d, at 478; Miller v Miller, 22 N.Y.2d 12, 15). Thus in Babcock the Court adopted a more flexible approach intended to give "controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." (Babcock, 12 NY2d, at 481.)

    25

    Of the various, sometimes competing, schools of thought on choice of law, the one that emerged as most satisfactory was "interest analysis," which sought to effect the law of the jurisdiction having the greatest interest in resolving the particular issue (see, Schultz v Boys Scouts, 65 N.Y.2d 189, 197, supra; Miller v Miller, 22 N.Y.2d 12, 15-16, supra). An immediate distinction was drawn between laws that regulate primary conduct (such as standards of care) and those that allocate losses after the tort occurs (such as vicarious liability rules). If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders. But if competing "postevent remedial rules" are at stake other factors are taken into consideration, chiefly the parties' domiciles (see, Schultz v Boy Scouts, 65 NY2d, at 197-199; Babcock, 12 NY2d, at 483).

    26

    Babcock itself involved a loss distribution rule — an Ontario guest statute limiting an automobile passenger's ability to recover from the driver — as did subsequent cases (Dym v Gordon, 16 N.Y.2d 120 [Colorado guest statute]; Long v Pan Am. World Airways, 16 N.Y.2d 337 [conflicting Maryland and Pennsylvania laws governing wrongful death recoveries]; Macey v Rozbicki, 18 N.Y.2d 289 [Ontario guest statute]; Farber v Smolack, 20 N.Y.2d 198 [vicarious liability]; Miller v Miller, 22 N.Y.2d 12 [Maine statute limiting wrongful death damages to $20,000]; Tooker v Lopez, 24 N.Y.2d 569 [Michigan guest statute]).

    27

    [73] In Neumeier v Kuehner (31 N.Y.2d 121), yet another guest statute case, the Court in seeking to return greater predictability and uniformity to the law, adopted a series of three rules that had been proposed by Chief Judge Fuld (see, Tooker v Lopez, 24 NY2d, at 585 [Fuld, Ch. J., concurring]). Although drafted in terms of guest statutes — drivers and passengers — these rules could, in appropriate cases, apply as well to other loss allocation conflicts (see, Schultz, 65 NY2d, at 200-201 [applying first and third Neumeier rules to conflicting charitable immunity laws]).

    28
    The Neumeier Rules
    29

    Under the first Neumeier rule, when the driver-host and passenger-guest share a common domicile, that law should control. Indeed, when both parties are from the same jurisdiction, there is often little reason to apply another jurisdiction's loss allocation rules. The domiciliary jurisdiction, which has weighed the competing considerations underlying the loss allocation rule at issue, has the greater "interest in enforcing the decisions of both parties to accept both the benefits and the burdens of identifying with that jurisdiction and to submit themselves to its authority" (Schultz, 65 NY2d, at 198). Moreover, this rule reduces opportunities for forum shopping because the same law will apply whether the suit is brought in the locus jurisdiction or in the common domicile, the two most likely forums (Schultz, 65 NY2d, at 199-201).

    30

    The second Neumeier rule addresses "true" conflicts, where the parties are domiciled in different States and the local law favors the respective domiciliary. When plaintiff's State, for example, would allocate the loss to defendant but defendant's State would force plaintiff to bear the loss, a true conflict arises. The rule provides that when the driver's (defendant's) conduct occurred in the State of domicile and that State would not impose liability, the driver should not be exposed to liability under the law of the victim's domicile. Conversely, when the plaintiff-passenger is injured in the place of domicile and would be entitled to recover, the out-of-State driver should generally be unable to interpose the law of his or her domicile to defeat recovery (31 NY2d, at 128). In essence, then, the second Neumeier rule adopts a "place of injury" test for true conflict guest statute cases.

    31

    Finally, the third Neumeier rule, applicable to other splitdomicile [74] cases, provides that the usually governing law will be that of the place where the accident occurred, unless "`displacing that normally applicable rule will advance the relevant substantive law purposes without impairing the smooth working of the multistate system or producing great uncertainty for litigants'" (31 NY2d, at 128). This rule, too, generally uses the place of injury, or locus, as the determining factor.

    32

    Assuming that the interest of each State in enforcement of its law is roughly equal — a judgment that, insofar as guest statutes are concerned, is implicit in the second and third Neumeier rules — the situs of the tort is appropriate as a "tie breaker" because that is the only State with which both parties have purposefully associated themselves in a significant way (see, Korn, The Choice-of-Law Revolution: A Critique, 83 Colum L Rev 772, 801 [1983]). Moreover, locus is a neutral factor, rebutting an inference that the forum State is merely protecting its own domiciliary or favoring its own law (see, Schultz, 65 NY2d, at 201). Additionally, the place of injury was the traditional choice of law crucible.

    33

    Schultz applied both the first and third Neumeier rules. The plaintiffs in that case, residents of New Jersey, sued New Jersey and Ohio domiciliaries in New York for injuries occurring here. Defendants urged that New Jersey charitable immunity law was controlling; plaintiffs argued for New York law, which does not recognize charitable immunity. As between plaintiffs and the New Jersey defendant — codomiciliaries — the Court looked to the first Neumeier rule and, after analysis, applied the law of the shared domicile, New Jersey. The third Neumeier rule, however, applied to the plaintiffs' claim against the Ohio domiciliary, because the parties had different domiciles and the injuries occurred in a separate jurisdiction. Although the third rule generally invokes the locus jurisdiction's law, the Court applied the proviso permitting resort to other law when it would advance substantive law purposes without impairing the multistate system or producing great uncertainty. We thus applied New Jersey law to that claim as well (Schultz, 65 NY2d, at 200-202).

    34

    Contribution rules — as involved in the present case — are loss allocating, not conduct regulating. Had conduct regulating been at issue here, our analysis would be greatly simplified, for the traditional rule of lex loci delicti almost invariably obtains. Similarly, if the parties shared the same domicile, [75] we would generally apply that jurisdiction's loss distribution law. Instead, our analysis is necessarily more complicated, calling upon us to evaluate the relative interests of jurisdictions with conflicting laws and, if neither can be accommodated without substantially impairing the other, finding some other sound basis for resolving the impasse.

    35
    Interest Analysis
    36

    The general scheme of workers' compensation acts is that an employer regardless of culpability is required to make specified payments to an injured employee and in exchange, the law immunizes the employer from further liability. Immunity "is part of the quid pro quo in which the sacrifices and gains of employees and employers are to some extent put in balance, for, while the employer assumes a new liability without fault, [it] is relieved of the prospect of large damage verdicts" (2A Larsen, Workmen's Compensation Law § 65.11 [1993]).

    37

    Some States immunize employers only from direct actions by injured workers; others extend protection from third-party contribution actions as well. The Missouri Supreme Court, in rejecting State and Federal constitutional challenges to the Missouri statute at issue here, noted that immunity "`is the heart and soul of this legislation which has, over the years been of highly significant social and economic benefit to the working [person], the employer and the State.'" (State ex rel. Maryland Hgts. Concrete Contrs. v Ferriss, 588 SW2d 489, 491 [Mo], quoting Seabord Coast Line R. R. Co. v Smith, 359 So 2d 427, 429 [Fla].) The court, quoting further from the Florida case, also observed that "`"the right to contribution is not a vested right on which legislation may not impinge"'" (588 SW2d, at 491).

    38

    Missouri's decision to shield employers from contribution claims is thus a policy choice implicating significant State interests: "to deny a person the immunity granted * * * by a work[er]'s compensation statute of a given state would frustrate the efforts of that state to restrict the cost of industrial accidents and to afford a fair basis for predicting what these costs will be." (Restatement [Second] of Conflict of Laws § 184, comment b, at 547.) Indeed, as the Restatement concluded in a related context, for another State "to subject a person who has been held liable in work[er]'s compensation to further unlimited liability in tort or wrongful death would frustrate [76] the work[er]'s compensation policy of the State in which the award was rendered." (Restatement [Second] of Conflict of Laws § 183, comment c, at 544.)

    39

    Arrayed against Missouri's interest in maintaining the integrity of its workers' compensation scheme is New York's interest in basic fairness to litigants. Under traditional joint and several liability rules, when more than one tortfeasor was responsible for plaintiff's injury, each was potentially liable for the entire judgment, irrespective of relative culpability. Indeed, plaintiff was not even required to sue all the wrongdoers, but could recover the entire judgment from the "deep pocket," who then had no recourse (Sommer v Federal Signal Corp., 79 N.Y.2d 540, 556).

    40

    In Dole v Dow Chem. Co. (30 N.Y.2d 143, 148-149 [1972]), this Court mitigated the inequity by allowing a defendant that pays more than its fair share of a judgment, as apportioned by the fact finder in terms of relative fault, to recover the difference from a codefendant. The Legislature, also recognizing the desirability of contribution, subsequently codified the Dole principles in CPLR article 14 (L 1974, ch 742). Stated simply, the "goal of contribution, as announced in Dole and applied since, is fairness to tortfeasors who are jointly liable." (Sommer v Federal Signal Corp., 79 NY2d, at 556-557.)

    41

    Manifestly, the interests of Missouri and New York are irreconcilable in this case. To the extent we allow contribution against Mueller, the policy underlying the Missouri workers' compensation scheme will be offended. Conversely, to the extent Osgood is required to pay more than its equitable share of a judgment, the policy underlying New York's contribution law is affronted. It is evident that one State's interest cannot be accommodated without sacrificing the other's, and thus an appropriate method for choosing between the two must be found.

    42

    This is a true conflict in the mold of Neumeier's second rule, where the local law of each litigant's domicile favors that party, and the action is pending in one of those jurisdictions. Under that rule, the place of injury governs, which in this case means that contribution is barred. This holding is consistent with the result reached historically, and reflects application of a neutral factor that favors neither the forum's law nor its domiciliaries. Moreover, forum shopping by defendants — who might attempt to invoke CPLR 1403 and bring a separate action for contribution in New York if sued else [77] where (compare, Grant Co. v Uneeda Doll Co., 19 AD2d 361, affd 15 N.Y.2d 571) — is eliminated.[2]

    43

    A primary reason that locus tips the balance, of course, is that ordinarily it is the place with which both parties have voluntarily associated themselves. In this case, there is some validity to Osgood's argument that it did nothing to affiliate itself with Missouri. Indeed, a decade after Osgood's last contact with the bending roll, the machine wound up in Missouri through no effort, or even knowledge, of Osgood. Moreover, the record establishes that Osgood was not in the business of distributing goods nationwide, but limited its activities to New York and parts of Pennsylvania, and thus Osgood may not have reasonably anticipated becoming embroiled in litigation with a Missouri employer.

    44

    For this reason, our decision to apply Missouri law rests as well on another factor that should, at times, play a role in choice of law: the protection of reasonable expectations (see, Restatement [Second] of Conflict of Laws § 6 [2] [d]; Allstate Ins. Co. v Hague, 449 US 302, 327 [Stevens, J., concurring]; Schultz, 65 NY2d, at 198 ["protecting the reasonable expectations of the parties" is one reason locus law is generally preferred when there are conflicting conduct-regulating rules]).[3] In view of the unambiguous statutory language barring third-party liability and the Missouri Supreme Court's holding in Ferriss, Mueller could hardly have expected to be haled before a New York court to respond in damages for an accident to a Missouri employee at the Missouri plant. By contrast, in ordering its business affairs Osgood could have had no reasonable expectation that contribution would be available in a products liability action arising out of the sale of industrial equipment. Indeed, Osgood's activity in connection with the bending roll occurred in 1958, some 14 years before Dole was decided and the principles of full contribution were introduced into our law. Moreover, even under present [78] law, contribution is not foolproof. A defendant, for example, may be unable to obtain jurisdiction over a joint tortfeasor; the joint tortfeasor may be insolvent or defunct (like Kling Bros. here); or defendant's own assets may be insufficient to pay its share of the judgment (see, Klinger v Dudley, 41 N.Y.2d 362, 369).

    45

    In sum, we conclude that Missouri law should apply because, although the interests of the respective jurisdictions are irreconcilable, the accident occurred in Missouri, and unavailability of contribution would more closely comport with the reasonable expectations of both parties in conducting their business affairs.

    46
    IV.
    47

    Finally, we turn to Osgood's contention that New York's public policy precludes application of the Missouri statute in this case. Under the public policy exception, when otherwise applicable foreign law would "violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal" (Loucks v Standard Oil Co., 224 N.Y. 99, 111 [Cardozo, J.]), the court may refuse to enforce it.

    48

    As Judge Simons noted in Schultz, the public policy exception should be considered only after the court has first determined, under choice of law principles, that the applicable substantive law is not the forum's law (Schultz, 65 NY2d, at 202). We have already cleared that hurdle in the present case. Moreover, the exception could apply only when New York's nexus with the case is substantial enough to threaten our public policy (id., at 202-203). While we have yet to explore whether there is a difference between the minimum contacts needed to satisfy the constitutional choice-of-law threshold and those required to implicate the public policy exception, it is unnecessary to do so today; the facts of this case satisfy both standards. Unlike Schultz, where New York's nexus was insufficient to implicate our public policy, this case involves a New York domiciliary who may be cast in liability by the effect of foreign law which is contrary to New York law. Accordingly, New York's interest in this case is sufficient to warrant scrutiny under the public policy exception.

    49

    Although we have noted that public policy may be found in the State Constitution, statutes and judicial decisions (Shannon v Irving Trust Co., 275 N.Y. 95, 102-103; Schultz, 65 NY2d, at 202), [79] plainly not every difference between foreign and New York law threatens our public policy. Indeed, if New York statutes or court opinions were routinely read to express fundamental policy, choice of law principles would be meaningless. Courts invariably would be forced to prefer New York law over conflicting foreign law on public policy grounds.

    50

    The refusal of courts to enforce foreign law as repugnant to public policy reached its zenith prior to the advent of modern choice of law doctrine. In fact, commentators have opined that in earlier times the public policy rationale really substituted as a choice of law mechanism when the prevailing rigid choice of law rules permitted no flexibility (see, Paulsen and Sovern, "Public Policy" in the Conflict of Laws, 56 Colum L Rev 969, 981 [1956]; see also, Feldman v Acapulco Princess Hotel, 137 Misc 2d 878, 888, n 14). That theory is supported by some of our cases.

    51

    In Mertz v Mertz (271 N.Y. 466), for instance, a wife sued her husband in New York for injuries arising out of his alleged negligent operation of a car in Connecticut. Both parties were New York domiciliaries, and under New York law at that time, a wife could not sue her husband for negligence. Connecticut law, however, did not recognize spousal immunity and under lex loci delicti, Connecticut law would ordinarily have applied. Based in part on public policy considerations this Court affirmed dismissal of the complaint. The same result would likely obtain today, however, under choice of law principles. In view of modern choice of law doctrine, resort to the public policy exception should be reserved for those foreign laws that are truly obnoxious.

    52

    The thrust of Osgood's argument is that New York's law permitting contribution is so strong that any encroachment upon the right violates fundamental public policy. In our choice of law analysis, of course, we explicitly considered New York's interest in allowing contribution and concluded that it is significant. Osgood's view, however, is that no abrogation of the right may be tolerated. We disagree.

    53

    Certainly, contribution is not a deeply rooted tradition of the common weal (Loucks, 224 NY, at 111), having been introduced into our law only relatively recently. Moreover, as noted, availability of contribution is not invariably guaranteed. And while Osgood claims that being forced to pay more than its equitable share of plaintiff's damages is unfair, "public policy is not measured by individual notions of expediency [80] and fairness or by a showing that the foreign law is unreasonable or unwise" (Schultz, 65 NY2d, at 202). In the considered judgment of the Missouri Legislature, employers providing workers' compensation benefits are not amenable to claims for contribution. New York law is to the contrary. But as Judge Cardozo observed: "Our own scheme of legislation may be different. * * * That is not enough to show that public policy forbids us to enforce the foreign right. * * * We are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home." (Loucks v Standard Oil Co., 224 NY, at 110-111.) Osgood has not sustained its "heavy burden" of proving that the Missouri statute is offensive to our public policy (Schultz, 65 NY2d, at 202).

    54

    Accordingly, the order of the Appellate Division should be affirmed, with costs.

    55

    Order affirmed, with costs.

    56

    [1] Were Mueller not subject to jurisdiction in New York, it could of course successfully move to dismiss for lack of personal jurisdiction.

    57

    [2] New York law permitting contribution against an employer is clearly a minority view (see generally, Annotation, Modern Status of Effect of State Workmen's Compensation Act on Right of Third-Person Tortfeasor to Contribution or Indemnity From Employer of Injured or Killed Workman, 100 ALR3d 350). A result that might impose New York law on the carefully structured workers' compensation schemes of other States — especially when the accident occurred there — is undesirable.

    58

    [3] We have eschewed reliance on the fictional expectation of the parties based on mere contact with the locus of an accident (Miller v Miller, 22 NY2d, at 20), but reasonable, justifiable expectations are another matter.

  • 9 Gregory v. Garrett Corp.

    1
    578 F.Supp. 871 (1983)
    2
    Gwendolyn L. GREGORY, Executrix under the Will of Joseph Morgan Gregory, Deceased, Plaintiffs,
    v.
    The GARRETT CORPORATION; Colt Electronics Co., Inc.; Phoenix Aerospace, Inc.; and Lockheed Corp., Defendants.
    The GARRETT CORPORATION and Lockheed Corporation, Third-Party Plaintiffs,
    v.
    TEXASGULF, INC. and TexasGulf Aviation, Inc., Third-Party Defendants.
    3
    No. 82 Civ. 2316 (GLG).[1]
    4

    United States District Court, S.D. New York.

    5
    December 16, 1983.
    6

    [872] [873] [874] Whitman & Ransom, New York City, for plaintiffs Gwendolyn L. Gregory, Mary V. Drew, and Mary L. McKee; Kevin Keating, Richard F. Lawler, New York City, of counsel.

    7

    Kreindler & Kreindler, New York City, for plaintiffs Morgan Guaranty (Fogarty), Woodling, and Claydon; Milton G. Sincoff, Steven Earl Anderson, New York City, of counsel.

    8

    Speiser & Krause, P.C., New York City, for plaintiff Constance A. Boyle; Frank H. Granito, Jr., New York City, of counsel.

    9

    Cummings & Lockwood, Stamford, Conn., for plaintiff Judith N. Sorenson; Mark E. Fuhrmann, Stamford, Conn., of counsel.

    10

    Costello & Shea, New York City, Perkins, Coie, Stone, Olsen & Williams, Seattle, Wash., for defendant and third-party plaintiff The Garrett Corp.; J. Donald Tierney, New York City, Keith Gerrard, Richard C. Coyle, Sherilyn Peterson, Seattle, Wash., of counsel.

    11

    Lester, Schwab, Katz & Dwyer, New York City, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, Mo., for defendant and third-party plaintiff Colt Electronics Co., Inc.; B. Jennifer Jaffee, New York City, Timothy W. Triplett, Kansas City, Mo., of counsel.

    12

    Donovan, Leisure, Newton & Irvine, New York City, Morris, Larson, King, Stamper & Bold, Kansas City, Mo., for defendant and third-party plaintiff Phoenix Aerospace, Inc.; Daniel R. Murdock, New York City, Steven G. Emerson, Kansas City, Mo., of counsel.

    13

    Mendes & Mount, New York City, for defendant and third-party plaintiff Lockheed Corp.; Kevin F. Cook, James W. Hunt, James M. Fitzsimons, New York City, of counsel.

    14

    J. Paul McGrath, Asst. Atty. Gen., John S. Martin, Jr., U.S. Atty., Dept. of Justice, Torts Branch, Civil Div. by Kathlynn G. Fadely, Susan M.H. Gillett, Trial Attys., Washington, D.C., for defendant U.S.

    15

    Townley & Updike, New York City, for defendants and third-party defendants TexasGulf Inc. and TexasGulf Aviation Inc.; Frederick D. Berkon, John C. Sabetta, Michael Belohlavek, New York City, of counsel.

    16
    OPINION
    17
    GOETTEL, District Judge:
    18

    Presented is a motion for summary judgment that requires the Court to decide very close issues concerning the scope of an employer's immunity from suit under the workers' compensation statutes of New York, Connecticut, and North Carolina. Before those issues can be precisely formulated, [875] however, the complexity of this case requires a fairly detailed accounting of its underlying facts.

    19
    FACTS
    20

    As has been true of a number of earlier cases involving airplane crashes, this one has grown into a formidable jungle of litigation. There are twenty-one related actions involving numerous direct claims, third-party claims, expert witnesses, requests for discovery, and motions, all springing from a simple but tragic event — an airplane accident that resulted in the death of all persons aboard the aircraft. Those caught up in the litigation include the decedents' families, estates, and employers, as well as the owner and operator of the aircraft, the United States government, and all those corporations that were in any way involved in the design, manufacture, sale, installation, maintenance, or inspection of the critical aircraft components whose failure may have caused, at least in part, the aircraft to crash.

    21

    The crash itself occurred at 6:40 p.m. on February 11, 1981, as corporate aircraft N520S, a Lockheed 731 JetStar owned and operated by TexasGulf Aviation, Inc. ("TGA"), approached for a landing at the Westchester County Airport, which lies just north of White Plains, New York. Of the eight persons who died when the JetStar crashed, two were members of its flight crew and six were employees of TexasGulf, Inc. ("TG"), the parent corporation and 100% shareholder of TGA.

    22

    More specifically, those on board and their corporate affiliations were as follows:

    23
                     PassengersDr. Charles F. Fogarty  Chairman of the Board and                          Chief Executive Officer of                          TG                        Chairman of the Board of TGAGordon N. McKee, Jr.    Vice President and Treasurer                          of TG                        Vice President and Treasurer                          of TGARobert J. Boyle         Vice President of TGClarence E. Drew        Manager of Corporate Communications                          at TGFrank J. Claydon, Jr.   Vice President of TGAlbert D. Woodling      Accounting Superintendent of                          TG                 Flight CrewJ. Morgan Gregory       President and Director of TGAShanley S. Sorenson     Pilot for TGA
    24

    Of the six passengers, four (Fogarty, McKee, Boyle, and Drew) were residents of Connecticut and worked for TG in Stamford, Connecticut. The other two passengers (Claydon and Woodling) were residents of North Carolina and worked at a TG office located there. TG is a major mining and mineral exploration company incorporated in Texas and maintaining its principal place of business in Stamford, Connecticut.

    25

    The two flight crew members were also residents of Connecticut but worked at TGA's headquarters at the Westchester County Airport in New York. Originally a department of TG, TGA in 1973 was spun off as a subsidiary and incorporated in New York to enable TG to continue to maintain a fleet of readily available corporate aircraft yet still meet the ownership requirements of the Federal Aviation Agency (the "FAA").[2]

    26

    [876] All eight of the decedents had been receiving their paychecks directly from TG, and all eight were covered by a workers' compensation insurance policy issued to TG and certain of TG's subsidiaries. Thus, as soon as the insurer verified that the crash had occurred during the course of the eight individuals' employment as they were returning from a business trip to Toronto, Ontario, approval was given for their surviving spouses (the "survivors")[3] to receive workers' compensation benefits in accordance with the terms of TG's insurance policy. The survivors of the six Connecticut residents accepted benefits under the terms of Connecticut's Workers' Compensation Act, while the two survivors of the North Carolina residents accepted benefits under the terms of North Carolina's Workers' Compensation Act.

    27

    Not surprisingly, though, the fairly minimal benefits provided under the relevant workers' compensation statutes were hardly enough to match the income that the survivors had been accustomed to receiving while the employees were alive and earning considerable salaries.[4] However, under the applicable statutory provisions, TG as the passengers' employer was, and is, immune from any additional direct liability to the survivors. See Conn.Gen.Stat. Ann. § 31-284(a) (1972); N.C.Gen.Stat. § 97-10.1 (1979). Hence, the survivors had to look to other entities if they were to recover any further compensation for the losses they had suffered.

    28

    Initially, the survivors followed the lead of TG and TGA, which had brought suit against a number of parties whose services and products were alleged to have caused the accident and thereby TGA's loss of the JetStar. See TexasGulf, Inc. v. Colt Electronics Co., No. 81 Civ. 7147 (S.D.N.Y. filed Nov. 17, 1981).[5] The theory of that pending action is that all those who were connected with the design, manufacture, sale, installation, and inspection of the JetStar's solid-state generator control units ("GCU's") are liable to TGA and TG for the loss of the aircraft because the GCU's failed to perform as specified on the night of the crash. Adopting a similar theory, the survivors filed a number of actions against the same five defendants involved in TGA's suit, namely: (1) Lockheed Corporation ("Lockheed"), which designed and manufactured the JetStar; (2) Phoenix Aerospace, Inc. ("Phoenix"), which designed and manufactured the GCU's that were installed in the JetStar and were in use on the night of the crash; (3) Colt Electronics Co. ("Colt"), which adapted the GCU's for the JetStar and sold them to TGA; (4) The Garrett Corporation ("Garrett"), whose division, AiResearch Aviation Company, located in Islip, New York, installed the GCU's on the aircraft; and (5) the United States (through the FAA), which approved Colt's application for a Supplemental Type Certificate covering the modification of the JetStar's electrical system and the installation of the GCU's into the aircraft, and which is responsible for the conduct of the air traffic controllers who were in communication with the JetStar on the night of the crash.[6]

    29

    [877] These defendants have, in turn, impleaded TG and TGA as third-party defendants on the theory that the crash was actually caused by the negligence of the flight and maintenance personnel working out of TGA's office and hangar at the Westchester Airport. The five defendants seek contribution from TG and TGA for any liability that is actually found to be attributable to the latter two parties.[7] In addition, the survivors of four of the passengers have brought wrongful death actions directly against TGA on the theory that the workers' compensation immunity that admittedly protects TG, the parent corporation, does not extend to its subsidiary, TGA.[8]

    30

    In the instant motion for summary judgment, TG and TGA seek dismissal of both the third-party claims and the direct claims. With respect to the third-party claims, TG and TGA put forth a two-part argument, both parts of which are essential to their motion. First, they argue that the issue of whether the third-party claims for contribution can be brought against TG as the employer is to be decided under the laws of Connecticut and North Carolina, and those laws clearly prohibit such claims. Second, TG and TGA argue that this immunity from contribution claims extends not only to TG but also to TGA, because the flight and maintenance crews and the passengers were co-employees, all in the employment of TG, and because TG and TGA must be considered as a single corporate entity. Garrett and the other defendants dispute both parts of TG's and TGA's argument. First, Garrett contends that New York law governs the issue of contribution and that New York's law clearly permits contribution claims in the workers' compensation context. Second, Garrett argues that even if Connecticut and North Carolina law were to apply, the scope of immunity under those states' laws would cover only TG and not TGA, because the two are separate corporate entities and TG is the sole employer of the passengers while TGA is the sole employer of the flight and maintenance crews.

    31

    As for the claims of the four survivors who are suing TGA directly, TGA moves for summary judgment on the same grounds, i.e., that the laws of Connecticut and North Carolina apply and that TGA as well as TG is immune from suit under those laws. While all but one of the plaintiffs agree that Connecticut's and North Carolina's laws apply, they disagree with TGA as to the scope of immunity provided under those laws. Their contention is that TGA is not immune from suit by the passengers because, as a separate corporate entity, the owner and operator of the JetStar, and the sole employer of the flight and maintenance crews, TGA cannot be considered the alter ego of TG and its crew members cannot be treated as co-employees of the passengers.

    32

    Having carefully reviewed the above arguments of the parties, the Court concludes for reasons set forth below that TG's and TGA's motion for summary judgment must be denied with respect to both the third-party claims and the direct claims, and that a full evidentiary hearing on the factual issues discussed below should be held as soon as possible.

    33
    DISCUSSION
    34

    The Court first considers the issues raised with respect to the actions involving third-party claims for contribution and then turns to the issues raised with respect to the plaintiffs' direct suits against TGA.

    35
    I. The Immunity Defense of TG and TGA With Respect to the Third-Party Claims of the Defendants
    36

    With respect to the third-party claims, the initial issue is a conflict of laws [878] question. All of the parties more or less agree upon what the law of each state is.[9] They also agree that if the Court determines that the law to be applied is that of New York, then there is no need to consider the second critical issue, that concerning the nature of the interrelationship of TG, TGA, and the flight and maintenance personnel. In other words, only if the Court finds that the law of Connecticut or North Carolina should be applied will it have to determine whether any immunity accorded TG also protects TGA. This is so because the law of the latter two states grants the employer immunity from third-party contribution claims, while the law of New York does not.

    37
    A. Employer's Liability to Third Parties, Generally
    38

    The ultimate issue to be determined here is whether under the applicable workers' compensation laws TG (and perhaps TGA), as the employer, is immune from any third-party contribution claims brought by Garrett and the other parties who are defending against the tort claims filed by the survivors of TG's six deceased employees. In general, the issue of an employer's liability to third-party claims has been characterized as one of the most closely contested controversies in the field of workers' compensation law,[10] and understandably so. After all, this is not the situation presented by the classic employer immunity rule, under which the employer is protected against any direct tort claims that the employee or his survivors might otherwise have. That basic immunity rule serves as the quid pro quo for the insurance coverage provided to the employee and his survivors, which encompasses even work-related accidents for which the employer could not be held liable under the common law. See, e.g., Conn. Gen.Stat.Ann. § 31-284(a) (1972); N.Y. Work.Comp.Law § 29(6) (McKinney's Supp. 1982); N.C.Gen.Stat. § 97-10.1 (1979).

    39

    Here, however, the Court is faced with the problem of whether the employer's immunity should protect him against the contribution or indemnity claims of a third party plaintiff who is a complete stranger to the employment relationship and who is effectively being held liable for injury or death caused at least in part by the employer. This problem is a much more difficult one. On the one hand, the employer can argue with great conviction and merit that to permit the contribution claim is to allow indirectly a recovery for a compensable injury that would not be allowed directly because of the statutory limitations that have been put on the employer's liability for such injuries. See 2A Larson, Workmen's Compensation Law § 76.11, at 14-562 (1982); also Elston v. Industrial Lift Truck Co., 420 Pa. 97, 216 A.2d 318, 320 n. 3 (1966) (noting the anomaly that, absent a limitation on the contribution that can be exacted from the employer, "he would be exposed to a potentially larger liability in those circumstances in which a third-party tortfeasor was involved than where his own negligence was the sole cause of the injury"). On the other hand, the third-party plaintiff can argue with equal cogency that he should not have to bear any portion of the liability not caused by him simply because chance would have it that the otherwise liable party happens to enjoy the immunity of the compensation act. "Why should [the third party], a stranger to the compensation system, subsidize that system by assuming liabilities that he could normally shift to or share with the employer?" 2A Larson, supra, § 76.11, at 14-563. With such persuasive arguments on [879] either side of the issue, it is not surprising that the courts of different states have resolved it differently.

    40
    B. Conflicting State Laws
    41

    Turning to the states whose laws arguably govern this issue, we find that Connecticut and North Carolina have followed what is clearly the majority rule. That rule, stated in general terms, is "that the employer whose concurring negligence contributed to the employee's injury cannot be sued or joined by the third party as a joint tortfeasor, whether under contribution statutes or at common law." 2A Larson, supra, § 76.20, at 14-571. In the most often cited Connecticut case on this point, it was held that "the compensation act is the `exclusive remedy' available against an employer and restricts his liability accordingly." A.A. Equipment, Inc. v. Farmoil, Inc., 31 Conn.Supp. 322, 330 A.2d 99, 100-01 (Super.Ct.1974); see also, Cirrito v. Continental Can Co., 519 F.Supp. 638, 640 (D.Conn.1981) ("It is clear that a third party should not be permitted to raise the issue of employer negligence in a suit or counterclaim for indemnification or contribution against the employer."); Therrien v. Safeguard Manufacturing Co., 35 Conn.Supp. 268, 408 A.2d 273, 276 (Super. Ct.1979). Similarly, the supreme court of North Carolina has held that "the North Carolina Workmen's Compensation Act abrogates the statutory right of a negligent third party to claim contribution from a negligent employer in equal fault ...." Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 75 S.E.2d 768, 777 (1953). Clearly then, both of these states have made a policy decision to adopt the majority view, which, as Professor Larson points out, favors a pro-employer resolution of the issue and stresses the value of stability in the field of workers' compensation law. See, 2A Larson, supra, §§ 76.91(a) & 76.92(a).[11]

    42

    New York, in direct contrast, has adopted the most pro-third-party approach of any state in the United States, one which stresses the value of fairness above all other considerations and downplays the exclusive liability provisions of the workers' compensation act. 2A Larson, supra, §§ 76.91(b) & 76.92(b). This policy was announced in the New York Court of Appeal's landmark ruling in Dole v. Dow Chemical Co., 30 N.Y.2d 143, 152-53, 282 N.E.2d 288, 331 N.Y.S.2d 382, 390-91 (1972). There the court held in very broad terms that the "[r]ight to apportionment of liability or to full indemnity, ... as among parties involved together in causing damage by negligence, should rest on relative responsibility and ... be determined on the facts." Id. at 153, 282 N.E.2d at 297-98, 331 N.Y.S.2d at 391-92. Although the court couched the right of the third-party tortfeasor in terms of an implied right to indemnity, the ease with which such an implied right was found among mere joint tortfeasors suggested that the right was essentially the equivalent of the right to contribution, 2A Larson, supra, § 76.38, at 14-623, and courts ever since have so interpreted the holding in Dole, see, e.g., Ackerman v. Southern Wood Piedmont Co., 409 F.Supp. 469, 471-72 (E.D.N.Y.1976); Coons v. Washington Mirror Works, Inc., 344 F.Supp. 653, 657-58 (S.D.N.Y.1972), rev'd on other grounds, 477 F.2d 864 (2d Cir. 1973).

    43

    Thus, the Court is faced with as clear a conflict of laws and policy choices as could [880] exist. New York's answer to this hotly disputed question of workers' compensation law is exactly the opposite of the answer reached by Connecticut and North Carolina. As a consequence, this Court must first determine which state's law should be applied before it can resolve the ultimate issue of whether TG as the employer is immune from the third-party contribution claims.

    44
    C. Conflict of Laws Analysis
    45

    Because jurisdiction over these various actions is based upon the parties' diverse citizenship, the Court is required to apply the choice of law rules of New York, the forum state, to determine which state's substantive law should be applied to any given issue. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941). Thus, as the Second Circuit has so aptly put the matter, "Our task ... is to determine not what law we would choose to apply but what law the New York courts would apply." O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194, 205 (2d Cir.), cert. denied, 439 U.S. 1034, 99 S.Ct. 638, 58 L.Ed.2d 696 (1978).

    46

    In this regard, the New York Court of Appeals has held that "[j]ustice, fairness and `the best practical result' ... may best be achieved by giving controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." Babcock v. Jackson, 12 N.Y.2d 473, 481, 191 N.E.2d 279, 285, 240 N.Y.S.2d 743, 749 (1963). Although resort to this "governmental interest" test may have been modified to some extent in Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 699, 376 N.E.2d 914, 915, 405 N.Y.S.2d 441, 442 (1978) ("[L]ex loci delicti remains the general rule in tort cases to be displaced only in extraordinary circumstances ...."), the instant case does present the type of extraordinary circumstances that require application of the interest analysis adopted in Babcock and applied in numerous cases since. We are dealing with an airplane crash, the situs of which was at least to some extent fortuitous.[12] In similar cases, courts applying New York law have consistently looked beyond the situs of the accident and considered a number of other contacts that each of the various states has had with the parties and events in question before deciding which state's law should be applied to determine a particular issue. See, e.g., Pan American World Airways, Inc. v. Boeing Co., 500 F.Supp. 656, 660-61 (S.D. N.Y.1980); O'Brien v. Grumman Corp., 475 F.Supp. 284, 293-95 (S.D.N.Y.1979); Cousins, supra, 44 N.Y.2d at 699-700, 376 N.E.2d 914, 405 N.Y.S.2d 441.

    47

    Thus, in an action sounding in tort, the types of contacts most often considered are: (1) the state in which the injury or death occurred, (2) the state in which the conduct occurred that caused the injury or death, (3) the domicile or place of business of each of the parties, and (4) the state in which the relationship between the parties is centered. Restatement (Second) of Conflict of Laws § 145(b)(2) (1971). In addition, because of the nature of the issue before the court, two other factors should be considered as well, namely: the principal place of employment of the individuals involved and the states under whose laws the survivors have accepted workers' compensation benefits.[13] See, e.g., O'Connor [881] v. Lee-Hy Paving, supra, 579 F.2d at 204; Ackerman v. Southern Wood Piedmont Co., supra, 409 F.Supp. at 472.

    48

    With these types of contact in mind, all of the parties agree that Connecticut, North Carolina, and New York are the three states having the most important contacts with the parties and events in question. New York's interest in the case derives from its being: (1) the situs of the accident; (2) the state in which most of the allegedly negligent conduct of the agents of TGA and the defendants occurred; (3) the principal place of business of TGA, and (4) the place where the critical relationships between TGA and the defendants and between the defendants and the plaintiffs are centered.[14] Connecticut's interest in the case derives from its being: (1) the principal place of business of the employer TG; (2) the domicile of four of the passengers, as well as of the two flight crew members; (3) the primary place of employment for those four passengers; and (4) the state under whose law their survivors have accepted and are receiving workers' compensation benefits. Finally, North Carolina has an interest as: (1) the domicile of the other two passengers; (2) the primary place of their employment; and (3) the state under whose laws their survivors have accepted and are receiving workers' compensation benefits.

    49

    Confronted with this array of contacts, the Court concludes that a New York court would apply the law of New York to determine whether TG and TGA can be held liable to third-parties for claims of contribution. Although the Court does not reach this conclusion easily, it finds a number of reasons for doing so.

    50

    First, at the most general level, is the strong support that is found in the Restatement (Second). "When the injury [has] occurred in a single, clearly ascertainable state and when the conduct which caused the injury also occurred there, that state will usually be the state of the applicable law with respect to most issues involving the tort." Restatement (Second) of Conflict of Laws § 145 comment (e) (1971). Here we find that New York was not only the situs of the "injury" and the place where most of the purportedly negligent conduct occurred,[15] but also the principal [882] place of business of one of the most critical parties, TGA,[16] and the state in which the complex relationships between the various parties are centered. With such an alignment of factors, the force of comment e of section 145 is magnified and the application of New York law is forcefully called for.

    51

    The second reason why the Court believes New York law must be applied here is that such application is called for under the general policies expressed by the New York Court of Appeals in Neumeier v. Kuehner, 31 N.Y.2d 121, 130, 286 N.E.2d 454, 461, 335 N.Y.S.2d 64, 71 (1972). There the court posited a special rule of law for determining whose law should be applied when: (1) the question is whether a driver's guest injured as a result of the driver's negligence may bring a cause of action against the driver and (2) the guest and driver are residents of different jurisdictions. In that situation, the court held that "the applicable rule of decision will be that of the state where the accident occurred but not if it can be shown that displacing that normally applicable rule will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants." Id. at 128, 286 N.E.2d at 460, 335 N.Y.S.2d at 70. The general policy that has been derived from this very specific rule is that the law of the state in which the accident occurred should apply if one of the parties to the action is domiciled in that state, unless application of another state's law would do more to advance the policies underlying the relevant laws of the various jurisdictions involved. In the instant case, where the application of one state's laws and policies is necessarily at the expense of the other states', there is no reason for displacing the general rule that the law of the state in which the injury occurred should be applied, particularly since that state is also where most of the negligent conduct occurred, where TGA has its principal place of business, and where the complex relationships between the parties are centered.

    52

    Given the fairly clear policy set forth in Neumeier, it is not surprising that other courts have applied the Neumeier rationale in a range of different contexts. Most significantly, in Ackerman v. Southern Wood Piedmont, supra, 409 F.Supp. at 472, Judge Neaher relied upon Neumeier and other New York decisions to support his conclusion that New York law should apply in a case involving the same issue as is found in the instant case, as well as similar facts. In Ackerman, Judge Neaher gave greater weight to the fact that the injury and the conduct causing the injury had both occurred in New York and lesser weight to the fact that New Jersey had an interest as the domicile of the plaintiffs, the center of the employment relationship, and the state under whose law workers' compensation benefits were being paid. Id. at 472. Although one might question the reasoning in Ackerman for giving what appears to have been too little consideration to New Jersey's express interest in barring third-party actions against employers, one can hardly disagree with the proposition that a New York court, faced with the same situation, would stress the same contacts emphasized by Judge Neaher and reach the same conclusion. This is true primarily because a New York court would be persuaded, as was Judge Neaher, that New York has an overwhelming "interest in the advancement of its strong public policy to hold a co-tortfeasor, albeit an employer of the plaintiff, responsible to the other tortfeasors for its proportionate share of a plaintiff's injury." Id. at 472.

    53

    [883] Indeed, it is the strength of this interest, effectively created by the holding in Dole v. Dow Chemical Co., supra, 30 N.Y.2d at 152-53, 282 N.E.2d at 296-97, 331 N.Y.S.2d at 390-91, that provides the third and perhaps most compelling argument for the application of New York law. A New York court, confronted with a tort claim based upon events and conduct occurring primarily in New York and knowing the striking stand taken in Dole on the issue of third party contribution, a position diametrically opposed to that of the majority of states, would have no hesitation in applying New York law here. Not to do so would be to undermine one of the primary purposes of New York's rule, that is to deter tortious conduct by attributing liability and damages among joint tortfeasors in proportion to their relative responsibility for injuries and losses, regardless of whether one of the tortfeasors happens to be an employer. This rule after all is one that implements the "tort policy goals of deterrence, equitable loss sharing by all wrongdoers, effective loss distribution over a large segment of society, and rapid compensation of the plaintiff...." Id. at 150, 282 N.E.2d at 295, 331 N.Y.S.2d at 389 (quoting Werner, Contribution and Indemnity, 57 Cal.L. Rev. 490, 516 (1969)). Because Dole itself was a workers' compensation case and because the rule it announced is in great part designed to deter tortious conduct, the Court does not see how in the instant case it can apply the opposite rule of Connecticut when New York has so many critical contacts with the parties and events in question.

    54

    The final argument for applying New York law is that the authority cited by TG and TGA in favor of applying Connecticut law is not apposite. In the first place, the two New York cases cited by TG and TGA as most supportive of their argument involve claims between those directly involved in employment relationships rather than third-party contribution claims brought by strangers to such relationships. See O'Brien v. Grumman Corp., 475 F.Supp. 284, 291 (S.D.N.Y.1979) (applying the law of the state where benefits were paid to determine issues raised in employee's direct claim against the employer); In re Estate of O'Connor, 21 A.D.2d 333, 335, 250 N.Y.S.2d 696, 698 (1964) (applying the law of the state where benefits were accepted to determine issues raised by insurer's subrogation claim against deceased employee's estate). As has already been explained, see supra note 12, the determination of which law should be applied to decide the rights of those directly involved in the employment relationships requires consideration of different factors than those that must be weighed when a stranger is involved. Indeed, this point was made expressly in Tuffarella v. Erie Railroad Co., 17 A.D.2d 484, 236 N.Y.S.2d 503, 507 (1962), when the court noted that "the question of whether or not a right of contribution existed must be determined by the law of the place of the accident, whereas questions relating to the injured employee's rights against his employer [are] to be determined by the law of the State whose workmen's compensation law defines and controls the rights and remedies of employee against employer." Consequently, O'Brien and O'Connor are of no real precedential value.

    55

    More importantly, the primary case upon which TG and TGA base their argument for applying Connecticut law, Elston v. Industrial Lift Truck Co., 420 Pa. 97, 216 A.2d 318 (1966), is distinguishable in ways that are so critical that it also is of little or no precedential value. First, with regard to the question of choice of laws, Elston represents the choice of law rules of Pennsylvania as determined by that state's supreme court. There is no reason to believe that New York's choice of law rules would be similarly determined by a New York court, even if uniformity of such rules is one of the most sought-after objectives in this particular field of law. Even though one may admire the Elston court's extraordinary deference to the interests of New Jersey, whose law was ultimately applied, that admiration does not necessarily lead one to the conclusion that a New York court would show similar deference in the same situation, let alone in the much different situation presented in the instant case.

    56

    [884] Second, the laws of Pennsylvania and New Jersey, between which the Elston court had to choose, were not in diametric opposition to one another as are the laws of New York and Connecticut, or North Carolina. Indeed, Pennsylvania and New Jersey both honored the exclusive remedy provisions of their workers' compensation acts. The only difference was that while New Jersey completely barred third-party contribution recovery, Pennsylvania merely limited such recovery to the amount of the employer's liability under the workers' compensation act. Elston, supra, 216 A.2d at 320. As the court said, "In so restricting recovery, Pennsylvania, preserves the limited liability feature of its workmen's compensation act while at the same time giving partial effect to its policy in favor of contribution between joint tortfeasors." Id. The fact that the underlying policies of Pennsylvania were primarily in accord with those of New Jersey was a critical factor in the court's determination that New Jersey law should be applied. Id. 216 A.2d at 324. That factor is not present in the instant case.

    57

    Finally and perhaps most importantly, Elston is distinguishable on its facts. In that case the foreign state, New Jersey, was not just the state under whose law benefits were paid but also the state in which occurred the injury and the conduct that caused the injury. This court has little doubt that a New York court, or the court of any state for that matter, if faced with such an overwhelming combination of significant contacts would have held just as the Pennsylvania court held. However, we are not faced with the same set of facts; rather, we find that while Connecticut is the state under whose laws benefits have been accepted, New York is the state where the deaths and most of the allegedly negligent conduct occurred.[17]

    58

    Thus, Elston is inapposite in three critical ways—on its facts, on the substantive laws, which were in only partial conflict, and on the choice of laws rules that were applied. Thus, even though this court views that case with considerable respect, particularly for its thorough and scholarly analysis, its final result offers little guidance in the instant action.

    59

    In sum, the lack of precedent in support of TG's and TGA's argument for the application of Connecticut, or North Carolina, law and the strong authority and reasoning favoring the application of New York law compel the Court to conclude that New York law should be applied to determine the issue of whether the third-party claims of Garrett and the other defendants ought to go forward. Because New York does permit such claims and does favor a policy of contribution among tortfeasors, including the employer, TG's and TGA's motion for summary judgment with respect to the third-party claims is denied.[18]

    60
    II. TGA's Motion for Summary Judgment with Respect to the Direct Claims of Morgan Guaranty Trust, Boyle, Claydon, and Woodling
    61

    In the four direct actions brought against TGA for the alleged negligence of [885] its flight and maintenance crews, TGA seeks summary judgment on the ground that the workers' compensation statutes of Connecticut and North Carolina apply and that an employer's immunity thereunder protects TGA as well as TG. TGA, in a rather sophisticated argument sets forth two separate theories in support of this immunity defense. The first theory is that TG and TGA were not separate entities for employment purposes but rather a single entity, that TGA was no more than an aviation department of TG, and that, as such, TGA had no purpose other than to carry out a part of TG's business. Because the subsidiary was in effect the alter ego of the parent, concludes TGA, the former is just as immune from suit as is the latter. TGA's second theory of immunity is that all members of its flight and maintenance crews were actually employed by TG, not TGA, and were thus co-employees of the six passengers. As co-employees, argues TGA, these crew members are immune from suit, and if they are immune so must TGA be for it can be found liable only if they, as its agents, are found liable.

    62

    Of course, for the Court to grant this motion for summary judgment, TGA, as the moving party, must demonstrate a complete absence of controversy as to all facts material to the resolution of the above legal issues. Fed.R.Civ.P. 56; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). In determining whether this requirement has been satisfied, the court must draw all reasonable inferences against the moving party. American International Group, Inc. v. London American International Corp., 664 F.2d 348, 351 (2d Cir.1981). If the party opposing summary judgment "generates uncertainty as to the true state of any material fact, the procedural weapon of summary judgment is inappropriate." Id. (quoting Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 444-45 (2d Cir.1980). Unfortunately for TGA, just such uncertainty has been raised by the plaintiffs.

    63

    On the one hand, the facts upon which TGA bases its two theories are rather more compelling than is usually the case when this type of defense is put forth. For example, it appears that TGA transported primarily, if not solely, TG employees on official TG business. Furthermore, TGA was originally, and is once again, a mere aviation department of TG. Indeed, it seems likely that TGA would have been a department at the time of the accident had its separate incorporation not been caused by the need to comply with federal laws and regulations having to do with a consideration extraneous to this case—the citizenship of corporate stockholders. See supra note 1. Even then, all of TGA's shares were indirectly owned by TG through a voting trust, which TG established with FAA approval. Moreover, it appears that all of TGA's flight and maintenance crew members were paid by TG. Finally, TGA apparently paid no income taxes, and its expenses were passed directly through to TG and appeared on TG's consolidated financial statement.

    64

    On the other hand, there does not appear to have been a complete integration of the two entities, and certain aspects of the complex of relationships between TG, TGA, and the flight and maintenance crew members remain at issue at this point. The most significant of these is the overwhelming amount of documentary evidence suggesting that the ownership and operation of the JetStar and other TGA aircraft were exclusively in the hands of TGA and that neither TG nor its executives had the right to exercise any control over the operation of TGA flights other than to determine their destinations and desired times of arrival. In addition, TGA appears to have held itself out to the public as a separate corporate entity in a number of ways. For example, its name alone appears on a number of FAA and Department of Labor documents which indicate that TGA was the sole operator of the various aircraft and that it had its own personnel. Finally, there is a question of fact concerning the nature of the work of the flight and maintenance crews as it related to the overall business purpose of first TGA and second [886] TG. If TGA's business purpose was the operation of aircraft and TG's business purpose the discovery and mining of minerals, then one question that may have to be answered is the extent to which the flight and maintenance crews of TGA were furthering the business of TG, as distinct from that of TGA, at the time of the flight.

    65

    As the discussion below brings out further, these unanswered questions require the Court to submit the dual aspects of TGA's defense to a full evidentiary hearing. Thus, even if we assume that TGA is correct in its summary of the law with regard to its theories of merged entities, joint employment, and vicarious liability, TGA's motion for summary judgment must be denied.

    66
    A. Law of Connecticut and North Carolina Applies
    67

    Although plaintiff Boyle contends that New York law applies to these issues, the three other plaintiffs and TGA agree that the law of Connecticut and North Carolina applies. In this instance, the Court has little difficulty in determining that it is the law of the latter two states that is applicable. Here, we do have the type of claim—one brought by the survivor directly against the employer's subsidiary (and perhaps alter ego)—that is covered by comment b to section 184 of the Restatement (Second) of Conflict of Laws. See supra note 12. The plaintiffs, having chosen to receive benefits under the compensation laws of Connecticut and North Carolina, respectively, must accept the immunity conditions that are laid down by the statutes and case law of those two states. Restatement (Second) of Conflict of Laws § 184 comment b (1971); see also O'Brien v. Grumman Corp., 475 F.Supp. 284, 291 (1979).

    68
    B. Should TGA and TG Be Considered as a Single Entity?
    69

    TGA's initial claim that it was merely the alter ego of TG is an extremely difficult one to prove. Whether one looks at this contention as an effort to pierce the corporate veil or as an argument that the parent and subsidiary were actually so intertwined as to be a single entity, it represents a legal theory that has not met with a warm reception in the courts of most states, including those of Connecticut, North Carolina, and New York. See, e.g., Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 662 (6th Cir.), cert. denied, 444 U.S. 836, 100 S.Ct. 71, 62 L.Ed.2d 47 (1979) (applying Kentucky law); Peterson v. Trailways, Inc., 555 F.Supp. 827, 833-34 (D.Colo.1983); Stoddard v. Ling-Temco-Vought, Inc., 513 F.Supp. 314, 326 (C.D. Cal.1980) (applying Texas law), remanded on other grounds sub nom. Ashland v. Ling-Temco-Vought, Inc., 711 F.2d 1431 (9th Cir.1983); O'Brien v. Grumman Corp., 475 F.Supp. 284, 292-93 (S.D.N.Y. 1979) (applying Georgia law); Samaras v. GATX Leasing Corp., 75 A.D.2d 890, 428 N.Y.S.2d 48, 49 (2d Dep't 1980); Phillips v. Stowe Mills, Inc., 5 N.C.App. 150, 167 S.E.2d 817, 819-20 (1969); Daisernia v. Co-operative G.L.F. Holding Corp., 26 A.D.2d 594, 270 N.Y.S.2d 542, 543 (3d Dep't 1966); Doe v. Saracyn Corp., 138 Conn. 69, 82 A.2d 811, 816 (1951); Wheeler v. New York, N.H. & H.R. Co., 112 Conn. 510, 153 A. 159, 160 (1931). But see, e.g., Wells v. Firestone Tire & Rubber Co., 97 Mich.App. 790, 296 N.W.2d 174, 176-77 (1980); Coco v. Winston Industries, Inc., 330 So.2d 649, 654-55 (La.App.1975), rev'd on other grounds, 341 So.2d 332 (1976). The reluctance with which the alter ego theory is greeted stems from a rather straightforward principle of fairness: that one who has gained the advantages of separate incorporation must also be willing to accept the consequences of such incorporation.[19] [887] Hence, courts have developed the general rule that "separate artificial corporate personalities are usually disregarded only when the corporate device is used to defraud creditors, create a monopoly, circumvent a statute or for other similar reasons." Boggs, supra, 590 F.2d at 662.

    70

    Typically no such "similar reasons" for piercing the corporate veil are presented in a workers' compensation case involving the issue of parent-subsidiary immunity. This is true because while almost all states provide immunity for the employer and most provide immunity for co-employees, e.g., Conn.Gen.Stat.Ann. § 31-293a (1972); N.Y. Workers' Comp. Law § 29(6) (McKinney Supp.1982); N.C.Gen.Stat. § 97-9 (1982), almost all also have a strong policy of preserving the employee's rights to bring tort claims against any culpable parties who are "strangers" to the employment relationship. See, Boggs, supra, 590 F.2d at 659-60; O'Brien, supra, 475 F.Supp. at 293; 2A Larson, Workmen's Compensation Law § 72.33, at 14-179 (1982) (criticizing those courts that have committed "the cardinal sin of forgetting the pervading rule that valuable common-law rights shall not be deemed destroyed by a statute except by clear language"). With such a balance of countervailing policies on the line it is not surprising to find courts concluding that absent exceptional circumstances a parent and subsidiary will be treated as distinct legal entities when sued by the employee or his survivors, even if the parent owns all of the stock of the subsidiary, has the right to control it, and has the same directors as does the subsidiary. See, e.g., Stoddard, supra, 513 F.Supp. at 326; Thomas v. Maigo, 37 A.D.2d 754, 323 N.Y. S.2d 106 (4th Dep't 1971). "Implicit in these decisions is the suggestion that the tort system should not deny recovery in an increasingly concentrated economy to an injured employee due to the fortuitous circumstance that the tortfeasor is not a stranger but is controlled by the same business enterprise that controls his immediate employer." Boggs, supra, 590 F.2d at 662.

    71

    The courts of Connecticut and North Carolina seem to have reached a similar conclusion. In Wheeler v. New York, N.H. & H.R. Co., 112 Conn. 510, 153 A. 159, 160 (1931), Connecticut's Supreme Court of Errors not only refused to treat as a single entity a subsidiary and a parent but also indicated that it was "in full accord" with an earlier Massachusetts holding that neither the identity of stockholders nor the parent corporation's complete control of the subsidiary "operated to create a merger of the corporations into one or make either the alter ego of the other, and that they were to be treated as distinct entities...." Id. In a later workers' compensation case, Doe v. Saracyn Corp., 138 Conn. 69, 82 A.2d 811, 816 (1951), the same court held that a lower court had been correct in refusing to instruct the jury that the real employer was a merged entity consisting of the corporation for which the plaintiff worked and the person who maintained virtually complete control and ownership of that corporation. Reaching this conclusion despite the fact that the individual defendant managed the corporation's operations and had hired the plaintiff and paid him his wages, the court explained its conclusion as follows:

    72
    The defendant was a legal entity with separate rights and powers conferred and duties and liabilities imposed by law. Under certain circumstances, the corporate entity may be disregarded, but the claims of proof do not warrant such action in this case. The entity will not be ignored where those in control have deliberately adopted the corporate form in order to secure its advantages.
    73

    Id. 82 A.2d at 816 (citations omitted).

    74

    In the one relevant North Carolina case, Phillips v. Stowe Mills, Inc., 5 N.C.App. 150, 167 S.E.2d 817, 819-20 (Ct.App.1969) the court used the same rationale to deny a parent corporation the immunity accorded [888] its subsidiary. The court reached this conclusion after conducting a thorough examination of the facts, which resulted in the ultimate finding that the parent could not be considered as the employer. This conclusion was reached despite a finding that the parent and subsidiary "had common administrative offices, a common purchasing agent, a common personnel department and a common sales organization ...." Id. 167 S.E.2d 817 at 819. The court found that these factors were offset by the fact that "the plaintiff was performing work under the supervision and control of" the subsidiary, as well as by the fact that the two corporate entities were treated separately for all accounting and tax purposes. Id.

    75

    The strong language of Wheeler, Doe, and Phillips suggests that for TGA to succeed with its alter ego theory,[20] it must prove a complete merger of TG's and TGA's corporate structures, accounting and tax procedures, operational control, and business purposes. However, as was indicated earlier, some of these key characteristics of the two corporations remain at issue. Most significantly, there remains a serious question as to which of the two entities really had operational control over the flight and maintenance crews. With such factual matters still in dispute, the Court has no choice but to submit this aspect of TGA's defense to a jury.

    76
    C. Whether TG Was Either the Sole or Joint Employer of the Flight and Maintenance Crews Is an Issue for the Jury
    77

    TGA's second theory of immunity rests upon the premise that TG was either the sole or joint employer of the flight and maintenance crews that worked out of TGA's Westchester facilities. Assuming the validity of that premise, TGA argues, the crew members are co-employees of the plaintiffs and thus immune from tort liability under the workers' compensation laws of Connecticut, Conn.Gen.Stat.Ann. § 31-293a (1972), and North Carolina, N.C.Gen. Stat. § 97-10 (1979). In addition, TGA contends, such immunity necessarily extends to TGA because it cannot be held vicariously liable if its agents, the crew members who are alleged to have been actively negligent, are immune from suit.

    78

    The problem with this argument in the context of a motion for summary judgment is that it requires the Court to find as a matter of law that TG was the employer of the crew members; yet, such a finding is one of fact, which should be left to the [889] jury. See, e.g., Bradford v. Air La Carte, Inc., 79 A.D.2d 553, 434 N.Y.S.2d 17, 19 (1st Dep't 1980); Lewis v. Barnhill, 267 N.C. 457, 148 S.E.2d 536, 544 (1966); Doe v. Saracyn Corp., 138 Conn. 69, 82 A.2d 811, 816 (1951). That is particularly true here, where there is conflicting evidence as to who the employer actually was. For example, while it appears that TG originally hired the crew members, carried them on its payroll, and had the right to terminate them, TGA appears to have had the right to control how they carried out their work. That right to control has consistently been held to be the most critical, if not the determinative, factor in deciding who a worker's employer is. See, e.g., Lewis v. Barnhill, 267 N.C. 457, 148 S.E.2d 536, 543 (1966); Parsons v. M.J. Daly & Sons, 114 Conn. 143, 158 A. 216, 218 (1932). Given this array of facts, it would be impossible to grant a motion based on this theory of employment. Which of the two corporate entities was the employer of the flight and maintenance crews is a matter that will have to be determined by the jury.

    79

    In denying this aspect of the motion, the Court reserves decision upon two difficult, underlying issues of law that require additional briefing. At the most technical level, the Court is uncertain whether the crew members who worked with TGA for several years can truly be viewed as having been "temporarily lent" within the meaning of Connecticut's loaned employee provision, Conn.Gen.Stat.Ann. § 31-292 (1982),[21] and also whether enactment of that provision has in any way limited the defense of joint employment under Connecticut law. At a more general level, the Court is not sure why in this particular case any immunity covering the crew members as co-employees would necessarily extend to TGA if it and TG were found to be separate entities. In other words, there is a need for further briefing on the question of whether TGA, as the alleged owner and operator of the JetStar, has incurred any liability independent of that which it may have incurred vicariously through the acts of the flight and maintenance crews.

    80

    Finally, by leaving these legal issues unresolved, the Court does not mean to imply that TGA's theories have generally been rejected by courts. Indeed, just the opposite is true. The concepts of the loaned employee and of joint employment appear to have gained acceptance not only on a national scale, see generally 1C Larson, Workmen's Compensation Law §§ 48.00— 48.40 (1982), but also in Connecticut and North Carolina, see, e.g., Lewis v. Barnhill, supra, 148 S.E.2d at 542 (loaned employee); Leggette v. J.D. McCotter, Inc., 265 N.C. 617, 144 S.E.2d 849, 852 (1965) (joint employers); De Paolo v. Cummins Diesel Engines of Connecticut, 22 Conn.Sup. 163, 164 A.2d 301, 302 (1960) (loaned employee); Parsons, supra, 158 A. at 218 (loaned employee). What the Court needs to ascertain, however, is the applicability of these concepts to the particular and unusual facts of this case.

    81
    CONCLUSION
    82

    For the reasons outlined in the discussion above, TG's and TGA's motion for summary judgment based upon the workers' compensation laws of New York, Connecticut, and North Carolina is denied, and trial of the matters discussed herein shall be scheduled as soon as the Court's trial calendar permits.

    83

    SO ORDERED.

    84

    [1] Together with: 82 Civ. 0816 (GLG), 82 Civ. 1042 (GLG), 82 Civ. 3045 (GLG), 82 Civ. 3640 (GLG), 82 Civ. 3911 (GLG)—82 Civ. 3913 (GLG), 82 Civ. 4997 (GLG), 82 Civ. 5278 (GLG), 82 Civ. 6297 (GLG), 82 Civ. 6459 (GLG), 83 Civ. 1082 (GLG)

    85

    [2]In 1973 a Canadian corporation purchased 30.4% of TG's outstanding shares. At the time eligibility for registration of an aircraft with the FAA turned in part on the requirement that the aircraft's owner must be a United States citizen, 49 U.S.C. § 1401(b)(1) (1970) (amended in 1977 & 1978). In addition, a corporate owner could be deemed a United States citizen only if no more than 25% of its outstanding shares were owned by foreign citizens, 14 C.F.R. § 47.2 (1973). Thus, the Canadian purchase of TG shares compelled TG to restructure its relationship with its aviation department in order for TG to maintain both maximum accessibility to a fleet of corporate jets and compliance with the FAA regulations. With FAA approval, TG created TGA as a Delaware corporation. In exchange for 100% of the authorized shares of TGA, TG assigned title to each of its aircraft to TGA, which then transferred, pursuant to a voting trust agreement, all of the outstanding stock of TGA to Texas Commerce Bank N.A.

    86

    Thereafter until 1982, although TG and TGA observed some of the formalities of separate corporations, the two entities for the most part interacted with one another much as they had when TGA was merely the aviation department of TG. Then in 1982, shortly after TG's Canadian assets were spun off and TG found no continuing need for TGA's separate incorporation, TG dissolved TGA, reacquired title to all the aircraft, and returned TGA to its original status of aviation department.

    87

    [3] In sixteen of the actions affected by this motion, the plaintiff is the surviving spouse of one of the decedents and is suing as executrix of his estate. In the remaining two actions, the plaintiff-executor is Morgan Guaranty Trust Company of New York. Nevertheless, for the sake of simplicity, the plaintiffs are referred to throughout the opinion as the "survivors."

    88

    [4] It should be noted that six of the survivors have received additional compensation from TG and TGA in exchange for signed releases relieving those two corporations from any liability for the crash other than that incurred under the relevant workers' compensation laws. The adequacy of that additional compensation and the validity of the releases are the subject of another motion for summary judgment, which the Court treats in a separate memorandum decision published simultaneously with this opinion.

    89

    [5] The instant motion in no way concerns this action by TGA.

    90

    [6] The actions against the four corporate defendants, all filed as related actions, can be identified by the docket numbers 82 Civ. 816, 82 Civ. 2316, 82 Civ. 3045, 82 Civ. 3911, 82 Civ. 3912, 82 Civ. 3913, and 82 Civ. 5278. The actions against the United States, also filed as related actions, can be identified by the docket numbers 82 Civ. 6296, 82 Civ. 6297, 82 Civ. 6459, 83 Civ. 1045, 83 Civ. 1082, 83 Civ. 1083, and 83 Civ. 1084.

    91

    [7] As used in this opinion, the term "contribution" refers both to contribution and to any implied right of indemnity, but not to any express, contractual right of indemnity.

    92

    [8] These actions can be identified by the docket numbers 82 Civ. 3640, 83 Civ. 4997, 83 Civ. 3662, and 83 Civ. 3663.

    93

    [9] Although defendant Garrett does argue that Connecticut law is unclear on this point, the Court finds no reason or authority for giving any other interpretation of Connecticut law than that uniformly stated in the opinions of Connecticut's lower courts and the U.S. District Court of Connecticut. See infra p. 879 & note 10.

    94

    [10] In Professor Larson's oft quoted words: "Perhaps the most evenly-balanced controversy in all of compensation law is the question of whether a third party in an action by the employee can get contribution or indemnity from the employer, when the employer's negligence has caused or contributed to the injury." 2A Larson, Workmen's Compensation Law § 76.11, at 14-561 (1982).

    95

    [11] To be accurate, two additional points should be noted. First, in the case of Connecticut, there has been a clear decision not to adopt or create any right of contribution among tortfeasors, even outside of the workers' compensation context. See, e.g., Gomeau v. Forrest, 176 Conn. 523, 409 A.2d 1006, 1007 (1979). Second, North Carolina has decided that in cases involving an actively negligent employer and a passively negligent third party the total liability of the third party to the employee should be reduced by the amount of compensation already paid by the employer's workers' compensation insurance. Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 75 S.E.2d 768, 773 (1953). Although from the third party's point of view this result has some of the same effects that contribution would, it is not the same from the perspective of the employer or from that of the employee, who is merely being deprived of a windfall recovery equivalent to the value of his workers' compensation benefits.

    96

    [12] The Court disagrees with the contention of Garrett and the other defendants that the situs of the crash was in no way fortuitous. While it is true that the round trip began and ended in New York and that much of the flight in both directions was over that state, the accident well might have occurred in Canada during either the takeoff or landing at Toronto, or in Connecticut, which abuts the Westchester County Airport to the northeast.

    97

    [13]TG and TGA would have the court raise to a position of preeminence the latter of these two factors—the state under whose laws workers' compensation benefits have been accepted. This the Court is unwilling to do, though it does accord that factor considerable significance because it points to the state that has the greatest interest in having upheld the exclusive remedy provisions of its workers' compensation act. However, to accord that factor preeminence would be to downplay unjustifiably New York's equally important interest in subordinating such exclusive remedy provisions to its rule in favor of contribution. To single out either of these two interests and give it preeminence by ruling that one type of contact is determinate would be to avoid confronting the true conflicts problem presented by this case.

    98

    Nor is TG and TGA's position on this matter strengthened by their reference to the Restatement (Second). The key sentence in comment b, upon which they rely, reads: "A person who accepts an award under the workmen's compensation statute of a given state may justly be held bound by the provisions of that statute insofar as immunity from tort and wrongful death liability is concerned." Restatement (Second) § 184 comment b (1982) (emphasis added). Although this statement appears at first glance to lend credence to the position taken by TG and TGA, it is not intended to be applied to the claims of third-parties who were never part of the employment relationship. This limitation is suggested not only by the words of the statement itself, but also by a full reading of both comment b and comment c, which reveals that the latter comment is the one applicable to third-party claims. Comment c directs one trying to decide which law should apply to determine an employer's immunity from such claims to refer to section 173, which in turn directs one to the four factors listed under section 145. Thus, the test that this Court applies is justified not only logically, because a stranger should not automatically be bound by the law of the state where the employment relationship is centered, but also more formally by the dictates of the Restatement (Second) itself.

    99

    [14] Although this factor overlaps the others in part, it needs to be given a separate place of its own. Most critically, New York was the center of the relationships between the parties in that it was the state from which the passengers departed and to which they were to return and the state from which TGA made its critical contacts with several of the five defendants and contracted to have the JetStar modified, tested, and inspected.

    100

    [15] Among the critical aspects of the alleged negligent conduct that occurred in New York were the following: the maintenance of the JetStar, the modification, installation, inspection, and repair of the GCU's, the giving of maintenance and flight instructions to the flight crew on the day in question, and the operation of the JetStar during much of the flight itself.

    101

    [16] TG and TGA mention in passing that Garrett and the other three corporate defendants have principal places of business in states with laws that bar third-party contribution claims against the employer, just as do Connecticut and North Carolina. Little or no significance can be attributed to this fact, however. Because these corporate defendants are truly strangers to the relevant employment relationships, the workers' compensation laws of the states in which the defendants have their principal places of business are of no relevance to the present case. Furthermore, even if this factor were of some significance, it would remain critically offset by the presence of TGA's principal place of business in New York, as well as by the several other contacts that New York has with the parties and events in question.

    102

    [17] Although there have been later cases relying upon Elston that involved fact patterns much closer to that of the instant case, see, e.g., Colombo v. Republic Steel Corp., 448 F.Supp. 833, 834 (W.D.Pa.1978) (applying New York's contribution rule because the plaintiff resided and received benefits there, even though Pennsylvania was the site of the injury and the conduct causing that injury), this Court neither is bound by those decisions nor believes that they are supported by a proper reading of Elston. To interpret that case as standing for the proposition that the law to be applied is that of the state where benefits are paid is to ignore the extraordinary pains taken by the Elston court to justify and circumscribe its holding.

    103

    [18] The Court does not foreclose the possibility of reconsidering this issue in the event that TG and TGA prove at trial that for workers' compensation purposes TGA should be viewed as a department of TG rather than as a separate corporation. See infra pp. 885-887. Such a finding could arguably diminish the importance of New York being TGA's principal place of business. Although the lessening of the importance of that contact might not be enough to swing the balance so that the application of Connecticut or North Carolina law is required, the Court prefers to await the outcome of trial before considering the issue, particularly since it will need to be more fully briefed before it is decided.

    104

    [19] As applied in the workers' compensation context, this principle has been stated most succinctly by the Sixth Circuit in Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 662 (6th Cir.), cert. denied, 444 U.S. 836, 100 S.Ct. 71, 62 L.Ed.2d 47 (1979), in which it is noted that: a business enterprise has a range of choice in controlling its own corporate structure. But reciprocal obligations arise as a result of the choice it makes. The owners may take advantage of the benefits of dividing the business into separate corporate parts, but principles of reciprocity require that courts also recognize the separate identities of the enterprises when sued by an injured employee. See Fletcher, Fairness and Utility in Tort Theory, 85 Harv.L.Rev. 537 (1972).

    105

    [20] Reserving final decision on the technical issue of whether a Connecticut court would ever recognize the alter ego theory in the workers' compensation context, the Court proceeds on the twin assumptions that a Connecticut court would do so if the defense were raised in an exceptional case and that the instant case does present exceptional circumstances. While the reasoning in Phillips, supra, 167 S.E.2d at 819, indicates that North Carolina has accepted the alter ego theory as a matter of law and is willing to look at the facts of each case to determine the applicability of the theory, the general language of Wheeler and Doe, see supra pp. 886-887, taken by itself, sounds like Connecticut's outright rejection of the theory except in cases of fraud or wrongdoing. Nonetheless, other language in Wheeler, supra, 153 A. at 160, suggests that if a subsidiary could show "a complete identity of interests" between itself and its parent, then a Connecticut court would recognize the theory as a matter of law. This conclusion is supported, moreover, by the general conclusion of Professor Larson that the range of fact patterns from which this problem arises "is so great that any generalization of a rule is impractical ....", 1C Larson's Workmen's Compensation Law § 72.40 at 14-187 (1982). Finally, it should be noted that even within a single state courts have come to opposite conclusions as to whether an alter ego defense can be rejected as a matter of law or requires careful factual analysis. Compare, e.g., Colin v. Altman, 39 A.D.2d 200, 202, 333 N.Y.S.2d 432, 433 (1st Dep't 1972) ("[T]he corporate veil is never pierced for the benefit of the corporation or its stockholders.") with Daisernia, supra, 26 A.D.2d at 595, 270 N.Y.S.2d at 543 (3d Dep't 1966) (court refused to enter judgment against defendant because it could not conclusively determine that he would be unable to establish his alter ego defense at trial). Thus, at least initially, the Court determines that the better approach is to consider this an exceptional case, because of the legalities which for a period of time compelled the separate existence of TGA, and to submit to the jury the question of whether TG and TGA were so intertwined that they should be considered as one entity for workers' compensation purposes.

    106

    [21]That section reads:

    107

    When the services of a worker are temporarily lent or let on hire to another person by the person with whom the worker has entered into a contract of service, the latter shall ... be deemed to continue to be the employer of such worker while he is so lent or hired by another.

    108

    Conn.Gen.Stat.Ann. § 31-292 (1983).

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