June 5, 2023
On June 5, 2023, New Jersey’s Supreme Court issued a decision in the case of Pantano v. New York Shipping Association, addressing the common law “borrowed-employee doctrine,” which arises in cases where a borrowed or loaned employee’s negligence is asserted to have caused harm to a third-party, and a plaintiff asserts vicarious liability against the borrowed employee’s original – or “general” employer.
This particular dispute arose out of a November 19, 2013 accident in which the plaintiff – a mechanic employed by Container Services of New Jersey (CSNJ) – was injured at work while attempting to move a heavy piece of industrial equipment.Another co-worker tried to help plaintiff move this heavy piece of equipment – known as a “genset” – into place using a forklift. As the co-worker did this, a chain slipped and the genset crushed the plaintiff’s left foot, ultimately resulting in several surgeries, followed by the foot’s amputation.
Plaintiff filed suit, naming, among others, his own employer CSNJ, as well as the landlord for the port property on which the accident occurred, and the employer of his co-worker, Marine Transport, Inc. (MT). MT moved for dismissal at the close of discovery, arguing that it did not employ the co-worker at the time of the accident, even though he was on MT’s payroll at that time, because he was a “borrowed servant” or “special employee” working for CSNJ at the time of the accident.
Ultimately, MT’s motion for summary judgment was denied due to the court finding sufficient factual disputes to submit the matter to a jury. At trial, a verdict was awarded to the plaintiff, but a motion for directed verdict on the “borrowed employee” issue was granted, with judgment being awarded to MT on that point. On appeal, the Appellate Division vacated that order, and reinstated a verdict in favor of the Plaintiff, including on the claim of vicarious liability as to MT.
The Supreme Court accepted certification of the question. The “borrowed-employee” doctrine, also known as the “borrowed servant” or “special employee” doctrine, arises where an employer (the “general employer”) who arranges or loans one of its workers to another employer (the “special employer”) and that loaned worker negligently injuries someone while working for the special employer. The legal question raised in this context is whether the borrowed employee’s negligence can be imputed vicariously to the general employer, the special employer, or both.
In 2004, the Supreme Court decided the matter of Galvao v. G.R. Robert Construction Co., 179 N.J. 462 (2004), creating a two-part test to determine whether a general employer could be vicariously liable for a borrowed employee’s negligence. First, the Court is to look at the question of “control,” which is demonstrated by showing “on-spot control,” or directing not only what shall be done, but how it shall be done. Alternatively, if the employer has “broad” control based on the method of payment, furnishing equipment, or the right of termination, control may be found.
If a general employer is demonstrated to have control of the borrowed employee, the Court then looks at the “business furtherance” prong of the test. This requires a demonstration that the work being done by the borrowed employee is furthering the general employer’s business, by showing first that the work is within the general contemplation of the general employer, and second, that the general employer derives an economic benefit by loaning its employee.”
The Pantano Court decided that the question of whether a general employer can be vicariously liable under this doctrine is presumptively a question of fact, for a jury to determine. The determination of a tortfeasor’s employment status in typical vicarious liability matters is similarly treated as a jury question, and the Court ruled that the Galvao decision was not intended to change that presumption. The Court noted that there may be cases where the evidence is so one-sided that an appropriate motion for summary judgment may be made – but where, as in this case, there are genuine questions of material facts regarding the status of a borrowed employee, the issue is properly presented to a jury.
For more information on the “borrowed employee” doctrine or on this decision, please feel free to contact the author, Tom Emala, at temala@mkcilaw.us.com.