Texas Supreme Court Will Decide Exclusive Remedy Dispute

The Texas Supreme Court agreed on March 31, 2017, to decide a dispute between an injured employee and his employer over whether the employee’s suit against the employer is barred by the exclusive remedy defense. The case, Arnold v. Gonzalez, No. 15-0729, will be set for oral argument by the court in the near future.

The legal issues in dispute turn on whether Texas law recognizes the “dual capacity” doctrine for employer liability. The dual-capacity doctrine is the theory that a workers’ compensation subscriber can be liable in tort to an employee “if it occupies, in addition to its capacity as an employer, a second capacity that confers on it obligations independent of those imposed on it as an employer.” The Texas Supreme Court recognized the doctrine, but declined to decide whether it applied to Texas workers’ compensation cases in Payne v. Galen Hosp. Corp., 12 28 S.W.3d 15, 20 (Tex. 2000).

Gonzalez was seriously and compensably injured while working near a conveyer belt in a produce packaging warehouse operated by AW in Weslaco, Texas. Arnold is employed as the President of A-W and owns the company with his wife. Arnold contended that while he individually owns the warehouse, he leases it to A-W in exchange for annual rent payments. He argued that A-W is responsible for maintenance and care of the property under the oral lease. A-W also owns the equipment in the warehouse, including the conveyor-belt system used to process produce.

After collecting workers’ compensation benefits, Gonzalez sued Arnold in his capacity as A-W’s President and owner. Gonzalez asserted premises liability claims based on Arnold’s alleged failure to maintain the property and equipment that he owned and controlled. The trial court denied Arnold’s motion for summary judgment based on the Act’s exclusive-remedy provision. The jury found that Gonzalez, Arnold, and A-W were negligent and attributed responsibility as follows: 65% to Arnold, 20% to A-W, and 15% to Gonzalez. The jury also awarded Gonzalez $2,615,000 in damages. Arnold appealed.

The Corpus Christi Court of Appeals affirmed the judgment. The court concluded that Arnold failed to preserve his complaints by obtaining a jury finding that he was acting in the course and scope of his employment with A-W in connection with Gonzalez’ injury.

Therefore, by not requesting a jury question regarding whether he was acting in furtherance of AW’s interests, Arnold has not preserved his affirmative defense that the workers’ compensation exclusive remedy provision applies in this case. See Abraxas Petroleum Corp., 20 S.W.3d at 763; see also Warnke, 358 S.W.3d at 343 (“The [TWCA’s] exclusive remedy provision is an affirmative defense that the defendant must plead and prove.”) (citing Exxon Corp., 842 S.W.2d at 630-31; AMS Const. Co., 357 S.W.3d at 43).

The case presents an important question in Texas law, in part because of the Texas non-subscription feature. If the exclusive remedy doctrine does not protect an employer from liability in a case like this, employers have less incentive to obtain workers’ compensation coverage and greater incentive to attempt to protect themselves with a non-subscriber plan.

We expect the Arnold case to be set for oral argument in May or June 2017. Arnold is the second case the court has accepted this term that touches upon workers’ compensation issues.

On March 10, 2017, the court granted a petition for review in Painter v. Amerimex Drilling, No. 16-120. Painter involves a travel issue that is regularly seen in workers’ compensation cases, although it is not, itself, a workers’ compensation case. The case will give the Supreme Court the opportunity to determine whether that travel issue should be treated differently from the way it would be handled in a workers’ compensation context, or similarly to comp.

In July 2007, three members of a drilling crew from Amerimex had been assigned to work the night shift on an oil and gas drilling rig at the Longfellow Ranch in Pecos County. The drilling site was remote. The company established a bunkhouse near Fort Stockton, some 30 miles from the drilling site. The Contract provides for the Driller to be paid $50.00 per day for transporting the Amerimex Crew between the drilling site and the bunkhouse as a Driver Bonus.

On July 28, 2007, after the Amerimex Crew’s shift ended, Burchett was driving the Crew from the rig site to the bunkhouse. Burchett fell asleep while driving, truck rolled over, and all of the crewmembers were ejected. Two crewmembers died.

The Division of Workers’ Compensation determined Burchett’s injuries were covered by WC “because he was paid to transport his crew to and from the worksite and the company bunkhouse. Moreover, delivering a crew to the worksite each day directly furthered the business interests of Amerimex.”

Representatives of the deceased employees sued Amerimex and the driver, Burchett. The trial court granted Amerimex’s summary judgment motion on the sole ground that Amerimex was not vicariously liable for any negligence of Burchett. The court of appeals affirmed.

Vicarious liability is the doctrine used in law to determine an employer’s liability for the actions of its employees. The Division of Workers’ Compensation found Burchett to have been acting in the course and scope of his employment for purposes of receiving benefits, while the trial court and court of appeals found that he was not acting in the course and scope of his employment for purposes of establishing Amerimex’s liability to the plaintiffs.