Judicial Estoppel Bars NY Defendants’ Exclusive Remedy Defense

In a divided decision, a New York appellate court held that where a Manpower, Inc. temporary worker was assigned to conduct inventory control at a pharmaceutical plant operated by two companies, and he sustained injuries there in a workplace accident, the companies could not defend the workers’ compensation claim on the basis that the worker was not their employee and then subsequently try to utilize the exclusive remedy defense in a civil action filed against them by the worker [Walker v. GlaxoSmithKline, LLC, 2022 N.Y. App. Div. LEXIS 489 (Jan. 27, 2022)]. The doctrine of judicial estoppel prevented them from taking two such inconsistent positions and a trial court erred when it refused to grant the plaintiff’s motion to bar the affirmative defense.

Background

In 2011, plaintiff was allegedly injured while working at a pharmaceutical plant owned and operated by defendants GlaxoSmithKline, LLC and Stiefel Laboratories, Inc. Plaintiff filed a claim for workers’ compensation benefits, wherein he listed Manpower, Inc. as his employer. GlaxoSmithKline subsequently filed a C-2 form reporting plaintiff’s injury and naming Old Republic Insurance Company as its carrier. Manpower likewise filed a C-2 form and named New Hampshire Insurance Company as its carrier.

Old Republic controverted the claim on the basis that plaintiff was an employee of Manpower and advised the Board that Sedgwick CMS, New Hampshire Insurance Company’s claim servicer, had already paid benefits to plaintiff. Following a hearing in 2012, a WCLJ decided, among other things, that Old Republic be discharged and removed from notice of the proceeding.

Plaintiff thereafter commenced the instant civil action in 2014 against multiple parties, including GlaxoSmithKline and Stiefel Laboratories. The defendants defended on exclusive remedy grounds and ultimately the trial court granted their motion for partial summary judgment. Plaintiff appealed.

Judicial Estoppel?

On appeal, the plaintiff argued that the defendants should be barred from relying upon the exclusive remedy rule as an affirmative defense based upon judicial estoppel. The majority of the appellate court noted that in the workers’ compensation case, the defendants had taken the position that the plaintiff was an employee of Manpower, that the claim should be the responsibility of Sedgwick, Manpower’s workers’ compensation carrier, and that there was no employer/employee relationship between the plaintiff and the defendants. In a subsequent letter to the Board, counsel for Old Republic reiterated that plaintiff was an employee of Manpower and not an employee of defendants and that Sedgwick, as the proper carrier, already paid benefits to plaintiff.

Defendants Were Successful in the Comp Proceeding

The Court continued that it was clear from the record that the defendants, through Old Republic, consistently advanced in the workers’ compensation case the theory that the plaintiff was not their employee. Old Republic, as the workers’ compensation carrier for defendants, was subsequently discharged from the workers’ compensation case. As such, stressed the majority, the defendants achieved the desired result after asserting the lack of an employer-employee relationship.

Now, said the appellate court majority, the defendants had taken a contrary position—i.e., that the plaintiff was employed by the defendants as a special employee and, therefore, his sole remedy for compensation was to pursue workers’ compensation benefits. Allowing defendants to argue in this action that the plaintiff was their employee, after they had disavowed an employer-employee relationship in the workers’ compensation proceeding and received a benefit from that position, would subvert the equitable policy behind the doctrine of judicial estoppel, said the majority. Since judicial estoppel precluded the defendants from relying on exclusive remedy defense, the plaintiff’s motion to dismiss the affirmative defense should have been granted. The trial court should not have granted partial summary judgment to the defendants.

Dissenting Opinion

Judge Clark dissented, arguing in relevant part that no transcript of the trial court’s hearing existed, it was not clear that the WCLJ actually issued a decision on the issue of the employer/employee relationship, and further, that the positions taken by the defendants were not so incompatible as to give rise to judicial estoppel. Here, the plaintiff was hired by Manpower and assigned to conduct inventory control at a pharmaceutical plant owned and operated by defendants. Thus, the plaintiff was the special employee of the defendants, not an employee directly employed by the defendants. Judicial estoppel, contended Judge Clark, required true inconsistency between the positions taken by the defendants and that, said the judge, was not present in this case.