Brief Fact Summary. The Ramsey County District Court (Minnesota) granted judgment in favor of the Plaintiff employee, Lynder Lambertson (Plaintiff) in the employee’s personal injury action initiated against the Appellant manufacturer, Cincinnati Corp. (Appellant). The trial court denied the Appellant manufacturer’s request for contribution from Third-Party Defendant employer, Hutchinson Manufacturing and Sales Inc. (Third-Party Defendant).
Synopsis of Rule of Law. An employee and in some instances an employer, is allowed to bring an action against a third party who is legally responsible for the employee’s injury. Such an action accomplishes two beneficial results for the workers’ compensation system: (1) The at-fault third party is made to reimburse the employer who has been forced to bear the cost of the third party’s activity and (2) the employee obtains a full common-law recovery against the third party, who is not subject to the benefits and burdens of the workers’ compensation system.
Contribution is appropriate where there is a common liability among the parties, whereas indemnity is appropriate where one party has a primary or greater liability or duty which justly requires him to bear the whole of the burden as between the parties.View Full Point of Law
Issue. Should contribution or indemnity be allowed where the result may be an employer’s paying an amount in excess of the statutorily prescribed proportion per worker’s compensation law?
Held. No. The manufacturer was entitled to contribution from the employer, but not to exceed the total workers’ compensation liability to the employee.
Discussion. The principal aim of the court in Lambertson was to achieve a sort of Solomonic balance between recoveries pursuant to workers’ compensation liability and third-party liability. The court hope to avoid two pitfalls, either of which would have created an inequity: 1) an employer being forced to bear the cost of the third party’s activity; or 2) a third party’s being forced to subsidize the workers’ compensation system by bearing full burden of a judgment despite possibly greater fault of an employer. The solution the court reached was one that merely allowed contribution from the employer up to the amount of the employee’s worker’s compensation benefits.
The court took the opportunity to distinguish between contribution and indemnity, stating, “Contribution is the remedy securing the right of one who has discharged more than his fair share of a common liability or burden to recover from another who is also liable the proportionate share which the other should pay or bear.” Conversely, “Indemnity is the remedy securing the right of a person to recover reimbursement from another for the discharge of a liability which, as between himself and the other, should have been discharged by the other.” The court then clarified the purpose behind, and the manner in which to apply, each: “Contribution requires the parties to share the liability or burden, whereas indemnity requires one party to reimburse the other entirely. Contribution is appropriate where there is a common liability among the parties, whereas indemnity is appropriate where one party has a primary or greater liability or duty which justly requires him to bear the whole of the burden as between the parties.”
As noted, the issue for the court in Lambertson was to achieve equitable apportionment of liability for recovery. As the court explained, “While there is no common liability to the employee in tort, both the employer and the third party are nonetheless liable to the employee for his injuries; the employer through the fixed no-fault workers’ compensation system and the third party through the variable recovery available in a common law tort action.” Thus, the court reversed, opting for remand with instruction to apply contribution, concluding, “Contribution is a flexible, equitable remedy designed to accomplish a fair allocation of loss among parties.