IN THE SUPREME COURT OF THE STATE OF ARIZONA
En Banc
FRED STOECKER and HILDEGARD E.
STOECKER, husband and wife,
)
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation; JORDAN FRAZIER and
)
JANE DOE FRAZIER, husband and
)
wife; SNOWDEN A. MOYER and JANE
)
DOE MOYER, husband and wife;
)
DERRICK SCHULL and JANE DOE
)
SCHULL, husband and wife; BUD
)
FOSTER and JANE DOE FOSTER,
)
husband and wife,
)
)
Defendants/Appellees.
)
___________________________________)
)
ARMANDO C. CRUZ and URSULA CRUZ,
)
husband and wife,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation,
)
)
Defendant/Appellee.
)
___________________________________)
)
ALBERT FLORES and NORMA P. FLORES, )
husband and wife,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation,
)
)
Defendant/Appellee.
)
___________________________________)
Supreme Court
No. CV-98-0361-PR
Court of Appeals
No. 2 CA-CV 96-0293
Pima County
Nos. 301294, 301295, 301296,
301297, 301298, 301299,
304009, 305146, and
305159
[Consolidated]
O P I N I O N
LUIS C. MALDONADO and ROSA O.
MALDONADO, husband and wife,
)
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation,
)
)
Defendant/Appellee.
)
________ __________________________)
)
ROBERT KOFIRA and LEANNE KOFIRA,
)
husband and wife,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation,
)
)
Defendant/Appellee.
)
___________________________________)
)
JAVIER FIMBRES and SYLVIA FIMBRES, )
husband and wife,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation; JORDAN FRAZIER and
)
JANE DOE FRAZIER, husband and
)
wife; SNOWDEN A. MOYER and JANE
)
DOE MOYER, husband and wife;
)
DERRICK SCHULL and JANE DOE
)
SCHULL, husband and wife; BUD
)
FOSTER and JANE DOE FOSTER,
)
husband and wife,
)
)
Defendants/Appellees.
)
___________________________________)
)
MICHAEL D. MATULIN and SHELLY
)
MATULIN, husband and wife,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
2
BRUSH WELLMAN, INC., a foreign
corporation; JORDAN FRAZIER and
JANE DOE FRAZIER, husband and
wife; SNOWDEN A. MOYER and JANE
DOE MOYER, husband and wife;
DERRICK SCHULL and JANE DOE
SCHULL, husband and wife,
)
)
)
)
)
)
)
)
Defendants/Appellees.
)
___________________________________)
)
LEE ANN HAYNES-KERN and RONALD
)
KERN, wife and husband,
)
)
Plaintiffs/Appellants,
)
)
v.
)
)
BRUSH WELLMAN, INC., a foreign
)
corporation; SNOWDEN A. MOYER and )
JANE DOE MOYER, husband and wife, )
)
Defendants/Appellees.
)
___________________________________)
Appeal from the Superior Court in Pima County
The Honorable J. Richard Hannah, Judge (Retired)
REVERSED IN PART AND REMANDED
_________________________________________
Memorandum Decision of the Court of Appeals,
Division Two, filed March 31, 1998
AFFIRMED IN PART, VACATED IN PART
James G. Heckbert
- and Winton Woods, Jr.
- and Dickerson Butler & Rodriguez, P. C.
By: J. Patrick Butler
Attorneys for Plaintiffs/Appellants
Rusing & Lopez, P.L.L.C.
By: Michael J. Rusing
Cynthia J. Kuhn
- and -
Steamboat Springs, Colorado
Tucson
Tucson
Tucson
3
Downey & Knickrehm
By: Thomas E. Downey, Jr.
Kate E. Knickrehm
Attorneys for Defendant/Appellee
Brush Wellman, Inc.
- and Jones, Day, Reavis & Pogue
By: Jeffery D. Ubersax
Janet L. Miller
Of Counsel for Defendant/Appellee
Brush Wellman, Inc.
Denver, Colorado
Cleveland, Ohio
Chandler Tullar Udall & Redhair
By: Dwight M. Whitley, Jr.
Attorneys for Defendants/Appellees
Frazier, Moyer, Schull, and Foster
Tucson
_________________________________________________________________
FELDMAN, Justice
¶1
We granted review to determine whether the exclusivity
provision of the workers’ compensation law bars employees' claims
that their employer breached a contract to supplement workers’
compensation benefits.
We have jurisdiction pursuant to Ariz.
Const. art. VI, § 5(3).
FACTS AND PROCEDURAL HISTORY
¶2
Nine former and present employees (Plaintiffs) of Brush
Wellman,
Inc.,
contracted
chronic
beryllium
disease
(CBD),
a
severe, progressive, and permanent lung condition, as a result of
their exposure to toxic levels of airborne beryllium dust while
working at Brush Wellman's Tucson plant.
Although only a small
fraction of the population develops CBD as a result of beryllium
exposure, no available testing method exists to determine whether
a particular individual may be susceptible.
A Brush Wellman
executive testified at deposition that approximately five percent
of Brush Wellman employees exposed to beryllium develop CBD.
4
Plaintiffs allege that Brush Wellman knew its employees would be
exposed and that some would contract CBD and therefore promised its
employees that it would take care of them by supplementing their
workers' compensation benefits to keep their salaries at the level
earned before they contracted CBD.
Thus, when one of Brush
Wellman’s employees was diagnosed as having CBD, a corporate
representative and the diagnosed employee signed a form that
specifically detailed what Brush Wellman would pay the employee as
an income supplement:
The Company recognizes a medical determination
that
(employee with CBD)
has contracted a
beryllium-related disease as a result of his
employment with the Company.
Our policy is
that this employee shall be guaranteed an
income at least equal to the highest rate of
pay at the time or subsequent to, the
diagnosis of [CBD]. This guarantee shall
remain in effect until the employee reaches
normal retirement age, or recovers from [CBD].
Brush Wellman also issued a policy statement:
Special provision is made for employees who,
in the course of employment with the company,
contract
[CBD],
and
consequently
become
partially or totally disabled.
Continued
performance in a job which they are able to
perform will be encouraged.
Such employees
shall not suffer reduction in cash income or
employee benefits as a result of their
disability. . . . The company will supplement
any income received through . . . Workers’
Compensation . . . so that total income is
equal to the employee’s straight time income
as of the last day worked. Pay will continue
until the employee . . . becomes eligible for
normal retirement benefits under the Company’s
Pension Plan.
¶3
Plaintiffs argue that this policy was part of their
contract with Brush Wellman when each was diagnosed with CBD
between 1991 and 1994. All received workers' compensation benefits
but not the income supplement.
¶4
Plaintiffs’ complaint contained a count for breach of
5
employment contract and tort counts alleging intentional injury and
breach of the covenant of good faith and fair dealing.
Brush
Wellman moved for summary judgment on all counts, arguing that the
contract claims were barred by the exclusivity provision of the
workers’ compensation law, that Plaintiffs failed to state a claim
for intentional injury, and that under the facts of the case,
Arizona does not recognize a claim for breach of the covenant of
good faith and fair dealing.
Without explanation, the trial court
granted Brush Wellman’s motion on all counts.
¶5
The court of appeals affirmed on all but the intentional
injury issue.
Stoecker v. Brush Wellman, Inc., No. 2 CA-CV 96-0293
(memorandum decision, March 31, 1998) ).
The court found that
Plaintiffs alleged sufficient facts to state a claim that Brush
Wellman acted knowingly and intentionally.
Despite
Plaintiffs’
contention
that
a
Mem. dec. at ¶ 7.
two-year
statute
of
limitations for common-law claims should apply, the court held that
a one-year statute of limitations applies to the intentional injury
doctrine, a statutory cause of action.
Mem. dec. at ¶¶ 8-9.
Because of factual questions pertaining to the discovery rule, the
court remanded the statute of limitations issue to the trial court.
Mem. dec. at ¶¶ 10-12.
¶6
The court also affirmed summary judgment on the contract
claims, concluding the claims were barred by A.R.S. § 23-1024,
which provides that workers’ compensation benefits shall be the
exclusive remedy for an employee injured in the course and scope of
employment.1
1
Mem. dec. at ¶ 5.
Because Plaintiffs failed to
A.R.S. § 23-1024 provides:
A.
An
employee,
6
or
his
legal
reject workers’ compensation prior to injury, as required by A.R.S.
§ 23-906, and in fact received compensation benefits, the court
found their claim was barred by § 23-1024's exclusivity provisions.
Plaintiffs sought and we granted review of the court of appeals’
affirmance of summary judgment on the breach of contract count.
Because of the procedural posture of the case, we take the facts in
the light most favorable to Plaintiffs and assume the truth of
Plaintiffs'
Wellman.
allegations
respecting
their
contracts
with
Brush
See Doe v. Roe, 191 Ariz. 313, 324, 955 P.2d 951, 962
(1998).
DISCUSSION
¶7
adopt
The Arizona Constitution requires the legislature to
a
workers’
compensation
system
designed
to
provide
compensation for accidental injuries arising out of the course of
employment.
See Ariz. Const., art. XVIII, § 8.
The legislature
has created a statutory scheme implementing this constitutional
mandate.
See A.R.S. §§ 23-901 to 23-1091 (the Act).
The Act
includes an exclusivity provision that any employee “who accepts
compensation waives the right to exercise any option to institute
representative in event death results, who
accepts compensation waives the right to
exercise any option to institute proceedings
in
court
against
his
employer
or
any
co-employee acting within the scope of his
employment, or against the employer's workers'
compensation
insurance
carrier
or
administrative service representative.
B.
An
employee,
or
his
legal
representative in event death results, who
exercises any option to institute a proceeding
in court against his employer waives any right
to compensation.
7
proceedings in court against his employer.”
¶8
A.R.S. § 23-1024 (A).
Our constitution also prohibits the legislature from
abrogating the right “to recover damages for injuries” or limiting
the “amount recovered.”
constitutional
Ariz. Const., art. XVIII, § 6.
provisions
are
complementary.
The two
Kilpatrick
Superior Court, 105 Ariz. 413, 419, 466 P.2d 18, 24 (1970).
v.
Thus,
when an injury falls within the scope of the compensation law, the
legislature may abrogate the right of action for tort recovery by
a worker who elected to accept compensation.
Id.; see also
Anderson v. Industrial Comm'n, 147 Ariz. 456, 461, 711 P.2d 595,
600 (1985).
¶9
The court of appeals agreed with Plaintiffs that § 23-
1024(A) does not “encompass [] all common law remedies against the
employer” but held that an employee’s “acceptance of workers’
compensation benefits waives all remedies . . . except for those
remedies [such as the tort action for intentional injury] created
or protected by the Arizona Constitution.” Mem. dec. at ¶4 (citing
Anderson, 147 Ariz. 456, 711 P.2d 595.
contract claim was barred.
Consequently,
Plaintiffs’
We disagree, believing the court's
characterization of the exclusivity rule is too broad.
dealt with
an
employee's
industrial injury.
tort
claim
seeking
recovery
Anderson
for
an
Claims that do not fall within the scope of the
workers' compensation statute are not barred by its exclusivity
provision.
See Ford v. Revlon, Inc., 153 Ariz. 38, 734 P.2d 580
(1987).
¶10
Our courts have always recognized that various actions,
including some tort actions, survive for workers whose claims are
not within the scope of the compensation scheme.
See, e.g., Ford,
153 Ariz. at 44, 734 P.2d at 586 (employee’s action against
8
employer for intentional infliction of emotional distress not
barred); Franks v. U. S. Fidelity & Guar. Co., 149 Ariz. 291, 718
P.2d
193
(App.
1985)
(employee’s
bad
faith
action
against
employer’s compensation carrier not barred because exclusivity
doctrine applies only to injuries covered by Act).
Thus, we have
never construed the exclusivity statute — as did the court of
appeals — so broadly as to preclude all claims except those
specifically protected by the constitution.
The claims precluded
are those in which the wrong alleged and the damages sought are
within the Act's coverage.
Kilpatrick, 105 Ariz. at 419, 466 P.2d
at 24 (claims against co-employees not precluded under thenexisting version of art. XVIII, § 8).
A.
Does a promise to supplement workers’ compensation benefits
fall within the scope of the Act?
1.
¶11
Scope of the Act
The underlying principle of the compensation system is a
trade of tort rights for an expeditious, no-fault method by which
an employee can receive compensation for accidental
sustained in work-related accidents.
injuries
See Pressley v. Industrial
Comm’n, 73 Ariz. 22, 236 P.2d 1011 (1951).
Because of this policy,
§ 23-1024's bar against an employee instituting court proceedings
does not run afoul of the non-abrogation clause when applied to a
covered employee's common-law tort action against an employer. See
Anderson, 147 Ariz. at 457, 711 P.2d at 596 (“[A] covered worker
may choose between the compensation system and the tort system.”);
see also Connors v. Parsons, 169 Ariz. 247, 818 P.2d 232 (App.
1991)
(holding
an
injured
worker's
intentional
acceptance
of
workers' compensation benefits waives tort remedies). In Anderson,
9
we again recognized the interplay between sections 8 and 6 of
article XVIII and concluded that the legislature could prohibit a
worker who had not previously waived tort rights but had accepted
compensation benefits from also seeking tort damages from the
employer.
¶12
147 Ariz. at 461-62, 711 P.2d at 600-01.2
This case, however, is a contract action, though it is
based on and necessarily pleads the prior industrial injury arising
from a risk of employment.
In such cases, Brush Wellman argues,
the exclusivity doctrine applies because if not for the industrial
injury,
the
Professor
contract
Larson
action
points
could
out
not
the
be
brought.
danger
of
Indeed,
plaintiffs
recharacterizing tort claims as contract actions to circumvent the
workers' compensation exclusivity provisions.
OF
6 A. LARSON, THE LAW
WORKMEN’S COMPENSATION § 65.38, at 12-49 to 12-53 (1999); see also
Vineyard v. Southwest Engineering & Contracting Co. Inc., 117 Ariz.
52, 53, 570 P.2d 823, 824 (App. 1977).
¶13
The present action, however, is not brought to recover
damages caused by the industrial injury but only to recover on
Brush Wellman's promise to provide benefits over and above any
compensation benefits Plaintiffs received for a specific workrelated injury.
This action is not a disguised method to seek tort
recovery for the industrial injury.
Cf. 6 A. LARSON, supra n.41.1,
at 12-50 (citing Schefsky v. Evening News Ass’n, 425 N.W.2d 768
(Mich.App. 1988)) and n.43, at 12-53 (citing Hensley v. United
States, 279 F.Supp. 548 (D. Mont. 1968)).
2
Tort recovery for an
Those interested in the origin and evolution of these clauses
should read Professor Roger Henderson’s scholarly article: Tort
Reform, Separation of Powers, and the Arizona Constitutional
Convention of 1910, 35 Ariz.L.Rev. 535, 573-605 (1993).
10
industrial
injury
can
include
“unlimited
recovery
for
actual
damages, expenses for past and prospective medical care, past and
prospective pain and suffering, lost earnings, and diminished
earning capacity.”
1190,
1196
Bryant v. Silverman, 146 Ariz. 41, 47, 703 P.2d
(1985).
None
of
these
damages
are
sought
here;
Plaintiffs are not camouflaging a tort claim as a contract claim
but, in the contract count, seeking only money owed by reason of
Brush
Wellman’s
contractual
obligation
to
supplement
their
compensation benefits by paying them the difference between their
actual
earnings
and
the
portion
of
compensation
benefits
representing lost earning capacity.
2.
¶14
Breach of a promise to provide supplemental benefits
Our courts have not yet addressed the question whether
our workers’ compensation statutes bar an employee’s contract claim
for supplemental benefits.
In Vineyard, however, the court of
appeals held that an employee’s acceptance of workers’ compensation
benefits barred his claim for damages for an industrial injury even
though the action was pleaded as a breach of the employer's express
promise to provide safety equipment.
While the court held the
claim was barred by the Act's exclusivity provision, it also stated
in
passing
that
“nothing
in
the
workmen's
compensation
law
prohibits . . . an express contract [to provide compensation over
and above workmen’s compensation benefits].”
117 Ariz. at 53, 570
P.2d at 824 (citing Lechuga, Inc. v. Montgomery, 12 Ariz.App. 32,
36, 467 P.2d 256, 260 (1970)); see also Fredericks v. Liberty Mut.
Ins. Co., 627 N.E.2d 782 (Ill.App. 1994) (action on contract
collateral to workers' compensation system not barred); Hornsby v.
Southland Corp., 487 A.2d 1069, 1072 (R.I. 1985) (worker’s claim
11
for breach of contractual promise of safe work environment is
precluded
by
workers'
compensation,
but
employer’s
breach
of
contractual promise to provide employee with more benefits than
provided by workers’ compensation may not be); Joseph H. King, Jr.,
The Exclusiveness of an Employee's Workers' Compensation Remedy
Against His Employer, 55 TENN. L.REV. 405, 490 (1988) (“Obviously,
if the employer breaches his contract with his employee, thereby
causing purely economic loss, the exclusive remedy rule should not
apply.”).
¶15
We do not find review of this case law very helpful.
No
case directly on point is cited, and we find none in our own
research.
Comments in various cases indicate that a contract to
pay benefits supplementing workers' compensation is not within the
exclusivity doctrine.
See, e.g.,
Hensley, 279 F. Supp 548;
Vineyard, 117 Ariz. at 53, 570 P.2d at 824; Fredericks, 627 N.E.2d
at 786; Schefsky, 425 N.W.2d 768; Hornsby, 487 A.2d at 1072.
We
prefer, however, not to decide this or any case on fragments of
dicta.
Text, sound policy, and fulfillment of constitutional and
statutory goals point the way.
The exclusivity provision is part
of the quid pro quo between the employee’s no-fault recovery and
the employer’s obligation to pay benefits.
Franks, 149 Ariz. at
294, 718 P.2d at 196 (citing 2A A. LARSON, supra § 65.11, at 12-1 to
12-2, now 6 A. LARSON, supra § 65.11, at 12-1 to 12-12 (1999)).
This trade-off, permitted by the constitution and imposed by
statute, frees the employer from tort liability.
¶16
But Plaintiffs here seek neither to impose tort liability
nor to recover tort damages.
The system was not designed or
intended to free an employer from performing its contractual
12
promises to provide specific benefits to its employees.
for
example,
commissions
that
to
an
an
employer
employee.
made
Would
a
contract
the
to
Suppose,
pay
exclusivity
sales
doctrine
preclude that employee from enforcing the contract after he had
been hurt in an industrial accident and had accepted compensation?
Such immunity for breach of contract was not part of the quid pro
quo for workers' compensation.
¶17
Nor
would
promises harmonize
immunity
with
the
from
text
performance
of
our
of
contractual
constitution
or
our
workers’ compensation statutes. While it is true that § 12-1024(A)
forbids, without limitation, an employee's institution of “court
proceedings” against an employer, that statute has never been and
cannot
be
read
apart
from
authorizes its existence.
at 25.
the
constitutional
provision
that
Kilpatrick, 105 Ariz. at 420, 466 P.2d
Article XVIII, § 8 mandates a system that
applies to
“personal injury . . . or death . . . from any accident arising out
of and in the course of . . . [] employment . . . .”
employer’s
no-fault
obligation
to
pay
compensation
for
The
such
injuries frees it from tort liability for industrial injury, no
matter how the claim may be disguised.
The gist of the contract
count in the present action, however, is not based on a personal
injury but on Brush Wellman's alleged breach of its contractual
promise. The relief sought is not damages caused by the injury but
supplemental benefits promised in the contract.
performance
of
contractual
promises
was
not
Freedom from
part
of
the
constitutional text that required the legislature to enact the
workers’ compensation system. Nor, we believe, has the legislature
sought to exceed the constitutional mandate. The statute's text is
read
in
pari
materia
with
the
13
constitutional
provision
that
authorizes it.
See Kilpatrick, 105 Ariz. at 416-17, 466 P.2d at
21-22.
¶18
Finally, expansion of the exclusivity doctrine, as sought
by Brush Wellman, would be very bad policy.
Brush Wellman's
industrial pursuit puts a number of its employees at grave and
perhaps unavoidable risk.
To engage skilled employees, such an
employer might want or need to offer specific protection for its
workers and their families should workers suffer the harm that
makes the job so dangerous.
Interpreting the exclusivity doctrine
so broadly as to permit an employer to renege on such promises
would hinder honest employers because workers who learn that their
prospective employer’s promise is unenforceable would likely reject
any offer to perform the high-risk work.
Conversely, such an
interpretation would allow an unscrupulous employer that had no
intention of performing its promise to take advantage of gullible,
unsophisticated, or desperate workers.
We refuse to adopt a rule
that reaches these untoward and undesirable results.
CONCLUSION
¶19
We conclude that Plaintiffs' contract count is not barred
by the doctrine of exclusivity.
The court of appeals' decision is
therefore vacated to the extent that it is inconsistent with this
opinion. The trial court's grant of summary judgment on this count
is vacated, and the case is remanded to the trial court for
proceedings consistent with this opinion.
______________________________
STANLEY G. FELDMAN, Justice
CONCURRING:
14
___________________________________
THOMAS A. ZLAKET, Chief Justice
___________________________________
CHARLES E. JONES, Vice Chief Justice
___________________________________
FREDERICK J. MARTONE, Justice
___________________________________
RUTH V. McGREGOR, Justice
15
