Weber v. Armco, Inc.

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Weber v. Armco, Inc.
1983 OK 53
663 P.2d 1221
Case Number: 59314
Decided: 05/10/1983
Supreme Court of Oklahoma

GEORGE WEBER AND SHARON WEBER, APPELLANTS,
v.
ARMCO, INC., AN OHIO CORPORATION, D/B/A NATIONAL WELLHEAD SUPPLY COMPANY, APPELLEE,
and
LIBERTY MUTUAL INSURANCE, INTERVENOR.

Certified Questions of Law from the United States Court of Appeals for the Tenth Circuit.

¶0 This action is pending on appeal before the United States Court of Appeals for the Tenth Circuit. The following questions have been certified by that court pursuant to the Uniform Certification of Questions of Law Act, 20 O.S. 1981 §§ 1601-1613 :

1. May an employee who is injured by a defective product manufactured by another person "in the same employ" as the injured employee utilize the "dual capacity" doctrine to assert a manufacturer's products liability claim against that other person as manufacturer of the product, notwithstanding the exclusivity provisions of the Oklahoma Workers' Compensation Act?

This Court has answered this question as follows:

After the amendment of 85 O.S.Supp. 1982 § 12 , which defines the extent of liability and immunity under the Workers' Compensation Act, an employee who is injured by a defective product manufactured by "another person" engaged in performance of a common task may assert a manufacturer's products liability claim against the other person as the manufacturer of the product. An employee may not assert such a claim before March 26, 1982, the effective date of the amendment.

2. If such an injured person may assert a claim for manufacturer's products liability in the circumstances stated in Question 1, may punitive damages be awarded under the products liability claim?

This Court has answered this question as follows:

Punitive damages may be assessed against the manufacturer of a product which injures the employee if the injury is attributable to conduct which reflects reckless disregard for public safety.

John M. Merritt, Inc. by John M. Merritt, Oklahoma City, for appellants.

Looney, Nichols, Johnson & Hayes by Burton J. Johnson, and John B. Nicks, Oklahoma City, for appellee.

HODGES, Justice.

[663 P.2d 1224]

¶1 George Weber (Weber) was an employee of Well-Tech Drilling Company (Well-Tech), a contractor hired by J.M. Huber Oil Company (Huber Oil) to drill and complete a well. Huber Oil also hired National Well-head Supply Company, a division of Armco (Armco), to install a wellhead which Armco had manufactured. Weber assisted an Armco employee with the installation, and on January 10, 1979, while the workers were attempting to remove a back pressure valve installed below the wellhead, a piece of ice was ejected from the wellhead which struck and injured Weber.

¶2 After receiving workers' compensation benefits from Well-Tech, Weber and his wife, Sharon, brought an action in federal district court against Armco as a third party tortfeasor, alleging negligence and products liability claims, and seeking compensatory and punitive damages. The products liability claim was based on faulty design and the presence of ice in the wellhead. The Webers also asserted that the back pressure valve, manufactured and supplied by Armco, was defective. The trial court held, as a matter of law, that Armco was immune from suit and granted Armco's motion for summary judgment. The Tenth Circuit certified two questions based on its belief that whether the Webers can assert a products liability claim against Armco depends on recognition of the dual-capacity doctrine by this Court.

I

¶3 The Webers contend that Armco acted in a dual-capacity because it occupied the two-fold position of employer and manufacturer and, therefore, it can be sued in tort. We do not agree.

¶4 Workers' compensation is a mutual compromise in which the employee relinquishes his/her right to sue for damages sustained in job-related injuries; and the employer accepts no-fault liability for a statutorily prescribed measure of damages.1 This trade-off has the net effect of imposing a form of strict liability upon the employer to pay for industrial accidents. As a result, workers' compensation is the exclusive damage remedy for the injured employee; and the employer is given immunity from common-law tort liability.2

¶5 The Oklahoma Workers' Compensation Act does not prohibit an injured employee from maintaining a common-law action against a negligent third person, not in the same employ as the injured worker, even if the injury occurs during the course [663 P.2d 1225] of employment.

¶6 This concept of duality, which confers third-party status upon the employer, is more meaningful when viewed in terms of an employer having a dual persona. An employer may become a third person if he possesses a second persona so completely independent from and unrelated to his status as an employer, that by established standards, the law recognizes it as a separate legal person.

¶7 The majority of jurisdictions have refused to apply the dual-capacity doctrine under a products liability theory, when the employer manufactures, modifies, distributes or installs a product used in the employee's work.

¶8 The minority view in products liability cases involving an employer-manufacturer, has been to apply the dual-capacity doctrine whenever the product is sold to the public as well as furnished to the employee.

¶9 We reject application of the dual-capacity doctrine to impose liability upon an employer-manufacturer. The employer has a duty arising out of the employment relationship to furnish safe equipment to its employees; and that duty arises whether the equipment is purchased or manufactured by the employer, either in connection with producing the same item for public consumption or otherwise.

¶10 There are circumstances in which application of the dual-capacity doctrine is appropriate.

¶11 The trial court was correct in granting summary judgment for Armco. In O'Baugh v. Drilling Well Control, Inc., 609 P.2d 355 (Okl. 1980), this Court held that if subcontractors of the same hirer work in a cooperative manner on a common task, with overlapping contractual responsibilities, and their joint endeavor is essential to attain the immediate goal, the exclusive remedy is under the Workers' Compensation Act. The facts in this case are indistinguishable from O'Baugh. In this instance, Huber Oil was the hirer, Well-Tech and Armco were hired as subcontractors; and Weber was assisting an employee of Armco in installation of the wellhead when the injury occurred.

¶12 In Newport v. Crane Service, Inc., 649 P.2d 765, 769 (Okl. 1982), we acknowledged that the O'Baugh doctrine had been abrogated by the amendment of 85 O.S.Supp. 1982 § 12 .

II

¶13 The question of whether punitive damages may be awarded in an action for products liability was recently answered by this Court. In Thirty v. Armstrong World Industries (March 22, 1983), 661 P.2d 515 (Okl. 1983), we said:

[663 P.2d 1228]

"Punitive damages may be assessed against the manufacturer of a product injuring the plaintiff if the injury is attributable to conduct that reflects reckless disregard for the public safety. `Reckless disregard' is not to be confused with inadvertent conduct. To meet this standard the manufacturer must either be aware of, or culpably indifferent to, an unnecessary risk of injury. Awareness should be imputed to a company to the extent that its employee[s] possess such information. Knowing of this risk, the manufacturer must also fail to determine the gravity of the danger or fail to reduce the risk to an acceptable minimal level. `Disregard for the public safety' reflects a basic disrespect for the interests of others.

"The following factors will aid the factfinder in determining whether the conduct of the manufacturer meets the required standard of `reckless disregard for the public safety:'

"A manufacturer's fault in failing to deal with a product defect increases with the gravity of the resulting risk of harm to the public. As the costs of correcting or reducing the danger decrease, so does the credibility of excuses for failing to do so. As the manufacturer's awareness of the existence and gravity of the product defect increases, so does its duty to correct the problem and its culpability for failing to do so. The time lapse in responding to a product defect, its reasons for not acting further, and the nature of steps actually taken to correct the defect shed light on the manufacturer's values of profits over safety, and therefore its culpability. If the manufacturer deliberately deceived the public about its product's safety, it will usually be especially blameworthy and deserving of punishment."

¶14 WE, THEREFORE, FIND:

1. After the amendment of 85 O.S.Supp. 1982 § 12 , which defines the extent of liability and immunity under the Workers' Compensation Act, an employee who is injured by a defective product manufactured by "another person" engaged in performance of a common task may assert a manufacturer's products liability claim against the other person as the manufacturer of the product. An employee may not assert such a claim before March 26, 1982, the effective date of the amendment.

2. Punitive damages may be assessed against the manufacturer of a product which injuries the employee if the injury is attributable to conduct which reflects reckless disregard for public safety.

¶15 QUESTIONS ANSWERED.

¶16 SIMMS, V.C.J., and LAVENDER, DOOLIN, OPALA, WILSON, JJ., concur.

¶17 BARNES, C.J., and IRWIN, J., concur in Part I, dissent in Part II.

Footnotes:

1 Mary Quella Kelly, "Workmen's Compensation and Employer Suability: The Dual-Capacity Doctrine," 5 St. Mary's L.J. 818 (1974).

"(a) If a workman entitled to compensation under this Act be injured by the negligence or wrong of another not in the same employ, such injured workman shall, before any suit or claim under this Act, elect whether to take compensation under this Act, or to pursue his remedy against such other."

Some credence should also be given to the argument that any change in compensation law which would permit a covered employee to institute litigation against his employer, to recover for an injury clearly covered by the Workers' Compensation Act, is a public policy decision for the Legislature. Longever v. Revere Cooper and Brass Incorporated, 408 N.E.2d 860 (Mass. 1980).

. . . "(i) that the immunity created hereby shall not extend to action by an employee, spouse, personal representative, parents, dependents or any other person against another employer, or its employees, on the same job as the injured or deceased worker where such other employer does not stand in the position of an intermediate or principal worker;" . . .

. . . "(ii) that such immunity created hereby shall not extend to action against another employer, or its employees, on the same job as the injured or deceased worker even though such other employer may be considered as standing in the position of a special master of a loaned servant where such special master neither is the immediate employer of the injured or deceased worker nor stands in the position of an intermediate or principal employer to the immediate employer of the injured or deceased worker."

"The Legislature shall have no power to revive any right of remedy which may have become barred by lapse of time, or by any statute of this State. After suit has been commenced on any cause of action, the Legislature shall have no power to take away such cause of action, or destroy any existing defense to such suit."