Principal employer not liable to independent contractor in asbestos case

By Joe Forward, Legal Writer, State Bar of Wisconsin

July 29, 2010 – No exceptions applied to place liability on a principal employer for the asbestos-related death of an independent contractor, the Wisconsin Supreme Court recently held.

In Tatera v. FMC Corporation, 2010 WI 90 (July 20, 2010), the supreme court ruled 4-3 to reverse an appeals court decision that FMC Corp. (FMC) negligently caused the death of Walter Tatera, who did work for FMC as an independent contractor.

The majority – in an opinion written by Justice Annette K. Ziegler – held that no exception applied to the general rule that “a principal employer is not liable in tort for injuries sustained by an independent contractor’s employee while he or she is performing the contracted work.”

Background

In 1967, FMC bought Stearns Electric Company (Stearns), a Milwaukee-based manufacturer of industrial electric brakes. A part within Stearns’ brake systems, a friction disk, contained some form of asbestos until 1986. Stearns purchased the friction disks from other manufacturers.

From 1968 to 1993, Walter Tatera worked for B&M Machine Products (B&M) in Hales Corners.

Stearns outsourced some of its work to B&M, supplying B&M with asbestos-containing friction disks for sizing and shaping. As an employee of B&M, Tatera grinded and shaped the disks.

In 2004, Tatera died from malignant mesothelioma, a rare form of cancer that has been linked to asbestos exposure. Tatera’s wife, as special administrator to her husband’s estate, filed suit alleging negligence and strict products liability.

Tatera claimed that the circumstances gave rise to a claim under Restatement (Second) of Torts section 388, adopted by the supreme court. Section 388 creates a cause of action in tort against a chattel supplier who has reason to know the chattel is dangerous, no reason to believe the supplied persons will know of the danger, and fails to exercise reasonable care to inform them.

Tatera claimed FMC supplied B&M with asbestos-containing products, failed to warn B&M workers of health hazards, failed investigate the health effects of asbestos, and failed to instruct B&M workers on precautionary measures necessary in working with asbestos containing products.

FMC moved for summary judgment on the general rule that principal employers are not liable in tort to independent contractors, and no exceptions apply.

The circuit court granted FMC’s motion. The appeals court reversed, holding that section 388 applies to “suppliers,” not just manufacturers, and exceptions applied to the general rule that principal employers are not liable in tort to independent contractors.

General rule

Under Wagner v. Continental Casualty Co., 143 Wis. 2d 379, 421 N.W.2d 835 (1988), a principal employer is not liable in tort for injuries sustained by an independent contractor’s employee, the supreme court explained.

The Wagner rule relies on the reasoning that a contract between a principal employer and an independent contractor includes payment for workers compensation coverage, the court explained. Thus, workers compensation provides the remedy, not tort liability.

However, there are exceptions to theWagner rule if “the principal employer committed an affirmative act of negligence” or “the employee was injured while engaged in an extrahazardous activity,” the court noted.

Affirmative act of negligence

Wisconsin precedent “requires more than an omission in order to impose liability on a principal employer for injuries sustained by an independent contractor’s employee,” the court explained. In other words, the alleged negligent act “must be affirmative.”

Here, the court held that a “failure to warn, the failure to investigate or test, and the failure to instruct are omissions, not affirmative acts.” Additionally, the court recognized that supplying asbestos-containing friction disks constitutes an affirmative act, but this affirmative act is not enough to impose liability on FMC for committing an affirmative act of negligence.”

Imposing negligence liability on a principal employer for the act of supplying a dangerous chattel to an independent contractor, the court wrote, “would undermine our three decades of precedent that requires an affirmative act of negligence.”

Extrahazardous activity

While independent contractors have a cause of action against principal employers when the activity is “extrahazardous,” no such action arises for “inherently dangerous ones,” the court explained. The distinction is that precautions can minimize the risk associated with inherently dangerous activities, but risks cannot be minimized with extrahazardous ones.

Here, the court held, “machining an asbestos-containing friction disk is not an extrahazardous activity because steps may be taken to minimize the risk of injury” by wearing protective equipment or taking proper precautions.

Holding that no exception to the Wagner rule applied, the court reversed the appeals court and barred Tatera’s negligence claim against FMC.

Dissent

The dissent written by Justice N. Patrick Crooks (joined by Abrahamson, C.J. and Bradley, J.), argued that Tatera established, at a minimum, a right to a trial based on the “affirmative act” exception to the Wagner rule.

The dissent noted that the majority failed to address the interplay between Restatement (Second) of Torts section 388 and the Wagner rule, instead holding the Wagner rule controlling.

“Regardless of whether Wagner applies exclusively, [section] 388 applies exclusively, or both apply, FMC is not entitled to summary judgment in this case,” Justice Crooks wrote.

Tatera set forth genuine issues of material fact as to the elements of [section] 388, Crooks explained, and “to the extent that Wagner applies, it does not bar Tatera’s claim.”

The dissent argued that the “affirmative act” exception applies “because FMC committed an affirmative act when it provided asbestos-containing friction disks to B&M for its employees to grind and manipulate without warning of the dangerous content.”

Attorneys

Mark Des Rochers of Appleton represented FMC. Jill Rakauski and Steven Penn of Penn Rakauski, Racine, represented the Tatera estate.