It operates a cheese processing plant located directly on the
New York and Pennsylvania state line. Part of the plant is located in New
York and part of the plant is located in Pennsylvania. Leprino purchased
the palletizer from Columbia in 1987. Columbia is a Washington
corporation with its principal place of business in Vancouver,
Washington. Columbia shipped the palletizer directly to the New York
portion of Leprino's plant, where it was still located at the time of the
Given its unique location, Leprino employs both New York and
Pennsylvania residents. Leprino has a policy that workers who injure
themselves in the course of their employment should avail themselves to
the workers' compensation laws and benefits of the state of their
residence. In this case, plaintiff, a Pennsylvania resident, applied for
and received Pennsylvania workers' compensation. Dkt. #18, Olsen Aff.
Columbia filed a third-party complaint against Leprino for contribution
or indemnification pursuant to New York Workers' Compensation Law §
11. Section 11 allows a third party to seek contribution or
indemnification from an employer for its proportionate share of liability
(if any) where an employee suffers a "grave injury" in the course of his
employment and sues that third party. Section 11 is an exception to the
exclusivity provisions of the Workers' Compensation Law by allowing the
third party claim against the employer even though a direct action by the
employee against the employer is prohibited. Because of Leprino's unique
location, on the border of New York and Pennsylvania, this case presents
interesting issues concerning the choice of law that should apply. In
addition to New York, three other states, Pennsylvania, Washington, and
Colorado all have some contacts with this litigation and the parties.
Except for New York, all of these three other states preclude actions for
contribution or indemnification by third-parties against employers of
injured parties. In a nutshell, Leprino claims that New York law does not
apply in this situation and, therefore, the third-party complaint must be
Leprino filed the instant motion to dismiss Columbia's third-party
complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a
claim or, in the alternative, for summary judgment pursuant to
Fed.R.Civ.P. 56. Leprino argues that Columbia cannot avail itself to New
York's grave injury exception because Pennsylvania Workers' Compensation
Law, which prohibits such an action, applies to this case.
Alternatively, Leprino claims that even assuming New York law applies,
Columbia cannot take advantage of Workers' Compensation Law § 11
because Leprino did not agree in writing to indemnify Columbia. Lastly,
Leprino asserts that Columbia waived its right to contribution or
indemnification from Leprino in certain purchase and service agreements
between the parties.
Columbia argues that New York law does apply because it is the site of
the accident and because New York has the greatest interest in the
litigation. Columbia also claims that no writing is required to bring a
claim pursuant to Section 11 and that it did not waive its right to seek
contribution or indemnification from Leprino.
For the reasons that follow, I find that Pennsylvania law should apply
to this case, and not New York law. Therefore, Leprino's motion to
dismiss Columbia' third-party complaint is granted.
A. Choice of Law
In a case in which jurisdiction is based on diversity of citizenship, a
court sitting in New York State must apply New York's choice of
law rules. Alderman v. Pan Am World Airways, 169 F.3d 99, 103 (1999),
citing Guaranty Trust Co. v. York, 326 U.S. 99, 108-09 (1945); Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). In New York, the
relevant analytical approach to choice of law issues is the `interest
analysis.' See Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 197 (1985);
In re Allstate Ins. Co. [Stolarz], 81 N.Y.2d 219, 225 (1993).
Pursuant to the interest analysis, "the law of the jurisdiction having
the greatest interest in the litigation will be applied and . . . the
facts or contacts which obtain significance in defining State interests
are those which relate to the purpose of the particular law in conflict."
Miller v. Miller, 22 N.Y.2d 12, 15-16 (1968); Neumeier v. Kuehner,
31 N.Y.2d 121, 127 (1972). The interest analysis adopted by the New York
Court of Appeals specifically "rejected the mechanical place of injury
rule in personal injury cases because it failed to take account of
underlying policy considerations." Neumeier, 31 N.Y.2d at 127. The Court
recognized that it was abandoning the "certainty provided by the old rule
for the more just, fair and practical result that may best be achieved by
giving controlling effect to the law of the jurisdiction which has the
greatest concern with, or interest in, the specific issue raised in the
litigation." Id. Under this formulation, the significant contacts are
still the parties' domiciles and the site of the tort. See Schultz, 65
N.Y.2d at 197. However, other significant contacts to consider are the
state where the conduct causing the injury occurred, the state where the
relationship between the parties is centered, and, in the context of
workers' compensation, the state where plaintiff has accepted workers'
compensation benefits. See Roach v. McGuire & Bennett, Inc.,
146 A.D.2d 89 (3d Dep't 1989); see also Restatement (Second) of Conflict
of Laws § 145 (2002).
With these contacts in mind, the choice is between the laws of New
York, Pennsylvania, Washington, and Colorado. New York is the site of the
Leprino plant, the site of plaintiff's employment, and consequently, the
site of the accident. However, none of the parties are domiciled in New
York. Plaintiff is a Pennsylvania resident and currently is receiving
Pennsylvania workers' compensation as a result of this accident.*fn2
Columbia is domiciled in the State of Washington. Presumably, Washington
is also the place where the tortious conduct occurred (that is the
manufacturing of the allegedly defective product). Leprino is domiciled
in the State of Colorado. However, Leprino operates manufacturing plants
in New York, Pennsylvania, and at least six other states.
In Schultz v. Boy Scouts of Am., 65 N.Y.2d at 198, and Cooney v. Osgood
Mach., Inc., 81 N.Y.2d 66 (1993), the New York Court of Appeals
recognized a distinction between "laws that regulate primary conduct
standards of care) and those that allocate losses after the tort
occurs (such as vicarious liability rules). If conflicting
conduct-regulating laws are at issue, the law of the jurisdiction where
the tort occurred will generally apply because that jurisdiction has the
greatest interest in regulating behavior within its borders. But if
competing `postevent remedial rules' are at stake other factors are taken
into consideration, chiefly the parties' domiciles." Cooney, 81 N.Y.2d at
72; see also Schultz, 65 N.Y.2d at 198.
Here, the law at issue relates to loss allocation. Cooney, 81 N.Y.2d at
74 ("Contribution rules — as involved in the present case —
are loss allocating, not conduct regulating."). The choice of law
principles relating to a loss allocating rule were articulated by the
Court of Appeals in Neumeier, 31 N.Y.2d at 128. The Court considered a
conflict of laws among guest statutes (also considered loss allocating
rules), and fashioned three rules to apply to cases in which loss
allocating rules were in conflict. The proper rule to apply depends on
the specific facts of the case and the respective domiciles of the
The first Neumeier rule provides that "[w]here the conflicting rules at
issue are loss allocating and the parties to the lawsuit share a common
domicile, the loss allocation rule of the common domicile will apply."
Padula v. Lilarn Props. Corp., 84 N.Y.2d 519, 522 (1994); Neumeier, 31
N.Y.2d at 128. "The second Neumeier rule addresses `true' conflicts,
where the parties are domiciled in different States and the local law
favors the respective domiciliary . . . . In essence, then, the second
Neumeier rule adopts a `place of injury' test . . . ."*fn3 Cooney, 81
N.Y.2d at 73; see Neumeier, 31 N.Y.2d at 128.
Where, as here, the parties are all domiciled in different states and
the accident occurred in yet another state, the so-called third Neumeier
rule applies to such "other split-domicile cases." Cooney, 81 N.Y.2d at
73-74. That rule provides:
Normally, the applicable rule of decision will be that
of the state where the accident occurred but not if it
can be shown that displacing that normally applicable
rule will advance the relevant substantive law
purposes without impairing the smooth working of the
multi state system or producing great uncertainty for
Neumeier, 31 N.Y.2d at 128.
Here, New York law conflicts with the laws of Pennsylvania,
Washington, and Colorado. The Pennsylvania Workers' Compensation Act,
77 Pa. Cons. Stat. § 481, prohibits contribution and indemnification
claims by a third party against the employer of an injured employee,
unless the employer expressly agrees in writing to be indemnified.*fn4
Compensation Law also bars third-party claims for
contribution and indemnification against the employer. See Colo. Rev.
Stat. § 8-41-102;*fn5 see also Keefe v. Pizza Hut of Am., Inc.,
868 P.2d 1092, 1094 (Colo.Ct.App. 1994) citing Williams v. White Mountain
Const. Co., 749 P.2d 423 (Colo. 1988) ("The exclusive remedy provision of
the Act also bars contribution and indemnity claims against the employer
by third parties who are liable to the injured employee."). Likewise,
Washington's Industrial Insurance Act, Wash. Rev. Code § 51.04.010,
prohibits third-party actions against employers.*fn6 However, where an
employer expressly agrees in writing to contract its immunity away under
the Act, it can be subject to indemnification or contribution. Even
then, "an indemnity clause of this type is enforceable only if it clearly
and specifically contains a waiver of the immunity of the workers'
compensation act, either by so stating or by specifically stating that
the indemnitor assumes potential liability for actions brought by its own
employees." Brown v. Prime Const. Co., Inc., 684 P.2d 73, 75 (Wash.
Likewise, New York prohibits third parties from seeking contribution or
indemnification from employers for claims brought by injured employees in
the absence of a specific written agreement entered into prior to the
accident. See Workers' Compensation Law § 11.*fn7 New York,
however, has one important exception not found in either Pennsylvania,
Washington, or Colorado. When a worker is "gravely injured," a third
party may seek contribution or indemnification from the employer for its
proportionate share of liability for the worker's injury.*fn8 Here, the
parties conceded at oral argument that plaintiff suffered a "grave injury"
within the meaning of Section 11.
Columbia argues that New York law should apply because it is the site
of the accident, the site of Leprino's plant, the site where Columbia
shipped its palletizer, and the site where plaintiff worked. Columbia
also asserts that New York has an interest in applying its "Labor Law and
industrial code to all industrial accidents that occur within its
borders." Columbia Brief, at 8.
Despite Columbia's thorough memoranda of law and thought provoking
argument, I believe that Pennsylvania law, not New York law, should apply
to determine whether Columbia's third-party action can survive.
Pennsylvania has a greater interest in protecting its statutory scheme
that immunizes employers from indemnification claims than New York has in
allowing such claims in the case of a grave injury. Plaintiff is a
Pennsylvania resident who received Pennsylvania workers' compensation
from a Pennsylvania fund into which Leprino paid. Further, Leprino is
located in Pennsylvania and in New York. Although plaintiff may have
worked in the New York portion of the plant, that contact is pure
happenstance. Therefore, the fact that the accident occurred in New York
is not sufficient to justify application of New York's rule of law to
New York does not have a great interest in protecting a non resident
manufacturer from a loss allocating rule designed to protect resident
employers. See Neumeier, 31 N.Y.2d at 126-27 (applying Canadian guest
statute to action against Canadian corporation and New York resident for
death of Canadian resident because New York should not "apply New York
law simply because some may think it is a better rule, where doing so
does not advance any New York State interest, nor the interest of any New
York State domiciliary."); Brewster v. Balt. & Ohio R.R. Co.,
185 A.D.2d 653, 654 (4th Dep't 1992) (holding that Pennsylvania law
applies to third-party action brought by two nonresident corporations
because, among other reasons, "New York has no further interest in
extending the benefits of its loss allocation rules to two nonresident
corporations. Pennsylvania, however, has an interest in protecting its
statutory scheme immunizing an employer from contribution claims.").
Moreover, application of Pennsylvania law does not offend New York's
interest in insuring that employees within its borders receive just
compensation for their work-related injuries. Plaintiff has received that
compensation through Pennsylvania's workers' compensation scheme.
application of Pennsylvania law may not affirmatively advance
the substantive law purpose of New York's grave injury exception, I find
it will not frustrate that purpose either.
New York's interest in protecting contribution and indemnification
rights of third parties was significantly limited after the enactment of
the 1996 Omnibus Workers Compensation Reform Act, which substantially
changed Section 11. The Legislature's intent was to repeal the
application of Dole v. Dow Chem. Co., 30 N.Y.2d 143 (1972) to the Workers'
Compensation scheme in New York. In Dole, the New York Court of Appeals
had held that a defendant in a personal injury case could seek
contribution from a negligent employer even though the direct action by
plaintiff against the employer was barred. Dole, 30 N.Y.2d at 152.
The 1996 amendment sought to curtail the rising insurance premiums and
attendant costs of doing business in New York that employers faced since
Dole. See Majewski v. Broadalbin-Perth Cent. Sch. Dist., 91 N.Y.2d 577,
584-85 (1998); see also Governor's Approval Mem. L. 1996, ch. 635, at
1912 (noting that Dole "contradicted the foundation of the bargain struck
between business and labor" in the workers' compensation scheme by
"exact[ing] an unacceptably heavy financial cost from New York employers
and hinder[ing] our State's ability to attract and maintain businesses
and jobs while providing no benefit to injured workers.").
I recognize that the Legislature did not bar third-party claims
altogether. The Legislature left the one exception at issue here for
gravely injured plaintiffs. However, I disagree with Columbia's argument
that the exception was meant to protect New York workers from industrial
accidents, and that this interest should outweigh Pennsylvania's interest
here. The exception permits only third-party contribution or
indemnification actions. Even a gravely injured New York worker cannot
sue their employer directly under the exception. In fact, the 1996
amendments sought to protect the rights of New York workers in other
ways, such as providing economic incentives to employers who voluntarily
undertook safety consultation or invested in machinery designed to
promote the safety of the workplace. See Governor's Approval Mem. L.
1996, ch. 635, at 1913-14.
Therefore, whatever interest New York may have had prior to the 1996
amendment is no longer relevant since the change in the law. For this
reason, I find Columbia's reliance on Jones v. Munson Trasp., Inc.,
685 F. Supp. 879 (E.D.N.Y. 1988), misplaced. Jones was decided when Dole
still applied to third-party claims against employers. In Jones, the
district court applied the interest analysis and held that New York law
applied to determine whether a defendant tortfeasor could bring a
third-party claim against a Wisconsin employer for injuries suffered by a
Wisconsin employee while working in New York. The district court held
that New York had a "strong public policy" of allowing each tortfeasor to
pay its proportionate share under Dole. Therefore, even though the
employee received Wisconsin workers' compensation, the court held that
New York law applied.
The "strong public policy" relied on by the Jones court no longer
exists, and has been replaced by a new public policy of limiting an
employer's liability for workplace injuries to workers' compensation
premiums, except in the case of a grave injury. In addition, the Jones
court characterized the Dole rule as
conduct-regulating, rather than loss
allocating, thereby making the site of the injury more significant.
Jones, 685 F. Supp. at 882. Clearly, the Legislature here intended to
shift the costs from New York's employers back to the third parties sued
directly by employees for work-related injuries. In this regard, the 1996
amendment can only be characterized as loss allocating. See Cooney, 81
N.Y.2d at 74 (noting that contribution rules are loss allocating).
I also find it persuasive that the tortious conduct at issue —
the allegedly defective design and manufacture of the palletizer —
took place in Washington, not New York. Although New York may have an
interest in deterring negligent conduct within its borders by applying
its laws to industrial accidents, application of Section 11, a loss
allocating rule, will not have that effect in the same way that a
conduct-regulating rule could. Similarly, I am not persuaded by the fact
that Columbia shipped the palletizer to Leprino in New York. The locus of
the parties' contractual relationship is less relevant in a tort case
that does not involve breach of contract issues.
Likewise, I find it compelling that neither the law of Columbia's
domicile (Washington), the law of the domicile of the party with which it
contracted (Colorado), nor the law of the domicile of the plaintiff
(Pennsylvania) would permit the third-party claim. In fact, but for the
grave injury suffered by plaintiff, even New York law would bar this
claim. Therefore, displacing the normally applicable place of injury rule
in this case will advance the relevant substantive law purposes (the
exclusivity of the workers' compensation scheme) without impairing the
smooth working of the multi-state system. Neumeier, 31 N.Y.2d at 128.
Therefore, I find that Pennsylvania law should apply because its
interest in limiting employer liability is greater than New York's
interest in allowing third parties to seek contribution or
indemnification from employers of gravely injured workers. See Schultz,
65 N.Y.2d at 200-202 (applying third Neumeier rule and holding that New
Jersey charitable immunity law applied to bar plaintiff's claims, even
though certain injuries occurred in New York); see also Roach v. McGuire
& Bennett, Inc., 146 A.D.2d 89, 139-41 (3d Dep't 1989) (applying
Pennsylvania Workers' Compensation law where plaintiff, a New York
resident and employee of New York corporation, was injured at a work site
in Pennsylvania, applied for and received Pennsylvania workers'
compensation insurance); Restatement (Second) of Conflict of Laws §
183, comment c (2002) ("For a State . . . to subject a person who has
been held liable in workmen's compensation to further unlimited liability
in tort or wrongful death would frustrate the workmen's compensation
policy of the State in which the award was rendered."); Carnley v. Aid to
Hospitals, Inc., 975 F. Supp. 252 (W.D.N.Y. 1997) (displacing site of
injury rule and holding that Texas Workers' Compensation law applied to a
third-party action for indemnification brought by a New York property
owner against a Texas employer of a Texas employee injured while working
in New York).*fn9
For the foregoing reasons, Leprino's motion to dismiss the third-party
complaint (Dkt. #18) is granted.
IT IS SO ORDERED.