Workers' Compensation-Valencia v. Freeland & Lemm Construction Company: Proving an Employer's Intent Remains Nearly Impossible in Tennessee

In August 1998, Francisco Valencia (Decedent), an employee of Freeland & Lemm Construction Company (Freeland), died after an open construction trench collapsed around him while working at a Freeland job site.1 Prior to Decedent's death, Freeland was twice cited for violating the Tennessee Occupational Safety and Health Act of 1972,2 which requires construction companies to slope the sides of their trenches or to use trench boxes.3 At the time of Decedent's death, trench boxes were on site, but unused.4 Additionally, the trench did not contain an exit, such as a stairway or ladder, a fact that created an additional violation of safety standards.5

Subsequently, Decedent's son, Mario Valencia (Valencia), filed suit against Freeland, alleging claims under the Workers' Compensation Act6 and, in the alternative, various causes of action in traditional tort liability.7 Valencia then amended the complaint to allege that Freeland acted with actual intent to injure Decedent.8 Freeland moved to dismiss Valencia's tort claims, and the trial court granted the motion.9 The trial court found that the amended complaint alleged facts that indicated Freeland's conduct was substantially certain to cause injury, but it fell short of alleging facts sufficient to show that Freeland acted with actual intent to injure.10 Prior precedent allowed an exception to workers' compensation exclusivity only when the employer acted with actual intent to injure.11 The court of appeals affirmed and held that Valencia could recover only under the Workers' Compensation Act.12

The Tennessee Supreme Court granted appeal to determine whether employer conduct that is substantially certain to cause employee death or injury falls within the judicially created exception to workers' compensation exclusivity.13 The Tennessee Supreme Court held, affirmed. Workers' compensation is an employee's exclusive remedy unless the plaintiff employee proves the employer acted with actual intent to injure the employee; conduct that is substantially certain to cause injury is not within the purview of the exception. Valencia v. Freeland & Lemm Constr. Co., 108 S.W.3d 239 (Term. 2003).

Like all states, Tennessee's workers' compensation statutes trace their history to nineteenth century Europe.14 In response to growing numbers of work-related deaths and injuries during the Industrial Revolution, Germany became the first European state to enact a comprehensive workers' compensation system.15 Germany's Accident Insurance Law of 1884 and its subsequent amendments covered virtually all German laborers.16 By 1910, nearly all European countries had enacted various forms of comprehensive workers' compensation statutes.17

In England and the United States during the late nineteenth century, the common law provided the only protection to employees injured while working.18 At common law, an employer owed an employee the duty to provide, among other things, a reasonably safe place to work.19 Additionally, employees injured at the hands of co-employees could invoke the doctrine of respondeat superior to hold the employer liable.20 Common law rules such as these, however, were severely limited by common law defenses available to the employer.21 Contributory negligence, assumption of the risk, and the fellow-servant rule would, if proved, completely bar an employee's recovery.22 England combated the harsh common law treatment of employees by enacting the Workmen's Compensation Act of 1897.23 American states began to follow their European peers by enacting workers' compensation acts in the twentieth century.24 Early on, some state courts invalidated such acts on constitutional grounds.25 In 1917, however, the United States Supreme Court issued a series of decisions that upheld a state's right to enact workers' compensation programs.26 Subsequently, Tennessee enacted its first workers' compensation statute on April 15, 1919.27

American workers' compensation acts typically provide the exclusive remedy available to employees injured by accident during the scope of employment; therefore, employees lose the right to sue under common law causes of action.28 Additionally, employees are limited to a statutorily defined recovery amount.29 In exchange for lost rights and statutorily capped recovery, employees may recover benefits in an expedited forum without proving their employers' fault.30 The policies surrounding such exclusivity are: "[F]irst, to maintain the balance of sacrifices between employer and employee in the substitution of no-fault liability for tort liability and, second, to minimize litigation, even litigation of undoubted merit."31 Exceptions have found their way into workers' compensation exclusivity, including an exception when an employer intentionally injures an employee.32

A majority of states recognize an employer intentional-tort exception to workers' compensation exclusivity.33 Several jurisdictions recognize such an exception by statute,34 others by judicial interpretation.35 Because most states define injury as arising from an accident, the leading theory supporting an intentional-tort exception is that the employer cannot allege the employee's injury was caused by accident if the employer intentionally caused such injury.36 Another theory to the exception is that public policy favors creating an intentional-tort exception as exemplified by Garcia v. Gusmack Restaurant Corp.,31 where the court stated, "[i]t would be anomalous to permit a defendant [who assaulted the plaintiff] . . . to say, 'I can assault you with impunity and the only remedy you have is to take Workmen's Compensation.'"38 The jurisdictions that recognize such an exception, however, do not agree on the definition of intent.39

As evolved from case law, the state of mind required by the employer for a finding of intent may be divided into three categories, beginning with the most stringent and most prevalent: (1) actual intent or a desire to bring about employee injury, (2) acts that the employer is substantially certain will result in injury, and (3) reckless misconduct that causes employee injury.40 Additionally, the New Mexico Supreme Court recently created an exception when an employer "willfully causes a worker to suffer an injury,"41 which is the functional equivalent of the substantially certain to injure test.

Of those jurisdictions recognizing the intentional-tort exception to workers' compensation exclusivity, the majority require that the employer act with conscious and deliberate intent to cause employee injury.42 Thus, a claimant that alleges that an employer negligently created a dangerous workplace condition or acted in a reckless manner resulting in injury will not satisfy the actual intent standard.43 To illustrate the standard, consider the following hypothetical situation: Employer requires Employee to labor in one-hundred degree heat for twelve hours without breaks. After complaining several times of heat-related symptoms, Employee suffers a serious heat-stroke and dies. Employee's next of kin brings suit for wrongful death. Under the actual intent to injure standard, Employee may not escape workers' compensation exclusivity if Employer merely desired more work product. In short, Employee's next of kin must prove that Employer subjectively intended to injure Employee to bring an action in tort.

Unlike the majority of jurisdictions using the actual intent to injure test, West Virginia has struggled with creating an exception when an employer acted with a willful, wanton, or reckless state of mind. In Mandolidis v. Elkins Indus.,44 the state's highest court interpreted section 23-4-2(c) of the West Virginia Code, which states "[i]f injury or death result to any employee from the deliberate intention of his or her employer to produce such injury or death, the employee . . . [has a] cause of action against the employer, as if [the Workers' Compensation Act] had not been enacted."45 Despite the statute's deliberate intent language, the majority in Mandolidis found that the statute would permit common law claims for employers' acts that were willful, wanton, or reckless in nature.46 The court stated that proving deliberate intent required a plaintiff to show that the employer acted with knowledge and appreciation of a "high degree of risk of physical harm."47

In response, the legislature redefined deliberate intent as acts exhibiting an employer's "consciously, subjectively and deliberately formed intention to produce the specific result of injury or death to an employee."48 Redefining intent partially limited the Mandolidis decision, but the legislature also enacted section 23-4-2(d)(2)(ii), which allowed an employee to escape exclusivity when the employee proved that (1) a specific unsafe condition existed "which presented a high degree of risk and a strong probability of serious injury or death"; (2) the employer had subjective knowledge of the unsafe condition and the risk associated therein; (3) the unsafe condition was a federal or state safety violation; (4) the employer intentionally subjected the employee to such dangerous condition; and (5) the unsafe condition was a "direct and proximate result of the employee's injury."49 Thus, the legislature chose to codify the dangerous-condition exception after the Mandolidis decision.

The West Virginia approach has not been accepted by commentators, courts, and legislatures.50 The line between reckless intent and simple negligence is quite delicate and extending the exception to include reckless conduct results in substantial judicial interpretation and inequitable administration according to one commentator.51

Unlike the West Virginia standard, the third approach, substantial certainty, is increasingly favored by jurisdictions.52 This approach centers on whether the employer acted with substantial certainty that the employee would be injured or killed.53 For example, North Carolina adopted the test in Woodson v. Rowland.54 In Woodson, an employee was killed when an unsloped, unbraced trench collapsed around him.55 Trench boxes were available to the employer, but were not used.56 The court first noted that an intentional tort committed by an employer would allow the plaintiff to seek damages in tort.57 The court then concluded that the evidence suggested that the employer subjected the employee to conditions that the employer knew were substantially certain to cause death or injury and that such intent and knowledge were tantamount to an employer committing intentional tort.58 Thus, the incident was not legally an accident and, therefore, did not subject the employee to workers' compensation exclusivity; the plaintiff could pursue traditional tort recovery.59

In Woodson, the court began its analysis by recognizing the balance that workers' compensation seeks to achieve: in exchange for losing their right to sue in tort for damages, employees are given compensation without proving employer fault.60 The court then explained that its holding was consistent with general definitions of intent as applied in tort actions.61 Finally, the court noted that the substantially certain test properly balances the purposes of workers' compensation and, at the same time, promotes safety in the workplace.62

It appears that the substantially certain test is, more or less, a possible tool used to prove an employer's state of mind.63 Certain evidence, such as employer knowledge of previous injuries, previous warnings of dangerous conditions, or requirements that an employee work in flagrantly dangerous conditions, tends to satisfy courts that apply this test.64 Applying the substantially certain exception to the hypothetical situation where Employer required Employee to labor in extreme heat after numerous complaints by the Employee, Employee's next of kin must only show that Employer was nearly certain that Employee would suffer injury to escape exclusivity. The test is satisfied more easily in this situation because Employee complained of his heat-related symptoms, giving Employer notice that such conditions might cause injury.

Professor Larson and many courts bemoan the substantial certainty test for a variety of reasons.65 Characterizing the test as "superficially attractive,"66 Larson points out that courts often look to the dangerous conditions and lose focus of the employer's intent.67 Additionally, Larson believes that the test is subject to inequitable application because certain conditions may appear likely to occur, but are not substantially certain to occur; the difference is one of subjective degree.68 Finally, Larson believes that allowing plaintiffs to pursue substantial certainty will open the doors to extensive litigation.69

The most recent development in the intentional-tort exception to workers' compensation exclusivity occurred when the New Mexico Supreme Court expressly overruled the actual intent to injure test and created an exception when the employer willfully injures an employee.70 In Delgado v. Phelps Dodge Chino, Inc., the court ruled that the intentional-tort exception will be recognized when "an employer intentionally inflicts or willfully causes a worker to suffer an injury."71 In order for a plaintiff to escape workers' compensation exclusivity, a plaintiff must show that:

(1) the . . . employer engage [d] in an intentional act or omission . . . that is reasonably expected to result in the injury suffered by the worker; (2) the . . . employer expect[ed] the intentional act or omission to result in the injury, or ha[d] utterly disregarded the consequences; and (3) the intentional act or omission proximately cause[d] the injury.72

The reasoning of the court was premised, in large part, on the peculiarities of New Mexico's workers' compensation statutes. Interpretation of the statutes must be accomplished by balancing the employee's rights and the employer's rights; employees are not given favor under the New Mexico system.73 Additionally, New Mexico workers' compensation will not cover injury when the employee willfully causes self-inflicted injury.74 Requiring an employer to prove willful self-inflicted employee injury is not consistent with requiring an employee to prove an employer's actual intent to injure; therefore, the court would violate the rule of construction applied to workers' compensation if it required a showing of an employer's actual intent to injure.75 Finally, the court criticized Larson's approval of the actual intent to injure test.76 In so doing, the court stated:

The actual intent test provides immunity from tort liability for all injuries inflicted by the employer except those rare, practically unprovable instances in which it is the employer's purpose to injure the worker . . . . [T]he actual intent test encourages an employer, motivated by economic gain, to knowingly subject a worker to injury in the name of profit-making. As long as the employer is motivated by greed, rather than intent to injure the worker, the employer may abuse workers in an unlimited variety of manners while still enjoying immunity from tort liability.77

Applying the willfulness test to the heat-exhausted Employee situation, Employer subjected Employee to a condition that could be objectively certain to cause injury. Employer also probably subjectively knew that working Employee without breaks for twelve hours would result in injury; this argument is bolstered by Employee's complaints of heat related symptoms. Finally, Employer's action was a proximate cause of Employee's death. Under the willfulness test, Employee should be able to bring suit in tort. In theory, the willfully inflicted injury test yields the same results as the substantial certainty test. The willfulness test, however, is based upon notions of balancing employers' rights with employees' rights instead of notions of traditional tortious intent. In conclusion, the two tests reach the same result although created by different means.

Turning to Tennessee law, it is helpful to observe the general contours of the state's workers' compensation system. The courts liberally construe workers' compensation statutes in favor of the employee to protect workers from uncompensated injuries.78 Additionally, courts reluctantly deviate from this underlying policy when interpreting workers' compensation statutes.79 Workers' compensation is the exclusive remedy when an employee is injured while employed,80 and the term "injury" is defined by statute as one caused by "accident arising out of and in the course of employment."81 Courts define "accident" as an event that "is not reasonably to be anticipated and is produced by an 'unusual combination of fortuitous circumstances.'"82 Finally, Tennessee will not allow recovery under workers' compensation where an employee's willful misconduct or intentional self-inflicted injury led to the injury.83 As in the majority of jurisdictions, Tennessee courts have created an exception to workers' compensation exclusivity when an employer intentionally injures an employee.84

In 1979, the Tennessee Court of Appeals first recognized such an exception to the exclusivity of workers' compensation statutes when an employer intentionally injures an employee.85 In Cooper v. Queen, the complaint alleged that the employee died of electrocution resulting from the employer's act of removing steel cable fiberglass insulators.86 The court framed the issue as "whether gross or criminal negligence is of such a character that it should be equivalent to intentional tortuous [sic] conduct and thus fall outside the scope of [section 50-6-108 of the Tennessee Code Annotated]."87 Although the court answered in the negative,88 it evinced its favor for an intentional-tort exception by stating, "an intentional tort by the employer in person upon the employee will afford a ground for common law action for damages."89 The court reasoned that such an exception is warranted because an employer "cannot allege an accident when he has intentionally committed [such an] act."90 The plaintiff alleged facts tending to show grossly negligent conduct; however, the court declined to extend the intentional-tort exception to such conduct.91 In so doing, the court recognized a narrow exception to the Tennessee Workers' Compensation Act when an employer acts with actual intent to injure the employee.92

In 1984, a Tennessee appellate court again examined the intentional-tort exception in King v. Ross Coal Co.93 The trial court dismissed the plaintiff employee's complaint, which alleged that the employee was injured by a falling boulder while drilling in a dangerous section of a strip mine after employees had repeatedly warned the employer of the dangerous condition.94 The employee claimed that the work-related injuries were not caused accidentally because the employer had been adequately warned of such danger, yet the employer refused to make the site safe because it would be too costly and burdensome.95 The court of appeals affirmed the dismissal and held that an employee must allege "more than a mere inference of tortious intent to convert the defendant's negligence into an intentional tort."96 The court also approved Lawson's commentary, which states:

Even if the alleged conduct goes beyond aggravated negligence, and includes such elements as knowingly permitting a hazardous work condition to exist, knowingly ordering claimant to perform an extremely dangerous job, wilfully and unlawfully violating a safety statute, this still falls short of the kind of actual intention to injure that robs the injury of accidental character.97

In 1987, a Tennessee court of appeals again refused to expand the exception by relaxing the actual intent to injure standard.98 In Mize v. Conagra, Inc., the plaintiff claimed that the employee died during a factory explosion caused by an employer-created dangerous condition.99 The court began by recognizing that Tennessee courts created an exception to workers' compensation exclusivity when an employer acts with actual intent to injure.100 The court stated, however, that the exception is limited; actual intent to injure is not necessarily implied where an employer knowingly permits dangerous working conditions and violates safety regulations.101 Finally, the court addressed the plaintiff's argument that other jurisdictions "have relaxed the actual intent" standard to include intentional acts that are substantially certain to result in injury.102 The court avoided this argument, however, by simply stating, "opinions from other jurisdictions construing workmens' compensation statutes are not binding on our courts."103

In Valencia v. Freeland, the Tennessee Supreme Court reached the same result as Mize, King, and Cooper by holding that recovery under workers' compensation is an employee's exclusive remedy unless the employee shows evidence of actual intent to injure the employee; conduct that is substantially certain to cause injury is not within the purview of the exception.104 The court began its analysis by framing the issue as "whether the judicially-created exception to the exclusive remedy requirement, 'actual intent,' should be broadly interpreted to include an employer's conduct that is 'substantially certain' to cause injury or death."105 The exception to exclusivity must be interpreted in accordance with section 50-6-108(a) of the Tennessee Code, which removes an employee's right to seek tort damages if the employee's injuries are compensable under the statute.106 The court then approved the lower courts' application of an intentional-tort exception to exclusivity107 and reiterated that proving actual intent to injure is a higher standard than alleging gross or criminal negligence.108

Valencia argued, on public policy grounds, that the intentional-tort exception should be extended to include employers' acts that are substantially certain to injure.109 The court found that traditional notions of tortious intent are not applicable to workers' compensation actions,110 and that a plaintiff must prove nothing short of actual intent to injure the employee to prevail.111 The court based its reasoning on the notion that employers were sufficiently deterred from creating dangerous conditions for fear of paying recovery to an employee without proof of fault.112 Finally, the court reasoned that extending the intentional tort exception to include acts that are substantially certain to result in injury would "radically depart from precedent" and depart from "the majority rule."113 The complaint did not allege facts suggesting actual intent to injure and, therefore, the court affirmed the lower courts' decisions.114

The recognition of an intentional-tort exception to workers' compensation exclusivity is well established in Tennessee.115 In light of the criticisms of the actual intent standard boldly announced by the New Mexico Supreme Court in Delgado, however, the plaintiff, Valencia, was undoubtedly frustrated by Tennessee's reluctance to enter the realm of substantial certainty, or at the least, to allow an exception for willful employer acts.116 Nevertheless, the court was constrained by Tennessee's tendency to resolve workers' compensation claims to include injured or killed employees within statutory coverage. Unlike New Mexico, Tennessee does not seek to balance rights and obligations of employers and employees.117 Tennessee's statute is remedial in nature and, therefore, has historically been construed to favor recovery within the workers' compensation system.118

The most disturbing aspect of the Tennessee workers' compensation statute and associated judicial construction is that employers are not sufficiently deterred from maintaining egregious working conditions, unsafe to their employees. In Valencia, the Tennessee Occupational Safety and Health Act of 1972 and fear of paying workers' compensation benefits in case of employee injury provided the defendant with some quantity of deterrence; however, such possible penalties did not persuade Freeland to install available trench boxes.119 As the law is construed presently, "the actual intent test encourages an employer, motivated by economic gain, to knowingly subject a worker to injury in the name of profit-making. As long as the employer is motivated by greed, rather than [actual] intent to injure the worker, the employer may abuse workers . . . while still enjoying immunity from tort liability."120 If the Tennessee compensation statute needs to be changed, however, it must come from the legislature and not the courts.

The Tennessee advisory council on workers' compensation meets twice a year.121 The council should be willing to examine the propriety of statutorily capping employee recovery when the employee is subjected to employer-known, treacherous working conditions. A change in the law could provide more incentive for employers to maintain safe working environments for fear of paying higher compensation or tort damages. Many possible legislative additions or modifications could solve the problem, and, at least in theory, West Virginia appears to have created a satisfactory exception to workers' compensation exclusivity with that state's "unsafe condition" exception.122 The law requires the injured employee to prove an employer's subjective knowledge of potentially life threatening work conditions and allows an employee to sue for damages but forecloses punitive or exemplary damages.123

The Tennessee workers' compensation scheme shows no general signs of failure in compensating employees for their injuries. The statutes, however, do not provide employers an adequate deterrent effect against maintaining life-threatening working conditions and, therefore, consideration of modification is needed.

J. DANIEL HUFFINES*

* Associate Staff, The University of Memphis Law Review, J.D. Candidate, May 2005, University of Memphis, Cecil C. Humphreys School of Law; B.S.B.A., 2002, University of Tennessee. The author extends a special thanks to Professor Ernest F. Lidge, III, for helpful advice and thoughtful suggestions.

Copyright University of Memphis Spring 2004
Provided by ProQuest Information and Learning Company. All rights Reserved