COLUMBIA, S.C. (Legal Newsline) – An asbestos defendant hoping to invoke the Workers’ Compensation process in South Carolina has failed and will instead be on the hook for a $16 million verdict.
CNA Holdings had argued Dennis Seay was a statutory employee of its corporate predecessor, but the court ruled Aug. 11 that that wasn’t the case.
Seay worked for Daniel Construction Company in the 1970s. Daniel was hired by the company that would become CNA to provide maintenance and repair workers at a polyester fiber plant in Spartanburg.
Justice John Few said his court has struggled to apply the “statutory employee doctrine” for more than 80 years.
“Today, following our more recent decisions on the statutory employee doctrine, we apply the doctrine in light of the General Assembly’s original purpose for enacting it: ‘to prevent owners and contractors from subcontracting out their work to avoid liability for injuries incurred in the course of employment,’” he wrote.
Seay, who is now deceased, developed mesothelioma, alleging as a result of exposure to work with pumps, valves and condensers at the plant from 1971-1980.
CNA argued that because it hired Daniel Construction and required it to pay Workers’ Comp premiums for its employees, that it was Seay’s statutory employer. If that were the case, CNA said, Seay would only be able to recover against it for his injuries through the Workers’ Comp process.
South Carolina’s asbestos litigation has drawn attention as a plaintiff-friendly system in recent years, and plaintiffs lawyers at Clawson Fargnoli of Charleston, Kassel McVey of Columbia, Dean Omar of Dallas and Simon Greenstone of Dallas scored a major victory with Seay’s 2019 verdict.
The trial court denied CNA’s statutory employer defense at the summary judgment phase, allowing the case to proceed to trial. A jury awarded $14 million in actual damages and $2 million in punitive damages to Seay’s widow.
The state Supreme Court analyzed five recent decisions and their effects on the statutory employee doctrine.
“Here, (CNA’s predecessor Hoechst) contracted out the maintenance and repair work to a sophisticated international construction company—Daniel Construction— not to a financially irresponsible subcontractor without the capacity to insure its workers,” Few wrote.
“But Hoechst went further—to its credit—and mandated through contract that the maintenance workers would be insured. The decisions of the circuit court, the court of appeals, and now this Court, in no way frustrate the policy of the statutory employee doctrine or the Workers' Compensation Law.”
Hoechst had no intention of avoiding the cost of insuring workers at the plant by hiring a contractor, Few wrote.
“Seay's family presumably received the worker's compensation benefits Hoechst obligated through contract that Daniel must provide,” Few wrote.
“The original purposes of the statutory employee doctrine are not served by making CNA Holdings an additional provider of workers' compensation benefits, because Daniel provided those benefits. The original purposes are certainly not served by granting CNA Holdings immunity for its wrongful conduct.
“It is not the role of courts to second-guess a legitimate business decision whose effect—far from the improper purposes the statutory employee doctrine was designed to prevent—was actually to guarantee that the workers affected by the decision would be insured against work-related injuries.”
Two justices dissented, with George James issuing an opinion explaining why.
“I do not understand how the majority's new affinity for the evolution of decision-making of business managers and the majority's new emphasis on the ‘modern economy’ is relevant to our analysis of Seay's employment status from 1969 through 1978,” he wrote.