Opinion
Civil No. 5-92-88 (DDA/RLE)
May 3, 2004
ROBERT D. BROWNSON and KRISTIK. WARNER, Brownson Ballou, PLLP, Minneapolis, Minnesota, for Plaintiff Conwed Corporation
TREVOR J. WILL, MICHAEL D. ROSENBERG, Foley Lardner, Milwaukee, Wisconsin, for Defendant Union Carbide Corporation
LISA M. ELLIOTT, Minneapolis, Minnesota, for Defendant Union Carbide Corporation
ORDER
This case raises several questions concerning the type and amount of damages an employer may recover from a third party pursuant to the subrogation provision of Minnesota's Workers' Compensation Act, Minn. Stat. § 176.061. Plaintiff Conwed Corporation ("Conwed") and Defendant Union Carbide Corporation ("Union Carbide") tried the consolidated products liability claims of a group of former Conwed employees to a jury in accordance with the procedure outlined in Tyroll v. Private Label Chemicals. Inc., 505 N.W.2d 54, 60-61 (Minn. 1993). The jury found both Conwed and Union Carbide at fault for causing injuries to six of those former employees and determined common law tort damages for those former employees in various categories, including general disability and loss of future earning capacity. Union Carbide now renews its motion for judgment as a matter of law on certain issues, arguing that Conwed's subrogation claim does not extend to its employees' general disability damages and that Conwed did not present evidence at trial sufficient to support the jury's determinations of damages for loss of future earning capacity. Both parties also have presented arguments addressing how the jury's allocation of fault affects Conwed's subrogation claim, and the Court will consider that issue in this Order as well. The Court holds that Conwed is not precluded as a matter of law from including its former employees' general disability damages in its subrogation claim and that the trial record was sufficient to allow the jury to consider damages for loss of future earning capacity. The Court therefore will deny Union Carbide's renewed Rule 50 motion. The Court further holds that the percentage of fault attributable to an employer in causing an employee's injury proportionally reduces the employer's subrogation recovery from a third party in the manner hereinafter described. The Court will enter judgment accordingly after the amount of workers' compensation benefits paid and payable to the six employees at issue is determined.
By Order dated November 6, 2003, the Court directed the parties to brief specified legal issues for resolution prior to the entry of judgment, including the issues Union Carbide raises in its renewed Rule 50 motion. Union Carbide retains the right to raise any other issues preserved for consideration under Fed.R.Civ.P. 50(b) by appropriate motion within the time limits allowed by rule.
I.
The extensive procedural and factual history of this litigation need not be rehearsed here in detail. The following is a summary of the facts pertinent to the questions before the Court. Union Carbide sold chrysotile asbestos, marketed under the brand name "Calidria," to Conwed from 1964 to 1974. During most of that time, Conwed used Union Carbide's Calidria asbestos as an ingredient in ceiling tiles Conwed manufactured at a plant in Cloquet, Minnesota. The procedures involved in the manufacture of Conwed's ceiling tiles resulted in the generation of large quantities of airborne dust containing asbestos fibers, to which many of the employees at the Cloquet plant were exposed in the course of their employment. Conwed was a self-insured employer under Minnesota's Workers' Compensation Act, and in the mid-1980s Conwed began paying workers' compensation benefits to a substantial number of its employees who alleged that they had sustained injuries as a result of their exposure to asbestos at the Cloquet plant.
Many of the Cloquet plant employees also brought products liability actions against Union Carbide based on the same injuries for which they received workers' compensation benefits from Conwed. Conwed has a statutory subrogation interest in recovering the workers' compensation benefits it paid or will pay to an employee from the proceeds of that employee's common law tort claim against a third party whose conduct necessitated the payment of benefits. Minn. Stat. § 176.061. All of the Cloquet employees involved in this case partially settled their tort claims against Union Carbide pursuant to Naig v. Bloomington Sanitation, 255 N.W.2d 891 (Minn. 1977), which permits an injured employee independently of the employer to settle that portion of his claim representing "damages not recoverable under worker's compensation." Id. at 894. A Naig settlement does not affect the employer's subrogation rights, id. at 895, and the employer remains free to assert its subrogation claim directly against the third party tortfeasor through "step[ping] into the shoes of the employee to continue the unsettled portion of the employee's tort cause of action." Tyroll, 505 N.W.2d at 60. See also Conwed Corp. v. Union Carbide Chems. Plastics Co., 634 N.W.2d 401, 406-08 (Minn. 2001) (describing the employer's subrogation action in detail). The employer in that situation tries the employee's tort case in the usual manner, and the employer may recover workers' compensation benefits paid and payable to the employee "out of the common law damages for which the third party tortfeasor is first found responsible." Tyroll, 505 N.W.2d at 60.
Conwed and Union Carbide tried the consolidated tort claims of eleven former Conwed employees, all of whom had entered into Naig settlements with Union Carbide, to a jury in September and October 2003. The jury found by special verdict that Union Carbide had failed to provide adequate warnings for the safe use of its Calidria asbestos and that Conwed was negligent with respect to the safety of its employees. The jury also found that six of the former Conwed employees had asbestos-related diseases causing a lung impairment and that the conduct of both Union Carbide and Conwed contributed to causing those injuries. The jury then allocated fault for causing those injuries between Conwed and Union Carbide in each of the six cases and determined damages. The jury's allocation of fault and the pertinent damages awards are as follows:
The Court followed the Minnesota Supreme Court's suggestion to divide the claims of Conwed's former employees into "reasonably related groups" for purposes of trial, Conwed, 634 N.W.2d at 413, and divided the cases based on the asbestos-related diseases from which the employees allegedly suffered. This consolidated group of eleven is part of a larger group of former Conwed employees who allegedly suffered from non-malignant diseases of the lung, including asbestosis.
The Court held as a matter of law that the evidence did not support a finding of fault on the part of the former Conwed employees, so the jury did not consider whether to allocate any percentage of fault to those employees.
1. Frederick Riedel: Conwed's fault: 88% Union Carbide's fault: 12% Past disability: $544,000
2. Arvin Rosen: Conwed's fault: 70% Union Carbide's fault: 30% Past disability: $120,000
3. Raymond Sarazin: Conwed's fault: 91% Union Carbide's fault: 9% Past disability: $457,000
4. Dale Skramstad: Conwed's fault: 88% Union Carbide's fault: 12% Disability (total past and future): $510,000 Loss of future earning capacity: $80,000
5. Eugene Smith: Conwed's fault: 88% Union Carbide's fault: 12% Disability (total past and future): $1,350,000
6. Donald Strom: Conwed's fault: 88% Union Carbide's fault: 12% Disability (total past and future): $1,513,600 Loss of future earning capacity: $120,000
Union Carbide's challenge to the jury's determinations of loss of future earning capacity damages requires a more thorough account of the evidence supporting those determinations for the two employees who received them, Dale Skramstad and Donald Strom, considered in the light most favorable to Conwed as the prevailing party. See EEOC v. Kohler Co., 335 F.3d 766, 772 (8th Cir. 2003) (stating standard for evaluating motions for judgment as a matter of law following a jury verdict). Although neither Skramstad nor Strom testified at trial, the jury had before it several factual stipulations concerning those men along with medical records and reports. The stipulations of fact indicate that both Skramstad and Strom were young when they began working at Conwed and were at the Cloquet plant during most of the years Conwed used Calidria asbestos in ceiling tiles. Skramstad was born in 1940, Strom in 1941. Skramstad began working at Conwed in 1958 at the age of 18 and received an hourly wage of $2.87 when he left Conwed in 1970; Strom began working at Conwed in 1960 at the age of 19 and had an hourly wage of $7.20 when he left Conwed in 1985.
The medical records in evidence for Skramstad and Strom include reports from Dr. Thomas Arnold, who evaluated those employees on behalf of Conwed in the early 1990s. Those reports describe the work histories and physical symptoms of both men in some detail. Skramstad worked primarily as a mechanic after leaving Conwed. He began suffering from shortness of breath in about 1990, and he left a position as an auto mechanic in 1991 after having difficulty breathing when pushing vehicles and inhaling fumes at his workplace. Strom obtained employment doing general repair work at another manufacturing plant after leaving Conwed, and that position seems to have required him to work throughout the plant. Strom, like Skramstad, suffered from progressively worsening breathing problems, beginning in Strom's case in about 1985. By 1990, Strom reported that he could not negotiate four flights of stairs at work without having to sit and rest for a period of time.
The trial record contains little direct evidence of Skramstad's and Strom's medical conditions after the early 1990s, when they settled their workers' compensation claims with Conwed. Conwed, however, offered medical expert opinion testimony describing the symptoms of nonmalignant asbestos-related disease, which include shortness of breath and reduction of pulmonary function, and indicating that those symptoms worsen progressively over time and are irreversible. One of Conwed's medical experts also offered year by year projections of precisely how Skramstad's and Strom's conditions would deteriorate over time in terms of lung function and workers' compensation disability ratings. Skramstad's disability rating was projected to be 25% at the time of trial, at age 62, and would increase to 50% before the end of Skramstad's life expectancy at age 78. Strom's disability rating was projected to be 75% at the time of trial, at age 61, and would increase as high as 95% at the end of Strom's life expectancy at age 78.
II.
Union Carbide argues that Conwed cannot recover any amount from the general disability damages of Conwed's employees because general disability damages are not "recoverable under workers' compensation" within the meaning of Naig and that the employees' claims for such damages thus were extinguished in their Naig settlements with Union Carbide. Union Carbide also argues that the jury impermissibly speculated in determining damages for loss of future earning capacity, primarily because the trial record lacked recent evidence of Skramstad's and Strom's earnings, work habits, and physical symptoms. Union Carbide finally argues that the fault the jury attributed to Conwed in causing an employee's injury diminishes the amount Conwed may recover in subrogation from that employee's tort claim. The Court will address those three arguments in turn.A.
At common law in Minnesota, a plaintiff in tort may recover general damages for "permanent disability." Dawydowycz v. Ouady, 220 N.W.2d 478, 481 (Minn. 1974). The jury determined general damages based on permanent disability for six of the former Conwed employees, and Union Carbide does not take issue here with the amount of those damages or the sufficiency of the evidence to support them. Union Carbide contends only that the jury improperly considered the employees' general disability damages because Minnesota does not permit Conwed to include those damages in its subrogation claim. Whether a particular class of damages properly was before the jury is a question of law. Porous Media Corp. v. Midland Brake. Inc., 220 F.3d 954, 961 (8th Cir. 2000).
Union Carbide's position is predicated upon Naig's distinction between damages "recoverable and nonrecoverable under worker's compensation," 258 N.W.2d at 894, and Tyroll's gloss upon that distinction. Naig holds that an employer's subrogation interest does not attach to "nonrecoverable" compensation that an employee receives for his injuries, i.e. payments that represent "the excess over and above any worker's compensation claims." 258 N.W.2d at 895. Tyroll attempts to clarify that distinction through defining a "line of demarcation" that separates common law damages into types that are recoverable under workers' compensation and types that are not recoverable. 505 N.W.2d at 59. Although Naig suggests that damages for "general disability . . . might be related to claims for workers' compensation," 258 N.W.2d at 895, Tyroll rejects that suggestion and states that general disability damages are "of the kind not recoverable under workers' compensation . . ., at least ordinarily." 505 N.W.2d at 59 (footnote omitted). Tyroll reasons that damages recoverable under workers' compensation are limited to the employee's common law damages representing economic loss and medical expenses, 505 N.W.2d at 60 n. 6, which implies that other categories of common law damages, including general disability, belong exclusively to the injured employee and therefore disappear from the employer's subrogation action if the employee enters into a Naig settlement.
Union Carbide interprets Tyroll's line of demarcation as an absolute, bright-line rule applicable to all cases, and at least one case in this District indeed has derived a converse bright-line rule from Tyroll, holding that the categories of "recoverable" damages, including past wage loss and loss of future earning capacity, belong exclusively to the employer and therefore disappear from the employee's tort case if the employer settles its subrogation claim in a reverse-Naig agreement with the third party tortfeasor. Van Gordon v. Beaver, 928 F. Supp. 858, 864 (D. Minn. 1996). The Court, however, is compelled to reject Union Carbide's interpretation of Tyroll as unsound. A categorical, bright-line division of an employee's common law damages can have the practical effect of depriving an employer or an employee of a recovery to which he otherwise would be entitled under Minnesota's workers' compensation law, which the Tyroll court cannot have intended. And, more significantly, such a bright-line distinction is inconsistent with the Minnesota Supreme Court's approach, both before and after Tyroll, to the characterization and allocation of an employee's common law damages in the context of workers' compensation.
The problems with a strict, bright-line distinction between categories of common law damages is most apparent from the perspective of an injured employee. As the Minnesota Court of Appeals has noted, workers' compensation benefits typically cover only a percentage of an injured employee's lost wages, leaving a gap between an employee's actual economic loss resulting from an injury and the workers' compensation benefits paid and payable to the employee. Sayre v. McGough Constr. Co, Inc., 580 N.W.2d 503, 505 (Minn.Ct.App. 1998). Sayre, like Van Gordon, involved a reverse-Naig situation in which the third party tortfeasor claimed the settlement of the employer's subrogation claim barred the injured employee from seeking damages from the third party tortfeasor for loss of future earning capacity, a category which is "recoverable" under workers' compensation. 580 N.W.2d at 504. The Court of Appeals rejected that argument, holding that the employee was entitled to recover damages for loss of future earning capacity to the extent that those damages exceeded analogous workers' compensation benefits paid and payable from the employer. Id. at 505. Holding otherwise, according to the Court of Appeals, would be inconsistent with the Workers' Compensation Act, which precludes an injured employee from obtaining a double recovery from a third party tortfeasor but which does not purport to limit the common law liability of a third part tortfeasor at the expense of an injured employee. 580 N.W.2d at 505.
Sayre states that this result is consistent with Van Gordon, 580 N.W.2d at 506, but the two decisions clearly conflict on this point.Compare Van Gordon, 928 F. Supp. at 864 ("These . . . precluded claims . . . include Plaintiff's request for . . . loss of earning capacity") (footnote omitted) with Sayre, 580 N.W.2d at 506 ("Sayre may pursue his claim for loss of earning capacity against the tortfeasor").
Allowing employees to receive damages from types that are recoverable under workers' compensation does not lead inevitably to the conclusion that an employer may receive damages from types that are not recoverable under workers' compensation. Tyroll's distinction between recoverable and not recoverable types of damages is predicated on the assumption that an employee's economic loss always will equal or exceed the workers' compensation benefits paid and payable to the employee, 505 N.W.2d at 59 n. 5, and if that assumption were valid, Tyroll's "line of demarcation" indeed would apply in all cases. Minnesota's workers' compensation law, however, allows for cases in which benefits paid and payable, exclusive of medical expenses, will exceed an injured employee's damages for wage loss and for loss of future earning capacity. That situation, as with the employee in Sayre, would lead to the damages Tyroll designates as "recoverable" being insufficient to satisfy the employer's subrogation claim even if the third party tortfeasor is completely at fault for causing the employee's injury.
This problem can result when the employee receives "permanent partial disability" benefits from the employer, which Conwed earlier has stated it paid to some of the employees at issue in this case. Unlike most types of benefits under Minnesota's Workers' Compensation Act, which are calculated as a percentage of the employee's wages, permanent partial disability benefits are calculated based only on the employee's medically-determined disability rating. Minn. Stat. § 176.101. An employee who qualifies for permanent partial disability benefits thus receives a predetermined amount for a particular level of permanent disability regardless of the wages the employee actually earned at the time of the injury. An employee who makes $10,000 per year and an employee who makes $75,000 per year, in other words, would be entitled to the same amount of permanent partial disability benefits for an identical injury.
One could argue that amounts payable as permanent partial disability benefits nevertheless represent the loss of potential future earnings resulting from a particular level of bodily disability. The Minnesota Supreme Court in fact originally took that position, holding that an employee could not simultaneously recover benefits for permanent partial disability and for wage loss because both types of benefits were intended to compensate for loss of earnings and the employee was not entitled to a double recovery. Pramschiefer v. Windom Hosp., 211 N.W.2d 365, 368 (Minn. 1973); Boquist v. Dayton-Hudson Corp., 209 N.W.2d 783, 785 (Minn. 1973). The Minnesota legislature, however, soon thereafter amended the Workers' Compensation Act to provide that permanent partial disability benefits were payable concurrently with wage loss benefits, adding language to the statute indicating that permanent partial disability benefits were intended to compensate the employee for "functional loss of use or impairment of function." 1974 Minn. Laws ch. 486, § 1 (presently codified at Minn. Stat. § 176.021 Subd. 3). See also Rozales v. Peerless Welder, Inc., 246 N.W.2d 851, 853 (Minn. 1976) (recognizing legislative overruling of Pramschiefer.) In light of that amendment, the Minnesota Supreme Court subsequently held that "permanent partial disability benefits must compensate for loss distinguishable from reduced earning capacity." Tracy v. Streater/Lytton Indus., 283 N.W.2d 909, 914 (Minn. 1979). See also Ahoe v. Quality Park Prods., 258 N.W.2d 885, 890 n. 2 (Minn. 1977) ("compensation payable for permanent partial disability represents general damages rather than payment for loss in earning capacity"). Furthermore, because permanent partial disability benefits are analogous to general damages, the payment of permanent partial disability benefits "is in no way dependent upon any prerequisite showing of wage loss." Moes v. City of St. Paul, 402 N.W.2d 520, 526 (Minn. 1987).
Tyroll acknowledges this line of cases, 505 N.W.2d at 59, but does not discuss them or explicitly overrule them. Tyroll thus does not account for a situation where an employer's subrogation interest, which extends to the full amount of workers' compensation benefits paid and payable,Kempa v. E.W. Coons Co., 370 N.W.2d 414, 419 (Minn. 1985), exceeds the full amount of an injured employee's loss of future earning capacity damages, thereby depriving the employer of a recovery from the third party tortfeasor to which the employer should be entitled under the Workers' Compensation Act. Sayre, in considering a similar problem, held that Tyroll's distinction between recoverable and not recoverable damages was not absolute because that distinction applied only "ordinarily," 580 N.W.2d at 505 (quoting Tyroll, 505 N.W.2d at 59), leaving open the possibility that a court could adjust the "line of demarcation" in an unusual case in order to protect a party's rights of recovery under the Workers' Compensation Act. That less rigid approach is consistent with Tyroll's reasoning and with other Minnesota Supreme Court cases, both before and after Tyroll, holding that a trial court has the authority to allocate a jury's damages award into portions recoverable and not recoverable under workers' compensation in any way that is "reasonable in light of the total award [and] not patently arbitrary." Klinski v. Southdale Manor, Inc., 518 N.W.2d 7, 10 (Minn. 1994) (quoting Krause v. Merickel, 344 N.W.2d 398, 403 (Minn. 1984)). The Court accordingly holds that Conwed is not precluded as a matter of law from recovering some part of its employees' general disability damages in its subrogation claim against Union Carbide. Whether Conwed ultimately makes such a recovery depends upon the type and amount of benefits Conwed paid and will pay to the employees at issue.
Sayre endorses the procedure the Minnesota Court of Appeals applied in Berg v. Jasper, Dev. Corp., No. C7-96-1998, 1997 WL 177655, at *2 (Minn.Ct.App. Apr. 15, 1997) (unpublished opinion), in which the Court of Appeals affirmed the trial court's deduction of workers' compensation benefits paid and payable from the corresponding categories of the employee's tort damages, including general disability damages. 580 N.W.2d at 505 n. 3.
B.
Loss of future earning capacity, like general disability, is an item of general damages under Minnesota common law. Kwapien v. Starr, 400 N.W.2d 179, 183 (Minn.Ct.App. 1987). Loss of future earning capacity damages represent compensation for an injury's continuing adverse effect upon the plaintiffs ability to earn a living. Id. A plaintiff may recover damages for loss of future earning capacity without presenting "specific proof of actual earnings or income either before or after the injury." Id. (quoting Wilson v. Sorge, 97 N.W.2d 477, 482-83 (Minn. 1959)). A plaintiff, however, has the burden of "prov[ing] the reasonable certainty of future damages by a fair preponderance of the evidence." Kwapien, 400 N.W.2d at 183 (citing Pietrzak v. Eggen, 295 N.W.2d 504, 507 (Minn. 1980)). A plaintiff may do this by showing "through medical or other testimony that the progress of a disability will have a detrimental effect on earning capacity." Mack v. McGrath, 150 N.W.2d 681, 683 (Minn. 1967) In determining damages for loss of future earning capacity, the finder of fact also should take into consideration such factors as the plaintiff's age, life expectancy, health, occupation, talents, skills, and training. Kwapien, 400 N.W.2d at 184.
Union Carbide claims that the jury determinations of loss of future earning capacity damages for Dale Skramstad and Donald Strom are necessarily speculative because the trial record lacks a reasonable basis for calculating the amount of those damages. The Court may not set aside the jury verdict unless "there is a complete absence of probative facts to support the verdict." Walsh v. Nat'l Computer Sys., Inc., 332 F.3d 1150, 1158 (8th Cir. 2003) (citation omitted). The Court, furthermore, must consider the evidence in the light most favorable to the verdict, consider as proved all facts Conwed's evidence tends to prove, and allow Conwed all favorable inferences from those facts. Id.
Conwed's case for loss of future earning capacity damages was not ideal, as Union Carbide suggests, but the evidence withstands scrutiny under the deferential standard of review. Recent evidence of the employees' wages and work history would have been helpful, but such evidence is not a necessary predicate for determining loss of future earning capacity. The evidence in the record is not materially different from Minnesota cases upholding awards of damages for loss of future earning capacity if the plaintiff shows that he has a permanent impairment of function resulting from his injury and that the impairment prevents the plaintiff from performing his job duties in the same manner as before the injury. See Sylvester v. Gleason, 371 N.W.2d 573, 576 (Minn.Ct.App. 1985) (citing cases). The jury here knew from the parties' stipulations and the medical records in evidence what Skramstad's and Strom's ages were, what they did at Conwed, and generally what their employment history was after leaving Conwed up to the early 1990s. The medical records establish that Skramstad and Strom began showing symptoms of asbestos-related disease, such as shortness of breath, in the 1980s, and other testimony indicates the degree to which those symptoms would worsen over those employees' life expectancies. The jury permissibly could infer from this record that Skramstad's symptoms affected his ability to perform his job as a mechanic and that Strom's symptoms affected his ability to move around his place of employment to perform his job. The jury also permissibly could infer that the progressive worsening of those employees' symptoms would cut short their chosen courses of employment, whatever they happened to be, after the early 1990s. The Court accordingly holds that this record supports a determination of damages for loss of future earning capacity for Skramstad and Strom.
C.
Although the Court's November 6, 2003, Order did not explicitly direct the parties to discuss the effect of Conwed's fault upon Conwed's subrogation claim, Union Carbide and Conwed each included arguments on that question in the briefs they submitted. Because the parties agree that the jury verdicts allow Conwed a recovery from Union Carbide in some amount, the Court finds that the comparative fault issue is ripe for adjudication and will address it here.
Although the parties refer to this question as a comparative fault issue, Minnesota's comparative fault statute, Minn. Stat. § 604.01, does not apply to an employer's subrogation recovery under the Workers' Compensation Act. Hudson v. Snyder Body. Inc., 326 N.W.2d 149, 157 (Minn. 1982). The actual question, as discussed below, is whether Union Carbide is entitled to an offset to Conwed's subrogation damages, which the Minnesota Supreme Court often refers to as the employer's "contribution" obligation, based on Conwed's fault. See Kempa, 370 N.W.2d at 420 (discussing employer's fault in the context of its subrogation claim) and Wilken v. Int'l Harvester Co., 363 N.W.2d 763, 767 (Minn. 1985) (noting that an employer's Lambertson contribution obligation serves in practice as an offset to the employer's subrogation interest).
It is well-settled that "the ultimate damages recoverable in the employer's subrogation suit are the benefits paid and payable" to the employee. Tyroll, 505 N.W.2d at 60. Conwed and Union Carbide disagree, however, concerning whether and how the jury's allocation of fault reduces the maximum amount of damages the employer may recover from the third party tortfeasor. Conwed asserts that its fault as the employer is irrelevant and that it may recover the full extent of benefits paid and payable from Union Carbide so long as the jury's damages award multiplied by Union Carbide's share of fault exceeds the amount of benefits paid and payable. That position has some support in Minnesota Supreme Court case law. Kempa v. E.W. Coons Co., 370 N.W.2d 414 (Minn. 1985), notes that damages in a subrogation action are diminished "by the aggregate fault of the employee and the employer," id. at 419, and Tyroll states that the court should enter judgment against the third party tortfeasor "for the amount of benefits paid and payable or such part thereof as the jury's award of damages will cover." 505 N.W.2d at 61. That language suggests that a third party tortfeasor must pay the entire amount of benefits paid and payable to the employer if the share of the employee's tort damages attributable to the third party tortfeasor's fault exceeds the amount of benefits paid and payable.
The effect of Conwed's proposed procedure, as Union Carbide points out, is to allow Conwed a full recovery even though the jury attributed between 70% and 91% of the fault for causing the employees' injuries to Conwed. An at-fault employer has an equitable obligation to contribute "an amount proportional to its percentage of negligence" to an award of damages to an injured employee. Lambertson v. Cincinnati Corp., 257 N.W.2d 679, 689 (Minn. 1977). Although an employer has no obligation to contribute to "nonrecoverable" amounts the third party tortfeasor paid in a Naig settlement, Tyroll, 505 N.W.2d at 61, a Naig settlement cannot allow Conwed to escape its contribution obligation for the portion of the jury verdict that is recoverable under workers' compensation. Tyroll indeed acknowledges that point, noting that comparative fault "may diminish or defeat [a third party tortfeasor's] liability for a subrogation claim."Id.
Union Carbide argues that its obligation to Conwed should equal Union Carbide's share of fault multiplied by the amount of benefits paid and payable rather than the jury verdict. (Union Carbide's Memo. Regarding Calculation of Damages at 11-12.) That position takes Conwed's fault into account, which Lambertson requires, but does not precisely describe the appropriate procedure under Minnesota law. Union Carbide is correct in asserting that, following a Naig settlement, the employer's contribution obligation is based on the amount of benefits paid and payable rather than on the amount of the verdict. Todalen v. United States Chem. Co., 424 N.W.2d 73, 81 (Minn.Ct.App. 1988), overruled in part on other grounds. Tyroll v. Private Label Chems. Co., 505 N.W.2d 54, 62 (Minn. 1993). That contribution obligation, however, is based on the employer's share of the fault, not the third party tortfeasor's. An employer's subrogation claim, in other words, is proportionally reduced by the percentage of fault attributable to the employer. Union Carbide's procedure would reach the correct result in this case, where no fault was attributable to Conwed's employees, but as a general rule that procedure would have the effect of penalizing the employer for any percentage of fault attributable to the employee, which the rationale behind Lambertson does not support.
Consider, for example, a case in which the third party tortfeasor's fault was 70%, the employer's fault was 20%, the employee's fault was 10%, and the employer's subrogation damages were $100,000. Multiplying the employer's subrogation damages by third party tortfeasor's fault, as Union Carbide suggests, would result in an award to the employer of $70,000 ($100,000 × .70), which effectively offsets the employer's award by the combined fault of the employer and the employee. The proper procedure in this case would be to reduce the employer's subrogation damages proportionally by the employer's fault ($100,000 ($100,000 × .20)), which would result in an award to the employer of $80,000.
In sum, then, the amount Conwed may recover from Union Carbide by way of subrogation involves a two-step procedure. The Court must first determine Conwed's total subrogation damages, which are equal to the amount of benefits paid and payable to the employee or to the percentage of the jury verdict attributable to Union Carbide's fault, whichever is less. The Court then reduces Conwed's total subrogation damages proportionally by the percentage of fault attributable to Conwed and enters judgment against Union Carbide in that amount.
III.
For the foregoing reasons, and based on all the records and proceedings in the case, IT IS HEREBY ORDERED THAT:
1) Union Carbide's Renewed Rule 50 Motion on Damages Recoverable in a Subrogation Action (Docket No. 654) is DENIED.
2) The Court will enter judgment in accordance with the procedure described in this Order following the determinations of workers' compensation benefits paid and payable to the employees at issue.