Opinion ID: 1204495
Heading Depth: 1
Heading Rank: 2

Heading: the washington department of labor & industries' appeal

Text: Two issues need to be resolved with respect to the Department of Labor's appeal. They are: (1) whether Washington or Idaho law governs the State of Idaho's claim of contribution and indemnification, and (2) whether Washington or Idaho law governs the Department of Labor's right to reimbursement for workers' compensation benefits paid from any settlement or award recovered in this case. We hold that on both issues Idaho law applies and, therefore, affirm the district court. The Washington Department of Labor & Industry has appealed the district court's ruling that Idaho law should apply to the State of Idaho's claim for contribution for the alleged negligence of Stack Steel, the employer, and the Washington department's claim for reimbursement of worker's compensation benefits received by plaintiff. Idaho law allows a third party tortfeasor to defend on the basis that the employer was concurrently negligent, and the third party is allowed a limited right of contribution by a setoff against damages reflecting the employer's negligence. This offset cannot exceed the amount of the worker's compensation benefits provided by the employer and surety. The employer's and surety's right of reimbursement from the third party recovery is reduced by an amount equal to the offset. See I.C. § 72-209(2), -223; Schneider v. Farmers Merchant, Inc., 106 Idaho 241, 678 P.2d 33 (1983); Pocatello Industrial Park Co. v. Steel West, Inc., 101 Idaho 783, 621 P.2d 399 (1980); Tucker v. Union Oil Co. of Calif., 100 Idaho 590, 603 P.2d 156 (1979); Liberty Mutual Ins. Co. v. Adams, 91 Idaho 151, 417 P.2d 417 (1966). Washington worker's compensation statutes and case law allow no negligence to be attributed to the employer and no reduction in the surety's right to reimbursement from the third party recovery for worker's compensation benefits paid to the injured employee. See Glass v. Stahl Specialty Co., 97 Wash.2d 880, 652 P.2d 948 (1982); Kelly v. Howard S. Wright Const. Co., 90 Wash.2d 323, 582 P.2d 500 (1978); Seattle First Natl. Bank v. Shoreline Concrete Co., 91 Wash.2d 230, 588 P.2d 1308 (1978). Thus, Idaho law conflicts with Washington law, and we must determine which state's law should properly be applied to this dispute. This exact conflict of law problem was addressed in our recent unanimous opinion of Runcorn v. Shearer Lumber Products, Inc., 107 Idaho 389, 690 P.2d 324 (1984), which had substantially identical facts to the present case. In both cases a Washington employer was doing business in Idaho through its employee. In both cases the employee was injured in Idaho due to the alleged negligence of an Idaho third partyin Runcorn, the third party was Shearer Lumber Products; in this case it is the State of Idaho. In both cases the third party defended claiming that the employer was concurrently negligent. In both cases the plaintiffs had received worker's compensation benefits paid by the Washington Department of Labor & Industry as surety on behalf of the Washington employer. In both cases the department surety argued that Washington law should apply barring any negligence to be attributed to the employer and no reduction in the surety's right of reimbursement from the tort recovery. However, in Runcorn Idaho law was determined to be applicable. In the present case, the employer and surety moved to dismiss the third party complaint filed by the State of Idaho based upon the employer's claim that Washington law applied and that, accordingly, no contribution and setoff was allowable. The district court held that Idaho law applied and denied the motion to dismiss. The department surety first argues that a reciprocity agreement between Washington and Idaho state agencies binds this Court to apply Washington law. However, this issue was disposed of in Runcorn: The document merely agrees as to who will provide coverage and who will pay benefits for workers crossing the state line. To interpret the reciprocity agreement as urged by plaintiff would require Washington tort law, as well as all aspects of Washington's workmen's compensation laws, to be applied by an Idaho court in a tort action against an Idaho resident for a tort occurring in Idaho. We do not believe that the reciprocity agreement applies to third party tort actions, or that the legislature gave such authority to the Idaho Industrial Accident Board.... 107 Idaho at 397, 690 P.2d at 332. (Emphasis added.) The department surety next argues that a conflicts of law analysis requires the application of Washington law as the correct choice of law. Runcorn also disposed of this issue by considering the policies and interests which underlie the different approaches of the Washington and Idaho statutes concerning the Washington employer's right of limited immunity versus a third party's right in Idaho of contribution from concurrent tortfeasors. Runcorn discussed the basic fairness of Idaho's approach as opposed to the extreme approaches taken by other states, including Washington. Further noted in Runcorn was that Washington's interest in employer immunity is substantially protected under Idaho law since the employer cannot be held liable beyond the amount already paid to the injured employee in worker's compensation benefits. An injured Washington employee, such as the plaintiff in this case, is also protected under Runcorn from a double deduction from tort recovery by the Idaho rule that the offset to the third party recovery also reduces the employer's surety's right to reimbursement from the recovery. Therefore, neither the Washington employer nor the employee are affected by the application of Idaho law. Runcorn also considered the significant contacts [1] which Idaho had with the parties and action. Runcorn ultimately concluded that Idaho has strong interests and policies which would be undermined by the application of the less equitable Washington laws. Therefore, we choose to apply the law of Idaho, the forum state. Runcorn, 107 Idaho at 397, 690 P.2d at 332. We hold that Runcorn is controlling on the present issue. This is not a different set of circumstances [in which] we might choose to apply Washington law.... Id. This Court has considered a conflicts of law issue in a case subsequent to Runcorn and noted the factors and significant contacts as set out by the Restatement (Second) of Conflict of Laws §§ 6, 145. See Johnson v. Pischke, 108 Idaho 397, 700 P.2d 19 (1985). Johnson quoted from Weintraub, Commentary on the Conflict of Laws § 6.8, pp. 277-78 (1980), which teaches that the contacts between each state should not be mechanically counted; rather that the conflict between the states' laws should be resolved rationally based upon the interests and policies of each state. Runcorn's analysis was substantially similar to the Johnson v. Pischke approach by considering the underlying policies and interests and the significant contacts of Washington and Idaho in concluding that Idaho law should apply. The application of Idaho law in this case enhances the predictability and certainty of the law. Other states such as Illinois and New York take the opposite extreme from Washington. In those states an employer is allowed to be sued for complete indemnity and contribution with no limited liability. Doyle v. Rhodes, 101 Ill.2d 1, 77 Ill.Dec. 759, 461 N.E.2d 382 (1984); Dole v. Dow Chemical Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288 (1972). If this Court concluded that Washington law should apply to these facts, the Court would also have to apply the laws of Illinois or New York or another foreign jurisdiction's law in the next case, depending on the trucking employer's and employee's domicile. Such a choice of laws would result in one Idaho third party tortfeasor's right of contribution being unlimited while another's would be non-existent. Idaho's significant interests would be at the mercy of other jurisdictions' less equitable approaches to the problem, and the outcome of each case would vacillate between extremes, depending on the happenstance of where the truck owner and employer are domiciled. Therefore, certainty and predictability are better served with Idaho's law being applied as we held in Runcorn. Of the many approaches which have been proposed and followed in attempting to resolve the conflicting states' interests and policies identified as factors under the Restatement (Second) of Conflicts of Laws, the analysis and choice of law in Runcorn and the present case are supported by the majority of authorities, which set forth a comparative impairment, weighing of interests, or better law analysis. See, e.g., Baxter, Choice of Law and the Federal System, 16 Stan.L.Rev. 1, 22 (1963); Horowitz, The Law of Choice of Law in CaliforniaA Restatement, 21 U.C.L.A.L. Rev. 719, 748-58 (1974); R. Leflar, American Conflicts Law, § 107 (3d ed. 1977); Currie, The Constitution and the Choice of Law: Governmental Interests and the Judicial Function, 26 U.Chi.L.Rev. 9 (1958). Idaho's significant contacts in the present case are that Idaho was the place where the injury occurred, the place where the negligence and contributory negligence of the third party, the employer, and the employee allegedly occurred, and the place of domicile of the third party, the State of Idaho. As stated in Johnson v. Pischke, 108 Idaho 397, 402, 700 P.2d 19, 24 (1985), of the contacts to be considered, none has a more significant relationship to the issue before us than Idaho, the place of the injury. Flowing from these contacts are Idaho's significant and important interests that third party tortfeasors be allowed a limited right of contribution through an offset reflecting the employer's concurrent negligence, if any. Idaho has further interests that out-of-state employers do not negligently operate or maintain their trucks in Idaho and that those employers through their sureties should not profit from their own negligence. Washington's contacts are that it is the domicile of the employer and employee. Flowing from these contacts is the interest that the employer have no liability and be completely immune except to provide worker's compensation benefits to injured employees. Washington also has an interest in having injured employees adequately compensated and further having safe working conditions. The application of Washington law would result in Washington's interests being enhanced; however, Idaho's interests would be completely undermined and unrecognized. The third party tortfeasor would get no contribution whatsoever for the employer's negligence, and the employer through its surety would be allowed to profit from its own negligence by complete reimbursement for the worker's compensation benefits paid. On the other hand, the application of Idaho law would result in Idaho's interests being served and Washington's interests being substantially although not totally protected. The Washington employer will still be accorded substantial immunity since it will not be held liable for any additional amount beyond that already paid in worker's compensation benefits. Washington employees or their heirs will receive the same compensation regardless of which state's law is applied. Only the Washington surety, who will not be permitted to benefit by the employer's wrong, will suffer. We conclude that Idaho as the forum state has the most significant interest in having its law applied under a comparative impairment, weighing of interests or better law analysis. At trial, if Stack Steel is determined to have been negligent, then the State of Idaho should be allowed an offset reflecting that percentage of comparative negligence, not to exceed the amount of worker's compensation benefits paid to the plaintiffs. [2] The department surety's right to reimbursement shall be reduced by an equal amount. Runcorn v. Shearer Lumber Products, Inc., supra .