TIMING IS EVERYTHING: A Delay in Intervening in a Third Party Action Can Have Unwanted Consequences
California Labor Code section 3852 provides a right to both an injured employee and their employer to seek damages proximately caused by a third party in connection with a work injury. More often than not the actions are pursued by the employee and employer concurrently, but at times, there will be situations wherein the employee or employer pursue a third party alone. Such third party actions can be a long, expensive process and the costs associated with pursuing the action can be prohibitive if the damages are not sufficient enough to justify the cost of pursuit. As such, there is a perception that one can save costs by allowing the employee or employer to bear the majority of the costs of litigation by delaying the timing of joining in a case. While several issues arise from such a strategy, including a claim for a common fund reduction by the active party, several recent cases have made it clear that the delay can result in a complete preclusion from pursuing the case at all.
In Zenith Ins. Co. v. Bunn-O-Matic (“Grasso”), Jan. 29, 2016, No. E062728, certified for nonpublication, printed at 81 CCC 192, the court of appeal affirmed the lower court’s denial of an injured workers’ motion to set aside the dismissal of a lawsuit brought by the workers’ compensation carrier against a third party tortfeasor. The case arose from a May 23, 2012 injury wherein the injured worker slipped and fell in liquid near a beverage machine. On May 21, 2014, the workers’ compensation carrier initiated a lawsuit against the manufacturer of the beverage machine. On May 29, 2014, pursuant to Labor Code section 3853, the carrier sent the injured worker a Notice of Commencement of Action. On June 19, 2014, the defendant filed an answer and one day later the injured worker retained an attorney. No later than June 27, 2014, a settlement had been reached between the workers’ compensation carrier and the defendant and a notice of settlement was provided to the injured worker. Two weeks after the settlement, on July 9, 2014, the injured worker filed an objection to the settlement along with a notice of intent to intervene in the matter. On July 11, 2014 the injured worker filed an ex parte application for leave to file a complaint in intervention, on July 14, 2014 the carrier filed a request for dismissal, and on July 16, 2014 the court took the ex parte application off calendar noting that the case had been dismissed. In November 2014, the Riverside County Superior Court denied a motion to set aside the dismissal and the decision was affirmed by the court of appeals. In affirming the decision, the court of appeal noted that the injured worker, prior to the dismissal, had not yet intervened nor filed a pleading seeking affirmative relief. The injured worker, in essence, had not become a party to the case prior to the dismissal and therefore had no grounds in which to seek to stop the settlement and/or dismissal.
In Vatuvei v. Citrus and allied essences, Ltd./Ace Fire Underwriters, Intervener, January 25, 2016, No. G051507 certified for nonpublication, printed at 81 CCC 184, the court of appeal affirmed the lower court’s decision to deny permission of a workers’ compensation carrier to intervene in an injured worker’s case when the request came two weeks before an already re-set trial date. This case arose from exposure to diacetyl from 2000 to 2010. In 2011, the injured worker filed a personal injury claim against his employer under the “fraudulent concealment” exception to the exclusivity rule, as well as third parties on various grounds. The injured worker settled his lawsuit against the employer in April 2014, and the employer notified the parties of its claim for reimbursement in the amount of $124,000. The injured worker withdrew some of his causes of action against the third parties, and as a result, the trial was reset to January 5, 2015. The employer, on December 22, 2014, sought to intervene in the matter alleging the same causes of action as the employee, along with the causes of action previously withdrawn by the employee. The Orange County Superior Court denied the request to intervene noting it was untimely as the insurer “knew or should have known” for years of the pending action and because it would prejudice the third party in that, in addition to the upcoming holiday schedule, the causes of action being asserted would necessitate additional discovery, trial preparation, and potentially additional witnesses, including experts. In this particular case, there was an issue of employer fault. The court rejected the insurer’s claim that Labor Code section 3853 allows the employer to intervene at any time and instead notes that one has a reasonable time to intervene and must not be guilty of an unreasonable delay after knowledge of the suit.
While Labor Code section 3852 and 3853 allow an injured worker and employer to pursue actions against third party tortfeasors, the rights provided by those code sections are not without limits. A delay in intervening in a case can cost a party the right to pursue their action and, as such, careful consideration should be taken in deciding when to intervene into a pending action.