NC Court of Appeals Highlights High Burden on Workplace Negligence Claims

March 1, 2013

On Jan. 15, 2013, the North Carolina Court of Appeals vacated a $450,000 negligent infliction of emotional distress (NIED) jury award to Lashanda Shaw, a former Goodyear Tire & Rubber Co. manager, on the grounds that the trial court lacked subject matter jurisdiction to hear her claim. The ruling, Shaw v. Goodyear Tire & Rubber Co., highlights the high burden for employees who attempt to seek recovery for workplace injuries through courts rather than state workers’ compensation systems (here, the North Carolina Industrial Commission).

The Shaw v. Goodyear Decision

Shaw filed suit against Goodyear asserting a multitude of claims, mostly for intentional torts arising out of Goodyear’s alleged mishandling of her workplace complaints of harassment and her subsequent termination. Of the multiple causes of action asserted, only Shaw’s claims of wrongful discharge and negligent infliction of emotional distress reached the jury.

Regarding Shaw’s wrongful discharge claim, the jury found that Goodyear retaliated against Shaw for complaining of harassment, but also found that she would have been terminated in the absence of any such complaints. Thus, the jury declined to award Shaw damages on this claim.

As to Shaw’s NIED claim, the jury found that Shaw suffered severe emotional distress that was proximately caused by Goodyear’s conduct. The jury thus awarded Shaw $450,000 in compensatory damages (and also found that Goodyear was liable for punitive damages, but declined to award any).

Goodyear appealed the award, arguing that the trial court lacked subject matter jurisdiction over Shaw’s NIED claim. Specifically, Goodyear argued that because Shaw’s NIED claim was premised on Goodyear’s negligence, her injury was an “accident” subject to the exclusivity provisions of the North Carolina Workers’ Compensation Act. In its de novo review, the North Carolina Court of Appeals agreed.

The Court of Appeals first noted that the jury’s punitive damages determination demonstrated a finding that Goodyear acted willfully or wantonly with regard to Shaw, meaning that it either deliberately intended to harm her, or that it demonstrated an utter indifference to or conscious disregard for her rights or safety.

The Court of Appeals next looked to North Carolina’s jurisprudence on workers’ compensation exclusivity to determine if it barred a judicial recovery for Shaw. The court contrasted the seminal decision in Woodson v. Rowland (which made an exception to the workers’ compensation bar by allowing plaintiffs to pursue both workers’ compensation and civil suits for “intentional conduct” substantially certain to cause substantial injury or death) with other cases, suggesting – but not holding – that willful and wanton negligence is insufficient to circumvent workers’ compensation exclusivity. The court adopted the reasoning of the latter cases and reconciled its ruling with Woodson.

The court reasoned that a continuum of “quasi-intent” exists between plainly intentional conduct and ordinary negligence. Along this continuum, the court was only aware of one case — Woodson — in which the plaintiff had succeeded in establishing sufficient constructive intent to rise above workers’ compensation exclusivity. Confirming the high bar set forth in Woodson, the court held that for purposes of avoiding workers’ compensation exclusivity, it is not enough that an employer acts recklessly or that an employer engages in willful or wanton conduct with regard to its employees. Rather, to recover for a workplace injury in the courts (instead of before the North Carolina Industrial Commission), a plaintiff must show that his or her employer engaged in conduct that is so egregious as to be tantamount to an intentional tort.

The Court of Appeals held that Shaw fell short of this burden, as all of her intentional tort claims were dismissed and her NIED claim failed to identify intentional tortious conduct by Goodyear. Instead, Shaw relied on allegations of “negligen[ce],” “reckless indifference” and “mishandling” of her complaints. Such conduct simply did not meet the “substantially certain to cause substantial injury or death” standard set forth in Woodson. As such, the Court of Appeals concluded that Shaw’s $450,000 judgment must be vacated on the grounds that the trial court was without jurisdiction to enter it.

Shaw Impact

The Shaw decision reinforces the view expressed in multiple North Carolina cases that the Woodson exception should be applied in only the most egregious of circumstances and casts doubt as to whether such claims will ever be found actionable again. The Shaw decision also highlights the need for employers in all states to:

  • Explore the ability to raise similar workers’ compensation bars to negligence-based employment claims in their applicable jurisdictions; and
  • Raise jurisdictional defenses to workplace negligence claims such as NIED, negligent retention and negligent supervision as early as possible in litigation.

Should you have any questions about the Shaw decision or the impact of similar exclusivity defenses for claims in your state, please contact the author or other members of the McGuireWoods LLP Labor and Employment group.