United Airlines Wins Important Appellate Decision Involving Jurisdiction
There are precious few reported decisions dealing with the jurisdictional requirements for bringing a claim petition in New Jersey when a New Jersey resident is employed out of state, is injured working out of state and is hired out of state. In the reported case of Marconi v. United Airlines, A-0110-18T4 (App. Div. July 22, 2019), the Appellate Division affirmed the dismissal of two claims against United Airlines for lack of jurisdiction in just this situation. The case was successfully handled at both the division and appellate levels by Prudence Higbee, Esq., a partner with Capehart Scatchard.
The facts in the case were not disputed. Richard Marconi lived in New Jersey and suffered a work injury to his left hip on January 31, 2015 working for United Airlines in Philadelphia. United paid full benefits to Marconi under Pennsylvania law, but eventually Marconi brought two claim petitions in New Jersey seeking permanency benefits that were not available in Pennsylvania. One claim petition was for the accident in 2015 and the other was an occupational claim alleging work exposures from 1988 to the present. Mr. Marconi admitted he was not hired in New Jersey and worked most of his career in Philadelphia with only a brief period of employment at Dulles Airport.
United moved to dismiss both claim petitions for lack of jurisdiction in New Jersey. Marconi tried to build up his contacts with New Jersey as much as he could. He argued that his supervisor reported to a United employee at Newark’s Liberty International Airport. Marconi also contended that he himself would telephone United staff at Liberty International Airport once every couple of months for technical advice. He received training all over the world, including in Newark. He would fly from Newark whenever United assigned him to do “field service.” Marconi’s supervisor sometimes would drive to Liberty International Airport to retrieve parts there. United argued that these contacts with New Jersey were truly minimal.
The Judge of Compensation reviewed Professor Larson’s treatise on grounds for jurisdiction:
- Place where the injury occurred;
- Place of making the contract;
- Place where the employment relation exists or is carried out;
- Place where the industry is localized;
- Place where the employee resides; or
- Place whose statute the parties expressly adopted by contract.
The Judge of Compensation dismissed both claims, finding that residence in New Jersey alone has never been sufficient for jurisdiction. The Appellate Division emphatically agreed: “We conclude that residency alone is an insufficient basis to confer jurisdiction on the Division for extra-territorial workplace injuries.”
Petitioner argued on appeal that even if residency alone was insufficient, the fourth factor, namely “place where the industry is localized,” should have been sufficient for jurisdiction in conjunction with petitioner’s residency in New Jersey. There are only one or two published cases that have ever discussed the concept of “localization” of an industry, and Marconi provides the most complete analysis to date, citing cases from around the nation on this concept.
First the Court said that “in no state workers’ compensation scheme was localization alone sufficient to confer jurisdiction.” Professor Larson explained the rationale for localization of an industry as a criterion for jurisdiction: “The state in which the employer’s business is localized has a relevant interest in a compensable injury . . . since the obligation side of the compensation relation is as much a part of that relation as the benefit side, and since the burden of payment would ordinarily fall most directly on the employer and community where the industry is centered.” The Court seemed to accept Marconi’s argument that New Jersey was a place where United’s industry was localized, but it still rejected jurisdiction. That was the most interesting aspect of the case.
The Appellate Division in Marconi analyzed the concept of localization in terms of advancement of company interests. “It is the nature and frequency of the employee’s relationship with the localized presence of the employer that lends weight to the fourth Larson factor. In other words, in this case, did Marconi’s ‘duties to a substantial extent . . . implement the localized business’ of United in New Jersey?” (citations omitted). The Court answered its own question in the negative. “Essentially, nothing in the course of Marconi’s two-decade employment with United advanced the company’s localized interests in New Jersey. In these circumstances, although United maintained a localized business interest in Newark, New Jersey has no substantial interest in exercising its jurisdiction over the petitions.”
The Court explained that Marconi’s contacts with Liberty International were mainly to advance Marconi’s ability to perform his work in Philadelphia. “Even when Marconi used United’s facilities at Liberty International Airport, it was to serve United’s interest elsewhere around the country.”
After disposing of the traumatic claim petition for lack of jurisdiction, the Court then dealt briefly with the occupational claim petition, reminding practitioners that there is a different standard for jurisdiction in occupational claims from traumatic claims. The Court cited Williams v. Port Authority of New York & New Jersey, 175 N.J. 82 (2003) to make this point clear: “The petitioner must demonstrate either that (1) there was a period of work exposure in this State that was not insubstantial under the totality of circumstances and given the nature of the injury; (2) the period of exposure was not substantial but the materials were highly toxic; or (3) the disease for which compensation is sought was obvious or disclosed ‘by medical examination, work incapacity, or manifest loss of physical function’ while working in New Jersey.” Obviously petitioner could not meet this test because there was no work exposure in New Jersey.
In the opinion of this practitioner, the Marconi decision provides the most thorough analysis to date of the fourth criterion cited by Professor Larson in his treatise, namely “localization of business.” The Court flatly concludes that “localization of business” alone is insufficient for New Jersey jurisdiction. The implications of this statement are significant because there are hundreds of cases pending in New Jersey now involving medical claim petitions where the injured worker lives in New York, is hired in New York, and works in New York. The only connection to New Jersey in many of these claims is that a medical procedure occurred in New Jersey. Medical providers have filed countless claims of this nature seeking jurisdiction in New Jersey to argue that the New York fee schedule should not apply and ultimately seeking the right to additional reimbursements. The Appellate Division has yet to weigh in on these cases. When one of these MCP cases finally reaches the Appellate Division, one can expect that the analysis in Marconi will certainly be considered.
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