New Jersey Supreme Court Rules Galvao Test for Borrowed Attorneys to Be Decided by Jury

New Jersey Supreme Court Rules Galvao Test for Borrowed Attorneys to Be Decided by Jury

In Pantano v. New York Shipping Association (A-19-22/087217) (Decided June 7, 2023), the Supreme Court of New Jersey held that an employer’s vicarious liability under the borrowed-employee doctrine, as guided by the test set forth in Galvao v. G.R. Robert Construction Co., 179 N.J. 462, 471-73 (2004), is presumptively for a jury to determine.

Fact of Pantano v. New York Shipping Association

In November 2013, plaintiff Philip Pantano, a mechanic employed by Container Services of New Jersey (CSNJ), was injured at work while attempting to move a heavy piece of industrial equipment. Lawrence Giamella, who was also working on the site that day, tried to help plaintiff move the equipment with a forklift; plaintiff’s foot was crushed in the process. Plaintiff collected workers’ compensation benefits from his employer, CSNJ. He and his wife also brought a personal injury action against numerous defendants, including Marine Transport, Inc. (MT). MT and CSNJ are related companies owned by the same person. The core of the parties’ dispute concerns which entity or entities employed the negligent worker, Giamella, at the time of the accident: MT, CSNJ, or both companies.

MT moved for summary judgment, arguing that it was not Giamella’s employer and was therefore not vicariously liable for his negligence. Although Giamella was on MT’s payroll, MT raised the affirmative defense that he was a “borrowed servant” or “special employee” working for CSNJ at the time of the accident, applying the multi-factor test set forth in Galvao. The pretrial judge denied MT’s motion. At the close of plaintiff’s case, MT moved for judgment pursuant to Rule 4:40-1, founded on the same borrowed-employee theory it had raised earlier in its summary judgment motion. The trial judge did not rule on the motion, reserving judgment for after the jury verdict.

The jury awarded plaintiff damages for pain and suffering, lost wages, and loss of consortium. Pursuant to an agreement reached by counsel, the jury was asked to presume that MT was vicariously liable and was not asked to resolve the borrowed-employee question. Instead, counsel assented to have the court resolve the borrowed-employee argument through the mechanism of MT’s yet-to-be-decided Rule 4:40-1 motion. In essence, the agreement contemplated that if the court ruled in MT’s favor on the motion and found that Giamella was, in fact, a borrowed employee working for CSNJ, then MT would not be liable for a jury award. Conversely, if the court denied MT’s motion, then MT would be liable for the award under the parties’ agreement.

The trial judge vacated the verdict and awarded judgment to MT, concluding that Giamella was a borrowed employee working for CSNJ when the accident occurred. The Appellate Division reversed, vacated the directed verdict, and reinstated the jury verdict in plaintiff’s favor.

NJ Supreme Court’s Decision in Pantano v. New York Shipping Association

The New Jersey Supreme Court affirmed. According to the New Jersey Supreme Court, the application of the Galvao multi-factor test is an issue for the jury to decide.

“Amplifying Galvao, we hold that the application of the multi-factor test — which can involve matters of disputed fact and witness credibility — is presumptively for a jury to determine,” the court wrote. “The court itself should not resolve the borrowed-employee issue unless the evidence concerning the factors is so one-sided that it warrants judgment in a moving party’s favor as a matter of law.”

In support of its decision, the New Jersey Supreme Court cited the pre-Galvao tradition of presumptively deeming borrowed-employee disputes as questions of fact for a jury. “In many instances, the general employer’s witnesses and proofs will clash with those presented and relied upon by the opposing side. Factual disputes about control and business advantage can readily turn on the assessment of the credibility of competing witnesses,” the court wrote. “Juries are well-suited to making those assessments, as they are for a host of other factual disputes entrusted to them at trial.”

The court went on to find that nothing in Galvao did or should change that traditional allocation of the jury’s role in borrowed-employee disputes. “Although we did not explicitly say in Galvao that the tradition should continue under the hybrid multi-factor test, there was no need to do so,” the court explained. “MT fails to provide us with any reasoned argument as to why the jury’s role should be diminished or altered by Galvao.”

In this case, the New Jersey Supreme Court found that because the evidence concerning the Galvao factors was not sufficiently one-sided, the trial court incorrectly granted defendant’s Rule 4:40-1 motion and deemed the worker who caused the accident a borrowed employee of plaintiff’s own employer.

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