California: Appellate Court Rules Minimum Contacts w/CA Not Sufficient for WC Benefits

California: Appellate Court Rules Minimum Contacts w/CA Not Sufficient for WC Benefits

The 2nd District Court of Appeal has issued a ruling reversing a finding by the W.C.A.B. that a professional athlete who played 1 of 34 games in California in her final year of playing professional sports was eligible for workers’ compensation benefits. In Federal Insurance Co (Chubb) v W.C.A.B. (Johnson) the applicant, Adrianne Johnson, had a career as a professional basketball player between 1997 and 2004. Her last year of competitive play was with the defendant, Connecticut Sun, insured by Federal Insurance Co (a Chubb entity). The only evidence of contact with California was a single game in Los Angeles in 2003.

Additionally, Johnson had filed a claim for a specific injury in Connecticut and resolved that claim for a lump sum payment of $30,000. Later, she filed the instant claim for a cumulative trauma to multiple body parts in CA. A WCJ had found entitlement to California workers’ compensation benefits based on that single game in California with an award of substantial, unapportioned PD and medical care. On Reconsideration, the W.C.A.B. had reversed and remanded the award with instructions to consider the issue of apportionment to the injuries for which she had already sought compensation, but the ruling on jurisdiction had not been disturbed.

Federal Insurance Co. sought appellate review arguing the W.C.A.B.’s finding of jurisdiction to award benefits in California was incorrect. The Court of Appeal granted review, ultimately agreeing with the Petitioners.

The first hurdle the Court had to overcome was whether appeal was proper, given the remand by the W.C.A.B. The Court noted certain threshold issues could be raised prior to a final award by the W.C.A.B. as those issues were capable of disposing of the entire case. Injury AOE-COE, statute of limitations, employment and jurisdiction were identified as issues that could be appealed without a final order of the W.C.A.B., as a finding that eliminated liability could result in significant judicial economy.

The Court of Appeal noted the employment and residence history for the applicant as showing no contacts with California at all other than that single game. Applicant had never resided in (or even near) California and her post basketball career employment had been in Kentucky. The Court outlined these facts in order to frame its discussion concerning jurisdiction and proper forum for compensation benefits:

“The issue in this case is which state’s workers’ compensation law applies, not which state has personal jurisdiction. (9 Larson’s Workers’ Compensation Law (rev. ed. 2013) § 140.02[1], p. 140-3 (Larson).) The issue may be characterized as a “conflicts issue,” which arises when there are contacts in multiple states. (Id. at § 140.01, p. 140-2.) But here, we must decide if California law may be invoked at all. Thus, “the question of jurisdiction ordinarily precedes the conflict of laws question, for only after the [workers’ compensation] commissioner determines that he has authority to entertain the action does he proceed to the ‘choice’ of whether to award benefits under our Workers’ Compensation Act or, rather, to defer to the earlier grant of benefits under the laws of another state”…

Thus, the WCJ’s determination that “[p]laying in even one professional basketball game in California is sufficient to establish jurisdiction” mischaracterizes the issue, which is not one of personal jurisdiction but rather one of whether one or more state compensation laws apply and whether in this case California may provide a forum for the claim.”

The Court then framed the jurisdiction argument in terms of “due process” for the employer under the US Constitution:

If an employer or the insurer are subject to workers’ compensation law of a state that does not have a sufficient connection to the matter they are deprived of due process. Also, the determination may depend on the application of the full faith and credit clause of the United States Constitution.[fn1] That is, if the workers’ compensation law of another state exclusively should apply and California does not have a sufficient contact with the matter, California must, under the full faith and credit clause, accede to the other state to provide a forum.

Extensively citing Larson’s Worker's Compensation Law, the Court identified the test not upon which forum has the greatest interest, but whether the interest of a state is legitimate and substantial in itself and only if a state has some “substantial interest” in the matter. The Court held California law, as reflected in Labor Code § 5305 (“The Division of Workers’ Compensation, including the administrative director, and the appeals board have jurisdiction over all controversies arising out of injuries suffered outside the territorial limits of this state in those cases where the injured employee is a resident of this state at the time of the injury and the contract of hire was made in this state.” ) was congruent with the US Supreme Court authorities the Court cited and also with the authorities in Restatement of Law on Conflicts of Law, Section 181 .

After its extensive analysis of US Constitutional authorities, Restatements and Larson’s Treatise, the Court got to the heart of the matter:

“…If this state lacks a sufficient relationship with Johnson’s injuries, to require the petitioner—the employer—to defend the case here would be a denial of due process such that the courts of this state do not have authority to act. This might be referred to as a lack of subject matter jurisdiction…

In addition, in Alaska Packers, supra, 294 U.S. at pages 547 to 548, the Court suggested that the interest of the forum state is to be weighed against that of another state “in determining the full faith and credit issue.” (9 Larson, supra, § 142.03[5], p. 142-9.) As case law evolved, the only test is whether the forum state has a legitimate interest. (Ibid.) If it does, that state will grant relief. If it does not, it will deny relief. Thus, if the forum state lacks a sufficient connection to the matter, it will, in effect, give full faith and credit to workers’ compensation law of another state that has such sufficient connection to the matter. ”

The Court then considered the circumstances of the matter before it, finding the contacts with California as insufficient to warrant the application of California law for a cumulative trauma claim.

The effects of participating in one of 34 games do not amount to a cumulative injury warranting the invocation of California law. As the cases show, a state must have a legitimate interest in the injury. A single basketball game played by a professional player does not create a legitimate interest in injuries that cannot be traced factually to one game. The effect of the California game on the injury is at best de minimis.

The situs of the employment relationship is often the most realistic basis for the invocation of a state’s workers’ compensation law. (9 Larson, supra, § 143.04[1], p. 143-23.) The making of an employment contract within the state is usually deemed to create an employment relationship within that state. (Id. at § 143.04[2][b], p. 143-23.) The situs of the Johnson employment relationship is Connecticut or New Jersey, not California. Here, Johnson received a Connecticut workers’ compensation award, at least in part, for her injury as suggested by the Board in this case when the Board called for an apportionment of the award. The places of Johnson’s injuries, employment relationship, employment contract, and residence, all possible connections for the application of a state’s workers’ compensation law, do not have any relationship to California.

 Accordingly, California does not have a sufficient relationship with Johnson’s injuries to make the application of California’s workers’ compensation law reasonable. And California law has no obligation to apply the workers’ compensation law of any other state. Thus, as a matter of due process, California does not have the power to entertain Johnson’s claim.

COMMENTS AND CONCLUSIONS

This case is now the 3rd published California decision that limits the ability of out of state professional athletes to pursue CT claims in California. While we now have amendments to Labor Code § 3600.5 which will significantly limit out of state professional athletes filing claims in California, that statue is limited to claims filed after 9/15/13. This case applies to all existing cases. While the Appellate Court does not provide a “bright line” definition to determine where California’s “legitimate” interest begins, the language concerning the complete lack of contact with California, other than playing in the state, may provide some arguments for what should be considered as legitimate. The McKinley case suggested that 7 games out of 80 did not rise to the level where California should accept jurisdiction. Arguably, that is a starting point for this discussion and it might end up effectively excluding athletes who did not play for teams based in CA. Further rulings should help refine whether the number of games played in CA is a relevant test (such as in Major League baseball where some divisional rival teams may come to San Diego, LA and San Francisco for a significant part of the season, even though the other indices for California’s jurisdiction [such as contract of hire, residency or specific injury in CA] are lacking).

Our firm has a large volume of such sports cases and many of the claims involve players with very limited playing time regardless of the location. Many only had training camp experience or played in preseason games before being cut or reassigned to NFL Europe etc.. The nature, particularly for professional football, is that many careers are fairly short (under 5 years) and much of the time is spent on practice squads or in multiple training camps for players who never establish careers as professional athletes. For many of those players, contacts with California are at best minimal and time spent actually playing or practicing in this state is virtually non-existent (much like Ms. Johnson who play a single game in CA but played and practiced outside of California for the overwhelming portion of her career).

One of the interesting aspects of the holding in this case is that it is not limited to professional sports cases. (McKinley is not limited to sports cases either but most employers do not have sophisticated employment contracts with venue provisions). The same principles applied in this case could apply to employments other than professional sports. To date, there simply has not been a history with plumbers, carpenters and truck drivers flooding California with CT claims where their employment occurred almost entirely out of state but they came to CA for one or two jobs. After SB 1309 however it has been speculated that the same principles for filing CT claims, that will be barred in Ca. for professional athletes, could provide a source of business for some applicant attorney firms. This could be an issue with employees in neighboring states such as Nevada, Arizona and Oregon, where the labor forces are fairly fluid and the employees could be convinced to come to California for a payday on a CT claim they cannot pursue in their home states. However, for such industries the holding in this case may suggest that more than an occasional foray into CA would be needed to invoke jurisdiction to file a CT claim.

It is also interesting that this court relied heavily on Federal case law, Restatement authorities and the Larson WC treatise, which is a national publication, as the basis for its ruling. The applicant attorney cited a series of W.C.A.B. panel decisions and writ denied cases to support his position that California had jurisdiction and the Court effectively dismissed the significance of the authorities. The Court’s analysis suggests on such “big topic” issues, reliance on California law alone may not be enough to convince a Court to follow what had been considered prevailing wisdom.

Footnote:

1. “Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State.” (U.S. Const., art. IV, § 1.)

© Copyright 2013 Shaw, Jacobsmeyer, Crain & Claffey PC. All rights reserved. Reprinted with permission.

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