Partners Ron Reitz and Dan Taylor were successful in securing a dismissal of a Third-Party Complaint in the USDC Western District, in a case involving a choice of law and indemnity provision in the contract for the sale of a hydraulic jack/snubbing unit. Plaintiff’s decedent, was fatally struck by the traveling assembly of the hydraulic jack while working on a well-pad in Wellsboro, PA. The manufacturer of the unit sought to join Plaintiff’s decedent’s employer, based on two indemnification clauses – one found in the Agreement of Sale for the unit and one embedded in an equipment manual provided for use with the hydraulic jack. The Agreement of Sale contained a choice of law provision providing that the agreement was to be construed under Texas law.

Our partners moved to dismiss the Third-Party Complaint, arguing that the strong public policy of Pennsylvania, as expressed in the language of the Pennsylvania Workers Compensation Act, by which an employer is immune from injury/death suits, including third-party claims, precluded the enforcement of the choice of law provision. In an eight-page opinion issued on January 17, 2020, Chief Judge Mark Hornak granted the Motion to Dismiss, adopting the arguments advanced in the motion. Chief Judge Hornak relied upon the rationale of Finney v. CSX Transportation, Inc., Finney v. CSX Transp., Inc., No. 09-3040, 2009 U.S. Dist. LEXIS 103269, 2009 (E.D. Pa. Nov. 5, 2009) cited in support of the motion, to conclude that Pennsylvania’s strong public policy of Employer Immunity presented the rare case in which the parties’ choice of law would not be enforced.  

Applying Pennsylvania law, Chief Judge Hornak noted that the contract “… contains exactly the kind of general indemnity language that Pennsylvania case law holds cannot waive Workers’ Compensation Act immunity. In their contract, [the parties] agreed to indemnify each other for “any claims” that arose from certain triggering events … And the indemnity provision defined “claims” to broadly mean claims “of any kind or nature whatsoever.” That sort of broad-brush language does not meet Bester’s standard for waiver under§ 481(b).”  See, Bester v. Essex Crane Rental Corp. v. Russell Construction Co., 619 A.2d 304, 307 (Pa. Super. 1993).

The underlying liability theories advanced by the Plaintiff included claims of products liability and negligence, and whether the hydraulic jack might allow the possibility for the traveling assembly to “free fall” from a suspended position without an energized power unit. For more information about the case contact Ron Reitz at rreitz@margolisedelstein.com