Woodall v. Rich Albany Hotel, LLC et al
Filing
26
MEMORANDUM-DECISION and ORDER granting 19 Motion to Intervene and denying 21 Motion for Judgment as a Matter of Law. ORDERED that Skywest's 19 Motion to Intervene is GRANTED. Skywest shall file its Complaint within seven days of the fili ng date of this Order. The Defendants' answer to the Complaint shall be filed twenty days after being served with the Intervenor's Complaint; and it is further ORDERED that Woodall's 21 Cross Motion to invalid Skywest's Lien is DENIED; and it is further ORDERED, that the Court shall hold a status conference within the following two weeks. The parties, including the Intervenor, shall file the dates and times that they may be available for a telephone conference on the record so that the Court can gauge the progression and the current status of the case. Signed by Magistrate Judge Randolph F. Treece on 4/11/2012. (dpk)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
TAYNA WOODALL,
Plaintiff,
-v-
Civ. No. 1:11-CV-449
(RFT)1
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RICH ALBANY HOTEL, LLC,
NEW CASTLE HOTELS, LLC, doing business
as Holiday Inn,
Defendants.
OF COUNSEL:
Hacker, Murphy Law Firm
Attorney for Plaintiff
7 Airport Park Boulevard
Latham, New York 12110
JOHN F. HARWICK, ESQ.
Office of Theresa J. Puleo
Attorney for Defendants
P.O. Box 12699
Albany, New York 12212
MURRY S. BROWER, ESQ.
KLG Luz & Greenberg LLP
Attorney for Intervenor Skywest Airlines
370 Lexington Avenue, 24th Floor
New York, New York 10017
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APPEARANCES:
THOMAS J. LUZ, ESQ.
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RANDOLPH F. TREECE
United States Magistrate Judge
MEMORANDUM-DECISION and ORDER
On April 21, 2011, Woodall commenced a diversity tort action, pursuant to 28
With the parties’ consent, the Honorable Lawrence E. Kahn, Senior United States District
Judge, pursuant to 28 U.S.C. § 636(c) and FED. R. CIV. P. 73, referred jurisdiction of this matter to
this Court. Dkt. No. 20.
1
U.S.C. § 1332(a), for injuries sustained due to a fall on the Defendants’ property. Dkt.
No. 1, Compl. Currently pending before the Court is a Motion to Intervene filed by
Woodall’s employer, Skywest Airlines - ASA X Jet (hereinafter “Skywest”), through
Sedgwick Claims Management Services, Inc., its third-party workers’ compensation
administrator (hereinafter “Sedgwick”). Dkt. No. 19, Mot. to Intervene, dated Jan. 19,
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2012.2 Skywest wishes to intervene in order to enforce a statutory subrogation
workers’ compensation lien. See Dkt. No. 16, Notice of Lien, dated Dec. 19, 2011.
Promptly thereafter, on January 23, 2012, Woodall filed a Cross Motion seeking an
order finding that Skywest does not have a valid lien. Dkt. No. 21, Pl.’s Cross Mot.3
The Defendants likewise filed a timely response to the Motion to Intervene. Dkt. No.
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23, Defs’ Resp. to Mot.4 Instead of opposing the Motion, the Defendants do not
object to Skywest’s intervention yet ask this Court to find Georgia’s law applicable
to the workers’ compensation lien issue, and to further hold that a proposed settlement
would not make Woodall “whole” as required by that statute, thereby rendering
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The Motion to Intervene is comprised of the following: Dkt. No. 19, Notice of Mot. to
Intervene; Dkt. No. 19-1, Sarah Smith Aff., dated Jan. 18, 2012, with Exs. 1-5; Dkt. No. 19-3, Mem.
of Law, dated Jan. 19, 2012.
2
Woodall’s Cross Motion is comprised of the following: Dkt. No. 21, Notice of Cross Mot.;
Dkt. No. 21-1, John F. Harwick Esq., Aff., dated Jan. 23, 2012; Dkt. Nos. 21-2 to 21-7 & 21-9, Exs.;
Dkt. No. 21-4, Notice of Lien; Dkt. No. 21-8, Tanya Woodall Aff., dated Dec. 22, 2011; and, Dkt.
No. 22-10, Pl.’s Mem. of Law, dated Jan. 23, 2012.
3
The Defendants’ Response is comprised of Murry S. Brower, Esq., Affidavit, dated Feb.
9, 2012, and a Memorandum of Law, with five Exhibits. Dkt. No. 23.
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Skywest’s lien unenforceable. As to the Cross Motion, Skywest filed an Opposition.5
Dkt. No. 24.
I. BACKGROUND
Apparently Woodall, who is a forty-four-year-old pilot, either sought lodging
at or was visiting the Holiday Inn, located on Wolf Road, Albany, New York, which
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is owned and operated by the Defendants. It is alleged that on December 28, 2009,
at approximately 9:15 a.m., Woodall slipped and fell on ice and snow that had
accumulated, causing her injuries and damages. Woodall claims that her fall was
precipitated by the negligence of the Defendants. See Dkt. No. 1, Compl. As a result
of her fall, Woodall “suffered a fractured bone and torn cartilage in [her] right wrist
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. . . [which] kept [her] out of work for over a year and required surgery and
postsurgical pain management injections.” Dkt. No. 21-8, Tayna Woodall Aff., dated
Dec. 22, 2011, at ¶ 5. Woodall is right handed and she has been advised that her
“right wrist will never be the same,” which conceivably may “interfere with [her]
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ability to earn a living as an airline pilot.” Id. at ¶¶ 5-6. This mishap occurred while
she was employed as a pilot for Skywest, and, accordingly she applied and received
A Memorandum of Law, dated February 8, 2012, and an Affidavit, dated February 27,
2012, from Thomas J. Luz, Esq., comprises Skyway’s Opposition to the Cross Motion. See Dkt.
Nos. 24 & 25.
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workers’ compensation, which she presumes6 were paid under Georgia’s Workers’
Compensation Law. Id. at ¶¶ 3-4. Records reveal that Woodall was paid through
workers’ compensation $19,800.88 for medical benefits and $22,228.03 for wage
indemnity for a total subrogation lien of $42,028.91. See Dkt. Nos. 21-4 (Notice of
Lien) & 21-5, Exs. (workers’ comp. payment schedule); Dkt. No. 19-1, Sarah Smith
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Aff., dated Jan. 18, 2012, at ¶ 6, & Ex. 4 (Payment Chart). Although Woodall
received $22,228.03 for salary indemnity, she avers that her actual lost income was
over $60,000. Woodall Aff. at ¶ 7, Dkt. No. 21-9, Wage Chart.
II. DISCUSSION
A. The Legal Standard for a Motion to Intervene
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Because Skywest, through its third-party administrator, Sedgwick, provides its
employees with workers’ compensation coverage and met this obligation to Woodall
after the accident by paying her medical bills and share of her salary, it now claims to
be subrogated to her rights to recover to the extent of those payments made from the
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third-party tortfeasor. Smith Aff., at ¶¶ 5-7. In order to protect this subrogated right,
Skywest seeks to intervene in this pending action pursuant to Federal Rules of Civil
Procedure 24(a) and (b). If a party files a
It appears that although Skywest is a Utah Corporation, it had a base of operation out of
Atlanta, Georgia. Woodall Aff. at ¶ 3; Dkt. No. 19-1, Sarah Smith Aff., dated Jan. 18, 2012, at ¶ 4,
Ex. 4, (a benefit payout list noting that Skywest is located in Atlanta, Georgia.).
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timely motion, the court must permit anyone to intervene who: (1) is
given an unconditional right to intervene by a federal statute; or (2)
claims an interest relating to the property or transaction that is the subject
of the action, and is so situated that disposing of the action may as a
practical matter impair or impede the movant’s ability to protect its
interest, unless existing parties adequately represent that interest.
FED. R. CIV. P. 24(a).
As the statute indicates, a putative intervenor as of right must meet four criteria: the
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applicant must (1) file a timely motion; (2) claim an interest relating to the property
or transaction that is the subject of the action; (3) be so situated that without
intervention the disposition of the action may impair that interest; and (4) show that
the interest is not already adequately represented by existing parties.
Butler,
Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 176 (2d Cir. 2001). A failure to
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meet all of these requirements justifies the denial of its motion. United States v.
Pitney Bowes Inc., 25 F.3d 66, 70 (2d Cir. 1994).
Skywest contends that it is entitled to intervene as a matter of right under
subsection 2 because it has an interest relating to the transaction which is the subject
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matter of the action, which could be impeded if not permitted to intervene. Skywest
claims that it has a substantial interest in this action because it paid benefits to
Woodall as a result of her injuries due to the fall and, “under the substantive law of
both New York and Georgia, is subrogated to Woodall’s right to recovery against the
Defendant[s].” Dkt. No. 19-3, Intervenor Mem. of Law at p. 1. Where, as here, an
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insurer has partially compensated an insured for a loss, both the insurer and insured
have a substantial right against the tortfeasor which qualifies them as real parties in
interest. United States v. Aetna Cas. & Sur. Co., 338 U.S. 366, 381 (1949);
Brocklesby Transp., A Div. of Kingsway Transp., Ltd v. E. States Escort Servs., 904
F.2d 131 (2d Cir. 1990) (for the proposition that if the insured is only partially
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compensated by the insurer, both the insurer and the insured are real parties-ininterest); Akwright-Boston Mfrs. Mut. Ins. Co. v. City of New York, 762 F.2d 205, 209
(2d Cir. 1985). But, before the Court can determine if Skywest has a protectible
interest in this litigation, it must first determine which substantive law governs in this
matter on the issue of preserving a lien. As mentioned above, Skywest argues that
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New York and/or Georgia Law permits such intervention.
B. Choice of Laws
1. The Legal Standard
The Court begins this discussion as to which substantive law applies with the
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understanding that for federal actions based upon diversity jurisdiction, which do not
implicate any federal policy, a federal court must apply the choice of law of the state
where it sits. Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496-97 (1941);
see also Ferens v. John Deere Co., 494 U.S. 516 (1990) (federal court applying
Mississippi state courts’ choice of law rules). Recently, the Second Circuit confirmed
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this proposition that federal courts are obligated to apply the choice of law rules of the
forum state, and, for this Court it is New York law. In re Courdert Bros. LLP, _F.3d_,
2012 WL 615281 (2d Cir. Feb. 28, 2012); see also In re Gaston & Snow, 243 F.3d
599, 601-02 (2d Cir. 2001). Therefore, federal courts’ proper function is “to ascertain
what the state law is, not what it ought to be.” Klaxon Co. v. Stentor Elec. Mfg. Co.,
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Inc., 313 U.S. at 497. Yet, it is a seminal principle of conflict of laws that unless the
laws of competing jurisdictions are actually in conflict, that is, there is a substantive
difference between them, a state can dispense with a choice of law analysis and freely
apply its own. Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 151 (2d Cir. 2008)
(noting that the first step is to determine if there is an actual conflict of law, which
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would require a choice between two state courts’ substantive law); Int’l Bus. Mach.
Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir. 2004).
New York’s choice of law has been evolutionary over the years. In 1963, the
New York Court of Appeals abandoned the long standing situs principle - “where the
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accident occurred” rule - for a “center of gravity” or “grouping of contract” doctrine.
Babcock v. Jackson, 12 N.Y.2d 473 (1963). But over time, in order to assure “greater
predictability and uniformity,” New York shifted, at least in the context of tort law,
from the “grouping of contacts” analysis - a virtual quantitative counting of which
state had the greater number of contacts with a particular matter - for a more refined
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principle of “interest analysis.” Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306,
320 (2011).7 The interest analysis test became the more “relevant analytical approach
to choice of law in tort actions in New York[:]” “[T]he law of the jurisdiction having
the greatest interest in the litigation will be applied and . . . the [only] facts or contacts
which obtain significance in defining State interests are those which relate to the
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purpose of the particular law in conflict[.]” Schultz v. Boy Scouts of Am., 65 N.Y.2d
189, 197 (1985) (alterations and quotation marks in the original, citation omitted). A
court should endeavor to apply the law of the jurisdiction having the most significant
and predominate relationship to the particular transactions and the parties, but it also
must concern itself with the legal policy aspects at stake. Zurich Ins. Co. v. Shearson
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Lehman Hutton, Inc., 84 N.Y.2d 309, 317 (1994) (cited by Int’l Bus. Mach. Corp. v.
Liberty Mut. Ins. Co., 363 F.3d at 143). “[T]his process requires [courts] first to
isolate the issue, next to identify the policies embraced in the laws in conflict, and
finally to examine the contacts of the respective jurisdictions to ascertain which has
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As a point of reference, Edwards v. Erie Coach Lines, Inc., illustrates the continuing
evolutionary nature of New York’s choice of laws. 17 N.Y.2d 306 (2011). The New York Court of
Appeals now instructs us that the “correct way to conduct a choice-of-law analysis is to consider
each plaintiff vis-á-vis each defendant, [that is,] a plaintiff-by-defendant inquiry.” 17 N.Y.2d at 329
(2011). As a result of applying this plaintiff-by-defendant analysis, along with the Neumeier three
rule framework also noted in Edwards, where the parties, particularly the defendants, resided in
different domiciles, different state allocation of loss laws become applicable simultaneously: for
example, in Edwards, Ontario law applied to the bus defendants, while New York law applied to the
Pennsylvania tractor-trailer defendants.
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a superior connection with the occurrence and thus would have a superior interest in
having its policy or law applied.” Miller v. Miller, 22 N.Y.2d 12, 16 (1968).
So, for example, in tort actions, if the conflict rules involve the appropriate
standard of conduct, there is a set of predominant factors to consider while,
conversely, if the rules in conflict concern allocation of losses, there is yet another set
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of predominant factors to weigh. Depending on which standard is relevant in a
particular case or what interest is being protected within a case, different results may
occur. Schultz v. Boy Scouts of Am., 65 N.Y.2d at 198 (discussing the implication of
the Babcock rule vis-á-vis the three rule framework pronounced in Neumeier v.
Kuehner, 31 N.Y.2d 121 (1972)8 as to the determinative role of the parties’ split
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In Neumeier v. Kuehner, the New York Court of Appeals was addressing conflicting guest
passenger statutes, which involved the allocation of losses after a tort occurred rather than regulating
primary conduct. In Neumeier, the plaintiff was an Ontario resident, the defendant a New York
State resident, and, the accident occurred in Ontario. The New York statute favored the non resident
plaintiff while the Ontario statute was favorable to the defendant driver, the New York resident. The
New York Court of Appeals found that although New York has a deep interest in protecting its own
residents against unfair or anachronistic statutes of another state, it has no legitimate interest in
ignoring the public policy of another jurisdiction. 31 N.Y.2d at 125-26. Referring to Tooker v.
Lopez, 24 N.Y.2d 569 (1969), the Neumeier Court noted, at least in regard to guest statutes, the
evolution of its choice of law rules gravitated towards “the formulation of a few rules of general
applicability promising a fair level of predictability.” Id. at 128. In doing so, the Neumeier Court
identified a three principled framework in handling such factors as the parties’ different domiciles,
situs of the accident, and the application of the appropriate law. Id. Weighing the facts before that
court, it was the third stated principle that controlled: “The law to be applied is that of the
jurisdiction where the accident happened unless it appears that displacing the normally applicable
rule will advance the relevant substantive law purposes of the jurisdictions involved.” Id. at 128-29
(quotation marks and alterations omitted). In the final analysis, the court displaced its normal situs
rule in order to advance the substantive law of the Ontario’s guest statute under those facts. Schultz
v. Boy Scout of Am., adopted the Neumeier three principle rule framework into other legal contexts
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(continued...)
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domiciles and the substantive law or policy being advanced as the predominant
guiding forces in determining which state law should apply). However, “it is well
settled that New York has long recognized the use of ‘center of gravity’ or ‘grouping
of contacts’ as the appropriate analytical approach to choice of law questions in
contract cases . . . [which would] establish which State has the most significant
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relationship to the transaction and the parties[.]” In the Matter of the Liquidation of
Midland Ins. Co., 16 N.Y.3d 536, 543-44 (2d Cir. 2011) (citing, inter alia, Zurich Ins.
Co. v. Shearson Lehman Hutton, 84 N.Y.2d at 317) (alterations omitted) (emphasis
added); Schwartz v. Liberty Mut. Ins. Co., 539 F.3d at 151 (noting that New York
applies a group of contacts theory to contract claims, looking to a spectrum of
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significant contacts as to which state has the most significant relationship to the
transaction and the parties).
2. Analysis
Each party in this discussion takes richly divergent perspectives whether a
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choice of law analysis is required. Skywest submits that either New York or Georgia
Workers’ Compensation Law is applicable as to whether it can intervene in this matter
and to what degree it may recover on its lien, though more strenuously arguing that
New York Workers’ Compensation Law is more appropriate. Woodall does not
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(...continued)
beyond guest passenger statutes. 65 N.Y.2d 189.
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address this issue specifically head on but argues that only Georgia Law is the
applicable law regarding the enforcement of Skywest’s lien. And, the Defendants take
another view that it is unnecessary to engage in a choice of law discussion,9 and
Skywest has the right to intervene in order to preserve its lien, yet the enforcement of
that lien in this case is controlled by Georgia law, and not New York.
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First, the Court must identify if there is an actual conflict between New York’s
and Georgia’s Workers Compensation Law before a choice of law analysis can
commence. Int’l Bus. Mach. Corp. v Liberty Mut. Ins. Co., 363 F.3d at 143 (citing In
re Allstate Ins. Co., 81 N.Y.2d 219, 223 (1993)). In New York, an insurer who has
paid disability benefits “shall have a lien on the proceeds of any recovery from such
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third party, whether by judgment, settlement or otherwise, after the deduction of
reasonable and necessary expenditures, including attorneys’ fees, incurred in effecting
such recovery, to the extent of the total amount of disability benefits provided by this
article and paid, and to such extent such recovery shall be deemed for the benefit of
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such carrier or the chairman.” N.Y. Workers’ Comp. Law. § 227(1) (emphasis
added). Whereas, Georgia’s law states that “[i]n the event an employee has a right of
action against such other person as contemplated in subsection (a) of this Code section
The Defendants’ perspective is that New York Workers’ Compensation Law does not
allow an employer/insurer to intervene, thus no choice of law issue exists.
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and the employer’s liability under this chapter has been fully or partially paid, then the
employer or such employer’s insurer shall have a subrogation lien, not to exceed the
actual amount of compensation paid pursuant to this chapter, against such recovery.
The employer or insurer may intervene in any action to protect and enforce such lien.
However, the employer’s or insurer’s recovery under this Code section shall be
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limited to the recovery of the amount of disability benefits, death benefits, and
medical expenses paid under this chapter and shall only be recoverable if the injured
employee has been fully and completely compensated, taking into consideration both
the benefits received under this chapter and the amount of the recovery in the thirdparty claim, for all economic and noneconomic losses incurred as a result of the
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injury. GA. CODE ANN. § 34-9-11.1(b) (emphasis added). Comparing the two states’
relevant statutes, it is readily discernible that there is a conflict between the two; New
York’s law places no restriction as to when or how an insurer can recapture the benefit
paid, whereas, under Georgia law, an insurer can only recover the benefits paid if the
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injured employee has been fully and completely compensated. Ostensibly, New
York’s law is more pro-insurer while Georgia’s law favors the injured insured.
Now that an actual conflict has been identified, the Court turns to New York’s
choice of law as it may pertain to workers’ compensation liens issues. In Carminucci
v. Pepsico, Inc., the plaintiff was injured in New York but received workers’
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compensation through Connecticut. 236 A.D.2d 499 (N.Y. App. Div. 2d Dep’t 1997).
The appellate court found that “[t]he rights of an employer to be reimbursed for
workers’ compensation benefits paid to an employee are governed by the law of the
State in which the benefits were paid.” Id. The appellate court then determined that,
since the plaintiff was paid benefits under Connecticut’s Workers’ Compensation
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Law, Connecticut law applied. Id. at 501 (citations omitted); see also Meras v. Slee,
271 A.D.2d 417 (N.Y. App. Div. 2d Dep’t 2000) (allowing a Connecticut employer
to intervene in order to preserve its rights to a lien under Connecticut law); McDuffie
v.Wilner, 415 F. Supp. 2d 412, 420 (S.D.N.Y. 2006). Notwithstanding this strong and
clear pronouncement of New York’s choice of law regarding workers’ compensation
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liens, Skywest challenges its validity, arguing that “this line has been criticized for
failing to apply the interest analysis required by the Court of Appeals in Bacock [v.
Jackson, 12 N.Y.2d 473].” Dkt. No. 19-3, Intervenor’s Mem. of Law at p. 12.
Skywest asserts that contrary to this stated proposition of law, it is the place of the
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acceptance of benefits, not where benefits are paid, that is a determinative factor to be
considered. Id. (citing Schultz v. Boy Scouts Am., 65 N.Y.2d 189). Skywest further
posits that this matter is a loss-allocation matter and should be decided under
Neumeier’s second rule in that where the parties are domiciled in different states and
the local law favors the respective domiciliary, the court should apply the law of the
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place of injury, which, in this case, happens to be New York’s. Id. (citing Neumeier
v. Kuhner, 31 N.Y.2d 121). Lastly, Skywest cites a trilogy of cases for the proposition
that when an injured party receives workers’ compensation from a State other than
New York, under the balancing of interest analysis, “[c]ourt[s] [have] determined that
New York Worker Compensation Law should apply.” Id. at p. 12-13 (citing Fiske v.
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Church of St. Mary of the Angels, 802 F. Supp. 872 (W.D.N.Y. 1992), Mihalic ex rel.
Estate of Johnson v. K-Mart of Amsterdam, 363 F. Supp. 2d 394, 399 (N.D.N.Y.
2005), & Glunt v. ABC Paving Co., 247 A.D.2d 871 (N.Y. App. Div. 4th Dep’t 1998).
This Court does not share Skywest’s contestation.
To argue that the Carminucci Court, after having the rich benefit of the
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Babcock, Neumeier, and Schultz precedents, actually ignored them and did not apply
the appropriate choice of law analysis created by them, may be myopic. As we all
should know, in New York, appellate courts are required, much like lawyers, trial
judges, and the public, to follow the law as announced by the New York Court of
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Appeals, the highest Court in the State. Even though the Carminucci’s decision may
be devoid of a multi-paged analysis and it may have delivered a crisp pronouncement
of the relevant law, such a decisive decision should not necessarily suggest that the
court did not perform an interest analysis, determining the jurisdiction with the
greatest interest which relates to the purpose of the particular law in conflict, that is
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here workers’ compensation lien statutes, or a grouping of contacts analysis to
establish which State law had the most significant relationship to the transaction (here
the enforcement of a lien) and the parties. What should not be forgotten about
Neumeier is that it formulated a few rules of general applicability which would
promise a fair level of predictability and uniformity. 31 N.Y.2d at 128. Carminucci
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likewise, in the scheme of things, presents a predictable and uniform rule as to which
jurisdiction would have the most predominant and relative interests in having its law
govern the preservation and prosecution of a workers’ compensation lien. This Court
recognizes that the New York Court of Appeals has not spoken on the choice of law
rules relevant to workers’ compensation lien provisions, but, when one of the State’s
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four appellate courts has rendered such a ruling, which has not been contradicted or
distinguished by another New York appellate court, it is generally deemed to be a
controlling precedent in New York.10
Next, Skywest submits that this is a loss-allocation case, which can easily be
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decided by Neumeier’s second rule, that is, where the parties are domiciled in different
This Court could not find any precedents that criticized directly Carmunucci or Meras v.
Slee, or the principle of law declared by them. Nor did Skywest provide any such criticizing
precedents. However, Skywest cited the Matter of O’Connor’s Estate, 21 A.D.2d 333 (N.Y. App.
Div. 2d Dep’t 1964) for the proposition that the governing law on workers’ compensation is where
the benefits are accepted. Dkt. No. 19-3, Intervenor’s Mem. of Law at p. 12. However, that
principle of law stated in Matter of O’Connor’s Estate has been met with significant disagreement.
See Roach v. McGuire & Bennett, Inc., 146 A.D.2d 89, 93 (N.Y. App. Div. 3d Dep’t 1989) & Fiske
v. Church of St. Mary of the Angels, 802 F. Supp. 872, 880 (W.D.N.Y. 1992).
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states, and the law of the place where the accident occurred favors its domiciliary, the
law where the place of injury occurred controls. Neumeier v. Kuhner, 31 N.Y.2d at
128. Accordingly, Skywest posits that in our case, it is New York.
Our facts and the choice of law as to the application of a lien’s recovery do not
fit neatly within the second rule. First, this Court is not prepared to limit the precept
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of preserving and enforcing workers’ compensation liens as purely within the loss
allocation category like other provisions of workers’ compensation laws, i.e., thirdparty contribution provisions. Lien laws have hybrid aspects of both loss allocation
and contract elements - the parties entered into a contractual relationship whereby an
employee provides his labor and, by statutory mandates, an employer provides, as part
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of the consideration for such labor, workers’ compensation insurance or coverage for
the benefit of that employee. True, the parties, as well as the prospective intervenor,
have separate domiciles: Woodall resides in New Hampshire; Defendant Rich Albany
Hotel exists under Delaware law but has a place of business in Albany, New York;
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Defendant New Castle exists under Connecticut law with a principal place of business
in that State; and Skywest is a Utah corporation with a principal place of business in
Atlanta, Georgia. Although the first component of Neumeier’s second rule may have
been satisfied, the second component, that the law of the place where the accident
occurred favors the domiciliary, has not been met.
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New York Workers’
Compensation Law section 227(1) does not favor Defendant New Castle, and
whatever lien law may be applicable is essentially immaterial to New Castle as a thirdparty tortfeasor. And, there is nothing within our record to indicate that Woodall, a
New Hampshire resident, would have been entitled to or did collect workers’
compensation benefits in New York. Although this Court is not prepared to concede
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that any of the Neumeier rules are applicable over the appropriate analysis as to which
state’s lien law is applicable, if any would, it would seem to be the third rule. 31
N.Y.2d at 128. “In other situations, when [the parties] are domiciled in different
states, the rule is necessarily less categorical.” Id. Hence, the third rule espouses that
the law of the state where the accident occurred would govern unless “it can be shown
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that displacing that normally applicable rule will advance the relevant substantive law
purposes without impairing the smooth working of the multi-state system or
producing great uncertainty for litigants.” Id.
Additionally, the trilogy of cases cited by Skywest to sustain its position that
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where there is a conflict of provisions of different state’s workers’ compensation law
the place of the injury governs, may not fairly square with our issue either. In each
of those cases, the courts were not dealing with the employer or insurer’s right to
enforce its lien but rather they were dealing with third-party actions seeking
contribution from the employer, who may have paid benefits to the injured worker for
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any damages occurring as a result of a tort. As in each of those cases, the relevant
workers’ compensation law provision dealt with contribution or indemnity against the
employer and had little, if anything, to do with the employer’s ability to recover from
a verdict or settlement those benefits paid to its employee.
As an illustration, the Court turns to Fiske v. Church of St. Mary of the Angels,
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802 F. Supp. 872. This is a case where a subcontractor’s employee, who was injured
in New York, sued the general contractor and building owner, New York defendants,
under New York Labor Law § 240. The building owner and the general contractor
filed a third party action against the subcontractor, a Pennsylvania business concern
who had paid benefits to the employee through Pennsylvania’s workers’
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compensation. Under Pennsylvania workers’ compensation law, plaintiff’s exclusive
remedy against his employer is the workers’ compensation benefits, which
conceivably would relieve the employer from liability, so not surprisingly, the
employer argued that Pennsylvania rather than New York law should apply in this tort
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action. New York law permits third-party contribution while Pennsylvania law does
not. Applying the legal analysis framework, the fact that the plaintiff received
workers’ compensation from the employer in Pennsylvania was “not of overriding
significance” as to which jurisdiction’s law should apply. 802 F. Supp. at 882.
Rather, the predominate factors had more to do with the fact that New York has a
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strong public policy for regulating safety at construction sites, that the general
contractor and owner of the building were New York corporations, that the overall
business relationship among the parties centered in New York, that the accident
occurred in New York, and that a third-party action was not against Pennsylvania
policy of protecting employers from actions instituted by employees. Id.; see also
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Glunt v. ABC Paving Co., 247 A.D.2d 871 (third party action for contribution);
Mihalic ex rel. Estate of Johnson v. K-mart of Amsterdam, 363 F. Supp. 2d 394
(discussing workers’ compensation law provisions that dealt with initiating third party
contribution actions).
Taking full measure of the comprehensive legal permutations of workers’
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compensation statutes, it does not necessary follow that one size fits all aspects of the
many and varied provisions of workers’ compensation laws when it comes to deciding
the appropriate choice of law. In some respects, a Neumeier analysis may be required,
while in others, a more basic rule may be applicable. Apparently, the allocation of
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loss aspect of a statutory provision dealing with third party action, contribution or
indemnity deserves a Neumeier analysis; however, that does not necessarily mandate
a similar treatment for a provision that allows employers and insurers to protect their
liens. As to the latter, it would seem that the state that has actually paid the workers’
compensation benefit would most often have the most interest in having its law apply.
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Nevertheless, in the scheme of things, a Neumeier/Schultz analysis would arrive
at the same conclusion as Carmunucci. As the record indicates, Woodall was
employed by Skywest, which has a base of operation in Georgia, and was paid
workers’ compensation under Georgia’s law. Woodall’s Aff., at ¶¶ 3 & 4; see also
Dkt. Nos. 19-1, Ex. 4 & 23, Exs. (workers’ compensation transactional records
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confirming Skywest’s base of operation in Atlanta Georgia).
Skywest’s and
Woodall’s overall contractual relationship is centered in Georgia. As a part of that
contractual employment relationship, their respective involvement in providing and
receiving disability benefits through Georgia highlights where their obligations to
each other were to be fulfilled. Certainly, Georgia’s legislature has expressed an
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interest that its workers’ compensation provisions be applicable in circumstances such
as this and that its employers and/or insurers are reimbursed for the payments that they
have made. Moreover, Georgia would have a significant interest in regulating the
interaction between its employers and employees in matters such as this. Absent from
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our record is any indication that any workers’ compensation benefits were paid in
accordance with New York law. Since Woodall was covered by Georgia’s workers’
compensation law and accordingly received benefit thereunder, New York’s interest
is minimal, and the New York domiciliary is not being deprived of a recovery or a
benefit that could be derived from New York’s workers’ compensation laws. It
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appears that Georgia’s interest here substantially outweighs New York’s interest.
Accordingly, as to the workers’ compensation lien, Georgia law is controlling.
3. Georgia Law
Skywest has filed a notice of lien in the amount of $42,028.91, of which
$22,228.03 was for indemnity benefits and $19,800.88 for medical benefits. With the
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commencement of this diversity action, consequently Skywest contends that it is
entitled to intervene as a matter of right. GA. CODE ANN. § 34-9-11.1(b); see supra
Part II.B.2. The Georgia statute actually creates two rights on behalf of the employer
or insurer: (1) Although an employer/insurer is entitled to a subrogation lien for the
disability benefits it has paid to an injured employer, in order to enforce the lien it
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must intervene in the employee’s suit. Thus, an employer has the right to intervene
to assert its lien; and (2) the employer has a right to recover on the lien where there
is a demonstration that the employee has been fully and completely compensated. As
to the former point, an employer/insurer must intervene in a employee’s tort claim to
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protect and enforce its subrogation lien. Anthem Cas. Ins. Co. v. Murray, 246 Ga.
App. 778, 780 (2001) (“It is the responsibility of the workers’ compensation provider
to protect its interest by intervention[.]”).11 And, as to the latter, the right to recover
If an employee action has been commenced, an employer/insurer has no right to pursue
a separate and independent action against the third-party tortfeasor. Anthem Cas. Inc. Co. v.
Murray, 246 Ga.App. 778, 782 (2001).
11
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is limited to the benefits paid and, furthermore, an employer/insurer cannot pursue
subrogation claims for benefits paid under a foreign law. Performance Food Group
Inc., v. Williams, 300 Ga.App. 831 (2009). “The right to enforce the lien is only ripe
once there is a showing that the plaintiff has been fully and completely compensated.”
Watkins v Vestil Mfg. Corp., 2008 WL 5102885, at *5 (N.D.Ga. Dec. 1, 2008). An
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employee is fully and completely compensated when the amount of the judgment or
settlement received by the injured party/employee exceeds the injured party’s
economic and noneconomic damages. Thurman v. State Farm Mut. Auto. Ins. Co.,
278 Ga. 162, 164 (2004). Economic damages would constitute medical expenses and
lost wages, while noneconomic damages represent pain and suffering. Canal Ins. Co.
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v. Liberty Mut. Ins. Co., 256 Ga.App. 866, 873 (2002) (identifying noneconomic
damages as pain and suffering). The burden rests with the employer/insurer to prove
that the insured employee has been fully compensated as to each category of
noneconomic loss and “that no portion of the lien is taken against any recovery for
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noneconomic losses.” Anthem Cas. Ins. Co. v. Murray, 246 Ga.App. at 780. To
reiterate, the employer/insurer’s right is always subordinate to the employee/insured’s
paramount right to complete compensation. Canal Ins. Co. v. Liberty Mut. Ins. Co.,
256 Ga. App. at 872.
It is incumbent upon the trial court, and not a jury, to determine if the employee
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has been fully and completely compensated; “neither party has a right to a jury
determination of whether the injured employee has been fully and completely
compensated[.]” Id. at 870 & 872-73. That determination compares the sum of the
workers’ compensation benefits paid by the employer/insurer and the amount of the
employee’s recovery in the third-party lawsuit to all economic and nonecomic losses
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caused by the injury. Georgia Elec. Membership Corp v. Garnto, 266 Ga.App. 452,
453 (2004); see also Austell Healthcare, Inc. v. Scott, 308 Ga.App. 393 (2011) (noting
that it is the trial court’s duty to weigh the evidence and make a factual determination
as to whether the employer has carried its burden). However, the Georgia statute does
not permit the matter of comparative or contributory negligence to be considered.
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Homebuilders Ass’n of Georgia v. Morris, 238 Ga.App. 194, 196 (1999). Although
it is not required, if there is a jury trial, a trial court is permitted to use a special verdict
form to assist it in determining what facet of the verdict constitutes economic and
noneconomic recoveries. Watkins v. Vestil Mfg. Corp., 2008 WL 5102885, at *3 n.2.
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Both Woodall and Defendants inform the Court that prior to the filing of the
notice of lien they engaged in settlement negotiation and may have arrived at a
proposed amount for only pain and suffering. Dkt. No. 23, Defs.’ Mem. of Law at p.
1. Yet, it is slightly unclear if Woodall has accepted the proposed amount. Even if
settlement had been consummated, the subrogation lien would still attach, the claim
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of the intervenor remain adjudicatory, and a fact finding would have to ensue to
determine whether Woodall had been fully and completely compensated by the
settlement. Int’l Maint. Corp. v. Inland Paper Board & Packaging, Inc., 256 Ga.App.
752, 755 (2002) (citations omitted).
Thus Georgia law makes clear “[f]ailure to allow intervention to protect the
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subrogation lien [even at the settlement stage] . . . constitutes an abuse of discretion
by the trial court[,]” Canal Ins. Co. v. Liberty Mut. Ins., 256 Ga.App. at 868, and, “an
intervenor may file any pleadings in the case that the original parties could have
filed.” Andrews v. Ford Motor Co., 310 Ga.App. 449, 454 (2011) (citing, inter alia,
Int’l Maintenance Corp v. Inland Paper, 256 Ga.App. at 754) (“an intervenor [may]
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file whatever briefs, evidence, or other papers it chooses[.]”).
4. Motion to Intervene
The Court returns to Skywest’s Motion to Intervene pursuant to Rule 24(a)(2).
As identified above, there are essentially four elements Skywest must meet in order
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to properly intervene.
The Movant must demonstrate an interest relating to the property or transaction
that is the subject of the pending action. Weighing the above discussion, it is evident
that the Georgia statute provides Skywest with a right to assert a subrogation lien for
the workers’ compensation benefits it has paid to Woodall, albeit a lien infused with
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a condition precedent. Canal Ins. Co. v. Liberty Mut. Ins. Co, 256 Ga.App. at 871
(shall only be recoverable “if the injured employee has been fully and completely
compensated”). This statutory right creates an interest on the part of Skywest in the
pending litigation between the current parties.
Furthermore, case precedent
establishes that Skywest’s right to intervene is fundamentally absolute, whether
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through a full plenary proceeding or a subsequent fact finding relative to any
settlement.
Next, the Movant must show that it is so situated that without intervention the
disposition may impair its interest and that the interest is not already adequately
represented by existing parties. From this record, neither Woodall nor the Defendants
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have an obligation or the inclination to ensure that the subrogation lien is paid.
Woodall’s and the Defendants’ opposition to the lien itself is more telling on whether
Skywest’s interest is impaired or imperiled without its intervention. At least for
Woodall there is a fear and an enmity that Skywest’s intervention may jeopardize the
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proposed settlement and obviously has infinitesimal interest in pursuing a recover on
Skywest’s behalf. There is a palpable adversity of interest to Skywest’s effort to
intervene and even to the assertion of the lien at this juncture of the litigation. For
these reasons, Skywest has rebutted the presumption of adequate representation,
Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 180 (2d Cir. 2001), and has
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persuaded this Court that without Skywest’s intervention, the lien would be
compromised.
Finally, the Movant would have to demonstrate that this Motion was filed
timely. Ostensibly, timeliness “defies precise definition,” and should be judged on a
case by case basis, United States v. Pitney Bowes Inc., 25 F.3d 66, 70 (2d Cir. 1994),
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hence a careful review of a case’s chronology may be helpful. Since the filing of the
Complaint, this lawsuit has been on an aggressive track: a complaint was filed on
April 21, 2011; issues were joined on May 10, 2011; and, a Scheduling Order was
issued on September 7, 2011.12 It is uncertain from the record when Skywest and its
third party administrator Sedgwick learned of this lawsuit, but correspondence, dated
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August 26, 2011, alerted Woodall of its lien: “Please be advised our lien is FINAL
and will need to be included in any settlement action.” Dkt. No. 23, Ex., Sedgwick
Lt.13 On December 19, 2011, Skywest filed its notice of lien, Dkt. No. 16, and on
January 19, 2012, filed this Motion to Intervene, Dkt. No. 19. Although four months
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may have past from notification of the lawsuit to the filing or the lien and an
Pursuant to the Scheduling Order, the discovery deadline is April 30, 2012. Dkt. No. 11,
Scheduling Order, dated Sept. 7, 2011.
12
Sarah Smith, a subrogation specialist with Sedgwick, states that it did not learn of the
existence of this action until mid-September 2011. Dkt. No. 19-1, Sarah Smith Aff., dated Jan 18,
2012, at ¶10. The time discrepancy between the August 26th Correspondence and Smith’s
recollection is too marginal to make a difference in our discussion.
13
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additional month for the filing of the Motion, it appears that this Motion is timely,
especially when considering that the Georgia Statute extends to employers/insurer the
right to intervene even after settlement and a judgment. Int’l Maint. Corp.v. Inland
Paper, 256 Ga.App. at 755. Skywest represents that it does not seek discovery nor an
extension of the discovery deadline. Dkt. No. 19-3, Movant Mem. of Law at p. 10.
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There is no indication that any trial or settlement will be impeded because of this
intervention.14 Bearing all of this in mind, there is no apparent prejudice to either
Woodall or the Defendants.15
III. CONCLUSION
Skywest has established that it is entitled to intervene in order to preserve and
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protect its lien. The applicable law to be considered relative to the subrogated lien at
the end of the litigation or settlement is Georgia law. The current status of this case,
which the Court must determine, will direct our course of action. Both Woodall and
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This Court realizes that a motion to intervene could be denied if granting it would
jeopardize a settlement and prejudice the parties. In re Holocaust Victim Assets Litig., 225 F.3d 191,
198-99 (2d Cir. 2000) (citing United States v. Pitney Bowes Inc., 25 F.3d at 72). But, this Court has
yet to confirm that indeed Woodall and the Defendants actually settled this matter. Accordingly,
it is prudent for us to proceed to the next step in this litigation and determine its current status.
14
Skywest also sought permission to Intervene pursuant to Rule 24(b). FED. R. CIV. P. 24(b).
In order to obtain permission, a movant would have to demonstrate by a timely motion a conditional
right to intervene, a claim that shares with the main action a common question of law or fact, and
that the intervention would not delay or prejudice. Because the Court has concluded that Skywest
may intervene as a matter of right, it is not necessary to consider this application under this
provision.
15
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Defendants indicate that there is a settlement at play. However, the Case Docket
indicates that mediation had failed. Dkt. No 15, Report of Evaluator David Taffany,
dated Dec. 7, 2011.16 But, the record further suggests that the Defendants have made
a proposed settlement for noneconomic losses, and it seems that “Plaintiff is interested
in accepting the lump sum settlement, but only if there exist no Workers’
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Compensation lien.” Dkt. No. 21-1, John F. Harwick, Esq., Aff., dated Jan 23, 2012,
at ¶ 9; see Dkt. No. 23, Defs.’ Mem. of Law. Because of these developments, the
Defendants urge this Court to immediately set up a proceeding to make factual
determinations as to whether the settlement makes Woodall whole and fully complete.
Dkt. No. 23, Murry S. Brower Aff. at Wherefore Clause. Whether this matter
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proceeds to trial or is settled as suggested, should there be an occasional conflict
between the Intervenor and Plaintiff, this Court has the responsibility to “referee such
disagreements and conflicts.” Broad v. Hitts, 2009 WL 5031372, at *2 (M.D.Ga Dec.
14, 2009) (quoting Int’l Maint. Corp. v. Inland Paper, 256 Ga.App. at 754-55..
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Accordingly, it is hereby
ORDERED, that Skywest’s Motion to Intervene, Dkt. No. 19, is granted.
Skywest shall file its Complaint within seven days of the filing date of this Order. The
It appears that as of December 13, 2011, an offer of settlement had been made yet the
action had not settled. Dkt. No. 21-7, Sedgwick Lt.
16
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Defendants’ answer to the Complaint shall be filed twenty days after being served
with the Intervenor’s Complaint; and it is further
ORDERED, that Woodall’s Cross Motion to invalid Skywest’s Lien, Dkt. No.
21, is denied; and it is further
ORDERED, that the Court shall hold a status conference within the following
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two weeks. The parties, including the Intervenor, shall file the dates and times that
they may be available for a telephone conference on the record so that the Court can
gauge the progression and the current status of this case.
IT IS SO ORDERED.
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April 11, 2012
Albany, New York
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