New Jersey Appellate Division reverses and remands a workers’ compensation court decision for failing to take into consideration a choice-of-law provision.
The Judge of Compensation’s decision denied Supreme Auto Transport’s (respondent) motion to dismiss, denied its motion to implead BMH Auto Transport LLC and found the petitioner was an employee of Supreme.
In describing the relationship between the parties, the Appellate Division noted that Supreme, located in Colorado, described itself as an “interstate brokerage corporation that facilitates the moving of cars between auto manufacturer[s].” The petitioner registered BMH as a business organization located in New Jersey on May 13, 2015. He was the sole owner, operator, member and employee of BMH.
Supreme and BMH entered into an “authorized carrier lease” in January 2018 in which Supreme leased equipment from BMH for a year. Supreme sought to “perform authorized transportation in certain equipment it does not own,” whereas BMH indicated it would “provide a driver and … operate the equipment as a[n] independent contractor.” The lease also included an independent contractor provision, where it noted that BMH was to provide workers’ compensation coverage for itself and its employees and that the lease would be governed by Colorado law.
In August 2018, the petitioner filed a claim petition with the Division of Workers’ Compensation in New Jersey, alleging injuries as a result of a May 25, 2018, car accident while driving from Rhode Island to Pennsylvania while in Supreme’s employment. Supreme filed an answer, denying employment. It also filed a motion to dismiss, asserting the employer was BMH, and a motion to implead BMH. There was a dispute as to whether Supreme or BMH, as Supreme’s independent contractor, employed the petitioner.
Supreme argued that Colorado law should apply pursuant to the contractual choice-of-law provision and that Colorado law presumes an independent-contractor relationship based on the language of the lease. After hearing Supreme’s chief operating officer’s and the petitioner’s testimonies, the Judge of Compensation rendered an order and oral opinion. The judge denied Supreme’s motions solely based on New Jersey law and did not reference the lease nor Colorado law.
Supreme appealed, arguing the judge failed to take into account Colorado law. The petitioner contended the contractual choice-of-law provision was raised for the first time on appeal, although the Appellate Division pointed out this was incorrect as Supreme raised this provision in its brief to the judge. The Appellate Division reviewed the relevant case law and indicated that New Jersey courts have generally upheld contractual choice if it did not violate public policy. To override choice-of-law, a judge has to find:
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
Kramer v. Ciba-Geigy Corp., 371 N.J. Super. 580, 598 (App. Div. 2004) (quoting Restatement (Second) of Conflicts of Laws § 187 (Am. Law Inst. 1971)).
In noting that the substantial-relationship prong of the Restatement did not prevent application of Colorado law because Supreme is located in Colorado, the Appellate Division also found the judge made no determination between the applicability of New Jersey and Colorado law, and reversed and remanded.
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