Supreme Court of Texas Affirms Negligence Cause of Action against Non-subscriber

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A significant case has come down from the Supreme Court of Texas. The case of Randy Austin v. Kroger Texas, L.P. gives some insight into the perils Texas employers face when they do not subscribe to workers’ compensation insurance. For the purposes of this article non-subscriber means a Texas business that declines to subscribe to or purchase workers’ compensation insurance – even if they provide an “equivalent” employee program.

The facts of the case involve an individual named Randy Austin. Mr. Austin was working as a janitor for Kroger at their Mesquite Texas location. One day, another Kroger employee power-washed the store’s rooftop air conditioning condenser units. This caused an oily liquid to leak through the store’s ventilation ducts and into the women’s and men’s bathrooms.

Kroger’s safety handbook recommended using Spill Magic when dealing with oily spills. Spill Magic is a powdery absorbent that removes liquids of all types and provides slip and fall protection. Spill Magic is commonly used by grocery stores, retail stores, restaurants, hotel chains and many municipalities. However, on the day in question, no Spill Magic was available.

Mr. Austin asked his supervisor what to do. His supervisor told him to simply “clean it up.” Therefore, Mr. Austin attempted to clean up the oily liquid with a mop and bucket. After cleaning the women’s bathroom he proceeded to the men’s bathroom where 80% of the floor was covered with the oily liquid. Mr. Austin asserted that despite exercising extreme caution, after mopping up 30% to 40% of the spill he slipped and fell.

The fall caused Mr. Austin to dislocate his hip and fracture his femur. As a result, Mr. Austin spent nine months in the hospital. Over the course of that time he underwent six surgeries. This left his left leg two inches shorter than his right leg.

Kroger had elected not to subscribe to the Texas workers’ compensation system. This is governed by Tex. Lab. Code § 406.002 whereby an employer can decline to participate, but in doing so, they lose the liability protections of the system. In addition, when a non-subscriber is faced with a lawsuit from an employee, the defenses of contributory negligence and assumption of the risk are not available (Tex. Lab. Code § 406.033(a)(1)). While Kroger provided significant medical and indemnity benefits to Mr. Austin, he believed the benefits were insufficient. Thereafter, Mr. Austin sued Kroger in state court on theories of gross negligence, negligence and premises liability.

Kroger removed the case to federal district court based on diversity jurisdiction. This was allowed as Kroger is based in Cincinnati Ohio. When a federal court hears a state court case, they generally apply state substantive law (here Texas laws) while maintaining use of their own federal procedural laws – such as the Federal Rules of Civil Procedure.

Before the federal district court, Kroger moved for summary judgment on all of Mr. Austin’s claims. The federal court granted the motion, and Austin’s attorneys appealed. The Fifth Circuit Court of Appeals affirmed as to gross negligence stating that “no reasonable juror could conclude that Kroger was consciously indifferent to the safety of its employees.” However, the Fifth Circuit reversed on the issue of negligence. On the premises liability claim, the Fifth Circuit said the law was unclear. Therefore, the Fifth Circuit asked the Supreme Court of Texas for clarification on the issue of premises liability in the context of the employer/employee relationship.

The Supreme Court of Texas ruled that employers have a duty to maintain their premises in a reasonably safe condition and to warn employees of concealed dangers. However, the court went on to state that an employee cannot recover on a theory of premises liability if the employee was fully aware of the dangerous condition. Because Mr. Austin knew about the dangerous oily substance on the floor, he could not recover on the theory of premises liability.

Kroger immediately hailed the decision as a victory for employers in Texas. Kroger also stated that the opinion strengthens non-subscribers’ defenses. On its face, this is true. Non-subscribers will not have to worry about a premises liability claim where the employee knows of the dangerous condition. However, Kroger had specifically requested that the Supreme Court of Texas preclude Mr. Austin’s negligence claim. Kroger argued that since Mr. Austin had alleged that the bathrooms were a dangerous condition his claim would have to sound in premises liability not negligence.

The Texas Supreme Court did not agree. In the interest of judicial efficiency, the court ruled that Kroger, as Mr. Austin’s employer, had a duty to provide Austin with the instrumentalities (in this case the Spill Magic) to safely do the job. Whether or not failure to provide the Spill Magic will result in a negligence finding will be for the federal court to determine. But one thing is clear: in no way can Kroger, and Texas non-subscribers in general, find comfort in the court’s language about having to provide Austin with the instrumentalities.

When interviewed, an attorney for Mr. Austin, Matthew Kita, understandably had a much different take than Kroger. He said that while the Texas Supreme Court ruled that Mr. Austin did not have a viable premises liability claim against Kroger, he did have a negligence claim for failing to provide the Spill Magic. No doubt Mr. Kita seized on the court’s language regarding the duty to provide the instrumentalities. And again, this “provide the instrumentalities” claim, i.e. the negligence claim, is the claim that the Fifth Circuit remanded to the federal district court.

This will be an interesting case to follow through the federal court system. A six-person federal jury panel may find Kroger was negligent for not providing the Spill Magic. If this happens, the test non-subscribers may face could be “Did we provide our employee, who was injured, the instrumentalities needed to enable him or her to safely perform their job?” If the answer is no, then the non-subscribing business may indeed be found negligent.

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Tom Swiatek

Tom Swiatek

As Assistant Vice President of Regulatory Services, General Counsel, and Editor in Chief of UR Nation, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a California Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.