Gallagher v. Pennsylvania Liquor Control Board
Gallagher v. Pennsylvania Liquor Control Board
Opinion of the Court
OPINION
Appeal was allowed to consider whether a trial court presiding over a civil negligence case erred in refusing to bifurcate trial to avoid exposing jurors to information from which it could be inferred that the plaintiff may have received some compensation for his injuries from a collateral source.
In November of 1999, while working as an inventory picker in a warehouse operated by the Pennsylvania Liquor Control Board (the “PLCB”), Appellee, John Gallagher, fell through an opening in an elevated walkway. He later commenced a negligence action against the PLCB; World Transportation, Inc., a logistical company that provided distribution and warehousing support to the PLCB; Appellant, Trans Freight Systems, Inc., which was also involved in the warehouse operations and which was World Transportation’s parent corporation; and others. Among other injuries, Appellee claimed to have suffered a disabling brain injury.
World Transportation and Appellant each asserted that it was Appellee’s employer, and therefore, was immune from civil suit in the courts of law under the employer-immunity provisions of the Pennsylvania Workers’ Compensation Act, 77 P.S. §§ 1-1041, 2501-2626. See 77 P.S. § 481. Appellee made a pre-trial request pursuant to Pennsylvania Rule of Civil Procedure 213(b), styled as a motion in limine, to have the question of which entity was his employer and the remaining trial issues bifurcated and otherwise to prohibit the mention of workers’ compensation during the proposed, separate
Despite the trial court’s ruling, in his opening statement, Appellant’s counsel made specific reference to Appellee’s receipt of workers’ compensation benefits, as follows:
[H]ow will we show you that Trans Freight Systems was in fact the employer under the law of John Gallagher? ... Workers compensation benefits. How did Mr. Gallagher receive workers compensation benefits after this incident occurred? Trans Freight Systems paid the workers compensation benefits.
R.R., at 308a-309a. Appellee’s counsel did not assert a contemporaneous objection; however, after the jury retired for the day, the trial judge spoke with counsel and criticized the remark of Appellant’s counsel as a violation of his ruling, as follows:
The Court: ... [TJhere was a comment in [Appellant’s counsel’s] opening regarding workers’ comp benefits. My*366 ruling was only that your client or anybody could mention that they paid premiums on his behalf. It had nothing to do with him getting benefits. If you misunderstood—
[Appellant’s Counsel]: I did. I apologize, Your Honor.
The Court: He was carried on the books as an employee and they made payments for premiums. But that is it.
[Appellant’s Counsel]: Okay. I apologize, Your Honor, if I misunderstood your ruling.
See R.R., at 322a-323a.
Prior to the resumption of the trial the next day, Appellee’s counsel expressed continuing concern regarding the effect of the opening remarks, and the trial court indicated its own discomfort in light of the recent decision of the Superior Court in Nigra v. Walsh, 797 A.2d 353 (Pa.Super. 2002) (awarding a new trial on the basis that a defendant/motorist violated the collateral source rule by suggesting to the jury that the plaintiff/passenger was receiving federal disability benefits, and because it was impossible to determine the effect of such violation on the verdict). For this reason, the court granted Appellee’s request to bar any and all references to workers’ compensation, including premium payments. See R.R., at 337a-338a (reflecting the trial court’s indication “I am very happy to just eliminate any issue with respect to the premiums, with respect to the benefits[;] [y]ou will have to prove employment another way”). The court subsequently stated to the jurors:
Folks, I forgot to mention before we started. In one of the opening statements yesterday, there was some mention of workers comp benefits. Please disregard that. That has no place in this case and should not in any way be considered by you in your deciding this case.
R.R., at 410a-411a.
Nonetheless, the subject of workers’ compensation resurfaced during the cross-examination of Appellee’s father, who was asked by Appellant’s counsel about his son having “had several prior workers’ compensation or work related injuries.”
[Appellee’s Counsel]: Motion for [a mistrial], Your Honor, reluctantly. Even if we didn’t have the issues in this case that we have related to employment, in the limited rulings you made about allowing information about workers compensation premiums.
The Court: That’s changed.
[Appellee’s Counsel]: I understand that. We’re still, I think, entitled to a [mistrial].
My recollection is on Monday after opening you once again said or you said, defense counsel not to mention workers compensation benefits. That was not the scope of your ruling. We now have workers compensation coming in again, and it was phrased as other or additional, I forgot which words preceded workers compensation claims. I reluctantly, believe me, very reluctantly, I move for a [mistrial].
[Appellant’s Counsel]: Your Honor, the question was, it was immediately rephrased. It was a prior work related injury. The Court: No. No. That’s not what you said. You used the term workers compensation.
[Appellant’s Counsel]: Your Honor, that was done—
The Court: Was this another mistake?
[Appellant’s Counsel]: Your Honor, that was done in error. I indicated immediately, I rephrased it to say work related injury. I don’t think this is an indication that a [mistrial] is appropriate. Clearly, it was immediately rephrased and it was in no way altering the facts of this case. And to address the issue of a [mistrial] is really, I think, not appropriate at this juncture.
The Court: Your comment was not appropriate. You have to watch what you’re saying.
R.R., at 428a-429a, 456a-57a; see also R.R., at 425 (reflecting counsel’s initial objection). The trial court denied the mistrial motion.
I think I was too hasty in precluding mention of the payment of premiums. So I am going to reverse myself on that. But it’s only the payment of premiums.
[Appellant’s Counsel]: Correct, Your Honor.
The Court: I just think that is an element that has to be part of the evidence in this case. My original ruling was that it could come in. I think I overreacted on that. I will let that in.
R.R., at 455a-456a. The court thus permitted Appellant’s former vice president of operations to testify that Appellant had in fact paid the workers’ compensation premiums for employees at the PLCB warehouse facility. See R.R., at 571a. On Appellee’s request, the trial court instructed the jurors:
Folks, I do want to remind you that you have heard the term workers compensation. That has nothing to do with any damage which may or may not be awarded by you in this case. You are to put that out of your mind. It is being introduced only on the issue of who employed Mr. Gallagher.
R.R., at 571a.
After the close of the evidence, World Transportation moved for a directed verdict on the employer-immunity ground. Counsel for Appellant and Appellee ultimately agreed that the trial court had the authority to decide the issue, see R.R., at 626a, and the court ruled that World Transportation was, and Appellant was not, Appellee’s employer. See R.R., at 641a-642a.
Appellee filed post-trial motions,
The trial court denied relief, reiterating its position that the evidence of premium payments was relevant to the employer identification issue, and thus, the decision whether to admit it, and whether to bifurcate, was committed to its sound discretion. In this regard, the court indicated that, on balancing considerations of judicial economy and fairness, it had concluded that bifurcation and/or exclusion was unnecessary. The court recognized that the evidentiary limitation couched as the collateral source rule derives from the substantive doctrine of damages law prescribing that payments from a collateral source do not diminish the damages otherwise recoverable from the tortfeasor. See id. at 6 (citing Johnson v. Beane, 541 Pa. 449, 664 A.2d 96, 100 (1995));
Upon the resolution of the post-trial motions, the verdict was molded to reflect an adjustment relative to the component attributed to Appellee’s negligence, as well as the addition of delay damages, and judgment was entered in favor of Appellee and against Appellant in the amount of $122,412.73.
On Appellee’s subsequent appeal from such judgment, the Superior Court reversed in a divided, memorandum decision, holding that the trial court abused its discretion by allowing collateral source evidence to infect the liability and damages phase of the trial, the error, caused prejudice, and a new trial was due. See Gallagher v. PLCB, No. 3209 EDA 2002, slip op. at 7, 841 A.2d 582 (Pa.Super.Nov.13, 2003). The majority decision centered on the first two challenges raised by Appellee, in which he alleged that the trial court erred in denying his bifurcation motion.
The failure to separate the issue relating to the identify of the employer from liability necessarily allowed evidence of workers’ compensation insurance coverage into the jury’s collective mind. The trial court’s cautionary instruction to the jury and explanation in its opinion that workers’ compensation coverage was admitted solely for purposes of identifying the employer illustrates the initial error committed—had the court bifurcated the trial, there would have been no need to caution the jury as to the purpose of the workers’ compensation insurance evidence.
Gallagher, slip op. at 6.
Although the Superior Court majority acknowledged the trial court’s efforts to narrowly constrain the presentation of evidence touching on workers’ compensation, it emphasized that the jurors were nevertheless subsequently informed of the fact of collateral source payments. Id. at 7. The majority described the discerned violation of the collateral source rule as “the residual error of the trial court’s refusal to bifurcate the trial” and concluded that, because the testimony that it found to have been improperly admitted may have affected the verdict, the appropriate remedy was a new trial. Id. at 7 (quoting Nigra, 797 A.2d at 356).
Judge Beck authored the dissenting opinion, in which she observed that evidence of compensation from collateral sources has routinely been permitted to establish material facts or for other evidentiary purposes that are not directly related to the plaintiff’s recovery, and generally can be accomplished without mention of actual payment. See Gallagher, slip op. at 1 (Beck, J., dissenting) (citing Beechwoods Flying Service, 504 Pa. at 623-24, 476 A.2d at 353 (holding that evidence of the procurement by a plaintiff of insurance against property damage was admissible in bailment case where it related to an element of the bailment contract); Capozi v. Hearst Pub. Co., 371 Pa. 503, 92 A.2d 177 (1952) (holding that evidence of a defendant’s maintenance of liability insurance,
This Court allowed appeal, limited to the issue of:
Applying the standards for appellate review set forth in Harman v. Borah, 562 Pa. 455, 756 A.2d 1116 (2000), and considering the scope of a trial court’s discretion under the Pennsylvania Rules of Evidence, did the Superior Court err in reversing the trial court’s denial of Gallagher’s motion for a new trial based on its conclusion that the collateral source rule had been violated and without consideration of actual prejudice, when the evidence of payments from a collateral source was relevant to the jury’s determination as to which of two defendants was Gallagher’s employer and the trial court gave a cautionary instruction to the jury that the evidence should be used only for that limited purpose.
Presently, the parties’ arguments are divided along the lines of the respective opinions of the Superior Court majority and dissent. Appellant highlights that the testimony the jurors heard relating to the employer identity issue was brief and expressly limited in scope, and the jurors never heard actual evidence of benefits payments. Appellant also notes that the Pennsylvania Rules of Evidence reflect the broad discretion that is vested in trial judges and specifically contemplate that limiting instructions may be given to structure the introduction of limited-purpose evidence and prevent reversible error, see Pa.R.E. 105, and criticizes the opinion of the Superior Court holding as being tantamount to an unwarranted -per se rule precluding the admission of material evidence. As concerns its counsel’s opening remarks, Appellant observes that no contemporaneous objection was asserted, and therefore,
Appellee characterizes the Superior Court majority’s holding as merely exemplifying mainstream enforcement of the strong and long-standing prohibition against introducing evidence of a collateral source. According to Appellee, the subject of workers’ compensation is so inherently prejudicial that errors in permitting references to it cannot be corrected by simple admonishments to jurors to ignore the topic. In this regard, Appellant points to some of the more forceful statements of this Court which have arisen in various contexts.
On the issue that the Superior Court decided, namely the propriety of the trial court’s ruling on bifurcation, we are in alignment with the position of Judge Beck. The decision whether to bifurcate is entrusted to the sound discretion of the trial court, which is in the best position to evaluate the necessity for such measures. See Stevenson v. General Motors Corp., 513 Pa. 411, 422-23, 521 A.2d 413, 419 (1987) (reviewing a refusal to bifurcate under an abuse of discretion standard). That Appellee presents a different perspective than that of the trial court concerning the time and resources that two hypothesized proceedings would have consumed as compared with the single one that in fact ensued is unpersuasive, since Appellee offers nothing concrete that would cause us to question or disturb the trial court’s comparative judgment in this regard.
Further, as Judge Beck noted, this Court has followed the majority view that, although evidence of a plaintiffs recovery from collateral sources is generally inadmissible and improper references may warrant a mistrial, an exception exists if the evidence of such recovery is relevant to a material issue in the case. See, e.g., Beechwoods Flying Service, 504 Pa. at 623-24, 476 A.2d at 353; DeVita v. Durst, 167 Pa. Cmwlth. 105, 116, 647 A.2d 636, 641 (1994) (“Courts have found evidence of insurance permissible where it is relevant to the issue in a case.” (citation omitted)).
We agree with Appellee that the matter of employment status is ultimately a question of law, and, where the facts are undisputed, it may be decided by the trial court without the
Based on the foregoing, we find no abuse of discretion in the trial court’s decision on bifurcation, which was the subject of Appellee’s first two issues raised in his appeal and was the expressed basis for the Superior Court’s disposition. Appellee seeks to conflate (and to some degree it appears that the Superior Court majority reasoning conflated) the bifurcation decision with the two instances in which Appellant’s counsel affirmatively violated the trial court’s pre-trial order by referencing workers’ compensation matters other than the payment of premiums by Appellant to establish an employment relationship. At the time that the court issued its pre-trial order, however, it was entitled to expect that its straightforward ruling limiting references to workers’ compensation would be respected and implemented by counsel. We decline, therefore, to inject considerations arising from hindsight into review of the sustainability of the pre-trial order as such.
In light of our holding that the trial court did not abuse its discretion in refusing to bifurcate the employer identification question and other trial issues in this case, the Superior Court’s order is vacated, and the matter is remanded for consideration of the remaining issues that were raised and properly presented in the appeal to the Superior Court.
. In this regard, the Court relied on the fact that World Transportation maintained the contract relative to logistical operations at the warehouse with the PLCB; the relevant licenses necessary to carry out the contract; and actual, day-to-day control over the employees. See R.R., at 641a.
. Appellant and the PLCB also filed post-trial motions. Appellant, however, did not pursue the issues that it raised in such motion on appeal, and the PLCB withdrew its claims for relief after reaching a settlement with Appellee.
. Parenthetically, via the Medical Care Availability and Reduction of Error Act, Act of March 20, 2002, P.L. 154, No. 13, the General Assembly has negated the substantive collateral source doctrine in medical professional liability actions. See 40 P.S. § 1303.508.
. Those two issues were framed as follows:
Whether the trial court erred as a matter of law in denying Plaintiffs Motion in Limine for bifurcation/severance of the employer issue particularly where the likelihood that payment or receipt of workers compensation benefits would be injected into the case.
Whether the trial court erred as a matter of law in denying Plaintiff's Motion in Limine to preclude evidence of receipt/payment of workers compensation benefits and in allowing defense counsel to ask about receipt of such benefits and payment of workers compensation benefits and premiums.
Gallagher, slip op. at 4.
. See, e.g., Lobalzo, 409 Pa. at 21, 185 A.2d at 561 (indicating, upon finding irrelevant references to a plaintiff's receipt of workers’ compensation benefits combined with a misleading jury charge issued by the trial court, that "[w]hen an error in a trial is of such a consequence that, like a dash of ink in a can of milk, it cannot be strained out, the only remedy, so that justice may not ingest a tainted fare, is a new trial”); Lengle v. North Lebanon Twp., 274 Pa. 51, 53, 117 A. 403, 404 (1922) (observing that, once the matter of payment or receipt of workers' compensation benefits was put before a jury in a case in which it has no relevance ”[c]orrective instructions had little chance to get this idea out of the jurors’ minds”); cf. Boudwin, 410 Pa. at 33, 188 A.2d at 260 (reflecting a plurality statement that “[¡judges should be vigilant, in personal injury trespass cases, to keep out of the trial all references to benefits collaterally received by the plaintiff.”).
. Accord 22 Am.Jur.2d Damages § 763 (2004) ("[E]vidence that the plaintiff was compensated by a collateral source for all or a portion of
We recognize that some jurisdictions do maintain a per se rule against the admission of collateral source evidence. See, e.g., Proctor v. Castelletti, 112 Nev. 88, 911 P.2d 853, 854 (1996). Notably, while this Court has rejected a per se approach, it has taken a comparatively narrow view on the issue of when collateral source payments are relevant. Compare 2 Stein on Personal Injury Damages § 13:14 (3d ed. 2004) ("Under the liberal view, evidence of collateral payments is admissible, at least in the trial court’s discretion, to show malingering.”), -with Boudwin, 410 Pa. at 36, 188 A.2d at 261 (reflecting a refusal to cognize the use of collateral source evidence to establish malingering), and Lobalzo, 409 Pa. at 20, 185 A.2d at 560 (same, with respect to attempted use of collateral source evidence for general impeachment purposes).
. See Pa.R.E. 411 (“Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.").
The collateral source rule as such is not specifically developed in the Rules of Evidence, but is referenced in a comment to Rule 402 as an exclusionary precept that is not abrogated by the Rules’ adoption.
. Appellant did file a motion for summary judgment based on the employer-immunity statute, but obviously the trial court was not disposed to grant relief in its favor based on the facts presented. See supra note 1.
. In any event, Appellee’s present position on this point was not maintained before the trial court. Rather, at trial, his counsel confessed confusion regarding the issue, as follows:
I've looked over some cases. I must admit I've not looked over them completely. I’m not a hundred percent sure. I've seen some cases that say that ultimately determination of who’s an employer is a legal issue. If the facts are in dispute they go to the jury. But I’ve never seen it done in a liability case like this, number one. And number two, I don’t know what facts you ask the jury to resolve. I just don't know. I was puzzling over that last night. And I still don’t know. I don’t think the jury gets asked who’s the employer because that’s the legal issue. But short of that, what questions can a jury resolve that then the court can rule on as a matter of law, I’m somewhat at the moment befuddled.
R.R., at 451a-452a.
. Accord McLandrich v. Southern Cal. Edison Co., 917 F.Supp. 723, 731 (S.D.Cal. 1996) (identifying as a putative employer's payment of workers’ compensation premiums as a relevant consideration in deter
. In K.H. v. J.R., 573 Pa. 481, 826 A.2d 863 (2003), the general rule was expressed that a notice of appeal filed from the entry of judgment is viewed as drawing into question any prior non-final orders that produced the judgment. See id. at 493-94, 826 A.2d at 871. It was therefore an available choice for Appellee, having filed a notice of appeal relative to the final judgment, to challenge the trial court’s bifurcation ruling as such. However, the proper review in such instance is obviously centered on an examination of the record for abuse of discretion as of the time that the bifurcation ruling was made, rather than from an end-of-trial perspective.
Notably, the principles governing appellate review of a trial court’s resolution of a motion for a new trial overlap with the review standard pertaining to the trial court’s pre-trial order and, obviously, further subsume an assessment of the appropriate remedy where an abuse of discretion or error of law is discerned. See Harman v. Borah, 562 Pa. 455, 467, 756 A.2d 1116, 1122 (2000).
. There are significant issues connected with whether or not Appellee may secure relief based on these violations which, in light of the Superior Court's approach, have not yet been addressed. For example, with regard to counsel's opening remarks, Appellant raised a waiver issue based upon the failure of Appellee’s counsel to assert a contemporaneous objection. See Brief of Appellee (Superior Court), at 7, 13-14. As another example, with respect to the reference to workers’ compensation arising during the cross-examination of Appellee’s father, an at least moderately distinct analysis should apply, since this was not a collateral source reference relative to the present case, as no recovery for the injuries in question was implied.
Dissenting Opinion
DISSENTING OPINION
While I commend the majority for its thorough review of the record in this case and its summary of Pennsylvania’s precedent as well as that of our sister states, I respectfully disagree with the result reached. The divergence of our opinions results from fundamentally different views of the impact of collateral source evidence on the minds of jurors and the corresponding role of the trial court in determining whether to admit references to a plaintiffs prior collateral source recovery.
As aptly noted by the majority, our Court long has observed the prejudicial effect of collateral source information. See Maj. Op. at 373, n. 5, 883 A.2d at 556, n. 5 (quoting Boudwin v. Yellow Cab Co., 410 Pa. 31, 188 A.2d 259, 260 (1963) (plurality)); Lobalzo v. Varoli, 409 Pa. 15, 185 A.2d 557, 561 (1962);
Consequently, this Court has tried to insulate our juries from references to collateral source information. The majority acknowledges the rationale for barring references to collateral sources but appropriately recognizes an exception to the rule: “although evidence of a plaintiffs recovery from collateral sources is generally inadmissible and improper references may warrant a mistrial, an exception exists if the evidence of such recovery is relevant to a material issue in the case.” Maj. Op. at 373-74, 883 A.2d at 557. I concur with the majority’s view that this exception may be appropriate in certain limited cases; the exception as implemented by the majority, however, has the potential to swallow the rule.
The majority affirms the trial court’s decision not to bifurcate the employer issue from the liability issues based on the conclusion that workers’ compensation “was a potentially relevant consideration” to the employer issue.
While I acknowledge that bifurcation should be utilized sparingly
Consequently, I would affirm the decision of the Superior Court because it was an abuse of discretion for the trial court to fail to determine whether it was possible to resolve the issue as a matter of law without exposing the jury to collateral source evidence.
. Moreover, as noted by the majority, the payment of workers’ compensation premiums, in fact, was not determinative of the employer issue.
Maj. Op. at 368, n. 1, 883 A.2d at 553, n. 1.
. As we have previously stated, bifurcation "should be carefully and cautiously applied and be utilized only in a case and at a juncture where informed judgment impels the court to conclude that application of the rule will manifestly promote convenience and/or actually avoid prejudice. Piecemeal litigation is not to be encouraged.” Stevenson v. General Motors Corp., 513 Pa. 411, 521 A.2d 413, 419 (1987) (quoting Brown v. Gen. Motors Corp., 67 Wash.2d 278, 407 P.2d 461, 464 (1965)).
. The majority apparently would have required the plaintiff to file a partial summary judgment motion to gain a “global pre-trial disposition of the question” and therefore does not fault the trial court’s "apparent
. See Proctor v. Castelletti, 112 Nev. 88, 911 P.2d 853, 854 (1996) (adopting "a per se rule barring the admission of a collateral source of payment for an injury into evidence for any purpose”); Reinan v. Pacific Motor Trucking Co., 270 Or. 208, 527 P.2d 256 (1974) (collecting cases and applying a strict exclusionary rule to collateral source evidence). Additionally, a number of other jurisdictions, while not adopting per se rules, have severely restricted the admission of such evidence. See Lund v. San Joaquin Valley R.R., 31 Cal.4th 1, 1 Cal.Rptr.3d 412, 71 P.3d 770, 777 (2003) (acknowledging California’s precedent that collateral source information will only be admitted upon "a persuasive showing that the evidence sought to be introduced is of substantive probative value’’); Gurliacci v. Mayer, 218 Conn. 531, 590 A.2d 914, 929 (1991) (collecting cases and adopting the standard that provides for an exception to the collateral source bar for evidence of malingering by the plaintiff where there is “corroborative evidence and a proper limiting instruction"); Sheffield v. Superior Ins. Co., 800 So.2d 197, 203 (Fla. 2001) ("Although we did not announce a per se rule of reversal we recognized the inherently damaging effects of the jury hearing collateral source evidence both on the issues of liability and on issues of damages.); Haischer v. CSX Transp., Inc., 381 Md. 119, 848 A.2d 620 (2004) (permitting certain limited exceptions to the inadmissibility of collateral source evidence in cases under the Federal Employer’s Liabilities Act and the Boiler Inspection Act where the plaintiff claims financial distress due to the injury and such evidence is used for the limited purpose of testing plaintiff's credibility).
Reference
- Full Case Name
- John GALLAGHER v. PENNSYLVANIA LIQUOR CONTROL BOARD, World Transportation, Inc., Envoy Warehouse, Inc. and Trans Freight Systems, Inc. Appeal of Trans Freight Systems, Inc.
- Cited By
- 29 cases
- Status
- Published