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Jackson v. Eagle KMC L.L.C.

Supreme Court of Arizona

January 2, 2019

Stephanie Jackson, an individual, Plaintiff/Appellant,
v.
Eagle KMC L.L.C., aka Eagle KMC Transportation, aka Eagle Transportation Co., aka Eagle J&K Transportation L.L.C., aka Eagle Tucson South, L.L.C., aka Eagle Transportation, L.L.C., an Arizona corporation; Rachael Gabriella Hender, a single woman; Werner Enterprises, Inc., a foreign corporation; Drivers Management, L.L.C., a foreign corporation, et al., Defendants/Appellees.

          Appeal from the Superior Court in Mohave County The Honorable Charles W. Gurtler, Judge No. S8015CV201600092

          Ryan Skiver (argued), The Skiver Law Firm, Scottsdale; James E. Harris, Harris & Associates P.C., L.L.O., Omaha, NE, Attorneys for Stephanie Jackson

          Phillip H. Stanfield, Daniel O. King, Lori L. Voepel (argued), Jones, Skelton & Hochuli, P.L.C., Phoenix, Attorneys for Eagle KMC L.L.C., Rachael Gabriella Hender, Werner Enterprises, Inc., and Drivers Management, L.L.C. James F. Mahoney, Emily K. Dotson, Resnick & Louis, P.C, Scottsdale, Attorneys for Amicus Curiae Arizona Trucking Association

          Stanley G. Feldman, Miller, Pitt, Feldman & McAnally, P.C, Tucson; David L. Abney (argued) Ahwatukee Legal Office P.C, Phoenix, Attorneys for Amicus Curiae Arizona Association for Justice/Arizona Trial Lawyers Association

          JUSTICE GOULD authored the opinion of the Court, in which CHIEF JUSTICE BALES and JUSTICES PELANDER, TIMMER, BOLICK, and LOPEZ, and JUDGE ECKERSTROM[*] joined.

          OPINION

          GOULD, JUSTICE

         ¶1 We hold that Arizona's automatic assignment provision in A.R.S. § 23-1023(B) does not apply when an employee receives workers' compensation benefits under another state's laws. Rather, the law of the state in which an employee's workers' compensation is paid determines the assignment rights of the employer and employee.

         I.

         ¶2 Stephanie Jackson, a South Carolina resident, was employed as a semi-truck driver for Drivers Management, LLC ("DM"), a Nebraska company. DM contracted with Eagle KMC, LLC ("Eagle"), an Arizona company, to provide training for Jackson in Arizona. In February 2014, Jackson was a passenger in a semi-truck driven by Rachael Hender, an Eagle employee. Jackson was injured when Hender rolled the semi-truck while driving in Arizona. She subsequently applied for and received workers' compensation in Nebraska. DM, which is self-insured for workers' compensation, paid Jackson's benefits.

         ¶3 In February 2016, a few days before Arizona's two-year statute of limitations expired, see A.R.S. § 12-542(1), Jackson filed this personal injury action against Eagle, Hender, and Werner Enterprises (the registered owner of the semi-truck) (collectively "Eagle"), alleging several claims, including strict liability, negligence, and "statutory violations." In accordance with Nebraska law, because DM had a subrogation claim against any third-party recovery, Jackson named DM as a defendant. See Neb. Rev. Stat. § 48-118 (stating an "employer having paid or paying compensation to [an] employee . . . shall be made a party to the suit" for subrogation purposes).

         ¶4 Eagle filed a motion to dismiss (later converted into a motion for summary judgment) arguing that pursuant to § 23-1023(B), Jackson had no legal interest in the action. Section 23-1023(B) provides, among other things, that if a person entitled to compensation under Arizona's workers' compensation laws does not file an action against a third person who caused the injury within one year of the action accruing, the action is deemed to be assigned to the employer or the workers' compensation insurer. The superior court granted summary judgment in favor of Eagle, reasoning that § 23-1023(B) applied here, and thus Jackson had no legal interest in the action.

         ¶5 The court of appeals reversed. Jackson v. Eagle KMC LLC, 244 Ariz. 224, 227 ¶ 14 (App. 2018). Relying on Quiles v. Heflin Steel Supply Co., 145 Ariz. 73, 77 (App. 1985), it held that § 23-1023(B) did not apply to Jackson's claim because her "workers' compensation benefits were adjudicated and paid in Nebraska," and therefore the law of Nebraska "governs subrogation, lien, and assignment rights in this action." Jackson, 244 Ariz. at 227 ¶ 13.

         ¶6 We granted review to determine whether the automatic assignment provision in ยง 23-1023(B) applies to actions against a third-party tortfeasor when an injured employee receives workers' compensation benefits under another state's laws. We have jurisdiction pursuant to ...


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