Lee v. Terex Corporation

Background

Ozzie Lee alleged that, while working for ACCO Engineered Systems on July 27, 2022, he was using a single-occupant scissor lift when its hydraulic gate fell on his hand as he tried to exit. He sued Terex Corporation, the lift’s manufacturer, and United Rentals, Inc., the company that rented the lift to ACCO Engineered Systems. His complaint asserted negligence and products-liability claims and sought compensatory damages, including damages for wage loss, loss of use of property, medical expenses, and other harm.

Lee filed the case in Santa Clara County Superior Court on May 2, 2023. Terex removed it to federal court on September 8, 2023, with United Rentals’ consent. The notice of removal relied on diversity jurisdiction and stated that the amount in dispute exceeded $75,000. Liberty Mutual Insurance Company had paid workers’ compensation benefits to Lee and later intervened as ACCO Engineered Systems’ subrogee—that is, an entity seeking repayment based on rights connected to benefits it paid. Liberty’s claim sought reimbursement under California Labor Code sections 3852 and 3853.

Motion to Remand

Lee moved to remand, meaning to return the case to state court. He relied on 28 U.S.C. § 1445(c), which provides that a civil action arising under a state’s workers’ compensation laws may not be removed to federal court. Lee argued that California Labor Code section 3852 both provides subrogation rights and gives an injured worker the right to sue a responsible third party. Liberty joined Lee’s motion.

Court’s Analysis

The court concluded that Lee’s negligence and products-liability claims did not arise under California workers’ compensation laws for purposes of section 1445(c). Those claims were independent of Lee’s workers’ compensation benefits, did not require deciding those benefits, and did not involve a dispute about the relevant workers’ compensation provisions. Lee instead had to prove the elements of negligence and products liability under California common law.

The court agreed that a claim under California Labor Code section 3852 arises under California workers’ compensation laws. But it held that Liberty’s claim did not prevent removal because Liberty was not a party when Terex removed the case. The court relied on the rule that removal is evaluated based on the pleadings and parties existing when removal occurred. It also relied on a prior decision involving a similar intervention and removal sequence, while acknowledging that this result creates concerns about allowing defendants to remove a case before a workers’ compensation insurer becomes a party.

Ruling

The court denied Lee’s motion to remand. The order did not decide the merits of Lee’s negligence or products-liability claims or Liberty’s subrogation claim. The hearing was vacated, and the initial case management conference remained scheduled. Judge Susan Illston signed the order on December 8, 2023.