argued as amended january 30 1978.: September 7, 1977.
ON APPEAL FROM THE UNITED STATES DISTRICT CORT FOR THE DISTRICT OF NEW JERSEY. C.A. No. 74-430.
Adams, Van Dusen and Hunter, Circuit Judges. Hunter, Circuit Judge, dissenting.
The task of a federal court sitting in diversity is frequently not an easy one, for it must foresake its realm of expertise and assume the aspect of a court of the forum state. Even when applying well-settled law, the federal tribunal must be alert to nuances of precedent. Where, as here, a federal court is asked to pass on the implication of a declaration by a state high court of a new principle in an evolving area of the law, it must act with even greater sensitivity.
In this case, we are called upon to evaluate the effect of a dictum by the New Jersey Supreme Court that failure to insist on a financially-responsible independent contractor will subject the employer of that contractor to liability to uncompensated victims for the contractor's negligence. This endeavor is a perplexing one, but it is not one this court is free to avoid. In the course of discharging our obligation, we must choose either to reject or to accept a nascent legal rule, and thus risk distorting state law as much by an excess of conservatism as by insufficient attention to stare decisis.
On August 31, 1972, appellant Gary Becker, a 19-year-old construction worker, was severely injured on his job site in Windsor, New Jersey when a heavy truck drove squarely over his pelvis.*fn1 Mr. Becker has sued to recover his damages, including the $35,000 in medical fees he had expended as of the time the complaint was filed.
The owner and general contractor of the $1.5 million shopping center project on which Mr. Becker was working at the time of the accident was I.P. Construction Corp. (hereinafter the developer).*fn2 Mr. Becker was employed by Wood-Pine Corp., a small company hired by the developer to pave the shopping center. The developer knew, or should have known, that Wood-Pine would hire subcontractors, since Wood-Pine itself had no trucks. In fact, Wood-Pine hired Windsor Contracting Corp., whose employee, Willard Edwards, drove the truck which injured Mr. Becker.*fn3
There is evidence to indicate that I.P. at least on some occasions in the past, had required insurance coverage from its subcontractors (395a, 408a-411a). Also, there is evidence that the standard liability insurance coverage in the construction industry allows for recoveries of up to $250,000 per accident. In contrast, Windsor's automobile liability insurance coverage was only $10,000, and Windsor is only minimally capitalized.
To recover for his injuries in this diversity action, Mr. Becker sued Windsor and its employee for negligence, also asserting claims against the developer. Mr. Becker contends that he will be unable to recover his damages from Windsor because of Windsor's limited insurance coverage and marginal capitalization, and that the developer breached its duty in allowing such a financially-irresponsible contractor to be hired.
The district court granted summary judgment for the developer, holding that under New Jersey Law the developer could not be held liable for the tort of an independent subcontractor regardless of the financial status of such subcontractor. It is this conclusion that we review here.*fn4
Inasmuch as no New Jersey cases are squarely on point, it is important to make clear that our disposition of this case must be governed by a prediction of what a New Jersey court would do if confronted with the facts before us.*fn5 Such an estimate cannot be the product of a mere recitation of previously decided cases. Rather, as in any diversity case, a federal court must be sensitive to the doctrinal trends of the state whose law it applies, and the policies which inform the prior adjudications by the state courts.*fn6 A diversity litigant should not be drawn to the federal forum by the prospect of a more favorable outcome than he could expect in the state courts. But neither should he be penalized for his choice of the federal court by being deprived of the flexibility that a state court could reasonably be expected to show.*fn7
The federal tribunal is thus obligated to follow the course that it expects New Jersey courts would adopt in similar circumstances.*fn8
Because we are dealing here with a summary judgment, our analysis is limited to the inquiry of whether any state of facts reasonably inferable from the record could entitle the plaintiff to send the case to the jury under New Jersey law. Our disposition is also influenced by the reluctance which New Jersey courts have manifested to dismiss innovative tort claims without full development of facts at trial.*fn9
It is true, as Mr. Becker suggests, that the concept of immunity of the employer of an independent contractor is in tension with the more general tort doctrine of respondeat superior, and that the former represents a judicial gloss on the latter.*fn10 Indeed some authorities have advocated the all-out abolition of the independent contractor immunity,*fn11 and one noted commentator has espoused the view that the proliferation of exceptions to the immunity precept is "sufficient to cast doubt on the validity of the rule."*fn12
Nonetheless, we discern no indication that the New Jersey courts are prepared to abandon on a wholesale basis the rule of an employer's immunity for the acts of his independent contractors and to adopt a pure theory of "enterprise liability." Instead, the New Jersey courts have adhered to the general doctrine of immunity, and the liability of employers has emanated from the exceptions articulated in Majestic Realty Associates Inc. v. Toti Contracting Co.*fn13
Under Majestic, an employer is responsible for the negligence of an independent contractor if one of three special circumstances is present:
(1) where the employer retains control over the aspect of the activity in which ...