Clinton Williams v. Liberty Mutual Insurance Co.
2014 U.S. App. LEXIS 1726
| 5th Cir. | 2014Background
- Clinton Williams, a Mississippi resident, was injured in Mississippi while working for an Alabama resident contractor; Liberty Mutual was the employer’s workers’ compensation insurer.
- Liberty Mutual delayed paying benefits for eight months; Williams pursued claims in both the Mississippi Workers’ Compensation Commission and an Alabama state court and settled compensation but reserved rights to sue for bad faith/outrage.
- Williams sued Liberty Mutual in Mississippi state court for intentional bad-faith refusal to pay compensation; Liberty Mutual removed the case to federal court.
- The district court held Alabama substantive law applied and dismissed Williams’ tort claim as barred by Alabama’s workers’ compensation exclusivity.
- The Fifth Circuit reversed, holding Mississippi choice-of-law principles apply and that Mississippi recognizes an independent tort for an insurer’s intentional bad-faith refusal to pay workers’ compensation (so the claim is not barred).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the insurer’s alleged intentional bad-faith refusal to pay benefits is a tort or contract claim | Williams: it is an independent intentional tort under Mississippi law (Holland) | Liberty Mut.: obligation derives from insurance contract; claim is contractual | Held: Classified as a tort under Mississippi law (Holland and progeny) |
| Which state’s substantive law governs (Mississippi or Alabama) | Williams: Mississippi has the most significant relationship (place of injury, where refusal occurred, plaintiff’s domicile) | Liberty Mut.: Alabama law governs (relationship centered in Alabama; district court applied Alabama) | Held: Mississippi law governs under Restatement (Second) §145/center-of-gravity test |
| Whether Alabama’s workers’ compensation exclusivity bars the claim | Williams: exclusivity does not bar an independent tort by the insurer | Liberty Mut.: exclusivity bars bad-faith claim under Alabama law | Held: Because Mississippi law governs and recognizes the independent tort, exclusivity does not bar Williams’ claim under Mississippi law |
| Whether Restatement §184 or Fifth Circuit precedent (Ellis) requires application of Alabama law | Williams: §184 and Ellis are distinguishable and do not compel Alabama law here | Liberty Mut.: §184/Ellis support applying Alabama law | Held: §184 and Ellis were inapposite; district court misapplied them; Mississippi §145 controls |
Key Cases Cited
- Southern Farm Bureau Cas. Ins. Co. v. Holland, 469 So. 2d 55 (Miss. 1984) (recognizing independent tort for insurer’s intentional bad-faith refusal to pay workers’ compensation)
- Stewart v. Matthews Indus., Inc., 644 So. 2d 915 (Ala. 1994) (Alabama holds exclusivity bars bad-faith workers’ compensation claims except for extreme "outrage" tort)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (federal courts in diversity must apply forum state’s choice-of-law rules)
- Ellis v. Trustmark Builders, Inc., 625 F.3d 222 (5th Cir. 2010) (application of Restatement §145 under Mississippi choice-of-law in a work-related negligence suit)
- Owens v. Mississippi Farm Bureau Cas. Ins. Co., 910 So. 2d 1065 (Miss. 2005) (distinguishable contract-interpretation decision; did not address classification of bad-faith denial as a tort)