Dragon v. Cheesecake Factory
300 Neb. 548
| Neb. | 2018Background
- Keith T. Dragon, a dishwasher, sued for workers’ compensation and the parties agreed to a $5,000 lump-sum settlement using the verified-release process under Neb. Rev. Stat. § 48-139(3).
- Employer filed the verified release May 1, 2017, triggering the 30-day payment deadline in § 48-139(4); payment was mailed June 8, more than 30 days later.
- Dragon moved for a 50% late-payment penalty under § 48-139(4) and attorney fees under § 48-125; the Workers’ Compensation Court denied relief and dismissed his petition with prejudice.
- The Workers’ Compensation Court relied on Holdsworth, which held that the broad release language waives post-release claims (including penalties and fees) once the release becomes effective.
- While the appeal was pending, the Legislature enacted L.B. 953 (2018), amending § 48-139(4) to make a verified release effective only upon payment and entry of an order of dismissal with prejudice.
- The Nebraska Supreme Court concluded L.B. 953 is a procedural amendment that applies to the pending appeal, held Dragon is entitled to the late-payment penalty, rejected employer’s reasonable-controversy defense as inapplicable to § 48-139(4), and affirmed denial of attorney fees for lack of supporting affidavit.
Issues
| Issue | Plaintiff's Argument (Dragon) | Defendant's Argument (Cheesecake Factory) | Held |
|---|---|---|---|
| Whether Dragon is entitled to a late-payment penalty under § 48-139(4) | The 2018 amendment (L.B. 953) is procedural and applies, so the release was not effective until dismissal; penalty is available | The 2014 version made the release effective upon payment, so payment—even late—waived penalty claims | Court: L.B. 953 is procedural and applies; Dragon entitled to late-payment penalty |
| Whether the reasonable-controversy doctrine excuses the late-payment penalty | Doctrine should not apply; parties had settled so no controversy remains | Employer: delay was reasonable due to dispute over child support liens and thus penalty should be excused | Court: Reasonable-controversy doctrine does not apply to § 48-139(4) late-payment penalties |
| Whether Holdsworth bars penalty claims after a verified release | Dragon: Holdsworth does not bar penalties under the post-L.B. 953 framework | Employer: Holdsworth controls; the release (once effective) waives penalties and fees | Court: Holdsworth still stands as to effect of an effective release, but under L.B. 953 the release was not yet effective—so penalties survive |
| Whether Dragon is entitled to attorney fees under § 48-125 | Dragon seeks fees for obtaining penalty | Employer opposes; argues no entitlement | Court: Denied—Dragon provided no affidavit detailing services/time/charges, so no fee award on record |
Key Cases Cited
- Holdsworth v. Greenwood Farmers Co-op, 286 Neb. 49 (Neb. 2013) (verified-release language waives rights under the Workers’ Compensation Act once release is effective)
- Jackson v. Branick Indus., 254 Neb. 950 (Neb. 1998) (distinguishing substantive vs. procedural statutory amendments)
- Armstrong v. State, 290 Neb. 205 (Neb. 2015) (discussion of the reasonable-controversy doctrine in waiting-time penalty context)
- Updike Grain Co. v. Swanson, 104 Neb. 661 (Neb. 1920) (early statement of the reasonable-controversy exception to waiting-time penalties)
- Bedore v. Ranch Oil Co., 282 Neb. 553 (Neb. 2011) (attorney-fee award requires affidavit showing services, time, and charges)