Conwed Corp. v. Union Carbide Corp.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 04-3386/3855
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Conwed Corporation, *
*
Cross-Appellee/Appellant, *
* Appeals from the United States
v. * District Court for the
* District of Minnesota.
Union Carbide Corporation, *
*
Cross-Appellant/Appellee. *
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Submitted: September 15, 2005
Filed: April 18, 2006
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Before RILEY, HEANEY, and COLLOTON, Circuit Judges.
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COLLOTON, Circuit Judge.
Conwed Corporation appeals the district court’s application of comparative
fault to reduce Conwed’s jury-awarded damages in its subrogation action to recover
workers’ compensation benefits paid and payable to its employees. Union Carbide
cross-appeals, claiming that the action was collaterally estopped, and that the court
incorrectly included certain damages and erroneously dismissed its counterclaim for
equitable contribution. We affirm in all but one respect.
I.
Conwed used asbestos purchased from Union Carbide to manufacture ceiling
tiles. Employees of Conwed, a self-insured employer, contracted asbestos-related
diseases, and Conwed paid them workers’ compensation benefits. The employees also
sued Union Carbide in tort based on a theory of product liability, and all of the
employees entered into settlements with Union Carbide for damages not compensated
through Minnesota’s statute governing workers’ compensation. Conwed then sued
Union Carbide in subrogation, seeking recovery for the workers’ compensation
benefits that were paid and payable (i.e., “benefits paid”). Union Carbide
counterclaimed for contribution and indemnity. The district court certified five
questions to the Supreme Court of Minnesota, and after receiving guidance on certain
matters of state law, Conwed Corp. v. Union Carbide Chemicals & Plastics, Co., 634
N.W.2d 401 (Minn. 2001), the district court proceeded to try the claims.
The court divided the claims into three disease groups and then tried the first
group, consisting of mesothelioma claims. The first trial resulted in a jury verdict for
Union Carbide. Conwed agreed to a dismissal of claims for the employees in the
second disease group (lung cancer), and the parties then tried the consolidated claims
of eleven employees with a third disease, asbestosis, in a bifurcated trial. The jury
found both Conwed and Union Carbide at fault for causing injuries to six of those
employees, and awarded common law damages, including general disability and loss
of future earning capacity.
In accordance with Tyroll v. Private Label Chemicals, Inc., 505 N.W.2d 54
(Minn. 1993), a special master determined the amount of benefits paid and payable by
Conwed to the employees. The district court reviewed and partially adopted the
special master’s findings, and determined the amount of subrogation damages to
which Conwed was entitled: the lesser of (1) the amount of benefits actually paid and
payable through workers’ compensation; or (2) the percentage of the jury’s award of
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damages attributable to Union Carbide’s fault. For five of the six employees, the
amount of workers’ compensation benefits paid and payable was less than the tort
damages attributable to Union Carbide, so the court reduced the amount of benefits
paid by the percentage of fault attributable to Conwed. For the sixth employee, the
tort damages attributable to Union Carbide were less than the benefits paid, so the
court reduced the tort damages attributable to Union Carbide by Conwed’s percentage
of fault. The remaining 118 asbestosis claims were stayed pending the appeal.
Conwed appeals, claiming that the district court improperly applied the jury’s
common law allocation of fault to the benefits paid and payable to determine
Conwed’s subrogation award. Conwed argues that the court instead should have
applied the allocation of fault only to the common law damages determined by the
jury, and then awarded as subrogation damages the lesser of (1) the resulting common
law damages amount or (2) the amount of the workers’ compensation benefits paid
and payable. Union Carbide cross-appeals, arguing that the second jury trial was
barred by collateral estoppel, because the issue of whether Union Carbide’s warnings
regarding its asbestos were adequate already had been conclusively established in the
first trial concerning mesothelioma. Alternatively, if the action was not barred, Union
Carbide claims the district court improperly allowed the jury to award disability
damages, damages for loss of future earning capacity, and damages for the predicted
progression of existing conditions. The district court denied Union Carbide’s claim
against Conwed for equitable contribution to offset the jury’s award of subrogation
damages, and Union Carbide appeals that decision as well.
II.
We address first whether the doctrine of collateral estoppel barred the second
jury trial. In the first trial concerning mesothelioma, the district court provided the
jury with a special verdict form. The first question asked, “Was the Calidria asbestos
Union Carbide sold to Conwed in a defective condition unreasonably dangerous to the
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users of that asbestos because Union Carbide failed to provide adequate warnings and
instructions for the safe use of that asbestos?” If the jury answered in the affirmative,
the verdict form then asked whether the defective condition of Union Carbide’s
asbestos was a direct cause of mesothelioma in each of the six employees, whether
Conwed was negligent with respect to the safety of the workers, and what amount of
money would compensate the employees. The jury instructions accompanying the
first question directed the jury as follows:
In deciding whether the manufacturer’s warnings and instructions were
reasonably adequate, consider all the facts and circumstances, including,
among others: 1) The likelihood that harm would result from use of the
product; 2) The seriousness of the harm that would result; 3) The cost
and ease of providing warnings and instructions that would avoid the
harm.
Instructions to the Jury (R. Doc. 749, at 9). The jury answered “no” to the first
question on the verdict form, and, in accordance with the instructions, did not answer
the remaining questions.
Union Carbide argues that the jury’s negative answer to this first question
precludes Conwed from challenging the adequacy of Union Carbide’s warnings in the
second jury trial concerning employees affected with asbestosis. The district court
held that despite the broad language of the first question, because the employee claims
were grouped by disease and the jury was instructed to consider all the facts and
circumstances, the jury reasonably could have assumed that the “harm” described in
the jury instructions was limited to mesothelioma. The district court noted that
Conwed did not present all of its evidence with respect to claims involving lung
cancer or asbestosis, and held that Union Carbide had not met its burden of showing
that the issue of the adequacy of Union Carbide’s warnings with respect to
mesothelioma plaintiffs was identical to the issues to be determined in the remaining
claims by employees afflicted with different diseases. The court further held that that
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Conwed did not have a fair opportunity to litigate the adequacy of the warnings with
respect to the claims of employees not before the first jury. We agree with the district
court that Conwed is not collaterally estopped from litigating the adequacy of Union
Carbide’s warnings with respect to asbestosis, because this issue was not necessarily
determined in the first trial.
A federal court with jurisdiction by virtue of diversity of citizenship applies
state law to questions of issue preclusion. Canal Capital Corp. v. Valley Pride Pack,
Inc., 169 F.3d 508, 513 (8th Cir. 1999). Issue preclusion is a mixed question of law
and fact, and the district court’s decision on that matter is subject to de novo review.
Liberty Mut. Ins. Co. v. FAG Bearings Corp., 335 F.3d 752, 757 (8th Cir. 2003).
Minnesota applies the doctrine of collateral estoppel to prevent parties from
relitigating issues that are “both identical to those issues already litigated by the
parties in a prior action and necessary and essential to the resulting judgment.” Pope
County Bd. of Comm’rs v. Pryzmus, 682 N.W.2d 666, 669 (Minn. Ct. App. 2004)
(internal quotation omitted). Collateral estoppel applies if all four of the following
elements are present:
1) the issue was identical to one in a prior adjudication; 2) there was a
final judgment on the merits; 3) the estopped party was a party or in
privity with a party to the prior adjudication; and 4) the estopped party
was given a full and fair opportunity to be heard on the adjudicated issue.
Willems v. Comm’r of Pub. Safety, 333 N.W.2d 619, 621 (Minn. 1983).
Issue identity “requires the party asserting it to establish that the precise
question was in fact presented and necessarily determined by the verdict in the former
trial.” Brooks Realty, Inc. v. Aetna Ins. Co., 128 N.W.2d 151, 153 (Minn. 1964). A
determination of the identical issue must be “necessarily implied” in the verdict of the
earlier action. Gollner v. Cram, 102 N.W.2d 521, 523 (Minn. 1960). Minnesota
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courts do not apply collateral estoppel rigidly, but instead focus on “whether an
injustice will be worked upon the party upon whom estoppel is urged.” Nelson v. Am.
Family Ins. Group, 651 N.W.2d 499, 511 (Minn. 2002). Union Carbide claims that
because the jury’s special verdict form separated the question of the adequacy of the
warnings from the question of whether Union Carbide’s asbestos caused
mesothelioma, the jury’s negative answer to the first question necessarily implies that
it found the warnings adequate with respect to all potential hazards.
As noted, the district court divided the cases into three trial groups based on the
type of injury claimed (mesothelioma, asbestosis, or lung cancer). Conwed was
required to assert and prove separate claims for each of its former employees, and the
divided trial structure limited the evidence presented in the first trial largely to the
disease of mesothelioma.
The arguments of counsel likewise focused on mesothelioma, and suggested
that whether the asbestos caused mesothelioma was part of the analysis in determining
whether the warnings were adequate. In closing argument, Union Carbide argued that
it was “not fair” to criticize its product warnings for failing to warn that the asbestos
may cause mesothelioma, because “there wasn’t any scientific basis” for saying that
“Calidria could cause mesothelioma.” (Closing Arg. Tr. at 26). Conwed similarly
urged the jury to consider “the likelihood that harm would result from use of the
product” when evaluating the adequacy of the warnings, and equated “harm” with
mesothelioma: “Once you have got mesothelioma it is incurable, you’re going to die.
This harm is as bad as it can be.” (Closing Arg. Tr. at 85).
Union Carbide argues that under the jury instructions in the first trial, the
question whether asbestos was likely to cause mesothelioma was relevant only if the
jury first found that the product warnings were inadequate. We are not persuaded,
however, that the questions of adequate warnings and causation were wholly
independent. The jury instructions contained ambiguities. By incorporating the
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likelihood that harm would result from the use of asbestos into the question whether
warnings were adequate, the broadly worded instruction on warnings permitted a
reasonable jury to conclude that warnings were adequate because the asbestos was not
likely to cause the “harm” that was the subject of the first trial – mesothelioma. Both
parties addressed the adequacy of warnings by debating whether the warnings were
sufficient to inform users of the dangers of contracting mesothelioma. Thus, viewing
the jury instructions as a whole in the context of the trial, we conclude that the first
jury’s verdict did not “necessarily imply” that Union Carbide’s warnings were
adequate for all purposes, including to warn against the possible harm of asbestosis.
Therefore, the doctrine of collateral estoppel did not bar the second trial.
III.
The remaining issues relate to whether the district court correctly determined
workers’ compensation subrogation damages under Minnesota law. We review
questions of state law de novo. Salve Regina Coll. v. Russell, 499 U.S. 225, 231
(1991).
A.
Conwed argues that the district court misapplied the jury’s allocation of fault
and incorrectly calculated its subrogation award. In Minnesota, workers’
compensation claims are regulated by statute. If an employee elects to receive
benefits from his or her employer, the employer has a right of indemnity against any
third-party tortfeasor whose action many have contributed to the employee’s injury.
Minn. Stat. § 176.061, subd. 3 (1992). Any recovery against the third party is divided
according to a three-step procedure. After collection costs are deducted, one third of
the remainder belongs to the injured employee without any right of subrogation by the
employer. Out of the remaining balance, the employer is reimbursed the amount of
workers’ compensation benefits paid, less a proportionate share of the collection costs.
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Any amount remaining is paid to the employee and is a credit against any benefits the
employer is obligated to pay in the future. Minn. Stat. § 176.061, subd. 6.
If the employer is apportioned any fault, the liable third-party tortfeasor may
assert a right of contribution against the employer in an amount proportional to the
employer’s fault, but not to exceed the amount of benefits paid and payable by the
employer. Lambertson v. Cincinnati Corp., 257 N.W.2d 679, 689 (Minn. 1977). This
contribution claim is essentially an equitable set-off against the employer’s recovery
of workers’ compensation benefits paid from the third-party tortfeasor.
Instead of proceeding with a trial, the employee also may choose to settle with
the third-party tortfeasor for all claims outside of the workers’ compensation scheme
(and thus not subject to the employer’s subrogation claim). In Minnesota, such a
settlement is known as a “Naig settlement,” based on the decision in Naig v.
Bloomington Sanitation, 258 N.W.2d 891 (Minn. 1977), which described the process.
After a Naig settlement, the employer may still assert a subrogation claim to recover
workers’ compensation benefits paid and payable from the third-party tortfeasor, but
the employee gives up his or her statutory right to one-third of any recovery. Id. at
894. The employer also has no liability to contribute to the settlement agreement
between the employee and the third-party tortfeasor. Kempa v. E.W. Coons Co., 370
N.W.2d 414, 418 (Minn. 1985).
Once an employee has entered into a Naig settlement with the third-party
tortfeasor, the employer steps into the shoes of the employee and asserts a subrogation
claim in tort against the third party to recover benefits paid. This subrogation
recovery is not subject to the statutory formula, and is limited to the type of
compensatory damages awarded under workers’ compensation. Tyroll, 505 N.W.2d
at 60-61. The district court holds a hearing to determine the amount of benefits paid
and payable, and any tort damages the employer recovers in the subrogation action
apply to this amount. If the tort damages exceed the amount of workers’
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compensation benefits paid and payable, then the employer’s maximum recovery is
limited to the benefits paid and payable. If the tort damages are less, the employer
may only recover the amount of the jury verdict. Id.
Minnesota courts, however, have not indicated how the jury’s allocation of fault
to the employer applies to this determination of subrogation damages following a Naig
settlement. The Supreme Court of Minnesota in Tyroll stated that “[u]nder this
method, comparative fault (when an issue) may diminish or defeat liability for the
subrogation claim.” 505 N.W.2d at 61. But because the jury in Tyroll did not find the
employer negligent, the court had no occasion to indicate precisely how the
employer’s fault would diminish the subrogation damages. Id. at 56.
Union Carbide entered into a Naig settlement with the employees. Conwed
then proceeded against Union Carbide to recover subrogation damages, and the court
appointed a special master to determine the amount of benefits paid. In the second
phase of the bifurcated asbestosis trial, however, the jury found both Conwed and
Union Carbide liable for causing injuries to six employees, and apportioned fault to
both companies. Conwed’s fault ranged from 70 to 91 percent, while Union Carbide’s
fault ranged from 9 to 30 percent. None of the six employees was found to be at fault.
The district court held that the allocation of fault should apply to the lesser of the
benefits paid or the percentage of common law tort damages attributable to Union
Carbide. It adopted a two-step procedure, under which the court first determined the
employer’s subrogation damages (the lesser of the benefits paid and payable as
determined in the hearing or the percentage of the jury’s award attributable to Union
Carbide’s fault). The court then reduced the total subrogation damages
proportionately by the percentage of fault attributable to Conwed and entered
judgment against Union Carbide in this amount.
Conwed disagrees with this method. It contends that the jury’s allocation of
fault should reduce the jury’s award of damages first, and then the lesser of this
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reduced verdict or the benefits paid should be the amount of the judgment. Conwed
urges that under Kempa and Tyroll, the employer’s subrogation damages must be
“recovered out of the common law tort damages for which the third party tortfeasor
is first found responsible.” Tyroll, 505 N.W.2d at 60. Because the jury’s allocation
of fault is part of the common law jury verdict, Conwed argues, it should be applied
to the verdict first. This reduced verdict, in Conwed’s model, may be recovered up
to the cap of benefits paid.
Union Carbide relies on a competing principle in Minnesota law, namely, that
third-party tortfeasors should not be forced to bear the costs of negligent employers.
It is a “basic proposition” in Minnesota decisions that all parties must pay according
to their share of fault, Todalen v. United States Chemical Co., 424 N.W.2d 73, 82
(Minn. Ct. App. 1988), and tortfeasors are liable for damages “commensurate with
their own relative culpability.” Kempa, 370 N.W.2d at 421. Lambertson equitable
contribution claims are recognized to prevent “a third-party stranger to the workers’
compensation system” from bearing the burden of a full common-law tort judgment,
and to preclude employers from recovering all workers’ compensation benefits paid
in a subrogation action, where the employer was at greater fault than the tortfeasor.
Lambertson, 257 N.W.2d at 684. Equitable contribution allows the employer to
recover only those portions of the subrogation damages attributable to the tortfeasor’s
negligence. Against this backdrop, Union Carbide argues that it should have to bear
the percentage of the benefits paid attributable to its relative fault, but Conwed should
have to bear the percentage attributable to its fault. Thus, the reduction due to
Conwed’s fault should apply to the lesser of the jury verdict or the benefits paid.
While Minnesota law is unsettled in this area, we believe that the Supreme
Court of Minnesota is more likely to agree with Union Carbide. Here, the jury found
that the employer bore a percentage of fault for the injuries to its employees.
Minnesota law consistently emphasizes that parties should bear the portion of
damages attributable to their percentage of fault, and Tyroll is not inconsistent with
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this principle. Therefore, we do not believe the Minnesota courts are likely to endorse
the view that Conwed may recover 100% of the benefits paid and payable, despite its
contribution to the injuries. We agree with the district court that the jury’s allocation
of fault should apply to the lesser of the benefits paid or the jury verdict. We note,
however, that the reduction should only be applied once, to the lesser of the full value
of the verdict or the benefits paid. The district court’s initial reduction of the pre-
comparison damages by Union Carbide’s percentage of fault was error.1
Union Carbide also claims an additional Lambertson contribution claim to set
off against the subrogation damages and to reduce further Conwed’s recovery, even
after the reduction by the jury’s allocation of fault. Comparative fault, however, is the
basis for the modified apportionment of damages that was developed in Lambertson
and applied as an equitable contribution claim. Kempa, 370 N.W.2d at 421.
Lambertson applies where a jury verdict must be apportioned between compensable
damages recoverable under workers’ compensation and those not recoverable, not
where noncompensatory damages have been settled and the trial is only to recover
workers’ compensation benefits paid. The Supreme Court of Minnesota refers to this
distinction when it notes that where only a subrogation claim is tried to the jury, “there
is no Lambertson contribution problem because the employer, even if at fault, is not
liable to contribute to the sum the tortfeasor paid the employee to settle the
‘nonrecoverable’ damages under the Naig release.” Tyroll, 505 N.W.2d at 61. The
1
For five of the six employees, the district court’s initial reduction of the jury
verdict had no effect, because this value was still greater than the amount of benefits
paid. For one employee, Frederick Riedel, the amount of the tort damages reduced by
Union Carbide’s fault was less than the amount of benefits paid, so the court
incorrectly reduced again the tort damages already reduced by Conwed’s fault. The
court should have reduced the amount of benefits paid ($69,426.74) rather than the
reduced tort damages ($65,982.62) by Conwed’s fault (88%). (Appellant’s App. at
49-50). The correct award of subrogation damages for this employee is $8,331.21,
rather than $7,917.91, a difference of $413.30, and the total award should be
$23,878.36 instead of $23,465.06.
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only damages at issue in this appeal are the subrogation damages, and the application
of comparative fault provides the proper allocation of damages without resort to an
additional equitable contribution.
B.
Union Carbide argues that the district court incorrectly allowed Conwed to
obtain common law general disability damages in a subrogation action when it
permitted Conwed to recover permanent disability benefits paid to six workers. It
contends that permanent disability benefits are a type of general disability damages,
and that general disability damages are not recoverable under workers’ compensation,
so they should not be recoverable in a subrogation action. Union Carbide contends
that any claim the employees had for non-compensable damages was settled by the
Naig settlement, so Conwed should not be permitted to recover permanent disability
benefits.
The district court held that Conwed could recover in a subrogation action
damages for permanent disability benefits paid to its employees under workers’
compensation. The jury found that six workers suffered from asbestos-related disease
causing lung impairment. Conwed had paid permanent partial disability to five of
these workers, and permanent total disability to one, so the court permitted Conwed
to seek recovery of these benefits paid. The court noted that although the language
in Tyroll seemed to indicate a line of demarcation between the categories of damages
recoverable and those not recoverable, Minnesota courts traditionally have enjoyed
the flexibility to allocate damage awards, and Conwed was not precluded as a matter
of law from recovering benefits paid for permanent disability.
We agree with the district court. It is true, as Union Carbide notes, that Tyroll
provides guidance concerning the types of damages “ordinarily” recoverable under
workers’ compensation:
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[C]ommon law tort damages for past and future wage loss and loss of
earning capacity are the kind of damages that should be deemed
recoverable under workers’ compensation. Common law damages of the
kind not recoverable under workers’ compensation should, we think, be
deemed to include pain and suffering, general disability, embarrassment,
disfigurement, and mental anguish. We believe this division for
allocation purposes should govern, at least ordinarily.
Tyroll, 505 N.W.2d at 59.
This division, however, is premised on the principle that employers should be
able to sue for the type of common law tort damages recoverable under workers’
compensation. The Minnesota Workers’ Compensation Act states that in a
subrogation action, an employer may recover “the aggregate amount of benefits
payable to or on behalf of the employee,” Minn. Stat. § 176.061, subd. 3, and, in
Minnesota, employers are required to pay workers’ compensation benefits for
permanent partial and total disability. See Minn. Stat. § 176.021, subd. 3; Minn. Stat.
§ 176.101, subd. 4.
As the district court points out, Minnesota courts also have been empowered to
allocate damages between those compensable under workers’ compensation and those
not compensable, see, e.g., Kempa, 370 N.W.2d at 417, and, prior to Tyroll, the
Minnesota Supreme Court allowed an employer to recover disability benefits, as well
as medical expenses, in a workers’ compensation subrogation action. Dockendorf v.
Lakie, 61 N.W.2d 752, 756 (Minn. 1953); Kempa, 370 N.W.2d at 417 n.1, 420 n.3
(including payments for permanent partial and total disability in the damages subject
to the employer’s subrogation interest). While Tyroll correctly notes that damages for
injuries such as embarrassment and mental anguish are not recoverable under workers’
compensation, payments for permanent disability benefits are authorized by statute.
They are not “general disability” payments akin to damages for pain and suffering or
mental anguish. The “aggregate amount of benefits paid” includes payments for
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permanent disability, and the district court thus determined correctly that Conwed is
not precluded from recovering permanent disability benefits in its subrogation action.
C.
The jury also awarded damages for loss of future earning capacity for two
employees. Union Carbide contends that because Conwed offered no evidence of the
employees’ current medical condition, work status, or earnings, and because the
district court dismissed Conwed’s claim for past lost wages for lack of proof, the
claim for loss of future earning capacity should have been dismissed as well. The
district court concluded that a stipulation of the parties and medical records in
evidence provided a sufficient basis for the jury’s award.
A reviewing court must consider the evidence in the light most favorable to the
verdict and may set aside a jury verdict only where no reasonable jury could have
arrived at the result based on the evidence. Majerus v. Guelsow, 113 N.W.2d 450, 454
(Minn. 1962). The district court held that, while recent evidence of Conwed’s
employees’ wages and work history may have been helpful, proof of that sort was not
required for the jury to determine a loss of future earning capacity. An employee
needed to show only that he suffered a permanent impairment of function resulting
from the injury, and that the impairment prevented him from performing his duties in
the same manner as before the injury. The court thought the jury permissibly could
infer the employees’ ages, employment history, and symptoms from the medical
records produced at trial.
We agree with the district court. Loss of future earning capacity does not
require specific proof of actual earnings either before or after the injury, Wilson v.
Sorge, 97 N.W.2d 477, 482-83 (Minn. 1959), and, for example, the Supreme Court
of Minnesota has allowed recovery for a plaintiff “who was presently performing
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homemaker activities and had no plans to resume gainful employment.” Kwapien v.
Starr, 400 N.W.2d 179, 183 (Minn. Ct. App. 1987) (citing LeMay v. Minneapolis
Street Railway Co., 71 N.W.2d 826, 831 (1955)). This is because the plaintiff need
only prove a loss of earning capacity, that is, that an impairment in his or her power
to earn a living was reasonably certain to occur as a result of the injuries. Id.
The plaintiff must prove “the reasonable certainty of future damages by a fair
preponderance of the evidence.” Id. There is no recovery for loss of future earning
capacity damages that are speculative, remote, or conjectural. Carpenter v. Nelson,
101 N.W.2d 918, 921 (Minn. 1960). An award for impairment of earning capacity
should be based on an evaluation of such factors as age, life expectancy, health,
occupation, talents, skill, experience, and training. Kwapien, 400 N.W.2d at 184.
The jury in this case was provided with information on the employees’ ages,
past wage rates, and medical histories. An expert testified regarding the percentage
of lung impairment suffered by both employees, and the rate at which the impairment
would be expected to increase. Conwed presented evidence of the employees’ ages
and last known wage rates. The record included medical records describing their
symptoms through the early 1990s. Under the standard of review and Minnesota law,
we conclude that this evidence is sufficient to support the award of loss of future
earnings.
D.
Union Carbide also argues that Conwed cannot recover damages for future
workers’ compensation benefits payable based on projections that existing conditions
will worsen. Union Carbide contends that Conwed can only recover where an
employee has filed a valid claim and where Conwed has a present duty to pay the
employee at the employee’s existing level of disability. The district court disagreed,
holding that Conwed could recover any benefits it expected to pay in the future based
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on existing conditions, including any benefits payable for existing conditions
projected to worsen. We agree.
This issue was certified to the Supreme Court of Minnesota. The court held that
“to the extent Certified Question No. 1 asks whether, under Minn. Stat. §176.061,
Conwed may recover for benefits it has paid or expects to pay following settlements
for existing claims based on existing illnesses that may worsen, we answer it in the
affirmative.” Conwed Corp., 634 N.W.2d at 408. In a footnote, the court clarified
that Conwed may not recover damages based on scientific projections regarding the
likelihood of the employees’ developing wholly new illnesses. Id. at 408 n.6. The
court thus distinguished between claims based on illnesses that had not yet manifested
themselves but were caused by the same exposure, and claims based on existing
illnesses that worsened. Conwed could recover for benefits that it expected to pay
based on worsening of existing illnesses, but not for wholly new illnesses. Id. at 408-
09.
This interpretation of Conwed Corp. is consistent with a previous decision of
the Supreme Court of Minnesota holding that a trial court need not require an
employer to commence a separate action as each future workers’ compensation claim
is made, but rather can make “approximations based on reasonable assumptions” and
award a final one-time lump sum based on these predictions. Wilken v. Int’l Harvester
Co., 363 N.W.2d 763, 767-68 (Minn. 1985). The employer’s subrogation award
should be calculated by the trial court, reduced to its present value, and disbursed in
a single payment. Id. We conclude, therefore, that Conwed may recover benefits paid
and payable to its employees for existing conditions that may worsen.
* * *
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For the foregoing reasons, we affirm the judgment of the district court in large
part, but remand with directions to enter judgment in the amount of $23,878.36, rather
than $23,465.06.
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