Ms. Jackson applied for and received workers' compensation in Nebraska.

Drivers Management, which was self-insured for workers' compensation, paid Ms. Jackson's benefits.

In February 2016, a few days before Arizona's two-year statute of limitations expired, A.R.S. § 12-542(1), Ms. Jackson filed a personal injury action in Arizona against Eagle, Ms. Hender, and Werner Enterprises (the registered owner of the semi-truck) (collectively, “Eagle”), alleging several claims, including strict liability, negligence, and “statutory violations.”

In accordance with Nebraska law, because Drivers Management had a subrogation claim against any third-party recovery, Ms. Jackson also named Drivers Management as a defendant.

Eagle moved for summary judgment, arguing that pursuant to Arizona law, A.R.S. § 23-1023(B), Ms. Jackson had no legal interest in the action. Section 23-1023(B) provides, among other things, that if a person entitled to compensation under Arizona's workers' compensation laws does not file an action against a third person who caused the injury within one year of the action accruing, the action is deemed to be assigned to the employer or the workers' compensation insurer.

The trial court granted summary judgment in favor of Eagle, reasoning that Section 23-1023(B) applied in this case and, therefore, that Ms. Jackson had no legal interest in the action.

The trial court's decision was reversed on appeal. The Arizona appeals court held that Section 23-1023(B) did not apply to Ms. Jackson's claim because her “workers' compensation benefits were adjudicated and paid in Nebraska” and, therefore, the law of Nebraska governed “subrogation, lien, and assignment rights in this action.”

The Arizona Supreme Court granted review to determine whether the automatic assignment provision in Section 23-1023(B) applied to actions against a third-party tortfeasor when an injured employee received workers' compensation benefits under another state's laws.

The Arizona Supreme Court's Decision

The court vacated the court of appeals' opinion, reversed the trial court's grant of summary judgment in favor of Eagle, and remanded the case to the trial court for further proceedings.

In its decision, the court explained that the issue was whether Arizona or Nebraska law applied to Ms. Jackson's claim against Eagle. If Arizona law applied, then Ms. Jackson had no legal interest in the action because, pursuant to Section 23-1023(B), she had not filed a claim against Eagle within one year after the accident and her claim had been automatically assigned to Drivers Management. In contrast, the court continued, if Nebraska law applied, then Ms. Jackson retained her legal interest, because Nebraska had no automatic assignment provision.

The court then ruled that Arizona's automatic assignment provision, Section 23-1023(B), did not apply when an employee received workers' compensation benefits under another state's laws. Rather, it decided, the law of the state in which an employee's workers' compensation was paid determined the assignment rights of the employer and employee.

The court rejected Eagle's contention that because Ms. Jackson did not qualify for an exemption pursuant to A.R.S. § 23-904(C), she was subject to the automatic assignment provision in Section 23-1023(B) and, therefore, had no legal interest in this action. According to the court, Section 23-904(C) was not relevant to the choice of law issue in this case because it did not apply to the assignment rights of employees and employers in the context of a third-party claim. Rather, the court said, Section 23-904(C) addressed when an out-of-state employee who was injured in Arizona was “exempt from” (i.e., not entitled to receive) workers' compensation benefits in Arizona.

The court concluded that because Ms. Jackson received workers' compensation benefits in Nebraska, that state's law regarding assignment applied to her claims against Eagle in this action. Thus, because Nebraska did not have an automatic assignment provision, Ms. Jackson had a legal interest in those claims.

The case is Jackson v. Eagle KMC L.L.C., No. CV-18-0056-PR (Ariz. Jan. 2, 2019). Attorneys involved include: Ryan Skiver (argued), The Skiver Law Firm, Scottsdale; James E. Harris, Harris & Associates P.C., L.L.O., Omaha, NE, Attorneys for Stephanie Jackson. Phillip H. Stanfield, Daniel O. King, Lori L. Voepel (argued), Jones, Skelton & Hochuli, P.L.C., Phoenix, Attorneys for Eagle KMC L.L.C., Rachael Gabriella Hender, Werner Enterprises, Inc., and Drivers Management, L.L.C. James F. Mahoney, Emily K. Dotson, Resnick & Louis, P.C., Scottsdale, Attorneys for Amicus Curiae Arizona Trucking Association. Stanley G. Feldman, Miller, Pitt, Feldman & McAnally, P.C., Tucson; David L. Abney (argued) Ahwatukee Legal Office P.C., Phoenix, Attorneys for Amicus Curiae Arizona Association for Justice/Arizona Trial Lawyers Association.