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Defense Digest

Party Time! Revisiting a Company’s Concerns During Social Activity Events

Defense Digest, Vol. 27, No. 4, September 2021

September 1, 2021

Key Points:

  • A company may be liable for injuries sustained during a recreational or social activity event if the injured worker can prove he or she was compelled to attend, and that the event provided some benefit to the company other than morale or employee health.
  • Be aware of your guest list for company events. Including clients and/or vendors may move an event into the area of “benefitting the company.”
  • Invite employees, but do not make attendance mandatory if you want to avoid potential liability.

With the world moving toward a return to normalcy, including company holiday parties, it is useful for employers to remain mindful of how a judge might consider a work injury when dealing with recreational or social activity work incidents. In a recent unpublished decision, a New Jersey appellate court addressed whether an injury that occurred when an employee was involved in a motor vehicle accident following a company holiday party was compensable. In Regalado v. F&B Garage Door, 2021 WL 2325311 (N.J. Super. App. Div. June 8, 2021), the New Jersey Superior Court, Appellate Division, held that the holiday party was a recreational/social activity that produced no benefit to the respondent/employer, beyond its effect on employee morale, and denied the petitioner’s/employee’s request for worker’s compensation benefits.

Under the New Jersey workers’ compensation statute, an employer must compensate an employee for accidental injuries “arising out of and in the course of employment.” N.J.S.A. 34:15-7. The statute excludes, however, any injuries that are sustained during “recreational or social activities.” An injured worker can overcome that barrier by proving that the activity is a “regular incident of employment” and “produces a benefit to the employer beyond improvement in employee health and morale.” If the petitioner fails to prove both of these, benefits are denied.

In Regalado, the petitioner worked for the employer as an office manager. The company held its annual holiday party at a restaurant on December 23, 2016. Only the company’s employees and their guests were invited; there were no clients, business associates or vendors. Because neither the petitioner nor her guest drove, the company’s owner agreed to provide transportation to and from the event. The petitioner was not paid to attend and was not compensated for her travel time.

After the party, the petitioner and her guest were being driven home by the company’s owner when they were involved in a motor vehicle accident—the car struck a parked car and flipped over. The petitioner was treated in the emergency room and discharged the next day; she was not admitted to the hospital. As a result of her injuries, the petitioner required surgical procedures to her neck and jaw, and had difficulty carrying anything more than ten pounds.

The petitioner later filed a claim for workers’ compensation benefits, which was denied. She argued that attendance at the holiday party was required in order to receive her end-of-year bonus. She also testified that attendance at the party was mandatory and that an absence would have negatively affected her employment or standing with the company. The company owner and another fact witness testified that the bonuses were paid in the days prior to the holiday party and that attendance was not mandatory for employees.

The appellate judges held that if an employer has required or compelled participation in a recreational or social activity, the Workers’ Compensation Judge should consider the activity as it would any other compensable work-related assignment. Further, when an employer directly commands an employee to engage in an activity, it is understood that the employee has been compelled. However, when a petitioner alleges she was compelled to attend, the injured employee must establish that she engaged in the activity based on an objectively reasonable belief that participation was required. Factors the court applies in determining this are: whether the employer directly solicits the employee’s participation in the activity; whether the activity occurs on the employer’s premises, during work hours and in the presence of supervisors, executives, clients or the like; and whether the employee’s refusal to attend or participate exposes the employee to the risk of reduced wages or loss of employment. An employee’s subjective impression of compulsion alone is not sufficient.

Here, the court held that the invitation did not carry any implied expectations or threats of reprisal if the petitioner did not attend. The court also commented that, because the party was held off site, after work hours, and away from client and vendors, the petitioner could not have reasonably felt compelled to attend. The court pointed to those factors as support that the petitioner’s attendance at the holiday party did not provide any benefit to the employer, and that she was not expected to further any professional relationship or provide some other benefit to her employer.

Keep this in mind in the upcoming months and as we enter the holiday season. The important takeaways are that, if the employee is compelled to attend a function and that function provides some benefit to the employer, other than company morale, any injury that occurs during that function could cause the company to be liable for workers’ compensation benefits. However, if employees are invited but are not obligated to attend, with no repercussions, and the company is not benefiting from the employee’s attendance at the event, then any incident that occurs will likely not result in the company being liable for workers’ compensation benefits.

Defense Digest, Vol. 27, No. 4, September 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

The Search-Incident-to-Arrest Doctrine Does Not License Strip Searches

In Beatty v. Gardner, No. 25-2860 (3d Cir. Sept. 16, 2026), Kyle Beatty sued police officers Clinton Gardner and Calvin Irvin under 42 U.S.C. § 1983 after they stopped, arrested, and searched him three times during a drug investigation in Williamsport, Pennsylvania. The officers initially smelled marijuana coming from the car in which Beatty was sitting and observed marijuana residue, giving them probable cause to arrest him. Beatty consented to the first pat-down, and the second search was conducted incident to his lawful arrest; neither search uncovered weapons or contraband. The officers then transported Beatty to the police station solely to strip-search him, but the strip search also revealed nothing. The District Court granted the officers summary judgment, concluding that the initial stop, arrest, and first two searches were reasonable and that qualified immunity protected the officers from liability for the strip search. The Third Circuit affirmed, but held that the strip search itself violated the Fourth Amendment. The court concluded that the search-incident-to-arrest doctrine does not automatically permit officers to strip-search an arrestee outside the jail or prison setting. Because strip searches are highly intrusive and the traditional justifications for searches incident to arrest (officer safety and preservation of evidence) did not justify the search of Beatty, the officers generally needed either the arrestee’s consent, exigent circumstances, or a warrant supported by probable cause to believe that a search beneath the clothing would reveal weapons, contraband, or evidence. Here, the officers had none of those justifications. Nevertheless, the court held that qualified immunity barred damages liability because, at the time of the search, the right against a warrantless strip search of an arrestee outside the institutional setting was not clearly established by Supreme Court or Third Circuit precedent. The court likewise upheld qualified immunity on Beatty’s First Amendment retaliation claim and affirmed summary judgment for the officers.

Thought Leadership

Two Tracks, No Preclusion: Ohio Supreme Court Preserves Separate Damages Claims After Chapter 2506 Appeals

The Supreme Court of Ohio has clarified that an administrative appeal under Ohio Revised Code Chapter 2506 does not bar a separate action for damages and declaratory relief that could not have been pursued in the administrative appeal. The Ohio Supreme Court considered Sheetz, Inc. v. Centerville (2026-Ohio-3531) as a result of a certified question from the Southern District of Ohio. The question was whether Sheetz, the gas station/convenience store brand, was barred from seeking damages in a separate action since damages were not sought in their administrative appeal. Ultimately, the Ohio Supreme Court ruled that res judicata does not bar a separate action for damages after ruling on an administrative appeal because R.C. Chapter 2506 is limited to judicial review and cannot grant affirmative relief. The case arose after Centerville’s city council rejected a site plan proposed by Sheetz, Inc. that had received unanimous approval from the City’s planning commission. Sheetz filed an administrative appeal pursuant to R.C. 2506 in the Montgomery County Court of Common Pleas, and two months later filed a complaint for damages and declaratory relief under 42 USC § 1983 as a takings action with the city, city council, and other objectors as improper takings and a violation of due process, as well as interference with business and contractual relationship. The city and city council removed the § 1983 action for damages to federal court. Montgomery County Court of Common Pleas reversed the city council’s denial, and allowed the Sheetz project to move forward. Upon that ruling, the federal court issued a show-cause order questioning whether the § 1983 action was barred by the doctrine of res judicata via claim preclusion (which includes all theories of recovery).  Sheetz argued that Ohio courts of common pleas do not have authority to award damages or declaratory relief as party of the R.C. Ch. 2506 appeal, therefore res judicata could not be triggered to apply to the § 1983 action. Additionally, Sheetz moved to certify the issue to the Ohio Supreme Court, citing differing results between the second and sixth districts on this same issue. Centerville approached the question, not from a claim preclusion standpoint, but from the holding in Grava v. Parkman, Twp which states that a final judgment rendered on the merits bars all subsequent action based on the same transaction or occurrence.  In yet another approach, an objector argued that claim preclusion was satisfied because Sheetz could have raised its damages claims in the administrative appeal – Sheetz disagrees. In their analysis, the Supreme Court of Ohio broke down the elements of a claim preclusion analysis: 1) a prior final, valid decision on the merits by a court of competent jurisdiction; (2) a second action involving the same parties, or their privies, as the first; (3) a second action raising claims that were or could have been litigated in the first action; and (4) a second action arising out of the transaction or occurrence that was the subject matter of the previous action. The Court held that R.C. Ch. 2506 does not permit a party to argue damages as R.C. Ch. 2506 limits the common pleas jurisdiction as if it were sitting on appeal, and therefore can only affirm, reverse, vacate, or modify the appealed order, or can remand the case to the administrative body. Further, the Court held that Grava’s conclusion that a final judgment precludes additional litigation for different relief is inapplicable under this fact pattern because it was meant only to apply to those matters in which the plaintiff brings the exact same case twice, but for new relief. The Court found Grava was inapplicable because Sheetz could have requested damages or declaratory relief in the R.C. 2506 appeal. Therefore, Grava would be nothing more than dicta if it even did apply. Going further, the Ohio Supreme Court disavowed Sixth Circuit precedent which, in reliance on Grava and other district court decisions, permitted an owner to seeking relief under 42 U.S.C. § 1983 alongside an administrative appeal. See Moore v Hiram Twp., 988 F.3d 353 (6th Cir.2021). The Ohio Supreme Court found that the Sixth Circuit had disregarded a critical decision in Community Concerned Citizens, Inc. v. Union Twp. Bd. of Zoning Appeals, 1993-Ohio-115, which clearly held that a R.C. Ch. 2506 appeal cannot be combined with a complaint seeking other claims for relief. Id. at ¶ 11. To that end, the Ohio Supreme Court has determined that the decisions Moore relied on (outside of Grava) are no longer good law, and that Moore was wrongly decided. The decision draws a clear procedural boundary: Chapter 2506 provides judicial review of an administrative decision, not a forum for independent claims seeking affirmative relief. Although Grava may place claims arising from a single transaction within the potential scope of claim preclusion, those claims are not barred unless the complete claim-preclusion test is satisfied. Because Sheetz could not have pursued damages or declaratory relief in its Chapter 2506 appeal, the separate action was not precluded. The remaining question for practitioners looking to apply or defend against this exception is when does the statute of limitations begin to run on damages and declaratory relief claims related to an administrative decision on appeal? A takings action in federal court has a 2-year statute of limitations, or as a state claim, 4 years (like the other tortious claims raised therein). Correlating this case with others, an administrative appeal will not likely toll the statute of limitations on claims based on a final decision by a municipal authority. Therefore, practitioners should look for these cases to be brought simultaneously.

Thought Leadership

Pennsylvania Supreme Court to Review Whether Legal Malpractice Claims May Be Recast as Breach of Contract Claims

The Pennsylvania Supreme Court recently granted allowance of appeal to consider whether a plaintiff may pursue a breach of contract claim against an attorney based on allegations that the attorney failed to provide competent legal services. The issue is significant in professional liability litigation because it concerns whether a plaintiff may avoid the statute of limitations applicable to professional negligence claims by characterizing the alleged misconduct as a breach of contract. Antoine Poteat retained attorneys Gary Asteak and Nino V. Tinari to represent him in a criminal matter. After his conviction was subsequently overturned through a Post Conviction Relief Act proceeding, Poteat filed suit against his former attorneys alleging that they breached their retainer agreements by failing to provide competent legal services. The attorneys argued that the claims sounded in professional negligence, rather than breach of contract, and were therefore time-barred. The trial court dismissed Poteat’s complaint, but the Superior Court, sitting en banc, reversed. The Superior Court held that the gist-of-the-action doctrine did not bar Poteat’s breach of contract claim because the alleged failure to provide competent legal services could constitute a breach of the parties’ agreement. The Court further held that a legal-services agreement contains an implied duty requiring an attorney to provide competent legal services, even where the agreement does not contain an express provision requiring such services. The Pennsylvania Supreme Court granted review in July 2026 and will consider whether the Superior Court’s decision conflicts with Pennsylvania precedent distinguishing contract and tort claims, including Bruno v. Erie Insurance Co. The Supreme Court will also address whether a plaintiff may maintain a breach of contract claim based on an implied duty to provide competent legal services without identifying a specific contractual provision that was breached. The Supreme Court’s decision could have significant implications for professional liability litigation in Pennsylvania, particularly where plaintiffs seek to characterize claims arising from alleged professional negligence as contractual claims.