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Defense Digest

When a Hotel Swim Becomes a Work Duty: The Implications of Terhune v. Port Authority

Defense Digest, Vol. 30, No. 3, September 2024

September 1, 2024

Key Points: 

  • Employees required to stay at specific off-site locations by their employers for work-related purposes may be covered by the New Jersey workers’ compensation statute, under the Special Mission Rule. 
  • Defense that an injury occurred during a recreational activity may not hold if the employee is fulfilling a directive related to their employment.
  • Insurance policies should account for scenarios where employees are on special missions.

A recent decision by the New Jersey Superior Court, Appellate Division, in Albert Terhune Jr. v. Port Authority of New York and New Jersey, 2024 WL 2042233 (N.J. App. Div. May 8, 2024), provides valuable insights into the application of the “special mission” rule in New Jersey workers’ compensation cases. This article breaks down the case and its implications for employers and insurance professionals in the realm of workers’ compensation.

On December 14, 2013, Albert Terhune Jr., the petitioner, an employee of the Port Authority of New York and New Jersey, was required to report for mandatory snow duty and was assigned to stay at a Marriot Hotel in the area. Following his snow removal shift, the petitioner returned to the hotel and completed some light exercises in the hotel gym, in accordance with his physician’s recommendations. The petitioner subsequently slipped and fell while attempting to enter the hotel pool. He filed a workers’ compensation claim, which the Port Authority denied, arguing that the accident did not arise out of and in the course of his employment with the Port Authority.

The New Jersey workers’ compensation court ruled in favor of the petitioner, a decision that was appealed and upheld by the Superior Court. In upholding the workers’ compensation court’s decision, the Superior Court found that the petitioner’s presence at the hotel was a direct result of his employment duties and, thus, gave rise to a “special mission” as defined by the applicable New Jersey workers’ compensation law.

Analysis
The Superior Court first analyzed application of the Special Mission Rule. The court emphasized that the petitioner was engaged in a special mission since he was required by his employer to stay at the hotel and effectively be on standby for snow removal. This aligns with the provision of N.J.S.A. 34:15–36, which states that an employee is considered to be in the course of employment when required by the employer to be away from the usual place of employment.

The court next looked at employer compulsion and benefits. The court noted that the petitioner was not given a choice in selecting his accommodations and was compensated for the entire stay, including meal vouchers and other expenses. This sort of directive and structure of compensation reinforced the Superior Court’s applicability of the Special Mission Rule.

While the Port Authority argued that the petitioner’s use of the hotel pool was a recreational activity and, thus, not compensable, the court rejected this notion. It highlighted that the petitioner was where he was supposed to be and doing what he was expected to do as part of his employment duties.

Key Points for Insurance Professionals
Understanding the Scope of “Special Mission” à This case illustrates that employees required to stay at specific off-site locations by their employers for work-related purposes may be covered by the New Jersey workers’ compensation statute, under the Special Mission Rule, even if injured during personal activities, such as exercising.

Employer Responsibilities à Employers must recognize that directing employees to a specific off-site location for work-related purposes naturally extends their liability for any injuries sustained by those employees during such assignments.

Recreational Activity Defense à The defense that an injury occurred during a recreational activity may not hold if the employee is fulfilling a directive related to their employment, even during an entirely recreational activity, underscoring the importance of context in New Jersey workers’ compensation claims.

Comprehensive Coverage Considerations à Insurance policies should account for scenarios where employees are on special missions, ensuring that there is clarity about coverage in cases of injuries sustained during such assignments.

Conclusion
The Terhune v. Port Authority decision highlights the importance of understanding the nuances of the Special Mission Rule under New Jersey workers’ compensation law. For insurance professionals, this case demonstrates the need for careful evaluation of employee assignments and the potential liabilities that come with directing employees to work away from their usual place of employment.

 

Defense Digest, Vol. 30, No. 3, September 2024, is prepared by Marshall Dennehey 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. © 2024 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

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First, it addressed the issue of whether it had jurisdiction to hear the appeal. A divided Superior Court determined that it did, with its basis for the holding being that the order from which the Chilutti’s appealed was a collateral order. Next, the Superior Court set out to address the merits of the Chilutti’s substantive claim. The Superior Court concluded that the parties lacked a valid agreement to arbitrate. Its rationale was that Uber’s website and application did not provide reasonably conspicuous notice of the terms to the Chiluttis. In reaching this decision, the en banc Superior Court held that browsewrap arbitration agreements are enforceable in Pennsylvania only if the registration website and application screens explicitly inform consumers that they are waiving the right to a jury trial, the registration process cannot be completed until the consumer is fully informed of this waiver, and, when the agreement is available via hyperlink, the waiver appears at the top of the first page of the terms in bold, capitalized text. Since the ruling, Pennsylvania courts have applied Chilutti I to determine if browsewrap agreements are enforceable.  For instance, the Allegheny County Court of Common Pleas invoked Chilutti I to reject an agreement that lacked an express jury-trial waiver on the assent screen.  See Miller v. Festival Fun Parks, LLC, 92 WDA 2025 (C.P. Alleg. Cnty. Mar. 24, 2025). Similarly, the Superior Court has held that notice which failed to explicitly state the consumer was waiving a jury-trial right did not “me[e]t the strict burden set forth by our en banc Court in Chilutti I.” Pierce v. FloatMe Corp., 348 A.3d 1077, 1088 (Pa. Super. 2025). While the issue of enforceability of browsewrap agreements appeared to have been resolved by Chilutti I, Pennsylvania courts’ grip on this issue has been slackened by the Pennsylvania Supreme Court’s January 21, 2026, opinion in Chilutti II. See Chilutti v. Uber Techs., Inc., 349 A.3d 826 (Pa. 2026) (“Chilutti II”). Therein, the Supreme Court did not address the merits of the Chiluttis’ substantive claim, but rather the issue of whether the Superior Court had appellate jurisdiction to immediately review the orders staying litigation pending arbitration. The Court ultimately vacated the en banc opinion on jurisdictional grounds, holding that the Superior Court did not have appellate jurisdiction because the trial court’s order from which the Chiluttis appealed did not qualify as a collateral order and, thus, the Superior Court erred in holding to the contrary and lacked jurisdiction to entertain the merits” of the Chiluttis’ substantive claim. As such, Chilutti II has rendered Chilutti I nonbinding, and the issue of enforceability of online arbitration agreements remains unresolved. However, in light of the fact the Supreme Court did not address or comment on the merits of the Chiluttis’ appeal, Chilutti I is still meaningful. Specifically, it provides guidance as to the standards a company should strive to meet to ensure they have obtained users’ assent so that they are able to enforce online arbitration agreements. Additionally, it may serve as persuasive authority in judges’ evaluations of petitions and/or motions to compel browsewrap arbitration agreements until this particular issue is properly put before our appellate courts. Keanna works in our Pittsburgh, PA office. She can be reached at (412) 803-1174 or KASeabrooks@MDWCG.com.

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