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The Tennessee Supreme Court this week dealt a blow to businesses and insurance companies, finding that employers can no longer argue that direct negligence claims are barred when the business admits vicarious liability for a worker's actions.

"We hold that the preemption rule is incompatible with Tennessee's system of comparative fault and decline to adopt it," the court said in a slip-and-fall case against Trader Joe's that has become a bellwether for multiple industries.

The decision finally puts to rest long-standing questions about when employers can use vicarious liability to bar direct negligence claims and discovery that could potentially show that a company had failed to properly train its workers.

"This puts an end to all the chatter we've heard from insurance companies about preemption," said Jonathan Griffith of Franklin, Tennessee, the lead plaintiffs' attorney in the case.

An attorney for Trader Joe's declined to comment Tuesday. But Griffith said that insurers and businesses, including trucking companies, had used the preemption argument in recent years to hide behind vicarious liability, a stategy that limited discovery of a company's safety and training regimes and did nothing to help prevent accidents in the future.

"As the opinion says, the purpose of tort law is deterrence," Griffith said.

The case began in 2018 when customer Melissa Binns claimed she slipped and fell at a Trader Joe's grocery store in Nashville. A shelf stocker had loaded a stocking cart in a "messy and disorganized" manner, causing a package of tofu to fall and leak liquid onto the store's floor. Binn's attorneys argued that the clerk did not clean up properly, leading to the plaintiff's injury.

Binns pursued claims of negligent activity, negligent training and negligent supervision of the clerk, along with vicarious liability and premises liability. Trader Joe's, one of the larger grocery chains in the country, argued that because it had admitted vicarious liability for the employee's negligence, the negligent training claims against the store should be dismissed under the preemption rule.

That rule is often referred to in litigation and has been utilized by courts around the country. But it had never been adopted by the Tennessee Supreme Court, the opinion explained. Three federal courts in Tennessee in 2018 had applied the rule, going so far as to predict that the state high court would eventually adopt it.

But the justices said the federal rulings, now weakened by overturned court rulings, "do not bind us."

Tennessee's comparative fault case law must take precedence, the state Supreme Court noted. That came into being in Tennessee in 1992 when the court formally abandoned the common law rule of contributory negligence. Legislatures in Florida and 32 other states have since passed statutes, or courts have adopted case law, requiring comparative fault in damage verdicts. A comparative fault bill in the South Carolina Legislature died last week. In Georgia, lawmakers specifically barred the use of the preemption rule after the adoption of the state's comparative fault law in recent years, one Tennessee Supreme Court justice noted.

In the Trader Joe's case in Tennessee, the Davidson County trial court in 2019 declined to buy into the preemption doctrine denied the grocer's motion to dismiss some of the claims. But the judge allowed the grocer to appeal the question in order to develop uniform law on the issue.

The trial court said she "finds that there is great inconsistency among the orders entered by Tennessee federal and state trial courts on the issue of whether a plaintiff can assert direct negligence claims against an employer if the employer admits that it will be vicariously liable for the negligent conduct attributed to its employees under the doctrine of respondeat superior."

The state Court of Appeals also denied Trader Joe's assertions, but the Supreme Court then agreed to weigh in.

The case could have significant impact on companies and insurers involved in liability claims for years to come. One of the lawyers for Trader Joe's, Michael Pethrick, said in oral arguments that the decision would affect all businesses in Tennessee and that allowing direct negligence claims will open defendants to unnecessary discovery and legal costs. It also will produce inflammatory information that can prejudice a jury, he argued.

"They've already got the employer on the hook," Pethrick said.

The high-stakes case has been closely watched in business circles because of its far-reaching implications. The American Trucking Association and the Tennessee Trucking Association filed an amicus a brief in the case supporting Trader Joe's arguments.

Griffith said that some trucking firms, in particular, have tried to use vicariously liability and preemption strategy to keep plaintiffs in accidents from discovering how little safety training had been provided to drivers or that the firms had a history of hiring problem drivers. An attorney who wrote the brief for the state trucking association could not be reached Tuesday.

Despite the business and insurance arguments, the high court justices found this week that negligent training and supervision claims are separate from the employer's vicarious liability of the worker - and involve the grocery's own negligence.

"...The liability stemming from negligent training and supervision is not vicarious," the Trader Joe's April 8 opinion notes, citing a 1997 court decision.

"An employer may be both directly liable for its own negligent conduct, as well as vicariously liable for the negligent conduct of its employee under the doctrine of respondeat superior," Justice Roger Page wrote in the opinion.

"Adopting the preemption rule would permit an employer to eliminate evidence of a breach of duty separate from the negligence of its employee, a clear inconsistency with Tennessee's system of comparative fault that seeks to achieve 'a tighter fit between liability and fault,'" the court said, quoting from another court ruling.

Practically speaking, allowing a vicarious liability to supersede the company's negligence, in the framework of Tennessee's comparative liability rule, would mean a jury would have to apportion fault perversely, sometimes making an injured party mostly at fault, the justices wrote.

During oral arguments, Justice Jeffrey Bivins questioned the Trader Joe's lawyer about that, noting that if a jury is not made aware that an employer had failed to train a worker, that could skew a comparative fault verdict. Justice Holly Kirby also pointed out that Tennessee statute allows punitive damages for negligent or inadequate training, suggesting that closing off discovery in negligence claims would not be consonant with the law.

"The whole purpose of the preemption trickery by the defense was to hide an employer's fault by, in my opinion, using the employee as a scapegoat," Griffith said.

Employers had essentially used the doctrine to say, "there's no need to discover our hiring practices; there's no need to discover our lack of safety training and multiple systems failures that we've had," Griffith said.

The case now goes back to the Davidson County Circuit Court for trial. The court documents did not indicate which insurer for Trader Joe's was involved in the claim, but Griffith said that Sedgwick was the claims manager.