## Facts

- Sheldon Jackson College hired Harbor Mechanical (owned by George Mattingly) to clean a campus drain pipe.
- Mattingly sent three employees, including his son, to perform the work.
- College employees excavated and braced a trench to expose the drain pipe for Harbor Mechanical’s workers.
- The trench collapsed, burying the workers and causing alleged serious physical and psychological injuries.
- Mattingly alleged business disruption and economic losses from losing the employees’ services, including lost income/profits and harm to business reputation.
- Mattingly also alleged he incurred expenses for employees’ medical care and suffered physical and emotional trauma from responding to the incident and operating the business without the injured employees.

## Issues

1. Whether a defendant may be liable in negligence for an employer’s purely economic losses (lost profits/income) resulting from physical injury to the employer’s employees, when the employer is a particularly foreseeable victim of the negligent conduct.
2. Whether the employer may recover (a) employees’ medical and hospitalization expenses, (b) the employer’s own emotional-distress damages, and (c) punitive damages based on the alleged conduct.

## Decision

- The Alaska Supreme Court reversed the dismissal as to Mattingly’s negligence claim for economic loss, holding the pleadings stated a claim for negligently caused economic injury to a particularly foreseeable plaintiff.
- The court remanded for further proceedings on the economic-loss claim.
- The court affirmed dismissal of claims seeking recovery for employees’ medical expenses.
- The court affirmed dismissal of Mattingly’s emotional-distress claim.
- The court affirmed dismissal of Mattingly’s punitive-damages claim.

## Legal Principles

- Negligence liability for purely economic loss may be recognized where the plaintiff is a particularly foreseeable and limited victim of the defendant’s conduct, avoiding indeterminate liability to the public at large.
- On a motion for judgment on the pleadings (or dismissal for failure to state a claim), the court assumes the pleaded facts are true and asks whether they could entitle the plaintiff to relief under a viable theory.
- Absent statutory authorization or a recognized independent duty, an employer generally cannot recover in tort from a third party for employees’ medical-care expenses.
- Emotional-distress recovery in negligence is limited and does not extend to an employer’s distress arising from injuries to employees and resulting business pressures on the facts pleaded.
- Punitive damages require a viable underlying claim supporting such relief; where related theories are dismissed or inadequately pleaded, punitive damages are not available.

## Conclusion

The court allowed Mattingly to pursue a negligence claim for lost profits as a particularly foreseeable plaintiff harmed by the trench collapse, but it rejected additional claims for employee medical expenses, Mattingly’s emotional distress, and punitive damages.


Mattingly v. Sheldon Jackson Coll., 743 P.2d 356 (Alaska 1987)