A former Eagan restaurant worker who was initially denied compensation for serious injuries she sustained on her way to an after-work meeting should have a chance to prove that her employer and its insurance company acted in bad faith to avoid payment, the Eighth U.S. Circuit Court of Appeals ruled Thursday.

A three-judge panel found unanimously that U.S. District Judge Joan Ericksen of St. Paul erred in February 2011 when she dismissed the case before trial on motions by the worker's employer and its insurer.

The panel found that Heather Alexandra Nunn, who now lives in Phoenix, had a plausible case alleging that Noodles & Co. and Zurich American Insurance Co. deliberately obstructed her claim for benefits.

"It's a good day for the little guy," said Nunn's attorney, James Lindell, of Minneapolis.

Peter Van Bergen, Zurich's attorney in Minneapolis, had little to say. "I guess there will be a trial," he said.

The appellate ruling restores Nunn's lawsuit in St. Paul, which is actually the second time she's sued Noodles & Co. and Zurich. The first suit was tried in October 2008 before an administrative law judge who awarded Nunn compensation for lost wages, medical expenses and partial reimbursement of her attorney fees.

Lindell said he was convinced that some of the defense witnesses lied in the administrative hearing, so he filed the new lawsuit under a statute designed to ensure fair play in workers' compensation cases.

Such cases are unusual, Lindell said, because the statute requires "clear and convincing" proof of egregious behavior, a relatively high standard. He said this is the first time he's filed such a suit in 35 years of practice.

'Doing what she was told'

"You've got a 21-year-old girl who was just doing what she was told and then got treated this way. Frankly, it pissed me off," Lindell said. "This case was about trying to restore integrity to the workers' compensation system."

Nunn, now 25, was working as a shift supervisor at Noodles & Co. four years ago when her boss, Raymond Gibson, told her to attend a meeting at his home after work. On the way there, Nunn ran a red light on her motorcycle and smashed into an oncoming car. Her medical bills exceeded $250,000, and she lacked insurance.

Circuit Judge Duane Benton of Kansas City, Mo., wrote that Zurich's representatives understood that if Gibson had called the meeting to discuss business, the insurer would be on the hook. He noted that Zurich attorneys Kristin Maland and Patrick Grove had explained the importance of characterizing the meeting as a social gathering to both Gibson and assistant manager Tom Mako.

Gibson did so in conversations with Noodles & Co.'s executives, but also told Zurich's claims representative that the meeting was called to discuss work issues. Even so, Zurich denied Nunn's claim on grounds that she may have been traveling to a social function that she was not required to attend. Zurich also asserted that company business meetings were all held on-site during work time, despite possessing evidence to the contrary.

'Self-serving' testimony

Grove argued to the administrative law judge that Nunn was injured on her way to an off-site "happy hour," but the judge found that Gibson's testimony was "self-serving, and lacking in credibility."

Lindell filed the federal lawsuit in St. Paul alleging that Noodles & Co. and Zurich obstructed Nunn's efforts to obtain more than $308,000 in benefits and attorneys' fees.

Ericksen threw out the case, finding that no reasonable jury could conclude by clear and convincing evidence that the defendants were "egregiously cruel or venal."

Benton, joined by judges Roger Wollman of Sioux Falls, S.D., and Diana Murphy of Minneapolis, disagreed.

"Viewing the facts most favorably to Nunn, there are genuine issues of material fact whether Noodles intentionally obstructed her receipt of workers' compensation benefits through Gibson's fabrications and its 17-month delay in payment," Benton wrote.

Dan Browning • 612-673-4493