Can an employer waive a workers' compensation notice defense by failing to argue it at the hearing? Darden Restaurant v. Labor Commission Explained

Background and facts

Chinyu James Sun managed an Olive Garden in St. George owned by Darden Restaurant. On July 1, 2020, he slipped on spilled ice in the kitchen and injured his right shoulder and neck. Sun filed a workers’ compensation claim, but he did not formally notify Darden of his injuries within the statutory 180-day window. Utah Code section 34A-2-407 bars an employee from recovering benefits if notice is not provided within that period, a provision the courts have treated as equivalent to a statute of limitations defense.

Darden pleaded the notice defense in its answer and introduced evidence at the hearing that no report was made. But Darden never argued that the claim should be dismissed for untimely notice. Instead, it used the absence of a report solely to contend that no injury ever occurred. Despite neither party requesting dismissal on notice grounds, the administrative law judge (ALJ) raised the issue sua sponte, placed the burden on Sun to prove a timely report, and dismissed both claims. The Commissioner, the Appeals Board, and ultimately the court of appeals each granted Darden relief on the notice bar—without addressing whether Darden had waived the defense by never seeking relief based on it.

Key legal issues

Two issues framed the Supreme Court’s analysis: (1) whether Darden waived the limitations defense by pleading it but failing to ask the ALJ for relief based on it; and (2) whether the ALJ’s sua sponte ruling nonetheless preserved the issue for appellate review under the principles articulated in Abu-Ulba v. Ananda Scientific, Inc., 2026 UT 24.

Court’s analysis and holding

The Court held that Darden waived the notice defense. While a limitations defense can be waived by failing to plead it or by presenting no supporting evidence, this case posed a distinct question: can it be waived by not requesting relief based on it even when it was pleaded and evidence existed? The Court answered yes. Because Darden knew about the defense, chose not to pursue it, and instead used the lack-of-notice evidence only to challenge whether an injury occurred at all, it made a deliberate litigation choice that constitutes waiver.

The Court then applied Abu-Ulba to determine whether the ALJ’s sua sponte ruling could cure that waiver. Under Abu-Ulba, a sua sponte ruling preserves an issue only if it satisfies both judicial economy and fairness. The Court found that even if judicial economy might be served by the factual record developed at the hearing, fairness was not. Sun had no reason to know he needed to marshal evidence specifically addressing compliance with the notice statute as a standalone defense—he understood the notice evidence as relevant only to whether the injury happened. Allowing Darden to abandon its chosen theory and rely on the ALJ’s sua sponte ruling on appeal would permit exactly the kind of strategic gamesmanship preservation doctrine is designed to prevent.

The Court vacated the court of appeals’ opinion and remanded for consideration of Darden’s unadjudicated merits challenges to the neck-injury claim, and further instructed a remand to the Labor Commission to address the merits of the shoulder-injury claim.

Practice implications

This decision is a sharp reminder that pleading an affirmative defense is not enough. Counsel must affirmatively argue the defense, tie the evidence to it, and explicitly request the relief it supports—at the hearing, before the tribunal that matters. Practitioners should also recognize that a tribunal’s sua sponte ruling on a waived or unargued issue will not automatically preserve it: under Abu-Ulba and now Darden, both judicial economy and fairness must be satisfied. When either is lacking, the sua sponte ruling is no substitute for proper advocacy.