Cortez v. Nacco Material Handling – Lawsuits Against Parent Company Employers

States have varying standards by which employees can subvert workers’ compensation laws and pursue litigation against an employer for negligence resulting in on-the-job injury.
Most state laws adhere to the general holding that workers’ compensation is the exclusive remedy by which workers can receive recompense from their employer in the event of a work-related illness or injury.

The idea is that workers’ compensation pays for necessary medical treatments, loss of wages during disability and compensation for permanent disability or death at work. The tradeoff is that workers are promptly and adequately compensated without having to prove negligence, but the employer can’t be sued by the worker even if it was negligent.

In South Carolina, the “exclusive remedy” provision is strong. It prohibits an employee, personal representative or next-of-kin from suing the employer, statutory employer and/or co-workers under common law. They can, however seek action against a third-party tortfeasor in some cases.

Our Spartanburg workers’ compensation attorneys understand, however, that in cases where employers have a “dual persona,” they may not be protected against civil litigation from workers who have suffered injury.

Recently in Cortez v. Nacco Material Handling Group, Inc., the Oregon Supreme Court held a lumber mill worker severely injured by a forklift could pursue a liability lawsuit against his employer’s parent company for failure to undertake certain safety measures. Specifically, the worker’s employer reportedly failed to have appropriately marked crosswalks, failed to provide adequate lighting, did not require workers to wear fluorescent vests and failed to have forklifts that were equipped with audible and visual movement and backup alarms. Although trial court held exclusive remedy barred the claim, Oregon Supreme Court reversed based on the Employer Liability Law, which imposes a heightened statutory standard of care for any entity responsible for work involving risk or danger. Here, the parent company was not worker’s “direct employer,” however it could be held liable as an “indirect employer.”

South Carolina does not have an Employer Liability Law. It does however – as of last year – formally recognize the “dual persona” doctrine, which can trump the exclusive remedy defense.

In Mendenall v. Anderson Hardwood Floors, the South Caorlina Supreme court last year underscored the exclusive remedy provision for injured workers, but did find some companies can have a “dual persona” based on liabilities taken on from predecessor companies during mergers and acquisitions. This is only the case when tort claims are entirely independent of a defendant’s obligation as an employer.

In the Mendenall case, a worker was employed by a firm (defendant) that through a series of mergers acquired a veneer company. At the time of the merger, Anderson assumed all the veneer companies liabilities. After that merger, the worker fell into a cement vat and suffered burns on 90 percent of his body. He later died of his injuries. His widow received workers’ compensation benefits, but then also sued Anderson.

While defendant claimed exclusive remedy, plaintiff asserted the veneer company would have been the subject of a product liability lawsuit, as it had designed and constructed the vat and her husband had never worked for it. However, when defendant Anderson merged with the veneer company, it assumed all liability and was therefore a “dual persona.”

The state supreme court allowed the state would accept the dual persona doctrine in limited circumstances, but did not rule on whether it applied to this case, as that was a matter for the trial court to determine.

If you have been injured at work in Spartanburg, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Cortez v. Nacco Material Handling Group, Inc., Oct. 2, 2014, Oregon Suprem Court

More Blog Entries
Marta v. Reid: On Penalties for the Late Payment of Workers’ Compensation Benefits, Oct. 24, 2014, Spartanburg Worker Injury Attorney Blog

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