Certified Question From Tenth Circuit re: “Dual-Capacity”
A divided Supreme Court of Oklahoma, responding to a question certified to it by the Tenth Circuit Court of Appeals, has held the state’s 2013 Workers’ Compensation Act (the “AWCA”) does not fully abrogate the so-called “dual-capacity” doctrine with regards to stockholders of an employer; they may be subject to suit for independent tortious acts if the stockholder was not acting in the role of employer [Odom v. Penske Truck Leasing Co., 2018 OK 23, 2018 Okla. LEXIS 23 (Mar. 13, 2018)]. The Court noted that, as to employers, the dual capacity doctrine could not be utilized to avoid the exclusive remedy provisions of the AWCA.
Odom was an employee of Penske Logistics, LLC which, in turn, was a wholly owned subsidiary of Penske Truck Leasing Co. (PTLC). After a trailer owned by PTLC fell on Odom and injured him, he filed a workers’ compensation claim against his employer. However, Odom and his wife also filed suit against PTLC in federal district court, alleging PTLC’s tortious negligence caused Perry Odom’s injury.
Finding PTLC was the sole stockholder of the employer, the federal district court found that dismissal was warranted pursuant to 85A O.S. Supp. 2013 § 5—Oklahoma’s exclusive remedy statute. The Tenth Circuit noted that the statute’s language appeared clearly to abrogate the dual-capacity doctrine with regard to employers, but the Circuit Court was concerned that the statute was ambiguous as to stockholders. Accordingly, it certified the question to the Supreme Court of Oklahoma.
The majority of the Oklahoma Court acknowledged that the dual-capacity doctrine previously permitted suits by employees against employers if the employer occupied a second capacity that conferred upon them obligations independent of those imposed upon them as an employer [for a general discussion of the dual capacity and dual persona doctrines, see Larson’s Workers’ Compensation Law, § 113.09, et seq.]. The majority added that pursuant to the 2013 reform legislation, Title 85A O.S. Supp. 2013 § 5 abrogated the dual-capacity doctrine with regard to employers.
The majority agreed that the statute’s language on the dual-capacity doctrine with regard to stockholders was ambiguous. The problem lay within the third sentence. For purposes of analysis, the majority broke down the third sentence of 85A O.S. Supp. 2013 § 5(A) into its two main clauses, observing that the first portion of the sentence provides:
No role, capacity, or persona of any employer, principal, officer, director, employee, or stockholder other than that existing in the role of employer of the employee shall be relevant for consideration for purposes of this act, ….
Title 85A O.S. Supp. 2013 § 5(A).
The majority added that sentence then concludes with a second clause, which provides:
and the remedies and rights provided by this act shall be exclusive regardless of the multiple roles, capacities, or personas the employer may be deemed to have.”
Title 85A O.S. Supp. 2013 § 5(A).
The Odoms urged the Court to adopt an interpretation of 85A O.S. Supp. 2013 § 5(A) where only those principals, officers, directors, or stockholders of an employer who are acting in their role, capacity, or persona as an employer, be shielded from third-party tort liability under the exclusive remedy provision. The Odoms stressed that there was no legislative intent behind shielding a separate corporate entity from liability for its own independent conduct merely because it owned stock in an injured worker’s employer.
PTLC countered that 85A O.S. Supp. 2013 § 5(A) unambiguously expanded the protections provided by the exclusive remedy provision in a broad fashion, protecting the entire set of categories—“employer, principal, officer, director, employee, or stockholder”—from suit regardless of any other capacity or role they might possess. That is to say, PTLC argued the intent of the Legislature was to abrogate the dual-capacity doctrine with respect to the same classes to which it was providing exclusive remedy protections.
Workers’ Compensation “Grand Bargain”
Citing Vasquez v. Dillard’s, Inc., 2016 OK 89, ¶26, 381 P.3d 768 and Evans & Assocs. Util. Services v. Espinosa, 2011 OK 81, ¶14, 264 P.3d 1190, the majority noted that recent decisions of the Court had stressed that the workers’ compensation system is a mutual compromise between employers and employees, and that exclusivity was at the heart of the grand bargain between employers and employees. Within that context, stressed the majority, abrogation of the dual-capacity doctrine with respect to employers was in keeping with this compromise because what matters for the purposes of exclusivity is the employment relationship and not any other role the employer may have.
On the other hand, the majority cautioned that an interpretation that extended the protections of the exclusivity provision absolutely to potentially legally distinct non-employer entities such as stockholders, regardless of how passive their connection might be to the employment relationship, went far beyond that original purpose and conflicted with later portions of 85A O.S. Supp. 2013 § 5(A).
Is the Stockholder Acting in Role of Employer?
The majority held that a stockholder may lose its status as a legal third person and fall under the exclusive remedy protections of 85A O.S. Supp. 2013 § 5(A) if the stockholder possesses a persona that is not independent from that of the employer. It added that, more simply stated, the question was whether the stockholder was acting in the role of employer, rather than being a mere passive stockholder? Whether this test is satisfied must be determined on a case-by-case basis.
Justice Reif dissented. The justice provided an historic overview of the exclusive remedy doctrine, adding that perhaps the best reason to reject the Odoms’ argument was that it resulted in an exception to the exclusive remedy/immunity rule that the Legislature did not clearly and explicitly provide. Justice Reif stressed that the Legislature considered and addressed the subject of exceptions in section 5(B). In doing so, the Legislature provided only two exceptions; one in cases where the employer fails to secure the payment of compensation and the other in cases of injuries caused by the intentional torts of the employer.
The justice added that the failure to secure compensation exception had existed since the inception of workers’ compensation. The intentional tort exception, with special conditions, had been the subject of legislation since 2011. The justice allowed that if the Legislature intended to limit or qualify the right of principals, officers, directors, employees, stockholders, partners and prime contractors to claim exclusive remedy/immunity, it would have expressly done so as it did in sections 5(B) and 5(H), and has consistently done in the past.
Is This Really a Dual Capacity Case?
After reading the majority and dissenting opinions, I’m left scratching my head just a bit. While I agree with the result determined by the majority, is this really a dual capacity case? Or is it something else? In the typical dual capacity case, the plaintiff argues that the employer has two capacities–two natures, if you will–with regard to the particular transaction. The hospital may both employ a nurse and treat that nurse medically for an illness or condition. If it’s relationship is one of medical provider and not as employer, it ought not to be able to hide behind the employment relationship as a shield to a negligence action.
In the instant case, the employer isn’t being sued. Its shareholder (stockholder) is the defendant. That defendant has no role as employer. It owns the employer, but doesn’t act as employer. Why? It does not act as employer for reasons of its own, since the decision to separate the corporate entities was its own. If PTLC has determined that it’s in its best interest to maintain a separate corporate structure for itself and for its subsidiary, why should the court not allow that separateness to continue all the way through the tort process. Should it be allowed to pick and chose among the benefits it desires, maintaining separate existence when that suits, ignoring it when it doesn’t?
I’m left wondering why both the Tenth Circuit and the Oklahoma Supreme Court felt it necessary to decide the case on dual capacity/dual persona grounds.
I see a separate issue with the argument presented by PTLC and the dissenting justice. As was pointed out by the majority, the term “stockholder” is not defined in Oklahoma’s AWCA. Pressed to its logical end, both the dissenting opinion and the argument of the defendant-PTLC is that shareholders of an employer should be immune from suit by an employee. Consider the following hypothetical: A worker, “W,” is employed by XYZ Corporation (“XYZ”), whose stock is publicly traded on the New York Stock Exchange. I own a few hundred shares of XYZ, but I don’t work for it, nor do I have any day-to-day contact with it or its employees. W and I are involved in an auto accident during the course and scope of W’s employment. Using the argument espoused by PTLC and the dissenting justice, I should be immune from suit, even if the accident was caused by my negligence.
You say, “That’s ridiculous; no one would take that position.” I say, “that is essentially the position of the dissenting opinion. True, PTLC was the sole shareholder of the employer, not an individual shareholder who might hold a small minority of shares. But, as already noted, “stockholder” is not defined by the Oklahoma act. In my hypothetical, I’m just as much a “stockholder” as PTLC was in the instant case. One should not need to result to some sort of “dual capacity” analysis to explain why I would be liable in tort. It wasn’t necessary in the instant case.
I should note that a few states, such as New York, allow immunity to extend to a parent corporation, but only where the parent is determined to be the alter ego of the subsidiary. That position seems to be consistent with the majority’s decision in this instant case. New York courts don’t see the need to resort to any sort of dual capacity discussion in order to arrive at their conclusions.