Waste Management Inc. v. Superior Court

13 Cal. Rptr. 3d 910, 119 Cal. App. 4th 105, 2004 Cal. Daily Op. Serv. 4719, 2004 Daily Journal DAR 6477, 2004 Cal. App. LEXIS 834

• Court: California Court of Appeal
• Decided: June 1, 2004
• Docket: D042260
• Status: Published

Opinions

Opinion

McCONNELL, P. J.

Rafael Peralta Rios (Rafael) was killed by a trash track while working as a mechanic for Waste Management of California, Inc. (WMCI). His wife and children (collectively the Peraltas) filed a workers’ compensation claim against WMCI.¹ They also sued Waste Management, Inc. and USA Waste of California (together WMI) for negligence and wrongful death, alleging WMI controlled the budget of WMCI, its subsidiary, and thereby prevented WMCI from replacing or repairing dangerous and improperly maintained trash tracks, including the one that killed Rafael. The court overruled WMI’s demurrer to the first amended complaint (complaint) and denied its motion to strike the Peraltas’ claim for punitive damages. We conclude the Peraltas cannot state a cause of action against WMI and accordingly grant its petition for writ of mandate.

FACTUAL AND PROCEDURAL BACKGROUND

The complaint, alleges² WMI and WMCI are separate entities. The trash track that killed Rafael was in disrepair due to the acts or omissions of WMI, specifically WMI’s control of WMCI’s budget, which prevented WMCI from repairing or replacing the track. WMI breached its duty of care to Rafael by ordering WMCI not to replace the defective track and refusing WMCI’s request to replace the track even though WMI knew of the track’s dangerous condition. WMI, motivated by greed and the desire to place its own profits over the safety of others, had a policy of requiring WMCI to reduce its overhead and operating expenses. As a result of these acts and omissions, Rafael suffered serious injury and death.

WMI demurred to the complaint on the grounds: (1) the Peraltas’ claim for negligent control of a subsidiary corporation does not state a cause of action; (2) the Peraltas did not allege facts showing any independent basis for imposing liability on WMI; (3) the Peraltas’ allegations show WMI is a coemployer and thus their action is barred by the exclusive remedy of workers’ compensation; and (4) the Peraltas have not alleged facts to show how WMI’s negligence caused Rafael’s death. The court overruled the demurrer and also denied WMI’s motion to strike the Peraltas’ punitive damages claim.

DISCUSSION

I

In reviewing a ruling on demurrer, we exercise our independent judgment on whether, as a matter of law, the complaint states a cause of action. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501 [82 Cal.Rptr.2d 368]; Trinkle v. California State Lottery (1999) 71 Cal.App.4th 1198, 1201 [84 Cal.Rptr.2d 496].) We accept as true the properly pleaded material facts but do not assume the truth of contentions, deductions or conclusions of fact or law. (Interinsurance Exchange v. Narula (1995) 33 Cal.App.4th 1140, 1143 [39 Cal.Rptr.2d 752]; Hernandez v. City of Pomona (1996) 49 Cal.App.4th 1492, 1497 [57 Cal.Rptr.2d 406].) We examine the complaint’s factual allegations to determine whether they state a cause of action on any available legal theory. (Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th 554, 560 [53 Cal.Rptr.2d 878].)

II

“A tort, whether intentional or negligent, involves a violation of a legal duty, imposed by statute, contract or otherwise, owed by the defendant to the person injured.” (5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, § 6, p. 61; Romero v. Superior Court (2001) 89 Cal.App.4th 1068, 1078 [107 Cal.Rptr.2d 801].) Without such a duty, any injury is injury without wrong. (5 Witkin, supra, § 6, p. 61; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 57-58 [77 Cal.Rptr.2d 709, 960 P.2d 513] [duty is threshold element of cause of action for negligence].) “The existence and scope of duty are legal questions for the court.” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 477 [110 Cal.Rptr.2d 370, 28 P.3d 116]; Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 674 [25 Cal.Rptr.2d 137, 863 P.2d 207].)

The harm for which the Peraltas seek damages was suffered by Rafael in the course of his employment with WMCI. Thus, the existence of any duty owed by WMI arises in the context of Rafael’s employment with WMCI.

HI

Under the workers’ compensation scheme, an employee’s remedy against an employer for a work-related injury is generally limited to the benefits provided by statute. (Lab. Code, § 3601.) Nevertheless, a plaintiff who recovers workers’ compensation from an employer can pursue common law tort actions against third parties for independent acts of negligence. (Lab. Code, § 3852; Privette v. Superior Court (1993) 5 Cal.4th 689, 697 [21 , 854 R2d 721]; Orosco v. Sun-Diamond. Corp. (1997) 51 Cal.App.4th 1659, 1664 [60 Cal.Rptr.2d 179].) This rule applies even if the third party tortfeasor is the parent company of the plaintiff’s employer, as long as there are independent acts of negligence. (Gigax v. Ralston Purina Co. (1982) 136 Cal.App.3d 591, 598 [186 Cal.Rptr. 395] (Gigax); Boggs v. Blue Diamond Coal Co. (6th Cir. 1979) 590 F.2d 655, 662.) However, a parent corporation is not liable for injuries of a subsidiary’s employee in the absence of evidence establishing a duty owed by the parent corporation to the employee. (Rick v. RLC Corp. (E.D.Mich. 1981) 535 F.Supp. 39, 44.) Although the relationship of parent and subsidiary does not by itself give rise to any duty on the part of the parent to the subsidiary’s employees, the parent may owe a duty arising out of obligations independent of the parent-subsidiary relationship. (Ibid.)

Employers have a nondelegable duty to furnish their employees with a safe place to work. (Lab. Code, § 6400; Bonner v. Workers’ Comp. Appeals Bd. (1990) 225 Cal.App.3d 1023, 1035 [275 Cal.Rptr. 337]; Levels v. Growers Ammonia Supply Co. (1975) 48 Cal.App.3d 443 [121 Cal.Rptr. 779]; see also Lopez v. University Partners (1997) 54 Cal.App.4th 1117, 1126 [63 Cal.Rptr.2d 359] [duty to provide safe workplace is imposed only on worker’s immediate employer or those who contract for services of immediate employer but retain control over work].) An employer’s parent corporation is not responsible for the working conditions of its subsidiary’s employees based on the existence of the parent-subsidiary relationship. (Muniz v. National Can Corp. (1st Cir. 1984) 737 F.2d 145, 148; Rick v. RLC Corp., supra, 535 F.Supp. at pp. 42-43.) Rather, the parent corporation may be liable only if it assumes a duty to act by affirmatively undertaking to provide a safe working environment at the subsidiary’s workplace. (Muniz v. National Can Corp., supra, at p. 148; Hinkle v. Delavan Industries, Inc. (W.D.Tenn. 1998) 24 F.Supp.2d 819, 821; cf. Johnson v. Abbe Engineering Co. (5th Cir. 1984) 749 F.2d 1131, 1133 [parent company liable for injuries to subsidiary’s employees where parent undertook to conduct and oversee safety inspections for subsidiary].) To impose liability for an employee’s injuries based solely on a parent-subsidiary relationship would result in treating the parent as an employer without providing it with the shield of employer immunity under workers’ compensation laws. (Love v. Flour Mills of America (10th Cir. 1981) 647 F.2d 1058, 1063.) Moreover, without a showing of an independent tort, plaintiffs would be able to obtain double recovery for the same act, a result that would undermine the central purpose of the workers’ compensation system. (Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 112 [202 Cal.Rptr. 30].)

IV

The Peraltas have not alleged any independent tort committed by WMI. There are no allegations WMI assumed a duty to ensure the safety', of WMCI’s employees, or that WMI owned, operated, manufactured, sold or serviced the truck that killed Rafael. In this regard, the Peraltas’ reliance on the Sixth Circuit Court of Appeals’ decision in Boggs v. Blue Diamond Coal Co., supra, 590 F.2d 655 is misplaced. In Boggs, the court held the parent corporation was not exempt from tort liability for a mining disaster that killed the subsidiary’s employees. (Id. at p. 663.) The parent corporation, having primary responsibility for mine safety functions, engaged in active misfeasance when it authorized removing existing ventilation and safety devices in the mine and concealed the changes from the mine inspectors who could have prevented the accident. The changes made by the parent corporation caused the explosion. (Id. at p. 658.)

Here, in contrast, there are no allegations WMI committed any independent acts of negligence or misfeasance. Unlike the parent corporation in Boggs, WMI did not direct its subsidiary’s safety operations. The responsibility for worker safety belonged to and remained with WMCI, which provided the allegedly defective truck and exclusively controlled the truck, the work site and the injured employee. (Kirk v. Kemp Bros. (1970) 12 Cal.App.3d 136, 141 [90 Cal.Rptr. 553] [person in control of premises is employer subject to statutory, nondelegable duty to provide safe place of employment].) Significantly, the Peraltas have not alleged WMI ordered or required WMCI to continue using the trucks, but only that WMI refused to allocate corporate funds to repair or replace those trucks as a cost-savings measure.

Moreover, nothing in the holding of Boggs relieves a subsidiary’s employee of the burden of proving the elements of a negligence cause of action against the parent, including the threshold element of a' duty owed by the parent to the employee. (See Rick v. RLC Corp., supra, 535 F.Supp. at pp. 44-45.) Even if, as the Peraltas’ claim, WMI engaged in a scheme to plunder monies belonging to WMCI to repair and replace WMCI’s trash trucks, WMI’s duty was to WMCI as its subsidiary, not to WMCI’s employees. Negligently controlling or intentionally mismanaging a subsidiary’s budget does not create a duty on the part of the parent corporation to ensure safety or prevent injuries to the subsidiary’s employees. WMI’s act of withholding capital or denying a budget request may have caused financial hardship to WMCI, but it did not cause Rafael’s injuries. Despite their artful pleading, the Peraltas have not alleged WMI’s duty was independent of the parent-subsidiary relationship and thus, they cannot state a separate tort cause of action as to WMI.

Unlike the facts in Boggs, the ultimate responsibility for employee safety here remained with WMCI as employer. (Bonner v. Workers ’ Comp. Appeals Bd., supra, 225 Cal.App.3d at pp. 1034-1035.) WMCI’s continued use of trash trucks it knew were dangerous or in disrepair was an unfortunate and ultimately tragic business decision. Even if, as the Peraltas allege, WMI controlled or influenced WMCI’s budget, WMCI remained a separate legal entity in control of allocating its own resources. The Peraltas cannot state a cause of action based on allegations that WMI directed and authorized the manner in which WMCI conducted its business.

This court’s decision in Gigax, supra, 136 Cal.App.3d 591, does not advance the Peraltas’ position. In Gigax, we held an employee of a subsidiary company may sue a parent corporation who has designed and manufactured a defective product which injured the subsidiary’s employee, where the employee had also received workers’ compensation benefits from his employer. (Id. at pp. 594, 601.) We reasoned because the parent company acted and operated as a separate business entity and exercised no control over the employee, the parent company was not an “employer” for purposes of the exclusive remedy provisions of workers’ compensation. (Id. at pp. 601, 607.)

The subsidiary’s employee in Gigax was able to maintain a separate action against the parent company based on an independent tort for products liability. Here, in contrast, the Peraltas have not shown any independent basis for WMI’s alleged liability. (Cf. Miller v. King (1993) 19 Cal.App.4th 1732, 1734—1735 [24 Cal.Rptr.2d 284] [injured employee of corporation entitled to sue property owner as third party tortfeasor on theory of premises liability].) The complaint states the truck that killed Rafael, owned and operated by WMCI, was in a dangerous condition because it was “negligently and/or intentionally improperly maintained, serviced and/or repaired.” Because WMCI created the risk of harm and was actively careless in allowing its employee to use the defective and dangerous truck, any claims of liability for misfeasance are necessarily directed at WMCI, not WMI.

V

The Peraltas seek to impose liability on WMI by alleging WMI instructed WMCI not to repair or replace the trucks and aflSrmatively prevented WMCI from doing so by withholding funds. However, the Peraltas have not pleaded WMI exercised control of WMCI “ ‘to a degree that exceeds the control normally exercised by a parent corporation.’ ” (Laird v. Capital Cities/ABC, Inc. (1998) 68 Cal.App.4th 727, 738 [80 Cal.Rptr.2d 454].) If, as the Peraltas claim, WMI completely and absolutely controlled WMCI, rendering WMCI incapable of repairing or replacing its own trucks, the corporations must be viewed as a single, indistinguishable economic entity. By alleging WMCI did not have the right to allocate its own resources, the Peraltas have alleged liability based only on the parent-subsidiary relationship. Under that theory, WMI is an employer entitled to the protection of the workers’ compensation exclusive remedy. (Lab. Code, § 3601; see Love v. Flour Mills of America, supra, 647 F.2d at p. 1063; Volb v. G.E. Capital Corp. (1995) 139 N.J. 110 [651 A.2d 1002, 1009]; Dobbs v. The Journal Co. (1984) 137 Mich.App. 663 [358 N.W.2d 32, 34].)

Despite their attempt to plead independent negligent acts or omissions, the Peraltas simply attribute or impute to WMI the negligent acts and omissions of WMCI. Allowing a third-party tortfeasor action against WMI based on the imputed acts or omissions of WMCI “would directly oppose the purpose of the Workers’ Compensation Act and the exclusive remedy provision of Labor Code section 3601.” (Shields v. County of San Diego, supra, 155 Cal.App.3d at p. 112.) Further, the Peraltas’ claim that WMI caused the unsafe working conditions by controlling WMCI’s fiscal policies and management decisions is nothing more than stating WMI is responsible for the acts or omissions of WMCI in implementing those policies and decisions. (See Orosco v. Sun-Diamond Corp., supra, 51 Cal.App.4th at p. 1670 [even if defendant corporations controlled operations of industrial plant through the employer, corporations were not liable for employee’s injuries absent some negligence by corporations separate from employer’s negligence].) The Peraltas are not entitled to “something that is denied to [the families of] other workers: the right to recover tort damages for industrial injuries caused by [an] employer’s failure to provide a safe working environment.” (Privette v. Superior Court, supra, 5 Cal.4th at p. 700.)

VI

The consequences of allowing the Peralta’s complaint to state a cause of action on these facts would be to create presumptive misfeasance by any parent corporation that approves a subsidiary’s budget whenever an employee of the subsidiary is injured due to poorly maintained equipment. We decline to sanction such a far-reaching result. Rather, we conclude that where, as here, a subsidiary corporation has satisfied its obligation to an employee by securing the payment of workers’ compensation benefits, the employee cannot hold the parent corporation liable for harm suffered by the employee in the course of employment unless the parent corporation’s alleged acts of negligence are separate from those of the subsidiary. Because the act or omission that resulted in Rafael’s injury and death—providing him with an unsafe truck—was the same act or omission alleged against WMI as a result of its control of WMCI’s budget, the Peraltas cannot state a cause of action against WMI.³

DISPOSITION

Let a writ of mandate issue directing the superior court to vacate its order overruling the demurrer and enter a new order sustaining the demurrer without leave to amend. The stay previously issued by this court on August 11, 2003, is vacated. Costs are awarded to the prevailing party in the writ proceeding.

McIntyre, L, concurred.

1 Although this allegation does not appear in Peraltas’ complaint, the parties do not dispute that the Peraltas are receiving workers’ compensation benefits as a result of Rafael’s employment-related injuries and death.

2 On review of a ruling on demurrer, we assume the truth of all properly pleaded-material allegations of the complaint. (StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 453, fn. 3 [84 Cal.Rptr.2d 843, 976 P.2d 214].)

3 In light of our disposition, we need not address WMI’s further contentions as to causation and punitive damages.