This is a negligence action, arising out of a workplace injury, in which we consider the personal liability of an individual in his capacity as an officer, director, and shareholder of the corporation that employed plaintiff before her injury but not at the time of her injury.
At the time the events material to our review began, Edgar C. Brown (Brown) was the sole shareholder of defendant Jantec, Inc. (Jantec). Brown also was an officer and director of Jantec. Under a franchise arrangement, Jantec operated three pizza restaurants, including Abby's Pizza Inn in Florence (Abby's).
In 1988, plaintiff began working at Abby's. Part of her job involved the use of a cheese grinder that had been installed in the early 1970s. The cheese grinder did not have a safety guard on it. Brown knew that there was no guard on the grinder.
On April 26, 1989, Brown sold all outstanding shares of Jantec to defendant Broughton & Harrell Corporation (B & H). Brown also ceased to be an officer and director of Jantec, and he had no interest in or position with B & H. On May 1, 1989, Jantec filed articles of dissolution and conveyed all assets, including the cheese grinder, to B & H. Plaintiff continued to work at Abby's under the ownership of B & H.
On January 14, 1990, while operating the cheese grinder, plaintiff lost her right hand. Plaintiff filed a workers' compensation claim, which was accepted.
Later, plaintiff filed this action for personal injury against Brown, Jantec, and B & H. As pertinent here, the second amended complaint alleged that
All defendants moved for summary judgment pursuant to ORCP 47. The trial court granted the motions and entered judgment for all defendants. Plaintiff appealed.
The Court of Appeals held that the trial court did not err in granting summary judgment to defendant B & H, because plaintiff's exclusive remedy against her employer was under the Workers' Compensation Law, ORS 656.018.
Brown petitioned for review. We allowed the petition and now reverse the decision of the Court of Appeals with respect to him.
On review of a summary judgment, this court determines whether there was a genuine issue as to any material fact and whether the moving party was entitled to judgment as a matter of law. ORCP 47C; Stevens v. Bispham, 316 Or. 221, 223, 851 P.2d 556 (1993). In reviewing a trial court's ruling on a motion for summary judgment, this court views the evidence and all reasonable inferences to be drawn from it in the light most favorable to the nonmoving party. Whitaker v. Bank of Newport, 313 Or. 450, 452, 836 P.2d 695 (1992).
We will consider each of plaintiff's three specifications of negligence against Brown in turn. The first specification of negligence is Brown's alleged removal of the safety guard from the cheese grinder. With respect to that allegation, there was no genuine issue of material fact. The affidavits and other evidence in support of, and in opposition to, defendants' motions for summary judgment demonstrate without dispute that the grinder had no safety guard when Jantec first acquired it and that Brown did not remove a safety guard.
We next consider plaintiff's second specification of negligence. Therein, plaintiff alleged that Brown was liable for failing "to replace the safety guard on the cheese grinder" and failing to warn plaintiff of its dangerous condition.
3A Fletcher Cyclopedia of the Law of Private Corporations § 1135 (1986 ed. & Supp. 1992 at 66-67) states:
See also Beri, Inc. v. Salishan Properties, Inc., 282 Or. 569, 580, 580 P.2d 173 (1978) (where the defendants were "charged with active participation on their own account[s], not merely in their capacities as corporate officers," in the tortious conduct alleged by the plaintiffs, the trial court erred in sustaining the defendants' demurrers). Under those principles, Brown is not insulated from liability for his negligence, if any, merely because of his status as a corporate officer, director, or agent of Jantec.
The question remains, however, whether the second specification of negligence against Brown nevertheless is barred by the provisions of the Workers' Compensation Law, ORS 656.001 et seq. ORS 656.018(1)(a), set out ante at note 1, provides that the workers' compensation liability of an employer who has complied with the requirements of the Workers' Compensation Law
ORS 656.018(2), also set out ante at note 1, further provides that a subject worker's rights under the Workers' Compensation Law "are in lieu of any remedies that [the worker] might otherwise have for such injuries against the worker's employer * * *, common law or statutory, except to the extent the worker is expressly given the right under this chapter to bring suit against the employer of the worker for an injury." See also ORS 656.005(13) (defining an "employer" as a person who "contracts to pay a remuneration for and secures the right to direct and control the services of any person"); ORS 656.017 (establishing employers' duties in regard to compliance with the Workers' Compensation Law).
Jantec was a complying employer under the Workers' Compensation Law when Brown allegedly failed to replace the safety guard on the cheese grinder and failed to warn plaintiff of the machine's dangerous condition. Jantec's compliance conferred a statutory exemption from liability on Brown, as well as on the corporation. See ORS 656.018(3), set out ante at note 1 (providing that "[t]he exemption from liability given an employer under this section is also extended to the * * * officers and directors of the employer").
In answering that question, we begin with the text and context of the statute. See State ex rel Juv. Dept. v. Ashley, 312 Or. 169, 174, 818 P.2d 1270 (1991) (describing methodology). Plaintiff's alleged damages, and Brown's asserted liability therefor, arose out of a compensable injury, which is a predicate for the application of ORS 656.018. However, the text of ORS 656.018 does not state expressly whether the statutory exemption applies to a former complying employer of an injured plaintiff with respect to alleged negligence that occurred during, and in the course and scope of, the former complying employment.
The context provides some, albeit limited, assistance. ORS 656.005(18) defines a "noncomplying employer" as "a subject employer who has failed to comply with ORS 656.017." ORS 656.020 provides that
The text and context of ORS 656.018 are not dispositive of the issue before us. We turn, therefore, to legislative history. See Bartz v. State of Oregon, 314 Or. 353, 357, 839 P.2d 217 (1992) ("When the text and context of the statute do not make the legislature's intention clear, we turn to the legislative history to aid us in construing the statute.") We have examined the legislative history of ORS 656.018 and have found nothing that bears on the present question.
We also consider, more generally, the purpose of the exclusive remedy provision of the Workers' Compensation Law. See Bartz v. State of Oregon, supra, 314 Or. at 358, 839 P.2d 217 (in addition to considering the wording and the legislative history of a statute, court considered its purpose). ORS 656.154 provides in part that, "[i]f the injury to a worker is due to the negligence or wrong of a third person not in the same employ, the injured worker * * * may elect to seek a remedy against such third person."
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"* * * [U]nder the act the injured workman may not sue his own employer, regardless of when the negligence occurs that leads to the injury * * *."
Mason v. Sutherlin Machine Works, 240 Or. 51, 54-55, 399 P.2d 1016 (1965) (citations omitted).
That is, a current complying employer may not be held liable in negligence for a workplace injury, even if the negligence occurred before the relevant employment relationship began. Brown asks this court to apply a corollary principle: that a prior complying employer whose alleged negligence is at issue should not be liable in negligence if the alleged negligence occurred during, and in the course and scope of, the former complying employment, even if the workplace injury occurs after the employment relationship with that employer ends.
The overall bargain that the legislature struck in fashioning the workers' compensation system supports Brown's position.
McGarrah v. SAIF, 296 Or. 145, 160-61, 675 P.2d 159 (1983) (footnote omitted).
Shoemaker v. Johnson, 241 Or. 511, 519, 407 P.2d 257 (1965) (citations omitted). An employer who complied fully with its statutory obligations to its employees has fulfilled its part of the bargain entirely. Under ordinary contract principles, a party who has fulfilled its part of the bargain entirely is entitled to performance by the other parties to the contract. The legislative quid pro quo should, therefore, apply with respect to a later-occurring workplace injury if the alleged negligence occurred during, and in the course and scope of, the former complying employment and if, for that reason, the workers' compensation remedy would have been exclusive had the same injury occurred during the complying employment.
The opposite rule would have anomalous results. Two employees who are otherwise situated identically could recover different amounts depending solely on whether the employer of one of them had changed ownership. Another anomaly is that a complying employer whose employee suffered no workplace injury at all during the entire course of employment would be liable for damages, while a complying employer whose employee suffers a substantial workplace injury during the course of employment would not be liable for damages. Finally, an employer who has sold its business and ceased employing workers would be faced with uncertain future liability for workplace injuries that have not yet occurred, but would be powerless to agree with the buyer of the business to be held harmless. See ORS 656.018(1)(a), (c) (agreements for contribution or indemnity, asserted by third persons from whom damages are sought on account of workplace injuries, are void).
We recognize that at least two other jurisdictions have reached a different result. See Duvon v. Rockwell Intern., 116 Wn.2d 749, 807 P.2d 876 (1991) (rejecting a former employer's argument that, because it had complied with the requirements of that state's "industrial insurance" scheme while it was the plaintiff's employer, it was entitled to immunity from the plaintiff's tort claim for an injury that occurred after the plaintiff became employed by a successor employer); Konken v. Oakland Farmers Elevator Co., 425 N.W.2d 302, 304-06 (Minn.App.1988) (holding that the plaintiff could sue his former employer for negligence, because he would have been injured even if he had not been employed by that employer and because the former employer no longer was subject to the burdens of the workers' compensation law on the plaintiff's behalf at the time of the workplace injury).
We conclude that ORS 656.018 protects a complying former employer of an injured plaintiff from common-law liability with respect to alleged negligence that occurred during, and in the course and scope of, the former complying employment. Plaintiff's second specification of negligence in this case falls within that category.
Plaintiff's third specification of negligence is the only one that refers to a time after Brown ceased to be associated with Jantec. That specification is very limited. It alleges that Brown was negligent in "transferring [to B & H] the assets of Jantec Corporation," including the cheese grinder, knowing of the grinder's dangerous condition, and in failing to warn B & H of that condition.
We conclude that the trial court did not err in granting Brown's motion for summary judgment.
The decision of the Court of Appeals is reversed and the judgment of the circuit court is affirmed as to Edgar C. Brown. The case is remanded to the circuit court for further proceedings.
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