Odom v. Penske Truck Leasing Co., L.P. , 893 F.3d 739 ( 2018 )

FILED
United States Court of Appeals
Tenth Circuit
PUBLISH June 19, 2018
Elisabeth A. Shumaker
UNITED STATES COURT OF APPEALS Clerk of Court
TENTH CIRCUIT
PERRY ODOM, and CAROLYN
ODOM,
Plaintiffs - Appellants,
v. No. 17-6065
PENSKE TRUCK LEASING CO.,
L.P.,
Defendant - Appellee,
and
HENDRICKSON USA, LLC,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. NO. 5:16-CV-00442-W)
Daniel E. Bryan III, Lane M. Clausen with him on the briefs, Hornbeek Vitali &
Braun P.L.L.C., Oklahoma City, Oklahoma, for Appellants.
L. Earl Ogletree, Cameron R. Capps with him on the brief, Wiggins Sewell &
Ogletree, Oklahoma City, Oklahoma, for Appellee.
Before TYMKOVICH, Chief Judge, HARTZ, and HOLMES, Circuit Judges.
TYMKOVICH, Chief Judge.
This appeal concerns the scope of Oklahoma’s recently modified workers’
compensation regime. Perry Odom suffered serious injuries when a semi-trailer
collapsed on him at work. His employer—Penske Logistics—did not own the
trailer, but his employer’s sole stockholder—Penske Truck Leasing—did. Odom
and his wife sought to recover from Penske Truck Leasing through a personal
injury action in federal court. The district court dismissed their complaint,
reasoning Oklahoma’s workers’ compensation scheme as applied here shielded an
employer’s stockholders from employee claims arising out of a workplace injury.
The Odoms appealed, challenging the district court’s interpretation of the
Oklahoma statute. We certified the interpretive question to the Oklahoma
Supreme Court. We have received an answer making it clear the district court
applied an incorrect legal standard in dismissing this case. We therefore reverse
and remand for further proceedings.
I. Background
At this stage of the proceedings, we assume the truth of the facts alleged in
the Odoms’ complaint.
Perry Odom worked for Penske Logistics in Oklahoma City, Oklahoma. On
July 27, 2015, Odom suffered life-threatening injuries when a trailer equipped
with an air suspension system collapsed on him, striking his head. In addition to
pursuing relief from the Oklahoma Workers’ Compensation Commission, Odom
-2-
and his wife filed this diversity action in the United States District Court for the
Western District of Oklahoma. See 28 U.S.C. § 1332. As relevant here, the
Odoms alleged the trailer’s owner, Penske Truck Leasing Co., L.P., negligently
inspected, tested, repaired, serviced and maintained the trailer, and then failed to
preserve evidence critical to this action.
As it turns out, however, Penske Truck Leasing also owned Odom’s
employer, Penske Logistics, as a corporate subsidiary. On this basis alone,
Penske Truck Leasing moved to dismiss the Odoms’ action for failure to state a
claim. It argued the exclusive-remedy provision of Oklahoma’s workers’
compensation statute barred civil suits against it based on workplace injuries
suffered by Penske Logistics employees.
The district court granted the motion. It read the Oklahoma statute to
immunize both employers and their stockholders from liability for work-related
negligence. As a result, the court agreed dismissal was in order so long as Penske
Truck Leasing could prove an ownership interest in Penske Logistics. In
subsequent briefing, Penske Truck Leasing offered an employee affidavit and a
corporate data sheet both establishing that fact. The Odoms did not refute this
evidence, and have not challenged it here. Accordingly, the district court
dismissed the case.
The Odoms appealed. Uncertainty over the proper interpretation of the
statute led us to solicit the view of the Oklahoma Supreme Court. See Odom v.
-3-
Penske Truck Leasing Co., 704 F. App’x 780 (10th Cir. 2017) (unpublished); see
10th Cir. R. 27.2(A)(1); see also Okla. Stat. tit. 20, § 1602 (granting the power to
answer certified questions). We asked whether the statute’s “exclusive-remedy
provision bar[s] an employee from [suing] a stockholder of his employer” in tort,
“even if . . . liability would arise from duties independent of the employment
relationship.” Odom, 704 F. App’x at 782. The Oklahoma Supreme Court
accepted our certified question and issued an opinion answering it. See Odom v.
Penske Truck Leasing Co., 415 P.3d 521 (Okla. 2018). Applying that answer, we
now decide the Odoms’ appeal.
II. Analysis
In light of the Oklahoma Supreme Court’s interpretation of Oklahoma law,
we must remand the Odoms’ action for further proceedings.
We begin with the statutory language. The Oklahoma statute in question
provides that “[t]he rights and remedies granted to an employee” under the
Oklahoma Administrative Workers’ Compensation Act are “exclusive of all other
rights and remedies” an employee or his spouse may assert against “the
stockholder . . . of the employer” for “injury, illness, or death.” Okla. Stat. tit.
85A, § 5(A). It goes on, however, to say “[n]o role, capacity, or persona of any
. . . stockholder other than . . . the role of employer . . . shall be relevant” under
the law. Id. (emphasis added).
-4-
The Oklahoma Supreme Court held this language ambiguous with respect to
stockholder liability. See Odom, 415 P.3d at 531. It thus sought “a reasonable
construction, one that will avoid absurd consequences if this can be done without
violating legislative intent.” Id. at 531. Accordingly, the court rejected a reading
of the statute that would offer substantive immunity “to potentially legally
distinct non-employer entities such as stockholders, regardless of how passive
their connection to the employment relationship is.” Id. at 532. Instead, it held
“[a] stockholder may . . . [receive] exclusive remedy protections . . . if [it]
possesses a persona that is not independent from that of the employer.” Id. at
532–33 (emphasis added) (bold omitted). In other words, a stockholder enjoys
immunity while “acting in the role of employer.” Id. at 533. Courts must
determine the stockholder’s persona “on a case-by-case basis,” id., looking not to
“activity or relationship, but identity,” id. at 532; see also id. (“The language of
the statute implies an inversion of the traditional dual-capacity doctrine set out in
Weber[ v. Armco, Inc., 663 P.2d 1221 (Okla. 1983) (abrogated by statute)].”); cf.
Weber, 663 P.2d at 1224–27 (explaining the “dual-capacity doctrine,” id. at
1226).
The district court did not consider Penske Truck Leasing’s “persona” or
“identity,” Weber, 663 P.2d at 1225, as Oklahoma law requires, see Odom, 415
P.3d at 532–33. Indeed, it had no occasion to. The evidence Penske Truck
-5-
Leasing filed below pertained only to its ownership of Penske Logistics, and the
district court dismissed this action based on that fact alone.
Accordingly, we must vacate the district court’s dismissal and remand for
further proceedings. To obtain immunity from liability under Oklahoma law,
Penske Truck Leasing must prove more than mere ownership of Penske Logistics.
As the Oklahoma Supreme Court explained, Penske Truck Leasing must prove it
“possessed” a “persona” or “identity” “not independent from” Penske Logistics.
III. Jurisdiction
We note also, for the benefit of remand, that Penske Truck Leasing’s
motion to dismiss did not constitute a challenge to the district court’s subject-
matter jurisdiction.
Penske Truck Leasing styled its motion to dismiss as challenging the
Odoms’ statement of a valid claim to relief. See Fed. R. Civ. P. 12(b)(6). The
district court, however, construed the motion as a challenge to its subject-matter
jurisdiction. See id. at 12(b)(1). It reasoned if Penske Truck Leasing indeed fell
under the protections of the exclusive-remedy provision, exclusive jurisdiction for
Odom’s claim would rest with the state’s Workers’ Compensation Commission.
But when a state proscribes its own courts’ jurisdiction over particular
subject matter, it does not divest the authority of federal courts within its borders.
This is because, as an axiom of our federal system, Congress alone defines the
lower federal courts’ subject-matter jurisdiction. E.g. Kontrick v. Ryan, 540 U.S.
-6-
443, 452 (2004); see also U.S. Const. art. III, § 1 (“The judicial Power of the
United States, shall be vested in one supreme Court, and in such inferior Courts
as the Congress may from time to time ordain and establish.”). Congress must, of
course, adhere to constitutional limits in doing so. See U.S. Const. art. III, § 2,
cl. 1 (limiting federal “judicial Power” to specified “Cases” and “Controversies”).
Those limits, however, do not concern the states’ allocation of their own judicial
resources. See id.
This is not to say a federal court may impose liability based on claims a
state has created but deprived its courts the power to adjudicate. Since the
Supreme Court’s decision in Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), the
federal courts have endeavored to minimize variation between federal and state
adjudication of state-created rights. Pursuant to that mission, the Supreme Court
has explained “a right which local law creates but . . . does not supply with a
remedy is no right at all for purposes of enforcement in a federal . . . diversity
case.” Woods v. Interstate Realty Co., 337 U.S. 535, 538 (1949) (emphasis
added). Thus, when a state closes its own courthouse doors on a claim it has
created, a federal court applying that state’s laws may not grant relief on that
claim either. Id.; U.S. Fid. & Guar. Co. v. Lee Invs. LLC, 641 F.3d 1126,
1132–33 (9th Cir. 2011); Goetzke v. Ferro Corp., 280 F.3d 766, 778–79 (7th Cir.
2002); see also Angel v. Bullington, 330 U.S. 183, 191–92 (1947) (first describing
the principle). But crucially, this is because the state jurisdiction-stripping
-7-
provision is so wrapped up with the state-created right that it counts as
substantive law for Erie purposes. See Guar. Trust Co. v. York, 326 U.S. 99, 109
(1945).
It is true that our opinion in Stuart v. Colorado Interstate Gas Company,
271 F.3d 1221 (10th Cir. 2001), might seem to strain these principles. In that
case, we said the federal courts would not “take jurisdiction” over a diversity
action “unless the plaintiff ha[d] asserted a claim cognizable in the state courts.”
Id. at 1225 (quoting 13B Charles Alan Wright et al., Federal Practice and
Procedure § 3602, at 375 (2d ed. 1984)). The parties in Stuart agreed that if
Colorado law applied, Colorado’s workers’ compensation regime would provide
the exclusive remedy. Id. We therefore held a determination that Colorado law
did apply sufficed to support dismissal for want of subject-matter jurisdiction.
See id. at 1231.
Perhaps Stuart can be read only as justifying a prudential refusal to
exercise subject-matter jurisdiction Congress has granted. See id. at 1224–25.
But in any event, we should construe that decision narrowly due to the Supreme
Court’s late emphasis on the federal courts’ “virtually unflagging” duty to hear
and decide cases within our jurisdictional grants. Sprint Commc’ns, Inc. v.
Jacobs, 134 S. Ct. 584, 591 (2013) (quoting Colo. River Water Conservation Dist.
v. United States, 424 U.S. 800, 817 (1976)); see Lexmark Int’l, Inc. v. Static
Control Components, Inc., 134 S. Ct. 1377, 1386 (2014). And though Erie
-8-
provides an alternate justification for federal courts to incorporate state door-
closing statutes into diversity suits, it also requires adherence to the Federal Rules
of Civil Procedure in actions touching those statutes. See, e.g., Shady Grove
Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 398 (2010). By this
logic, when a party goes beyond the pleadings in invoking a state door-closing
statute at the motion-to-dismiss stage, district courts should consider the motion
under Rule 56 rather than Rule 12(b)(1). See Fed. R. Civ. P. 12(d).
And even if Stuart remains good law, it is not particularly relevant to this
case. Indeed, we cabined it substantially in Radil v. Sanborn Western Camps,
Inc., 384 F.3d 1220 (10th Cir. 2004). In Radil, the parties agreed Colorado law
governed but disputed the exclusive-remedy provision’s application to the facts.
See id. at 1225. We observed—as we had not in Stuart—that Colorado’s
exclusive remedy provision provided a waivable affirmative defense to liability,
not an obstacle to state court jurisdiction. See id. We therefore held a dispute
over “the application of the exclusivity defense bar” went to a claim’s merit, not
our jurisdiction. Id. at 1226 (emphasis added).
This case thus falls within Radil’s ambit rather than Stuart’s. Penske Truck
Leasing invoked Oklahoma’s exclusive-remedy provision as a substantive defense
to liability, not a jurisdictional limitation. This is consistent with the Oklahoma
courts’ treatment of the statute. See Strickland v. Stephens Prod. Co., 411 P.3d
369, 372 (Okla. 2018); Shadid v. K 9 Univ., LLC, 402 P.3d 698, 699 (Okla. Civ.
-9-
App. 2017); see also Benedetti v. Climax Energy Co., 415 P.3d 43, 45 (Okla.
2018) (treating a previous version of the provision as providing “statutor[y]
immun[ity] from civil liability”); cf. Lind v. Barnes Tag Agency, Inc., 2018 WL
2016092, at *2 n.1 (Okla. 2018) (describing a challenge to subject-matter
jurisdiction under a previous version of the provision as “intertwined with the
merits of the controversy” and treating it as a motion for summary judgment).
And it is yet unclear whether the Oklahoma statute actually strips jurisdiction
from the Oklahoma courts.
In sum, an invocation of Oklahoma’s exclusive-remedy provision that goes
beyond the pleadings should be reviewed as a motion for summary judgment, not
as a challenge to federal subject-matter jurisdiction. See Fed. R. Civ. P. 12(d).
IV. Conclusion
For the reasons given above, we REVERSE the district court’s order and
REMAND for further consideration consistent with this opinion.
-10-