Crystal Grimsley v. Manitowoc Co Inc

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 16-1196
_____________
CRYSTAL GRIMSLEY,
Individually & as Administratrix of the Estate of
Rickie L. Grimsley, Deceased,
Appellant
v.
THE MANITOWOC COMPANY, INC;
MANITOWOC CRANE COMPANIES LLC;
MANITOWOC CRANES LLC;
GROVE US, LLC; KYLE MELLOTT
_____________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(District Court No. 1-15-cv-01275)
District Judge: The Honorable William W. Caldwell
Argued December 19, 2016
Before: SMITH, Chief Judge, McKEE, and SHWARTZ, Circuit Judges
(Filed: January 10, 2017)
Robert F. Englert [ARGUED]
RFE Law Firm
105 Rutgers Avenue
P.O. Box 249
Swarthmore, PA 19081
Counsel for Appellant
1
James DeCinti
John T. Pion
Pion Nerone Girman Winslow & Smith
1500 One Gateway Center
420 Fort Duquesne Boulevard
Pittsburgh, PA 15222
Stephanie L. Hersperger [ARGUED]
Pion Nerone Girman Winslow & Smith
240 North 3rd Street
Payne Shoemaker Building, 10th Floor
Harrisburg, PA 17101
Counsel for Appellee
_____________________
OPINION*
____________________
*
This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
2
SMITH, Chief Judge.
Plaintiff Crystal Grimsley brings suit individually and as the executrix of the estate
of her late husband, Rickie L. Grimsley, who passed away in a crane-related accident at
work. Named as defendants are several business entities and the crane’s operator, Kyle
Mellott.
On October 29, 2015, the District Court dismissed plaintiff’s Complaint with
prejudice for two reasons. First, the District Court determined that one of the entities,
Grove, U.S., LLC (“Grove”), employed the decedent at the time of the accident, and is
therefore entitled to immunity under the Pennsylvania Workers’ Compensation Act, 77
P.S. § 481(a). Second, it extended that immunity to Grove’s parent companies
(collectively, the “Manitowoc entities”).1 The District Court determined that plaintiff
sought to pierce the corporate veil against those entities in order to circumvent the
employer-immunity statute and hold them liable for Grove’s conduct. Finally, the District
Court dismissed the claim against Mellott on the ground that Mellott and the decedent
were co-employees. Plaintiff filed a motion for reconsideration, which the District Court
denied on January 4, 2016.
This timely appeal followed.2 We exercise plenary review, applying the same
1
According to the Complaint, the entities named as defendants form a chain
of ownership: Grove is owned by Manitowoc Cranes, LLC, which is owned by
Manitowoc Crane Companies, LLC, which is owned by The Manitowoc Company,
Inc.
2
The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have
jurisdiction pursuant to 28 U.S.C. § 1291.
3
standard as the District Court. N.Y. Shipping Ass’n Inc. v. Waterfront Comm’n of N.Y.
Harbor, 835 F.3d 344, 352 (3d Cir. 2016). For the following reasons, we will reverse and
remand for further proceedings.
I
We begin with the District Court’s determination that Grove is entitled to
immunity from suit under Pennsylvania law because it employed the decedent. We will
reverse because the Complaint does not plead sufficient facts to establish an employment
relationship as a matter of law.
A
The Pennsylvania Workers’ Compensation Act provides that: “The liability of an
employer under this act shall be exclusive and in place of any and all other liability to
such employes, . . . or anyone otherwise entitled to damages in any action at law or
otherwise on account of any injury or death . . . .” 77 P.S. § 481(a). This so-called
exclusivity provision “bar[s] actions at common law against an employer.” Kline v. Arden
H. Verner Co., 469 A.2d 158, 161 (Pa. 1983).
Under Pennsylvania law, the employment relationship is fact-intensive and not
easily resolved at the pleadings stage. See JFC Temps, Inc. v. W.C.A.B., 680 A.2d 862,
864 (Pa. 1996) (“[The] employer-employee relationship . . . is . . . based upon findings of
fact.”). The question is which entity “possess[es] the right to control the manner of the
performance of the servant’s work . . . .” Id.
The Supreme Court of Pennsylvania has recognized that corporate parent-
subsidiary relationships pose special challenges in this context:
4
[I]n a situation wherein the issue is which of two corporations, one of which
is a wholly-owned subsidiary of the other, is the employer of an injured
employee, the problem of determining the question of control can properly
be resolved only by a consideration of the functions performed by every
interested party—each corporation and the injured employee—in addition to
other indicia of control.
Mohan v. Publicker Indus., Inc., 222 A.2d 876, 879 (Pa. 1966). We have interpreted
Mohan as requiring two steps: First, we apply a “functional” analysis. Second, if that
analysis is inconclusive, we turn to other indicia of control. Joyce v. Super Fresh Food
Mkts., Inc., 815 F.2d 943, 946–47 (3d Cir. 1987).
Functional analysis “focus[es] on the functions performed by each corporation and
by the employee.” Mohan, 222 A.2d at 879. “If the corporate functions are distinct and . .
. the employee is shown to have acted in furtherance of the functions of only one, . . .
then that corporation will be deemed his employer.” Id. In Mohan, for example, the
decedent received paychecks from the parent company, but worked at a plant owned by a
subsidiary, making products sold by the subsidiary. See id. at 878–79. The Supreme
Court of Pennsylvania concluded that the subsidiary was the employer “without regard to
any other indicia of control.” Joyce, 815 F.2d at 946.
But the entities will not always have distinct functions. See Mohan, 222 A.2d at
879. Where functional analysis “does not provide a clear-cut answer,” it is appropriate to
“turn to other indicia of the right to control.” Joyce, 815 F.2d at 946–47. Other indicia of
control include “which party has the right to hire and the right to fire, which party has the
obligation to pay wages, which party supplies the employee with the tools of her job, and
to which party the employee normally reports.” Id. at 947 (citations omitted).
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B
In this case, the District Court correctly determined that the Complaint “does not
shed much light, if any, on Grimsley’s functions as an employee at the Facility or the
distinct functions of each corporate defendant.” A009. But the District Court erred when
it concluded that “the allegations in the complaint suggest the existence of an employer /
employee relationship between Grove and Grimsley on the date of the incident.” A010.
The few indicia of control pled in the Complaint are insufficient to establish
immunity as a matter of law at this early stage. The only indicia that favor Grove—the
2013 W-2 form and payroll checks—suggest that Grove paid the decedent’s salary. Yet it
is well established under Pennsylvania law that payment of salary alone is not sufficient
to establish an employer-employee relationship. See, e.g., Joyce, 815 F.2d at 948 (“[T]he
fact that [a company] managed payroll is not at all probative . . . .”); JFC Temps, Inc.,
680 A.2d at 864 (“The payment of wages may be considered, but is not a determinative
factor.”); Mohan, 222 A.2d at 878 (finding that it was “clear” that the entity issuing an
employee’s checks was not his employer); Venezia v. Phila. Elec. Co., 177 A. 25, 26 (Pa.
1935) (“The payment of wages is not a decisive factor . . . and one may be the servant
and employee of another, though hired and paid by a third person.”). Discovery may
reveal that Grimsley’s functions aligned with one entity in particular, rendering the W-2
form and payroll checks irrelevant to the analysis. See Mohan, 222 A.2d at 878–79.
Defendants also rely on the fact that the Occupational Safety and Health
Administration (“OSHA”) identified Grove as the decedent’s employer. We fail to
understand why we should accord that finding any consideration. Defendants have not
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argued that OSHA’s finding is preclusive in this litigation or that OSHA relied on factors
coextensive with Pennsylvania law. Without peering outside the Complaint, there is no
apparent link between OSHA’s conclusion and any indicium of control recognized by
Pennsylvania courts.
In sum, the District Court determined that Grove employed the decedent based on
a factor that is not determinative. Even if select facts “suggest that Grove was Grimsley’s
employer at the time of the incident,” A010 (emphasis added), those facts do not establish
that Grove is subject to dismissal as a matter of law. Accordingly, we conclude that the
District Court erred in according immunity to Grove and will remand for further
proceedings.3
II
The District Court also concluded that Grove’s immunity extends to the
Manitowoc entities. Having concluded that Grove is not immune from suit, we need not
reach that issue.4 Nonetheless, we write to clarify the nature of the claims that remain in
the case.
The District Court’s analysis proceeded in two steps. First, it determined that
plaintiff solely sought relief against the Manitowoc entities on an “alter-ego” (veil-
piercing) theory. That is, the District Court read the Complaint as solely alleging that The
Manitowoc Company, Inc., through its chain of subsidiaries, dominated and controlled
3
The District Court may, in its discretion, order limited discovery on the
issue of the employer’s identity. See Fed. R. Civ. P. 26(d)(1).
4
We will also reinstate the claim against Mellott because it is premature to
conclude that Mellott and the decedent were co-employees.
7
Grove. Second, the District Court predicted that the Supreme Court of Pennsylvania
would recognize immunity under this circumstance. It viewed plaintiff’s alter-ego claim
as an attempt to circumvent Grove’s immunity and hold the Manitowoc entities liable for
conduct that would otherwise be immune from suit. Plaintiff responds that she did not sue
the Manitowoc entities on an alter-ego theory, and that the District Court’s novel and
unsupported prediction of state law is, in effect, “reverse” veil-piercing in violation of
Kiehl v. Action Manufacturing Co., 535 A.2d 571 (Pa. 1987). We conclude that the
District Court incorrectly characterized plaintiff’s claims. We therefore need not address
whether the rule adopted by the District Court violates Kiehl.
Pennsylvania law distinguishes between claims based on direct participation in a
tort and actions performed behind the veil of a sham corporation. “Under the participation
theory, the court imposes liability on the individual as an actor rather than as an owner.
Such liability is not predicated on a finding that the corporation is a sham and a mere
alter ego . . . .” Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 89–90 (Pa. 1983).
A fair reading of the Complaint discloses that plaintiff sued the Manitowoc entities
on a direct participation theory. In particular, plaintiff pled: “At all times relevant hereto,
Manitowoc was responsible for and/or assumed responsibility for the safety and security
of the property, premises, and crane manufacturing facility . . . .” Compl. ¶ 27. Plaintiff
also pled that The Manitowoc Company, Inc. directly employed Kyle Mellott, the crane
operator who allegedly caused the accident. Additionally, the Complaint enumerates
separate Counts for each entity. Those Counts allege that the entities are liable for
individual acts or omissions.
8
To be sure, plaintiff pled that Manitowoc “dominated and controlled” Grove.
Compl. ¶ 22. But there is no reason to disregard the parts of the Complaint that seek relief
on a participation theory because plaintiff also pled facts that sound in veil-piercing. See
Fed. R. Civ. P. 8(d)(2)–(3) (providing for alternative and inconsistent pleadings); Estate
of Lagano v. Bergen Cty. Prosecutor’s Office, 769 F.3d 850, 855 (3d Cir. 2014)
(“[T]he . . . complaint must be read as a whole, and its averments and the inferences
reasonably drawn from those averments must be viewed in the light most favorable to the
plaintiff.”). Moreover, plaintiff is the master of her Complaint, and has repeatedly
insisted—in the District Court and here—that she will not pursue an alter-ego theory.
Based on those representations, plaintiff should simply be estopped from making a veil-
piercing argument in any further proceeding. See generally MD Mall Assocs., LLC v.
CSX Transp., Inc., 715 F.3d 479, 486 (3d Cir. 2013), as amended (May 30, 2013).
III
For the foregoing reasons, we will vacate the orders and remand for further
proceedings consistent with this opinion.
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