Plаintiff appeals from a limited judgment dismissing with prejudice all of his claims against defendant Swanson Group, Inc. 1 The trial court granted defendant’s motion for summary judgment on the ground that defendant is exempt from liability under the exclusive remedy provision, ORS 656.018, of the workers’ compensation law. According to plaintiff, the exclusive remedy provision does not shield defendant, because defendant was not his employer and instead was merely a “member” of the limited liability company (LLC) that employed plaintiff. For the reasons explained below, we affirm in part, reverse in part, and remand for further proceedings.
When reviewing a grant of summary judgment, we examine the record in the light most favorable to the non-moving party to determine whether there are genuine issues of material fact and whether the moving party is entitled to judgment as a matter of law. ORCP 47 C;
Jones v. General Motors Corp.,
Sun Studs owned and operated a forklift, which defendant had purchased as an asset when it acquired Sun Studs, Inc., a predecessor owner of Sun Studs. 2 While employed by Sun Studs, plaintiff was injured by the forklift when it was backing up. As a result of the accident, plaintiff filed a claim for and obtained workers’ compensation benefits from Sun Studs’s insurer. Plaintiff then filed this action for damages against defendant.
In his amended complaint, plaintiff alleged three claims for relief against defendant: (1) violation of the Oregon Employer Liability Law (ELL), ORS 654.305 to 654.336, (2) negligence, and (3) noncompliance with workers’ compensation statutes, ORS 656.017. The ELL “imposes a heightened statutory standard of care on a person or entity who еither is in charge of, or responsible for, any work involving risk or danger.”
Woodbury v. CH2M Hill, Inc.,
Defendant moved for summary judgment against the three claims and presented four arguments. First, defendant argued that, as a member of an LLC, it could not be directly liable solely by reason of its status as a member or manager of Sun Studs. Second, defendant asserted that it did not exercise sufficient control over Sun Studs for the ELL to apply. Third, defendant argued that the workers’ compensation law provides plaintiffs exclusive remedy, and, as a member of the LLC that employed plaintiff, defendant is entitled to exclusive remedy protection. Finally, defendant argued that it complied with the workers’ compensation statutes by obtaining workers’ compensation insurance.
Plaintiff conceded that he could not pursue his claim for noncompliance with the workers’ compensation statutes. After hearing arguments, the trial court ruled:
“1. Defendant Swanson’s Motion for Summary Judgment on Plaintiffs Sixth Claim for Relief under the Noncomplying Employer statutes was conceded by Plaintiff and, therefore, Defendant Swanson’s motion on that claim is granted;
“2. Defendant Swanson’s Motion for Summary Judgment on the Plaintiffs Fourth Claim for Relief under the Employers’ Liability Law is denied on the basis that there is a genuine issue оf material fact precluding summary judgment;
“3. Defendant Swanson’s Motion for Summary Judgment on the argument of immunity from liability under the limited liability statutes in Chapter 63 is denied on the basis that there is a genuine issue of material fact;
“4. Defendant Swanson’s Motion for Summary Judgment on the Exclusive Remedy Defense contained in ORS 656.018(3) is granted.
“5. Based on the Court’s ruling on the Exclusive Remedy Defense, all claims by Plaintiff against Swanson Group, Inc., are hereby dismissed with prejudice.”
Thus, the trial court concluded that plaintiff had established questions of fact for trial on defendant’s potential liability under the ELL claim, and the court rejected defendant’s limited liability defense under ORS chapter 63 relating to both the ELL claim and the negligence claim based on material factual disputes. Nevertheless, the trial court dismissed those claims against defendant based on the exclusive remedy provision, ORS 656.018.
On appeal, plaintiff argues that the trial court erred in granting defendant’s summary judgment motion on the ground that the exclusive remedy provision applied to defendant as a “member” of Sun Studs, plaintiffs employer. According to plaintiff, the exclusive remedy provision in ORS 656.018(3) extends
In this case, we must determine whether the legislature intended to include “members” of limited liability companies among those exempt from liability under the exclusive remedy provisions of ORS 656.018. In determining legislative intent, we consider the statutоry text, context, and any relevant legislative history.
State v. Gaines,
This case turns on an interpretation of the exclusive remedy provision, ORS 656.018, which provides, in part:
“(l)(a) The liability of every employer who satisfies the duty required by ORS 656.017(1) is exclusive and in place of all other liability arising out of injuries, * * * that are sustained by subject workers, the workers’ beneficiaries and anyone otherwise entitled to recover damages from the employer on account of such сonditions or claims resulting therefrom!.]
“(3) The exemption from liability given an employer under this section is also extended to the employer’s insurer, the self-insured employer’s claims administrator, the Department of Consumer and Business Services, and the contracted agents, employees, officers and directors of the employer, the employer’s insurer, the self-insured employer’s claims administrator and the department^]”
(Emphases added.) Subsection (1) shields employers from liability, and subsection (3) extends the shield to other entities and persons, including directors оf the employer. Neither subsection (1) nor subsection (3) explicitly lists an LLC member or owner of a limited liability company.
Defendant contends that the legislature nevertheless intended to include owners of LLCs as entities exempt from liability. For purposes of ORS chapter 656, an employer is defined as “any person, * * * who contracts to pay a remuneration for and secures the right to direct and control the services of any person.” ORS 656.005(13)(a) (emphasis added). A “person,” in turn, “includes [a] partnership, joint venture, association, limited liability company and corporation.” ORS 656.005(23). According to defendant, by including an LLC as a “person” that may be an employer under the exclusive remedy provision, the legislature additionally intended to include the LLC’s members as an employer.
We reject defendant’s argument that the exclusive remedy provision applies to members of an LLC. First, an LLC is a legal entity distinct from its members, much as a partnership is a separate legal entity from its partners or a corporation is a separate legal entity from its shareholders. See ORS 63.001(9) (providing that an “entity” includes an LLC) and ORS 63.001(17) (defining an LLC as “an entity that is an unincorporated association having one or more members”). Thus, when the exclusive remedy provision applies to an LLC as an employer, it does not necessarily apply to the LLC’s members.
Second, if the legislature had intended to include LLC members as one of the types of entities protected under the exclusive remedy provision, it knew how to do so expressly. When the legislature enacted thе LLC statutes, it included a provision that extends the
“Unless the context otherwise requires, throughout Oregon Revised Statutes:
«‡ * ‡ í¡< ifc
“(2) Wherever a section of Oregon Revised Statutes applies to both ‘partners’ and ‘directors,’ the section shall also apply:
‡ i¡í ‡ ‡
“(b) In a limited liability company without managers, to the members of the limited liability company.”
(Emphases added.) In this case, there is no dispute that Sun Studs, as a member-managed LLC, is a limited liability company without managers. Thus, by virtue of ORS 63.002(2), if the exclusive remedy provision of the workers’ compensation statutes applies to both partners аnd directors, it also applies to defendant as the sole member of Sun Studs. As explained above, ORS 656.018(3) lists additional entities and persons who are exempt from liability. That list includes directors, but not partners. We note that the legislature amended the workers’ compensation laws, ORS chapter 656, in 1995, the same year that it enacted ORS 63.002. 4 Had the legislature intended to exempt LLC members from liability, it could have easily done so, either by listing partners or by expressly including members in ORS 656.018(3). The legislature did not do so. Therefоre, we conclude that the exclusive remedy provision provided to employers in ORS 656.018 does not apply to members of an LLC employer.
Case law supports our conclusion as well. The Oregon Supreme Court addressed a similar issue where an injured worker filed a claim for negligence against her prior corporate employer and the defendant, the corporation’s sole shareholder, who was also an officer and director. The worker alleged that the cоrporation and the defendant were liable for her injury from a cheese grinder, which the corporation had owned before the defendant sold his shares to the worker’s new employer.
Fields v. Jantec, Inc.,
“With regard to [the defendant’s] status as a shareholder of Jantec, ORS 60.151 provides that a shareholder is not liable for the acts or debts of the corporation merely by reason of being a shareholder. Plaintiff does not allege, and the record does not demonstrate, any reason not to respect the corporate form of Jantec.”
Id. at 439 n 3. Rather than suggest that the exclusive remedy provision shields shareholders from liability — the way it shields officers and directors — the court thought it was important enough to note that shareholders enjoy their liability protection under a different statute, ORS 60.151. 5 Thus, a shareholder, as an owner of a corporation, does not fall under the protection of the exclusive remedy provision in ORS 656.018(3). By analogy, a member, as an owner of an LLC, also does not fall under the protection of the exclusive remedy provision in ORS 656.018(3).
In the alternative, defendant argues that if the trial court erred in granting summary judgment based on the exclusive remedy provision, defendant is entitled to summary judgment based on three arguments it made to the trial court. First, defendant contends that, as a member, it is immune from liability on both of plaintiffs claims against it under ORS 63.165. Second, defendant contends that there is no genuine issue of material fact
We begin with whether ORS 63.165 protects defendant. Under ORS 63.165(1),
“[t]he debts, obligations and liabilities of a limited liability company, whether arising in contract, tort or otherwise, are solely the debts, obligations and liabilities of the limited liability company. A member or manager is not personally liable for a debt, obligation or liability of the limited liability company solely by reason of being or acting as a member or manager.”
(Emphasis added.)
Defendant argues that ORS 63.165 shields it from liability because its alleged tortious conduct occurred while it was acting as a member-manager. Defendant cites a continuing legal education (CLE) publication to support its contention that members are shielded from liability for activities conducted as a member:
“A
member of an LLC (in the capacity as a member) is shielded from the liabilities of the LLC whether or not the member actively рarticipates in the management of the LLC.” 1
Advising Oregon Businesses
§ 7.29, 7-22 (OSB CLE 2007). CLE materials, however, are “not authority of any kind.”
Johnson v. Brown,
Although defendant correctly notes that a member who actively participates in the LLC is not liable for
the LLC’s liabilities,
ORS 63.165 does not shield members from their own tortious conduct.
See J.C. Compton Co. v. Brewster,
Testimony from David C. Culpepper, a member of the LLC Task Force that drafted the revision to ORS 63.165, mirrors the commentary in the ULLCA:
“If the member of the LLC was doing something for the LLC and engaged in some activity that caused harm, caused a car accident or slip and fall or something like that, then both that member, because they were the individual causing the liability, and the LLC would have liability.”
Tape Recording, House Committee on Business and Consumer Affairs, SB 51A, Feb 24, 1999, Tape 40, Sidе A (statement of David C. Culpepper). It is clear from the ULLCA commentary and legislative history that the protection from liability in ORS 63.165 does not shield members from liability for their own conduct. Here, plaintiff has already claimed and received compensation for Sun Studs’s conduct. He is not attempting to now recover from defendant for Sun Studs’s liability. Rather, plaintiff is alleging that defendant’s own conduct in managing Sun Studs’s safety protocols caused plaintiffs injury. In other words, plaintiff contends that defendant committed aсts that are actionable in tort and that defendant bears direct responsibility for its own tortious conduct. As a matter of law, ORS 63.165 does not protect defendant against plaintiffs allegations.
We next turn to defendant’s ELL claim. The ELL imposes liability on “all
owners,
contractors or subcontractors and other persons having charge of, or responsibility for, any work involving a risk or danger to the employees.” ORS 654.305 (emphasis added). To be liable under the ELL, the owner must be in charge of or responsible for the work invоlving the risk or danger.
Wilson v. P.G.E. Company,
A “common enterprise” exists when (1) the plaintiffs direct employer and the defendant participate in a project of which the defendant’s operations were integral or component parts; (2) the work involved a risk or danger to the employees or public; (3) the plaintiff was an adopted or intermingled employee of the defendant; and (4) the defendant had charge of, or responsibility for, the activity or instrumentality that caused the plaintiffs injury.
Sachar v. Bohemia, Inc.,
There is also no “retained control” liability. In
Wilson,
the Supreme Court held that there was no retained control liability for the defendant who reserved the right to step in and exercise authority to impose greater safety precautions if it perceived the plaintiffs direct employer’s safety procedures were inadequate.
Finally, defendant did not have actual control over the instrumentality of plaintiffs injury. There is no right to control where the defendant’s control of the direct employer and the plaintiff is provided by a safety procedure in a contract.
Wienke v. Ochoco Lumber Co.,
In this case, plaintiff has not alleged that defendant advised Sun Studs on how to operate the forklift. Rather, defendant implemented a broad safety рolicy, which it implemented with all of its subsidiary LLCs, including Sun Studs. Defendant’s policy did not specifically target Sun Studs, let alone the use of the forklift. And, defendant did not advise Sun Studs on how it should operate the forklift. There are insufficient facts that defendant exercised actual control over the forklift. Viewing the evidence in the light most favorable to plaintiff, we conclude that defendant is entitled to a judgment as a matter of law on plaintiffs ELL claim.
We now turn to plaintiffs negligence claim. Defendant argues that, in
Boothby,
the Oregon Supreme Court held that the liability of an owner/general contractor for common-law negligence and negligence
per se
claims arising out of the work the plaintiff performed is “no more extensive than his or her liability for that work under the ELL.”
Boothby
relied on
Howard v. Foster & Kleiser Co.,
But
Howard’s
and Boothby’s rationale applies to cases where (1) the ELL is applicable to the defendant and (2) the court determines that the defendant has met the relatively high stаndard of care under the ELL. It stands to reason that if a defendant can meet a higher standard of care under the ELL, then the defendant can most certainly meet
the lower standard of care under negligence. The predicate for the rationale, though, does not exist in this case. We have concluded that the ELL claim should be dismissed because defendant did not exercise control over the instrumentality that caused plaintiffs injury; thus, the ELL is inapplicable
To summarize, we reverse the trial court’s order granting defendant’s motion for summary judgment and dismissing all of plaintiffs claims against defendant with prejudice. The exclusive remedy provision in ORS 656.018(3) does not apply to plaintiffs claims against defendant. Although the trial court correctly dismissed plaintiffs ELL claim because the ELL does not apply to defendant, the provision that protects members from liabilities of an LLC under ORS 63.165 does not apply to the allegations of negligence that plaintiff makes against defendant for its own conduct. We therefore remand the case to the trial court to resolve plaintiffs negligence claim.
Affirmed in part, reversed in part, and remanded.
Notes
Plaintiff filed claims against several defendants, inсluding Nacco Materials Handling Group, Inc., who are not parties to this appeal. In this opinion, “defendant” refers only to Swanson Group, Inc.
Sun Studs, Inc., was the former owner of Sun Studs, LLC. Defendant created an LLC subsidiary, Swanson Roseburg, LLC, to purchase Sun Studs, Inc. Shortly after the acquisition, defendant changed the name of Swanson Roseburg, LLC, to Sun Studs, LLC.
Defendant concedes that it is not plaintiffs employer for purposes of the exclusive remedy provision.
Among the legislature’s amendments was the addition of ORS 656.027(25), which exеmpted LLC members from being considered subject workers for workers’ compensation purposes. The legislature, therefore, no doubt understood that the workers’ compensation laws would affect LLCs and their members.
In this case, however, the statute that acts as a counterpart to ORS 60.151 and shields members of an LLC does not aid defendant, as we discuss below.
ULLCA § 303(a) provides:
“Except as otherwise provided in subsection (c), the debts, obligations, and liabilities of a limited liability company, whether arising in contract, tоrt, or otherwise, are solely the debts, obligations, and liabilities of the company. A member or manager is not personally liable for a debt, obligation, or liability of the company solely by reason of being or acting as a member or manager.”
ULLCA § 303(a) and ORS 63.165(1) are identical except section 303(a) refers to subsection (c), which is not found in ORS 63.165. Subsection (c), which allowed members to waive the liability shield, was deliberately omitted because 1997 IRS regulations obviated the need for LLCs to possess characteristics similar to those of a corporation for tax purposes. House Committee on Business and Consumer Affairs, SB 51A, Peb 24,1999, Ex G (Senate Bill 51 summary and commentary).