Corr v. Willamette Industries, Inc.

• Decision Date: 30 January 1986
• Docket Number: No. 50978-6,50978-6
• Parties: Christopher John CORR, Appellant, v. WILLAMETTE INDUSTRIES, INC.; Western Kraft Corporation; Western Kraft Company; Western Kraft Paper Corporation; and John Does 1 through 10, Respondents. En Banc
• Court: Washington Supreme Court

Page 217

105 Wn.2d 217

713 P.2d 92

Christopher John CORR, Appellant, v. WILLAMETTE INDUSTRIES, INC.; Western Kraft Corporation;

Western Kraft Company; Western Kraft Paper

Corporation; and John Does 1 through

10, Respondents.

No. 50978-6.

Supreme Court of Washington,

En Banc.

Jan. 30, 1986.

Bogle & Gates, Kelly P. Corr, Seattle, for appellant.

James J. Stanton, Gary W. House, Seattle, for respondents.

PEARSON, Justice.

This case raises the issue of whether the workers' compensation act, RCW 51.04.010 et seq., provides the exclusive remedy for an employee injured by defective Corco, Inc. was an Ohio corporation engaged in the manufacture and sale of corrugated paper packaging and plastic packaging products. In 1977 Willamette Industries, Inc. absorbed Corco in a corporate merger. Willamette acquired Corco's accounts receivable, accounts payable, physical plant, inventory, work in progress, finished goods, patents, trade name, customer lists, and goodwill.

                equipment designed and built by his employer's corporate predecessor.   Under the facts of this case, we hold that the workers' compensation act is the exclusive remedy available to appellant
                

Willamette also acquired substantially all of Corco's plant equipment, including two bulk bin compressor units. Corco employees had designed and built only two such units, both of which Corco had used in the manufacture of large cardboard boxes known as bulk bins. The two bulk bin compressor units never were sold or otherwise placed in the stream of commerce except as incident to the merger of Corco and Willamette.

Pursuant to the terms of the merger agreement, and by virtue of statute, Willamette succeeded to all Corco's liabilities and obligations, RCW 23A.20.060(5), and continued the same line of business. Willamette used the two bulk bin compressor units without modification. Willamette never sold either of these units.

In April 1980, Western Kraft Paper Group, a wholly-owned subsidiary of Willamette, employed Christopher Corr as a general laborer at its plant in Bellevue, Washington. On July 1, 1980, Corr suffered serious injuries while cleaning one of the bulk bin compressor units. Corr subsequently filed for, and received, workers' compensation benefits.

In October 1981, Corr initiated this products liability action against Willamette, the parent corporation of Western Kraft Paper Group. Corr also alleged that Willamette negligently failed to provide "a safe and helpful working environment". Willamette later moved for summary judgment on the ground that the workers' compensation act

                provides the exclusive remedy available to an injured employee.   The trial court granted summary judgment in favor of Willamette and dismissed the action with prejudice.   Corr appealed directly to this court
                

I

The Legislature has abolished common law actions between employee and employer for personal injuries suffered by the employee in the workplace. RCW 51.04.010. The workers' compensation act provides the exclusive remedy in such cases. Spencer v. Seattle, 104 Wash.2d 30, 700 P.2d 742 (1985); Provost v. Puget Sound Power & Light Co., 103 Wash.2d 750, 696 P.2d 1238 (1985). However, if a third person not in the same employ as the injured employee causes the injury, the injured worker may seek damages from the third person. RCW 51.24.030. An election to proceed against a third person does not jeopardize the injured worker's right to receive benefits under the workers' compensation act. RCW 51.24.040.

Corr argues that Willamette is such a third person, subject to liability in that capacity for the injuries suffered by Corr. Two doctrines potentially support Corr's characterization of Willamette as a third person: (1) dual capacity, and (2) dual persona. As discussed below, this court has rejected the former and finds that the latter does not apply given the facts of this case.

II

The dual capacity doctrine has been defined as

that theory under which an employer who normally enjoys immunity from common-law and statutory liability under the exclusive remedy provision of workers' compensation law may become liable to an employee when acting in a capacity outside the employer-employee relationship, which capacity may impose obligations apart from those imposed as an employer.

Annot., Workmen's Compensation Act as Furnishing Exclusive Remedy for Employee Injured by Product Manufactured, Sold, or Distributed by Employer, 9 A.L.R.4th

                873, 875 n. 2 (1981).   Corr argues that Willamette acted in a dual capacity as:  (1) an employer with an obligation to provide a safe working environment;  and (2) a manufacturer of a product used in the workplace, which subjects Willamette to products liability claims.   If the doctrine of dual capacity were the law of this state, Corr arguably would have a cause of action against Willamette in its second capacity as a product manufacturer
                

This court, however, recently rejected the dual capacity doctrine in Spencer v. Seattle, supra. In Spencer, this court held that the workers' compensation act barred suit against a city by an employee of its park department for injuries allegedly caused by the negligence of the road department. In rejecting the dual capacity doctrine, this court recognized that "[t]he 'dual capacity' doctrine has been subject to much criticism. Even Arthur Larson, who is given much credit for the doctrine's evolution, believes it should be jettisoned because of misapplication and abuse." (Citations omitted.) Spencer, at 32-33, 700 P.2d 742.

Many other jurisdictions have refused to apply the dual capacity doctrine to an employer also acting in the capacity of manufacturer. See 2A A. Larson, Workmen's Compensation § 72.83 (1983). Courts have rejected the dual capacity doctrine in the employer/manufacturer relationship because an employer's obligation to provide a safe workplace cannot be separated from the duty owed by an employer to his employees by reason of his manufacture of equipment with which employees must work. See 9 A.L.R.4th 873 (1981). We believe this rationale is sound and reiterate our rejection of the dual capacity doctrine.

III

The "dual capacity" doctrine, however, must be distinguished from the doctrine of "dual persona". A. Larson, at § 72.81. Professor Larson explains the "dual persona" doctrine thusly:

An employer may become a third person, vulnerable to tort suit by an employee, if--and only if--he possesses a A. Larson, at § 72.81. The focus is not upon the degree of distinction between the second function and the first, but whether the second function generates obligations distinct from those related to the employment activity.

second persona so completely independent from and unrelated to his status as employer that by established standards the law recognizes it as a separate legal person.

A leading example of dual persona is the case of Billy v. Consolidated Mach. Tool Corp., 51 N.Y.2d 152, 412 N.E.2d 934, 432 N.Y.S.2d 879 (1980). In Billy the court held that where, by corporate merger, the employer succeeds to the liabilities of the manufacturer of the equipment, the employer cannot avoid those liabilities merely because the workers' compensation law covered the decedent. Billy, at 162, 412 N.E.2d 934, 432 N.Y.S.2d 879. The court in Billy reasoned that the decedent's representative was not suing the decedent's former employer, but rather was suing the successor to the liabilities of the alleged tortfeasor. The court concluded that the employer-employee relationship did not control because the obligation arose out of an independent business transaction between corporations, not out of the employment relationship. The court distinguished Billy from cases applying the "dual capacity" doctrine because in Billy third parties with no employment relationship with the decedent committed the tort, and not the decedent's employer or any of its agents. ¹ Accordingly, the court ruled that the lower court erred in dismissing the cause of action merely because the defendant had been the decedent's employer.

Two additional jurisdictions also have adopted the dual persona doctrine in the context of corporate mergers. See Kimzey v. Interpace Corp., 10 Kan.App.2d 165, 694 P.2d 907 (1985); Schweiner v. Hartford Accident & Indem. Co., 120 Wis.2d 344, 354 N.W.2d 767 (Ct.App.1984). The circumstances which supported imposition of dual persona These three decisions, however, fail to carry through the analysis of the dual persona doctrine to its reasonable conclusion. The doctrine rests on the premise that if the merging corporations had not merged, the injured claimant could have sued the manufacturing corporation as a third person tortfeasor. Billy, 51 N.Y.2d at 161-62, 412 N.E.2d 934, 432 N.Y.S.2d 879; Kimzey, 10 Kan.App.2d at 169-70, 694 P.2d 907; Schweiner, 120 Wis.2d at 352-53, 354 N.W.2d 767; see also RCW 51.24.030. Under the facts of this case, however, an injured claimant never could have sued Corco as a third person because Corco had no liabilities or obligations flowing to Willamette's employees. The two bulk bin compressor units were not manufactured for resale or entry into the stream of commerce. From the time of installation until merger, both units remained in Corco's workplace.

                liability in Billy, Kimzey and Schweiner are indistinguishable from those present in this case.   The predecessor corporation, Corco, manufactured the plant equipment which exposed Corr to the risk of injury.   As manufacturer, Corco might have had potential liability for injuries caused by the plant equipment.   When Willamette and Corco merged, Willamette succeeded to the liabilities and obligations of Corco.   Accordingly, under Billy, Kimzey and Schweiner, Corr arguably should be entitled to recover under the doctrine of dual persona
                

Only by virtue of the merger did the defective plant equipment transfer from Corco to Willamette. Thus, absent the merger, Corr could have been injured by this machinery only if ...