Manor v. Nestle Food Co.

• Decision Date: 30 May 1995
• Docket Number: No. 13819-4-III,13819-4-III
• Citation: 78 Wn.App. 5,895 P.2d 27
• Parties: Paul E. MANOR and Lynette Manor, husband and wife, Appellants, v. NESTLE FOOD COMPANY, Respondent.
• Court: Washington Court of Appeals

Page 5

78 Wn.App. 5

895 P.2d 27

Paul E. MANOR and Lynette Manor, husband and wife, Appellants, v. NESTLE FOOD COMPANY, Respondent.

No. 13819-4-III.

Court of Appeals of Washington, Division 3 Panel Three.

May 30, 1995.

John H. McKean, Moses Lake, for appellants.

Wayne L. Williams, Rolland, O'Malley, Williams, Olympia, for respondent.

MUNSON, Judge.

Paul E. and Lynette Manor appeal the summary judgment dismissal of their personal injury claim against Nestle Food Company. Because we hold a self-insured parent company is not, as a matter of law, the "employer" of its subsidiary's workers and that the Manors' suit is not barred by a previous Department of Labor and Industries' determination, we reverse.

Mr. Manor was injured January 15, 1992, at the Carnation Processed Potato Plant in Othello when a forklift driver backed over his foot. On January 26, he was hospitalized and diagnosed as having acute inflammatory polyradiculoneuropathy (Guillain-Barre syndrome). He became completely paralyzed and was placed on a respirator until June 1. He remained hospitalized until November 20, when he was allowed to go home although he still needed assistance with basic living functions.

Mr. Manor began driving truck for Midwest Motors, a division of the Carnation Company, in 1975. In 1981, Midwest Motors was incorporated as Carnaco Transport, Inc. Carnaco maintained facilities in Moses Lake separate and distinct from the facilities owned by Carnation in Moses Lake. As a Carnaco driver, Mr. Manor often hauled general freight for businesses that were not related to Carnation.

In 1979, Carnation was authorized to self-insure its workers' compensation liability in Washington. This included the liability of its subsidiary, Carnaco. In 1985, Carnation became a wholly owned subsidiary of Nestle Holdings, Inc., and the name was changed to Nestle Food Company in 1991.

Mr. Manor filed a workers' compensation claim on January 15, 1992, the day of the injury. On February 14, the Department of Labor and Industries issued a notice of decision allowing Mr. Manor's claim. The Manors filed suit against Nestle seeking damages as a result of Mr. Manor's injury on April 14, 1993, and on January 21, 1994, the trial court granted Nestle's motion to dismiss. The Manors now appeal that dismissal.

When reviewing an order granting summary judgment, an appellate court engages in the same inquiry as did the trial court. Barr v. Day, 124 Wash.2d 318, 324, 879 P.2d 912 (1994). The summary judgment must be affirmed if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. CR 56(c). Under RAP 9.12, only the evidence and issues called to the attention of the trial court may be considered on appeal. All facts and reasonable inferences are considered in a light most favorable to the nonmoving party, and all questions of law are reviewed de novo. Caritas Servs., Inc. v. Department of Social & Health Servs., 123 Wash.2d 391, 402, 869 P.2d 28 (1994).

Here, the facts are essentially undisputed; the parties raise only issues of law. The first such issue is whether Nestle is Mr. Manor's employer as a matter of law and, thus, immune from suit. The Manors contend the question is one of fact, not of law.

Under Washington's workers' compensation statutes, RCW 51, employees injured in their work may not sue their employers; their relief is limited to that provided by workers' compensation "except as otherwise provided in this title". RCW 51.04.010. One of those exceptions permits an injured worker to sue a third party "not in a worker's same employ" who may be liable for his or her injuries. RCW 51.24.030(1).

"For purposes of workmen's compensation, an employment relationship exists only when: (1) the employer has the right to control the servant's physical conduct in the performance of his duties, and (2) there is consent by the employee to this relationship." Novenson v. Spokane Culvert & Fabricating Co., 91 Wash.2d 550, 553, 588 P.2d 1174 (1979). Both of these prongs present questions of fact. Smick v. Burnup & Sims, 35 Wash.App. 276, 279, 666 P.2d 926 (1983).

In Washington, there are two methods by which employers may provide workers' compensation coverage for their employees: (1) they may insure with the state fund; or (2) if qualified, they may self-insure. RCW 51.14.010. Nestle is a qualified self-insurer. Nestle argues it, together with its subsidiaries, must be considered as one employer under WAC 296-15-023. WAC 296-15-023 deals with certification of self-insurers; it states:

(1) The certification of a firm will include all of its subsidiaries or divisions doing business in the state of Washington. A subsidiary is defined, for the purpose of this rule, as an entity which is fifty percent owned and/or has its interest controlled by another single firm.

(2) One certificate will be issued to an approved self-insurer, including all subsidiaries or divisions. The entities will be considered as one employer for all purposes of Title 51 RCW.

(Italics ours.) Nestle maintains that it, as well as Carnaco, must be considered Mr. Manor's employer, and that it is consequently immune from any lawsuit arising from the injury.

Included in the record is an affidavit of Larry J. Wilkinson, senior surety analyst with the Department of Labor and Industries. Mr. Wilkinson states the policy behind the requirement a self-insurer include all subsidiaries or divisions is to prevent an employer from selectively self-insuring some risks while leaving others insured by the state fund.

In Meads v. Ray C. Roberts Post 969, Inc., 54 Wash.App. 486, 774 P.2d 49 (1989), an employee of Ray C. Roberts Service Club, Inc., was injured at work. She sued Ray C. Roberts Post 969, Inc., the owner of the building. The court stated:

The Post argued essentially that the Service Club corporation was a subsidiary of and completely controlled by the Post, and that, ipso facto, this made Meads the Post's employee. The trial court agreed; we do not. We reverse.

....

Corr [v. Willamette Indus., Inc., 105 Wash.2d 217, 713 P.2d 92 (1986) ] does not support the Post's "parent-subsidiary ipso facto" argument, nor does any other Washington case.

Meads, at 487-88, 774 P.2d 49. Under Meads, if Nestle had been a participant in the state fund rather than a self-insurer, it would not, as a matter of law, have been immune from the Manors' suit. Our Supreme Court has stated that employees should receive the same treatment whether their employer is self-insured or insures through the state fund:

At no place in the statute is there any suggestion that employees who are employed by self-insurers are somehow to receive fewer benefits than those employees whose employers are under the state system. Nowhere in RCW Title 51 is there even a hint that the legislature intended some covered employees to be treated differently than others.

Johnson v. Tradewell Stores, Inc., 95 Wash.2d 739, 745, 630 P.2d 441 (1981).

Where, as here, an agency has specifically been delegated rule-making power by the Legislature, its regulations are presumed valid. Weyerhaeuser Co. v. Department of Ecology, 86 Wash.2d 310, 314, 545 P.2d 5 (1976). A challenged regulation will be upheld if it is reasonably consistent with the statute it implements. Weyerhaeuser, at 314, 545 P.2d 5.

To the extent WAC 296-15-023 requires all self-insurers to include subsidiaries and divisions, it prevents an employer from selectively self-insuring its low risk employees while leaving its high risk employees insured with the state fund. To that extent, it is reasonably consistent with RCW 51. However, it is not reasonably consistent to the extent it requires all entities covered by a...