Opinion ID: 1857771
Heading Depth: 1
Heading Rank: 2

Heading: Whether Rapid Leasing May be Considered to be Calvin Veasley's Employer.

Text: Rapid Leasing urges that it is so closely related to the other corporations affiliated with CRST, Inc. that it should be considered to be the employer of Calvin Veasley. It makes two arguments in this regard. First, it asserts that the industrial commissioner in a case involving CRST, Inc. and Lincoln Sales and Services, Inc. found that, although Lincoln had actually hired an employee, CRST, Inc. was that person's employer under the workers' compensation act. [1] The basis for the commissioner's conclusion appears to have been that Lincoln was CRST, Inc.'s agent for hiring the employee and that CRST, Inc. possessed the actual right of control over the employee's activities. In the present case, Rapid Leasing has not demonstrated that it designated Lincoln or any of the other affiliated corporations as its hiring agent. Nor has it demonstrated that it possessed a right to control Calvin Veasley's activities. For this reason, its first argument must fail. The second argument that Rapid Leasing advances is that all of these affiliated corporations are engaged in a joint venture so as to make them all the employer of Calvin Veasley. In support of this contention, Rapid Leasing relies in part on our decision in Thomas v. Hansen, 524 N.W.2d 145, 146-47 (Iowa 1994). We are convinced that, although employer status may be predicated on a joint-venture theory in some situations, this is not true of all joint ventures. In the Thomas case, the employment status of the injured employee had been specially tailored to meet the needs of two cooperating contractors with respect to the workers' compensation requirements of the company who was letting the contracts. In addition, neither of the putative employers was a corporation. In contrast, the relationship that Rapid Leasing holds with its corporate affiliates appears to have been the result of a conscious compartmentalization of the responsibilities of each for purposes of gaining corresponding advantages. In Wodogaza v. H & R Terminals, Inc., 161 Mich.App. 746, 411 N.W.2d 848 (1987), the Michigan court described a similar situation as follows: We are aware of the manifold business, financial, practical and even aesthetic considerations that may move a corporate entity to diversify its structure through the creation of subsidiary corporations. Within these considerations, however, should be a recognition of the obligations which arise as a consequence of such diversification. Id., 411 N.W.2d at 852. Similarly, in Peterson v. Trailways, Inc., 555 F.Supp. 827, 832-33 (D.Colo.1983), the federal court stated it is hardly unjust to require a parent corporation to recognize the existence of an entity which it has posited as separate and complete. We are convinced that the same is true with respect to separate corporate subsidiaries being required to assume the responsibilities of their separate and complete existence. We have recognized, in other contexts, that persons who have created or purchased corporate entities should not be permitted to disregard the corporate form in order to gain an advantage. Sullivan Graphics, Inc. v. Board of Review, 533 N.W.2d 213, 215 (Iowa 1995) (the acquisition of all stock in a corporation does not make acquiring party the owner of the assets for purposes of taxing statutes affecting corporate property); Regal Ins. Co. v. Summit Guar. Corp., 324 N.W.2d 697, 703 (Iowa 1982) (sole shareholder of corporation could not disregard corporate form to gain bona fide purchaser status with regard to assets acquired); Inn Operations, Inc. v. River Hills Motor Inn Corp., 261 Iowa 72, 83-84, 152 N.W.2d 808, 815 (1967) (parent company did not acquire taxpayer status in situation in which subsidiaries were the legal entities assessed with the tax). Rapid Leasing may not successfully assert that it was Calvin Veasley's employer.