Opinion ID: 2521086
Heading Depth: 1
Heading Rank: 4

Heading: Ralston's Liability

Text: While RCW 51.04.010 establishes the general liability for self-insured employers, RCW 51.24.030 carves out an exception for an action against a third party. [9] Applying this third party exception, Minton argues that Continental and Ralston are also subject to liability as the owners-sellers of defective equipment under DuVon and section 388 of the Restatement. Relying on Fletcher v. Martin Electronics, Inc., 825 F.2d 301 (11th Cir.1987), Ralston responds that corporations do not owe employees of wholly owned subsidiaries an independent duty to provide safe workplaces absent evidence which would pierce the corporate veil. The Fletcher court held that the directors and shareholders of the parent corporation owed no independent duty to provide an employee of the wholly owned subsidiary with a safe workplace. Id. at 304. This proposition has been upheld by the Supreme Court when the United States brought an action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601-9675, against the parent corporations of chemical manufacturers for the costs of cleaning up industrial waste generated by a chemical plant. United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The Court noted, It is a general principle of corporate law deeply `ingrained in our economic and legal systems' that a parent corporation (so-called because of control through ownership of another corporation's stock) is not liable for the acts of its subsidiaries. Id. at 61, 118 S.Ct. 1876 (quoting William O. Douglas & Carrol M. Shanks, Insulation from Liability Through Subsidiary Corporations, 39 Yale L.J. 193 (1929)). A parent corporation may be liable when state law supports piercing the corporate veil. Id. at 55, 118 S.Ct. 1876. To pierce the corporate veil and find a parent corporation liable, the party seeking relief must show that there is an overt intention by the corporation to disregard the corporate entity in order to avoid a duty owed to the party seeking to invoke the doctrine. Morgan v. Burks, 93 Wash.2d 580, 587, 611 P.2d 751 (1980); Anderson v. Section 11, Inc., 28 Wash.App. 814, 626 P.2d 1027 (1981). Generally, a party must show that the corporation manipulated the entities in order to avoid the legal duty. Peterick v. State, 22 Wash.App. 163, 185, 589 P.2d 250 (1977) (per curiam), overruled on other grounds by Stenberg v. Pac. Power & Light Co., 104 Wash.2d 710, 719-21, 709 P.2d 793 (1985). Relying on Deno v. Standard Furniture Co., 190 Wash. 1, 66 P.2d 1158 (1937), Minton argues that whether the corporate entity should be disregarded is a question of fact for the jury. However, the holding in Deno was more limited, finding only that the facts of that case were such as to make it a proper question for the jury. Id. at 9, 66 P.2d 1158. Contrary to Minton's assertion, therefore, summary judgment in favor of the corporation may be appropriate if the plaintiff fails to show evidence of either the requisite manipulation, or the perpetration of a fraud on plaintiffs. Peterick, 22 Wash. App. at 185, 589 P.2d 250. Minton asserts that this court should pierce the corporate veil because Continental demonstrated an intent to disregard the corporate identity and was, in fact, only an instrumentality of Ralston. In support of this assertion, Minton points to the fact that Continental labeled itself a subsidiary of Ralston on its letterhead and had its headquarters at the same location as Ralston. However, this court has held that [m]ere common ownership of stock, the same officers, employees, etc., does not justify disregarding the separate corporate identities unless a fraud is being worked upon a third person. Rena-Ware Distribs., Inc. v. State, 77 Wash.2d 514, 518, 463 P.2d 622 (1970); see also One Pac. Towers Homeowners' Ass'n v. HAL Real Estate Invs., Inc., 108 Wash.App. 330, 350, 30 P.3d 504 (2001) (stating Washington courts will not imply an overt intent to disregard the corporate form from the presence of common directors, shareholders, or a common business address) review granted, No. 72087-8 (Wash. June 2002). Because Minton has not asserted that Continental and Ralston were attempting to perpetrate a fraud on a third party by maintaining separate identities, the fact that Continental and Ralston had a common headquarters and that Continental held itself out as a subsidiary of Ralston does not justify disregarding the corporate entity. Accordingly, we hold that there are no genuine issues of material fact regarding Ralston-Purina's liability and summary judgment in its favor is appropriate.