Opinion ID: 1350624
Heading Depth: 1
Heading Rank: 2

Heading: the history of lee way's status as an own-risk employer

Text: Prior to the guaranty's effective date the Workers' Compensation Court had approved renewal of Lee Way's 1982 and 1983 applications for a permit to carry its own-risk insurance. For at least those two years the trial tribunal found that Lee Way qualified in its own right as an own-risk employer under the provisions of 85 O.S. 1981 § 61(d). [4] Guaranties by its parent company, PepsiCo, or by any other third party, were neither offered nor sought as a prerequisite for obtaining own-risk status. It was not until June 8, 1984 that the Workers' Compensation Court notified Lee Way by letter that its status as an own-risk employer could be maintained only if PepsiCo would provide the court a written guaranty for any liabilities that Lee Way may incur under the Workers' Compensation Act. [5] Because the trial tribunal was aware that the completion of the sale/merger of Lee Way to Commercial Lovelace Motor Freight, Inc. was imminent when it informed Lee Way of the guaranty requirement, the court instructed in its June 8, 1984 letter that, upon completion of the divestiture, the new owners would be required to replace the PepsiCo guaranty. On July 9, 1984 the trial tribunal entered an order revoking Lee Way's status as a self-insured employer on the basis that it was financially unable to carry its own risk without compensation insurance. Lee Way timely appealed to the three-judge review panel from the trial tribunal's order revoking its permit as self-insurer. Shortly thereafter PepsiCo submitted its written guaranty for filing in the trial tribunal. The complete text of the guaranty is as follows: GUARANTEE [sic] To enable the continuing compliance by Lee Way Motor Freight, Inc., a Delaware corporation, maintaining its principal office at 3401 Northwest 63rd Street, Oklahoma City, OK 73116 (herein, Lee Way), with the terms and conditions of Own Risk Permit No. 12176 issued Lee Way by the Workers' Compensation Court of Oklahoma, and to induce the Workers' Compensation Court of Oklahoma to withdraw and annul it Order dated July 9, 1984, revoking Own Risk Permit No. 12176, PepsiCo, Inc., a Delaware corporation, maintaining its world headquarters at Purchase, New York, the owner of all of Lee Way's issued and outstanding capital stock, hereby guarantees the payment of any and all awards and judgments granted by the Workers' Compensation Court of Oklahoma to any Lee Way employee covered by the terms of the Oklahoma Workers' Compensation Act (85 O.S.A. § 1, et seq. ) or the amounts ordered by the said Oklahoma Workers' Compensation Court to any other person, firm or corporation arising out of any Workers' Compensation claim made by any such Lee Way employee. PepsiCo, Inc. hereby agrees that this guarantee [sic] will remain in full force and effect from the date hereof until such time as PepsiCo, Inc. shall provide written notice to the Oklahoma Workers' Compensation Court that said guarantee [sic] is no longer in force and effect. Dated at Purchase, N.Y., this 27th day of July, 1984.    [Emphasis added.] The appeal from the trial tribunal's order revoking the own-risk permit was never set for hearing. Instead, the tribunal was informed by an August 9, 1984 letter that Lee Way had obtained insurance coverage effective August 6, 1984. Then, PepsiCo notified the court by its August 29, 1984 letter that it was revoking its guaranty effective immediately. Subsequently, on February 27, 1985 Lee Way Motor Freight, Inc. merged with Commercial Lovelace Motor Freight, Inc. into another entity called Lee Way Holding Co. On March 7, 1985 Lee Way Holding Co. filed a voluntary petition in bankruptcy for Chapter 11 reorganization. The question dispositive of this controversy is whether PepsiCo  as guarantor  is legally subject to inclusion in the certification order where (a) the unpaid benefits certified for enforcement were awarded before the effective date of its statutory guaranty and (b) the employer defaulted on payments after that guaranty had been revoked. [6]