Opinion ID: 484641
Heading Depth: 2
Heading Rank: 1

Heading: TGA's Workers' Compensation Immunity Defense

Text: 30 Under North Carolina law, which the parties agree governs TGA's workers' compensation immunity defense, if an employer is covered by the Workers' Compensation Law, suit may not be brought by or on behalf of an employee injured or killed in the course of his employment on the basis of negligence of the employer or a fellow employee. See N.C.Gen.Stat. Secs. 97-2, 97-9, 97-10.1 (1985). TGA contends principally that Woodling's suit was barred under this statute either because TGA was the alter ego of TG and hence should be treated as Albert Woodling's employer for these purposes, or because, in light of TG's payment of the salaries of TGA personnel, both these personnel and TGA were employees of TG and hence fellow employees of Albert Woodling. We conclude that the district court did not err in refusing to uphold either of these contentions as a matter of law, for both depended on factual premises as to which, on the basis of the evidence presented at trial, reasonable minds could reject TGA's view. 31 Whether one is an employee of a particular employer within the meaning of N.C.Gen.Stat. Sec. 97-2(2) is a question of fact to be determined by applying the common-law tests for finding an employer-employee relationship. See Hayes v. Board of Trustees of Elon College, 224 N.C. 11, 29 S.E.2d 137, 140 (1944); Carter v. Frank Shelton, Inc., 62 N.C.App. 378, 303 S.E.2d 184, 187 (1983), review denied, 310 N.C. 476, 312 S.E.2d 883 (1984). The right to control the employee, i.e., the power to set work hours, assign duties and establish the manner of performance, is determinative of who is the employer. Barrington v. Employment Security Commission, 55 N.C.App. 638, 286 S.E.2d 576, 579, review denied, 305 N.C. 584, 292 S.E.2d 569 (1982); accord Lucas v. Li'l General Stores, 289 N.C. 212, 221 S.E.2d 257, 261-62 (1976); Carter v. Frank Shelton, Inc., 303 S.E.2d at 187. In the absence of supervisory control, the payment of salary and the right to hire and discharge are insufficient to establish employer status. See Barrington v. Employment Security Commission, 286 S.E.2d at 579; Godley v. County of Pitt, 54 N.C.App. 324, 283 S.E.2d 430, 432 (1981), rev'd on other grounds, 306 N.C. 357, 293 S.E.2d 167 (1982); Forgay v. North Carolina State University, 1 N.C.App. 320, 161 S.E.2d 602, 606 (1968). Whether such control exists is usually a question of fact for the jury. See Restatement (Second) of Agency Sec. 220 comment c (1958). 32 There could be little question that the Jetstar was operated by TGA. There was evidence that TG and TGA had repeatedly certified to various state and federal agencies that TGA owned and operated the aircraft; indeed, they twice made such certifications with specific reference to the crash at issue here. Under the above principles, therefore, the principal fact question for the jury was which company had supervisory control of the TGA personnel at the pertinent times. Taking the evidence in the light most favorable to Woodling as nonmoving party and giving her the benefit of all reasonable inferences and credibility evaluations, as we must in reviewing a denial of a motion for judgment n.o.v., see, e.g., Mattivi v. South African Marine Corp., 618 F.2d 163, 167-68 (2d Cir.1980), we conclude that there was ample proof that TGA, not TG, had supervisory control of TGA personnel with respect to all matters of flight safety and operation. 33 First, there was evidence that TGA personnel could not be overruled by TG personnel on matters of flight safety and operation. The TGA Operations Manual stated that the captain of the airplane has 34 complete and final authority as to its operation.... At any time, the Captain may delay, re-route or terminate a trip for any reason which, in his opinion, may compromise the safety of the passengers and the aircraft. UNDER NO CIRCUMSTANCES WILL ANY PASSENGER BE ALLOWED TO OVERRULE THE CAPTAIN CONCERNING THE CONDUCT OF THE FLIGHT. 35 (Emphasis in original). A number of witnesses testified that the TGA pilots, not TG personnel, in fact made the determinations concerning when and which planes could fly, when to cancel flights for mechanical or other safety reasons, and when to divert aircraft in mid-flight for safety reasons. These witnesses included TGA's chief pilot and the widow of TG's Chairman who died in the crash. In addition there was evidence that TGA's president and its director of maintenance personally supervised the operations of the TGA pilots and maintenance personnel. 36 Plainly there was sufficient evidence to permit the jury to infer that at the time of the crash the Jetstar was operated by TGA personnel under the supervision and control of TGA and that TG did not control those operations. Accordingly, there was no basis for the requested ruling that TG was as a matter of law the employer of either TGA or TGA's personnel. 37 TG and TGA also argue that N.C.Gen.Stat. Sec. 97-9's extension of the employer's immunity to those conducting his business entitled TGA to judgment. We disagree, for it was not established as a matter of law either that TG and TGA were alter egos or that TGA was merely conducting the business of TG. The evidence was that TG, which was substantially foreign-owned, had set up TGA as a separate entity incorporated in the United States for the purpose of registering aircraft with the Federal Aviation Agency. TG chose the name Texasgulf Aviation, Inc. because, according to TG board of directors minutes, it was not so similar to the name of [TG] as to tend to confuse or deceive. TGA had a board of five directors; only one was also a director of TG. TGA operated out of White Plains, New York, while TG was headquartered in Stamford, Connecticut. TGA made and signed contracts in its own name, including contracts for the lease, modification, and storage of its aircraft and contracts for the training of pilots. TGA personnel referred to themselves as employees of TGA, not of TG. And, as discussed above, TGA, not TG, had the final say with respect to all important matters of the flight and safety of TGA aircraft. 38 These facts, which would have sufficed to insulate TG from common-law liability for the acts of TGA, also sufficed to defeat this facet of TGA's workers' compensation immunity defense, for a North Carolina court would not find TGA to have been conducting the business of TG within the meaning of Sec. 97-9 if it could not hold TG liable for TGA's acts. See Lewis v. Barnhill, 67 N.C. 457, 148 S.E.2d 536, 544 (1966); see also McWilliams v. Parham, 269 N.C. 162, 152 S.E.2d 117, 122 (1967) (stockholder does not possess corporation's workers' compensation immunity from suit); cf. Thomas v. Maigo Corp., 37 A.D.2d 754, 754, 323 N.Y.S.2d 106, 106-07 (4th Dep't 1971) (subsidiary that was distinct legal entity was not employee of parent for purposes of workers' compensation immunity); Daisernia v. Co-operative G.L.F. Holding Corp., 26 A.D.2d 594, 594-95, 270 N.Y.S.2d 542, 543 (3d Dep't 1966) (same). 39 The vast majority of courts have declined to disregard the corporate veil to extend one corporation's workers' compensation immunity to another. See O'Brien v. Grumman Corp., 475 F.Supp. 284, 292 (S.D.N.Y.1979) (collecting cases); Annot., 30 A.L.R.4th 948, 951 (1983) (same). The North Carolina case most closely on point refused to do so even when the parent and subsidiary shared administrative offices, purchasing agents, personnel department, and sales organization. See Phillips v. Stowe Mills, Inc., 5 N.C.App. 150, 167 S.E.2d 817, 820 (1969); cf. Thomas v. Maigo Corp., 37 A.D.2d at 754, 323 N.Y.S.2d at 106 (subsidiary was separate legal entity from parent and was not covered by parent's immunity even though subsidiary was wholly-owned, controlled, dominated, and financed by parent). Given the significant legal and corresponding financial advantages of separate incorporation, we decline to extend North Carolina law so as to disregard the corporate veil in order to expand workers' compensation immunity and thereby remove one of the few reciprocal burdens of such advantages. See Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 662 (6th Cir.), cert. denied, 444 U.S. 836, 100 S.Ct. 71, 62 L.Ed.2d 47 (1979).