Court Opinion

ID: 9862554
Source: CourtListenerOpinion
Date Created: 2023-09-25 01:21:32.397216+00
Date Added: 2024-06-11T11:25:48.636343
License: Public Domain

NARES, J., Dissenting.
As the majority acknowledges, an injured employee who recovers workers’ compensation benefits from an employer may also pursue a separate civil action against third parties for damages caused by their independent, tortious acts: “The claim of an employee ... for compensation does not affect his or her claim or right of action for all damages proximately resulting from the injury or death against any person other than the employer.” (Lab. Code, § 3852.)
“The [Workers’ Compensation] Act’s exclusivity clause applies to work-related injuries regardless of fault, including those attributable to the employer’s negligence or misconduct [citation], as well as the employer’s failure to provide a safe workplace [citation]. But the exclusivity clause does not preclude the employee from suing anyone else whose conduct was a proximate cause of the injury.” (Privette v. Superior Court (1993) 5 Cal.4th 689, 697 [21 Cal.Rptr.2d 72, 854 P.2d 721].) Further, as the majority also recognizes, this rule permits the employee to sue the parent company of the employee’s employer for its own independent acts of negligence or other misconduct. (Gigax v. Ralston Purina Co. (1982) 136 Cal.App.3d 591, 601 [186 Cal.Rptr. 395] (Gigax); Boggs v. Blue Diamond Coal Co. (6th Cir. 1979) 590 F.2d 655, 662 (Boggs).)
In Gigax, we held that an employee of a subsidiary company may sue a parent corporation who has manufactured a defective product which caused injury to an employee of the subsidiary company when used in the scope of employment, even though the parent company had no right to control the day-to-day activities of its subsidiary’s employee, an attribute normally inherent in an employer-employee relationship. We held that the exclusive remedy principle extended no farther than to the employer with the right to *115control the employee. (Gigax, supra, 136 Cal.App.3d at p. 598-601; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 111 [202 Cal.Rptr. 30].)
No California court has addressed the precise factual situation presented here. However, Boggs, supra, 590 F.2d 655, a case cited with approval by the majority, involved a similar factual situation to the one alleged by the Peraltas and demonstrates why their allegations are sufficient to support a claim against the parent corporation of Rafael’s employer. In Boggs, the widows of 15 miners killed in a methane gas explosion at the Scotia Mine sued then-employer, the mine operator, and its parent corporation, Blue Diamond Coal Co. (Id. at p. 657.) The plaintiffs alleged that they were not subject to the exclusivity of the workers’ compensation system because of Blue Diamond’s separate and independent negligence in failing to remedy serious safety problems in order to reap a greater profit: “Blue Diamond’s management recognized that improvements in the ventilation of the Scotia Mine were needed in order to minimize the accumulation of methane gas but negligently delayed construction of these improvements. Blue Diamond authorized removal of existing ventilation and safety devices in order to open a new tunnel of the mine but concealed the changes from federal mine inspectors who would have taken immediate steps to correct the dangerous condition or to close the mine had they known of the changes. The ventilation changes increased the methane gas in the existing tunnel and caused the explosion. Blue Diamond recklessly created a dangerous situation and put the miners’ lives at risk in order to increase its profits in a rising market.” (Id. at p. 658.)
The district court held that the plaintiffs’ claims were barred by the workers’ compensation system and the Sixth Circuit Court of Appeals reversed. Rejecting the argument that Blue Diamond should be considered the miners’ employer for purposes of workers’ compensation exclusivity, the Sixth Circuit held that the parent company could not rely on protections of being a separate corporate entity from its subsidiary, but then also request the court to ignore that separateness when it benefited the parent in the workers’ compensation setting: “[A] business enterprise has a range of choice in controlling its own corporate structure. But reciprocal obligations arise as a result of the choice it makes. The owners may take advantage of the benefits of dividing the business into separate corporate parts, but principles of reciprocity require that courts also recognize the separate identities of the enterprises when sued by an injured employee.” (Boggs, supra, 590 F.2d at p. 662.)
The Boggs court then went on to conclude that because the plaintiffs had alleged independent acts of negligence by the parent company, their claim was not barred by Tennessee’s workers’ compensation system: “The parent should be *116liable under customary principles of the common law for harm resulting from its own negligent or reckless conduct. [Citation.] [][] This is not derivative liability. The parent is not liable under the doctrine of Respondeat superior for the negligence of the subsidiary. [Citation.] For purposes of the doctrine of Respondeat superior, a subsidiary which provides workmen’s compensation should be treated as having terminated the derivative liability of its parent or principal by satisfaction of the claim. [Citation.] But neither these rules of agency nor the workmen’s compensation law insulate the parent from tort liability for its independent acts of negligence which cause injury to its subsidiary’s employees.” (Boggs, supra, 590 F.2d at p. 663, italics added.)
Likewise in this case, the Peraltas adequately pleaded independent negligent or wrongful acts by Waste Management, Inc. and USA Waste of California (together, WMI). They first alleged that the garbage truck that allegedly killed Rafael Peralta “was negligently and/or intentionally improperly maintained, serviced and/or repaired and was in a dangerous condition.” They then alleged that WMI controlled the budget of its subsidiary Waste Management of California, Inc. (WMCI) and “ordered, instructed, and/or prevented WMCI from replacing the incident truck and/or performing necessary repairs on the truck.” The Peraltas alleged that WMI knew of the dangerous condition of the truck, and that WMCI had requested that the dangerous truck be replaced, but WMI “refused and/or blocked said request” in the interest of “saving money” and increasing profits. These allegations, which we must accept as true for the purposes of a demurrer, are more than adequate to take the Peraltas’ claim against the parent WMI outside the workers’ compensation system. The Peraltas allege independent tortious acts by WMI that directly resulted in Rafael’s death. As the allegations of the complaint make clear, the Peraltas are not alleging liability based upon respondeat superior or other derivative liability because of the acts of the subsidiary. Rather, they allege that independent tortious acts by WMI created a risk of harm that would not have otherwise existed. The acts were those of WMI and it may therefore be sued outside of the workers’ compensation system because the Peraltas allege that it recklessly (or intentionally) created a dangerous situation and put employees’ lives at risk in order to increase its profits. (Boggs, supra, 590 F.2d at p. 663.) No more need be alleged to state a claim for tort liability against WMI.
The majority concludes that there was no independent duty on the part of WMI here because in general safety issues are the responsibility of the employer. However, this conclusion misapprehends both the basis for liability of third parties who injure employees and general principles of tort law.
“ ‘The Labor Code does not purport to alter the correlative rights and liabilities of persons who do not occupy the reciprocal statuses of employer and employee. Our workmen’s compensation laws were not designed to *117relieve one other than the employer from any liability imposed by statute or by common law.’ [Citation.]” (Pac. Emp. Ins. Co. v. Hanford etc. Ins. Co. (1956) 143 Cal.App.2d 646, 648 [299 P.2d 928].) Further, “[t]he workers^] compensation statutes governing employer and employee actions against third parties do not define the substantive law which determines whether an employee or an employer will in fact recover. [Citation.] Instead, the substantive law which governs employer and employee actions is usually the general tort law.” (County of San Diego v. Sanfax Corp. (1977) 19 Cal.3d 862, 873-874 [140 Cal.Rptr. 638, 568 P.2d 363].)
Thus, we must apply common law negligence principles to determine if there was a duty owed in this case. The majority’s conclusion that there was no duty on the part of WMI fails to recognize the difference between misfeasance and nonfeasance in common law negligence cases. “As Witkin notes, ‘[t]he “legal duty” of care may be of two general types; (a) the duty of a person to use ordinary care in activities from which harm might reasonably be anticipated, (b) An affirmative duty where the person occupies a particular relationship to others. In the first situation, he is not liable unless he is actively careless; in the second, he may be liable for failure to act affirmatively to prevent harm.’ [Citation.] Thus, in considering whether a person had a legal duty in a particular factual situation, a distinction must be made between claims of liability based upon misfeasance and those based upon nonfeasance. ‘Misfeasance exists when the defendant is responsible for making the plaintiff’s position worse, i.e., defendant has created a risk. Conversely, nonfeasance is found when the defendant has failed to aid plaintiff through beneficial intervention. . . . [L]iability for nonfeasance is largely limited to those circumstances in which some special relationship can be established. If, on the other hand, the act complained of is one of misfeasance, the question of duty is governed by the standards of ordinary care [to prevent others from being injured as a result of affirmative conduct].’ [Citations.]” (Andrews v. Wells (1988) 204 Cal.App.3d 533, 538-539 [251 Cal.Rptr. 344], fa. omitted.)
The Peraltas allege in their complaint that WMI committed misfeasance, i.e., that its affirmative conduct in instructing its subsidiary not to replace or repair dangerous garbage trucks, despite the subsidiary’s request, caused Rafael’s death. It was not based upon a duty created by any relationship of parent and subsidiary, employer and employee, or the employer’s duty to maintain a safe workplace. The allegations are that WMI’s independent acts caused or increased the risk of harm. The Peraltas do not allege, as the majority claims, that WMI breached a nondelegable duty to provide a safe workplace or that the negligent acts of WMCI should be imputed to WMI. The Peraltas are not alleging, as the majority concludes, that WMI is responsible for the acts or omissions of its subsidiary. Rather, they are claiming that when *118WMCI itself attempted to create a safe working environment, WMI prevented the needed actions and instructed WMCI not to take any action.
The majority reaches its conclusion by ignoring the allegations of the complaint. For example, the majority states that the Peraltas did not allege that WMI “ordered or required WMCI to continue using the trucks.” (Maj. opn., ante, at p. 111.) In fact, that is exactly what the Peraltas claim. The complaint alleges that WMI “ordered, instructed, and/or prevented WMCI from replacing the incident truck and/or performing necessary repairs on the truck.” The majority also states that “withholding capital or denying a budget request may have caused financial hardship to WMCI, but it did not cause Rafael’s injuries.” (Maj. opn., ante, at p. 111.) The Peraltas allege that but for WMI’s refusal to allow WMCI to operate with safe vehicles, Rafael would not have died. That was also the basis for liability alleged in Boggs, supra, 590 F.2d 655. The majority focuses on the actions of the subsidiary, WMCI, remarking that WMCI’s use of unsafe trash trucks was an “unfortunate and ultimately tragic business decision,” and that WMCI was “in control of allocating its own resources.” (Maj. opn., ante, at p. 112.) However, the Peraltas allege it was WMI who made this business decision and that it was in control of WMCI’s resources. The majority overlooks the actual allegations pleaded against WMI, thus reaching a conclusion that is not supported by the Peraltas’ complaint.
The majority attempts to distinguish this case from a situation where a parent corporation takes actual control of safety functions that are ordinarily the responsibility of the subsidiary. As the majority acknowledges, in that situation the employee may sue the parent for negligence outside the workers’ compensation system. (See Boggs, supra, 590 F.2d at p. 662; Johnson v. Abbe Engineering Co. (5th Cir. 1984) 749 F.2d 1131, 1133.) However, this attempted distinction is one without relevance to the question presented. While these cases found liability attached under nonfeasance principles because the parent company assumed a safety duty normally relegated to a subsidiary, none of the cases cited by the majority holds that an employee cannot also sue a parent corporation who has not assumed all safety functions on the basis of misfeasance for its actions related to the particular accident in question. Any third party, whether a complete stranger or as here a parent corporation, who negligently or intentionally creates a risk of harm or increases a risk may be held liable for such acts. Second, the notion that WMI could only be held liable if it assumed control over day-to-day activities of WMCI runs contrary to the rationale under which courts have concluded that parent corporations are not considered employers subject to the workers’ compensation system: they have no right to control day-to-day activities of the subsidiary’s employees. (Gigax, supra, 136 Cal.App.3d at pp. 598-601; Shields v. County of San Diego, supra, 155 Cal.App.3d at *119p. 111.) Third, even if there were such a requirement, the complaint sufficiently alleges that WMI had effectively become the arbiter of safety at WMCI. The fact that WMI did so by completely controlling the funding of WMCI as to safety and refusing to allow WMCI to spend the money necessary to make Rafael’s workplace safe does not mean WMI is any less liable than a parent corporation who affirmatively takes over safety operations, but conducts them in a negligent manner. In fact, if the allegations against WMI are proven, its actions, because .they are affirmative and intentional, are more appropriately subject to liability than merely negligent safety practices.1
The majority concludes that the allegations of the complaint that WMI so controlled WMCI that it could not repair or replace its trucks make them essentially one entity and the parent WMI thus subject to the protections of the workers’ compensation system. However, as discussed above, the court in Boggs rejected an identical argument made by the parent corporation in that case. (Boggs, supra, 590 F.2d at p. 662.)
The majority last concludes that denying WMI’s demurrer would “create presumptive misfeasance by any parent corporation that approves a subsidiary’s budget whenever an employee of the subsidiary is injured due to poorly maintained equipment.” (Maj. opn., ante, at p. 113.) But that is not what the Peraltas are attempting to establish. They merely seek to impose tort liability on a parent corporation that allegedly created an unsafe workplace by refusing to allow its subsidiary to replace defective or dangerous garbage trucks, despite the subsidiary’s notice to the parent corporation that the trucks were in a dangerous condition. Those allegations establish independent misfeasance on the part of WMI that is actionable under California law.
The allegations of the Peraltas’ complaint, taken as true for the purposes of WMI’s demurrer, were sufficient to support a claim based upon the independent tortious conduct of WMI. I would therefore deny the petition for writ of mandate seeking to set aside the court’s order overruling WMI’s demurrer.
A petition for a rehearing was denied June 25, 2004, and the petition of real parties in interest for review by the Supreme Court was denied September 22, 2004. George, C. J., did not participate therein.

 It is also interesting to note that the cases cited by the majority as finding no liability on the part of the parent corporation for dangerous workplace conditions at the subsidiary, with one exception, did not determine the liability question based upon the pleadings, but only after evidence was received as to the extent of the parent corporation’s involvement in safety functions. (See Rick v. RLC Corp. (E.D. Mich. 1981) 535 F.Supp. 39 [directed verdict/judgment notwithstanding the verdict]; Muniz v. National Can Corp. (1st Cir. 1984) 737 F.2d 145 [judgment following court trial]; Hinkle v. Delavan Industries, Inc. (W.D. Tenn. 1998) 24 F.Supp.2d 819 [summary judgment].) The one case decided at the pleading stage did so because the employee alleged only derivative liability on the part of the parent company, not an independent act of negligence. (Love v. Flour Mills of America (10th Cir. 1981) 647 F.2d 1058, 1063.)