Court Opinion

ID: 4114528
Source: CourtListenerOpinion
Date Created: 2017-01-10 18:00:46.274769+00
Date Added: 2024-06-11T13:17:57.596085
License: Public Domain

NOT PRECEDENTIAL

                     UNITED STATES COURT OF APPEALS
                          FOR THE THIRD CIRCUIT
                               _____________

                                    No. 16-1196
                                   _____________

                               CRYSTAL GRIMSLEY,
                   Individually & as Administratrix of the Estate of
                           Rickie L. Grimsley, Deceased,
                                                 Appellant

                                          v.

                     THE MANITOWOC COMPANY, INC;
                    MANITOWOC CRANE COMPANIES LLC;
                        MANITOWOC CRANES LLC;
                      GROVE US, LLC; KYLE MELLOTT
                             _____________

                  On Appeal from the United States District Court
                        for the Middle District of Pennsylvania
                          (District Court No. 1-15-cv-01275)
                 District Judge: The Honorable William W. Caldwell

                              Argued December 19, 2016

        Before: SMITH, Chief Judge, McKEE, and SHWARTZ, Circuit Judges

                               (Filed: January 10, 2017)

Robert F. Englert                [ARGUED]
RFE Law Firm
105 Rutgers Avenue
P.O. Box 249
Swarthmore, PA 19081
      Counsel for Appellant

                                          1
James DeCinti
John T. Pion
Pion Nerone Girman Winslow & Smith
1500 One Gateway Center
420 Fort Duquesne Boulevard
Pittsburgh, PA 15222

Stephanie L. Hersperger         [ARGUED]
Pion Nerone Girman Winslow & Smith
240 North 3rd Street
Payne Shoemaker Building, 10th Floor
Harrisburg, PA 17101
       Counsel for Appellee
                             _____________________

                                    OPINION*
                              ____________________

*
 This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
                                          2
SMITH, Chief Judge.

      Plaintiff Crystal Grimsley brings suit individually and as the executrix of the estate

of her late husband, Rickie L. Grimsley, who passed away in a crane-related accident at

work. Named as defendants are several business entities and the crane’s operator, Kyle

Mellott.

      On October 29, 2015, the District Court dismissed plaintiff’s Complaint with

prejudice for two reasons. First, the District Court determined that one of the entities,

Grove, U.S., LLC (“Grove”), employed the decedent at the time of the accident, and is

therefore entitled to immunity under the Pennsylvania Workers’ Compensation Act, 77

P.S. § 481(a). Second, it extended that immunity to Grove’s parent companies

(collectively, the “Manitowoc entities”).1 The District Court determined that plaintiff

sought to pierce the corporate veil against those entities in order to circumvent the

employer-immunity statute and hold them liable for Grove’s conduct. Finally, the District

Court dismissed the claim against Mellott on the ground that Mellott and the decedent

were co-employees. Plaintiff filed a motion for reconsideration, which the District Court

denied on January 4, 2016.

      This timely appeal followed.2 We exercise plenary review, applying the same

      1
      According to the Complaint, the entities named as defendants form a chain
of ownership: Grove is owned by Manitowoc Cranes, LLC, which is owned by
Manitowoc Crane Companies, LLC, which is owned by The Manitowoc Company,
Inc.
      2
         The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. We have
jurisdiction pursuant to 28 U.S.C. § 1291.
                                            3
standard as the District Court. N.Y. Shipping Ass’n Inc. v. Waterfront Comm’n of N.Y.

Harbor, 835 F.3d 344, 352 (3d Cir. 2016). For the following reasons, we will reverse and

remand for further proceedings.

                                                 I

       We begin with the District Court’s determination that Grove is entitled to

immunity from suit under Pennsylvania law because it employed the decedent. We will

reverse because the Complaint does not plead sufficient facts to establish an employment

relationship as a matter of law.

                                                 A

       The Pennsylvania Workers’ Compensation Act provides that: “The liability of an

employer under this act shall be exclusive and in place of any and all other liability to

such employes, . . . or anyone otherwise entitled to damages in any action at law or

otherwise on account of any injury or death . . . .” 77 P.S. § 481(a). This so-called

exclusivity provision “bar[s] actions at common law against an employer.” Kline v. Arden

H. Verner Co., 469 A.2d 158, 161 (Pa. 1983).

       Under Pennsylvania law, the employment relationship is fact-intensive and not

easily resolved at the pleadings stage. See JFC Temps, Inc. v. W.C.A.B., 680 A.2d 862,

864 (Pa. 1996) (“[The] employer-employee relationship . . . is . . . based upon findings of

fact.”). The question is which entity “possess[es] the right to control the manner of the

performance of the servant’s work . . . .” Id.

       The Supreme Court of Pennsylvania has recognized that corporate parent-

subsidiary relationships pose special challenges in this context:
                                                 4
       [I]n a situation wherein the issue is which of two corporations, one of which
       is a wholly-owned subsidiary of the other, is the employer of an injured
       employee, the problem of determining the question of control can properly
       be resolved only by a consideration of the functions performed by every
       interested party—each corporation and the injured employee—in addition to
       other indicia of control.

Mohan v. Publicker Indus., Inc., 222 A.2d 876, 879 (Pa. 1966). We have interpreted

Mohan as requiring two steps: First, we apply a “functional” analysis. Second, if that

analysis is inconclusive, we turn to other indicia of control. Joyce v. Super Fresh Food

Mkts., Inc., 815 F.2d 943, 946–47 (3d Cir. 1987).

       Functional analysis “focus[es] on the functions performed by each corporation and

by the employee.” Mohan, 222 A.2d at 879. “If the corporate functions are distinct and . .

. the employee is shown to have acted in furtherance of the functions of only one, . . .

then that corporation will be deemed his employer.” Id. In Mohan, for example, the

decedent received paychecks from the parent company, but worked at a plant owned by a

subsidiary, making products sold by the subsidiary. See id. at 878–79. The Supreme

Court of Pennsylvania concluded that the subsidiary was the employer “without regard to

any other indicia of control.” Joyce, 815 F.2d at 946.

       But the entities will not always have distinct functions. See Mohan, 222 A.2d at

879. Where functional analysis “does not provide a clear-cut answer,” it is appropriate to

“turn to other indicia of the right to control.” Joyce, 815 F.2d at 946–47. Other indicia of

control include “which party has the right to hire and the right to fire, which party has the

obligation to pay wages, which party supplies the employee with the tools of her job, and

to which party the employee normally reports.” Id. at 947 (citations omitted).

                                             5
                                            B

      In this case, the District Court correctly determined that the Complaint “does not

shed much light, if any, on Grimsley’s functions as an employee at the Facility or the

distinct functions of each corporate defendant.” A009. But the District Court erred when

it concluded that “the allegations in the complaint suggest the existence of an employer /

employee relationship between Grove and Grimsley on the date of the incident.” A010.

      The few indicia of control pled in the Complaint are insufficient to establish

immunity as a matter of law at this early stage. The only indicia that favor Grove—the

2013 W-2 form and payroll checks—suggest that Grove paid the decedent’s salary. Yet it

is well established under Pennsylvania law that payment of salary alone is not sufficient

to establish an employer-employee relationship. See, e.g., Joyce, 815 F.2d at 948 (“[T]he

fact that [a company] managed payroll is not at all probative . . . .”); JFC Temps, Inc.,
680 A.2d at 864 (“The payment of wages may be considered, but is not a determinative

factor.”); Mohan, 222 A.2d at 878 (finding that it was “clear” that the entity issuing an

employee’s checks was not his employer); Venezia v. Phila. Elec. Co., 177 A. 25, 26 (Pa.

1935) (“The payment of wages is not a decisive factor . . . and one may be the servant

and employee of another, though hired and paid by a third person.”). Discovery may

reveal that Grimsley’s functions aligned with one entity in particular, rendering the W-2

form and payroll checks irrelevant to the analysis. See Mohan, 222 A.2d at 878–79.

      Defendants also rely on the fact that the Occupational Safety and Health

Administration (“OSHA”) identified Grove as the decedent’s employer. We fail to

understand why we should accord that finding any consideration. Defendants have not
                                            6
argued that OSHA’s finding is preclusive in this litigation or that OSHA relied on factors

coextensive with Pennsylvania law. Without peering outside the Complaint, there is no

apparent link between OSHA’s conclusion and any indicium of control recognized by

Pennsylvania courts.

       In sum, the District Court determined that Grove employed the decedent based on

a factor that is not determinative. Even if select facts “suggest that Grove was Grimsley’s

employer at the time of the incident,” A010 (emphasis added), those facts do not establish

that Grove is subject to dismissal as a matter of law. Accordingly, we conclude that the

District Court erred in according immunity to Grove and will remand for further

proceedings.3

                                             II

       The District Court also concluded that Grove’s immunity extends to the

Manitowoc entities. Having concluded that Grove is not immune from suit, we need not

reach that issue.4 Nonetheless, we write to clarify the nature of the claims that remain in

the case.

       The District Court’s analysis proceeded in two steps. First, it determined that

plaintiff solely sought relief against the Manitowoc entities on an “alter-ego” (veil-

piercing) theory. That is, the District Court read the Complaint as solely alleging that The

Manitowoc Company, Inc., through its chain of subsidiaries, dominated and controlled

       3
         The District Court may, in its discretion, order limited discovery on the
issue of the employer’s identity. See Fed. R. Civ. P. 26(d)(1).
       4
       We will also reinstate the claim against Mellott because it is premature to
conclude that Mellott and the decedent were co-employees.
                                             7
Grove. Second, the District Court predicted that the Supreme Court of Pennsylvania

would recognize immunity under this circumstance. It viewed plaintiff’s alter-ego claim

as an attempt to circumvent Grove’s immunity and hold the Manitowoc entities liable for

conduct that would otherwise be immune from suit. Plaintiff responds that she did not sue

the Manitowoc entities on an alter-ego theory, and that the District Court’s novel and

unsupported prediction of state law is, in effect, “reverse” veil-piercing in violation of

Kiehl v. Action Manufacturing Co., 535 A.2d 571 (Pa. 1987). We conclude that the

District Court incorrectly characterized plaintiff’s claims. We therefore need not address

whether the rule adopted by the District Court violates Kiehl.

       Pennsylvania law distinguishes between claims based on direct participation in a

tort and actions performed behind the veil of a sham corporation. “Under the participation

theory, the court imposes liability on the individual as an actor rather than as an owner.

Such liability is not predicated on a finding that the corporation is a sham and a mere

alter ego . . . .” Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 89–90 (Pa. 1983).

       A fair reading of the Complaint discloses that plaintiff sued the Manitowoc entities

on a direct participation theory. In particular, plaintiff pled: “At all times relevant hereto,

Manitowoc was responsible for and/or assumed responsibility for the safety and security

of the property, premises, and crane manufacturing facility . . . .” Compl. ¶ 27. Plaintiff

also pled that The Manitowoc Company, Inc. directly employed Kyle Mellott, the crane

operator who allegedly caused the accident. Additionally, the Complaint enumerates

separate Counts for each entity. Those Counts allege that the entities are liable for

individual acts or omissions.
                                              8
       To be sure, plaintiff pled that Manitowoc “dominated and controlled” Grove.

Compl. ¶ 22. But there is no reason to disregard the parts of the Complaint that seek relief

on a participation theory because plaintiff also pled facts that sound in veil-piercing. See

Fed. R. Civ. P. 8(d)(2)–(3) (providing for alternative and inconsistent pleadings); Estate

of Lagano v. Bergen Cty. Prosecutor’s Office, 769 F.3d 850, 855 (3d Cir. 2014)

(“[T]he . . . complaint must be read as a whole, and its averments and the inferences

reasonably drawn from those averments must be viewed in the light most favorable to the

plaintiff.”). Moreover, plaintiff is the master of her Complaint, and has repeatedly

insisted—in the District Court and here—that she will not pursue an alter-ego theory.

Based on those representations, plaintiff should simply be estopped from making a veil-

piercing argument in any further proceeding. See generally MD Mall Assocs., LLC v.

CSX Transp., Inc., 715 F.3d 479, 486 (3d Cir. 2013), as amended (May 30, 2013).

                                            III

       For the foregoing reasons, we will vacate the orders and remand for further

proceedings consistent with this opinion.

                                             9