The Employer's Legal Resource: Oklahoma Supreme Court Addresses Dual Capacity Doctrine for Stockholders of Employers
You may remember application of the dual capacity doctrine under the now-repealed Oklahoma Workers Compensation Act (OWCA): an employer is generally immune from tort liability to an injured employee, but might become liable to the employee in tort if the employer, in addition to its capacity as an employer, occupied a second capacity towards the employee completely independent from and unrelated to its status as an employer.
In 2013 the OWCA was repealed and replaced by the Administrative Workers Compensation Act (AWCA). As part of the AWCA, 85A Okla. Stat. § 5 was enacted. Section 5 states, in part, that "the remedies and rights provided by this act shall be exclusive regardless of the multiple roles, capacities, or personas the employer may be deemed to have." As the Court of Civil Appeals held last year, this statute unambiguously abolished the dual capacity doctrine with regard to employers.
In a recent case the Oklahoma Supreme Court confronted a different issue - whether the AWCA also abolished the doctrine of dual capacity with regard to stockholders of an employer, such as a parent corporation.
Perry Odom was an employee of Penske Logistics, LLC. Penske Logistics was a wholly-owned subsidiary of Penske Truck Leasing Co. A trailer owned by Penske Truck Leasing fell on Odom while he was working for Penske Logistics. Odom filed a worker's comp claim against Penske Logistics, his employer. He then filed suit in federal court for negligence against Penske Truck Leasing. The question raised was whether Penske Truck Leasing, the sole shareholder of the employer, could be sued in tort for negligence or whether Odom was limited to the remedies provided by the AWCA. Because it was a matter of state law, the question was sent to the Oklahoma Supreme Court.
In answering the question, the Oklahoma Supreme Court first confirmed what the Court of Civil Appeals had already held - that § 5 of the AWCA abolished the dual capacity doctrine with respect to employers.
The Supreme Court then addressed whether an injured employee could sue his employer's stockholders. The Supreme Court found the language of § 5 concerning the application of the dual capacity doctrine to stockholders was ambiguous. Resolving this ambiguity, the Supreme Court held the AWCA did not fully abolish the dual capacity doctrine with regard to an employer's stockholders. This means if the stockholder possesses a persona which is independent from that of the employer, the stockholder may be sued outside the AWCA. The test set forth by the Supreme Court is:
- Is the stockholder acting in the role of employer, rather than being a mere passive stockholder?
The Supreme Court stated that whether the test is satisfied must be determined on a case-by-case basis, based upon the particular facts of the case.
Because the facts regarding the role of Penske Truck Leasing had not been fully developed, the Supreme Court could not determine whether Penske Truck Leasing could be sued under the dual capacity doctrine. The case was sent back to federal court to develop those facts.
The takeaway from the Supreme Court's opinion is that AWCA did not fully abolish the dual capacity doctrine for an employer's stockholders. If the facts show an employer's stockholder possesses a persona independent from that of the employer, it may face liability to an employee outside of the AWCA. Until the legislature addresses the Supreme Court's decision and amends AWCA to unambiguously abolish the dual capacity doctrine for an employer's stockholders, stockholders must carefully consider their involvement with their subsidiary's business activities.
By Jon E. Brightmire, firstname.lastname@example.org