Cortez v. Nacco Material Handling Group, Inc.

337 P.3d 111 (2014)

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Nature of the Case

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Facts

Swanson Group, Inc., purchased a lumber mill, Sun Studs, Inc., and reorganized that business as a limited liability company. Swanson is the sole member of Sun Studs, LLC, and it elected to manage Sun Studs, making Sun Studs a member-managed LLC. Swanson provided the LLCs that it owned with a safety manual, which stated general policies and served as a 'template' that each LLC could customize to its particular operations. Swanson delegated day-to-day responsibility for safety at Sun Studs to Sun Studs' mill manager and HR director. It was up to mill manager and HR director to identify and rectify any safety violations or unsafe workplace issues or safety hazard type issues' at the worksite. Ash was Swanson's HR director and supervised his counterpart at Sun Studs. Harris was Swanson's vice president of operations. In that capacity, Harris supervised Sun Studs' mill manager. Ash and Harris conducted periodic performance reviews of Sun Studs' managers and served as a resource to whom Sun Studs' HR director and mill manager could turn if they had a problem that required 'corporate level upper-end' decision-making. The Swanson executives did not visit Sun Studs to monitor safety conditions or set safety policy. P suffered severe injuries when a Sun Studs employee drove a forklift down a dark corridor and accidentally hit him. P filed a claim for and received workers' compensation benefits from Sun Studs. He then filed this action against Swanson, as well as other Ds. P alleged that Swanson was negligent. Swanson (D) does not dispute that a reasonable juror could infer from the evidence on summary judgment that Sun Studs was negligent in failing to have appropriately marked crosswalks, in failing to provide adequate lighting, in failing to require workers to wear fluorescent vests, and in failing to have forklifts equipped with audible and visual movement and backup alarms. D also does not dispute that a reasonable juror could infer from the evidence on summary judgment that it had the authority, as the member-manager of Sun Studs, to require Sun Studs to provide safer conditions. D contends that ORS 63.165(1) shields LLC members and managers from personal liability for 'acting' as a member-manager. D reasons that 'merely having the authority to require the LLC to prevent a workplace accident * * * is not sufficient for personal liability to attach to a managing-member for every act of negligence that arises out of the operations of the LLC's business.' Ds moved for summary judgment. D argues that it will be liable as Sun Studs' member-manager only when an officer or director of a corporation would be liable for a corporate employee's negligence-that is, only if D 'actively participated' in Sun Studs' negligence. The trial court agreed and granted summary judgment. The Appeals Court revered and D appealed. P argues that the sole function of ORS 63.165(1) is to make clear that LLC members and managers are immune from vicarious liability for the LLC's debts, obligations, and liabilities. P reasons that, to the extent a member or a manager is independently liable to an employee or a third party, ORS 63.165(1) provides no protection from that liability.