Cortez v. Nacco Material Handling Group, Inc.

Oregon Supreme Court · Corporations

CorporationsLimited liability companiesWorkers' compensationEmployers Liability LawOfficer and manager liabilityLLC member liabilitymanager liabilityvicarious liability

Facts

Plaintiff worked for Sun Studs, LLC, a lumber mill owned and managed by Swanson Group, Inc. Swanson set general policies, provided a safety manual template, delegated day-to-day safety responsibility to Sun Studs' mill manager and HR director, and retained oversight authority, including authority to direct correction of observed safety violations. Plaintiff was severely injured when a forklift driven by another Sun Studs employee hit him in a dark corridor. Plaintiff alleged that Swanson negligently failed to provide or require safety measures such as lighting, crosswalks, vests, alarms, inspections, and competent safety personnel, and also alleged an ELL violation.

Issue

Whether ORS 63.165(1) immunized Swanson, as the member-manager of an LLC, from plaintiff's negligence and ELL claims; whether the summary judgment record supported plaintiff's negligence and ELL theories on the merits; and whether the pre-2013 workers' compensation exclusive-remedy statute, ORS 656.018, extended immunity to LLC members for this workplace injury claim.

Rule

ORS 63.165(1) protects LLC members and managers from vicarious liability for the LLC's debts, obligations, and liabilities, including when they act in managing the LLC, but it does not immunize them from personal liability for their own actionable acts or omissions. When an LLC member-manager functions like a corporate officer, negligence liability is governed by the corporate officer standard: the officer is liable for a subordinate's tort only if the officer knew of it or participated in it. Under the ELL, a nonemployer may be liable if it is engaged in a common enterprise, actually controls the risk-producing activity, or retains the right to control the manner or method in which that activity is performed. Before June 24, 2013, ORS 656.018 did not extend workers' compensation immunity to LLC members.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Blue Mesa Timber LLC operates a sawmill in Eugene, Oregon. Its sole member-manager, Alder Crest Holdings, sets production targets and signs off on budgets but never visits the mill; after a worker is injured by a machine lacking guards, the worker sues Alder Crest only because it owned and managed the LLC.

Which is the strongest argument against dismissal of the claim based solely on LLC status?

Explanation. The majority read ORS 63.165(1) as protecting LLC members and managers from vicarious liability for LLC obligations, not as conferring blanket immunity for their own tortious acts or omissions. So LLC status alone does not require dismissal if the plaintiff alleges actionable conduct by the member-manager. (Derived from Cortez v. Nacco Material Handling Group, Inc. (n.d.).)