PHILADELPHIA –- A panel of federal appellate judges believes the local District Court incorrectly interpreted and characterized the injury claims of a plaintiff whose husband lost his life in a work-related crane accident, and have remanded the case for further proceedings.

On Jan. 10, judges D. Brooks Smith, Theodore A. McKee and Patty Shwartz ruled to reverse and remand a case brought by plaintiff Crystal Grimsley against defendants The Manitowoc Company, Inc.; Manitowoc Crane Companies, LLC; Manitowoc Cranes, LLC; Grove US, LLC and Kyle Mellott, back to the U.S. District Court for the Eastern District of Pennsylvania.

In June 2015, Crystal Grimsley brought 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 in the action are several business entities and the crane’'s operator, Mellott.

On Oct. 29, 2015, the District Court dismissed Grimsley’'s complaint with prejudice for two reasons; first, one of the entities, Grove, employed the decedent at the time of the accident, and was therefore entitled to immunity under the Pennsylvania Workers’ Compensation Act (PWCA), and that immunity was likewise extended to Grove’'s parent companies (the Manitowoc entities).

The District Court ruled Grimsley “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” in addition to dismissing the claim against Mellott, on the ground that Mellott and the decedent were co-employees.

Grimsley filed a motion for reconsideration, which the District Court denied on Jan. 4, leading Grimsley to appeal. Smith explained the Third Circuit chose to reverse the trial court’'s determination and remand the case for further proceedings.

"“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,”" Smith said.

"“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.’ 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,"” Smith stated.

"“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. 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,"” Smith said.

Smith said the defendants pointed the fact that the Occupational Safety and Health Administration (OSHA) identified Grove as the decedent’'s employer, but added there was no apparent link between OSHA’'s decision and any indication 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,” 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,"” Smith said.

“"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. Nonetheless, we write to clarify the nature of the claims that remain in the case."

The District Court determined the plaintiff solely sought relief against the Manitowoc entities on an “alter-ego” or “veil-piercing” theory – therefore, the Court read the Complaint as solely alleging that The Manitowoc Company, Inc., through its chain of subsidiaries, “dominated and controlled Grove”. Further, the District Court predicted that the Supreme Court of Pennsylvania would recognize immunity under this circumstance.

Grimsley responded she did not sue the Manitowoc entities on an alter-ego theory, and that the District Court’'s prediction of state law is, in effect, “reverse” veil-piercing. The Third Circuit agreed, and concluded the District Court incorrectly characterized plaintiff’s claims; namely, the appeals court said Grimsley filed suit against “actions performed behind the veil of a sham corporation” on a direct participation theory.

“"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. To be sure, plaintiff pled that Manitowoc ‘dominated and controlled’ Grove. 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,"” Smith said.

"“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. For the foregoing reasons, we will vacate the orders and remand for further proceedings consistent with this opinion."

The plaintiff is represented by Robert F. Englert of RFE Law Firm, in Swarthmore.

The defendants are represented by James DeCinti, John T. Pion and Stephanie L. Hersperger of Pion Nerone Girman Winslow & Smith, both in Harrisburg and Pittsburgh.

U.S. Court of Appeals for the Third Circuit case 16-1196

U.S. District Court for the Eastern District of Pennsylvania case 1:15-cv-01275

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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