Opinion
No. 84-1368
Decided April 30, 1986.
Worker's compensation — Specific safety requirement — Parent corporation not liable for its subsidiary, even if wholly owned — Relief granted pursuant to R.C. 4123.522, when.
APPEAL from the Court of Appeals for Franklin County.
This is an appeal from a judgment of the court of appeals denying a writ of mandamus.
Appellant, Edwin N. Lewis, was injured on September 19, 1977 when he fell down an elevator shaft at his place of employment. He worked for appellee Great Lakes Terminal Warehouse ("Great Lakes") in Toledo, which was affiliated with Southern Michigan Cold Storage Company ("Southern Michigan").
Lewis' workers' compensation claim was granted. Later, in 1979, he applied for an additional award based on a violation of a specific safety requirement. In December of that year, Great Lakes filed an answer denying any violation. After an investigation, a hearing was scheduled for March 3, 1981. Notice was mailed to Great Lakes in Toledo, but no one appeared for Great Lakes. On March 30, 1981, a hearing officer found that Great Lakes had violated the specific safety requirement and ordered the additional award.
By letter dated August 18, 1981, Consulting Industrial Services, Inc. ("consultant") notified the Industrial Commission that Great Lakes had terminated its business in Ohio as of December 1, 1980. The consultant advocated payment of the additional award for a specific safety violation from a surplus fund financed by all other insured employers. The commission, however, maintained that the fact that the employer had discontinued its business in Ohio had no effect upon its obligation to make the payment.
Subsequently, the consultant notified the commission that Great Lakes was incorrectly listed as a division of Southern Michigan. The consultant stated that Great Lakes actually was a subsidiary of Southern Michigan and requested a hearing on the matter. Based on that notice, the commission referred the claim for a hearing on the question of the corporate relationship between Great Lakes and Southern Michigan.
On December 9, 1981, Southern Michigan requested relief from the order granting the additional award claiming that it failed to receive notice of that hearing and that "such failure was due to causes beyond the control and without the fault or neglect of such persons or his representative and that such person or his representative did not have actual knowledge of the import of the information contained in such notice." The motion also stated that Great Lakes' address in Toledo, Ohio, was not the address of Southern Michigan. An affidavit from the treasurer of Southern Michigan was submitted explaining that she would have received any and all notices forwarded to the company concerning any workers' compensation claim occurring in the state of Ohio; that she never received notice of the hearing concerning an award for a specific safety violation; and thus Southern Michigan was not represented at the hearing.
The commission granted relief to Southern Michigan pursuant to R.C. 4123.522, allowing Southern Michigan to file an application for rehearing on the additional award within twenty days thereafter.
R.C. 4123.522 states:
"The employee, employer and their respective representatives shall be entitled to written notice of any hearing, determination, order, award or decision under the provisions of Chapter 4123 of the Revised Code.
"If any person to whom a notice is mailed shall fail to receive such notice and the industrial commission, upon hearing, shall determine that such failure was due to cause beyond the control and without the fault or neglect of such person or his representative and that such person or his representative did not have actual knowledge of the import of the information contained in such notice, such person may take the action afforded to such person within twenty days after the receipt of such notice of such determination of the industrial commission. Delivery of such notice to the address of such person or his representative shall be prima facie evidence of receipt of such notice by such person."
Lewis filed the instant action in mandamus in the court of appeals, seeking to vacate the commission's order. Lewis asserted that the commission abused its discretion when it granted relief to Southern Michigan pursuant to R.C. 4123.522. He contended there is no evidence that the failure of Southern Michigan to receive notice of the hearing arose from causes beyond its control. Lewis also asserted that the affidavit of Southern Michigan's treasurer was insufficient as a matter of law to establish a basis for relief pursuant to R.C. 4123.522. The commission denied any abuse of discretion. The court of appeals denied the writ.
An appeal as of right brings the cause to this court for review.
Gallon, Kalniz Iorio Co., L.P.A., William R. Menacher and William E. Takacs, for appellant.
Anthony J. Celebrezze, Jr., attorney general, Jenice R. Golson and Lee M. Smith, for appellee Industrial Commission.
Shumaker, Loop, Kendrick, Jack G. Fynes and Deborah L. Kovac, for appellee Southern Michigan Cold Storage Co.
As always in cases of this kind, mandamus will not issue unless there is an abuse of discretion. State, ex rel. Walters, v. Indus. Comm. (1985), 20 Ohio St.3d 71, 72.
It is undisputed that Great Lakes was Lewis' employer. The factual issue exists as to whether Great Lakes was a subsidiary or a division of Southern Michigan, and thus whether Southern Michigan is liable for the violation of a specific safety requirement.
The general rule is that a parent corporation is not liable for its subsidiary, even if wholly owned. North v. Higbee Co. (1936), 131 Ohio St. 507 [6 O.O. 166], syllabus; General Motors Corp. v. Moffett (1927), 27 Ohio App. 219, 226-227. The parent corporation is liable, however, where the other entity is a division or subdivision of the parent.
Lewis argues that Southern Michigan's failure to receive notice was not "due to cause beyond the control and without the fault or neglect" of the company, but rather was the result of its violation of Ohio Adm. Code 4121-3-21, which prescribes that employers must file changes of address with the commission. Southern Michigan counters by saying that the rule has no applicability to companies that ceases business as did Great Lakes.
Should the Industrial Commission decide its cases on unknown facts? We think not. If Great Lakes was a separate subsidiary corporation, for which Southern Michigan generally is not liable, Southern Michigan would be under no compulsion to comply with Ohio Adm. Code 4121-3-21. On the other hand, if Great Lakes was a division of Southern Michigan, Southern Michigan would have been duty-bound to follow the rule. In short, the commission cannot determine the question of whether Southern Michigan's failure to receive notice resulted from excusable neglect until it determines the corporate relationship between Southern Michigan and Great Lakes. Likewise, the commission cannot decide whether Southern Michigan is liable to Lewis for violation of a specific safety requirement until it discovers the corporate relationship between the two entities. Whether Southern Michigan is liable or not will dictate whether it pays for the violation of a specific safety requirement, or whether the payment is made from the surplus account funded by all other insured employers.
Southern Michigan contended before the Industrial Commission that it was not notified of the hearing. There is no evidence to refute this assertion, nor is there any evidence that Southern Michigan's failure to be notified resulted from its own fault or neglect. Southern Michigan placed before the commission an affidavit from its treasurer saying no notice was received. That affidavit, together with the aforementioned need to determine the corporate relationship between Great Lakes and Southern Michigan, justify the commission's order granting relief. The Industrial Commission did not abuse the discretion conferred upon it by R.C. 4123.522 when it granted relief under that section and allowed Southern Michigan to apply for rehearing. "The action of an administrative officer or board within the limits of the jurisdiction conferred by law is presumed, in the absence of proof to the contrary, to be valid and to have been done in good faith and in the exercise of sound judgment." Wheeling Steel Corp. v. Evatt (1944), 143 Ohio St. 71 [28 O.O. 21], paragraph seven of the syllabus.
The judgment of the court of appeals denying the writ is affirmed.
Judgment affirmed and writ denied.
CELEBREZZE, C.J., SWEENEY, LOCHER, HOLMES and C. BROWN, JJ., concur.
DOUGLAS and WRIGHT, JJ., concur in judgment only.