254 October 2, 2014 No. 64
64
Cortez v. Nacco Material Handling Group 356 Or
October 2, 2014
IN THE SUPREME COURT OF THE
STATE OF OREGON
Antonio CORTEZ,
Respondent on Review/
Cross-Petitioner on Review,
v.
NACCO MATERIAL HANDLING GROUP, INC.,
a Delaware corporation,
assumed business name Hyster Company;
and Papé Material Handling Inc.,
an Oregon corporation,
fka Papé Lift, Inc.,
assumed business name Hyster Sales Company,
Defendants,
and
SWANSON GROUP, INC.,
an Oregon corporation,
Petitioner on Review/
Cross-Respondent on Review.
(CC 0503-02632; CA A144045; SC S060604)
En Banc
On review from the Court of Appeals.*
Argued and submitted April 30, 2013.
Matthew J. Kalmanson, Hart Wagner, LLP, Portland,
argued the cause and filed the briefs for petitioner on
review cross-respondent on review. With him on the briefs
/
was Janet M. Schroer.
Robert K. Udziela, Portland, argued the cause for respon-
dent on review cross-petitioner on review. J. Randolph
/
Pickett, Pickett Dummigan LLP, Portland, filed the brief for
respondent on review cross-petitioner on review. With him
/
on the brief were R. Brendan Dummigan, Kristen West and
______________
* Appeal from Multnomah County Circuit Court, Michael H. Marcus, Judge.
248 Or App 435, 274 P3d 202 (2012).
Cite as 356 Or 254 (2014) 255
Kimberly O. Weingart of Pickett Dummigan LLP, Peter O.
Hansen of Hansen Malagon, and Robert K. Udziela.
W. Michael Gillette, Schwabe, Williamson & Wyatt, P.C.,
Portland, filed the brief for amicus curiae Associated Oregon
Industries. With him on the brief was David Anderson.
KISTLER, J.
The decision of the Court of Appeals is reversed. The judg-
ment of the circuit court is affirmed in part and reversed in
part, and the case is remanded to the circuit court for fur-
ther proceedings.
Plaintiff filed an action for negligence and violations of Employer’s Liability
Law (ELL). The trial court granted a limited judgment in favor of defendant
on the ground that workers’ compensation was plaintiff’s exclusive remedy. The
Court of Appeals reversed, concluding that ORS 63.165(1) did not immunize lim-
ited liability company (LLC) members or managers for their own tortious conduct
and that the 2011 version of exclusive remedy provision of the workers’ compen-
sation statutes, ORS 656.018(3) (2011), did not apply to LLC members or man-
agers. The court also concluded that plaintiff’s had failed to present sufficient
evidence that defendant was liable under the ELL. Held: (1) ORS 63.165(1) immu-
nizes members and managers of an LLC from vicarious liability for the debts,
obligations, and liabilities of that LLC; LLC members and managers, however,
remain personally liable for their acts and omissions to the extent those acts or
omissions would be actionable against the member or manager if that person
were acting in an individual capacity; (2) evidence on summary judgment did not
permit an inference that defendant either had actual knowledge of the conditions
that resulted in plaintiff’s injury or actively participated in creating them; (3)
a jury reasonably could find that defendant was liable under the ELL for plain-
tiff’s injuries because it retained the right to control the manner or method in
which the risk-producing activity was performed; and (4) the 2011 version of the
exclusive-remedy provision of the workers’ compensation statutes did not apply to
workplace injury claims against LLC members.
The decision of the Court of Appeals is reversed. The judgment of the circuit
court is affirmed in part and reversed in part, and the case is remanded to the
circuit court for further proceedings.
256 Cortez v. Nacco Material Handling Group
KISTLER, J.
Plaintiff worked for a lumber mill, Sun Studs, LLC.
One evening while he was walking from one area of the mill
to another, a forklift hit and severely injured him. After
receiving workers’ compensation benefits, plaintiff brought
this action against Swanson Group, Inc., which owns Sun
Studs, as well as other defendants. Plaintiff alleged that
Swanson was liable for negligently failing (or for negligently
failing to require Sun Studs) to provide a safe workplace and
for failing to provide competent safety personnel. Plaintiff
also alleged that Swanson was liable under the Employers
Liability Law (ELL), which requires employers to take cer-
tain safety measures. Swanson moved for summary judg-
ment, and the trial court granted its motion on the ground
that the workers’ compensation statutes provided the exclu-
sive remedy for plaintiff’s injuries. The court entered a lim-
ited judgment in Swanson’s favor.
The Court of Appeals affirmed the trial court’s judg-
ment regarding plaintiff’s ELL claim, reversed its judgment
regarding plaintiff’s negligence claim, and remanded the
negligence claim for further proceedings. Cortez v. Nacco
Materials Handling Group, 248 Or App 435, 274 P3d 202
(2012). The court held that neither the workers’ compen-
sation statutes nor a statute immunizing limited liability
company members and managers barred plaintiff’s claims
against Swanson. Id. at 441-43, 445. Turning to the mer-
its of plaintiff’s claims, the Court of Appeals held that the
allegations in plaintiff’s complaint stated a negligence claim
but that plaintiff did not have a claim against Swanson
under the ELL. Id. at 447-49. We allowed the parties’ cross-
petitions for review and now reverse the Court of Appeals
decision. We affirm the trial court’s judgment regarding
plaintiff’s negligence claim, reverse its judgment regard-
ing plaintiff’s ELL claim, and remand the ELL claim to the
trial court for further proceedings.
Because Sun Studs is currently organized as a
limited liability company (LLC), we discuss that form of
organization briefly before setting out the facts. An LLC is
a relatively new form of business organization. See Larry
Cite as 356 Or 254 (2014) 257
E. Ribstein & Robert R. Keatinge, 1 Ribstein and Keatinge
on Limited Liability Companies § 1.2 (2012) (explaining
that the first limited liability company act was passed in
1977). The persons who own an LLC are its “members.”
ORS 63.001(21). The members can manage the LLC them-
selves, or they can appoint a manager or group of managers
to manage the company. ORS 63.001(19), (20). The statutes
accordingly distinguish between member-managed and
manager-managed LLCs. See Synectic Ventures I, LLC v.
EVI Corp., 353 Or 62, 65 n 1, 294 P3d 478 (2012) (discussing
that distinction).1
LLCs share many attributes of limited partner-
ships, but they differ from that form of business organiza-
tion in at least one respect: in Oregon, a “member or man-
ager [of an LLC] is not personally liable for a * * * liability of
the [LLC] solely by reason of being or acting as a member or
manager.” ORS 63.165(1). By contrast, in Oregon, a limited
partner will become personally liable for the limited part-
nership’s obligations if the limited partner “participates in
the control of the business.” ORS 70.135; see Ribstein and
Keatinge, Limited Liability Companies § 1.6 (“Unlike lim-
ited partners, LLC members do not lose their limited liabil-
ity for participating in control of the business.”).
With that background in mind, we turn to the facts
of this case.2 In 2001, Swanson Group, Inc., purchased a
lumber mill, Sun Studs, Inc., and reorganized that business
as a limited liability company.3 Swanson is the sole mem-
ber of Sun Studs, LLC, and it elected to manage Sun Studs,
making Sun Studs a member-managed LLC. Sun Studs is
one of several timber-related LLCs that Swanson owns and
manages. Swanson sets general policies and priorities for
those LLCs. Sun Studs, like the other LLCs that Swanson
owns, has its own employees, who are responsible for the
day-to-day operation of the mill and also for implementing
Swanson’s general directives.
1
The persons appointed as the managers of a manager-managed LLC may
but need not be members of the LLC. ORS 63.001(19).
2
To the extent the facts are disputed, we set out those facts in the light most
favorable to plaintiff, the party opposing summary judgment.
3
Unless otherwise specified, the phrase “Sun Studs” refers to Sun Studs,
LLC, rather than Sun Studs, Inc.
258 Cortez v. Nacco Material Handling Group
Regarding safety, 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. Specifically, Swanson delegated
responsibility “to [Sun Studs’ mill manager and HR direc-
tor] to carry out the safety program and to follow as close as
they can the template provided by [Swanson].” It was “up to
[Sun Studs’ 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. Swanson’s executive vice presi-
dent explained the relationship between Ash and Sun Studs’
HR director:
“So the practical way it works is that Mr. Ash would pro-
vide what I would say is oversight in the overall direct set-
ting: [Ash would tell Sun Studs HR director,] [y]ou need to
have these types of programs. Here’s the steps you need to
take to implement. Here’s the things you need to do. Here’s
the programs you need to ensure you’ve implemented. I’m
here at this point if you [Sun Studs’ HR director] need any
help. Or if you want any support on your safety committee
meetings or in your training sessions, then I’ll [Ash] help
you with that.”
Harris was Swanson’s vice president of operations.
In that capacity, Harris supervised Sun Studs’ mill man-
ager. Swanson’s executive vice-president explained the rela-
tionship between Harris and Sun Studs’ mill manager:
“Mr. Harris was more of: You need to make sure you’re
doing what you have got to do safety-wise. You need to
make sure that you’re compliant. I’m going to be checking
on you and making sure that I’m satisfied with your efforts
in the safety program and the safety process.”
Swanson’s executive vice-president explained that the
“[p]rimary responsibility for safety” rested with Sun Studs’
HR director and mill manager.
Ash and Harris conducted periodic performance
reviews of Sun Studs’ managers. Ash and Harris also served
Cite as 356 Or 254 (2014) 259
as a resource to whom Sun Studs’ HR director and mill man-
ager could turn if they had a problem that required “corpo-
rate level upper-end” decision-making. On one occasion, Ash
attended a safety committee meeting at Sun Studs to ensure
that Sun Studs’ supervisors did not need any help or further
assistance. Otherwise, Swanson executives did not visit Sun
Studs to monitor safety conditions or set safety policy. If Ash
or Harris observed a safety violation when either of them
was on Sun Studs’ worksite, each person had authority to
direct Sun Studs to correct the violation.
In this case, plaintiff suffered severe injuries one
evening when another Sun Studs employee drove a forklift
down a dark corridor and accidently hit him. Plaintiff filed a
claim for and received workers’ compensation benefits from
Sun Studs. He then filed this action against Swanson, as
well as other defendants.4 Plaintiff alleged in his amended
complaint that Swanson was negligent in the following
ways:
“(a) In failing to prevent violation [sic] of the require-
ments of the Oregon Occupational and Safety and Health
Code as enacted by the department of Consumer & Business
Services;
“(b) In failing to properly inspect the place where the
plaintiff was required to work;
“(c) In failing to provide competent safety personnel to
inspect the work site;
“(d) In failing to require Sun Studs, LLC to have avail-
able an appropriately marked crosswalk to cross a working
yard at night in safety;
“(e) In failing to require Sun Studs, LLC to provide
appropriate yard lighting so that pedestrians could be seen;
“(f) failing to require Sun Studs, LLC to provide
In
fluorescent work vests for better visibility of pedestrians;
“(g) In failing to require Sun Studs, LLC to provide
forklifts equipped with audible and visual movement and
backup alarms;
4
Because this case arises from a limited judgment resolving plaintiff’s
claims against Swanson, we do not discuss plaintiff’s claims against the other
defendants, which manufactured, sold, and serviced the forklift that hit plaintiff.
260 Cortez v. Nacco Material Handling Group
“(h) In failing to furnish safe machinery, equipment,
appliances, and instrumentalities for the use of employees;
“(i) In failing to see that the machinery equipment
and appliances instrumentalities for the use of employees
were inspected and maintained in safe condition; and
“(j) In failing to warn plaintiff of hazards or danger[s]
when having actual knowledge or in the exercise of reason-
able care would have had knowledge of hazards or dangers
that would not be apparent to plaintiff.”
Plaintiff also claimed that Swanson had violated the ELL,
based on similar allegations.5
Swanson moved for summary judgment.6 Swanson
argued that it was immune from liability under either a stat-
ute that provides immunity to LLC members and managers,
ORS 63.165(1),7 or under the statute that provides that
workers’ compensation is the exclusive remedy for certain
workplace injuries, ORS 656.018 (2011).8 Plaintiff responded
that neither ORS 63.165(1) nor ORS 656.018 (2011) immu-
nized Swanson from liability under the ELL and negligence
law. Additionally, in response to Swanson’s summary judg-
ment motion, plaintiff introduced evidence that, in his view,
permitted a reasonable juror to infer that Swanson retained
control over job safety at Sun Studs and that Swanson neg-
ligently failed to require that Sun Studs take certain safety
precautions.
5
Plaintiff alleged one other claim for relief against Swanson. Plaintiff con-
ceded that claim, and the trial court granted summary judgment on that claim
in Swanson’s favor. Plaintiff does not challenge that ruling.
6
Swanson moved for summary judgment twice. The trial court denied the
first motion but granted the second. The latter ruling gave rise to this appeal.
7
ORS 63.165(1) provides
“The debts, obligations and liabilities of a limited liability company, whether
arising in contract, tort or otherwise, are solely the debts, obligations and
liabilities of the limited liability company. A member or manager is not per-
sonally liable for a debt, obligation or liability of the limited liability company
solely by reason of being or acting as a member or manager.”
8
We set out the text of ORS 656.018 (2011) later in the opinion and sum-
marize its terms here. Briefly, ORS 656.018(1) (2011) provided that employers
that provide workers’ compensation benefits to their employees are immune from
further liability for their employees’ workplace injuries. ORS 656.018(3) (2011)
extended the immunity provided in subsection (1) to, among others, an employer’s
officers, directors, and insurers. Subsection (3) did not extend that immunity
expressly to LLC members and managers.
Cite as 356 Or 254 (2014) 261
The trial court ruled that the evidence on sum-
mary judgment would permit a reasonable juror to find that
Swanson had been negligent and that it had violated the
ELL. The trial court also ruled that ORS 63.165(1) did not
shield Swanson from liability as the managing member of
Sun Studs. The trial court concluded, however, that ORS
656.018 (2011), the exclusive remedy provision of the work-
ers’ compensation statutes, granted immunity to both Sun
Studs (plaintiff’s employer) and also Swanson (Sun Studs’
member-manager). The trial court granted Swanson’s sum-
mary judgment motion on that ground and entered a limited
judgment in Swanson’s favor.
The Court of Appeals affirmed the trial court’s
judgment regarding plaintiff’s ELL claim, reversed its judg-
ment regarding plaintiff’s negligence claim, and remanded
for further proceedings on the negligence claim. The court
held that neither ORS 656.018 (2011) nor ORS 63.165(1)
shielded Swanson from liability. Cortez, 248 Or App at 443,
446. Regarding ORS 656.018 (2011), the Court of Appeals
reasoned that that subsection (1) of that statute immunized
employers (including LLCs) from liability for their employee’s
workplace injuries but that subsection (3) of that statute
did not extend that immunity to LLC members. Id. at 441-
43. Regarding ORS 63.165(1), the court reasoned that that
statute protected LLC members and managers only from
vicarious liability for the LLC’s obligations and, as a result,
did not shield LLC members and managers from personal
liability for their own acts.
Considering the merits of plaintiff’s claims, the
court concluded that the allegations in plaintiff’s amended
complaint stated a negligence claim against Swanson. See
248 Or App at 445. The Court of Appeals did not address
Swanson’s argument that “plaintiff [had] failed to present
sufficient facts [on summary judgment] to establish his
negligence claim” because it determined that Swanson had
not made that argument to the trial court. 248 Or App at
449.9 Finally, the court held that plaintiff had no ELL claim
9
We reach a different conclusion. Not only did plaintiff argue in the trial
court that the evidence that he had submitted in response to Swanson’s sum-
mary judgment motion permitted an inference that Swanson had been negligent,
but Swanson responded in its reply that, “[e]ven when viewed in the light most
262 Cortez v. Nacco Material Handling Group
against Swanson because Swanson was not a person “hav-
ing charge of, or responsibility for, any work involving a risk
or danger to [plaintiff].” Id. at 446.
Swanson petitioned for review of the Court of
Appeals decision reversing the trial court’s judgment regard-
ing plaintiff’s negligence claim. Plaintiff cross-petitioned
for review of the Court of Appeals decision affirming the
trial court’s judgment regarding his ELL claim. We allowed
both parties’ petitions. Before turning to the various issues
that the parties raise on review, we note a legislative
change that affects the sequence in which we consider those
issues. After oral argument, the legislature amended ORS
656.018(3) to provide that that subsection extends immu-
nity to LLC members. Or Laws 2013, ch 488, § 1.10 Because
the 2013 amendment applies only to claims arising on or
after June 24, 2013, see id. § 2, it does not apply to plaintiff’s
claims against Swanson, which arose before the amend-
ment’s effective date.
Although the 2013 amendment does not resolve
plaintiff’s claims against Swanson, it does affect the order
in which we consider the issues that Swanson has raised on
review. As a result of the 2013 amendment, our resolution of
one of those issues—whether the pre-2013 exclusive remedy
provision of the workers’ compensation statutes applied to
LLC members—will affect only a small number of persons
(Swanson and any other LLC member facing a workplace
injury claim that arose before June 24, 2013). The other
statutory immunity issue that Swanson raises has greater
significance, however. It affects all claims brought against
LLC members and managers, except for workplace injury
claims that arise on or after June 24, 2013. We accordingly
begin with Swanson’s arguments regarding ORS 63.165(1),
favorable to Plaintiff, none of the evidence in the summary judgment record sup-
ports Plaintiff’s claims for relief.” Beyond that, because the parties submitted
evidence on the merits of plaintiff’s negligence claim in support of and opposition
to Swanson’s summary judgment motion, Swanson was free to argue in the Court
of Appeals that the trial court’s ruling on that claim was “right for the wrong rea-
son.” See Outdoor Media Dimensions Inc. v. State of Oregon, 331 Or 634, 659, 20
P3d 180 (2001) (explaining when an appellate court may affirm under the “right
for the wrong reason” doctrine).
10
The 2013 amendment added LLC members but not LLC managers to the
list of exempt entities in ORS 656.018(3). Or Laws 2013, ch 488, § 1.
Cite as 356 Or 254 (2014) 263
which provides that an LLC member or manager is not per-
sonally liable for the LLC’s debts, obligations, and liabilities
solely by reason of being or acting as a member or manager.
I. ORS 63.165(1)
The parties’ arguments on this issue frame the fac-
tual and legal questions that we must resolve. Swanson’s
argument assumes that plaintiff has a colorable negligence
claim against Sun Studs for failing to provide a safe work-
place.11 Swanson 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 light-
ing, in failing to require workers to wear fluorescent vests,
and in failing to have forklifts equipped with audible and
visual movement and backup alarms. Swanson also does
not dispute that a reasonable juror could infer from the evi-
dence on summary judgment that it had the authority, as
the member-manager of Sun Studs, to require Sun Studs to
provide safer conditions. Swanson notes, however, that ORS
63.165(1) shields LLC members and managers from per-
sonal liability for “acting” as a member-manager.12 Swanson
reasons that, under ORS 63.165(1), “merely having the
authority to require the LLC to prevent a workplace acci-
dent * * 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.”
Swanson 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 Swanson “actively partici-
pated” in Sun Studs’ negligence. Swanson contends that
11
Of course, the exclusive remedy provision of the workers’ compensation
statute bars plaintiff, as a statutory matter, from suing Sun Studs and its
employees for negligently causing his workplace injury. See ORS 656.018(1), (3).
12
An LLC member can be a passive owner of the LLC, much like a corpo-
rate shareholder. Alternatively, an LLC member can manage the LLC either in
a member-managed LLC or in a manager-managed LLC, if the member is des-
ignated as the manager of the manager-managed LLC. Ribstein and Keatinge,
Limited Liability Companies § 2.3. We assume that the issues that arise from
extending immunity to LLC members and managers for “acting” in those capaci-
ties primarily will involve persons (whether members or managers) who manage
the LLC.
264 Cortez v. Nacco Material Handling Group
the evidence on summary judgment does not permit an
inference that it either actually knew of the conditions at
Sun Studs that allegedly led to plaintiff’s injuries or that it
actively participated in the creation of those conditions.
Plaintiff takes a different view of both ORS 63.165(1)
and the evidence. He 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, obli-
gations, and liabilities. Plaintiff 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. As a corollary to that argument, plaintiff con-
tends that the evidence on summary judgment permits a
reasonable juror to infer that Swanson’s negligence led to
plaintiff’s injury; specifically, plaintiff argues that a reason-
able juror could infer that Swanson “retain[ed] control over
job site safety” and, having retained control, failed to pro-
vide (or to require Sun Studs to provide) a safe workplace.
In considering those issues, we begin with the stat-
utory interpretation question that the parties raise—the
extent to which ORS 63.165(1) immunizes Swanson for its
actions or failures to act in managing Sun Studs. Because
we agree with plaintiff that ORS 63.165(1) immunizes
Swanson only from vicarious liability for the LLC’s obliga-
tions, we also consider whether the evidence on summary
judgment would permit a reasonable juror to hold Swanson
liable for negligence.
A. Statutory Immunity under ORS 63.165(1)
In interpreting ORS 63.165(1), we begin, as we cus-
tomarily do, with the text and context of ORS 63.165(1) and
then turn to that statute’s legislative history. See State v.
Gaines, 346 Or 160, 171-72, 206 P3d 1042 (2009).
1. Text
ORS 63.165(1) provides:
“The debts, obligations and liabilities of a limited liability
company, whether arising in contract, tort or otherwise,
are solely the debts, obligations and liabilities of the limited
liability company. A member or manager is not personally
Cite as 356 Or 254 (2014) 265
liable for a debt, obligation or liability of the limited liabil-
ity company solely by reason of being or acting as a member
or manager.”
In many respects, the two sentences in subsection (1) mir-
ror each other. The first sentence provides that the “debts,
obligations and liabilities” of an LLC are “solely” the debts,
obligations, and liabilities of the LLC. The second sentence
provides that a member or a manager of an LLC is not per-
sonally liable for the LLC’s debts, obligations, and liabilities
“solely by reason of being or acting as a member or manager”
of the LLC. Each sentence makes clear, in a different way,
that a member or a manager of an LLC is not vicariously
liable for the LLC’s debts, obligations, and liabilities, as a
general partner will be vicariously liable for the partner-
ship’s obligations.
The use of the word “being” in the second sentence
in ORS 63.165(1) is consistent with that interpretation.
Merely “being” a member or manager does not make that
person liable for the LLC’s obligations. However, the use of
the word “acting” in the second sentence interjects ambigu-
ity into the text. On the one hand, “acting” could mean that
a member or manager is not personally liable for any debts,
obligations or liabilities of the LLC that arise solely by rea-
son of the “actions” that a member or manager takes in that
person’s official capacity. Read broadly, the phrase “acting as
a member or manager” would provide members and manag-
ers immunity not only from vicarious liability but also from
personal liability for their actions in managing an LLC.
On the other hand, the word “acting” may play a
more modest role. It may simply confirm that a member or
manager of an LLC is not vicariously liable for the LLC’s
debts, obligations, and liabilities. Specifically, the word “act-
ing” could serve to make clear that, unlike a limited partner
who will become vicariously liable if he or she participates
in the control of the business, a member or manager of an
LLC will not be vicariously liable for actively managing the
LLC’s business. Cf. ORS 70.135(1) (providing that, although
a limited partner is ordinarily not vicariously liable for
the limited partnership’s liabilities, a limited partner will
become vicariously liable for those liabilities if he or she
266 Cortez v. Nacco Material Handling Group
participates in the control of the business). The text, specifi-
cally the word “acting,” is capable of more than one interpre-
tation, and we turn to the context.
2. Context
The context does little to clarify the text’s meaning.
Essentially, it reveals that, as initially enacted in 1993, ORS
63.165(1) shielded an LLC member or manger from liabil-
ity for the LLC’s obligations only for “being” a member or
manager. Or Laws 1993, ch 173, § 35.13 As noted, granting
immunity for “being” a member or manager implies only
that the grant of immunity extends to vicarious liability.
In 1999, the legislature amended the part of ORS
63.165 (1993) at issue by adding the word “acting.” Or Laws
1999, ch 86, § 10. As discussed above, the addition of the
word “acting” could have been intended to expand the scope
of ORS 63.165(1) to include not only immunity from vicari-
ous liability but also immunity from liability for all “actions”
that a member or manager of an LLC takes in his or her offi-
cial capacity. Alternatively, the legislature could have added
“acting” to make clear that a member or manager of an LLC
will not be vicariously liable either for “being” a member
or manager of an LLC or for “acting” as such, i.e., for exer-
cising control over the LLC. That is, the legislature may
have wanted only to clarify that a member or manager of an
LLC enjoys greater immunity than a limited partner does.
Cf. ORS 70.135(1) (1997).14 Because the context does not
resolve the ambiguity inherent in the text of ORS 63.165(1),
we turn to the statute’s legislative history.
3. Legislative History
The legislative history of ORS 63.165 shows that the
1993 legislature enacted the initial version of that statute to
13
As first enacted, ORS 63.165 (1993) provided:
“A member or manager of the limited liability company is not personally lia-
ble for any debt, obligation or liability of the limited liability company merely
by reason of being a member or manager or both.”
See Or Laws 1993, ch 173, § 35.
14
We note that the most recent version of the Uniform Limited Partnership
Act (2001) abolishes the so-called “control rule” for determining when a limited
partner will become personally liable for the partnership’s liabilities. Oregon still
retains that rule. See ORS 70.135(1).
Cite as 356 Or 254 (2014) 267
protect members and managers from vicarious liability for
the LLC’s obligations even when the member or manager
actively managed the LLC. A member of a taskforce charged
with advising the legislature on LLCs told the 1993 House
Judiciary Subcommittee on Civil Law:
“The limited liability company gives flexibility for mem-
bers to participate as little or as much as they wish * *
*
as opposed to a limited partner[ship] where the limited
partner[s] cannot [participate] without running the risk of
becoming general partners.”
Tape Recording, House Judiciary Subcommittee on Civil
Law, SB 285, May 19, 1993, Tape 116, Side A (statement of
David Culpepper).
The legislative history of the 1999 amendments to
the LLC statutes does not reveal an intent to depart from
that original understanding. Rather, a member of the LLC
taskforce told the 1999 legislature that the proposed amend-
ments to ORS 63.165 merely “clarifie[d] the provisions [of
the 1993 LLC statute] that members and managers do not
have personal liability for obligations of the LLC.” Tape
Recording, House Committee on Business and Consumer
Affairs, SB 51A, Feb 24, 1999, Tape 40, Side A (statement of
David Culpepper).
In clarifying ORS 63.165(1), the 1999 legislature
relied on the recently published Uniform Limited Liability
Company Act (ULLCA) (1996) and adopted verbatim sub-
sections 303(a) and (b) from that uniform statute. The com-
ment to those 1996 ULLCA provisions sheds some light on
the 1999 legislature’s intent. See Bellikka v. Green, 306 Or
630, 637, 762 P2d 997 (1988) (considering the comment to a
uniform law on which an Oregon statute was based).
The relevant part of the comment to Section 303
explains:
“A member or manager is responsible for acts or omissions
to the extent those acts or omissions would be actionable in
contract or tort against the member or manager if that per-
son were acting in an individual capacity. Where a mem-
ber or manager delegates or assigns the authority or duty
to exercise appropriate company functions, the member or
268 Cortez v. Nacco Material Handling Group
manager is ordinarily not personally liable for the acts or
omissions of the officer, employee, or agent [of the LLC] if
the member or manager has complied with the duty of care
set forth in Section 409(c).”
ULLCA § 303 comment (1996). The first sentence in the com-
ment makes clear that the use of the word “acting” in sec-
tion 303 of the ULLCA, and by extension in ORS 63.165(1),
was not intended to immunize members and managers from
personal liability for their actions in managing an LLC.
Rather, members and mangers remain personally liable for
the actions that they take on behalf of an LLC to the same
extent that they would be liable “if [they] were acting in an
individual capacity.”
Having identified that, as a general rule, members
or managers will remain personally liable for their own
acts, the comment goes on to identify one instance in which
members or managers ordinarily will not be personally
liable. The second sentence quoted above recognizes that,
when a member or manager of an LLC delegates authority
to carry out company functions, as an officer or director of a
corporation might, the member or manager ordinarily will
not be personally liable for a subordinate’s negligence. We
do not read the second sentence as establishing statutory
immunity in that situation. Rather, the second sentence rec-
ognizes that, as a matter of common law, a member or man-
ager ordinarily will not be personally liable for a subordi-
nate’s negligence. Cf. Jennifer L. Berger, Carol A. Jones, and
Britta M. Larsen, 3A Fletcher’s Corporate Cyclopedia § 1161
(2002) (describing the courts’ resolution of that common-law
issue).
Considering the text, context, and legislative his-
tory of ORS 63.165(1), we conclude that the 1999 amend-
ments to ORS 63.165 did not change its substance but
instead confirmed the 1993 legislature’s original intent.
Unlike limited partners, members or managers who partici-
pate in or control the business of an LLC will not, as a result
of those actions, be vicariously liable for the LLC’s debts,
obligations, or liabilities. However, a member or manager
remains responsible for his or her acts or omissions to the
extent those acts or omissions would be actionable against
Cite as 356 Or 254 (2014) 269
the member or manager if that person were acting in an indi-
vidual capacity. See ULLCA § 303 comment (1996). Because
ORS 63.165(1) does not shield Swanson from responsibility for
its own negligent acts in managing Sun Studs, we turn to the
question whether, as a matter of Oregon negligence law, there
was evidence from which a reasonable juror could find that
Swanson was liable for the injuries that plaintiff suffered.
B. Oregon Negligence Law
This court explained in Fazzolari v. Portland School
Dist. No. 1J, 303 Or 1, 734 P2d 1326 (1987), that,
“unless the parties invoke a status, a relationship, or a par-
ticular standard of conduct that creates, defines, or limits
the defendant’s duty, the issue of liability for harm actually
resulting from [a] defendant’s conduct properly depends on
whether that conduct unreasonably created a foreseeable
risk to a protected interest of the kind of harm that befell
the plaintiff.”
Id. at 17. In this case, Swanson argues that its relation-
ship to plaintiff is governed by a “particular standard of
conduct”—namely, those standards that apply to corporate
officers and directors. Swanson argues, and plaintiff does
not dispute, that this court has recognized that “[a] director
of a corporation is not liable for any tort of other subordinate
agents in which he did not participate.” Pelton v. Gold Hill
Canal Co., 72 Or 353, 357-58, 142 P 769 (1914) (holding that
a corporation’s directors were not liable for conversion when
the manager of the corporation sold, without the directors’
knowledge or participation, wheat entrusted to the corpo-
ration); accord Lewis v. Devils Lake Rock Crushing Co., 274
Or 293, 298, 545 P2d 1374 (1976) (applying that rule to the
officer of a corporation who had not participated in or been
aware of another officer’s conversion of the plaintiff’s prop-
erty); cf. Muellhaupt v. Strowbridge Est. Co., 136 Or 106,
123-24, 298 P 189 (1931) (applying that rule but holding that
the plaintiff had an actionable claim against the defendant
because he had had knowledge of a fraud committed on the
corporation’s behalf and personally profited from it).
Swanson argues that, in acting as the member-
manager of Sun Studs, its role was comparable to that of
270 Cortez v. Nacco Material Handling Group
a corporate officer and should be judged by the same stan-
dard. We agree with both the premise and conclusion of that
argument. As Swanson’s argument implicitly recognizes, an
LLC gives its members flexibility in choosing a management
structure. See Ribstein and Keatinge, Limited Liability
Companies § 2.3.15 In this case, the evidence on summary
judgment showed that Swanson had adopted a corporate
model; that is, in managing safety at Sun Studs, Swanson
acted in the same way that an officer in a corporation would.
Swanson delegated primary responsibility for safety to Sun
Studs’ HR director and mill manager but retained oversight
authority of their implementation of Swanson’s safety poli-
cies. Having agreed with Swanson’s premise, we also agree
with its conclusion that the negligence standards that apply
to corporate officers and managers apply to Swanson.
Turning to the applicable common-law negligence
standard, we note that this court has held that a director
or an officer of a corporation will be liable for a subordi-
nate’s tortious acts if the officer knew of those acts or par-
ticipated in them. See Lewis, 274 Or at 298 (officers); Pelton,
72 Or at 357-58 (directors).16 In this case, a reasonable juror
could infer that Swanson “participated” in worksite safety
at Sun Studs in three respects: Swanson formulated a gen-
eral safety policy that it directed Sun Studs to implement; it
delegated primary authority for safety at Sun Studs to Sun
Studs’ HR director and mill manager; and Swanson under-
took to oversee those persons’ implementation of Swanson’s
general safety policies. However, there was no evidence
from which a reasonable juror could infer that Swanson
negligently had formulated the general safety plan that it
directed Sun Studs to implement. Similarly, a reasonable
15
Ribstein and Keatinge explain that, “[w]hile the management structure
of an LLC is limited only by the owners’ imagination,” there are three “funda-
mental” or typical structures: a corporate or “representative management” struc-
ture; a limited partnership or “entrenched management” structure; and a gen-
eral partnership or “direct management” structure. Limited Liability Companies
§ 2.3.
16
In this case, plaintiff does not assert any other basis for Swanson’s lia-
bility. Cf. Lewis, 274 Or at 298 (quoting Fletcher’s Corporate Cyclopedia for the
proposition that an officer of a corporation could be liable for a subordinate’s con-
version of another’s property “based on [the officer’s] participation, knowledge
amounting to acquiescence or the breach of some duty [the officer] owes to the
owner of the property”).
Cite as 356 Or 254 (2014) 271
juror could not infer that Swanson negligently delegated pri-
mary responsibility for safety to Sun Studs’ HR director and
mill manager. See Schaefer v. D & J Produce, Inc., 403 NE2d
1015, 1021 (Ohio App 1978) (recognizing that an officer with
general responsibility may delegate that responsibility to a
subordinate as long as the officer exercises due care in doing
so). Finally, there was no evidence from which a reasonable
juror could infer that Swanson negligently exercised the
oversight authority that it retained over Sun Studs’ imple-
mentation of Swanson’s safety policies. See id.17
One final point deserves mention. The “participa-
tion” doctrine that the court stated in Pelton and that we
apply here rests on a distinction between misfeasance and
nonfeasance. See Pelton, 72 Or at 358 (recognizing that dis-
tinction). As the California Court of Appeal explained in
Towt v. Pope, 336 P2d 276 (Cal App 1959), “[i]n the absence
of active participation in an act of misfeasance, generally
an officer of a corporation is not personally liable to a third
person for nonfeasance.” Id. at 283. As noted, one potential
problem with the participation doctrine is that it is some-
times difficult to categorize a specification of negligence as
either nonfeasance or misfeasance. See Miller v. Muscarelle,
170 A2d 437, 447 (NJ Super Ct App Div 1961) (discussing
the inconsistencies that have resulted in applying that dis-
tinction). Another potential problem is that the doctrine
can foreclose any inquiry into an officer’s negligent failure
to carry out an assigned task. See Schaeffer, 403 NE2d at
1020.
Initially, most American courts adopted the partici-
pation doctrine to determine when an officer or manager will
be liable for a subordinate or fellow employee’s negligence.
See Miller, 170 A2d at 447 (describing the development of the
doctrine). A substantial number of jurisdictions still adhere
17
As discussed below, the “participation” standard that this court stated in
Pelton turns on a distinction between misfeasance, which is actionable, and non-
feasance, which is not. It is sometimes difficult, however, to classify a specifica-
tion of negligence as either misfeasance or nonfeasance. Evidence that Swanson
undertook to oversee Sun Studs’ implementation of Swanson’s general safety poli-
cies illustrates that difficulty. We assume, for the purposes of resolving plaintiff’s
negligence claim, that Swanson’s undertaking constituted “participation” even
though it is arguable that, if Swanson were negligent, any error on its part lay in
its failure to supervise, namely its nonfeasance.
272 Cortez v. Nacco Material Handling Group
to it. See 3A Fletcher’s Corporate Cyclopedia § 1161 (listing
jurisdictions). Other jurisdictions have rejected or modi-
fied the doctrine. See Miller, 170 A2d at 447-49 (rejecting
the standard); Schaefer, 403 NE2d at 1020 (describing cases
rejecting the doctrine as reflecting the modern trend); Martin
v. Wood, 400 F2d 310, 312-13 (3d Cir 1968) (same). Those
courts that have rejected or modified the doctrine have not
always been consistent in articulating a new standard; how-
ever, they have recognized, as a general rule, that an officer
or manager whose assigned task is the supervision of others
will be liable for a negligent failure to carry out that task
even though that failure could be characterized as nonfea-
sance. See Restatement (Third) of Agency § 7.01 comment d
(2006).18
In this case, both plaintiff and Swanson have
framed their arguments on the assumption that plaintiff
must prove participation or knowledge on Swanson’s part to
prevail on his negligence claim. Neither party has argued
that a different standard applies or should apply in Oregon.
We accordingly leave that issue for another case. Applying
the standard on which the parties’ arguments rest, we hold
that plaintiff’s negligence claim fails.19
II. THE ELL
The ELL “imposes a heightened statutory stan-
dard of care on a person or entity who either is in charge
of, or responsible for, any work involving risk or danger.”
Woodbury v. CH2M Hill, Inc., 335 Or 154, 159, 61 P3d 918
18
The Restatement sets out the following principles:
“[T]he fact that A is the President of P Corporation does not in itself subject A
to liability for E [an employee’s] violation of the Fair Housing Act. In contrast,
if A directs or participates in an action that violates the Act, A is subject to
liability. However, an agent whose assigned function within an organization
includes the supervision of others may be subject to liability when a failure
by the agent properly to supervise breaches a duty that the agent owes to a
third party.”
Restatement at § 7.01 comment d.
19
In this case, the difference between the standard stated in Pelton and the
standard stated in The Restatement (Third) may not make any difference because
we have assumed that, in undertaking to oversee Sun Studs’ implementation of
the safety plan, there was sufficient evidence of participation to test Swanson’s
actions for negligence. The difference, however, might matter in a subsequent
case.
Cite as 356 Or 254 (2014) 273
(2003).20 In this case, the “work involving risk or danger”
was driving forklifts through the areas of the mill in which
Sun Studs’ employees customarily walked. The question on
which plaintiff’s ELL claim turns is whether Swanson was
a person “having charge of, or responsibility for” that work.
See ORS 654.305 (stating that standard).21 On that issue,
this court has held that, in addition to a worker’s direct
employer, liability under the ELL
“can be imposed on a person or entity who (1) is engaged
with the plaintiff’s direct employer in a ‘common enter-
prise’; (2) retains the right to control the manner or method
in which the risk-producing activity was performed; or
(3) actually controls the manner or method in which the
risk producing activity is performed.”
Woodbury, 335 Or at 160 (summarizing Wilson v. P.G.E.
Company, 252 Or 385, 391-92, 448 P2d 562 (1968)).
Swanson was not plaintiff’s “direct employer,” and
the Court of Appeals held that a reasonable juror could
not infer that Swanson was plaintiff’s “indirect employer”
for the purposes of the ELL; that is, the Court of Appeals
held that a reasonable juror could not infer that Swanson
was engaged in a common enterprise with Sun Studs, that
Swanson actually controlled the risk-producing activity, or
that Swanson retained the right to control that activity.
Cortez, 248 Or App at 446-48. On review, we agree with
the Court of Appeals that Swanson was not liable under
the ELL on a common-enterprise or actual-control theory
of responsibility. See Sacher v. Bohemia, Inc., 302 Or 477,
486-87, 731 P2d 434 (1987) (defining when a third party will
20
The ELL provides:
“Generally, all owners, contractors or subcontractors and other persons
having charge of, or responsibility for, any work involving a risk or danger to
the employees or the public shall use every device, care and precaution that
is practicable to use for the protection and safety of life and limb, limited
only by the necessity for preserving the efficiency of the structure, machine
or other apparatus or device, and without regard to the additional cost of
suitable material or safety appliance [sic] and devices.”
ORS 654.305.
21
Swanson does not argue that, if it were a person “having charge of, or
responsibility for,” the risk-producing activity, no reasonable juror could find
from the evidence on summary judgment that it failed to satisfy the standard
that the ELL requires.
274 Cortez v. Nacco Material Handling Group
be liable under a common-enterprise theory);22 Woodbury,
335 Or at 162 (explaining that a reasonable juror could find
actual control where the owner oversaw the construction of
a high platform from which the plaintiff fell and instructed
the plaintiff’s employer how to build the platform). We dis-
agree, however, that a reasonable juror could not infer that
Swanson retained the right to control the method or manner
in which the risk-producing activity was performed.
To establish that Swanson “retained the right to
control” a risk-producing activity, plaintiff must either “iden-
tify some source of legal authority for that perceived right”
or evidence from which a retained right could be inferred.
See Boothby v. D.R. Johnson Lumber Co., 341 Or 35, 41, 137
P3d 699 (2006). In this case, Swanson was the sole member-
manager of Sun Studs. As such, the governing statutes gave
Swanson the right to manage Sun Studs’ business. See ORS
63.130(1)(a) (explaining that, in member-managed LLCs,
each member has equal rights in the management and con-
duct of the LLC’s business). Although Swanson chose to del-
egate responsibility for day-to-day decisions to Suns Studs’
mill manager and HR director, Swanson retained the right,
under ORS 63.130, to manage all aspects of Sun Studs’ oper-
ation, including the way that forklifts operated in the mill
and the safety conditions in their area of operation.
Beyond that, there was evidence from which a rea-
sonable juror could infer that, even though Swanson had
chosen to delegate primary authority to Sun Studs to oper-
ate the mill and regulate the way that forklifts were used,
Swanson retained the right to do so itself. See Boothby, 341
Or at 41 (noting that a retained right to control can be based
on either a source of legal authority, such as a contract, or
evidence of a retained right). In this case, Swanson’s execu-
tive vice president acknowledged that Swanson “could have
made all of th[e safety] changes” when it first acquired Sun
Studs that Sun Studs later made in response to plaintiff’s
22
Typically, a common enterprise theory applies to a work site in which two
companies are working together on a project. The court has recognized that,
when an employee of one company works with another company that has “charge
of, or responsibility for, any work involving a risk or danger” and the employee is
injured as a result, the employee can bring an ELL claim against the other com-
pany under a common enterprise theory. See Thomas v. Foglio, 225 Or 540, 358
P2d 1066 (1961).
Cite as 356 Or 254 (2014) 275
accident. Similarly, the executive vice-president agreed
“that if the Swanson group people wanted to change either
the design or the equipment used in the yard at Sun Studs,
they could do that.” A reasonable juror could infer from that
evidence that, as the LLC statutes state, Swanson retained
the right to manage the day-to-day operations of Sun Studs,
including the operation of the forklifts and attendant safety
procedures. Put differently, a reasonable juror could infer
that Swanson “retain[ed] the right to control the manner or
method in which the risk-producing activity was performed.”
See Woodbury, 335 Or at 160.
Because Swanson argues that this court’s decision
in Wilson leads to a different conclusion, we discuss that case
briefly. In Wilson, an owner contracted with an independent
contractor to build an electric transmission line. 252 Or at
389. Under the contract, the independent contractor was
responsible for the method or manner in which the risk-pro-
ducing activity was performed. Id. at 393. The owner, how-
ever, retained the contractual right to “ ‘increase th[e] safety,
efficiency, and adequacy’ of the independent contractor’s
”
methods “ ‘[i]f at any time the Contractor’s methods * * *
appear to the [owner] to be unsafe.’ ” Id. at 394 (quoting the
contract) (emphasis deleted).
The contractual right that the owner retained in
Wilson, as the court characterized it, was limited to requir-
ing greater safety procedures than those that the contractor
had put in place, and the question in Wilson was whether
the owner’s retention of that right was sufficient to make
it liable under the ELL. The court held that it was not, for
three related reasons. First, the court explained that, in
order for an owner’s retained right to give rise to liability
under the ELL, the right had to “bear some relation to the
creation of a risk of danger to work[ers] resulting from dan-
gerous working conditions.” Id. at 396 (emphasis added).
Under the terms of the parties’ contract, however, the inde-
pendent contractor was responsible for the manner or meth-
ods in which the risk-producing activity was performed. Id.
at 396. Second, although the owner retained the right to
require greater safety procedures, the court explained that
the retention of that right “created no risk of danger to [the]
plaintiff.” Id. The court reasoned that the retention of that
276 Cortez v. Nacco Material Handling Group
right would create a risk of danger to the plaintiff only if it
caused the independent contractor to be less diligent regard-
ing safety, a possibility that the court discounted because
“the duty to maintain safety remained the primary duty of
the contractor.” Id. Finally, the court reasoned that impos-
ing liability on owners for retaining a contractual right to
require greater safety measures would serve as a disincen-
tive to including such clauses in future contracts and thus
would be contrary to the purposes underlying the ELL. Id.
at 396-97.
Wilson arose in the context of an ELL claim against
an owner by an employee of an independent contractor.
This court explained that, under the terms of the contract,
the independent contractor was responsible for the method
and manner in which the risk-producing activity was per-
formed and that the owner retained only the limited right
to require greater safety measures than the ones that
the contractor had put in place. In that circumstance, the
right that the owner retained did not bear on the creation
of any additional risk to which the employee was exposed.
Whatever the merits of that decision,23 this case arises in
a different context. Sun Studs was not an independent con-
tractor over which Swanson retained only a limited right
of control. Rather, Swanson was the sole member-manager
of Sun Studs, and the jury reasonably could find that, as
such, Swanson retained the right to control all aspects of
Sun Studs’ operation.
Put differently, a jury reasonably could find from the
evidence on summary judgment that Swanson “retain[ed]
the right to control the manner or method in which the
risk-producing activity was performed.” See Woodbury, 335
Or at 160. Were we to hold otherwise, we would effectively
eviscerate a category of responsibility under the ELL that
we have long recognized. See, e.g., Boothby, 341 Or at 41;
Woodbury, 335 Or at 160; Wilson, 252 Or at 392. The trial
court correctly held that the evidence in support of plain-
tiff’s ELL claim was sufficient to avoid summary judgment.
23
Plaintiff does not argue that Wilson was wrongly decided, and we assume
that the court’s decision was correct in light of the particular contractual rela-
tionship in that case.
Cite as 356 Or 254 (2014) 277
We recognize that some tension may exist between
our resolution of plaintiff’s negligence and ELL claims.
Any tension results, however, from the differences between
the common-law tort standards stated in Pelton and Lewis
and the broader statutory standards that the legislature
adopted in the ELL. Our negligence cases have held that, in
the absence of knowledge or participation, corporate officers
and directors are not liable for their employees’ negligence.
That is so even though corporate officers, having delegated
responsibility to others to carry out tasks, retain the right
to control how those tasks are carried out. Our ELL cases,
however, have held that persons who retain the right to
control how others carry out risk-producing activities are
liable under the ELL. Our resolution of plaintiff’s claims
reflects those differing standards. Because we conclude that
Swanson is not entitled to summary judgment on the merits
of plaintiff’s ELL claim, we turn to Swanson’s remaining
argument that ORS 656.018 (2011) shielded it from liability
for violating the ELL.
III. ORS 656.018
The workers’ compensation statutes provide that
the right to receive workers compensation is the exclusive
remedy for certain workplace injuries. ORS 656.018 (2011).
Before 2013, ORS 656.018 (2011) provided, in part:
“(1)(a) The liability of every employer who satisfies the
duty required by ORS 656.017(1) is exclusive and in place
of all other liability arising out of injuries, * * that are
*
sustained by subject workers, the workers’ beneficiaries
and anyone otherwise entitled to recover damages from the
employer on account of such conditions or claims resulting
therefrom * * *.
“* * * * *
“(3) The exemption from liability given an employer
under this section is also extended to the employer’s
insurer, the self-insured employer’s claims administrator,
the Department of Consumer and Business Services, and
the contracted agents, employees, officers and directors
of the employer, the employer’s insurer, the self-insured
employer’s claims administrator and the department[.]”
In analyzing Swanson’s reliance on ORS 656.018
(2011), the Court of Appeals recognized that an LLC can be
278 Cortez v. Nacco Material Handling Group
an “employer” within the meaning of the workers’ compensa-
tion statutes and thus can come within the exclusive remedy
provision in ORS 656.018(1) (2011). See ORS 656.005(13)(a)
and (23) (defining who is an “employer” for the purposes of
workers’ compensation).24 The Court of Appeals also recog-
nized that ORS 656.018(3) (2011) did not extend the immu-
nity that LLCs enjoy as “employers” to LLC members in the
same way that that subsection extended immunity to corpo-
rate officers and directors. The Court of Appeals found that
omission telling and concluded that, as a result, LLC mem-
bers such as Swanson did not come within the protections of
ORS 656.018(3) (2011).
On review, Swanson advances primarily three
arguments to demonstrate that ORS 656.018 (2011) included
LLC members.25 Swanson argues initially that, in shielding
LLCs from liability as employers in ORS 656.018(1) (2011),
the legislature necessarily intended to shield the managing
members of an LLC as well. Swanson reasons that, because
LLCs cannot function without managers, shielding LLCs
from liability without also extending immunity to the per-
sons who manage them would defeat the goal of granting
immunity to LLCs in the first place. As a policy matter,
Swanson’s argument has some force. It is difficult, however,
to reconcile Swanson’s policy argument with the text and
context of ORS 656.018 (2011).
As the Court of Appeals noted, subsection (1) of
ORS 656.018 (2011) exempted employers “who satisf[y]
the duty required by ORS 656.017(1)” from further liabil-
ity for their employees’ workplace injuries. Subsection (3) of
that statute extended that exemption to, among others, the
employer’s employees, officers, directors, and insurers. ORS
656.018(3) (2011). Subsection (3), however, did not extend
24
ORS 656.005(13)(a) defines an employer as “any person * * * who contracts
to pay a remuneration for and secures the right to direct and control the services of
any person.” ORS 656.005(23) provides that the term “ ‘person’ includes [a] part-
nership, joint venture, association, limited liability company and corporation.”
25
As noted, the 2013 legislature amended ORS 656.018 to add LLC mem-
bers to the list of exempt entities in ORS 656.018(3). That legislative change
clarifies the scope of ORS 656.018(3) going forward, but it does not necessarily
resolve what that subsection meant before then. The 2013 amendment could have
been precautionary. We accordingly discuss Swanson’s arguments based on ORS
656.018(3) (2011).
Cite as 356 Or 254 (2014) 279
that exemption to LLC members and managers. That omis-
sion may have been an oversight. However, we hesitate to
insert what the legislature has omitted based on our unsup-
ported belief that the legislature must have meant some-
thing other than what it said.
The context also cuts against Swanson’s argument.
As the Court of Appeals noted, the legislature provided a
“key” in the LLC statutes to define when other statutory
provisions will apply to LLCs. See Cortez, 248 Or App at
441. Specifically, ORS 63.002(2) provides that, “[w]hen-
ever a section of the Oregon Revised Statutes applies to
both ‘partners’ and ‘directors,’ the section shall also apply”
to members in member-managed LLCs and managers in
manager-managed LLCs. Because ORS 656.018 (2011) did
not refer to both partners and directors, ORS 63.002(2)
teaches that members and managers do not qualify for the
immunity that ORS 656.018(3) (2011) extended to direc-
tors. For us to accept Swanson’s argument, we would have
to overlook not only the omission of members and managers
from ORS 656.018(3) (2011) but also the fact that, under the
terms of ORS 63.002(2), ORS 656.018 (2011) did not apply to
LLC members and managers.
Swanson’s second argument is based on ORS
63.160, which authorizes LLCs to indemnify members and
managers for their actions on behalf of the LLC. Swanson
notes that ORS 656.018(1) (2011) prevented third parties
from bringing indemnification claims against entities that
qualify as “employers” under that subsection. Swanson rea-
sons that, if ORS 656.018(3) (2011) did not include mem-
bers and managers and if ORS 656.018(1) (2011) precluded
it from bringing an indemnification claim against Sun
Studs LLC, the indemnification that ORS 63.160 authorizes
LLCs to provide members and managers will be ineffective
as applied to workplace injury claims that LLC employees,
such as plaintiff, bring against LLC member-managers.
Swanson’s point is a fair one. We note, however,
that, if we were to agree with Swanson and interpret ORS
656.018(3) (2011) to include LLC members and managers,
then the indemnification that ORS 63.160 authorizes would
be rendered superfluous as applied to workplace injury claims
280 Cortez v. Nacco Material Handling Group
that LLC employees bring against LLC members and man-
agers. Whichever way we interpret ORS 656.018(3) (2011),
ORS 63.160 would become either ineffective or unnecessary
as applied to one subset of claims for which LLC members
and managers may be held liable. The context that Swanson
identifies is, ultimately, a wash and provides no basis for
departing from the plain text of ORS 656.018(3) (2011) and
ORS 63.002(2).
Finally, Swanson argues that the list of exempt
entities set out in ORS 656.018(3) (2011) is not exclusive;
rather, Swanson contends that the list illustrates types or
categories of exempt entities. Swanson reasons that, because
managing members of an LLC may be similar to officers or
directors, we should recognize that ORS 656.018(3) (2011)
included not only officers and directors but also managing
members. We agree that, as noted above, Swanson’s role
in managing safety at Sun Studs was comparable to that
of a corporate officer. However, Swanson’s final argument
is at odds with the interpretative principle stated in ORS
63.002(2). As noted, that principle identifies those instances
in which sections of the Oregon Revised Statutes that do
not refer expressly to LLCs will apply to them. Under ORS
63.002(2), a statutory section will apply to LLC members
and managers when that section applies to “both ‘partners’
and ‘directors.’ ” That statutory directive cuts against inter-
preting the terms “officer” and “director” in ORS 656.018(3)
(2011) to include not only corporate officers and directors but
other persons who perform comparable tasks. We accord-
ingly agree with the Court of Appeals that Swanson cannot
take advantage of the statutory immunity that ORS 656.018
(2011) provided.
We summarize our conclusions briefly. ORS 63.165
immunizes members and managers of an LLC from vicari-
ous liability for the debts, obligations, and liabilities of that
LLC. LLC members and managers, however, remain per-
sonally liable for their acts and omissions to the extent those
acts or omissions would be actionable against the member or
manager if that person were acting in an individual capac-
ity. Even though ORS 63.165 does not shield Swanson from
liability for its own negligence in managing Sun Studs,
Swanson acted towards Sun Studs in the same way that an
Cite as 356 Or 254 (2014) 281
officer of a corporation would. Applying the negligence stan-
dard applicable to corporate officers, we conclude that the
evidence on summary judgment does not permit an infer-
ence that Swanson either had actual knowledge of the con-
ditions that resulted in plaintiff’s injury or actively partici-
pated in creating them. Swanson was entitled to summary
judgment on plaintiff’s negligence claim.
Even though Swanson was not plaintiff’s employer
for the purposes of the ELL, the jury reasonably could find
that Swanson was responsible for those injuries under the
ELL because it retained the right to control the manner or
method in which the risk-producing activity was performed.
It follows that Swanson was not entitled to summary judg-
ment on plaintiff’s ELL claim.
Finally, the exclusive remedy provision of the workers’
compensation statutes did not apply to workplace injury
claims against LLC members that arose before June 24,
2013. Because plaintiff’s injury occurred before that date,
ORS 656.018 (2011) did not shield Swanson from liability
under the ELL.
The decision of the Court of Appeals is reversed.
The judgment of the circuit court is affirmed in part and
reversed in part, and the case is remanded to the circuit
court for further proceedings.