United States Court of Appeals
For the First Circuit
No. 04-2429
ANTONIO C. BRAGA and DEBRA BRAGA,
Plaintiffs, Appellants,
v.
GENLYTE GROUP, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Stahl, Senior Circuit Judge,
Lipez, Circuit Judge,
and Oberdorfer,* Senior District Judge.
Brian Cunha, with whom Brian Cunha & Associates, P.C. were on
brief, for appellants.
Timothy P. Van Dyck, with whom Brian H. Lamkin and Edwards &
Angell, LLP, were on brief for appellee.
August 25, 2005
*
Of the District of the District of Columbia, sitting by
designation.
OBERDORFER, Senior District Judge. This case tests the
line between the workers’ compensation rights of an employee
injured on a job in Massachusetts and the immunity from tort suit
provided to the injured employee’s employer by the same
Massachusetts workers’ compensation law that benefitted the injured
employee, where the employer has participated in a series of
mergers during which the employee’s job status remained unaffected.
On the unique and relatively complex facts here, we find and
conclude that this plaintiff’s tort claim is barred by the
Massachusetts workers’ compensation law, pursuant to which one of
defendant’s merger successors has previously compensated plaintiff.
Plaintiff-appellant Antonio Braga (“Braga”) received
workers’ compensation benefits for an injury he sustained while an
employee of Genlyte-Thomas Group, LLC (“Genlyte-Thomas”). He and
his wife are suing in tort for that same injury Genlyte Group, Inc.
(“Genlyte”). Braga had worked as an employee of Genlyte before it
contributed substantially all of its assets (along with those
contributed by Thomas Industries, Inc.) to create Genlyte-Thomas.
The Bragas claim that defects in a hydraulic press Braga was
operating while working for Genlyte-Thomas before that merger
caused his injury. The Bragas base their claims against Genlyte on
its status as successor, by merger, to Lightolier Incorporated
(“Lightolier”); it had owned the allegedly defective press when it
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merged with Braga’s then-employer. The Bragas claim that
Lightolier knew the press was defective at the time of its merger,
but that it did not disclose or remedy the defects.
The Bragas allege that this knowledge of the defect
created inchoate liability for Lightolier that carried over in the
merger, giving the Bragas a cause of action against Genlyte.
Genlyte argues essentially that any liability was satisfied, and
any tort claims barred, by Massachusetts workers’ compensation law
– the privileges and immunities of which also carried forward in
the merger. The Bragas counter that those immunities do not apply
here because their tort claims, based on Lightolier’s conduct,
arose independently from Genlyte’s workers’ compensation
obligations.
This is the second time this case has come up on appeal.
The district court initially dismissed the Bragas’ claims as barred
by workers’ compensation in a one-sentence order that cited no
Massachusetts law. Finding that the case presented a “complex and
fact-bound” question of state law, a previous panel of this court
reversed and remanded for “analysis of a more fully developed
factual scenario under Massachusetts law.” Braga v. Genlyte, Inc.,
57 Fed. Appx. 451, 454 (1st Cir. 2003) (unpublished) (“Braga I”).
On remand, the district court granted summary judgment for Genlyte,
again holding that “plaintiffs’ claims are barred by workers’
compensation.”
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The Bragas contend that the changes in Braga’s employer’s
corporate structure over time relieve him of the barrier to tort
claims generally applicable to those enjoying the benefits of
workers’ compensation. Genlyte argues that its workers’
compensation tort immunity survived the mergers. The key question
is whether, but for the mergers, Lightolier would have been liable
to the Bragas. We hold that it would not have been. Accordingly,
we conclude that the workers’ compensation barrier was not lifted
by the transactions involved here and we affirm summary judgment in
favor of the defendant, albeit on a theory different from that
employed by the court below.
I. BACKGROUND
On November 18, 1998, Braga was injured while operating
a hydraulic press (the “Press”) at a Genlyte-Thomas manufacturing
facility in Fall River, Massachusetts (the “Fall River facility”).
The Press became activated while Braga was trying to remove a piece
of metal jammed in it. It slammed down on Braga’s hand, causing
severe and permanent damage. He alleges that the Press was
defective in that it lacked adequate guards to prevent an operator
from unintentionally activating it, and that this defect caused his
accident.
A. Corporate History
In January 1980, Braga began working as a press operator
at the Fall River facility for Aluminum Processing Corporation
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(“APC”). APC, a wholly-owned subsidiary of Lightolier, operated
the Fall River facility at that time.
In September, 1980, Lightolier purchased the Press,
second-hand, for use in its manufacturing facility in Norwich,
Connecticut (the “Norwich facility”).
On Friday, January 15, 1982, APC (along with all then-
existing subsidiaries of Lightolier) merged into Lightolier. Three
days later, on Monday, January 18, 1982, Lightolier merged into BZ
Holdings Corporation (“BZ Holdings”), a wholly-owned subsidiary of
BZ Acquisition Corporation (“BZ Acquisition”). That same day, BZ
Holdings changed its name to “Lightolier Incorporated.”1 Braga’s
employment status continued unchanged, save that his employer was
now Lightolier/BZ rather than APC.
In 1985, BZ Acquisition, which owned Lightolier/BZ,
merged into Genlyte. Lightolier/BZ thus became a wholly-owned
subsidiary of Genlyte.
In January 1991, Lightolier/BZ merged into Genlyte.
Genlyte continued to operate the former Lightolier/BZ business
under the name “Lightolier.” Braga’s employment again continued
unchanged, save that his employer was now Genlyte.
1
To distinguish among the various Lightolier entities, we
refer only to the original, pre-January 15, 1982, company as
“Lightolier.” We refer to the corporation that existed from
January 15-18, 1982, as “Lightolier/APC,” and to the post-January
18, 1982, entity as “Lightolier/BZ.”
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Around this time, the Norwich facility was converted from
manufacturing to warehousing use. In June 1991, Genlyte
transferred the Press from its Norwich facility to its Fall River
facility, where Braga worked.
On April 28, 1998, Genlyte and Thomas Industries each
contributed substantially all of its corporate assets to create a
new entity, Genlyte-Thomas. Genlyte became the majority owner of
Genlyte-Thomas and Thomas became the minority owner. Genlyte-
Thomas continued to do business under the “Lightolier” name.
Braga’s employment again continued unchanged, save that his
employer was now Genlyte-Thomas. Braga was still an employee of
Genlyte-Thomas when his accident occurred on November 18, 1998.
After that accident, the Occupational Safety and Health
Administration inspected the Press and cited Genlyte-Thomas for a
violation because the “operating buttons of the [Press] were not
adequately guarded to prevent unintentional operation.”
B. Litigation History
The Bragas first filed a “Complaint for Discovery”
against Lightolier in state court in 1999. That complaint was
dismissed without prejudice after some discovery.
The Bragas next filed a substantive suit against
Lightolier in state court on September 6, 2001. After the case was
removed to federal court on diversity grounds, plaintiffs amended
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the complaint to name Genlyte, one of Lightolier’s successors by
merger, as the defendant.
On November 21, 2001, Genlyte moved to dismiss the
complaint for failure to state a claim on the ground that it was
barred by the workers’ compensation law. On January 4, 2002, the
district court granted that motion to dismiss in a one-sentence
endorsement on the face of the motion: “Allowed, as Lightolier,
Inc. would also be an employer for this purpose. Herbolsheimer v.
SMS Holding Co., 608 N.W.2d 487 (Mich[. Ct. App.] 2000).” The
Bragas appealed.
On February 13, 2003, a panel of this court reversed and
remanded for further proceedings. The court was “reluctant to
affirm an order of dismissal where the district court neglected to
analyze the questions raised by the complaint under the law
governing the case,” that is, Massachusetts state law. Braga I, 57
Fed. Appx. at 454. The court noted that the Supreme Judicial Court
of Massachusetts had addressed the “questions raised by the
intersection of the immunity of an employer under the workers’
compensation scheme and successor liability” in Gurry v. Cumberland
Farms, 550 N.E.2d 127 (Mass. 1990), which should be “central” to
the analysis of this issue. Braga I, 57 Fed. Appx. at 454.
On remand, following limited discovery, plaintiffs filed
an amended complaint. The Bragas asserted claims of negligence
based on “(Old) ‘Lightolier’ . . . negligently transferring by
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means of the merger, to BZ Holdings/(New) ‘Lightolier’ the
defective [Press]” and of breach of the implied warranty of
merchantability. His wife asserted a claim of loss of consortium.
On February 13, 2004, Genlyte moved for summary judgment
on the basis of an Agreed Statement of Undisputed Facts.
On October 5, 2004, the district court granted that
motion and again dismissed the plaintiffs’ claims. The district
court’s analysis centered, as directed, on Gurry. The district
court noted that Gurry permitted a suit in tort to proceed against
an employer as successor of a corporation that “was never
decedent’s employer and would have been susceptible to a third-
party claim outside of the workers’ compensation protection.” On
the other hand, the court recognized that, in Gurry, claims based
on the conduct of a predecessor that had employed Gurry “failed
because ‘all [the] acts and omissions alleged against [it] arose
out of the direct employment relationship.’” (Citing Gurry, 550
N.E.2d at 131.) The district court framed the dispositive question
as whether Braga had been “an employee of Lightolier, the allegedly
negligent predecessor corporation.” The court focused on whether
Braga was employed by Lightolier/APC from its creation on Friday,
January 15, 1982, through its merger with BZ Holdings three days
later, on Monday, January 18, 1982. The district court held that
Braga’s having “performed no work over the weekend is irrelevant to
his employment status.” Because Braga’s employment was never
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terminated, it was “clear that [Lightolier/APC] did employ him,
although it only had a brief existence.” Based on this reasoning,
the district court concluded that plaintiffs’ claims were barred by
the workers’ compensation statute.
II. DISCUSSION
We review the district court’s grant of summary judgment
de novo. Burke v. Town of Walpole, 405 F.3d 66, 75 (1st Cir.
2005). Like the lower court, we are to “constru[e] the record in
the light most favorable to the nonmoving party and resolv[e] all
reasonable inferences in that party’s favor.” Whitlock v. Mac-
Gray, Inc., 345 F.3d 44, 45 (1st Cir. 2003). Summary judgment is
proper only if the record establishes that “there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Fed. R. Civ. P. 56(c)). We are
not bound by the district court’s rationale, but may affirm its
grant of summary judgment “on any ground supported by the record.”
Cimon v. Gaffney, 401 F.3d 1, 4 (1st Cir. 2005).
A. The Massachusetts Workers’ Compensation Scheme
The Massachusetts workers’ compensation statute generally
provides the exclusive remedy for employees who suffer work-related
injuries. Mass. Gen. Laws ch. 152, § 24. A non-employer third
party tortfeasor, however, is not protected by the immunity from
suit by an injured worker that workers’ compensation law affords
that worker’s employer. Mass. Gen. Laws ch. 152, § 15. Injured
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employees are thus free to sue third party tortfeasors whose
negligence caused or contributed to their work-place injuries.
Where a third party whose actions might subject it to a
tort suit by an injured worker later merges with the injured
worker’s employer – so that the employer and the “third party”
become one and the same – a dilemma arises. After a merger, the
surviving corporation is “liable for[] all liabilities and
obligations of each of the constituent corporations in the same
manner and to the same extent as if such . . . surviving
corporation had itself incurred such liabilities or obligations.”
Mass. Gen. Laws ch. 156B, § 80(b). As successor to the alleged
tortfeasor, the surviving entity should ordinarily be subject to
suit by the injured employee to the same extent the third party
would have been absent the merger. On the other hand, under the
circumstances here, neither the plaintiffs, nor the state decisions
on which they rely, explain to our satisfaction why the injured
employee’s employer is not immunized from tort liability by the
same law that provided compensation administratively to the injured
employees. See, e.g., infra Part II.D.3.
B. The Dual Persona Doctrine
The Bragas claim that they should be able to sue Genlyte
as successor to the original Lightolier despite the otherwise
applicable workers’ compensation immunity. They rely on what is
commonly referred to as the “dual persona” doctrine. According to
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that concept an “employer may become a third person, vulnerable to
tort suit by an employee, if – and only if – it possesses a second
persona so completely independent from and unrelated to its status
as employer that by established standards the law recognizes that
persona as a separate legal person.” 6 Arthur Larson & Lex K.
Larson, Larson’s Workers’ Compensation Law § 113.01[1], at 113-2
(2005) (“Larson”); see also Gurry, 550 N.E.2d at 131 (citing this
definition from an earlier edition of the Larson treatise). Where
such a “dual persona” exists, the dual persona doctrine may permit
a tort suit only if the “nonemployer persona” owed the injured
employee duties “totally separate from and unrelated to” duties
arising out of the employment relationship. Larson, § 113.01[4],
at 113-10 (emphasis in original).
Gurry is the leading Massachusetts case on the “dual
persona” doctrine. The facts in Gurry, as here, are somewhat
involved. Gurry worked for United Cranberry Growers Associates,
Inc. (“Cranberry”), a wholly-owned subsidiary of Delaware Food
Store, Inc. (“DFS”). Cumberland Farms Dairy, Inc. (“Dairy”),
another DFS subsidiary, sold managerial services to Cranberry. As
part of these duties, Dairy designed, and commissioned a contractor
to build, buggies for Cranberry. The next year, Cranberry and
Dairy merged into DFS, which in turn merged into Cumberland Farms,
Inc. (“Cumberland”). Gurry continued at his job, with Cumberland
becoming his employer as a result of the mergers. Gurry was killed
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while working for Cumberland, operating one of the buggies.
Gurry’s beneficiaries received workers’ compensation payments. The
Gurry plaintiffs nonetheless sued Cumberland, alleging that
negligent design, manufacture and maintenance of the buggy by its
predecessors, Cranberry and Dairy, caused Gurry’s death.
The question thus presented was one of first impression
in Massachusetts: could an employee injured on the job sue an
employer for negligence on the part of the employer’s corporate
predecessors? The Supreme Judicial Court found that the “answer
depends on the interrelationship of two statutes: the business
corporation law and the workers’ compensation act.” Gurry, 550
N.E.2d at 130 (citations omitted). The Gurry court observed that,
under Massachusetts business corporation law, “Cumberland stood in
the shoes of Cranberry [] and Dairy . . . , inheriting any
liabilities for tortious conduct, as well as any privileges in the
form of statutory immunities, that those predecessors would have
had.” Id. at 131 (citing Mass. Gen. Laws ch. 156B § 80(a)).
The court held that Cumberland could not be sued for
Cranberry’s alleged negligence because Cranberry itself “would have
been immune from suit since all the acts and omissions alleged
against [it] arose out of the direct employment relationship”
between it and Gurry. Id. On the other hand, “Dairy was never
Kevin Gurry’s employer, and would have been susceptible to a third-
party claim as a tortfeasor outside of the protection of workers’
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compensation” if not for the merger. Id. (citing Mass. Gen. Laws
ch. 152 § 15 (1988 ed.)). Had the merger not occurred, plaintiffs
would have been able to bring a third party suit against Dairy, the
company that designed and supervised the manufacture of defective
equipment for the decedent’s then-employer, Cranberry. The Gurry
court emphasized that “the workers’ compensation statute was
intended to deal with injuries and liability occurring in the
course of the employer-employee relationship.” Id. Since a claim
based on Dairy’s conduct did not arise from an employment
relationship, but “from the negligence of an independent
corporation,” allowing it to go forward would not interfere with
the purpose of the workers’ compensation statute. The court
concluded that “insulat[ing] Cumberland from liability it acquired,
as a result of its merger with Dairy[,] because [Cumberland]
happened to be Kevin Gurry’s employer, would subvert the important
aims of both the workers’ compensation system and the business
corporation statute.” Id.
C. Braga’s Employment Status
The district court held that workers’ compensation bars
this suit because Braga was employed by Lightolier/APC during its
“brief existence.” Braga’s employment status during the three-day
period from January 15-18, 1982 is the primary issue the parties
address on appeal.
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Plaintiffs argue that this question cannot be resolved as
a matter of law but requires a detailed, fact-specific inquiry into
the relationship between Braga and Lightolier/APC. As explained
below, we disagree.
Massachusetts business corporation law provides that “all
of the estate, property, rights, privileges, powers and franchises
of the constituent corporations” automatically vest in the
surviving corporation upon merger “without further act or deed.”
Mass. Gen. Laws ch. 156B, § 80(a)(5). Despite the Bragas’
hyperbolic claim that treating employees as assets that transfer by
law upon merger means viewing them as “chattels of the
corporation,” a corporation’s employment contracts are counted
among its assets. See, e.g., Modis, Inc. v. Revolution Group,
Ltd., 11 Mass. L. Rptr. 246, 1999 WL 1441918, at *6 (Mass. Super.
Ct. Dec. 29, 1999) (describing “employment contracts and employment
‘arrangements’” as “assets [that] became the property of [the
surviving corporation] after the merger”); cf. Dickson v. Riverside
Iron Works, Inc., 372 N.E.2d 1302, 1304-05 (Mass. App. Ct. 1978)
(plaintiff may enforce employment contract against surviving
corporation after merger).
The Bragas argue that employees do not automatically
continue working for a surviving corporation after a merger but
must establish employment relationships anew with that entity. Cf.
Holliday v. Pers. Prods. Co., 939 F. Supp. 402, 405-07 (E.D. Pa.
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1996) (rejecting argument that workers’ compensation immunity would
not apply after employer’s merger with third party tortfeasor
unless employee consented to be employed by new corporate entity).
If that were the law, employees of merging corporations would lose
their jobs instantaneously upon a merger, absent some affirmative
conduct showing that they now worked for the surviving corporation.
Similarly, the employment status of those in otherwise identical
positions would vary with their awareness of, and view toward,
changes in corporate status that did not affect the conduct of
their jobs in any way. None of the cases plaintiffs cite, however,
supports such odd results. See, e.g., Langevin’s Case, 91 N.E.2d
920, 921 (Mass. 1950); Abbott v. Link-Belt Co., 88 N.E.2d 551, 554
(Mass. 1949). Indeed, none even addresses the relevant question,
namely, how a merger affects continuity of employment. We see no
basis for holding that there was a gap in Braga’s employment during
the January 15-18, 1982, period. He simply continued as an
employee of the corporate entity that succeeded his employer, first
Lightolier/APC, then Lightolier/BZ.
However, the question of whether Lightolier/APC employed
Braga is not dispositive, but merely a red herring here. This can
be seen by moving the analysis back one level, thus framing it in
terms of the initial merger of Lightolier and APC (Braga’s original
employer) rather than the merger of Lightolier/APC and BZ Holdings
three days later. Whether or not Lightolier/APC employed Braga
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during its three-day existence, Lightolier – which it succeeded –
unquestionably never employed him. Since Lightolier owned the
allegedly defective Press when it merged with Braga’s then-
employer, APC, Lightolier’s merger with APC appears to raise the
same liability issues that the Bragas claim are raised by
Lightolier/APC’s merger with BZ Holdings. But the mere fact that
Lightolier did not employ Braga would not establish successorship
liability. Lightolier/APC can inherit Lightolier’s third-party
liability only if such liability would have existed absent the
merger. The plaintiffs in Gurry were able to sue the decedent’s
employer not merely because its predecessor, Dairy, had not
employed him, but because Dairy “would have been susceptible to a
third-party claim as a tortfeasor outside of the protection of
workers’ compensation” if not for the merger. 550 N.E.2d at 131
(emphasis added).
The foregoing considered, the question we must answer is
whether Lightolier “would have been susceptible to a third-party
claim” but for the merger. If so, Genlyte may be sued. If not, it
may not.
D. Could the Bragas Have Brought a Third Party Claim Against
Lightolier?
Although Gurry provides the question, it does not provide
the answer. While the Supreme Judicial Court of Massachusetts
“alluded favorably to the [dual persona] theory” in Gurry, it has
“never explicitly adopted” it, much less established its scope or
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set parameters for it. Barrett v. Rodgers, 562 N.E.2d 480, 482
(Mass. 1990). No Massachusetts court has considered whether Gurry
should be extended to circumstances like these, where an employer’s
predecessor merely owned defective equipment when it merged with
the employer and an employee was later injured by that equipment.
1. Preliminary Issues on Applying Massachusetts
Law
A federal court that faces an unresolved state law
question is to “‘ascertain the rule the state court would most
likely follow under the circumstances.’” Braga I, 57 Fed. Appx. at
453 (quoting Blinzler v. Marriott Int’l, Inc., 81 F.3d 1148, 1151
(1st Cir. 1996)). It is reasonable to “assume that the state court
will follow the rule that appears best to effectuate relevant
policies.” Moores v. Greenberg, 834 F.2d 1105, 1107 (1st Cir.
1987) (internal quotation and modification omitted). “We may seek
guidance ‘in analogous state court decisions, persuasive
adjudications by courts of sister states, learned treatises, and
public policy considerations identified in state decisional law.’”
Braga I, 57 Fed. Appx. at 453 (quoting Blinzler, 81 F.3d at 1151).
In so doing, “we must exercise considerable caution when
considering the adoption of a new application” of state law that
could “expand [its] present reach.” Doyle v. Hasbro, Inc., 103
F.3d 186, 192 (1st Cir. 1996). A federal court sitting in
diversity must “take care not to extend state law beyond its well-
marked boundaries in an area . . . that is quintessentially the
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province of state courts.” Markham v. Fay, 74 F.3d 1347, 1356 (1st
Cir. 1996).
Extrapolating from analogous decisions in sister states
and policy pronouncements of Massachusetts courts, we conclude that
Gurry should not be extended to permit suit here.
2. Relevant Massachusetts Policy
The Supreme Judicial Court of Massachusetts has described
the “very broad” exclusivity provision of the workers’ compensation
scheme as its “cornerstone.” Berger v. H.P. Hood, Inc., 624 N.E.2d
947, 949 (Mass. 1993). It has also cautioned courts against
creating “[a]ny change in compensation law which would permit a
covered employee to recover compensation benefits and, in addition,
permit litigation by the employee against his employer to recover
for an injury clearly covered by the Workmen’s Compensation Act.”
Longever v. Revere Copper & Brass Inc., 408 N.E.2d 857, 860 (Mass.
1980). “The instances in which a single legal entity . . . will be
liable under both the workers’ compensation scheme and in a lawsuit
for a single injury arising out of a single workplace incident are
very rare.” Barrett, 562 N.E.2d at 483.
3. Analogous Decisions from our Sister States
With this Massachusetts background in mind, we turn to
analogous decisions of our sister states. Any exception to the
immunity that workers’ compensation schemes provide employers “must
be narrowly construed to fit only the policy reasons that give rise
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to its inception, and not allowed to expand to envelop situations
that [workers’ compensation] was otherwise intended to cover.”
Herbolsheimer v. SMS Holding Co., 608 N.W.2d 487, 495 (Mich. Ct.
App. 2000); see id. (“dual-persona doctrine should be interpreted
more narrowly rather than more broadly” where its scope is
unclear). It is important that the dual persona doctrine “not be
used for the purpose of simply evading the exclusivity provision of
the Workmen’s Compensation Act.” Kimzey v. Interpace Corp., 694
P.2d 907, 912 (Kan. Ct. App. 1985); cf. Gurry, 550 N.E.2d at 131
(evaluating how suit would affect “important aims” of workers’
compensation and corporate successorship principles).
The majority – and, we conclude, better-reasoned – view
among courts that have considered circumstances akin to those here
is that an employer cannot be held liable on the basis of a
predecessor’s mere ownership of defective equipment when it merged
with the employer. See Corr v. Willamette Indus., Inc., 713 P.2d
92, 96 (Wash. 1986) (“No obligation or liability would have existed
prior to the merger, and none should be created by the merger that
could not have existed independently.”); Vega v. Standard Mach.
Co., 675 A.2d 1194, 1197-98 (N.J. Super. Ct. App. Div. 1996)
(predecessor’s ownership of defective machine at merger did not
create liability, when merger did not render predecessor a “seller”
or “supplier” and consequently predecessor had no duty to warn).
The key question is whether the employer had a separate duty to the
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employee-claimant outside of the employment relationship. See
Hatch v. Lido Co. of New Eng., 609 A.2d 1155, 1157 (Me. 1992)
(predecessor’s negligent pre-merger installation or maintenance of
equipment in its own facility for its own use did not implicate a
“separate and unrelated duty” for the post-merger entity, beyond
that of an employer to its own employees); Herbolsheimer, 608
N.W.2d at 496-97 (question of liability hinged on whether
predecessor had “separate obligations” to claimant).
The flaws in plaintiffs’ approach are clearer when
considering the continuity of the corporate entities. Plaintiffs
are arguing in effect that, on the one hand, Genlyte-Thomas is a
continuation of Lightolier/APC for the purpose of holding the
successor corporation liable. On the other hand, plaintiffs argue
that Lightolier/APC is so distinct and separate from its successors
that its “transfer” of the Press via merger created new duties and
liabilities. The latter view is inconsistent not only with the
former, but with the very nature of a corporate merger: “[T]he
consolidation of two or more corporations is like the uniting of
two or more rivers, neither stream is annihilated, but all continue
in existence. A new river is formed, but it is a river composed of
the old rivers, which still exist, though in a different form.”
Atlantic & B. Ry. v. Johnson, 56 S.E. 482, 484 (Ga. 1907) (quoting
Thompson on Corporations § 8341). “The object of the consolidation
of two or more solvent corporations into one is not usually to wind
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up the business of the old corporations but to continue as a unit
that which theretofore had been separate.” Proprietors of Locks &
Canals on Merrimack River v. Boston & M.R.R., 139 N.E. 839, 841
(Mass. 1923). It is the continuity of the constituent corporations
that plaintiffs apparently fail to grasp in theorizing that the
transfer of equipment through a merger can itself create third
party liability. Where the “transferor [] and transferee []
bec[o]me one and the same as of the moment of transfer,” there is
“[i]n effect, . . . no transfer (and therefore no duty owed) from
one entity to another, since at the moment of transfer there was
only one entity, the surviving corporation.” Duvon v. Rockwell
Int’l, 807 P.2d 876, 881 (Wash. 1991) (describing rationale of
Corr).
Although the cases discussed above represent the majority
view, the states have not taken a uniform approach to the present
factual scenario. Plaintiffs rely heavily on Billy v. Consol.
Mach. Tool Corp., 412 N.E.2d 934 (N.Y. 1980), in which the New York
Court of Appeals permitted suit to go forward against an employer
based on its status as successor to corporations that had designed
and manufactured allegedly defective equipment for their own use.2
The equipment passed to the successor corporation through a series
of mergers. The court held that, but for the merger, plaintiff
2
As plaintiffs point out, Gurry cites Billy favorably.
However, it does so only in general terms that sheds no light on
the instant dispute. Gurry, 550 N.E.2d at 131.
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could have sued the predecessor corporations based on their design
and manufacture of the defective equipment. The court concluded
that this potential liability survived the merger, “since the
obligation upon which [the successor] is being sued arose not out
of the employment relation, but rather out of [the] independent
business transaction” of the merger itself. Id. at 940; see also
Schweiner v. Hartford Accident & Indem. Co., 354 N.W.2d 767, 772-73
(Wis. 1984) (holding that, but for merger, plaintiff could have
sued predecessor that manufactured defective equipment as third
party, but not analyzing basis for such a suit).
A strong dissent in Billy exposed the flaws in the
majority’s reasoning. The dissent noted that the inchoate tort
liability the predecessor incurred after installation of the
defective equipment for its own use was “to anyone injured by the
defect other than an employee, as to whom [workers’] compensation
law immunized it from common-law liability.” Billy, 412 N.E.2d at
942 (Meyer, J., dissenting) (emphasis in original). The Billy
dissent reasoned that the successor company inherited the
predecessor’s immunity from liability, including immunity from an
employee’s suit. As a result, the merger provided no basis for
liability; it was not the equivalent of a sale or transfer of
assets (with the concomitant legal obligations this would entail),
and the act of merging itself did not, as a matter of law, create
liability. Id. at 942-44; see id. at 942 (“[E]ven under the most
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liberal application of the [dual persona] doctrine a manufacturer-
employer is held protected by compensation immunity when the
product was manufactured solely for his own use and not for
distribution to the general public.”).
III. CONCLUSION
We are persuaded that the Supreme Judicial Court of
Massachusetts would adopt the reasoning of those courts that have
declined to extend the dual persona theory to circumstances like
those here. Lightolier purchased the Press for its own use. It
did not sell the Press or allow non-employees to use it. (It is
not even alleged to have modified the Press.) In the hypothetical
world in which no merger occurred, the Press could have caused an
injury for which plaintiff would have received workers’
compensation only if he worked for Lightolier. See supra Part
II.A. In such a case, plaintiff would obviously have no third-
party claim. It is the merger itself on which plaintiff relies to
stake his present claim. Allowing a merger to increase, rather
than preserve, inchoate liability is not consistent with the policy
of the workers’ compensation act or the law of corporate
successorship. We are reluctant to expand the dual persona theory
to any application beyond that which Massachusetts has already
approved, particularly since the policy reasons on which the Gurry
court relied are not implicated here. We are even more reluctant
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where, as here, the better reasoned cases from other jurisdictions
hold that such an expansion would not be warranted.
For the foregoing reasons, the district court’s decision
is AFFIRMED.
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Braga v. Genlyte Group, Inc.
Court: Court of Appeals for the First Circuit
Date filed: 2005-08-25
Citations: 420 F.3d 35
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