Gigax v. Ralston Purina Co

In Gigax v. Ralston Purina Co. (1982) 136 Cal.App.3d 591, the plaintiff was employed as a laborer for Van Camp Seafood Company, a corporation, (Van Camp) and was injured while operating a conveyor belt designed by the parent company, Ralston Purina Company (Ralston). Van Camp and Ralston were each distinct corporate entities. (Gigax, supra, 136 Cal.App.3d at p. 602, fn. 6.) When the plaintiff sued Ralston, Ralston claimed to be the plaintiff's employer for workers' compensation purposes. Ralston had purchased the assets of Van Camp and was therefore the parent corporation. Ralston argued that Van Camp was merely an "operating division" under the control of Ralston and, therefore, Ralston was in reality the plaintiff's employer for purposes of workers' compensation law. (Gigax, supra, at p. 594-602.) The trial court adopted Ralston's position and granted summary judgment in favor of Ralston. On appeal by the plaintiff, the Court of Appeal reversed. The Court of Appeal defined the nature of the question before it as "a parent corporation's claim of immunity from common law tort liability for injuries to the employees of a kindred corporation." (Gigax, supra, 136 Cal.App.3d at p. 598.) In addressing that issue, the Court of Appeal said, "the degree of separation between a parent and subsidiary entity, whether true subsidiary or simply a subdivision of a larger integrated whole, is ... a factual matter." (Id. at p. 602.) The Court of Appeal held that a triable issue existed whether "Van Camp acts and operates as a separate business entity. It is a proper factual inference from the record below that Van Camp is a corporation totally separate and distinct, in location, function and identity from its corporate parent, Ralston." (Id. at p. 602.) In short, Gigax affirmed that a parent corporation may be treated as separate and distinct from a subsidiary corporation, and not be treated as the employer of the subsidiary's employee, depending upon the facts and circumstances. The Court held an employee of a subsidiary company may sue a parent corporation who has designed and manufactured a defective product which injured the subsidiary's employee, where the employee had also received workers' compensation benefits from his employer. ( Id. at pp. 594, 601.) The Court reasoned because the parent company acted and operated as a separate business entity and exercised no control over the employee, the parent company was not an "employer" for purposes of the exclusive remedy provisions of workers' compensation. ( Id. at pp. 601, 607.) In Gigax, the Court held that an employee of a subsidiary company may sue a parent corporation who has manufactured a defective product which caused injury to an employee of the subsidiary company when used in the scope of employment, even though the parent company had no right to control the day-to-day activities of its subsidiary's employee, an attribute normally inherent in an employer-employee relationship. The Court held that the exclusive remedy principle extended no further than to the employer with the right to control the employee. ( Gigax, supra, 136 Cal. App. 3d at p. 598-601.) In sum, in Gigax v. Ralston Purina Co. (1982), an employee was injured while working for Van Camp Seafood Company (Van Camp) and, specifically, while cleaning a conveyer belt machine. After obtaining compensation through his worker's compensation claim, the employee also filed an action against Van Camp's parent company, Ralston Purina Co. (Ralston), based on theories of product liability, negligence, and reckless misconduct. Ralston claimed that, because Van Camp was a division in its corporation, it also was entitled to the statutory immunity afforded to Van Camp. The court in Gigax rejected Ralston's argument and concluded that Van Camp was an entirely separate business entity. (Gigax v. Ralston Purina Co., supra, 136 Cal.App.3d at p. 602.) The court also concluded that, because Ralston did not exercise control over the plaintiff's conduct, it was not the plaintiff's statutory employer. (Id. at p. 601.) Ralston, therefore, was not entitled to the statutory immunity afforded under the workers' compensation law. In Gigax, the trial court granted Ralston's motion for summary judgment based on its status as the plaintiff's employer and the exclusive remedy under Labor Code section 3601. In concluding that Ralston was not entitled to rely on the worker's compensation law, the appellate court reversed the trial court's judgment, thereby allowing Gigax to bring a civil action against Ralston.