Who Is Liable for Work Related Diseases When Corporations Merge ?
In LTV Steel Company, Inc. v. Workers' Compensation Appeal Board (Mozena), 562 Pa. 205, 754 A.2d 666 (2000), the Pennsylvania Supreme Court addressed a following situation:
Mozena worked at the steel plant in Aliquippa from 1957 forward.
When he commenced employment, the plant was owned by Jones & Laughlin Steel Corporation (J&L).
By 1974, LTV Corporation (LTV) had acquired 100% of the stock of J&L and merged J&L into its operations and made it a wholly owned subsidiary of LTV.
In 1978, LTV acquired Youngstown Sheet and Tube Steel Company and merged it with J&L in 1981.
In 1981, LTV purchased Republic Steel and merged it with J&L and amassed all of the assets under the name of LTV Steel Company.
On August 21, 1995, Mozena petitioned for benefits and alleged that he suffered a bilateral hearing loss as a result of his long-term exposure to occupational noise at the Aliquippa plant. Mozena, 562 Pa. at 209-210, 754 A.2d at 668.
LTV presented the deposition testimony of attorney Mark Katz (Attorney Katz), the senior attorney at LTV, in an attempt to establish that from 1957 to 1973, Mozena worked for J&L and LTV was not liable for any pre-1974 injury to Mozena.
Attorney Katz conceded that through stock sales which resulted in the total purchase of J&L in 1974, LTV assumed all assets and liabilities of J&L, including all workers' compensation claims which existed prior to 1974.
The WCJ awarded benefits to Mozena and determined that he had worked for LTV from 1957, forward because LTV had assumed the liabilities of its constituent companies through merger.
LTV appealed to the Board which affirmed.
LTV petitioned for review with this Court.
The Court affirmed.
LTV then petitioned for allowance of appeal with our Pennsylvania Supreme Court. Mozena, 562 Pa. 212-214, 754 A.2d at 670-671.
With respect to the issue of whether LTV was liable for any of Mozena's hearing loss before it acquired J&L in 1974, our Pennsylvania Supreme Court affirmed:
It is well established law in the Commonwealth that when corporations merge the surviving corporation succeeds to both the rights and liabilities of the constituent corporation. . . . If we allowed a surviving company to deny responsibility for hearing loss caused by its predecessor, we would be sanctioning corporate restructuring as a means of escaping liability.
We agree with the Commonwealth Court that such a result would not advance the humanitarian objectives of the Act. Mozena, 562 Pa. at 225-226, 754 A.2d at 677.