Investors entitled to the exclusive remedy provision: Arkansas court

Principals and stockholders in a company sued by the widow of worker killed on the job are entitled to the exclusive remedy provision of workers compensation in Arkansas, a state appellate court held Wednesday.

In Myers v. Yamato Kogyo Co. Ltd., the Court of Appeals of Arkansas, Division 1 in Little Rock, affirmed in a 5-1 decision an Arkansas Workers Compensation Commission ruling that passive investors/stockholders are considered employers for the purposes of the Arkansas Workers Compensation Act.

In 2014, a ladle man employed by Newport, Arkansas-based steel manufacturer Arkansas Steel Associates LLC was killed at work when a load of molten metal spilled and covered his body. The employer did not dispute that his death was work related, and its insurer paid out death benefits to his widow.

The widow filed a wrongful death lawsuit against Arkansas Steel in White County Circuit Court, but the company, which no longer exists, was dismissed from the action. A subsidiary of Yamato Kogyo Co. Ltd., along with several other companies, were the principal stockholders in Arkansas Steel at the time of the accident and were named in its place. Jurisdiction of the case was transferred to the Arkansas Workers Compensation Commission, which held that the steel company’s parent companies, including Yamato Kogyo, were entitled to the exclusive remedy provision of the workers compensation act. The widow appealed the decision.

The Arkansas Court of Appeals affirmed the commission’s decision. The court noted that the commission found that the other business entities named in the wrongful death lawsuit were employers for the purposes of the exclusive remedy provision because they were principals or stockholders of Arkansas Steel. Although the widow argued that the entities were third parties who could be sued for workplace safety violations, the appellate court agreed with the commission that the plain language of Arkansas state statutes supports the commission’s conclusion that an “employer” includes its principals and stockholders. Therefore, since the widow was receiving benefits under the workers comp, she was “not allowed to sue the parent companies in tort for alleged workplace negligence,” said the appellate court.

The court also dismissed her argument that Arkansas’ statutes are unconstitutional as applied by the commission because it “grants tort immunity to a defendant who doesn’t have an employment relationship with the injured party.” The appellate court, however, noted that the courts have taken a “narrow view” of attempts to seek damages beyond the exclusive remedy provision of the act, and upheld the constitutionalist of Arkansas’ statutes.

In his dissent, Judge Phillip Whiteaker said he disagreed with the majority’s decision, and that he did not believe investors or stockholders were entitled to the exclusive remedy provision.

“I conclude that by the plain language of the statute, ‘principals’ and ‘stockholders’ enjoy the exclusive-remedy provisions of the workers compensation statutes only when they are ‘acting in his or her capacity as an employer’ and not when they are acting as passive investors/stockholders,” he wrote in his dissent.

Attorneys for the widow and the investors did not immediately respond to request for comment.