Accountability: The Sins of a Subsidiary
Simon v. Bertucci Contr. Co., LLC, No. 20-3320, 2022 WL 4079868, at *1 (E.D. La., Sept. 6, 2022).
Author: Jakob Jackson
This case arose out of an alleged injury sustained by the plaintiff, Orlando Simon, in December 2019 while he worked on the AB4 Spud Barge (“the Spud Barge”).1 The suit alleged that Bertucci Contracting Company LLC (“Bertucci”) violated its duty as a Jones Act employer to provide the plaintiff with a safe place to work and to provide a seaworthy vessel.2 Bertucci is also alleged to owe maintenance and cure benefits.3 The plaintiff sought to extend the claims to Crosby Tugs (“Crosby”) because Crosby purchased Bertucci prior to the alleged injury.4 Crosby filed a motion for summary judgment asserting that it “is neither plaintiff’s employer nor owner of the Spud Barge.”5
A court will grant summary judgment whenever “the pleadings, the discover and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact.”6 While a court will consider all the evidence, it will not make determinations of credibility or weigh the evidence. A court will merely determine whether “the movant is entitled to judgment as a matter of law.”7
Crosby contended that it could not be liable for the plaintiff’s claims because it is neither the employer of the plaintiff nor is it the owner of the Spud Barge.8 Crosby also contended that, absent extreme circumstances, it cannot be held liable as a parent company for the actions of its subsidiary, Bertucci.9
In order for a Jones Act claim to be successful, an employee must show “proof of an employment relationship either with the owner of the vessel of with some other employer who assigns the worker to a task creating a vessel connection . . . .”10 Crosby stated that it had never employed the plaintiff.11 However, the plaintiff contended that Thurman Hallum, an employee of Crosby Dredging, LLC, instructed him to perform tasks and directed the plaintiff to perform the task which led to the alleged injury.12 Plaintiff contended that because Crosby Dredging, LLC is a sister company of Crosby, Hallum acted as a borrowed employee while working on the Spud Barge.13 However, the court held that this argument did not satisfy the borrowed employee requirements and Crosby was found not liable to the plaintiff under the Jones Act.14
The court further held the “plaintiff has no maintenance and cure claim against Crosby . . .” because the plaintiff failed to establish the necessary employee to employer relationship.15
An unseaworthiness claim is based on the vessel owner’s obligation in providing a seaworthy vessel that is reasonably fit for the vessel’s performance.16 The Spud Barge, at the time of the injury, was owned by Bertucci and had no affiliation with Crosby.17 However, the plaintiff argued that the Spud Barge was preparing to be towed by a vessel owned by Crosby.18 The court held that Crosby is not liable for the alleged unseaworthiness because the only party which owned and operated the vessel at the time of the incident was Bertucci.19
The major issue of this case arose from the relationship between Crosby and Bertucci regarding the plaintiff’s claims. The court reiterated a corporate law cornerstone stating, “that a parent corporation . . . is not liable for actions taken by its subsidiaries.” Exceptions arise when a parent company is acting through the subsidiary as an alter ego.20
The alter ego doctrine is a rare exception and applies if (1) the owner exercises a complete and total control over a corporation regarding the alleged wrongful act and (2) this control served as a tool to commit fraud which injured the party.21 The Fifth Circuit held that tort claims do not require the second element and expressed factors for an analysis for the first element.22 These factors showcase such extreme scenarios in which the parent company essentially strips the subsidiary of any and all autonomy. The court stated that the first prong of the analysis is not focused on mere control over a subsidiary’s stock, but rather such a domination and control of the subsidiary’s action and policies which strip the corporation of its own will or independent existence.23
The plaintiff’s claims against Crosby are based on the fact that Crosby purchased Bertucci before the incident but does not provide evidence which suggests a complete control.24 The plaintiff maintained that Crosby and Crosby Dredging, LLC are sister companies which share the same address and registered agent.25 However, the court determined that these facts were insufficient to blur the lines of separate companies and do not satisfy the stringent analysis required by the alter ego doctrine.26
Therefore, the court held that Crosby is not liable to the plaintiff for the alleged actions of Bertucci nor is it liable for the any alleged actions of Crosby Dredging, LLC.27 Crosby may be liable for its own alleged negligence but are not liable for the actions of the other defendants.28 Thus, the motion for summary judgment was granted.29
1 Simon v. Bertucci Contr. Co., LLC, No. 20-3320, 2022 WL 4079868, at *1 (E.D. La. 2022).
2 Id.
3 Id.
4 Id.
5 Id.
6 Id.
7 Id.
8 Id. at *2.
9 Id.
10 Id.
11 Id.
12 Id.
13 Id.
14 Id.
15 Id.
16 Id. at *3.
17 Id.
18 Id.
19 Id.
20 Id.
21 Id. (citing Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347, 359 (5th Cir. 2003)).
22 Id.
23 Id. (quoting United States v. Jon-T Chemicals, Inc., 768 F.2d 686, 693 (5th Cir. 1985)).
24 Id. at *4.
25 Id.
26 Id.
27 Id.
28 Id.
29 Id.
