Wednesday, July 21, 2010

Second Department Holds That One Entity Must Control the Day-to-Day Operations of Another Entity to Qualify For Alter-Ego Status

Samuel v. Fourth Ave. Assoc.: In this case the Second Department noted that the defense of Workers' Compensation Law sects. 11 and 29(6) applies to entities that are alter-egos of the plaintiff's employer. To qualify as an alter-ego, the two entites must be operated as a single, integrated entity, or one entity must control the day-to-day operations of the other. In Samuel, the defendant failed to show that it and the plaintiff's employer operated as a single entity or that either entity controlled the day-to-day operations of the other. Therefore, the Second Department reversed an award of summary judgment in favor of the defendant.

Similarly, the Court held that the defendant had failed to show that it controlled the manner, details or results of the plaintiff's work, such that it could be considered the plaintiff's special employer.

From an Appellate perspective, by its citation to Parochial Bus v. Bd. of Ed. of City of N.Y. (60 N.Y.2d 539), it can be gleaned from the Second Department's decision that the latter theory was raised in the trial court, but not relied upon by the trial court when it awarded summary judgment to the defendant.

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