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MAXINE KIEHL AND LYNN ANN HESS v. ACTION MANUFACTURING COMPANY (12/24/87)

decided: December 24, 1987.

MAXINE KIEHL AND LYNN ANN HESS, APPELLANTS,
v.
ACTION MANUFACTURING COMPANY, APPELLEE



Appeal from the Order of the Superior Court of Pennsylvania Entered July 3, 1986 at Nos. 02648 and 02649 Philadelphia, 1985, Affirming the determination of the Philadelphia Court of Common Pleas, Philadelphia County, Entered October 1, 1985 at Nos. 3778 and 3779 May Term 1980.

COUNSEL

Stephen F. Dryden, Edward McCandless, Philadelphia, for appellants.

William Goldstein, Philadelphia, for appellee.

Nix, C.j., and Larsen, Flaherty, McDermott, Zappala and Papadakos, JJ.

Author: Larsen

[ 517 Pa. Page 184]

OPINION OF THE COURT

In this case we must decide whether a parent corporation is entitled to immunity (pursuant to the Pennsylvania Workmen's

[ 517 Pa. Page 185]

Compensation Act, Act of June 2, 1915 P.L. 736 as amended June 21, 1939 P.L. 520 (Purdon's 1952) 77 P.S. ยง 481(a)) from a third party suit brought against the parent corporation by an employee of its wholly owned subsidiary corporation.

Appellants, Maxine Kiehl and Lynn Ann Hess, brought individual actions in trespass against Appellee, Action Manufacturing Company (Action). Appellants were production line employees of Amcom Incorporated (Amcom), a wholly owned subsidiary of Action. Action manufactures munitions for the United States government including, fire control devices, fuzes, arming devices and explosives.

Before Amcom was formed, Action operated four munitions plants. Three plants were located at Bermuda, Cedar and Large Streets in Philadelphia, and were operated as divisions of Action. A fourth plant located in Vineland, New Jersey was a wholly-owned subsidiary of Action, called Amram Incorporated (Amram). Due to expansion of Action's business, land and buildings were purchased in Atglen, Pennsylvania, to manufacture load detonaters. The production of load detonaters could not be accomplished by Amram or the non-subsidiary divisions because the United States government required minimum distances between metropolitan areas and plants handling explosives or pyrotechnics and none of the existing plants satisfied the federal standards.

Upon advice of counsel, a decision was made by Harry Stern, president of Action, to incorporate Amcom as a wholly-owned subsidiary of Action, rather than operate the Atglen plant as a division of the parent company. The corporations shared similar officers. Harry Stern was president, and Milton Rice was vice-president and comptroller of both Action and Amcom. Mr. Stern hired Joe Tamany as plant manager of Amcom. Mr. Tamany was entrusted with the day-to-day management, including, recruitment, hiring and firing of employees. Amcom ...


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