{ "id": 3607075, "name": "MARGUERITE FORSYTHE et al., Appellees, v. CLARK USA, INC., Appellant", "name_abbreviation": "Forsythe v. Clark USA, Inc.", "decision_date": "2007-02-16", "docket_number": "No. 101570", "first_page": "274", "last_page": "311", "citations": [ { "type": "official", "cite": "224 Ill. 2d 274" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "233 N.E.2d 748", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1968, "pin_cites": [ { "page": "752" } ], "opinion_index": 0 }, { "cite": "361 Ill. App. 3d 642", "category": "reporters:state", "reporter": "Ill. 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Supp.", "case_ids": [ 3875179 ], "year": 1976, "pin_cites": [ { "page": "1283-84, 1287-89", "parenthetical": "court found a parent liable for breach of bargaining agreement by subsidiary where parent specifically directed the subsidiary to disregard obligations under the NLRA" } ], "opinion_index": 0, "case_paths": [ "/f-supp/416/1267-01" ] }, { "cite": "35 N.Y.2d 979", "category": "reporters:state", "reporter": "N.Y.2d", "case_ids": [ 2314545 ], "year": 1975, "pin_cites": [ { "page": "980", "parenthetical": "holding a corporate officer liable not on account of his being an officer of the corporate defendant but as an active individual participant in the wrongdoing" } ], "opinion_index": 0, "case_paths": [ "/ny-2d/35/0979-01" ] }, { "cite": "324 N.E.2d 886", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1975, "pin_cites": [ { "page": "886", "parenthetical": "holding a corporate officer liable not on account of his being an officer of the corporate defendant but as an active individual participant in the wrongdoing" } ], "opinion_index": 0 }, { "cite": "365 N.Y.S.2d 528", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1975, "pin_cites": [ { "page": "528-29", "parenthetical": "holding a corporate officer liable not on account of his being an officer of the corporate defendant but as an active individual participant in the wrongdoing" } ], "opinion_index": 0 }, { "cite": "485 S.W.2d 261", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10053850 ], "year": 1971, "pin_cites": [ { "page": "271-72" } ], "opinion_index": 0, "case_paths": [ "/sw2d/485/0261-01" ] }, { "cite": "353 Mass. 614", "category": "reporters:state", "reporter": "Mass.", "case_ids": [ 3865045 ], "year": 1968, "pin_cites": [ { "page": "619" } ], "opinion_index": 0, "case_paths": [ "/mass/353/0614-01" ] }, { "cite": "166 F.3d 937", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 1397213 ], "year": 1999, "pin_cites": [ { "page": "941" } ], "opinion_index": 0, "case_paths": [ "/f3d/166/0937-01" ] }, { "cite": "247 F.3d 471", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11108190 ], "year": 2001, "pin_cites": [ { "page": "486-87" } ], "opinion_index": 0, "case_paths": [ "/f3d/247/0471-01" ] }, { "cite": "590 F.2d 655", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 823105 ], "year": 1979, "pin_cites": [ { "page": "663" } ], "opinion_index": 0, "case_paths": [ "/f2d/590/0655-01" ] }, { "cite": "755 N.E.2d 556", "category": "reporters:state_regional", "reporter": "N.E.2d", "case_ids": [ 9491162 ], "year": 2001, "pin_cites": [ { "page": "559, 563" } ], "opinion_index": 0, "case_paths": [ "/ne2d/755/0556-01" ] }, { "cite": "679 N.W.2d 598", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 9266956 ], "year": 2004, "pin_cites": [ { "page": "605" } ], "opinion_index": 0, "case_paths": [ "/nw2d/679/0598-01" ] }, { "cite": "68 F.3d 1082", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 7415173 ], "year": 1995, "opinion_index": 0, "case_paths": [ "/f3d/68/1082-01" ] }, { "cite": "910 F.2d 24", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10530583 ], "year": 1990, "pin_cites": [ { "page": "27", "parenthetical": "parent corporation can be held directly liable if actively involved in the affairs of its subsidiary" } ], "opinion_index": 0, "case_paths": [ "/f2d/910/0024-01" ] }, { "cite": "909 F. 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Supp.", "case_ids": [ 11983982 ], "weight": 3, "year": 1996, "pin_cites": [ { "page": "1490" }, { "page": "1490" } ], "opinion_index": 0, "case_paths": [ "/f-supp/966/1478-01" ] }, { "cite": "133 S.W.3d 776", "category": "reporters:state_regional", "reporter": "S.W.3d", "case_ids": [ 9263091 ], "weight": 4, "year": 2004, "pin_cites": [ { "page": "777, 779" }, { "page": "779, 782" }, { "page": "779" } ], "opinion_index": 0, "case_paths": [ "/sw3d/133/0776-01" ] }, { "cite": "69 Cal. Comp. Cas. 759", "category": "reporters:specialty", "reporter": "Cal. Comp. Cases", "weight": 4, "year": 2004, "pin_cites": [ { "page": "762" }, { "page": "763" }, { "page": "763" } ], "opinion_index": 0 }, { "cite": "153 Ill. 2d 26", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4738245 ], "year": 1992, "pin_cites": [ { "page": "32" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/153/0026-01" ] }, { "cite": "31 Ill. 2d 69", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2832377 ], "year": 1964, "pin_cites": [ { "page": "86" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/31/0069-01" ] }, { "cite": "169 Ill. 2d 110", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 909171 ], "year": 1995, "pin_cites": [ { "page": "124" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/169/0110-01" ] }, { "cite": "138 Ill. 2d 369", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5576205 ], "year": 1990, "pin_cites": [ { "page": "373" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/138/0369-01" ] }, { "cite": "95 Ill. 2d 360", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3111432 ], "year": 1983, "pin_cites": [ { "page": "368-69" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/95/0360-01" ] }, { "cite": "844 F.2d 56", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 10542394 ], "year": 1988, "pin_cites": [ { "page": "57" } ], "opinion_index": 0, "case_paths": [ "/f2d/844/0056-01" ] }, { "cite": "129 F.3d 773", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11898620 ], "year": 1997, "pin_cites": [ { "page": "779" } ], "opinion_index": 0, "case_paths": [ "/f3d/129/0773-01" ] }, { "cite": "137 Ill. 2d 332", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3251633 ], "year": 1990, "pin_cites": [ { "page": "342-44" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/137/0332-01" ] }, { "cite": "13 Ill. 2d 460", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2775597 ], "year": 1958, "pin_cites": [ { "page": "463" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/13/0460-01" ] }, { "cite": "85 Ill. 2d 352", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5469643 ], "year": 1981, "pin_cites": [ { "page": "356" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/85/0352-01" ] }, { "cite": "146 Ill. 2d 155", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5597125 ], "year": 1991, "pin_cites": [ { "parenthetical": "holding that a third party sued by an employee injured in a workplace accident can bring a contribution claim against the employer, but that the employer's liability is limited to the amount it would be required to pay under the Workers' Compensation Act" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/146/0155-01" ] }, { "cite": "158 Ill. 2d 166", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 780296 ], "year": 1994, "pin_cites": [ { "page": "173-74", "parenthetical": "citing with approval the principle that the general law mandates that piercing must never be made in favor of a corporation or its shareholders" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/158/0166-01" ] }, { "cite": "86 Ill. 2d 188", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5469637 ], "year": 1981, "pin_cites": [ { "page": "206", "parenthetical": "stating that a party \"cannot assert the equitable doctrine of piercing the corporate veil to disregard the separate corporate existence of a corporation he himself created to gain an advantage which would be lost under his present contention\"" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/86/0188-01" ] }, { "cite": "109 Ill. App. 3d 633", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5451669 ], "year": 1982, "pin_cites": [ { "page": "636" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/109/0633-01" ] }, { "cite": "296 Ill. App. 3d 260", "category": "reporters:state", "reporter": "Ill. 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CLARK USA, INC., Appellant." ], "opinions": [ { "text": "JUSTICE GARMAN\ndelivered the judgment of the court, with opinion:\nJustices Fitzgerald and Karmeier concurred in the judgment and opinion.\nJustice Freeman specially concurred, with opinion, joined by Justice Burke.\nChief Justice Thomas and Justice Kilbride took no part in the decision.\nOPINION\nOn March 13, 1995, Michael F. Forsythe and Gary Szabla, mechanics at a refinery owned and operated by Clark Refining and Marketing (Clark Refining), were killed. The estate of each decedent received payment from Clark Refining pursuant to the Workers\u2019 Compensation Act (820 ILCS 305/1 et seq. (West 2002)). In 1996 and 1997, plaintiffs Marguerite Forsythe and Elizabeth Szabla, as special administrators of the estates of their late husbands, filed suits against Clark Refining and other defendants. Subsequently, plaintiffs added Clark Refining\u2019s parent company, Clark USA, as a defendant.\nClark USA is the only defendant involved in this appeal. At the close of discovery, the trial court granted Clark USA\u2019s motion for summary judgment pursuant to section 2 \u2014 1005 of the Code of Civil Procedure (735 ILCS 5/2 \u2014 1005 (West 2002)). The trial court did not state its reasoning. Plaintiffs appealed, and the appellate court reversed and remanded. 361 Ill. App. 3d 642. Following that decision, defendant petitioned this court for leave to appeal pursuant to Supreme Court Rule 315 (177 Ill. 2d R. 315).\nWe granted defendant\u2019s petition to consider two issues: first, whether a parent company can be held hable under a theory of direct participant liability for controlling its subsidiary\u2019s budget in a way that led to a workplace accident; second, if such a theory is recognized, whether the exclusive-remedy provision of the Workers\u2019 Compensation Act (820 ILCS 305/5 (West 2002)) immunizes a parent company from liability.\nBACKGROUND\nClark Refining operated an oil refinery in Blue Island, Illinois. Defendant is Clark Refining\u2019s parent company and sole shareholder. On March 13, 1995, decedents were on their lunch break when a fire broke out at the refinery, killing them both. The fire was apparently caused when other Clark Refining employees attempted to replace a valve on a pipe without ensuring that flammable materials within the pipe had been depressurized. Plaintiffs claim that those employees were not maintenance mechanics and were not trained or qualified to perform the work they were attempting.\nPlaintiffs\u2019 allegations of liability center around defendant\u2019s overall budgetary strategy. Specifically, plaintiffs allege that defendant breached a duty to use reasonable care in imposing its business strategy on Clark Refining by (1) \u201crequiring [Clark Refining] to minimize operating costs including costs for training, maintenance, supervision and safety,\u201d (2) \u201crequiring [Clark Refining] to limit capital investments to those which would generate cash for the refinery thereby preventing [Clark Refining] from adequately reinforcing the walls of the lunchroom or relocating the lunchroom to a safe position within the refinery,\u201d and (3) \u201cfailing to adequately evaluate the safety and training procedures in place at the Blue Island Refinery.\u201d Moreover, plaintiffs allege that defendant\u2019s strategy of capital cutbacks forced Clark Refining to have unqualified employees act as maintenance mechanics which, in turn, led to the fire that killed the decedents. This, plaintiffs argue, constitutes proximate cause.\nIn support of its motion for summary judgment, defendant contended that it owed no duty to either decedent by virtue of its status as a mere holding company, which was connected to Clark Refining only as a shareholder. Defendant submitted evidence to prove that Clark Refining owned and operated the refinery while defendant itself had no control over the day-to-day operations. Plaintiffs countered that defendant was directly responsible for creating conditions that precipitated the accident.\nIn support of their argument, plaintiffs cited evidence that defendant\u2019s directors created and approved Clark Refining\u2019s budget, striving to \u201cposition itself as a low cost refiner and marketer\u201d with the goal of replenishing defendant\u2019s cash reserve by \u201cdecreasing] capital spending *** to minimum sustainable levels\u201d through the institution of a \u201csurvival mode\u201d business plan. Plaintiffs also produced evidence that the boards of directors of Clark Refining and defendant met simultaneously. Moreover, plaintiffs relied upon evidence that the belt-tightening budget created by Clark Refining was overseen by Paul Melnuk, who served as defendant\u2019s president as well as chief executive officer of Clark Refining.\nThe trial court granted summary judgment without explanation. Subsequently, plaintiffs appealed and the appellate court reversed and remanded, rejecting a claim by defendant that it was entitled to immunity under the Workers\u2019 Compensation Act. The appellate court held that \u201cplaintiffs presented sufficient evidence to raise an issue of material fact as to whether defendant directly participated in creating conditions within the refinery which led to the deadly fire.\u201d 361 Ill. App. 3d at 655. One justice dissented, finding that plaintiffs presented no evidence of separate acts, attributable solely to defendant, by which defendant directly caused the injuries in this case. 361 Ill. App. 3d at 658 (McNulty, J., dissenting).\nANALYSIS\nSection 2 \u2014 1005 of the Code of Civil Procedure provides for summary judgment when the pleadings, depositions, and admissions on file, together with any affidavits, show that there is no genuine issue as to any material fact such that the moving party is entitled to a judgment as a matter of law. 735 ILCS 5/2 \u2014 1005 (West 2002). The purpose of summary judgment is not to try a question of fact but simply to determine if one exists. Robidoux v. Oliphant, 201 Ill. 2d 324, 335 (2002). In reviewing a summary judgment disposition, this court will construe the record strictly against the movant and liberally in favor of the nonmoving party. Jackson v. TLC Associates, Inc., 185 Ill. 2d 418, 423-24 (1998). Moreover, it must be noted that summary judgment dispositions \u201cshould not be allowed unless the moving party\u2019s right to judgment is clear and free from doubt.\u201d Jackson, 185 Ill. 2d at 424. If the undisputed material facts could lead reasonable observers to divergent inferences, or where there is a dispute as to a material fact, summary judgment should be denied and the issue decided by the trier of fact. Jackson, 185 Ill. 2d at 424. This court reviews a grant of summary judgment de novo. Roth v. Opiela, 211 Ill. 2d 536, 542 (2004).\nI. Direct Participant Liability\nTo state a cause of action for negligence, plaintiffs must show that defendant owed and breached a duty of care, proximately causing the plaintiffs injury. Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 114 (1995). The threshold issue in this case is the existence of a duty, which is a question of law for the court to decide. Chandler v. Illinois Central R.R. Co., 207 Ill. 2d 331, 340 (2003). As we have recently stated, the \u201ctouchstone of this court\u2019s duty analysis is to ask whether a plaintiff and a defendant stood in such a relationship to one another that the law imposed upon the defendant an obligation of reasonable conduct for the benefit of the plaintiff.\u201d Marshall v. Burger King Corp., 222 Ill. 2d 422, 436 (2006), citing Happel v. Wal-Mart Stores, Inc., 199 Ill. 2d 179, 186 (2002). Four factors inform this inquiry: (1) the reasonable foreseeability of injury, (2) the likelihood of injury, (3) the magnitude of the burden of guarding against the injury, and (4) the consequences of placing the burden upon the defendant. Marshall, 222 Ill. 2d at 436-37.\nBefore undertaking our analysis, we note, as did the parties and the appellate court, that the theory of direct participant liability presented here has not previously been addressed in Illinois. It has been addressed in other states and throughout the federal courts, however. We will consider this authority where appropriate in our analysis.\nPlaintiffs argue that defendant demanded Clark Refining operate its refinery pursuant to an overall business strategy that it knew would adversely affect safety by forcing reductions in training and maintenance. Indeed, plaintiffs contend that defendant actively and directly mandated unreasonable cuts in Clark Refining\u2019s budget in order to carry out its strategy. This strategy was outlined in Clark USA business records calling for a \u201csurvival mode\u201d business philosophy accomplished through \u201creduced capital spending,\u201d \u201creduced working capital investment,\u201d and \u201creduced operating expense level.\u201d Plaintiffs allege that this \u201csurvival mode\u201d strategy was mandated, despite the fact that defendant knew or should have known that the only feasible budget cuts would come from safety, maintenance, and training expenses. This, plaintiffs\u2019 conclude, constitutes direct participation by defendant in the harm caused. As such, plaintiffs contend the appellate court correctly found that defendant owed them a duty based on the direct participant theory and not on the legal relationship of defendant to its subsidiary.\nDefendant contends that unless the standards for piercing the corporate veil are met, a parent company cannot be held liable for the negligence of its subsidiary. Attendant to that rule is the principle that a parent company does not owe a duty to third parties to supervise or control the conduct of its subsidiary to ensure that the subsidiary acts with reasonable care. Clark Refining owed a nondelegable duty to its employees to provide them with a safe workplace while defendant, as a parent, owed no duty whatsoever to ensure that Clark Refining met its obligations.\nAdditionally, even if direct liability is a recognized theory of recovery, defendant argues that the simple task of setting financial goals and employing an overall strategy to meet those goals is not improper but, instead, is \u201cconsistent with the parent\u2019s investor status\u201d and thus \u201cshould not give rise to direct liability.\u201d United-States v. Bestfoods, 524 U.S. 51, 69, 141 L. Ed. 2d 43, 62, 118 S. Ct. 1876, 1889 (1998). Because its conduct was always consistent with its investor status, defendant claims, there is no basis to treat it as a direct participant in the negligence alleged herein.\nWhile the Supreme Court has held that \u201c[i]t is a general principle *** deeply \u2018ingrained in our economic and legal systems\u2019 that a parent corporation *** is not liable for the acts of its subsidiaries\u201d (Bestfoods, 524 U.S. at 61, 141 L. Ed. 2d at 55-56, 118 S. Ct. at 1884, quoting W.O. Douglas & C. Shanks, Insulation from Liability Through Subsidiary Corporations, 39 Yale L.J. 193 (1929)), a significant body of case law supports the direct participant theory of liability urged by the plaintiffs. Some of that authority relies on the 1929 article quoted above and written, in relevant part, by then-Professor William O. Douglas.\nDouglas noted that liability has been imposed in \u201cinstances where the parent is directly a participant in the wrong complained of.\u201d 39 Yale L.J. at 208. In such instances, \u201cthe use of the latent power incident to stock ownership to accomplish a specific result made the parent a participator in or doer of the act,\u201d specifically evident where \u201cthere was interference in the internal management of the subsidiary; an overriding of the discretion of the managers of the subsidiary.\u201d 39 Yale L.J. at 209. Douglas stated further that \u201cdirect intervention or intermeddling by the parent in the affairs of the subsidiary and more particularly in the transaction involved, to the disregard of the normal and orderly procedure of corporate control carried out through the election of the desired directors and officers of the subsidiary and the handling by them of the direction of its affairs, seems to have been determinative in some cases to holding the parent liable.\u201d 39 Yale L.J. at 218.\nThe United States Supreme Court quoted the Douglas & Shanks article approvingly in Bestfoods, 524 U.S. at 64-65, 141 L. Ed. 2d at 58, 118 S. Ct. at 1886 (\u201cAs Justice (then-Professor) Douglas noted almost 70 years ago, derivative liability cases are to be distinguished from those in which \u2018the alleged wrong can seemingly be traced to the parent through the conduit of its own personnel and management\u2019 and \u2018the parent is directly a participant in the wrong complained of.\u2019 [Citation.] In such instances, the parent is directly liable for its own actions\u201d). The Court noted that the simple fact that directors of a parent corporation serve as directors of its subsidiary does not, standing alone, expose the parent corporation to liability for its subsidiary\u2019s acts. Bestfoods, 524 U.S. at 69-70, 141 L. Ed. 2d at 60-61, 118 S. Ct. at 1888. The Court went on to state, however, that \u201cthe acts of direct operation that give rise to parental liability must necessarily be distinguished from the interference that stems from the normal relationship between parent and subsidiary,\u201d and \u201c[t]he critical question is whether, in degree and detail, actions directed to the facility by an agent of the parent alone are eccentric under accepted norms of parental oversight of a subsidiary\u2019s facility.\u201d Bestfoods, 524 U.S. at 71-72, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889.\nSimilarly, in Esmark, Inc. v. National Labor Relations Board, 887 E2d 739 (7th Cir. 1989), the Seventh Circuit, in a case dealing with a potential violation of the National Labor Relations Act, cited Douglas & Shanks\u2019 article extensively and noted that Judge Learned Hand also recognized that a parent corporation could be held liable for the actions of its subsidiaries if the parent directly supervised the conduct of a specific transaction. In Kingston Dry Dock Co. v. Lake Champlain Transportation Co., 31 F.2d 265, 267 (2d Cir. 1929), Judge Hand wrote that such liability \u201cnormally must depend upon the parent\u2019s direct intervention in the transaction, ignoring the subsidiary\u2019s paraphernalia of incorporation, directors and officers.\u201d Relying on that authority, the Seventh Circuit held that \u201ca parent corporation may be held liable for the wrongdoing of a subsidiary where the parent directly participated in the subsidiary\u2019s unlawful actions.\u201d Esmark, 887 F.2d at 756.\nMoreover, the court held that \u201c[w]here the parent specifically directs the actions of its subsidiary, using its ownership interest to command rather than merely cajole,\u201d the possibility of direct liability is present and will be imposed \u201cwhere a parent disregards the separate legal personality of its subsidiary (and the subsidiary\u2019s own decisionmaking \u2018paraphernalia\u2019), and exercises direct control over a specific transaction.\u201d Esmark, 887 F.2d at 757. The court described this as a \u201ctransaction-specific\u201d theory of direct participation, citing numerous cases where parent companies have been held liable for misconduct by their subsidiaries. Esmark, 887 F.2d at 756 (collecting cases); see, e.g., L.B. Industries, Inc. v. Smith, 817 F.2d 69, 71 (9th Cir. 1987) (per curiam); United States v. Sutton, 795 F.2d 1040, 1060 (Temp. Emer. Ct. App. 1986) (\u201cA shareholder may be liable if he is a \u2018central figure\u2019 in a corporation\u2019s tortious conduct\u201d); Cher v. Forum International, Ltd., 692 F.2d 634, 640 (9th Cir. 1982); D.L. Auld Co. v. Park Electrochemical Corp., 553 F. Supp. 804, 808 (E.D.N.Y. 1982) (denying summary judgment in favor of the defendant where the plaintiff presented a claim that the defendant participated in the patent infringement perpetrated by its subsidiary); International Union, United Auto Workers v. Cardwell Manufacturing Co., 416 F. Supp. 1267, 1283-84, 1287-89 (D. Kan. 1976) (court found a parent liable for breach of bargaining agreement by subsidiary where parent specifically directed the subsidiary to disregard obligations under the NLRA); State v. Ole Olsen, Ltd., 35 N.Y.2d 979, 980, 324 N.E.2d 886, 886, 365 N.Y.S.2d 528, 528-29 (1975) (holding a corporate officer liable not on account of his being an officer of the corporate defendant but as an active individual participant in the wrongdoing); Cooper v. Cordova Sand & Gravel Co., 485 S.W.2d 261, 271-72 (Tenn. App. 1971); My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 619, 233 N.E.2d 748, 752 (1968) (holding that while common ownership and management will not ordinarily give rise to liability, liability may be imposed where there is active and direct participation by one corporation in the affairs of another or where there is \u201cconfused intermingling\u201d of the activities of the two corporations); Crescent Manufacturing Co. v. Hansen, 174 Wash. 193, 198, 24 E2d 604, 606 (1933). Under this \u201ctransaction-specific\u201d theory, shareholders or parent corporations are not held directly liable for their own independently wrongful acts but, instead, for their actions against third-party interests through the agency of subsidiaries. Esmark, 887 F.2d at 756. Accordingly, the court held that a parent corporation can be liable for interposing a guiding hand in the transactions of its subsidiary. Esmark, 887 F.2d at 756.\nPlaintiffs also cite other cases approving of direct liability. In Papa v. Katy Industries, Inc., 166 F.3d 937, 941 (7th Cir. 1999), the Seventh Circuit, again interpreting the National Labor Relations Act, evinced its continuing support for direct participant liability when it cited Es-mark, Bestfoods, and Kingston Dry Dock to state \u201cthat limited liability does not protect a parent corporation when the parent is sought to be held liable for its own act, rather than merely as the owner of the subsidiary that acted.\u201d Similarly, in Pearson v. Component Technology Corp., the Third Circuit, interpreting federal law, stated that \u201c[although not often employed *** it has long been acknowledged that parents may be \u2018directly\u2019 liable for their subsidiaries\u2019 actions when the \u2018alleged wrong can seemingly be traced to the parent through the conduit of its own personnel and management,\u2019 and the parent has interfered with the subsidiary\u2019s operations in a way that surpasses the control exercised by a parent as an incident of ownership.\u201d Pearson, 247 F.3d 471, 486-87 (3d Cir. 2001), citing Bestfoods, 524 U.S. at 64, 141 L. Ed. 2d at 58, 118 S. Ct. at 1886, quoting 39 Yale L.J. at 207. Likewise, in Boggs v. Blue Diamond Coal Co., 590 F.2d 655, 663 (6th Cir. 1979), the Sixth Circuit, interpreting Kentucky law, implicitly indicated its recognition of direct liability when it stated that \u201ca parent is not immune from tort liability to its subsidiary employees for its own, independent acts of negligence.\u201d\nThe Indiana Supreme Court, in Commissioner of Department of Environmental Management v. RLG, Inc., 755 N.E.2d 556, 559, 563 (Ind. 2001), also accepted direct participant liability when it held a defendant\u2019s sole officer and shareholder liable for violations of Indiana environmental laws and stated that \u201can individual, though acting in a corporate capacity *** may be individually liable *** as a direct participant under general legal principles.\u201d Additionally, the Iowa Supreme Court accepted a direct participant theory of liability when it held that a member of a limited liability corporation could be sued because it had undertaken to perform management services for the corporation and allegedly performed those services negligently. Estate of Countryman v. Farmers Cooperative Ass\u2019n, 679 N.W.2d 598, 605 (Iowa 2004). Other courts have also accepted the theory of direct participant liability. See, e.g., United States v. TIC Investment Corp., 68 F.3d 1082, 1091 n.9 (8th Cir. 1995) (interpreting the Comprehensive Environmental Response, Compensation, and Liability Act, the court held that \u201ca parent corporation may be directly liable for activities carried out ostensibly by its subsidiary if the parent corporation, in effect, actually operated the subsidiary\u2019s facility by having the authority to control and actually or substantially controlling the facility\u201d); United States v. Kayser-Roth Corp., 910 F.2d 24, 27 (1st Cir. 1990) (parent corporation can be held directly liable if actively involved in the affairs of its subsidiary); Dassault Falcon Jet Corp. v. Oberflex, Inc., 909 F. Supp. 345, 347, 354 (M.D.N.C. 1995) (direct participant liability could be maintained against a parent company for breach of warranty). Taken together, these cases make evident the substantial weight of authority supporting recognition of this theory of liability.\nIn opposition to plaintiffs\u2019 theory, defendant contends that a parent corporation owes no duty to supervise its subsidiary\u2019s conduct for the benefit of third parties. Defendant cites Young v. Bryco Arms, 213 Ill. 2d 433, 452 (2004), where this court noted its recognition of the general rule that \u201cone has no duty to control the conduct of another to prevent him from causing harm to a third party, absent a special relationship with either the person causing the harm or the injured party.\u201d Building on that point, defendant argues that courts have uniformly rejected the argument that the parent-subsidiary relationship qualifies as the kind of \u201cspecial relationship\u201d necessary to give rise to a duty to supervise or control the conduct of the subsidiary. In re Birmingham Asbestos Litigation, 619 So. 2d 1360 (Ala. 1993). Supporting this contention, defendant cites Joiner v. Ryder System Inc., 966 F. Supp. 1478 (C.D. Ill. 1996), where the district court applied Illinois law and concluded that a duty could not be predicated either on the parent\u2019s ability to control its subsidiary or on its actual exercise of control:\n\u201cRSI \u2014 as every parent corporation does \u2014 obviously has the power to control its subsidiaries. In fact, RSI owns them and RSI can \u2018force\u2019 them to do anything it wants. That power, by itself, however, does not impose a duty upon RSI. Only if RSI abused the power \u2014 by exerting too much control \u2014 could it be held liable for the conduct of its subsidiaries as an alter ego.\u201d Joiner, 966 F. Supp. at 1490.\nAdditionally, defendant contends that direct participant claims virtually identical to those raised here were rejected by two state appellate decisions, one from Texas and one from California. In Coastal Corp. v. Torres, 133 S.W.3d 776 (Tex. App. 2004), refinery employees injured in an explosion brought a negligence action against the refinery\u2019s parent company. The employees alleged that \u201c \u2018through central budgetary authority exercised by Coastal\u2019s corporate officers *** Coastal *** assumed control over maintenance, turnaround, and inspection matters at the plant,\u2019 \u201d limited expenditures, and \u201ccontrolled and influenced its subsidiary in a way that directly resulted in appellees\u2019 injuries.\u201d Coastal Corp., 133 S.W.3d at 777, 779. The Coastal Corp. court noted that the plaintiffs in that case alleged \u201cnegligent control of the budget, not negligent control over details of specific operational activities,\u201d and eventually found that the parent company had no duty as a matter of Texas law to \u201capprove budgets for its subsidiaries in order to assure that the subsidiaries repair defects on their premises.\u201d Coastal Corp., 133 S.W.3d at 779, 782.\nSimilarly, in Waste Management Inc. v. Superior Court of San Diego, 69 Cal. Comp. Cas. 759 (2004), plaintiffs brought an action against a parent company for negligently controlling its subsidiary\u2019s budget such that the subsidiary was prevented from replacing and repairing trash trucks. The court recognized direct participant liability and stated that \u201cthe parent may owe a duty arising out of obligations independent of the parent subsidiary relationship.\u201d Waste Management, 69 Cal. Comp. Cas. at 762. The court went on to hold, however, that \u201cNegligently controlling or intentionally mismanaging a subsidiary\u2019s budget does not create a duty on the part of the parent corporation to ensure safety or prevent injuries to the subsidiary\u2019s employees.\u201d Waste Management, 69 Cal. Comp. Cas. at 763.\nAs defendant points out, Coastal Corp. and Waste Management stand for the proposition that mere budgetary mismanagement is not enough to support direct participant liability. Additionally, however, the Coastal Corp. court noted that \u201cit is apparent that liability is imposed when there is specific control over the activity that caused the accident.\u201d Coastal Corp., 133 S.W.3d at 779. Similarly, the Waste Management court stated that the plaintiffs\u2019 case failed because they could not show that the parent company \u201cdirected and authorized the manner in which the subsidiary conducted its business.\u201d (Emphasis in original.) Waste Management, 69 Cal. Comp. Cas. at 763. In other words, these courts found that a viable claim of liability under the direct participant theory cannot rest solely upon budgetary mismanagement, but budgetary mismanagement can make up one part of a viable claim, in conjunction with the direction or authorization of the manner in which an activity is undertaken. The Joiner decision echoes this sentiment. There, the court granted summary judgment in favor of the parent/defendant, noting significantly that the parent/defendant did \u201cnot get involved in the day-to-day activities or management of the subsidiaries.\u201d Joiner, 966 F. Supp. at 1490. Based upon this analysis, we conclude that budgetary mismanagement, accompanied by the parent\u2019s negligent direction or authorization of the manner in which the subsidiary accomplishes that budget, can lead to a valid cause of action under the direct participant theory of liability.\nConsidering the above, we hold that direct participant liability is a valid theory of recovery under Illinois law. Where there is evidence sufficient to prove that a parent company mandated an overall business and budgetary strategy and carried that strategy out by its own specific direction or authorization, surpassing the control exercised as a normal incident of ownership in disregard for the interests of the subsidiary, that parent company could face liability. The key elements to the application of direct participant liability, then, are a parent\u2019s specific direction or authorization of the manner in which an activity is undertaken and foreseeability. If a parent company specifically directs an activity, where injury is foreseeable, that parent could be held liable. Similarly, if a parent company mandates an overall course of action and then authorizes the manner in which specific activities contributing to that course of action are undertaken, it can be liable for foreseeable injuries. We again stress, though, that allegations of mere budgetary mismanagement alone do not give rise to the application of direct participant liability.\nOur finding is supported by the policy-based factors courts use to determine whether a duty exists. Marshall v. Burger King Corp., 222 Ill. 2d at 436-37 (the factors are (1) the reasonable foreseeability of injury, (2) the likelihood of injury, (3) the magnitude of the burden of guarding against the injury, and (4) the consequences of placing the burden upon the defendant). Certain heavy industries, like refining, inherently involve a great amount of danger. It is conceivable that severe cutbacks in staffing, safety, maintenance, and training in such industries could lead, with reasonable foreseeability, to the injury of others. The likelihood of injury in those circumstances would not be remote and could be deadly. Additionally, the magnitude of the burden of guarding against such injury would not be great. Parent companies are free to craft overall business and budgetary strategies; such companies simply must not interfere directly in the manner their subsidiaries undertake certain activities such that the subsidiaries are no longer free to utilize their own expertise. Alternatively, if parent companies do interfere directly in the manner their subsidiaries undertake certain activities, they must do so with reasonable care. Finally, it is not an undue burden to require that parent corporations engage in the considered exercise of due care in an already limited role. As we have already acknowledged, parent corporations are generally not liable for the acts of their subsidiaries. Bestfoods, 524 U.S. at 61, 141 L. Ed. 2d at 55-56, 118 S. Ct. at 1884, quoting 39 Yale L.J. 193. Moreover, the mere fact of a parent-subsidiary relationship, without a great deal more, does not give rise to liability. Bestfoods, 524 U.S. at 61, 141 L. Ed. 2d at 56, 118 S. Ct. at 1884, quoting 1 W Fletcher, Cyclopedia of Law of Private Corporations \u00a733, at 568 (rev. ed. 1990).\nThis court has repeatedly and consistently highlighted the point that it is \u201caxiomatic that every person owes to all others a duty to exercise ordinary care to guard against injury which naturally flows as a reasonably probable and foreseeable consequence of his act.\u201d Frye v. Medicare-Glaser Corp., 153 Ill. 2d 26, 32 (1992), quoting Nelson v. Union Wire Rope Corp., 31 Ill. 2d 69, 86 (1964); see also Mt. Zion State Bank & Trust v. Consolidated Communications, Inc., 169 Ill. 2d 110, 124 (1995); Widlowski v. Durkee, 138 Ill. 2d 369, 373 (1990); Feldscher v. E&B, Inc., 95 Ill. 2d 360, 368-69 (1983). Recognizing that a parent company may have a duty based upon direct participant liability does not end the analysis though. Certain facts must still be present to give rise to its application.\nII. Direct Participant Liability Applied\nReturning to the specific issue in this case, we must resolve whether there exists a question of material fact such that the evidence presented could lead a reasonable observer to believe that defendant\u2019s overall business and budgetary strategy involved the negligent direction or authorization of the manner in which Clark Refining conducted its business. If so, the trial court\u2019s grant of summary judgment was inappropriate.\nDefendant\u2019s overall business strategy at the time of the tragic accident involved here mandated increased productivity driven, at least in part, by budgetary cuts. The question remains, though, whether those cuts were negligently directed by or conducted in a manner authorized by defendant at the expense of Clark Refining. Answering this question requires a close look at the role of defendant\u2019s president, Paul Melnuk, who also served as chief executive officer of Clark Refining.\nIn Bestfoods, the Supreme Court pointed out that lower courts must \u201crecognize that \u2018it is entirely appropriate for directors of a parent corporation to serve as directors of its subsidiary, and that fact alone may not serve to expose the parent corporation to liability for its subsidiary\u2019s acts.\u2019 \u201d Bestfoods, 524 U.S. at 69, 141 L. Ed. 2d at 60, 118 S. Ct. at 1888, citing American Protein Corp. v. AB Volvo, 844 F.2d 56, 57 (2d Cir. 1988). The Court acknowledged the \u201c \u2018well established principle [of corporate law] that directors and officers holding positions with a parent and its subsidiary can and do \u201cchange hats\u201d to represent the two corporations separately, despite their common ownership.\u2019 \u201d Bestfoods, 524 U.S. at 69, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888, citing Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 779 (5th Cir. 1997). Further, the Court noted that it should be presumed that directors are wearing their \u201csubsidiary hats,\u201d rather than their \u201cparent hats,\u201d when acting for the subsidiary. Bestfoods, 524 U.S. at 69, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888.\nAccordingly, to establish liability, plaintiffs must establish more than the fact that Paul Melnuk made policy decisions and supervised subsidiary activities. Best-foods, 524 U.S. at 69, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888. Instead, plaintiffs must show that the conduct complained of occurred while Paul Melnuk was acting in his capacity as an officer of Clark USA, rather than as an officer of Clark Refining. Bestfoods, 524 U.S. at 69, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888. In attempting to do so, plaintiffs point to additional language from Bestfoods, where the Court stated that \u201cthe presumption that an act is taken on behalf of the corporation for whom the officer claims to act is strongest when the act is perfectly consistent with the norms of corporate behavior, but wanes as the distance from those accepted norms approaches the point of action by a dual officer plainly contrary to the interests of the subsidiary yet nonetheless advantageous to the parent.\u201d Bestfoods, 524 U.S. at 70 n.13, 141 L. Ed. 2d at 61 n.13, 118 S. Ct. at 1888 n.13.\nSeizing upon that language, plaintiffs point to the April 1995 \u201cMemorandum to the Executive Committee,\u201d prepared by Paul Melnuk, completed on Clark USA letterhead, and including a document entitled \u201c1995 Economic Imperatives.\u201d Moreover, plaintiffs point to another Clark USA business record, the agenda for the February 15, 1995, board of directors meeting, which includes a section entitled \u201cClark USA Liquidity Overview.\u201d That document lays out a \u201csurvival mode\u201d business philosophy marked by \u201creduced capital spending,\u201d \u201creduced working capital investment,\u201d and \u201creduced operating expense level.\u201d The document further states that the \u201cgoal is to replenish [defendant\u2019s] strategic cash reserve to $200 million.\u201d Defendant\u2019s continued emphasis on this goal is supported by the \u201c1995 Economic Imperatives,\u201d one of which was to \u201cReplenish cash balance to 200 million\u201d by reducing capital spending to \u201cminimum sustainable levels.\u201d Relying on this, plaintiffs contend that the business and budgetary strategy defendant mandated in this case was carried out for its own benefit at the foreseeable expense of safety and spending at Clark Refining and at the direction of Paul Melnuk. As such, the only benefit of the business and budgetary strategy involved in this case ran to defendant and not Clark Refining. This, plaintiffs argue, proves that Paul Melnuk was acting not on behalf of Clark Refining but, instead, on behalf of Clark USA.\nIn opposition, defendant cites the testimony of Paul Melnuk himself where he claims that the 1995 Imperatives, though completed on defendant\u2019s letterhead, were actually carried out for Clark Refining. Additionally, defendant notes that the 1995 Imperatives include discussion of the continuing need to spend on necessary health and safety as well as ensure that all existing environmental, health, and safety needs are fully supported.\nAt the very least, there is a genuine issue of material fact as to whose \u201chat\u201d Melnuk was wearing when he completed the 1995 memorandum. If the fact finder concludes that Melnuk was acting on behalf of defendant and thus wearing his Clark USA \u201chat,\u201d there is some evidence that he was directing or authorizing the manner in which Clark Refining\u2019s budget was implemented such that he had a duty, under the direct participant theory of liability, to do so with reasonable care. The additional evidence produced by plaintiffs indicating that Melnuk knew both that the budgetary reductions involved here had to come in large part from controllable costs such as education, training, repairs, and equipment maintenance, and that these reductions were compromising safety at the refinery raises an issue of material fact as to whether or not defendant breached that duty. The trial court\u2019s grant of summary judgment was therefore inappropriate.\nIf Paul Melnuk, acting on behalf of defendant, directed or authorized the manner in which the budget cuts in this case were taken, he had a duty to do so in a nonnegligent way. If Melnuk directed or authorized the manner in which the budget cuts at issue were taken, knowing that safety at the Blue Island refinery would be compromised, and did so superseding the discretion and interest of Clark Refining, direct participant liability could attach. Determining whether this duty applies to the facts of this case, and whether defendant is liable, involves factual inquiry. See, e.g., O\u2019Hara v. Holy Cross Hospital, 137 Ill. 2d 332, 342-44 (1990) (this court held that whether or not a hospital had a duty to protect a nonpatient invited into an emergency room involved a factual inquiry into whether the nonpatient was invited to participate in the care and treatment of the patient and thus summary judgment in favor of hospital was inappropriate). This inquiry is not suitable for this court on review and not appropriate for disposition at summary judgment, especially considering that this court must interpret the record strictly against the moving party and liberally in favor of the nonmoving party. Jackson, 185 Ill. 2d at 423-24.\nIII. Immunity Under the Illinois Workers\u2019 Compensation Act\nHaving found that direct participant liability is a potentially valid theory of recovery in this case, and that a genuine issue of material fact exists as to its application, we still must analyze the exclusive remedy provision of the Workers\u2019 Compensation Act (820 ILCS 305/ 5(a) (West 2002)). Defendant claims that, even if it were found liable under the direct participant theory, the exclusivity provision renders it immune. The provision, found in section 5(a) of the Act, provides:\n\u201cNo common law or statutory right to recover damages from the employer *** for injury or death sustained by any employee while engaged in the line of his duty as such employee, other than the compensation herein provided, is available to any employee who is covered by the provisions of this Act ***.\u201d 820 ILCS 305/5(a) (West 2002).\nThis provision serves a balancing function. On the one hand, the Act establishes a new \u201csystem of liability without fault, designed to distribute the cost of industrial injuries without regard to common-law doctrines of negligence, contributory negligence, assumption of risk, and the like.\u201d Gannon v. Chicago, Milwaukee, St. Paul & Pacific Ry. Co., 13 Ill. 2d 460, 463 (1958). On the other hand, the Act imposes \u201cstatutory limitations upon the amount of the employee\u2019s recovery, depending upon the character and the extent of the injury\u201d and provides \u201cthat the statutory remedies under it shall serve as the employee\u2019s exclusive remedy if he sustains a compensable injury.\u201d McCormick v. Caterpillar Tractor Co., 85 Ill. 2d 352, 356 (1981).\nDefendant asserts that plaintiffs\u2019 theory of liability in this case should be treated no differently than a conventional veil-piercing theory, contending that plaintiffs\u2019 claim has to be that the parent company interfered to such an extent in the subsidiary\u2019s business that it should be treated as if it were the subsidiary. In that situation, defendant continues, the parent company has become the subsidiary/employer and should be subject to the same burdens and entitled to the same protections a subsidiary/employer would have under the Workers\u2019 Compensation Act. See Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155 (1991) (holding that a third party sued by an employee injured in a workplace accident can bring a contribution claim against the employer, but that the employer\u2019s liability is limited to the amount it would be required to pay under the Workers\u2019 Compensation Act).\nWe reject this argument. Direct participant liability, as we now recognize it, does not rest on piercing the corporate veil such that the liability of the subsidiary is the liability of the parent. On the contrary, this form of liability is asserted, as its name suggests, for a parent\u2019s direct participation, superseding the discretion and interest of the subsidiary, and creating conditions leading to the activity complained of. Here, plaintiffs claim that defendant directly participated in creating conditions within the Blue Island refinery that led to the fire by directing or authorizing the manner in which Clark Refining\u2019s cost-cutting budget was instituted with no regard for the discretion and interest of Clark Refining itself.\nIn essence, defendant is requesting that it be allowed to pierce its own corporate veil in order to avoid liability. Illinois courts have consistently expressed reluctance for allowing such a practice. See In re Rehabilitation of Centaur Insurance Co., 158 Ill. 2d 166, 173-74 (1994) (citing with approval the principle that the general law mandates that piercing must never be made in favor of a corporation or its shareholders); Main Bank of Chicago v. Baker, 86 Ill. 2d 188, 206 (1981) (stating that a party \u201ccannot assert the equitable doctrine of piercing the corporate veil to disregard the separate corporate existence of a corporation he himself created to gain an advantage which would be lost under his present contention\u201d); see Hughey v. Hoffman Rosner Corp., 109 Ill. App. 3d 633, 636 (1982); Schmidt v. Milburn Brothers, Inc., 296 Ill. App. 3d 260, 267 (1998). The appellate court in this case recognized this point when it rejected defendant\u2019s attempt \u201cto have its cake and eat it too: asserting, on the one hand, that it was merely a shareholder in arguing that it owed no duty to the decedents, while, at the same time, attempting to invoke the Act\u2019s grant of immunity by characterizing itself as the decedents\u2019 employer.\u201d 361 Ill. App. 3d at 651-52.\nIn Schmidt, this point was made particularly clear. That case involved a plaintiff injured in a collision with a driver who worked for a company loosely affiliated with the defendant, plaintiffs own employer. The defendant in the case asserted the protection of the exclusive remedy provision of the Workers\u2019 Compensation Act. The court was not persuaded, stating that:\n\u201c[I]f defendants are right, [defendant] pays nothing for the negligence of its driver \u2014 no workers\u2019 compensation premiums, no workers\u2019 compensation benefits, no tort liability. That would turn the exclusive remedy provision of the [Workers\u2019 Compensation Act] into a sword, instead of a shield. No useful societal purpose would be served. [Defendant] would receive all the benefits the law provides to a separate and distinct corporate body with none of the usual detriments ***.\u201d Schmidt, 296 Ill. App. 3d at 269.\nWe agree with this analysis. It was Clark Refining, not defendant, who paid workers\u2019 compensation benefits to the decedents\u2019 families. It was Clark Refining, not defendant, who actually employed the decedents. As such it is Clark Refining, not Clark USA, that should enjoy the exclusive remedy provision of the Workers\u2019 Compensation Act. We decline to allow Clark USA to pierce its own corporate veil. Accordingly, the Workers\u2019 Compensation Act does not immunize defendant from liability.\nCONCLUSION\nDrawing no ultimate conclusions on the merits of plaintiffs\u2019 case and mindful that summary judgment is an extraordinary remedy, summary judgment was inappropriate in this matter. We recognize the direct participant theory of liability. We note, however, that this theory of liability gives rise to a duty only in limited circumstances. Budgetary oversight alone is insufficient, as is a parent company\u2019s commission of acts consistent with its investor status.\nIf there is sufficient evidence to show that a parent corporation directed or authorized the manner in which an activity is undertaken, however, a duty arises. Specifically, the duty to utilize reasonable care in directing or authorizing the manner in which that activity is undertaken. Accordingly, a parent corporation can be held liable if, for its own benefit, it directs or authorizes the manner in which its subsidiary\u2019s budget is implemented, disregarding the discretion and interests of the subsidiary, and thereby creating dangerous conditions. In such situations, parent-defendants will not be protected by the exclusive remedy provision of the Workers\u2019 Compensation Act.\nFor these reasons, we affirm the appellate court\u2019s reversal of the trial court\u2019s grant of summary judgment and its remand of the cause to the circuit court for further proceedings.\nAffirmed.\nCHIEF JUSTICE THOMAS and JUSTICE KIL-BRIDE took no part in the consideration or decision of this case.", "type": "majority", "author": "JUSTICE GARMAN" }, { "text": "JUSTICE FREEMAN,\nspecially concurring:\nOur ruling today, for the first time, recognizes that direct participant liability is a valid theory of recovery under Illinois law. We also find that, on the specific record presented in this case, the trial court erred in granting defendant, Clark USA, Inc., summary judgment on plaintiffs\u2019 direct participant liability claims. I am in agreement with the ultimate result reached by the majority opinion. I write separately, however, to offer additional reasons in support of the reversal of summary judgment in this matter.\nIn March 1995, plaintiffs\u2019 decedents were killed in a fire which followed an explosion occurring at their workplace, a refinery located in Blue Island. The refinery is owned and operated by decedents\u2019 employer, Clark Refining & Marketing, Inc. (Clark Refining). Defendant, Clark USA, Inc., owns 100% of the stock of Clark Refining. Plaintiffs allege that the fatal fire started when untrained operators, who were not maintenance mechanics, performed maintenance tasks and disassembled a valve which, instead of being drained of flammable materials, was still pressurized. As a result, these materials escaped and burst into flames. Decedents were eating in a lunchroom located in the maintenance building at the refinery across an access road from the maintenance work, and the explosion and subsequent fire trapped and killed them before they could escape the building.\nSubsequent to the accident, plaintiffs filed suit, naming Clark Refining\u2019s parent company, Clark USA, Inc., as a defendant based upon the theory of direct participant liability for controlling the budget of its subsidiary in such a way that directly led to the workplace accident and, ultimately, to the death of decedents. Plaintiffs alleged that defendant negligently imposed an \u201coverall business strategy\u201d directing the subsidiary to minimize costs and capital investments, which allegedly caused the subsidiary to engage in the dangerous practice of reducing training and maintenance. According to plaintiffs, as a result of this direct interference by the parent company, untrained operators were assigned to perform dangerous maintenance tasks at the plant. This occurred, plaintiffs contend, because there was a large maintenance backlog caused by economic cutbacks specifically dictated and directed by defendant in order to increase its own profits.\nDuring the course of this lengthy litigation, the parties have engaged in an extensive amount of discovery, including the exchange of countless business records as well as the taking of depositions of numerous individuals with knowledge of the events that occurred prior, during and after the time of the accident. Indeed, the appellate record in the instant matter exceeds 60 volumes and reaches nearly 15,000 pages. Two weeks before this cause was set for jury trial, the circuit court of Cook County granted defendant summary judgment pursuant to section 2 \u2014 1005 of the Code of Civil Procedure (735 ILCS 5/2 \u2014 1005 (West 2002)). The trial court\u2019s order granting summary judgment, however, stated only that defendant\u2019s motion was granted and contained no specific findings by the trial court to indicate the basis for its ruling.\nIt is in this procedural posture that the instant cause comes to us on appeal. We must, therefore, review the ruling of the circuit court to determine whether, under the specific facts and circumstances of this case, the circuit court erred in granting defendant summary judgment. The standards used to determine the propriety of a grant of summary judgment are familiar and well settled. The purpose of summary judgment is not to try a question of fact but, rather, to determine whether a genuine issue of material fact exists. Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 42-43 (2004). The entry of summary judgement is appropriate only where \u201cthe pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.\u201d 735 ILCS 5/2 \u2014 1005(c) (West 2004).\nIn determining whether a genuine issue of material fact exists, a court must construe the pleadings, depositions, admissions, and affidavits strictly against the movant and liberally in favor of the opponent. Bagent v. Blessing Care Corp., 224 Ill. 2d 154, 162-63 (2007). A triable issue precluding the entry of summary judgment exists where the material facts are disputed or where, the material facts being undisputed, reasonable persons might draw different inferences from the undisputed facts. Bagent, 224 Ill. 2d at 162-63. Although summary judgment can aid in the expeditious disposition of a lawsuit, it is nevertheless a drastic means of disposing of litigation and, therefore, should be allowed only where the right of the moving party is clear and free from doubt. Adams, 211 Ill. 2d at 43 (and cases cited therein).\nIt is with these standards in mind that we hold today that the trial court improvidently granted defendant summary judgment. We have carefully reviewed the vast amount of evidence adduced by plaintiffs in opposition to defendant\u2019s motion for summary judgment. Various business documents generated by defendant and/or its subsidiary, coupled with the deposition testimony of several individuals familiar with events transpiring prior, during and subsequent to the accident, raise numerous genuine issues of material fact as to whether defendant, through its direct control of Clark Refining, negligently caused the maintenance and training of employees at the Blue Island facility to degrade to such a level that safe operation of the plant became impossible, ultimately leading to the fatal accident in this case.\nAt this juncture, I underscore that our opinion today does not alter the bedrock principle of limited liability for corporate shareholders, and that direct participant liability is a very narrow exception to this general principle. Today\u2019s decision stands for the proposition that if a parent company merely articulates general policies and supervises a subsidiary\u2019s budgeting decisions, such conduct alone is not enough to give rise to direct liability on the part of the parent. In other words, conduct that is entirely \u201cconsistent with the parent\u2019s investor status\u201d does not pose a problem. United States v. Bestfoods, 524 U.S. 51, 69, 141 L. Ed. 2d 43, 62, 118 S. Ct. 1876,1889 (1998). Thus, activities by the parent company that involve the subsidiary, such as \u201cmonitoring of the subsidiary\u2019s performance, supervision of the subsidiary\u2019s finance and capital budget decisions, and articulation of general policies and procedures,\u201d will, generally, not give rise to direct liability. Bestfoods, 524 U.S. at 72, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889. The \u201ccritical question\u201d in deciding whether the parent company can be held liable under a theory of direct participant liability is \u201cwhether, in degree and detail, actions directed to the [subsidiary] by an agent of the parent alone are eccentric under accepted norms of parental oversight of a subsidiary\u2019s facility.\u201d Bestfoods, 524 U.S. at 72, 61-62, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889. Throughout these proceedings, defendant has voiced the valid concern that the direct participation liability theory of recovery must not be stretched to such an extent that it encompasses routine and proper exercises of shareholder control, lest the exception swallows the general rule and serves to spawn a flood of lawsuits against parent companies. I agree with defendant on this point, and our opinion today preserves the proper balance between the general rule and this narrow exception.\nIn addition, defendant has voiced concern that it could be held liable under the direct participant theory simply because it shares its officers and directors with its subsidiary. Our opinion today guards against such a result, as it recognizes the principle that \u201cit cannot be enough to establish liability [under a direct participation theory] that dual officers and directors made policy decisions and supervised activities at the facility.\u201d Bestfoods, 524 U.S. at 69-70, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888. This is true because when an individual wears two \u201chats\u201d \u2014 i.e., as an officer and/or director of both the parent and the subsidiary companies \u2014 a court will \u201cgenerally presume \u2018that the directors are wearing their \u201csubsidiary hats\u201d and not their \u201cparent hats\u201d when acting for the subsidiary.\u2019 \u201d Bestfoods, 524 U.S. at 69, 141 L. Ed. 2d at 61, 118 S. Ct. at 1888, quoting P Blumberg, Law of Corporate Groups: Procedural Problems in the Law of Parent & Subsidiary Corporations \u00a71.02.1, at 12 (1983). In other words, a parent company will generally not be found liable for decisions made by a subsidiary\u2019s board and/or officers simply because these individuals are also officers or directors of the parent company. Rather, liability will result only in instances where the conduct complained of occurred while the officers/ directors were acting in their capacity as officers/ directors of the parent, rather than of the subsidiary. As the Court in Bestfoods explained: \u201cthe presumption that an act is taken on behalf of the corporation for whom the officer claims to act is strongest when the act is perfectly consistent with the norms of corporate behavior, but wanes as the distance from those accepted norms approaches the point of action by a dual officer plainly contrary to the interests of the subsidiary yet nonetheless advantageous to the parent.\u201d Bestfoods, 524 U.S. at 70 n.13, 141 L. Ed. 2d at 61 n.13, 118 S. Ct. at 1888 n.13.\nIt should be emphasized that rarely will a parent company that generally observes corporate formalities step outside the proper role of a parent to so pervasively interfere with the operations of the subsidiary that it can be viewed as directly inflicting harm on the subsidiary\u2019s employees or third parties doing business with the subsidiary. In the matter before us, however, plaintiffs have presented sufficient evidence of conduct by defendant to create a genuine issue of material fact as to whether that conduct could not only be deemed \u201ceccentric under accepted norms of parental oversight\u201d of a subsidiary\u2019s business (Bestfoods, 524 U.S. at 72, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889), but also \u201cplainly contrary to the interests of the subsidiary yet nonetheless advantageous to the parent\u201d (Bestfoods, 524 U.S. at 70 n.13, 141 L. Ed. 2d at 61 n.13, 118 S. Ct. at 1888 n.13), to the extent that it could serve as a predicate for direct participant liability on the part of defendant.\nFirst, the record contains several business documents which raise a genuine issue of material fact with respect to the nature and extent of direct involvement by defendant in the affairs of its subsidiary, Clark Refining. As background, I note that throughout the time period at issue in this matter, defendant and Clark Refining had largely (although not entirely) overlapping boards of directors, which often held joint meetings. In addition, the president and chief executive officer of defendant, Paul Melnuk, was also the president, chief executive officer (CEO) and chief operating officer (COO) of Clark Refining. As further background information, I note that, in his deposition, Melnuk testified that he had no previous experience in the oil refining business, and that he concentrated on the financial aspects of the business. Melnuk further stated in his deposition that defendant had no operations personnel, and that its function was to simply serve as a holding company.\nIt is against this background that we have reviewed the following business records. For example, plaintiffs point to a business record entitled \u201cClark USA Liquidity Overview.\u201d This document is part of the agenda for the Clark USA, Inc., February 15, 1995, board of directors meeting, and commands that the \u201c1995 philosophy is survival mode,\u201d and that the \u201cgoal is to replenish the strategic cash reserve to $200 million.\u201d This goal was to be accomplished through \u201creduced capital spending,\u201d \u201creduced working capital investment,\u201d and \u201creduced operating expense level.\u201d\nDefendant\u2019s continued focus on this financial goal is reflected in a document entitled \u201cInteroffice Memorandum,\u201d which is dated April 19, 1995, from Paul Melnuk to the \u201cExecutive Committee\u201d regarding an \u201cEC Meeting\u201d to be held the following week. As part of this memo, Melnuk included as attachments documents entitled \u201cClark USA, Inc. 1995 Imperatives April 1995,\u201d \u201cClark USA, Inc. 1994 Performance Distribution Grade Level 13 and Above,\u201d and \u201cClark USA, Inc. Scorecard First Quarter, 1995.\u201d In the 1995 \u201cImperatives\u201d document, focus was placed upon replenishing Clark USA, Inc.\u2019s strategic cash reserve of $200 million by reducing the capital spending at the Blue Island refinery to the \u201cminimum sustainable level.\u201d In the \u201cScorecard\u201d document, \u201ckey achievements\u201d were listed to include \u201ccash balance\u201d and \u201c1995 Imperatives,\u201d whereas key disappointments were listed to include \u201cperformance management,\u201d \u201cemployee morale/lack of leadership,\u201d \u201cshort-term thinking,\u201d and \u201cBlue Island tragedy.\u201d\nThese documents create, in several respects, genuine issues of material fact that preclude entry of summary judgment. First, although defendant has asserted that it is a mere holding company, the \u201cInteroffice Memo\u201d contains documents which, on their face, deal with Clark USA, Inc., matters, and the memo itself is directed to the \u201cExecutive Committee.\u201d The existence of an executive committee for Clark USA, Inc., however, would run counter to defendant\u2019s argument that it is merely a holding company and has no operating personnel. During his deposition, Melnuk acknowledged the words as they are written in the memo and, specifically, in the attachment entitled \u201cClark USA, Inc. 1995 Imperatives.\u201d Melnuk, however, offered another, alternative reading of these words, stating: \u201cThe words on this page as you read them are the words as you read them. These are actually, in fact, the 1995 Imperatives of Clark Refining and Marketing, Inc., and in this regard the title on this page is incorrect.\u201d (Emphasis added.) Similarly, with respect to the attachment to the memo entitled \u201cClark USA, Inc. Scorecard First Quarter, 1995,\u201d Melnuk testified in his deposition that although the title states \u201cClark USA,\u201d this document \u201cis in fact a score card of the business of Clark R[efining] and Marketing],\u201d again contending that the title of the document was \u201cincorrect.\u201d At a minimum, these differing interpretations of the language of these documents and their contents create a genuine issue of material fact precluding entry of summary judgment.\nIn addition, plaintiffs assert that these documents create a genuine issue of material fact as to whether defendant\u2019s mandated budget cuts were targeted to reduce Clark Refining\u2019s capital spending on essential items such as safety training and maintenance. Plaintiffs contend that such commands are especially egregious and inappropriate in a refinery setting dealing with highly explosive materials, where an accident such as occurred here is foreseeable. According to plaintiff, the actions of defendant constitute precisely the type of conduct on the part of a parent company that may be considered \u201ceccentric under accepted norms of parental oversight\u201d (Bestfoods, 524 U.S. at 72, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889) and \u201cplainly contrary to the interests of the subsidiary yet nonetheless advantageous to the parent\u201d (Bestfoods, 524 U.S. at 70 n.13, 141 L. Ed. 2d at 61 n.13, 118 S. Ct. at 1888 n.13), to the extent that it could serve as a predicate for direct participant liability on the part of defendant.\nIn support of this theory, plaintiffs point to evidence that they assert shows that although defendant, through Melnuk, was aware of the negative effects of the mandated cuts on the safety, training, and maintenance at the Blue Island refinery, it nevertheless continued to require Clark Refining to comply with its dictates. For example, Ronald Anderson, a former union president at the refinery, stated in his deposition testimony that the issue of the lack of preventative maintenance at the refinery \u2014 including that employees were forced to \u201ccut[ ] corners\u201d with respect to maintenance and safety \u2014 was sent up the corporate chain of command, all the way to Melnuk. According to Anderson, under the direction of the \u201ccorporate office,\u201d members of the refinery\u2019s safety and environmental department worked only a daytime shift, even though the plant operated on a 24-hour basis. This meant that untrained operators were left to perform these specialized jobs during the off-shifts. In his deposition, Anderson described the situation at the plant as being one of \u201ccontinuous deterioration\u201d with respect to maintenance, safety, and training, and stated that the refinery was \u201cfalling apart.\u201d According to Anderson, Melnuk would not provide authorization to remedy the situation, despite the fact that, as union president, he directly discussed these issues with Melnuk. Anderson also stated that flyers were posted around the refinery which discussed the financial status and competitiveness of the company, which asked for increases in production, and which pointed out that other refineries had entered into bankruptcy. Anderson testified that this created a \u201cfear factor\u201d at the plant, in that \u201cpeople *** who generally would not compromise situations, compromised their job, were placed in a position through fear to be tempted to compromise things,\u201d meaning that they \u201ccut corners\u201d because they believed that otherwise \u201cthe place was going to shut down and everybody was going to lose their jobs.\u201d\nBased upon this evidence, a genuine issue of material fact was raised as to whether defendant\u2019s extreme cost-cutting requirements \u2014 dictated to the subsidiary despite the knowledge that its measures resulted in a dangerous reduction in training and maintenance which adversely affected safety at the refinery \u2014 may be considered \u201ceccentric under accepted norms of parental oversight\u201d (Bestfoods, 524 U.S. at 72, 141 L. Ed. 2d at 62, 118 S. Ct. at 1889) and \u201cplainly contrary to the interests of the subsidiary yet nonetheless advantageous to the parent\u201d (Bestfoods, 524 U.S. at 70 n.13, 141 L. Ed. 2d at 61 n.13, 118 S. Ct. at 1888 n.13), to the extent that it could serve as a basis for direct participant liability on the part of defendant. In addition, there is clearly a genuine issue of material fact with respect to what \u201chat\u201d Melnuk was wearing during this time period when he was apprised of these safety concerns but nevertheless dictated budget cuts. I also note that, during these proceedings, defendant has not challenged plaintiffs\u2019 assertion that it knew of the potential danger at the refinery due to its business plan.\nIn addition, plaintiffs also rely upon the deposition testimony of Terence Quirke, an economics planning engineer at the Blue Island refinery, to withstand defendant\u2019s summary judgment motion. Quirke testified with respect to the development and implementation of operating budgets at the Blue Island facility. According to Quirke, Melnuk \u2014 the president, CEO and COO of both defendant and its subsidiary \u2014 was personally and actively involved in creating and implementing operating budgets at the plant. According to Quirke, starting in 1993 management implemented a \u201czero based budget\u201d approach that took into account the actual costs of each item and operation in detail.\nAccording to Quirke, he and colleagues at the refinery established a working budget and assumed that it would be approved by management. Quirke testified, however, that he was informed that \u201cPaul Melnuk had said that the budget was too much.\u201d Quirke then inquired about what items needed to be cut, and he was told that the budget had to be reduced by 25%. In response, Quirke compiled a list of items that could and could not be cut. The bulk of the expenditures at the refinery were non-discretionary \u2014 including raw materials and utilities that were necessary to operate the plant. The remaining 20% of the costs were controllable, including employee wages, benefits, education, training, repairs, and equipment maintenance. According to Quirke, the only choice in complying with the requirement to reduce costs by 25% was to cut the controllable costs within the budget. According to Quirke\u2019s deposition testimony, this was explained to Melnuk, and, eventually, the budget with these reductions was approved. Quirke testified that, as a result of the mandated budget cuts, several troubling events occurred at the refinery, including 20 workers being replaced with 6 in one department, and new operator training and refresher training being entirely eliminated.\nAccording to plaintiffs, when defendant ordered the budget cuts at the Blue Island refinery, it knew that safety, training, staffing, education and maintenance would all be compromised, and, accordingly, it was foreseeable that injury would occur as a result. Plaintiffs further contend that the record reflects that the subsidiary had no decision in this reduction. Finally, plaintiffs point to Clark Refining\u2019s own internal investigation of the accident, which cited a lack of training, maintenance and safety as having played a causative role.\nAccordingly, in light of the evidence presented by plaintiffs, a genuine issue of material fact has been raised with respect to whether defendant merely established parameters or financial goals for its subsidiary. The evidence raises a question as to whether defendant actively mandated aggressive cuts in its subsidiary\u2019s budget knowing that these cuts could only be accomplished by dramatic reductions in maintenance, training and safety. Moreover, the evidence raises a question with respect to the forseeability of injury, as it appears that defendant had several opportunities, after ordering drastic budget reductions and observing their negative effects, to change course but did not. This conduct raises material questions of fact as to whether defendant\u2019s actions fall within the direct participant liability doctrine.\nIn sum, our opinion today recognizes a very narrow exception to the general rule. I underscore the procedural posture of this case: it is here on a review of a grant of defendant\u2019s motion for summary judgment. In assessing the circuit court\u2019s ruling, we construe, as we must, all evidence strictly against the movant \u2014 defendant\u2014and liberally in favor of the opponent \u2014 plaintiffs. With our opinion today, this court only determines that plaintiff adduced sufficient evidence to withstand defendant\u2019s motion for summary judgment. The decision today should not be interpreted as indicating or telegraphing whether plaintiffs will ultimately succeed on the merits of this cause of action. That is a question for the trier of fact to decide at trial.\nJUSTICE BURKE joins in this special concurrence.\nAs the United States Supreme Court observed in United States v. Bestfoods, \u201cit is hornbook law that \u2018the exercise of the \u201ccontrol\u201d which stock ownership gives to the stockholders ... will not create liability beyond the assets of the subsidiary.\u2019 \u201d Best-foods, 524 U.S. at 61-62, 141 L. Ed. 2d at 56, 118 S. Ct. at 1884, quoting W.O. Douglas & C. Shanks, Insulation from Liability Through Subsidiary Corporations, 39 Yale L.J. 193 (1929).", "type": "concurrence", "author": "JUSTICE FREEMAN," } ], "attorneys": [ "John C. Berghoff, Jr., and Michele Odorizzi, of Mayer, Brown, Rowe & Maw, LLR of Chicago, for appellant.", "Philip H. Corboy and Edward G. Wilier, of Corboy & Demetrio, EC., William R. Quinlan and James Niewiara, of Quinlan and Carrol, and Martin J. Healy, Jr., and David E Huber, all of Chicago, for appellees.", "Francis K. Tennant, of Wolf & Tennant, of Chicago, for amicus curiae Illinois Trial Lawyers Association." ], "corrections": "", "head_matter": "(No. 101570.\nMARGUERITE FORSYTHE et al., Appellees, v. CLARK USA, INC., Appellant.\nOpinion filed February 16, 2007.\nJohn C. Berghoff, Jr., and Michele Odorizzi, of Mayer, Brown, Rowe & Maw, LLR of Chicago, for appellant.\nPhilip H. Corboy and Edward G. Wilier, of Corboy & Demetrio, EC., William R. Quinlan and James Niewiara, of Quinlan and Carrol, and Martin J. Healy, Jr., and David E Huber, all of Chicago, for appellees.\nFrancis K. Tennant, of Wolf & Tennant, of Chicago, for amicus curiae Illinois Trial Lawyers Association." }, "file_name": "0274-01", "first_page_order": 284, "last_page_order": 321 }