Chicago, Illinois (March 31, 2009) Clark USA, Inc., has agreed to settle a lawsuit brought by the families of two mechanics killed when a fire erupted at an oil refinery in Blue Island, Illinois, for $12 million. The families were represented by Martin Healy, Jr. and David Huber, of Healy Scanlon Law Firm, Ltd., and Edward G. Willer of Corboy & Demetrio.In March of 1995, Michael Forsythe and Gary Szabla were both employed as maintenance mechanics for Clark Refining & Marketing, Inc., (Clark Refining), which operated an oil refinery in Blue Island, Illinois. On March 13, 1995, both men were killed when a fire erupted at the refinery while they were on their lunch break. The fire was caused by other Clark Refining operators who were performing maintenance work by replacing a four-inch valve on a machine without ensuring that the flammable materials within the pipe had been depressurized.After Clark Refining paid each estate under the Workers’ Compensation Act, the plaintiffs filed wrongful death lawsuits against Clark USA, the sole shareholder of Clark Refining. The lawsuit alleged that Clark USA’s overall business strategy was focused on limiting costs and increasing revenue. As a result, funds for training, maintenance, supervision and safety at the refinery were insufficient. Due to budget restraints imposed upon Clark Refining by its parent company Clark USA, operators were performing maintenance work. The plaintiffs alleged that those employees were not maintenance mechanics and not trained or qualified to work on refinery equipment. Clark USA argued that as a mere holding company with no control over the day-to-day operations, it owed no duty to any refinery employees.
The trial court agreed with Clark USA and granted Summary Judgment in its favor, thus dismissing the lawsuit. The plaintiffs appealed that ruling and the Illinois Appellate Court reversed the trial court acknowledging a “direct participation” exception for the first time. Forsythe, et. al. v. Clark USA, Inc., 361 Ill.App.3d 642 (1st Dist. 2005). It ruled that a holding company which directly intervenes in the management of its subsidiaries can be held liable for injuries to the subsidiary’s employees.
Defendants then appealed to the Illinois Supreme Court. In Forsythe, et al. v. Clark USA, Inc., 224 Ill.2d 274 (2006), the Illinois Supreme Court addressed “direct participant” liability and adopted the theory as the law of Illinois.
In adopting the theory, the Court found that where there is evidence sufficient to prove that a parent company mandated an overall business 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 are a parent company’s specific direction or authorization of the manner in which an activity is undertaken and the foreseeability of harm. In this case, the CEO of Clark USA and Clark Refining was the same officer who issued directives on behalf of the parent corporation and forced the subsidiary into a “survival mode operation,” which resulted in operators performing maintenance work beyond their abilities.
Since the Forsythe decision, many plaintiffs have utilized direct participant liability as an alternative to piercing the corporate veil to hold parent companies responsible.
Martin Healy, Jr., an attorney for the Forsythe family stated,
No amount of compensation can repair the damage done to the Forsythe family that day. The family is pleased that the matter is resolved after many years of litigation.
Edward G. Willer, an attorney for the Szabla family stated,
Gary Szabla was 37 years old and married with two very young children. He and his family were living the American dream. Now, after more than fourteen years of litigating this case at the trial, appellate and Supreme Court level, the family is relieved to finally obtain full justice and closure to this tragedy.
Clark USA was represented by attorneys John Berghoff, Mark Ter Molen and Karen Prena of Mayer Brown, attorney Russell R. Eggert of Reed Smith, LLP., and James F. Bennett of Dowd Bennet, LLP.
The case was mediated before former presiding Judge Donald O’Connell. The settlement was approved by Circuit Court Judge Thomas Quinn.
Marguerite Forsythe, as Administrator of the Estate of Michael F. Forsythe, deceased, and Elizabeth M. Szabla, Special Administrator of the Estate of Gary Szabla, deceased v. Clark USA, Inc., Court no. 2007 L 009909
About Healy Scanlon Law Firm
Healy Scanlon law firm has a reputation for getting exceptional results in difficult, complex cases.
About Corboy & Demetrio
Corboy & Demetrio is one of the nation’s premier law firms. It represents individuals and their families in serious personal injury and wrongful death cases and is renowned for its achievements in the courtroom and for its contributions to the community. The rights and concerns of its clients are at the core of Corboy & Demetrio’s practice. That commitment, dedication, compassion and relentless drive has resulted in exceptional service and exceptional results for its clients. The firm has acquired more than $3 billion in settlements and verdicts and has attained more than 500 settlements and verdicts in excess of $1 million.
For further information, contact Martin Healy, Jr. at Healy Scanlon Law Firm, 312-226-4236 or Edward G. Willer at Corboy & Demetrio, 312-346-3191