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Hoschar v. Appalachian Power Company, No. 12-2482

Decided: January 7, 2014

The Fourth Circuit held (1) that the United States District Court for the Southern District of West Virginia properly denied Roger and Judy Hoschar’s (collectively, the appellants) motion to remand, as federal jurisdiction was proper due to complete diversity between the parties; and (2) that the district court properly granted summary judgment to Appalachian Power Company (APCO) because—under West Virginia law—there was no genuine issue of material fact regarding APCO’s actual or constructive knowledge of certain health risks associated with accumulations of bird excrement on the precipitators of its coal-fired power plant.  The Fourth Circuit therefore affirmed the judgment of the district court.

APCO owns the Philip Sporn power plant (Sporn), located in West Virginia.  Sporn, a coal-fired power plant, has five precipitators that “remove granular ash particles (fly ash) from the gasses produced by burning coal.”  APCO hired Industrial Contractors, Inc. (ICI) to perform maintenance at Sporn—including welding on the precipitators to prevent fly ash leakage.  Roger Hoschar (Mr. Hoschar), a boilermaker employed by ICI, worked exclusively at Sporn from March 2006 to March 2007.  Usually, Mr. Hoschar’s duties consisted of hanging from a suspended platform and welding corroded parts of the ducts on the Unit 5 precipitator (Unit 5).  Before welding, Mr. Hoschar had to remove debris that had agglomerated in the steel channels—including bird excrement.  ICI terminated Mr. Hoschar in March 2007.  In March 2009, Mr. Hoschar’s doctor discovered a mass on his right lung; after part of Mr. Hoschar’s lung was removed, a biopsy revealed that the mass was histoplasmosis—“an infectious disease caused by inhaling the spores of a naturally occurring soil-based fungus . . . .”  While Mr. Hoschar was performing maintenance at Sporn, the Occupational Safety and Health Administration website contained a page titled “Respiratory Protection: Hazard Recognition”; this page referenced a publication by the National Institute for Occupational Safety and Health (NIOSH) called “Histoplasmosis: Protecting Workers at Risk” (the NIOSH publication).  The NIOSH publication asserted that the relevant fungus “seems to grow best in soils having a high nitrogen content, especially those enriched with bird manure or bat droppings” and stated that the fungus “can be carried on the wings, feet, and beaks of birds and infect soil under roosting sites or manure accumulations inside or outside buildings.”

The appellants sued APCO and ICI for negligence in a West Virginia state court.  They sought damages for Mr. Hoschar’s histoplasmosis infection, alleging that he contracted the disease after inhaling contaminated dust while removing the bird manure and fly ash from Unit 5’s steel channels.  APCO removed the action to federal district court under 28 U.S.C. § 1332, stating that its principal place of business is in Columbus, Ohio, and that there was complete diversity among the parties.  The appellants filed a motion to remand the lawsuit to state court, asserting that complete diversity did not exist because APCO’s principal place of business is in Charleston, West Virginia.  The district court found that APCO’s principal place of business is in Columbus, Ohio, and therefore denied the appellants’ motion to remand.  After the discovery period, ICI and APCO filed separate summary judgment motions, both of which were granted by the district court.  The appellants subsequently settled with ICI; however, the appellants also appealed the district court’s denial of their motion to remand to state court, as well as the court’s grant of summary judgment in favor of APCO.

The Fourth Circuit found that—consistent with Hertz Corp. v. Friend, 559 U.S. 77, and Central West Virginia Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101—APCO’s “nerve center” is in Columbus, Ohio.  The Fourth Circuit noted that, inter alia, “APCO’s entire Board of Directors is located in Columbus,” as are twenty-two of its twenty-seven corporate officers—including its CEO, CFO, Secretary, and Treasurer; that the corporate officers in Columbus make significant decisions and make corporate policy “such that they direct, control, and coordinate APCO’s activities”; that only five of the twenty-seven corporate officers are based in Charleston; and that the Charleston officers simply conducted “day-to-day operations and public interface” rather than the corporate direction, control, and coordination indicative of a nerve center.  The Fourth Circuit rejected the appellants’ asserted difference between “ultimate” control and “actual” control, finding that these two terms are synonymous under Hertz—“provided that ultimate control amounts to directing, controlling, and coordinating the corporation’s activities.”  The Fourth Circuit also found that APCO’s references to Charleston as its “headquarters” was merely a misnomer, and that the actual nerve center activities occur in Columbus.  With regard to the district court’s grant of APCO’s summary judgment motion, the Fourth Circuit noted that there was no evidence that APCO employees knew the relevant fungus was present at Sporn.  Furthermore, with regard to constructive knowledge, the Fourth Circuit noted that APCO did not have reason to be award of the NIOSH publication.

Lastly, though the appellants argued that the question of APCO’s knowledge was inherently a factual determination for the jury, the Fourth Circuit noted that the knowledge determination pertained to “whether a legal duty was owed to Mr. Hoschar in the first place”—and that the appellants failed to present evidence creating a genuine issue of material fact in this regard.

Full Opinion

– Stephen Sutherland