"But I didn't do it!": Expanding Theories of Vicarious Liability[dagger]

FDCC Quarterly, Summer 2008 by Franklin, Robert T

I.

INTRODUCTION

Since deregulation of the trucking industry, competition in the "for hire" segment of that industry has become increasingly competitive. Many motor carriers continue to utilize the traditional approach of directly soliciting freight from shippers for all, or at least most, of their work. There has, however, also been a steady growth in the use of intermediaries and third party logistic companies who attempt to play a creative role in matching motor carriers with available freight.

Brokers enter into agreements with motor carriers pursuant to which the carriers will haul freight for the broker's customers. The agreements between the broker and the motor carrier, and between the broker and the shipper, often focus primarily on responsibility for damage to the freight being hauled. Traditionally, it was understood that only the motor carrier would have liability for injuries to the public caused by the motor carrier's operation of its vehicles in the course of transporting freight. Under the doctrine of respondeaî superior, such motor carriers are generally liable for the negligent acts of their employees, and certain agents (e.g. owners and operators under dispatch), for their negligent acts in the course of operating the vehicles moving the freight.1

Awards by juries in civil cases have steadily risen over time. cases involving those injured in an accident with a commercial motor vehicle are no exception. Indeed, verdicts in those cases are frequently higher than the same injuries would have produced if the plaintiff's claim was against the operator of an auto. Juries often view motor carriers, and their insurers, as "deep pockets" with adequate resources to pay a significant award. Moreover, there may be inflammatory factors in such cases (e.g. a fatigued driver operating in excess of the maximum hours allowed under federal law), which results in even higher verdicts.

As average verdicts have continued to rise, the price of insurance, particularly excess insurance, has similarly continued to increase over time. Motor carriers engaged in interstate commerce are required to carry a substantial amount of insurance under federal regulations, typically in the minimum amount of $750,000 or $1,000,000 per occurrence.2 Carriers with greater resources purchase excess insurance above those limits. Given the rising costs of that excess coverage, however, many motor carriers choose only the minimum amounts required. While those amounts are substantial, they are often far below the amount needed to satisfy a judgment.

One's liability, of course, is not limited to the amount of his or her insurance. Many motor carriers, however, are essentially "judgment proof" for amounts substantially above the proceeds from their applicable insurance policies. Accordingly, plaintiffs' attorneys have become increasingly creative in attempting to pursue theories against other parties involved in the freight hauling process who might constitute additional "deep pockets" from which to recover. For example, there have been an increasing number of claims against freight brokers for injuries sustained in an accident with the motor carrier to whom the broker tendered freight.3 More recently, at least one published opinion has recognized the possibility of such a claim against a shipper who directly obtains a motor carrier.4

Traditionally, one is not responsible for the negligent acts of an independent contractor with whom he or she deals. Courts have, however, recognized a number of exceptions to that general rule. Those exceptions include: (1) when the principal retains control of the manner and means of doing the work subject to the contract;5 (2) an employer being held vicariously liable for the negligence of an independent contractor performing non-delegable duties imposed on the employer by statute, contract, franchise or charter;6 (3) when the activity in question constitutes a nuisance per se,7 or inherently dangerous work;8 (4) under the doctrine of agency by estoppel;9 and (5) when the party causes the unlawful conduct or activity of the independent contractor, knows of and sanctions the illegal conduct or activity by the contractor, or such unlawful conduct or activity is a proximate cause of an injury or harm.10

Perhaps the most popular theories utilized by those seeking to impute liability upon a party for the acts of an independent contractor with whom that party contracts are "negligent hiring" and "negligent entrustment." These theories have long been recognized in the truck litigation context as providing the basis for independent claims against a motor carrier, above and beyond vicarious liability, for the negligent acts of its employee. For example, courts have allowed claims against the motor carrier premised upon the theory that the carrier "knew or should have known" that a driver was unsafe, and thus the motor carrier was negligent in hiring or retaining the driver and for entrusting a commercial motor vehicle to the driver. These theories have also been utilized, more recently, in the context of claims against brokers and even shippers.