Motor Carrier Claims for Negligent Entrustment, Hiring and...

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Presenting a live 90-minute webinar with interactive Q&A

Motor Carrier Claims for Negligent

Entrustment, Hiring and Retention Navigating Discovery, Apportionment of Fault, Impact of

Motor Carrier's Admission of Vicarious Liability, and More

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, AUGUST 16, 2017

J. Kent Emison, Partner, Langdon & Emison, Kansas City, Mo.

Patrick E. Foppe, Esq., Lashly & Baer, St. Louis

Matthew Wright, Founder, Wright Law, Franklin, Tenn.

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MOTOR CARRIER CLAIMS FOR NEGLIGENT ENTRUSTMENT,

HIRING AND RETENTION

Presenters:

Patrick E. Foppe

Matthew E. Wright

Kent Emison

About your Presenter

Patrick E. Foppe frequently defends claims involving commercial motor vehicle accidents. He

conducts rapid response investigations to serious accidents as part of Lashly & Baer’s Rapid

Response Team. Patrick serves on the Defense Research Institute’s (DRI) Trucking Law

Committee’s Steering Committee and is the Chair of Publications. He also serves on the

Transportation Lawyers Association’s (TLA) Executive Committee and is Vice-Chair of its

Membership Committee. He has received numerous awards for his pro bono work, community

service, and professional accomplishments. Patrick is also a regular author and is an invited

speaker by many industry groups. Patrick and his wife Kate have seven children.

Lashly & Baer, P.C.

714 Locust Street

St. Louis, Missouri 63101

[email protected]

314-621-2939

6

Presentation Outline

I. Derivative Liability

A. Elements of Various Causes of Action

B. Majority and Minority Rule

C. Punitive Damages Exception

II. Where Does the Rubber Meets the Road?

III. Discovery Strategies

I. FMCSR Implications

II. Key Documents and Deposition Considerations

IV. Trial Strategies and Practical Tips

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Overview of “Derivative” Liability

• Negligent entrustment, hiring, retaining, training or supervising claims

• Often used to introduce evidence, which is not directly related to the

accident, against the motor carrier or others

• Seeks to hold a principal/entrustor directly liable for negligently hiring,

retaining, training or supervising its agent/entrustee who causes injury to

another

• Unlike respondeat superior liability, which simply holds a principal vicariously

liable for the wrongful acts of its agent, deriviate claims mainly focus on the

principal/entrustor’s conduct

― the proximate cause of the plaintiff’s injury is the principal/entrustor’s

negligence in entrusting, hiring, retaining, training or supervising the

agent/entrustee

• Imposing liability on the principal/entrustor requires a finding of culpability

by the agent/entrustee in causing an injury to a third party; thus, liability is

“derivative”

8

Overview of the FMCSR

• The FMCSR generally apply to all “employers” and “commercial motor vehicles,”

which transport property or passengers in interstate commerce. See FMCSR §

390.3(a).

• An “employer” is generally a person engaged in a business affecting interstate

commerce that owns or leases a “commercial motor vehicle” in connection with

that business, or assigns employees to operate it. Id.

• Every employer shall be knowledgeable of and comply with all the regulations

contained in the FMCSR which are applicable to that motor carrier’s operations.

See FMCSR § 390.3(e)(1).

• Every driver and employee shall be instructed regarding, and shall comply with, all

applicable regulations contained in the FMCSR. See FMCSR § 390.3(e)(1).

• Whenever under the FMCSR a duty is prescribed for a driver or a prohibition is

imposed upon the driver, it is the duty of the motor carrier to require observance

of such duty or prohibition. See FMCSR § 390.11.

9

Duties Imposed Upon Motor Carriers Under the FMCSR

• § 383 – duty to have a CDL;

• § 382 – duty to drug and alcohol test;

• § 391.11 – duty to ensure the qualifications of the driver (i.e. valid

drivers license, list of violations, etc.);

• § 391.21 – duty to have a proper application for employment;

• § 391.23 – duty to do background investigation;

• § 391.27 – duty to provide a record of violations;

• § 391.31 – duty to take a road test and secure a certificate of driver’s

road test;

• § 391.41 – duty to secure a medical examiner’s certificate;

10

Duties Imposed Upon Motor Carriers Under the FMCSR

• § 391.51 – duty to maintain driver qualification file;

• § 391.53 – duty to maintain driver investigation history file;

• § 392.3 – duty to drive while not ill or fatigued;

• § 392.4 – duty to drive while not under the influence of drugs;

• § 392.6 – duty to provide schedules to conform with speed limits;

• § 395.3 – duty to conform to “hours of service” rules or maximum

driving time;

• § 395.8 – duty to maintain driver logs;

• § 396.3 – duty to maintain inspection, repair, and maintenance

records ; and

• § 396.11– duty to maintain driver vehicle inspection reports.

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Negligent Entrustment - Elements

1. The entrustee (driver) was incompetent by reason of age, inexperience,

habitual recklessness or otherwise;

2. The entrustor (motor carrier or others) knew or had reason to know of the

entrustee’s incompetence;

3. There was entrustment of the chattel (tractor and/or trailer); and

4. The negligence of the entrustor concurred with the conduct of the entrustee

to cause the plaintiff’s injuries.

Restatement (2nd) of Torts § 390:

― One who supplies directly or through a third person a chattel for the use

of another whom the supplier knows or has reason to know to be likely

because of his youth, inexperience, or otherwise, to use it in a manner

involving unreasonable risk of physical harm to himself and others

whom the supplier should expect to share in or be endangered by its

use, is subject to liability for physical harm resulting to them.

12

Negligent Entrustment - Considerations

• Generally, an employer-employee relationship need not be proven.

• Implicit is that the harm must have resulted from the use of the

tractor (or trailer?).

• Entrustment can be shown through the giving of express or implied

permission. Rainey by & Through Rainey v. Pitera, 651 N.E.2d 747

(1st Dist. 1995).

• Plaintiff must generally prove that entrustor actually knew or had

reason to know the driver was incompetent or reckless in driving.

Halford v. Alamo Rent-a-Car, LLC, 921 So. 2d 409 (Ala. 2005).

• In theory, a driver is not required to have a spotless driving record to

be considered a competent driver. See e.g., Askew v. R & L Transfer,

Inc., 676 F. Supp. 2d 1298 (M.D. Ala. 2009).

13

Negligent Entrustment - Considerations

• Typically, the plaintiff must prove that the entrustor knew or should

have known of the driver’s incompetence by showing “evidence of

precious acts of negligent or reckless driving . . . previous accidents,

or previous acts of driving while intoxicated.” Id.

• In the context of a trucking case, the driver’s driving record becomes

central to the analysis as motor carriers have an obligation under the

FMCSRs to investigate their driver’s records (more later).

• In a case where the claims against the driver are the only claims in

the lawsuit, his driving record may not be admissible as it is

prejudicial character evidence.

• However, where the claims against the employer are joined with

those against the driver, the driving record may be admissible

notwithstanding the potential for prejudice. See Bruck v. Jim Walter

Corp., 470 So. 2d 1141 (Ala. 1985). 14

Negligent Hiring/Retention - Elements

1. The employer knew or should have known that the

employee had a particular unfitness for the position

so as to create a danger of harm to third persons;

2. Such particular unfitness was known or should have

been known at the time of the employee’s hiring or

retention; and

3. This particular unfitness proximately caused the

plaintiff’s injury.

See e.g., Van Horne v. Muller, 705 N.E.2d 898 (Ill. 1998).

15

Negligent Hiring/Retention - Considerations

• Implicit to cause of action for negligent hiring and retention is a

threshold requirement that plaintiff prove that employer-employee

relationship existed between the employer and negligent driver.

• Some jurisdictions require the negligent driver to be acting within

the course and scope of his/her employment to pursue these claims.

• Other States, like Missouri, only require employer to have played

some role in bringing the offending employee into contact with the

injured party. Hare v. Cole, 25 S.W.3d 617 (Mo. App. W.D. 2000).

• In some jurisdictions, the “particular unfitness” language is replaced

by “dangerous proclivity”.

• The “particular unfitness” element is particularly important: the

tortious conduct of the driver must be consistent with the known

particular unfitness/dangerous proclivity.

16

Negligent Supervision – Elements

• Some jurisdictions use the same basic elements as negligent retention/hiring above.

• Other States simply require the plaintiff to prove that: (1) an employer had a duty to

supervise its employees, (2) the employer negligently supervised an employee, and (3)

such negligence proximately caused the plaintiff's injuries. See e.g., Mueller v.

Community Consolidated School District 54, 678 N.E.2d 660 (1st Dist. 1997).

• Still other States have adopted the Restatement (2nd) of Torts § 317:

A master is under a duty to exercise reasonable care so to control his servant while

acting outside the scope of his employment as to prevent him from intentionally

harming others or from so conducting himself as to create an unreasonable risk of harm

to them, if:

― The servant is using a chattel of the master; and

― The master knows or has reason to know that he has the ability to control his

servant; and

― The master knows or should know of the necessity and opportunity for exercising

such control.

• See e.g., Truck Ins. Exch. v. Prairie Framing, LLC, 162 S.W.3d 64, 82 (Mo. App. W.D.

2005).

17

Majority vs. Minority Rule

• Majority rule: an employer’s admission of an agency relationship with

the driver (respondeat superior liability) bars a plaintiff from seeking

any other theory of derivative liability

― The rationale: once liability is imputed through agency, other

theories serve no real purpose other than to waste the court’s

time and energy and introduce potentially inflammatory

evidence.

• Minority rule: an admission of agency does not preclude a separate

claim brought under other theories of derivative liability

― The rationale: those other theories are distinct from agency in

that they are not derivative of the employee’s negligence

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Majority vs. Minority Rule – Jurisdictions

MAJORITY RULE Citation MINORITY RULE Citation

Missouri McHaffie v. Bunch, 891 S.W.2d 822 (Mo. banc 1995)

Kansas Marquis v. State Farm Fire & Cas. Co., 961 P.2d 1213 (Kan. 1998)

Indiana Tindall v. Enderle, 320 N.E.2d 764 (Ind. Ct. App. 1974)

Minnesota Lim v. Interstate Sys. Steel Div., Inc., 435 N.W. 830 (Minn. Ct. App. 1989)

Georgia Bartja v. National Union Fire Ins. Co. of Pittsburgh, 463 S.E.2d 358 (Ga. 1995)

New Jersey Di Cosala v. Kay, 450 S.2d 508 (N.J. 1982)

Florida Clooney v. Geeting, 352 So. 2d 1216 (Fla. 2d DCA 1977)

Ohio Clark v. Stewart, 185 N.E. 71 (Ohio 1933)

Texas Arrington’s Estate v. Fields, 578 S.W.2d 173 (Tex. Civ. App. 1979)

South Carolina James v. Kelly Trucking Co., 661 S.E.2d 329 (S.C. 2008)

Washington LaPlant v. Snohomich Cty., 271 P./3d 254, 357 (Wash. App. 2011)

Tennessee Ali v. Fisher, 145 S.W.3d 557 (Tenn. 2004)

Arkansas Elrod v. G. & R. Constr. Co., 628 S.W.2d 17 (Ark. 1982)

Alaska Pagenkopf v. Chatham Elec., Inc., 165 P.3d 634 (Alaska 2007)

*This is only a partial list of jurisdictions. Some States have yet to rule either way.

19

The “Punitive Damages Exception”

• Some jurisdictions that follow the majority rule allow those other

claims to proceed should they plead sufficient facts to support a

claim for punitive damages against the entrustor/principal. See e.g.,

Wilson v. Image Flooring, LLC, 400 S.W.3d 386, 392-93 (Mo. App. W.D.

2013). Some courts allow allegations of “willful and wanton” or

“gross negligence” to proceed. See e.g., Locket v. Bi-State Transit

Authority, 445 N.E.2d 310 (Ill. 1983); Adams Leasing Co. v. Knighton,

456 S.W.2d 574 (Tex. Civ. App. 1970).

• Jurisdictions that allow the punitive damages exception include:

― Missouri, Illinois, Texas, Indiana, Georgia and North Carolina

• The entrustor/principal’s conduct should be willful and wanton

• Can a principal be held vicariously liable for an agent’s punitive

conduct?

― “Complicity rule” under Restatement (2nd) of Torts § 909

20

Example – Employer Found Liable

Boyd v. L.G. DeWitt Trucking Co., Inc.

405 S.E.2d 914 (N.C. Ct. App. 1991)

• Driver had two convictions for DUI, three convictions for reckless

driving, and six speeding convictions.

• Driver had worked for employer “off and on” for about 20 years.

• The night of the incident, the driver had been drinking. He drove his

rig into the back of a pickup truck, instantly killing the decedent and

a young passenger.

• The court held that a reasonable jury could find that the employer

knew or should have known that the driver posed a danger to the

driving public, and the employer was negligent in entrusting the

truck to him. Further, due to the severity and number of the driver’s

offenses, the evidence was sufficient to find that the employer’s

entrustment of a truck to the driver was willful or wanton, thus

supporting punitive damages.

21

Negligent Entrustment - Frohardt v. Bassett, 788 N.E.2d 462 (Ct. App. Ind. 2003),

• Plaintiff’s brought a claim for negligent entrustment against Penske Truck Leasing

(not a motor carrier).

• Penske’s rental agent did not question Bassett about his health, request a medical

certification, require him to take a driving test or demonstrate his driving skill

before renting him the truck.

• The Frohardts’ were injured by Basset when their car slowed for traffic congestion

and Bassett rear-ended them with the rented truck.

• Upon rental of the truck, Bassett presented a valid driver’s license to Penske.

Bassett did not appear to be intoxicated and seemed to be a competent adult . . .

Bassett testified that he had driven a similar truck before and knew the difference

between a car and a truck of this size.

• The Court dismissed the Frohardts’ negligent entrustment claims against Penske,

reasoning that the Frohardts failed to show Penske entrusted the rental truck to

Bassett with “actual and immediate knowledge” he was incompetent to drive.

22

Example – Employer Found Not Liable

Interim Personnel of Central Virginia v. Messer

559 S.E.2d 704 (Va. 2002)

• A driver was twice convicted of DUI, failed to pay fines or attend

counseling, and was declared a “habitual offender.”

• Employer hired him to do administrative work as well as make short

deliveries to the post office. The driver hid his criminal offenses from

the employer.

• The driver stole a third party’s truck, operated the truck while

intoxicated “for his own frolic,” and crashed into the plaintiff’s

vehicle, injuring her.

• The employer was held NOT LIABLE because the prior acts would not

place a reasonable employer on notice or make it foreseeable that

the driver would steal a truck, drive it while intoxicated, and cause

an accident distant from his place of work.

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Graves Amendment Protections Against the Mere Owner of Equipment

• The Graves Amendment, 49 U.S.C. § 30106(a) generally bans the imposition of

vicarious liability on owners/lessors of motor vehicles for harm resulting from the

operation of the vehicles. See e.g., Windmill Distrib. Co. L.P. v. Hartford Fire Ins.

Co., 449 F. App’x 81, 82 (2nd Cir. 2012); United States v. Mandel, 647 F.3d 710, 722

(7th Cir. 2011). The Graves Amendment provides in part:

― An owner of a motor vehicle that rents or leases the vehicle to a person (or an

affiliate of the owner) shall not be liable under the law of any state or

political subdivision thereof, by reason of being the owner of the vehicle (or

an affiliate of the owner), for harm to persons or property that results or

arises out of the use, operation, or possession of the vehicle during the period

of the rental or lease, if:

― The owner (or an affiliate of the owner) is engaged in the trade or business

of renting or leasing motor vehicles; and

― There is no negligence or criminal wrongdoing on the part of the owner (or

an affiliate of the owner).

24

Graves Amendment – “Savings Clause”

• Application of the “savings clause”:

― Carton v. GMAC, the Eighth Circuit stated, “Although the Graves Amendment

prohibits vicarious liability claims against owners of leased vehicles, the

Graves Amendment contains a savings clause which allows an owner of a

leased vehicle to be found directly liable for the owner’s negligence or

criminal wrongdoing.” 611 F.3d. 451, 457 (8th Cir. 2010).

― The Eighth Circuit concluded that Plaintiff’s negligent entrustment claim

would be allowed as a direct claim against the equipment owner under Iowa

law. Id. at 457-59.

― However, in some states like Missouri, claims for negligent hiring, supervision,

retention or negligent entrustment are all various forms of “vicarious

liability.” See e.g., Coomer v. Kansas City Royals Baseball Corp., 437 S.W.3d

184, 205-06 (Mo. banc 2014).

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Graves Amendment – Considerations

― Can protect owners of trailers. See 49 U.S.C.A. § 30102(a)(6).

See e.g., Yoon Young Lee v. Rivera, 27 Misc. 3d 1201(A), 910

N.Y.S.2d 409, Slip Op. 50517(U) (Sup. Ct. 2010); Johnson v. Xtra

Lease, LLC, No. 08 C 5042, 2010 WL 706037 (N.D. Ill. Feb. 24,

2010).

― Summary judgment granted to lessor where plaintiffs failed to

adduce any evidence of lessor's negligence, including lessor's

failure to maintain brakes on 2003 Freightliner tractor-trailer.

Berkan v. Penske Truck Leasing Canada, Inc., 535 F.Supp.2d 341

(W.D.N.Y.2008).

― Granting lessor's motion to dismiss where plaintiff failed to

supply any legal authority imposing a legal duty on lessors to

investigate lessees' driving records. Vedder v. Cox et al., 859

N.Y.S.2d 900 (N.Y.Sup.Ct.2008).

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Motor Carrier Claims for Negligent Entrustment, Hiring and...

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