Agency & PartnershipAgency & PartnershipProfessor Donald J. KochanProfessor Donald J. Kochan

Class 9Class 9

Today’s MaterialsToday’s Materials

Pages 174-202Pages 174-202

Vicarious Tort LiabilityVicarious Tort Liability Independent Independent

ContractorsContractors Borrowed Borrowed

ServantsServants

Limitations to the Independent Limitations to the Independent Contractor ExceptionContractor Exception

Not all relationships that look like Not all relationships that look like Independent Contractor Independent Contractor

Relationships will Absolve the Relationships will Absolve the Employer/Principal/Hiring Party from Employer/Principal/Hiring Party from

LiabilityLiability

Hixon v. Sherwin-Williams Co.Hixon v. Sherwin-Williams Co. Water Damage to Kitchen Floor/Insurance/Subcontractor Water Damage to Kitchen Floor/Insurance/Subcontractor

CaseCase

Level of CareLevel of Care

““A principal is liable . . . For the consequences of negligently A principal is liable . . . For the consequences of negligently failing to select a competent contractor . . .”failing to select a competent contractor . . .”

Experience, Reputation, Competence, Experience, Reputation, Competence, Duty of Inquiry and Due Diligence Duty of Inquiry and Due Diligence

From the Text: From the Text: ““HixonHixon sets forth two of the widely accepted limitations on the sets forth two of the widely accepted limitations on the

independent contractor defense: Contracting for work on independent contractor defense: Contracting for work on inherently dangerous activities (vicarious liability) and inherently dangerous activities (vicarious liability) and

negligently hiring an independent contractor (direct liability). negligently hiring an independent contractor (direct liability). The third limitation is the nondelegable duty doctrine . . .” The third limitation is the nondelegable duty doctrine . . .”

Kleeman v. RheingoldKleeman v. Rheingold

MedMal Case Where Attorneys are Sued for the MedMal Case Where Attorneys are Sued for the Malfeasance of a Hired Process Server That Caused an Malfeasance of a Hired Process Server That Caused an Expiration of a Claim Due to the Statute of LimitationsExpiration of a Claim Due to the Statute of Limitations

““The general rule is that a party who retains an The general rule is that a party who retains an independent contractor, as distinguished from a mere independent contractor, as distinguished from a mere employee or servant, is not liable for the independent employee or servant, is not liable for the independent

contractor’s negligent acts.”contractor’s negligent acts.” Based on the right to control – Based on the right to control – the manner of work and sensible placement of risk of loss.the manner of work and sensible placement of risk of loss.

EXCEPTIONS:EXCEPTIONS: Negligence of Employer in SelectionNegligence of Employer in Selection

Instruction or Supervision that Negates ICInstruction or Supervision that Negates IC Inherently Dangerous ActivitiesInherently Dangerous Activities

Non-Delegable Duties (applicable here)Non-Delegable Duties (applicable here)

Kleeman v. Rheingold (cont.)Kleeman v. Rheingold (cont.)

Non-Delegable Duty of Care CaseNon-Delegable Duty of Care Case

Expectations of the Attorney’s RoleExpectations of the Attorney’s Role

Assuring proper service of process is Assuring proper service of process is non-delegable; a person hires an non-delegable; a person hires an attorney for a particular purposeattorney for a particular purpose

Non-Delegable Duty CasesNon-Delegable Duty Cases

Special StatusSpecial Status

Contractual RelationshipContractual Relationship

InvitationInvitation

See Notes on Pages 181-183See Notes on Pages 181-183And do the Problems on Pages 184-185And do the Problems on Pages 184-185

Borrowed/Loaned ServantsBorrowed/Loaned Servants

Shifting Liabilities IssuesShifting Liabilities Issues

Vague and Fact-Specific (but recognize that the facts Vague and Fact-Specific (but recognize that the facts need to be examined for these possibilities for additional need to be examined for these possibilities for additional

liability, assignment of liability, and absolution from liability, assignment of liability, and absolution from liability for the parties involved)liability for the parties involved)

From Black’s Law Dictionary: From Black’s Law Dictionary: ““borrowed employeeborrowed employee.. An employee whose services An employee whose services

are, with the employee's consent, lent to another are, with the employee's consent, lent to another employer who temporarily assumes control over the employer who temporarily assumes control over the employee's work. • Under the doctrine of respondeat employee's work. • Under the doctrine of respondeat

superior, the borrowing employer is vicariously liable for superior, the borrowing employer is vicariously liable for the employee's acts. But the employer may also be the employee's acts. But the employer may also be

entitled to assert immunity under workers'-entitled to assert immunity under workers'-compensation laws.”compensation laws.”

What Relationship Choice?What Relationship Choice? Realize Incentives to Choose One Relationship Realize Incentives to Choose One Relationship

Over Another?Over Another?

Why Might You Want to Structure a Relationship Why Might You Want to Structure a Relationship as Independent Contractor? Avoidance of as Independent Contractor? Avoidance of

Vicarious Liability?Vicarious Liability?

Consider Why an IC might Demand a Higher Consider Why an IC might Demand a Higher Compensation. Because of the Liability Risks Compensation. Because of the Liability Risks

Assumed?Assumed?

Understand Bonding and Insurance IssuesUnderstand Bonding and Insurance Issues

Charles v. BarrettCharles v. Barrett

Supply of Motor Van and Chaueffeur CaseSupply of Motor Van and Chaueffeur Case

Division of responsibilitiesDivision of responsibilities

Is there a new relation or just an Is there a new relation or just an extension/continued relationship and why extension/continued relationship and why

does that matter?does that matter?

Was are “in the business of” or standard Was are “in the business of” or standard industry practice important?industry practice important?

Nepsted v. LambertNepsted v. Lambert General Contractor at Construction Site Injured by Crane CaseGeneral Contractor at Construction Site Injured by Crane Case

““Whose Business” TestWhose Business” Test

““Right of Control and Direction” TestRight of Control and Direction” Test

Possible Dual Liability Between General Employer and Specific Possible Dual Liability Between General Employer and Specific EmployerEmployer

Destinction Between “Authoritative Control” and “Mere Destinction Between “Authoritative Control” and “Mere Designation of Work or Suggestions”Designation of Work or Suggestions”

““The orders of the borrowing employer must be commands and The orders of the borrowing employer must be commands and not requests if the worker is to be found to be a loaned servant.”not requests if the worker is to be found to be a loaned servant.”

What is the nature of command and control? – Power of Discharge What is the nature of command and control? – Power of Discharge not Decisivenot Decisive

Gordon v. Gordon v. S.M. Byers Motor Car Co.S.M. Byers Motor Car Co.

Explosion by Negligent Overflow of Gasoline CaseExplosion by Negligent Overflow of Gasoline Case

What is control?What is control?

Why did “common understanding” matter?Why did “common understanding” matter?

Why does “performed on behalf of both” matter?Why does “performed on behalf of both” matter?

Why does “promoting the interest of” matter to Why does “promoting the interest of” matter to the factual inquiry?the factual inquiry?

DePratt v. SergioDePratt v. Sergio Another Crane Accident CaseAnother Crane Accident Case

Rejects Dual Liability Approach – What is that?Rejects Dual Liability Approach – What is that?

Recognizes imperfections of rule but affirms.Recognizes imperfections of rule but affirms.

““The circuit court applied the following tests which this court has set forth in The circuit court applied the following tests which this court has set forth in numerous cases for determining whether a loaned employee retains his numerous cases for determining whether a loaned employee retains his

employment with his loaning employer (the general employer) or becomes employment with his loaning employer (the general employer) or becomes the employee of the borrowing employer (the special employer):the employee of the borrowing employer (the special employer):

(1) Did the employee actually or impliedly consent to work for a special (1) Did the employee actually or impliedly consent to work for a special employer?employer?

(2) Whose was the work he was performing at the time of injury?(2) Whose was the work he was performing at the time of injury?(3) Whose was the right to control the details of the work being performed?(3) Whose was the right to control the details of the work being performed?

(4) For whose benefit primarily was the work being done?(4) For whose benefit primarily was the work being done?Applying these tests the circuit court concluded that the crane operator had Applying these tests the circuit court concluded that the crane operator had

become the employee of Metal Buildings and that Metal Buildings, not become the employee of Metal Buildings and that Metal Buildings, not Sergio Crane, bore liability for the crane operator's negligent conduct.”Sergio Crane, bore liability for the crane operator's negligent conduct.”

Sprager v. Worley Hospital, Inc.Sprager v. Worley Hospital, Inc. Captain of the Ship DoctrineCaptain of the Ship Doctrine

MedMal Sponge Left Behind After Surgery Case – MedMal Sponge Left Behind After Surgery Case – Is the Surgeon Responsible for the Acts of the Is the Surgeon Responsible for the Acts of the

Nurses?Nurses?

Level of command and controlLevel of command and control

Generally rejects captain of the ship doctrine Generally rejects captain of the ship doctrine absent additional facts and surgeons mere absent additional facts and surgeons mere presence in the operating room not enoughpresence in the operating room not enough

Read Problems on Page 202Read Problems on Page 202

Concluding ThoughtsConcluding Thoughts

These are Highly Factual Inquiries, so:These are Highly Factual Inquiries, so:

Understand How to Apply Law to FactsUnderstand How to Apply Law to Facts

Understand the Metrics Involved in That ProcessUnderstand the Metrics Involved in That Process

Understand How Prevalent the Issue of Control Is in the Understand How Prevalent the Issue of Control Is in the AnalysisAnalysis

Consider How You Can Draft Agreements Differently to Consider How You Can Draft Agreements Differently to Assign Liabilities to Suit the Preferences of the PartiesAssign Liabilities to Suit the Preferences of the Parties