Knocking Out Direct Negligence Claims Against the Employer

1. Knocking Out Direct Negligence Claims Against the Employer Maranga Morgenstern Roundtable Discussion Judy Liao and Phil Tukia January 27, 2012

2. Applicability: Cases where Both Employer and Employee Driver are Sued John Doe vs. UPS and UPS Driver Claims against UPS: Negligence as to Employer by Respondeat Superior AND direct claims of: Negligent Entrustment Negligent Hiring Negligent Retention Negligent Training Negligent Supervision

3. Q: Can an employer who admits vicarious liability also be sued for direct claims of negligence? No.

4. California Supreme Court Armenta v. Churchill (1954) 42 Cal. 2d 448, 456 At issue: negligent entrustment claim against employer of driver Employer admitted driver acting within course and scope of employment at time of accident Holding: Evidence by Pltf in support of negligent entrustment claim consisting of: 37 prior traffic violations including manslaughter conviction ? should not be admitted. Plaintiff�s claims of negligence and negligent entrustment are two alternative theories to impose same liability Both claims dependent upon finding of negligence on driver Employer admitted vicarious liability in event driver held liable

5. Armenta continued Further, case holding: �� represents an effort to promote judicial economy by avoiding unnecessary litigation�� �Effort to ensure prejudicial evidence on negligence is kept our pursuant to Evidence Code Section 1104� Evidence Code 1104 �evidence of a trait of a person's character with respect to care or skill is inadmissible to prove the quality of his conduct on a specified occasion.

6. In 1954 � when Armenta was decided : California tort law landscape regarding fault was all or nothing. In the 1970�s there was a change in tort law by way of introduction of comparative fault system.

7. California Court of Appeal, Fourth District Jeld-Wen Inc. v. Superior Court (2005) 131 Cal.App.4th 853 At issue: summary judgment regarding Pltf�s negligent entrustment claim against employer Employer admitted vicarious liability for negligent acts of employee Followed holding of California Supreme Court in Armenta. Holding: Same as Armenta even after comparative fault system established in California : � Once employer admittedly becomes vicariously liable for the negligent acts of the employee, there is no remaining basis at a future trial to attempt to prove negligence of the employer, as through knowledge of employee�s prior accidents, because subject liability has already been adequately and completely established�

8. California Supreme Court 2011 : Diaz v. Carcomo, 51 Cal.4th 1148 Reaffirms Armenta and Enlarges Scope Facts: Pltf alleged Defendant Sugar Transport�s employee had driven negligently and Sugar Transport both vicariously liable for negligence of employee and directly liable for its own negligence in hiring, retaining, and entrusting vehicle to employee. Sugar Transport admitted vicariously liability Over defense objection, trial court admitted evidence of employee�s driving and employment history offered to support negligent hiring claim. Evidence of poor driving record of employee Dishonesty � lied on employment application Status as illegal alien Use of a phony social security number to obtain employment

9. Verdict at Trial: 45% on individual car driver 25% on Sugar Transport driver 35% on Sugar Transport Decision affirmed by Court of Appeal ? Defendant appealed to Supreme Court Result is incongruous Under vicarious liability, employer cannot be liable for a greater percentage of fault than the employee No matter how negligent an employer may be in entrusting vehicle to employee, only when the employee drives negligently can employer be held negligent. Negligent hiring did not separately contribute to harm

10. Diaz Continued Holding: Supreme Court agreed with Defendant Sugar Transport � If .. All of plaintiff�s causes of action dependent on contention that employee�s negligent driving in scope of employment caused pltf�s injuries, if defendant offers to admit vicarious liability�then that..will remove from the case the issue of employer�s liability for any damage caused by employee�s negligent driving leaving no materials issue to which negligent entrustment evidence can be relevant..�

11. Pltfs Argument vs. Def. Argument Jury should be allowed to apportion �moral fault� Will have a deterrent result Employers should be held directly liable for negligent entrustment and hiring on a moral basis Role of comparative fault system in tort law relates to causation of harm not moral blame Negligent hiring did not separately contribute to harm other than actual negligence of driver

12. Diaz v. Carcomo � Ultimate Holding California law now crystal clear that claims of negligent entrustment, hiring, training, and supervision cannot be maintained when employer admits vicarious liability Expands Armenta and Jeld-Wen that only dealt with negligent entrustment claims Majority of states follow same rule established by Diaz See McHaffie v. Bunch (MO 1995); Houlihan v. McCal (Md. 1951); Rosettie v. Board of Education (N.Y. 1990); Hackett v. Washington Metropolitan Area Transit Authority (D.D.C. 1990); Gant v. L.J. Transport, Inc. (Ill. 2002); Loom Craft Carpet Mills v. Gorell (Tex. 1992) Holding: Supreme Court ruled for Defense. As a matter of law: direct negligence claims for negligent entrustment, hiring, training, and supervision fail upon employer admission of vicarious liability for negligence of employee

13. Practical Effect of Diaz Case Once an employer has admitted to vicarious liability, Plaintiff cannot bring or maintain a separate action for negligent hiring or entrustment. Absent these claims, Plaintiff will be unable to admit prejudicial evidence relating to driver With prejudicial evidence, jury is more likely to be swayed and more likely to assign fault employer. Jury should not be swayed by prior negligence which has nothing to do with the subject accident.

14. Applicability in MM Law Cases In cases where Plaintiff has sued both the employee driver and employer, and the employer agrees to admit vicarious liability on behalf of employee as employee acted in course and scope, the following is appropriate: Motion for Summary Adjudication on Plaintiff�s Direct Claims of Negligence Against Employer for: (1) negligent entrustment (2) negligent supervision (3) negligent hiring (4) negligent training Based upon Diaz v. Carcomo

15. Content of MSA Single undisputed issue of material fact: Defendant admitting vicarious liability on behalf of employee Supporting Evidence: Form Interrogatory No. 2.11 Response (agent / agency interrogatory) Request for Admission Recently, MSA brought in Arenas v. UPS against Plaintiff firm Dreyer Babich. MSA was granted as unopposed by Pltf.