1. Agency & Partnership Professor Donald J. Kochan Class 9

2. Today’s Materials Pages 174-202 Pages 174-202 Vicarious Tort Liability Vicarious Tort Liability Independent Contractors Independent Contractors Borrowed Servants Borrowed Servants

3. Limitations to the Independent Contractor Exception Not all relationships that look like Independent Contractor Relationships will Absolve the Employer/Principal/Hiring Party from Liability

4. Hixon v. Sherwin-Williams Co. Water Damage to Kitchen Floor/Insurance/Subcontractor Case Water Damage to Kitchen Floor/Insurance/Subcontractor Case Level of Care Level of Care “A principal is liable... For the consequences of negligently failing to select a competent contractor...” “A principal is liable... For the consequences of negligently failing to select a competent contractor...” Experience, Reputation, Competence, Duty of Inquiry and Due Diligence Experience, Reputation, Competence, Duty of Inquiry and Due Diligence From the Text: From the Text: “Hixon sets forth two of the widely accepted limitations on the independent contractor defense: Contracting for work on inherently dangerous activities (vicarious liability) and negligently hiring an independent contractor (direct liability). The third limitation is the nondelegable duty doctrine...”

5. Kleeman v. Rheingold MedMal Case Where Attorneys are Sued for the Malfeasance of a Hired Process Server That Caused an Expiration of a Claim Due to the Statute of Limitations MedMal Case Where Attorneys are Sued for the Malfeasance of a Hired Process Server That Caused an Expiration of a Claim Due to the Statute of Limitations “The general rule is that a party who retains an independent contractor, as distinguished from a mere employee or servant, is not liable for the independent contractor’s negligent acts.” Based on the right to control – the manner of work and sensible placement of risk of loss. “The general rule is that a party who retains an independent contractor, as distinguished from a mere employee or servant, is not liable for the independent contractor’s negligent acts.” Based on the right to control – the manner of work and sensible placement of risk of loss. EXCEPTIONS: EXCEPTIONS: Negligence of Employer in Selection Negligence of Employer in Selection Instruction or Supervision that Negates IC Instruction or Supervision that Negates IC Inherently Dangerous Activities Inherently Dangerous Activities Non-Delegable Duties (applicable here) Non-Delegable Duties (applicable here)

6. Kleeman v. Rheingold (cont.) Non-Delegable Duty of Care Case Non-Delegable Duty of Care Case Expectations of the Attorney’s Role Expectations of the Attorney’s Role Assuring proper service of process is non- delegable; a person hires an attorney for a particular purpose Assuring proper service of process is non- delegable; a person hires an attorney for a particular purpose

7. Non-Delegable Duty Cases Special Status Special Status Contractual Relationship Contractual Relationship Invitation Invitation See Notes on Pages 181-183 And do the Problems on Pages 184-185

8. Borrowed/Loaned Servants Shifting Liabilities Issues Shifting Liabilities Issues Vague and Fact-Specific (but recognize that the facts need to be examined for these possibilities for additional liability, assignment of liability, and absolution from liability for the parties involved) Vague and Fact-Specific (but recognize that the facts need to be examined for these possibilities for additional liability, assignment of liability, and absolution from liability for the parties involved) From Black’s Law Dictionary: “borrowed employee. An employee whose services are, with the employee's consent, lent to another employer who temporarily assumes control over the employee's work. Under the doctrine of respondeat superior, the borrowing employer is vicariously liable for the employee's acts. But the employer may also be entitled to assert immunity under workers'-compensation laws.” From Black’s Law Dictionary: “borrowed employee. An employee whose services are, with the employee's consent, lent to another employer who temporarily assumes control over the employee's work. Under the doctrine of respondeat superior, the borrowing employer is vicariously liable for the employee's acts. But the employer may also be entitled to assert immunity under workers'-compensation laws.”

9. What Relationship Choice? Realize Incentives to Choose One Relationship Over Another? Realize Incentives to Choose One Relationship Over Another? Why Might You Want to Structure a Relationship as Independent Contractor? Avoidance of Vicarious Liability? Why Might You Want to Structure a Relationship as Independent Contractor? Avoidance of Vicarious Liability? Consider Why an IC might Demand a Higher Compensation. Because of the Liability Risks Assumed? Consider Why an IC might Demand a Higher Compensation. Because of the Liability Risks Assumed? Understand Bonding and Insurance Issues Understand Bonding and Insurance Issues

10. Charles v. Barrett Supply of Motor Van and Chaueffeur Case Supply of Motor Van and Chaueffeur Case Division of responsibilities Division of responsibilities Is there a new relation or just an extension/continued relationship and why does that matter? Is there a new relation or just an extension/continued relationship and why does that matter? Was are “in the business of” or standard industry practice important? Was are “in the business of” or standard industry practice important?

11. Nepsted v. Lambert General Contractor at Construction Site Injured by Crane Case General Contractor at Construction Site Injured by Crane Case “Whose Business” Test “Whose Business” Test “Right of Control and Direction” Test “Right of Control and Direction” Test Possible Dual Liability Between General Employer and Specific Employer Possible Dual Liability Between General Employer and Specific Employer Destinction Between “Authoritative Control” and “Mere Designation of Work or Suggestions” Destinction Between “Authoritative Control” and “Mere Designation of Work or Suggestions” “The orders of the borrowing employer must be commands and not requests if the worker is to be found to be a loaned servant.” “The orders of the borrowing employer must be commands and 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 not Decisive What is the nature of command and control? – Power of Discharge not Decisive

12. Gordon v. S.M. Byers Motor Car Co. Explosion by Negligent Overflow of Gasoline Case Explosion 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 the factual inquiry? Why does “promoting the interest of” matter to the factual inquiry?

13. DePratt v. Sergio Another Crane Accident Case Another 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 numerous cases for determining whether a loaned employee retains his employment with his loaning employer (the general employer) or becomes the employee of the borrowing employer (the special employer): (1) Did the employee actually or impliedly consent to work for a special employer? (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? (4) For whose benefit primarily was the work being done? Applying these tests the circuit court concluded that the crane operator had become the employee of Metal Buildings and that Metal Buildings, not Sergio Crane, bore liability for the crane operator's negligent conduct.”

14. Sprager v. Worley Hospital, Inc. Captain of the Ship Doctrine Captain of the Ship Doctrine MedMal Sponge Left Behind After Surgery Case – Is the Surgeon Responsible for the Acts of the Nurses? MedMal Sponge Left Behind After Surgery Case – Is the Surgeon Responsible for the Acts of the Nurses? Level of command and control Level of command and control Generally rejects captain of the ship doctrine absent additional facts and surgeons mere presence in the operating room not enough Generally rejects captain of the ship doctrine absent additional facts and surgeons mere presence in the operating room not enough Read Problems on Page 202 Read Problems on Page 202

15. Concluding Thoughts These are Highly Factual Inquiries, so: Understand How to Apply Law to Facts Understand How to Apply Law to Facts Understand the Metrics Involved in That Process Understand the Metrics Involved in That Process Understand How Prevalent the Issue of Control Is in the Analysis Understand How Prevalent the Issue of Control Is in the Analysis Consider How You Can Draft Agreements Differently to Assign Liabilities to Suit the Preferences of the Parties Consider How You Can Draft Agreements Differently to Assign Liabilities to Suit the Preferences of the Parties