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Edwards v. McElliotts Trucking, LLC

United States District Court, S.D. West Virginia, Huntington Division

August 2, 2017

McELLIOTTS TRUCKING, LLC; DANNY McGOWAN, individually and as an employee of McElliotts Trucking, LLC and/or as agent of Cardinal Transport; CARDINAL TRANSPORT, INC.; HAROLD MIDKIFF, individually as agent driver of McElliotts Trucking, LLC and/or as agent driver of Cardinal Transport, Inc., Defendants.



         Pending before the Court are Defendant Cardinal Transport's Motion Summary Judgment, ECF No. 72, and Motion to Strike and Exclude Untimely Evidence, ECF No. 84. For the reasons explained in the following Memorandum Opinion the Court GRANTS in part and DENIES in part the Motion for Summary Judgment, and DENIES the Motion to Strike.

         I. Background

         On October 3, 2015, Plaintiff Richard Edwards was assisting Defendant Danny McGowan, owner of McElliotts Trucking, load large metal rods on to a flatbed trailer at McGowan's truck yard in Kenova, West Virginia. Edwards Dep. 44, Def.'s Mot. for Summ. J. Ex. 7, ECF No. 72-7. McGowan used a forklift and straps to lift the rods on to the bed of the trailer while Edwards attached the straps to the tines of the forklift, guided the rods into place, and placed stops on the trailer to prevent the rods from rolling off during transport, also known as “scotching.” Edwards Dep. 69-72. The rods weighed approximately two-thousand pounds each. McGowan Dep. 91, Pl.'s Resp. to Mot for Summ J. Ex. 4, ECF No. 79. During the course of loading the rods, one fell from the bed of the trailer and struck Edwards' leg. Edwards Dep. 71. Edwards was severely injured and eventually lost the lower part of his leg.

         The rod that struck Edwards was part of a shipment of similar materials produced by Special Metals, a Huntington, West Virginia manufacturing firm, and destined for one of its customers. McGowan Dep. 91; Pl.'s Resp. Ex. 7. Special Metals placed the shipment with Defendant Cardinal Transport. Cardinal is an interstate motor carrier that ships freight by semi-truck. Riley Aff. ¶ 2, Def.'s Mot. for Summ. J. Ex. 1, ECF No. 72. Cardinal leased the trucks owned by McElliotts to deliver loads negotiated by McGowan as an exclusive Cardinal sales agent. Exclusive Freight Sales Agency Agreement, Def.'s Mot. for Summ. J. Ex. 3, ECF No. 72-3; Independent Contractor Agreement, Def.'s Mot. for Summ. J. Ex. 4, ECF No. 72-4.

         At the time of the accident, McGowan was an exclusive Cardinal sales agent and leased his trucks to Cardinal to deliver shipments for Cardinal customers. Id.; McGowan Dep. 47. As both a sales agent and an owner-operator lessor, McGowan solicited customers for Cardinal and arranged for transport using his trucks to deliver shipments. Exclusive Freight Sales Agency Agreement 2; Cardinal Agent's Policy Manual 1-5, Pl.'s Resp. Ex. 13; Independent Contractor Agreement ¶ 1. For his services as an exclusive sales agent with Cardinal, Cardinal paid McGowan an 8.5 percent commission of the first one million dollars in sales per annum and then nine percent on all sales over one million dollars in the same year. Cardinal Agent's Policy Manual 3. McGowan's commission was contingent on placing the shipments on Cardinal-leased trucks, unless Cardinal provided its written permission for McGowan to arrange shipment on another carrier. Exclusive Freight Sales Agency Agreement 1. Cardinal permitted McGowan to negotiate shipping rates with shippers, but the rate negotiated was subject to approval by Cardinal. Cardinal Agent's Policy Manual 4.

         When a shipment was ready for transport McGowan arranged for his trucks, leased by Cardinal, to pick up the shipment and transport it to its destination. McGowan Dep. 66-68. McGowan was paid seventy-six percent of the shipping fee. McGowan Dep. 63. From the commission McGowan was required to pay for a driver, fuel, tolls, and maintenance for the trucks. McGowan Dep. 63-64.

         On occasion Special Metals would place a shipment with Cardinal that did not fill an entire trailer. McGowan Dep. 68. In those instances, McGowan would haul the partial load back to his truck yard in Kenova where he would unload it and store it until he collected enough shipments to fill an entire trailer. Id. He would then load multiple shipments on one trailer. McGowan Dep. 68, 88, 90 Edwards was injured while McGowan was reloading a trailer. McGowan Dep. 91.

         Edwards brought suit for his injuries against McGowan, McElliotts Trucking, Midkiff, and Cardinal Transport. Compl. ¶¶ 2-5. Only Cardinal filed a summary judgment motion and thus the Court will only address the claims against Cardinal. Edwards alleges that as McGowan's ultimate employer, Cardinal is vicariously liable to him for the injuries caused by the accident in McGowan's truck yard. Compl. ¶¶ 60-87. Edwards advances two theories of vicarious liability. The first is based on West Virginia common law and the second on federal regulations that impose certain requirements on Cardinal's relationship with McGowan. Id. Edwards also alleges negligent training, hiring, and supervision and negligent entrustment. Id.

         II. Legal Standard

         To obtain summary judgment, the moving party must show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). In considering a motion for summary judgment, the Court will not “weigh the evidence and determine the truth of the matter[.]” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). Instead, the Court will draw any permissible inference from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986).

         Although the Court will view all underlying facts and inferences in the light most favorable to the nonmoving party, the nonmoving party nonetheless must offer some “concrete evidence from which a reasonable juror could return a verdict in his [or her] favor[.]” Anderson, 477 U.S. at 256. Summary judgment is appropriate when the nonmoving party has the burden of proof on an essential element of his or her case and does not make, after adequate time for discovery, a showing sufficient to establish that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The nonmoving party must satisfy this burden of proof by offering more than a mere “scintilla of evidence” in support of his or her position. Anderson, 477 U.S. at 252.

         III. Analysis

         The Court will address Edwards' common law vicarious liability claim and Cardinal's arguments against it, first and address his federal vicarious liability claim, negligent hiring, and negligent entrustment claims in turn.

         a. Common Law Vicarious Liability

         It is the burden of the proponent of vicarious liability, in this case Edwards, to make a prima facie showing of the existence of a master-servant relationship. Zirkle v. Winkler, 585 S.E.2d 19, 22 (W.Va. 2003) (quoting Sanders v. Georgia-Pacific Corp., 225 S.E.2d 218, 222 (W.Va. 1976)). Once that showing has been made “it is incumbent upon one who would defeat liability on the basis of an independent contractor relationship to show such fact.” Id.

         Four features of a relationship must be present to sustain a claim of vicarious liability in West Virginia common law. They are: “(1) Selection and engagement of the servant; (2) Payment of compensation; (3) Power of dismissal; and (4) Power of control.” Cunningham v. Herbert J. Thomas Mem'l Hosp. Ass'n, 737 S.E.2d 270, 277 (W.Va. 2012) (quoting Paxton v. Crabtree, 400 S.E.2d 245, Syl. pt. 5 (W.Va. 1990)). The determinative feature, the West Virginia Supreme Court of Appeals held, is the power of control. Id.

         On the power of control, the West Virginia Supreme Court expounded “the entity engaging an independent contractor is not required to surrender all control in order to maintain an independent contractor relationship.” The Court described the power to control the outcome of the contract as insufficient to create an employer-employee relationship. Instead, it is the power over the process, not just the outcome, that demonstrates the essential feature of control such that a master-servant relationship exists. Roberston v. Morris, 546 S.E.2d 770, 773 (W.Va. 2001).

         Cardinal admits that the first three elements are present in its relationship with McGowan, but it contests the fourth element-the power of control. It argues that it did not have the kind of control over McGowan to create a master-servant relationship exposing it to vicarious liability for his allegedly negligent acts. It further argues that Edwards has not presented any evidence contrary to its argument and therefore cannot survive summary judgment.

         At the summary judgment phase, the plaintiff is not required to prove the case; the plaintiff must only present more than a “scintilla” of evidence supporting the claim such that a reasonable juror could find in the plaintiff's favor. In a claim for vicarious liability of an employer, a plaintiff meets this burden “[w]here the evidence relative to whether a particular person in an independent contractor or an employee is in conflict or, if not in conflict, admits of more than one reasonable inference . . . .” Zirkle, 585 S.E.2d 19, Syl. pt. 3 (quoting Levine v. Peoples Broad. Corp., 140 S.E.2d 438 (W.Va. 1965)). The evidence before the Court is conflicting and subject to more than one reasonable inference. Accordingly, the classification of the relationship between McGowan and Cardinal is committed to the jury.

         Two contracts govern McGowan's relationship with Cardinal. The first is the “Exclusive Freight Sales Agency Agreement” and the second is titled “Independent Contractor Agreement.” The substance of the first governs McGowan's rights and duties as a sales agent. The second governs Cardinal's lease of McGowan's trucks to deliver the shipments arranged by McGowan under the sales agent agreement. A review of the sales agent agreement reveals Cardinal exerted significant control over McGowan's operation. Although the contract itself is quite short, the contract incorporates the “Cardinal Agent's Policy Manual”-a tome-like document that touches on every aspect of an agent's business. See Cardinal Agent's Policy Manual 1-97. The Manual requires, among other things, every customer to go through a credit check and meet standards set by Cardinal, and that all shipping rates negotiated by the sales agent be reviewed by Cardinal. Id. 1, 4-5. These two requirements give Cardinal, at the very least, veto power over the primary functions of the sales agent-soliciting customers and negotiating shipping rates. The Manual goes on, however. Shipping contracts are only completed once Cardinal provides a finalized contract to the agent. Id. 5. Billing is also largely handled by Cardinal. Id. 14. Cardinal issues invoices to shippers for each load moved, sends a report to agents twice a month informing them of outstanding invoices, and sends statements to each customer with an open invoice. Id.

         The sales agent agreement further supports an inference of control. Most notably, the contract contains a non-compete clause, barring the sales agent from working with a customer or competitor of Cardinal as a sales agent for one year. Exclusive Freight Sales Agency Agreement 3. The contract also states that any money collected by the sales agent is the sole property of Cardinal until Cardinal remits to the sales agent his or her commission. Id. 1-2. The agreement bars the sales agent from shipping any freight on any carrier except Cardinal unless he or she receives Cardinal's express written permission. Id. 1. It also bears repeating that McGowan was an exclusive sales agent, meaning he worked solely for Cardinal. Id.

         The Independent Contractor Agreement, despite its name, further supports an inference of Cardinal's meaningful control over the process of shipping loads placed with McGowan. The lessor, in this case McGowan, could only hire drivers that complied with certain qualifications, including a particular driver ranking on “CSA2010.” Id. ¶ 5(b)(viii). McGowan was further required to purchase and maintain at least $500, 000 of public liability and property damage insurance as well as an insurance policy covering collision, fire, theft, or other catastrophes. Id. ¶ 6(e). McGowan was also required to file with Cardinal all log sheets, physical examination certificates, and accident reports and keep a copy of the contract in the truck at all times. Independent Contractor Agreement ¶ 5(a)(ii)-(iii). McGowan testified in his deposition that his drivers were required to contact Cardinal dispatch daily to inform Cardinal of their progress. McGowan Dep. 68. All of McGowan's trucking business was through Cardinal. McGowan Dep. 61.

         Taken together, McGowan's business with Cardinal stretched from soliciting customers and negotiating shipping rates to leasing his trucks to Cardinal and finding drivers to deliver the shipment to its destination. At each of these stages, however, Cardinal had the power to exercise meaningful control over McGowan's business. Cardinal had the power to review potential customers and the rates negotiated with McGowan. Cardinal provided McGowan with forms and advice on how best to conduct his sales agent business, collected shipping fees, paid McGowan his commission, and reminded customers of their outstanding balances. Cardinal further required all drivers to meet certain qualifications, checked up on them daily, imposed insurance requirements on McGowan, and set reporting requirements on a range of information.

         While both McGowan and Cardinal's owner testified that they understood their relationship to be that of an independent contractor, their characterization of the relationship is not determinative. Zirkle, 585 S.E.2d 23. Neither are the labels used for the parties in their agreements. Id. The provisions of the agreements and other testimony from McGowan support a reasonable inference that McGowan was an employee of Cardinal and thus Cardinal could be subject to vicarious liability for the negligent acts of McGowan.[1]

         b. Scope of Employment

         Even if McGowan is ultimately found to be an employee of Cardinal, Cardinal is only liable for McGowan's negligent acts done in the scope of his employment. West Virginia common law defines the scope of employment with three elements: (1) the conduct is of the kind he or she is employed to perform; (2) the conduct occurs within the authorized space and limits; and (3) it is actuated, at least in part, by a purpose to serve the master. W.Va. Reg'l Jail and Corr. Facility Auth. v. A.B., 766 S.E.2d 751, 770 (W.Va. 2014). Again, the West Virginia Supreme Court explained “[o]rdinarily, the determination whether an employee has acted within the scope of employment presents a question of fact.” Id. Where there is conflicting evidence or where the evidence is in accord but is subject to conflicting inferences, the determination is for the jury. Id. Here again the evidence presented to the Court is either in conflict or susceptible to contrary but reasonable inferences. Thus, the jury must decide whether McGowan was acting within the scope of his employment when Edwards was injured.

         Cardinal commits much of its argument to highlighting that it never expressly authorized McGowan to load or unload anything, thus, rendering his loading practices outside the kind of conduct for which Cardinal employed McGowan. Whether McGowan was expressly permitted or required to do any loading is not determinative of whether he was acting within the scope of his employment. On this issue the West Virginia Supreme Court held “[w]here a master sends forth an agent he is responsible for the acts of his agent within the apparent scope of his authority, though the agent oversteps the strict line of his duty.” Nees v. Julian Goldman Stores, Inc., 146 S.E. 61, 62 (W.Va. 1928). An employee may be acting within the scope of employment even if the act is unauthorized when the act “can fairly and reasonably be deemed to be an ordinary and natural incident or attribute of that act or a natural, direct or logical result of it.” Levine v. Peoples Broadcasting Corp., 140 S.E.2d 438, 442 (W.Va. 1965); see also Travis v. Alcon Labs. Inc., 504 S.E.2d 419, 431 (W.Va. 1998) (“[A]n employer may be liable for the conduct of an employee, even if the specific conduct is unauthorized or contrary to express orders, so long as the employee is acting within his general authority and for the benefit of the employer.”). Whether the act is a natural incident to one's employment is a “relative term” that “requires a consideration of surrounding circumstances . . . ordinarily determined by the jury.” Griffith v. George Transfer & Rigging, Inc., 201 S.E.2d 281, 288 (W.Va. 1973).

         It is not a far stretch to deem loading a truck a natural incident to shipping freight by truck. Indeed, it is fair to say that it is necessary. The fact that McGowan was not loading shipments at their destination does not, as a matter of law, transform the act into “something different in kind from that authorized.” A.B., 766 S.E.2d at 770. From the evidence presented to the Court, partial loads are often dispatched by Special Metals to McGowan's trucks. It is reasonably expected that McGowan would then attempt some form of consolidation to make his operation more efficient. See Riley Dep. 48-49, Pl.'s Resp. Ex. 1, ECF No. 79 (“You know, the idea is to put as much money, legally, on your truck as possible.”). Accordingly, a reasonable inference can be drawn that loading and unloading to consolidate partial loads onto a single truck were natural incidents to McGowan's employment. It is for the jury, not this Court, to make the ultimate determination whether McGowan's loading practices were in fact a natural incident to his employment.

         Cardinal also argues that McGowan was not actuated by a purpose to serve Cardinal because any efficiencies realized by McGowan accrued solely to McGowan. For each truckload he transported McGowan was paid seventy-six percent of the total shipping fee. Out of that fixed commission McGowan had to pay tolls, fuel, and his drivers; the remainder was his profit. Thus, Cardinal argues, any savings by consolidating loads would accrue only to McGowan in the form of lower labor, toll, and fuel costs by using one truck instead of multiple trucks. The Court agrees with Cardinal's description, but it is only a partial account of the division of benefits realized by McGowan and Cardinal.

         McGowan need not be actuated solely by a desire to serve Cardinal. A.B., 766 S.E.2d at 770 (finding the act must be “actuated, at least in part, by a purpose to serve the master.” (emphasis added)). It is reasonable to infer that where McGowan was able to create efficiencies in his trucking operation he could use those savings to present more competitive shipping rates to Special Metals thereby ensuring continued use of Cardinal as its carrier. The actuating purpose of McGowan's consolidation method was undeniably self-serving, but a reasonable inference can be drawn ...

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