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(A
revised version of this article will appear in The Construction
Lawyer, Volume 22, No. 1, January 2002, published by
the American Bar Association's Forum on the Construction
Industry.)
By
John W. Ralls
Thelen Reid Brown Raysman & Steiner LLP
A
dairy farm hired a contractor to perform work on the owner's
property. After an employee of the contractor was killed,
the employee's family sued the owner on the theory that
it was negligent in hiring the contractor.
The
trial court granted the owner's motion for summary judgment
based on two California Supreme Court cases, Toland v.
Sunland Housing Group, Inc., 18 Cal.4th 253 (1998) and
Privette v. Superior Court, 5 Cal.4th 689 (1993). The Court
of Appeal reversed.
The
California Supreme Court granted review, reversed the judgment
of the Court of Appeal and held that the rationale of Privette
and Toland also applied to the tort of negligent
hiring. Camargo v. Tjaarda Dairy, 25 Cal.4th 1235,
108 Cal.Rptr.2d 617 (2001).
As
a general rule, the hirer of an independent contractor is
not liable to third parties for the negligence of the contractor
or its employees. However, there are many exceptions to
this general rule, including the exceptions set forth in
§§411 through 416 of the Second Restatement of
Torts. Under §413 of the Second Restatement of Torts,
a person who hires an independent contractor to do inherently
dangerous work but who fails to provide in the contact or
in some other manner that special precautions be taken to
avert the peculiar risks of that work can be liable if the
contractor's negligent performance of the work causes injury
to others. Under §416, even if the hiring person has
provided for special precaution in the contract or otherwise,
the hiring person can be liable if the contractor fails
to exercise reasonable care to take such precautions and
the contractor's performance of the work causes injury to
others. The rules set forth in §§413 and 416 are
referred to as the peculiar risk doctrine.
In
Privette and Toland, the court held that under
the peculiar risk doctrine, the hiring person's liability
does not extend to the hired contractor's employees. Privette
dealt with the rule stated in Restatement §413. Toland
dealt with the rule stated in §416. Citing Toland,
the court wrote that the rationale of both cases was that
because California's Workers' Compensation Act shields the
contractor from tort liability to its employees, "it
would be unfair to impose liability on the hiring person
when the liability [of] the one primarily responsible for
the worker's on-the-job injuries is limited to providing
workers' compensation coverage."
In
light of these decisions, the plaintiff sought to make a
case under a negligent hiring theory. Negligent hiring is
dealt with in the Restatement at §411, entitled "Negligence
in Selection of Contractor." That section provides,
"An employer is subject to liability for physical harm
to 'third persons' caused by his failure to exercise reasonable
care to employ a competent and careful contractor: (a) to
do work which will involve a risk of physical harm unless
it is skillfully and carefully done, or (b) to perform any
duty which the employer owes to 'third persons.' "
The
court observed that liability under §411 is, like liability
under §§413 and 416, "derivative" in
the sense that it derives from the "act or omission
of the hired contractor, because it is the hired contractor
who caused the injury by failing to use reasonable care
in performing the work."
"Therefore,
in a negligent hiring case under the theory set forth in
§411, just as in peculiar risk cases under the theory
set forth in §§413 and 416, 'it would be unfair
to impose liability on the hiring person when the liability
of the contractor, the one primarily responsible for the
workers' on-the-job injuries, is limited to providing workers'
compensation coverage.' "
The
court said its conclusion that employees of an independent
contractor should not be permitted to bring a negligent
hiring action against the hirer of the contractor was supported
by the idea that permitting recovery would give employees
an unwarranted windfall.
In
a footnote, the court pointed out that it has granted review
but not yet decided two cases that present two related questions:
Whether the Privette/Toland rationale applies to
(1) the tort of negligent exercise of retained control or
(2) the tort of negligent provision of unsafe equipment.
"[O]ur opinion today should not be read as having prejudged
those questions." In a concurring opinion, an associate
justice hinted that she would vote for a different result
"when the court considers theories of hirer liability
that cannot with any possibility be deemed vicarious or
derivative…."
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For more information about the issues covered in this report, please contact John Ralls in our San Francisco office at 415-369-7210 or at jralls@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2001 Thelen Reid Brown Raysman & Steiner LLP
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