Freight Brokers Vicariously Liable For Carrier Negligence: California Trial Court Creates New Public Policy

The issue in this case threatens the viability of small and medium size firms that act as intermediaries who promote efficiency in a vital industry, the transportation of goods by truck, and could diminish competition. 

KAM-WAY is a motor, freight or trucking broker. A freight broker is an individual or company that serves as liaison between another individual or company that needs shipping services and an authorized motor carrier. A broker does not control or own the large commercial vehicles used to transport goods. Defendant HSD Trucking (“HSD”) is a motor carrier, a “person providing commercial motor vehicle transportation for compensation.” Harbhajan Singh (“Singh’’) is the owner of HSD and was the driver of HSD’s  vehicle at the time of the accident giving rise to this litigation. HSD was an independent contractor who could transport goods in his vehicles for other shippers or through other brokers. 

KAM-WAY was retained by a grower of fruits and vegetables to find a trucker to carry a cargo to Arizona. KAM-WAY suggested HSD for the job. HSD provided all equipment and personnel, and chose the route and other means to move the cargo from its point of dispatch to its intended point of delivery. HSD picked up goods directly from the shipper. KAM-WAY had no possession of or control over the cargo or the truck.

David Chavez, the plaintiff in this case,  is an acquaintance of defendant Singh and was being trained by Singh to become a truck driver. Singh paid Chavez $ 300 per trip to help him drive the truck, and Chavez had assisted Singh on other trips before the trip during which the accident occurred. Chavez was sitting in the passenger seat of Singh’s truck when Singh allegedly caused it to roll.

Chavez sought relief against KAM-WAY based on the theory that Singh was acting within his scope of employment for HSD. KAM-WAY moved for summary judgment because Singh was an independent contractor and therefore KAM-WAY was not liable for his negligence. KAM-WAY argued that a “nondelegable duty of care” can only be imposed on motor carriers, not on brokers. The trial court denied the motion because the existence of a triable issue of fact existed as to whether KAM-WAY breached its duty to Chavez. 

The trial court acknowledged that the“nondelegable duty doctrine had only been applied to carriers, but determined for the first time that “The articulated [nondelegable duty] rule that applies to carriers, should apply to brokers. . . as a matter of public policy.”

Issue Areas:

Free Enterprise, Limited Government

Case:

KAM-WAY Transportation v. Superior Court (Chavez), No. 220283 (California Supreme Court)

Read the Amicus Brief:

Question(s) Presented:

Did the trial court err in expanding “as a matter of public policy” the“ nondelegable duty doctrine”to freight brokers who arrange the transportation of third parties’ goods by independent contractor truck operators over ​​whom broker has no legal or operational control?

Additional Background:

“The court reasoned that expansion of the doctrine upheld the policy articulated by this Court in its carrier cases because finding there to be a nondelegable duty was necessary to ensure “the incentive for careful supervision of its business”and “members of the public who are injured would be deprived of the financial responsibility of those who had been granted the privilege of conducting their business over the public highways.” (Citing to Serna v. Pettey Leach Trucking, Inc.110 Cal. App. 4th 1475,1481 (2003). 

Heretofore,this Court has carefully limited the liability of a party who hires an independent contractor, see, e.g., Privette v. Superior Court (1993) 5 Cal. 4th 689, Toland v. Sunland Housing Group, Inc. (1998) 18 Cal. 4th 253, and Hooker v. Department of Transportation (2002) 27 Cal. 4th 198, and has never held that a freight or truck broker can be held vicariously liable for the negligent acts of its independent contractor motor carrier under the nondelegable duty doctrine, nor has any Court of Appeal.

ALF’s Amicus Brief:

In an amicus brief ALF argues that the Supreme Court should review the doctrine of vicarious liability in the context of a broker-principal relationship. The trial court relies on Serna which applies a nondelegable duty to carriers, not brokers. Vicarious liability is an exception to the general rule that one is not liable for the negligent acts of an independent contractor. The trial Court treated vicarious liability as a general rule rather than as a rule for particular classes of persons engaged in specific activities that they have control over. A freight broker is not in a position to supervise or control truckers, they merely connect shippers with carriers and facilitate transactions between these parties. The trial court misunderstands this Court’s precedents and the role of the freight broker as an intermediary rather than a supervisor. Amici ask this Court to correct the mistake of the trial court by reviewing and reversing this misguided creation of the public policy that will disrupt the existing framework of business relations and likely eliminate smaller brokers from the market by forcing them to insure for actions outside of their control and competency.

Status:

On October 15, 2014 the California Supreme Court denied the petition.