Court Of Appeal Holds That Doctrine Exempting Hirer From Vicarious Liability For Neglience Of A Person Hired By Independent Contractor Does Not Apply Under Federal Motor Carrier Act
In Vargas v. FMI, Inc., the California Court of Appeal held that, despite authority allowing delegation of tort liability for negligence of independent contractors, the Federal Motor Carrier Act creates a non-delegable duty to safely operate vehicles on public highways, which extends the motor carrier's liability not only to members of the public, but also to independent contractor drivers.
Jose Vargas and Luis Felipe Villalobos were a two-man team driving a tractor-trailer across the country. Villalobos was driving and Vargas was in the sleeper berth when the tractor-trailer rolled over, injuring Vargas. Vargas sued FMI, Inc. (the motor carrier and trailer owner), Eves Express, Inc. (the tractor owner), Eswin Suchite (Eves's principal), and Villalobos (the driver), for negligence. The trial court granted summary judgment for FMI and Eves, concluding as a matter of law that neither was vicariously liable for Villalobos's alleged negligence.
Vargas appealed, contending that (1) as a federally licensed motor carrier, FMI owed him a nondelegable duty of care and is vicariously liable for Villalobos's negligence, and (2) Eves is vicariously liable for Villalobos's negligence under California's vehicle owner liability statute. FMI and Eves responded that under Privette v. Superior Court a hirer is not vicariously liable for the negligence of a person hired by an independent contractor. FMI and Eves also argued that Eves was not vicariously liable for the negligence of Villalobos under the Graves Amendment.
The Court of Appeal reversed the granting of summary judgment by the trial court and held that Privette and its progeny were inapplicable where, as here, the basis for vicarious liability is alleged to be a "franchise granted by public authority" (a federal motor carrier's license). Moreover, the Court held that Privette was inapplicable because federal law requires motor carriers using leased vehicles to "have control of and be responsible for" such vehicles in order to "protect the public from the tortious conduct of the often judgment-proof truck-lessor operators." The Federal Motor Carrier Act's intent was to protect the public and hold motor carriers liable for injuries to members of the public caused by leased vehicles. The Court further rejected the Graves argument asserted by defendants, and held that there was insufficient evidence to find that the tractor's owner is entitled to Graves Amendment protection, which shields owners of leased vehicles "engaged in the trade or business of renting or leasing motor vehicles" from vicarious liability for the alleged negligence of their lessee's drivers.
Vargas v. FMI, Inc. is an important ruling in California for motor carriers, independent owner operators, tractor lessors, and drivers hired by independent owner operators. While the court's holding affirms the non-delegable duty of motor carriers under the Federal Motor Carrier Act, it also takes away one of the last defenses (Privette) available to carriers who hired independent owner operators who then hired their own independent drivers. Vargas is also important California jurisprudence because it impedes application of the Graves Amendment, which had become a critical defense for tractor lessors nationwide.