Volkova v. C.H. Robinson

Volkova v. C.H. Robinson Co.

United States District Court for the Northern District of Illinois, Eastern Division

February 7, 2018, Decided; February 7, 2018, Filed

No. 16 C 1883

Reporter

2018 U.S. Dist. LEXIS 19877 *; 2018 WL 741441

NATALIA VOLKOVA, individually and as Trustee of the Estate of Alexandre Volkov, deceased, Plaintiff, v. C.H. ROBINSON COMPANY, et al., Defendants.

Prior History: Volkova v. C.H. Robinson Co., 2016 U.S. Dist. LEXIS 202841 (N.D. Ill., Dec. 20, 2016)

Core Terms

transportation, preempted, motor carrier, hiring, negligent hiring, carrier, broker, allegations, preemption, drivers, routes, shipments, freight, personal injury, regulation, loads

Counsel:  [*1] For Natalia Volkova, individually and as Trustee, estate of Alexandre Volkov, Plaintiff: Christopher Michael Norem, LEAD ATTORNEY, Law Offices of Parente & Norem, P.C., Norem, P.C., Chicago, IL.

For C.H. Robinson Company, C.H. Robinson Company, Inc., C.H. Robinson Worldwide, Inc., C.H. Robinson International, Inc., Defendants: William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, Michael Samuel Shapiro, Scandaglia Ryan LLP, Chicago, IL.

For Dung Quoc Nguyen, individually, doing business as Antioch Transport, Inc., Antioch Transport Inc., Defendants: Jamie Sean Lane, LEAD ATTORNEY, Smith Amundsen, Chicago, IL; Peter Michael Henry, Smithamundsen Llc, Chicago, IL.

For Antioch Transport Inc., ThirdParty Plaintiff, C.H. Robinson Worldwide, Inc., C.H. Robinson Company, Inc., C.H. Robinson Company, C.H. Robinson International, Inc., Defendant: Jamie Sean Lane, LEAD ATTORNEY, Smith Amundsen, Chicago, IL; Peter Michael Henry, Smithamundsen Llc, Chicago, IL; William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, Scandaglia Ryan LLP, Chicago, IL.

For C.H. Robinson [*2]  Company, Inc., C.H. Robinson Company, C.H. Robinson International, Inc., C.H. Robinson Worldwide, Inc., Cross Claimants, ThirdParty Plaintiffs, Cross Claimants: William Joseph Ryan, LEAD ATTORNEY, Eric J Munoz, Scandaglia Ryan LLP, Chicago, IL.

For Antioch Transport Inc., Cross Defendant, ThirdParty Plaintiff: Jamie Sean Lane, LEAD ATTORNEYS, Smith Amundsen, Chicago, IL.

Judges: Ronald A. Guzmán, United States District Judge.

Opinion by: Ronald A. Guzmán

Opinion

MEMORANDUM OPINION AND ORDER

For the reasons stated below, the Robinson defendants' motion to dismiss certain claims [194] is granted.
STATEMENT

The Court assumes general knowledge of the facts of the case, which was filed after the decedent's tractor-trailer crashed into another tractor-trailer, driven by defendant Dung Quoc Nguyen, who was making a U-turn in the middle of the highway. Plaintiff's second amended complaint ("SAC") alleges in part that Defendants C.H. Robinson Company, Inc. and C.H. Robinson Worldwide, Inc. (collectively, "Robinson") negligently hired Antioch Transport, Inc. and its driver, Nguyen.

According to the SAC, Robinson is a federally-registered property broker, while Antioch is a federally-authorized motor carrier. (SAC, Dkt. # 191, [*3]  ¶¶ 10, 36.) Robinson selects and contracts with motor carriers (in this instance, Antioch) to haul freight shipments for its customers. (Id. ¶¶ 35-36, 48.) Plaintiff alleges that Robinson is liable for failing to perform sufficient investigation and evaluation in hiring Antioch and Nguyen to transport the load at issue. (Id. ¶¶ 38, 40-43, 176.)

Robinson contends in the instant motion to dismiss that the negligent hiring claims are preempted by the Federal Aviation Administration Authorization Act of 1994 ("FAAAA").1

Standard

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court assumes all factual allegations in the complaint to be true, viewing all facts and any inferences reasonably drawn therefrom in the light most favorable to the plaintiff. Parish v. City of Elkhart, 614 F.3d 677, 679 (7th Cir. 2010). The factual allegations in the complaint must be enough to raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "The complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010).

Analysis

To succeed on a cause of action regarding the negligent hiring, Plaintiff must show that Robinson negligently hired Antioch and Nguyen when Robinson knew or should have known that they were "unfit for the [*4]  required contracted job so as to create a danger of harm to other third parties." Hayward v. C.H. Robinson Co., 2014 IL App (3d) 130530, 388 Ill. Dec. 140, 24 N.E.3d 48, 55 (Ill. App. Ct. 2014).

Under the relevant provision of the FAAAA:

a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1) (emphasis added). In turn, the term "transportation" includes:

(A) a motor vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning use; and

(B) services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.

49 U.S.C. § 13102(23) (emphasis added).

In addressing preemption under the FAAAA, the Supreme Court has stated that "[t]he phrase 'related to' . . . embraces state laws 'having a connection with or reference to' carrier 'rates, routes, or services,' whether directly or indirectly." [*5]  Dan's City, 133 S. Ct. at 1778. (citations and certain internal quotation marks omitted). However, the FAAAA "does not preempt state laws affecting carrier prices, routes, and services 'in only a tenuous, remote, or peripheral . . . manner.'" Id. (citation omitted). The Court "must examine the underlying facts of each case to determine whether the particular claims at issue 'relate to' [the broker's] rates, routes or services." Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1433 (7th Cir. 1996) (interpreting the ADA). The state "'law must relate to carrier rates, routes, or services either by expressly referring to them, or by having a significant economic effect on them.'" Nationwide Freight Sys., Inc. v. Ill. Commerce Comm'n, 784 F.3d 367, 373-74 (7th Cir. 2015) (quoting Travel All Over the World, 73 F.3d at 1432). Moreover, "it is not sufficient that a state law relates to the 'price, route, or service' of a [broker] in any capacity; the law must also concern a [broker's] 'transportation of property.'" Dan's City, 133 S. Ct. at 1778-79. "[F]ederal preemption is an affirmative defense upon which the defendants bear the burden of proof." Georgia Nut Co. v. C.H. Robinson Co., No. 17 C 3018, 2017 U.S. Dist. LEXIS 177269, 2017 WL 4864857, at *3 (N.D. Ill. Oct. 26, 2017) (internal citations omitted).

It is clear from the parties' briefs and the Court's independent research that there is authority supporting both sides of the preemption issue with respect to the negligent hiring claim. However, while other cases might be instructive, they do not dictate a specific result, [*6]  as the Seventh Circuit has cautioned against "develop[ing] broad rules concerning whether certain types of common-law claims are preempted by the [FAAAA]." Travel All Over the World, 73 F.3d at 1431. Instead, as noted, the Court "must examine the underlying facts of each case to determine whether the particular claims at issue 'relate to' [broker] rates, routes or services." Id.

With respect to the negligent hiring claims against Robinson, the SAC contains the following relevant allegations:

35. That for the fiscal year ending 2014 CH Robinson filed a form 10-K with the United States Securities and Exchange Commission describing their business as:

'We are a service company. We provide freight transportation services and logistics to companies of all sizes, in a wide variety of industries. * * * We have developed global transportation and distribution networks to provide transportation and supply chain services worldwide. * * * As a third-party logistics provider, we enter into contractual relationships with a wide variety of transportation companies, and utilize those relationships to efficiently and cost-effectively transport our customers' freight. . . . Depending on the needs of our customer and their supply chain requirements, [*7]  we select and hire the appropriate transportation for each shipment.'

36. That despite all of the publicly available information showing that Antioch Transport, Inc. was an unsafe company on July 1, 2014, the CH Robinson Defendants executed a carrier agreement with Antioch Transport, Inc. to provide them loads to haul in interstate commerce for Robinson customers.

37. That CH Robinson's carrier agreement with Antioch Transport, Inc. placed safety requirements on Antioch to ensure that its drivers are properly trained and licensed, are competent and capable of safely handling and transporting Robinson's shipments, and that drivers would be dispatched in accordance with the maximum available hours of service rules promulgated by the FMCSA [Federal Motor Carrier Safety Act] while operating in the United States. Robinson also required that Antioch maintain their equipment for use in hauling Robinson loads in good operating condition and repair and in compliance with all Federal, State, Provincial/Territorial, Municipal statutes and/or regulations so that it is suitable and properly configured to safely load, transport, and unload the shipments tendered by Robinson.

(SAC, Dkt. # 191, ¶¶ 35-37.) [*8] 

The SAC further alleges that it was Robinson's corporate policy to not, among other things:

• Order or review carrier safety information before hiring any motor carrier to haul their loads.

• Ask any motor carrier to provide their 'Company Safety' report or any other available carrier or safety data.

• Ask any motor carrier to provide any information demonstrating that their drivers were actually properly trained or licensed, or competent and capable of safely handling and transporting shipments.

(Id. ¶¶ 41-42.)

Finally, the SAC alleges that Robinson had a duty to ensure that its drivers would not create a risk of injury, had a duty of reasonable care in selecting and hiring commercial drivers, and "had an obligation to comply with the FMSCA and the FMCSRs [Federal Motor Carrier Safety Regulations] in all respects, at all times relevant." (Id. ¶¶ 118-120.)

As used in the FAAAA, "[t]he term 'services' is . . . broad, encompassing 'all elements of the [motor] carrier service bargain.'" Midwest Trading Grp., Inc. v. GlobalTranz Enters., Inc., No. 12 C 9313, 2015 U.S. Dist. LEXIS 27095, 2015 WL 1043554, at *3 (N.D. Ill. Mar. 5, 2015) (citation omitted). A straightforward reading of Plaintiff's allegations demonstrates that the negligent hiring claims relate to the core service provided by Robinson — hiring motor carriers to transport shipments. [*9]  See Georgia Nut Co., 2017 U.S. Dist. LEXIS 177269, 2017 WL 4864857, at *3 ("While the services of a freight broker do not include the actual transportation of property, they are focused on arranging how others will transport the property; these services, therefore, fall within the scope of the FAAAA preemption.").

Further, in alleging that Robinson has failed to adequately and properly perform its primary service, the negligent hiring claim directly implicates how Robinson performs its central function of hiring motor carriers, which involves the transportation of property. Therefore, because enforcement of the claim would have a significant economic impact on the services Robinson provides, it is preempted. Id. ("Enforcing state negligence laws that would have a direct and substantial impact on the way in which freight brokers hire and oversee transportation companies would hinder th[e] objective of the FAAAA[,]" which "does not allow courts to impute state-law derived rights into transportation agreements," with the result of "expand[ing] the bargained-for rights of the agreement.").

Plaintiff argues that because her claim involves personal injury and not damage to property, the claim is not preempted. It is true that certain courts have found that [*10]  negligence claims seeking relief for personal injury are not preempted. See, e.g., Mann v. C.H. Robinson Worldwide, Inc., Nos. 16 C 102, 16 C 104 & 16 C 140, 2017 U.S. Dist. LEXIS 117503, 2017 WL 3191516, at **7-8 (W.D. Va. July 27, 2017) (concluding that negligent hiring claim based on injuries sustained in truck accident not preempted) (citing Montes de Oca v. El Paso-L.A. Limousine Express, Inc., No. 14 C 9230, 2015 U.S. Dist. LEXIS 33707, 2015 WL 1250139 (C.D. Cal. Mar. 17, 2015) (holding FAAAA did not preempt personal injury claim against transportation broker); Owens v. Anthony, No. 2:11-cv-33, 2011 U.S. Dist. LEXIS 139961, 2011 WL 6056409, at *3 (M.D. Tenn. Dec. 6, 2011) ("The Court agrees with the numerous courts which have found that personal injury negligence claims are not preempted by the FAAAA."); Jimenez-Ruiz v. Spirit Airlines, Inc., 794 F. Supp. 2d 344 (D.P.R. June 16, 2011) (concluding that plaintiff's claim for personal injuries sustained while disembarking an aircraft was not preempted by the ADA)).

The Court, however, respectfully disagrees with the analyses of these courts to the extent that they do not faithfully apply the preemption analysis established by the Supreme Court, as described above. In essence, Plaintiff contends that a proper application of the preemption analysis should be disregarded in a case where the plaintiff is seeking relief for personal injury. (Pl.'s Reply, Dkt. # 199, ¶ 7) ("In this case, the plaintiff is the trustee of the estate of her dead husband who was traveling on I-80 when a driver [hired by] Robinson fell asleep and drove into oncoming traffic causing the subject collision. [*11]  . . . Alex Volkov did not bargain for the possibility of a horrific death caused by the negligent defendants but that is what he received."). The Court recognizes the devastation caused by the accident and certainly sympathizes with Plaintiff. Nevertheless, the Court cannot ignore the straightforward preemption analysis as laid out by the Supreme Court, and finds instructive the analysis in Rowe v. New Hampshire Motor Transportation Association, 552 U.S. 364, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008). In Rowe, the Supreme Court found preempted Maine statutes regulating the delivery of tobacco products in spite of the State's argument that the laws were enacted in an "effort[] to protect its citizens' public health, particularly when those laws regulate so dangerous an activity as underage smoking." Id. at 373-74. The Supreme Court concluded that "[d]espite the importance of the public health objective, we cannot agree with Maine that the federal law creates an exception on that basis exempting state laws that it would otherwise pre-empt." Id. at 374. The Court finds no ground in the instant case on which to depart from this reasoning.

Contrary to Plaintiff's argument that a finding of preemption leaves her without a remedy, she may and has sought recourse against the carrier, Antioch, and its driver, Nguyen. Nor is [*12]  Plaintiff's reliance on § 14501(c)(2)(A), which provides that the FAAAA "shall not restrict safety regulatory authority of a State with respect to motor vehicles," persuasive. Id. (emphasis added). Plaintiff points to no convincing authority supporting the proposition that a state common law claim for negligent hiring constitutes a safety regulation of a motor vehicle.

Conclusion

For the reasons stated herein, the Court finds that the negligent hiring claims against the Robinson defendants are preempted, and grants Robinson's motion to dismiss those claims against it.

Date: February 7, 2018

/s/ Ronald A. Guzmán

Ronald A. Guzmán

United States District Judge

End of Document

1 The preemption-clause language in the FAAAA is informed by decisions interpreting parallel language in the preemption provision of the Airline Deregulation Act of 1978 ("ADA"). Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 133 S. Ct. 1769, 1778, 185 L. Ed. 2d 909 (2013). The Court further notes that the FAAAA was amended by the ICC Termination Act of 1995 ("ICCTA"). Thus, while different courts may refer to the relevant federal law as the ADA, the FAAAA, or the ICCTA, the same analytical framework applies, and the Court uses only the FAAAA acronym in this order for ease of reference, unless otherwise indicated.

Ying Ye v. Global Sunrise, Inc.

Ying Ye v. Global Sunrise, Inc.

United States District Court for the Northern District of Illinois, Eastern Division

March 4, 2020, Decided; March 4, 2020, Filed

No. 1:18-CV-01961

Reporter

2020 U.S. Dist. LEXIS 37142 *; 2020 WL 1042047

YING YE, as Representative of the Estate of Shawn Lin, Deceased, Plaintiff, v. GLOBAL SUNRISE, INC., and GLOBALTRANZ ENTERPRISES, INC., Defendants.

Core Terms

motor carrier, negligent hiring, preemption, transport, broker, preempted, motor vehicle, allegations, freight, load, communications, freight broker, carrier, vicarious liability, brokerage services, delivery, driver, routes

Counsel:  [*1] For Ying Ye, as Representative of the, estate of, Shawn Lin, deceased, Plaintiff: Malorie J Peacock, LEAD ATTORNEY, Cowen Rodriguez Peacock, San Antonio, TX; Robert Morris Disque, III, LEAD ATTORNEY, PRO HAC VICE, Cowen Rodriguez Peacock, San Antonio, TX; Kenneth H. Levinson, Levinson and Stefani, Chicago, IL; Shannon Dylan Pearcy, PRO HAC VICE, Cowen Rodriguez Peacock, San Antonio, TX.

Global Sunrise, Inc., Defendant, Pro se, Springfield, IL.

For GlobalTranz Enterprises, Inc., Defendant: William Phillip Ryan, LEAD ATTORNEY, Marwedel, Minichello & Reeb, P.C., Chicago, IL; Matthew Carl Koch, Marwedel, Minichello & Reeb, P.C., Chicago, IL.

Judges: Elaine E. Bucklo, United States District Judge.

Opinion by: Elaine E. Bucklo

Opinion
MEMORANDUM OPINION AND ORDER

Defendant GlobalTranz Enterprises, Inc. ("GlobalTranz"), seeks to dismiss plaintiff Ying Ye's claims against it pursuant to Federal Rules of Civil Procedure Rule 12(b)(6) because they are preempted by the Federal Aviation Administration Authorization Act of 1994 (the "FAAAA"), 49 U.S.C. § 14501(c)(1). Dkt. No. 62. For the reasons that follow, GlobalTranz's motion is granted in part and denied in part.

I.

Plaintiff sues GlobalTranz and Global Sunrise, Inc. ("Global Sunrise"), seeking damages for the death of her spouse, Shawn Lin. According [*2]  to the Amended Complaint, Dkt. No. 55, GlobalTranz, a freight broker that provides third-party logistics services, contracted with Global Sunrise, a motor carrier, to transport freight from Illinois to Texas. Lin died in a motor-vehicle accident caused by a Global Sunrise driver, David Antoine Carty, who was carrying a load on behalf of GlobalTranz.

Plaintiff's allegations against GlobalTranz invoke two theories of liability. First, plaintiff alleges that GlobalTranz acted negligently in selecting Global Sunrise to transport freight. For example, GlobalTranz knew or should have known that Global Sunrise operated in an unsafe manner due to its extensive history of safety violations, which is available on the Federal Motor Carrier Safety Administration website. Second, plaintiff alleges that GlobalTranz had sufficient control over Global Sunrise and Carty to make it vicariously liable for Lin's death. Specifically, GlobalTranz directly communicated with Carty about the load, set the dates and times for pickup and delivery, and required the following from Carty or Global Sunrise: the use of a specific trailer, daily tracking and driver location reports, calls from Carty to be dispatched [*3]  and before entering detention, immediate notification if the shipper's instructions did not match the rate confirmation, verification that the bill of lading matched the temperature on the load confirmation, and a two-hour pickup and delivery ETA. Also, the bill of lading for Carty's load identified GlobalTranz, not Global Sunrise, as the carrier and made no mention of Global Sunrise.

II.

To survive a motion to dismiss under Rule 12(b)(6), plaintiff must allege "a short and plain statement of the claim showing that [she] is entitled to relief." Fed. R. Civ. P. 8(a)(2). That is, she must state a claim "that is plausible on its face" after I disregard conclusory allegations. W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670, 675 (7th Cir. 2016) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)). In resolving a motion to dismiss under Rule 12(b)(6), I accept plaintiff's well-pled factual allegations as true and draw all reasonable inferences in her favor. Id.

III.

To reach the merits of GlobalTranz's motion, I must first address a procedural misstep. "Preemption is an affirmative defense" which a pleading need not anticipate. Bausch v. Stryker Corp., 630 F.3d 546, 561 (7th Cir. 2010) (citations omitted). GlobalTranz should have filed an answer and moved for judgment on the pleadings under Rule 12(c). See id. at 561-62. However, this error "is of no consequence" where a court has before [*4]  it all it needs to rule on the defense and the plaintiff does not complain of the error. Carr v. Tillery, 591 F.3d 909, 913 (7th Cir. 2010). That is the situation here. Moreover, a Rule 12(c) motion is governed by the same standard that is used for a Rule 12(b)(6) motion. Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir. 2014).

Turning to GlobalTranz's motion, the issue before me is whether plaintiff's claims against GlobalTranz—negligent hiring and vicarious liability—fall within the FAAAA's preemption rule, 49 U.S.C. § 14501(c). Congress enacted the preemption provision of the FAAAA "with the aim of eliminating the patchwork of state regulation of motor carriers that persisted fourteen years after it had first attempted to deregulate the trucking industry." Nationwide Freight Sys., Inc. v. Illinois Commerce Comm'n, 784 F.3d 367, 373 (7th Cir. 2015) (citing Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 261, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013); S.C. Johnson & Son, Inc. v. Transp. Corp. of Am., Inc., 697 F.3d 544, 548-49 (7th Cir. 2012)). In the relevant provision, the FAAAA provides:

a State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1). The term "transportation" includes:

(A) a motor vehicle, . . . property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning [*5]  use; and

(B) services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.

49 U.S.C. § 13102(23).

The FAAAA's preemptive scope is broad and includes "laws and actions having some type of connection with or reference to a [broker's] rates, routes, or services, whether direct or indirect." Nationwide Freight, 784 F.3d at 373. However, when a state law has only a "tenuous, remote, or peripheral" relationship with such rates, routes, or services, it is not preempted. Id. (quoting Dan's City, 569 U.S. at 261). To determine that the FAAAA preempts a state law claim, two requirements must be met: (1) "a state must have enacted or attempted to enforce a law" and (2) that law must relate to a broker's "rates, routes, or services 'either by expressly referring to them, or by having a significant economic effect on them.'" Id. at 373-74 (quoting Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1432 (7th Cir. 1996)).

A.

I first address plaintiff's claim that GlobalTranz acted negligently in hiring Global Sunrise to transport freight. As the parties recognize, no federal appellate court has determined whether the FAAAA preempts personal injury claims alleging a broker negligently selected a motor carrier [*6]  for the transportation of property and district courts are "sharply divided" on that question. Loyd v. Salazar, No. CIV-17-977-D, 416 F. Supp. 3d 1290, 2019 U.S. Dist. LEXIS 160694, 2019 WL 4577108, at *4 (W.D. Okla. Sept. 20, 2019) (DeGiusti, J.); compare Volkova v. C.H. Robinson Co., No. 16 C 1883, 2018 U.S. Dist. LEXIS 19877, 2018 WL 741441, at *4 (N.D. Ill. Feb. 7, 2018) (Guzmán, J.) (dismissing negligent hiring claim against a broker as preempted by the FAAAA) with Mann v. C.H. Robinson Worldwide, Inc., Nos. 16 C 102, 16 C 104 & 16 C 140, 2017 U.S. Dist. LEXIS 117503, 2017 WL 3191516, at *7-8 (W.D. Va. July 27, 2017) (Dillon, J.) (determining that the FAAAA does not preempt a personal injury claim against a broker alleging negligent hiring of a carrier).

To succeed on her negligent hiring claim, plaintiff must show that GlobalTranz selected Global Sunrise as an independent contractor when it knew or should have known that Global Sunrise was "unfit for the required contracted job so as to create a danger of harm to other third parties." Hayward v. C.H. Robinson Co., 2014 IL App (3d) 130530, 388 Ill. Dec. 140, 24 N.E.3d 48, 55 (Ill. App. Ct. 2014).1 Negligence claims under state common law fulfill the first requirement for FAAAA preemption. See United Airlines, Inc. v. Mesa Airlines, Inc., 219 F.3d 605, 607 (7th Cir. 2000) (state common-law actions are an "other provision having the force and effect of law" for purposes of the Airline Deregulation Act's preemption provision). The issue then becomes whether plaintiff's negligent hiring claim relates to GlobalTranz's broker services by either expressly referring to those services or by having a significant economic effect on them.

The heart of plaintiff's negligent hiring claim is that GlobalTranz [*7]  failed to exercise reasonable care in arranging for a motor carrier, that is, its service as a freight broker. As used in the FAAAA, a "broker" is:

a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.

49 U.S.C. § 13102(3). Plaintiff alleges that GlobalTranz provided "third-party logistics services and acts as a freight broker," marketed "itself to both shippers and motor carriers," contracted with Global Sunrise, a motor carrier, to transport freight from Illinois to Texas, and knew or should have known of Global Sunrise's history of unsafe operations. Dkt. No. 55, Am. Compl. at ¶¶ 2.5, 2.6, 4.13, 4.12, 4.37. These allegations implicate a freight broker's services regarding the transportation of property. See, e.g., Georgia Nut Co. v. C.H. Robinson Co., No. 17 C 3018, 2017 U.S. Dist. LEXIS 177269, 2017 WL 4864857, at *3 (N.D. Ill. Oct. 26, 2017) (Ellis, J.) ("While the services of a freight broker do not include the actual transportation of property, they are focused on arranging how others will transport the property; these services, therefore, fall within the scope of the FAAAA preemption.") [*8]  (citation omitted).

While state common law does not expressly reference freight brokers, plaintiff's negligent hiring claim seeks to shape how freight brokers perform their services. For example, in Rowe v. N.H. Motor Transp. Ass'n, the Supreme Court determined that the FAAAA preempted a Maine law that established requirements on tobacco deliveries, in part, because it imposed liability for a motor carrier's "failure to sufficiently examine every package" for unlicensed tobacco. 552 U.S. 364, 372-73, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (emphasis in original). Similarly, to avoid liability for a negligent hiring claim like plaintiff's, brokers would need to examine each prospective motor carrier's safety history and determine whether any prior issues or violations would be permissible under the common law of one or more states. Enforcing such a claim would have a significant economic impact on GlobalTranz's broker services. Volkova, 2018 U.S. Dist. LEXIS 19877, 2018 WL 741441, at *3. Furthermore, such an imposition on brokers would thwart the deregulatory objective of the FAAAA. See Costello v. BeavEx, Inc., 810 F.3d 1045, 1051 (7th Cir. 2016). Accordingly, plaintiff's negligent hiring claim is preempted.

Plaintiff argues that her negligent hiring claim falls within a statutory exception that provides the FAAAA's preemption rule "shall not restrict the safety [*9]  regulatory authority of a State with respect to motor vehicles . . . ." 49 U.S.C. § 14501(c)(2)(A). Even if I assume that plaintiff's claim can be considered a safety regulation, that claim has an attenuated connection to motor vehicles. GlobalTranz is not alleged to directly own, operate, or maintain motor vehicles. Plaintiff's expansive reading of the safety regulatory exception seeks "an unwarranted extension of the exception to encompass a safety regulation concerning motor carriers rather than one concerning motor vehicles." Loyd, 2019 U.S. Dist. LEXIS 160694, 2019 WL 4577108, at *7; see also Gillum v. High Standard, LLC, No. SA-19-CV-1378-XR, 2020 U.S. Dist. LEXIS 14820, 2020 WL 444371, at *5 (W.D. Tex. Jan. 27, 2020).

Nor am I convinced by plaintiff's argument that cases interpreting the analogous preemption provision of the Airline Deregulation Act ("ADA") merit the conclusion that the FAAAA does not preempt any personal injury negligence claims. The negligent hiring claim against GlobalTranz is not a "run-of-the-mill" personal injury claim seeking damages for premises liability. Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1261, 1266 (9th Cir. 1998), opinion amended on denial of reh'g, 169 F.3d 594 (9th Cir. 1999) (In the context of the ADA, the "service" of an airline "does not refer to the pushing of beverage carts, keeping the aisles clear of stumbling blocks, the safe handling and storage of luggage, assistance to passengers in [*10]  need, or like functions."). And, the Seventh Circuit has rejected the development of "broad rules concerning whether certain types of common-law claims are preempted by the ADA." Travel All Over the World, 73 F.3d at 1433 ("Instead, we must examine the underlying facts of each case to determine whether the particular claims at issue 'relate to' airline rates, routes or services.") (discussing Morales v. Trans World Airlines, 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992)).

Plaintiff is also mistaken that the preemption of her negligent hiring claim leaves her without a remedy. Federal law mandates that motor carriers must maintain an insurance policy, bond, or other security in an amount "sufficient to pay . . . for each final judgment against the registrant for bodily injury to, or death of, an individual resulting from the negligent operation, maintenance, or use of motor vehicles, or for loss or damage to property . . . or both." 49 U.S.C. § 13906(a)(1). There is no such mandate for brokers. Cf. 49 U.S.C. §§ 13906(b)(1)(A), 13906(b)(2)(A). This provision, and the safety regulatory exception discussed above, indicate that Congress intended that a motor carrier, in this case Global Sunrise, may be liable for personal-injury negligence actions despite the FAAAA's preemption provision.

B.

I next address plaintiff's claim that GlobalTranz is vicariously liable for Global [*11]  Sunrise and Carty's negligence. To succeed on that claim, plaintiff must establish a principal-agent relationship between GlobalTranz and Global Sunrise and Carty. See Sperl v. C.H. Robinson Worldwide, Inc., 408 Ill. App. 3d 1051, 946 N.E.2d 463, 470, 349 Ill. Dec. 269 (Ill. App. Ct. 3rd Dist. 2011) ("A principal is vicariously liable for the conduct of its agent but not for the conduct of an independent contractor.") (citation omitted). In an agency relationship, "a principal has the right to control an agent's conduct and an agent has the power to affect a principal's legal relations" whereas "an independent contractor undertakes to produce a given result but, in the actual execution of the work, is not under the order or control of the person for whom he does the work." Id. (citations omitted); see also Lang v. Silva, 306 Ill. App. 3d 960, 715 N.E.2d 708, 716, 240 Ill. Dec. 21 (Ill. App. Ct. 1st Dist. 1999).

As discussed, common-law tort claims, like plaintiff's vicarious liability claim, meet the first requirement for FAAAA preemption. See Mesa Airlines, Inc., 219 F.3d at 607. GlobalTranz argues that this claim meets the second requirement for FAAAA preemption for the same reasons as plaintiff's negligent hiring claim—GlobalTranz's alleged communications with Global Sunrise and Carty relate to the services GlobalTranz provides as a freight broker. GlobalTranz also argues that these alleged communications do not constitute sufficient control over [*12]  Carty or Global Sunrise to impose vicarious liability.

GlobalTranz's arguments are unconvincing. Unlike plaintiff's negligent hiring claim, which seeks to hold GlobalTranz liable for its own actions, her vicarious liability claim seeks to hold GlobalTranz liable for the actions of Carty and Global Sunrise. GlobalTranz admits that the safety regulatory exception to FAAAA preemption, 49 U.S.C. § 14501(c)(2)(A), applies "to the motor carrier that actually operates the vehicle." Dkt. No. 67, Reply Br. at 14. As Congress excluded such conduct from the FAAAA's preemption rule, it follows that a principal can be held liable for its agents' negligent operation of a motor vehicle. Furthermore, GlobalTranz's argument that plaintiff's allegations pertain only to its broker services asks me to conclude that its alleged communications with Carty and Global Sunrise are purely "incidental details required to accomplish" those broker services rather than a principal's exercise of control over its agents. Dkt. No. 62 at 14. However, at this stage, I am required to draw all reasonable inferences in plaintiff's favor, not that of GlobalTranz.

The issue then becomes whether plaintiff has alleged facts that give rise to an inference [*13]  that GlobalTranz had the right to control the manner in which Global Sunrise and Carty operated motor vehicles. Here, plaintiff alleges GlobalTranz communicated directly with Carty about the load, required that Carty call it to be dispatched, required the use of a specific trailer, and required communications at multiple points in the transport of the load as well as daily tracking updates and location reports. Also, GlobalTranz, not Global Sunrise, is alleged to be the carrier listed on the bill of lading. These facts are sufficient to raise an inference that GlobalTranz controlled the manner in which Carty and Global Sunrise carried out their work of transporting a load in a motor vehicle. See, e.g., Sperl, 946 N.E.2d at 473 (affirming jury determination that driver was agent of freight broker where broker communicated directly with the driver, set type of trailer to be used, required a dispatch call and constant communication from the driver, and used fines to encourage timely delivery of a load). Whether that is actually the case remains to be decided. See Thakkar v. Ocwen Loan Servicing, LLC, No. 15-CV-10109, 2017 U.S. Dist. LEXIS 143824, 2017 WL 3895596, at *4 (N.D. Ill. Sept. 6, 2017) ("The existence and scope of an agency relationship are questions of fact.") (citation omitted). Plaintiff may proceed with her vicarious liability [*14]  claim against GlobalTranz.

IV.

GlobalTranz's motion to dismiss is granted with respect to plaintiff's negligent hiring claim and is denied with respect to plaintiff's vicarious liability claim.

ENTER ORDER:

/s/ Elaine E. Bucklo

Elaine E. Bucklo

United States District Judge

Dated: March 4, 2020

End of Document

1 The parties argue under the premise that Illinois law governs the substance of plaintiff's tort claims against GlobalTranz. I agree. As this case is before me under diversity jurisdiction, I apply the choice of law principles of the forum state: Illinois. Tanner v. Jupiter Realty Corp., 433 F.3d 913, 915 (7th Cir. 2006). "For tort actions, Illinois instructs the court to ascertain the forum with the 'most significant relationship' to the case." Id. at 915-16 (quoting Esser v. McIntyre, 169 Ill. 2d 292, 661 N.E.2d 1138, 1141, 214 Ill. Dec. 693 (Ill. 1996)). Here, while the accident allegedly occurred in Texas, GlobalTranz's conduct is alleged to have occurred in Illinois, where it and Global Sunrise are allegedly domiciled.

Sperl v. C.H. Robinson Worldwide, Inc.

Sperl v. C.H. Robinson Worldwide, Inc.

Appellate Court of Illinois, Third District

March 30, 2011, Opinion Filed

No. 3-09-0830

Reporter

408 Ill. App. 3d 1051 *; 946 N.E.2d 463 **; 2011 Ill. App. LEXIS 307 ***; 349 Ill. Dec. 269 ****

SUSAN D. SPERL, Individually and as Executor of the Estate of Joseph G. Sperl, Deceased, Plaintiff-Appellee, v. C.H. ROBINSON WORLDWIDE, INC., Defendant-Appellant (C.H. Robinson Worldwide-Ltl, Inc., C.H. Robinson Company, Inc., d/b/a C.H. Robinson International, Inc., DeAn J. Henry, Toad L. Dragonfly Express, PBX, Inc., d/b/a Tyson Food Logistics, a Foreign Corporation, Tyson Fresh Meats, Inc., a Foreign Corporation and Michael R. Smith, Defendants).WILLIAM TALUC and SKYE TALUC, Plaintiffs-Appellees, v. C.H. ROBINSON WORLDWIDE, INC., and C.H. ROBINSON COMPANY, Defendants-Appellants (C.H. Robinson Company, Inc., C.H. Robinson International, Inc., C.H. Robinson Worldwide-Ltl, Inc., DeAn Henry, Individually and d/b/a DJ Transport, Michael R. Smith, Individually and d/b/a Toad L. Dragon Fly Express, Luann G. Whitener-Black, Individually and d/b/a Toad L. Dragonfly Express, Defendants).ANNETTE SANDERS, Individually and as Administrator of the Estate of Thomas S. Sanders, Deceased, Plaintiff-Appellee, v. C.H. ROBINSON WORLDWIDE, INC., and C.H. ROBINSON COMPANY, (referred to as C.H. Robinson Worldwide), Defendants-Appellants (C.H. Robinson International Inc., C.H. Robinson Company, Inc., C.H. Robinson Company, LP, C.H. Robinson Worldwide Foundation, DeAn J. Henry, Luann G. Whitener-Black and Michael R. Smith, Individually and d/b/a Toad L. Dragonfly Express, Defendants).

Subsequent History: As Corrected April 22, 2011. Released for Publication May 9, 2011.

Appeal denied by Sperl v. C.H. Robinson Worldwide, Inc., 955 N.E.2d 480, 2011 Ill. LEXIS 1450, 353 Ill. Dec. 13 (Ill., Sept. 28, 2011)

Related proceeding at, Decision reached on appeal by Carolina Cas. Ins. Co. v. Estate of Sperl, 2015 IL App (3d) 130294, 2015 Ill. App. LEXIS 48, 389 Ill. Dec. 793, 27 N.E.3d 635 (Jan. 27, 2015)

Decision reached on appeal by, Remanded by Sperl v. Henry, 2017 Ill. App. LEXIS 748 (Ill. App. Ct. 3d Dist., Dec. 6, 2017)

Prior History:  [***1] Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois, Nos. 04-L-428, 05-L-812, 09-L-005. Honorable James E. Garrison, Judge, Presiding.

Disposition: Affirmed.

Core Terms

load, driver, carrier, delivery, fines, transportation, dispatch, trial court, potatoes, agency relationship, customers, warehouse, fault, special instruction, new trial, deliver, federal regulation, temperature, freight, trip, doctrine of respondeat superior, independent contractor, weight of the evidence, constant, parties, broker, leased, cases

Case Summary

Procedural Posture

Defendant corporation challenged a judgment of the Circuit Court of the 12th Judicial Circuit, Will County, Illinois, in favor of two plaintiffs, individually and as the executor and administrator (respectively) of the estate of two decedents, and plaintiff individual, in an action for wrongful death and personal injuries. The trial court denied the corporation's motion for judgment notwithstanding the verdict (judgment n.o.v.) or a new trial.

Overview

The jury concluded that the corporation was vicariously liable based on agency for a driver's negligent operation of a tractor-trailer when she ran over several vehicles, causing a multiple-car accident, while delivering a load of potatoes for the corporation. The driver's employer had contracted with the corporation for the load. The corporation argued that the trial court should have granted its motion for judgment n.o.v. or a new trial because the evidence did not support the jury's finding that a principal-agent relationship existed between it and the driver. The appeals court found there were substantial facts that indicated the existence of an agency relationship. The corporation controlled the manner of the driver's work performance, and enforced its special instructions with a system of fines. The corporation also controlled the method of payment. The driver and the driver's employer did not need to be included on the jury's verdict form for purposes of allocating fault under 735 ILCS 5/2-1117 (2008), as the finding of an agency relationship between the corporation and the driver eliminated the possibility of comparing conduct for purposes of apportioning liability.

Outcome

The judgment was affirmed.

LexisNexis® Headnotes

Civil Procedure > Appeals > Standards of Review > De Novo Review

Civil Procedure > Trials > Judgment as Matter of Law > Judgment Notwithstanding Verdict

HN1[]  Standards of Review, De Novo Review

A judgment n.o.v. is properly entered where all the evidence, viewed in a light most favorable to the opponent, so overwhelming favors the moving party that no contrary verdict based on that evidence could ever stand. In ruling on a motion for judgment n.o.v., the court does not weigh the evidence or reassess the witnesses' credibility. A trial court should not enter judgment n.o.v. if there is any evidence establishing a substantial factual dispute or the determination regarding conflicting evidence is decisive to the outcome of the trial. Although the Appellate Court of Illinois applies a de novo standard of review to the denial of a motion for judgment n.o.v., the Pedrick standard applies on appeal as well.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Evidence > Weight & Sufficiency

Civil Procedure > Judgments > Relief From Judgments > Motions for New Trials

HN2[]  Standards of Review, Abuse of Discretion

On a motion for a new trial, the trial court will weigh the evidence and order a new trial if the verdict is contrary to the manifest weight of the evidence. A verdict is against the manifest weight of the evidence only where the opposite result is clearly evident or where the jury's finding is unreasonable, arbitrary or not based on the evidence. The Appellate Court of Illinois will not reverse the court's ruling on a motion for a new trial unless it is affirmatively shown that the trial court has clearly abused its discretion.

Business & Corporate Law > ... > Duties & Liabilities > Negligent Acts of Agents > Liability of Principals

Torts > Vicarious Liability > Agency Relationships > Negligence

HN3[]  Negligent Acts of Agents, Liability of Principals

Generally, a person injured by the negligence of another must seek his or her remedy from the person who caused the injury. The principal-agent relationship is an exception to this general rule. Under the doctrine of respondeat superior, a principal may be held liable for the negligent actions of an agent that caused a plaintiff's injury, even if the principal does not himself engage in any conduct in relation to the plaintiff.

Business & Corporate Law > Agency Relationships > Duties & Liabilities > General Overview

Torts > Vicarious Liability > Agency Relationships > General Overview

Business & Corporate Law > ... > Agents Distinguished > Independent Contractors, Masters & Servants > Independent Contractors

HN4[]  Agency Relationships, Duties & Liabilities

A principal is vicariously liable for the conduct of its agent, but not for the conduct of an independent contractor. The difference is defined by the level of control over the manner of work performance. An agency is a consensual relationship in which a principal has the right to control an agent's conduct and an agent has the power to affect a principal's legal relations. An independent contractor relationship is one in which an independent contractor undertakes to produce a given result but, in the actual execution of the work, is not under the order or control of the person for whom he does the work.

Business & Corporate Law > ... > Establishment > Proof of Agency > General Overview

Business & Corporate Law > ... > Agents Distinguished > Independent Contractors, Masters & Servants > Independent Contractors

Business & Corporate Law > ... > Establishment > Elements > General Overview

Business & Corporate Law > Agency Relationships > Types > General Overview

HN5[]  Establishment, Proof of Agency

A fact finder's determination of whether an agency relationship exists should be made by considering all of the surrounding circumstances and actions of the parties, without exclusive weight being given to contractual labels or provisions. Specific conduct can demonstrate by inference the existence of an agency relationship, despite contractual evidence that the parties intended an independent contractor relationship. The Supreme Court of Illinois has emphasized that the label given by the parties in a written agreement will not be dispositive of the employment status. Although a carrier agreement is a factor to consider, it does not, as a matter of law, determine an individual's agency status.

Business & Corporate Law > ... > Agents Distinguished > Independent Contractors, Masters & Servants > Independent Contractors

HN6[]  Independent Contractors, Masters & Servants, Independent Contractors

In determining whether a person is an agent or an independent contractor, the court's cardinal consideration is the right to control the manner of work performance, regardless of whether that right was actually exercised. Another significant factor is the nature of work performed in relation to the general business of the employer. Other factors to consider are: (1) the right to discharge; (2) the method of payment; (3) the provision of necessary tools, materials, and equipment; (4) whether taxes are deducted from the payment; and (5) the level of skill required. No single factor is determinative, and the significance of each may change depending on the work involved.

Business & Corporate Law > ... > Agents Distinguished > Independent Contractors, Masters & Servants > Independent Contractors

HN7[]  Independent Contractors, Masters & Servants, Independent Contractors

In determining whether a person is an agent or an independent contractor, a factor of great significance is the nature of the work performed in relation to the general business of the defendant.

Business & Corporate Law > ... > Duties & Liabilities > Negligent Acts of Agents > Joint & Several Liability

Torts > Procedural Matters > Multiple Defendants > Joint & Several Liability

HN8[]  Negligent Acts of Agents, Joint & Several Liability

In cases of negligence, 735 ILCS 5/2-1117 (2008) allows a jury to allocate the total fault attributable to the plaintiff among two or more tortfeasors if their fault is greater than 25%. Section 2-1117 also requires that the tortfeasors' liability be capable of being legally apportioned. If liability among the tortfeasors cannot be apportioned, § 2-1117 does not apply.

Business & Corporate Law > ... > Duties & Liabilities > Negligent Acts of Agents > General Overview

Torts > Vicarious Liability > Agency Relationships > General Overview

Business & Corporate Law > ... > Duties & Liabilities > Negligent Acts of Agents > Liability of Principals

HN9[]  Duties & Liabilities, Negligent Acts of Agents

When an action is brought against a master based on allegedly negligent acts of the servant and no independent wrong is charged on behalf of the master, liability is entirely derivative, being founded upon the doctrine of respondeat superior. A principal found to be vicariously liable is not found to be at fault but, rather, only liable by application of the doctrine of respondeat superior. In such cases, there is only a basis for indemnity, not for apportionment of damages between the principal and the agent.

Judges: JUSTICE LYTTON delivered the judgement of the court, with opinion. Justices Holdridge and McDade concurred in the judgment and opinion.

Opinion by: LYTTON

Opinion

 [**466]  [****272]  [*1052]    JUSTICE LYTTON delivered the judgement of the court, with opinion.

Justices Holdridge and McDade concurred in the judgment and opinion.

OPINION

Plaintiffs, Susan Sperl, individually and as the executor of the estate of Joseph Sperl; Annette Sanders, individually and as the administrator of the estate of Thomas Sanders; and William and Skye Taluc, filed a complaint against, among others, defendant C.H. Robinson Worldwide, Inc., a/k/a C.H. Robinson Company (CHR), for wrongful death and personal injuries they sustained due to DeAn Henry's negligent operation of a tractor-trailer. The jury concluded that CHR was vicariously liable based on agency and entered judgment in favor of plaintiffs in the amount of  [**467]   [****273]  $23,775,000. The trial court denied CHR's motion for judgment notwithstanding the verdict (judgment n.o.v.) or a new trial. On appeal, CHR claims that (1) the evidence failed to establish an agency relationship, and (2) the trial court erred in refusing to allocate fault with Henry and her employer, Luann Whitener-Black,  [***2] d/b/a Toad L. Dragonfly Express (Dragonfly). We affirm.

On the morning of April 1, 2004, Henry was driving a tractor-trailer containing a load of potatoes from Idaho to CHR's warehouse in Bolingbrook, Illinois. As she approached Plainfield, traveling on Interstate 55, she noticed that the vehicles ahead of her were not moving. Henry was unable to stop her truck and ran over several vehicles, causing a multiple-car accident. Joseph Sperl and Thomas Sanders died in the collision, and William Taluc sustained serious injuries. Henry owned the tractor she was driving and leased it to Dragonfly, a motor carrier. On that day, Henry was delivering a load for CHR.

Plaintiffs sued Henry, Dragonfly and CHR for wrongful death and personal injuries sustained as a result of Henry's negligence. Henry and Dragonfly admitted liability. CHR denied liability and sought contribution from Henry and Dragonfly.

At trial, the evidence revealed that CHR is a logistics company that provides a variety of transportation-related services. It is a federally licensed freight broker. At the time of the accident, it was not a licensed motor carrier. CHR does not own tractor-trailers, nor does it employ drivers. Instead,  [***3] CHR sells its services to customers or shippers needing to transport goods and then contracts with carriers to provide transportation for its customers.

A network of federally licensed carriers hauls freight, primarily perishable products, for CHR and its customers. Dragonfly is one of  [*1053]  those carriers. In March of 2002, Dragonfly and CHR entered into a contract carrier agreement that was standard for the industry. It provided that CHR was exclusively liable for Dragonfly's freight charges; CHR's customers had no obligation to pay Dragonfly. Dragonfly agreed that all transportation provided to CHR would be performed under the contract. It warranted that it would use competent drivers. Dragonfly also warranted that neither CHR nor its customers were responsible for the drivers' salaries, wages, charges, or worker's compensation expenses. The contract described the relationship between the parties as follows:

"The parties understand and agree that the relationship of Carrier to Robinson [CHR] hereunder is solely that of an independent contract and that Carrier shall and does, employ, retain or lease on its own behalf all persons operating motor vehicles transporting commodities under this  [***4] Contract."

Once a carrier signed a contract carrier agreement, it could begin to haul loads for CHR. Upon arranging a delivery, CHR issued a load confirmation sheet (LCS) for the load. The LCS identified the carrier, driver, product and rate. It also included any special instructions that applied to the load.

In 2004, Jewel Food Stores began remodeling its supermarket distribution center and searching for an alternative warehouse that could temporarily distribute its perishable products. Jewel representatives knew that CHR was a federally licensed seller of produce and fruit and could handle special projects. CHR was able to offer multiple temperature storage capabilities and could transport perishable items to Jewel's stores. As a result, Jewel entered into a delivery contract with CHR in which CHR purchased produce for Jewel,  [**468]   [****274]  stored it, and then arranged for transportation to Jewel's various grocery stores.

Henry owned her semi-tractor and leased it to Dragonfly. In the spring of 2004, Dragonfly gave Henry permission to use its carrier authority to book and deliver loads on her own. If Henry booked a load, she kept all the profit. If Dragonfly dispatched Henry, Dragonfly kept 5%.

On  [***5] March 29, 2004, Henry called Troy Pleasants, a transportation manager in CHR's Bolingbrook office, and requested a load. Pleasants offered a load of potatoes that CHR had recently purchased in Idaho. The potatoes were to be loaded and delivered to CHR's Bolingbrook warehouse, where they would be repackaged and shipped to various Jewel grocery stores. Pleasants stated that CHR required a refrigerated trailer that measured at least 48 feet in length for the job. Henry accepted the load for a payment of $1,800, less a $700 advance for fuel.

 [*1054]  CHR sent Dragonfly an LCS confirming the shipment. At the top of the LCS, in bold-face type, it stated: "Driver must call Troy Pleasants for dispatch." Under the subheading "DRIVER SPECIAL INSTRUCTIONS", it listed the following requirements:

"1. Driver must make check calls daily by no later than 10 am CST daily or $50 will be deducted from the rate.

2. Driver must verify package count and/or pallet count being loaded on the truck.

3. Driver may incur a fine of $500 for being a full day late, without any proof of breakdown.

4. Driver may incur a fine of $250 for being late for an appt time.

5. Driver must stay in constant communication with me throughout  [***6] entire load.

6. Driver may incur a fine, if he does not call, for any of the following reasons

a.) waiting longer than 2 hours for product * * *

7. Driver must call after each pick up and verify that he is loaded.

8. FAILURE TO NOTIFY FINE: If driver has a 7 am appt for that day of delivery, and has a problem that delays him to make on time delivery, and we do not receive a phone call until after or at the time of the delivery appt:

a.) The carrier will be fined $250

b.) The carrier could also be responsible to cover the loss sales and cost to cover the customer product for that day.

* * *

9. Driver must pulp all product being loaded on the truck. If pulp temperature is plus or minus 2 degrees from the temperature on the dispatch sheet, driver must call their CH Robinson Representative ASAP.

10. All Drivers must check call the day before delivery no matter what day it is. If the driver is more than 700 miles out at or before 10 CST driver must check call again at 4 PM. Any driver 700 miles out after 10 am CST MUST check call at 4 PM CST, and again at 10 PM CST the *** before delivery.

* * * Most importantly, the DRIVER must stay in constant communication with Central Product and/or the night crew  [***7] service."

At trial, Henry testified that Dragonfly did not dispatch her regarding the load; she contacted Troy Pleasants directly looking for a load to deliver. Henry further testified that she was in constant contact with CHR dispatch throughout her trip. She called Pleasants, or another member  [**469]   [****275]  of his phone team, five times during her trip, sometimes calling multiple times within a single day. During each  [*1055]  phone conversation, Pleasants asked Henry about her location and about the temperature and integrity of the load. Henry stated that, although she did not see the LCS for the load of potatoes, she was aware of the fines CHR could impose because she had worked with CHR in the past. She knew that CHR's fines ranged from $50 to $500 and that multiple fines could be imposed. She was also aware that if she was late delivering a load, a fine would be imposed. Henry testified that she would do "everything [she] could" to avoid a fine. Federal regulations only allowed Henry to drive 10 hours each day. CHR's schedule put pressure on Henry as a driver. Henry stated that, given the amount of time she had to get to Illinois, she would not have been able to deliver the load to the Bolingbrook warehouse  [***8] within CHR's schedule without violating federal regulations.

On cross-examination, Henry testified that CHR did not instruct her on how to get from Idaho to Bolingbrook. She made the decision to take Interstate 80 to Interstate 55, but she called CHR for directions when she was close to the warehouse. She also testified that had she successfully delivered the potatoes, CHR would have directly deposited the payment into her personal account at Transport Alliance Bank.

Pleasants testified that after talking to Henry on March 29, he filled in the driver's name as "DeAn" on the dispatch sheet and faxed a copy of the LCS to Dragonfly. According to the LCS, Henry was required to stay in constant contact with CHR during delivery. CHR imposed fines on the drivers to ensure timely delivery of a load. He was not surprised that Henry would not make any money on the trip if she followed federal regulations.

Plaintiffs' expert Whitney Morgan agreed that CHR was generally a freight broker but stated that CHR's conduct in this case "also fell outside that definition and into the definition of a motor carrier." Morgan noted that CHR dealt directly with Henry and that if Henry successfully delivered this  [***9] load, she would be paid directly by CHR. In addition, Henry received a fuel advance from CHR. Morgan noted that Dragonfly did not dispatch Henry. She believed that, for this load, CHR was acting as a motor carrier with respect to dispatch, management and supervision of the load.

CHR trucking expert Michael Napier testified that carriers and brokers dispatch in different ways. Carriers dispatch to determine driver conditions, hours of service, tax obligations and driver qualifications. By contrast, a "broker" dispatches to monitor load characteristics. He opined that CHR acted as a broker in this case, noting that CHR's special instructions and fines were not unusual in the industry.

At the close of the evidence, CHR moved for a directed verdict on  [*1056]  the issue of agency. The trial court denied defendant's motion. The jury then returned three general verdicts in favor of plaintiffs. It specifically found that Henry was an agent of CHR at the time of the accident, making defendant vicariously liable for plaintiffs' injuries under the doctrine of respondeat superior. The court entered judgment against CHR.  [***10]  CHR filed a posttrial motion for judgment n.o.v. or, in the alternative, a new trial, which was denied.

STANDARD OF REVIEW

HN1[] A judgment n.o.v. is properly entered where all the evidence, viewed in a light most favorable to the opponent, so overwhelming favors the moving party that no contrary verdict based on that  [**470]   [****276]  evidence could ever stand. Pedrick v. Peoria & Eastern R.R. Co., 37 Ill. 2d 494, 229 N.E.2d 504 (1967). In ruling on a motion for judgment n.o.v., the court does not weigh the evidence or reassess the witnesses' credibility. Maple v. Gustafson, 151 Ill. 2d 445, 603 N.E.2d 508, 177 Ill. Dec. 438 (1992). A trial court should not enter judgment n.o.v. if there is any evidence establishing a substantial factual dispute or the determination regarding conflicting evidence is decisive to the outcome of the trial. Maple, 151 Ill. 2d at 454. Although we apply a de novo standard of review to the denial of a motion for judgment n.o.v., the Pedrickstandard applies on appeal as well. Jones v. Chicago Osteopathic Hospital, 316 Ill. App. 3d 1121, 738 N.E.2d 542, 250 Ill. Dec. 326 (2000).

HN2[] In contrast, on a motion for a new trial, the trial court will weigh the evidence and order a new trial if the verdict is  [***11] contrary to the manifest weight of the evidence. Maple, 151 Ill. 2d at 454. A verdict is against the manifest weight of the evidence only where the opposite result is clearly evident or where the jury's finding is unreasonable, arbitrary or not based on the evidence. Maple, 151 Ill. 2d at 454. We will not reverse the court's ruling on a motion for a new trial unless it is affirmatively shown that the trial court clearly abused its discretion. Id. at 455.

ANALYSIS

I. Agency Relationship

CHR argues that the trial court should have granted its motion for judgment n.o.v. or a new trial because the evidence did not support the jury's finding that a principal-agent relationship existed between CHR and Henry. Specifically, it claims that the evidence overwhelmingly demonstrated that Henry was an independent contractor and that CHR had no right to control her actions in transporting the load of potatoes.

HN3[] Generally, a person injured by the negligence of another must seek his or her remedy from the person who caused the injury. Darner v.  [*1057]  Colby, 375 Ill. 558, 31 N.E.2d 950 (1941). The principal-agent relationship is an exception to this general rule. Woods v. Cole, 181 Ill. 2d 512, 693 N.E.2d 333, 230 Ill. Dec. 204 (1998). Under the doctrine of respondeat  [***12] superior, a principal may be held liable for the negligent actions of an agent that caused a plaintiff's injury, even if the principal does not himself engage in any conduct in relation to the plaintiff. Woods, 181 Ill. 2d at 517.

HN4[] A principal is vicariously liable for the conduct of its agent but not for the conduct of an independent contractor. Petrovich v. Share Health Plan of Illinois, Inc., 188 Ill. 2d 17, 719 N.E.2d 756, 241 Ill. Dec. 627 (1999). The difference is defined by the level of control over the manner of work performance. Horwitz v. Holabird & Root, 212 Ill. 2d 1, 816 N.E.2d 272, 287 Ill. Dec. 510 (2004). An agency is a consensual relationship in which a principal has the right to control an agent's conduct and an agent has the power to affect a principal's legal relations. Resolution Trust Corp. v. Hardisty, 269 Ill. App. 3d 613, 646 N.E.2d 628, 207 Ill. Dec. 62 (1995). An independent contractor relationship is one in which an independent contractor undertakes to produce a given result but, in the actual execution of the work, is not under the order or control of the person for whom he does the work. Horwitz, 212 Ill. 2d at 13.

 [**471]  [****277]   HN5[] A fact finder's determination of whether an agency relationship exists should be made by considering all of the surrounding circumstances and actions  [***13] of the parties, without exclusive weight being given to contractual labels or provisions. See Roberson v. Industrial Comm'n, 225 Ill. 2d 159, 866 N.E.2d 191, 310 Ill. Dec. 380 (2007). Specific conduct can demonstrate by inference the existence of an agency relationship, despite contractual evidence that the parties intended an independent contractor relationship. Dahan v. UHS of Bethesda, Inc., 295 Ill. App. 3d 770, 692 N.E.2d 1303, 230 Ill. Dec. 137 (1998).

In Roberson, the supreme court emphasized that the label given by the parties in a written agreement will not be dispositive of the employment status. Although a carrier agreement is a factor to consider, it does not, as a matter of law, determine an individual's agency status. Roberson, 225 Ill. 2d at 183; see also Earley v. Industrial Comm'n, 197 Ill. App. 3d 309, 553 N.E.2d 1112, 143 Ill. Dec. 126 (1990). The trier of fact must also look to the facts of the case to define the relationship between CHR and the drivers transporting the loads. See Petrovich, 188 Ill. 2d at 46. Here, the carrier agreement provided that the relationship of the carrier to CHR was "solely that of an independent contract" and that the carrier employed the drivers. However, there are substantial facts that indicate the existence of an agency relationship.

HN6[] In  [***14] determining whether a person is an agent or an independent contractor, the court's cardinal consideration is the right to control the manner of work performance, regardless of whether that right was actually exercised. Commerce Bank v. Youth Services of Mid-Illinois, Inc., 333 Ill. App. 3d 150, 775 N.E.2d 297, 266 Ill. Dec. 735 (2002). Another significant factor is the  [*1058]  nature of work performed in relation to the general business of the employer. Ware v. Industrial Comm'n, 318 Ill. App. 3d 1117, 743 N.E.2d 579, 252 Ill. Dec. 711 (2000). Other factors to consider are: (1) the right to discharge; (2) the method of payment; (3) the provision of necessary tools, materials, and equipment; (4) whether taxes are deducted from the payment; and (5) the level of skill required. Commerce Bank, 333 Ill. App. 3d at 153; Ware, 318 Ill. App. 3d at 1122. No single factor is determinative, and the significance of each may change depending on the work involved. Roberson, 225 Ill. 2d at 175.

Applying these factors to this case, we find that the jury's decision was not against the manifest weight of the evidence. First, CHR controlled the manner of Henry's work performance. Henry testified that she contacted Pleasants at CHR and asked for a load. CHR required her to have  [***15] a refrigerated trailer of a specified length. Henry accepted a load of potatoes that CHR had purchased in Idaho for delivery to its warehouse in Bolingbrook. The LCS dictated special instructions concerning the load. Henry did not see a copy of the LCS for the load of potatoes; however, she testified that she was familiar with the LCS requirements based on previous deliveries she had made for CHR. The special instructions required her to pick up the load at a specified time, make daily check calls, and stay in constant communication with Pleasants and other CHR dispatchers. Henry was instructed to notify CHR if she had an accident. She was also required to continuously measure the temperature of the load during her trip. If the load did not register a certain temperature,  [**472]   [****278]  the LCS required her to call CHR immediately.

CHR enforced its special instructions with a system of fines. Pleasants testified that the fines were imposed as incentives to drivers to get the load delivered on time. Yet, federal regulations mandated that Henry drive 10 hours each day. Henry testified that the schedule imposed by CHR dictated her method of delivery and created pressure on her as a driver to get to her  [***16] destination. Henry stated that if she followed federal regulations, she would be late delivering her load to the Bolingbrook warehouse; Pleasants agreed with that assessment. These extensive requirements, coupled with Henry's fine-based compliance, directed Henry's conduct during the entire transportation process and support the finding that CHR had the right to control the manner in which Henry performed her job. See Ware, 318 Ill. App. 3d at 1123 (control demonstrated by showing detailed regulations and proving driver was personally responsible for their observance).

HN7[] Another factor of "great significance" is the nature of the work performed in relation to the general business of the defendant. Ware, 318 Ill. App. 3d at 1122. Here, Henry's services are closely aligned  [*1059]  with CHR's business. CHR is in the business of transportation logistics, handling the means and methods of hauling freight for its customers. CHR's business necessarily requires the service of semi-tractor drivers. The nature of Henry's work is hauling freight for customers from one location to another. The work Henry performs is not unique; it is directly related to, if not the same as, the general transportation business  [***17] conducted by CHR. In this case, the second factor weighs in favor of an agency relationship.

Other factors also support the jury's verdict. First, CHR controlled the method of payment. Henry called Pleasants and requested a load. Dragonfly was not involved in the negotiations, and once Henry accepted the load, she was dispatched by CHR, not Dragonfly. If Henry successfully completed a delivery, CHR paid her directly by depositing the negotiated fee into her bank account. Second, the evidence indicates that CHR provided the materials for delivery. Although Henry owned her tractor and leased the trailer from Dragonfly, CHR purchased the potatoes and requested delivery to its Bolingbrook facility.

Thus, several of the factors, including the two most pivotal ones, indicate that Henry was acting as CHR's agent at the time the accident occurred. Thus, we cannot say that the jury's decision was unreasonable, arbitrary or contrary to the evidence. Accordingly, the trial court properly denied CHR's motion for judgment n.o.v. or for a new trial.

Nevertheless, CHR asks us to disregard the jury's verdict and follow two federal district cases in which CHR was the defendant, Jones v. C.H. Robinson Worldwide, Inc., 558 F. Supp. 2d 630 (W.D. Va. 2008),  [***18] and Schramm v. Foster, 341 F. Supp. 2d 536 (D. Md. 2004). In those cases, CHR moved for summary judgment on the issue of liability. Both district courts granted the motion, finding that the carrier driver was an independent contractor and that, as a result, CHR was not liable for the driver's negligence. In Jones, CHR arranged the pick up date and time, communicated information from the shipper regarding the loading and unloading of the cargo and required the driver to make daily calls regarding the status of the shipment. Jones, 558 F. Supp. 2d at 639. In Schramm, CHR directly dispatched the driver, instructed him to pick up and deliver  [**473]   [****279]  the load at a certain time, gave him directions to the delivery destination and required the driver to call CHR during the trip. Schramm, 341 F. Supp. 2d at 544-45.

We find those cases distinguishable. Critical facts that are present in our case were not present in either Jonesor Schramm. Here, CHR owned the product being transported and the load was being delivered to a CHR warehouse. Moreover, CHR imposed fines on Henry to ensure  [*1060]  she maintained CHR's schedule during the trip. CHR's special instructions included the potential for multiple fines and  [***19] forced Henry to violate federal regulations in order to avoid them. These facts support the inference that CHR controlled the details of Henry's operations, schedule and compensation.

The jury heard the testimony, considered the evidence and concluded that CHR had an agency relationship with Henry. That finding was not unreasonable or arbitrary. Considering the evidence in a light most favorable to plaintiffs, we cannot say it overwhelmingly favors CHR. Thus, the trial court properly permitted the jury to decide the case and interpret the inferences to be drawn based on the evidence.

II. Allocation of Fault

CHR also claims that Henry and Dragonfly should have been included on the jury's verdict form for purposes of allocating fault under section 2-1117 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1117 (West 2008)).

HN8[] In cases of negligence, section 2-1117 allows a jury to allocate the total fault attributable to the plaintiff among two or more tortfeasors if their fault is greater than 25%. 735 ILCS 5/2-1117 (West 2008). Section 2-1117 also requires that the tortfeasors' liability be capable of being legally apportioned. 735 ILCS 5/2-1117 (West 2008). If liability among the tortfeasors  [***20] cannot be apportioned, section 2-1117 does not apply. Woods, 181 Ill. 2d at 520.

HN9[] "When an action is brought against a master based on allegedly negligent acts of the servant and no independent wrong is charged on behalf of the master, liability is entirely derivative, being founded upon the doctrine of respondeat superior." Moy v. County of Cook, 159 Ill. 2d 519, 524, 640 N.E.2d 926, 203 Ill. Dec. 776 (1994). A principal found to be vicariously liable is not found to be at fault but, rather, only liable by application of the doctrine of respondeat superior. American National Bank & Trust Co. v. Columbus-Cuneo-Cabrini Medical Center, 154 Ill. 2d 347, 609 N.E.2d 285, 181 Ill. Dec. 917 (1992). In such cases, there is only a basis for indemnity, not for apportionment of damages between the principal and the agent. Id. at 353.

In this case, the finding of an agency relationship between CHR and Henry eliminates the possibility of comparing conduct for purposes of apportioning liability. Henry admitted negligence, and the jury found that she was acting as CHR's agent when the accident occurred. CHR was only found liable by application of the doctrine of respondeat superior. Since CHR's liability is exclusively derivative, it is not entitled to an allocation or  [***21] comparison of fault under section 2-1117 of the Code.

 [*1061]  CHR also argues that the trial court should have allowed an apportionment instruction between CHR and Dragonfly because Dragonfly had a contractual relationship with Henry. CHR claims that Dragonfly is also legally responsible for Henry's negligence based on its carrier lease with Henry. CHR's argument, however, ignores the jury's finding of an agency  [**474]   [****280]  between CHR and Henry. Once that legal relationship was established, CHR became entirely liable for Henry's negligent conduct, which was the proximate cause of the accident. Dragonfly's relationship with Henry may allow CHR to seek contribution from Dragonfly, but it does not reduce CHR's liability for plaintiffs' damages. See Woods, 181 Ill. 2d at 519-20. Thus, the trial court properly denied CHR's verdict form seeking to allocate fault between Henry, Dragonfly and CHR.

CONCLUSION

The judgment of the circuit court of Will County is affirmed.

Affirmed.

End of Document

Sompo Japan Ins. Co. v. B&H Freight, Inc

Sompo Japan Ins. Co. v. B&H Freight, Inc.

United States District Court for the Northern District of Illinois, Eastern Division

April 8, 2016, Decided

Case No. 16 C 355

Reporter

177 F. Supp. 3d 1084 *; 2016 U.S. Dist. LEXIS 47802 **

SOMPO JAPAN INSURANCE COMPANY OF AMERICA, as subrogee of Canon U.S.A., Inc., Plaintiff, v. B&H FREIGHT, INC., et al., Defendants.

Subsequent History: Costs and fees proceeding at, Judgment entered by Sompo Japan Ins. Co. of Am. v. B&H Freight, Inc., 2017 U.S. Dist. LEXIS 17960 (N.D. Ill., Feb. 8, 2017)

Core Terms

Freight, Carmack Amendment, carrier, brokers, preempts, regulation, alleges

Counsel:  [**1] For Sompo Japan Insurance Company of America, as subrogee of Canon U.S. A., Inc., Plaintiff: Justin M. Heilig, Teresa H Dooley, LEAD ATTORNEYS, PRO HAC VICE, Hill Rivkins LLP, New York, NY USA; Donald J. O'Meara, Jr., Stephen C. Veltman, Pretzel & Stouffer, Chtd., Chicago, IL USA.

For B & H Freight, Inc., Defendant: Carl M. Perri, Jr., LEAD ATTORNEY, Clausen Miller, P.C., New York, NY USA; Harvey R. Herman, LEAD ATTORNEY, Clausen Miller P.C., Chicago, IL USA; Matthew James Van Dusen, Clausen Miller PC, New York, NY USA; William Claiborne Dickinson, Clausen Miller, P.c., Chicago, IL USA.

For Midwest Star Group, Inc., Defendant: Marc J Blumenthal, LEAD ATTORNEY, Attorney at Law, Buffalo Grove, IL USA; William D. Bierman, Price, Meese, Shulman & D'Arminio, P.C., Woodcliff Lake, NJ USA; Thomas Christopher Martin, Price, Meese, Shulman & D'Arminio, Woodcliff Lake, NJ USA.

For B & H Systems, Inc., Defendant: Daniel G. McDermott, LEAD ATTORNEY, Christopher J. Dicicco, Marshall, Dennehey, Warner, Coleman & Goggin, New York, NY USA; Donald W. Devitt, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Chicago, IL USA.

For Midwest Star Group, Inc., Cross Claimant: William D. Bierman, Price, Meese, Shulman [**2]  & D'Arminio, P.C., Woodcliff Lake, NJ USA; Thomas Christopher Martin, Price, Meese, Shulman & D'Arminio, Woodcliff Lake, NJ USA.

For B & H Freight, Inc., Cross Defendant: Carl M. Perri, Jr., LEAD ATTORNEY, Matthew James Van Dusen, Clausen Miller, P.C., New York, NY USA; Harvey R. Herman, LEAD ATTORNEY, Clausen Miller P.C., Chicago, IL USA.

For B & H Systems, Inc., Cross Defendant: Daniel G. McDermott, LEAD ATTORNEY, Christopher J. Dicicco, Marshall, Dennehey, Warner, Coleman & Goggin, New York, NY USA; Donald W. Devitt, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Chicago, IL USA.

For B & H Systems, Inc., Cross Claimant: Donald W. Devitt, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Chicago, IL USA.

For Midwest Star Group, Inc., Cross Defendant: Marc J Blumenthal, LEAD ATTORNEY, Attorney at Law, Buffalo Grove, IL USA; William D. Bierman, Price, Meese, Shulman & D'Arminio, P.C., Woodcliff Lake, NJ USA; Thomas Christopher Martin, Price, Meese, Shulman & D'Arminio, Woodcliff Lake, NJ USA.

Judges: Milton I. Shadur, Senior United States District Judge.

Opinion by: Milton I. Shadur

Opinion

 [*1085]  MEMORANDUM OPINION AND ORDER

Acting as subrogee of Canon U.S.A., Inc. ("Canon"), Sompo Japan Insurance Company of America ("Sompo [**3]  Japan") filed this action against B&H Freight, Inc. ("B&H Freight"), B&H Systems, Inc. ("B&H Systems") and Midwest Star Group, Inc. ("Midwest Star") under 49 U.S.C. § 14706,1 part of what is commonly called the Carmack Amendment. Its Complaint Count II also invokes the supplemental jurisdiction provisions of 28 U.S.C. § 1367 to advance a state-law claim solely against B&H Freight. B&H Freight has responded with a Fed. R. Civ. P. ("Rule") 12(b)(6) motion to dismiss Count II on the ground that it is preempted by the Carmack Amendment.

Motion To Dismiss Standards

Under Rule 12(b)(6) a party may move for dismissal for the "failure to state a claim upon which relief can be granted." Familiar Rule 12(b)(6) principles require the district court to accept as true all of Sompo Japan's well-pleaded factual allegations and view them in the light most favorable to it as the non-moving party (Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013)). But "legal conclusions or conclusory allegations that merely recite a claim's elements" are not entitled to any presumption of truth (Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012)).

Backgound

Sompo Japan's claims stem from a shipment of 567 Canon EOS Rebel T-5 camera kits that never arrived at its destination. In November 2014 Canon had arranged with one or both of B&H Freight and [**4]  B&H Systems -- the two companies share an office -- to ship four such loads. But the missing shipment itself was handled by Midwest Star. Sompo Japan's two counts present alternative reasons why B&H Freight may be liable for Midwest Star's failure to deliver the camera kits.

Count I characterizes B&H Freight as a motor carrier or freight forwarder. It alleges that Canon delivered the camera kits to B&H Freight or B&H Systems or both, and if B&H Freight was thus involved Sompo Japan alleges that it is on the hook for the loss without any defense or exception to liability under the Carmack Amendment.

On the other hand, Count II anticipates a defense that B&H Freight might raise -- and that it has in fact raised -- to Count I. To that end Sompo Japan pleads in the alternative that if B&H Freight was instead merely a broker, then it violated its state-law duty in that capacity to place the camera kits with a carrier that was reliable and, perhaps more importantly, was insured for the full value of its cargo.

B&H Freight targets Count II (having simultaneously answered Count I). It argues that the Carmack Amendment preempts any state-law claims that might be brought against it, even if it is deemed (as its Count I answer asserts) [**5]  to be a broker not subject to liability under that statute.

 [*1086]  Preemption by the Carmack Amendment

There can be no doubt that "[t]he Carmack Amendment generally preempts separate state-law causes of action that a shipper might pursue against a carrier for lost or damaged goods" (REI Transport v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 697 (7th Cir. 2008)). But while Sompo Japan is indeed pursuing a shipper's claim for lost goods, it is not clear that the Carmack Amendment also preempts suits against parties that are not carriers. On that score neither party cites a controlling appellate court case, nor has this Court discovered one.

In an effort to fill that void, B&H Freight draws attention to the fact that Count II alleges the same injury as Count I. But the question whether those counts are indeed distinct claims or merely alternate theories of recovery2 is not a fruitful one. Certainly any claim for relief against a carrier under state law must be premised on an injury distinct and separate from the loss of goods if the claimant is to escape preemption by the Carmack Amendment (Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7th Cir. 1997)). But Gordon does not of course stand for the proposition that thieves who waylay a truck are immune from suit (however impractical) simply because a claim against their victim for the loss of goods would have to be brought under the Carmack Amendment. So the existence [**6]  of distinct injuries becomes important only if the Carmack Amendment might preempt any claims at all where it does not also impose liability.

And there B&H Freight's argument falls apart. For although Adams Express Co. v. Croninger, 226 U.S. 491, 505-06, 33 S. Ct. 148, 57 L. Ed. 314 (1911) declared more than a century ago that the Carmack Amendment displaces state law by so thoroughly occupying the field that nothing remains of the states' police power on the subject, it spoke only of carrier liability: It defined the preempted field as "the subject of the liability of a carrier under a bill of lading which he must issue." So too did N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 455 (7th Cir. 1996) demarcate that field as "the liability of a common carrier to a shipper for loss of, or damage to, an interstate shipment."

To be sure, at one point in Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987) our Court of Appeals referred to the Carmack Amendment's scope without a limiting reference to carriers, saying it preempts "all state and common law remedies inconsistent with the Interstate Commerce Act." But its introductory analysis of that statute referred accurately to the seminal Supreme [**7]  Court decision in Adams Express as having "addressed the preemptive scope of the Carmack Amendment relating to state regulation of carrier liability" (id. at 1412, emphasis added). No selective snippet from the Hughes opinion can deflect that home truth.

Importantly, B&H Freight has pointed to no remedy provided by the Carmack Amendment against it as a broker that would be inconsistent with Count II -- indeed it seeks to leave Sompo Japan without any remedy at all. Needless to say, there is nothing in the part of the United  [*1087]  States Code that governs motor carrier transportation (Part B of subtitle 4 of Title 49, hereafter simply "Part B") that even suggests that brokers were to be immunized from all liability whatever, whether due to negligence or (as is required by B&H Freight's interpretation) to their intentional wrongful acts, such that any state remedy at all would be inconsistent with its purposes.

It must be remembered that evidence of Congress' manifest purpose to supplant state law by occupying a field must take the form of either a pervasive scheme of federal regulation or a predominant federal interest (Frank Bros., Inc. v. Wis. Dep't of Transp., 409 F.3d 880, 886 (7th Cir. 2005)). Certainly the Carmack Amendment imposes no regulations on brokers at all (see Section 14706), and aside from some registration, confidentiality and record-keeping [**8]  requirements (see Sections 13901, 14908(a)(1) and 14122) Part B prescribes how brokers must conduct their business only if arranging for the transportation of household goods (see Sections 13906(b) and 13904(a)(1)).

In a striking particular, no provision of Part B prohibits brokers from placing contracts with motor carriers that flout their own registration and insurance obligations (see Sections 13902 and 13906(a)),3 a sure sign that there was no intention on the part of Congress to define all of a broker's obligations through that statute. And because the content of a broker's duties to its customers primarily impacts such traditional areas of state concern as contract, negligence and perhaps fiduciary responsibility, there is no dominant federal interest in regulating those duties such that the slightest mention of brokers would signal that the states were no longer suffered to intrude their law into the federal realm of carrier regulation.

Conclusion

Because brokers are not liable under the Carmack Amendment, it does not [**9]  preempt a claim for failing to perform whatever duties they might have under state law. Hence B&H Freight's motion to dismiss Count II (Dkt. No. 49) is denied.

/s/ Milton I. Shadur

Milton I. Shadur

Senior United States District Judge

Date: April 8, 2016

End of Document

1 Further references to Title 49 of the United States Code will take the form "Section --," omitting the prefatory "49 U.S.C."

2 For excellent discussions of the distinction between the federal law concept of a "claim for relief" and the state common law or code pleading concept of a "cause of action," with the latter including a theory of recovery as the former does not, see NAACP v. Am. Family Mut. Ins. Co., 978 F.2d 287, 291-93 (7th Cir. 1992) and Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1077-78 (7th Cir. 1992).

3 Brokers arranging for the transportation of household goods are required to do so by the Surface Transportation Board (see 49 C.F.R. § 371.105), but the Board's obligation to regulate brokers for the protection of shippers extends only to those involved with household goods (see Section 13904(c)).

Scheinman v. Martin's Bulk Serv, Inc.

Scheinman v. Martin's Bulk Serv, Inc.

United States District Court for the Northern District of Illinois, Eastern Division

December 9, 2013, Decided; December 9, 2013, Filed

No. 09 C 5340

Reporter

2013 U.S. Dist. LEXIS 172599 *; 2013 WL 6467525

MURRAY SCHEINMAN, Plenary Guardian of the Estate and Person of JEFFREY J. SCHEINMAN, a Disabled Person, Plaintiff, v. MARTIN'S BULK MILK SERVICE, INC., SAMUEL G. FRANKE, INTERNATIONAL PAPER COMPANY, and UNIVERSAL AM-CAN LTD., Successor to OVERNIGHT EXPRESS, INC., Defendants.

Prior History: Scheinman v. Martin's Bulk Milk Serv., Inc., 2013 U.S. Dist. LEXIS 172087 (N.D. Ill., Dec. 6, 2013)

Core Terms

delivery, driver, hauling, load, CARRIER, broker, brokerage agreement, shipment, Bills, instructions, Memo, principal-agent, summary judgment motion, regulations, tractor, paper products, transportation, Confirmation, undisputed, personnel, Sheet, terms, truck, obligations, driving, independent contractor, distribution center, contractual, parties, shipper

Case Summary

Overview

HOLDINGS: [1]-In this negligence action, no reasonable jury could find that the shipper exercised sufficient control over the manner in which the driver performed his work for purposes of establishing a principal-agent relationship; [2]-No reasonable jury could find that the shipper exerted control over how the driver performed his hauling duties on July 3, 2008 where the shipper's instructions in the 7/3/08 Memo Bills regarding where and when to deliver its July 3, 2008, shipment did not reasonably suggest that the shipper had the ability to control the means by which the driver accomplished this desired result; [3]-The fact that the carrier's clearly stood to benefit from its arrangement with the driver's employer was not enough to establish a principal-agent relationship when there was no evidence that the carrier controlled the driver's actions in hauling the assigned load.

Outcome

Defendants' motion granted.

LexisNexis® Headnotes

Civil Procedure > Judgments > Summary Judgment > Evidentiary Considerations

Civil Procedure > ... > Summary Judgment > Burdens of Proof > General Overview

Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > General Overview

HN1[]  Summary Judgment, Evidentiary Considerations

Summary judgment is appropriate if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the initial responsibility of identifying materials in the record that demonstrate the absence of a genuine issue of material fact. Fed. R. Civ. P. 56(c)(1). To survive a motion for summary judgment, the nonmoving party must establish some genuine issue for trial such that a reasonable jury could return a verdict in its favor. When ruling on a motion for summary judgment, the court views all facts in the light most favorable to the nonmoving party and draws all reasonable inferences in favor of the nonmoving party.

Civil Procedure > ... > Federal & State Interrelationships > Choice of Law > General Overview

HN2[]  Federal & State Interrelationships, Choice of Law

A federal court sitting in diversity applies the substantive law of the forum state to plaintiff's claims in cases where the parties have not identified any choice-of-law issue.

Torts > Vicarious Liability > Independent Contractors > General Overview

Torts > Vicarious Liability > Agency Relationships > General Overview

HN3[]  Vicarious Liability, Independent Contractors

Under Illinois law, the general rule is that a party injured by the negligence of another must seek his remedy against the person who caused his injury. An exception is the doctrine of respondeat superior. Under the doctrine of respondeat superior, a principal may be held liable for the negligent actions of an agent that caused a plaintiff's injury, even if the principal does not himself engage in any conduct in relation to the plaintiff. An agency is a consensual relationship in which a principal has the right to control an agent's conduct and an agent has the power to affect a principal's legal relations. An independent contractor, by comparison, undertakes to produce a given result but, in the actual exercise of the work, is not under the order or control of the person for whom he does the work.

Evidence > Burdens of Proof > Allocation

Torts > Vicarious Liability > Agency Relationships > General Overview

HN4[]  Burdens of Proof, Allocation

Whether a principal-agent relationship exists is a question of fact that should be made by considering all of the surrounding circumstances and actions of the parties, without exclusive weight being given to contractual labels or provisions. Among the factors to be considered in determining this issue are: the right to control the manner in which the work is performed; the right to discharge; the method of payment; who provides the tools, materials, or equipment; the level of skill required to perform the work; and who deducts or pays for insurance, social security, and taxes on the employee's behalf. Another significant factor is the nature of work performed in relation to the general business of the employer. No single factor is determinative, but the right to control the manner in which the work is performed is considered to be the most important factor and is the hallmark of agency. The burden of proving the existence and scope of an agency relationship is on the party seeking to impose liability on the principal.

Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Appropriateness

Torts > Vicarious Liability > Independent Contractors > General Overview

Civil Procedure > Trials > Jury Trials > Province of Court & Jury

Torts > Vicarious Liability > Agency Relationships > General Overview

HN5[]  Entitlement as Matter of Law, Appropriateness

The test of whether an individual is an agent or independent contractor is generally a question of fact for the trier of fact. However, when the facts are not in dispute, the trial court is permitted to decide the issue as a matter of law and grant summary judgment.

Torts > Vicarious Liability > Agency Relationships > General Overview

HN6[]  Vicarious Liability, Agency Relationships

The actual conduct of the parties, and not the language of any agreement between them, typically controls in the analysis of whether a principal-agent relationship exists. A contract's statement of employment status is accordingly considered a relevant—but not dispositive—factor in determining whether an individual is an independent contractor, insofar as it is "indicative of the intent of the parties.

Contracts Law > Contract Conditions & Provisions > General Overview

Torts > Vicarious Liability > Agency Relationships > General Overview

HN7[]  Contracts Law, Contract Conditions & Provisions

Courts have routinely held that a requirement of timely delivery does not impose any particular route or other methods for making the delivery.

Torts > Vicarious Liability > Agency Relationships > General Overview

HN8[]  Vicarious Liability, Agency Relationships

Shippers have an interest in making sure that their customers received their goods in a timely manner; and the fact that the shipper monitored this process to ensure prompt delivery no more creates an agency relationship than does the designation of overnight delivery on a Federal Express package.

Counsel:  [*1] For Murray Scheinman, Plenary Guardian of the Estate also known as Jeffrey J Scheinman, Plaintiff: Richard Francis Burke, Jr., LEAD ATTORNEY, Clifford Law Offices, P.C., Chicago, IL; Courtney A. Marincsin, Kimberly Maureen Halvorsen, Shannon Marie McNulty, Clifford Law Offices, Chicago, IL.

For Martin's Bulk Milk Service, Inc., Samuel G Franke, Defendants: Joseph Gerard Skryd, LEAD ATTORNEY, James J. Temple, Jason M Briesemeister, Jason David Gluskin, Matthew Richard Schreck, Mulherin, Rehfeldt & Varchetto, P.C., Wheaton, IL; Daniel Laurence Polsby, Ruberry, Stalmack & Garvey, LLC, Chicago, IL; Kristen Cheryl Leppert, Brenner Ford Monroe & Scott Ltd, Chicago, IL; Robert James Golden, Dowd & Dowd, Ltd, Chicago, IL.

For International Paper Company, Overnite Express, Inc., Universal Am Can Ltd., Successor to Overnight Express, Inc and Ox LLC, Defendants: Carlton Dean Fisher, LEAD ATTORNEY, Cecilia Anne Horan, William Yu, Hinshaw & Culbertson, Chicago, IL.

For Martin's Bulk Milk Service, Inc., Samuel G Franke, Counter Claimants, Counter Defendants, Cross Defendants: Joseph Gerard Skryd, LEAD ATTORNEY, James J. Temple, Jason David Gluskin, Matthew Richard Schreck, Mulherin, Rehfeldt & Varchetto,  [*2] P.C., Wheaton, IL; Daniel Laurence Polsby, Ruberry, Stalmack & Garvey, LLC, Chicago, IL; Kristen Cheryl Leppert, Brenner Ford Monroe & Scott Ltd, Chicago, IL; Robert James Golden, Dowd & Dowd, Ltd, Chicago, IL.

For Murray Scheinman, Plenary Guardian of the Estate, Counter Defendant, Cross Defendant: Richard Francis Burke, Jr., LEAD ATTORNEY, Clifford Law Offices, P.C., Chicago, IL; Courtney A. Marincsin, Shannon Marie McNulty, Clifford Law Offices, Chicago, IL.

For International Paper Company, Overnite Express, Inc., Counter Claimants, Counter Defendants: Carlton Dean Fisher, LEAD ATTORNEY, William Yu, Hinshaw & Culbertson, Chicago, IL.

For Universal Am Can Ltd., Counter Claimant: Carlton Dean Fisher, LEAD ATTORNEY, Hinshaw & Culbertson, Chicago, IL.

For Universal Am Can Ltd., Universal Am Can Ltd., Successor to Overnight Express, Inc and Ox LLC, International Paper Company, Counter Defendants: Carlton Dean Fisher, LEAD ATTORNEY, William Yu, Hinshaw & Culbertson, Chicago, IL.

For Overnite Express, Inc., Universal Am Can Ltd., Successor to Overnight Express, Inc and Ox LLC, Universal Am Can Ltd., Successor to Overnight Express, Inc and Ox LLC, Overnite Express, Inc., International Paper  [*3] Company, International Paper Company, Cross Defendants: Carlton Dean Fisher, LEAD ATTORNEY, William Yu, Hinshaw & Culbertson, Chicago, IL.

Judges: JAMES F. HOLDERMAN, United States District Court Judge.

Opinion by: JAMES F. HOLDERMAN

Opinion

CORRECTED MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge:

On July 3, 2008, Jeffrey Scheinman was severely injured, and became permanently disabled, when his stopped BMW convertible was rear-ended at a red light at the intersection of Skokie Valley Road and Half Day Road in Highland Park, Illinois. In this lawsuit, plaintiff Murray Scheinman ("Plaintiff), Jeffrey Scheinman's guardian, brings negligence claims against: (1) the driver of the truck that struck Jeffrey Scheinman's car, Samuel G. Franke ("Franke"); (2) Franke's employer, motor carrier Martin's Bulk Milk Service, Inc. ("MBMS"); (3) the shipper of the load carried by Franke on July 3, 2008, International Paper Company ("IPC"); and (4) the company that arranged for MBMS to handle IPC's deliveries, Universal Am-Can Ltd. ("UACL").

Plaintiff's claims against IPC and UACL are based on vicarious liability, and Plaintiff has alleged that Franke was acting as IPC's and UACL's agent at the time of the July 3, 2008,  [*4] collision. (Dkt. No. 168 ("5th Am. Compl.") Count III, ¶ 5; Count IV, ¶ 5.) Pending before the court are "International Paper Company's Motion for Summary Judgment Against the Plaintiff (Dkt. No. 313) and "Universal Am-Can Ltd.'s Motion for Summary Judgment Against the Plaintiff (Dkt. No. 314).1 For the reasons set forth below, IPC's motion for summary judgment is granted and UACL's motion for summary judgment is granted.

BACKGROUND2

A. Background of the Parties

Franke was employed by MBMS as a truck driver beginning in 1999, and was working as an MBMS truck driver on July 3, 2008, when the truck he was driving collided with Jeffrey Scheinman's vehicle. (Dkt. No. 307 ("IPC's SMF")3 ¶¶ 3, 15.) MBMS owned the "tractor" or cab portion of the truck driven by Franke on July 3, 2008, and MBMS personnel gave Franke his driving assignment that day. (Id. ¶¶ 4, 16, 64;  [*6] see also Dkt. No. 327 ("Pl.'s Resp. to IPC's SMF") ¶ 4.)

The box container being hauled by Franke on July 3, 2008, contained a load of paper products being shipped by IPC from its regional distribution center in Hammond, Indiana, to three of IPC's customers in Minneapolis, Minnesota. (IPC's SMF ¶ 67; Dkt. No. 325 ("Pl.'s Add'l Facts") ¶ 27; see also 5th Am. Compl. at Count III, ¶ 7.) In his capacity as an MBMS truck driver, Franke regularly hauled paper products from IPC's regional distribution center in Hammond, Indiana, to the MBMS terminal in Wilton, Wisconsin. (IPC's SMF ¶¶ 22, 59; see also Pl.'s Resp. to IPC's SMF ¶ 59.) IPC did not contract directly with MBMS for these trucking services; rather, IPC contracted with UACL, and UACL, in turn, contracted with MBMS. (IPC's SMF ¶ 9; Pl.'s Resp. to IPC's SMF ¶ 9.)

B. Relevant Contracts

Two general contracts govern the relationships between MBMS, IPC, and UACL, and are potentially relevant to the court's analysis:

• the "OXEN  [*7] Overnite Express 2007 Outbound Contract," originally executed between IPC and Overnight Express, Inc. ("OEI") on October 1, 2007, and assumed by UACL on behalf of OEI pursuant to Amendment No. 1, effective June 13, 2008 (hereinafter the "IPC-UACL Agreement"), and

• the "Universal Am-Can Ltd. Master Brokerage Agreement" between UACL and MBMS, effective June 12, 2008 (hereinafter the "UACL-MBMS Master Brokerage Agreement").

1. The IPC-UACL Agreement

The IPC-UACL Agreement itself consists of two parts: the October 1, 2007 contract between IPC and OEI (Defs.' & Pl.'s Ex. 15 ("IPC-OEI Contract")) and Amendment No. 1 to the IPC-OEI Contract (Defs.' & Pl.'s Ex. 16 ("Amendment No. 1.")). It is undisputed that, pursuant to Amendment No. 1 to the IPC-OEI Contract, UACL assumed OEI's responsibilities under the IPC-OEI Contract effective June 13, 2008. (IPC's SMF ¶ 6; see also Amendment No. 1 at IP000006 ("Effective June 13, 2008 CARRIER will be operating under the name of [UACL]. . . . All other terms of the [IPC-OEI] Contract shall remain and are in full force and effect.") (italics in original).) In accordance with this assumption of responsibility, and with the approach taken by the parties in  [*8] their briefing before the court, the court replaces "OEI" with "UACL" in the following recitation of the relevant contract terms.

The IPC-UACL Agreement identifies UACL as the "CARRIER" and IPC as the "SHIPPER," and states the parties' mutual intent "to enter into a contract, not a common carrier relationship, under which CARRIER shall perform transportation-related services for SHIPPER for all commodities unless covered otherwise by separate agreement between the parties." (IPC-UACL Agreement at UACL/OEI_000035.) Although the record is missing the specific document describing the "Services" that UACL was obligated to perform for IPC under the terms of the IPC-UACL Agreement,4 the IPC-UACL Agreement elsewhere states UACL's obligation to provide IPC with tractors, drivers, and trailer combinations on a daily or weekly basis. (See IPC-UACL Agreement § 7.A.) Under a section labeled "CARRIER Personnel," the IPC-UACL Agreement requires UACL to provide IPC with qualified, licensed drivers who shall "comply with applicable local, state, and federal laws and regulations." (IPC-UACL Agreement § 3.H.) UACL is also required to provide IPC with clean, water-tight, and safe trailers, and to maintain  [*9] all tractors and trailers in safe operating condition. (IPC-UACL Agreement §§ 3.G., 3.J.)

The IPC-UACL Agreement further states that "[a]ll shipments tendered to [UACL]" are subject to the terms and conditions contained in IPC's sample bill of lading, that UACL shall obtain a delivery receipt "[u]pon delivery of each shipment," and that UACL shall provide IPC with a copy of any such delivery receipt. (IPC-UACL Agreement § 10; see also Pl.'s Add'l Facts ¶ 17.) Pursuant to Section 9 and Exhibit H of the IPC-UACL Agreement, UACL was required to have the ability to communicate electronically with IPC regarding the acceptance of a load tender, the anticipated pick-up date/time, any unexpected delays, and other similar "delivery events." (IPC-UACL Agreement § 9; id. at UACL_OEI000060-61 ("Ex. H"); see also Pl.'s Add'l Facts ¶¶ 18-25.)

The IPC-UACL Agreement also sets forth additional "CARRIER" obligations, including UACL's obligation:

•  [*10] to "[c]oordinate and establish delivery schedules for all services provided,"

• to meet a "Minimum On-Time Delivery Requirement" of 98% (defining as "not on-time" shipments that "do not meet their delivery appointment, shipments not picked up from facilities as promised, shipments not delivered with established and reasonable transit times, and transit failures en-route"), and

• to "[e]mploy at its cost and expense the personnel required to maintain and operate CARRIER'S motor vehicle equipment as required to perform the services contemplated under this Agreement."

(IPC-UACL Agreement §§ 3.C., 3.F., 3.H.; see also Pl.'s Add'l Facts ¶ 12.) As noted above, the IPC-UACL Agreement further states that "CARRIER'S personnel shall be fully qualified and shall procure and maintain such licenses and permits as are required by local, state, or federal laws and regulations required to maintain and operate the motor vehicle equipment" and that "CARRIER'S personnel shall comply with applicable local, state, and federal laws and regulations." (IPC-UACL Agreement § 3.H.)

Section 20 of the IPC-UACL Agreement, labeled "Independent Contractor," states:

CARRIER is, and shall perform services under this Agreement  [*11] as, an independent contractor.

CARRIER shall solely direct all persons performing services performed by CARRIER under this Agreement, and such persons shall be and remain subject to the exclusive control and direction of CARRIER. Under no circumstances shall SHIPPER be construed as having responsibility for CARRIER'S safety, means or methods.

(IPC-UACL Agreement § 20; see also IPC's SMF ¶ 8.)

IPC had the right to terminate its agreement with UACL "[s]hould there be a continuing or substantial failure in [UACL's] performance" under the IPC-UACL Agreement, if IPC first provided UACL an opportunity to cure. (IPC-UACL Agreement § 8; see also Pl.'s Add'l Facts ¶ 26.) Events constituting a "continuing substantial failure" include, but are not limited to:

• Failure to comply with facility safety rules and operating procedures [specific examples omitted];

• A combined calendar year minimum service acceptance level for origin equipment supply commitments and on-time deliveries of less than 98 percent;

• Three consecutive months of minimum service acceptance level below 98 percent in either origin equipment supply commitments and/or on-time deliveries;

• Two or more delivery service written complaints  [*12] within a three (3) month period from [IPC's] customers requesting that [UACL] no longer deliver to their facilities;

• A downgrade in [UACL's] DOT rating by the Department of Transportation;

• Failure to maintain minimum insurance coverage;

• Non-compliance with Federal, State, or Municipal laws and regulations; and

• Bankruptcy or other insolvency of [UACL].

(IPC-UACL Agreement § 8.)

The parties dispute whether UACL acted as a "broker" or a "carrier" with respect to IPC's shipment on July 3, 2008. (See IPC's SMF ¶ 13; Pl.'s Resp. to IPC's SMF ¶ 13.) It is undisputed, however, that UACL contracted with MBMS to fulfill UACL's obligations under the IPC-UACL Agreement, as discussed in detail below. (IPC's SMF ¶ 9.)

Joan Anderton ("Anderton"), manager of IPC's Hammond, Indiana, regional distribution center, testified that IPC "expected that [its] product would be . . . picked up and delivered based upon the contract requirements" in the IPC-UACL Agreement, regardless of whether UACL provided the driver or hired "some other driver" to complete the delivery. (Defs.' & Pl.'s Ex. 11 ("Anderton Dep.") at 26:17-27:6; Pl.'s Add'l Facts ¶¶ 35-36.) Similarly, Steve Mundy ("Mundy"), Manager of IPC's Motor  [*13] Carrier Group, testified that the IPC-UACL Agreement "does not prohibit a carrier from using another carrier," and that he would expect that, if UACL used any other trucking company to make one of IPC's deliveries, this second trucking company would also comply with the terms of the IPC-UACL Agreement. (Defs.' & Pl.'s Ex. 13 ("Mundy Dep") at 102:21-103:11; Pl.'s Add'l Facts ¶¶ 35-36.) Mundy further testified that, "regardless of whether [MBMS] made the actual delivery of [IPC's] goods," in the event of a breach of the IPC-UACL Agreement, he would seek satisfaction from UACL. (Mundy Dep. at 103:12-19; Pl.'s Add'l Facts ¶ 37; see also Dkt. No. 346 ("UACL's Resp. to Pl.'s Add'l Facts") ¶ 34 ("UACL admits that UACL had the responsibility to fulfill the terms of the IPC-UACL/OEI agreement.").) Mundy's testimony is consistent with that of Mark Limback ("Limback"), President of UACL, who testified that UACL was permitted to act as "both a contract carrier and a broker" with respect to IPC shipments, and could "use[ ] an independent contractor to haul" IPC shipments as a means of fulfilling UACL's contractual obligations. (Pl.'s Add'l Facts ¶ 41; Dkt. No. 345 ("IPC's Resp. to Pl.'s Add'l Facts")  [*14] ¶ 41; see also Defs.' & Pl.'s Ex. 9 ("Limback Dep.") at 15:5-17:12.)

2. The UACL-MBMS Master Brokerage Agreement

Various UACL employees testified that UACL contracted with MBMS to transport IPC paper products. (See generally IPC's SMF ¶¶ 12, 14 (citing Defs.' & Pl.'s Ex. 7 ("Hubbs Dep."); Defs.' & Pl.'s Ex. 10 ("Hansen Dep."); and Limback Dep.) Gina Hubbs ("Hubbs"), Vice President of UACL, stated that the June 12, 2008, UACL-MBMS Master Brokerage Agreement was the effective contract governing the relationship between UACL and MBMS at the time of the July 3, 2008, collision, and she agreed that "the paper products that were being moved [on July 3, 2008] were being moved as part of [UACL's] obligations to provide transportation services pursuant to [the IPC-UACL Agreement]." (Hubbs Dep. at 76:13-19, 110:2-111:7.) Limback similarly testified that MBMS "would have delivered the goods under their master brokerage agreement" with UACL, and he identified the relevant contract as the June 12, 2008, UACL-MBMS Master Brokerage Agreement. (Limback Dep. at 84:22-24, 107:3-5.)

Both Hubbs and Limback acknowledged at their depositions that the UACL-MBMS Master Brokerage Agreement is not signed by UACL.  [*15] (Hubbs Dep. at 111:8-13; Limback Dep. at 107:6-9.) As explained by Limback, "[o]ur policy was unless the trucking company wanted a signed copy back [from us], we expected that they would abide by our contracted terms by them signing it." (Limback Dep. at 107:11-14.) It is undisputed that the June 12, 2008, UACL-MBMS Master Brokerage Agreement was signed by an MBMS representative named J. Pat Podlena. (IPC's SMF ¶ 12; see also UACL-MBMS Master Brokerage Agreement at 3.)

Pursuant to the June 12, 2008, UACL-MBMS Master Brokerage Agreement, MBMS agreed to "comply with all federal, state and local laws regarding the provision of the transportation services contemplated under this Agreement," to procure and maintain specific amounts and types of insurance coverage, and "to contact UACL's designated agent with billing information immediately upon completion of loading and with the name of receiver and status of delivery immediately upon completion of delivery." (UACL-MBMS Master Brokerage Agreement ¶¶ 3, 5, 10; (Dkt. No. 326 ("Pl.'s Resp. to UACL's SMF") ¶ 18.) The UACL-MBMS Master Brokerage Agreement also includes a clause stating, in relevant part:

[MBMS] is an independent contractor and  [*16] is IN NO WAY TO BE CONSIDERED AN AGENT, EMPLOYEE OR JOINT VENTURER OF UACL, in the providing of any services hereunder.

(UACL-MBMS Master Brokerage Agreement ¶ 3 (capitalization in original); see also IPC's SMF ¶ 12.)

C. MBMS's Relationship with Franke and MBMS's Relevant Conduct with Respect to the July 3, 2008, Shipment of IPC Paper Products

As noted above, MBMS owed the tractor portion of the truck driven by Franke on July 3, 2008. (IPC's SMF ¶¶ 4, 33.) MBMS personnel were responsible for giving Franke his driving assignments, both generally and on July 3, 2008. (Id. ¶¶ 16, 24, 64.) Franke received his paycheck and W-2 form from MBMS, and MBMS deducted his payroll taxes. (Id. ¶ 28.) MBMS was responsible for maintenance of the tractor driven by Franke. (Id. ¶ 37.)

MBMS also kept a driver qualification file on Franke, reviewed his work annually, and provided him with an employee handbook which contained instructions from MBMS on how to use the fuel pump, how to fill out MBMS paperwork, MBMS's expectations of its drivers, and MBMS's safety procedures, including instructions on how to do a pre-trip inspection and what to do in the event of an accident. (Id. ¶ 44.)

As an MBMS employee, Franke  [*17] hauled deliveries from IPC's Hammond, Indiana, regional distribution center to MBMS's terminal in Wilton, Wisconsin, every day starting about two to three years before the accident. (Id. ¶ 59; see also Defs.' & Pl.'s Ex. 3 ("Franke Dep. (2d)") at 130:6-21.) MBMS generally directed its drivers to take the shortest route, in terms of either distance or time, within reason and based on conditions. (IPC's SMF ¶ 20; Pl.'s Resp. to IPC's SMF ¶ 20.) Otherwise, the specific route taken was left to the discretion of each driver. (See Franke Dep. (2d) 123:15-124:20; Defs.' & Pl.'s Ex. 6 ("Berndt Dep.") at 37:18-38:3.) Janet Berndt, MBMS's Safety Director and Office Manager, testified that she did not personally tell Franke which route to take from Hammond to Wilton, and that Franke "knew the route." (Berndt Dep. at 42:16-24.)

On July 3, 2008, either David Martin ("Martin"), Operations Manager for MBMS, or one of the MBMS dispatchers whom Martin supervised called Franke and directed him to go to IPC's Hammond, Indiana, regional distribution center to pick-up a load of IPC paper products for delivery. (IPC's SMF ¶¶ 16, 24, 61, 64; see also Defs.' & Pl.'s Ex. 2 ("Franke Dep. (1st)") at 25:10-28:6.)  [*18] Franke was given this assignment after MBMS personnel received a Broker Confirmation Sheet faxed by UACL employee Melody Hansen on July 3, 2008, discussed below. (See Pl.'s Resp. to IPC's SMF ¶ 64.)

According to Berndt, Martin terminated Franke's employment with MBMS as a result of the July 3, 2008, collision. (IPC's SMF ¶ 74.)

D. IPC's Relationship with Franke and MBMS and IPC's Relevant Conduct with Respect to the July 3, 2008, Shipment of IPC Paper Products

IPC's Hammond, Indiana, regional distribution center was managed by its subcontractor, Exel Logistics ("Exel"), and Exel employees were responsible for loading trailers with IPC paper products. (Anderton Dep. at 149:1-15; 181:20-182:2; see also Pl.'s Resp. to IPC's SMF ¶ 40.) Anderton testified that—at the request of IPC—Exel also prepared three bills of lading, or "Memo Bills," for the loads that were being transported by Franke on July 3, 2008. (Pl.'s Add'l Facts ¶ 27; see also IPC's Resp. to Pl.'s Add'l Facts ¶ 27; see Pl.'s Ex. 21 ("7/3/08 Memo Bills").)

The 7/3/08 Memo Bills specified the product being shipped, the number of pallets or cartons being shipped, the weight of the shipment, and the name and address of IPC's customers  [*19] to whom the goods were to be delivered. (Pl.'s Add'l Facts ¶ 30.) In addition to the customers' addresses and contact information, the 7/3/08 Memo Bills also included a precise time frame or "delivery window" during which delivery had to be made. (Id. ¶ 31; see also Mundy Dep. at 110:5-16.) Two pages of the 7/3/08 Memo Bills included instructions to call IPC if there were problems with the delivery or if the driver was detained for more than one hour. (Pl.'s Add'l Facts ¶¶ 32-33.)5 Franke signed the 7/3/08 Memo Bills after the trailer was loaded at IPC's Hammond, Indiana, regional distribution center on July 3, 2008, above a blank line labeled "Carrier/TRL#." (IPC's SMF ¶ 71; see also 7/3/08 Memo Bills.) Boilerplate language at the bottom of the 7/3/08 Memo Bills defines "carrier" as meaning "any person or corporation in possession of the property under contract." (Pl.'s Add'l Facts ¶ 29; see also 7/3/08 Memo Bills.)

After Franke arrived in Wilton, he usually would drop off his  [*20] load of IPC paper products for later delivery in Minnesota by another MBMS driver. (IPC's SMF ¶ 70.) As a general practice, after an MBMS driver made a delivery to one of IPC's customers, MBMS would submit the relevant memo bill to UACL in order for MBMS to be paid. (Id. ¶ 68.) IPC did not make payments directly to Franke or MBMS, but instead paid UACL for carrier services. (Id. ¶¶ 29-30; Pl.'s Add'l Facts ¶ 48.)

IPC did not direct Franke to use any particular route and did not instruct him on how to drive his truck. (IPC's SMF ¶¶ 19, 55, 73.) IPC also did not require Franke to inspect, clean, or maintain his tractor or trailer, or require him to use a designated place for the cleaning, servicing, or gassing of his tractor-trailer. (Id. ¶¶ 39, 42.) IPC was not responsible for the maintenance of the tractor, for expenses such as gas and oil, or for obtaining licenses or permits for the tractor. (Id. ¶¶ 29, 38.) IPC did not pay Franke his salary or wages, nor did IPC provide Franke any employee benefits, including health insurance, workers compensation insurance coverage, pension plans, retirement accounts, profit sharing, vacation pay, or sick pay. (Id. ¶ 29.) IPC never provided Franke  [*21] with clothing or log books, a co-driver, or money with which to purchase gas. (Id. ¶ 41.) Franke never wore any clothing that said "International Paper Company," nor did IPC supply any graphics, placard, stickers, or logos for the tractor driven by Franke. (Id. ¶¶ 32, 34.)

Other than requiring delivery within the time frame specified in the 7/3/08 Memo Bills, IPC did not dictate what hours Franke needed to work, and IPC did not keep track of Franke's hours or service to ensure he was in conformity with Federal Motor Carrier Safety Regulations. (Id. ¶¶ 48, 53.) IPC never required Franke to take a physical exam. (Id. ¶ 54.) IPC did not hire, discipline, fine, counsel, or fire any of MBMS's drivers, although it was Martin's understanding that IPC had the right to reject an MBMS driver if he or she used "bad language," was improperly dressed, or treated others with disrespect. (Id. ¶¶ 35, 48-50; see also Pl.'s Resp. to IPC's SMF ¶ 51.) IPC never instructed Franke on his appearance or personal grooming standards, and did not maintain a personnel file on Franke. (IPC's SMF ¶ 51.) IPC did not conduct any safety meetings or informational meetings which Franke was required to attend. (Id. ¶  [*22] 52.)

There is no evidence in the record that IPC gave MBMS or Franke any specific instructions regarding compliance with the IPC-UACL Agreement, other than the information contained in the 7/3/08 Memo Bills. (See IPC's SMF ¶ 18; Pl.'s Resp. to IPC's SMF ¶ 18.) Although IPC generally tracked its on-time deliveries, (Pl.'s Resp. to IPC's SMF ¶ 55; see also Anderton Dep. at 143:17-18 ("We would review on-time delivery from our facility on a daily basis.")), the parties have not cited any evidence that IPC ever tracked Franke's performance specifically, or that Franke or MBMS received performance evaluations from IPC. Anderton testified that IPC was "unaware of and had no influence over" UACL's decision to contract with MBMS for purposes of executing the July 3, 2008, delivery. (Anderton Dep. at 26:4-9.)

E. UACL's Relationship with Franke, MBMS, and IPC and UACL's Relevant Conduct with Respect to the July 3, 2008, Shipment of IPC Paper Products

As noted above, UACL was contractually obligated under the IPC-UACL Agreement to provide IPC with qualified, licensed, and lawful drivers; to provide IPC with clean, water-tight, and safe trailers; to maintain tractors and trailers in safe operating  [*23] condition; and to satisfy a minimum on-time delivery requirement of 98% on IPC shipments. (IPC-UACL Agreement § 3; Pl.'s Add'l Facts ¶¶ 12, 50-55; see also Pl.'s Resp. to UACL's SMF ¶¶ 19, 33, 35, 37-39, 43, 49, 53-55, 73.) Any drivers supplied by UACL to IPC under the IPC-UACL Agreement were also required to communicate with IPC regarding the acceptance of a load tender, the anticipated pick-up date/time, any unexpected delays, and other similar delivery events. (IPC-UACL Agreement § 9 and Ex. H; Pl.'s Add'l Facts ¶¶ 18-25; Pl.'s Resp. to UACL's SMF ¶ 47.) Again, as discussed above, UACL and IPC representatives testified that UACL was permitted to hire the services of another trucking company to satisfy these obligations, and it is undisputed that UACL contracted with MBMS for this purpose. (Pl.'s Add'l Facts ¶¶ 35, 38; Dkt. No. 308 ("UACL's SMF") ¶ 9.) Specifically, it is undisputed that Franke would not have been hauling the load of IPC paper products on July 3, 2008, unless UACL had asked MBMS to do so pursuant to UACL's contractual obligations under the IPC-UACL Agreement. (Pl.'s Add'l Facts ¶ 43.) Other than the information contained in the UACL-MBMS Master Brokerage Agreement  [*24] and the 7/3/08 Broker Confirmation Sheet, there is no evidence in the record that UACL gave MBMS or Franke any specific instructions regarding compliance with the IPC-UACL Agreement. (See UACL's SMF ¶ 18; Pl.'s Resp. to UACL's SMF ¶ 18.)

On July 3, 2008, UACL representative Melody Hansen faxed to MBMS a "Broker Confirmation Sheet" instructing MBMS to make a pick-up of paper goods at IPC's Hammond, Indiana, regional distribution center at 7:00 p.m. that night. (Pl.'s Resp. to IPC's SMF ¶ 64; see also Pl.'s Ex. 20 ("7/3/08 Broker Confirmation Sheet").). The 7/3/08 Broker Confirmation Sheet stated that IPC's shipment had to be delivered on July 7, 2008, between 7:30 a.m. and 4:00 p.m. at three different locations in the Minneapolis area. (Id.) MBMS personnel dispatched Franke to IPC's Hammond, Indiana, regional distribution center after receiving the 7/3/08 Broker Confirmation Sheet faxed by Hansen. (Pl.'s Resp. to IPC's SMF ¶ 64.)

Hansen regularly provided similar broker confirmation sheets to MBMS as part of her duties for UACL. (UACL's SMF ¶ 63.) MBMS drivers were required to provide executed IPC memo bills to UACL upon completion of any delivery made pursuant to this arrangement, whereupon  [*25] UACL would pay MBMS for services rendered. (Id. ¶ 68.)

Franke never had any conversations with anyone at UACL concerning the load he was hauling on July 3, 2008, or any of the loads he hauled before July 3, 2008. (UACL's SMF ¶¶ 17, 62, 66.) Other than through broker confirmation sheets, Hansen never provided Franke with any additional directions, instructions, tools, instrumentalities, safety instructions, or driving instructions. (IPC's SMF ¶ 63.) Hansen did not discipline or fine Franke, or require Franke to stay in communication or contact with her as a representative of UACL. (Id.)

No one from UACL gave MBMS or Franke any additional instructions or directions, beyond those contained in the broker confirmation sheets and the Master Brokerage Agreement. (See UACL's SMF ¶ 18; see also Pl.'s Resp. to UACL's SMF ¶ 18.) UACL did not direct Franke to use any particular route, nor did UACL dictate what hours Franke needed to work—although UACL did communicate to MBMS the pick-up and delivery schedules established by IPC. (UACL's SMF ¶¶ 19, 48, 55; Pl.'s Resp. to UACL's SMF ¶ 48.) UACL did not pay Franke his salary or wages, nor did UACL provide Franke any employee benefits, including health  [*26] insurance, workers compensation insurance coverage, pension plans, retirement accounts, profit sharing, vacation pay, or sick pay. (UACL's SMF ¶ 29.) UACL did not cover the cost of Franke's repairs, maintenance, supplies, or travel expenses. (Id.) UACL did not provide Franke with clothing or log books, a co-driver, or money with which to purchase gas. (Id. ¶ 41.) UACL did not supply any graphics, placard, stickers or logos for the tractor driven by Franke and owned by MBMS. (Id. ¶ 34.)

UACL never fined Franke for not being in compliance with any requirements. (Id. ¶ 48.) UACL did not keep track of Franke's hours or service to ensure he was in conformity with Federal Motor Carrier Safety Regulations. (Id. ¶ 53.) UACL never required Franke to take a physical exam. (Id. ¶ 54.) UACL did not hire, discipline, counsel, or fire any of MBMS's drivers. (Id. ¶¶ 35, 48-50.) UACL did not instruct Franke on his appearance or personal grooming standards. (Id. ¶ 51.) UACL did not maintain a personnel file on Franke. (Id.) UACL never required Franke to inspect, clean, or maintain his tractor or trailer, nor did UACL require Franke to use a designated place for the cleaning, servicing, or gassing of  [*27] his tractor-trailer. (Id. ¶¶ 39, 42.) UACL never dictated to any drivers that came to the Hammond distribution center how to use their log books, what clothing to wear, what equipment should be used, how to operate his tractor on the road, or report what was going on with their driving. (Id. ¶ 43.) UACL did not conduct any safety meetings or informational meetings which Franke was required to attend. (Id. ¶ 52.)

LEGAL STANDARD

HN1[] Summary judgment is appropriate if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the initial responsibility of identifying materials in the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); see also Fed. R. Civ. P. 56(c)(1). "To survive a motion for summary judgment, 'the nonmoving party must establish some genuine issue for trial such that a reasonable jury could return a verdict in [its] favor.'" United States v. King-Vassel, 728 F.3d 707, 711 (7th Cir. 2013) (quoting Gordon v. FedEx Freight, Inc., 674 F.3d 769, 772-73 (7th Cir. 2012)).  [*28] When ruling on a motion for summary judgment, the court views all facts in the light most favorable to the nonmoving party and draws all reasonable inferences in favor of the nonmoving party. Id.

HN2[] As a federal court sitting in diversity, this court applies the substantive law of the forum state, Illinois, to Plaintiff's claims, in cases such as this one where the parties have not identified any choice-of-law issue. Camp v. TNT Logistics Corp., 553 F.3d 502, 505 (7th Cir. 2009). HN3[] Under Illinois law, "[t]he general rule is that a party injured by the negligence of another must seek his remedy against the person who caused his injury." Perkinson v. Manion, 163 Ill. App. 3d 262, 516 N.E.2d 977, 980, 114 Ill. Dec. 822 (Ill. App. Ct. 5th Dist. 1987). "An exception is the doctrine of respondeat superior." Id. "Under the doctrine of respondeat superior, a principal may be held liable for the negligent actions of an agent that caused a plaintiff's injury, even if the principal does not himself engage in any conduct in relation to the plaintiff." Sperl v. C.H. Robinson Worldwide, Inc., 408 Ill. App. 3d 1051, 946 N.E.2d 463, 470, 349 Ill. Dec. 269 (Ill. App. Ct. 3d Dist. 2011)). "An agency is a consensual relationship in which a principal has the right to control an agent's conduct  [*29] and an agent has the power to affect a principal's legal relations." Id. An independent contractor, by comparison, "undertakes to produce a given result but, in the actual exercise of the work, is not under the order or control of the person for whom he does the work." Id.

HN4[] Whether a principal-agent relationship exists is a question of fact that "should be made by considering all of the surrounding circumstances and actions of the parties, without exclusive weight being given to contractual labels or provisions." Id. "Among the factors to be considered in determining this issue are: the right to control the manner in which the work is performed; the right to discharge; the method of payment; who provides the tools, materials, or equipment; the level of skill required to perform the work; and who deducts or pays for insurance, social security, and taxes on the employee's behalf." Dowe v. Birmingham Steel Corp., 2011 IL App (1st) 091997, 963 N.E.2d 344, 351, 357 Ill. Dec. 391 ( 2011). "Another significant factor is the nature of work performed in relation to the general business of the employer." Sperl, 946 N.E.2d at 471. "No single factor is determinative, but the right to control the manner in which the work  [*30] is performed is considered to be the most important factor" and is the "hallmark of agency." Dowe, 963 N.E.2d at 351 (quoting Simich v. Edgewater Beach Apartments Corp., 368 Ill. App. 3d 394, 857 N.E.2d 934, 940, 306 Ill. Dec. 535 (Ill. App. Ct. 1st Dist. 2006)). "The burden of proving the existence and scope of an agency relationship is on the party seeking to impose liability on the principal." Krickl v. Girl Scouts, III. Crossroads Council, Inc., 402 Ill. App. 3d 1, 930 N.E.2d 1096, 1100, 341 Ill. Dec. 582 (Ill. App. Ct. 1st Dist. 2010).

As noted above,HN5[]  "[t]he test of whether an individual is an agent or independent contractor is generally a question of fact for the trier of fact." Dowe, 963 N.E.2d at 351. "However, when the facts are not in dispute, the trial court is permitted to decide the issue as a matter of law and grant summary judgment." Id.; accord Krickl, 930 N.E.2d at 1100; see also Perkinson, 516 N.E.2d at 980 ("Whether the relationship of principal and agent or owner and independent contractor exists is a question of fact for the jury unless the relationship is so clear as to be indisputable."); Tansey v. Robinson, 24 Ill. App. 2d 227, 164 N.E.2d 272, 275 (Ill. App. Ct. 1st Dist. 1960) ("unless those facts [relevant to establishing a principal-agent relationship] clearly  [*31] appear, the relationship cannot become purely a question of law.") (citing Thiel v. Material Service Corp., 364 Ill. 539, 5 N.E.2d 88, 91 (Ill. 1936)).

ANALYSIS

I. International Paper Company's Motion for Summary Judgment

The majority of the factors relevant to establishing a principal-agent relationship are not present in the relationship between IPC and Franke. It is undisputed that IPC did not pay Franke directly, withhold taxes from Franke's earnings, insure either Franke or the truck he was driving, pay Franke's expenses, or furnish tools, materials, or equipment for Franke to utilize when hauling IPC's paper products. IPC did not have the right to terminate Franke's employment as an MBMS truck driver, although IPC did retain the right to request a different driver from UACL, which would have the effect of terminating Franke's assignment only to that portion of MBMS's business. See Boyle v. RJW Transport, Inc., No. 05 C 1082, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *11 (N.D. Ill. June 20, 2008) (Kennelly, J.) ("a shipper's right to reject—but not fire—a driver does not create an agency relationship"); accord Dowe, 963 N.E.2d at 352 (finding no principal-agent relationship as a matter of law despite the fact that  [*32] the shipper "had the right to terminate the services of a driver if it believed the driver was not performing the work in a safe manner, he was impaired, or it received a customer's complaint"). The hauling services provided by Franke also did not go to the heart of IPC's business, but were instead the type of generic delivery services utilized by many manufacturers, retailers, and distributors. Compare Sperl, 408 Ill. App. 3d at 1058-59 ("The work [driver] performs ... is directly related to, if not the same as, the general transportation business conducted by [the alleged principal]."). Neither party has argued that Franke's occupational skills as a truck driver weigh in favor of, or against, a finding of agency.

The most important factor, and only remaining factor, is whether IPC had the right to control the manner in which Franke hauled IPC's paper products. Plaintiff argues the undisputed facts demonstrate that "IPC exerted extensive control over the delivery activities of UACL and any driver utilized by UACL to haul IPC's products" through the IPC-UACL Agreement, or that there is at least a genuine issue of material fact as to whether an agency relationship exists between IPC and Franke.  [*33] (Dkt. No. 329 ("Pl.'s IPC Resp.") at 5, 7.) The court disagrees.

The court first addresses the relevance of the IPC-UACL Agreement. Plaintiff has argued that "the plain language of the contractual agreement between IPC and UACL/OEI . . . strongly support[s] a finding that MBMS, and Franke were agents of IPC." (Pl.'s IPC Resp. at 2.) In response to Plaintiff's Statement of Additional Facts, IPC generally "denies that the IPC-UACL/OEI contract gave rise to any duties or responsibilities on FRANKE," although IPC does not further develop this argument in its reply brief. (IPC's Resp. to Pl.'s Add'l Facts ¶¶ 15-25.) The plain language of the IPC-UACL Agreement does not mention MBMS or Franke, either by name or by inference, instead referring to UACL as the only "CARRIER." Additionally, neither the UACL-MBMS Master Brokerage Agreement nor the 7/3/08 Broker Confirmation Sheet contains language stating that UACL—rather than IPC—required MBMS or Franke to comply with the terms of the IPC-UACL Agreement. In short, there is no evidence of a direct contractual relationship or obligation between IPC and MBMS or Franke. On the other hand, representatives from both IPC and UACL agreed that UACL was  [*34] permitted to hire another driver or trucking company to haul IPC's shipments on behalf of UACL, thereby satisfying UACL's obligations under the IPC-UACL Agreement, and in its briefing before the court IPC has analyzed various requirements of the IPC-UACL Agreement as though they apply to MBMS and Franke. (See Dkt. No. 344 ("IPC's Reply") at 8-10 (analyzing "[a] contractual provision that requires a driver to have a CDL" and "a contractual provision 'requiring' safe operation of a truck in compliance with traffic laws").) The court need not determine whether the terms of the IPC-UACL Agreement actually applied to MBMS and Franke for purposes of deciding IPC's pending motion for summary judgment. Even assuming that the terms of the IPC-UACL Agreement did apply to MBMS and Franke, as discussed in detail below, the court concludes that no reasonable jury could find that IPC exercised sufficient control over the manner in which Franke performed his work for purposes of establishing a principal-agent relationship.

Both Plaintiff and IPC agree that HN6[] "[t]he actual conduct of the parties, and not the language of any agreement between them, typically controls in the analysis of whether a principal-agent  [*35] relationship exists." Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *6. A contract's statement of employment status is accordingly considered a relevant—but not dispositive—factor in determining whether an individual is an independent contractor, insofar as it is "indicative of the intent of the parties." Earley v. Industrial Comm'n, 197 Ill. App. 3d 309, 553 N.E.2d 1112, 1118, 143 Ill. Dec. 126 (Ill. App. Ct. 4th Dist. 1990) (noting that the employment status designated in a contract "may swing the balance" in a close case). Section 20 of the IPC-UACL Agreement, titled "Independent Contractor," states in relevant part, "[u]nder no circumstances shall [IPC] be construed as having responsibility for [UACL's] safety, means or methods." (IPC-UACL Agreement § 20.) On its face, Section 20 of the IPC-UACL Agreement is evidence of IPC's and UACL's mutual intent to establish an independent contractor relationship, which in turn suggests that IPC did not intend to create a principal-agent relationship with Franke or any other driver supplied by UACL pursuant to the IPC-UACL Agreement. A reasonable jury would consider this factor to weigh in favor of IPC's position on the question of agency.

As for other potential indicia of control, it is undisputed  [*36] that IPC did not determine the route that Franke took from Hammond, Indiana, to Wilton, Wisconsin; that IPC did not require Franke to work any specific hours; that IPC did not train or instruct Franke in how to drive his tractor or how to haul loads for IPC; that IPC did not specifically request that Franke be assigned to the July 3, 2008, shipment; and that IPC did not discipline Franke.

Plaintiff argues that IPC nevertheless exerted significant control over the manner in which Franke performed his work by (1) issuing specific delivery instructions in the 7/3/08 Memo Bills, including the location and time frame for deliveries; (2) requiring UACL to purchase electronic software that "would allow IPC to stay in constant electronic communication with drivers regarding all facets of the transportation of its goods" and "to effectively control and supervise all drivers transporting its loads"; (3) setting a performance standard of 98% "on-time deliveries"; and (4) requiring drivers "to be fully qualified and have appropriate licenses and permits" and "to operate their truck safely in compliance with local, state, and federal laws." (See generally Pl.'s IPC Resp. at 5-11.)6 None of these  [*37] undisputed facts, either alone or together, is sufficient to establish a genuine dispute of material fact as to whether a principal-agent relationship existed between IPC and Franke.

First, HN7[] courts have routinely held that a requirement of timely delivery does not "impose any particular route or other methods for making the delivery." Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *8; see also Wilson-McCray v. Stokes, No. 01 C 1929, No. 01 C 5808, 2003 U.S. Dist. LEXIS 22225, 2003 WL 22901569, at *5 (N.D. Ill. Dec. 9, 2003) (Kennelly, J.) (contract provisions requiring the timely delivery of goods "merely specified the particular hauling task—i.e. delivery in a timely fashion—and  [*38] did not control the manner in which this task is to be completed"); Shoemaker v. Elmhurst-Chicago Stone, Inc., 273 Ill. App. 3d 916, 652 N.E.2d 1037, 1041, 210 Ill. Dec. 61 (Ill. App. 3d 1st Dist. 1994) ("Elmhurst's instructing Anderson where he should deliver the load did not control the manner in which the job was done but rather specified the particular hauling task for which Lawrence Trucking was hired."); Manahan v. Daily News-Tribune, 50 Ill. App. 3d 9, 365 N.E.2d 1045, 1047, 8 Ill. Dec. 659 (Ill. App. Ct. 3d Dist. 1977) (finding no principal-agent relationship where contract required newspaper deliveryperson to make deliveries "at the times and to the persons and placed designated by [the newspaper company]"). IPC's instructions in the 7/3/08 Memo Bills regarding where and when to deliver its July 3, 2008, shipment do not reasonably suggest that IPC had the ability to control the means by which Franke accomplished this desired result.7

Second, IPC's requirement that MBMS and Franke maintain communication with IPC 8 does not suggest that IPC had control over the manner in which Franke hauled IPC's shipment. The specific obligations set forth in Exhibit H to the IPC-UACL Agreement require carriers hauling for IPC to report, through the use of designated electronic software, when a load tender is accepted or rejected, the expected pick-up date and time, the actual pick-up date and time, the expected delivery date and time, any revised expected delivery date and time, and the actual delivery date and time. (IPC-UACL Agreement, Ex. H; see also Pl.'s IPC Resp. at 10 (citing Hansen Dep. at 89-90).) Similarly, two pages of the 7/3/08  [*40] Memo Bills explicitly required the driver to "contact IP" or "call IP" if the driver experienced problems with the delivery or was detained for more than one hour. (See 7/3/08 Memo Bills.) Requiring reports on a driver's progress, however, does not signify that the shipper has any ability to direct or control the driver's actions in hauling the assigned load. As Judge Kennelly stated in Wilson-McCray, HN8[] shippers have "an interest in making sure that [their] customers received their goods in a timely manner; and the fact that [the shipper] monitored this process to ensure prompt delivery no more creates an agency relationship than does the designation of overnight delivery on a Federal Express package." Wilson-McCray, 2003 U.S. Dist. LEXIS 22225, 2003 WL 22901569, at *6.

The fact that IPC set a performance  [*41] standard of 98% "on-time deliveries" likewise does not reasonably suggest that IPC had the ability to control how Franke hauled his assigned load. IPC's performance goal, like its delivery instructions, is a manifestation of its desired end result, and does not reasonably suggest that IPC had control over Franke's preferred method of getting from Point A to Point B within the established time frame. IPC did offer performance evaluations of its carriers, in which "[o]n-time delivery was typically one of the metrics that would be measured." (Anderton Dep. at 142:24-123:9.) As in Boyle, however, Anderton's testimony on this point "does not present these discussions as an occasion for mandates by [IPC] regarding the particulars of delivery operations." Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *8. Anderton testified that, on a daily basis, IPC resolved any "performance issue" by contacting the carrier and asking "Why was this shipment late yesterday?" (Anderton Dep. at 143:17-144:1.) Again, this type of communication does not suggest that IPC was giving "marching orders" to MBMS or Franke, Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *8, especially when it is undisputed that IPC did not have any knowledge of or input  [*42] regarding Franke's individual assignment to haul IPC's shipment.

The fact that IPC required drivers to "comply with applicable local, state, and federal laws and regulations" is a closer call. (IPC-UACL Agreement § 3.H.) On its face, this contract provision applied to all UACL personnel "required to perform the services contemplated under this Agreement," (id.), and therefore had the potential to directly address the manner in which Franke hauled IPC's load of paper goods. Moreover, IPC stood to benefit from Franke's compliance with this contact term. See Nat'l Cont'l Ins. Co. v. Empire Fire & Marine Ins. Co., 157 F.3d 610, 613 (8th Cir. 1998) (service contract requiring compliance with federal safety regulations benefitted both owner and lessee). As IPC notes, however, Franke also had an independent duty to comply with all applicable laws, and at least one court has found that "[l]anguage requiring compliance with laws and regulations does not render an independent contractor an agent or employee." Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *9; see also United States v. Mutual Trucking Co., 141 F.2d 655, 657, n.1, 658-59 (6th Cir. 1944) (contract between shipper and carrier requiring carrier's compliance  [*43] with applicable licensing and insurance regulations did not create principal-agent relationship). Section 3.H. of the IPC-UACL Agreement does not specify any particular laws or regulations with which IPC expected UACL's personnel to comply, nor does Section 3.H. refer to any specific traffic laws, rules-of-the-road, or other similar regulations. Without more, the court concludes that no reasonable jury could find that Section 3.H. established IPC's ability to control Franke's actions in hauling the assigned load on July 3, 2008.

For the reasons set forth above, viewing the record in the light most favorable to Plaintiff and drawing all reasonable inferences in Plaintiff's favor, the court concludes that no reasonable jury could find that IPC exerted control over how Franke performed his hauling duties on July 3, 2008. As a matter of law, the court holds that no principal-agent relationship existed between IPC and Franke, and IPC therefore cannot be liable for Franke's alleged negligence under a theory of respondeat superior. IPC's motion for summary judgment is granted accordingly.

II. Universal Am-Can Ltd.'s Motion for Summary Judgment

Plaintiff argues that, as a matter of law, "MBMS/Franke  [*44] were operating as UACL's agent in performing UACL's contractual obligations as the motor carrier in transporting IPC's paper goods," or that, in the alternative, "a genuine issue of material fact exists as to the agency relationship between UACL and MBMS/Franke." (Dkt. No. 328 ("Pl.'s UACL Resp.") at 2.) Again, the court disagrees.

As with IPC, the majority of the factors relevant to establishing a principal-agent relationship are not present in the relationship between UACL and Franke. It is undisputed that UACL did not pay Franke directly, withhold taxes from Franke's earnings, insure either Franke or the truck he was driving, pay Franke's expenses, or furnish tools, materials, or equipment for Franke to utilize when hauling loads pursuant to the UACL-MBMS Master Brokerage Agreement. UACL did not have the right to terminate Franke's employment as an MBMS truck driver, and neither party has argued that Franke's occupational skills as a truck driver weigh in favor of, or against, a finding of agency.

On the question of control, Plaintiff relies on the IPC-UACL Agreement in arguing that "UACL most certainly maintained control over MBMS and Franke because when MBMS/Franke were hauling  [*45] the load for UACL, MBMS/Franke necessarily had to do everything UACL was contractually obligated to do." (Pl.'s UACL Resp. at 7-8.) This argument by Plaintiff goes too far. While it may have been in UACL's best interest to explicitly require MBMS and Franke to comply with the terms of the IPC-UACL Agreement, there is no evidence that UACL took this step. The relationship between UACL and MBMS is governed by the UACL-MBMS Master Brokerage Agreement and the 7/3/08 Broker Confirmation Sheet. Neither of these contracts refers to the IPC-UACL Agreement or explicitly incorporates its provisions. Moreover, Plaintiff does not cite or rely on any particular provisions of the IPC-UACL Agreement in support of his argument that UACL controlled Franke's actions. In the court's above analysis of IPC's motion for summary judgment, the court has explained why many of the contract terms in the IPC-UACL Agreement do not establish the contours of a principal-agent relationship, even if this contract did apply to Franke.

Most of Plaintiff's other arguments are likewise materially indistinguishable from the arguments considered and rejected above, including Plaintiff's argument that a principal-agent relationship  [*46] is established by: (1) the requirement in the UACL-MBMS Master Brokerage Agreement that MBMS comply with all applicable federal, state and local laws (Pl.'s UACL Resp. at 9-10); (2) the requirement in the UACL-MBMS Master Brokerage Agreement that MBMS contact UACL with billing information and information regarding the status of delivery, and Martin's testimony that UACL required Franke to contact UACL if he was running behind on his pick-up or delivery schedule (Pl.'s UACL Resp. at 9); and (3) the fact that Hansen provided MBMS certain delivery details, both over the phone and through the 7/3/08 Broker Confirmation Sheet (Pl.'s UACL Resp. at 9). For the reasons set forth above, these undisputed facts do not permit a reasonable jury to conclude that UACL controlled Franke's actions in hauling the assigned load on July 3, 2008.

The only significant difference between Franke's relationship with IPC and his relationship with UACL is the fact that the hauling services Franke provided on July 3, 2008, did go to the heart of UACL's business. See Sperl, 408 Ill. App. 3d at 1058-59 ("The work [driver] performs . . . is directly related to, if not the same as, the general transportation business conducted  [*47] by [the alleged principal]."). In this case, UACL's "business" was its obligation to transport IPC's paper goods pursuant to the IPC-UACL Agreement. This is the specific task that MBMS and Franke performed at UACL's request. The fact that UACL's clearly stood to benefit from its arrangement with MBMS is not enough, however, to establish a principal-agent relationship when there is no evidence that UACL controlled Franke's actions in hauling the assigned load on July 3, 2008. See also Boyle, 2008 U.S. Dist. LEXIS 48724, 2008 WL 4877108, at *11 (concluding that this factor [the nature of the work performed in relation to the general business of the purported principal] "is ill-suited to the trucking context . . . [and] does not translate well from worker's compensation law").

Plaintiff relies exclusively on Sperl to argue that a transportation broker 9 can be held liable for a driver's negligence. In Sperl, however, the nature of the broker's business was one of two "pivotal" factors that the court relied on. Sperl, 946 N.E.2d at 472. The court also concluded that the broker "directed [the driver's] conduct during the entire transportation process" through "extensive requirements," such as the broker's requirements  [*48] that the driver provide a refrigerated trailer of a specified length, that the driver continuously measure the temperature of the load during the trip, and that the driver stay in "constant communication" with the broker during the trip. Sperl, 946 N.E.2d at 471-72. The broker also enforced these requirements by imposing a system of fines. Id. at 472. Additionally, the delivery instructions provided by the broker put pressure on the driver to violate federal driving regulations. Id. As the driver testified, "given the amount of time she had to get to Illinois, she would not have been able to deliver the load to the Bolingbrook warehouse within [the broker's] schedule without violating federal regulations" that only allowed the driver to drive ten hours each day. Id. at 469. In addition to these indicia of control in Sperl, other factors supporting the jury's finding of agency included the fact that the broker communicated directly with the driver to tender and dispatch the load, the broker paid the driver directly by depositing money in her bank account, and the broker owned the load being delivered to its own warehouse facility. Id. at 472. None of these factors are present in the  [*49] factual record in this case.

For the reasons explained above, viewing the record in the light most favorable to Plaintiff and drawing all reasonable inferences in Plaintiff's favor, the court concludes that no reasonable jury could find that UACL exerted control over how Franke performed his hauling duties on July 3, 2008. In light of this lack of evidence, as a matter of law, the court  [*50] holds that no principal-agent relationship existed between UACL and Franke, and UACL therefore cannot be liable for Franke's alleged negligence under a theory of respondeat superior. UACL's motion for summary judgment is granted accordingly.

CONCLUSION

For the reasons set forth above, Defendants' "Motion to Strike Superfluous Argument Contained in Plaintiff's Responses to UACL's and IPC's Statement of Facts" (Dkt. No. 343) and Defendants' motions to strike embedded in IPC's and UACL's Local Rule 56.1(a) responses (Dkt. Nos. 345, 346) are denied. Defendants' "Motion to Strike and Bar Testimony of David Martin and Pat Podlena Pursuant to [FRE] 701 and 702" (Dkt. No. 342) is granted. "International Paper Company's Motion for Summary Judgment Against the Plaintiff (Dkt. No. 313) is granted. "Universal Am-Can Ltd.'s Motion for Summary Judgment Against the Plaintiff (Dkt. No. 314) is granted. "Ox LLC's Motion for Summary Judgment" (Dkt. No. 303) is denied as moot. Judgment is entered in favor of IPC and UACL on all claims alleged against them, and Counts III and IV of the Fifth Amended Complaint are dismissed with prejudice. The parties' schedule entered by the court on September 5, 2013 (Dkt.  [*51] No. 364) remains in effect. Parties are encouraged to discuss settlement. The case is set for a status report on the progress of the parties' settlement discussions at 10:00 a.m. on 12/17/13.

ENTER:

/s/ James F. Holderman

JAMES F. HOLDERMAN

United States District Court Judge

Date: December 9, 2013

End of Document

1 Defendant OX LLC has been dismissed as a defendant in this lawsuit. (Dkt. No. 360.) OX LLC's motion for summary judgment (Dkt. No. 303) is therefore denied as moot.

2 The court acknowledges that, in response to IPC's and UACL's objection and motion to strike, this court has denied Franke and MBMS the opportunity to respond to the pending summary judgment motions. (See Dkt. No. 339.) The court hereby clarifies that its recitation of the undisputed facts in the Background section and throughout this Memorandum Opinion and Order is for purposes of its analysis in adjudicating the claims and defenses addressed in this Memorandum Opinion and Order only.

IPC and UACL have also filed motions to strike certain of Plaintiff's responses to their 56.1(a)(3) statements  [*5] of undisputed material facts and certain paragraphs of Plaintiffs 56.1(b)(3)(C) statement of additional undisputed material facts, alleging that these items fail to comply with N.D. Ill. Local Rule 56.1. (See Dkt. Nos. 343, 345, and 346.) This court has the discretion to strictly enforce Local Rule 56.1 or to overlook transgressions of the rule, as long as it does so with an even hand. Modrowski v. Pigatto, 712 F.3d 1166, 1169 (7th Cir. 2013). The court has reviewed the Defendants' concerns, and has carefully scrutinized Plaintiff's responses and assertions of fact—along with those of Defendants—to avoid the inclusion of any unsupported facts in this Background section. Consequently, exercising the court's discretion, Defendants' motions to strike are denied.

3 Where IPC and UACL have set forth the same fact in their respective Rule 56.1(a)(3) statements of material fact, the court cites only to IPC's statement for purposes of efficiency.

4 See IPC-UACL Agreement § 3.A. ("CARRIER shall . . . [p]rovide services as set forth in Exhibit C, Motor Carrier Rate and Weekly Commitment Schedule."); Exhibit C to the IPC-UACL Agreement is not part of either Defendants' Exhibit 15 or Plaintiff's Exhibit 15.

5 According to Franke, however, IPC did not require him to provide status reports or to notify IPC of anything that was happening while he was on the road. (Compare IPC's SMF ¶ 47; Pl.'s Resp. to IPC's SMF ¶ 47.)

6 Plaintiff also argues that IPC controlled the mode of transportation, insofar as the IPC-UACL Agreement required UACL to satisfy certain "Trailer Requirements" and "Trailer Pool Requirements." (IPC-UACL Agreement at § 3.J and § 3.K.) No party has taken the position that IPC or UACL required Franke—as opposed to MBMS—to provide a tractor or trailer as part of his hauling responsibilities. The court therefore finds these contractual provisions to be irrelevant to the question of whether IPC controlled Franke's actions when hauling IPC's July 3, 2008, shipment.

7 Plaintiff notes that the boilerplate language on each Memo Bill includes blank boxes stating "SHIPPER PER" and "AGENT PER." (Pl.'s IPC Resp. at 10; see also 7/3/08 Memo Bills.) This vague allusion to agency does not create a genuine dispute of material fact regarding Franke's legal relationship with IPC, as the word "agent"  [*39] by itself does not establish any particular form of control over Franke's conduct or actions. Similarly, the deposition testimony of David Martin and Pat Podlena concluding that Franke was acting as an agent of IPC and UACL when hauling IPC's July 3, 2008, shipment is a bare legal conclusion that is inadmissible under Federal Rule of Evidence 701(c). Defendants' "Motion to Strike and Bar Testimony of David Martin and Pat Podlena Pursuant to [FRE] 701 and 702" (Dkt. No. 342) is accordingly granted.

8 The court acknowledges that this is a disputed question of fact, insofar as Franke testified that IPC did not require drivers to provide status reports, call in, or otherwise "notify them of anything that was happening while [Franke] was doing his work." (IPC's SMF ¶ 47 (citing Franke Dep. (2d) at 450:12-24).) The court views this disputed fact in the light most favorable to Plaintiff for purposes of its analysis.

9 The court recognizes that the parties dispute whether UACL acted as a "broker" or a "carrier" with respect to the July 3, 2008, shipment. It is undisputed, however, that UACL had a contractual obligation to haul or carry IPC's shipment on July 3, 2008, and that UACL contracted with MBMS to fulfill this obligation. The transportation broker in Sperl similarly contracted with carriers to provide transportation services for its (shipper) customers. Sperl, 946 N.E.2d at 467. The fact that UACL was contractually obligated to haul IPC's load, rather than to broker it, is immaterial to the court's analysis of and reliance on the Sperl decision. For ease of discussion, the court uses the term "broker" to apply to UACL's actions in contracting with MBMS, while acknowledging Plaintiff's position on this point.

McComb v Bugarin

McComb v. Bugarin

United States District Court for the Northern District of Illinois, Eastern Division

February 26, 2014, Decided; February 26, 2014, Filed

No. 11 C 0256

Reporter

20 F. Supp. 3d 676 *; 2014 U.S. Dist. LEXIS 24157 **

MICHAEL MCCOMB, as Parent and Special Administrator of the Estate of GISELLE MCCOMB, deceased, Plaintiff, v. JOSE L. BUGARIN, BUGARIN TRUCKING, INC., J.L. SHANDY TRANSPORTATION, INC., J.L. SHANDY-SHAMROCK DIVISION, INC., J.L. CROTTY, LLC, CENTRAL STEEL AND WIRE COMPANY, INC., and STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.

Prior History: McComb v. Nat'l Cas. Co., 994 F. Supp. 2d 918, 2013 U.S. Dist. LEXIS 156181 (N.D. Ill., Oct. 31, 2013)

Core Terms

Steel, contractor, brakes, truck, incompetent, carriers, proximate cause, hiring, driver, rating, summary judgment, violations, unfitness, damages, driving, trailer, independent contractor, motor carrier, collision, lights, Route, legal cause, intersection, killed, haul

Counsel:  [**1] For Michael McComb, as Parent and Special Administrator of the Estate of Giselle McComb, Deceased, Plaintiff: Timothy Michael Whiting, LEAD ATTORNEY, Whiting Law Group, Ltd., Chicago, IL.

For Bugarin Trucking, Inc., Jose L Bugarin, J.L. Shandy Transporation, Inc., Defendants: Mary Kay Scott, LEAD ATTORNEY, Joshua C. Bell, Brenner, Ford, Monroe & Scott, Ltd, Chicago, IL.

For Central Steel and Wire Company, Inc., Defendant: Harvey A. Paulsen, LEAD ATTORNEY, Paulsen, Malec & Malartsik, Ltd., Wheaton, IL.

For State Farm Mutual Automobile Insurance Co., Defendant: Frank Charles Stevens, LEAD ATTORNEY, Taylor, Miller LLC, Chicago, IL.

Judges: REBECCA R. PALLMEYER, United States District Judge.

Opinion by: REBECCA R. PALLMEYER

Opinion

 [*678]  MEMORANDUM OPINION AND ORDER

On December 28, 2010, Giselle McComb was killed when the car she was driving was struck by a semi-tractor trailer driven by Defendant Jose Bugarin. Giselle's father, Plaintiff Michael McComb ("McComb"), brought this suit as the special administrator of his daughter's estate asserting claims for wrongful death against several defendants. In addition to Bugarin, Plaintiff has named J.L. Shandy Transportation ("Shandy") (the trucking company under whose authority Bugarin  [**2] operated), and Central Steel and Wire Company ("Central Steel") (the manufacturer whose steel Bugarin was hauling at the time of the accident). Specific to Central Steel, McComb alleges that the Chicago-based company is liable for the death of Ms. McComb based on its negligent selection of its contractors, Shandy and Bugarin. Central Steel now moves for summary judgment, arguing that (1) it did not violate any duty to McComb, and (2) McComb failed to show that the accident was proximately caused by any negligence on Defendant's part. For the reasons explained below, Central Steel's motion for summary judgment [108] is granted.

BACKGROUND
I. The Collision

On the evening of December 28, 2010, trucker Jose Bugarin, operating under the authority of J.L. Shandy Transportation, left Central Steel's Portage, Indiana facility. Bugarin's semi-tractor trailer was loaded with 46,480 pounds of steel plate destined for another Central Steel facility in Milwaukee. (Pl.'s Statement of Material Facts [112], hereinafter "Pl.'s 56.1", ¶¶ 1, 2; Def.'s 56.1 ¶ 4.)1 En route to Milwaukee, Bugarin drove northbound on U.S.  [*679]  Route 41 through Lake County, Illinois, a stretch of roadway that the driver described  [**3] as "unfamiliar." (Id. ¶ 21.) Due to this lack of familiarity, Bugarin was unaware that, at approximately 7:21 p.m., he was approaching a major intersection at the junction of Route 41 and Illinois State Route 173. (Id.) The intersection was not readily apparent to the driver due to a power outage that had darkened the intersection's street lights, stop lights, and the lights of nearby businesses; as a result, the headlights of passing cars provided the only sources of light in the area. (Id. ¶ 20.) In fact, Bugarin testified in his deposition that he believed he had already passed the intersection of U.S. 41 and Illinois 173 until, just before impact, he saw the westbound car driven by Ms. McComb directly in front of his truck. (Id. ¶ 14.) Only then did Bugarin apply his brakes (Def.'s 56.1 ¶ 16), but, at that point, he was too late. Bugarin's semi-tractor trailer collided with Ms. McComb's vehicle on its driver's side, killing her. (4th Am. Compl. ¶ 13.)

II. The Post-Accident Investigation

Following the wreck, Deputy Sheriff John Vinson ("Deputy Vinson"), an accident investigator with the Lake County Sheriff's Office, was dispatched to the scene to determine the cause of the accident. (Def.'s 56.1 ¶ 17.) In preparing his report, Deputy Vinson performed various roadway measurements, took photographs of the scene, and interviewed Bugarin and witnesses of the crash. (Id. ¶ 18.) Based on the length of the skid marks leading to the point of impact, Vinson concluded that Bugarin had been traveling at or near the posted speed limit of 50 miles per hour at the time of the accident. (Id. ¶ 22.) The following day, Deputy Vinson requested that Illinois State Trooper James Kirkpatrick ("Trooper Kirkpatrick")  [**5] perform an investigation of Bugarin's truck. (Id. ¶ 23.) Trooper Kirkpatrick performed both visual and diagnostic assessments of the vehicle at a nearby tow yard, evaluating the truck's tires, wheels, brakes, lights, horn, windshield wipers, and cab. (Id. ¶¶ 25-26.) Kirkpatrick's investigation uncovered several violations of the Federal Motor Safety Carrier Regulations ("FMSCRs"): all four trailer brakes were out of adjustment, a brake chamber on the right side of the first drive axle was loose, a shock absorber was missing, and the brakes' required automatic slack adjusters had been replaced by manual adjusters. (Pl.'s 56.1 ¶¶ 13, 18.) Kirkpatrick also cited Bugarin for failing to perform a proper pre-trip inspection. (Id. ¶ 14.) Each of these violations existed prior to the collision, Kirkpatrick concluded, and had the driver conducted a proper pre-trip inspection, "it would have been incumbent upon [Bugarin] to cause [the violations] to be repaired prior to driving." (Id. ¶ ¶ 15-17; Kirkpatrick Dep., Ex. G to Def.'s Mot., at 43:3-14.) Shandy acknowledges that a competent driver should be able to recognize the identified violations in a pre-trip inspection, and Bugarin further admits  [**6] that, had he known of the brake violations on his truck, he would have adjusted them before operating the vehicle. (Pl.'s 56.1 ¶¶ 19-21.) Neither party provides information concerning how much time these adjustments might have taken, nor do they suggest how long such repairs would have kept Bugarin's truck out of service.

 [*680]  Deputy Vinson's report, which he based on his own data as well as the findings of Trooper Kirkpatrick's investigation, concluded that the only "major contributing cause" of the accident was the lack of traffic lights at the intersection of U.S. Route 41 and Illinois State Route 173 (Def.'s ¶ 34); Kirkpatrick did identify "improperly adjusted brakes" as a "minor contributing cause" of the wreck, as well. (Kirkpatrick Dep., Ex. G to Def.'s Mot, at 51:6-15.) Nonetheless, neither Trooper Kirkpatrick nor Deputy Vinson had any opinion as to whether the identified violations had any impact on the accident that killed Ms. McComb. Specifically, Kirkpatrick testified that he did not know whether either the loose brake chamber or the out-of-adjustment trailer brakes affected the stopping ability of the Bugarin truck; and Vinson could not offer an opinion as to whether these brake  [**7] issues impacted Bugarin's ability to stop or whether any of the violations discovered on the truck had played a causal role in the accident. (Def.'s 56.1 ¶¶ 31-32, 35-36.) Bugarin, for his part, testified that he did not notice anything wrong with his truck's brakes while driving that night. (Id. ¶ 13.) Vinson's report also concluded that neither weather, road conditions, Bugarin's speed, nor McComb's car played any role in causing the collision.

III. Central Steel's Selection of Shandy & Bugarin

Shandy is one of several common carriers used by Central Steel to haul loads between its various locations in the Midwest, including the facilities in Portage, Indiana and Milwaukee, Wisconsin. (Id. ¶ 10.) Over the course of a 20-year business relationship, Shandy's drivers have hauled between 12,000 and 20,000 loads for Central Steel. (Id. ¶ 9.) Each of Shandy's drivers, including Bugarin, operate as independent contractors, working pursuant to full-time leases under Shandy's motor carrier operating authority (USDOT #235110). (Id. ¶ 6.) Central Steel's process for evaluating the competency of its potential carriers includes the investigation of their insurance coverage, their current operating  [**8] authority status, and their Federal Motor Carrier Safety Administration ("FMCSA") safety rating. (Id. ¶ 11.) Specifically, Central Steel requires all of its carriers to maintain the highest FMCSA rating: "satisfactory." (Id. ¶ 12.) As of December 28, 2010, Shandy carried a "satisfactory" FMCSA rating (although that rating was, at that point, ten years old 2), and it was authorized by that organization to operate on the nation's roadways. (Id. ¶ 7-8; Pl.'s 56.1 ¶ 9.)

Through the end of 2010, the FMCSA also maintained a separate safety assessment program known as "SafeStat."3 Developed in 1997, SafeStat provided real-time motor carrier safety data via the FMSCA website. (Pl.'s 56.1 ¶¶ 4-5.) SafeStat ratings were percentile-based safety measures for carriers relative to their peers across various Safety Evaluation Areas ("SEAs"), such as driver fitness, crash data, and vehicle maintenance. (FMCSA Web site, Ex. 19 to Def.'s Resp.) Overall SafeStat Scores were assigned only to carriers who were deficient (defined as falling within the bottom quartile) in at least two SEAs. (Id.) Given that SEA values reflected carriers'  [**9] performance relative to their peers, the FMCSA  [*681]  posted the following warning on its website:

Because of State data variations, FMCSA cautions those who seek to use the SafeStat data analysis system in ways not intended by the FMCSA. Please be aware that use of the SafeStat for purposes other than identifying and prioritizing carriers for FMCSA and state safety improvement and enforcement programs may produce unintended results and not be suitable for certain uses.

(Def.'s Mot. at 17.) Nonetheless, Plaintiff highlights that, from February 28, 2008 to December 28, 2010, Shandy's vehicle maintenance SEA value was "consistently deficient," and its rating was 81.23 4 on December 17, 2010. (Pl.'s 56.1 ¶ 7.) Neither party has submitted information concerning Shandy's other SEA values. Central Steel checked carriers' FMCSA rankings, but admits it did not check their SafeStat scores; Defendant also points out, however, that FMCSA ratings are "the exclusive means used by the U.S. Secretary of Transportation in determining whether a motor carrier is qualified (from a safety perspective) to operate in interstate commerce." (Def.'s 56.1 ¶¶ 10-11; Def.'s Mot. at 16 (citing 49 C.F.R. § 385.13).)

IV. This Lawsuit

McComb filed the instant suit against several defendants, including Shandy, Bugarin, and Central Steel, on January 13, 2011 [1]. Plaintiff's third amended complaint [63] included two counts against Central Steel: Count V alleged liability for negligent selection, while Count VI sought punitive damages for the conduct of Count V. Central Steel moved to dismiss both counts [71], later withdrawing its motion with regards to Count V. The court granted Central Steel's motion and dismissed Count VI [80], because Illinois law does not allow for decedents' next of kin to recover punitive damages. Plaintiff subsequently filed his fourth amended complaint [83], seeking damages from Central Steel for wrongful death based on liability stemming from the alleged wrongful selection of Shandy and Bugarin as  [**11] Defendant's independent contractors.

DISCUSSION

I. Summary Judgment Standard

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "To determine whether genuine issues of material fact exist, we ask if 'the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Adeyeye v. Heartland Sweeteners, LLC, 721 F.3d 444, 449 (7th Cir. 2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). In determining the existence of material facts, the court must examine the evidence and draw all reasonable inferences in the light most favorable to the nonmoving party. Righi v. SMC Corp., 632 F.3d 404, 408 (7th Cir. 2011).

II. Negligent Selection

Plaintiff has sued Central Steel for damages under the Illinois Wrongful Death Act due to injuries caused by Shandy and Bugarin, Defendant's shipping contractors. Generally speaking, a principal  [*682]  is not liable for the acts of its independent contractors. Horwitz v. Holabird & Root, 212 Ill. 2d 1, 9, 816 N.E.2d 272, 276, 287 Ill. Dec. 510 (Ill. 2004)  [**12] (citing Gomien v. Wear-Ever Aluminum, Inc., 50 Ill. 2d 19, 21, 276 N.E.2d 336, 338 (Ill. 1971)). Under Illinois law—which follows § 411 of the Restatement (Second) of Torts—a principal may be held liable under a theory of negligent selection for injuries caused by its independent contractor where the principal was negligent in hiring the contractor in the first place. See Restatement (Second) of Torts § 411; see also Gomien, 50 Ill. 2d at 22-23, 276 N.E.2d at 338 (relying on § 411); Alvis v. City of Du Quoin, 406 Ill. App. 3d 1226, 998 N.E.2d 722, 376 Ill. Dec. 180, 2011 WL 10500871, at *6 (Ill. App. Ct. 5th Dist. 2011) ("The negligent hiring of a contractor in Illinois is governed by section 411 of the Restatement (Second) of Torts[.]"). "An action for negligent hiring or retention of an employee requires the plaintiff to plead and prove (1) that the employer knew or should have known that the employee had a particular unfitness for the position so as to create a danger of harm to third persons; (2) that such particular unfitness was known or should have been known at the time of the employee's hiring or retention; and (3) that this particular unfitness proximately caused the plaintiff's injury." Doe v. BSA, 2014 IL App (2d) 130121, 378 Ill. Dec. 667, 4 N.E.3d 550, 2014 WL 274426, *8 (Ill. App. Ct. 2d Dist. 2014) [**13]  (quoting Van Horne v. Muller, 185 Ill 2d 299, 310, 705 N.E.2d 898, 904, 235 Ill. Dec. 715 (Ill. 1998)); see also Restatement (Second) of Torts § 411 cmt. b ("The employer of a negligently selected contractor is subject to liability . . . for physical harm caused by his failure to exercise reasonable care to select a competent and careful contractor, but only for such physical harm as is so caused. In order that the employer may be subject to liability it is, therefore, necessary that harm shall result from some quality in the contractor which made it negligent for the employer to entrust the work to him.").

Here, Plaintiff claims that Central Steel knew or should have known that Shandy and Bugarin were "incompetent, unsafe, and unfit to haul Central Steel's loads" due to the fact that they "had been assigned a deficient safety rating by the FMCSA for vehicle maintenance." (4th Am. Compl., Count V, ¶ 22; Pl.'s Resp. at 22-24.) McComb further alleges that Defendant's failure to "sufficiently inquire" into Shandy's and Bugarin's competence as carriers was the proximate cause of his daughter's death and, therefore, Central Steel is liable to McComb  [**14] for damages under the Illinois Wrongful Death Act. (4th Am. Compl., Count V, ¶¶ 24, 31 (citing 740 ILCS § 180/1).) Under Illinois law, assuming Plaintiff establishes Shandy's and Bugarin's incompetence, Central Steel would be liable for any injuries proximately caused by its contractors' poor vehicle maintenance. The court will address the third element of Plaintiff's claim (i.e., proximate cause) first, as it is dispositive.

The term "proximate cause" encompasses two distinct requirements: cause in fact and legal cause. Young v. Bryco Arms, 213 Ill. 2d 433, 446, 821 N.E.2d 1078, 1085, 290 Ill. Dec. 504 (Ill. 2004) (citing Lee v. Chicago Transit Authority, 152 Ill. 2d 432, 455, 605 N.E.2d 493, 178 Ill. Dec. 699, (Ill. 1992)). The first requirement, cause in fact, is present "when there is a reasonable certainty that a defendant's acts caused the injury or damage." Id. In deciding this question, the court asks whether the injury would have occurred absent the defendant's conduct. The second requirement, legal cause, is established only if the defendant's conduct is "so closely tied to the plaintiff's injury that he should be held legally responsible for it." Simmons v. Garces, 198 Ill. 2d 541, 558, 763 N.E.2d 720, 732, 261 Ill. Dec. 471 (2002)  [**15]  [*683]  (quoting McCraw v. Cegielski, 287 Ill. App. 3d 871, 873, 680 N.E.2d 394, 396, 223 Ill. Dec. 661 (1996)). This is a question of policy: "how far should a defendant's legal responsibility extend for conduct that did, in fact, cause the harm?" City of Chicago v. Beretta U.S.A. Corp., 213 Ill. 2d 351, 395, 821 N.E.2d 1099, 1127, 290 Ill. Dec. 525 (Ill. 2004) (citing Simmons, 198 Ill. 2d at 558, 763 N.E. 2d at 732). Although proximate cause is generally a question of fact, where the facts alleged do not sufficiently demonstrate both cause in fact and legal cause, the lack of proximate cause may be determined by the court as a matter of law. Beretta, 213 Ill. 2d at 395-96, 821 N.E.2d at 1127-28 (citing Simmons, 198 Ill. 2d at 558, 763 N.E.2d at 732).

As Central Steel points out, Plaintiff has failed to offer any evidence that Defendant's contractors' particular incompetence (i.e., poor vehicle maintenance) was actually to blame for McComb's damages. (Def.'s Reply at 24.) In fact, McComb actively disavows that a brake failure caused the accident, clarifying that he "has not alleged that the application of deficient brakes is the cause of this collision." (Pl.'s Resp. at 27 (emphasis in original).)5 Relying instead on a misunderstanding  [**16] of Illinois's law of negligent selection, Plaintiff argues that, because "the tractor and trailer involved in the collision should not have been on the road in the first place due to its vehicle deficiencies" (Pl.'s Sur-Reply at 13), McComb "only needs to show that there is a question as to whether Central Steel knew, or in the exercise of reasonable care should have known, that Shandy and Bugarin was an incompetent, unsafe, or unfit motor carrier" based on their poor vehicle maintenance scores. (Pl.'s Resp. at 26.)

In support of the argument that Defendant's "selecting an incompetent and unfit motor carrier . . . was the direct and proximate cause of Giselle's tragic death" (Pl.'s Resp. at 27 (emphasis in original)), Plaintiff cites three cases that, like this one, involved negligent selection claims by victims  [**17] of car accidents caused by independent contractors driving tractor-trailers. None of the cases Plaintiff cites were decided under Illinois law. Further, in all three, the damages caused by the incompetent contractors were related to the characteristic that rendered him incompetent to begin with. See L. B. Foster Co. v. Hurnblad, 418 F.2d 727, 727-28, 730 (9th Cir. 1969) (affirming jury verdict for plaintiff who alleged liability for negligent selection where contractor had a history of using unsafe equipment and the accident was caused by a brake failure); Hudgens v. Cook Ind., Inc., 1973 OK 145, 521 P.2d 813, 814-15 (Okla. 1974) (reversing summary judgment for defendant where plaintiff alleged that defendant had negligently selected a trucking company that used "defective and unsafe equipment" and the investigating officer testified that the accident was caused, in part, by slick, threadbare tires on both the trailer and the driving axle); Chinn v. Mark Transp., Inc., L-829-06, 2010 N.J. Super. Unpub. LEXIS 246, 2010 WL 374958 (N.J. Super. A.D. Feb. 4, 2010) ("We recognize that [the defendant] could be liable only if [the independent contractor]'s disqualification was the cause of the harm to plaintiffs.") (citing Restatement (Second) of Torts § 411 cmt. b).  [**18] These cases offer no support for Plaintiff  [*684]  here, where the condition of the truck did not cause the accident.

The deposition testimony McComb cites does not alter this conclusion. First, Plaintiff offers the testimony of Dr. Thomas M. Corsi, an expert in liability and transportation, who suggests that Defendant never should have hired the contractors because of their low SafeStat scores for poor vehicle maintenance. Corsi went on to testify that if Bugarin had never been hired by Central Steel, he would not have been hauling Defendant's goods on December 28, 2010, and, therefore, he could not have collided with Ms. McComb's vehicle. (Pl.'s Sur-Reply [120] at 12-13.)6 Second, McComb argues that Shandy's and Bugarin's poor vehicle maintenance prevented them from identifying problems with Bugarin's truck that, if spotted, would have kept it off the road that night. (Pl.'s Reply at 26-28.) As Plaintiff points out, even Bugarin admits that he would not have driven his truck if he had known that a brake chamber required maintenance. (Bugarin Dep., Ex. C to Def.'s Mot., at 129:5-8.)

Both of these theories are insufficient to establish causation, however, as they require an extension of Defendant's liability far beyond the reach of its actual culpability. In the first theory, Plaintiff focuses on the error in Defendant's decision to hire allegedly incompetent contractors, while ignoring the issue of what, if any, role their particular unfitness played in the accident that killed Ms. McComb. McComb relies on Dr. Corsi's testimony to establish that Central Steel should not have hired Shandy and  [**20] Bugarin and that these contractors' vehicle struck and killed Plaintiff's daughter. Although this establishes a connection between Bugarin's hiring and Ms. McComb's death, that connection does not constitute a legal cause. There is, of course, a literal sense in which anything that happens that would not have happened "but for" a prior event is causally connected to that event. Cf. Gavin v. AT&T Corp., 464 F.3d 634, 639 (7th Cir. 2006) (observing that parties to a securities fraud would not have existed, absent the Big Bang). But to prove a negligent selection claim, there must be a showing that the contractor's particular incompetence caused the accident. Plaintiff has not made such a showing here. Instead, he appears to conflate the broad liability that attaches vicariously to employers for their employees' actions (i.e., respondeat superior) with the narrower direct liability that principals face for negligently selecting independent contractors.7

 [*685]  McComb's second narrative of causation similarly argues for liability that is overbroad. Under this theory, Central Steel's selection of its contractors was the proximate cause of this deadly accident if Bugarin's truck suffered from any defect that should have kept it off the road that night, regardless of the defect's contribution to the wreck. For instance, based on McComb's logic, even if Bugarin's truck had been in perfect working condition on December 28, 2010 except for a burned out taillight or a loud muffler—either of which would have made the vehicle unlawful to drive in Illinois 8 —Central Steel's selection of its contractors was the proximate cause of Ms. McComb's death. But even assuming that Defendant's conduct was not too remote to establish it as the legal cause of Plaintiff's injury,  [**22] Plaintiff has failed to show that Central Steel's selection of its contractors was even a "but for" cause of Ms. McComb's death. As noted above, Plaintiff explicitly denies that any mechanical issue with the brakes caused the collision (Pl.'s Resp. at 27), a denial that is supported by Deputy Vinson's conclusion that the lack of traffic lights were the only "major contributing cause" of the accident. (Def.'s ¶ 34.) Thus, the only way in which McComb claims that the contractors' poor maintenance work caused the accident is that a better contractor would have detected the defects in Bugarin's tractor-trailer and taken it out of service for repairs on the night of the accident. Yet, this hypothetical chain of events relies, without any justification, on one of two assumptions: (1) that an adequate contractor would not have discovered any issues with Bugarin's rig early enough to repair it in time for Bugarin to make his run from Portage, Indiana as scheduled; or (2) if the tractor tailor was not fixed in time, that an adequate contractor would have chosen not to put another rig on the road—one which, had it departed at the same time, might well have been involved in the same accident.

Each of the aforementioned deficiencies in McComb's arguments for causation point to the same conclusion: Plaintiff has failed to establish that Defendant's selection of allegedly incompetent contractors was the proximate cause of the unfortunate events of December 28, 2010. Accordingly, Defendant is entitled to summary judgment as a matter of law, and the court need  [**24] not explore the other issues presented in this case.

CONCLUSION

For the foregoing reasons, Defendant Central Steel's motion for summary judgment [108] is granted.

ENTER:

Dated: February 26, 2014

/s/ Rebecca R. Pallmeyer

REBECCA R. PALLMEYER

United States District Judge

End of Document

1 Plaintiff failed to comply with Local Rule 56.1. Rather than, as is required, affirming or denying each paragraph of Central Steel's statement, McComb simply offered his own version of events without reference to Defendant's. N.D.  [**4] Ill. LR.56.1(b) ("Each party opposing a motion filed pursuant Fed. R. Civ. P. 56 shall serve . . . a concise response to the movant's statement that shall contain . . . a response to each numbered paragraph in the moving party's statement[.]"). As a result, the court's factual background will cite to both parties' statements where appropriate. Where the court was able to identify a disagreement between the parties' facts, it refers to both.

2 The parties do not explain whether the age of that rating is significant.

3 SafeStat  [**10] was replaced by a new program known as "Compliance, Safety, Accountability" or "CSA" at the end of 2010. (Def.'s Mot. at 16n.1.)

4 An SEA value of 1 indicated the top-rated carrier for that evaluation area, while an SEA of 100 would indicate the worst-rated carrier. Thus, Shandy's 81.23 rating reflected that 81.23% of carriers had higher scores for vehicle maintenance at that time.

5 There is a shred of evidence that Bugarin's loose brake chamber at least contributed to the collision. (See Kirkpatrick Dep., Ex. G to Def.'s Mot, at 51:6-15 ("Q: Okay. And what did you determine could be a contributory cause [of the December 28, 2010 accident]? . . A: Improperly adjusted brakes.").) Plaintiff has not made this argument, however, and in fact has disavowed it.

6 Plaintiff argues that the testimony of Dr. Thomas M. Corsi provides the necessary evidence that "Shandy/Bugarin's  [**19] SafeStat percentile score for vehicle maintenance was the proximate case of his injury." (Pl.'s Sur-Reply at 12.) Specifically, Plaintiff quotes the following portion of Dr. Corsi's deposition testimony:

Q: It's your opinion because Shandy had a high vehicle maintenance score in December of 2010 that nobody should have hired Shandy, right?

A: Yes.

. . .

Q: It's your opinion that this accident would not have occurred if Central Steel didn't hire Shandy, right?

A: Yes.

. . .

Q: Doctor, do you feel that a shipper such as Central Steel, if it had done its homework and checked these scores, wouldn't hire a company like Shandy?

A: Yes.

(Corsi Dep., Ex. B. to Def.'s Reply, at 77:23-81:23.)

7 For example, under Plaintiff's interpretation of negligent selection, wherever a principal hires a contractor that, for any reason, is incompetent for the task at hand, the principal would be liable for any harm the contractor causes in  [**21] the principal's service, regardless of the incompetence's connection to the harm. This is clearly inconsistent with Illinois law. See Restatement (Second) of Torts § 411 cmt. b ("In order that the employer may be subject to liability it is, therefore, necessary that harm shall result from some quality in the contractor which made it negligent for the employer to entrust the work to him.").

8 Chapter  [**23] Twelve of the Illinois Vehicle Code identifies the equipment required of each vehicle operating on the state's roads. It is illegal to drive any vehicle that lacks any required part. See 625 ILCS § 5/12-101 ("It is unlawful for any person to drive . . . any vehicle . . . which does not contain those parts . . . as required in this Chapter."). Tail lamps and "adequate mufflers" are two of the parts required by the Code. Id. §§ 5/12-201 ("Every motor vehicle, trailer, or semi-trailer shall also exhibit at least 2 lighted lamps, commonly known as tail lamps, which shall be mounted on the left rear and right rear of the vehicle so as to throw a red light visible for at least 500 feet[.]"), 602 ("Every motor vehicle driven or operated upon the highways of this State shall at all times be equipped with an adequate muffler [.]").

Dolter v. Keene's Transfer, Inc.

Dolter v. Keene's Transfer, Inc.

United States District Court for the Southern District of Illinois

August 5, 2008, Decided; August 5, 2008, Filed

Case No:3:08-cv-262-JPG/DGW

Reporter

2008 U.S. Dist. LEXIS 59436 *; 2008 WL 3010062

MICHAEL DOLTER, Personal Representative of The Estate of Cathie Ann Dolter, Plaintiff, vs. KEENE'S TRANSFER, INC., MARION BEATY, SCHNEIDER NATIONAL CARRIERS, INC., SCHNEIDER NATIONAL BULK CARRIERS, INC., SCHNEIDER NATIONAL LEASING, INC., AFJ, LLC, FLYING J, INC., d/b/a "Flying J Travel Plaza", DEAN OLDENKAMP, BEKINS VAN LINES, LLC and UNKNOWN ENTITIES, Defendants.

Prior History: Dolter v. Keene's Transfer, Inc., 2008 U.S. Dist. LEXIS 59802 (S.D. Ill., July 28, 2008)

Core Terms

carrier, allegations, driver, lease, transport, notice, dual

Counsel:  [*1] For Michael Dolter, Personal Representative of the Estate of Cathie Ann Dolter, Plaintiff: Edward R. Bradley, LEAD ATTORNEY, Bradley Law Firm, Louisiana, MO.

For Keene's Transfer, Inc., Marion Beaty, Defendants: Ted L. Perryman, LEAD ATTORNEY, Roberts, Perryman et al., Generally Admitted, Belleville, IL.

For Schneider National Carriers, Inc., Schneider National Bulk Carriers, Inc., Schneider National Leasing, Inc., Defendants: Michael Reda, LEAD ATTORNEY, Hepler Broom et al. - Edwardsville, Edwardsville, IL.

For AFJ, LLC, Flying J Inc, doing business as Flying J Travel Plaza, Dean Oldenkamp, Defendants: Richard B. Korn, LEAD ATTORNEY, Fox, Galvin LLC, Generally Admitted, St. Louis, MO; Bart C. Sullivan, Fox Galvin, LLC - St. Louis, Generally Admitted, St. Louis, MO.

For Bekins Van Lines, LLC, Defendant: Ted L. Perryman, Roberts, Perryman et al., Belleville, IL.

Judges: J. Phil Gilbert, United States District Judge.

Opinion by: J. Phil Gilbert

Opinion

MEMORANDUM AND ORDER

Now before the Court are the motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by defendants Schneider National Leasing, Inc. (Doc. 9), Schneider National Bulk Carriers, Inc. (Doc. 10) and Schneider National Carriers, Inc.  [*2] (Doc. 11) (collectively, the "Schneider defendants"). The plaintiff has responded to the motions (Docs. 40, 41 & 42), and the Schneider defendants have filed a joint reply to those responses (Doc. 47).

I. Dismissal Standard

When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197, 2200, 167 L. Ed. 2d 1081 (2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007)). To avoid dismissal under Rule 12(b)(6) for failure to state a claim, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In Bell Atlantic, the Supreme Court held that this requirement is satisfied if the complaint (1) describes the claim in sufficient detail to give the defendant "'fair notice of what the . . . claim is and the grounds upon which it rests,'" Bell Atlf., 127 S. Ct. at 1964 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)), and (2) contains factual allegations that plausibly suggest the plaintiff has a right to relief "above the speculative level," Bell Atl., 127 S. Ct. at 1965.

In Bell Atlantic, the Supreme Court rejected Conley v. Gibson's  [*3] more expansive interpretation of Rule 8(a)(2) that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," Conley, 355 U.S. at 45-46. Bell Atlantic, 127 S. Ct. at 1968; EEOC v. Concentra Health Servs., 496 F.3d 773, 777 (7th Cir. 2007). Now "it is not enough for a complaint to avoid foreclosing possible bases for relief; it must actually suggest that the plaintiff has a right to relief . . . by providing allegations that 'raise a right to relief above the speculative level.'" Concentra Health Servs., 496 F.3d at 777 (quoting Bell Atl., 127 S. Ct. at 1965).

Nevertheless, Bell Atlantic did not do away with the liberal federal notice pleading standard. Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007) (citing Erickson v. Pardus, 551 U.S. 89, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007)). A complaint still need not contain detailed factual allegations, Bell Atl., 127 S. Ct. at 1964, and it remains true that "[a]ny district judge (for that matter, any defendant) tempted to write 'this complaint is deficient because it does not contain . . .'  [*4] should stop and think: What rule of law requires a complaint to contain that allegation?" Doe v. Smith, 429 F.3d 706, 708 (7th Cir. 2005) (emphasis in original). Nevertheless, a complaint must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic, 127 S. Ct. at 1965. If the factual detail of a complaint is "so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is entitled under Rule 8," it is subject to dismissal. Airborne Beepers, 499 F.3d at 667.

II. Alleged Facts

The allegations in the complaint establish the following relevant facts for the purposes of this motion.

Around 6 p.m. on January 21, 2008, Cathie Ann Dolter and plaintiff Michael Dolter, her husband, visited the Flying J Plaza truck stop in Granite City, Illinois. While Cathie Ann Dolter was walking across the parking lot she was struck from behind by a tractor-trailer driven by defendant Marion Beaty ("Beaty"). She died several hours later.

The truck tractor Beaty was driving was licensed to defendant Keene Transfer, Inc. ("Keene") and was towing a trailer owned by one of the Schneider defendants  [*5] but leased to Keene. At the time, each of the Schneider defendants was engaged in the business of interstate trucking and shipment. Beaty was a Keene employee and was acting within the scope of his employment at the time of the accident.

Dolter filed this lawsuit against a variety of entities, including Beaty, Keene and the Schneider defendants. He alleges the Schneider defendants are liable for Beaty's negligence because each of them was a "statutory employer" of Beaty and had a duty to control leased equipment operated for its benefit. The plaintiff also alleges Beaty was acting as an agent for the Schneider defendants. The Schneider defendants ask the Court to dismiss the claims against them on the grounds that they are barred by 49 U.S.C. § 30106(a) and that the complaint fails to state a claim based on statutory employment.

III. Analysis

All parties agree that 49 U.S.C. § 30106(a) 1 bars liability based solely on the fact that the Schneider defendants owned the trailer hauled by the rig involved in the accident. However, Dolter argues that the Schneider defendants are liable because Beaty was their agent or statutory employee.

A. Agency

Dolter alleges that Beaty was acting as an agent for the Schneider defendants. It is true that state law of agency can provide a basis for holding a trailer owner vicariously liable for the acts of others in the scope of their authority. See, e.g., Schramm v. Foster, 341 F. Supp. 2d 536 (D. Md. 2004). In Schramm, the court confirmed that a driver may act as an agent for another and thereby subject the other to liability for his conduct within the scope of his agency under a respondeat superior theory of liability. Id. at 543. This is true whether the agency is express  [*7] or implied. Id.

"Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Restatement (Second) of Agency ("Restatement") § 1 (1958). "A master-servant relationship is a form of agency in which the master employs the servant as 'an agent to perform service in his affairs' and 'controls or has the right to control the physical conduct of the other in the performance of the service.'" General Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 392, 102 S. Ct. 3141, 73 L. Ed. 2d 835 (1982) (citing Restatement § 2).

Dolter has not sufficiently pled an agency relationship. It is true that Dolter gives the Schneider defendants fair notice in the complaint that he claims Beaty was their agent. However, no facts alleged in the complaint plausibly suggest that such a legal relationship exists such that Dolter might have a claim for relief against the Schneider defendants on an agency theory. A complaint must contain more than labels and conclusions, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007), but that is all Dolter has provided to establish the existence of  [*8] an agency relationship. In the absence of any supporting facts plausibly suggesting an agency relationship, the plaintiff's assertion of such a relationship does not rise above the level of speculation. Therefore, the complaint fails to state a claim for liability against the Schneider defendants on an agency theory.

B. Statutory Employment

Dolter also asserts a theory of "statutory employment." "Statutory employment" is a theory under which employer liability is imposed even when an employment relationship does not technically exist. Often such a relationship stems from Federal Motor Carrier Safety Administration regulation 49 C.F.R. § 376.12(c)(1). That regulation requires motor carriers who lease vehicles from others to "have exclusive possession, control, and use of the equipment for the duration of the lease" and to "assume complete responsibility for the operation of the equipment for the duration of the lease." 49 C.F.R. § 376.12(c)(1). This regulation gives carrier lessees an incentive to assure the vehicles they lease are safely operated. See Alford v. Major, 470 F.2d 132, 134 (7th Cir. 1972). Under this regulation, the carrier lessee is vicariously liable as a matter of law  [*9] for a driver's acts in driving the vehicle even if the driver is not an employee of the carrier lessee under state law employment principles such that the common law theory of responde at superior applies. Simmons v. King, 478 F.2d 857, 867 (5th Cir. 1973)

This "statutory employment" theory cannot be used to hold the Schneider defendants liable for Beaty's or Keene's acts or omissions. Such a theory imposes liability on carriers who lease equipment, not on the equipment owners. Thus, while it is possible that Keene may be liable for Beaty's conduct under a "statutory employment" theory, the Schneider defendants will not be.

Dolter does not disagree with the foregoing analysis. Instead, he argues that Beaty could be a dual employee, that is, an employee of Keene and the Schneider defendants at the same time. Dolter cites Dealer's Transport Co. v. Werner Transportation Company, 203 F.2d 549 (8th Cir. 1953), in support of his argument. In Dealer's Transport, the Court found that a tractor-trailer driver was a dual employee of two transport companies that were jointly involved, either in a joint enterprise or as joint adventurers, in transport activities. Id. at 554. This case is distinguishable  [*10] from Dealer's Transport, however, because the complaint does not allege dual employment liability or any kind of joint transport activity, does not give the Schneider defendants fair notice of what a dual employment theory of liability could be based on, and does not allege facts plausibly suggesting such a dual employment exists.

The plaintiff also argues that statutory and regulatory definitions demonstrate a statutory employment relationship. He notes that Beaty qualifies as an "employee" under 46 C.F.R. § 390.5 2, and that the Schneider defendants are "motor carriers" under 49 U.S.C. § 13102(14). 3 Dolter again cites Schramm v. Foster, 341 F. Supp. 2d 536 (D. Md. 2004), in support of his argument. In Schramm, a broker contracted with a carrier to haul a load of goods for a third party, and the tractor driver, an employee of the carrier, was in an accident that injured others. The court examined whether the broker was a statutory employer of the driver such that it would be liable for the driver's negligent conduct. Id. at 548-49. The court noted that the driver qualified as an "employee" under 46 C.F.R. § 390.5 but found that in the particular transaction at issue the broker was  [*11] not functioning as a carrier. Id. at 549-50.

Schramm is not helpful except to the extent it holds that each situation must be examined on its own facts. Id. In the case at bar there is no dispute whether the Schneider defendants are brokers or carriers; it is clear they are carriers. Instead, the issue is whether, considering the specific allegations, the facts plausibly suggest the Schneider defendants were Beaty's statutory employers at the time of the accident. They do not. There is no suggestion that the Schneider defendants participated in the arrangement that resulted in Beaty's hauling the load for Keene such that Beaty could be considered the Schneider  [*12] defendants' statutory employee. There can be no liability simply because a driver is someone's employee and a transport business is a motor carrier where there is no connection between the "employee" and the carrier regarding the particular transaction in issue.

Because the facts in the complaint do not plausibly suggest an agency relationship or a statutory employment relationship, the complaint is insufficient under Bell Atlantic.

IV. Conclusion

For the foregoing reasons, the Court GRANTS the Schneider defendants' motions to dismiss (Docs. 9, 10 & 11) and DISMISSES Counts X through XVIII without prejudice. The Court dismisses these claims without prejudice because it appears the plaintiff may be able to plead a set of facts plausibly suggesting relief is available from the Schneider defendants, although he failed to do so in the original complaint. The Court ORDERS that the plaintiff shall have up to and including August 22, 2008, to amend his complaint to allege such facts. Should he fail to amend his complaint by August 22, 2008, the Court will construe that failure as an admission that sufficient facts cannot be pled and will dismiss Counts X through XVIII with prejudice.

IT IS SO  [*13] ORDERED.

DATED: August 5, 2008.

/s/ J. Phil Gilbert

J. Phil Gilbert

United States District Judge

End of Document

1 49 U.S.C. § 30106(a) states:

An owner of a motor vehicle  [*6] that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner), for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if--

(1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and

(2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner).

2 49 C.F.R. § 390.5 state, in pertinent part,

Employee means any individual, other than an employer, who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and a freight handler.

3 49 U.S.C. § 13102(14) defines a motor carrier as "a person providing motor vehicle transportation for compensation."

Brettman v. M&G Truck Brokerage, Inc.

Brettman v. M&G Truck Brokerage, Inc.

Appellate Court of Illinois, Second District

January 17, 2019, Opinion Filed

No. 2-18-0236

Reporter

2019 IL App (2d) 180236 *; 127 N.E.3d 880 **; 2019 Ill. App. LEXIS 24 ***; 431 Ill. Dec. 347 ****

DEREK BRETTMAN, Individually and as Guardian of GINA BRETTMAN, a Disabled Person, Plaintiff-Appellant, v. M&G TRUCK BROKERAGE, INC., and TEXANA PICKLE PRODUCERS, INC., Defendant-Appellees.

Subsequent History: Appeal denied by Brettman v. M&G Truck Brokerage, Inc., 2019 Ill. LEXIS 540, 429 Ill. Dec. 275, 124 N.E.3d 471, 2019 WL 2237005 (Ill., May 22, 2019)

Prior History:  [***1] Appeal from the Circuit Court of McHenry County. No. 15-LA-76. Honorable Thomas A. Meyer, Judge, Presiding.

Brettman v. M&G Truck Brokerage, Inc., 2018 IL App (2d) 180236-U, 2018 Ill. App. Unpub. LEXIS 2309 (Dec. 21, 2018)

Disposition: Affirmed.

Core Terms

driver, delivery, negligent hiring, load, hired, contractor, carrier, agency relationship, contracted-for, broker, trip, summary judgment, posttermination, retention, haul, truck, terminated, independent contractor, trial court, completion, cucumbers, driving, counts, deliver, proximate cause, shipment, traffic, speed, vicarious liability, reasonable care

Case Summary

Overview

HOLDINGS: [1]-The accident occurred after the tractor trailer's owner had completed its contract for delivery and after the freight broker ceased to exercise any control over it; [2]-At the time of the accident, the broker did not exercise any control over the owner so as to continue in an agency relationship; [3]-The broker could not longer inform the owner what to deliver, where to deliver it, what temperature to keep it at, or to stay in contact, and it could not tell the driver to rest, and the owner alone instructed and controlled the driver after the delivery; [4]-The work itself, delivering the cucumbers, was performed without incident, and it was the worker, not the work, who went on, post-termination, to injure a third-party; [5]-The contract terminated upon completion of the contracted-for task, and after the delivery, the owner had no remaining obligations to the broker.

Outcome

Judgment affirmed.

LexisNexis® Headnotes

Civil Procedure > ... > Summary Judgment > Evidentiary Considerations > Absence of Essential Element

Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes

Civil Procedure > ... > Summary Judgment > Burdens of Proof > Movant Persuasion & Proof

Civil Procedure > Appeals > Summary Judgment Review > Standards of Review

Civil Procedure > Appeals > Standards of Review > De Novo Review

HN1[]  Evidentiary Considerations, Absence of Essential Element

Summary judgment is proper where, when viewed in the light most favorable to the non-moving party, the pleadings, depositions, admissions, and affidavits on file reveal 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. While a plaintiff need not prove his entire cause during summary judgment, he must present some evidentiary facts to support the elements of his cause of action. If a plaintiff fails to establish even one element of the cause of action, summary judgment in favor of defendant is wholly proper. The appellate court reviews a grant of summary judgment de novo. And, the appellate court may affirm a grant of summary judgment for any reason that finds its basis in the record, regardless of whether the trial court exercised similar reasoning.

Business & Corporate Law > ... > Agents Distinguished > Independent Contractors, Masters & Servants > Independent Contractors

Business & Corporate Law > ... > Duties & Liabilities > Authorized Acts of Agents > Liability of Principals

HN2[]  Independent Contractors, Masters & Servants, Independent Contractors

The principal-agent relationship is an exception to the general rule that a plaintiff in a negligence action must seek a remedy from the person who caused the injury. Under the theory of respondeat superior, a principal is vicariously liable for the conduct of its agent, but not for the conduct of an independent contractor. In distinguishing between an agent and an independent contractor, the court must consider the level of control under which the agent or independent contractor operates. An agent voluntarily enters into a relationship whereby the principal has a right to control his conduct. An independent contractor undertakes to produce a certain result, but he is not under the control of the person for whom he does the work. The court is to consider whether there is a right to control the manner of work performance, regardless of whether that right is exercised. The court may consider the nature of the work performed in relation to the general business of the employer, the right to discharge, the method of payment, the provision of necessary tools, whether taxes are deducted from payment, and the level of skill required. No single factor is determinative.

Business & Corporate Law > Agency Relationships > Termination > Accomplishment of Purpose

HN3[]  Termination, Accomplishment of Purpose

An agent's actual authority may terminate upon the occurrence of circumstances under which the agent should reasonably conclude the principal would no longer assent to the agent's taking action on the principal's behalf. If the principal has engaged the agent for a particular task, its completion is such a circumstance.

Torts > ... > Elements > Causation > Causation in Fact

Torts > ... > Causation > Proximate Cause > Foreseeability of Harm

HN4[]  Causation, Causation in Fact

In a negligence action, the plaintiff must plead and prove: (1) the existence of a duty of care owed to the plaintiff by the defendant; (2) a breach of that duty; (3) an injury proximately caused by that breach; and (4) damages. Proximate cause has two components: cause in fact and legal cause. As to cause in fact, courts typically consider the but-for test or the substantial-factor test. The but-for test states that conduct cannot be a cause of an event if the event would have occurred without it. The substantial-factor test states that conduct is a cause of an event if it was a material element and a substantial factor in bringing about the event. As to legal cause, courts typically assess foreseeability. A court must consider whether the injury is one that a reasonable person would see as a likely result of his conduct, or whether the injury is so highly extraordinary that imposing liability is not justified. The question is one of policy—how far should a defendant's legal responsibility extend for conduct that did, in fact, cause the harm?

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN5[]  Negligent Hiring, Retention & Supervision, Elements

In an action for negligent hiring or retention of an employee, specifically, the plaintiff must plead and prove: (1) that the employer knew or should have known that the employee had a particular unfitness for the position so as to create a danger of harm to third persons; (2) that such particular unfitness was known or should have been known at the time of the employee's hiring or retention; (3) that this particular unfitness proximately caused the plaintiff's injury; and (4) damages. Further, the duty of care in selecting an independent contractor is that which a reasonable person would exercise under the circumstances.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN6[]  Negligent Hiring, Retention & Supervision, Elements

The common-law tort of negligent hiring or retention finds its basis in the Restatement (Second) of Torts § 411 (1965): One who employs an independent contractor to: (a) do work which involves risk of bodily harm unless it is skillfully and carefully done; or (b) perform a duty which the employer owes to third persons, is subject to liability for bodily harm caused by the failure to exercise reasonable care to employ a competent contractor. A "competent and careful contractor" is a contractor who possesses the knowledge, skill, experience, and available equipment which a reasonable man would realize that a contractor must have in order to do the work which he is employed to do without creating unreasonable risk of injury to others, and who also possesses the personal characteristics which are equally necessary, Restatement (Second) of Torts § 411 cmt. a, at 377 (1965). The Illinois Supreme Court has adopted section 411 of the Restatement.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

Torts > ... > Causation > Proximate Cause > Foreseeability of Harm

HN7[]  Negligent Hiring, Retention & Supervision, Elements

Proximate cause is typically a matter for the jury. However, if the facts alleged do not sufficiently demonstrate both cause in fact and legal cause, which involves policy considerations, the lack of proximate cause may be determined by a court as a matter of law. The definition of the cause of action of negligent hiring or retention centers on the work to be performed and whether the incompetent execution of that work caused harm to a third party. Again, in an action for negligent hiring or retention, the injury must have occurred by virtue of the servant's employment. The employer's liability attaches only where there was demonstrated some connection between the plaintiff's injuries and the fact of employment. An employer is subject to liability for harm to third persons caused by its failure to exercise reasonable care to employ a competent and careful contractor to do work that will involve a risk of harm unless that work is carefully done.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN8[]  Negligent Hiring, Retention & Supervision, Elements

As a matter of public policy, the courts have set a rigorous proximate-cause standard for the cause of action. The supreme court strongly implied that, to support a claim for negligent hiring or retention, the injury must have occurred while the independent contractor was directly involved in the performance of the contracted-for work, as opposed to an act collateral to the work for which the contractor was engaged.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN9[]  Negligent Hiring, Retention & Supervision, Elements

The law of negligent hiring and retention in this state appears to afford little scope for liability for posttermination acts of employees. The court considers first the following representative statement of the tort: Liability for negligent hiring arises only when a particular unfitness of an applicant creates a danger of harm to a third person which the employer knew, or should have known, when he hired and placed this applicant in employment where he could injure others. This language suggests that the purpose of the tort is to prevent injuries that occur during the term of employment and, consequently, suggests that the employer's duty of care does not extend beyond the cessation of employment.

Torts > Business Torts > Negligent Hiring, Retention & Supervision > Elements

HN10[]  Negligent Hiring, Retention & Supervision, Elements

An employer may be liable for out-of-the-scope acts, but only where the employee is on the employer's premises or using the chattel of the employer and the employer has reason to know of the need and opportunity for exercising control over the employee. As no authority exists for posttermination liability, and as out-of-scope liability is extremely limited, Illinois law and policy have demonstrated a rigorous standard of proximate causation in the context of negligent hiring or retention cases. Under this strict concept of causation, if the injury occurs after the actor's employment has ended, then a fortiori the injury cannot be connected to that employment. What plaintiff seeks is a broadening of liability as currently recognized by Illinois law.

Civil Procedure > ... > Summary Judgment > Entitlement as Matter of Law > Appropriateness

HN11[]  Entitlement as Matter of Law, Appropriateness

Summary judgment is a drastic remedy to be awarded only where the right of the movant is clear and free from doubt.

Counsel: Milo W. Lundblad and Jerome A. Urbik, of Brustin & Lundblad, Ltd., of Chicago, for appellant.

James P. Crawley and Gerald A. Kennedy, of Kennedy & Associates, PC, of Chicago, for appellee M&G Truck Brokerage, Inc.

Michael D. Sanders and Kingshuk K. Roy, of Purcell & Wardrope, Chtrd., of Chicago, for other appellee.

Judges: JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Justices Burke and Hudson concurred in the judgment and opinion.

Opinion by: JORGENSEN

Opinion

 [****350]  [**883]   JUSTICE JORGENSEN delivered the judgment of the court, with opinion.

Justices Burke and Hudson concurred in the judgment and opinion.

OPINION

[*P1]  Plaintiff, Derek Brettman, individually and as guardian of Gina Brettman, appeals the trial court's grant of summary judgment to defendants, M&G Truck Brokerage, Inc., and Texana Pickle Producers, Inc., on four counts. Counts I and II were against M&G for negligence (vicarious liability) and negligent hiring. Counts III and IV were against Texana and were also for negligence (vicarious liability) and negligent hiring. For the reasons that follow, we affirm.

 [*P2]  I. BACKGROUND

 [*P3]  This matter arises out of a traffic accident between Gina Brettman and a tractor trailer driven by Isreal Vela, an employee of E.G.G. Trucking, which was owned by Efren Garcia (hereinafter collectively referred to as E.G.G., where appropriate). The accident occurred at a Huntley intersection that was under construction. It occurred [***2]  after Vela had delivered a load of cucumbers from Texana in Progresso, Texas, to a Kraft/Claussen pickling plant in Woodstock. M&G brokered the delivery of the cucumbers. Plaintiff filed a 27-count complaint against E.G.G., Kraft/Claussen, Texana, M&G, and various entities involved in the construction of the intersection, such as Brown Traffic Products and Siemen's Industry, Inc. Plaintiff reached settlements with many of these entities, including Kraft/Claussen and several of the construction entities. Plaintiff's action remains pending as to E.G.G. This appeal concerns M&G and Texana only, and the trial court has entered the requisite finding under Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016).

 [*P4]  Texana grows cucumbers in Texas and Mexico. It sells the cucumbers to processing facilities across the United States, such as the Kraft/Claussen plant in Woodstock. It is not a trucking company, does not own any commercial or semi-trucks, and does not have a department-of-transportation number or motor-carrier authority. It does not contract with trucking companies. Rather, it works with shipping brokers to arrange the shipments. (In 2010, four years before the accident, a part owner of Texana, Frank Gonzalez, left [***3]  Texana and became a part-owner at M&G. Members of the same, extended Gonzalez family work at both companies.)

 [*P5]  M&G is a Texas business entity that brokers freight delivery of products. M&G maintains a roster of 3000 carrier companies across the country, upon which it draws to arrange for the shipment of goods for its clients. To be on the roster, a carrier is required to submit a carrier information form, an insurance certificate,  [**884]  [****351]  a W-9 form, and its motor-carrier and department-of-transportation numbers. M&G does not have an exclusive contract with any of its carriers. It works with a number of carriers, just as each carrier works with a number of brokers. As such, M&G does not have a long-term contract with any of its carriers. Instead, each shipment load requires its own contract.

 [*P6]  E.G.G. is a licensed motor carrier. It owned the refrigerated trailer involved in the instant case. It also owned the tractor that pulled the trailer, and it paid for all of the maintenance and insurance for the equipment. E.G.G. hired Vela, who had been working for E.G.G. for 10 years.

 [*P7]  In August 2013, Texana entered into a contract with Kraft/Claussen to supply cucumbers for the 2013-14 season. Throughout [***4]  that season, Texana worked with 10 different brokerage companies to arrange for the shipment of its cucumbers. In turn, those 10 brokerage companies secured 100 different motor carriers to haul the cucumbers.

 [*P8]  On March 9, 2014, Texana contacted M&G, asking M&G to arrange the shipment at issue. M&G, in turn, chose E.G.G. to haul the load. M&G had been working with E.G.G. since 2007. In those seven years, M&G had selected E.G.G. to haul as many as 10 loads per month without incident.

 [*P9]  M&G took the following actions in brokering the load. It negotiated the freight and shipping charges. And, it negotiated its own commission on the shipping charges. After the delivery was completed, Texana would pay M&G the shipping charge. Then, M&G would pay E.G.G., after deducting its own commission. M&G advanced $1500 to E.G.G. to cover expenses in hauling the load, like gas.

 [*P10]  The contract between M&G and E.G.G. set forth certain instructions for the trip, such as the required temperature to keep the trailer. Kraft/Claussen chose the temperature and the deadline for delivery. Vela was to call M&G daily, before 10 a.m., or be subject to a $150 fine. He was also to call M&G if there was any delay that would [***5]  prevent him from delivering the load on time.

 [*P11]  Instructions aside, Vela testified in deposition that he conducted his own pre-trip inspection of the truck. He would address any problems with equipment without asking M&G for help. He chose what route to take, what speed to travel, and when to fuel up. He did not feel rushed over the course of the trip.

 [*P12]  E.G.G. paid Vela for executing the trip. It administered Vela's drug testing and provided his safety training. E.G.G. instructed Vela to pick up the load from Texana at approximately 11 a.m. on March 9, 2014. Vela was to deliver the load to Kraft/Claussen by 5 a.m. on March 14, 2014.

 [*P13]  After unloading the cucumbers at the Kraft/Claussen plant, Vela was no longer required to check in with M&G. E.G.G. instructed Vela to take Interstate 90 to the nearest truck stop to wait for a new load assignment, which could originate from M&G or a new broker. After delivering the load, about 25 miles from the Kraft/Claussen plant but before reaching Interstate 90, Vela collided with Brettman at an intersection. Vela was going straight, driving at the posted speed limit of 45 miles per hour, and Brettman was turning left with a green arrow. The intersection [***6]  was under construction, and Vela later stated that he was confused by the traffic control signals. Vela saw that the permanent traffic signals were covered, so he assumed there were no traffic controls for drivers traveling in his direction. At the last second, he saw a temporary traffic signal hung with wire over the intersection.  [**885]   [****352]  The temporary signal was red. He could not stop in time, and he collided with Brettman. Brettman suffered severe injuries as a result of the collision and filed the instant lawsuit.

 [*P14]  In the seventh amended complaint at issue here, the first four counts are relevant. In count I, plaintiff alleged negligence (vicarious liability) against M&G. Plaintiff theorized that E.G.G., with Vela as its driver and Garcia as its owner, were agents of M&G, because M&G imposed rules on driver conduct, thereby exercising a requisite degree of control to establish a principal-agent relationship. The agents were guilty of one of the following wrongful acts or omissions: failure to stop at a red light, failure to keep a reasonably careful lookout for other vehicles, failure to decrease speed, and driving too fast for conditions. As a result of these wrongful acts or omissions, [***7]  Vela's truck collided with Brettman's automobile, causing injury.

 [*P15]  In count III, plaintiff alleged the same, but against Texana.

 [*P16]  In count II, plaintiff alleged negligent hiring against M&G. He alleged that M&G had a duty to exercise reasonable care when it selected a carrier to haul the load at issue. In his view, the exercise of reasonable care included performing an independent investigation and background check on E.G.G. and Vela. Had M&G performed an adequate investigation, it would have discovered, inter alia, that E.G.G. was an unrated motor carrier and that Vela had a history of forging timesheets. M&G negligently hired a company it should have known to be unfit. The exercise of reasonable care in hiring also included supervising E.G.G. in the transportation and delivery of commercial product to Kraft/Claussen. M&G failed in this as well. As a result of these wrongful acts or omissions, Vela's truck collided with Brettman's automobile, causing injury.

 [*P17]  In count IV, plaintiff alleged the same, but against Texana.

 [*P18]  The parties proceeded to discovery, where the evidence established the facts discussed above. In addition, plaintiff retained Whitney Morgan to testify to a broker's duty [***8]  of care in selecting a trucking company. Morgan had worked for the U.S. Department of Transportation, enforcing regulations. Morgan reviewed the evidence in the case, including the deposition testimony of Vela and Garcia. In Morgan's view, brokers should contract only with carriers that have satisfactory ratings from the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA conducts compliance reviews to determine whether a carrier meets minimum safety standards. The FMCSA never conducted a compliance review on E.G.G., so E.G.G. was an "unrated" carrier. In Morgan's opinion, a broker should not contract with an unrated carrier.

 [*P19]  Morgan posited that, if a broker were going to contract with an unrated motor carrier, it should conduct its own safety review. To do this, a broker should go to the FMCSA website to see if a given carrier has a record of accidents or safety violations. The FMCSA website showed that, while unrated overall, E.G.G. was rated at 75% on one metric measuring management controls. This was above FMCSA's "intervention threshold" of 65%. E.G.G.'s two drivers had four citations between them in the 14 months preceding the accident for falsifying timesheets and [***9]  driving without enough rest. In fact, Garcia admitted in deposition that he was aware that Vela had previously falsified a timesheet. Garcia informed Vela that he would be fired if he did it again. Also, Vela previously documented average speeds of 70 miles per hour. This speed is unrealistic,  [**886]   [****353]  given that a trip is not entirely highway driving. Either Vela was speeding, or he drove more hours than allowed by federal regulations.

 [*P20]  According to Morgan, it is clear that Vela once again falsified his timesheets while performing on the contract with M&G. Under certain conditions applicable here, federal regulations require a driver to rest a minimum of 10 hours before going back on the road each day. Morgan hypothesized that, from the times and locations recorded on Vela's cell phone, it is clear he did not do this. Morgan believed that Vela drove 18 hours without proper rest before arriving at the Kraft/Claussen docking station and that he got less than 6.5 hours of sleep on the night preceding the accident.

 [*P21]  Maria Vergara, a general manager for M&G, testified in deposition that she has used the FMCSA website to search for driver safety violations. In the past, she has disqualified certain [***10]  carriers based on the FMCSA information concerning prior violations. However, she did not perform a review of E.G.G. prior to this trip. She was aware, prior to contracting with E.G.G. for this trip, that an E.G.G. driver had been in a weather-related accident within the past year. No one was hurt in that accident.

 [*P22]  Both M&G and Texana moved for summary judgment. In his response, plaintiff affirmatively abandoned count III, negligence (vicarious liability) against Texana. The trial court granted summary judgment to M&G and Texana on the remaining counts.

 [*P23]  As to count I, vicarious liability as to M&G, the court agreed with M&G that any agency relationship shared by M&G and E.G.G., if it ever existed, terminated after Vela completed the delivery. The court stressed that M&G had no control over Vela after the delivery:

"[P]laintiff put forth the argument that[,] if the fatigue *** occurred as a result of his driving while in the employ or acting as an agent of *** M&G, *** M&G should *** then continue to be responsible after *** the delivery of the product, and I would disagree with that because after the delivery *** their authority to control his actions terminated as well.

And they couldn't [***11]  tell him don't drive. They couldn't tell him sleep." (Emphases added.)

Further, Vela no longer had an obligation to check in with M&G. The court stated:

"[T]here was no obligation that he make phone calls, there was no obligation that he refrigerate anything. There was no obligation to *** M&G that he do anything. He was dead to them at that stage."

 [*P24]  The court rejected plaintiff's argument that the agency relationship continued after the delivery because, according to plaintiff, "if you have a trip assignment, a trip contract, that trip does not end until the driver reaches his home base." See St. Paul Fire & Marine Insurance Co. v. Frankart, 69 Ill. 2d 209, 370 N.E.2d 1058, 13 Ill. Dec. 31 (1977). M&G responded that St. Paul was inapposite. It concerned the interpretation of an insurance contract, not the scope of an agency relationship. The court agreed with M&G: "I don't think the St. Paul case is applicable to this situation. I think factually it is distinguishable, and the fact that it addresses insurance coverage rather than the scope of an agency relationship for people who hired a carrier tells me not to rely on it."

 [*P25]  As to counts II and IV, negligent hiring, the court granted summary judgment to M&G and Texana, respectively. It determined that, regardless of which company had selected [***12]  E.G.G., the accident occurred after the completion of the work  [**887]   [****354]  E.G.G. was hired to perform. The court appeared to classify the issue of liability beyond the limits of the contracted-for work as determinative of the duty element rather than the proximate-cause element. It stated: "I'm less comfortable getting into a question of proximate cause, because that's a tougher standard for summary judgment." This appeal followed.

 [*P26]  II. ANALYSIS

 [*P27]  Plaintiff appeals the trial court's grant of summary judgment to M&G and Texana on all four counts. We will not address count III, negligence (vicarious liability) as to Texana, because plaintiff unequivocally conceded below and at oral argument that no evidence supported that claim. Therefore, the argument is waived.

 [*P28]  As to the remaining counts, HN1[] "summary judgment is proper where, when viewed in the light most favorable to the non-moving party, the pleadings, depositions, admissions, and affidavits on file reveal 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." Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294, 305, 837 N.E.2d 99, 297 Ill. Dec. 319 (2005). "[W]hile a plaintiff need not prove [his] entire cause during summary judgment, [he] must present some evidentiary facts [***13]  to support the elements of [his] cause of action. [Citation.] If a plaintiff fails to establish even one element of the cause of action, summary judgment in favor of defendant is wholly proper." Wallace v. Alexian Bros. Medical Center, 389 Ill. App. 3d 1081, 1085, 907 N.E.2d 490, 329 Ill. Dec. 899 (2009). We review a grant of summary judgment de novo. Sollami v. Eaton, 201 Ill. 2d 1, 7, 772 N.E.2d 215, 265 Ill. Dec. 177 (2002). And, we may affirm a grant of summary judgment for any reason that finds its basis in the record, regardless of whether the trial court exercised similar reasoning. Northern Illinois, 216 Ill. 2d at 305.

 [*P29]  A. Count I: Negligence (Vicarious Liability) as to M&G

 [*P30]  The parties agree that count I turns on the existence of a principal-agent relationship between M&G and E.G.G. when the alleged negligence occurred. Plaintiff's argument is twofold. He contends that (1) an agency relationship was formed when M&G exercised control over E.G.G.'s delivery of the load and (2) the agency relationship continued after the delivery and through the time that the accident occurred. We reject plaintiff's argument. We agree with the trial court that, even if an agency relationship was formed during the delivery of the load, it terminated when E.G.G. completed its contractual obligation to deliver the load and M&G ceased to exercise any control over it or its driver. Because there was no agency relationship [***14]  at the time the alleged negligence occurred, the trial court correctly granted summary judgment to M&G.

 [*P31]  HN2[] The principal-agent relationship is an exception to the general rule that a plaintiff in a negligence action must seek a remedy from the person who caused the injury. Sperl v. C.H. Robinson World Wide, Inc., 408 Ill. App. 3d 1051, 1056, 946 N.E.2d 463, 349 Ill. Dec. 269 (2011). Under the theory of respondeat superior, a principal is vicariously liable for the conduct of its agent, but not for the conduct of an independent contractor. Id. at 1057. In distinguishing between an agent and an independent contractor, the court must consider the level of control under which the agent or independent contractor operates. Id. An agent voluntarily enters into a relationship whereby the principal has a  [**888]   [****355]  right to control his conduct. Id. An independent contractor undertakes to produce a certain result, but he is not under the control of the person for whom he does the work. Id. The court is to consider whether there is a right to control the manner of work performance, regardless of whether that right is exercised. Id. The court may consider the nature of the work performed in relation to the general business of the employer, the right to discharge, the method of payment, the provision of necessary tools, whether [***15]  taxes are deducted from payment, and the level of skill required. Id. at 1058. No single factor is determinative. Id.

 [*P32]  Both parties agree that Sperl controls the issue of whether M&G and E.G.G. ever shared an agency relationship. The facts of Sperl are as follows. CHR was a federally licensed freight broker. It sold its services to customers needing to transport goods, and then it contracted with carriers to provide transportation to its customers. One of the carriers with whom CHR contracted was Dragonfly. Dragonfly agreed that all transportation would be performed under the contract, which required it to use competent drivers and be responsible for the drivers' salaries, charges, and workers' compensation expenses. The contract specified that Dragonfly was an independent contractor. The contract allowed Dragonfly to haul loads for CHR. As to the specific trip at issue, however, Dragonfly's driver hauled a load of potatoes owned by CHR. CHR issued a load confirmation sheet with special instructions. The special instructions required that Dragonfly's driver "stay in constant communication with [CHR]" and make "check calls" daily no later than 10 a.m. Id. Further, the driver was to keep the truck [***16]  at a certain temperature and was given a strict deadline. All of these requirements were enforceable by fine. The driver collided with the plaintiff during the haul of CHR's potatoes. She later testified that CHR's tight deadlines and system of fines put pressure on her and made it impossible for her to also comply with federal regulations limiting driving time. A jury determined that the driver had been an agent of CHR, making CHR liable for damages from the crash.

 [*P33]  On appeal, CHR argued that the trial court should have granted its motion for a judgment notwithstanding the verdict or a new trial, because the evidence did not support the jury's determination of an agency relationship. The appellate court disagreed, holding that the evidence was sufficient to uphold the jury's special finding. Id. at 1060. Despite contractual evidence that the parties intended an independent-contractor relationship, specific conduct indicated an agency relationship. Id. at 1057-58. The court explained that the driver's services were closely aligned with CHR's business of hauling freight for its customers. Id. at 1058-59. CHR owned the product at issue as well as the warehouse to which it was being delivered. Id. at 1059. CHR was, therefore, motivated [***17]  to see that the driver delivered the product with care. And, CHR enforced an extensive system of fines, influencing the driver's compensation. It was while trying to adhere to CHR's strict operation requirements that the driver collided with the plaintiff. The court concluded: "Th[e] extensive requirements, coupled with [the driver's] fine-based compliance, directed [her] conduct during the entire transportation process and support the finding that CHR had the right to control the manner in which [the driver] performed her job." Id. at 1058. As the evidence supported that CHR had the right to control the manner in  [**889]   [****356]  which the driver performed her job, it also supported the existence of an agency relationship. Id. at 1059.

 [*P34]  Some of the indicia of control set forth in Sperl are, arguably, present here. M&G was engaged exclusively in the trucking business. M&G instructed E.G.G. to maintain the truck at a certain temperature and check in once per day. E.G.G. was to notify M&G if the shipment was going to be late. M&G imposed a system of fines to enforce its requirements. Unlike in Sperl, however, M&G did not own the product at issue or the warehouse to which it was being delivered. M&G was not acting in furtherance [***18]  of its own business when it instructed E.G.G. to maintain the truck at a certain temperature. Rather, acting as a broker, it passed on requirements from Kraft/Claussen. There was no indication that M&G required E.G.G. to remain in "constant contact" or that its operation requirements and system of fines were so onerous that E.G.G. felt pressure to violate federal regulations in order to avoid incurring fines. To the contrary, Vela testified that he did not feel pressure.

 [*P35]  The key difference, however, is that, in Sperl, the accident occurred when the driver was acting at the broker's direction. Here, in contrast, the accident occurred after E.G.G. had completed its contract for delivery and after M&G ceased to exercise any control over it. For that reason, we, like the trial court, do not find it necessary to determine whether sufficient evidence supports that M&G ever had a right to control E.G.G. so as to establish an agency relationship. To us, it is dispositive that, at the time of the accident, M&G did not exercise any control over E.G.G. so as to continue in an agency relationship.

 [*P36]  We look to the Restatement (Third) of Agency for further support that the agency relationship terminated [***19]  upon the completion of the contracted-for delivery: HN3[] "An agent's actual authority may terminate upon the occurrence of circumstances under which the agent should reasonably conclude the principal would no longer assent to the agent's taking action on the principal's behalf. If the principal has engaged the agent for a particular task, its completion is such a circumstance." Restatement (Third) of Agency § 3.09(b) (2003) (not yet adopted by the supreme court, cited for guidance only). Here, if it ever existed, the agency relationship terminated upon the completion of the task of delivering the cucumbers to the Kraft/Claussen plant. E.G.G. had already completed the assigned task before the time of the alleged negligence—failure to stop at a red light, failure to keep a reasonably careful lookout for other vehicles, failure to decrease speed, and driving too fast for conditions. No indicia of control were present at that time. M&G could no longer direct E.G.G. in any manner. M&G could no longer inform E.G.G. what to deliver, where to deliver it, what temperature to keep it at, or to stay in contact. It could not tell Vela to rest. E.G.G. alone instructed and controlled Vela after the delivery.

 [*P37]  Plaintiff argues that there is [***20]  "some indication" that E.G.G. was still acting within the scope of its agency relationship with M&G following the delivery, because it expected M&G to look for loads it could haul on its return trip to Texas. We reject this argument. That E.G.G. remained open to working with M&G in the future does not create a "genuine issue" that it was operating at its direction at the time of the accident. E.G.G.'s hope or expectation of future business with M&G cannot show M&G's current control over E.G.G.

 [*P38]  [****357]  [**890]    Plaintiff also argues, as he did below, that the agency relationship between M&G and E.G.G. did "not terminate at the point of delivery [but] continue[d] at least until the owner-driver return[ed] to the point where the haul originated, to the terminal from which the haul was assigned, or the owner-driver's home terminal from which he customarily obtain[ed] his next assignment." St. Paul, 69 Ill. 2d at 218; see also Occidental Fire & Casualty Co. of North Carolina, 113 Ill. App. 3d 215, 446 N.E.2d 937, 68 Ill. Dec. 766 (1983); Hodges v. Johnson, 52 F. Supp. 488 (W.D. Va. 1943).

 [*P39]  Plaintiff takes this quote out of context. St. Paul discussed not the termination of an agency relationship, but the definition of a term in an insurance policy, "being used in the business." St. Paul, 69 Ill. 2d at 213. To interpret that term, the court looked to define a trip or an assignment. Id. at 218-19. The court determined that, in the [***21]  context of the insurance-coverage issue before it, a trip did not necessarily end at the point of delivery but could include the return leg. Id. at 219.

 [*P40]  Our ruling does not conflict with the definition of a trip set forth in St. Paul and the other cases cited by plaintiff. This case is not about the definition of a term in an insurance contract. It is about the right to control the work. M&G's right to exercise any control over Vela ended upon the completion of delivery. It was E.G.G., not M&G, who instructed Vela after the completion of delivery and on the return leg. Upon the completion of delivery, E.G.G. was free to accept a new assignment from M&G or any other broker. Unless the parties entered into a new contract, M&G had no control over E.G.G. after its delivery of the cucumbers and satisfaction of the instant contract. Thus, there was no evidence of an agency relationship at the time of the alleged negligence, so M&G cannot be vicariously liable for the alleged negligence. Summary judgment was properly granted on count I.

 [*P41]  B. Counts II and IV: Negligent Hiring

 [*P42]  Plaintiff next argues that the trial court erred in granting summary judgment to M&G and Texana on counts II and IV, respectively, [***22]  for negligent hiring. Under this theory, M&G and Texana would be liable not for E.G.G.'s actions, but for their own actions in hiring E.G.G. to transport the goods. HN4[] In a negligence action, the plaintiff must plead and prove: (1) the existence of a duty of care owed to the plaintiff by the defendant; (2) a breach of that duty; (3) an injury proximately caused by that breach; and (4) damages. Calles v. Scripto-Tokai Corp., 224 Ill. 2d 247, 270, 864 N.E.2d 249, 309 Ill. Dec. 383 (2007). Proximate cause has two components: cause in fact and legal cause. Turcios v. DeBruler Co., 2015 IL 117962, ¶ 23, 392 Ill. Dec. 541, 32 N.E.3d 1117. As to cause in fact, courts typically consider the but-for test or the substantial-factor test. Id. The but-for test states that conduct cannot be a cause of an event if the event would have occurred without it. Id. The substantial-factor test states that conduct is a cause of an event if it was a material element and a substantial factor in bringing about the event. Id. As to legal cause, courts typically assess foreseeability. Id. ¶ 24. A court must consider whether the injury is one that a reasonable person would see as a likely result of his conduct, or whether the injury is so highly extraordinary that imposing liability is not justified. Id. "The question is one of policy—how far should a defendant's legal responsibility [***23]   [**891]   [****358]  extend for conduct that did, in fact, cause the harm?" Id.

 [*P43] HN5[]  In an action for negligent hiring or retention of an employee, specifically, the plaintiff must plead and prove: (1) that the employer knew or should have known that the employee had a particular unfitness for the position so as to create a danger of harm to third persons; (2) that such particular unfitness was known or should have been known at the time of the employee's hiring or retention; (3) that this particular unfitness proximately caused the plaintiff's injury; and (4) damages. Doe v. Catholic Bishop of Chicago, 2017 IL App (1st) 162388, ¶ 11, 415 Ill. Dec. 683, 82 N.E.3d 1229. Further, the duty of care in selecting an independent contractor is that which a reasonable person would exercise under the circumstances. Carney v. Union Pacific R.R. Co., 2016 IL 118984, ¶ 66, 412 Ill. Dec. 833, 77 N.E.3d 1. HN6[] The common-law tort of negligent hiring or retention finds its basis in the Restatement (Second) of Torts § 411 (1965): "One who employs an independent contractor to: (a) do work which involves risk of bodily harm unless it is skillfully and carefully done; or (b) perform a duty which the employer owes to third persons, is subject to liability for bodily harm caused by the failure to exercise reasonable care to employ a competent contractor." (Emphasis added.) A "competent and careful contractor" is a contractor who "possesses the knowledge, [***24]  skill, experience, and available equipment which a reasonable man would realize that a contractor must have in order to do the work which he is employed to do without creating unreasonable risk of injury to others, and who also possesses the personal characteristics which are equally necessary." Restatement (Second) of Torts § 411 cmt. a, at 377 (1965). The Illinois Supreme Court has adopted section 411 of the Restatement. Carney, 2016 IL 118984, ¶ 88; Gomien v. Wear-Ever Aluminum, Inc., 50 Ill. 2d 19, 21, 276 N.E.2d 336 (1971).

 [*P44]  We begin with count II, negligent hiring against M&G. The parties spend much of their briefs citing to Morgan's and Vergara's deposition testimony and debating whether there is a genuine issue that M&G failed in its duty to exercise reasonable care in hiring E.G.G. Rather than engage in this debate, even if we assume that there was sufficient evidence to raise a material factual issue as to whether M&G breached its duty of care in hiring E.G.G., plaintiff's argument ultimately fails. The remaining question is whether the failure to exercise reasonable care in hiring E.G.G. to perform the contracted-for work proximately caused the injuries. Although the trial court properly recognized E.G.G.'s completion of the contracted-for work as an enormous hurdle for plaintiff, it did not seem to recognize that the completion of the contracted-for [***25]  work implicated the proximate-cause element: "I'm less comfortable getting into a question of proximate cause, because that's a tougher standard for summary judgment." Instead, the trial court incorrectly assumed that the termination of the hiring relationship implicated the duty element. (Perhaps the court meant that there can be no duty to exercise reasonable care in retaining an independent contractor where that contractor is no longer retained.) In any case, M&G does not seriously debate that it had a duty to exercise reasonable care in hiring a carrier. Regardless of the court's misstatement, we may affirm a grant of summary judgment for any reason that finds its basis in the record. Northern Illinois, 216 Ill. 2d at 305. This claim turns on proximate cause.

 [*P45]  We recognize thatHN7[]  proximate cause is typically a matter for the  [**892]  [****359]  jury. Platson v. NSM, America, Inc., 322 Ill. App. 3d 138, 144, 748 N.E.2d 1278, 255 Ill. Dec. 208 (2001). However, if the facts alleged do not sufficiently demonstrate both cause in fact and legal cause, which involves policy considerations, the lack of proximate cause may be determined by a court as a matter of law. City of Chicago v. Beretta, U.S.A., Corp., 213 Ill. 2d 351, 395-96, 821 N.E.2d 1099, 290 Ill. Dec. 525 (2004). Proximate cause is not a matter for the jury in this case, because the cause of action at issue sets forth a rigorous proximate-cause standard that simply cannot be met under the [***26]  existing record. As we explain, the definition of the cause of action of negligent hiring or retention centers on the work to be performed and whether the incompetent execution of that work caused harm to a third party. Again, in an action for negligent hiring or retention, the injury must have occurred by virtue of the servant's employment. Bates v. Doria, 150 Ill. App. 3d 1025, 1032, 502 N.E.2d 454, 104 Ill. Dec. 191 (1986). The employer's liability attaches "only where there was demonstrated some connection between the plaintiff's injuries and the fact of employment." Id. As stated in Carney, 2016 IL 118984, ¶ 65, an employer is subject to liability for harm to third persons caused by its failure to exercise reasonable care to employ a competent and careful contractor to do work that will involve a risk of harm unless that work is carefully done.

 [*P46]  HN8[] As a matter of public policy, the courts have set a rigorous proximate-cause standard for the cause of action. Doe v. Boy Scouts of America, 2014 IL App (2d) 130121, ¶ 43, 378 Ill. Dec. 667, 4 N.E.3d 550. In Gomien, the supreme court strongly implied that, to support a claim for negligent hiring or retention, the injury must have occurred while the independent contractor was directly involved in the performance of the contracted-for work, as opposed to an act collateral to the work for which the contractor was engaged. Gomien, 50 Ill. 2d at 24.

 [*P47]  In Gomien, the defendant [***27]  manufacturer selected an independent contractor to solicit sales. The defendant knew that the contractor must operate a motor vehicle to perform his obligations under the agreement, and the defendant had a duty to persons using highways to exercise reasonable care in selecting the contractor. While operating his vehicle for the solicitation of sales for the defendant, the contractor struck and injured the plaintiff. The plaintiff pleaded that, had the defendant investigated, it would have learned that the contractor was a habitually negligent driver with a history of traffic violations and accidents. The trial court dismissed the complaint, and the appellate court affirmed. The appellate court reasoned that there could be no liability, because the accident occurred not when the contractor was directly involved in the work of soliciting customers or selling products, for which he was retained, but when he was engaged in the collateral act of operating his motor vehicle on the highway. Gomien v. Wear-Ever Aluminum, Inc., 131 Ill. App. 2d 760, 765, 264 N.E.2d 511 (1970). The supreme court reversed: "Under this state of pleadings, the operation of the automobile by the contractor was not an act collateral to the performance of the work for which he was engaged. It was [***28]  part of the conduct directly involved in the performance of the work contracted for." Gomien, 50 Ill. 2d at 24.

 [*P48]  Applying the law set forth in Gomien leads to a different result in this case. In Gomien, the injury occurred while the contractor was directly involved in completing the contracted-for task. If, as in Gomien, the injury here had occurred while Vela was operating his motor vehicle to deliver produce, M&G might have  [**893]   [****360]  been subject to liability under a theory of negligent hiring or retention. The difference is that, here, Vela was not operating his vehicle to perform the contracted-for work when the injury occurred. The work for which he had been engaged was completed. He was no longer hired or retained by M&G. He was 25 miles away from the pickle plant.

 [*P49]  As in Gomien, in every Illinois negligent hiring or retention case cited by plaintiff, the accident occurred while the selected contractor performed the contracted-for work. See, e.g., Carney, 2016 IL 118984, ¶ 88 (no liability, although the construction accident occurred on the job, because the victim subcontractor was not a third party entitled to protection under the cause of action); Hayward v. C.H. Robinson Co., 2014 IL App 3d 130530, ¶ 43, 388 Ill. Dec. 140, 24 N.E.3d 48 (no liability, although the traffic accident occurred while the contractor delivered the [***29]  broker's freight, because the broker did not have reason to know of the particular unfitness); see also Platson, 322 Ill. App. 3d at 140 (a negligent supervision claim; assault occurred at work). Similarly, in every non-Illinois negligent hiring or retention case cited by plaintiff, the accident occurred while the selected contractor performed the contracted-for work. See L.B. Foster Co. v. Hurnblad, 418 F.2d 727, 728 (9th Cir. 1969) (the accident occurred during the contracted-for haul of steel); McComb v. Bugarin, 20 F. Supp. 3d 676, 678 (N.D. Ill. 2014); Schramm v. Foster, 341 F. Supp. 2d 536, 540 (D. Md. 2004) (the accident occurred during the contracted-for shipment of soymilk); Puckrein v. ATI Transport, Inc., 186 N.J. 563, 897 A.2d 1034 (N.J. 2006) (the accident occurred during the contracted-for removal of waste); Hudgens v. Cook Industries, Inc., 1973 OK 145, 521 P.2d 813 (the accident occurred during the contracted-for shipment of wheat).

 [*P50]  Our research has not revealed an Illinois negligent hiring or retention case finding proximate cause when the injury occurred after the completion of the contracted-for work, during a period this court has referred to as posttermination. We find Boy Scouts instructive on the limitations of posttermination liability. In Boy Scouts, a retired scout executive sexually assaulted a teenage boy. The mother sued the local Boy Scouts organization, the Blackhawk Area Council (BAC), alleging, inter alia, negligent hiring and retention. Her theory of the case was as follows. The executive [***30]  was a pedophile who posed a constant threat to boys. BAC knew that, in the past, pedophiles had infiltrated its leadership. BAC did not appropriately screen the executive before awarding him the position, negligently hiring him. If it had screened the executive, it would have known that, in the 1970s, he had been discharged from the military for suspected homosexual activity1 and that, in the late 1980s or early 1990s, he had been apprehended in Germany for driving under the influence while an 18-year-old man was in the car with him. Also, BAC did not heed warning signs that occurred during the executive's tenure, negligently retaining him. It had been told that the executive positioned himself in the boys' locker room of a swimming pool complex so as to see the boys changing. The executive interacted with the victim between 2001 and 2006, beginning when the victim was 10 years old. During that time, the executive exploited his leadership role to gain the victim's  [**894]   [****361]  trust, admiration, and obedience. The two saw each other at all major scouting events. The executive spoke with the victim and his mother at these events. The executive took a special interest in the victim, encouraging him [***31]  to apply for a foreign exchange program. The executive visited the victim's home to speak with his mother about it. He also agreed to pay for the victim to attend modeling school, though the victim's mother ultimately decided against it. In March 2006, the executive retired. He no longer held a position with BAC. Three months later, in June or July 2006, the executive invited the victim to go to an event in Michigan with him. The two would share a hotel room, with no one else. The mother agreed to the trip, because she had known the executive for several years, she knew him to be a scout leader, and she trusted him. While on the trip, the executive sexually assaulted the victim.

 [*P51]  The trial court granted summary judgment to BAC. It explained that, as a matter of law, BAC could not have committed the tort of negligent hiring and retention, because BAC no longer employed the executive when the executive inflicted the injuries for which the plaintiff sought relief.

 [*P52]  This court affirmed. We noted that there was no authority in Illinois for holding an employer liable for posttermination acts. Boy Scouts, 2014 IL App (2d) 130121, ¶ 41. We acknowledged that other jurisdictions were split on the question of liability for posttermination [***32]  acts, but we declined to make a definitive statement absent a full briefing. Id. ¶¶ 41, 42. Nevertheless, we appreciated the logic and practicality of deeming an employee's termination a cutoff for employer liability. Id. ¶ 41. And, we observed:

HN9[] "The law of negligent hiring and retention in this state appears to afford little scope for liability for posttermination acts of employees. We consider first the following representative statement of the tort: 'Liability for negligent hiring arises only when a particular unfitness of an applicant creates a danger of harm to a third person which the employer knew, or should have known, when he hired and placed this applicant in employment where he could injure others.' [Citation.] This language suggests that the purpose of the tort is to prevent injuries that occur during the term of employment and, consequently, suggests that the employer's duty of care does not extend beyond the cessation of employment." Id. ¶ 42.

 [*P53]  We distinguished acts occurring posttermination from acts occurring outside the scope of employment. HN10[] An employer may be liable for out-of-the-scope acts, but only where the employee is on the employer's premises or using the chattel [***33]  of the employer and the employer has reason to know of the need and opportunity for exercising control over the employee. Id. ¶ 43. As no authority exists for posttermination liability, and as out-of-scope liability is extremely limited, Illinois law and policy have demonstrated a rigorous standard of proximate causation in the context of negligent hiring or retention cases. Id. "Under this strict concept of causation, if the injury occurs—as here—after the actor's employment has ended, then a fortiori the injury cannot be connected to that employment." Id. We summarized that "what plaintiff seeks is a broadening of liability as currently recognized by Illinois law." Id. ¶ 51.

 [*P54]  As in Boy Scouts, plaintiff here is asking this court to expand Illinois law on negligent hiring or retention. We decline to do so. Plaintiff has not cited one case where the accident, wrongful act, or injury occurred posttermination. This case is different  [**895]   [****362]  from a scenario where a contractor's incompetent workmanship resulted in a construction failure post-job, such as a cornice falling off of a building and onto a pedestrian. See, e.g., Carney, 2016 IL 118984, ¶ 79 (discussing the Restatement (Second) of Torts § 411 (1965)). In that example, the work itself was not performed [***34]  in a manner so as to reasonably protect third parties from harm. Here, the work itself, delivering the cucumbers, was performed without incident. Rather, it was the worker, not the work, who went on, posttermination, to injure a third party. Illinois does not have a policy of making those who select independent contractors become insurers for the independent, posttermination actions of those contractors.

 [*P55]  We reject plaintiff's theory that, because E.G.G. continued to perform on its contract with M&G on the return leg of the trip, the accident did not occur posttermination. Plaintiff again cites to St. Paul for the proposition that, in the trucking industry, an assignment to haul a load does not end until the driver reaches his home base or is assigned a new job. Again, St. Paul is not applicable. St. Paul sought to define terms set forth in an insurance contract. That issue is inapposite to the instant case. More to the point, here, the contract terminated upon completion of the contracted-for task, the delivery of the cucumbers. After the delivery, E.G.G. had no remaining obligations to M&G. Postdelivery meant posttermination.

 [*P56]  We also reject plaintiff's alternate theory that, even [***35]  if the accident occurred posttermination, the negligent act—driving too many hours so as to become fatigued—occurred predelivery while E.G.G. performed on its contract with M&G. Still, we find this case analogous to Boy Scouts. In that case, the executive engaged in acts, such as grooming, while employed that created a condition for the wrongful act of molestation. However, he committed the wrongful act of molestation, which caused the injury, posttermination. Here, even if we assume the independent contractor became fatigued while completing his contract for M&G, he committed the wrongful acts—failing to stop at a red light, failing to keep a reasonably careful lookout for other vehicles, failing to decrease speed, and driving too fast for conditions—posttermination.

[*P57] We now turn to count IV, negligent hiring against Texana. We first note that plaintiff is unable to point to any evidence that supports that Texana hired E.G.G. Plaintiff's expert, Morgan, opined only that M&G was negligent in selecting E.G.G.; Morgan did not offer any opinion as to Texana. In fact, plaintiff concedes: "While plaintiff agrees that the preponderance of the evidence does indicate that M&G hired E.G.G., [***36] M&G itself denies this. Consequently, [whether Texana hired E.G.G.] is a material fact that is in dispute and should be resolved by a jury, not on summary judgment." Plaintiff also states that one person at M&G,

1 The court, of course, rejected the mother's insinuation that homosexual individuals were more likely to commit acts of child abuse.

Ga. Nut Co. v. C.H. Robinson Co.

Ga. Nut Co. v. C.H. Robinson Co.

United States District Court for the Northern District of Illinois, Eastern Division

October 26, 2017, Decided; October 26, 2017, Filed

No. 17 C 3018

Reporter

2017 U.S. Dist. LEXIS 177269 *; 2017 WL 4864857

GEORGIA NUT COMPANY, Plaintiff, v. C.H. ROBINSON COMPANY d/b/a Robinson Fresh, and ALL INTERSTATE TRUCKING LLC, Defendant.

Subsequent History: Motion denied by Georgia Nut Co. v. C.H. Robinson Co., 2018 U.S. Dist. LEXIS 71806 (N.D. Ill., Apr. 30, 2018)

Core Terms

Nut, preempted, preemption, almonds, transportation, Trucking, routes, transportation of property, negligent supervision, negligent hiring, state law, broker, freight broker, shipment, carrier, insurer, insurance claim, arranging, shipping, argues, hire, motion to dismiss, negligence claim, processing, delivery, handling

Counsel:  [*1] For Georgia Nut Company, Plaintiff: Karl G. Leinberger, LEAD ATTORNEY, Markoff Leinberger LLC, Chicago, IL.

For C.H. Robinson Company, doing business as Robinson Fresh, Defendant: Joel H. Steiner, LEAD ATTORNEY, Paul Anthony Gajewski, Axelrod, Goodman, Steiner & Bazelon, Chicago, IL.

Judges: SARA L. ELLIS, United States District Judge.

Opinion by: SARA L. ELLIS

Opinion

OPINION AND ORDER

Plaintiff Georgia Nut Company ("Georgia Nut") brings this action against Defendants' C.H. Robinson Company ("C.H. Robinson") and All Interstate Trucking ("AI Trucking"), for their failure to deliver 42,000 pounds of almonds. Georgia Nut brings claims for negligent hiring and negligent supervision against C.H. Robinson (Count I), C.H. Robinson's negligent performance in its voluntary undertaking of submitting a claim to the insurer (Count II), and a Carmack Amendment violation against AI Trucking (Count III). Defendant C.H. Robinson moves to dismiss Count I and Count II arguing that both Counts are preempted by the Federal Aviation Administration Authorization Act ("FAAAA"), 49 U.S.C. § 14501, because they seek relief under state laws that have an effect on the prices, routes, or services of freight brokers covered by the FAAAA. Because the hiring and supervision of [*2]  a shipping company is within the definition of transportation services covered by the FAAAA and enforcement of the state-law negligence claims relating to these services would have a significant effect on these services, the FAAAA preempts state-law negligent hiring and negligent supervision claims, and the Court grants the motion to dismiss Count I. But because C.H. Robinson has failed to show that the submission of the insurance claims relates to transportation services, the Court denies the motion to dismiss Count II.

BACKGROUND1

Georgia Nut hired freight broker C.H. Robinson, who hired motor carrier AI Trucking, to deliver 42,000 pounds of almonds from Livingston, California to Niles, Illinois. While no written contract existed between Georgia Nut and C.H. Robinson, the freight broker agreed to arrange the shipment of almonds for payment. Georgia Nut directed C.H. Robinson to ship the almonds directly from Livingston, California to Niles, Illinois without any detours during the route.

On Friday, June 17, 2016, AI Trucking took possession of the almonds from the Del Rio Nut facility. Upon pick up, Georgia Nut paid Del Rio Nut Company $162,960 for the almonds. After the truck was [*3]  loaded, someone from Del Rio Nut placed an industry-standard, tamper-proof band with a unique load-identifying seal number that matched the sale number on the bill of lading on the cargo door. Between June 17 and June 21, 2016, AI Trucking routed the shipment of almonds through the state of Georgia on its way from Livingston, California to Niles, Illinois. AI Trucking failed to adhere to Georgia Nut's directive by shipping the almonds through the state of Georgia on its way to Illinois, rather than going directly from California to Illinois.

On Tuesday June 21, 2016, AI Trucking delivered the shipment of almonds to Georgia Nut's facility in Niles, Illinois. Upon delivery of the almonds in Niles, Illinois, Georgia Nut discovered that the band seal number on the cargo door did not match the unique load-identifying seal number for the bill of lading. Because band tampering renders the almonds unusable for human consumption, Georgia Nut rejected the shipment upon delivery and did not receive any reimbursement for the total loss from the almonds.

On July 6, 2016, Georgia Nut provided a Standard Form for Presentation of Loss and Damages Claims to C.H. Robinson, who then submitted a claim to [*4]  the insurer. C.H. Robinson required Georgia Nut to use C.H. Robinson to handle all aspects of the process of making a claim with the insurer. Until February 2017, C.H. Robinson disclosed no information about the insurance claim to Georgia Nut, at which point C.H. Robinson solely revealed the identity of the insurer.

AI Trucking was established in July of 2015 and was administratively dissolved on December 7, 2016. Public Federal Motor Carrier Safety Administration (FMCSA) records show that AI Trucking had one driver and drove one mile in 2015.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

ANALYSIS [*5] 

I. Preemption Under the Federal Aviation Administration Authorization Act (FAAAA)

C.H. Robinson argues that the claims in Count I and Count II relate to the services C.H. Robinson provides as a broker, and therefore the FAAAA expressly preempts Georgia Nut's negligent hiring and negligent supervision claim and its claim of C.H. Robinson's negligence in its submitting a claim to the insurer .

The FAAAA express preemption clause states, in relevant part:

[A] State . . . may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any private motor carrier, broker or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1).2 "The FAAAA's preemption clause prohibits enforcement of state laws 'related to a price, route, or service of any" broker "with respect to the transportation of property.'" Dan's City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013) (quoting 49 U.S.C. § 14501(c)(1)). Transportation is defined in Title 49 "as 'services related to th[e] movement' of property, 'including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.'" [*6]  Id. at 261 (quoting 49 U.S.C. § 13102(23)(B)).

In determining whether a state law claim is subject to FAAAA preemption, the Seventh Circuit stated that two requirements must be met: "First, a state must have enacted or attempted to enforce a law. Second, that law must relate to carrier rates, routes, or services 'either by expressly referring to them, or by having a significant economic effect on them.'" Nationwide Freight Sys., Inc. v. Ill. Commerce Comm'n, 784 F.3d 367, 373-74 (7th Cir. 2015) (quoting Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1432 (7th Cir. 1996)). Preemption under the FAAAA is broad, and includes "laws and actions having some type of connection with or reference to a carrier's rates, routes, or services, whether direct or indirect." Id. at 373. But state laws are "not preempted where [their] relationship with carrier rates, routes, or services is 'tenuous, remote, or peripheral.'" Id. quoting Dan's City Used Cars, 569 U.S. at 261. Finally, "federal preemption is an affirmative defense upon which the defendants bear the burden of proof." Fifth Third Bank ex rel. Tr. Officer v. CSX Corp., 415 F.3d 741, 745 (7th Cir. 2005).

A. Negligent Supervision and Negligent Hiring

Georgia Nut alleges that C.H. Robinson failed to hire a legitimate transportation company to carry a shipment of 42,000 pounds of almonds from Livingston, California directly to Niles, Illinois, breaching its duty of reasonable care. C.H. Robinson argues that the FAAAA preempts this claim because it relates to C.H. [*7]  Robinson's services as a freight broker because it attempts to regulate C.H. Robinson's transportation services. Georgia Nut argues that FAAAA preemption does not apply to this claim because the effect on prices, routes, or services is too tenuous to invoke FAAAA preemption, and because the claim is similar to a breach of contract claim in that it is based on C.H. Robinson's "self-imposed undertakings." Doc. 19 at 3.

State common-law negligence claims satisfy the first requirement for preemption under the FAAAA. See United Airlines, Inc. v. Mesa Airlines, Inc., 219 F.3d 605, 607 (7th Cir. 2000) (holding that state common law satisfies the first requirement in ADA preemption cases). Therefore, this case turns on whether C.H. Robinson's alleged negligent supervision and negligent hiring relates to its services as a freight broker by either expressly referring to them or by having a significant economic effect on those services.

While the services of a freight broker do not include the actual transportation of property, they are focused on arranging how others will transport the property; these services, therefore, fall within the scope of the FAAAA preemption . Midwest Trading Grp., Inc. v. GlobalTranz Enters., No. 12 C 9313, 2015 U.S. Dist. LEXIS 27095, 2015 WL 1043554, at *3 (N.D. Ill. Mar. 5, 2015). Central to C.H. Robinson's efforts to perform its services as a broker was the hiring of AI Trucking [*8]  to transport the almonds. It is C.H. Robinson's alleged negligence in performing this duty that forms the basis of Georgia Nut's claim in Count I.

Common-law negligent hiring and negligent supervision claims do not expressly reference freight broker services; however, they do have a significant economic effect on those services. The purpose of the FAAAA preemption was to free interstate shipping from a patchwork of state laws and regulations and to replace those rules with "competitive market forces." Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364, 371, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (describing Congress' overarching goal in passing the ADA "as helping ensure transportation rates, routes, and services that reflect 'maximum reliance on competitive market forces,' thereby stimulating 'efficiency, innovation, and low prices,' as well as 'variety' and 'quality'"). Enforcing state negligence laws that would have a direct and substantial impact on the way in which freight brokers hire and oversee transportation companies would hinder this objective of the FAAAA. The FAAAA does not allow courts to impute state-law derived rights into transportation agreements, which would expand the bargained-for rights of the agreement. See United Airlines, Inc., 219 F.3d at 609 ("[W]hen the state begins to change the parties' financial [*9]  arrangements . . . it is supplying external norms, a process that the national government has reserved to itself in the air transportation business."). Therefore, Georgia Nut's claim in Count I meets the second requirement of FAAAA preemption.

Georgia Nut argues that its claim in Count I survives preemption because it is similar to a contract claim. Courts have typically held that state contract claims are not preempted because enforcement of contract provisions under state law is consistent with Congress' purpose in passing the preemption provision of the FAAAA. Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 230, 115 S. Ct. 817, 130 L. Ed. 2d 715 (1995) (The ADA is designed to promote reliance on competitive market forces, and those require an "effective means to enforce private agreements."). However, courts have also consistently held that claims that seek to expand a plaintiff's rights under their existing agreement are preempted. See S.C. Johnson, 697 F.3d at 558 (stating that theories of tortious interference with contract, breach of fiduciary duty, and fraudulent inducement to enter a contract are preempted because they are efforts to change the bargain that the parties had reached). Georgia Nut's negligent hiring and negligent supervision claim is just such a claim. Georgia Nut and C.H. Robinson [*10]  entered into an oral agreement for Georgia Nut to pay C.H. Robinson to arrange for the shipment of almonds from California to Illinois. Whether the series of events that ultimately led to Georgia Nut receiving a shipment of unusable nuts breaches this agreement is a separate question from whether C.H. Robinson committed the torts of negligent supervision and negligent hiring. Allowing Georgia Nut to proceed on this tort theory as though it were a contract claim would go beyond enforcing the parties' bargain and would in effect modify or enhance the bargain in a manner the parties did not negotiate or agree. See United Airlines, Inc., 219 F.3d at 609 (claims that enlarge or enhance the parties' agreement based on state laws that are external to the agreement are preempted). Georgia Nut argues that, "[t]he fact that one claim involves negligence law and the other involves contract law is a difference without a distinction." Doc. 19 at 4. This is incorrect. The Supreme Court specifically noted that there is a key distinction between contract claims and negligence claims, which is dispositive for purposes of preemption. Wolens, 513 U.S. at 233 ("This distinction between what the State dictates and what the airline itself undertakes confines courts, in [*11]  breach-of-contract actions, to the parties' bargain, with no enlargement or enhancement based on state laws or policies external to the agreement."). The Court finds no basis in the law to exempt contract-like negligence claims from the preemptive effect of the FAAAA. Therefore, the Court grants the motion to dismiss Count I.

B. Negligent Voluntary Undertaking — Insurance Claim Submission

Georgia Nut also alleges that C.H. Robinson performed negligently in its voluntary undertaking of submitting a claim to the insurer. C.H. Robinson argues that this negligence claim is preempted by the FAAAA.

Because Count II seeks to enforce state common law, the first prong of the Seventh Circuit's test to determine whether a claim is preempted by the FAAAA is satisfied. United Airlines, Inc., 219 F.3d at 607. Therefore this claim also turns on whether the services provided by C.H. Robinson in submitting a claim to the insurer relate to its services as a freight broker and if so, whether the negligent voluntary undertaking claim regulates those services by expressly referring to them or by having a significant economic effect on them.

The FAAAA preempts state-laws that relate to broker services provided with respect to the transportation [*12]  of property. 49 U.S.C. § 14501(c)(1). "Transportation of property" is a key limitation on the breadth of the preemptive effect of the FAAAA. Dan's City, 569 U.S. at 261 (The phrase "with respect to the transportation of property " "'massively limits the scope of preemption' ordered by the FAAAA.") (quoting City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 449, 122 S. Ct. 2226, 153 L. Ed. 2d 430 (2002)). As noted above, Title 49 defines transportation "as 'services related to th[e] movement' of property, 'including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.'" Id. at 261 (quoting 49 U.S.C. § 13102(23)(B)).

Processing of insurance claims after shipping is complete is not listed in Title 49 as a service related to the movement of property. However, the list of services under Title 49 is non-exhaustive. In support of its argument that claims handling is a service related to the transportation of property, C.H. Robinson cites to Tirgan v. Roadway Package Sys., No. CIV. A. 94-2768(JEI), 1995 U.S. Dist. LEXIS 538, 1995 WL 21098 (D.N.J. Jan. 3, 1995), which held that claims for bad faith handling of damages claims by interstate shippers are preempted by the Carmack Amendment, 49 U.S.C. § 11707. C.H. Robinson asserts, without citation, that the preemptory effect of the Carmack Amendment is "narrower" than FAAAA, and that if claim processing is [*13]  preempted by the Carmack Amendment it "stands to reason" that it is preempted under the FAAAA as well. Doc. 21 at 9.

The burden of establishing that federal law preempts a state law belongs to the party seeking to invoke preemption. CSX Corp., 415 F.3d at 745. C.H. Robinson does not provide any evidence or citation showing that processing these claims on behalf of a client is central to role of a broker in the transportation of property. It is not clear how processing an insurance claim well after the completion of shipping relates to the act of arranging for the delivery of property. The fact that similar claims are preempted under the Carmack Amendment is perhaps informative, but C.H. Robinson has not developed this argument beyond the unsupported statements that the Carmack Amendment preemption is more narrow than the FAAAA and that it is therefore reasonable that things preempted under the Carmack Amendment are preempted under the FAAAA. This may be true, but C.H. Robinson has not shown it to be so, and the Court will not research and make C.H. Robinson's arguments for it. See Economy Folding Box Corp. v. Anchor Frozen Foods Corp., 515 F.3d 718, 721 (7th Cir. 2008) ("It is not the court's responsibility to research the law and construct the parties' arguments for them."). Because C.H. Robinson has failed to show that processing insurance claims is a service [*14]  related to the movement of property, it has failed to meet its burden to demonstrate that federal law preempts the claim in Count II. The Court, therefore, denies C.H. Robinson's motion to dismiss Count II.

CONCLUSION

For the foregoing reasons, the Court grants in part and denies in part C.H. Robinson's motion to dismiss Count I and Count II of the first amended complaint. The Court grants the motion with respect to Count I and denies the motion with respect to Count II. The Court dismisses Count I without prejudice to Georgia Nut filing an amended complaint.

Dated: October 26, 2017

/s/ Sara L. Ellis

SARA L. ELLIS

United States District Judge

End of Document

1 The facts in the background section are taken from Plaintiff's First Amended Complaint and are presumed true for the purpose of resolving the motion to dismiss. See Virnich v. Vorwald, 664 F.3d 206, 212 (7th Cir.2011).

2 The FAAAA's preemption language is borrowed from the Airline Deregulation Act of 1978 ("ADA"), 49 U.S.C. § 41713. Rowe v. N.H. Motor Transp. Ass'n, 552 U.S. 364, 370, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008). Courts have generally incorporated judicial interpretations of the ADA's functionally identical preemption provision into their analysis of the FAAAA preemption provision. Id.