Agency & Partnership Professor Donald J. Kochan

1. Agency & PartnershipProfessor Donald J. Kochan Class 8

2. Today’s Materials • Pages 137-173 • Vicarious Tort Liability

3. Vicarious Liability – Basics • Generally, “It is accepted doctrine that one is liable for the damages caused when directing or participating in the commission of a tort by someone else.” • BUT note that is Imprecise: Vicarious Liability is “liability in addition to the liability of the employee . . .” • Agent May Be Liable Alone • Principal May Be Liable Alone • Both Agent and Principle May Be Liable

4. Jones v. Hart • Pawn Broker 1698 English Case • Master-Servant Case – See definitions in Notes and Glossary • How is an Independent Contractor Different? • Respondeat Superior – Know What it Means • Importance of Trier of Fact and Level of Control – see note 5 on page 140, for example

5. Employee/Agent Liability • Note 8 on Page 141 • Personal liability issues for agent actions • Duties of Agent to Principal: “ought not to have done” v. “ought to have done”

6. Holmes and Wigmore onRespondeat Superior • Understand the historical development in the common law • Command Issues • Scope Issues • Employer-Employee Relationship NOT necessary for Proving Vicarious Liability

7. Heims v. Hanke • Slip and Fall on a Sidewalk Case; Spilling of Water After Car Wash Case • Is the Uncle a Principal? Is the Nephew an Agent? • Imputation of Negligence to Uncle? • Exercise of Ordinary Care • Forseeability • Does Volunteering Establish a M/S or P/A relationship?

8. Sandrock v. Taylor • Guest Passenger in Intersection Collision • Was the transportation gratuitous or under demand and control? • Imputability of the negligence of a driver to a passenger • Purely Social Relationship Distinction – i.e. A/P never existed (REMEMBER that is always the first question – Was there and Agnecy/Principal Relationship) • The Notes following the case are instructive

9. Rationale for Respondeat Superior • Direction, Control, and Command • Indemnification – Always Remember the Principal Can Sue the Agent So That All Are Made Whole • Understand the Discussions on pages 129-152 of: • Holmes • Baty • Posner

10. Imputed Contributory Negligience • “Both Ways” Test • Just Understand the Basic Concept regarding Liability

11. Direct Tort Liability of an Employer/Principal • Main Issue is the Exercise of Due Care in Hiring and Choosing Your Agents/Employees – Be Careful Who You Trust to Do Your Bidding

12. Kane Furniture Corp. v. Miranda • Carpet Installer Case/Car Accident After Drinking • Distinction Between Agents and Independent Contractors • Definition of Relationship Key to Decide Vicarious Liability • “It has been said that the level of control is the most important factor in determining whether a person is an independent contractor or an employee.”

13. Restatement (Second) of Agency Sec. 220 “(1) A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject tothe other's control or right to control. (2) In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered: (a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by the time or by the job; (h) whether or not the work is a part of the regular business of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; and (j) whether the principal is or is not in business.”

14. Restatement (Third) of Agency Sec. 7.07 “(1) An employer is subject to vicarious liability for a tort committed by its employee acting within the scope of employment. (2) An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control. An employee's act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer. (3) For purposes of this section, (a) an employee is an agent whose principal controls or has the right to control the manner and means of the agent's performance of work, and (b) the fact that work is performed gratuitously does not relieve a principal of liability.”

15. Restatement (Third) of Agency Sec. 7.07 comment f “f. Definition of employee. For purposes of respondeat superior, an agent is an employee only when the principal controls or has the right to control the manner and means through which the agent performs work. The definition has the consequence of distinguishing between employees and agents who are not employees because they retain the right to control how they perform their work. If a person has no right to control an actor and exercises no control over the actor, the actor is not an agent. See § 1.01, Comment f(1). The fact that an agent performs work gratuitously does not relieve a principal of vicarious liability when the principal controls or has the right to control the manner and means of the agent's performance of work. A person who causes a third party to believe that an actor is the person's employee may be subject to liability to the third party for harm caused by the actor when the third party justifiably relies on the actor's skill or care and the actor's conduct, if that of an employee, would be within the scope of employment. For the general principle of estoppel . . . Numerous factual indicia are relevant to whether an agent is an employee. These include: the extent of control that the agent and the principal have agreed the principal may exercise over details of the work; whether the agent is engaged in a distinct occupation or business; whether the type of work done by the agent is customarily done under a principal's direction or without supervision; the skill required in the agent's occupation; whether the agent or the principal supplies the tools and other instrumentalities required for the work and the place in which to perform it; the length of time during which the agent is engaged by a principal; whether the agent is paid by the job or by the time worked; whether the agent's work is part of the principal's regular business; whether the principal and the agent believe that they are creating an employment relationship; and whether the principal is or is not in business. Also relevant is the extent of control that the principal has exercised in practice over the details of the agent's work. . . .”

16. Lazo v. Mak’s Trading Co. • Rice Unloader Assault Case/Odd-Jobbers/Day-Workers • Home Depot Example? • Distinction Between Employees and Independent Contractors • From the Concurrence: “an employer cannot be held liable for an employee’s assaultive acts where the tortious conduct was not taken within the scope of employment, the employer did not authorize the violence and the use of force is not within the discretionary authority afford the employee . . .” (emphasis added) • From the Concurrence: “… no connection between the assualy and the tortfeasor’s duty as a day laborer . . .” • Read Notes re fact-specific nature and difficulty of application of doctrines

17. Soderback v. Townsend • Negotiation of Gas Leases Case • Level of Responsibility/Level of Control Issues • Representation of “Working For” Issue – difference between such representation and authority to so represent • “However, all principals and agents are not also masters and servants. The Comment to § 250, 1 Restatement 2d 549-550, Agency, states the distinction as follows: ‘A principal employing another to achieve a result but not controlling or having the right to control the details of his physical movements is not responsible for incidental negligence while such person is conducting the authorized transaction. Thus, the principal is not liable for the negligent physical conduct of an attorney, a broker, a factor, or a rental agent, as such. In their movements and their control of physical forces, they are in the relation of independent contractors to the principal. It is only when to the relation of principal and agent there is added that right to control physical details as to the manner of performance which is characteristic of the relation of master and servant that the person in whose service the act is done becomes subject to liability for the physical conduct of the actor. . . .’”Kowaleski v. Kowaleski, 385 P.2d 611, 612-613 (Or. 1983).

18. Hunter v. R.G. Watkins & Son, Inc. • Employee in Personal Automobile Case • What is the distinction between “control” and “right to control” in terms of vicarious liability? • Notice the court thinks the control test is “overemphasized” • Read the Notes following the case (esp. re issues of choice, skill, licenses, and discretion)

19. Sandrock v. Taylor • See earlier discussion of case • Whether there is an existence of a master-servant relationship • This excerpt focuses on fact of contract with “complete liberty to use his own discretion and judgment as to the method and manner of performance without any right on the part of the Co-Op to direct or control his performance.” (emphasis added) • Importance of Classification for Vicarious Liability

20. Concluding Thoughts It is all about who is liable and when and for what actions and for whose actions ...