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Motor
Carrier May Be Liable For ‘Independent Contractor’
By Roger T. Creager
This article was published by the Virginia
Lawyers Weekly in its February 28, 2005 issue. It is
reproduced here by permission of Virginia Lawyers Weekly.
A tractor-trailer crosses over into the oncoming lane, crashes
into a small car, and kills its driver. Counsel for the
decedent’s family investigates the case and believes that a
good recovery can be made in a wrongful death action because
the trailer bore the name of a major trucking company which
has insurance coverages totaling $5 million. The trucking
company’s law firm responds, however, that the tractor
hauling the load actually was not owned or operated by it. It
was owned and driven by the truck driver, who was operating as
an “independent contractor” at the time of the collision,
and had leased the tractor to the trucking company. The
“independent contractor” says his insurance coverage is
very limited and he has no net assets.
Will the decedent’s family be limited to a modest recovery
from the “independent contractor?” The answer provided by
the applicable laws, regulations, and case law is, “probably
not.” The trucking company should be liable for any
negligence of the driver even if he was denominated as an
“independent contractor” operating a leased
tractor-trailer.
The arrangement and argument used by the trucking company in
an effort to avoid liability is not new to the law. Rather,
trucking companies and their lawyers have been using the
independent-contractor/leased truck arrangement for decades in
an effort to minimize liability.
But under applicable law, a motor carrier has little or no
hope of avoiding corporate liability exposure by this
arrangement. Federal statutes and regulations applicable to
motor carrier leasing arrangements render the motor carrier
under whose authority the load is being hauled the
“statutory employer” of the driver even if he would be an
independent contractor under state law principles that would
apply in other contexts. If the trucking company’s
Department of Transportation Number and/or Motor Carrier
Number (sometimes still referred to as the “ICC number”)
are on the side of the truck leased to the motor carrier, the
trucking company is responsible for the driver and his
negligence, even if he is not actually an employee of the
trucking company.
Congress in 1956 amended the Interstate Common Carrier Act to
authorize the Secretary of Transportation to require a motor
carrier to assume direction and control of vehicles leased by
it. 49 U.S.C. § 14102 . The Federal Leasing Regulations,
enacted pursuant to this law, require the motor carrier/lessee
to “assume complete responsibility for the operation of the
equipment for the duration of the lease.” 49 C.F.R. §
376.12(c)(1). The regulations also require that the “lease
shall provide that the authorized carrier/lessee shall have
exclusive possession, control, and use of the equipment for
the duration of the lease.”
The federal law and regulations have the effect of making the
motor carrier/lessee liable for the negligence of the driver
of the leased vehicle as a matter of law. Federal
statutory-employment principles impose upon the motor carrier
complete liability to the public for harm caused in the
operation of the equipment operated under the carrier’s
authority. See Ryder Truck Rental, Inc. v. UTF Carriers,
Inc., 907 F.2d 34 (4th Cir. 1990). The effect of the
federal leasing regulations is to make the carrier/lessee
liable to the same extent as it would be for its own equipment
operated by its own employees. See Cox v. Bond
Transportation, Inc., 249 A.2d 579 (N.J.), cert. denied,
395 U.S. 935 (1969).
Moreover, the authorized carrier operating the leased
equipment is liable to members of the public for the
negligence of the driver even if the driver is or could
arguably be, at least for some purposes, the employee of
another person or entity, or an “independent contractor”
for some purposes. See Baker v. Roberts Express, Inc.,
800 F. Supp. 1571
(S.D. Ohio 1992). Thus, when a carrier leases trucking
equipment and a driver from a lessor, the driver becomes the
statutory or deemed employee of the carrier/lessee.
The United States Court of Appeals for the Fourth Circuit has
adopted these principles and has held that the intent of the
federal leasing regulations was to correct widespread abuses
incident to leases of trucking equipment and to make sure that
licensed carriers would be responsible in fact, as well as in
law, for the maintenance of leased equipment and the
supervision of borrowed drivers. See Proctor v. Colonial
Refrigerated Transportation, Inc., 494 F.2d 89 (4th Cir.
1974) (citing American Trucking Associations v. United
States, 344 U.S. 298 (1953). According to the Fourth
Circuit:
The statute and regulatory pattern clearly eliminates the
independent contractor concept from such lease arrangements
and casts upon Colonial [the motor carrier] full
responsibility for the negligence of Bales [the
“independent contractor”] as driver of the leased
equipment. Any language to the contrary in the lease
agreement would be violative of the spirit and letter of the
federal regulations and therefore unenforceable.
494 F.2d at 92; see also Graham v. Malone Freight Lines,
Inc., 948 F. Supp. 1124, 1131-32 (Mass. 1996) (under
statutory-employment doctrine, carrier/lessee is liable as a
matter of law for accidents that occur while lease is in
effect); Hodges v. Johnson, 52 F. Supp. 488 (W.D. Va.
1943) (holder of certificate from ICC is responsible for
operation of vehicles, even where vehicles are operated by
independent contractors of certificate holder).
As the authorities briefly discussed above demonstrate, in
personal injury cases involving tractor-trailers counsel
should be very mindful of the overlay of federal
statutory-employment concepts and applicable federal
regulations. It is very important to be absolutely certain
what motor carrier number was on the side of the
tractor-trailer, and to take immediate action to preserve
photographic and other evidence of that fact. Counsel will
also want to determine quickly whether a leasing arrangement
was involved, since the federal leasing regulations will be
important in that event. Counsel should promptly obtain a copy
of the written lease agreement, which is required by the
federal regulations. Special legal principles governing the
responsibility of motor carriers may play an important role in
determination of the liability of the motor carrier for any
negligence of the driver of the truck.
1. Roger T. Creager is with the law firm
of Marks & Harrison, P.C., in its Richmond office. He
concentrates his practice on personal injury cases, and has
handled numerous wrongful death and serious personal injury
cases arising out of collisions involving tractor-trailers.
2. Motor carriers and their counsel
occasionally cite Penn v. Virginia Intern. Terminals, Inc.,
819 F.Supp. 514 (E.D.Va.1993), and argue that it supports an
argument that the federal statutory-employment principles
should not always be controlling. The Penn decision
pointed out that a 1992 amendment (still found at 49 C.F.R. §
376.12(c)(4)) of the leasing regulations added a provision
that nothing in Section 376.12(c)(1) (requiring the carrier to
assume complete responsibility for operation of leased
vehicles) “is intended to affect whether the lessor is an
independent contractor or an employee of the authorized
carrier lessee.” Carriers sometimes argue that this
provision means that they can still avoid responsibility to
the public for the driver of a leased vehicle by arguing that
he is an “independent contractor.” The author believes
that this argument should be rejected, since it is contrary to
the vast body of authority imposing liability on the
authorized carrier, and is contrary to the purpose and
explicit language of Section 376(c)(1), requiring that the
carrier assume complete responsibility for the operation of
the leased vehicle. The correct reading of the Penn decision
and of Section 376(c)(4) is that the driver of a leased
vehicle may still be found to be an independent contractor for
purposes of employment benefits, worker’s compensation
benefits, and similar matters. The Penn decision
involved the issue of a driver's coverage by workers'
compensation insurance rather than the issue of whether a
member of the public, injured by the operation of leased truck
equipment, could hold the carrier/lessee liable as the
driver's statutory employer. |
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