STATE OF MICHIGAN TRANSPORTATION COMPENDIUM OF LAW

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1 STATE OF MICHIGAN TRANSPORTATION COMPENDIUM OF LAW Paul E. Scheidemantel Eric Shih Clark Hill PLC 500 Woodward Avenue Suite 3500 Detroit, MI Phone: (313) Revised 2012

2 A. Elements of Proof for the Derivative Negligence Claims of Negligent Entrustment, Hiring/Retention and Supervision 1. Respondeat Superior (Let the Master Answer) a. What are the elements necessary to establish liability under a theory of Respondeat Superior? Generally speaking, [t]he test of the liability of the master for his servant s acts is whether the latter was at the time acting within the scope of his employment. The phrase in the course or scope of his employment or authority when used relative to the acts of a servant, means while engaged in the service of his master, or while about his master s business. Nevins v. Roach, 249 Mich. 311, , 228 N.W. 709 (1930). A master is responsible for the wrongful acts of his servant committed while performing some duty within the scope of his employment. An employer is not vicariously liable for acts committed by its employees outside the scope of employment, because the employee is not acting for the employer or under the employer s control. Rogers v. J.B. Hunt Transport, Inc., 466 Mich. 645, 651, 649 N.W.2d 23 (2002). For example, an employee s negligence while on a frolic or detour, or after hours, is not imputed to the employer. Nor is an employer liable for torts intentionally or recklessly committed by an employee beyond the scope of his employer s business. Id.; see also Chajnacki v. Dougherty, 254 Mich. 296, 297, 236 N.W. 789 (1931) ( [A] master is not liable for the negligent acts of his servant unless at the time the servant is acting within the scope of his employment or within his actual authority. ). As applied to motor carriers who do not directly employ their drivers, Michigan adopt[s] that portion of the statutory employee rule that creates a fictional employment relationship between the driver and carrier and then look[s] to the application of state law for the imposition of liability. Paul v. Bogle, 193 Mich. App. 479, 488, 484 N.W.2d 728 (1992). A driver is considered to be the constructive or statutory employee of the carrier when: (1) the carrier does not own the vehicle; (2) the carrier operates the vehicle under an arrangement with the owner that is subject to federal regulation; and (3) the carrier does not literally employ the driver. The doctrine of respondeat superior imposes vicarious liability on the carrier for the negligence of its employee driver. Id. at 487. Additionally, a carrier s failure to remove its identifying placards can be deemed evidence of its implied consent to the use of the vehicle, regardless of whose business interests were being pursued at the time of an accident. Id. at Negligent Entrustment a. What are the elements necessary to establish liability under a theory of negligent entrustment? To establish a claim of negligent entrustment involving a motor vehicle, the burden is on the plaintiff to prove that: (1) the motor vehicle was driven with the permission and authority of the owner, (2) the entrustee was in fact an incompetent driver, (3) the owner knew at the time of the entrustment that the entrustee was incompetent or unqualified to operate the vehicle, or had knowledge of such facts and circumstances as would imply knowledge on the part of the owner of such incompetence, and (4) the entrustment was causally connected to the injury for which the 2

3 plaintiff complains. Brunell v. Snappy Car Rental, Inc., 1999 Mich. App. LEXIS 2495, * 3-4 (Mich. Ct. App. 1999) (citing Perin v. Peuler, 373 Mich. 531, 130 N.W.2d 4 (1964)). Liability for negligent entrustment arises when the owner permits an incompetent or inexperienced person to use his chattel with knowledge that such use is likely to cause injuries to others. Haring v. Myrick, 368 Mich. 420, 423, 118 N.W.2d 260, 261 (1962). In such circumstances, the owner s liability is also in part vicarious for it cannot arise unless the person entrusted with the automobile uses it negligently; but, the primary basis for the owner s liability is said to be his own negligence in permitting its use by an incompetent or inexperienced person with knowledge of the probable consequences. Id. See also Hendershott v. Rhein, 61 Mich. App. 83, 232 N.W.2d 312 (1975); Elliott v. A. J. Smith Contracting Co., 358 Mich. 398, 413, 100 N.W.2d 257 (1960). 3. Negligent Retention/Hiring a. What are the elements necessary to establish liability under a theory of negligent retention/hiring? To establish a claim for negligent retention/hiring, a plaintiff must prove that: (1) the employer knew or should have known of the employee s/contractor s tortious propensities at the time of hiring; and (2) the employer s negligence was the proximate cause of the plaintiff s injuries. Under Eger v. Helmar, 272 Mich. 513, 262 N.W. 298 (1935), the plaintiff has the burden to prove that the employer failed to exercise due care in hiring the employee/contractor, and the mere fact that the [employee/contractor] negligently caused an injury to another affords no presumption that the employer was negligent in his selection of the employee/contractor. Id. at 519. The court implicitly adopted the view that an employer has a duty to exercise care in hiring and/or retaining workers, and may be held liable if it breaches that duty and causes damage to a plaintiff. See id. In Lincoln v. Fairfield-Nobel Co., 76 Mich. App. 514, , 257 N.W.2d 148 (1977), the court held that under a negligent hiring or retention theory, the employer s liability arises out of its own negligent acts, not from its relationship with its employees or contractors. Accordingly, Under this theory, it would be unnecessary for [the] plaintiff to show any agency relationship between [the plaintiff] and defendant. Id. As to an employee s intentional torts, the Michigan Supreme Court held that An employer who knew or should have known of his employee s propensities and criminal record before commission of an intentional tort by [the] employee... would be liable for damages to a customer injured by his conduct. Hersh v. Kentfield Builders, Inc., 385 Mich. 410, 412, 189 N.W.2d 286 (1971) (citing Bradley v. Stevens, 329 Mich. 556, 46 N.W.2d 382 (1951)). The court also held that an employer must use due care to avoid the selection or retention of an employee whom he knows or should know is a person unworthy, by habits, temperament, or nature, to deal with the persons invited to the premises by the employer and that [t]he employer s knowledge of past acts of impropriety, violence, or disorder on the part of the employee are generally sufficient to make future tortious acts of a similar nature foreseeable. Id. at

4 4. Negligent Supervision a. What are the elements necessary to establish liability under a theory of negligent supervision? There is no reported Michigan case setting forth the elements of a negligent supervision claim and applying them to find liability in the context of an employer/employee or principal/agent relationship. That said, the court in Millross v. Plum Hollow Golf Club, 429 Mich. 178, 193; 413 N.W.2d 17 (1987) acknowledged that a master may be under a duty to exercise reasonable care to control his servant while acting outside the scope of his employment to prevent him from intentionally harming others or from conducting himself to create an unreasonable risk of harm to them, if: (a) the servant (i) is upon the premises in possession of the master or upon which the servant is privileged to enter only as his servant, or (ii) is using property of the master, and (b) the master (i) knows or has reason to know that he has the ability to control his servant, and (ii) knows or should know of the necessity and opportunity for exercising such control. Further, Michigan has recognized liability for negligent supervision regarding the use of a motor vehicle in the context of parental failure to adequately supervise a child. In Muma v. Brown, 378 Mich. 637, 646, 148 N.W.2d 760 (1967), the Michigan Supreme Court held that [I]f a parent knows, or could reasonably be expected to know, that an inexperienced minor operator over whom he can exercise supervision and control will undertake to operate a motor vehicle, the availability of which to such inexperienced driver is also under the control of the parent, the parent is under obligation to exercise a high degree of care to render the vehicle unavailable to the child. The court held that under such theory, the general rules of negligence must be applied, meaning that there must be some act of the parents that was the proximate case of the injurious or damaging act, and that the harm resulting from the act was a foreseeable result. Id. at See also Dortman v. Lester, 380 Mich. 80, 84, 155 N.W.2d 846 (1968) (holding that liability may arise in one for the tortious conduct of another if the person controls, or has a duty to use care to control the conduct of another who is likely to do harm if not controlled, and fails to exercise care in such control ); Zapalski v. Benton, 178 Mich. App. 398, 444 N.W.2d 171 (1989) (holding that parents may be liable for failing to prevent their child from intentionally harming another if they are aware or have reason to know of their child s tortious propensities). B. Defenses 1. Admission of Agency is Not a Defense Admission of agency would not likely serve as a defense to a derivate negligence claim in Michigan. In Perin v. Peuler, 373 Mich. 531, 535, 130 N.W.2d 4, 7 (1964) (overruled on other grounds), the Michigan Supreme Court held that the common law action for negligent entrustment stands unimpaired by Michigan s 55-year-old owner-liability statute. In Perin, the plaintiff filed an action against the defendant father and defendant son, alleging she was injured by the negligent driving of the defendant son, who was operating a car owned by the defendant father. Id. at 547 (Kelly, J., dissenting). The defendant father responded by filing an answer admitting that the car was being driven by his son with his knowledge and consent, thereby implicating the owner liability statute. Id. Notwithstanding the danger of prejudice to the defendant who had already admitted liability under one theory of suit, the Court held that the 4

5 plaintiff in negligence may rely upon the owner-liability statute to hold the owner responsi[ble] for negligent operation of the latter s motor vehicle by another, and at the same time rely upon the quoted rule to hold the owner responsi[ble] for personal negligence arising out of negligent entrustment of such motor vehicle. Id. at 538 (majority opinion). 2. Traditional Tort Defenses Depending on the facts of a particular case, traditional tort defense such as comparative fault, failure to mitigate damages, superseding and intervening causes, and others, may also apply. C. Punitive Damages 1. Is evidence supporting a derivative negligence claim admissible to prove entitlement to punitive damages? Punitive damages are generally not recoverable in Michigan, except where expressly authorized by statute. Gilbert v. DaimlerChrysler Corp., 470 Mich. 749, 765; 685 N.W.2d 391 (2004). There are no Michigan statutes expressly authorizing punitive damages in civil tort liability actions involving transportation-related matters. However, exemplary damages may be recovered in certain circumstances as an added measure of compensatory damages, usually in cases involving intentional torts. Exemplary damages are intended to compensate for malicious or willful and wanton conduct by the defendant that inspire[s] feelings of humiliation, outrage and indignity in the plaintiff. Veselenak v. Smith, 414 Mich. 567, 574, 327 N.W.2d 261 (1982). Inasmuch as Perin v Peuler, 373 Mich. 531, 130 N.W.2d 4 (1964) suggests that evidence supporting a defendant s liability under a derivative theory of suit is admissible even where the defendant has already admitted liability under an ownership statute or agency theory, Perin would appear to allow introduction of such evidence to support an award of exemplary damages under those circumstances as well. This Compendium outline contains a brief overview of Michigan law concerning certain select legal topics. It provides a general synopsis of current law and is not intended to serve as a detailed analysis of legal issues. This outline is provided solely for general information and educational purposes. It does not solicit, establish, or continue an attorney-client relationship with any attorney or law firm identified as an author, editor or contributor. The contents should not be construed as legal advice or opinion. While every effort has been made to ensure accuracy, the contents should not be relied upon for any specific factual situation. These materials are not intended to cover all laws or regulations that may be applicable to a specific factual situation. If you have questions or matters to be resolved for which legal advice may be indicated, you are encouraged to contact a lawyer licensed in the state for which you are investigating a claim and/or seeking legal advice. 5