STATE OF NORTH DAKOTA TRANSPORTATION COMPENDIUM OF LAW
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1 STATE OF NORTH DAKOTA TRANSPORTATION COMPENDIUM OF LAW Nicholas C. Grant Ebeltoft. Sickler. Kolling. Grosz. Bouray. PLLC PO Box 1598 Dickinson, ND Tel: (701) Revised 2012
2 This outline is intended to provide a general overview of North Dakota transportation law. The discussion on any particular topic is not necessarily an indication of the total law related to an area of North Dakota s law related to transportation. Like most states, transportation law in North Dakota is governed by general principles of tort and contract law. North Dakota is a modified comparative fault state. N.D.C.C A plaintiff may only recover if the fault of all other persons contributing to the injury exceeds the plaintiff s own fault. Claims will be barred if the plaintiff is 50% at fault or more. Any damages must be diminished in proportion to the amount of the contributing fault of the claimant. When two or more parties are found to have contributed to the injury, the liability of each party is several only, and is not joint, and each party is liable only for the amount of damages attributable to the percentage of fault of that party. However, if persons act in concert in committing a tortious act or aid, encourage, ratify, or adopt the act for their benefit, those parties will be jointly liable for all damages attributable to their combined percentage of fault. A. Elements of Proof for the Derivative Negligence Claim of Respondeat Superior 1. Respondeat Superior ( Let the principal answer ) a. What are the elements necessary to establish liability under a theory of Respondeat Superior? Respondeat superior is sometimes referred to in North Dakota as vicarious liability, as they both embody the same legal concept. Nelson v. Gillette, 571 N.W.2d 332, 333 (N.D. 1997). This doctrine is statutorily incorporated in North Dakota, and is based on general principal-agency law. N.D.C.C Ordinarily, an employer is liable for the negligence of its employee in the transaction of the employer s business. Zimprich v. Broekel, 519 N.W.2d 588, 590 (N.D. 1994). This liability arises from an employer s right to control the employee. Accordingly, vicarious liability only extends to acts of the employee done on the employer s behalf, and in the course and scope of the employee s employment. Id. Under North Dakota law, employers are not generally liable for the negligence of independent contractors, unless the employer retains control over the independent contractor s work. Doan ex. rel. Doan v. City of Bismarck, 632 N.W.2d 815, 822 (N.D. 2001). Importantly, North Dakota does not recognize the retained control doctrine as a form of vicarious liability, but rather as an affirmative duty on the employer to exercise all retained control with reasonable care. Id. Thus, employers who entrust work to an independent contractor are subject to liability for harm to others for whom the employer owes a duty to exercise reasonable care, if 2
3 the employer retains control of any part of the work, causing harm by failing to exercise such control with reasonable care. Id. (quoting Restatement (Second) Torts 414 (1965)) (internal quotation marks omitted). The degree of retained control necessary to impose this affirmative duty arises only when the employer retains control over the method, manner, and operative detail of the work. Doan ex. rel Doan, 632 N.W.2d at 822. Importantly, the case law focuses on the level of control that is retained in the contractual agreement, rather than the amount actually asserted. b. Examples In Zimprich v. Broekel, 519 N.W.2d 588 (N.D. 1994), the North Dakota Supreme Court held, despite the independent contractor being a statutory employee under federal law, the employer/carrier was not strictly liable for the negligence of the independent contractor. The Court stated that liability is determined under applicable state law, not a federal scheme that creates a fictitious employment relationship. Id. at 591. The Court held that the truck lessee/broker was not liable for the negligence of its independent contractor, as the lessee did not retain control over the manner, method, and operative detail of the independent contractor s performance of the work. Id. at 593. c. Placard Liablity There are no reported cases in North Dakota dealing with placard liability. 2. Elements of Direct Negligence Claim of Negligent Entrustment a. What are the elements necessary to establish liability under a theory of negligent entrustment? North Dakota recognizes the cause of action of negligent entrustment. Barsness v. General Diesel and Equipment Co., Inc., 383 N.W.2d 840, 842 (N.D. 1986). This cause of action is based on 390 of the Restatement (Second) Torts, which reads: 390. Chattel for Use by Person Known to be Incompetent. One who supplies directly or through a third person a chattel for the use of another whom the supplier knows or has reason to know to be likely because of his youth, inexperience, or otherwise, to use it in a manner involving unreasonable risk of physical harm to himself and others whom the supplier should expect to share in or be endangered by its use, is subject to liability for physical harm resulting to them. One of the essential elements of the cause of action of negligent entrustment is that the injured party demonstrate the supplier of the motor 3
4 vehicle knew or had reason to know the entrustee would likely use it in a manner involving an unreasonable risk of physical harm. Collette v. Clausen, 667 N.W.2d 617, 623 (N.D. 2003). 3. Elements of Direct Negligence Claim of Negligent Hiring ( Negligent Selection ), Supervision, and Retention a. What are the elements necessary to establish liability under a theory of negligent hiring or supervision? The direct liability torts of negligent hiring, supervision, and retention are often pled together in North Dakota. All three causes of action suppose an affirmative duty on the employer, and are not based on vicarious liability for the negligence of the employee. In order to be held liable under any of these theories, the plaintiff must establish a duty, breach, causation, and damages. The tort of negligent hiring or selection requires the plaintiff to show that, at the time the employer hired the employee or selected the independent contractor, the employer had either actual or constructive knowledge the employee or independent contractor were incompetent. Schlenk v. Northwestern Bell Telephone Co., Inc., 329 N.W.2d 605, 613 (N.D. 1983). This cause of action is an exception to the general rule that employers are not liable for the negligence of independent contractors, and is based on Restatement (Second) Torts 411. Id. Importantly, the North Dakota Supreme Court has held that, unless the work is of the sort that can only be safely done by person possessing special skill and training, the employer has no affirmative duty to investigate the work and safety practices of the independent contractor. Schlenk, 329 N.W.2d at 614. The basic rule in North Dakota is that the employer has the right to rely on the presumption that the contractor will perform his work in manner as to discharge his legal duties owing to his employers and third persons. Id. (citing Fettig v. Whitman, 285 N.W.2d 517, 523 (N.D. 1979). A claim for negligent supervision may arise when an employer fails to exercise ordinary care in supervising the employment relationship to prevent the foreseeable misconduct of an employee from causing harm to other employees or third persons. Koehler v. County of Grand Forks, 2003 ND 44, 28, 658 N.W.2d 741. Like ordinary negligence cases, the plaintiff alleging negligent supervision must establish duty, breach, causation, and damages. Id. The determination of whether a duty exists is generally a preliminary question of law for the court; however, if the existence of the duty depends on resolution of factual issues, the facts must be resolved by the trier of fact. Groleau v. Bjornson Oil Co., Inc., 676 N.W.2d 763 (N.D. 2004). To succeed on a negligent retention claim, the plaintiff must establish the following elements: 1) a duty of care owed by an employer to a third 4
5 B. Defenses person; 2) breach of that duty; 3) injury to the third person proximately caused by the employer s breach. Richard v. Washburn Public Schools, 2011 ND 240, 24. To determine whether a duty exists, the court will consider the relationship of the parties, foreseeability of harm to the injured party, and public policy concerns. Id. (citing Gingerich v. City of Elkhart Prob. Dep t, 273 F.R.D. 532, 538 (N.D. Ind. 2011)). The employer may be subject to liability when it retains an employee that habitually misconducts themselves in a manner dangerous to others, and the employer has knowledge of this propensity. See id. 1. Traditional Tort Defenses An affirmative defense to a claim of vicarious liability would be arguing that the actions of the employee were outside the course and scope of the employment, and were not done on the employer s behalf. See Zimprich, 519 N.W.2d at 591. Traditional tort defenses may also apply to claims of vicarious liability and the direct negligence theories of negligent entrustment, retention, supervision, and hiring, including: contributory negligence; statute of limitations; statute of repose; assumption of the risk; failure to mitigate damages; superseding and intervening causes; laches; waiver; estoppel; and sudden emergency. As stated previously, North Dakota is a modified comparative fault state. N.D.C.C Thus, if the fault of the plaintiff is more than all other potentially liable parties combined, then the plaintiff is unable to recover. In other words, if a plaintiff is 50% or more at fault, then he or she is barred from recovery. C. Punitive or Exemplary Damages The availability of exemplary damages in North Dakota is governed by statute. Under N.D.C.C , in an action for breach of an obligation not arising from contract, when the defendant has been rendered guilty by clear and convincing evidence of oppression, fraud, or actual malice, the court or jury may award exemplary damages. The procedure for pleading exemplary damages is also proscribed, requiring the party seeking these types of damages to amend the pleadings after suit is filed. The motion must require an applicable legal basis for awarding exemplary damages, and must be accompanied by affidavit or deposition testimony providing a factual basis for the motion. Importantly, mere negligence does not justify the award of exemplary damages. McLean v. Kirby Co., 490 N.W.2d 229, 248 (N.D. 1992). 5
6 Exemplary damages may be awarded against the principal for the acts of the agent only if at least one of the following is shown by clear and convincing evidence: The principal or a managerial agent authorized the doing and manner of the act; The agent was unfit and the principal or managerial agent was reckless in employing or retaining the agent; The agent was employed in a managerial capacity and was acting in the scope of employment; or The principal or managerial agent ratified or approved the doing and manner of the act. N.D.C.C (8). Despite the language above, the conduct of the agent must still constitute oppression, fraud, or actual malice to justify an award of punitive damages against the principal. Exemplary damages are capped in North Dakota at two times the amount of compensatory damages or two hundred fifty thousand dollars, whichever is greater.... N.D.C.C (4). This compendium outline contains a brief overview of certain laws concerning various litigation and legal topics. The compendium provides a simple synopsis of current law and is not intended to explore lengthy analysis of legal issues. This compendium is provided for general information and educational purposes only. 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 be accurate, the contents should not be relied upon in any specific factual situation. These materials are not intended to provide legal advice or to cover all laws or regulations that may be applicable to a specific factual situation. If you have matters or questions to be resolved for which legal advice may be indicated, you are encouraged to contact a lawyer authorized to practice law in the state for which you are investigating and/or seeking legal advice. 6
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