Section C: Vicarious Liability

Ira. S. Bushey & Sons, Inc. v. U.S. (1968) PAGE 429

Drydock Owner (P) v. Coast Guard (D)

Rule: An employer is vicariously liable for the reasonably foreseeable conduct of its employees performed
within the scope of employment, even when such conduct was not motivated with a purpose to serve the
employer.

Facts: Lane, an intoxicated seaman was returning at night from shore leave to his ship, a United States (D)
Coas Guard vessel in drydock. However, before going on board, he opened three water intake valves that
controlled the flooding of the tanks of one side of the drydock. This flooded the drydock

Trial Court: Rejected that argument and held that an expansion of the employer’s liability would serve the
public policy of a more intensive screening of employees and allocation of resources.

Holding: (Friendly,J).
Yes, an employer is vicariously liable for the reasonably foreseeable conduct of its employees performed
within the scope of employment, even when such conduct was not motivated with a purpose to serve the
employer. Courts have gone to find the motive of the negligent employee was to serve the master,
“MOTIVE TEST” is artificial.

Lane was surely not serving the government in his destructive action, but his conduct was not so
unforeseeable as to make it unfair to charge (D) government with responsibility. It was foreseeable that
sailors return to the ship intoxicated, and in crossing the drydock might intentionally or negligently damage
it. Allocation of a reasonable foreseeable even is fair, Government (D) must bear the loss. Affirmed.

Reasoning/ Discussion. The level of foreseability in a respondent superior issue is not the same as foresee
ability in a negligence case. For purposes of respondent superior, it is only required that an employer would
perceive that harm could flow from actions of their employees, whether or not employer takes all
precautions.
· The Ps conduct was not so unforeseeable as to make it unfair to charge the D with responsibility
· It WAS foreseeable that crew members crossing the dry-dock might do damage, negligently or

1. Respondent superior history:

· The damage must be done, while the person is actually employed in the masters service, otherwise the
servant shall answer for his own misbehavior.
· Today, the law holds master and servant liable for torts that arise out of and in the course of
employment

River Wear Commissioners v. Adamson (1876)

Ruling: In the great majority of cases the servant actually guilty of the negligence is poor and unable to
make good the damage, especially if it is considerable, and the master is at least comparatively rich and
consequently it is generally better to fix the master with liability, but there is also concurrent liability in the
servant who is not charged from liability because his master also is liable.

2. Efficiency arguments:
· Vicarious liability reduces the risk that the insolvency of a particular employee will impose an
uncompensated risk on a 3rd party.
· Also reduces the need to have an extensive network of voluntary contracts between employees and
employers to make the employer the ultimate risk bearer when the employee is solvent
· Protects 3rd parties who know that some firm employee is responsible for the less, but can’t determine
which is responsible

3. Frolic and detour: traditional applications:

· Under vicarious liability, it is still necessary to determine which acts fall within the scope of
employment. Employees don’t always act as employees when they are supposed to be on the job
· Imposing vicarious liability creates a strong incentive for the employer to monitor the behavior of the
employee.

Broadway v. Kelly Brothers Contractors (2000) PAGE 434

Facts: The employee of the D killed a 3 yr old boy while driving his employer’s truck to church from which
he planned on driving to work afterwards.
Ruling: It was for the jury to decide whether the employee had the authority to determine his own itinerary
such that within the scope and course of his employment at the time of the accident.

Lisa M v. Henry Mayo Newhall Memorial Hospital (1995) PAGE 434

Facts: The P was a pregnant woman who was sexually assaulted when the D was in a room with her for an
ultrasound examination.
Ruling: The hospital was not vicariously liable for the wrong… The motivating emotions have to be fairly
attributable to work related events or conditions.
The technicians (D) decision to engage in conscious exploitation of the P did not arise out of the
performance of the examination, although the circumstances of the examination made it possible.

Kephart v. Genuity (2006) PAGE 435

Facts: The Ds employee, Graham, in a prolonged fit of road rage, forced the Ps car off the highway where it
overturned and left the P a quadriplegic.
Ruling: LISA M. case was followed. The time of the Ds incident was well removed from any requirement
of employment; he left his house 5 hours earlier for personal reasons.

5. Negligent hiring
Schechter v. Merchants Home Delivery (2006) PAGE 435
Facts: The D hired 2 workers to install a new washing machine in the Ps home, but instead robbed the 80 yr
old P.
Ruling: the actions fell outside the course of employment, BUT allowed the P to reach a jury on the theory
of negligent hiring, on the issue of whether the D failed in its duty to supervise, train and maintain its
delivery personnel.

6. Vicarious liability in the modern regulatory state:

Meritor Savings Bank v. Vinson (1986) pg 435

Facts: Supreme Court refused to hold definitively that the common law rules of vicarious liability applied to
sexual harassment cases brought under Title VII of the Civil Rights Act of 1964.

Burlington Industries v. Ellerth (1998) Page 436

Ruling: The court 1st announced the general rule is that sexual harassment by a supervisor is not conduct
within the scope of employment BUT held further that employers were vicariously liable when a supervisor
with immediate or successively higher authority over the employee created a hostile environment.
Subject to 2 defenses:
1. The liability doesn’t attach to an employer who exercised reasonable care to promptly prevent and
correct any sexually harassing behavior.
2. Liability could not be imposed for the benefit of employees who unreasonably failed to take advantage
of any preventive or corrective opportunities provided by the employer to avoid harm otherwise, which
operates as a form of contributory negligence.

7. The borrowed servant PAGE 436

· RULE: as long as the employee is furthering the business of his general employer by the service
rendered to another, there will be no inference of a new relation UNLESS command has been
surrendered, and no interference of its surrender from the mere fact of its division.
· Recent cases have tended to hold BOTH employers responsible for the torts of the borrowed servant
- It is unreasonable to choose between the two when each shares the right to control the employer’s
actions.

9. Beyond vicarious liability PAGE 437

· Even when the D doesn’t employ the actual wrongdoer, he may be liable under so-called owner consent
statutes that entitled the victim of a tort to sue both the driver of a vehicle and its owner even if the driver is
not engaged in the owners business.

10. Joint enterprise:

· A principle of vicarious liability also holds each partner to a joint enterprise vicariously liable for the
wrongs of his partner.

Heick v. Bacon (1997) PAGE 438

Ruling: Court refused to treat a passenger and a driver as a join enterprise while on a pleasure trip that took
them from bar to bar to drink and play games. Court rejected the minority rules for any purpose in which
they have a common interest of any kind. Injured party couldn’t sue because she didn’t have a mutual right
of control over the operation of the vehicle.

11. Independent contractors:

· Line between employees and independent contractors is often vague
· And could turn on such matters as whether the asserted employees work for multiple firms, wear
uniforms or get paid regular salary.
· Independent contractor: one who by virtue of his contract possesses independence in the manner and
method of performing the work he has contracted to perform for the other party to the contract.

12. Employer liability for independent contractors

· One important exception to no-vicarious liability rule for independent contractors arises when the
independent contractor doesn’t work on the employers premises
· It is generally held that if the owner of a lot employs a contractor to make an excavation on which the
lateral support of a building of an adjoining owner the doctrine of respondent superior is applicable and the
liability of the owner of the lot is to be determined as though he actually made the excavation himself.
· Same principle applies to damage from blasting or the cutting of electrical conduits, water pipes or
gasoline lines located below the ground.
427 NEGLIGENCE AS TO DANGER INHERENT IN THE WORK

Petrovich v. Share Health Plan of Illinois, Inc. (1999) Page 440

D: Share Health Plan of Illinois, HMO, and Dr. Kowalski P: Pretroviche (decedent)

Procedural History: P filed a medical malpractice action against the D for failing to diagnose in a timely
manner.
Rule: A health maintenance organization (HMO) may be held vicariously liable for the negligence of
its independent contractor’s physicians under the doctrine of apparent and implied authority.

Facts: P) alleged that Kowalski, her doctor, and Share Health Plan (D), her HMO, were liable for the
negligent and tardy diagnosis of her tongue cancer. D operated as a financing entity in arranging and paying
for health care treatment by contracting with independent medical groups and practitioners. Share did not
employ physicians directly, operate or maintain health care facilities, or supervise the administration of
medical treatment.

Issue: May a health maintenance organization (HMO) be held vicariously liable for the negligence of its
independent contractors physicians under doctrines of apparent and implied authority?

Holding and Rule: Yes. An HMO can be vicariously liable for the negligence of its independent contractor
physicians via apparent authority or implied authority.

As a general rule, no vicarious liability exists for the actions of independent contractors. However vicarious
liability under the doctrine of respondent superior may be imposed for actions of independent contractors
when an agency relationship is established under either the doctrine of apparent authority or implied
authority.

Reasoning:
· No vicarious liability exists for the actions of independent contractors
· It MAY nevertheless be imposed for the actions of independent contractors where an agency
relationship is established under either the doctrine of apparent authority or the doctrine of implied authority

1. Apparent Authority:
· Under apparent authority, a principal will be bound by those who have agency through direct authority,
and by those who appear to have such authority.
· the doctrine functions like an estoppel.

Court relied on Gilbert v. Sycamore Municipial Hospital (1993)

Facts: The P (patient) suffered a heart attack after being treated and released by a physician at the D
hospital emergency room. The P charged the D with vicarious liability for the physician’s negligence in
failing to diagnose the Ps heart problem.

Ruling:
Trial: summary judgment to the D, D couldn’t be held vicariously liable because the emergency room doc.
was an independent contractor.
Appeals: court reversed: a genuine issue of material fact existed as to whether the doctor was acting as the
Ds apparent agent.
§ Held that unless the patient knows or should have known that the physician is an independent contractor,
vicarious liability can attach to a hospital for the medical malpractice of its physicians under the apparent
authority doctrine.

· Elements needed to prove apparent authority against the D

1. HOLDING OUT: that the HMO held itself out as the provider of health care, without informing the
patient that the care is given by independent contractors
 2. JUSTIFIABLE RELIANCE: The patient justifiably relied upon the conduct of the MO by looking to
the HMO to provide health care services rather than to a specific physician.

Applying the following to Petrovich Case:

1. Holding Out: could be established because no indication that P knew or should have known of the
private contractual agreements between the D and its physicians.
a. She didn’t receive clear notice that her care was supplied by independent contractors.

2. Justifiable reliance:
a. Element is MET where the P relies on the HMO to provide health care services AND doesn’t rely on a
specific physician
b. NOT MET where the P selects his own personal physician and merely looked to the HMO as a conduit
through which the P received medical care.
D argues: that the P can’t establish a justifiable reliance claim because she didn’t select them
Court argues:
· Rejects the Ds argument
· Where a person has no choice BUT to enroll with a single HMO and doesn’t rely upon a specific
physician, then that person is likewise relying upon the HMO to provide health care.
Ps employer selected D for her.
P had no choice of health plans whatsoever
Once the P became part of the Ds plan, the D required the P to obtain her primary medical care from one of
its primary care doctors.