Opinion ID: 2585247
Heading Depth: 2
Heading Rank: 2

Heading: Applying the Rationale of Privette, Toland and Camargo to the Doctrine of Negligent Exercise of Retained Control

Text: Again, section 414 provides: One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by his failure to exercise his control with reasonable care. (Italics added.) Defendant Caltrans contends that employees of a contractor are not others for the purposes of section 414. There are no illustrations to section 414, and the comments to section 414 cast no light on this question. (See § 414, corns, a-c, pp. 387-388.) However, section 414like sections 413 and 416, which set out the peculiar risk doctrine at issue in Privette and Toland, and section 411, which sets out the negligent hiring doctrine at issue in Camargo appears in chapter 15 of the Restatement. And as we noted in Toland, and reiterated in Camargo, a tentative draft to the Restatement 'stated that when the Sections in this Chapter speak of liability to `another,' or `others,' or to `third persons,' it is to be understood that the employees of the contractor, as well as those of the defendant himself, are not included. (Rest.2d Torts (Tent. Draft No. 7, Apr. 16, 1962) ch. 15, special note, p. 18, italics added.)' ( Toland, supra, 18 Cal.4th at pp. 266-267, 74 Cal.Rptr.2d 878, 955 P.2d 504.) ( Camargo, supra, 25 Cal.4th at p. 1241, 108 Cal. Rptr.2d 617, 25 P.3d 1096.) In Camargo, we noted that [t]he overwhelming majority of the courts of other jurisdictions that have addressed the question have concluded that an employee of a contractor is not a third person for the purposes of section 411. [Citations.] ( Camargo, supra, 25 Cal.4th at p. 1241, 108 Cal.Rptr.2d 617, 25 P.3d 1096.) Unfortunately, the courts of our sister states have not developed a similar consensus, nor have they spoken with anything like the same clarity, with regard to the question whether employees of contractors are others for the purposes of section 414. The courts of a number of states have assumed, without directly addressing the question, that an employee of a contractor may sue the hirer of the contractor for negligent exercise of retained control, and these courts have focused, instead, on whether a triable issue was presented as to retention of control or on whether a judgment in favor of the plaintiff was supported by sufficient evidence as to retention of control. (See Alabama Power Co. v. Beam (Ala.1985) 472 So.2d 619, 622-625; Elkins v. Arkla, Inc. (1993) 312 Ark. 280, 849 S.W.2d 489, 490-492; Corsetti v. Stone Co. (1985) 396 Mass. 1, 483 N.E.2d 793, 799; Clausen v. Aberdeen Grain Inspection (S.D.1999) 594 N.W.2d 718, 721-723; Hittel v. WOTCO, Inc. (Wyo.2000) 996 P.2d 673, 676-678.) The courts of states that have directly addressed it are evenly split on the question whether an employee of a contractor may sue the hirer of the contractor for negligent exercise of retained control. Answering the question in the affirmative, the Supreme Court of North Dakota has stated the rule broadly. Employees of an independent contractor fall within the protection of Section 414, and an employer of an independent contractor owes a duty to the independent contractor's employees to exercise the retained control with reasonable care. ( Fleck v. ANG Coal Gasification Co. (N.D.1994) 522 N.W.2d 445, 447.) Taking a more nuanced position, the Supreme Court of Utah has held that a hirer is not liable to an employee of an independent contractor for negligent exercise of retained control, unless the hirer's conduct meets the active participation standard. ( Thompson v. Jess (Utah 1999) 979 P.2d 322, 326-328 (Thompson) . ) Under the 'active participation' standard, a principal employer is subject to liability for injuries arising out of its independent contractor's work if the employer is actively involved in, or asserts control over, the manner of performance of the contracted work. [Citation.] Such an assertion of control occurs, for example, when the principal employer directs that the contracted work be done by use of a certain mode or otherwise interferes with the means and methods by which the work is to be accomplished. [Citations.] ( Id. at p. 327.) Therefore, retained control is somewhat of a misnomer for the doctrine as the Utah Supreme Court applies it. Under the standards announced herein, a duty of care is imposed if the principal employer asserts affirmative control over or actually participates actively in the manner of performing the contracted work. `Retained,' to the extent the word implies passivity or nonaction, is inapt. ( Id at p. 328, fn. 3.) Like the North Dakota Supreme Court in Fleck, supra, 522 N.W.2d 445, the Supreme Court of New Mexico has voiced a broad theory of liability. If [an employer of an independent contractor] has the right to, and does, retain control of the work performed by the independent contractor, he owes the duty of care to the independent contractor's employee which, if breached, can result in liability to the employee. [Citation.] ( Valdez v. Cillessen & Son, Inc. (1987) 105 N.M. 575, 734 P.2d 1258, 1262.) However, the New Mexico Supreme Court announced this broad rule in a case in which the hirer's conduct would have more than satisfied the active participation standard announced by the Utah Supreme Court in Thompson, supra, 979 P.2d 322. An employee of a lathing and plastering subcontractor was injured in the collapse of scaffolding. A grant of summary judgment in favor of the hirer was reversed by the New Mexico Supreme Court because there was evidence in the record that the hirer had issued detailed directions to the subcontractor concerning virtually every aspect of the job, including the manner in which the scaffolding was to be erected, and that the hirer, through its superintendent at the jobsite, had fired the employees of subcontractors, instructed employees on how, when, and where to do their jobs, and assigned employees to tasks other than those which they had been hired to do. ( Valdez, at pp. 1262-1263.) On the other hand, the courts of other states have concluded that an employee of an independent contractor is barred from suing the hirer of the contractor for negligent exercise of retained control. The Court of Appeals of Kentucky concluded that [n]othing in the discussions of Sections 413, 414, 416, and 427 of the Restatement, Torts 2d, indicates that an employee of an independent contractor is within the class of `others' protected by those sections. ( King v. Shelby Rural Electric Cooperative Corp. (Ky.1974) 502 S.W.2d 659, 662, italics added.) In Parker v. Neighborhood Theatres (Ct.Spec.App.1988) 76 Md.App. 590, 547 A.2d 1080, the Court of Special Appeals of Maryland, after concluding the plaintiff had failed to establish retention of control, added that the plaintiff had also failed to provide the court with any authority that an employee of an independent contractor injured by the negligence of his own master is a person intended to be included among the class of persons to whom the owner owes a nondelegable duty of reasonable care.... No matter how appellant phrases it, what he is unsuccessfully attempting is an end run on the Worker's Compensation Law. ( Id. at p. 1085.) In Sutherland v. Barton (Minn. 1997) 570 N.W.2d 1, the Supreme Court of Minnesota found that no triable issue had been presented as to retained control, and so it reinstated the summary judgment in favor of the hirer, which had been reversed by the intermediate appellate court. In the course of reaching that conclusion, the court noted that when applying the Restatement [Second of Torts] sections that impose liability on companies hiring independent contractors, we have held that 'others' does not include the employees of an independent contractor. [Citation.] This limitation also applies to § 414. ( Id. at p. 5, fn. omitted.) Recently, the Courts of Appeal of California that have addressed the question have agreed that a hirer may, under certain circumstances, be liable to an employee of a contractor under a retained control theory. However, they have disagreed as to whether mere retention of control is sufficient, or whether something more, something like the Utah Supreme Court's concept of active participation, must be shown. (Compare Grahn v. Tosco Corp. (1997) 58 Cal.App.4th 1373, 68 Cal.Rptr.2d 806 (Grahn) with Kinney v. CSB Construction, Inc. (2001) 87 Cal.App.4th 28, 103 Cal.Rptr.2d 594 (Kinney) .) Under Grahn, the hirer may be held liable to the independent contractor's employee where the hirer retains sufficient control over the work of an independent contractor to be able to prevent or eliminate through the exercise of reasonable care the dangerous condition causing injury to the independent contractor's employee. [Citations.] ( Grahn, at p. 1393, 68 Cal.Rptr.2d 806, italics added.) Under Kinney, on the other hand, mere retention of the ability to control safety conditions is not enough. [A] general contractor owes no duty of care to an employee of a subcontractor to prevent or correct unsafe procedures or practices to which the contractor did not contribute by direction, induced reliance, or other affirmative conduct. The mere failure to exercise a power to compel the subcontractor to adopt safer procedures does not, without more, violate any duty owed to the plaintiff. Insofar as section 414 might permit the imposition of liability on a general contractor for mere failure to intervene in a subcontractor's working methods or procedures, without evidence that the general contractor affirmatively contributed to the employment of those methods or procedures, that section is inapplicable to claims by subcontractors' employees against the general contractor. ( Kinney, at p. 39, 103 Cal.Rptr.2d 594.) The Kinney court, we conclude, correctly applied the principles of our decisions in Privette and Toland, whereas the Grahn court made much the same mistake in applying Privette to section 414 as it did in applying that case to section 411 (see Camargo, supra, 25 Cal.4th at pp. 1242-1245, 108 Cal.Rptr.2d 617, 25 P.3d 1096, disapproving Grahn, supra, 58 Cal.App.4th 1373, 68 Cal.Rptr.2d 806, insofar as it was inconsistent with that opinion). In Grahn, an employee of an independent contractor sued the hirer of the contractor under three theories of negligence, including negligent hiring (§ 411) and negligent exercise of retained control (§ 414). ( Grahn, supra, 58 Cal.App.4th at pp. 1389-1396, 68 Cal.Rptr.2d 806.) Grahn was decided after Privette but before Toland, and without the benefit of the gloss provided by Toland the Court of Appeal in Grahn misunderstood Privette to have been bottomed on the ground that the hirer in a peculiar risk case is not directly negligent. In Privette, the court had before it only the issue of whether a peculiar risk theory could be used to hold a nonnegligent hirer liable under vicarious liability for the negligence of the independent contractor. ( Grata, at p. 1384, 68 Cal.Rptr.2d 806.) To the contrary, as we explained in Toland and reiterated in Camargo, the rationale of our decision in Privette extends to cases where the hirer is directly negligent in the sense of having failed to take precautions against the peculiar risks involved in the work entrusted to the contractor. To repeat: In Toland, we rejected the plaintiffs argument that Privette did not bar recovery for direct liability under section 413, but only for vicarious liability under section 416. ( Camargo, supra, 25 Cal.4th at pp. 1243-1244, 108 Cal.Rptr.2d 617, 25 P.3d 1096.) The Grahn court repeated its mistake in applying Privette to the doctrine of retained control. Having retained control of the independent contractor's work, the hirer has a direct and nonimputed obligation to see that reasonable precautions are taken to eliminate or reduce the risk of harm to the employees of its independent contractors. ( Grahn, supra, 58 Cal. App.4th at p. 1394, 68 Cal.Rptr.2d 806, italics added.) Again, the conclusion that a hirer's liability can be characterized as direct does not end the inquiry into whether the hirer should be held liable for injuries to a contractor's employees, as we explained in Camargo. Admittedly, as the Grahn court observed, under section 411, the hirer is, in a sense, being taxed with his own negligence under a theory of direct liability. ( Grahn, at p. 1385, 68 Cal.Rptr.2d 806.) However, the same could be said with regard to an action brought under the peculiar risk theory set forth in section 413. More importantly, under both sections 411 and 413, the liability of the hirer is `in essence vicarious or derivative in the sense that it derives from the act or omission of the hired contractor, because it is the hired contractor who caused the injury by failing to use reasonable care in performing the work.' ( Toland, supra, 18 Cal.4th at p. 265, 74 Cal.Rptr.2d 878, 955 P.2d 504.) Therefore, in a negligent hiring case under the theory set forth in section 411, just as in peculiar risk cases under the theories set forth in sections 413 and 416, `it would be unfair to impose liability on the hiring person when the liability of the contractor, the one primarily responsible for the worker's on-the-job injuries, is limited to providing workers' compensation coverage.' ( Toland, supra, 18 Cal.4th at p. 267, 74 Cal.Rptr.2d 878, 955 P.2d 504.) ( Camargo, supra, 25 Cal.4th at p. 1244, 108 Cal.Rptr.2d 617, 25 P.3d 1096.) Similarly, because the liability of the contractor, the person primarily responsible for the worker's on-the-job injuries, is limited to providing workers' compensation coverage, it would be unfair to impose tort liability on the hirer of the contractor merely because the hirer retained the ability to exercise control over safety at the worksite. In fairness, as the Kinney court recognized, the imposition of tort liability on a hirer should depend on whether the hirer exercised the control that was retained in a manner that affirmatively contributed to the injury of the contractor's employee. We are persuaded that the holdings of Privette and Toland should also apply to employees' claims under section 414 at least where, as here, (1) the sole factual basis for the claim is that the hirer failed to exercise a general supervisory power to require the contractor to correct an unsafe procedure or condition of the contractor's own making, and (2) there is no evidence that the hirer's conduct contributed in any way to the contractor's negligent performance by, e.g., inducing injurious action or inaction through actual direction, reliance on the hirer, or otherwise. The fairness rationale at the core of Privette and Toland applies equally to preclude imposition of liability on a hirer for mere failure to exercise a general supervisory power to prevent the creation or continuation of a hazardous practice, where such liability would exceed that imposed on the injured plaintiffs immediate employer, who created the hazard. ( Kinney, supra, 87 Cal.App.4th at p. 36, 103 Cal.Rptr .2d 594.) In Kinney, an employee of a subcontractor (PBE) was injured in a fall from scaffolding, and he sued the general contractor, CSB Construction, Inc. (CSB), for negligent exercise of retained control. Kinney is strikingly similar to the present case in that, although the hirer in theory retained a high degree of control over safety conditions at the jobsite, there was no indication the hirer contributed to the accident by an affirmative exercise of that control. The parties agreed for purposes of the summary judgment motion that during the performance of the subcontract, CSB `had the right to order any safety means or measures that it felt were appropriate' on the jobsite.... [According to the testimony of CSB's site superintendent], [i]f he saw an unsafe condition, he 'had a right to do whatever [he thought was] appropriate.' ... Specifically, `[i]f a subcontractor was working without adequate fall protection and [he] felt that fall protection was required, [he] would ... tell them that they needed fall protection' and `would ... stop the work until they had good fall protection.' ... However, he did not recall an instance in which he actually directed PBE or any of the other subcontractors on the job to alleviate an unsafe condition. ( Kinney, supra, 87 Cal. App.4th at p. 31, 103 Cal.Rptr.2d 594.) The question, as the Kinney court framed it, was whether a general contractor who claims the power to control all safety procedures on the worksite may be liable to the injured employee of a subcontractor for failing to direct the subcontractor to take safety precautions where there is no evidence that any conduct by the general contractor contributed affirmatively to the injuries. ( Kinney, supra, 87 Cal.App.4th at p. 30, 103 Cal.Rptr.2d 594.) Kinney answered that question in the negative. We hold that in light of recent California Supreme Court holdings limiting the liability of general contractors for injuries to employees of subcontractors, liability cannot be imposed on the general contractor based upon a mere failure to require the subcontractor to take safety precautions, where the general contractor's failure is not shown to have affirmatively contributed to the creation or persistence of the hazard causing the plaintiffs injuries. Accordingly, we affirm the judgment for defendant. (Ibid.) The Kinney court correctly applied our prior decisions. Imposing tort liability on a hirer of an independent contractor when the hirer's conduct has affirmatively contributed [3] to the injuries of the contractor's employee is consistent with the rationale of our decisions in Privette, Toland and Camargo because the liability of the hirer in such a case is not `in essence vicarious or derivative in the sense that it derives from the act or omission of the hired contractor.' ( Camargo, supra, 25 Cal.4th at p. 1244, 108 Cal.Rptr.2d 617, 25 P.3d 1096, quoting Toland, supra, 18 Cal.4th at p. 265, 74 Cal.Rptr.2d 878, 955 P.2d 504.) To the contrary, the liability of the hirer in such a case is direct in a much stronger sense of that term. Unlike the rule announced in Grahn, the rule announced in Kinney is not susceptible to the objection raised by Caltrans that a defendant will never be able to prevail on a motion for summary judgment in an action for negligent exercise of retained control. To the contrary, where, as here, the plaintiff fails to present a triable issue as to whether the defendant's exercise of retained control affirmatively contributed to the employee's injuries, summary judgment is appropriate. Caltrans also objects that two policy considerations that we have relied upon in barring employees of independent contractors from bringing tort actions against the hirers of the contractors under the peculiar risk doctrine or the negligent hiring doctrine also apply to actions brought under the retained control doctrine. Caltrans finds support in the following passage from Camargo: Two of the related policy considerations we relied upon in Privette also support our conclusion here that an employee of an independent contractor should not be permitted to bring a negligent hiring action against the hirer of the contractor: (1) The rule of workers' compensation exclusivity, which shields an independent contractor who pays workers' compensation insurance premiums from further liability to its employees, should equally apply to the person hiring the contractor because the hirer has indirectly paid the cost of such coverage inasmuch as it was presumably calculated into the contract price ( Privette, supra, 5 Cal.4th at p. 699, 21 Cal.Rptr.2d 72, 854 P.2d 721); and (2) permitting such a recovery would give employees of independent contractors an unwarranted windfall, something that is denied other workersthe right to recover tort damages for industrial injuries caused by their employer's failure to provide a safe working environment ( id. at pp. 699-700, 21 Cal.Rptr.2d 72, 854 P.2d 721). ( Camargo, supra, 25 Cal.4th at pp. 1244 1245, 108 Cal.Rptr.2d 617, 25 P.3d 1096, fn. omitted.) Caltrans's reliance is misplaced. While it is true that the cost of workers' compensation insurance coverage is as likely to have been calculated into the contract price paid by the hirer in a retained control case as it is in peculiar risk or negligent hiring cases, the contract price could not have reflected the cost of injuries that are attributable to the hirer's affirmative conduct. The contractor has no way of calculating an increase in the costs of coverage that are attributable to the conduct of third parties, which is why the employee, despite the existence of the workers' compensation system, is not barred from suing a third party who proximately causes the employee's injury. (See Lab.Code, § 3852.) Moreover, a close reading of our opinion in Privette reveals another ground for distinguishing between peculiar risk and negligent hiring cases, on the one hand, and negligent exercise of retained control cases, on the other, in this regard. At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor's negligence in performing the work. [Citations.] Central to this rule of nonliability was the recognition that a person who hired an independent contractor had `no right of control as to the mode of doing the work contracted for` ( Green v. Soule (1904) 145 Cal. 96, 99, 78 P. 337; accord, McDonald v. Shell Oil Co. (1955) 44 Cal.2d 785, 788, 285 P.2d 902.) [4] The reasoning was that the work performed was the enterprise of the contractor, who, as a matter of business convenience, would be better able than the person employing the contractor to absorb accident losses incurred in the course of the contracted work. This could be done, for instance, by indirectly including the cost of safety precautions and insurance coverage in the contract price. [Citations.] ( Privette, supra, 5 Cal.4th at p. 693, 21 Cal.Rptr.2d 72, 854 P.2d 721, italics added.) On the other hand, if a hirer does retain control over safety conditions at a worksite and negligently exercises that control in a manner that affirmatively contributes to an employee's injuries, it is only fair to impose liability on the hirer. Similarly, if an employee of an independent contractor can show that the hirer of the contractor affirmatively contributed to the employee's injuries, then permitting the employee to sue the hirer for negligent exercise of retained control cannot be said to give the employee an unwarranted windfall. The tort liability of the hirer is warranted by the hirer's own affirmative conduct. The rule of workers' compensation exclusivity does not preclude the employee from suing anyone else whose conduct was a proximate cause of the injury ( Privette, supra, 5 Cal.4th at p. 697, 21 Cal.Rptr.2d 72, 854 P.2d 721), and when affirmative conduct by the hirer of a con tractor is a proximate cause contributing to the injuries of an employee of a contractor, the employee should not be precluded from suing the hirer. Grahn v. Tosco Corp., supra, 58 Cal. App.4th 1373, 68 Cal.Rptr.2d 806, is disapproved insofar as it is inconsistent with this opinion.