Do the Federal Motor Carrier Rules Apply to Shippers Who Hire Independent Contractors?

Posted in Georgia Supreme Court decisions,truck accident on November 10, 2020

Do the Federal Motor Carrier Rules Apply to Shippers Who Hire Independent Contractors?

That was the question in a recent Georgia court case.

In 2015, Christopher Hinson was driving a Southern Oil tanker truck when he collided with a car traveling at 79 mph. Three people in the car were killed.

Hinson was an employee of Southern Oil and was on his way to a terminal to get fuel for a delivery to a gas station at the time of the accident. The next of kin brought claims alleging the truck driver’s negligent operation of the fuel tanker truck resulted in a collision with the victim’s vehicle and that Southern Oil and Stubbs Oil—the owner of the fuel being transported in the tanker truck— were liable for damages.

At the time of the accident, the plaintiffs allege that the truck driver was asleep at the wheel and under the influence of illegally-prescribed drugs. However, that wasn’t the question presented on appeal. Rather, the court was asked to consider whether Stubbs Oil—who hired Southern Oil to deliver its fuel to its gas stations—could be held liable for Southern Oil and Hinson’s negligence under the theory of vicarious liability. That’s when a supervisory party (like an employer) is responsible for the conduct of an employee or associate based on the relationship between the two.

Was Stubbs the “Statutory Employer” under the Federal Motor Carrier Safety Regulations?

The Federal Motor Carrier Safety Regulations (FMCSRs) regulate commercial motor vehicles in interstate commerce.

In this case, Stubbs Oil asked the trial court to dismiss the action against them, arguing that the plaintiffs sought to improperly expand liability against the fuel owner under federal law. The trial court denied the motion, and Stubbs Oil filed an appeal.

Stubbs Oil said that it couldn’t be held vicariously liable because it wasn’t the truck driver or Southern Oil’s statutory employer under the FMCSRs and that Southern Oil was acting as an independent contractor.

Stubbs purchased fuel from large oil companies and then resold it to individual gas stations. To deliver the fuel, Stubbs hired third-party motor carriers, who owned large fuel tankers like Southern Oil. However, Stubbs didn’t have written contracts with any of these carriers. Instead, the typical procedure for scheduling deliveries began with Stubbs contacting a third-party carrier to ask if it could make a delivery. If so, it would email the carrier a ticket with the delivery information. Stubbs didn’t monitor the carrier or oversee its actions at the fuel terminal. It only gave the third-party trucker an account number which was used to draw fuel. Also, Stubbs didn’t dictate the carrier’s route or method of delivery.

This approach to fuel deliveries is typical of any shipper using the services of an independent delivery contractor.

After completing a delivery, the third-party carrier provided Stubbs with a bill of lading and an invoice, and Stubbs Oil paid for the delivery.

Was Stubbs Vicariously Liable for the Accident?

The plaintiffs alleged that the truck driver’s negligent operation of the fuel tanker truck resulted in a motor-vehicle collision that killed three people and that Southern Oil was vicariously liable as his employer. In addition, the plaintiffs argued that Stubbs Oil was vicariously liable because it acted as the truck driver and Southern Oil’s statutory employer under the FMCSRs.

At trial, the judge found that Southern Oil could only operate as a private motor carrier, and therefore, Stubbs Oil was—by implication—Hinson and Southern Oil’s statutory employer. But on appeal, Presiding Judge Dillard of the Georgia Court of Appeals held that the trial court erred in finding Stubbs could be held vicariously liable as the statutory employer of Hinson and Southern Oil under the FMCSRs.

Judge Dillard explained that the FMCSRs apply to “motor carriers, not to shippers who engage independent contractors to transport goods.” The FMCSRs define a “for-hire motor carrier” as “a person engaged in the transportation of goods or passengers for compensation.” On the other hand, a “shipper” is “a person who tenders property to a motor carrier or driver of a commercial motor vehicle for transportation in interstate commerce…”

The plaintiffs claimed Stubbs was a motor carrier under the FMCSRs, but Judge Dillard said that the relevant issue was whether Stubbs “acted as a motor carrier in the specific transaction at issue.” Here, there was no doubt that Stubbs hired Southern Oil to transport its fuel and that Southern Oil used its own vehicle and driver. Therefore, Stubbs was acting as a shipper in this situation.

Moreover, Judge Dillard and the Court of Appeals said that the FMCSRs define an “employer” as “any person engaged in a business affecting interstate commerce who owns or leases a commercial vehicle in connection with that business, or assigns employees to operate it…” But without evidence of either a written or oral lease between the big rig driver or Southern Oil and Stubbs, Stubbs couldn’t be characterized as a statutory employer.

There was no question that Stubbs didn’t own the tanker truck driven by Hinson and involved in the accident. As such, it wasn’t operating as a motor carrier at the time. And there was no evidence of a written lease between Stubbs and Southern Oil or Hinson as to the tractor-trailer. In addition, there was no evidence of an oral lease between Southern Oil and Stubbs Oil. Instead, the evidence showed:

  • Southern Oil and Stubbs actually denied the existence of an oral lease;
  • The truck driver was directly employed by Southern Oil;
  • Only Southern Oil contacted the truck driver and directed his actions for deliveries;
  • Stubbs had no control over the truck driver or Southern Oil beyond prescribing the basic parameters for the delivery; and
  • The tanker truck involved in the accident had Southern Oil’s logo and DOT number on it, not that of Stubbs Oil.

Could Stubbs Oil be Vicariously Liable under the Theory of Respondeat Superior?

This legal doctrine states that an employer or principal is legally responsible for the wrongful acts of an employee or agent if those acts occur within the scope of the employment or agency.

Georgia Statute § 51-2-4 says that “[a]n employer generally is not responsible for torts committed by his employee when the employee exercises an independent business and in it is not subject to the immediate direction and control of the employer.”

Judge Dillard explained that in the absence of evidence of actual control, the test distinguishing an employee from an independent contractor is whether “the employer assumed the right to control the time, manner and method of executing the work, as distinguished from the right merely to require certain definite results in conformity to the contract.”

There was no question that Stubbs Oil and Southern Oil were distinct and separate companies, and there was no evidence Stubbs Oil exercised the level of control over Southern Oil or the truck driver required to incur any liability for their alleged negligence.

As a result, the trial court erred in denying summary judgment to dismiss the action against Stubbs Oil. Stubbs Oil Co. v. Price, 2020 Ga. App. LEXIS 580 (Ga. App. October 19, 2020).

Takeaway

Southern Oil was one of the third-party carriers Stubbs Oil used on occasion to transport its fuel to gas stations. Hinson was a full-time truck driver for Southern Oil. The Georgia Court of Appeals held that there wasn’t the level of control required to find Stubbs Oil responsible for the actions of its independent contractor’s driver’s negligence in causing the accident.

All of this goes to show just how important it is you hire a knowledgeable truck accident lawyer who really knows the rules and does the legal research to win.