Tarron v. Bowen Machine & Fabricating, Inc (8/3/2010)

August 13, 2010

Arizona Supreme Court Holds that Borrowing Employer Need Not Have Exclusive Control Over Borrowed Employee to be Vicariously Liable for Employee’s Negligent Acts Under Borrowed Servant Doctrine.

Plaintiff fell and was seriously injured while working at a copper smelter because of the negligence of two workers at the site.  The two workers had been loaned to the Plaintiff’s employer by another company, the Defendant, under a labor agreement.  Plaintiff sued Defendant, alleging respondeat superior liability for the negligence of the two borrowed employees.

The trial court granted partial summary judgment for Plaintiff as to Defendant’s vicarious liability.  A jury awarded damages of $1.5 million and apportioned fault among Plaintiff, his employer, and Defendant.  The Arizona Court of Appeals reversed the partial summary judgment, finding an issue of fact as to whether Defendant had surrendered to Plaintiff’s employer the exclusive right to control the two workers with regard to the work activities that had caused the accident.

The Arizona Supreme Court granted review, affirmed the Court of Appeals’ reversal of the partial summary judgment, and remanded for a new trial.

Under the doctrine of respondeat superior liability, an employer is generally vicariously liable for the negligent work-related actions of its employees.  The borrowed servant doctrine, however, allows an employer who loans an employee to do work for another business to escape vicarious liability for the employee’s negligence under certain circumstances. 

To determine vicarious liability as between the two employers, courts focus on which employer had control of the details of the particular work being done at the time of the injury-causing incident.  The loaning employer remains vicariously liable if it exercised actual control over the acts giving rise to the injury or retained a right to control those acts.  In some circumstances, both employers may be liable because each had actual control of, or the right to control, the employee’s actions.  The issue typically presents a question of fact for the jury.

Here, the labor agreement stated that the borrowing employer would have no direction or control over the method of performance of the borrowed employees’ work.  On this basis, the trial court ruled as a matter of law that Defendant was vicariously liable because it retained a contractual right to control the employees that it loaned.  But contract provisions, although relevant, are not controlling.  Instead, the fact finder must determine the objective nature of the relationship.

Because both employers may be liable under certain circumstances, the Court disapproved of prior decisions suggesting that the borrowing employer must have the exclusive right to control the borrowed employee to be vicariously liable. 

The Court of Appeals correctly concluded that summary judgment was improper because of disputed issues of fact regarding the right to control the borrowed employees.  The Court remanded for a new trial on the limited issue whether Defendant had ceded its right to control the work done by the two negligent employees.  

Chief Justice Berch authored the opinion for the unanimous court.