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An Employer’s Concession of Vicarious Liability Bars Negligent Hiring and Retention Claims and Renders Evidence Supporting Such Claims Irrelevant

By Christopher M. Cotter

October 5, 2011

On June 23, 2011 the Supreme Court of California handed down a decision in Diaz v. Carcamo (2011) 51 Cal.4th 1148, which reaffirms the long-standing principle that an employer’s exposure for negligently hiring, retaining or entrusting an employee is limited solely to that employee’s own negligence.  The employer has no additional, distinct culpability for its negligent hiring and entrustment.  The Supreme Court further held that where an employer concedes to its vicarious liability for the acts of an employee, any evidence of the employer’s negligent hiring, retention or entrustment of the employee is irrelevant and inadmissible.

The Supreme Court originally established the principle that an employer’s vicarious liability is framed solely by the negligence of its employees in the 1954 case of Armenta v. Churchill (1954) 42 Cal.2d 448.  In Armenta, truck driver Dale Churchill hit and killed a man while backing up.  The man’s survivors sued both Dale and his wife, Alece, who owned the truck and employed Dale as its driver.  Alece admitted to her vicarious liability for Dale’s actions and the Supreme Court held that such an admission rendered the plaintiffs’ negligent entrustment claims against Alece irrelevant.  Vicarious liability and negligent entrustment were deemed “alternative theories under which . . . to impose upon [Alece] the same liability as might be imposed upon [Dale].”  Id. at 457.  Alece’s admission of vicarious liability had removed “the legal issue of her liability . . . from the case.”  Id.  Congruently, evidence of Dale’s 37 traffic violations, including a conviction of manslaughter, was excluded at trial.

In the nearly six decades since Armenta, a number of sea change tort reforms had called into question Armenta’s continued viability. 

Specifically, at the time Armenta was decided California apportioned fault on an “all or nothing” basis.  Any contributory negligence on the part of a plaintiff acted as a complete bar to recovery.  Conversely, each defendant found to be at fault was jointly and severally liable irrespective of their share or contribution.  It therefore did not matter whether a trial court submitted a negligent entrustment claim to the jury, because an employer admitting to vicarious liability would either be liable for all of a plaintiff’s damages or none at all.  Then, in 1975, the Supreme Court instated the first sea change by transitioning to the current comparative fault system.  Under comparative fault principles, liability is apportioned according to the respective fault of the various tortfeasors.

The next sea change was Proposition 51, passed by California voters in 1986, which narrowed the scope of joint and several liability.  Proposition 51 retained joint and several exposure amongst tortfeasors for a plaintiff’s economic damages, but limited tortfeasors’ exposure for non-economic damages to their proportionate percentage of fault. 

In light of these changes plaintiffs had argued, and the trial court and Court of Appeals in Diaz accepted, that excluding the submission of negligent entrustment, hiring or retention claims to a jury served to create an empty chair defendant where the employer should be sitting.  These holdings challenged Armenta by proposing that an employer’s negligent acts are distinct from those of their employees and should expose them to additional liability for their proportionate share of fault. 

The Supreme Court has now stepped in to dispel that position.  Diaz reaffirms the longstanding concept that negligent entrustment, hiring or retention may “establish an employer’s own fault but should not impose additional liability; instead, the employer’s liability cannot exceed that of the employee.”  Diaz, 51 Cal.4th at 1159.  “No matter how negligent an employer was in entrusting a vehicle to an employee, however, it is only if the employee then drove negligently that the employer can be liable for negligent entrustment, hiring, or retention.”  Id.  Naturally, the Diaz Court held that it is prejudicial to include an employer on a special verdict form under these circumstances.

Scope and Application

It should be noted that the Supreme Court easily dismissed the Court of Appeal’s argument that Armenta could be distinguished because it involved negligent entrustment rather than negligent hiring.  “A claim that an employer was negligent in hiring or retaining an employee-driver rarely differs in substance from a claim that an employer was negligent in entrusting a vehicle to the employee.”  Id.at 1157.  Any arguments that Diaz itself can be distinguished from situations dealing with negligent training, negligent retention or the like are similarly dissuasive.

It should also be noted that the Supreme Court refrained from holding that an employer can never be independently negligent in cases where vicarious liability is admitted.  For instance, the Court reasoned that when an employer provides a driver with a defective vehicle, the employer’s negligence might directly contribute to a tort and expose the employer to liability in its own right.  The test is essentially whether an employer’s negligent acts directly cause or contribute to the tort, or whether the employer merely acted negligently in relation to an employee involved in tortious conduct.

Evidentiary Implications

The Supreme Court did not stop at merely reaffirming Armenta in the post-comparative fault world.  Rather, the Diaz Court further held that any evidence in support of a negligent entrustment, retention or hiring claim against an employer who admits to vicarious liability is irrelevant and inadmissible.  Similar to the Armenta Court’s exclusion of the employee’s 37 traffic violations and conviction of manslaughter, the Supreme Court in Diaz determined that evidence of the employee’s past accidents, including one just 16 days before the incident at issue, illegal alien status, falsified Social Security information, past employment terminations and misrepresentations on his employment application was all prejudicial, irrelevant and inadmissible information.

As a practical matter, plaintiffs must now demonstrate how the evidence they seek to discover and present to a jury is relevant to the employee’s alleged tortious conduct.  Any evidence which speaks to an employer’s negligence, whether pertaining to the employer’s own conduct or to its employee’s background, qualifications and driver history, is irrelevant, prejudicial and inadmissible.