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California Appellate Court Holds that Motor Carriers are Liable For Injuries Sustained By Co-Drivers of Leased Vehicles in Jose Vargas v. FMI, Inc.

By Christopher M. Cotter

Christopher is a member of Snyder Law's Transportaion Law Practice Group.

California’s Second District Court of Appeal recently issued an Opinion in Jose Vargas v. FMI, Inc., et al. (Case No. B246660, January 23, 2015) holding that the Privette doctrine does not shield a motor carrier from vicarious liability for injuries to employees of independent contractors hired by the motor carrier. An unpublished portion of the Opinion decided against shielding a tractor lessor from liability under the Graves Amendment, but should not be interpreted as a harbinger that tractor-trailer lessors might lose their Graves Amendment protection.

The facts of Vargas are that FMI Inc., a federally licensed motor carrier, selected Eves Express Inc., a tractor owner, and its drivers Jose Vargas and Luis Villalobos, to transport goods across the country. Approximately four hours into the trip, Villalobos lost control of the tractor-trailer after purportedly falling asleep at the wheel, causing the vehicle to roll over and injuring Vargas, who was in the sleeper berth at the time. Vargas sued FMI and Eves, alleging vicarious liability for the negligence of Villalobos. FMI moved for summary judgment based on the Privette doctrine, which holds that a hirer of an independent contractor delegates workplace safety to the independent contractor and is therefore not liable for injuries sustained by its employees in the course and scope of their employment (which liability is subject to the exclusive remedy of worker’s compensation). Eves moved for summary judgment under the Graves Amendment, which provides that the owner of a leased vehicle is not vicariously liable for the negligence of the lessee so long as the owner is engaged in the business of renting or leasing motor vehicles. The trial court granted both motions for summary judgment, and Vargas appealed.

In the published portion of its Opinion, the Second District Court of Appeal discussed the split in Federal authority over whether motor carriers can be held liable for injuries to drivers of leased vehicles. The Vargas Court followed the lead of AmeriGas Propane, L.P. v. Landstar Ranger, Inc. (2010) 184 Cal.App.4th 981 in holding that FMI Inc.’s non-delegable responsibilities under the Federal Motor Carrier Safety Regulations (commonly referred to as “placard liability”) govern not only injuries suffered by members of the public, but those suffered by drivers of leased vehicles injured by the negligence of co-drivers as well. The Vargas Court distinguished the doctrine of non-liability afforded by Privette and its progeny, holding that because motor carriers operate under a franchise granted by public authority, the non-delegable liability of motor carriers dictated by the FMCSRs trumps Privette.

The general takeaway of Vargas is that, absent an express change to the FMCSRs indicating legislative intent to limit motor carrier liability, motor carriers will be liable in California for injuries suffered by drivers of leased vehicles arising from alleged violations of the FMCSRs. It should be noted, however, that this liability is not without limitation. In AmeriGas Inc. v. Landstar Ranger, Inc. (2014) 230 Cal.App.4th 1153 (AmeriGas II), Barry Snyder of Snyder Law LLP successfully argued to the Fourth District Court of Appeal that the FMCSRs do not apply to the unloading of cargo. A motor carrier’s liability to employees of independent contractors should therefore be limited to those injuries caused by the negligence of co-drivers while operating on the public highways.

Finally, in a non-published portion of the Opinion, the Vargas Court found that Eves failed to present evidence that it was “engaged in the trade or business of renting or leasing motor vehicles.” Plaintiffs’ attorneys sometimes argue that the Graves Amendment only applies to car rental companies, and they may cite this case in support of that position. Their position is not well taken. The plain language of the Graves Amendment – “engaged in the trade or business of renting or leasing motor vehicles” – is not so limited to traditional car rental companies. In fact, there is not even a requirement that renting or leasing motor vehicles be the exclusive or even primary business of the vehicle owner. In the case of Vargas, it appears that Eves simply failed to present a declaration or other evidence to substantiate its business model. Graves Amendment protection for tractor-trailer lessors is on safe footing.