Carrier loses appeal in injury case focused on contractor-employer relationship

Cardinal Transport, an Illinois-based carrier, is on the hook for its share of a more than $5 million award handed down by a lower court after a friend of an independent owner-operator  who was in a lease agreement with Cardinal lost a leg while helping load metal rods onto a truck.

In a split vote late last week, a three-judge panel of the U.S. Court of Appeals for the 4th Circuit rejected Cardinal’s request for a new trial. 

The request for a new trial focused in part on the issue of the District Court’s instruction to the jury at the initial trial. But the question of the relationship between contractor and employer, and the fact that federal rules are relevant in defining that relationship, also took center stage in the litigation. 

The man who lost his leg is Richard Edwards Jr., who was helping load metal rods in West Virginia onto a truck owned by Danny McGowan. McGowan was operating a forklift to load the rods, and one of them fell on Edwards’ foot. “Edwards suffered severe pain and extensive injuries from the incident, including the amputation of his leg,” the decision stated. 

The rods fell, according to the initial lawsuit, when McGowan “suddenly and unexpectedly backed the forklift up pulling the heavy pipe off the truck which crushed Plaintiff’s foot.” The amputation was from the knee down. 

McGowan had a two-pronged relationship with Cardinal. He was an exclusive sales agent, who “solicited customers and negotiated shipment sales for Cardinal,” the decision said. In addition, he was an independent owner-operator and leased trucks to Cardinal through his company, McElliotts Trucking. 

According to the original action filed in February 2016, McGowan’s truck bore the Cardinal logo. The original lawsuit also says it was operating under Cardinal’s DOT number.

At the time of the incident in October 2015, McGowan was consolidating an order for Special Metals, a Cardinal client. McGowan regularly engaged in an act called “consolidation,” in which he would receive shipments that did not fill a full truck. He would then store that freight at his yard until it could be consolidated with other freight to make a fuller load on a truck. 

“Consolidation allowed Cardinal’s clients to satisfy internal deadlines for the freight to be removed from their property, while also allowing Cardinal’s drivers to earn more money per truck,” the appellate decision said.

The consolidation was part of the lawsuit because Cardinal argued that the practice was “beyond the scope of his employment,” the decision said, and it shouldn’t be held liable for what happened. Cardinal’s other argument as to why it should not be held liable for Edwards’ injuries is that West Virginia, where the incident occurred, does not “impose strict liability on lessee motor carriers for the negligence of lessor owner-operators.”

According to the appellate decision, the lower court instructed the jury that it could find Cardinal “vicariously liable” if it could find there was an employer-employee relationship between the two, and that McGowan, when operating the forklift, was “acting within the scope of that relationship during the accident.”

The jury came in with a $5 million judgement in damages. Cardinal argued for a new trial because it said that the verdict “went against the clear weight of the evidence that McGowan was acting outside the scope of his employment at the time of the accident.” 

Judge Albert Diaz, writing for the majority, reviews the history of federal regulation defining the relationship status between a driver and the lessee, which in this case would be Cardinal. He noted that dispatchers at Cardinal would speak with McGowan daily, would handle customer invoices and billing for McGowan, and required that McGowan follow the rules of the Cardinal policy manual, which it described as “voluminous.”

Cardinal had asked for a new trial partly on the basis that the consolidation was “beyond the scope of McGowan’s alleged employment with Cardinal,” according to Diaz’s opinion. But Diaz also said the evidence was strong that Cardinal knew about the consolidation that ultimately led to the action that cost Edwards his leg. 

Cardinal also disputed parts of the instructions that the jury received. But the Diaz opinion said Cardinal was “correctly put to the task” and that any error in the jury instructions was “harmless.”

Judge G. Steven Agee, in a dissent, said the jury instructions were “erroneous as a matter of law.” Edwards’ legal team also had not clearly established that Cardinal was liable for McGowan’s actions, he wrote. Agee said the court should vacate the lower court judgement and remand the case for a new trial.

For more articles by John Kingston, please go here.

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