Drexel v. Union Prescription Centers, Inc., 77-1620

• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
• Citation: 582 F.2d 781
• Docket Number: No. 77-1620,77-1620
• Parties: DREXEL, Rose Marie, Administratrix of the Estate of Drexel, Edward H., Sr., deceased and Drexel, Rose Marie in her own right, Appellant, v. UNION PRESCRIPTION CENTERS, INC., Appellee.
• Decision Date: 11 August 1978

Page 781

582 F.2d 781 DREXEL, Rose Marie, Administratrix of the Estate of Drexel,
Edward H., Sr., deceased and Drexel, Rose Marie in
her own right, Appellant,
v.
UNION PRESCRIPTION CENTERS, INC., Appellee. No. 77-1620. United States Court of Appeals,
Third Circuit. Argued Jan. 10, 1978.
Decided Aug. 11, 1978.

Page 783

Edward F. Silva, Jack E. Feinberg, Feinberg, Deutsch, Felgoise, McErlean & Moldovsky, Philadelphia, Pa., for appellant.

Robert F. Rossiter, Joseph R. Davison, Obermayer, Rebmann, Maxwell & Hippel, Philadelphia, Pa., for appellee.

Before ADAMS, BIGGS and WEIS, Circuit Judges.

OPINION OF THE COURT

BIGGS, Circuit Judge.

This is an appeal, pursuant to 28 U.S.C. § 1291, from a final order of the United States District Court for the Eastern District of Pennsylvania, dated March 23, 1977, granting appellee's motion for summary judgment. The case presents difficult questions concerning the liability of a franchisor for the allegedly negligent acts of its franchisee. After a careful examination of the record, we conclude that unresolved issues of material fact exist as to both a real and an apparent master-servant or agency relationship between the franchisor and the franchisee. Accordingly, we will reverse the judgment of the district court and remand the case for further proceedings.

I. FACTS

According to the complaint, plaintiff's husband, the decedent, had been given a prescription for the drug "Aldactone" which was properly filled on March 3, 1975, by Union Prescription Center, a retail drugstore located in Reading, Pennsylvania. On April 14, 1975, decedent returned to the same drugstore to have the prescription refilled. This time, however, decedent received not "Aldactone," a diuretic, but "Coumadin," a blood thinner. As a result of taking "Coumadin," decedent sustained massive traumatic injuries from which he died on May 12, 1975.

Plaintiff, appellant herein, instituted this diversity action ¹ for damages under the Pennsylvania wrongful death and survival statutes ² against defendant-appellee Union Prescription Centers, Inc. (UPC). The complaint, which charged UPC with "negligence and carelessness and malpractice" in improperly refilling the prescription, alleged that UPC was "the owner, operator, possessor and in control" of the Reading drugstore and that "(a)ll of the acts alleged to have been done or not to have been done by defendant were done or not done by defendant, its agents, servants, workmen, and/or employees, acting in the course and scope of their employment with and on behalf" of UPC.

UPC filed a motion for summary judgment which stated, Inter alia, that on October 15, 1974, UPC has entered into a franchise agreement with Joseph J. Todisco, Jr., whereby Todisco purchased from UPC the right to acquire and operate the Union Prescription Center in Reading; that UPC "was not at any time material to plaintiff's cause of action, the owner, operator, possessor, or in control" of the Reading store;

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that UPC had never supplied or sold any drugs or medication to the Reading store; that Todisco, acting as an "independent contractor," was not "an agent, servant, workman, and/or employee" of UPC; and that therefore defendant was not in a position whereby a duty of due care was owed plaintiff's decedent. A copy of the Franchise Agreement was attached as an exhibit to UPC's motion. ³ Subsequently, in support of its motion for summary judgment, UPC submitted affidavits signed by Todisco, the franchisee, and by James B. Young, Esquire, corporate counsel for UPC. ⁴ In opposing the motion for summary judgment, plaintiff submitted the deposition of Todisco, but filed no countervailing affidavits. On the basis of that record, the district court granted summary judgment for UPC in a written opinion, 428 F.Supp. 663 (E.D.Pa.1977), and this appeal followed.

II. VICARIOUS LIABILITY

Appellant contended in the district court and asserts on appeal that UPC is vicariously liable for Todisco's alleged negligence either because UPC retained sufficient control over the operation of the Reading drugstore to establish a master-servant relationship or because UPC "held itself out" to the public as the owner or operator of the Reading store. We shall examine these theories in turn. In so doing, we heed the well-established principles that the moving party in a motion for summary judgment must show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, Rule 56(c), Fed.R.Civ.P., 28 U.S.C.; Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), Cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977), and that the evidence and the inferences drawn therefrom must be considered in a light most favorable to the party opposing the summary judgment motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam); Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir. 1972); Long v. Parker, 390 F.2d 816, 821 (3d Cir. 1968), Vacated on other grounds, 384 U.S. 32, 86 S.Ct. 1285, 16 L.Ed.2d 333 (1969).

Although it apparently was never questioned in the district court proceedings that Pennsylvania substantive law was to be applied in this diversity case, See Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964), both parties, at the request of this court, submitted additional briefs regarding a potential conflict-of-laws issue. As discussed Infra, one of plaintiff's contentions is that a master-servant relationship existed between UPC and its franchisee as evidenced by the terms of the Franchise

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Agreement. The district court, applying Pennsylvania law, concluded that the Franchise Agreement did not demonstrate such a relationship and that UPC was entitled to summary judgment. However, section XXIII.I of the Franchise Agreement states: "This Agreement shall be interpreted, construed and governed under and by the laws of the state of Wisconsin." Thus, it could be argued that the district court, to the extent that it was required to interpret and construe the Agreement in determining the existence of a master-servant relationship, should have considered, under Pennsylvania choice-of-law theory, whether to give effect to section XXIII.I. Cf. Siata International U.S.A. Inc. v. Insurance Co. of North America, 498 F.2d 817, 820 (3d Cir. 1974); Boase v. Lee Rubber & Tire Corp., 437 F.2d 527, 529-30 (3d Cir. 1970). Nevertheless, we are now satisfied, and both parties agree without objection, that whether the relationship between UPC and its franchisee is ultimately determined by the law of Wisconsin, in deference to section XXIII.I, rather than by the law of Pennsylvania, is inconsequential since the laws of both states are in accord in their treatment of the matters before us. See, e.g., Raasch v. Dulany, 273 F.Supp. 1015, 1018 & n.1 (E.D.Wis.1967); Bond v. Harrel, 13 Wis.2d 369, 108 N.W.2d 552, 555 (1961). Having therefore concluded that no conflict of law exists, we find no reason to diverge from the position of both parties and the district court that Pennsylvania law governs in this case. Cf. Pierce v. Capital Cities Communications, Inc., 576 F.2d 495 (3d Cir. 1978).

A. Appellant's Master-Servant Theory

We first consider appellant's contention that summary judgment was erroneous because factual questions exist requiring jury resolution with respect to the precise nature of the relationship between UPC and its franchisee. Under Pennsylvania law, when an injury is done by an "independent contractor," the person employing him is generally not responsible to the person injured. Hader v. Coplay Cement Mfg. Co., 410 Pa. 139, 150-51, 189 A.2d 271, 277 (1963). However, when the relationship between the parties is that of "master-servant" or "employer-employee," as distinguished from "independent contractor-contractee," the master or employer is vicariously liable for the servant's or employee's negligent acts committed within the scope of his employment. Smalich v. Westfall, 440 Pa. 409, 415, 269 A.2d 476, 481 (1970). While Pennsylvania courts have set forth numerous criteria to determine whether a given person is an employee-servant or an independent contractor, See, e.g., Stepp v. Renn, 184 Pa.Super.Ct. 634, 637, 135 A.2d 794, 796 (1957), "the basic inquiry is whether such person is subject to the alleged employer's control or right to control with respect to his physical conduct in the performance of the services for which he was engaged . . . . The hallmark of an employee-employer relationship is that the employer not only controls the result of the work but has the right to direct the manner in which the work shall be accomplished; the hallmark of an independent contractee-contractor relationship is that the person engaged in the work has the exclusive control of the manner of performing it, being responsible only for the result." Green v. Independent Oil Co., 414 Pa. 477, 483-84, 201 A.2d 207, 210 (1964) (citations omitted); See Johnson v. Angretti, 364 Pa. 602, 607, 73 A.2d 666, 669 (1950); Feller v. New Amsterdam Casualty Co., 363 Pa. 483, 486, 70 A.2d 299, 300 (1950); Joseph v. United Workers Ass'n., 343 Pa. 636, 639, 23 A.2d 470, 472 (1942). Actual control of the manner of work is not essential; rather, it is the right to control which is determinative. Coleman v. Board of Education, 477 Pa. 414, 383 A.2d 1275, 1279 (1978); Yorston v. Pennell, 397 Pa. 28, 39, 153 A.2d 255, 260 (1959).

Difficulties arise, of course, in the application of these familiar principles to the facts of a given case. Each case must be decided on its own facts. George v. Nemeth, 426 Pa. 551, 554, 233 A.2d 231, 233 (1967); Namie v. DiGirolamo, 412 Pa. 589, 594, 195 A.2d 517, 519 (1963). The difficulties are perhaps especially evident where, as here, the alleged master and...