Shaw v. Delta Airlines, Inc.

• Decision Date: 28 May 1992
• Docket Number: No. CV-N-91-539-ECR.,CV-N-91-539-ECR.
• Citation: 798 F. Supp. 1453
• Parties: Samuel SHAW and Lola Shaw, Plaintiffs, v. DELTA AIRLINES, INC., a Delaware corporation; SkyWest Airlines, Inc., a Utah corporation; and Does I-XXV, Defendants.
• Court: U.S. District Court — District of Nevada

798 F. Supp. 1453

Samuel SHAW and Lola Shaw, Plaintiffs, v. DELTA AIRLINES, INC., a Delaware corporation; SkyWest Airlines, Inc., a Utah corporation; and Does I-XXV, Defendants.

No. CV-N-91-539-ECR.

United States District Court, D. Nevada.

May 28, 1992.

Robert E. Dickey, Jr., Clark & Dickey, Ltd., Reno, Nev., for plaintiffs.

Frederic R. Starich, Reno, Nev., and Nancy L. Pearl and L. Richard Musat, Treece, Alfrey & Musat, P.C., Denver, Colo., for defendants.

ORDER

EDWARD C. REED, Jr., Senior District Judge.

Defendant Delta Airlines, Inc. ("Delta") filed its motion for summary judgment on March 23, 1992 (document # 14). This action concerns the crash of an airplane operated by Defendant SkyWest Airlines, Inc. ("SkyWest"). Plaintiff Samuel Shaw was on-board SkyWest flight 5855 scheduled to fly from Salt Lake City, Utah to Elko, Nevada on January 15, 1990. The flight crashed just miles from the Elko airport, and Plaintiff Samuel Shaw suffered serious personal injuries as a result.

Delta argues that the Shaws have stated no claims against Delta. Delta claims that, legally, SkyWest is not Delta's agent, partner, or joint venturer. Furthermore, Delta points to its agreement with SkyWest and argues that Delta and SkyWest are engaged in a simple contractual relationship in which Delta acts only as the ticketing and marketing agent for SkyWest. Since each party is an independent contractor, argues Delta, only the company on whose plane the accident occurred can be liable to the Plaintiffs.

Plaintiffs concede that SkyWest is not a subsidiary or division of Delta. However, Plaintiffs argue that certain facts sustain the conclusion that SkyWest was Delta's agent for the purposes of carrying passengers on less-travelled "commuter" routes that Delta does not itself fly. They present evidence that indicates that SkyWest uses Delta trademarks and insignia, the two companies are often mentioned together by Delta in national print advertisements and airline industry schedules, and that Delta has control over SkyWest routes and timetables. Thus, Plaintiffs claim that Delta presents the image to the public that SkyWest is part of Delta, or at the least Delta's agent. As such, Plaintiffs argue, a jury could hold Delta liable on an apparent authority theory.

LEGAL ANALYSIS

The court can only conceive of three legal relationships that might give rise to vicarious liability under facts such as the ones involved in this case.¹ If Delta is liable to Plaintiffs, it must be because Delta was SkyWest's general partner, Delta was SkyWest's joint venturer, or because SkyWest was Delta's agent with apparent authority to carry passengers on behalf of Delta. The court will consider each argument individually below.

I. Summary Judgment Standard

When faced with a defendant's motion for summary judgment, the facts before the court "must be viewed in the light most favorable to the nonmoving party," Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). The court's role is simply to assess whether "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). "There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. at 2511. If the nonmoving party is unable to meet this burden, the moving party is entitled to summary judgment as a matter of law. Fed.R.Civ.P. 56(c).

II. Possible Legal Relationships Between Delta and SkyWest²

A. Partnership

Since Delta and SkyWest were parties to a contract under which both would presumably make a profit from their combined efforts, one might argue that these two parties were engaged in a partnership. The position of the vast majority of states is that if two or more parties intend for their relationship to result in a partnership, the law will treat the relationship as a partnership, regardless of whether the parties themselves call the relationship a partnership or intend the legal consequences that flow from that label.³

However, the authorities also clearly indicate that there is no specific test to determine the existence of a partnership. An express written agreement to form a partnership is not required. Gosman v. Gosman, 271 Md. 514, 519, 318 A.2d 821, 824 (1974). The trier of fact must look to the conduct of the parties and all the circumstances surrounding their relationship and transactions. Cochran v. Board of Supervisors of Del Norte County, 85 Cal. App.3d 75, 81, 149 Cal.Rptr. 304, 307 (1978); Presutti v. Presutti, 270 Md. 193, 197-98, 310 A.2d 791, 794 (1973). The key factor is not the subjective intent of the parties to form a partnership, but instead the intent of the parties to do the things that the law will consider a partnership. In re Western World Funding, Inc., 52 B.R. 743, 777 (D.Nev.1985). It is immaterial that the parties do not call their relationship, or believe it to be, a partnership, especially where the rights of third parties are concerned. Id.

The law provides a laundry list of factors to look at in deciding whether or not parties intended to form a partnership. Nevada has adopted the Uniform Partnership Act ("UPA"). NRS 87.070 UPA § 7 is entitled "Rules for determining existence of partnership." According to this section, "receipt by a person of a share of profits of a business is prima facie evidence that he is a partner in the business...."

On its face, this section might seem to imply that any contractual agreement under which both parties receive profits is a partnership. However, most jurisdictions find that mere participation in profits does not create a partnership unless the partners also share losses. Johnson v. Chilcott, 599 F.Supp. 224, 226 (D.Colo.1984); U.S. for Use of Altman v. Young Lumber Co., 376 F.Supp. 1290, 1297 (D.S.C.1974); Scharf v. Crosby, 120 A.D.2d 971, 972, 502 N.Y.S.2d 891, 892 (1986). Also, most authorities require that each partner have some degree and right of control over the business. See NRS 87.180(5); Western World, 52 B.R. at 777; Thomas v. Price, 718 F.Supp. 598, 605-06 (S.D.Tex.1989); Impastato v. De Girolamo, 117 Misc.2d 786, 789, 459 N.Y.S.2d 512, 514 (1983). "Although the sharing of profits and losses is prima facie evidence of a partnership, the issue of control is the more important criterion in determining the existence of a partnership." Thomas, 718 F.Supp. at 605-06 (footnotes omitted).

In the instant case, the agreement between Delta and SkyWest does not indicate any desire to engage in a business as risk-sharing partners with joint-control over the enterprise. It is true that both parties expected to make a profit from the enterprise, however, a person "who has no proprietary interest in a business except to share profits as compensation for services is not a partner or joint venturer." Impastato, 117 Misc.2d at 789, 459 N.Y.S.2d 512. Even where one party exercises some degree of control over the other, and their joint fortunes depend upon the same business factors, a partnership does not necessarily exist. Coca-Cola Bottling Co. of Elizabethtown, Inc. v. Coca-Cola Co., 696 F.Supp. 57, 74 (D.Del.1988).

In this case, SkyWest certainly did not have joint control over the operations of Delta. Nor did SkyWest directly participate in the profits or losses of the Delta corporation. The "Delta Connection" agreement might be characterized as simply a business referral arrangement, whereby Delta benefits through its ability to issue tickets to connecting passengers and SkyWest benefits through the payments it receives on the tickets of passengers that Delta has sent to it. The court concludes that, under the above legal standards, no reasonable jury could conclude that Delta and SkyWest were general partners.

B. Joint Venture

In Nevada, "a joint venture is a contractual relationship in the nature of an informal partnership wherein two or more persons conduct some business or enterprise, agreeing to share jointly, or in proportion to capital contributed, in profits and losses." Bruttomesso v. Las Vegas Metropolitan Police, 95 Nev. 151, 154, 591 P.2d 254, 256 (1979). It is usually entered into for a limited business objective and typically for a brief period of time. Hook v. Giuricich, 108 Nev. 29, 823 P.2d 294, 296 (1992).

The label "joint venture" clearly does not apply in this case. Delta and SkyWest did not agree to a short-term business deal in which they proposed to jointly share in profits or losses. Nor did either party invest capital in a joint business deal. The court's reasoning from its partnership analysis applies equally as well here: Delta and SkyWest are contract parties to a business referral agreement. There is no joint venture under Nevada law.

C. Agency

Plaintiffs' major argument is that SkyWest was the agent of Delta for purposes of carrying passengers like Mr. Shaw. Delta argues that although it may be SkyWest's agent for ticketing, marketing, and scheduling, SkyWest is not its agent for any purpose. Since there is no explicit agency agreement, Plaintiffs argue instead that the law may deem SkyWest the agent of Delta on an apparent authority theory. They claim that Delta has used advertising and marketing strategies aimed at creating the impression in the minds of the travelling public that SkyWest is somehow a part of Delta.

Delta makes much of the fact that the Delta Connection agreement expressly states that no employee, independent contractor, or agent of either company shall be deemed to be an employee, independent contractor, or agent of the other. However, it is clear that a clause negating agency in a written contract is not controlling. Ludolph v. Bechtel Associates Professional Corp., D.C., 542 F.Supp. 630, 633 (D.D.C.1982); Drummond v. Hilton Hotel Corp., 501 F.Supp. 29, 31 (E.D.Pa.1980); RHO Co., Inc. v. Dep't of...