Vagle v. Pickands Mather & Co., 78-1569

Decision Date14 January 1980
Docket NumberNo. 78-1569,78-1569
PartiesKeith VAGLE, Appellee, v. PICKANDS MATHER & COMPANY, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Gene W. Halverson (argued), Halverson, Watters, Bye & Downs, Duluth, Minn., Steven L. Reyelts, Duluth, Minn., on brief, for appellant.

Paul J. Louisell, Duluth, Minn., argued and on brief, for appellee.

Before ROSS and McMILLIAN, Circuit Judges, and VAN SICKLE, * District Judge.

McMILLIAN, Circuit Judge.

Appellant, Pickands Mather, appeals from a jury verdict of $582,000 in favor of appellee, Keith Vagle, on Vagle's personal injury claim. For reversal appellant argues that the district court erred (1) in instructing the jury that Pickands Mather was vicariously liable for the negligence of Conomos, the independent contractor and appellee's employer; (2) in holding, as a matter of law, that as managing agent of Erie Properties, Pickands Mather was liable for torts committed by Erie employees; (3) in instructing the jury that appellant had a duty to warn appellee of the electrical substation; (4) in admitting into evidence OSHA Regulations as a guide on the standard of care; and (5) in failing to rule that the jury's award of damages was excessive. We agree with appellant that the court improperly instructed the jury that it was Appellant, Pickands Mather & Company, is a Delaware corporation with its principal place of business in Ohio. It is the "Managing Agent" of Erie Mining Company, a Minnesota corporation which mines taconite at Hoyt Lakes, Minnesota. John B. Conomos Painting Contractors (Conomos) is a Pennsylvania corporation engaged primarily in providing industrial painting services. At the time of the accident, Conomos had contracted to paint the exterior of the Erie Mining Plant at Hoyt Lakes. Appellee, Keith Vagle, was a painter employed by Conomos.

vicariously liable for negligence on the part of Conomos and reverse and remand for a new trial.

On September 5, 1973, Vagle and a co-worker, Tom Henderson, were standing on a scaffold at Erie's Hoyt Lakes property spray-painting a steel bridge which runs parallel to and within a few feet of an electrical transformer substation. As Henderson attempted to unplug his spray gun, the hoses attached to his spray gun touched the "live" portion of the electrical substation and the electrical charge from the 13,800 volt substation knocked both painters to the ground. As a result of the accident Vagle lost 70% Of his stomach and developed a speech impairment due to persisting neurological defects, suffering a total disability of 25%.

Although Pickands Mather was the only defendant, the jury was instructed to determine the comparative negligence of Conomos, Pickands Mather and Vagle. Vagle argued that Conomos negligently failed to make proper arrangements to guard and protect its employees from exposure to electrocution and that Pickands Mather negligently failed to warn Vagle and his co-workers of the danger, failed to guard and protect the transformer, and failed to shut off the transformer. The jury found that Conomos was 60% Negligent, Pickands Mather 37% Negligent and Vagle 3% Negligent. It further found that Vagle was entitled to $600,000 damages, reduced by 3%, for a total judgment of $582,000.

Appellant's first claim of error is that the trial court improperly gave, as jury instructions, §§ 414, 416, 422 and 427 of Second Restatement of Torts (see appendix), which confer vicarious liability on Pickands Mather for Conomos' negligence. These Restatement sections confer liability on "one who entrusts work to an independent contractor" for negligence on the part of the independent contractor. Appellant argues that these instructions were improperly given because the employee of an independent contractor is not within the group of persons intended to be protected by the Restatement. We agree.

In this diversity case Minnesota law governs. The Minnesota Workmen's Compensation Statute provides that an employee who is covered by workmen's compensation and who is injured "under circumstances which create a Legal liability for damages" on the part of a third party, cannot collect workmen's compensation and also sue the third party if the third party and the employee's employer are engaged in a "common enterprise." Minn.Stat.Ann. § 176.061, subd. 1 (West) (emphasis added). If, however, the employer and the third party are not engaged in a common enterprise, the employee may bring suit against the third party while also receiving workmen's compensation. Thus, two questions must be answered to determine if Vagle, who collected workmen's compensation from Conomos, may bring a suit against Pickands Mather: first, is Pickands Mather "legally liable" to Vagle, and second, if Pickands Mather is legally liable, is it immune from suit because it was engaged in a common enterprise with Conomos?

The jury was instructed that Pickands Mather could be found liable in two ways: first, directly liable for its own negligence, and second, vicariously liable for Conomos' negligence. Minnesota courts have held that the employer of an independent contractor will be liable to third parties, including the employees of the independent contractor, for the employer's Own negligence. E. g., Whirlpool Corp. v. Morse, 222 F.Supp. 645 (D.Minn.1963), Aff'd, 332 F.2d 901 (8th Generally, the employer of an independent contractor is not liable to third parties for the negligence of the independent contractor or the employees of the independent contractor. E. g., Rausch v. Julius B. Nelson & Sons, Inc., 276 Minn. 12, 149 N.W.2d 1 (1967). There is an exception to the general rule of the employer's nonliability for so-called "nondelegable duties." "Where the law imposes a definite, affirmative duty upon (an employer) by reason of his relationship with others, whether as an owner or proprietor of land or chattels or in some other capacity, such persons cannot escape liability for a failure to perform the duty thus imposed by entrusting it to an independent contractor." F. Harper, Law of Torts § 292 (ed. 1933), Cited in Van Arsdale v. Hollinger, 68 Cal.2d 245, 66 Cal.Rptr. 20, 24, 437 P.2d 508, 512 (1968) (bank). Thus, the employer of an independent contractor is subject to vicarious liability "to others" when the work to be performed is likely to create a peculiar unreasonable risk of physical harm unless special precautions are taken under Restatement §§ 413 and 416 or when a special danger is inherent or normal to the work under Restatement § 427.

Cir. 1964) (per curiam) (employer failed to exercise reasonable care to see to it that his premises were safe for business invitees which, under Minnesota law, include employees of independent contractor); Thill v. Modern Erecting Co, 272 Minn. 217, 136 N.W.2d 677 (1965) (interference or other negligent exercise of control retained by employer over performance of work of independent contractor). However, the Minnesota courts have not decided whether the employer of an independent contractor can be held vicariously liable, that is, liable for the negligence of the independent contractor although the employer is free from fault, to the Employees of the independent contractor. Cf. Olson v. Kilstofte & Vosejpka, Inc., 327 F.Supp. 583, 588 (D.Minn.1971), Aff'd sub nom. Olson v. Red Wing Shoe Co, 456 F.2d 1299 (8th Cir. 1972) (per curiam) (district court resolution of vicarious liability issue noted as unaddressed as yet by the Minnesota state courts).

The Restatement sections 1 at issue use the word "others" to describe those persons to whom the employer of an independent contractor owes such "nondelegable duties." Appellant Pickands Mather argues that "others" should not be read to include the employees of an independent contractor. As stated earlier, Minnesota courts have not yet addressed this question. There is a definite split of authority. Some courts have held that this vicarious liability does Not extend to employees of independent contractors. E. g., Hess v. Upper Mississippi Towing Corp., 559 F.2d 1030, 1034-35 (5th Cir. 1977); Craig v. Olin Mathieson Chemical Corp., 427 F.2d 962 (7th Cir.), Cert. denied, 400 U.S. 964, 91 S.Ct. 365, 27 L.Ed.2d 383 (1970); Parsons v. Amerada Hess Corp., 422 F.2d 610, 614 (10th Cir. 1970); Lipka v. United States, 369 F.2d 288, 292-93 (2d Cir. 1966), Cert. denied, 387 U.S. 935, 87 S.Ct. 2061, 18 L.Ed.2d 997 (1967); Sloan v. Atlantic Richfield Co., 552 P.2d 157, 160 (Alaska 1976); Welker v. Kennecott In the absence of controlling Minnesota law, we read the late Judge Neville's analysis in the Olson case to be dispositive. Judge Neville was "strongly persuaded that the employees of an independent contractor should Not be included among those to whom a contractee (the employer) owes a nondelegable duty to take precautions required by the specific work in which they are engaged." 327 F.Supp. at 588 (emphasis added). There are several policy reasons supporting this view. First, the employer of the independent contractor has in effect paid the workmen's compensation premiums for the employees of the independent contractor because this expense is included in the fee charged by the independent contractor for its services. Id.; Sloan v. Atlantic Richfield Co., supra, 552 P.2d at 159. Therefore the rule that an employee who collects workmen's compensation from his immediate employer does not have a common law right of action against that employer should also apply to the independent contractor's employer.

Copper Co., 1 Ariz.App. 395, 403 P.2d 330, 339 (1965); Florida Power & Light Co. v. Price, 170 So.2d 293, 298 (Fla.1964); King v. Shelby Rural Electric Cooperative Corp., 502 S.W.2d 659, 661-663 (Ky.1973), Cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 235 (1974); Hader v. Coplay Cement Mfg. Co., 410 Pa. 139, 189 A.2d 271, 277 (Pa.1963); Humphreys v. Texas...

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