Askew v. R & L Transfer, Inc. et al

Filing 67

OPINION AND ORDER directing as follows: (1) def R & L Transfer, Inc.'s 30 motion for summary judgment is denied on plf Lucile Askew's claim for simple negligence; this claim will go to trial against def R & L Transfer, Inc.; (2) Def R & L Transfer, Inc.'s 30 motion for summary judgment is granted on all other claims asserted by plf Askew, with judgment entered in favor of def R & L Transfer, Inc. and plf Askew on these other claims. Signed by Honorable Myron H. Thompson on 12/30/09. (Attachments: # 1 civil appeals checklist)(djy, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE MIDDLE DISTRICT OF ALABAMA, EASTERN DIVISION

LUCILE ASKEW, Individually ) and as Administratrix of ) the Estate of Linzie Askew, ) ) Plaintiff, ) ) v. ) ) R & L TRANSFER, INC., and ) KENNETH LEE HOLT, an ) Individual, ) ) Defendants. )

CIVIL ACTION NO. 3:08cv865-MHT (WO)

OPINION AND ORDER Plaintiff Lucile Askew ("Askew"), as representative for the estate of her deceased husband, brings this lawsuit against defendants Kenneth Holt ("Holt") and R & L Transfer, Inc. ("Transfer") for the wrongful death of her husband in a vehicular accident.1 Askew charges the defendants with state-law claims of simple negligence, 1. In her complaint, Askew states that she brings this lawsuit "individually" as well as in her capacity as representative for the estate of her late husband. At the pretrial of this case, however, counsel for Askew made clear that Askew is pursuing this case in her representative capacity only.

simple wantonness, negligent entrustment, and negligent supervision and training.2 The court has jurisdiction

under 28 U.S.C. § 1332 (diversity of citizenship). This case is currently before the court on Transfer's motion for summary judgment. below, summary-judgment will For the reasons discussed be granted in favor of

Transfer on all claims except that of simple negligence. 2. In her complaint, Askew charges Transfer with "Negligent or Wanton Entrustment" and "Negligent or Wanton Hiring, Training, or Supervision." However, in her response to the summary-judgment motion, Askew uses the headings "There is Substantial Evidence of Negligent Entrustment" and "There is Substantial Evidence of Negligent Training and Supervision by R & L Transfer, Inc.," and she addresses only the issues of negligent entrustment, Pl.'s Resp. M. Summ. J. 14, and negligent supervision and training, Pl.'s Resp. M. Summ. J. 21. Therefore, the other potential contentions (wanton entrustment, negligent hiring, and wanton hiring, training, and supervision) are deemed to have been abandoned. See Edwards v. Hyundai Motor Mfg. Alabama, LLC, 603 F. Supp.2d 1336, 1357 (M.D. Ala. 2009) (Thompson, J.) (citing Brasseler, U.S.A. I., L.P. v. Stryker Sales Corp., 182 F.3d 888, 892 (Fed. Cir. 1999) (affirming the "unremarkable proposition that assertions made in the pleadings [,] ... but not made in opposition to a motion for summary judgment, need not be considered by the district court ... in ruling on the motion for summary judgment")). In any event, no evidence or argument has been offered to support any of the abandoned contentions. 2

I. STANDARD FOR SUMMARY JUDGMENT Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In deciding

whether summary judgment should be granted, the court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986).

II. BACKGROUND In the early morning hours of October 17, 2008, Askew's husband was last in a line of motorists stopped in traffic on I-85 North in Chambers County, Alabama. Holt, driving a tractor-trailer, collided with the

3

vehicle driven by Askew's husband. as a result of the accident.

Askew's husband died

At the time of the accident, Holt was an employee of R & L Carriers Shared Services, LLC ("Shared Services") but was driving a tractor-trailer owned by Transfer and leased to Gator Freightways, Inc. ("Gator"). The

interrelationship among Transfer, Shared Services, and Gator is complex: owns 100 % of R & L Carriers, Inc. ("Carriers") Transfer, Gator, and other related

companies.

Carriers also shares ownership of Shared

Services with Transfer, Gator, and three other related companies. The same 23 individuals, led by Chief Executive Officer Ralph L. Roberts, comprise the officers of

Transfer, Carriers, and Gator.

A sub-group of seven of

these individuals operates Shared Services along with an additional Vice President of Tax, who is not an officer in the other companies.

4

III. DISCUSSION A. Negligence Askew charges Transfer with negligence on the basis of respondeat superior. employer on the theory "To recover from a tortfeasor's of respondeat superior, the

plaintiff must show by substantial evidence that the employee's act was within the scope of the employee's employment." Hulbert v. State Farm Mut. Auto. Ins. Co., There is no dispute that

723 So. 2d 22, 23 (Ala. 1998).

Holt was acting within the scope of his employment when his tractor-trailer collided with the vehicle driven by Askew's husband; however, there is substantial

disagreement between the parties as to whether Holt was employed by Transfer. In Alabama, "proof of ownership of a motor vehicle causing injury raises a rebuttable presumption that the person in the possession and control of that vehicle was the agent or servant of the owner, and was acting within the line and scope of his employment." Thompson v.

5

Havard, 235 So. 2d 853, 856 (Ala. 1970).

Furthermore,

even when the presumption is challenged, "if there is any evidence which reflects upon the credibility of that evidence by defendant on that question, or from which an inference may be drawn to a different result ... the question of whether the operator of the [vehicle] was defendant's agent acting in the line and scope of his authority should be submitted to the jury." Durbin v.

B.W. Capps & Son, Inc., 522 So. 2d 766, 767 (Ala. 1988) (citation omitted). Thus, Askew must demonstrate that

there is a genuine issue of material fact as to whether Holt was an employee of Transfer. burden. Transfer contends that it has rebutted the ownership presumption by demonstrating that Holt's truck was leased by Gator and that Holt was employed by Shared Services; Transfer maintains that it is a completely separate Askew has met this

entity from both Gator and Shared Services.

In contrast,

Askew contends that there is evidence that the operations

6

of Transfer, Carriers, Gator, and Shared Services are so tightly intertwined that the companies and their

operations are virtually indistinguishable. M. Summ. J. 5.

Pl.'s Resp.

Transfer, Carriers, and Gator are managed by the same officers; the same family owns all three companies; and Shared Services is owned, in part, by Transfer, which is itself owned by Carriers. Wade Dec. 2-5. Furthermore,

Carriers Safety Director Gerald Krissa testified to "R & L's" relationship with Holt. Krissa Dep. 43-44. While

the Safety Director may have been referring to Carriers in his testimony, it is also reasonable to conclude, especially when viewing the evidence in a light most favorable to Askew, that "R & L" denotes Transfer. Id.

The "R & L CARRIERS" website explains that Transfer and Gator are "sister regional carriers that collectively operate as R+L Carriers," implying that they operate as one larger entity. R & L Carriers Frequently Asked

7

Questions,

http://www.rlcarriers.com/faq.asp

(last

visited on December 10, 2009). It is a well-recognized general principle of law that a corporate structure may be pierced or disregarded

"where the corporate entity has been used as a subterfuge and to observe it would work an injustice." Fletcher Cyclopedia § 41.10. Thus, under Alabama law, "a separate

legal existence will not be recognized when a corporation is `so organized and controlled and its business

conducted in such a manner as to make it merely an instrumentality of another.' ... Whether the separate legal entity of a corporation may be `pierced' and

personal liability imposed is `a question of fact treated as an evidentiary matter to be determined on a case by case basis.'" Environmental Waste Control, Inc. v.

Browning-Ferris Industries, Inc., (Ala. 1997) (citations

711 So. 2d 912, 914 In making this

omitted).

determination of whether a corporate structure should be disregarded so that it and another company should be

8

treated as one, the court must look to a number of nonexhaustive factors: (a) company A owns all or most of the capital stock of company B; (b) the two companies have common directors or officers; (c) one company finances the other; (d) one company subscribes to all the capital stock of the other company or otherwise caused its

incorporation; (e) one company has grossly inadequate capital; (f) one company pays the salaries and other expenses or losses of the other; (g) one company has substantially no business except with the other company or no assets except those conveyed to it by the other company; (h) in the papers of company A or in the

statements of its officers, company B is described as its department or division, or company B's business or

financial responsibility is referred to as company A's own; (i) one company uses the property of the other company as its own; (j) the directors or executives of one company do not act independently in the interest of that company but take their orders from the other

9

company; and (k) the formal legal requirements of the two companies are not observed. See id. at 915.

Applying the above legal principle and listed factors and viewing the evidence in a light most favorable to Askew, the court concludes that Askew has presented a genuine issue of material fact as to whether Transfer, albeit a corporation, and its affiliate companies are, through their operations and public presentation, so intertwined as to be essentially one, such that Holt, in working for Shared Services, also worked for Transfer.

B. Wantonness Askew also charges Transfer with wanton behavior based on Holt's conduct. The State of Alabama defines

"wantonness" as "Conduct which is carried on with a reckless or conscious disregard of the rights or safety of others." 1975 Ala. Code § 6-11-20(b)(3). This is a

high standard of culpability and "not merely a higher degree of culpability than negligence." Jinright v.

10

Werner Enterprises, Inc., 607 F. Supp.2d 1274, 1276 (M.D. Ala. 2009) (Thompson, J.) (quoting Tolbert v. Tolbert, 903 So. 2d 103, 114 (Ala. 2004) (quotation marks and citations omitted)). Alabama courts will allow a jury to

determine whether conduct was wanton if there is any evidence that would support that determination. Cash v.

Caldwell, 603 So. 2d 1001, 1003 (Ala. 1992) ("Wantonness is a question of fact for the jury, unless there is a total lack of evidence from which the jury could

reasonably infer wantonness."). Askew has not provided any facts from which it could be inferred that Holt recklessly or consciously caused the accident. Holt stated in his deposition that he was

traveling through fog on the morning of the accident and, as a result, was unable to stop in time to avoid hitting Askew's husband's vehicle. contradicts Holt's Holt Dep. 227-28. of the weather Askew that

description

morning, but she presents no evidence that Holt saw Askew's husband's car in time to stop or that Holt was driving in a wanton manner. 11 There is no evidence that

Holt was driving at a great, or otherwise unsafe, speed, was using drugs or alcohol, ignored traffic signals, or otherwise was conducting himself with "a reckless or conscious disregard of the rights or safety of others." 1975 Ala. Code § 6-11-20(b)(3). Askew's submissions show a "total lack of evidence from which the jury could reasonably infer wantonness." Cash, 603 So. 2d at 1003. will be granted in Therefore, summary judgment of Transfer on Askew's

favor

wantonness claim.

C. Negligent Entrustment Askew maintains that, under Alabama law, Transfer is directly liable for her husband's death because it

negligently entrusted the tractor-trailer to Holt. To establish a cause of action for negligent

entrustment, Askew must show: "(1) an entrustment; (2) to an incompetent; (4) (3) with knowledge cause; and that (5) he is

incompetent;

proximate

damages."

Pryor v. Brown & Root USA, Inc., 674 So. 2d 45, 51 (Ala. 12

1995) (citations omitted).

Bracketing whether Transfer

entrusted the vehicle to Holt, the court finds that Askew's claim fails because there is no evidence in the record to suggest that Holt was incompetent to drive the tractor-trailer. "Incompetence" is defined as the "state or fact of being unable or unqualified to do something." Halford v.

Alamo Rent-A-Car, LLC, 921 So. 2d 409, 416 (Ala. 2005) (quoting Black's Law Dictionary 780 (8th ed. 2004)). In

Alabama, "the incompetence of a driver is measured by the driver's demonstrated ability (or inability) to properly drive a vehicle." Halford, 921 So. 2d at 413-14. As a

professional tractor-trailer driver for nearly a decade, Holt was competent to drive the tractor-trailer at the time of the accident. For several years before the accident, Holt drove the same stretch of I-85 North, five nights a week, without incident. Holt Dep. 216-17. In the nine-plus years Holt

worked of full-time for Shared Services, he was issued two moving violations (in March 1999 and September 2007) 13

and was involved in four minor accidents (only one of which seemingly involved a second motor vehicle).3 Resp. M. Summ. J. 12. Pl.'s

At the time of the accident, Holt

had a valid commercial driver's license. These blemishes on an otherwise clean professional driving record do not amount, under the law, to

incompetence. "demonstrated

The law requires that a driver have had a ability to properly drive a vehicle,"

Halford, 921 So. 2d at 413-14 (Ala. 2005); it does not require that he have a record completely free of mistake. See, e.g., Pryor, 674 So. 2d at 52 ("[Defendant]'s prior

driving record--two speeding tickets and a suspended prosecution of a DUI charge over a 10-year period--is not sufficient to support a claim of negligent

entrustment."); Thompson, 235 So. 2d at 857 ("[P]roof of two moving violations or accidents within a two year

3. Holt (1) damaged yard equipment while driving a tractor on company property, (2) hit a parked vehicle, cracking its fender, (3) hit an animal of some kind while driving, and (4) was involved in a sideswipe accident. Pl.'s Resp. M. Summ. J. 12-13. 14

period

prior

to

[this]

accident

...

is

probably

insufficient [to create a fact issue of the driver's incompetence.]"). 4 time of the on As Holt was not incompetent at the summary judgment in favor claim of is

accident, Askew's

Transfer

negligent-entrustment

appropriate.

D. Negligent Supervision and Training Askew charges that, under Alabama law, Transfer is liable for negligently supervising and training Holt. To

support a claim of negligent supervision and training, Askew must demonstrate that (1) Holt committed a tort recognized under Alabama law, see Stevenson v. Precision Standard, Inc., 762 So. 2d 820, 824 (Ala. 1999), (2) Holt was incompetent to drive his tractor-trailer, see Lane v. Central Bank of Alabama, 425 So. 2d 1098, 1100 (Ala. 4. Askew attempts to compare the facts of this case with those in Edwards v. Valentine, 926 So. 2d 315 (Ala. 2005). Askew neglects to mention, however, that the individual entrusted with the vehicle in Valentine had been convicted on multiple occasions for driving under the influence and was known to be a "habitual drunkard." 15

1983),

(3)

Transfer

had

actual

notice

of

Holt's

incompetence or would have known had it exercised due diligence, see Armstrong Bus. Servs. V. AmSouth Bank, 817 So. 2d 665, 682 (Ala. 2001), and (4) Transfer failed to respond to this notice adequately. See id. Because, as discussed above, no evidence in the record suggests that Holt was incompetent, Askew's claim of negligent supervision and training fails. 425 So. 2d at 1100. Summary judgment in See Lane, favor of

Transfer on Askew's negligent hiring-and-training claim is appropriate.

E. The Graves Amendment Transfer contends that the Graves Amendment, 49

U.S.C. § 30106, "a federal tort reform statute which purports to shield rental car companies from certain vicarious liability suits," Garcia v. Vanguard Car Rental USA, Inc., 540 F.3d 1242, 1244 (11th Cir. 2008), protects it from any liability in this litigation. Because only

Askew's simple negligence claim has survived summary 16

judgment so far, the court will address the amendment as to this claim only. The amendment, enacted in 2005, provides in relevant part: "An owner of a motor vehicle that rents or leases the vehicle to a person (or an affiliate of the owner) shall not be liable under the law of any State or political subdivision thereof, by reason of being the owner of the vehicle (or an affiliate of the owner) for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease if-(1) the owner (or an affiliate of the owner) is engaged in the trade or business of renting or leasing motor vehicles; and (2) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner). *** "The term `affiliate' means a person other than the owner that directly or indirectly controls, is controlled by, or is under common control with the owner. In the preceding sentence, the term `control' means the power to direct the management and policies of a person 17

whether through ownership securities or otherwise." 49 U.S.C. §§ 30106(a), 30106(d)(1).

of

voting

Thus, in order for

the Graves Amendment to apply, Transfer must be "engaged in the trade or business of renting or leasing motor vehicles" and, with regard to Holt's accident, there must have been "no negligence" on its part or the part of an "affiliate." The 49 U.S.C. §§ 30106(a). need not reach the question whether

court

Transfer was in the business of renting or leasing motor vehicles, for there is sufficient disputed evidence to defeat the amendment's requirement that there was "no negligence ... on the part of the owner (or an affiliate of the owner)." its employee, Id. but Transfer argues that Holt was not that he worked for Shared

rather

Services, an affiliate. Shared Services,

Even if Holt was an employee of argument fails for two

Transfer's

reasons.

First, as discussed above, Askew has presented

a genuine issue of material fact as to whether Transfer and its affiliate companies are, through their operations 18

and public presentation, so intertwined under Alabama law as to be essentially one, such that Holt, in working for Shared Services, also worked for Transfer. Second,

because the evidence supports the conclusion that Shared Services (acting through its employee Holt) was

vicariously negligent, see Hulbert, 723 So. 2d at 23, and because there is evidence that Shared Services meets the definition of an "affiliate" under the Graves Amendment, a jury could reach the conclusion that the amendment does not shield Transfer from liability because there was negligence on the part of its affiliate. Transfer argues that the requirement that "there is no negligence ... on the part of the owner (or an

affiliate of the owner)" is ambiguous and thus that the court should look to the legislative history underlying the Graves Amendment as well as the relevant case law when interpreting its meaning. The company insists that

"[t]here is no indication in the legislative history that the negligence savings clause was intended to impose liability on a vehicle owner for the negligence of an 19

affiliate."

Def. Br. Graves Amend. at 7.

While the

legislative history might be silent on this issue, that silence does not defeat any easy interpretation here because the statute is unambiguous. See United States v. Gonzales , 520 U.S. 1, 6 (1997) ("Given the

straightforward statutory command, there is no reason to resort to legislative history."). The statute is clear

and straightforward that, if the owner of the vehicle or an "affiliate" of the owner is negligent, then the

statute does not shield the owner from liability for the affiliate's negligence. Moreover, this construction of the statute not only avoids "absurd results," Lewis v. Barnhart, 285 F.3d 1329, 1331 to (11th. avoid Cir. 2002) (courts will it interpret is fully

statutes

"absurd

results"),

consistent with the purpose of the statute, which is "to shield rental car companies from certain vicarious Moreover,

liability suits," Garcia, 540 F.3d at 1244.

the plain language of the statute ensures that companies that rent vehicles to others (including perhaps even 20

their affiliates) are protected from liability but only if there is no negligence on their part or on the part of an affiliate if the affiliate meets the amendment's

strict definition of "a person other than the owner that directly or indirectly controls, is controlled by, or is under common control with the owner," with the "term `control' [to] mean[] the power to direct the management and policies of a person whether through ownership of voting securities or otherwise." 49 U.S.C. § 30106(d)(1). Thus, not all affiliates fall within in the

amendment's definition; rather only where the "control" relationship between the owner and the affiliate is so close as to meet the amendment's definition (one company has "the power to direct the management and policies" of the other) has Congress chosen to treat the affiliate and the owner as one and preclude the protection of the amendment when one of them has been negligent. This reading of the reach of the amendment's

protection is consistent with the Supreme Court directive "that the interposition of a corporation will not be 21

allowed to defeat a legislative policy." Abbott assure 321 U.S. 349, 363 (1944). that car rental to get companies around

Anderson v.

Therefore, so as to do the not falsely or

unfairly

attempt

owner-negligence

restriction by setting up affiliates, Congress wrote into the Graves Amendment what is essentially a mechanism for determining when an owner's and an affiliate's business structures (be they corporate or otherwise) will be

disregarded or pierced and the two will be treated as one. This court is, obviously, bound to follow that Note, Piercing the Corporate Law

legislative directive.

Veil: The Alter Ego Doctrine Under Federal Common Law, 95 Harv. L. Rev. 853, 856 (1982) ("[W]hen Congress has enacted particular statutory guidelines for going behind the corporate structure ... courts must defer to the congressional will."). *** Accordingly, it is ORDERED as follows: (1) Defendant R & L Transfer, Inc.'s motion for summary judgment (Doc. No. 30) is denied on 22

plaintiff negligence.

Lucile

Askew's

claim

for

simple

This claim will go to trial against

defendant R & L Transfer, Inc. (2) Defendant R & L Transfer, Inc.'s motion for summary judgment (Doc. No. 30) is granted on all other claims asserted by plaintiff Askew, with judgment entered in favor of defendant R & L Transfer, Inc. and against plaintiff Askew on these other claims. DONE, this the 30th day of December, 2009. /s/ Myron H. Thompson UNITED STATES DISTRICT JUDGE