Parker v. Miller et al
Filing
88
OPINION and ORDER granting in part and denying in part 72 Defendant Showplace Wood Products, Inc.'s Motion to Dismiss and granting in part and denying in part 73 Defendants Fowlds Brothers Trucking, Inc., Dakotaland Transportation, Inc., Bru ce Fowlds and Jerald Fowlds' Motion to Dismiss. All claims against Fowlds Brothers Trucking, Inc., Bruce Fowlds, and Jerald Fowlds are DISMISSED. Further, Count 5 is DISMISSED as to Showplace only and Count 13 is DISMISSED in its entirety. All other claims remain pending. Signed by Judge George C. Smith on 8/7/18. (sem)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
SHANICE J. PARKER,
Plaintiff,
Case No. 2:16-cv-1143
JUDGE GEORGE C. SMITH
Magistrate Judge Elizabeth P. Deavers
v.
ERIC M. MILLER, et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court upon the Partial Motions to Dismiss of Defendants
Showplace Wood Products, Inc. (“Showplace”) (Doc. 72) and Fowlds Brothers Trucking, Inc.
(“Fowlds Brothers”), Dakotaland Transportation, Inc. (“Dakotaland’), Bruce Fowlds (“Bruce”),
and Jerald Fowlds (“Jerald”) (Doc. 73). The motion is fully briefed and ripe for disposition. For
the following reasons, both motions are GRANTED IN PART and DENIED IN PART.
I.
BACKGROUND
Plaintiff Shanice Parker was involved in a single-car accident on April 12, 2016, while
traveling eastbound on I-70 in Licking County, Ohio due to a malfunctioning tie rod in her vehicle.
(Doc. 45, 2d Am. Compl. ¶ 106). Parker’s vehicle was disabled in the right-most lane of eastbound
travel on I-70. (Id. ¶ 107). Shortly after, Ohio State Highway Patrol Trooper Rodney Hart arrived
in his patrol car and eventually parked it in the right-most lane directly behind Parker’s disabled
vehicle. (Id. ¶ 116). Hart activated the emergency lights on his patrol car and placed road flares
to indicate that oncoming traffic should move over into the middle or left-most lanes. (Id. ¶ 110).
Hart also asked Parker to be seated in the front passenger seat of the patrol car so he could interview
her regarding her single-car accident. (Id. ¶ 114). Within minutes, Parker was seriously injured
when a tractor trailer driven by Defendant Eric Miller crashed into the parked patrol car in which
Parker was seated. (Id. ¶¶ 118–31).
At the time of the accident, Miller was a truck driver whom Parker alleges was employed
by “Defendant Dakotaland and/or Defendant Fowlds Brothers and/or Defendant Showplace” and
was driving the truck as part of his job duties. (Id. ¶ 138). The truck involved in the accident was
leased by Dakotaland from Fowlds Brothers. (Id. ¶¶ 11–12). At the time of the accident, the truck
contained wood products manufactured by and being transported on behalf of Showplace. (Id.
¶¶ 23, 138).
Parker alleges that the three businesses (Dakotaland, Fowlds Brothers, and Showplace) are
closely-related. Specifically, she alleges that Dakotaland and Fowlds Brothers operate as a single
enterprise, with 75% of their business comprising the shipment of goods for Showplace. (Id. ¶ 31).
Since 2000, Showplace has exclusively used Dakotaland and/or Fowlds Brothers as the motor
carrier hauling its outbound loads. (Id. ¶ 29). Bruce and Jerald Fowlds are the eponymous Fowlds
Brothers, and each owns 50% of both Dakotaland and Fowlds Brothers. (Id. ¶ 8). Miller,
Dakotaland, Fowlds Brothers, Showplace, Bruce, and Jerald are all citizens of South Dakota,
whereas Parker is a citizen of Ohio and/or Washington, D.C. (Id. ¶¶ 1, 3–7, 13).
In her Second Amended Complaint, Parker asserts claims for (1) negligent operation of a
motor vehicle (against Miller); (2) statutory traffic violations establishing negligence per se
(against Miller); (3) strict liability for Miller’s negligence (against Dakotaland);1 (4) negligent
hiring, training, supervising, and retaining of Miller (against Dakotaland and Fowlds Brothers);
1
Originally, this count was also asserted against Showplace. However, Parker subsequently stipulated to the
dismissal of this count as against Showplace only. (Doc. 83).
2
(5) statutory violations establishing negligence per se in the hiring, training, supervising, and
retaining of Miller (against Dakotaland, Fowlds Brothers, and Showplace); (6) negligent
entrustment of the tractor trailer to Miller (against Dakotaland and Fowlds Brothers); (7) corporate
veil piercing based on alter ego status (against Dakotaland, Bruce, and Jerald); (8) corporate veil
piercing based on alter ego status (against Fowlds Brothers, Bruce, and Jerald); (9) corporate veil
piercing based on a “single enterprise theory” (against Dakotaland and Fowlds Brothers);
(10) vicarious liability for Miller’s negligence (against Dakotaland and Fowlds Brothers); (11)
vicarious liability for Dakotaland’s and Fowlds Brothers’ negligence (against Showplace);
(12) negligent retention of Dakotaland and Fowlds Brothers (against Showplace); and (13) nondelegable duty (against Showplace). (Id. ¶¶ 144–208).
Showplace, Fowlds Brothers, Dakotaland, Bruce, and Jerald now move for partial
dismissal of Parker’s Second Amended Complaint. Bruce and Jerald seek dismissal of all claims
against them because there are no grounds for piercing the corporate veils of either Dakotaland or
Fowlds Brothers, and therefore this Court lacks personal jurisdiction over them as South Dakota
citizens. Fowlds Brothers seeks dismissal of all claims against it on grounds that it is a separate
entity from Dakotaland, and therefore it was not Miller’s employer and not responsible for his
actions or for hiring or supervising him. Showplace seeks dismissal of Counts 5 and 13, as well
as Parker’s request for punitive damages against it. Finally, Dakotaland seeks dismissal of
Parker’s request for punitive damages against it.
II.
A.
STANDARDS OF REVIEW
Dismissal under Rule 12(b)(2)
Bruce and Jerald bring their motion pursuant to Rule 12(b)(2) of the Federal Rules of Civil
Procedure, alleging that this Court lacks personal jurisdiction over them. When confronted with a
Rule 12(b)(2) motion, “[t]he plaintiff bears the burden of establishing the existence of
3
jurisdiction.” Estate of Thompson v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 360 (6th Cir.
2008) (citing Brunner v. Hampson, 441 F.3d 457, 462 (6th Cir. 2006)). When the Court resolves
a Rule 12(b)(2) motion based on “written submission and affidavits . . . rather than resolving the
motion after an evidentiary hearing or limited discovery, the burden on the plaintiff is ‘relatively
slight,’ . . . and ‘the plaintiff must make only a prima facie showing that personal jurisdiction exists
in order to defeat dismissal.’” Air Prods. & Controls, Inc. v. Safetech Int’l, Inc., 503 F.3d 544,
549 (6th Cir. 2007) (quoting Am. Greetings Corp. v. Cohn, 839 F.2d 1164, 1169 (6th Cir. 1988);
Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991)). Under such circumstances “the
pleadings and affidavits submitted must be viewed in a light most favorable to the plaintiff, and
the district court should not weigh ‘the controverting assertions of the party seeking dismissal.’”
Id. (quoting Theunissen, 935 F.2d at 1459).
Although Plaintiff’s prima facie burden is relatively slight, the Court must still find that
“‘[P]laintiff has set forth specific facts that support a finding of jurisdiction in order to deny the
motion to dismiss.’” Palnik v. Westlake Entm’t, Inc., 344 F. App’x 249, 251 (6th Cir. 2009)
(quoting Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 (6th Cir. 2006)). Thus, “it
remains the plaintiff’s burden and the complaint must have ‘established with reasonable
particularity’ those specific facts that support jurisdiction.” Id. (quoting Neogen Corp. v. Neo Gen
Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002)). Consequently, the rules are designed in part
to protect potential defendants from a “plaintiff’s bald allegation of jurisdictional facts.” Serras v.
First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989).
“In diversity cases, federal courts apply the law of the forum state to determine whether
personal jurisdiction exists.” Nationwide Mut. Ins. Co. v. Tryg Intern. Ins. Co., Ltd., 91 F.3d 790,
793 (6th Cir. 1996) (citations omitted). In order for personal jurisdiction to be proper, “both the
4
state[’s] long-arm statute and constitutional due process requirements” must be met. Calphalon
Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000). As the United States Court of Appeals for
the Sixth Circuit has noted, “Ohio’s long-arm statute is not coterminous with federal constitutional
limits.” Estate of Thompson, 545 F.3d at 361 (citing Calphalon Corp., 228 F.3d at 721). Thus,
for the Court to have personal jurisdiction, it must find that the requirements of both Ohio’s longarm statute and constitutional due process are met. Id.
B.
Dismissal under Rule 12(b)(6)
Fowlds Brothers, Showplace, and Dakotaland bring their motions to dismiss pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure, alleging that Plaintiff has failed to state a
claim upon which relief can be granted.
Under the Federal Rules, any pleading that states a claim for relief must contain a “short
and plain statement of the claim” showing that the pleader is entitled to such relief. Fed. R. Civ.
P. 8(a)(2). To meet this standard, a party must allege sufficient facts to state a claim that is
“plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim will be
considered “plausible on its face” when a plaintiff sets forth “factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Rule 12(b)(6) allows parties to challenge the sufficiency of a complaint under the foregoing
standards. In considering whether a complaint fails to state a claim upon which relief can be
granted, the Court must “construe the complaint in the light most favorable to the plaintiff, accept
its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Ohio Police &
Fire Pension Fund v. Standard & Poor’s Fin. Servs. LLC, 700 F.3d 829, 835 (6th Cir. 2012)
(quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)). However, “the tenet that a
court must accept a complaint’s allegations as true is inapplicable to threadbare recitals of a cause
5
of action’s elements, supported by mere conclusory statements.” Iqbal, 556 U.S. at 663. Thus,
while a court is to afford plaintiff every inference, the pleading must still contain facts sufficient
to “provide a plausible basis for the claims in the complaint”; a recitation of facts intimating the
“mere possibility of misconduct” will not suffice. Flex Homes, Inc. v. Ritz-Craft Corp of Mich.,
Inc., 491 F. App’x 628, 632 (6th Cir. 2012); Iqbal, 556 U.S. at 679.
III.
DISCUSSION
The Court will discuss each claim sought to be dismissed in turn.
A.
Claims against Bruce and Jerald
1.
Veil piercing is not appropriate as to Bruce or Jerald.
Neither Bruce nor Jerald are alleged to have taken any relevant actions outside the capacity
of owner or officer of the two corporations. Accordingly, to impose liability on either Bruce or
Jerald, Parker must allege facts sufficient to pierce the corporate veils of Dakotaland or Fowlds
Brothers. To determine whether a corporation’s veil can be pierced, Ohio courts apply a threepronged test:
The corporate form may be disregarded and individual shareholders held liable for
wrongs committed by the corporation when (1) control over the corporation by
those to be held liable was so complete that the corporation has no separate mind,
will, or existence of its own, (2) control over the corporation by those to be held
liable was exercised in such a manner as to commit fraud, [an illegal act, or a
similarly unlawful act] against the person seeking to disregard the corporate entity,
and (3) injury or unjust loss resulted to the plaintiff from such control and wrong.
Minno v. Pro-Fab, Inc., 121 Ohio St. 3d 464, 2009-Ohio-1247, 905 N.E.2d 613 (quoting
Belvedere Condominium Unit Owners’ Ass’n v. R.E. Roark Cos., Inc., 67 Ohio St.3d 274, 617
N.E.2d 1075 (1993), at paragraph three of the syllabus, as modified by Dombroski v. WellPoint,
Inc., 119 Ohio St.3d 506, 2008-Ohio-4827, 895 N.E.2d 538).
Bruce and Jerald argue that, even assuming arguendo that Parker has sufficiently alleged
that they exercise complete control over Dakotaland and Fowlds Brothers, she has not alleged that
6
their control was exercised in such a manner as to commit fraud or an illegal act. (Doc. 74, Mot.
at 15–16). Parker responds that her Second Amended Complaint alleges that Dakotaland “owns
no real estate” and regularly transfers approximately 85% of its revenue to Fowlds Brothers as
truck lease payments (Doc. 45, 2d Am. Compl. at ¶ 76). In her opposition brief, she asserts that
this allegation is sufficient to establish purposeful undercapitalization to shield assets from Parker,
which would be a fraudulent use of the corporate form. (Doc. 82, Resp. at 26).
However, the transfer of assets between Dakotaland to Fowlds Brothers implicates the
concept of horizontal veil piercing between corporations, not the vertical veil piercing that Parker
seeks to accomplish between Dakotaland and Bruce and Jerald (and between Fowlds Brothers and
Bruce and Jerald) to reach shareholder assets. And importantly, Parker does not allege that
Dakotaland has insufficient remaining assets to compensate her. Thus, even if, arguendo, the
second prong were met, Parker has not alleged that Bruce and Jerald’s fraudulent exercise of
control over the corporations harmed her in any way. There are therefore no grounds on which to
pierce the corporate veils of Dakotaland or Fowlds Brothers to reach Bruce or Jerald’s assets.
2.
Parker alleges no independent grounds for personal jurisdiction over Bruce
or Jerald.
As Bruce and Jerald are citizens of South Dakota, Parker must allege that they engaged in
activity that would satisfy both Ohio’s long-arm statute and due process constraints for the Court
to exercise personal jurisdiction over them. While no party disputes this Court’s personal
jurisdiction over Dakotaland or Fowlds Brothers, “[i]t is settled that jurisdiction over the individual
officers of a corporation cannot be predicated merely upon jurisdiction over the corporation.”
Weller v. Cromwell Oil Co., 504 F.2d 927, 929 (6th Cir. 1974). And Parker has not alleged that
Bruce or Jerald took any relevant actions outside their capacity as owners and officers of the
corporations that would qualify under Ohio’s long-arm statute.
7
In her opposition brief, Parker argues only that, in addition to the accident occurring in
Ohio, “[t]he brothers are the equal owners of Defendant Dakotaland and Defendant Fowlds
Brothers, businesses that regularly transact business in the state of Ohio, using Ohio infrastructure
to deliver products and supplies to end-users across the eastern seaboard, including deliveries to
people and companies in Ohio.” (Doc. 82, Resp. at 27). Parker asserts that these activities satisfy
the first three subsections of Ohio’s long-arm statute, namely, “transacting any business in [Ohio],”
“contracting to supply services or goods in [Ohio],” and “causing tortious injury by any act or
omission in [Ohio].” Ohio Rev. Code § 2307.382(A).
But the Court has already determined supra that the corporate form should be respected as
between each of Dakotaland and Fowlds Brothers on the one hand, and Bruce and Jerald on the
other. As a result, Parker alleges no more than corporate activity, not activity by Bruce and Jerald
individually. As Parker has not alleged facts that satisfy Ohio’s long-arm statute as to Bruce and
Jerald, the Court will dismiss all claims against them for lack of personal jurisdiction.
B.
Claims against Fowlds Brothers
Although Parker alleges that Miller was functionally employed by “Dakotaland and/or
Fowlds Brothers and/or Showplace,” Parker does not dispute that Miller was at least nominally an
employee of Dakotaland, the company that actually engages in the trucking business (as opposed
to Fowlds Brothers, who, at least nominally, only owns the trucks and leases them to Dakotaland,
and as opposed to Showplace, who, at least nominally, only uses Dakotaland as its independent
contractor for its shipping needs).
The Second Amended Complaint reflects that Dakotaland (and not Fowlds Brothers) is
registered as a “motor carrier” with the Department of Transportation, and Parker relies on
violations of various regulations applicable only to “motor carriers” for her claim of negligent
hiring and supervision in Count 5. (Doc. 45, 2d Am. Compl. ¶¶ 4, 169). Parker also alleges that
8
the vehicle Miller was driving was leased by Dakotaland from Fowlds Brothers at the time of the
accident, and thus only Dakotaland could have negligently entrusted the truck to Miller as alleged
in Count 6. As a result, all of Parker’s claims against Fowlds Brothers hinge on Parker’s theory
that Dakotaland and Fowlds Brothers are really a single enterprise—in other words, that the two
corporations are alter egos of each other and that the assets of one should be available to satisfy
the liabilities against the other.
As recognized by the Court’s previous order denying summary judgment for Fowlds
Brothers (Doc. 38), Dakotaland and Fowlds Brothers are certainly related. Both have identical
shareholders in identical proportions, and both share the same president and vice president. (Doc.
45, 2d Am. Compl. ¶¶ 6–8). Both have the same physical address. (Id. ¶ 28). In or around January
2016, the companies shifted some of Dakotaland’s employees to Fowlds Brothers in order for both
companies to qualify as small employers under the Affordable Care Act. (Id. ¶ 69). Those same
employees were immediately loaned back to Dakotaland, though their payroll is processed through
Fowlds Brothers. (Id. ¶ 70). The majority of Fowlds Brothers’ truck leasing business comes from
Dakotaland. (Id. ¶ 73). Parker aptly describes the two corporations as “engaging in symbiotic
business enterprises that are financially dependent upon each other.” (Id. ¶ 77).
However, the Ohio Supreme Court has definitively held that horizontal veil piercing is not
available for sister corporations like Dakotaland and Fowlds Brothers, even where they share the
same owners. Minno v. Pra-Fab, Inc., 121 Ohio St. 3d 464, 905 N.E.2d 613 (2009). In Minno,
an employee injured on the job sued his nominal employer (See-Ann) and its sister company (ProFab), who the plaintiff argued were “fundamentally indistinguishable” from one another. Id. ¶ 5.
Both See-Ann and Pro-Fab had “common individual shareholders and officers, are engaged in
similar lines of work, and possess identical business addresses.” Id. ¶ 14.
9
Despite these commonalities, the Ohio Supreme Court emphasized that “the corporations
are separately incorporated and neither corporation has an ownership interest in the other.” Id.
Under these circumstances (as opposed to an individual shareholder alleged to be fundamentally
indistinguishable from a corporation), “the common shareholder ownership of sister corporations
does not provide one sister corporation with the inherent ability to exercise control over the other.
Any wrongful act committed by one sister corporation might have been instigated by the
corporation’s owners, but it could not have been instigated by the corporation’s sister.” Id. ¶ 13.
The Minno court therefore held that “a plaintiff cannot pierce the corporate veil of one corporation
to reach its sister corporation. A corporation’s veil may not be pierced in order to hold a second
corporation liable for the corporate misdeeds of the first when the two corporations have common
individual shareholders but neither corporation has any ownership interest in the other
corporation.” Id.
The
relationship
between
Dakotaland
and
Fowlds
Brothers
is
functionally
indistinguishable from that of the sister corporations in Minno. Therefore, Parker may not pierce
Dakotaland’s corporate veil to reach Fowlds Brothers.
To avoid this result, Parker argues that she has not sought horizontal veil piercing at all,
but has instead advanced a separate legal theory—that Dakotaland and Fowlds Brothers are a
single enterprise. Parker contends that “Single Enterprise Theory is akin to the alter ego doctrine,
wherein the economic fact pushes through the paper differentiations embodied in the corporate
certificates and liabilities are dealt with in accord with the business, instead of the legal fact of
corporate entity.” (Doc. 82, Resp. at 12). She claims that such a theory has long been recognized
by Ohio courts, but cites in support only a single case from 1907 and a single law review article
from 1947, neither of which go further than recognizing that the corporate form may be disregarded
10
in the case of fraud. In re Rieger, 157 Fed. 609, 1907 U.S. Dist. LEXIS 437, 1 A.F.T.R (P-H) 155,
8 Ohio L. Rep. 498 (S.D. Ohio 1907); The Theory of Enterprise Entity, p. 345, Adolf A. Berle, Jr.,
Columbia Law Review, April 1947.
Parker also attempts to distinguish “horizontal veil piercing” and “single enterprise theory”
by arguing that the former allows for vicarious liability of the affiliate, whereas the latter holds the
affiliate directly liable. (Doc. 82, Resp. at 11). But this distinction is not supported by citation,
nor is it a correct statement of the law. The justification for veil piercing is that the shareholder
and the corporation are one and the same, such that the shareholder may fairly be held directly
liable for the corporation’s liabilities. Belvedere, 67 Ohio St. 3d at 288. Thus, even as described
by Parker, her “single enterprise theory” is no more than an attempt at the horizontal veil piercing
foreclosed by the Ohio Supreme Court in Minno.
Finally, Parker argues that Fowlds Brothers is seeking a “third bite at the apple” on the
single enterprise theory, referencing the Court’s earlier orders denying summary judgment for
Fowlds Brothers (Doc. 38) and denying reconsideration of that order (Doc. 57). (Doc. 82, Resp.
at 24). But in those earlier stages of the litigation, Parker had not yet fully articulated her single
enterprise theory and the Court was without the benefit of the parties’ full briefing on the issue. It
is clear at this stage that Minno is controlling and, accordingly, all claims against Fowlds Brothers
are dismissed.
C.
Claims against Showplace
Parker asserts several negligence-based claims against Showplace: statutory violations
establishing negligence per se in the hiring, training, supervising, and retaining Miller (Count 5),
vicarious liability for Dakotaland’s negligence (Count 11), negligent retention of Dakotaland
(Count 12), and non-delegable duty to ensure Dakotaland operated in a non-negligent manner
(Count 13). Showplace moves for dismissal of only Counts 5 and 13.
11
1.
Count 5 (statutory violations establishing negligence per se)
Showplace argues Count 5 must be dismissed because the regulations it is alleged to have
violated do not provide a private right of action. However, Parker has not asserted claims based
solely on the violation of the regulations; she asserts only that Showplace’s violation of the
regulations establishes negligence per se. (Doc. 45, 2d Am. Compl. ¶ 173). The distinction is
important:
A plaintiff attempting to assert a private right of action under a statute is asserting
that a violation of the particular statute, standing alone, entitles her to a remedy.
Fawcett v. G.C. Murphy & Co., 348 N.E.2d 144, 146 (Ohio 1976); Cort v. Ash, 422
U.S. 66, 77 (1975). Negligence per se, on the other hand, merely satisfies the duty
and breach elements of a negligence claim. Pond v. Leslein, 647 N.E.2d 477, 479
(Ohio 1995); Sikora [v. Wenzel], 727 N.E.2d [1277,] 1281 [(Ohio 2000)]. The
plaintiff still must meet her proofs on proximate cause and damages. Pond, 647
N.E.2d at 479.
Thornton v. State Farm Mut. Auto Ins. Co., No. 1:06-CV-00018, 2006 WL 3359448, at *14 (N.D.
Ohio Nov. 17, 2006). Parker has simply asserted a basic common law negligence claim whose
first two elements, she contends, may be satisfied by Showplace’s violation of various regulations.
The availability of a private right of action under the regulations is therefore irrelevant.
The problem with Parker’s Count 5 is that the standards she identifies largely cannot form
the basis for negligence per se. Parker relies primarily on the Federal Motor Carrier Safety
Regulations (“FMCSRs”) at 49 C.F.R. §§ 350–99, as well as the motor carrier safety standards
contained in Ohio Administrative Code §§ 4901:2-5-02 through 08. These are administrative rules
and regulations adopted by the U.S. Department of Transportation and Ohio’s Public Utilities
Commission, respectively; they are not legislatively-enacted statutes. Again, the distinction is
important: “[T]he violation of an administrative rule does not constitute negligence per se.”
Chambers v. St. Mary’s Sch., 82 Ohio St. 3d 563, 568, 1998-Ohio-184, 697 N.E.2d 198, 203.
12
In Chambers, the Ohio Supreme Court “distinguished between duties arising from statutes,
which reflect public policy, and duties arising from administrative rules, which are created by
administrative agency employees who act to implement the General Assembly’s public-policy
decisions.” Lang v. Holly Hill Motel, Inc., 122 Ohio St. 3d 120, 2009-Ohio-2495, 909 N.E.2d 120,
¶ 18 (citing Chambers, 82 Ohio St.3d at 564, 566–567). “If we were to rule that a violation of the
[Building Code] (an administrative rule) was negligence per se, we would in effect bestow upon
administrative agencies the ability to propose and adopt rules which alter the proof requirements
between litigants. Altering proof requirements is a public policy determination more properly
determined by the General Assembly . . . .” Chambers, 82 Ohio St. 3d at 568. Accordingly, Ohio
does not recognize negligence per se based on the violation of an administrative regulation.
The one legislative enactment listed in Count 5 that might be relevant to negligence per se
is Ohio Revised Code § 4511.79(B), which provides:
No owner, as defined in section 4501.01 of the Revised Code, of a “commercial
motor vehicle,” “commercial car,” or “commercial tractor,” or a person employing
or otherwise directing the driver of such vehicle, shall require or knowingly permit
a driver in any such condition described in division (A) of this section to drive such
vehicle upon any street or highway.
However, this statute does not apply to Showplace in the context of Parker’s accident. The statute
applies only to owners of commercial motor vehicles (defined in § 4501.01 has having title to the
vehicle) or employers of drivers of such vehicles.
Parker’s Second Amended Complaint alleges that Fowlds Brothers, not Showplace, is the
owner of the vehicle Miller was driving. (Doc. 45, 2d Am. Compl. ¶ 11). And Parker has not
sufficiently alleged that Showplace “employed or otherwise direct[ed]” Miller as the driver of the
vehicle. Her general allegation that “Defendant Miller was the agent, servant, and/or employee of
Defendant Dakotaland and/or Defendant Fowlds Brothers and/or Defendant Showplace” are not
13
plausible in light of the more specific allegations she makes as to the hiring and supervision of
Miller. (Id. ¶ 16). To wit:
Bruce Fowlds, Jon Otto and Dan Parker (all three of which Parker alleges to be officers or
employees of Dakotaland and/or Fowlds Brothers, but not of Showplace) hire drivers for
Dakotaland and/or Fowlds Brothers. Bruce Fowlds has the final decision-making power
as to hiring, disciplining, and retaining drivers. (Id. ¶¶ 59, 61, 62, 65)
Bruce Fowlds, Jon Otto, and Dan Parker comprise Dakotaland and/or Fowlds Brothers’
“Review Board,” whose purpose is to “address company safety concerns, including driver
employment and retention decisions.” (Id. ¶ 67).
Miller submitted his employment application to Dakotaland and/or Fowlds Brothers. The
application was reviewed by Bruce Fowlds, Jon Otto, and Dan Parker, and Dan Parker
reached out Miller’s past employers for references. “Defendant Bruce Fowlds, Jon Otto,
and Dan Parker, through consensus on behalf of Defendant Dakotaland and/or Defendant
Fowlds Brothers, hired Defendant Miller to operate a commercial motor vehicle in
interstate commerce.” (Id. ¶¶ 83–84, 92).
After Miller was involved in multiple accidents while “operating a commercial motor
vehicle for Defendant Dakotaland and/or Defendant Fowlds Brothers,” “[t]he Review
Board took no action against Defendant Miller.” (Id. ¶¶ 101–102).
Miller was eventually “placed on probation for his accidents by Safety Director, Dan
Parker.” (Id. ¶ 103).
According to Parker’s own allegations, Miller was hired, supervised, and retained by Dakotaland
and/or Fowlds Brothers without Showplace’s involvement. Parker’s further suggestion that
“Showplace has de facto control over Defendant Dakotaland’s daily operations as it provides
seventy-five (75%) percent [sic] of the loads hauled by Defendant Dakotaland” does not hold
water. (Id. ¶ 54). Although it may be true that “[i]f Defendant Showplace terminated, altered or
otherwise reduced its relationship and/or reliance on Defendant Dakotaland to haul its products,
then Defendant Dakotaland would suffer a financial hardship” (id.), this financial relationship is
not sufficient to create de facto control over daily operations by one company over another. It
certainly does not suffice to demonstrate that Showplace was Miller’s employer or was otherwise
directing Miller as required by § 4511.79(B).
14
In sum, Parker has not identified any statutory violations which could form the basis of
negligence per se on the part of Showplace. To the extent that Parker hopes to establish that
Showplace violated a non-statutory duty, that negligence claim would be redundant with Counts
11 and 12 (asserting vicarious liability for Dakotaland’s negligence and direct liability for
Showplace’s retention of Dakotaland, respectively).
Accordingly, Parker’s claims against
Showplace in Count 5 must be dismissed.
2.
Count 13 (non-delegable duty)
Parker’s Count 13 asserts that “Showplace is a commercial trucking company and a
registered motor carrier with the U.S. department of Transportation (U.S. DOT #867220) which is
subject to the Federal Motor Carrier Safety Regulations as an interstate trucking company and has
a non-delegable duty to the public at large and may not use outside motor carriers to shield itself
from liability.” (Doc. 45, 2d Am. Compl. ¶ 205). She further states that “Showplace breached its
non-delegable duty by selecting, hiring and/or retaining a Defendant Dakotaland and/or Defendant
Fowlds Brothers when the independent contractor’s driver, Defendant Miller negligently operated
a commercial motor vehicle in an unsafe manner . . . .” (Id. ¶ 208).
Parker’s appeal to the FMCSRs is unavailing as to Showplace. Although it may itself be
a registered motor carrier, Showplace was not acting as a motor carrier in the context of Parker’s
injuries. Instead, as reflected by Parker’s own allegations, it was acting as the manufacturer of
wood products, which it then arranged to have transported by Dakotaland, a registered motor
carrier. (Id. ¶¶ 23–27).
More importantly, to the extent Parker seeks to hold Showplace liable for the actions of
Dakotaland and/or Fowlds Brothers, this claim is also redundant. The existence of any duty on
the part of Showplace must be established as part of Parker’s basic negligence claims in Counts
11 and 12. Strother v. Hutchinson, 67 Ohio St.2d 282, 285, 423 N.E.2d 467 (1981) (elements of
15
negligence are (1) the existence of a duty owed by the defendant to the plaintiff, (2) a breach of
that duty, (3) causation, and (4) damages). The ability to delegate that duty (or lack thereof) might
be raised in defense to Counts 11 and 12, but it does not by itself create a separate cause of action.
The cases cited by Parker do not hold otherwise. Accordingly, Count 13 must be dismissed.
D.
Punitive damages
All moving Defendants (Dakotaland, Fowlds Brothers, Bruce, Jerald, and Showplace)
moved to dismiss Parker’s requests for punitive damages. However, now that all claims against
Fowlds Brothers, Bruce, and Jerald have been dismissed, the Court need only consider the viability
of Parker’s prayers for punitive damages against Dakotaland and Showplace.
Punitive damages may be awarded if a plaintiff establishes that “[t]he actions or omissions
of that defendant demonstrate malice or aggravated or egregious fraud, or that defendant as
principal or master knowingly authorized, participated in, or ratified actions or omissions of an
agent or servant that so demonstrate.” Ohio Rev. Code § 2315.21(C)(1). Parker and Defendants
both identified the correct standard for actual malice:
Actual malice, necessary for an award of punitive damages, is (1) that state of mind
under which a person’s conduct is characterized by hatred, ill will or a spirit of
revenge, or (2) a conscious disregard for the rights and safety of other persons that
has a great probability of causing substantial harm.
Preston v. Murty, 32 Ohio St. 3d 334, 334, 512 N.E.2d 1174, 1174 (1987). “[A]ctual malice can
be inferred from conduct and surrounding circumstances which may be characterized as reckless,
wanton, willful or gross.” Villella v. Waikem Motors, Inc., 45 Ohio St. 3d 36, 37, 543 N.E.2d 464,
467 (1989) holding modified by Moskovitz v. Mt. Sinai Med. Ctr., 69 Ohio St. 3d 638, 635 N.E.2d
331 (1994). But the actions of a defendant must rise above mere negligence to be considered
actual malice. “The focus is on the actor’s conscious disregard of an almost certain risk of
substantial harm. This distinguishes ‘malicious’ from ‘non-malicious’ conduct.” Kuebler v.
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Gemini Transp., No. 3:12-CV-114, 2013 WL 6410608, at *5 (S.D. Ohio Dec. 9, 2013) (Rose, J.).
“The type of aggravated circumstances sufficient to support an award of punitive damages in a
motor vehicle accident case may include intoxication and deliberate actions to flee the scene or
evade responsibility.” MacNeill v. Wyatt, 917 F. Supp. 2d 726, 730 (S.D. Ohio 2013) (Litkovitz,
M.J.) (citing Cabe v. Lunich, 70 Ohio St. 3d 598, 640 N.E.2d 159, 163 (1994)).
No defendant has argued that Parker’s allegations as to Miller are insufficient to support a
claim for punitive damages against him. Parker’s Second Amended Complaint alleges that Miller
had full visibility of the patrol car’s flashing lights with sufficient time and distance to change
lanes or bring the truck to a stop, and yet he failed to apply his brakes until only a few seconds
before the crash. (Doc. 45, 2d Am. Compl. ¶¶ 120–32). The Court previously denied Miller’s
motion for summary judgment on the request for punitive damages in Parker’s First Amended
Complaint (Doc. 38), and Miller has not re-moved to dismiss the request for punitive damages in
Parker’s Second Amended Complaint.
1.
Punitive damages against Dakotaland
In an earlier stage of this case, the Court granted Dakotaland’s motion to dismiss the request
for punitive damages in Parker’s First Amended Complaint. (Doc. 26). In that order, the Court
concluded that Parker’s First Amended Complaint did not sufficiently allege that Dakotaland
“knowingly authorized, participated in, or ratified actions or omissions” of Miller as required by
the second prong of R.C. § 2315(C)(1).
But in drafting her Second Amended Complaint, Parker had the benefit of significant
discovery that was not available when drafting the earlier version. The Second Amended
Complaint contains many more detailed factual assertions as to Dakotaland’s alleged malice.
While it remains true that Parker has not alleged that Dakotaland authorized, participated in, or
ratified Miller’s dangerous driving, Parker has now sufficiently alleged that Dakotaland’s own
17
actions in hiring and retaining Miller demonstrate malice could satisfy the first prong of R.C.
§ 2315(C)(1). Specifically, Parker now alleges:
Dakotaland received an incomplete employment application from Miller which disclosed
a previous crash on October 22, 2013 and an issue with Miller’s commercial driver’s
license. Despite concerns with the application, Dakotaland did not make further inquiries
of Miller as to the previous crash or the license issue. (Doc. 45, 2d Am. Compl. ¶¶ 81, 83,
86). Nor did Dakotaland inquire with Miller as to inconsistencies between the application
and various medical forms he submitted. (Id. ¶ 91).
Dakotaland sought references from Miller’s previous employers, one of whom described
Miller as “poor” in regard to compliance with safety regulations and logs and stated that
he had been discharged for not having sufficient experience and being hard on equipment.
(Id. ¶ 84).
Despite its concerns, Dakotaland hired Miller on February 2, 2015. (Id. ¶ 92).
Dakotaland did not make inquiries sufficient to discover that Miller had also been issued
nine FMCSR violations while driving a commercial motor vehicle on August 26, 2014.
(Id. ¶ 85). Dakotaland also failed to identify that Miller had less than 12 months of
experience operating a commercial motor vehicle. (Id. ¶ 94). Having less than 12 months
of experience meant Miller was an “entry-level driver” under 49 CFR 380.502.
Miller was placed into service as a commercial motor vehicle driver for Dakotaland without
entry-level driver training as required by 49 C.F.R. §§ 380.502–13. (Id. ¶ 95).
Within his first year of employment with Dakotaland, Miller was involved in five crashes.
Miller received no additional training or instruction after any of these crashes. (Id. ¶ 101).
Dakotaland’s written policies provide that after the third driver incident in a year, the
offending driver is to be terminated. Yet Dakotaland continued to employ Miller, even
after he was involved in five crashes within his first year. (Id. ¶ 102).
Dakotaland placed Miller on probation for his safety record during his annual review on
February 2, 2016 (approximately two and a half months prior to the accident involving
Parker). (Id. ¶ 103). During his probationary period, Miller received a written warning
from Dakotaland for, inter alia, his repeated history of damaging the truck and trailer. The
letter also indicates that one of these incidents occurred in early March 2016. (Id. ¶ 104).
Yet Dakotaland continued to employ Miller without further training or discipline. (Id.).
Less than a month after Miller received the written warning, he was involved in the accident
that injured Parker. (Id. ¶ 105).
These facts, if true, could support a finding of malice on the part of Dakotaland in hiring
and retaining Miller. Parker alleges that Dakotaland knew, or should have known, at the time it
18
hired Miller that he had a poor safety record, but nevertheless employed him to operate commercial
motor vehicles, a potentially dangerous activity.
Moreover, during Miller’s employment,
Dakotaland was faced with Miller’s numerous crashes that should have resulted in termination
pursuant to Dakotaland’s own policies; yet Dakotaland continued to employ Miller without
additional training or discipline. Thus, Parker has sufficiently alleged that Dakotaland, in hiring
and continuing to employ Miller, exhibited a conscious disregard of an almost certain risk of
substantial harm. Parker’s request for punitive damages against Dakotaland therefore stands.
2.
Punitive damages against Showplace
Just as with Dakotaland, Parker has not alleged any facts to support an inference that
Showplace authorized, participated in, or ratified Miller’s conduct. Nor has she alleged any facts
that would support Showplace’s knowledge, and conscious disregard, of the safety threat posed by
Miller prior to the crash. She does allege, however, that Showplace knew or should have known
that Dakotaland as a whole had an unsafe driving record, even outside of Miller’s driving, and that
it consciously disregarded that risk by continuing to retain Dakotaland as its exclusive motor
carrier hauling outbound loads. Specifically, Parker alleges that:
Since Dakotaland began transporting goods for Showplace in 2000, Showplace has
received telephone calls, social media messages, and email complaints from the motoring
public concerning unsafe driving by Dakotaland drivers. (Doc. 45, 2d Am. Compl. ¶ 33).
Through these complaints or otherwise, Showplace has been on notice of incidents of
dangerous driving by Dakotaland including incidents involving law enforcement, improper
parking in the roadway, hard-braking causing cargo or pallets to skid 10–15 feet, cutting
other vehicles off on the highway, almost causing crashes, tailgating, hit-skip, weaving
through traffic, unsafe lane changes, passing on the right, speeding, and crashes. (Id. ¶ 34).
Showplace was on notice of multiple crashes with other vehicles caused by or involving
Dakotaland drivers, including three crashes in 2014. (Id. ¶ 35).
At various times during the period between November 2010 through the time of Parker’s
injuries, Dakotaland was listed in publicly available profiles as being on alert status with
the Federal Motor Carrier Safety Administration. Namely, Dakotaland was on alert status
in the following categories:
19
o
o
o
o
o
Unsafe Driving (28 months)
Fatigued Driving (4 months)
Hours of Service Compliance (14 months)
Crash Indicator (21 months)
Controlled Substance/Alcohol (1 month) (Id. ¶ 36).
Showplace has never inquired as to Dakotaland’s safety record, data, or statistics available
from the Department of Transportation. (Id. ¶ 40). Nor has Showplace discussed
Dakotaland’s safety record with Dakotaland. (Id.¶ 42).
Showplace asserts that it cannot have known that Dakotaland posed a risk to the public
because Dakotaland maintained a federal license as a motor carrier. (Doc. 86, Reply at 2–3).
However, Showplace cites no authority for the proposition that a valid federal motor carrier license
means that the motor carrier poses no risk to the public per se. And even if Showplace did not
have actual knowledge of Dakotaland’s spotty safety record, Ohio courts may impose punitive
damages based on constructive knowledge. E.g., Davis v. Sun Ref. & Mktg. Co., 109 Ohio App.
3d 42, 58, 671 N.E.2d 1049, 1060 (Ohio Ct. App. 1996); Stephens v. A-Able Rents Co., 101 Ohio
App. 3d 20, 29, 654 N.E.2d 1315, 1320–21 (Ohio Ct. App. 1995). If, as Parker alleges,
Dakotaland’s safety statistics with the Department of Transportation were easily available to the
public, her allegations could support constructive knowledge on the part of Showplace that
Dakotaland may have posed an almost certain risk of substantial harm. As a result, Parker’s
request for punitive damages against Showplace stands.
IV.
CONCLUSION
For the foregoing reasons, the Motions to Dismiss are GRANTED IN PART and
DENIED IN PART. All claims against Fowlds Brothers Trucking, Inc., Bruce Fowlds, and Jerald
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Fowlds are DISMISSED. Further, Count 5 is DISMISSED as to Showplace only and Count 13
is DISMISSED in its entirety. All other claims remain pending.
The Clerk shall remove Documents 72 and 73 from the Court’s pending motions list.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT
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