Kinn v. United States Bakery

WRONGFUL DEATH: Magistrate’s recommended summary judgment rulings in MVA death case involving independent contractor distributor of bakery’s products whose driver was allegedly under influence of marijuana and issues of agency, subservant employment, joint venture, non-delegable duty under Federal Motor Carrier Safety Regulations, negligent selection of independent contractor, punitives… DeSoto.

Daizey Kinn was driving north on US 87 with her mother Shannon McBee and young daughter as passengers 4/2/18. Allen Scarlett was driving south in a BNT Distributing vehicle when he lost control on a turn and struck Kinn’s vehicle. McBee died and Kinn was injured.

BNT supplies food products to grocery stores and other small stores. US Bakery dba Franz Family Bakeries is a major producer of bread products, operating in several western states with bakeries throughout the region and some of those products are delivered from out-of-state facilities to Montana. BNT approached US Bakery in 5/16 to see if it would be interested in having someone distribute its products in the territory that BNT was servicing. They entered into a Distribution Agreement authorizing BNT to sell US Baker products in several Montana locations. It identified BNT as an “independent contractor with management and control of its own business.” Prior to 12/17, US Bakery employed a sales rep who serviced accounts in Lewistown, Stanford, Moore, Hobson, and Eddie’s Corner. BNT added that area to its business in 12/17 and began distributing US Bakery products on a route from Billings to Lewistown which included accounts previously serviced by the US Bakery sales rep as well as other accounts in Harlowton and Ryegate that were not previously serviced by the US Bakery sales rep.

At the time of the MVA, Scarlett was driving a BNT vehicle distributing US Bakery products to retailers along the Lewistown Route including the Lewistown Albertsons, the largest customer of US Bakery on that route. US Bakery entered into a Scan Based Trading System Agreement with Safeway, which operates Albertsons stores, identifying US Bakery as the supplier of the bread products sold at the Lewistown Albertsons. To facilitate scan based trading, it maintained the operating system and provided BNT with handheld devices to place its orders. US Baker collected payment directly from Albertsons for the products sold there, then provided BNT a credit for that amount.

Kinn made a claim against BNT and sued US Bakery 2/4/19. Her original complaint alleged that Scarlett was an employee-in-fact and/or agent of US Bakery and that US Bakery was vicariously liable for Scarlett’s negligent conduct, and that US Bakery and BNT were in a joint venture and US Bakery was jointly liable for Scarlett’s negligence. She asserted claims against US Bakery for negligence, wrongful death, and survival and requested punitives. She filed an amended complaint adding a theory of direct liability alleging that US Bakery failed to exercise reasonable care in selection of BNT as an independent contractor and a theory of vicarious liability alleging that because US Bakery operates vehicles under a public license it had a non-delegable duty of safety and is liable for BNT’s negligence.

Kinn requests summary judgment that Scarlett was transporting goods in interstate commerce and was therefore subject to the Federal Motor Carrier Safety Regulations, and for summary judgment that US Bakery and BNT were in a joint venture. US Bakery requests summary judgment on liability and punitives which would effectively dispose of all 6 claims.

Kinn cites Watts v. MRL (Mont. 1994) for the proposition that when “an employee is a subservant of a company that was, in turn, a servant of a principal, the employee is deemed a servant of the principal,” and argues that if BNT was a servant of US Bakery, Scarlett is a servant or employee of US Bakery. But while Watts relied on common-law principles, Kinn does not cite any Montana authority applying the subservant theory outside the FELA context as a basis for tort-related vicarious liability. But even assuming that the theory is viable, her evidence is insufficient to raise a material fact issue regarding an employment relationship between Scarlett and US Bakery as there is insufficient evidence that US Bakery controlled or had the right to control his physical conduct on the job. BN principal Bryan Halpin confirmed in his deposition that US Bakery did not have any control over Scarlett’s day-to-day work activities. While Kinn points to evidence that he used scanning devices, trays, and delivery racks provided by US Bakery, that is not sufficient to find that US Bakery controlled or had the right to control his physical conduct on the job, while the undisputed evidence demonstrates that BNT hired him, paid his wages, set the delivery schedule, owned the van, and otherwise had the right to control his day-to-day work. Thus her subservant theory of employment fails as a matter of law.

Kinn also argues that there is sufficient evidence of an agency relationship between US Bakery and BNT such that US Bakery can be held vicariously liable for BNT’s negligence, acting through its driver. However, the Court agrees with US Bakery that, under the Butler (Mont. 2000) factors, the undisputed evidence demonstrates that it did not have control over BNT sufficient to establish an actual agency relationship. For example, as to the 1st factor — right or exercise of control — Kinn points to evidence that US Bakery required BNT to use pricing negotiated between US Bakery and Albertsons, use a proprietary device for ordering products and inventorying deliveries to Albertsons, submit to a scan-based trading system used between Albertsons and US Bakery, and comply with the stale date schedule. However, she overlooks the facts as they relate to the many other customers serviced by BNT. At the beginning of 2018, it had 27 accounts on 2 different routes including the Lewistown Route. While US Bakery set the price for products sold at the Lewistown Albertsons and 2 other accounts, BNT set the price for products sold to all its other customers, and BNT set its own delivery schedule, placed orders for all of its customers, decided what US Bakery products to sell, set the prices for the US Bakery products it sold for the vast majority of its customers, and did not need US Bakery’s permission to add or discontinue servicing other accounts.

Kinn has presented no evidence establishing a material fact issue as to whether US Bakery and BNT intended to create a joint venture, even as to the Lewistown Albertsons. Because “intent is crucial to the determination of whether a joint venture exists,” Pearson (Mont. 2016), US Bakery is entitled to summary judgment on her joint venture theory.

Because the evidence establishes that US Bakery is a private motor carrier the cases holding that a common carrier is liable for the negligence of its independent contractors do not apply. The Court agrees with US Bakery that the Thomas (D.Mont. 1958) rationale in holding that a motor carrier may be vicariously liable under Montana law for the negligence of an independent contractor applies only to common carriers, not to private carriers like US Bakery. Thus US Bakery’s motion for summary judgment on Kinn’s non-delegable duty theory of liability should be granted.

Assuming that BNT is an independent contractor, Kinn’s theory of direct liability alleges that US Bakery failed to exercise reasonable care in selecting BNT. She alleges, inter alia, that it knew that BNT would be delivering its bread products to multiple retailers on a 350-mile roundtrip while “using a commercial motor vehicle with a gross vehicle weight in excess of 10,000 lbs,” and that Scarlett was under the influence of marijuana and BNT did not screen him for drug use before hiring him. Her negligent hiring claim rests in part on the allegation that US Bakery “should have verified that the subcontractor it hired was complying with the FMCSRs.” However, because it did not have a non-delegable duty to ensure that BNT was complying with the FMCSRs, Kinn cannot maintain a negligent hiring claim based on US Bakery’s failure to verify that BNT was complying with those regulations. However, she further alleges that US Bakery failed to exercise reasonable care in selecting BNT as an independent contractor because it did nothing to ensure that it would employ qualified drivers and failed to determine whether it had enacted any safety plan, drug & alcohol policy, or driver training. US Bakery has not shown that it is entitled to JML on this aspect of her claim.

Kinn alleges that US Bakery acted with actual malice “by intentionally disregarding facts that created a high probability of injury and deliberately proceeding to act with indifference to the high probability of injury” to McBee, Kinn, “and any other persons foreseeably on the roadway.” She accuses US Bakery of claiming that BNT “was an independent contractor to avoid the cost of implementing driver safety programs, drug testing, proper driver training programs, and background checks,” and that the MVA “occurred as a direct result of a poorly trained driver who was under the influence of controlled substances at the time of the wreck.” US Bakery argues that it is entitled to summary judgment on this claim for punitives on the ground that it cannot be held liable for the negligence of BNT and its driver under any of Kinn’s theories. However, there are material fact issues precluding summary judgment for US Bakery on her claim for negligent selection of an independent contractor. While it remains to be seen whether she will be able to prove conduct upon which a jury could award punitives, the claim is sufficient to survive summary judgment.

The Court recommends that summary judgment be granted for US Bakery as to Kinn’s agency, joint enterprise, and non-delegable duty theories of liability, but denied as to her negligent hiring theory and claim for punitives; that Kinn’s motion for summary judgment as to joint venture be denied; and that Kinn’s motion for summary judgment as to interstate commerce, survivorship and US Bakery’s motion for summary judgment as to wrongful death damages be denied as moot.

The parties’ motions in limine will be addressed as needed after Judge Christensen has ruled on this F&R.

(The Court was notified 5/11/20 that the case settled.)

Kinn v. United States Bakery, 44 MFR 222, 4/28/20.

Lance Jasper & Robert Bell (Reep, Bell & Jasper), Missoula, for Kinn; Paul Haffeman & Stephanie Hollar (Davis, Hatley, Haffeman & Tighe), Great Falls, for US Bakery.