Appellate Court Ruling Demonstrates How Agency Is Established In A Liability Suit

February 20, 2016

Agency is a legal concept by which the acts of an agent can bind or otherwise create liability for the principal. Though there is no precise formula for determining the existence of an agency relationship, the main consideration is the principal’s right to control the agent. A principal need not actually exercise control over the worker, it need only have the power to do so. In evaluating control, courts consider the principal’s right to hire and fire; it’s right to terminate the relationship; and decide the manner and direction of work. Courts also consider the manner of pay, whether the employer provides the tools and materials to the worker, and whether the employer deducts or pays for insurance, taxes and Social Security. With the litany of factors involved, evaluating a potential agency relationship is very fact-intensive and decided on a case-by-case basis. Accordingly, a party’s ability to put forth quality evidence is critical for establishing whether or not an agency relationship exists.

The review of these factors was recently put to the test in McHale v. W.D. Trucking, Inc., when the 1st District Appellate Court affirmed a jury’s verdict against the defendants, a truck driver, trucking company, and logistics company, in a wrongful-death action brought by the deceased’s husband. In McHale, a truck struck and killed his wife as she stood on the shoulder next to her disabled vehicle. The truck involved in the accident was part of a supply chain route for a major automaker. The appellate court was forced to consider whether the trucking company, who had admitted liability, was acting as an agent for the logistics company. Thus, a main issue at trial and on appeal was whether the truck driver was acting on behalf of the logistics company, thereby making the logistics company vicariously liable for the driver’s negligent conduct.

The plaintiff in McHale, presented evidence at trial of the contracts entered into between the three defendant entities, testimony showing the driver operated in accordance with the logistics company’s policies and procedures, and documents that the company retained control over the driver, his routes, his times and other incidental parts of completing his assignments. Additionally, according to the Court, the plaintiff established that the driver was pulling the logistics provider’s trailer at the time of the accident. While the logistics company denied it controlled any of the driver’s actions and argued the driver was an independent contractor under the contract between it and the sub-contractor. Independent contractors are not normally considered agents because they are not under the orders or controls of the person for whom they perform work. However, in certain circumstances, an independent contractor can be considered to be an agent acting on behalf of another, such as when there is sufficient evidence of the principal’s ability to exert control.

Taking into account all of the evidence at trial, the appellate court determined the jury’s finding that an agency relationship existed between the defendants was not against the manifest weight of the evidence. The court explained that there was a “litany of … requirements set by [the logistics company] with which [the trucking carrier] needed to comply,” and that this provided a sufficient basis to support the jury’s decision. The court also pointed to language in the contract between the logistics company and the automaker, where the company had “sole and exclusive control” over transportation and was required to ensure the routes complied with the automaker’s requirements. Even though the contract did not involve any arrangements made between the logistics company and the driver or trucking company, evidence of the company’s monitoring of the drivers compliance through progress calls and monthly reports demonstrated it maintained sufficient control to establish agency with the driver.