Cardinal Transport owes $5M in vicarious liability case

July 22, 2020

Tyson Fisher

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Cardinal Transport is on the hook for $5 million in a vicarious liability case involving an incident with a truck leased to the company.

On June 26, the Fourth Circuit Court of Appeals affirmed a West Virginia district court jury’s award of $5 million to Richard Edwards Jr. Edwards lost a leg when helping a trucker leased to Cardinal Transport. The company argues that the truck owner was not an employee, so it should not be held liable for his actions.

Pipe crushes Edwards’ foot

In October 2015, Danny McGowan was loading metal pipe onto a truck he owned under Kenova, W.V.-based McElliotts Trucking. McGowan was using a forklift while on McElliotts Trucking’s freight yard. Edwards was assisting McGowan in loading the truck.

As McGowan was loading the last piece of pipe onto the truck, Edwards began securing the pipe. Before he could disconnect the strap connecting the pipe to the forklift, McGowan backed the forklift up, pulling the pipe off the truck. The 2,000-pound pipe crushed Edwards’ foot. His right leg was amputated below the knee as a result.

Edwards filed a lawsuit against McGowan, McElliotts Trucking and Cardinal Transport. According to the complaint, McElliotts’ truck was leased to Cardinal Transport. The truck had both McElliotts’ and Cardinal Transport’s logos. Also named in the lawsuit was Harold Midkiff, the driver of the truck. The complaint claims Midkiff acted negligently by allowing McGowan to load the truck in an unsafe manner.

The pipe shipment came from Special Metals, which was placed with Cardinal Transport. From there, Cardinal Transport leased the trucks owned by McElliotts Trucking to deliver the loads negotiated by McGowan, who is also an exclusive sales agent and owner-operator lessor of Cardinal Transport.

The lawsuit alleges 12 separate counts: one against McGowan, one against Midkiff, five against McElliottsTrucking, four against Cardinal Transport and one count for punitive damages against all defendants.

Cardinal Transport liable for damages

On Aug. 6, 2018, McElliotts Trucking entered into a settlement agreement with Edwards. The settlement was for $200,000, 188 acres of land in Carter County, Ky., and a race car chassis with a driving suit and helmet. That left only Cardinal Transport as the defendant for the trial to be held the next day.

On Aug. 14, 2018, a jury found McElliotts Trucking defendants negligent and Cardinal vicariously liable. In total, the jury awarded Edwards more than $5.4 million in damages. With McElliotts Trucking’s settlement valued at $372,500, the final judgment was lowered to just over $5 million.

Cardinal Transport motioned for a new trial. First, the company claimed that McElliotts Trucking defendants “were unequivocally proven to be independent contractors, not employees,” according to court documents. Second, Cardinal Transport claimed loading/unloading of trucks is unquestionably outside the scope of employment.

However, West Virginia law states the power to control the process of the work determines the relationship.

The district court ruled that Cardinal Transport “had the exclusive power to exercise meaningful control over McElliotts defendants’ operations, even beyond processes mandated by federal regulation.”

Certain provisions in the Cardinal-McElliotts contract include:

  • Labeling McGowan as an agent.
  • Preventing McGowan from soliciting business outside the umbrella of Cardinal Transport during his employment and for one year after.
  • Confidentiality requirement on McElliotts Trucking.
  • Mandating any money collected by McElliotts Trucking is the sole property of Cardinal Transport until commission is remitted to the agent.
  • Requiring Cardinal Transport to approve any shipping on non-Cardinal Transport trucks.

McGowan was the exclusive agent of Cardinal Transport for 14 years, according to court documents. A court order also stated that a sales agency agreement includes more than 100 pages of binding company policy thattouch on every aspect of an agent’s business.

Regarding the scope-of-employment argument, West Virginia law defines scope of employment with three key elements:

  1. Conduct is of the kind he or she is employed to perform.
  2. Conduct occurs within the authorized space and limits.
  3. It is actuated, at least in part, by a purpose to “serve the master.”

Although the court found no evidence that the company directly controlled loading of the shipments, it also found that the company was aware of the practice itself and at least implicitly approved it.

Furthermore, the practice served Cardinal Transport’s customer, Special Metals.

Regardless, Cardinal Transport used both arguments when it had motioned for summary judgment. The district court denied the motion on those arguments then, and consistently denied a motion for a new trial based on similar arguments.

Cardinal Transport argued that the jury instructions were flawed. It contests the use of the phrase “with regard to the trucking operations” to define the scope of liability in their independent contractor defense, as stated in the final instructions. Previously, in nonbinding preliminary instructions to describe to the jury the evidence and claims they were about to hear, the court used the phrase “with regard to the loading and unloading of trailers.”

However, the district court explained that the preliminary instructions were more of an incorrect statement than the final instructions. With the final instructions being legally binding, the court found no merit in an argument of inconsistency. Essentially, an error in instructions is considered harmless.

Harmless error in Cardinal Transport verdict

Cardinal Transport appealed the denial of its motion for a new trial. The Fourth Circuit Court of Appeals agreed with the lower court’s ruling. However, one judge filed a dissenting opinion.

Judge G. Steven Agee argued that Cardinal Transport had to rebut facts never put into evidence and found by a jury. Consequently, there is no way to know which path the jury would choose based on its general verdict.

“An appellate court cannot reach a harmless error conclusion by crediting evidence as proven fact when the record does not show that the jury found that evidence to establish the necessary facts,” Agee wrote. “Because the verdict did not make it ‘reasonably certain’ that the jury was not influenced by the erroneous rebuttable presumption theory, I would vacate the verdict for Edwards and remand for a new trial.”

From here, Cardinal Transport can motion for a retrial from the appellate panel, the full Fourth Circuit or petition to the Supreme Court. As of publication, no motion for either has been filed.

Tyson Fisher

Tyson Fisher joined Land Line Magazine in March 2014. An award-winning journalist and tireless researcher, his news reports, features and blogs bring depth to our editorial content, backed with solid detail. Tyson is a lifelong Kansas Citian.