Harris Ex Rel. the Estate of Ward v. Fedex National LTL, Inc.

United States Court of Appeals
For the Eighth Circuit
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No. 13-1981
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Kena Harris, as Administrator of the Estate of Chaungene L. Ward, Deceased;
Monica Nolan
lllllllllllllllllllll Plaintiffs - Appellants
v.
FedEx National LTL, Inc.
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: March 25, 2014
Filed: July 24, 2014
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Before LOKEN, BYE, and BENTON, Circuit Judges.
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LOKEN, Circuit Judge.
On October 28, 2007, commercial truck driver Oleg Velichkov lost control and
rolled his tractor-trailer, which came to rest blocking both lanes of westbound
Interstate 80 in York County, Nebraska. A vehicle driven by Chaungene L. Ward
collided with the over-turned truck, killing Ward and seriously injuring his passenger,
Monica Nolan. At the time of the accident, Velichkov was employed by Fresh Start,
Inc. (“Fresh Start”), driving a tractor leased by Mickey’s Trucking Express, Inc.
(“Mickey’s”), to Fresh Start. The tractor was pulling two trailers owned by FedEx
National LTL, Inc. (“FedEx”) from FedEx’s Cincinnati, Ohio, service center to its
service center in Salt Lake City, Utah. Ward’s estate and Nolan brought this diversity
action against Velichkov, Fresh Start, Mickey’s, the husband and wife who owned
Fresh Start and Mickey’s, and FedEx, alleging various theories of tort liability. After
discovery, the district court1 granted FedEx’s motion for summary judgment.
Plaintiffs eventually dismissed their remaining claims with prejudice, resulting in a
final judgment, and now appeal the grant of summary judgment to FedEx. Reviewing
the grant of summary judgment de novo and applying the governing law of Nebraska,
we affirm. See Williams v. TESCO Servs., Inc., 719 F.3d 968, 970, 972 (8th Cir.
2013) (standard of review).
The ultimate issue is whether FedEx is liable for the admitted negligence of
truck driver Velichkov. In opposing summary judgment, plaintiffs asserted four
theories of liability under Nebraska law. The district court rejected the three theories
asserted in plaintiffs’ complaint on the merits. It rejected the fourth by denying as
untimely plaintiffs’ motion to amend their complaint. We construe plaintiffs’ rather
ambiguous briefs as appealing all four rulings. We consider the four theories in turn,
viewing the facts material to each, when disputed, in the light most favorable to
plaintiffs, the non-moving parties. Id. at 970.
I. The Employer/Independent Contractor Issue
FedEx, in addition to employing its own drivers and vehicles to deliver goods
to its shipper-customers, contracts with independent motor carriers to transport goods
1
The Honorable John M. Gerrard, United States District Judge for the District
of Nebraska.
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and trailers between FedEx service centers. At times, these carriers provide the
drivers, the tractors, and the trailers for this service. At other times, FedEx retains
“subhaulers” that provide drivers and tractors to pull FedEx trailers in what FedEx
refers to as a “power only” relationship. In mid-September 2007, Fresh Start and
FedEx entered into a written Subhaul Agreement providing that Fresh Start would
provide transportation services as an independent contractor. In an Addendum, Fresh
Start agreed to comply with twelve detailed requirements when pulling FedEx-owned
trailers on a “power only” basis. On October 26, Fresh Start’s owner received a
power-only assignment from FedEx’s central dispatch and assigned driver Velichkov
to complete the job. He drove the tractor to FedEx service centers to pick up and
drop off trailers. The accident occurred during the last leg of the assignment, when
Velichkov was transporting two FedEx-owned trailers from the Cincinnati service
center to the Salt Lake City service center.
Under Nebraska law, one who employs an independent contractor is generally
not liable for physical harm caused to another by the acts or omissions of the
contractor or its servants. Plaintiffs’ complaint alleged that FedEx was nonetheless
liable for Velichkov’s negligence because he was acting as FedEx’s employee or
servant at the time of the accident. Whether a truck driver is acting as an employee
or as an independent contractor “depends on the facts underlying the relationship of
the parties irrespective of the words or terminology used by the parties to characterize
and describe their relationship.” Kime v. Hobbs, 562 N.W.2d 705, 711 (Neb. 1997).
Thus, the Subhaul Agreement, which provided that Fresh Start was an independent
contractor, is relevant but not controlling. Though ordinarily a question of fact,
“where the facts are not in dispute and where the inference is clear that there is, or is
not, a master and servant relationship, the matter is a question of law.” Id.
Applying the ten factors considered by the Supreme Court of Nebraska in Kime
and other cases, the district court concluded that Fresh Start, and therefore its
employee, Velichkov, were independent contractors of FedEx as a matter of Nebraska
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law. Addressing the critical control factor, the district court acknowledged that the
Addendum to the Subhaul Agreement placed conditions on the manner in which
Fresh Start and its servants could transport FedEx-owned trailers but concluded that
these requirements “were to assure performance of the delivery -- in other words, to
control ‘the final result of the work’ instead of ‘the specific manner in which the work
is performed.’” Harris v. Velichkov, 860 F. Supp. 2d 970, 983 (D. Neb. 2012),
quoting Omaha World-Herald v. Dernier, 570 N.W.2d 508, 514 (Neb. 1997). In
addition, the court reasoned, “plaintiffs’ focus on the element of control ignores the
remaining nine factors listed above, several of which weigh (and weigh heavily) in
favor of an independent contractor relationship.” Id.
On appeal, plaintiffs argue the district court erred in granting summary
judgment on this issue because it misconstrued in FedEx’s favor the extent to which
FedEx controlled how power-only drivers performed this service. We disagree. The
district court applied the proper standard under Nebraska law, carefully considered
the control factor, and concluded “[t]here is no evidence from which a reasonable
trier of fact could conclude that Fresh Start was FedEx’s ‘employee’ -- much less that
Velichkov was.” Id. at 983-84. The minor ways in which plaintiffs argue the district
court improperly credited FedEx’s view of the facts were not material to this ruling.
The use of an independent power-only contractor to pull FedEx trailers between
FedEx service centers was not comparable to the agreement in Huggins v. FedEx
Ground Package System, Inc., where FedEx required an independent contractor and
its drivers “to look and act like FedEx employees while they performed FedEx
[package delivery] services” for FedEx customers. 592 F.3d 853, 859 (8th Cir. 2010).
II. The Nondelegable Duty Theory.
The Supreme Court of Nebraska has recognized limited exceptions to the
general rule that one who employs an independent contractor is not liable for harm
caused by the contractor’s employees. One exception is when “the employer [here,
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FedEx] has a nondelegable duty to protect another from harm. Nondelegable duties
include . . . a duty imposed by statute or rule of law, and . . . the duty of due care
when the independent contractor’s work involves special risks or dangers.” Eastlick
v. Lueder Constr. Co., 741 N.W.2d 628, 634-35 (Neb. 2007) (citations omitted).
Plaintiffs do not argue that “special risks or dangers” created a nondelegable duty in
this case, no doubt because the Supreme Court of Nebraska has held that “a motor
vehicle is not an inherently dangerous instrumentality,” including when used in “the
transportation of cattle in a tractor-trailer under normal conditions.” Kime, 562
N.W.2d at 713; see Ek v. Herrington, 939 F.2d 839, 843-44 (9th Cir. 1991). Rather,
plaintiffs argue that FedEx as a “motor carrier” subject to the Federal Motor Carrier
Safety Regulations (“FMCSR”) had a nondelegable duty under Nebraska law2 to
ensure that Fresh Start and its drivers, as independent contractors, adhered to those
safety standards by reason of 49 C.F.R. § 390.11, which provides:
Whenever . . . in this subchapter a duty is prescribed for a driver or a
prohibition is imposed upon the driver, it shall be the duty of the motor
carrier to require observance of such duty or prohibition. If the motor
carrier is a driver, the driver shall likewise be bound.
Whether a duty is owed under Nebraska tort law is a question of law. Parrish v.
Omaha Pub. Power Dist., 496 N.W.2d 902, 909 (Neb. 1993). The Supreme Court of
Nebraska has not addressed whether the FMCSR -- or any other federal regulations --
create a nondelegable duty that regulated parties are liable for the harm caused by
their independent contractors’ violations. Indeed, that Court “ha[s] never held that
an administrative regulation can . . . expand the scope of tort liability beyond the
general duty to exercise reasonable care.” A.W. v. Lancaster Cnty. Sch. Dist. 0001,
784 N.W.2d 907, 920 (Neb. 2010).
2
We doubt there is a federal private right of action for a violation of the
FMCSR. See Stewart v. Mitchell Transp., 241 F. Supp. 2d 1216, 1219-21 (D. Kan.
2002). In any event, plaintiffs did not assert such a claim.
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The district court assumed without deciding that 49 C.F.R. § 390.11 “would
support a nondelegable duty if it applied to FedEx” but noted that plaintiffs had no
supporting authority for this state law theory. The court rejected the theory because
“FedEx was not acting as a motor carrier in this case.” While FedEx is a federally
registered motor carrier and acts as such in delivering goods for its customers, the
court explained, in this case it was a shipper of goods that hired Fresh Start, also a
registered motor carrier, to provide transportation services. “A transportation
company may have authority to act as a shipper, broker, or carrier, and the Court must
focus on the specific transaction at issue, not whether FedEx acts as a motor carrier
in other transactions.” 860 F. Supp. 2d at 979, citing Schramm v. Foster, 341 F.
Supp. 2d 536, 548 (D. Md. 2004) (“plaintiffs have failed to prove that Robinson acted
as a motor carrier in the specific transaction at issue”). Section 390.11 of the
regulations imposes a duty on the motor carrier to require that a driver comply with
his duties. Fresh Start was the motor carrier in this transaction.
On appeal, plaintiffs argue (i) FedEx is a “for-hire motor carrier” as defined in
49 C.F.R. § 390.5 (“a person engaged in the transportation of goods or passengers for
compensation”); (ii) the district court erred in applying the definition of “shipper”
found in the inapplicable motor vehicle leasing regulations, 49 C.F.R. § 376.2(k) (a
shipper is a “person who sends or receives property which is transported in interstate
or foreign commerce”); and (iii) a motor carrier does not cease acting as a motor
carrier when it contracts with a third party to assist in the transportation process. We
agree with the district court and the cases it cited that the FMCSR applies to motor
carriers, not to shippers who engage independent contractors to transport goods.
Thus, the relevant inquiry is whether FedEx “acted as a motor carrier in the specific
transaction at issue.” Schramm, 341 F. Supp. 2d at 548.3
3
Accord Caballero v. Archer, No. SA-04-CA-561-OG, 2007 WL 628755, at *4
(W.D. Tex. Feb. 1, 2007); Alaubali v. Rite Aid Corp., No. C 06-5787 SBA, 2007 WL
3035270, at *5 (N.D. Ca. Oct. 16, 2007), aff’d, 320 F. App’x 765 (9th Cir. 2009).
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In this case, FedEx retained Fresh Start to move goods from one service center
to another. Fresh Start selected its drivers without FedEx oversight and operated
under its own authority as a registered motor carrier, rather than under FedEx’s
authority. One need not refer to the definition of shipper elsewhere in the extensive
FMCSR regulations to determine that FedEx was acting as a shipper in this
transaction. As the Second Circuit commented in Lyons v. Lancer Insurance Co.,
“The shipper is the entity that purchases the transportation services of the carrier.”
681 F.3d 50, 59 (2d Cir. 2012) (emphasis added), cert. denied, 133 S. Ct. 1242
(2013). Because FedEx was not acting as a motor carrier, it had no duty --
nondelegable or otherwise -- to require that driver Velichkov observe his FMCSR
duties by reason of 49 C.F.R. § 390.11. The district court properly granted summary
judgment rejecting this theory.
III. The Negligent Entrustment Theory.
Plaintiffs’ complaint alleged that FedEx was liable because it negligently
entrusted its trailers to Velichkov. Under Nebraska law,
it is negligence to permit a third person to use a thing or to engage in an
activity which is under the control of the actor, if the actor knows or
should know that such person intends or is likely to use the thing or to
conduct himself in a manner as to create an unreasonable risk of harm
to others.
DeWebster v. Watkins, 745 N.W.2d 330, 334 (Neb. 2008), quoting Restatement
(Second) of Torts § 308. In opposing summary judgment, plaintiffs argued that
FedEx had control of trailers it owned; that FedEx had a duty under § 380.113(a) of
the FMCSR to ensure that Velichkov was certified and properly trained to operate a
double trailer; and that FedEx’s breach of this duty gave rise to a claim of negligent
entrustment. The district court granted summary judgment dismissing this claim,
concluding that, even if Velichkov was not properly certified (a disputed fact), FedEx
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had no duty to inquire into that fact because Velichkov’s employer, Fresh Start, not
FedEx, was the motor carrier bound by the FMCSR regulations.
On appeal, citing § 390 of the Restatement, plaintiffs argue that FedEx may be
liable even though it entrusted its trailers to Velichkov indirectly through a third
party, Fresh Start. But even if the Supreme Court of Nebraska would adopt this
aspect of § 390, there was no evidence that FedEx was aware of facts permitting a
reasonable jury to find that it knew or should have known Velichkov was not a
properly certified driver. Thus, as the district court recognized, the negligent
entrustment claim turned on whether FedEx as a “motor carrier” was duty-bound by
§ 380.113 of the FMCSR to ensure Velichkov’s certification. Once again, plaintiffs
argue that FedEx was a “motor carrier” for purposes of § 380.113 simply because “it
was engaged in the primary business of transporting goods for compensation.” As
we have explained, we agree with the district court that this is an overly broad,
impractical interpretation of regulations drafted for other purposes. We acknowledge
there might be specific facts that would warrant imposing § 380.113 duties, as a
matter of federal law, on a registered motor carrier using a power-only independent
contractor to pull trailers owned by the carrier-shipper. As plaintiffs have not
presented such facts and are using this federal regulation to support a claim of
negligence under state law, we agree with the district court that the undisputed facts
warranted the grant of summary judgment dismissing the claim.
IV. The Unpleaded Claim -- Negligent Hiring of Fresh Start
Count V of plaintiffs’ complaint alleged that FedEx negligently hired and
trained Velichkov to operate the tractor-trailer, a claim foreclosed by the district
court’s determination that Velichkov was an employee of an independent contractor,
Fresh Start. The court’s scheduling order allowed the parties until April 9, 2010 to
file motions to amend their pleadings. After the scheduling order was amended four
times to extend the discovery deadlines, on November 30, 2011, plaintiffs moved for
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leave to amend their complaint to add allegations that (i) FedEx knew or should have
known of Mickey’s poor safety rating and Fresh Start’s association with Mickey’s,
and therefore (ii) FedEx negligently hired, trained, supervised, and entrusted its
trailers to independent contractor Fresh Start. Plaintiffs argued that these
amendments were meant to “clarify” that their claims of negligence extended to
FedEx’s relationship with Fresh Start as well as driver Velichkov. The district court
denied the motion for leave to amend for two reasons. First, the proposed amended
complaint “would add an entirely new theory of recovery.” Second, “more to the
point,” Rule 16(b)(4) of the Federal Rules of Civil Procedure requires a showing of
good cause to amend outside the court’s scheduling order, and “nothing in the
plaintiffs’ briefs explains, or seeks to explain, why they only sought leave to amend
their complaint over 17 months after the deadline for doing so had passed.” Harris
v. Velichkov, Order of Feb. 21, 2012, at 2-3.
On appeal, plaintiffs concede that Rule 16(b)(4) provides the governing
standard and requires a showing of good cause. See Popoalii v. Corr. Med. Servs.,
512 F.3d 488, 497 (8th Cir. 2008). They argue there was good cause for their tardy
request for leave to amend because the evidence supporting the new theories in the
amended complaint became available during a discovery process that was unusually
protracted due to scheduling difficulties not attributable to the plaintiffs. We review
the district court’s denial of leave to amend for abuse of discretion. Id.
“The primary measure of good cause is the movant’s diligence in attempting
to meet the [scheduling] order’s requirements. . . . Our cases reviewing Rule 16(b)
rulings focus in the first instance (and usually solely) on the diligence of the party
who sought modification of the order.” Sherman v. Winco Fireworks, Inc., 532 F.3d
709, 716-17 (8th Cir. 2008) (quotation omitted). A district court acts “within its
discretion” in denying a motion to amend which made no attempt to show good
cause. Freeman v. Busch, 349 F.3d 582, 589 (8th Cir. 2003); see Leary v. Daeschner,
349 F.3d 888, 907-08 & n.26 (6th Cir. 2003).
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Here, plaintiffs seek to survive their lack of a good cause showing in the
district court with a due-diligence argument not made to the district court -- that they
learned the necessary facts in discovery after the scheduling order’s deadline had
passed. It would be extraordinary to allow a party to establish on appeal an abuse of
discretion by the district court based on an argument not timely made to that court in
exercising its discretion. But assuming such a showing is theoretically possible,
plaintiffs do not come close to making it here -- they provide no specific citations to
the summary judgment record that would permit us to conclude, in the first instance,
that they acted promptly when they first learned of newly discovered evidence that
warranted the tardy assertion of new theories of FedEx liability that would
undoubtedly have required further extensions of the discovery period to fully explore.
Thus, the district court did not abuse its discretion in denying plaintiffs’ untimely
motion for leave to amend their complaint.
The judgment of the district court is affirmed.
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