STATE OF IOWA TRANSPORTATION COMPENDIUM OF LAW
Mark J. Herzberger Michael McDonough Simmons, Perrine, Moyer & Bergman, P.L.C. 115 Third Street SE Suite 1200 Cedar Rapids, IA 52401 Tel: (319) 366-7641 Internet: www.simmonsperrine.com Email: [email protected] [email protected]
Revised 2014 A. Liability of Employer for Negligence involving Employees.
In Iowa, there are several theories by which an employer might be held liable for negligence involving its employees. Some of the claims are derivative, which means that liability can only be imposed on the employer if the employee is found to be at fault for causing injury to a third party and some are direct, which imposes liability on the employer for its own acts, and does not depend on whether the employee is found at fault.
In Iowa, under the doctrine of respondeat superior, an employer is liable for the negligence of an employee committed while the employee is acting within the scope of his or her employment. Jones v. Blair, 387 N.W.2d 349, 355 (Iowa 1986); Sandman v. Hagan, 261 Iowa 560, 566, 154 N.W.2d 113, 117 (1967). A claim of vicarious liability under the doctrine of respondeat superior rests on two elements, 1) proof of an employer/employee relationship, and 2) proof that the injury occurred within the scope of that employment. Biddle v. Satori Mem’l Hosp., 518 N.W.2d 795, 797 (Iowa 1994). For an act to be within the scope of employment the conduct complained of “must be of the same general nature as that authorized or incidental to the conduct authorized.” Sandman, 261 Iowa at 567, 154 N.W.2d at 117. Thus, an act is deemed to be within the scope of one's employment “where such act is necessary to accomplish the purpose of the employment and is intended for such purpose.” Id. The question becomes whether the employer’s conduct is so unlike that authorized it is substantially different. In other words, a deviation from the employers business to pursue the employees’ own business must be substantial in nature to relieve the employer from liability. Id.
2. Iowa Code section 321.493. Owner Liability.
Iowa Code section 321.493provides:
(1) For purposes of this section:
a. “Owner” means the person to whom the certificate of title for the vehicle has been issued or assigned or to whom a manufacturer’s or importer’s certificate of origin for the vehicle has been delivered or assigned. However, if the vehicle is leased, “owner” means the person to whom the vehicle is leased, not the person to whom the certificate of title for the vehicle has been issued or assigned or to whom the manufacturer’s or importer’s certificate of origin for the vehicle has been delivered or assigned.
b. “Leased” means the transfer of the possession or right to possession of a vehicle to a lessee for a valuable consideration for a continuous period of twelve months or more, pursuant to a written agreement.
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(2) a. Subject to paragraph “b”, in all cases where damage is done by any motor vehicle by reason of negligence of the driver, and driven with the consent of the owner, the owner of the motor vehicle shall be liable for such damage.
b. The owner of a vehicle with a gross vehicle weight rating of seven thousand five hundred pounds or more who rents the vehicle for less than a year under an agreement which requires an insurance policy covering at least the minimum levels of financial responsibility prescribed by law, shall not be deemed to be the owner of the vehicle for the purpose of determining financial responsibility for the operation of the vehicle or for the acts of the operator in connection with the vehicle’s operation.
(3) A person who has made a bona fide sale or transfer of the person’s right, title, or interest in or to a motor vehicle and who has delivered possession of the motor vehicle to the purchaser or transferee shall not be liable for any damage thereafter resulting from negligent operation of the motor vehicle by another, but the purchaser or transferee to whom possession was delivered shall be deemed the owner. The provisions of section 321.45, subsection 2, shall not apply in determining, for the purpose of fixing liability under this subjection, whether such sale or transfer was made.
Under this statute a lessee motor carrier is liable for the negligent acts of its driver. The purpose of the statute is to protect an innocent third party from the careless operation of a motor vehicle and to make the owner responsible for the negligence of one to whom the owner entrusted its operation. Briner v. Hyslop, 337 N.W.2d 858 (Iowa 1983). The statute provides two definitions of owner, the titleholder or a lessee. The statutory definition of “leased” requires four elements: a) a transfer of possession or right of possession; b) there must be valuable consideration paid for that possession; c) the lease must be for a period of 12 continuous months or more; and d) there must be a written lease agreement. Carton v General Motors Acceptance Corp., 639 F.Supp. 2d 982 (N.D. IA 2009) indicates that it is the actual possession, not the right to possession which may be the determinative factor. In Carton a vehicle lessor defaulted on the lease. The titleholder had obtained a replevin decree ordering possession be given back to the titleholder, however, this had not occurred at the time of the accident in question. The court noted that while the driver/leasor no longer had the right to possession, she still had actual possession and under the plain language of the statute was deemed to be the owner at the time of the accident, not the titleholder. Id. At 993. To reach this result, the court held that the replevin order did not terminate the lease. The replevin only dealt with the right to possession and in all other respects the lease was still in effect. Id.
321.493 also carves out another exception to a title owner’s liability. Under subparagraph 2, the title owner of a vehicle is exempt from liability where a bona fide sale or transfer has been made and possession delivered to the purchaser. The Iowa Supreme Court has noted when an owner has departed with possession and control of a vehicle under a conditional contract for sale, 3 Revised 2014 the rationale for imposing vicarious liability on a consent owner dissipates. It would be unfair to impose liability on an owner who simply holds title after the sale to secure payment but not to exercise control over the vehicle. Beganovic v. Musfeldt, 775 N.W.2d 313, 319 (2009).
Iowa courts have recognized a cause of action for negligent entrustment in a variety of circumstances. The owners liability is based on his own separate negligence in permitting the vehicle’ use by an incompetent or inexperienced person with knowledge of the probable consequences. Krausnick v. Hoegg Roofing, 20 N.W.2d 432, 236 (Iowa 985), 163 ALR 1413 (1945). While section 321.493(1) imposes liability on owners without a showing of negligence on the part of the owner in entrusting the vehicle to another, this theory of recovery is recognized as a separate basis for liability and has not been supplanted by the owner liability statute. This theory may still, therefore, have relevance to a claim for punitive damages against the owner for entrustment where egregious circumstances exist. No cases in Iowa have yet dealt with such a situation.
4. Negligent Hiring.
The following elements must be proven to sustain a cause of action for negligent hiring:
(1) the employer knew, or in the exercise of ordinary care should have known, of its employee’s unfitness at the time of hiring;
(2) through the negligent hiring of the employee, the employee’s incompetence, unfitness or dangerous characteristics proximately caused the resulting injuries; and
(3) there is some employment or agency relationship between the tortfeasor and the defendant employer.
Godar v. Edwards, 588 N.W.2d 701, 708-09 (Iowa 1999). Relevant inquiries with respect to a negligent hiring claim include what the employer knew about the individual at the time of hiring, what pre-employment investigations the employer performed, whether the employer followed its usual pre-employment procedure, how do the employer’s pre-employment procedure compare to efforts made by other similar employers, and the specifics of the employer’s policy or procedure in making new hires. See also Wilson v. Darr, 553 N.W.2d 579, 584 (Iowa 1996).
5. Negligent Retention, Supervision or Training.
In order to establish a cause of action for negligent retention, supervision or training, the plaintiff must prove that:
(1) the employer knew, or in the exercise of ordinary care should have known, of its employee’s unfitness at the time the employee engaged in wrongful or tortuous conduct;
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(2) through the negligent supervision of the employee, the negligent employee’s incompetence, unfitness or dangerous characteristics proximately caused injuries to the plaintiff; and
(3) there is some employment or agency relationship between the employee and the defendant employer.
Estate of Harris v. Papa John’s Pizza, 679 N.W.2d 673 (Iowa 2004). A claim of negligent supervision must also include an underlying tort or wrongful act committed by the employee. Cubit v. Mahaska County, 677 N.W.2d 777 (Iowa 2004) (in action by state trooper against county, alleging county negligently failed to train dispatcher with information that driver fleeing from law enforcement officers intended to crash vehicles into officers, negligent supervision claim arose out of act or omission in connection with emergency response so as to fall within scope of statutory immunity provided to county).
6. Traditional Tort Defenses.
Depending on the facts of a particular case, traditional tort defenses such as comparative fault, failure to mitigate damages, superseding and intervening cause, and other similar defenses may be available to the employer.
B. Punitive Damages.
Iowa Code section 668A.1 provides the following regarding punitive damages:
668A.1 Punitive or exemplary damages.
1. In a trial of a claim involving the request for punitive or exemplary damages, the court shall instruct the jury to answer special interrogatories or, if there is no jury, shall make findings, indicating all of the following:
a. Whether, by a preponderance of clear, convincing, and satisfactory evidence, the conduct of the defendant from which the claim arose constituted willful and wanton disregard for the rights or safety of another.
b. Whether the conduct of the defendant was directed specifically at the claimant, or at the person from which the claimant’s claim is derived.
2. An award for punitive or exemplary damages shall not be made unless the answer or finding pursuant to subsection 1, paragraph “a”, is affirmative. If such answer or finding is affirmative, the jury, or court if there is no jury, shall fix the amount of punitive or exemplary damages to be awarded, and such damages shall be ordered paid as follows:
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a. If the answer or finding pursuant to subsection 1, paragraph “b”, is affirmative, the full amount of the punitive or exemplary damages awarded shall be paid to the claimant.
b. If the answer or finding pursuant to subsection 1, paragraph “b”, is negative, after payment of all applicable costs and fees, an amount not to exceed twenty-five percent of the punitive or exemplary damages awarded may be ordered paid to the claimant, with the remainder of the award to be ordered paid into a civil reparations trust fund administered by the state court administrator. Funds placed in the civil reparations trust shall be under the control and supervision of the executive council, and shall be disbursed only for purposes of indigent civil litigation programs or insurance assistance programs.
3. The mere allegation or assertion of a claim for punitive damages shall not form the basis for discovery of the wealth or ability to respond in damages on behalf of the party from whom punitive damages are claimed until such time as the claimant has established that sufficient admissible evidence exists to support a prima facie case establishing the requirements of subsection 1, paragraph “a”.
Punitive damages are recoverable only upon a showing that "by a preponderance of clear, convincing, and satisfactory evidence" the defendant's conduct constituted "willful and wanton disregard" for the rights and safety of the plaintiff. Iowa Code § 668A.1(1). Conduct is "willful and wanton" if "the actor has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow, and which thus is usually accompanied by a conscious indifference to the consequences." Fell v. Kewanee Farm Equip. Co., a Div. of Allied Prods., 457 N.W.2d 911, 919 (Iowa 1990). Merely objectionable conduct will not suffice to meet the procedural requirements of section 668A.1, rather, the plaintiff must be able to offer evidence that the defendant engaged in a persistent course of conduct to show that the defendant acted with no care and with no regard for the consequences of those acts. See McClure v. Walgreens Co., 613 N.W.2d 225 (Iowa 2000).
Employers could be liable for punitive damages involving the actions of its employees in some cases. In Briner v. Hyslop, 337 N.W.2d 858 (Iowa 1983), the Iowa Supreme Court held that an employer may be held liable for punitive damages for the reckless employment or retention of an employee, the ratification or approval of outrageous acts by its employees, or for outrageous acts performed by an employee in a managerial capacity. In Seraji v. Perket, 452 N.W.2d 399, 402 (Iowa 1990), a negligent hiring case, the Iowa Supreme Court held the following evidence was not enough to meet the standard required for an award of punitive damages: the employees driving record was not good, the company learned that the employee’s license had been revoked on at least one occasion, that the employee had been convicted of speeding on at least four occasions, and that the employee was also convicted of driving without a license. The Court held that the employer’s conduct did not amount to the type of reckless disregard required for an award of punitive damages.
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C. Logo / Placard Liability
Iowa courts have not directly addressed the issue of placard liability. However, the U.S. District Court for the Northern District of Iowa, in Lyons v. Anderson, 123 F.Supp.2d 485 (N.D. Iowa 2000), construing Iowa Code Section 321.493 and ICC regulation 49 CFR 376.12(c)(1), the control regulation, and held that both were in “complete harmony”, and the lessee motor carrier was a proper party to the action. The Court reasoned the control regulation made the lessor responsible for the control and operation of the vehicle and the ownership statute made the lessor the owner and vicariously liable for the consent driver. The Court simply found that neither responsibility to control the vehicle under the Control Regulation nor the lessors statutory liability under the Iowa Code were governed by the existence or non-existence of the carriers placard on the vehicle. This ruling would tend to make one think that Iowa would not adopt a placard liability theory.
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