Tennessee Rejects Preemption Rule When Vicarious Liability Admitted

April 18, 2016

Does comparative fault still apply for direct negligence claims when the employer has admitted vicarious liability?  In its recent ruling on a Tenn. R. App. P. 10 Extraordinary Appeal, the Tennessee Court of Appeals has answered “yes.”

As a result of the recent ruling in Jones v. Windham, the Court of Appeals has rejected the so-called preemption rule, barring direct negligence claims against an employer when vicarious liability is admitted.  Instead, the “non-preemption rule” applies as it comports with Tennessee’s system of comparative fault. 

This case involves an extraordinary Tennessee Rule of Appellate Procedure 10 appeal from the trial court’s dismissal of direct negligence claims against employers of a driver who struck a minor child with a van. The incident giving rise to the lawsuit occurred in March  2011, when defendant Shavonna Windham (“Windham”) struck a minor child with her vehicle while transporting children in a van for a local daycare. The mother of the minor child, Melanie Jones (“Mother”) filed suit against Windham asserting negligence, and also sued the employers of Windham, Remark and Kimberly Chism (“Defendant Employers”) for negligence per se, negligent hiring, and negligent retention. The complaint had also alleged as defendants, the daycare entities. However, it was undisputed during the summary judgment stage that these were “d/b/a” entities of the Chisms. The Defendants filed an answer generally denying liability to both the complaint and a subsequent amended complaint. The answer conceded that the Defendant Employers would be vicariously liable for any negligence that Windham had committed.

After Mother was denied summary judgment, she pursued a Rule 10 extraordinary appeal, which the Court of Appeals granted and limited to the following issues: 1) “May a jury apportion fault to an employer for direct liability based on negligent hiring, supervision or training of the employee, where the employer admits vicarious liability or respondeat superior for the negligence of its employee and is, therefore, one hundred (100%) responsible (jointly and severally) for the fault of the employee” and 2)  “Whether the trial court committed error by dismissing all claims against the employer for compensatory damages while allowing a claim for punitive damages [to] proceed against the employer.”

Ruling in the Court of Appeals:

The Court began by noting that the issue of whether a plaintiff may proceed with a direct negligence claim against an employer when the employer has admitted vicarious liability was an issue of first impression for the Tennessee courts. The Court noted that jurisdictions are split on the issue, with some courts adopting the rule proposed by Defendant Employers and some courts either rejecting it outright or recognizing potential exceptions. The Court held that due to this, it would follow the lead of the recent decision of the Kentucky Supreme Court in MV Transportation, Inc. v. Allgeier, 433 S.W.3d 324 (Ky. 2014), and refer to the conflicting approaches as the “preemption rule” and the “non-preemption rule.”

The preemption rule is that once an employer has admitted vicarious liability for the actions of its agent, a plaintiff may no longer proceed against the employer on a direct negligence claim such as negligent entrustment or negligent hiring. The Court noted that the reasoning behind this was the notion that evidence of independent negligence becomes unnecessary, irrelevant, or prejudicial once vicarious liability has been admitted. This approach has been adopted in Missouri.

Under the non-preemption rule, an employer’s admission to vicarious liability does not preempt the claim that the employer’s own negligence may have caused or contributed to the injury. The legal theories behind this rule recognize that there mere fact that an independent negligence claim against the employer is contingent upon the conduct of the employee does not mean that the employer’s conduct itself does not represent a source of independent fault.

The Court then held that the preemption rule was not in accord with Tennessee’s system of comparative fault and that it was therefore inconsistent with existing Tennessee jurisprudence. The Court also noted at the outset that any supposed prejudice to the jury from evidence to support an independent claim would be mitigated by appropriate procedural safeguards. In support of its holding, the Court noted that in Tennessee, vicarious liability is an independent claim separate and distance from other theories of liability asserted against a principal. The Court also compared the preemption rule to jurisdictions which have contributory negligence as opposed to comparative fault theories. The Court noted that the likelihood for potential prejudice might be higher in contributory negligence jurisdiction.

In comparative negligence jurisdictions, however, the Court noted that there is no justification for the preemption rule, as it does not shield the jury from unnecessary evidence, but “inappropriately withholds consideration of an actor’s alleged legal fault.”  The Court also noted that permitting the preemption rule might go against the principles of judicial economy in that the door is left open for the employee to seek contribution from the employer, a possibility still open in Tennessee law. The Court also noted the procedural safeguards that could be utilized to avoid any potential prejudice including jury instructions and bifurcated proceedings.

The Court then held that due to its holding that the preemption rule should not apply in Tennessee, the issue of whether an exception existed for punitive damages was pretermitted.

Judge Gibson filed a dissenting opinion in this case contending that Tennessee should adopt the preemption rule because once an employer has admitted respondeat superior liability for an employee’s negligence, it is improper to allow the plaintiff to proceed against the employer on a negligent hiring or negligent supervision theory of liability. Judge Gibson argues that an employer’s admission of vicarious liability imputes the full amount of the employee’s liability to the employer, and thus additional theories of negligence serve no real purpose.

This opinion was issued on March 11, 2016, so the time for filing an application for permission to appeal to the Tennessee Supreme Court has not yet run.  Given that this is an issue of first impression in Tennessee and there is a split among jurisdictions as to the approach, I would not be surprised if the Supreme Court accepted the matter for appeal, if asked.

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