Employers Liable Only Once For Employee Negligence - California Follows the Majority Rule

Under respondeat superior, an employer is held vicariously liable for the acts of an employee when driving a vehicle within the scope of employment, irrespective of any fault by the employer. Alternatively, an employer can be directly liable for its own negligence under the theory of negligent hiring/retention or negligent entrustment. As a practical matter, a plaintiff injured by the driving employee can allege all such theories; however, does that remain true once the employer admits liability under respondeat superior?

In Armenta v. Churchill (1954) 42 Cal.2d 448 (Armenta), the California Supreme Court held that once an employer admits liability under respondeat superior for an employee driver, the plaintiff is then barred from also pursuing a claim of negligent entrustment. The Court concluded that these were merely two alternative theories for holding an employer liable for the same injury. Under the “all of nothing” principles then in place, an employer would either be held for 100% of the damages, or none at all, regardless of the theory used. However, since Armenta, California has adopted comparative negligence principles and voters enacted Proposition 51, creating mechanisms for parsing out the separate liability of each party involved. As a result, the courts of appeal split as to the continuing viability of Armenta, with the Court of Appeal in Diaz finding that Proposition 51 required a separate evaluation of the employer’s direct liability.

In Diaz v. Carcamo (2011) ___ Cal.4th ___, S181627, the unanimous Supreme Court has resolved the conflict below and upheld Armenta, noting that this remained the majority rule in the U.S. The Court first dismissed the purported distinction between a claim of negligent entrustment (Armenta) and negligent hiring (Diaz), noting these were “functionally identical” when addressing an employee driver. The Court also found it made no difference whether the employer conceded vicarious liability before or during trial. As to the main issue, the Court sided with Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853, finding that the employer’s liability cannot exceed that of the employee driver who allegedly caused the accident, and that nothing in the development of negligence principles since Armenta had changed this. As a result, once vicarious liability for the employee is conceded, making the employer fully liable for the employee’s actions, the additional claims of negligent entrustment or negligent hiring become duplicative and superfluous and must be barred. Indeed, the Court noted the inherent inequity of holding the employer for a second share of liability in excess of the negligent driver’s liability, and remanded for a full retrial. For more details about Diaz, see the Torts & Products update page.
 

California Supreme Court 5/12/10 Conference

In its weekly conference, see list of actions, the California Supreme Court granted review in:

  • Jankey v. Lee, in which the Court of Appeal held that the Americans with Disabilities Act does not preempt Civil Code § 55, which entitles the prevailing defendant to attorney's fees upon defeating a claim for injunctive relief under the California Disabled Persons Act. See Attorney-Related update page.
  • Diaz v. Carcamo, in which the Court of Appeal rejected an employer's argument that by conceding its liability under respondeat superior it was shielded from a claim that it was independently negligent in its hiring and retention of that same employee. See Torts & Products update page. In doing so, the Court of Appeal in Diaz distinguished two prior cases which held that an employer is protected from a claim of negligent entrustment upon such a concession. See Armenta v. Churchill (1954) 42 Cal.2d 448 and Jeld-Wen, Inc. v. Superior Court (2005) 131 Cal.App.4th 853.