Diaz v Carcamo Legal Analysis

Principle-Agency Relationships
A principle-agency relationship exists between an employer and an employee. The employer sets out the scope of duties for the employee, and then the employee acts as agent in carrying out those duties. This relationship means that tortious acts committed by the employee while in the performance of duties relating to his employment are the responsibility of the company. Principals are “liable for the tortious conduct of an agent who is acting within the scope of his or her authority.” In this case, the driver Carcamo, was driving a truck on the highway, which is within the scope of his authority in his employment as a truck driver. Had the accident in question occurred while he was not in the course of his duties, the company would not have vicarious liability (Pearson, 2012).
There are a couple of different types of principal-agency relationships, including employer/employee and independent contractor. In this case, the driver, Carcamo was employee of Sugar Transport. As such, Sugar Transport “conceded its liability for any negligence ultimately attributed by the court to its employee” (Biren, 2019).
The case of Diaz v Carcamo was originally about Sugar Transport being sued by Diaz over injuries she suffered in an accident in which Carcamo was involved. There was a third party driver also involved. Carcamo, however, had a poor driving record, and that led to claims by Diaz that he should not have been hired and entrusted to drive the truck for Sugar. This follows the legal principle of negligent entrustment. At issue in this case, when it arrived at California Supreme Court, was whether both the principles of respondeat superior and negligent entrustment could be applied. The California Supreme Court found that they could not, after lower courts found that they could. Thus, Sugar Transport invoked respondeat superior as a means of avoiding having to testify about Carcamo’s prior driving record. The ultimate decision in this case meant that Sugar Transport did not have to pay the $22 million in damages that were awarded in the case, because the jury had been biased by evidence that should not have been allowed.
Recommendation
The tactic used by Sugar Transport to attempt to avoid answering questions about its hiring and entrustment of Carcamo was a good approach to the issue. In California law, per Armenta v Churchill, only one of the two options can be adopted, as in this situation respondeat superior seemed to be the one that would have the lower damage award. Sugar Transport, therefore, was wise to choose that approach rather than leaving the case in the hands of the jury. They were right to take the case all the way to California Supreme Court, where they eventually prevailed.
The case means, however, that the company should dismiss Carcamo. His employment has cost the company money, and continued employment only serves to increase the risk to the company going forward. In particular, now that he has been a part of this case, if the company continues to let him drive, it might have a much tougher time defending itself in future, should be become involved in another accident. It would be difficult for a jury to avoid taking the fact that he was involved here into account, knowing that the company has the option to terminate him.
HR Legal Issues
Apparently, Carcamo had a poor driving record. By hiring Carcamo despite this record, the HR department at Sugar did two things. One, it increased legal risk because drivers with poor driving records are more likely to get into crashes in the first place. Two, it opened the door for a lawsuit on the basis of negligent entrustment. Accidents happen, but when the company knowingly puts a poor driver on the road in charge of a massive truck, that creates the perception of negligence. Sugar’s HR department erred in doing so, and will need to review its policies and procedures going forward, to ensure that this situation is not repeated.
By violating the principle of negligent entrustment, Sugar Transport created the situation in which it found itself, and while it got the ruling it wanted in Supreme Court, it spent a lot of money to get there. Subsequent to this case, an Appellate Court ruling supported Civil Code section 3294, subdivision (b), which “authorizes the use of previous acts of an employee in determining punitive damages against an employer” (Poole Shaffery, 2017).
Conclusions
Sugar Transport’s HR department erred when hiring Carcamo, because of his prior driving record. It erred in putting him on the road. This created a situation where the company could be sued under the principle of negligent entrustment. While it was able to avoid this by claiming vicarious responsibility, the risk created by the negligence was unacceptable. The company must take Carcamo off the road, and probably will want to terminate him. The company also should re-evaluate its hiring procedures with respect to drivers, to ensure that all drivers hired have acceptable driving records. The company would still be exposed via the principle-agency relationship and the concept of respondeat superior, but would not be exposed to a suit based on negligent entrustment, which would allow for evidence of past actions of the driver (or the company) to be entered into the trial.

References

Biren Law Group (2019) High court addresses employer liability in truck accidents. Biren Law Group. Retrieved March 10, 2019 from https://www.biren.com/articles/california-high-court-looks-at-employer-liabilit/

Pearson. (2012) Summary: Agency law. Pearson Education. Retrieved March 10, 2019 from http://wps.prenhall.com/chet_cheeseman_paralegal_2/61/15831/4052842.cw/-/4052848/index.html

Poole Shaffery (2017) Employment law: Beyond Diaz v Carcamo: the diminishing returns of admitted vicarious liability. Poole Shaffery. Retrieved March 10, 2019 from https://www.pooleshaffery.com/news/2017/october/employment-law-beyond-diaz-v-carcamo-the-diminis/