The $15,000,000 oil change

[Jarlaxle]

No, this is NOT from The Onion.

https://www.fox2detroit.com/news/why-a- ... oil-change

https://notthebee.com/article/a-jeep-ow ... EbpNrOxpoI

[BoSoxGal]

The Jeep owner will be indemnified by the dealership, who is the actual negligent party having hired a total idiot and given him free rein to create a deadly workplace environment. The bad laws in Michigan that protect employers at the expense of workers are the problem here, not the legitimate legal theory upon which the deceased’s attorney is attempting to get adequate recompense for his family for his untimely and entirely preventable death.

[ex-khobar Andy]

It all makes sense - in other words it appears that Michigan law has been followed - until you get to the end point which clearly makes no sense in terms of what is fair and what isn't. It wasn't the fault of the guy who was killed or the car owner, and you could even make the case that the mechanic who did not know how to drive a stick was not at fault. Someone gave him a task which he was not qualified or trained to do, which makes it the dealership's fault. Isn't this what insurance is for? But states' rights and all that . . .

[Big RR]

BSG--are you sure the owner will be indemnified? I dguess there may be some sort of contractual provision for indemnification in the service agreement, but otherwise I am unaware of any such indemnification requirement.

In any event, I would think the vehicle owner might well have a claim against the dealership if he were found to be liable under the theory the decedent's i using (and I imagine his insurance would defend him and cover any such loss (as well as proceed against the dealer to recover any amounts paid out)

Like most no fault laws, workers compensation is a double edged sword, as it streamlines the compensation process getting (generally) quicker results for payment of medical bills and ultimate scheduled compensation, but in serious accidents, like this, it does fall short.

Andy--the theory is, if I permit someone to use/drive my car, I will remain responsible for any damage (s)he causes. Sure, the dealer is at fault here, but the employee cannot sue them (part of the tradeoff for workers compensation). However, I do think the dealer may be ultimately on the hook for any losses of the vehicle owner.

[BoSoxGal]

BSG--are you sure the owner will be indemnified? I dguess there may be some sort of contractual provision for indemnification in the service agreement, but otherwise I am unaware of any such indemnification requirement.

In any event, I would think the vehicle owner might well have a claim against the dealership if he were found to be liable under the theory the decedent's i using (and I imagine his insurance would defend him and cover any such loss (as well as proceed against the dealer to recover any amounts paid out)

Like most no fault laws, workers compensation is a double edged sword, as it streamlines the compensation process getting (generally) quicker results for payment of medical bills and ultimate scheduled compensation, but in serious accidents, like this, it does fall short.

If you’d bothered reading the links, you’d have seen that the court has ordered that the dealership indemnify the owner. Of course that is subject to appeal but the legal reasoning seems sound.

What is indisputable is that extreme negligence on the part of the dealership led to the death of an entirely innocent party. His family deserves adequate recompense and workers compensation won’t provide that.

[BoSoxGal]

I hope that Sue will share her perspective on this case.

[Big RR]

BSG--thanks; I'll admit I did not read the links (I avoid anything from Fox, and "not the bee" also doesn't sound like a link I'd trust), but as I said, I did agree with you (and apparently the judge) that the dealership is ultimately responsible (and I would be interested to see how the obligation to indemnify arose). And I also do agree that the compensation under workers comp ultimately falls short in cases like this.

[ex-khobar Andy]

From the Fox link Jarl gave:

In that separate lawsuit, a judge has ruled that the dealership must provide indemnity for the Jeep owner. But even that is tricky.

Now that the dealership has been ordered to provide indemnity, the attorney for the dealership is representing the Jeep owner in the trial. [My underlining.]

The dealership is going to appeal the indemnity ruling.

How can one lawyer represent both the dealership and the Jeep owner if they are appealing the indemnification ruling?

[Sue U]

I hope that Sue will share her perspective on this case.

Be careful what you wish for.

Just as a factual matter as to value, it's not a "$15 million oil change," that's just a gimmicky headline. It's a claim for damages for the injury and wrongful death of a 42-year-old man who was providing for his wife and children. And just because the lawsuit demands $15 million as compensation, that doesn't mean that's what will be ultimately awarded; that's for a jury to decide based on the proofs of the decedent's pain & suffering and the economic loss to the survivors. In Michigan, apparently, you can plead a monetary amount in the complaint that starts the lawsuit (some states allow it, some states require it to meet a jurisdictional threshold, and some states -- like mine -- prohibit mentioning a specific amount for personal injury damages). By way of comparison, if this case were venued in NJ or NY, I would estimate "full value" of damages at twice that amount, with a "reasonable" settlement being in the $10-15 million range depending on all available insurance coverage.

Okay, moving on to liability rules, let's start with the basics, which here means that liability for both automobile-related injuries and workplace injuries is highly regulated by statute rather than common law, since both are subject to compulsory insurance. (So if you want to blame someone for how complicated and fucked up some of these systems are, blame legislators and insurance companies. Lawyers are just navigating through the rules they created.) So although common-law principles of negligence generally apply, they are substantially modified by both the auto and workers comp statutes.

Section 257.401 of Michigan's Motor Vehicle Code provides, in relevant part:

The owner of a motor vehicle is liable for an injury caused by the negligent operation of the motor vehicle whether the negligence consists of a violation of a statute of this state or the ordinary care standard required by common law. The owner is not liable unless the motor vehicle is being driven with his or her express or implied consent or knowledge. It is presumed that the motor vehicle is being driven with the knowledge and consent of the owner if it is driven at the time of the injury by his or her spouse, father, mother, brother, sister, son, daughter, or other immediate member of the family.

So you can see from the highlights that the automobile owner (and the owner's insurer) is liable as long as the vehicle is operated with the owner's "consent or knowledge." And this right here is why there is a defense to liability, because the language of this statute is subject to interpretation. I do not know if there is Michigan case law that specifically addresses this issue, but if I were defending this case, I'd argue that there was no "consent or knowledge" regarding the auto dealership allowing an unlicensed driver unfamiliar with a stick shift to operate the vehicle. To the extent he allowed the dealership to "drive," it is a reasonable to expect that the dealership ensure that its staff is minimally qualified to do so.

Problem is, if the vehicle owner gets out of the case, the deceased employee's family is left with no compensation beyond worker's comp, because comp is the legislative trade-off for workplace injuries in lieu of suing the employer for its or co-employees' negligence. In Michigan, the comp death benefit is an average of the highest 39 paid weeks during the last 52 weeks of employment, and it is paid out for a maximum of 500 weeks. So if the deceased was making $2,000/wk (~100k/year), the maximum his family would receive from comp is $1 million -- paid over 10 years. And that is nothing in a case like this.

So that's where the statutes would leave the bereaved under ordinary circumstances as a matter of legislative policy choices. But common sense and a decent respect for the value of human life tell us that the employer's negligence in this case was far beyond the ordinary dumbfuckery of running a business involving dangerous machinery, and the dealership *should* be held responsible for the loss. What's a judge to do?

In this case, the trial court got around the statutes by allowing for indemnity as kind of a legal fiction to make the vehicle owner merely a pass-through for the dealership's liability. The question now becomes whether it is permissible to get this kind of liability through the "back door" of indemnification when direct liability is barred by the comp statute. And I'm gonna guess this will be a loser on appeal because this is the exceptional case that would contradict the legislature's express public policy decision regarding compensation for workplace injury. Michigan law allows for an exception to the "comp bar" only where the employer has committed an "intentional" wrong.

In my state, we solved this problem judicially with a series of cases that would allow for direct employer liability in limited circumstances despite the comp bar. Now, an employee can sue an employer directly where the employer's conduct was so flagrant as to effectively be an "intentional" wrong or where it was substantially certain that someone would be injured or killed by the act or practice. See, e.g., Millison v. E.I. du Pont (employer concealed evidence of advancing asbestos disease in employees' medical exams) and Laidlow v. Hariton Machinery (employer's removal of a safety guard on machinery was substantially certain to result in injury).* Whether this Michigan case rises to that level of "intentional" wrong or "substantial certainty" of injury -- or whether anyone is even arguing that Michigan courts adopt this approach -- is anyone's guess.



* Point of personal pride: Millison and Laidlow were both litigated up to the NJ Supreme Court by friends and mentors of mine, and I have used both precedents to obtain rulings on employer liability in the first-ever use of "offensive collateral estoppel" in NJ, on behalf of one of the original Millison plaintiffs. (Unfortunately, my decisions went unpublished.)



ETA:

How can one lawyer represent both the dealership and the Jeep owner if they are appealing the indemnification ruling?

To the extent that the indemnification riling means that liability for the Jeep owner = liability for the dealership, they have an identity of interests with respect to the issue. So with proper consent of the parties and waiver of any other conflicts, one lawyer can represent both. Moreover, the dealership's liability insurer and excess insurer stand to be on the hook for substantially more of any damages awarded than the Jeep owner's auto insurer. Auto coverage is probably $100k or less, while I would guess that the dealership probably has between $5 and $10 million in liability coverage.

[Jarlaxle]

Of course...the Jeep owner now has to pay a pile of money to a lawyer.

Best argument EVER for tort reform.

[Sue U]

Of course...the Jeep owner now has to pay a pile of money to a lawyer.

Best argument EVER for tort reform.

No, the Jeep owner's insurer is paying its own lawyers for defense. That's their job. And that's exactly what insurance defense is for.

And in any event, now it's the dealership's insurer that's paying the lawyers.

Also, I don't think you actually know what "tort reform" means.

[Scooter]

Rather than being a "legal fiction", couldn't the indemnity be seen as a logical consequence of what would play out in court? If the vehicle owner is found liable for the accident, then he would have a obvious claim against the dealership to recover his losses because they so clearly and egregiously breached their duty of care to him, irrespective of the employer/employee relationship between the dealership and the victim. So why not just short circuit the process to its obvious end, and have the dealership indemnify the vehicle owner from the outset?

[Big RR]

In this case, the trial court got arwound the statutes by allowing for indemnity as kind of a legal fiction to make the vehicle owner merely a pass-through for the dealership's liability. The question now becomes whether it is permissible to get this kind of liability through the "back door" of indemnification when direct liability is barred by th e comp statute. And I'm gonna guess this will be a loser on appeal because this is the exceptional case that would contradict the legislature's express public policy decision regarding compensation for

Sue--"legal fiction" aside, I would think that the car owner could sue the dealer for any and all losses (s)he had on account of the accident as the dealer permitted a non licensed, unqualified driver to operate the vehicle, resulting in the damage and the death of the employee. Thus, while the family might be barred from a suit against the dealer, woudl you agree the owner of the vehicle could sue (and prevail against) the dealership? And, if such were the case, could that right (or at least the recovery) be assigned to the family of the dead person in exchange for a release. Face it, many (perhaps most) people don't carry that much is a car liability policy, and even fewer have umbrella policies, so unless the owner were wealthy or had a great job where wages could be attached, the recovery might only be somewhere between $15,000 and $100,000 (bankruptcy could cut off much more liability). Cooperation in the suit could be worth a lot to the family of the decedent.

If I were defending the car owner, I would try to negotiate such a release (if it were possible).

[Jarlaxle]

Of course...the Jeep owner now has to pay a pile of money to a lawyer.

Best argument EVER for tort reform.

No, the Jeep owner's insurer is paying its own lawyers for defense. That's their job. And that's exactly what insurance defense is for.

And in any event, now it's the dealership's insurer that's paying the lawyers.

Also, I don't think you actually know what "tort reform" means.

Loser pays all legal fees.

[BoSoxGal]

Thank you for that thorough analysis, Sue!

I am sad that it sounds like the deceased’s family is unlikely to prevail on this theory of liability.

[Sue U]

Rather than being a "legal fiction", couldn't the indemnity be seen as a logical consequence of what would play out in court? If the vehicle owner is found liable for the accident, then he would have a obvious claim against the dealership to recover his losses because they so clearly and egregiously breached their duty of care to him, irrespective of the employer/employee relationship between the dealership and the victim. So why not just short circuit the process to its obvious end, and have the dealership indemnify the vehicle owner from the outset?

Indemnification is usually a matter of contract, and here there is undoubtedly no such contract between the Jeep owner and the dealership (there may even be some language in the paperwork for the oil change that expressly disclaims liability). Common-law indemnification, as a creature of equity, is squirrely at best, and I'm sure the dealership raised all kinds of objections to it in the trial court. Plus, insurance companies simply don't like to pay, so if there is a defense to be offered, they will do it. Now that they have lost in the trial court, it's all for one and one for all on the appeal.

Also, you'd still have the big public policy issue of the decedent's estate getting through indemnification what it would be prohibited from obtaining directly by the workers comp statute. I can totally see the appellate court saying, "Well, this is a tragedy for this family, but the legislature has already decided the limits of an employer's liability to an employee no matter the formalities, and that's the trade-off for having comp. If you don't like the result, talk to the legislature about changing the law."

Thus, while the family might be barred from a suit against the dealer, woudl you agree the owner of the vehicle could sue (and prevail against) the dealership?

The Jeep owner would certainly have a property damage claim against the dealership. Beyond that, nothing is certain.

And, if such were the case, could that right (or at least the recovery) be assigned to the family of the dead person in exchange for a release. Face it, many (perhaps most) people don't carry that much is a car liability policy, and even fewer have umbrella policies, so unless the owner were wealthy or had a great job where wages could be attached, the recovery might only be somewhere between $15,000 and $100,000 (bankruptcy could cut off much more liability). Cooperation in the suit could be worth a lot to the family of the decedent.

If I were defending the car owner, I would try to negotiate such a release (if it were possible).

Well, that's how it would work in an insurance bad-faith case; the defendant would assign his right to coverage to the plaintiff and the plaintiff would pursue the insurer for the full value of damages. But here there are actual good-faith defenses to both the Jeep owner's and the dealership's tort liability. And that kind of assignment might not necessarily fly. I once tried something similar in a construction accident case taking an assignment of a subcontractor's claim against the general after a carpenter I represented was severely injured; I forget the exact facts and legal theory, which I thought was sound if a bit convoluted, but I do remember Judge Long (then on the appellate bench) accusing me of "playing fast and loose with the court" and "attempting to whipsaw" the GC before barring my claim. (I may have roles of GC and sub reversed here, it was 25 years ago fer crissakes. Issue involved whose employee, if any, was the carpenter and who had the obligation for workers comp coverage.)

[MajGenl.Meade]

I'd argue that there was no "consent or knowledge" regarding the auto dealership allowing an unlicensed driver unfamiliar with a stick shift to operate the vehicle. To the extent he allowed the dealership to "drive," it is a reasonable to expect that the dealership ensure that its staff is minimally qualified to do so.

Sue hits what I would be screaming about (as the vehicle owner). I expect the people in a service station, repair shop, brake replacer, oil change place, etc. to be fully equipped to provide the service(s) they put forward as "their" expertise. I surrender my vehicle to someone(s) of whom I have reasonable expectation that they are trained, qualified and capable of assuming the professional responsibilty advertized.

Loaning my vehicle to the neighbor, I should indeed ask if she has the experience required for a manual transmission. But that's not the same thing as turning one's car over to a business which advertizes a service and must be assumed (by all rational measures) to be capable of providing the service.

[Big RR]

And Meade, the dealer likely sold the owner that manual transmission car and might even have offered free or discount oil changes if the car were brought to them. They could hardly claim they were not familiar with that sort of car.

Sue--thanks; that's pretty much what I thought. But I am wondering what would be the best way for the family to proceed; I can think of a lot of ways their recovery against him could be pretty limited depending on how judgment proof he was. His cooperation in proceeding against the dealership could be worth a lot. It might be worth taking the chance (especially if he carried only minimum liability insurance ans many do).

I also wonder whether the family could bring suit against JEEP for some sort of failure to warn; the decedent was a dealership employee, not a Jeep employee. Would the arrangement between the dealer and Jeep protect them from suit as well?

[Sue U]

I am wondering what would be the best way for the family to proceed; I can think of a lot of ways their recovery against him could be pretty limited depending on how judgment proof he was. His cooperation in proceeding against the dealership could be worth a lot. It might be worth taking the chance (especially if he carried only minimum liability insurance ans many do).

If the Michigan auto statute is effectively a strict-liability law, then I think the indemnification claim by the Jeep owner is not a bad option, but it relies very heavily on judicial formalism over effective result, which does have public policy implications w/r/t worker's comp. What should the result be if the decedent were killed by a co-employee who mistakenly stepped on the gas instead of the brake, or who failed to properly engage the parking brake? What if there were no car involved, and the co-employee had dropped a tool chest on decedent's head? Workplace negligence happens, routinely, that's why there's comp. The fact that comp is inadequate is a political decision, not a judicial one. Also, although in the name of the Jeep owner, the third-party indemnification claim was being made by the auto insurer, and they have their own calculus as to whose ox should be gored.

But I do think our NJ approach of employer liability for types of "gross" negligence is a reasonable middle ground essentially expanding the scope of "intentional" in "intentional tort," because it 1) expresses a kind of civic morality and 2) discourages employers from egregious conduct. Now, was the conduct here so reckless that there was a substantial certainty that someone would be seriously injured or killed? I think you could plausibly make that case, but it might be a pretty close call, in my opinion.

I also wonder whether the family could bring suit against JEEP for some sort of failure to warn; the decedent was a dealership employee, not a Jeep employee. Would the arrangement between the dealer and Jeep protect them from suit as well?

Failure-to-warn requires that the intended user be unaware of the hazards of an inherently unsafe product. I don't think that's a claim that would get much traction, unless a manual clutch now constitutes a hidden danger.

Also, and not for nothing, we haven't even begun to discuss the issue of decedent's family having to pay back any comp benefits (to the dealer's insurer) out of any "third-party" recovery received (from the dealer's insurer), whether as an assignment or a pass-through of the Jeep owner's claim.

[Big RR]

Also, and not for nothing, we haven't even begun to discuss the issue of decedent's family having to pay back any comp benefits (to the dealer's insurer) out of any "third-party" recovery received (from the dealer's insurer), whether as an assignment or a pass-through of the Jeep owner's claim.

And that, little Adam, is another story.