Opinion
Case No. 3:21-cv-202
06-13-2023
AFFILIATED FM INSURANCE COMPANY, as subrogee of Kirchhoff Automotive Manchester Inc. f/k/a VR Volunteer Inc., Plaintiff, v. RANDSTAD NORTH AMERICA, INC., Defendant.
Jefferson C. Orr, Pro Hac Vice, S. Joseph Welborn, Pro Hac Vice, Samuel Joseph Welborn, Vic L. McConnell, Smith Cashion & Orr, PLC, Nashville, TN, for Plaintiff. Kevin C. Baltz, Taylor B. Mayes, Butler Snow LLP, Nashville, TN, for Defendant.
Jefferson C. Orr, Pro Hac Vice, S. Joseph Welborn, Pro Hac Vice, Samuel Joseph Welborn, Vic L. McConnell, Smith Cashion & Orr, PLC, Nashville, TN, for Plaintiff. Kevin C. Baltz, Taylor B. Mayes, Butler Snow LLP, Nashville, TN, for Defendant. ORDER CHARLES E. ATCHLEY JR., UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Randstad North America, Inc.'s Motion to Dismiss [Doc. 22]. Through its motion, Defendant argues that Plaintiff Affiliated FM Insurance Company fails to state a claim upon which relief can be granted. [Id.]. For the reasons expressed below, Defendants' Motion to Dismiss [Doc. 22] is GRANTED in part and DENIED in part.
I. BACKGROUND
Plaintiff Affiliated FM Insurance Company ("Affiliated FM") is a Rhode Island corporation with its principal place of business in Rhode Island. [Doc. 19 at ¶ 2]. Defendant Randstad North America, Inc. ("Randstad") is a Delaware corporation with its principal place of business in Georgia, though it is authorized to do business in Tennessee. [Id. at ¶ 3]. Kirchhoff Automotive Manchester Inc. ("Kirchhoff") owns an automotive plant located in Manchester, Tennessee. [Id. at ¶ 7]. Randstad is a national staffing company that provides companies with temporary employees throughout various industries, and it was operating under a valid staffing agreement with Kirchhoff executed on April 6, 2016. [Id. at ¶¶ 9, 16; Doc. 19-1]. Affiliated FM filed a Complaint on June 4, 2021. [Doc. 1]. It then filed an Amended Complaint on July 23, 2021. [Doc. 19].
This matter arises from a fire that occurred at Kirchhoff's automotive plant, which was insured by Affiliated FM. [Id. at ¶¶ 1, 8]. Beginning in early 2016, Randstad communicated with Kirchhoff to better understand the working environment and staffing needs of Kirchhoff. [Id. at ¶ 10]. According to the First Amended Complaint, Kirchhoff "repeatedly communicated" its staffing needs and required minimum worker qualifications to Randstad, including that employees must be competent, fit, and able to comply with Kirchhoff's rules and guidelines. [Id. at ¶¶ 11-13]. One such rule and/or guideline was that workers were prohibited from smoking in certain areas. [Id. at ¶ 12]. Randstad represented to Kirchhoff that it would "only supply personnel to Kirchhoff that would comply with Kirchhoff's rules and regulations." [Id. at ¶ 14]. Randstad and Kirchhoff ultimately entered into a staffing agreement wherein Randstad agreed to fulfill certain Kirchhoff staffing needs. [Id. at ¶ 16; Doc. 19-1].
Randstad supplied David Smith to Kirchhoff to perform work at the plant, which included operation of a forklift, and represented that Smith was fit, competent, and able to comply with the rules and guidelines of Kirchhoff. [Id. at ¶¶ 17-18]. Kirchhoff claims that Randstad "failed to properly screen, interview, and/or evaluate David Smith for working at the plant, as Mr. Smith had a long standing propensity and habit of smoking cigarettes." [Id. at ¶ 19]. On or around June 6, 2018, a large fire occurred at the plant in the area Smith was operating a forklift and where smoking was prohibited. [Id. at ¶ 20]. The cause of the fire was Smith "negligently discard[ing] a cigarette in an area where smoking was strictly prohibited." [Id.]. The fire resulted in Kirchhoff incurring damages of $8,971,482.23. [Id. at ¶ 23]. Affiliated FM made payment to Kirchhoff compensating the loss, after Kirchhoff's deductible was met. [Id. at ¶ 24]. All told, Affiliated FM paid out $8,961,482.23 to Kirchhoff. [Id.].
Affiliated FM now brings two distinct claims against Randstad: negligence and negligent hiring/retention/training/supervision. [Id. at 5-8]. In response, Defendant Randstad filed a Motion to Dismiss. [Doc. 22]. Plaintiff Affiliated FM responded in opposition, and Randstad then replied to Plaintiff's response. [Doc. 29, 31].
II. STANDARD
Rule 12(b)(6) provides that a defendant may move to dismiss for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In considering a motion to dismiss under Rule 12(b)(6), the Court "must construe the complaint in the light most favorable to the plaintiff, accept all of the complaint's factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claim that would entitle him to relief." Engler v. Arnold, 862 F.3d 571, 574-75 (6th Cir. 2017) (internal quotations omitted).
"The [plaintiff's] factual allegations, assumed to be true, must do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief." League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007). "Mere labels and conclusions are not enough; the allegations must contain 'factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' " Id. at 575 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Further, the Court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986).
"A copy of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes," so a court may consider such an exhibit. Fed. R. Civ. P. 10(c). Further, "[i]f inconsistent with the allegations of the complaint, the exhibit controls." Mengel Co. v. Nashville Paper Pros. & Specialty Workers Union, 221 F.2d 644, 647 (6th Cir. 1955); see Turnage v. Oldham, 346 F. Supp.3d 1141, 1152 (W.D. Tenn. 2018) ("Although a court must accept all well-pled facts as true, if a document referenced in the complaint contradicts the allegations in the complaint, the document 'trumps the allegations.' ").
III. ANALYSIS
Randstad makes several distinct arguments that the claims should be dismissed. Particularly, Defendant claims: (1) the loaned servant doctrine prevents it from being liable for negligence; (2) the language of the staffing agreement prevents both claims from moving forward; and (3) because the loaned servant doctrine and anti-subrogation rule apply. [See Doc. 22]. Each claim is analyzed below.
i. Negligence Claim and the Loaned Servant Doctrine
In Tennessee, the loaned servant doctrine prevents liability in certain situations. Particularly, an "employee of one employer may become the servant of another and shift the liability for his negligent acts to the second employer." Parker v. Vanderbilt Univ., 767 S.W.2d 412, 416 (Tenn. Ct. App. 1988). The Tennessee Supreme Court explained this doctrine and established what courts should analyze when determining if an employee is a loaned servant of another in Gaston v. Sharpe:
[A] servant at a particular time may remain under the control of his general employer for some purposes and yet be under the control of a special employer
for others. Likewise it sometimes happens that a particular work in which the servant is engaged may be properly considered as the work or business of both the general employer and the special employer.179 Tenn. 609, 168 S.W.2d 784, 786 (1943) (citing Restatement of Agency § 227) (emphasis added). Whether an employee is a "loaned servant" is generally a question of fact, but where there exists an unambiguous written instrument controlling the relationship between the two employers at issue, it becomes a question of law for the court. Parker, 767 S.W.2d at 417 (quoting Merritt v. Nationwide Warehouse Co., Ltd., 605 S.W.2d 250, 255 (Tenn. Ct. App. 1980)).
Since the question of liability is always raised because of some specific act done, the important question is not whether or not he remains the servant of the general employer as to matters generally, but whether or not, as to the act in question, he is acting in the business of and under the direction of one or the other. It is not conclusive that in practice he would be likely to obey the directions of the general employer in case of conflict of orders. The question is as to whether it is understood between him and his employers that he is to remain in the allegiance of the first as to a specific act, or is to be employed in the business of and subject to the direction of the temporary employer as to the details of such act.
The Court finds several Tennessee cases persuasive. In Parker v. Vanderbilt University, the court found Vanderbilt was not liable for negligence of doctors it employed because of the loaned servant doctrine. 767 S.W.2d 412 (Tenn. Ct. App. 1988). In Parker, doctors employed by Vanderbilt University were on duty at General Hospital, and Vanderbilt was ultimately sued for the alleged negligence of these doctors. Id. at 413-14. The appellate court upheld the trial court's decision that the doctors were loaned servants of General Hospital largely because of the written agreement between Vanderbilt and General Hospital. Id. at 416-17. Particularly, the contractual language provided that the doctors "as members of the medical staff, were accountable solely to General; General had the right to approve the assignment of all medical staff personnel and all residents were to be supervised by and accountable to General." Id. at 417. As such, the doctors were the loaned servants of General Hospital.
So too here, there is a written instrument controlling the relationship between Randstad and Kirchhoff—the staffing agreement. [Doc. 19-1]. In the staffing agreement, any employee is "to perform work under [Kirchhoff's] supervision and direction and [Kirchhoff is] responsible for the work and the work product of the[ ] employee[ ]," and Kirchhoff shall be "responsible for . . . all necessary site-specific safety training . . . ." [Doc. 19-1]. This is similar to the language in the contract between Vanderbilt University and General Hospital, which provides the doctors would be supervised by and accountable to General. See Parker, 767 S.W.2d at 417. As to the act in question, Kirchhoff contracted to both supervise and provide "all necessary site-specific training and equipment." [Doc. 19-1]. That is, while working the forklift in the area in which smoking was prohibited, Smith was functioning as an employee of Kirchhoff because the forklift itself was provided by Kirchhoff, and Smith was acting in the business of and under the direction of Kirchhoff at that moment. See Gaston, 168 S.W.2d at 786.
Similarly, in Arrow Electronics v. Adecco Employment Services, Inc., the Tennessee court found a temporary employee of Adecco was a loaned servant of Arrow Electronics. 195 S.W.3d 646 (Tenn. Ct. App. 2005). Adecco, a temporary employment staffing agency similar to Randstad, contracted with Arrow Electronics to provide a temporary employee. Id. at 648. Though the contractual language established that the employee remained an employee of Adecco "as to matters generally," it also plainly noted that "as to any work done for Arrow, [the employee] act[s] in the business of and under the direction of Arrow." Id. at 653. Thus, the court determined that the employee was the loaned servant of Arrow and, as such, Arrow would be responsible for any negligence on the part of the employee—not Adecco. See id. Likewise here, the language of the staffing agreement between Randstad and Kirchhoff, while maintaining that Smith was a general employee of Randstad, plainly notes that Kirchhoff is responsible for the site-specific training, work, and work product of Smith. [See Doc. 19-1].
Plaintiff largely relies on Chamberlain v. Lee to argue that the loaned servant doctrine does not apply because of the level of control at issue in this matter. 148 Tenn. 637, 257 S.W. 415 (1924). However, the facts in Chamberlain differ significantly from those in the present case. In Chamberlain, a contractor hired to fix an elevator in an office building was injured after an elevator attendant moved the elevator while the contractor was working on it. Id. at 416. Before the contractor began work on the elevator, the attendant was told by his supervisor (the janitor) to "do what [the contractor] tells you to do," and the defendants argued he was thus a loaned servant of the contractor. Id. The court determined this was not the case, explaining that inter alia there was no formal contract between the elevator attendant and the contractor/Plaintiff, there was no understanding that the services of the elevator attendant were being transferred to the contractor, and the elevator attendant was only authorized to do one specific task for the contractor. Id. at 417. That is, generally, there was no formal relationship between the elevator attendant and contractor, and the janitor never gave up control over the elevator attendant and his greater work. See id.
Here, the relationship between Randstad and Kirchhoff was formalized in a staffing agreement. [Doc. 19-1]. Pursuant to that agreement, Kirchhoff was to be responsible for site-specific training and safety precautions, and further retained responsibility for the work and work product of Smith. [See id.]. That is, the relationship between Smith and Kirchhoff is significantly different than that of the elevator attendant and contractor in Chamberlain. Smith was not only authorized to do a specific task for Kirchhoff in the area in which smoking was prohibited, but his greater work was largely controlled by Kirchhoff.
As such, while determination as to whether one becomes a "loaned servant" is usually a fact question left for the jury, the staffing agreement executed between Randstad and Kirchhoff renders it a question of law. The Court finds that Smith was indeed a loaned servant whose specific actions—including his actions while operating the forklift for Kirchhoff and in defiance of the site-specific safety protocol—were under the control of Kirchhoff. As such, Randstad cannot be liable for his negligence. The negligence claim shall therefore be dismissed.
ii. Negligent Hiring/Supervision/Retention Claim
In Tennessee, to adequately state a claim for negligent hiring, the plaintiff must show the five historical elements of negligence and "that the employer had knowledge of the employee's unfitness for the job." See Heflin v. Iberiabank Corp., 571 S.W.3d 727, 737 (Tenn. Ct. App. 2018) (citing Bazemore v. Performance Food Grp., 478 S.W.3d 628, 638-39 (Tenn. Ct. App. 2015)). The five historical elements of negligence in Tennessee are: (1) a duty of care owed by defendant to the plaintiff; (2) conduct that falls below the applicable standard of care amounting to a breach of that duty; (3) injury or loss; (4) actual causation; and (5) proximate or legal causation. McClenahan v. Cooley, 806 S.W.2d 767, 774-75 (Tenn. 1991). Defendant does not claim that Plaintiff has failed to allege any of the historical elements of negligence, but rather that the language in the staffing agreement precludes this claim from moving forward. [See generally Doc. 23 at 6-7]. Nonetheless, the Court finds that Plaintiff has alleged adequate facts to substantiate the elements of this claim. [See Doc. 19 at ¶¶ 27, 33-36, 40-49, 51].
In Wishone v. Yellow Cab Company, when exploring a negligent hiring claim, the Tennessee court noted:
The employer must exercise a degree of care commensurate with the nature and danger of the business in which he is engaged and the nature and grade of service for which the servant is intended. He must exercise due care to discover incompetency and whether he has done so is held to be a question for the jury. Consistent with this rule actual knowledge of incompetency upon the part of the employer is not necessary to render the employer liable for an act of an incompetent servant.20 Tenn.App. 229, 97 S.W.2d 452, 453-54 (1936) (emphasis added). In other words, an employer like Randstad may be liable for not exercising the necessary due care and diligence in retaining the employment of an individual, even if it is not liable for the more specific negligence at issue. Furthermore, whether due care was exercised is generally a jury question. See id.
As a preliminary matter, Defendant's argument that the loaned servant doctrine also prevents this second claim falls flat. A claim of negligence brought via the doctrine of respondeat superior is separate and independent of a claim for negligent hiring. See Gunter v. Estate of Armstrong, 600 S.W.3d 916, 928 (Tenn. Ct. App. 2019). Negligent hiring and supervision is "based on the principle that a person conducting an activity through employees is liable for harm resulting from negligent conduct in the employment of improper persons or instrumentalities in the work involving risk of harm to others." Gates v. McQuiddy Office Prods., No. 02A01-9410-CV-00240, 1995 WL 650128, at *1 (Tenn. Ct. App. Nov. 2, 1995) (citing Restatement (Second) of Agency § 213(b) (1958)). That is, this claim is not superfluous; it follows logically that the negligence and negligent hiring claims are independent of one another. It is further undisputed that Smith remained an employee of Randstad—even if he was a loaned servant as to the particular task or function he assumed for Kirchhoff. Thus, the loaned servant doctrine does not preclude this claim. For these same reasons, Defendant's argument that the anti-subrogation rule prevents recovery for negligent hiring also falls flat.
Defendant's primary argument for dismissal of this claim concerns the contractual language found in the staffing agreement. Particularly, Randstad argues that the staffing agreement only required certain "qualifying and screening" processes of candidates for potential Kirchhoff employment—and screening that concerns the habit of smoking cigarettes was not one of these requirements. [Doc. 19-1, Doc 23 at 6-7]. Plaintiff argues that the staffing agreement is not dispositive on this question, as it states that "Randstad offers a choice of additional qualifying and screening processes," that additional discovery will demonstrate Randstad was aware of this duty to screen, and that the Amended Complaint contains adequate allegations consistent with this theory. [Doc. 19-1] (emphasis added); [Doc. 29 at 12-15].
The Court finds Plaintiff's counterarguments convincing. While true that the explicit terms of the staffing agreement do not include a specific requirement to screen a prospective employee's propensity to smoke, when viewing the Amended Complaint in a light most favorable to Plaintiff, there are enough factual allegations to suggest a jury might find that Randstad indeed owed this duty Kirchhoff. Plaintiff avers that Randstad was aware of Kirchhoff's work environment and site-specific rules/regulations—including the restriction on smoking. [Doc. 19 at ¶¶ 10-12]. Plaintiff further alleges that Randstad "represented . . . it would only supply personnel to Kirchhoff that would comply with [its] rules and regulations, including [its] policies/prohibitions against smoking in certain areas of the Plant" and thus owed a duty to "take reasonable care to ensure that employees . . . were not unfit, incompetent or otherwise dangerous to [Kirchhoff]." [Id. at ¶¶ 14, 40].
When determining whether a specific duty of care was owed, courts "balance the foreseeability and gravity of the potential risk of harm against the burden imposed on the defendant in protecting against that harm." Rice v. Sabir, 979 S.W.2d 305, 308 (Tenn. 1998) (citing McClung v. Delta Square Ltd. Partnership, 937 S.W.2d 891, 902 (Tenn. 1996)). Conducting such a balancing test here, particularly where additional discovery will likely impact the analysis, is inappropriate. See [Doc. 29 at 14] (explaining that parol evidence could very well demonstrate that Randstad had agreed to screen for and/or address this particular propensity during the hiring process).
The Amended Complaint contains adequate factual allegations that Randstad owed this specific duty to Kirchhoff, and that Randstad failed in upholding this duty. Ultimately, whether Randstad owed a duty to screen the employees provided to Kirchhoff—including and specifically Smith—for smoking habit or propensity is a question that cannot be answered at this stage in the litigation. Doing so would require the Court to look beyond the Amended Complaint and make factual determinations that are not appropriate at the motion to dismiss stage. As such, Defendant has not carried its burden and this claim shall proceed.
IV. CONCLUSION
Accordingly, Defendant Randstad's Motion to Dismiss [Doc. 22] is GRANTED in part and DENIED in part. Plaintiff's claim for negligence is hereby DISMISSED. The claim for negligent hiring/retention may proceed.
SO ORDERED.