SUPREME COURT OF ARIZONA
En Banc
JAMES TARRON and SHERRY TARRON, ) Arizona Supreme Court
husband and wife, ) No. CV-09-0230-PR
)
Plaintiffs/Appellees, ) Court of Appeals
) Division One
v. ) No. 1 CA-CV 08-0436
)
BOWEN MACHINE & FABRICATING, ) Maricopa County
INC. dba BOWEN INDUSTRIAL ) Superior Court
CONTRACTORS, INC., a foreign ) No. CV2006-002351
corporation, )
)
Defendant/Appellant. ) O P I N I O N
_________________________________ )
Appeal from the Superior Court in Maricopa County
The Honorable John A. Buttrick, Judge
REVERSED AND REMANDED
________________________________________________________________
Opinion of the Court of Appeals, Division One
222 Ariz. 160, 213 P.3d 309 (App. 2009)
AFFIRMED
________________________________________________________________
ELY, BETTINI, ULMAN, & ROSENBLATT Phoenix
By Ronald Ozer
Burton Rosenblatt
Attorneys for James Tarron and Sherry Tarron
THE CAVANAGH LAW FIRM, P.A. Phoenix
By Ralph E. Hunsaker
Taylor C. Young
Attorneys for Bowen Machine & Fabricating Inc. and
Bowen Industrial Contractors, Inc.
LAW OFFICES OF DAVID L. ABNEY, ESQ. Phoenix
By David L. Abney
Attorney for Amicus Curiae of
The Law Offices of Charles M. Brewer, Ltd.
________________________________________________________________
B E R C H, Chief Justice
¶1 This case concerns the “borrowed servant” doctrine.
The issue for decision is whether a general employer is
vicariously liable for the negligence of two “borrowed
employees” working at the jobsite of a special employer.
I. FACTUAL AND PROCEDURAL BACKGROUND
¶2 James Tarron was injured while working at a Phelps
Dodge Corporation copper smelter. He fell into a gap created
when two workers removed access ramps to a converter. Instead
of covering the gap or installing a barrier, the workers strung
yellow caution tape around the opening. Thinking that a
handrail was in place, Tarron leaned on the caution tape, lost
his balance, and fell approximately eighteen feet, seriously
injuring his elbow and ankle.
¶3 The two workers who put up the caution tape were
temporary employees loaned to Phelps Dodge under a labor
agreement with Bowen Machine & Fabricating, Inc. The labor
agreement consisted of a 1995 “Master Agreement” and a 2004
“Supplement.”
¶4 Tarron sued Bowen, alleging that Bowen was responsible
under the doctrine of respondeat superior for the negligent work
of the two borrowed employees.1
1
Tarron’s recovery from Phelps Dodge was limited to workers’
compensation benefits. See Ariz. Rev. Stat. (“A.R.S.”) § 23-
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¶5 Bowen moved for summary judgment, arguing that it was
not vicariously liable because the two employees were working
under Phelps Dodge’s direction. Tarron cross-moved for partial
summary judgment. The trial court granted Tarron’s motion and
denied Bowen’s motion, finding that, although Phelps Dodge
“exercised actual control over the work at issue,” section 6 of
the Master Agreement gave Bowen the legal right to control the
employees.
¶6 The jury awarded Tarron damages of $1.5 million,
apportioning fault as follows: Tarron, 2%; Phelps Dodge, 38%;
and Bowen, 60%.
¶7 The court of appeals affirmed the denial of Bowen’s
motion for summary judgment, but reversed the partial summary
judgment in favor of Tarron, finding an issue of material fact
as to “whether Bowen surrendered to Phelps Dodge the exclusive
right to control [the two employees’] work activities related to
installing a barrier.” Tarron v. Bowen Mach. & Fabricating,
Inc., 222 Ariz. 160, 165, 171 ¶¶ 21, 47-48, 213 P.3d 309, 314,
320 (App. 2009).
¶8 We granted Tarron’s petition for review and Bowen’s
cross-petition because interpretation of the borrowed servant
doctrine is an issue of statewide importance. We have
1022 (1995) (making recovery of workers’ compensation “the
exclusive remedy against the employer or any co-employee acting
in the scope of his employment”).
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jurisdiction under Article 6, Section 5, Clause 3, of the
Arizona Constitution and Arizona Revised Statutes (“A.R.S.”)
section 12-120.24 (2003).
II. DISCUSSION
A. The Borrowed Servant Doctrine2
1. Background
¶9 The doctrine of respondeat superior generally holds an
employer vicariously liable for the negligent work-related
actions of its employees. See Throop v. F.E. Young & Co., 94
Ariz. 146, 150–51, 382 P.2d 560, 562–63 (1963); Lee Moor
Contracting Co. v. Blanton, 49 Ariz. 130, 133–36, 65 P.2d 35,
36–38 (1937). The borrowed servant doctrine allows an employer
who loans its employees to another to escape vicarious liability
for the employees’ negligent acts under certain circumstances.
¶10 A borrowed servant relationship arises
when an employer sends one of its employees to do some
work for a separate business. The employer usually is
referred to as the “general employer” in the law of
agency. The separate business often is called the
“borrowing” or “special” employer. The transfer
frequently is pursuant to a contract between the
general and borrowing employers which calls for
compensating the general employer. . . . The general
employer has no intention of severing its employment
relationship with its employee. Instead, the loaned
2
We use the term “borrowed servant” or “borrowed employee”
doctrine to distinguish vicarious liability in the tort context
from the “loaned” or “lent” employee doctrine applicable in the
workers’ compensation context. See Inmon v. Crane Rental
Servs., Inc., 205 Ariz. 130, 132 n.2 ¶ 6, 67 P.3d 726, 728 n.2
(App. 2003).
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employee is subject to the instructions of the
borrowing employer.
J. Dennis Hynes, Chaos and the Law of Borrowed Servant: An
Argument for Consistency, 14 J.L. & Com. 1, 4 (1994).
¶11 The doctrine has generated much confusion. Justice
Cardozo reflected on the difficulty in determining when to
attribute a borrowed employee’s acts to the general employer and
when to the special: “The law that defines or seeks to define
the distinction between general and special employers is beset
with distinctions so delicate that chaos is the consequence. No
lawyer can say with assurance in any given situation when one
employment ends and the other begins.” Benjamin N. Cardozo, A
Ministry of Justice, 35 Harv. L. Rev. 113, 121 (1921); see also
Restatement (Third) of Agency § 7.03 cmt. d(2) (2006) (“When an
actor negligently injures a third party while performing work
for the firm that has contracted for the actor’s services, the
question is whether that firm (often termed the ‘special
employer’) or the initial employer (often termed the ‘general
employer’), or both, should be subject to liability to the third
party.”).
¶12 To determine whether a general employer remains
vicariously liable for the negligent act of an employee it has
contracted out to another, courts typically examine whether the
general employer either exercised actual control over the acts
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giving rise to the injury or retained a right to control those
acts. See, e.g., Williams v. Wise, 106 Ariz. 335, 338, 476 P.2d
145, 148 (1970) (focusing on “the right to control, rather than
the actual exercise of control”); Lee Moor, 49 Ariz. at 136, 65
P.2d at 37–38 (“Control or right to control determines
liability.”).
¶13 In determining liability, courts focus on “which
employer had control of the details of the particular work being
done at the time of the injury-causing incident.” Ruelas v.
Staff Builders Pers. Servs., Inc., 199 Ariz. 344, 346 ¶ 5, 18
P.3d 138, 140 (App. 2001). In some circumstances, the general
employer and special employer may both be liable because each
had actual control of, or the right to control, the employee’s
actions. See, e.g., Inmon, 205 Ariz. at 135 ¶ 20, 67 P.3d at
731; Ruelas, 199 Ariz. at 348 ¶ 13, 18 P.3d at 142; McDaniel v.
Troy Design Servs. Co., 186 Ariz. 552, 555-56, 925 P.2d 693,
696-97 (App. 1996).
¶14 The Master Agreement provides that the loaned employees
are “not agents or employees” of Phelps Dodge and that Phelps
Dodge “will have no direction or control as to the method of
performance” of their work. Based on this language, the trial
court found Bowen vicariously liable as a matter of law,
reasoning that it had retained a contractual right to control
the two borrowed workers.
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¶15 Summary judgment is appropriate “if no genuine issues
of material fact exist and the moving party is entitled to
judgment as a matter of law.” Wells Fargo Bank v. Ariz.
Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust
Fund, 201 Ariz. 474, 482 ¶ 14, 38 P.3d 12, 20 (2002). We stated
long ago, however, that “[w]hether a lent or hired servant
continues the servant of his general employer, or becomes the
servant of the borrower or hirer, is always a question of fact.”
Lee Moor, 49 Ariz. at 135, 65 P.2d at 37; see also Restatement
(Third) of Agency § 7.03 cmt. d(2) (“It is a question of fact
whether a general or a special employer, or both, have the right
to control an employee’s conduct.”); Restatement (Second) of
Agency § 227 cmt. a (1958) (to same effect).
¶16 Notwithstanding the sweeping language in Lee Moor and
the Restatement sections, summary judgment on the question may
sometimes be appropriate. If the evidence is such that
“reasonable persons might well come to different conclusions as
to who had the control or right of control at the time of the
accident, the issue should be submitted to the jury.” Williams,
106 Ariz. at 338–39, 476 P.2d at 148–49; see also Orme Sch. v.
Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990) (finding
entry of summary judgment appropriate “if the facts produced in
support of the claim . . . have so little probative value, given
the quantum of evidence required, that reasonable people could
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not agree with the conclusion advanced by the proponent of the
claim”). Since Williams, a number of Arizona cases have
resolved the borrowed servant question as a matter of law.
E.g., Ruelas, 199 Ariz. at 348 ¶ 14, 18 P.3d at 142; McDaniel,
186 Ariz. at 556–57, 925 P.2d at 697–98. Thus, while the
borrowed servant issue typically presents a fact question, if
the employer’s right to control is “clear and uncontradicted,”
the court may determine the issue as a matter of law. Williams,
106 Ariz. at 339, 476 P.2d at 149. We review a trial court’s
grant of summary judgment de novo, viewing the evidence in favor
of the party against whom summary judgment was entered.
Espinoza v. Schulenburg, 212 Ariz. 215, 216 ¶ 6, 129 P.3d 937,
938 (2006).
2. Contract Reservation of Right to Control
¶17 The record contains ample evidence that Phelps Dodge
actually controlled the work of the two employees.
Notwithstanding this evidence, Tarron claims that the superior
court correctly ruled, based on language in the Master
Agreement, that Bowen had reserved a contractual right to
control the employees.
¶18 Workers are often borrowed “pursuant to a contract
between the general and borrowing employers which calls for
compensating the general employer.” Hynes, supra ¶ 10, at 4.
These contracts “routinely provide that the lent employee is not
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a special employer’s employee for any purpose.” Section 6 of
the Master Agreement follows that model, providing that Phelps
Dodge “will have no direction or control as to the method of
performance of the Work” performed by employees borrowed from
Bowen. The provisions of the Master Agreement, on their face,
thus plainly gave Bowen the right to control the work of the two
employees.
¶19 The question nonetheless remains whether, despite these
contract terms, Bowen ceded that right to Phelps Dodge. Bowen
maintains that notwithstanding the contract terms, the court
should find as a matter of law that Phelps Dodge exercised
complete control over the details of the job function at issue.
Tarron counters that the contract provisions conclusively
establish Bowen’s right to control as a matter of law.
¶20 The court of appeals correctly rejected both positions.
Contrary to Tarron’s assertion, contract language does not
always determine employment status. See Santiago v. Phoenix
Newspapers, Inc., 164 Ariz. 505, 508, 794 P.2d 138, 141 (1990).
Rather, the factfinder must determine the “objective nature of
the relationship.” Id. (quoting Anton v. Indus. Comm’n, 141
Ariz. 566, 568, 688 P.2d 192, 194 (App. 1984)).
¶21 In Santiago, for example, the plaintiff was injured
when he was struck by a newspaper delivery car. 164 Ariz. at
506, 794 P.2d at 139. He sued Phoenix Newspapers, claiming that
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the driver was an agent of that company. Id. The contract
between the driver and the defendant, however, identified the
driver as an independent contractor. Id. at 507, 794 P.2d at
140.
¶22 We concluded that “[c]ontract language does not
determine the relationship of the parties[;] rather the
‘objective nature of the relationship [is] determined upon an
analysis of the totality of the facts and circumstances of each
case.’” Id. at 508, 794 P.2d at 141 (quoting Anton, 141 Ariz.
at 568, 688 P.2d at 194). Other evidence — that the newspaper
“designated the time for pick-up and delivery, the area covered,
the manner in which the papers were delivered, i.e., bagged and
banded, and the persons to whom delivery was made,” id. at 510,
794 P.2d at 143 — would support a jury’s finding that the
deliveryman was a newspaper company employee, rather than an
independent contractor. Id. at 512, 794 P.2d at 145. We
therefore vacated the summary judgment in favor of the newspaper
and remanded the case for a trial on the merits. Id. at 513,
794 P.2d at 146.
¶23 Santiago demonstrates that contractual language is not
talismanic. Contractual provisions may provide evidence of
employment status, but they are not determinative. The trier of
fact must examine the objective nature of the employment
relationship when determining employment status, one indicator
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of which may be contract terms.
3. The Restatement (Third) of Agency § 7.03
¶24 The court of appeals also relied on the Restatement
(Third) of Agency § 7.03 in determining that it should “not
limit the facts to be considered to the contract between the two
employers[,] but . . . the jury should consider all relevant
facts, especially facts that contradict the clear terms of a
contract.” Tarron, 222 Ariz. at 169 ¶ 38, 213 P.3d at 318
(citing Restatement (Third) of Agency § 7.03 cmt. d(2)). We
agree with this approach.
¶25 Arizona courts have traditionally relied on the
Restatement (Second) of Agency § 227 for guidance in determining
an employer’s right to control employees. See, e.g., Williams,
106 Ariz. at 337–38, 476 P.2d at 147–48; Inmon, 205 Ariz. at
135–36 ¶ 22, 67 P.3d at 731–32; Ruelas, 199 Ariz. at 346 ¶ 5, 18
P.3d at 140. That section provides that “the important question
is not whether or not [the employee] 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.” Restatement (Second)
of Agency § 227 cmt. a (emphasis added). Section 227 creates a
presumption that the general employer remains vicariously
responsible for the employees’ actions, stating that “[i]n the
absence of evidence to the contrary, there is an inference that
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the actor remains in his general employment so long as, by the
service rendered another, he is performing the business
entrusted to him by the general employer.” Id. cmt. b.
¶26 The Third Restatement retains the presumption, but
permits the general employer to rebut it by presenting “factual
indicia” showing that the special employer has assumed control.
See § 7.03 cmt. d(2). It recognizes that a general employer in
the business of providing temporary workers may surrender or
cede to the special employer its right to control the work of
borrowed employees. See id. (“When both a general and special
employer have the right to control an employee’s conduct, the
practical history of direction may establish that one employer
in fact ceded its right of control to the other, whether through
its failure to exercise the right or otherwise.”).
¶27 We find appropriate § 7.03’s practical allocation of
liability to the employer that actually controls the work or has
the right to control the accident-causing conduct and is in the
best “position to take measures to prevent the injury suffered
by the third party.” It harmonizes with our borrowed servant
jurisprudence by examining the right to control and emphasizing
that such an analysis should usually be a question for the trier
of fact. See id.
¶28 Although not providing an exhaustive list, § 7.03
identifies several factors to guide the right-of-control
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determination, many of which have been employed by Arizona
courts for years. It includes
the extent of control that an employer may exercise
over the details of an employee’s work and the timing
of the work; the relationship between the employee’s
work and the nature of the special employer’s
business; the nature of the employee’s work, the
skills required to perform it, and the degree of
supervision customarily associated with the work; the
duration of the employee’s work in the special
employer’s firm; the identity of the employer who
furnishes equipment or other instrumentalities
requisite to performing the work; and the method of
payment for the work.
Id. § 7.03 cmt. d(2); cf. Ruelas, 199 Ariz. at 347 ¶¶ 8-9, 18
P.3d at 141 (considering several of the factors specified by
§ 7.03 cmt. d(2)); McDaniel, 186 Ariz. at 555, 925 P.2d at 696
(same). Section 7.03 also suggests consideration of which
employer was in the better position “to take measures to prevent
the injury suffered by the third party.” Restatement (Third) of
Agency § 7.03 cmt. d(2).
¶29 In some instances, a general employer and a special
employer may both be vicariously liable for an injury. See,
e.g., Inmon, 205 Ariz. at 135 ¶ 20, 67 P.3d at 731; McDaniel,
186 Ariz. at 556, 925 P.2d at 697. The comments to § 7.03
expressly embrace this possibility of dual liability. See
Restatement (Third) of Agency § 7.03 cmt. d(2) (noting that when
a borrowed employee negligently injures another, “the question
is whether . . . the ‘special employer’[] or . . . the ‘general
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employer’[], or both, should be subject to liability”) (emphasis
added); id. (calling it a fact question “whether a general or a
special employer, or both, have the right to control an
employee’s conduct”).
¶30 The possibility of dual liability for the acts of
borrowed servants conflicts with the notion that a special
employer must have the exclusive right to control a borrowed
employee in order to be vicariously liable, and to the extent
that our cases suggest that exclusive control is necessary, we
disapprove such suggestions. See Inmon, 205 Ariz. at 135 ¶ 19,
67 P.3d at 731; McDaniel, 186 Ariz. at 555, 925 P.2d at 696.
Instead, the facts surrounding the borrowed servant relationship
determine whether the general employer, the special employer, or
both actually controlled or had the right to control the injury-
causing activity of the borrowed employees.
¶31 We also distance ourselves from the “furthering the
business” language in Lee Moor, 49 Ariz. at 135, 65 P.2d at 37,
because we find the construct unhelpful. The borrowed servant
at some level always furthers the business of the lender, which
is lending or leasing employees. Instead, the question is
whether the lender actually controlled the borrowed employees or
ceded the right to control.
4. Bowen’s Right to Control Borrowed Employees
¶32 Whether Bowen ceded its right to control the borrowed
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employees’ work must be considered in light of the facts
relating to the injury-causing event. The trial court
considered only one fact — the contractual provisions — which,
although relevant to the determination of whether Bowen retained
a right of control, are not conclusive on the issue. We agree
with the court of appeals that there was sufficient evidence in
the record to create a material issue of fact regarding whether,
despite the contract, Bowen had ceded its right of control to
Phelps Dodge. The grant of summary judgment therefore was not
proper.
B. New Trial
¶33 Because we find that genuine issues of material fact
exist as to whether Bowen retained a right to control the work
of the borrowed employees, we affirm the court of appeals’
reversal of the trial court’s entry of partial summary judgment
as to Bowen’s vicarious liability and remand for a new trial.
For the same reason, we agree with the court of appeals that
summary judgment was properly denied to Bowen. We take this
opportunity to clarify the issues on remand.
¶34 The jury awarded Tarron $1.5 million in damages.
Because the jury’s award was unrelated to which employer was
liable to pay damages, we see no reason to retry the jury’s
award of damages.
¶35 The jury allocated thirty-eight percent of fault to
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Phelps Dodge and two percent to Tarron. Neither the petition
nor the cross-petition challenges those allocations. Tarron’s
petition for review seeks to affirm the trial court judgment
holding Bowen liable for the remaining sixty percent as a matter
of law; the cross-petition claims that Bowen is not liable at
all under the facts of this case. There is therefore no reason
to remand on any issue other than whether Bowen ceded its right
to control the work performed by the two employees. The remand
is therefore limited to that issue.
III. CONCLUSION
¶36 For the foregoing reasons, we reverse the trial court’s
entry of summary judgment for Tarron as to Bowen’s vicarious
liability, affirm the judgment of the court of appeals, and
remand this cause to the trial court for a new trial.
_______________________________________
Rebecca White Berch, Chief Justice
CONCURRING:
_____________________________________
Andrew D. Hurwitz, Vice Chief Justice
_____________________________________
Michael D. Ryan, Justice
_____________________________________
W. Scott Bales, Justice
_____________________________________
A. John Pelander, Justice
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