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Anderson v. Marathon Petroleum Co.

decided: September 16, 1986.

LA DONNA ANDERSON, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF DONALD ANDERSON, PLAINTIFF-APPELLANT,
v.
MARATHON PETROLEUM COMPANY, F/K/A MARATHON OIL COMPANY, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Southern District of Illinois, Benton Division. No. 84 C 4169 -- James L. Foreman, Judge.

Author: Posner

Before BAUER and POSNER, Circuit Judges, and SWYGERT, Senior Circuit Judge.

POSNER, Circuit Judge.

This diversity personal-injury suit pits two residents of Illinois (Donald Anderson, who died while the case was on appeal, and his widow) against a nonresident corporation, Marathon Petroleum Company. The district judge granted a directed verdict for Marathon at the close of the plaintiffs' case on the ground that the plaintiffs had failed to show a breach of duty by Marathon.

Anderson was an employee of Tri-Kote, Inc., which had a contract with Marathon to clean the inside of Marathon's oil storage tanks by sandblasting. The evidence, viewed most favorably to the Andersons, showed that sandblasting in a confined space creates clouds of silicon dust, which if breathed in over a long-period of time caused silicosis, a serious lung disease from which, in fact, Anderson died. Anderson began working for Tri-Kote in 1970 as a sandblaster, mostly on the Marathon contract, and quit in 1983 when he was diagnosed as suffering from silicosis. During this period he averaged three or four days a week sandblasting Marathon storage tanks. Until 1980 the only form of mask that Tri-Kote supplied Anderson to protect him from silicon dust was a so-called "desert hood." It had no fresh-air hose but only a wire mesh in front of the nose and mouth, and the dust could get in through the mesh. Supervisory personnel of Marathon often saw Anderson coming out of a storage tank with dust on his face after sandblasting and they knew that Tri-Kote had supplied him with just the patently inadequate "desert hood." Yet Marathon did nothing to try to get Tri-Kote to protect its workers better. The two employees of Tri-Kote who sandblasted Marathon's storage tanks before Anderson came on the scene also died of silicosis.

The issue is the tort duty of a principal to the employees of his independent contractor. The duty could be vicarious or direct: vicarious if the principal is not himself at fault in the accident to the employee, direct if he is. Mrs. Anderson makes both sorts of claim, though her emphasis is on the former, and that is the one we shall discuss first. The district judge rejected both claims, and our practice is to give some deference to determinations of the law of a state by a district judge sitting in that state. Enis v. Continental Illinois Nat'l Bank & Trust Co., 795 F.2d 39, 40 (7th Cir. 1986).

Generally a principal is not liable for an independent contractor's torts even if they are committed in the performance of the contract and even though a principal is liable under the doctrine of respondeat superior for the torts of his employees if committed in the furtherance of their employment. See, e.g., Gomien v. Wear-Ever Aluminum, Inc., 50 Ill. 2d 19, 21, 276 N.E.2d 336, 338 (1971); Kouba v. East Joliet Bank, 135 Ill. App. 3d 264, 267, 481 N.E.2d 325, 328, 89 Ill. Dec. 774 (1985). The reason for distinguishing the independent contractor from the employee is that, by definition of the relationship between a principal and an independent contractor, the principal does not supervise the details of the independent contractor's work and therefore is not in a good position to prevent negligent performance, whereas the essence of the contractual relationship known as employment is that the employee surrenders to the employer the right to direct the details of his work, in exchange for receiving a wage. The independent contractor commits himself to providing a specified output, and the principal monitors the contractor's performance not by monitoring inputs--i.e., supervising the contractor--but by inspecting the contractually specified output to make sure it conforms to the specifications. This method of monitoring works fine if it is feasible for the principal to specify and monitor output, but sometimes it is not feasible, particularly if the output consists of the joint product of many separate producers whose specific contributions are difficult (sometimes impossible) to disentangle. In such a case it may be more efficient for the principal to monitor inputs rather than output--the producers rather than the product. By becoming an employee a producer in effect submits himself to that kind of monitoring, receiving payment for the work he puts in rather than for the output he produces.

Since an essential element of the employment relationship is thus the employer's monitoring of the employee's work, a principal who is not knowledgeable about the details of some task is likely to delegate it to an independent contractor. Hence in general, though of course not in every case, the principal who uses an independent contractor will not be as well placed as an employer would be to monitor the work and make sure it is done safely. This is the reason as we have said for not making the principal vicariously liable for the torts of his independent contractors. See Calabresi, Some Thoughts on Risk Distribution and the Law of Torts, 70 Yale L.J. 499, 545 (1961).

This rule is not applied, however, when the activity for which the independent contractor was hired is "abnormally dangerous," see Restatement (Second) of Torts § 427A (1964), or in an older terminology "ultrahazardous," see, e.g., Cities Service Co. v. State, 312 So. 2d 799, 802 (Fla. Dist. Ct. App. 1975)--i.e., if the activity might very well result in injury even if conducted with all due skill and caution. When an activity is abnormally dangerous, it is important not only that the people engaged in it use the highest practicable degree of skill and caution, but also--since even if they do so, accidents may well result--that the people who have authorized the activity consider the possibility of preventing some accidents by curtailing the activity or even eliminating it altogether. See Bethlehem Steel Corp. v. EPA, 782 F.2d 645, 652 (7th Cir. 1986); Shavell, Strict Liability versus Negligence, 9 J. Legal Stud. 1 (1980). On both scores there is an argument for making the principal as well as the independent contractor liable if an accident occurs that is due to the hazardous character of the performance called for by the contract. The fact that a very high degree of care is cost-justified implies that the principal should be induced to wrack his brain, as well as the independent contractor his own brain, for ways of minimizing the danger posed by the activity. And the fact that the only feasible method of accident prevention may be to reduce the amount of the activity or substitute another activity argues for placing liability on the principal, who makes the decision whether to undertake the activity in the first place. The electrical utility that has to decide whether to transport nuclear waste materials by motor or rail may be influenced in its choice by the relative safety of the modes--if it is liable for the consequences of an accident.

True, the principal would in any event be liable indirectly if the price it paid the independent contractor fully reflected the dangers of the undertaking; but this condition would be fulfilled only if the contractor were fully answerable for an accident if one occurred. And though fully liable in law, the independent contractor would not be fully liable in fact if a damage judgment would exceed his net assets. The likelihood of the independent contractor's insolvency is greater the more hazardous the activity; by definition, expected accident costs are greater. Another thing making them greater is that the contractor will be strictly liable for accidents caused by the abnormally dangerous character of his activity, see Restatement, supra, § 427A, comment a, and therefore his expected legal-judgment costs will be higher than those of a contractor liable only for negligence. With the exposure of the independent contractor to liability so great, it may be necessary to make the principal liable as well in order to ensure that there is a solvent defendant. This is important not only to provide compensation for accident victims but also to reduce the number of accidents. Without such liability a principal might hire judgment-proof independent contractors to do his dangerous jobs, knowing that the contractor would have an incentive to cut corners on protecting safety and health and that this would reduce the cost of the contract to him. See Sykes, The Economics of Vicarious Liability, 93 Yale L.J. 1231, 1241-42, 1272 (1984).

In sandblasting abnormally dangerous? A district judge in Louisiana, in the only case we have found on the question, held not. Touchstone v. G.B.Q. Corp., 596 F. Supp. 805, 815 (E.D. La. 1984). In the absence of any precedent establishing the abnormal dangerousness of sandblasting, the plaintiffs in this case were obliged to lay a factual basis for an inference that people engaged in sandblasting cannot prevent a serious risk of injury by taking precautions. They did not do this. So far as the record shows (an important qualification), if the sandblaster is equipped not with the ridiculous "desert hood" but with a proper face mask to which a fresh-air hose is attached, so that the worker is breathing fresh air rather than air filled with silicon dust, the worker is in no danger, nor anyone else. The design of an effective hood may be more difficult than we are assuming it to be, cf. Byrd v. Hunt Tool Shipyards, Inc., 650 F.2d 44, 48 (5th Cir. 1981), but in the absence of precedent or data we cannot just assume that the protection of the workers is so difficult that sandblasting should be classified as abnormally dangerous.

Mrs. Anderson presses on us cases which suggest that something less than abnormal danger may be enough to take a case out of the rule that a principal is not liable for the torts of its independent contractors. An example is Johnson v. Central Tile & Terrazzo Co., 59 Ill. App. 2d 262, 276-77, 207 N.E.2d 160, 167 (1965), which says that "if one employs another to do work which he should recognize as involving some peculiar risk to others unless special precautions are taken, the one doing the employing will remain liable if harm results because these precautions are not taken," even though the person "employed" is actually an independent contractor. See also Donovan v. Raschke, 106 Ill. App. 2d 366, 370, 246 N.E.2d 110, 113 (1969); 5 Harper, James & Gray, The Laws of Torts § 26.11, at pp. 88-89 (2d ed. 1986). The words "peculiar risk" bring to mind section 416 of the Restatement. And the closely related section 427 speaks of a danger that is "inherent," a concept apparently distinguishable in the restaters' minds from the "abnormally dangerous" concept of 427A (an a fortiori ground for not allowing the principal to shift his duty of care to the independent contractor). This concept, too, is echoed in Illinois cases, such as Clark v. City of Chicago, 88 Ill. App. 3d 760, 763-64, 410 N.E.2d 1025, 1028, 43 Ill. Dec. 892 (1980)--but Clark seems to treat the terms as synonymous. On the general question see the lucid discussion in Prosser and Keeton on the Law of Torts § 71, at pp. 512-15 (5th ed. 1984).

The distinction between an abnormal risk on the one hand and a peculiar or inherent risk on the other hand is easiest to understand in situations where the activity, though not always or generally hazardous, is so in the particular case. Thus in Donohue v. George W. Stiles Construction Co., 214 Ill. App. 82, 89-91 (1919), discussed and distinguished in Johnson, the prime contractor hired a subcontractor to do structural steel repair work in a post office, right over the heads of the postal employees--and sure enough, one of them was injured. The present case is dissimilar. And even if the present case is within the "peculiar risk" or "inherent danger" exception as recognized by the Illinois cases, Mrs. Anderson must lose. With rare exceptions, some based on statutes such as the omni-present scaffolding acts (see, e.g., Ill. Rev. Stat. ch. 48, PP60 et seq.) that impose strict liability on contractors for injuries to their subcontractors' employees caused by hazardous working conditions, the cases that make principals vicariously liable for the torts of their independent contractors involve injuries to third parties rather than employees; and the general though not uniform view is that the employee has no common law tort right against his employer's principal in such a case. See, e.g., Conover v. Northern States Power Co., 313 N.W.2d 397, 404-06 (Minn. 1981); Sloan v. Atlantic Richfield Co., 552 P.2d 157, 159-60 (Alaska 1976); Johns v. New York Blower Co., 442 N.E.2d 382, 386-88 (Ind. App. 1982); Prosser and Keeton on the Law of Torts, supra, at 514 n. 63; 5 Harper, James & Gray, supra, § 26.11, at p. 82 n. 47 (third paragraph of note). Granted, Fried v. United States, 579 F. Supp. 1212 (N.D. Ill. 1983), is an exception, and it purports to be an interpretation of Illinois law; but the only cases on which the court relied involved injuries to non-employees, see id. at 1216, and the court did not seem aware that this might make all the difference. There are other exceptional cases, but the majority view as we have said is against such liability.

There is a reason for the distinction between the plaintiff who is an employee of the independent contractor and the plaintiff who is not. If a nuclear reactor blows up and thousands of people are irradiated, we would not allow the reactor company to slough off all liability for the accident onto a careless independent contractor, who, not having the resources to compensate the victims of his tort, had lacked adequate incentives to take care. Similarly, we would not want Marathon to be able to avoid liability to its neighbors caused by its hiring contractors, who turn out to be careless, to perform abnormally dangerous jobs. But the only people endangered in this case were the contractor's employees; and they are compensated for the risks of their employment by a combination of wages, benefits, and entitlement to workers' compensation in the event of an accident. The principal pays for the package indirectly, in the contract price, which is calculated to cover the contractor's labor as well as other costs. Moreover, as we shall see, if the contractor does not carry workers' compensation insurance and proves unable to pay benefits out of its own pocket, the principal must pay the benefits. The principal thus has every incentive to assure safe ...


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