This article is a companion piece to this video 

In this episode of our video and podcast series, On Subrogation: Vicarious Liability – Respondeat Superior Doctrine, RG subrogation lawyer Kim Rathbone discusses vicarious liability in the context of subrogation claims.

Vicarious Liability: Subrogating Against an “Innocent” Third Party

Terms like “vicarious liability” and “Doctrine of Respondeat Superior” might initially seem like inaccessible legalese, but they are actually both straightforward concepts that are important for any subrogation professional to understand. Vicarious liability is a form of indirect/secondary liability that establishes indirect legal responsibility for another person’s breach of their duty of care. 

This legal doctrine means that a third party who is completely innocent can be held legally responsible for the tortious conduct of a first party, because of the nature of the third party’s relationship with the first party who has breached their duty of care.

Subrogation Law & Primary vs. Vicarious Liability

As it applies to the subrogation process, vicarious liability is different from primary liability (an individual breaches their duty of care with their own actions) or joint liability (multiple parties breach their duty of care in conjunction with each other) because the vicariously-liable party has taken no illegal or negligent action but can still be held responsible if they benefited from the actions of the primarily-liable party. 

The most common relationship to which vicarious liability is applied is that of the employer-employee relationship. This is because in order to prove that a third party is vicariously liable, it must be established that the third party has a certain degree of control over the primary party’s actions or means of achieving their actions. 

The most common defense to vicarious liability in employer-employee property damage subrogation is the independent contractor defense. This defense aims to void vicarious liability on the premise of the employee not actually being an employee, just a project contractor. We discuss this possible pitfall in an episode of our YouTube series, On Subrogation: Independent Contractor Defense.

The independent contractor defense can make a property damage subrogation case tricky, but diligent attorneys focused in subrogation rights and insurance law understand the nuances of this vicarious liability argument. RG lawyer and lead of our arbitration department, Ana Zgela, details a property subrogation case study on fire damage in an article recently published in the Subrogator. This case saliently demonstrates the different types of liability, especially secondary, or vicarious, liability.

Vicarious liability can also be applied to other situations where one person is paramount in the relationship and the other person is dependent, which is why parents can sometimes be found vicariously liable for the wrongdoings of their children, as discussed in this episode of our On Subrogation podcast.

The Respondeat Superior Doctrine & Subrogation Arbitration

So, when does the Respondeat Superior Doctrine come into play? This doctrine is applied when employers are vicariously liable for the acts or omissions (omission here meaning a failure to act) of their employees when said employees are acting within the scope of their employment. 

For example: An employee is hired as a forklift driver. While operating the forklift, the employee moves a large crate, and in doing so, damages a customer’s car. Because the employee’s actions were within the course of his employment (moving a crate using a forklift), the employer would likely be vicariously liable for the damages.

The Respondeat Superior Doctrine can become more difficult to apply when an employee’s actions are not as clearly within the scope of employment. For example, if a delivery driver stops to get gas mid-delivery and a tort occurs, this stop to get gas will likely be determined as a “detour” – a brief activity that an employer might reasonably expect to occur within the course of employment, and for which the employer can be vicariously liable.

Now, let’s say that same delivery driver later stops at a bar and consumes a few alcoholic drinks. This would not be a “detour”, but would instead be considered a “frolic” – an activity not within the course and scope of their employment. There is no vicarious liability with a frolic, because the employee’s actions are outside the scope of employment, and an employer is therefore not liable for the employee’s independent acts.

Subrogation Suits & the Purpose of Vicarious Liability

The vicarious liability legal doctrine is meant to prevent tortious conduct from recurring, and to also give greater insurance of compensation for the injured party. Vicarious liability also helps ensure that those who benefit from the activity that led to the injury also have a responsibility for the damage. This means that the employee responsible for the tort remains jointly liable in a situation with Respondeat Superior, so both parties can be held accountable for damages.

If just an employee is sued in a subrogation suit, that employee could seek indemnification from their employer or bring their employer into the lawsuit if the employee’s actions occurred within the course and scope of their employment. Conversely, if only the employer is pursued in the lawsuit, they cannot seek indemnification from the employee. However, they can argue that said employee’s actions occurred outside the course and scope of the employment, in the hopes that the employer can avoid liability.

Still have questions about this vicarious liability as it applies to subrogation lawsuits? Check out our insurance subrogation podcast, “On Subrogation,” as well as our collection of subrogation education videos on YouTube, to hear Rathbone Group’s skilled subrogation lawyers break down complicated topics in easy-to-understand ways.