Hirer Liable for Injury to Subcontractor’s Employee Due to Failure to Act, Not Just Affirmative Acts, Holds Court of Appeal

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The Privette doctrine, named after the court case Privette v. Superior Court (1993) 5 Cal.4th 689, provides that a higher-tiered party such as an owner or general contractor is not liable for injuries sustained by employees of a lower-tiered party such as a subcontractor on a construction project. There are, however, exceptions to the Privette doctrine. One of these exceptions is known as the “retained control doctrine.”

Under the retained control doctrine, a higher-tiered party cannot avoid liability under the Privette doctrine if the higher-tiered party: (1) retains control over the conditions of the work; (2) negligently exercises  control over such conditions; and (3) its negligent exercise of control contributes to the injuries sustained by the  employee of the lower-tiered party.

In Sandoval v. Qualcomm Incorporated (October 19, 2018), Case No. D070431, the California Court of Appeals for the Fourth District held that the retained control doctrine did not apply where an employee of a subcontractor was severely burned by an “arc flash” from a live circuit breaker even though: (1) the higher-tiered party had informed the lower-tiered contractor that certain live circuit breakers were energized; (2) the higher-tiered party had not authorized the lower-tiered contractor to remove a panel that resulted in the arc flash; and (3) employees of the higher-tiered party were not in the room when the accident happened.

Sandoval v. Qualcomm Incorporated

Jose Sandoval was an employee of ROS Electrical Supply. ROS was a subcontractor to TransPower Testing, Inc., which was hired by Qualcomm Incorporated to upgrade its power generation system. Sandoval was severely burned by an “arc flash” from a live circuit breaker while performing an inspection of the power generation system.

In 2013, TransPower was hired by Qualcomm to upgrade the amperage of certain  components of its power generation system, called “bus bars,” from 1,200 amps to 2,000 amps. Firouz Sharghi, the president of TransPower, inspected the breaker system to see if the bus bars were rated to handle 2,000 amps or if they needed to be upgraded. Unable to see the bus bars inside the panel, TransPower contacted ROS, who sent Sandoval for a second inspection.

Sharghi did not tell Sandoval to bring any personal protective equipment since the panel would be de-energized by Qualcomm. On the day of the re-inspection, Sandoval, Sharghi, George Guadana an employee of TransPower, and three Qualcomm employees went to the breaker room to re-inspect the bus bars. The Qualcomm employees told Sharghi that half of the breakers were de-energized but half were not. The Qualcomm employees left the room while the inspection was being conducted.

After the Qualcomm employees left the room, Sharghi directed Guadana, who was wearing personal protective equipment, to remove a panel on the utility side of the breaker. The utility side was still energized but Sandoval was not told that it was. While Sharghi got below the breaker to photograph the bus bars from behind the removed panel he heard a booming sound and a scream. When he came out, he saw Sandoval covered in blue flames from an arc flash that had occurred from the backside of the breaker where the panel had been removed.

Sandoval later filed suit against Qualcomm, TransPower and ROS. At trial, Qualcomm argued that it was immune from liability under the Privette doctrine and, further, that it had not retained control over the safety conditions since Qualcomm employees had told Sharghi that half of the breakers were energized, had not authorized Sharghi to remove the panel on the utility side of the breaker, and were not in the room when Sandoval was injured by the arc flash.

Nevertheless, the jury found that Qualcomm had negligently retained control over the safety conditions and awarded more than $1 million in economic damages and $6 million in noneconomic damages findingthat Qualcomm was 46 percent at fault, TransPower was 45 percent at fault, and Sandoval was 9 percent at fault. Qualcomm filed a motion for directed verdict asking the judge change the jury’s verdict and also filed a motion for new trial based on apportionment of liability. The trial court denied Qualcomm’s motion for directed verdict but granted Qualcomm’s motion for new trial on the ground that the apportionment of fault between Qualcomm and TransPower was excessive because the facts did not support that TransPower was less liable than Qualcomm.

Qualcomm appealed.

The Appeal

On appeal, the Court of Appeal found that an earlier opinion it had issued was informative, Regalado v. Callaghan (2016) 3 Cal.App.5th 582. In Regalado, a homeowner, who himself was a licensed subcontractor, acted as an owner-builder on a pool project at his home. He had a pool contractor install a concrete vault underground to hold propane. A year later, he had a second pool contractor install a propane tank in the vault. Neither the homeowner nor the pool contractor read the instruction manual which said not install the tank in a pit because of the risk of explosion. When one of the pool contractor’s employees turned on the propane tank it exploded.

At trial, the homeowner argued that the employee was required to show that the homeowner “affirmatively contributed” to the employee’s injury to be liable. On appeal, the Court of Appeals held that a hirer’s “affirmative contribution” to an injury not only encompassed active acts by a hirer but also negligent omissions to act.

Here, held the Court of Appeals, while Qualcomm’s employees informed Sharghi that certain breakers had been de-energized but others had not, “that such information needed to be given not only to the contractor or subcontractor, but also to its respective employees who would be working in the switchgear room”:

Although [a Qualcomm employee] during the safety briefing told everyone, including Sandoval, that certain segments of the switchgear remained energized and later, after the lockout/tagout procedure, used his hand to show Sharghi which breakers remained energized and which were de-energized, there is no record evidence that [the Qualcomm employee] specifically gave Sandoval this information once they were all inside the mezzanine, just prior to TransPower’s inspection. We conclude this evidence alone is substantial, supports the jury’s finding Qualcomm negligently exercised its retained control over the safety conditions at the worksite, and warranted denial of Qualcomm’s [motion for directed verdict].

Conclusion

Sandoval puts hirers in a precarious position. While I don’t disagree that the retained control doctrine should apply to both affirmative acts as well as negative omissions to act, the Court of Appeal’s conclusion that Qualcomm’s employees had an obligation to inform TransPower and ROS that certain breakers “were hot and others not” as well their specific employees at the job site, creates some very real practical concerns.

What if TransPower and ROS simply checked in at the front desk and weren’t shown into the breaker room? What if TransPower and ROS were shown into the breaker room, but the person who showed them into the breaker room, was simply a regular employee with no knowledge of how the power generation system operated? What if information on the energized and de-energized breakers was shared in advance with TransPower but not explained in person that day?

What I think is clear, however, is that we are going to see beefier defense and indemnity clauses even in simple service contracts.

 

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