Garret Murai | California Construction Law Blog

“The wheels of justice turn slowly, but grind exceedingly fine” – Plutarch

And grind they do . . . slowly. For long time readers of the California Construction Law Blog you may recall a case we reported on over three years ago in 2018 – Sandoval v. Qualcomm Incorporated – a rather sad case about a severely injured employee of an electrical subcontractor with an even more surprisingly ending.

In Sandoval, the 4th District Court of Appeals affirmed a $7 million judgment against project owner Qualcomm Incorporated in which a jury found that Qualcomm was liable under the Privette doctrine for injuries sustained by the employee who was severely burned over one third of his body by an “arc flash” from a live circuit breaker. The Court of Appeals, in a surprising decision, upheld the verdict holding that Qualcomm was liable even through: (1) Qualcomm had informed the electrical subcontractor that certain live circuit breakers were energized; (2) Qualcomm had not authorized the lower-tiered contractor to remove a panel that resulted in the arc flash; and (3) employees of Qualcomm were not in the room when the accident happened.

Fast forward three years to September 2021. Qualcomm attorneys petition the California Supreme Court for review of the Court of Appeal’s decision. And the Supreme Court granted review.

The Supreme Court Decision

In Sandoval v. Qualcomm Incorporated, Case No. S252796 (September 9, 2021), the California Supreme Court, describing the Privette doctrine and two of its exceptions – the “concealed hazard” exception and the “retained control” exception – explained:

Strong public policy considerations readily acknowledged in our past decisions generally support a straightforward presumption about the responsibilities of hirers and contractors for worker injuries in situations like this: A person or entity hiring an independent contractor (a “hirer”) ordinarily delegates to that independent contractor all responsibility for the safety of the contractor’s workers. This presumption is rooted in hirers’ reasons for employing contractors in the first place, and society’s need for clear rules about who’s responsible for avoiding harms to workers when contractors are hired. We have therefore generally avoided subjecting hirers to tort liability for those workers’ injuries. But that presumption gives way to two recognized exceptions: where the hirer either withholds critical information regarding a concealed hazard (Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659, 664 (Kinsman)); or retains control over the contractor’s work and actually exercises that control in a way that affirmatively contributes to the worker’s injury (Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202 (Hooker)).

Describing the “concealed hazard” exception under Kinsman, the Supreme Court explained:

In Kinsman we recognized that a landowner-hirer cannot effectively delegate its duties respecting a concealed hazard without disclosing that hazard to the contractor. In this context, a “concealed” hazard means something specific: a hazard that the hirer either knows or reasonably should know exists, and that the contractor does not know exists and could not reasonably discover without the hirer’s disclosure. We draw no distinction between a hazard whose very existence is concealed and a hazard which is in some way apparent but whose dangerousness is concealed. The sufficiency of the hirer’s disclosure is “measured by a negligence standard,” that is, a standard of reasonable care. If the hirer does not sufficiently disclose the concealed hazard, the hirer retains its tort duties owed to the contract workers respecting that hazard. A contrary conclusion would cut against the rationale justifying Privette‘s presumption of delegation. A contractor is not best situated to perform work safely when the contractor lacks critical information about relevant hazards. Nor is there any unfairness in holding the hirer liable where only the hirer possessed that critical knowledge.

Describing the “retained control” exception under Hooker, the Supreme Court explained:

In Hooker, we recognized that hirers do not always fully delegate control to their contractors. We concluded that in some such “retained control” situations, notwithstanding Privette‘s presumption to the contrary, the hirer must owe a duty of care to the contract workers.

The plaintiff in such cases must establish not only that the hirer retained control over the contracted work, but also that the hirer actually exercised that retained control in a manner that affirmatively contributed to the contract worker’s injury. Because Hooker‘s application has produced significant confusion, we dwell at some length here on the meaning of Hooker‘s three key concepts: retained control, actual exercise, and affirmative contribution.

A hirer “retains control” where it retains a sufficient degree of authority over the manner of performance of the work entrusted to the contractor. This concept simply incorporates the Restatements’ theory of retained control: Against a backdrop of no hirer duty respecting the manner of performance of work entrusted to a contractor, the Restatements provide that a hirer who retains control over any part of that work owes others a duty of reasonable care respecting the hirer’s exercise of that retained control. So “retained control” refers specifically to a hirer’s authority over work entrusted to the contractor, i.e., work the contractor has agreed to perform. For simplicity we will often call this the “contracted work” — irrespective of whether it’s set out in a written contract or arises from an informal agreement. A hirer’s authority over noncontract work — although potentially giving rise to other tort duties — thus does not give rise to a retained control duty unless it has the effect of creating authority over the contracted work. Furthermore, a hirer’s authority over the contracted work amounts to retained control only if the hirer’s exercise of that authority would sufficiently limit the contractor’s freedom to perform the contracted work in the contractor’s own manner. 

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A hirer “actually exercise[s]” its retained control over the contracted work when it involves itself in the contracted work “such that the contractor is not entirely free to do the work in the contractor’s own manner.” In other words, the hirer must exert some influence over the manner in which the contracted work is performed. Unlike “retained control,” which is satisfied where the hirer retains merely the right to become so involved, “actual exercise” requires that the hirer in fact involve itself, such as through direction, participation, or induced reliance.

“Affirmative contribution” means that the hirer’s exercise of retained control contributes to the injury in a way that isn’t merely derivative of the contractor’s contribution to the injury. Where the contractor’s conduct is the immediate cause of injury, the affirmative contribution requirement can be satisfied only if the hirer in some respect induced — not just failed to prevent — the contractor’s injury-causing conduct. It is not enough for the hirer’s exercise of control to incidentally give the hirer the opportunity to prevent the contractor’s injury-causing conduct.

A hirer’s conduct also satisfies the affirmative contribution requirement where the hirer’s exercise of retained control contributes to the injury independently of the contractor’s contribution (if any) to the injury. 

The critical factor here is the relationship between the hirer’s conduct and the contractor’s conduct, not whether the hirer’s conduct, assessed in isolation, can be described as “affirmative conduct.” Importantly, neither “actual exercise” nor “affirmative contribution” requires that the hirer’s negligence (if any) consist of an affirmative act. The hirer’s negligence may take the form of any act, course of conduct, or failure to take a reasonable precaution that is within the scope of its duty under Hooker.

Applying each of these exceptions, the Supreme Court held that Qualcomm owed no tort duty to the injured worker, Sandoval, because Qualcomm neither failed to sufficiently disclose the hazard of a potential arc flash under Kinsman nor affirmatively contributed to Sandoval’s injuries under Hooker. The Supreme Court also held that the pattern jury instruction used in the case – CACI No. 1009B – does not adequately capture the elements of a Hooker claim.

With respect to the “concealed hazard” exception under Kinsman, the Supreme Court explained that Frank Sharghi, President of TransPower Testing, Inc., the general contractor who had hired the subcontractor employing Sandoval, had testified that that he was aware of which circuits were live and which were not. Thus, explained the Supreme Court, the condition of the live circuits “was not actually concealed.” Further, explained the Supreme Court,  the testimony of Qualcomm’s plant operator Mark Beckelman, was that he reminded Sharghi and his team that some circuits in the switchgear room would remain live. Thus, explained the Supreme Court, Qualcomm had in fact disclosed that there would be live circuits in the switchgear room. “Either way,” held the Supreme Court, “Qualcomm effectively delegated to TransPower any tort duties Qualcomm otherwise would have owed Sandoval respecting these live circuits under Kinsman.”

With respect to the “retained control” exception under Hooker, the Supreme Court explained that, while Qualcomm had control over the power-down process, by powering-down the circuits to be worked on but not powering down other circuits. this did not constitute “retained control” over the contracted work because the power-down process was not within the scope of work Qualcomm had entrusted to TransPower:

True: Qualcomm directed TransPower to observe the power-down process. And it asked TransPower to confirm that TransPower was satisfied with Qualcomm’s performance of the power-down process. Qualcomm nonetheless stopped short of offering — and TransPower never agreed — that TransPower take responsibility for actually performing the power-down process. Nor is it enough here that the power-down process was a necessary precondition for TransPower’s work, or that both the power-down process and TransPower’s work were essential components of a single larger job. Instead, Qualcomm’s performance of the power-down process implicates a retained control duty only to the extent that performance actually resulted in retained control over the work Qualcomm did entrust to TransPower: the inspection of the main cogen circuit.

Further, explained the Supreme Court, although Qualcomm’s performance of the power-down process arguably limited TransPower’s own freedom to power down “additional” circuits during its inspection, Qualcomm did not retain control over the inspection of the main cogen circuit merely by keeping certain other circuits live:

Qualcomm’s creation of this condition at the worksite imposed too little a degree of control over TransPower’s manner of performing the inspection. Even if Qualcomm could be said to have conveyed an expectation that TransPower perform its work in the presence of live circuits, TransPower was aware of and had ample freedom within the scope of its entrusted work to accommodate the presence of the live circuits effectively in its own manner, particularly since they were safely covered by bolted-on protective panels and not relevant to TransPower’s inspection. Qualcomm did not retain control over the inspection merely by declining to shut down these circuits or to give TransPower the authority to do so. Under the circumstances here, Qualcomm’s control over what was and what was not powered down did not constitute retained control over the contracted work.

Finally, explained the Supreme Court, even though Qualcomm may have had authority to require specific precautions during the inspection, such as by powering down the generator, Qualcomm did not “actually exercise” that authority:

Even assuming that Qualcomm retained control by retaining the authority to require or provide such precautions — e.g., supervision, a personal warning for Sandoval, arc flash protection suits, barricades, and/or additional warning signage — TransPower remained entirely free to implement (or not) any of these precautions in its own manner, issues over which Qualcomm exerted no influence. Although Sandoval argues that Qualcomm’s performance of the power-down process gave rise to a “duty” on Qualcomm’s part to take these precautions, he does not argue — nor is there any indication in the evidence — that Qualcomm’s performance of the power-down process induced TransPower’s failure to take any of these precautions itself. Likewise, that Qualcomm may have previously supervised TransPower’s work does not establish, in this case, that Qualcomm induced TransPower’s reliance on Qualcomm supervision. Sharghi’s uncontradicted testimony established that the reason TransPower did not request or wait for Qualcomm’s supervision was that Sharghi felt “in charge,” “knew what [he was] doing,” and didn’t “need” a monitor. That Qualcomm’s employees may have been trained to provide personal warnings to everyone in the room, or that Qualcomm’s managers and experts may have considered such warnings “critical,” does not establish that Qualcomm induced TransPower’s reliance on Qualcomm to provide them. Substantial evidence does not support the conclusion that Qualcomm actually exercised its retained control with regard to any of these precautions.

Conclusion

Sandoval provides important clarifications under Privette doctrine and, specifically, with respect to the “retained control” exception under Hooker. First, even if a hirer could make a worksite safer, as in the present case had Qualcomm powered down all of the circuits, if the scope of work does not involve work in the still dangerous areas, the hirer will not be deemed to have retained control over those dangerous areas. Second, even if there are dangerous areas of a worksite, so long as a contractor has adequate means of ensuring the safety of its workers, the hirer will again not be deemed to have retained control over those dangerous areas. And, finally, even if a hirer could require that its contractors implement certain worksite safety measures, a hirer will not be deemed to have retained control over the contractor’s means and methods so as to avoid injury to the contractor’s employees. 

Extra Credit Points: Can you guess what the illustration above is based on? If you guessed Plutarch, sorry. If you guessed the “Wheel of Pain” from 1982’s Conan the Barbarian, featuring our former Governor, you guessed right. We’re very high brow here at the California Construction Law Blog.

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