Oregon Construction Case Law Update: Retaining Right to Control Safety Measures Will Lead to Contractor Liability
From the desk of Smith Freed Eberhard: Oregon’s Employer Liability Law (“ELL”) imposes nearly strict liability for owners, contractors, and subcontractors who are responsible for work involving a risk or danger. This liability can extend to a subcontractor’s employee’s “indirect employer” (i.e., a general contractor), if the indirect employer retains the right to control jobsite safety. Prior Oregon cases have held that merely requiring greater safety measures would not be enough to impose liability on the general contractor. In this new case, the Oregon Supreme Court clarified that retaining any right to control safety could impose liability for violations of the ELL.
Claims Pointer: In this jobsite injury case, the Oregon Supreme Court puts contractors on notice that they may be liable for jobsite injuries if they retain any right to control safety, even if they only require additional safety measures or perform additional safety inspections. This decision highlights the need for carefully crafted risk transfer provisions in contracts and the procurement of additional insurance to manage the liability exposure for jobsite injuries.
Yeatts v. Polygon Northwest Co., 360 Or 170 (August 4, 2016).
Polygon Northwest Co. (“Polygon”) was the general contractor on a townhouse project. It contracted with Wood Mechanix, LLC (“Wood Mechanix”) to frame the townhouses. Arthur Yeatts, an employee of Wood Mechanix, sustained serious injuries after he fell from the third floor of a townhouse when a guardrail he leaned against gave way. Mr. Yeatts sued Polygon, claiming that Polygon was liable for his injuries under the ELL and also claiming that Polygon was negligent (Mr. Yeatts could not sue Wood Mechanix for any fault it may have had in causing his injuries because the workers compensation laws prevent that kind of claim from being made).
In his ELL claim against Polygon, Mr. Yeatts alleged that Polygon was responsible for his injuries because it failed to require and utilize a guardrail system that was effective in preventing falls. The ELL essentially provides a strict liability standard governing worker safety. It requires owners, contractors and subcontractors to “… use every device, care and precaution that is practicable to use for the protection and safety of life and limb…without regard to the additional cost of suitable material or safety appliance and devices.” ORS 654.305.
Polygon moved for summary judgment dismissal of Mr. Yeatts’ claims, arguing that it was not liable under the ELL because it did not control the guard rails and that it was not negligent. Remarkably, the trial court granted summary judgment dismissal to Polygon on both claims. Mr. Yeatts appealed, but the Oregon Court of Appeals affirmed the trial court. Mr. Yeatts then appealed again to the Oregon Supreme Court.
The Oregon Supreme Court held that there are three ways by which an “indirect employer” such as a general contractor like Polygon can be held liable for a subcontractor’s employee’s injuries under the ELL: 1) a “common enterprise” theory, 2) an actual control theory, or 3) a retained right to control theory.
Common enterprise. An indirect employer’s liability would arise if its employees and the employees of the direct employer had intermingling duties and responsibilities in performing the risk-creating activity, or if equipment controlled by the indirect employer was used in that activity. The record contained no evidence that Polygon’s employees or equipment were engaged or used in framing the project or in the design, assembly, or maintenance of the guardrail that failed. Therefore, the court held there was no evidence of a common enterprise.
Actual control. The Court also held that there was no evidence of Polygon’s active, on-site participation in or control of the framing, so summary judgment in favor of Polygon was proper on this point.
Right to control. The Court analyzed whether Polygon retained the right to control the risk-producing activity – i.e., Mr. Yeatts’ framing work at a dangerous height above the concrete floor. The Court noted that although Wood Mechanix’s subcontract with Polygon required Wood Mechanix to be primarily responsible for jobsite safety, the subcontract also permitted Polygon to require additional safety measures beyond those required by law. Additionally, the subcontract provided that Polygon’s employees would inspect the construction site daily for safety hazards and issue safety hazard notices. The Court concluded that under these circumstances, Polygon retained the right to control the risk-producing activity. Consequently, it held that Mr. Yeatts could pursue an ELL claim against Polygon.
Interestingly, the Court also found that Polygon was not negligent in failing to adequately control and supervise the work. It held that Polygon did not actually control jobsite safety and that Polygon reasonably relied on Wood Mechanix’s expertise in providing safety measures. However, this holding provided no comfort to Polygon because a contractor’s potential liability under the ELL exists regardless of whether or not it behaved negligently. Again, under the ELL, a contractor is required to use every safety precaution that is practicable, regardless of cost. The liability risk exists if an injured plaintiff can argue that a contractor could have, would have, or should have taken other or additional safety measures.
The take away from this case is that general contractors are stuck between a rock and a hard place on ELL claims. General contractors cannot practically delegate all safety obligations to their subcontractors because, among other reasons, their prime contracts typically require general contractors to ensure worker safety. On the other hand, the mere retention of any right to control safety itself creates liability exposure. To transfer this risk, contractors should work carefully with their legal counsel and insurance agents to ensure that appropriate contract provisions are in place and that additional insurance endorsements (not just certificates) are obtained.
View full opinion at: http://www.publications.ojd.state.or.us/docs/S062977.pdf
Case updates are intended to inform our clients and others about legal matters of current interest. They are not intended as legal advice. Readers should not act upon the information contained in this article without seeking professional counsel.
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