Metropolitan News-Enterprise

 

Friday, January 10, 2025

 

Page 4

 

C.A. Overturns $150 Million Award in Deadly Explosion Case

Opinion Says Failure to Instruct on Liability Shield for Companies Hiring Contractors to Run Operations Was Reversible Error Where There Were Questions About Whether Defendant Retained Control of Power Plant

 

By a MetNews Staff Writer

 

Div. Three of the Fourth District Court of Appeal has overturned a jury award of more than $150 million—in an action in which the plaintiffs sought to hold the partial owner of a North Palm Springs power plant responsible for a March 2017 deadly explosion that killed their family member—due to the failure of the trial judge to instruct on a doctrine providing a liability shield to those that hire third-party contractors to run operations.

At issue was whether the defendant was protected from liability under the so-called “Privette doctrine”—named after the 1993 California Supreme Court case of Privette v. Superior Court—which provides the liability shield based on a presumption that the hirer of an independent contractor automatically delegates to that party the responsibility to perform the work safety obligations for which it was hired.

Riverside Superior Court Judge Manuel Bustamante Jr. declined the defendant’s request to instruct on the doctrine, saying that the corporation, which not only held a 50% indirect interest in the owner of the power plant but also was the parent company of the contractor hired to manage the day-to-day activities at the facility, was too involved in the operations to trigger the protections of Privette and its progeny.

Justice Thomas M. Goethals wrote the opinion, filed Dec. 11, and certified for publication on Wednesday, which found that the instructions were warranted because there was a question of fact as to how involved the partial owner was in overseeing safety protocols. The decision, joined in by Acting Presiding Justice Eileen C. Moore and Justice Joanne Motoike, reverses the judgment and directs the trial court to conduct a new trial.

Corporate Interests

The question arose in a case against Diamond Generating Corporation (“DGC”), which held an interest in Sentinel Energy Center LLC, the owner of the Wildflower Energy natural gas power plant. In 2011, before the plant became operational, Sentinel opened a competitive bidding process to hire a plant operator.

A subsidiary of DGC—DGC Operations LLC (“OPS”)—won the contract and was selected to oversee the day-to-day operations and maintenance of the plant.

DGC executives conducted the interview process to find a plant manager, which resulted in the hiring of Tom Walker in 2012. Walker, an OPS employee, was responsible for the operations of the facility, including certain safety protocols.

After Walker was hired, DGC remained involved in supervising his work through 2016 by, among other things, conducting his annual performance reviews, which included a category on plant safety. Even after 2016, when Walker was formally reassigned to report to an OPS general manager, DGC executives exerted oversight as to plant safety.

The March 2017 explosion occurred during the annual maintenance of a gas-burning turbine. Five OPS employees did not properly follow newly enacted protocols for depressurizing the unit—purportedly due to inadequate training—and the lid blew off the turbine, killing worker Daniel Collins.

Daniel Collins’ wife and son, Denise and Christopher Collins, filed a complaint against DGC under a negligent undertaking theory. According to the plaintiffs, DGC undertook a duty to render “safety-related services” at the power plant because it took upon itself matters relating to overseeing OPS’s work.

The jury agreed and found for the plaintiffs, determining that DGC was 97% at fault.

Privette Doctrine

Goethals wrote:

“In the three decades since Privette was decided, our Supreme Court has repeatedly reaffirmed the general rule that a hirer is not liable for on-the-job injuries to an independent contractor’s employee….However, the rationale for the rule has evolved, and ‘more recent [Supreme Court] cases emphasize delegation as the key principle underlying this rule: Because the hirer presumptively delegates to the independent contractor the authority to determine the manner in which the work is to be performed, the contractor also assumes the responsibility to ensure that the worksite is safe, and the work is performed safely.’ ”

He continued:

“It is undisputed here that Privette shields Sentinel, the plant owner: Sentinel hired and contracted with OPS, Collins’s employer, to handle all safety matters at the plant, and in doing so, Sentinel both expressly (as a matter of contract) and presumptively (under Privette) delegated safety responsibilities to OPS. The issue before us is whether the same is true for DGC, as a partial indirect owner of Sentinel.”

Noting that the doctrine shields any entity in the “chain of delegation,” and that DGC may well be covered under that theory, the justice said that “our analysis does not end there.”

Exceptions to Doctrine

He pointed out that exceptions have emerged in the jurisprudence following Privette, one of which provides that a hirer owes a duty to a contract worker if the party retains control over any part of the work and negligently exercises that authority in a way that affirmatively contributes to the worker’s injury.

As to this exception, Goethals opined that “[t]he jury in this case was not given an opportunity to decide whether DGC exercised retained control over OPS’s work or whether its negligence affirmatively contributed to Collins’s death, because the trial court refused to instruct on Privette.”

Turning to the evidence, he reasoned:

“On the one hand, there is substantial evidence that DGC undertook to ensure Walker was adequately performing his safety-related functions as OPS plant manager, at least from the plant’s construction through mid-2016….The evidence also suggests that even after August 2016, when Walker stopped reporting to DGC and began reporting to another OPS employee, DGC was still involved in plant safety, as it hosted quarterly meetings with Walker and other OPS managers and reviewed OPS’s proposed changes to the plant’s safety and procedure manuals in fall 2016.”

Continuing, he wrote:

“On the other hand, there is evidence that DGC was not involved in the particular safety failures that led to the March 2017 explosion: it was OPS employees (not DGC employees) who proposed and approved the January 2017 changes…; and it was OPS plant manager Tom Walker, then supervised by OPS general manager Adam Christodoulou, who neglected to train OPS employees on those changes after they were adopted in January 2017.”

Prejudicial Error

Under these circumstances, the jurist declared:

“[W]e conclude the trial court prejudicially erred in refusing to instruct the jury on the Privette doctrine and its exceptions. Such instructions were warranted by substantial evidence, and the trier of fact could reasonably have reached a result more favorable to DGC in the absence of the error.”

However, he said:

“We decline to hold that, pursuant to Privette, DGC is entitled to judgment notwithstanding the verdict. The record before us presents too many factual questions to support such a ruling; the issues relate particularly to whether DGC retained partial control over the Sentinel plant and negligently exercised that retained control in a way that affirmatively contributed to Collins’s death.”

The case is Collins v. Diamond Generating Corporation, 2025 S.O.S. 75.

 

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