Opinion
1:01CVO1061.
May 7, 2003.
ORDER AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This case now comes before the Court on several motions made by the defendants. Specifically, Rubén Mendez (Mendez) has filed a motion to dismiss, or in the alternative, for summary judgment, D.L. Peterson Trust Company (Peterson Trust) has filed a motion for summary judgment, Sara Lee Corporation (Sara Lee) has filed a motion for summary judgment, and SLKP Compania de Servicios Administativos (SLKP) and Aymara Sanchez Hernandez (Sanchez) have joined together in a motion in which SLKP requests summary judgment and Sanchez requests partial summary judgment. Additionally, defendants have collectively filed a motion to strike certain documents which plaintiffs intend to use to oppose the motions for summary judgment. All of these motions are now before the Court for decision.
Although other defendants are listed in the caption of the case, only the five with currently pending summary judgment motions appear to remain in the case. The others have been dropped out at various points in the past.
I. Facts
The facts, as stated in the light most favorable to plaintiffs, are as follows. On the morning of May 17, 1999, seven-year-old Dalton Folwell waited on the porch of his home for the school bus that would take him to school. Dale Folwell, his father, waited on the porch with him until they saw the bus approach. He then told his son good-bye and went into the house. The bus arrived and, with its stop arm extended and red warning lights flashing, came to a stop across the street from where Dalton was waiting. As Dalton crossed the street to board the bus, a car driven by Sanchez approached in the lane opposite the bus. According to Willette Speas, the driver of the bus, Sanchez was driving at least forty-five miles per hour in a thirty-five mile per hour zone and did not slow down. Her car struck Dalton, throwing him fifty feet and into his yard.
Both Dale Folwell and Dalton's mother Synthia were in their home at the time that Dalton was hit. They did not immediately realize that an accident had occurred; but, within a few moments, they were notified by a witness to the accident and came to Dalton's side. Police and ambulance workers arrived soon after. Unfortunately, there was nothing that could be done. Dalton was taken to the hospital, but was declared brain dead six hours later.
In her deposition in this case, Sanchez admitted that she saw the bus stopped in front of her with its doors open. She also acknowledged that she was aware that children would likely be near the bus and that she had concern about where they were. Despite all this, she failed to stop or look to her right (Dalton's direction) before hitting Dalton. Her only explanation was that she failed to stop because, according to her, in her native country of Costa Rica, the bus system is completely different and drivers need only slow, not stop, when approaching a stopped school bus. She does claim that she was driving below the speed limit and that she slowed as she approached the bus. Of course, this is contradicted by the bus driver and the Court must view the evidence in the light most favorable to plaintiffs. As for the stop sign and flashing red lights on the bus, Sanchez cannot say she did not see them, she can only say (at her deposition) that she did not remember whether they were displayed.
Sanchez's work situation at the time of the accident is critical to some of the motions before the Court. As stated previously, Sanchez is a native of Costa Rica. She is also a Costa Rican citizen. When the accident occurred, she was on the payroll of SLKP, a Costa Rican company that is a wholly owned subsidiary of Sara Lee. Sanchez had worked as a contract and service manager supervising several plants in Latin America for SLKP. However, at the time of the accident, she was in the process of training to become an operations manager. As a part of this change in duties, Mendez, who is her supervisor and president of SLKP, recommended that she take part in special training to prepare her for the new position. This training involved her being sent to North Carolina to participate in various tasks and projects as designated by Sara Lee.
The training that Sanchez was sent to receive was quite extensive. For a year's time, she was supposed to alternate between Costa Rica and North Carolina at two-week intervals. While in North Carolina, she was provided a car and an apartment by Sara Lee. She also rotated among several Sara Lee work sites and jobs to give her a sampling of work that the Sara Lee plants performed. Sara Lee controlled her day-to-day work assignments and her work sites were supposed to give her projects which "fulfill [ed] a need of the plant or division." (O'Dell-Michie Dep. Ex. 1) Finally, Sara Lee had at least some power to terminate Sanchez while she was working in North Carolina. (Rogalski Dep. at 11-12)
Although Sara Lee provided the car to Sanchez, Peterson Trust is the registered owner of the car. Sara Lee leased the car from Peterson Trust as part of a group of cars which it allowed employees such as Sanchez to use.
Based on these facts, plaintiffs have raised a number of claims, all under North Carolina law, against the various defendants. Against Sanchez, they raise claims for wrongful death, punitive damages based on wrongful death, and negligent infliction of emotional distress. Although plaintiffs' amended complaint is not entirely clear as to the other defendants, it appears that plaintiffs raise these same claims as to all of the corporate defendants and also add a claim for negligent entrustment as to those defendants. Finally, as to Mendez, plaintiffs contend that he improperly supervised Sanchez and that he was negligent and reckless in allowing her to operate a vehicle. They seek to hold him personally liable on this basis.
II. Motion to Strike
In their motion to strike, defendants attempt to exclude certain exhibits introduced by plaintiffs in opposition to the various motions for summary judgment. The Court finds that detailed discussion of the motion is unnecessary because the great majority of the evidence challenged by defendants' motion does not affect the outcome of any of the summary judgment motions. Moreover, at times, the evidence comes from an alternative source. To the extent that some of the challenged evidence does affect the summary judgment motions, and to the extent that the Court is willing to consider the evidence, that will be noted at the proper points in the discussion of the summary judgment motions. The Court's reasons for allowing the evidence will also be set out at that time. Otherwise, the Court will not rely on the challenged evidence in reaching its decisions on the motions for summary judgment. Because all of the challenged evidence is either admissible, comes from an alternative source, or plays no part in the Court's decision, there is no reason to formally strike any of it from the record. Therefore, defendants' motion to strike is denied.
III. Legal Standards
Summary judgment should be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must view the evidence in a light most favorable to the non-moving party. Pachaly v. City of Lynchburg, 897 F.2d 723, 725 (4th Cir. 1990). When opposing a properly supported motion for summary judgment, the party cannot rest on conclusory statements, but must provide specific facts, particularly when that party has the burden of proof on an issue. Id. "The summary judgment inquiry thus scrutinizes the plaintiff's case to determine whether the plaintiff has proffered sufficient proof, in the form of admissible evidence, that could carry the burden of proof of his claim at trial." Mitchell v. Data General Corp., 12 F.3d 1310, 1316 (4th Cir. 1993) (emphasis added). A mere scintilla of evidence will not suffice. Rather, there must be enough evidence for a jury to render a verdict in favor of the party making a claim. A few isolated facts are not sufficient. Sibley v. Lutheran Hosp. of Maryland, Inc., 871 F.2d 479 (4th Cir. 1989).
Because all of plaintiffs' claims arise under state law, special rules apply. When state law is unclear, the federal court must rule in such a manner as it appears the highest state court would rule if presented with the issue. Where the state's highest court has not decided the particular issue, the federal court should examine the rulings of the lower state courts. Rulings of the lower courts may be considered as persuasive evidence of state law, but they are not binding on the federal court should it be convinced the highest court would rule to the contrary. Sanderson v. Rice, 777 F.2d 902, 903 (4th Cir. 1985), cert. denied, 475 U.S. 1027, 106 S.Ct. 1226, 89 L.Ed.2d 336 (1986). Furthermore, the federal court must rule on state law as it exists, as opposed to surmising or suggesting an expansion of state law. Burris Chemical, Inc. v. USX Corp., 10 F.3d 243 (4th Cir. 1993).
IV, Peterson Trust's Motion for Summary Judgment
In their amended complaint, plaintiffs advanced two theories of liability with regard to Peterson Trust. The first was that Peterson trust should be liable for Sanchez's actions because she was acting as its agent at the time she struck and killed Dalton. The second is that Peterson Trust, as the owner of the car Sanchez was driving, negligently entrusted her with its use, so that it is responsible for the damages that she caused. Peterson Trust seeks summary judgment as to both of these theories. Plaintiffs have not pursued their first theory of liability. There is no evidence in the record to support the idea that Sanchez was an agent of Peterson Trust at the time of the accident. However, they do oppose Peterson Trust's motion for summary judgment on the negligent entrustment claim. The opposition is an unusual one because they assert it to be their belief that Sara Lee "owned" the car. Whatever the facts may be in that regard, it is clear that Peterson Trust cannot be found liable for negligent entrustment.
In order to establish a claim of negligent entrustment under North Carolina law, plaintiffs must show that (1) Peterson Trust owned the automobile, (2) Sanchez was incompetent to drive it or was habitually careless or reckless, (3) Peterson Trust knew of this, but let Sanchez drive anyway, and (4) one or more of the plaintiffs were injured due to Sanchez's negligence. Roberts v. Hill, 240 N.C. 373, 378-379, 82 S.E.2d 373, 378-379 (1954).
Peterson Trust asserts that, at a minimum, plaintiffs cannot prove two elements of the test. It denies that plaintiffs have produced any evidence that Sanchez was incompetent to drive or that she was habitually careless or reckless, and even if she was, Peterson Trust had no reason to know this.
The Court agrees with Peterson Trust that plaintiffs' negligent entrustment claim fails. Without addressing the second element at this time, the Court finds that plaintiffs cannot establish the third element of their claim. The facts of the case are clear. Peterson Trust was no more than the titleholder of the car Sanchez drove. It leased the car to Sara Lee and relinquished all control over who drove the car. Whether or not Sanchez was incompetent, reckless, or careless as a driver, and whether or not any other defendants knew or should have known this, Peterson Trust did not know it and had no reason to know it. There is no evidence that it knew that Sanchez was driving the car or even that she existed. It also did not give control of the car to Sanchez. Plaintiffs do not show otherwise.
For all of these reasons, plaintiffs' claim of negligent entrustment fails as to Peterson Trust and should be dismissed. Also, because the claim of negligent entrustment was the only way for plaintiffs to impute damages caused by Sanchez to Peterson Trust, all claims they raise against this defendant fail and Peterson Trust should be dismissed from the suit.
V. Rubén Mendez's Motion to Dismiss or for Summary Judgment
Rubén Mendez seeks summary judgment on all of plaintiffs' claims against him. He also seeks dismissal of plaintiffs' claims against him based on a lack of personal jurisdiction. The Court has reviewed the parties' arguments and finds that Mendez had, and possibly may still have, substantial connections to North Carolina. However, the Court need not make a final decision on this issue because it finds that Mendez is entitled to summary judgment on all of plaintiffs' claims against him.
Mendez is president of SLKP. However, plaintiffs have sued him in his personal capacity for allegedly sending Sanchez to North Carolina for training. According to plaintiffs, Mendez knew that Sanchez would be driving while in North Carolina, knew or should have known that she was uncomfortable driving in North Carolina, and knew that Costa Rica and North Carolina had very different laws regarding school buses. They state that he was negligent because he failed to inform her of the difference in laws and failed to see that she received proper training before driving in North Carolina.
There is some conflicting evidence as to whether Mendez is the president or vice president of SLKP. It makes no difference to the outcome of this case.
Under the law of North Carolina, an officer of a corporation is not personally liable for the torts of an employee simply because of his corporate office. Wolfe v. Wilmington Shipyard, Inc., 135 N.C. App. 661, 670, 522 S.E.2d 306, 312-313 (1999). Still, if an officer "actively participates" in a tort, he may be liable even though he was acting in his corporate capacity. Wilson v. McLeod Oil Co., Inc., 327 N.C. 491, 518, 398 S.E.2d 586, 600 (1990)
The difference in the material facts between Wilson and Wolfe are instructive for the present case. In Wilson, a corporate officer maintained that he should not be personally liable for trespass and nuisance claims based on gasoline leaking from storage tanks. However, the North Carolina Court of Appeals held that he could be liable because of a long list of activities personally connecting him with the tort. He signed the contract allowing the tanks to be installed, oversaw the way business involving the tanks was conducted, oversaw the servicing and repair of the tanks, signed the papers arranging for gasoline deliveries to the tanks, and supervised the account. And, most significantly, when a one to two thousand gallon loss from the tanks was reported, it was reported to him. He stated he put locks on the surface openings of the tanks which stopped the problem. However, another witness gave testimony indicating that Midway Oil Company (a corporate non-party to the case) may have investigated and found that the tanks had leaked, or there had been a spill. Wilson at 501, 518, 398 S.E.2d 590, 600.
In contrast, Wolfe involved a fatal accident at a shipyard. Following the accident, an investigation revealed sixty safety violations at the shipyard, thirty-nine of which were deemed "serious." Witnesses also testified that, despite the fact that the yard was supposed to have a safety committee which met regularly and supervised safety activities, it did not. Wolfe at 664-665, 522 S.E.2d at 309. The plaintiff in Wolfe sought to hold both the corporation operating the shipyard and its president liable. Even though an expert witness testified that in the shipyard industry, management is responsible for shipyard safety, the North Carolina Court of Appeals held that the corporate officer could not be held liable. It noted that, whatever the industry norm, the plaintiff had presented no evidence that the company president was actually responsible for safety and safety training at the shipyard. In fact, the president stated in his deposition that he was not. Based on this record, the Court of Appeals held that the president could not be held liable for the safety violations and the death resulting therefrom. Id. at 670-671, 522 S.E.2d at 313.
Even using a broad definition, it cannot be said that Mendez "actively participated" in any meaningful way in torts committed by Sanchez. Plaintiffs state in their brief opposing summary judgment that Mendez was responsible for reviewing and approving Sanchez's compensation, appraising the quality of her work in Costa Rica, recommending her for promotions, sending her to North Carolina for training, and giving her a $20.00 a week allotment for gasoline. Plaintiffs' argument ignores the fact that most of these actions by Mendez were simply his duties as a corporate officer and were not even remotely related to the tort committed by Sanchez so that it could be said he actively participated in it. Therefore, Mendez's duties do not constitute "active participation" under North Carolina law.
The only alleged actions of Mendez which even tangentially relate to the fact that Sanchez was driving in North Carolina were the acts of placing her in the training program and signing the gas reimbursement form. Even this characterization of Mendez's acts overstates them. Mendez only recommended Sanchez for the program. Luis Torres, a Sara Lee employee to whom Mendez reported directly, actually approved the recommendation. Likewise, Mendez only signed off on a per diem calculation prepared by an employee in his Human Resources department. This calculation included money for gasoline. Mendez did not independently decide that Sanchez should drive a car or that she should be given gas money. His actions are simply too far removed from and play too minor a role in the alleged negligent actions committed by Sanchez — speeding through a school bus stop sign without slowing or looking in all directions — to be characterized as "active participation."
Plaintiffs also want to hold Mendez responsible for his alleged inactions. They contend that Mendez knew that traffic laws, including laws dealing with stopped school buses, were very different in North Carolina than in Costa Rica, and that he did not take steps to educate or train Sanchez to drive in the United States. They also claim that he knew or should have known that Sanchez was uncomfortable with driving in North Carolina due to her unfamiliarity with the traffic laws, but fail to cite to evidence supporting this assertion. Instead, plaintiffs cite to the deposition of Sabeth Sancho who spoke of her awareness of Sanchez's discomfort. They do not tie Sancho's knowledge to Mendez. For this reason alone, the claim fails.
Moreover, even if Mendez was aware, the alleged inactions by Mendez do not qualify as "active participation" in Sanchez's tortious conduct. The inactions practically mirror those described in Wolfe. The plaintiff in Wolfe failed to show that the company president was directly involved in overseeing the safe operation of the shipyard. The plaintiffs here, likewise, have failed to produce evidence that Mendez was directly involved in any sort of driver training or safety program. Also, plaintiffs have not shown that Mendez played a part in planning or supervising Sanchez's training in the United States. Defendants, on the other hand, have produced affirmative evidence that those responsibilities did not belong to Mendez, but to other SLKP or Sara Lee employees. See (Mendez, Torres and O'Dell-Michie Deps.) Under North Carolina law, Mendez did not "actively participate" in the motor vehicle tort committed by Sanchez. Therefore, plaintiffs' attempts to hold him personally liable for Sanchez's actions fail and summary judgment should be granted to Mendez as to all claims raised against him.
VI. Sanchez's Partial Motion for Summary Judgment
In their amended complaint, plaintiffs have raised claims against Sanchez for the wrongful death of Dalton Folwell, for negligent infliction of severe emotional distress as to Dale and Synthia Folwell, and for punitive damages stemming from her actions in committing these torts. Sanchez does not deny that she struck and killed Dalton with her automobile and does not deny for purposes of summary judgment that she was negligent in doing so. However, she maintains that she should be granted summary judgment on certain parts of plaintiffs' claims. Specifically, she contends that plaintiffs cannot seek damages for Dalton's pain and suffering, that Dale and Synthia cannot maintain their negligent infliction claims, and that her alleged conduct does not rise to the level of culpability necessary to allow punitive damages to be assessed.
A. Pain and Suffering Damages
Sanchez's argument regarding damages for pain and suffering experienced by Dalton is the most easily dealt with because it so clearly fails. As another federal court has previously found, pain and suffering may occur either before or after an impact such as the one that killed Dalton and suffering may include fear of the impending collision. Livingston v. United States, 817 F. Supp. 601, 604-605 (E.D.N.C. 1993). Here, plaintiffs have introduced evidence in the form of an affidavit from Dalton's bus driver, Willette Speas, stating that she witnessed the accident and that she saw Dalton look at Sanchez's car immediately before it hit him. This is sufficient to support the claim for pain and suffering damages.
Speas' affidavit is among the exhibits challenged in defendants' motion to strike. However, defendants raised no objection to the part of the affidavit stating that Dalton looked at Sanchez's car just before impact. Instead, they object to other portions and then ask that the entire affidavit be removed from the record. Such a removal would not be proper. Even if the Court were to find defendants' contentions concerning Speas' affidavit to have merit, the Court would strike only the offending portions, not the entire affidavit. For this reason, the parts of the affidavit dealing with Dalton's pain and suffering will be considered and, in fact, stand unchallenged by defendants.
Sanchez did not address plaintiffs' evidence that Dalton was aware that the impact of her car was imminent. Her entire focus has been on whether he underwent any pain and suffering after the impact occurred. In support of her argument that he did not, she submits the affidavit of a retired doctor who has reviewed Dalton's EMS and hospital records and, based on these alone, concluded that Dalton received an "immediate" injury which rendered him unconscious and, therefore, the deceased did not experience any conscious pain and suffering. Plaintiffs point out in their brief that the doctor failed to take into account the events which took place before the EMS arrived. Therefore, the opinion is incomplete. In addition, it is conclusory. Sanchez has not asked to receive summary judgment solely on post-accident pain and suffering, and even if she had, there are too many loose ends. To the extent she relies on Livingston, supra, it is not apposite because there, the court made its ruling on post-accident pain and suffering as a finder of fact. In summary judgment proceedings, the facts must be viewed in a light most favorable to plaintiffs.
Although the affidavit is convincing in some respects, the Court notes that it is also general and conclusory and might not be sufficient to entitle Sanchez to summary judgment on post-accident pain and suffering. For instance, the affidavit either does not address or does not clearly address whether Dalton would have felt the impact of the car in other parts of his body before being struck in the head, whether he was rendered unconscious by the blow from the car as opposed to a blow suffered while landing after being thrown through the air by the force of the impact, or whether he may have been conscious prior to the arrival of EMS.
B. Negligent Infliction of Emotional Distress
Sanchez next contends that Synthia and Dale cannot maintain their claims for negligent infliction of emotional distress. In order to establish such a claim, plaintiffs must show that Sanchez (1) negligently engaged in conduct, (2) which would reasonably and foreseeably cause plaintiffs severe emotional distress, and (3) which did, in fact, cause severe emotional stress. Pardasani v. Rack Room Shoes. Inc., 912 F. Supp. 187, 192 (M.D.N.C. 1996). Here, Sanchez does not contend that Dale and Synthia cannot produce evidence that she was negligent or that they did not suffer severe emotional distress from the death of their son. She argues only that the element of foreseeability, as it has been defined under North Carolina law, is absent.
In the context of whether third parties may recover for emotional distress suffered due to concern or upset caused by an injury to a family member, the element of foreseeability often becomes a particularly critical element in North Carolina case law. The North Carolina Supreme Court has addressed this problem directly, but has refused to offer a bright-line test. Instead, it has listed factors to be considered when assessing foreseeability. These include (1) the plaintiffs' proximity to the negligent acts, (2) the relationship between the plaintiffs and the person injured, and (3) whether the plaintiffs observed the negligent act. Johnson v. Ruark Obstetrics and Gynecology Associates, P.A., 327 N.C. 283, 305, 395 S.E.2d 85, 98 (1990). These factors are not an ironclad rule. "Questions of foreseeability and proximate cause must be determined under all the facts presented, and should be resolved on a case-by-case basis by the trial court and, where appropriate, by a jury." Id.
Before looking at the North Carolina cases cited by the parties, it should be pointed out that in all the cases wherein a recovery was allowed, such as in a motor vehicle accident, the person actually observed the accident or negligent activity so that the actual observance of the activity inflicted the emotional distress, as opposed to the learning about the result of the negligent activity having inflicted the distress. As will be seen, that did not occur here. The negligent activity did not directly inflict mental suffering. Rather, it was the subsequent observation and learning about the result of the negligent activity which inflicted the pain. Were it otherwise, it is clearly foreseeable that whenever one person is injured, there likely would be many people who would be upset over the loss. North Carolina only allows recovery for the foreseeable, direct infliction of mental suffering. Plaintiffs fail to satisfy other factors as well.
Following Johnson, the North Carolina Courts have decided a number of cases using factors set out in that case. Several of these cases are sufficiently similar factually so that they shed light on the result required by North Carolina law in the case at bar. One of these is Andersen v. Baccus, 335 N.C. 526, 439 S.E.2d 136 (1994). In Andersen, a pregnant woman was involved in a serious automobile accident. Soon afterward, but before she was cut out of the car, her husband was brought to the scene. The woman delivered a stillborn son before eventually dying from injuries sustained in the accident. Id. at 527, 439 S.E.2d at 137. Even though the husband came to the scene and witnessed much of the aftermath of the accident, the husband was still not allowed to recover for negligent infliction of emotional distress. In holding that the husband could not recover for negligent infliction of emotional distress, the North Carolina Supreme Court noted three reasons: (1) the husband did not witness the accident, (2) he was not in close proximity to the accident, and (3) no facts suggested that the defendant in the case knew of his existence or that he would be harmed by the injuries his wife suffered in the accident. Id. at 523-533, 439 S.E.2d 140. The court determined that these facts precluded a finding of foreseeability. The importance of the case is not just that two of the three factors in Johnson were absent. Rather, in Andersen, the court identified the additional factor of a defendant's knowledge of a plaintiff's presence and relationship to the injured party as playing a part in the foreseeability analysis.
A defendant's knowledge of the plaintiff's presence took on critical importance in the case of Fields v. Dery, 131 N.C. App. 525, 509 S.E.2d 790 (1998), rev. denied, 350 N.C. 308, 534 S.E.2d 590 (1999). There, the plaintiff was driving three cars behind her mother when the defendant's car ran a stop sign, struck the mother's car, and rolled it three times. The mother was thrown from the car and killed. The plaintiff witnessed the accident and was the first to reach her mother's side. Clearly, all three Johnson factors were present in the case. The plaintiff was in the proximity of the accident, had a close relationship with the decedent, and actually witnessed the defendant's negligent acts. Still, the North Carolina Court of Appeals held that the plaintiff could not recover. It explained its decision by noting that the defendant had no knowledge of the relationship between the plaintiff and the person he killed. In other words, though it was possible that a person three cars behind the person injured might be a close relative of the injured person, defendant had no way to know that this was actually the case. The Court found it was not foreseeable, as that term has been defined in these circumstances under North Carolina law. Id. at 529, 509 S.E.2d 792.
Just as important as the cases where North Carolina courts have refused to allow recovery, are the ones where plaintiffs have been allowed to proceed. In Johnson itself, recovery was allowed for the parents of a stillborn child who were present and observed many negligent actions of the doctors responsible for the child's safe delivery. Johnson at 306, 395 S.E.2d at 97. Naturally, the doctors knew of the parents, their observation, and their relationship to the unborn child. Likewise, in Wrenn v. Byrd, 120 N.C. App. 761, 766, 464 S.E.2d 89, 93 (1995), rev. denied, 342 N.C. 666, 467 S.E.2d 738 (1996), the North Carolina Court of Appeals allowed a wife, who had taken her husband in for medical treatment, to proceed with a negligent infliction claim against a doctor who allegedly committed medical malpractice in treating the husband. Once again, the alleged tortfeasor knew about the presence of the wife and of her relationship to the injured person. Finally, the North Carolina Court of Appeals also upheld a trial court's decision to allow recovery for a mother who was riding in the automobile with her two-year-old daughter when another motorist caused an accident which injured the daughter. Fox-Kirk v. Hannon, 142 N.C. App. 267, 277, 542 S.E.2d 346, 352 rev. denied, 353 N.C. 725, 551 S.E.2d 437 (2001). Not only was the parent present, but her presence and her likely relationship to the injured child would have been immediately obvious to the defendant given that the plaintiff was an adult in the car with a two-year-old child.
Applying the factors in Johnson and the idea of foreseeability being related to the knowledge by defendant of plaintiffs' presence, the Court concludes plaintiffs' emotional injuries were not foreseeable to Sanchez under North Carolina law. Both Dale and Synthia were in the proximity of the accident and had a close relationship to Dalton. However, neither were present so as to have actually witnessed the accident nor immediately perceived its results. They realized what had occurred only after being alerted by a third party. Perhaps more importantly, Sanchez had no knowledge of Dale and Synthia's existence, presence nearby, or relationship to Dalton. Unfortunately for Dale and Synthia, there is no meaningful way to distinguish their case from those of other close relatives, such as those in Andersen and Fields, who have arrived on the scene of an accident a short time after it occurred and who were not allowed to recover. As pointed out previously, because of the nature of the tort of negligent infliction, a plaintiff must observe the negligent act and the defendant must have reason to know of the presence of the plaintiff and the relationship between the plaintiff and the injured person. The North Carolina courts have not defined foreseeability in an unlimited fashion in these types of cases and it is not the province of this Court to deviate from those rules or expand North Carolina law. Sanchez's motion for summary judgment should be granted as to Dale and Synthia's claims of negligent infliction of emotional distress.
Dale did state in his deposition that he heard a "thump" that he now believes was Sanchez's car striking his son. (D. Folwell Dep. at 34) However, he did not realize this at the time of the accident. While hearing the thump might be considered "observing the accident" in some sense of the phrase, it is clear that the thrust of the observation requirement is not technical in nature but more substantive. The North Carolina Supreme Court has described the observation factor as being "able to see or hear or otherwise sense the collision or to immediately perceive the injuries suffered." Gardner v. Gardner, 334 N.C. 662, 667, 435 S.E.2d 324, 328 (1993). The obvious import of this statement is that the key to foreseeability is not technical observation, but an immediate understanding on the part of the plaintiff about what has occurred at the time the negligent conduct occurs.
C. Punitive Damages
The final point on which Sanchez seeks summary judgment is plaintiffs' punitive damages request. According to Sanchez, although she could be found to be at fault for Dalton's injuries, her conduct in causing those injuries did not rise to the level necessary to support punitive damages under North Carolina law.
Punitive damages in North Carolina are limited by statute. They are not allowed unless a plaintiff shows that a defendant was not only liable for compensatory damages, but that an aggravating factor was present and related to the injury. The three statutory aggravating factors are fraud, malice, and willful or wanton conduct. N.C. Gen. Stat. § 1D-15(a). Because plaintiffs make no claim of fraud or malice, the only question in the present case is whether Sanchez's conduct could be found by a jury to be "willful or wanton." The terms "willful or wanton" and "gross negligence" are used interchangeably in North Carolina case law and are both defined as actions done with "`conscious or reckless disregard for the rights and safety of others.'" Yancey v. Lea, 354 N.C. 48, 52, 550 S.E.2d 155, 157 (2001), quoting Bullins v. Schmidt, 322 N.C. 580, 583, 369 S.E.2d 601, 603 (1988). The terms have also been described as acts "`done needlessly, manifesting a reckless indifference to the rights of others.'" Id. quoting Parish v. Hill, 350 N.C. 231, 239, 513 S.E.2d 547, 551, rev. denied, 350 N.C. 600, 537 S.E.2d 215 (1999). The difference between negligence and gross negligence "is not in degree or magnitude of inadvertence or carelessness, but rather is intentional wrongdoing or deliberate misconduct affecting the safety of others." Id. at 53, 369 S.E.2d at 158.
Several key pieces of evidence support plaintiffs' argument for punitive damages. Sanchez admitted in her deposition that she saw the stopped school bus, saw that its doors were open, knew that children could be around, and knew that she needed to be careful. There is also evidence in the record by Willette Speas that Sanchez drove through the bus stop sign at ten miles per hour over the speed limit without slowing down. Finally, Sanchez stated in her deposition that she did not recall whether she saw the flashing lights of the bus or the stop sign. However, there are notations in the police report of Officer Jeff Broome of the Winston-Salem Police Department that the lights on the bus were flashing, that the stop sign was extended from the side of the bus, and that it had eight and one-half-inch high letters.
Speas' made two statements which are are contained in the police report of Winston-Salem Police Officer Jeff Broome and in an affidavit submitted by plaintiffs. Defendants have challenged the two statements in their motion to strike. They object to the statement in the police report by arguing first that the report itself is inadmissible and second that Speas' statements contained in the report are hearsay. The report itself is admissible for the reasons set out below in note 8. As for defendants' hearsay argument, the Court finds that Speas' statements are not inadmissible hearsay because they are excited utterances which relate to a startling event and which were made while Speas was still under the stress of the excitement caused by the event. Fed.R.Evid. 803. Officer Broome noted her excited emotional state and even that she was eventually unable to proceed with the interview because of it. Finally, Ms. Speas sets out these facts in her affidavit, making defendants' motion to strike the police reports superfluous.
Defendants also claim that Speas' statements should be disregarded because there is no evidence she observed Sanchez's car in a sufficient manner to allow her to express an opinion concerning its speed. First, that goes to the weight of the evidence and is irrelevant for purposes of summary judgment. Second, even if that were a present concern, her view of the scene as described in her statement to Officer Broome dispels that notion.
Defendants have challenged this report in their motion to strike on the grounds that it was not authenticated, was not attached to an affidavit so that it could be considered under Fed.R.Civ.P. 56(c), contained hearsay statements, and contained accident reconstruction opinions without any designation of the officer as an expert witness. Plaintiffs have responded to these objections by resubmitting a version of the report attached to the affidavit of Officer Broome which authenticates the document. This disposes of the first two objections raised by defendants. To the extent that the report may contain any inadmissible evidence, those portions of the report will not be considered. However, Officer Broome's notations concerning the operation of the lights and stop arm and the size of the letters on the sign are from his personal observations and, possibly, the statements of Willette Speas. To the extent they are based on Speas' statements, those statements are not hearsay for the reasons discussed previously in note 7.
Taken together and viewed in the light most favorable to plaintiffs, the Court finds that plaintiffs have presented enough evidence of gross negligence on the part of Sanchez to allow the case to proceed beyond summary judgment. Based on the evidence described above, a jury could find that Sanchez realized that a child might be near, was conscious that her automobile posed a danger to that child, and simply disregarded the danger by speeding past the bus without even slowing down. Moreover, Sanchez has made statements that she did not recall seeing the stop sign or flashing lights of the bus. She also states that, based on the school bus laws in Costa Rica, she believed that she only had to slow rather than stop. However, these statements do not defeat plaintiffs' evidence for purposes of summary judgment. Sanchez at least recognized a need to slow her car to preserve Dalton's right to safety, and Speas has stated that Sanchez did not slow her vehicle. This alone is a conscious disregard of Dalton's safety. Further, Officer Broome's observations concerning the lights, stop sign, and size of the lettering, along with Sanchez's admission that she looked at the front of the bus as she approached it, provide circumstantial evidence from which a jury could find that, whether or not she now recalls it, Sanchez must have seen the stop sign and simply ignored it. She has not stated that people in Costa Rica are allowed to drive through school bus "stop signs," or on what basis she felt she could do so while driving in this country. Thus, there is evidence of a conscious disregard of Dalton's rights.
In addition to the evidence discussed above, plaintiffs also submitted statements given by Sanchez to police officers shortly after the accident. In those statements, Sanchez admits that she saw the stop sign and lights, that she can read and understand the word "stop" in English, and that she understands stop signs generally. Unfortunately for plaintiffs, the statements are part of the exhibits defendants seek to have stricken, defendants have pointed out several legitimate problems with plaintiffs' presentation of the evidence, and plaintiffs have not cured those problems. Therefore, the Court did not consider these statements at summary judgment.
Defendants do not directly address plaintiffs' evidence or the conclusions that could be reached using it. They argue instead that no North Carolina Court has ever allowed punitive damages in an automobile accident case that did not involve excessive speeding, intoxication, or a racing competition on public roadways. The North Carolina Supreme Court did note this. See Yancey, 354 N.C. at 53-54, 550 S.E.2d at 158. However, in that same decision, the court also stated explicitly that this was not due to any hard and fast rule that punitive damages were limited to those circumstances. It treated the prior cases as only a "guide" to the analysis of whether the plaintiff in that case could claim punitive damages. Id. Nothing in Yancey indicates that "conscious or reckless disregard for the rights of and safety of others" does not remain as the ultimate standard in any case where punitive damages are an issue.
Although not mentioned by the parties, what is more significant is that in a previous case brought in this district and decided using North Carolina law, two plaintiffs were allowed to proceed to trial with a punitive damages claim even though their allegations did not include any of the three factors that defendants contend must be present. Phillips v. Dallas Carrier Corp., 766 F. Supp. 416 (M.D.N.C. 1991). In Phillips, the defendant truck driver approached a car stopped in an intersection. He admitted that he could have stopped his truck. However, because he was in a hurry and thought the car might be stalled (as opposed to turning), he crossed a double yellow line and passed the car on the left. At the same time, the car turned left and was struck by the passing truck. Phillips is strikingly similar to the present case because it involved a driver who, viewing the evidence in the light most favorable to the plaintiffs, perceived a possibly dangerous condition and realized that he could take a corrective measure that would lessen the danger. Instead, he committed a clear traffic infraction and caused an accident in the process. A jury could find all of these same things as to Sanchez. It could find she was speeding, failed to slow down, and failed to stop for a school bus stop sign, all when she knew children would be nearby and trying to cross the road. The court in Yancey discussedPhillips and merely distinguished it on the facts, as opposed to indicating any disapproval.
Overall, the Court finds that there is evidence from which a jury could conclude that Sanchez demonstrated a conscious or reckless disregard for Dalton's safety and rights. The Court notes that plaintiffs' evidence regarding punitive damages is neither overwhelming, unchallenged, nor has it been subjected to cross-examination. Therefore, the fact that the claim survives summary judgment does not mean that the claim will necessarily be allowed to reach the jury. Sanchez's motion for summary judgment on plaintiffs' punitive damages claim should be denied.
V. Sara Lee and SLKP's Motions For Summary Judgment
Although Sara Lee and SLKP have filed separate motions for summary judgment, they contain mainly similar issues and arguments. For this reason, the Court will address the motions together.
A. Negligent Entrustment
Most of the issues raised by SLKP and Sara Lee concern their possible liability for torts committed by Sanchez. However, plaintiffs have also raised separate claims of negligent entrustment against both SLKP and Sara Lee. Those defendants now seek summary judgment on those claims.
As stated in the portion of this recommendation dealing with plaintiffs' claim against Peterson Trust, plaintiffs must show that (1) SLKP or Sara Lee owned the automobile, (2) Sanchez was incompetent to drive it or was habitually careless or reckless, (3) SLKP or Sara Lee knew of this, but let Sanchez drive anyway, and (4) one or more of the plaintiffs were injured due to Sanchez's negligence. Hill, supra. Both SLKP and Sara Lee deny that plaintiffs can establish the first three of these elements of their claim.
SLKP is easily entitled to summary judgment on this claim. Plaintiffs do not argue, nor have they produced evidence to show, that it was the owner of the car Sanchez drove or that it gave the car to Sanchez. Sara Lee is in a somewhat different position, although the end result is the same. Sara Lee did give the car to Sanchez and had possession and control over the car to the extent that it might be considered the owner of the car, not for all purposes, but at least in a negligent entrustment situation. The parties debate this last point. However, the Court need not decide it because plaintiffs fail to show that Sanchez was an incompetent driver or that Sara Lee knew or should have known this.
The evidence is undisputed that Sanchez drove the car while in possession of a valid Costa Rican driver's license. Under the laws of North Carolina, this means that she was legally allowed to drive in the State. N.C. Gen. Stat. § 20-8(3) (nonresidents may drive legally without going through the North Carolina licensing process if they have a valid license in their home country). Furthermore, the evidence also shows that had Sara Lee conducted a check of Sanchez's driving history, it would have found that Sanchez had a clean driving record at the time she was given the car, that she had taken a driver's education course in Costa Rica, and that SLKP had shown her a video on defensive driving. Nothing in this driving history would indicate to anyone that Sanchez was a reckless or careless driver.
This case is strikingly similar to the case of Dwyer v. Margono, 128 N.C. App. 122, 493 S.E.2d 763 (1997), rev, denied, 347 N.C. 670, 500 S.E.2d 85 (1998). There, the plaintiff sued a rental car company for negligent entrustment. The company had rented a car to an Indonesian resident who was in this country temporarily. The Indonesian then caused a fatal wreck while driving at more than 90 miles per hour in a heavy rain. In upholding the dismissal of the negligent entrustment claim as to the rental company, the North Carolina Court of Appeals noted that the Indonesian had a valid foreign driver's license, some driver's S.E.2d at 766. All of these things are true in the present case as well.
Plaintiffs contend that the case is distinguishable because the Indonesian's employer in the United States gave him some basic driver's training, while Sara Lee gave Sanchez no training. Although this is a distinction between Dwyer and the present case, there is no indication that the training made a critical difference in Dwyer or that the outcome would have changed if the training were absents. The only general standard for conduct noted by the court in Dwyer was an obligation to see that a person entrusted with a vehicle is properly licensed.Id. at 128, 493 S.E.2d. at 766. The plaintiffs there introduced expert testimony that the industry standard in the rental car industry required inquiry into familiarity with the United States' driving laws and ability to operate an automobile. The North Carolina Court of Appeals did not adopt this standard. It did find that even if the plaintiffs made such an inquiry, nothing would have shown the driver to be incompetent or reckless. The same is true here. Even if the Court were to apply the standard, Sanchez's record and training do not show her to have been an incompetent or reckless driver. The fact that the school bus system in Costa Rica is different than in the United States and that Sanchez was nervous about busy roads and speed, do not show her to be an incompetent or reckless driver. If anything, Sanchez's nervousness might suggest that she would be less careless and reckless than average, not more. For all of these reasons, plaintiffs' claims of negligent entrustment against SLKP and Sara Lee should be dismissed.
B. Employer Status
One of the more hotly contested issues in this case is the identity of Sanchez's employer at the time of the accident. Defendants insist that SLKP and SLKP alone is Sanchez's employer. Plaintiffs, on the other hand, maintain that Sara Lee is Sanchez's true employer.
The North Carolina Supreme Court has stated that where a party "for whom the work is being done retains the right to control and direct the manner in which the details of the work are to be executed . . . it is universally held that the relationship of employer and employee is created." Youngblood v. North State Ford Truck Sales, 321 N.C. 380, 384, 364 S.E.2d 433, 437 (1988). A nonexclusive list of factors to be used in considering whether sufficient control exists to create an employer/employee relationship are: (1) the source and nature of any compensation, (2) the provision of the tools necessary to perform the job, (3) control over the time at which work is performed, (4) control over the manner in which work is performed, (5) the right to terminate, and (6) the assignment of duties. Id. at 385, 364 S.E.2d 437-438.; Sutton v. Ward, 92 N.C. App. 215, 217, 374 S.E.2d 277, 279 (1988).
Although Youngblood is a workers' compensation case, it is still applicable to the present case. The test for finding coverage under North Carolina's Workers' Compensation Act and the common law test for finding an employer-employee relationship are the same. Sutton v. Ward, 92 N.C. App. 215, 217, 374 S.E.2d 277, 279 (1988), citing, Haves v. Board of Trustees of Elon College, 224 N.C. 11, 29 S.E.2d 137 (1944).
In the present case, SLKP paid Sanchez's salary (Mata Decl. ¶ 6), recommended her for the training program in North Carolina (Mendez Aff. ¶ 4), provided her with travel and expense money (Luis Torres Dep. at 44 Mata Decl. ¶ 6), and retained the right to terminate her (Mata Decl. ¶ 4). On the other hand, Sara Lee accepted Sanchez into the training program, provided her with the use of an apartment and an automobile (Sanchez Dep. at 17), assigned all of her duties (O'Dell-Michie Dep. at 21, Ex. 1), provided her with the equipment, training, etc., to perform those activities (Id.), set her work schedule (Id.), and also had some right to terminate her (Rogalski Dep. at 11-12). There is no serious factual dispute in the record as to any of these things. The only question between the parties is the result that the facts dictate under North Carolina law.
Plaintiffs have proffered more evidence in the way of Sara Lee's post-accident conduct which tends to show that Sara Lee was Sanchez's employer. Sara Lee hired Sanchez's attorney and paid funeral costs as ordered by the court, and some other costs. (Broom, Collins, and Barger Affs.) Other evidence is subject to defendants' motion to strike. The Court need not make a final decision on the admissibility of this other evidence because the evidence of Sara Lee's pre-accident control over Sanchez is so overwhelming.
As an initial matter, the Court need not render a decision as to whether or not SLKP was Sanchez's employer at the time of her accident. SLKP has conceded that it was. This concession is not at odds with the evidence so as to be incorrect. Therefore, the Court simply accepts SLKP's employer status as established and turns its attention to Sara Lee.
There is no doubt under North Carolina law that Sara Lee was Sanchez's employer while she trained in North Carolina. Sara Lee admitted Sanchez into the training program and had the right to terminate her. Its control over her work assignments and conditions in North Carolina was total and she worked on assignments which benefitted Sara Lee. Furthermore, Sara Lee alone provided the tools and facilities necessary for Sanchez to accomplish the tasks it assigned her. Finally, the living quarters and automobile provided to her could certainly be seen as a form of compensation for her work. At the very least, they are a way of covering expenses similar to the per diem and travel expenses paid by SLKP.
The fact that SLKP is Sanchez's employer does not mean that Sara Lee cannot be. The concepts of borrowed servants and joint employees are recognized under North Carolina law and appear to apply and be highly relevant to this case which involves a company and its wholly owned subsidiary with evidence of employee movement between them. Brown v. Friday Services, Inc., 119 N.C. App. 753, 759, 460 S.E.2d 356, 360, rev. denied, 342 N.C. 191, 463 S.E.2d 234 (1995). A person may be an employee of two different employers at the same time. Id. Here, Sara Lee had the right to not only control the work which Sanchez performed, but also the manner of performing it. Wolfe v. Wilmington Shipyard, Inc., 135 N.C. App. 661, 668, 522 S.E.2d 306, 311 (1999). Thus, Sara Lee was Sanchez's special employer.
Sara Lee argues that Sanchez is not its employee because she was training rather than working. Of course, Sara Lee has cited no case law supporting the idea that the terms "work" and "training" are mutually exclusive. They are obviously synonymous in the present case. Sanchez trained by performing work for Sara Lee. In fact, she was explicitly supposed to be assigned tasks which met the needs of Sara Lee's plants or divisions as a part of her training. Sara Lee also protests that if Sanchez is considered an employee of Sara Lee, other similar trainees, including some sent from separate companies such as outside contractors who make garments for Sara Lee, would be considered employees as well. The status of similarly situated trainees may understandably be an important future concern for Sara Lee, but is not a matter before the Court at this time. The Court's concern is whether the facts could support a finding under North Carolina law that Sanchez was a Sara Lee employee at the time of the accident. They quite clearly do, and Sara Lee's motion for summary judgment on this issue should be denied.
C. Corporate Liability for Negligence
Having decided that Sanchez could be an employee of both SLKP and Sara Lee at the time she struck and killed Dalton, the Court must now turn to the issue of whether, why, and to what extent SLKP and Sara Lee will be liable for any damages stemming from her alleged negligent acts.
Plaintiffs' theory for pursuing liability on the part of SLKP and Sara Lee is not that they were directly involved in Sanchez's alleged negligence, but that, as Sanchez's employers, they are liable under the principle of respondeat superior. Of course, employers are not liable for all actions of their employees. Rather, they are responsible for conduct employees engage in while acting within the scope of their employment.Bradley v. Hidden Valley Transportation, Inc., 148 N.C. App. 163, 557 S.E.2d 610 (2001), aff'd, 355 N.C. 485, 562 S.E.2d 422 (2002). Employees are said to be acting within the scope of their employment if their actions furthered the employer's business and were assigned or authorized by the employer.Edwards v. Akion, 52 N.C. App. 688, 693, 279 S.E.2d 894, 898,aff'd, 304 N.C. 585, 284 S.E.2d 518 (1981).
Sara Lee argues that Sanchez was simply giving a ride to a co-worker and that this makes her errand "purely personal." Certainly, her motives may have included giving a helping hand to a fellow employee. However, it is also undisputed that her actions furthered the business of Sara Lee.
On the morning Dalton Folwell was killed, Sanchez was sharing a Sara Lee apartment with Mario Torres, who worked for another subsidiary or division of Sara Lee and who was in North Carolina to conduct business with Sara Lee. Sanchez and Torres left the apartment in the automobile provided to Sanchez by Sara Lee, with the purpose of their trip being to take Torres to the Sara Lee facility where he was expected to work that day. The facility Sanchez took Torres to was not Sanchez's assigned work facility. Torres had not been given a car by Sara Lee. Sanchez dropped Torres off at the facility and began returning to the apartment. Her only objective in returning to the apartment was to work on a presentation that she was to give later in the day at her assigned work facility as a Sara Lee employee.
The evidence permits a finding that Sanchez acted to benefit her employer, Sara Lee, and this act was assigned or authorized by Sara Lee. There is no direct evidence that Sara Lee specifically assigned Sanchez to transport Torres to work, or that this was part of her regular duties, or that she was told to do so by Sara Lee officials on this particular day. The evidence of authorization comes from circumstantial evidence. Sara Lee brought Torres into the country on business and allowed him to stay in the apartment with Sanchez; yet, it did not provide him with transportation to and from work. Apparently, cars were provided to only certain employees in the training program and employees often rode together as a result. Furthermore, Sanchez states that another trainee, Sabeth Sancho, who also had a Sara Lee furnished automobile, was supposed to give Torres a ride, but asked Sanchez to do it instead. (Sanchez Dep. at 15-23; Sancho Dep. at 48) From this, a jury could find, based on Sancho's request and the living and transportation arrangements created and controlled by Sara Lee, that Sara Lee created an environment so as to tacitly authorize Sanchez to ferry co-workers in Sara Lee's car when necessary for them to be at their assigned work locations.
In their briefs, the parties focus on whether N.C. Gen. Stat. § 20-71.1(b) amounts to prima facie evidence that Sara Lee was responsible for Sanchez operating the automobile. That statute states that proof of registration of the motor vehicle shall be prima facie evidence of ownership and that the motor vehicle was being operated by a person for whom the owner was legally responsible and for the owner's benefit. Sara Lee retorts that the vehicle was not registered in its name, but rather it leased the vehicle from Peterson Trust. It points to N.C. Gen. Stat. § 20-4.01 which states that a lessor can be deemed the owner of the automobile, but only if the lease involves a right of purchase, which the lease in this case did not. It would appear that by applying these statutes very literally, Sara Lee would not be an owner under the terms of N.C. Gen. Stat. § 20-4.01(26). However, it is also clear that the lease and use of the automobile in this case by Sara Lee establishes agency because Sara Lee had the right to control the use of the automobile and permitted Sanchez to drive it. InDeArmon v. B. Myars Corp., 312 N.C. 749, 325 S.E.2d 223 (1985), the North Carolina Supreme Court made clear that N.C. Gen. Stat. § 20-71.1(b) was merely a rule of evidence and not one of substantive law. It merely permitted the shifting of the burden of going forward with respect to the evidence of agency to those persons better able to establish those facts. In this case, if the rule were imposed, it would merely require Sara Lee to go forward and present evidence that even though it leased the automobile, it did not have a right to control its use. But, it has already been established that Sara Lee did control the use of the automobile.
Despite the complexity of the facts set out above, defendants cite Bradley, supra, for the proposition that Sanchez cannot have been acting within the scope of her employment because persons commuting to and from work are not considered to have been acting in the scope of their employment. Bradley, supra. Of course, defendants ignore the clear fact that Sanchez was not commuting to or from work. Her work that morning was to occur in the apartment Sara Lee had provided to her. She simply departed from this work site to use Sara Lee's car to take a co-worker to a different Sara Lee work site. The facts inBradley are easily distinguishable because it involved anhourly worker who had clocked out for the day before being involved in an accident while driving his employer's vehicle to his employer's house to drop it off. Id. at 166, 557 S.E.2d 613. In contrast, Sanchez was a salaried employee who would, at least arguably, be "on the clock" whenever she was about her employer's business. Moreover, she was furnished an automobile in a situation where she likely would be expected to give rides to fellow employees in furtherance of her employer's business.
SLKP also requests summary judgment on this claim, but only on the basis that Sanchez was performing a personal errand at the time, a proposition which has just been rejected for purposes of summary judgment. As noted earlier, SLKP has conceded that it was her employer at the time of the accident. It does not show and argue that if plaintiffs' respondeat superior claims against Sara Lee are allowed to go forward, then plaintiffs could not proceed against SLKP as well.
D. Corporate Liability for Punitive Damages
North Carolina's standards for holding employers liable for negligence damages and punitive damages differ. Therefore, the Court must now decide whether there is any basis for holding Sara Lee and SLKP liable for any punitive damages.
North Carolina has passed a specific statute which generally bars vicarious liability for punitive damages. N.C. Gen. Stat. 1D-15(c). That statute states that corporations cannot be held liable for punitive damages unless "the officers, directors, or managers of the corporation participated in or condoned the conduct constituting the aggravating factor giving rise to punitive damages." Id. As set out above, the alleged conduct giving rise to punitive damages in the present case is Sanchez's allegedly knowingly speeding through a school bus stop sign without even slowing down. Therefore, unless plaintiffs can show that "officers, directors, or managers" of SLKP and Sara Lee "participated in or condoned" that conduct, they cannot seek punitive damages from Sanchez's employers.
Plaintiffs make two arguments in favor of extending punitive damages liability to Sara Lee and SLKP. The first is almost independent of Sanchez's liability and is based on the corporations having allowed Sanchez to drive in North Carolina without checking her background or giving her additional driver's training. The corporations' actions and duties in this regard have already been addressed by the Court in the section of this recommendation dealing with plaintiffs' negligent entrustment claim against Sara Lee. In that section, the Court found that Sara Lee's actions did not permit a finding of negligent entrustment. Therefore, punitive damages may not be assessed on this basis.
Plaintiffs' second argument in favor of punitive damages against the corporations is that Sanchez's employers should be held liable for her conduct because she was a "manager" of the corporations. The North Carolina Court of Appeals recently noted that the North Carolina legislature did not define the word "manager" as used in the punitive damages statute. Miller v. B.H.B. Enterprises, Inc., 152 N.C. App. 532, 539-540, 568 S.E.2d 219, 225 (2002). Therefore, the Court of Appeals held that the word should be given its plain meaning, which it then defined to be "one who `conducts, directs, or supervises something.'"Id., quoting Webster's Third New International Dictionary, p. 1372 (1968). Using this definition, Sanchez was not a "manager" for Sara Lee. As discussed previously, Sanchez became an employee of Sara Lee when she entered its training program. However, plaintiffs point to no facts indicating that her position at Sara Lee ever required her to function beyond a trainee level in work she did for Sara Lee. Plaintiffs have produced no case law suggesting a management trainee can be a "manager" or that where a corporation agrees to train the employees of a separate corporation, the employees become management of the corporation doing the training. Plaintiffs cannot seek punitive damages from Sara Lee by contending that Sanchez was a manager of Sara Lee.
SLKP is in a slightly different position than Sara Lee, but the result is the same. Prior to the time of the accident, Sanchez held the position of "Contract Manager and Service Manager." (Sanchez Dep. at 127) According to her, her duties at one point with SLKP involved "supervising engineers at the [textile] plants, more the plants than the engineers." (Sanchez Dep. at 127) However, at the time of the accident, she had been transferred to the position of "Operations Manager Trainee," with the hope that she would move to the position of "Operations Manager" at the end of the training. Although Sanchez was a "manager" at some points prior to the accident and intended to be again, there is no indication in the record that she was a "manager" at the time she was involved in the accident that killed Dalton Folwell. The only duties reflected in the record are participating in various training projects, not "conducting, directing, or supervising something." Because they have failed to show that Sanchez was a manager for SLKP at the time of the accident, plaintiffs cannot pursue punitive damages against the company under North Carolina law.
IT IS THEREFORE ORDERED that objections are due and are to be hand-delivered to the opposing party on or before noon, May 20, 2003, and responses to objections are due and are to be hand-delivered to the opposing party on or before noon, June 2, 2003.
IT IS FURTHER ORDERED that defendants' motion to strike certain exhibits (docket no. 84) be, and the same hereby is, denied.
IT IS RECOMMENDED that defendant Rubén Mendez's motion for summary judgment or to dismiss (docket no. 41) and defendant D.L. Peterson Trust's motion for summary judgment (docket no. 44) be granted in their entirety and that these defendants be dismissed from this case.
IT IS FURTHER RECOMMENDED that defendant Aymara Sanchez Hernandez's motion for partial summary judgment (docket no. 53) be granted as to plaintiffs Dale and Synthia Folwell's claims for negligent infliction of emotional distress, but denied as to plaintiffs' claims for punitive damages and damages for Dalton's pain and suffering.
IT IS FURTHER RECOMMENDED that defendant SLKP Compania De Servicios Administrativos' motion for summary judgment (docket no. 53) be granted as to plaintiffs' claims for negligent entrustment and punitive damages, but denied to the extent that SLKP argues that it is not liable under the theory ofrespondeat superior for any damages caused by Sanchez's mere negligence.
IT IS FURTHER RECOMMENDED that defendant Sara Lee Corporation's motion for summary judgment (docket no. 50) be granted as to plaintiffs' claims for negligent entrustment and punitive damages, but denied to the extent that Sara Lee argues that it is not liable under the theory of respondeat superior for any damages caused by Sanchez's mere negligence.