Koganti v. Pods Enters.

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KARTEEK KOGANTI et al., Plaintiffs and Appellants, v. PODS ENTERPRISES, LLC, Defendant and Respondent.

D080905

California Court of Appeals, Fourth District, First Division

April 27, 2023

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Riverside County No. RIC1817775 John W. Vineyard, Judge. Reversed and remanded with directions.

Law Offices of Ted B. Wacker and Ted B. Wacker; The Arkin Law Firm and Sharon J. Arkin for Plaintiffs and Appellants.

Bishop Berry and Aaron Hancock; Cox Wootton Lerner Griffin &amp Hansen and Lynn Lucy Krieger; Greines, Martin, Stein &amp Richland, Edward L. Xanders and Jeffrey Gurrola, for Defendant and Appellant.

O'ROURKE, J.

Plaintiffs and appellants Karteek Koganti, Siv Atej Meka, Ramakrishna Gopu, Phani-Raj Ponna, Venkatrikan Juttiga and Gowtham Meka appeal a summary judgment entered in favor of defendant and respondent PODS Enterprises, LLC (PODS) on plaintiffs' complaint for personal injuries arising out of an automobile accident involving a semi-truck carrying containers owned by PODS. Plaintiffs sued PODS, the driver and others alleging causes of action for negligence, vicarious liability, and violations of certain federal laws, in part alleging PODS unlawfully brokered the transportation and permitted interstate brokerage services without complying with financial security requirements. PODS successfully moved for summary judgment; the court ruled PODS met its burden to show it was acting as a shipper and not a motor carrier, precluding liability under any of the plaintiffs' causes of action.

On appeal, plaintiffs contend (1) the evidence raises triable issues of fact as to PODS's status as a motor carrier; (2) disputed issues of fact exist as to whether PODS acted as a principal in retaining agents to act as a broker to locate a driver, and thus is liable under agency principles; and (3) even if the broker and driver were independent contractors, PODS as the hirer of a common carrier is liable under the regulated hirer exception to the rule of nonliability for an independent contractor's negligence. Plaintiffs challenge the trial court's order excluding evidence of testimony recounting content contained on PODS's website and certain portions of plaintiffs' opposing expert's declaration.

We reverse the summary judgment. The trial court improperly sustained PODS's objections to plaintiffs' evidence, including to portions of their expert declaration, and PODS did not specifically object to the expert's conclusion that PODS undertook to act as a motor carrier in the transaction at issue or his opinion that PODS "is liable for all injuries arising out of the incident as if it was the motor carrier transporting the goods at the time of the incident." We hold the evidence raises a disputed fact issue for the jury as to PODS's status as a motor carrier, and therefore its liability for the negligence of the entities involving in transporting the load.

FACTUAL AND PROCEDURAL BACKGROUND

We state the undisputed facts and other facts in the light most favorable to plaintiffs as the losing parties, resolving evidentiary doubts and ambiguities in their favor. (See Gund v. County of Trinity (2020) 10 Cal.5th 503 507, fn. 2.)^[1]

In January 2018, plaintiffs were involved in a motor vehicle accident in Pennsylvania caused by Vasili Ursati while Ursati was operating a tractor trailer. Ursati was driving in the course and scope of his work for IBY Transportation, Inc. (IBY), a motor carrier. Ursati's cargo was containers owned by PODS containing goods of PODS's customers. PODS hired Total Quality Logistics, LLC (TQL) to arrange the transportation of its customers' goods and TQL placed the cargo with IBY. PODS considers itself a moving company and it maintains a motor carrier license with the Department of Transportation.

After the accident, plaintiffs sued Ursati, IBY, PODS, VI Solution Group, Inc. and VI Solution Group, LLC. Their operative first amended complaint alleges causes of action for negligence, vicarious liability, and violations of certain federal laws.^[2] They allege PODS's negligence in "hiring, supervising, entrusting, contracting, and/or retaining [TQL] as an agent was a substantial factor in causing harm to" them, as was PODS's negligence in entrusting and allowing Ursati to drive the vehicle. Plaintiffs allege PODS and the other defendants "directly and/or indirectly" employed and retained Ursati, and were vicariously liable for their "employee/agent" Ursati's tortious conduct. Plaintiffs allege as to PODS and TQL that PODS was a licensed motor carrier, PODS accepted goods from its customers pursuant to its authority as a motor carrier, and PODS "unlawfully brokered the load containing [its customers'] goods to [TQL] to transport," which violated federal law. Plaintiffs also allege PODS violated federal law by failing to comply with registration and financial security requirements for permitting interstate brokerage services as a broker.

PODS moved for summary judgment or alternatively summary adjudication of issues. Though it conceded it was a "storage and moving company," it argued it acted exclusively as the cargo's shipper, using third party carriers to transport its customers' goods, and thus it assumed no responsibility for injuries to third parties during transit. PODS presented evidence that typically a PODS customer will order a container, which is dropped off, unloaded at the customer's residence or office, packed by the customer, then picked up loaded and returned by PODS to a PODS storage center. It presented evidence that while it maintained a motor carrier registration with the United States Department of Transportation and used trucks and drivers for local pickups and drop offs, it viewed deliveries between storage centers as "entirely distinct." According to PODS, when a customer asks that a container be moved across country, PODS arranges for the container's shipment from one PODS storage center to another storage center near the new location, and thus it did not act as a motor carrier for those shipments. It presented evidence that this arrangement was reflected in PODS's rental agreement and privacy policy.

With respect to the specific case, PODS presented evidence it had worked with TQL, a freight broker that hired and placed the shipment with IBY as the carrier, and TQL arranged for transportation between PODS storage centers. PODS asserted it played no role in IBY's selection and was not privy to the communications between TQL and IBY; it did not act as a motor carrier or a freight broker with respect to the shipment involved in the accident. According to PODS, it "had no input into or control over TQL's retention of IBY and IBY's selection of Mr. Ursati to deliver the load. It neither employed Mr. Ursati nor directed his operations."

PODS argued plaintiffs could provide no evidence in support of their cause of action for negligence under a theory of negligent entrustment, for which they had to demonstrate PODS knew or should have known its entrustee was" 'incompetent or reckless.'" It argued its retention of a freight broker was not an illegal or per se negligent act. PODS presented evidence that TQL maintained its certification as a freight broker by the Federal Motor Carrier Safety Administration since onboarding with PODS in 2011, and its insurance had never lapsed during that time.

As for the claim of vicarious liability, PODS argued it did not employ or direct the operations of Ursati, who worked for and was supervised by IBY. PODS acknowledged it was registered as a motor carrier at the time of the accident, and that under Serna v. Pettey Leach Trucking, Inc. (2003) 110 Cal.App.4th 1475, 1477, a motor carrier "remains vicarious[ly] liabl[e] for the negligence of all drivers or sub-carriers in the chain of privity under it." PODS argued its registration was "irrelevant because it was not functioning as a motor carrier when the accident occurred." According to PODS, its motor carrier registration was used only for trips between customers' residences and PODS storage centers, which were considered local deliveries, but the accident involved an interstate delivery between storage centers in New York and North Carolina, which PODS did not perform. PODS stated all involved parties understood it did not act as a motor carrier for shipments between storage centers, but only acted exclusively as a shipper using third party carriers. PODS pointed out neither its rental agreement nor privacy policy described PODS as transporting the cargo between storage centers, only its role as arranging or coordinating shipment and transportation by third parties. Finally, PODS argued even if some communication or agreement created a triable issue as to whether it obligated itself to customers to transport containers with its own resources, it would be irrelevant to the sufficiency of the vicarious liability cause of action, as nothing in any agreement suggested it was intended to benefit third party bodily injury claimants.^[3]

In opposition, plaintiffs first argued PODS did not shift the summary judgment burden of proof to them because PODS failed to provide any analysis as to what constitutes a shipper under the Federal Motor Carrier Act.^[4] They further argued even if PODS sufficiently shifted the burden to them, the evidence raised triable issues of fact as to PODS's role with respect to the cargo load at issue. According to plaintiffs, PODS could not be the "individual shipper" or a "commercial shipper" within the meaning of federal law in part because it did not own the goods being transported, nor did it assume the responsibility to pay the tariff or transportation charges for the containers.

Plaintiffs argued there was a...