Marina Kolchinsky v. Western Dairy Transport, LLC ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1739
MARINA D. KOLCHINSKY
and LIDIA L. KOLCHINSKY,
Plaintiffs-Appellants,
v.
WESTERN DAIRY TRANSPORT, LLC,
and WD LOGISTICS, LLC,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 15 C 10544 — Matthew F. Kennelly, Judge.
____________________
ARGUED DECEMBER 17, 2019 — DECIDED JANUARY 6, 2020 —
OPINION ISSUED FEBRUARY 6, 2020 *
____________________
*The court initially resolved this appeal by nonprecedential order. The
order is being reissued as an opinion.
2 No. 19-1739
Before RIPPLE, SYKES, and ST. EVE, Circuit Judges.
PER CURIAM. After Marina Kolchinsky and her mother,
Lidia Kolchinsky, were severely injured in a car collision
with a tractor-trailer in Illinois, they sued the truck driver
and the two companies that contracted with him. They filed
in federal court based on diversity of citizenship; Illinois law
controlled. The district court entered partial summary
judgment in favor of Western Dairy Transport, LLC, and
WD Logistics, LLC, concluding that the driver was an
independent contractor so the Kolchinskys could not hold
the companies responsible for the driver’s alleged negli-
gence. Because the district court properly classified the
driver as an independent contractor, we affirm the summary
judgment for the companies.
William G. Bentley, a Colorado citizen and the owner
and sole member of Bill Bentley Trucking, LLC, a Colorado
company, rear-ended the Kolchinskys’ car while driving a
tractor-trailer through Illinois. 1 Bentley had just dropped off
a load of milk in Minnesota and was en route to Indiana
with an empty trailer to pick up another load. Both deliver-
ies had been arranged by WD Logistics, an LLC consisting of
Missouri and Texas citizens. WD Logistics instructed
Mr. Bentley to transport the milk from Indiana to its destina-
tion; how he got to Indiana was up to him. The Kolchinskys,
especially Marina, were severely injured in the crash.
At the time Bentley Trucking regularly provided freight-
transportation services to WD Logistics according to the
terms of a Carrier/Broker Agreement. The nonexclusive
1The Kolchinskys’ claims against Bentley and Bentley Trucking are not
part of this appeal.
No. 19-1739 3
agreement provided that Bentley Trucking was an inde-
pendent contractor and retained “full control” over its
personnel and that either party could terminate the agree-
ment upon 30 days’ written notice. When Bentley Trucking
accepted a job from WD Logistics, it agreed to call the broker
daily with a status update, protect the freight, notify the
broker of any damage, and inform the broker of delivery.
Bentley Trucking was also responsible for determining
delivery times but agreed to inform WD Logistics if Bentley
(in his capacity as a driver for Bentley Trucking) could not
meet the schedule; the broker reserved the right to withhold
any resulting damages from Bentley Trucking’s pay. Finally,
the agreement required Bentley Trucking to pay its employ-
ees and provide and maintain its own tractor, fuel, insur-
ance, licenses, and permits.
The Kolchinskys, Wisconsin citizens, sued Bentley in fed-
eral court alleging that he negligently collided with their car
and asserting more than $75,000 in damages. Citing theories
of respondeat superior and vicarious liability, the
Kolchinskys also sued Bentley Trucking, WD Logistics, and
Western Dairy Transport, an LLC with the same members as
WD Logistics.
WD Logistics moved for summary judgment, arguing
that because Bentley Trucking was not its agent, the broker
could not be held liable for Bentley’s negligent driving. In
support the company offered evidence showing that
WD Logistics did not control how Bentley Trucking per-
formed its work for WD Logistics. It pointed to the agree-
ment, which classified Bentley Trucking as an independent
contractor, and to testimony that the parties conducted their
business consistently with the terms of the agreement.
4 No. 19-1739
Bentley Trucking also negotiated the rate for each job, and
WD Logistics did not withhold payroll-related taxes or
insurance. And apart from the few communication require-
ments set out in the agreement, Bentley Trucking controlled
the details of the delivery, including providing and main-
taining the tractor, and selecting the driver, the route, the
number of hours to drive per day, and where to refuel.
Western Dairy also moved for summary judgment, argu-
ing that the only possible basis for liability against it was
through WD Logistics and that it had no business relation-
ship with WD Logistics with respect to the trip at issue.
Western Dairy and WD Logistics are owned by the same
parent company, but their roles are distinct: Western Dairy
owns and leases trucks and trailers and hauls freight, while
WD Logistics brokers the hauls. In other words, Western
Dairy was a carrier hired by WD Logistics to transport loads
for third parties; it also sometimes supplied trailers that
other carriers used to haul loads brokered by WD Logistics.
Bentley Trucking was one of those other carriers. And
Bentley Trucking was the carrier for the load brokered by
WD Logistics at the time of the collision.
In their opposition to the motion for summary judgment,
the Kolchinskys pointed to several aspects of Bentley Truck-
ing’s relationship with WD Logistics that, they argued,
supported finding an agency relationship. First, the
Carrier/Broker Agreement instructed that when Bentley
Trucking was carrying a load, the driver had to call
WD Logistics with a daily status update and upon delivery,
and also report any damage to the load. WD Logistics paid
Bentley Trucking directly and could withhold damages
resulting from a late delivery or lost load. Finally,
No. 19-1739 5
WD Logistics provided Bentley Trucking with trailers to
haul the loads and had the power to fire Bentley Trucking,
and at the time of the accident, Bentley Trucking was haul-
ing exclusively for WD Logistics.
The judge granted the summary-judgment motions, con-
cluding as a matter of Illinois law that Bentley Trucking was
an independent contractor. 2 And because any possible path
to liability for Western Dairy ran through WD Logistics, the
details of Western Dairy’s relationship to the broker were
ultimately irrelevant.
The judge entered a final judgment for WD Logistics and
Western Dairy under Rule 54(b) of the Federal Rules of Civil
Procedure, which permitted the Kolchinskys to immediately
appeal even though their claims against Bentley and Bentley
Trucking remain pending. In response to an order from this
court, the judge explained that he had entered final judg-
ment because allowing immediate review of the summary-
judgment order would be more expedient than trying the
case against Bentley and Bentley Trucking alone and then
holding a second trial if the appeal was successful.
2 A federal court exercising diversity jurisdiction must apply the choice-
of-law rules used by the state in which the court sits. NewSpin Sports, LLC
v. Arrow Elecs., Inc., 910 F.3d 293, 300 (7th Cir. 2018). When there is no
dispute over which state’s law applies, the court will apply the substan-
tive law of the state in which the federal court sits. Med. Protective Co. of
Fort Wayne v. Am. Int'l Specialty Lines Ins. Co., 911 F.3d 438, 445 (7th Cir.
2018). Here, the parties agree that Illinois law applies, and their choice is
consistent with Illinois’s presumption in personal-injury cases to apply
the law of the state in which the injury occurred. Townsend v. Sears,
Roebuck & Co., 879 N.E.2d 893, 903 (Ill. 2007).
6 No. 19-1739
On appeal the Kolchinskys first argue that a reasonable
jury could conclude based on the summary-judgment evi-
dence that WD Logistics and Western Dairy exercised
enough control over Bentley Trucking to create an agency
relationship. We review a summary judgment de novo,
drawing reasonable inferences in favor of the Kolchinskys,
the nonmoving parties. Walker v. Ingersoll Cutting Tool Co.,
915 F.3d 1154, 1157 (7th Cir. 2019).
Under Illinois law, deciding whether an agency relation-
ship exists requires a multifactor analysis. The “cardinal
consideration” for determing the existence of an agency
relationship is whether the alleged principal has the “right to
control the manner of work performance.” Sperl v. C.H.
Robinson Worldwide, Inc., 946 N.E.2d 463, 471 (Ill. App. Ct.
2011). Other considerations include whether the nature of
the work is in the principal’s field, whether the principal has
the right to discharge the purported agent, the method of
payment and whether taxes are deducted, the provision of
equipment, and the level of skill required. Id. Though no
single factor controls, id., and weighing them is typically a
question of fact, a court may decide the question if the
underlying facts are not disputed, Dowe v. Birmingham Steel
Corp., 963 N.E.2d 344, 351 (Ill. App. Ct. 2011).
We agree with the district judge that the evidence shows
as a matter of law that Bentley Trucking was not an agent of
WD Logistics. The Kolchinskys’ strongest facts in support of
an agency relationship are that WD Logistics required
Bentley to contact it at various times when carrying its loads,
including a daily status call and a call upon delivery, and
that WD Logistics could charge Bentley Trucking for dam-
ages if a delivery was late or damaged. But none of these
No. 19-1739 7
facts shows the degree of control that Illinois courts have
required when finding that an agency relationship exists.
See, e.g., Sperl, 946 N.E.2d at 471–72 (upholding a finding of
agency relationship where the broker specified the trailer
length, required the driver to take the trailer temperature
regularly, and imposed strict communication requirements
and delivery times enforced by fines); see also Powell v. Dean
Foods Co., 7 N.E.3d 675, 698 (Ill. App. Ct. 2013) (upholding a
finding of agency relationship where the trial evidence
showed that the shipping company controlled the drivers’
actions, required drivers to wear uniforms, and provided
trailers; and the evidence also showed that the driver pulled
exclusively for the company for 60 years and used its letter-
head).
Meanwhile, courts applying Illinois law consistently
have declined to find an agency relationship when a compa-
ny hires an independent driver to deliver a load to designat-
ed persons at designated hours but does not reserve the
right to control the manner of delivery. See Powell, 7 N.E.3d
at 697–98 (citing Shoemaker v. Elmhurst-Chi. Stone Co.,
652 N.E.2d 1037 (Ill. App. Ct. 1994), as modified (July 12,
1995)); Manahan v. Daily News-Tribune, 365 N.E.2d 1045,
1046–47, 1050–51 (Ill. App. Ct. 1977). Even if a broker re-
quires an exclusive relationship, has the power to fire, and
sets rules governing the manner of loading the trucks, no
agency relationship exists if the broker does not have the
power to control the details of the manner of delivery. See
Dowe, 963 N.E.2d at 351 (finding no agency relationship
where a trucking company chose the route, set hours, and
provided and maintained equipment and insurance). Here,
it is undisputed that WD Logistics and Bentley Trucking
adhered to the terms of their agreement, which explicitly
8 No. 19-1739
states that Bentley Trucking had “full control” over its
personnel, was solely responsible for its own operational
costs and its equipment, and would perform services as an
“independent contractor.” See Manahan, 365 N.E.2d at 1051
(“If the parties to the relation are bound by a contract which
by its terms clearly defines that relationship as that of em-
ployer/independent contractor, and the parties abide by that
contract, then the contract may be conclusive of their rela-
tionship.”).
The Kolchinskys’ remaining points do not support find-
ing an agency relationship. The fact that Bentley Trucking
was hauling exclusively for WD Logistics is irrelevant
because the broker did not require it. See Sperl, 946 N.E.2d at
471 (focusing on the employer’s right to control behavior);
see also Trzaska v. Bigane, 60 N.E.2d 264, 265–67 (Ill. App. Ct.
1945) (finding no agency relationship where the driver is
free to refuse a load). Likewise, the fact that WD Logistics
provided Bentley Trucking with trailers also cannot support
a finding of an agency relationship. See Petersen v. U.S.
Reduction Co., 641 N.E.2d 845, 851 (Ill. App. Ct. 1994) (finding
no agency relationship despite providing a trailer). And the
Kolchinskys’ arguments that WD Logistics (as opposed to
the owners of the freight) paid Bentley Trucking directly and
had the power to fire the company are somewhat distracting:
WD Logistics did not deduct income taxes or social security
contributions like it would for an employee, and the
Carrier/Broker Agreement provided that either party could
terminate the relationship. Bentley Trucking, moreover, was
solely responsible for paying all payroll-related expenses for
its drivers, including workers’ compensation, unemploy-
ment, and social security.
No. 19-1739 9
The Kolchinskys next argue that Bentley and Bentley
Trucking had apparent authority to act for WD Logistics. To
support this theory, the Kolchinskys point to various bills of
lading from Bentley Trucking’s trips—including the trip it
completed before the collision—on which Mr. Bentley
signed boilerplate forms on behalf of WD Logistics or
Western Dairy, some designating him as a pickup “agent.”
The Kolchinskys also note that the trailer bore Western
Dairy’s logo and was en route to pick up a load for
WD Logistics when the collision happened. The forms,
however, more often designated Bentley as “driver.” And
when Bentley was en route from Minnesota to Indiana, he
was not yet working on a job under the Carrier/Broker
Agreement. He had accepted a new job for WD Logistics,
but it did not begin until he picked up the new load in
Indiana, which never happened because of the intervening
accident. So regarding the trip in question, Bentley was not
acting on the broker’s behalf.
And it is difficult to imagine how an apparent-agency
theory could fit the facts of this case. The Kolchinskys do not
argue that Mr. Bentley ever appeared to them as Western
Dairy’s agent. But even if the bills of lading and Western
Dairy’s logo could create apparent agency, to survive sum-
mary judgment the Kolchinskys needed evidence that could
create an inference that their injuries would not have oc-
curred “but for [their] justifiable reliance on the apparent
agency.” O'Banner v. McDonald's Corp., 670 N.E.2d 632, 634–
35 (Ill. 1996). They offered no such facts, and this failure
alone is reason enough to reject this theory. See id. The
undisputed record, moreover, contradicts any such infer-
ence: The Kolchinskys stopped their car on the side of the
10 No. 19-1739
road before they could have seen the truck bearing Western
Dairy’s logo, and the truck struck their car from behind.
Finally, the Kolchinskys argue that the judge erred in fail-
ing to address their argument that Western Dairy could be
held liable for the accident based on a joint venture relation-
ship with WD Logistics. But the judge did address it—he
simply concluded that this argument was irrelevant given
his conclusion that any theory of liability against Western
Dairy required finding WD Logistics liable (either individu-
ally or as part of a joint venture). We agree with this analy-
sis. The evidence shows that Western Dairy had no part in
the transaction leading to Mr. Bentley’s fateful trip. And
even if there were a joint venture between WD Logistics and
Western Dairy, Bentley Trucking was not its agent for the
same reason it was not the agent of WD Logistics alone.
AFFIRMED