§77.5 Loaned Servant Doctrine

The Case: Arrow Electronics v. Adecco Employment Services, Inc ., 195 S.W.3d 646 (Tenn. Ct. App. 2005).

The Basic Facts: Plaintiff used temporary workers from Defendant's temporary employment service. Plaintiff sued defendant for property damages caused by temporary worker's negligence while working in Plaintiff's warehouse.

The Bottom Line:

  • "Tennessee recognizes the 'loaned servant' doctrine, under which '[a]n employee of one employer may become the servant of another and shift the liability for his negligent acts to the second employer.' Parker v. Vanderbilt Univ., [767 S.W.2d 412, 416 (Tenn. Ct. App. 1988)] (citing Richardson v. Russom Crane Rental Co., [543 S.W.2d 590 (Tenn. Ct. App. 1975)]). The test to determine whether an employee is a loaned servant of another employer has been set out in Gaston v. Sharpe, 168 S.W.2d 784 (Tenn. 1943). In Gaston, the Court said:
    [A] servant at a particular time may remain under the control of his general employer for some purposes and yet be under the control of a special employer for others. Likewise it sometimes happens that a particular work in which the servant is engaged may be properly considered as the work or business of both the general employer and the special employer.

    The question is difficult. It is considered at some length in [Restatement of Agency, § 227]. We take the following from [Restatement] as a satisfactory rule: 'Since the question of liability is always raised because of some specific act done, the important question is not whether or not he remains the servant of the general employer as to matters generally, but whether or not, as to the act in question, he is acting in the business of and under the direction of one or the other. It is not conclusive that in practice he would be likely to obey the directions of the general employer in case of conflict of orders. The question is as to whether it is understood between him and his employers that he is to remain in the allegiance of the first as to a specific act, or is to be employed in the business of and subject to the direction of the temporary employer as to the details of such act. This is a question of fact in each case.'
    168 S.W.2d at 786." 195 S.W.3d at 651-52.
  • "In Gaston, the Court concluded that the question of whether a servant of one employer has become the servant of another is generally a question of fact for the jury. However, in Parker v. Vanderbilt Univ., 767 S.W.2d 412 (Tenn. Ct. App. 1988), the Court stated that:
    As we have discussed above, whether a servant of one employer has become the servant of another is a question of fact. Gaston v. Sharpe, [168 S.W.2d at 786]. Ordinarily, that determination would be for the jury. However, in this case, the relationship between the two hospitals is governed by a written agreement. The interpretation of an unambiguous written agreement is a question of law for the court. Merritt v. Nationwide Warehouse Co., Ltd., [605 S.W.2d 250, 255 (Tenn. Ct. App. 1980)].
    Id . at 416." Id. at 652.
  • "By its plain language, the Agreement between Adecco and Arrow establishes that McCurdy remains the employee of Adecco as to matters generally, but, as to any work done for Arrow, he is acting in the business of and under the direction of Arrow. Therefore, under the authority outlined above, and pursuant to the plain language of the Agreement, McCurdy is the loaned servant of Arrow and, as such, Arrow would be liable for any negligence on the part of McCurdy in performing his duties for Arrow. However, despite the plain language of the Agreement, the question still remains as to whether the Agreement was being followed at the time of the incident giving rise to this litigation (i.e. whether McCurdy was actually under the direction and control of Arrow at that time)." Id. at 653.
  • "[After reviewing the facts in the record, the Court concluded that w]hether misunderstanding, forgetfulness, or negligence, we find that McCurdy was the loaned servant of Arrow when performing the specific act that caused the injury in this case." Id. at 654.

Recent Cases:   Gager v. River Park Hosp., No. M2009-02165-COA-R3-CV, 2010 WL 4244351 (Tenn. Ct. App. Oct. 26, 2010) (holding plaintiff in retaliatory discharge case was not the employee or loaned servant of defendant).

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The foregoing is an excerpt from Day on Torts: Leading Cases in Tennessee Tort Law, published by John A. Day, Civil Trial Specialist, Fellow in the American College of Trial Lawyers, recipient of Best Lawyers in America recognition, Martindale-Hubbell AV® Preeminent™ rated attorney, and Top 100 Tennessee Mid-South Super Lawyers designee. Read John’s full bio here.

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