Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

Exercise 2

FACTS AAA North Jersey, Inc., contracted with Five Star Auto Service to perform towing and auto repair services for AAA (formerly the American Automobile Association). One night, Terence Pershad, a Five Star tow truck driver, responded to an AAA call for assistance by the driver of a car involved in an accident in Hoboken, New Jersey. While at the scene, Pershad got into a fight with Nicholas Coker, a passenger in the disabled car. Pershad assaulted Coker with a knife.
Coker filed a suit in a New Jersey state court against Pershad, Five Star, and AAA. The court determined that Pershad was Five Star's employee and that Five Star was an independent contractor, not AAA's employee. Thus, AAA was "not responsible for the alleged negligence of its independent contractor, defendant Five Star, in hiring Mr. Pershad." Five Star entered into a settlement with Coker. Coker appealed the ruling in AAA's favor.
ISSUE Did Five Star work as an independent contractor free of AAA's control?
DECISION Yes. A state intermediate appellate court affirmed the lower court's ruling. AAA could not be held liable for the actions of Five Star, its independent contractor, under the circumstances of this case.
REASON "One who hires an independent contractor has no right of control over the manner in which the work is to be done." AAA did not control Five Star's work-AAA assigned work to Five Star, and Five Star completed it without AAA's supervision. Their agreement stated that Five Star was an independent contractor. Five Star bought its own trucks and other equipment, and it chose which employees to send on towing calls and which trucks and equipment the employees would use. Five Star also hired and fired its own employees.
Additionally, Five Star had provided towing services for AAA for about eight years, and there was no indication that Five Star lacked the skills to provide those services. Five Star also performed auto repair services for customers other than AAA, and AAA was not solely in the towing business. Providing towing and other roadside assistance was part of AAA's regular business, but the automobile club provided a variety of services to its members, and contracted with many businesses-such as gas stations, motels, and others-to provide those services.
FOR CRITICAL ANALYSIS -Legal Environment Consideration Under the contract with AAA, Five Star was required to be available to service AAA members. Does this support Coker's argument that Five Star was AAA's employee? Why or why not?