Studebaker V. Nettie’s Flower Garden, Inc.

Studebaker v. Nettie’s Flower Garden, Inc.

Case Analysis

Stacey Floyd

Webster University

Studebaker v. Nettie’s Flower Garden, Inc.

Summary

        In Studebaker v. Nettie’s Flower Garden, Inc. Judith Studebaker was involved in an automobile accident.  The driver of the other vehicle was James Ferry, a delivery driver for Nettie’s Flower Garden, Inc. (Nettie’s).  Studebaker filed an action against Nettie’s under the respondeat superior theory and was awarded $125,000.00.  Nettie’s appealed the decision.          James Ferry was a delivery driver for Nettie’s and furnished his own vehicle.  Nettie required his vehicle to have heating and air conditioning and they also set standards for Ferry’s dress attire, his conduct, and they also monitored his compliance.  Ferry was paid $2.50 - $3.00 per delivery and was required to make two runs per day with the first run beginning at 9:30 a.m. and the second at 1:30 p.m.  Ferry was also required to stop at the downtown St. Louis shop to transport items back to the Grand Avenue shop for which he was paid $5.00 even if there were no items to transport.  Ferry had an assigned area but he mapped out his own route.  On the day of the accident, after completing his morning run and seeing there were no items to for him to transport from the downtown shop to the Grand Avenue shop, Ferry stopped by a pawn shop on personal business. On the way to the Grand Avenue shop to begin his afternoon run, his van collided with Studebaker’s vehicle.  

        Nettie’s argued that when the accident occurred Ferry was not driving his vehicle to serve their business interests.  However the jury found that there was significant evidence to determine that at the time of the accident, Ferry was advancing the business interest of Nettie’s and was acting within the scope of his employment.  Nettie’s further contended that there was no substantial evidence that they controlled or had the right to control Ferry at the time of the collision.  However the evidence showed that Nettie’s had previously set standards (attire, vehicle requirements, etc.) for how Ferry performed his job so this point was also denied.  

 Questions

1.  Did Nettie's control or have the right to control Ferry at the time of the collision?

Yes, Nettie’s did control or have the right to control Ferry at the time of the collision.  Although Ferry was not paid by the hour, there were certain standards that Ferry set for him.  His vehicle had to be heated and air conditioned, his attire had to be neat in appearance, and he had to conduct himself in a certain manner. Nettie’s also monitored these requirements and if Ferry fell below standard, Nettie’s reprimanded him.  Also even though Ferry chose his own route, he was assigned a territory and was required to make two runs each day plus stop by the downtown location to transport items back to the Grand Avenue location.  Ferry’s first run was at 9:30 with his second run starting at 1:30 and the accident occurred at 11:45 a.m. while he was on his way to the Grand Avenue location.  So Nettie’s did have control or the right to control Ferry at the time of the collision.

1. Is not the fact that Ferry, just prior to the accident, had gone to a pawn shop compelling evidence that he was using his van exclusively for his independent purposes and was not acting within the course of his employer's business?

No this is not compelling evidence because Ferry was not just starting his day. He had already completed his morning run and made his stop at the downtown location and was on his way back to the store to make his evening run. So although he made a stop to handle personal business, he was still in the middle of his daily routine that is required by Nettie’s.

1. Give your opinion on the ethics of businesses converting employees to independent contractors to reduce or eliminate costs such as health, and retirement benefits, vacations, overtime, etc.

Depending on the type of business, converting employees to independent contracts can be beneficial for both the employer and the employee. Contingent workers may receive an immediate financial gain due to an underpayment in taxes. Also they are afforded the flexibility that a regular employee may not have.  Also by working as a contract or contingent worker, an employee can use that time to determine if the company is a company they would want to work for on a permanent basis.  For employers, converting workers to contract workers can save them expenses such as contributing to social security, unemployment and health insurance, and worker’s compensation.  Just as there are benefits, there are also downsides to converting employees to contract workers.  For the employee, they will lose their benefits and many employees seek out positions with benefits in mind.  They also may not have the job security that regular employees may have.  Employers may start to lose employees because many employees need their benefits.  Employers may also incur recruiting expenses as they try to fill the contracts.  All in all I would say that before an organization converts their employees to contract workers and before the workers agree to accept the contract, they should both weigh the pros and cons.  Because even though the employer converts the employees, the employees still have a choice on whether or not they continue to work for the company as a contract worker.