argued as amended september 28 1993.: June 23, 1993.
Appeal from the United States District Court for the District of New Jersey. (D.C. Civil No. 92-02910).
Before: Stapleton, Mansmann and Hutchinson, Circuit Judges.
These consolidated diversity actions arise from a fatal car accident which took the lives of the appellant's father and of the driver of a limousine hired by a casino to transport one of its patrons from the Philadelphia airport. The main issue we address is whether, under New Jersey law, one (such as the casino) who hires an independent contractor who is uninsured, or financially unable to pay tort judgments, as was the limousine company and its driver, is liable in tort for that independent contractor's negligence under New Jersey's "incompetent contractor" exception to the general rule against such imputed liability. We addressed this issue in Becker v. Interstate Properties, 569 F.2d 1203 (3d Cir. 1977), cert. denied, 436 U.S. 906, 56 L. Ed. 2d 404, 98 S. Ct. 2237 (1978), holding that the "incompetent contractor" exception extends to financial incompetence. The district court declined to follow Becker 's majority opinion.
We must also review the sufficiency of the evidence of the casino's alleged direct negligence based on actual or constructive knowledge of the independent contractor's physical incompetence to drive. Finally, this appeal also raises the issue of whether the casino's deviation from its own self-imposed internal hiring criteria, or the fact that it failed to ascertain that the hired independent contractor was not currently registered with the Interstate Commerce Commission, constitutes direct negligence.
The district court granted summary judgment in favor of Showboat on October 20, 1992, and entered an order on December 15, 1992, directing the entry of a final judgment in accordance with Fed. R. Civ. P. 54(b).*fn1 This is an appeal from that order.
The tragic events giving rise to this suit occurred on November 29, 1988, when Richard DeCecco, the driver of the independent contractor limousine service hired by Showboat to transport a patron, Augusto Jorge, from the Philadelphia International Airport, suffered a fatal heart attack en route from the airport, causing the limousine to swerve into oncoming traffic on the New Jersey side of the Walt Whitman Bridge. The ensuing accident was also fatal to Raymond Robinson, the driver of the car which collided head-on with the limousine. Augusto Jorge was severely injured in that accident as well.
DeCecco had a history of heart disease, and the evening before the accident, he visited the emergency room of the Atlantic City Medical Center with chest pains. He was released, however, with a prescription to treat gastritis, an apparent misdiagnosis. Before leaving the airport with Jorge the following day, DeCecco expressed the fact that he was not feeling well and told Jorge that he needed to place a telephone call. DeCecco entered the airport terminal, presumably to locate a telephone booth, but Jorge did not actually witness DeCecco placing the alleged call, nor did he hear any of the alleged telephone conversation. While it appears likely that DeCecco in fact placed a call, perhaps to Showboat, it remains unclear whether DeCecco indicated to Showboat that he was ill, how seriously ill he was feeling at the time, and whether he requested assistance.
An Interstate Commerce Commission investigation subsequent to the accident revealed that the limousine was not insured or ICC approved at the time of the accident, and was thus in service in violation of federal law. We must decide initially whether Showboat's failure to assure that the independent contractor limousine service was insured and thus "financially competent" renders Showboat liable, either imputedly or directly, to the uncompensated victims of the contractor's negligence on the theory of having knowingly engaged an incompetent contractor.
We note preliminarily that Internal Operating Procedure 9.1 reflects our tradition that reported panel decisions are binding on subsequent panels, and in banc consideration is required before overruling such decisions. However, when we are applying state law and there is persuasive evidence that it has undergone a change, we are not bound by our previous panel decision if it reflected our reliance on state law prior to its modification. Smith v. Calgon Carbon Corp., 917 F.2d 1338, 1343 (3d Cir. 1990). This is such a case in that two appellate decisions of the New Jersey courts, handed down subsequent to our Becker decision, have rejected the Becker extension of the "incompetent contractor" exception. We, as a panel, are thus not bound by Becker 's view of New Jersey law.
Faced with the issue of whether liability in tort for the negligence of a financially incompetent independent contractor falls on the hiring entity, the New Jersey Supreme Court noted that "ordinarily where a person engages a contractor, who conducts an independent business by means of his own employees, to do work not in itself a nuisance . . ., he is not liable for the negligent acts of the contractor in the performance of the contract." Majestic Realty Associates, Inc. v. Toti Contracting Co., 30 N.J. 425, 153 A.2d 321, 324 (1959) (citations omitted). The court further noted that this general rule of employer non-liability gives way under certain limited circumstances. The only traditionally recognized exception relevant to the present case is where the employer knowingly engages an "incompetent contractor." Id. See also Terranella v. Union Bldg. & Const. Co., 3 N.J. 443, 70 A.2d 753 (1950); Izhaky v. Jamesway Corp., 195 N.J. Super. 103, 478 A.2d 416 (1984). In dictum which would expand the "incompetent contractor" exception beyond all precedent, however, the court suggested that "in the application of concepts of distributive Justice perhaps . . . a loss arising out of the tortious conduct of a financially irresponsible contractor should fall on the contractee." 153 A.2d at ...