The Privette doctrine and material suppliers

Building the case that an injured employee of a material supplier is not a subcontractor bound by Privette

2024 December

Are employees of material suppliers  barred from suing owners or general contractors for personal injuries suffered at a job site?

Under Privette v. Superior Court (1993) 5 Cal.4th 689, neither an independent contractor nor its employees can usually pursue a civil action for personal injuries against an owner or contractor that hired the independent contractor. The employee’s remedy for injuries is limited to a workers’ compensation claim. But over time, the Supreme Court has carved out two exceptions to the Privette doctrine:

(1) When the hirer retains control over safety at the jobsite, Hooker v. Department of Transportation (2002) 27 Cal.4th 198, and (2) when the employee is injured as a result of a concealed danger of which the hirer knew or should have known. (Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659.) The threshold issue, therefore, is whether the plaintiff-employee either was, or worked for, an independent  contractor. But not every company on a construction site is an independent contractor. It is common to have material suppliers at a construction site. What if one of these suppliers, or their employees, is injured on the site?

Is their claim barred by Privette?

None of the policy reasons for restricting employees of subcontractors to workers’ compensation justify extending that restriction to employees of material suppliers. Neither the Supreme Court nor any Court of Appeal has ever held that Privette applies to a material supplier.

Privette, briefly

“At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor’s negligence in performing the work. . . . Central to this rule of nonliability was the recognition that a person who hired an independent contractor had no right of control as to the mode of doing the work contracted for.” (Privette, 5 Cal.4th at p. 693.)

The common-law rule was based on the principle that “the work performed was the enterprise of the contractor, who, as a matter of business convenience, would be better able than the person employing the contractor to absorb accident losses incurred in the course of the contracted work.” (Ibid.) The contractor, Privette explained, could do this by including the cost of safety precautions and insurance coverage in the contract price. (Ibid.)

Over time, exceptions developed as courts recognized the harsh effects of the rule. A key exception was the doctrine of peculiar, or special, risk when the contracted work posed an inherent risk of injury to others. As Privette explained,

It was believed that as between two parties innocent of any personal wrongdoing – the person who contracted for the work and the hapless victim of the contractor’s negligence – the risk of loss occasioned by the contracted work was more fairly allocated to the person for whose benefit the job was undertaken. . . . Also, by spreading the risk of loss to the person who primarily benefitted from the hired work, the courts sought to promote workplace safety, a concern of great significance to the public.

(Privette, 5 Cal.4th at pp. 693-694.)

The peculiar-risk doctrine eventually included protection for the hired contractor’s employees who were injured due to the negligence of that contractor. (See, e.g., Woolen v. Aerojet General Corp. (1962) 57 Cal.2d 407, 410-411.)

Privette reconsidered this application of the peculiar-risk doctrine. In Privette, a homeowner hired a roofing contractor. One of the contractor’s employees, injured when he fell from the roof, sued the homeowner under the peculiar risk doctrine. The Supreme Court held that the homeowner was not liable to the employee, explaining:

the peculiar risk doctrine seeks to ensure [the injured party] will not go uncompensated, that the risk of loss for such injuries is spread to the person who contracted for and thus primarily benefitted from the contracted work, and that adequate safety measures are taken to prevent injuries resulting from such work. . . . But in the case of on-the-job injury to an employee of an independent contractor, the workers’ compensation system of recovery regardless of fault achieves the identical purposes that underlie recovery under the doctrine of peculiar risk: it ensures compensation for injury by providing swift and sure compensation to employees for any workplace injury; it spreads the risk created by the performance of dangerous work to those who contract for and thus benefit from such work, by including the cost of workers’ compensation insurance in the price for the contracted work; and it encourages industrial safety.

(Privette, 5 Cal.4th at 701, emphasis added.)

A rationale for this conclusion was that the hirer is typically less knowledgeable, compared to the contractor, to prevent injury to the contractor’s employees than is the contractor. (Privette, 5 Cal.4th at pp. 693, 699-700; Sandoval v. Qualcomm, Inc. (2021) 12 Cal.5th 256, 269.)

Extension of the Privette doctrine

The Supreme Court extended Privette to preclude actions by an independent contractor’s employees against hirers for failing to take special precautions against known special risks. (Toland v. Sunland Housing Group, Inc. (1998) 18 Cal.4th 253, 267.) In Camargo v. Tjaarda Dairy (2001) 25 Cal.4th 1235, the Court held that Privette and Toland barred an independent contractor’s employee from recovery against a hirer on a theory of negligent hiring of the subcontractor.

In Seabright Ins. Co. v. USAirways, Inc. (2011) 52 Cal.4th 590, 602-60, the Court considered Privette’s application to an action against a hirer (i.e., either an owner or a contractor who hires an independent contractor) based on a nondelegable duty. The Court acknowledged a distinction between (1) regulatory requirements that predate the contracted work and apply to owner/hirer and, in contrast, (2) regulatory requirements (such as Cal-OSHA regulations) that arise from the work the contractor was hired to perform. Privette applies to the latter, and bars the contractor’s employee’s action against the hirer/owner, because it delegated compliance with those regulations to the contractor.

In Hooker, supra, 27 Cal.4th 198, the Court held that a hirer may be liable to an employee of a contractor if the hirer retained control of the safety conditions at the jobsite and if the hirer affirmatively contributed to the employee’s injuries. Kinsman, supra, 37 Cal.4th 659, held that an employee could pursue a civil action if her or his injury was the result of a concealed danger of which the hirer knew or should have known, the employee or survivors may seek compensation from the hirer.

Despite its broad language, Privette restricted its application to contractors or employees of contractors or subcontractors – that is, those who are actually doing work on the land, building, or project – what the Court refers to as “contract workers.” In Privette, the plaintiff’s employer was a roofing company who was hired to install a new tar and gravel roof on Privette’s duplex. The plaintiff’s employer was not selling roofing materials or any other supplies.

Privette did not state or imply that its exception to the peculiar-risk doctrine applied to everyone who is incidentally on the premises, such as vendors or material suppliers for the contractors. Neither Toland, Camargo, nor Seabright held or implied that Privette extended to vendors or materials suppliers. “[L]anguage in an opinion must be understood in the light of the facts and the issues before the court, and an opinion is not authority for a proposition not considered.” (Gomes v. County of Mendocino, 1995) 37 Cal.App.4th 977, 985.)

The burden on the defendant to show an independent contractor-hirer relationship

Alvarez v. Seaside Transportation Servs. LLC (2017) 13 Cal.App.5th 635, 642, explained that “[t]he Privette line of decisions establishes a presumption that an independent contractor’s hirer delegates to that contractor its tort law duty to provide a safe workplace for the contractor’s employees.” But a “presumption affecting the burden of producing evidence does not arise until the foundational facts are established.” (Id., 13 Cal.App.5th at p. 644.)

A defendant is not entitled to Privette’s presumption until the defendant first produces evidence that the plaintiff was an independent contractor or an employee of an independent contractor hired to perform work on the jobsite. Whether Privette applies depends on whether the defendant establishes that a hirer-independent contractor relationship existed between the worker’s employer and the defendant. This is not an exception to Privette; it is the defendants’ threshold burden of proving a foundational fact that is embedded in the Privette doctrine.

There is a distinction between the vendor-purchaser relationship and the employer (or hirer)-relationship. (White v. Uniroyal, Inc. (1984) 155 Cal.App.3d 1, 25.) They might not be mutually exclusive, but they are not identical and do not necessarily overlap. Whether the foundational fact exists – whether the relationship is other than one of vendor-purchaser – is a triable issue for the jury. (Ibid.)

Distinctions between material suppliers and contractors

California law draws a distinction between material suppliers and contractors. In Theisen v. County of Los Angeles (1960) 54 Cal.2d 170, Theisen, a general contractor, subcontracted with Petterson Corporation to fabricate custom-made doors. Petterson in turn sub-subcontracted with Durand Door Supply to make some of those doors. Petterson failed to pay Durand in full. Durand sought its remedies as a subcontractor under Code of Civil Procedure sections 1190.1 et seq. If Petterson was a subcontractor, then Durand was as well and would be entitled to avail itself of those remedies. If Petterson was a material supplier, then so was Durand and it was not entitled to the statutory remedies. (Theisen, 54 Cal.2d at p. 172.)

The parties in Theisen debated whether an entity performed its work on the premises, or off, as the touchstone of whether it was a contractor or material supplier. The Supreme Court saw the issue differently.

In our opinion the essential feature which constitutes one a subcontractor rather than a materialman is that in the course of performance of the prime contract he constructs a definite, substantial part of the work of improvement in accord with the plans and specifications of such contract, not that he enters upon the job site and does the construction there. We are not here concerned with the mere furnishing of materials from which doors were to be constructed by the general contractor nor are we interested in the sale of standard stock-in-trade doors. Specifically we are dealing with a contract whereby the doors were to be fabricated according to the specifications of the prime contract and as a constituent part of the construction of the public improvement which was the subject of the contract.

(Theisen, 54 Cal.2d at p. 183, emphasis added.) Because the doors were custom- made according to the architect’s specifications, the Supreme Court concluded that Petterson was a subcontractor and Durand was a sub-subcontractor. (Theisen, 54 Cal.2d at p. 1834.)

Piping Specialties Co. v. Kentile, Inc. (1964) 229 Cal.App.2d 586, followed Theisen to conclude that a company that merely sold pipe fittings was a material supplier, not a contractor. In Piping Specialties, the landowner contracted with a general contractor to construct a “tank farm” for a plant on its land. The general contractor contracted with Gray Fabrications for the fabrication and delivery of various fittings. Gray, in turn, purchased from Piping materials for Gray to use to complete its contract with the general contractor. If Gray was a subcontractor, then Piping, as a material supplier to Gray, was entitled to statutory remedies to be paid. If Gray itself was a material supplier, however, then Piping was not so entitled. (Piping Specialties, 229 Cal.App.2d at p. 587.)

Piping Specialties held that Gray’s work was not “in accord with the plans and specifications” of the project, within the meaning of that test as used in Theisen. Piping Specialties, 229 Cal.App.2d at 589. The appellate court rejected the notion that the material supplier could be a contractor because, “in one sense, all materials which ultimately find their way in a completed work of improvement must ‘accord with’ the plans or specifications.” (Piping Specialties, 229 Cal.App.2d at p. 589.)

Theisen, as Piping Specialties explained, drew a distinction between items that are designed and manufactured for a particular job and stock-in-trade items, that are designed for use in similar jobs whenever they might be needed:

We do not regard it as necessarily controlling that the items are kept in stock ready for immediate delivery (although that fact, if true, weighs in favor of the materialman category), but whether or not the item is one which manufacturers stand ready to produce and deliver, on order, according to designs already in existence.

(Ibid.)

Contractors don’t just furnish materials, they install them

Business & Professions Code, Chapter 9, which regulates contractors, specifically disavows its application to material suppliers. After Theisen, the Legislature amended Business & Professions Code section 7045 to state that those who supply materials, even finished products manufactured to unique specifications, are not contractors unless they also install those materials:

This chapter does not apply to the sale or installation of any finished products, materials, or articles of merchandise that do not become a fixed part of the structure, nor shall it apply to a material supplier or manufacturer furnishing finished products, materials, or articles of merchandise who does not install or contract for the installation of those items.

(Bus. & Prof. Code § 7045, emphasis added.) Business & Professions Code section 7052 reinforces this distinction:

This chapter does not apply to any person who only furnishes materials or supplies without fabricating them into, or consuming them in the performance of, the work of the contractor.

(Bus. & Prof. Code § 7052.)

Defendants might contend that Theisen and Piping Specialties pre-date Privette and did not involve injured workers. The statutes involved in those decisions concern contractors’ licenses so, the defendants’ contention might go, they are inapplicable as well.

But the pertinent distinction drawn by the Legislature and the courts is between furnishing materials and, in construction matters, doing a substantial part of the work of the improvement according to the specifications and plans. The mere fact that the Supreme Court explained the distinction in one context does not mean its reasoning is inapplicable or unsound in other contexts.

A look at an on-point Florida case

No court in California has addressed this question in this context, but Florida has. By statute, workers’ compensation benefits are the exclusive remedy for employees injured on the job, regardless of whether they work for a contractor or subcontractor, and the contractor and subcontractor are responsible for such benefits. (Fla. Stat. § 440.10(1)(a), (1)(b).) All contractors and subcontractors, likewise, are entitled to immunity from civil liability. (Adams Homes of Northwest Florida, Inc. v. Cranfill (Fla.App. 2009) 7 So.3d 611, 613.)

In Adams Homes, a builder purchased roofing materials from Seacoast Building Supplies. The agreement covered purchase and delivery to the construction site. A subcontractor was responsible for installing the roof on the home. Cranfill worked for Seacoast. He delivered the roofing materials and, as customary in the industry, delivered the materials to the roof. Cranfill was seriously injured when the plywood cover collapsed and he fell through the roof. He filed suit against the builder for negligent construction or maintenance.

The appellate court held that Cranfill’s employer, Seacoast, was a materialman and thus the builder was not entitled to immunity from civil suit. Adams Homes examined the state’s construction lien statute, which defined a contractor as a person other than a “materialman.” “‘[M]aterialman’ means any person who furnishes materials under contract to the owner, contractor, subcontractor, or sub-subcontractor on the site of the improvement or for direct delivery to the site of the improvement and who performs no labor in the installation thereof.” (Adams Homes, 7 So.3d at p. 614, citing Fla.Stat. § 713.01(20).) Delivery of roofing materials to the roof is “no more than delivery of the materials in the usual fashion. Putting them on the roof does not make the supplier a subcontractor.” (Adams, 7 So.3d at p. 616.)

Adams Homes also addressed and rejected the builder’s arguments that, by delivering the roofing materials to the roof instead of just leaving them on the ground, Seacoast was doing roofing work and, thus, Cranfill was a deemed employee of the builder.

First, delivery of roofing materials to the roof, according to the general manager of the Adams Homes local office, is standard operating procedure. Likewise, a manager for Seacrest testified that roofing materials as part of standard practice were “delivered to the roof top.” This seems to us to be no more than delivery of the materials in the usual fashion of a vendor and vendee, and nothing more. Putting them on the roof does not make the supplier a subcontractor.

(Adams Homes, 7 So.3d at p. 616.)

The appellate court relied in part on Goldstein v. Acme Concrete Corp. (Fla. 1958) 103 So.2d 202, 205, which held that an employee of a concrete supplier, who was pouring concrete into forms constructed by the general contractor, was not a statutorily deemed employee of the general contractor. The concrete supplier was a materialman; its relationship with the general contractor was vendor and vendee.

In Rebisso, Inc. v. Frick (1952) 94 Ohio App. 45, 108 N.E.2d 282, aff’d  in  part,  rev’d  in part  on  another  point, (1953) 112 N.E.2d 651, an action to foreclose on a mechanics lien, the manufacturer of parts of septic tank were delivered to a job site and assembled for later installation by plumbing contractor. The appellate court held that the manufacturer was a material man and not entitled to a mechanic’s lien:

Whether materials furnished by a dealer to a contractor to be used in the process of the erection of a building were selected from the stock of the dealer or made by him in his own establishment or procured from another for the particular purpose, such dealer, having nothing to do relative to the installation of said materials or the fabrication thereof into the structure, is a material man and not a subcontractor.

(Rebisso, Inc., 94 Ohio App. at p. 47.)

As a matter of policy, Privette should not be extended to material suppliers. The Supreme Court has explained that the “hirer is typically less knowledgeable and more poorly positioned to prevent injury to the contract workers than the contractor is.” (Sandoval, 12 Cal.5th at p. 270, citing Privette, 5 Cal.4th at pp. 693, 700.) A material supplier is not “better able than [the hirer] to absorb accident losses” by “including the cost of safety precautions and insurance coverage in the contract price.” (Privette, 5 Cal.4th at p. 693.)

Of all the people who are at the jobsite, the material supplier and its delivery personnel are the least qualified to manage the safety of the jobsite. Not only do suppliers and deliverers not have the expertise, their authority typically extends no further than delivering the materials to the hirer, contractor, and subcontractors, so they can use the material for the construction project.

Using the example of a purchase of roofing materials, if a material supplier was responsible for installing and anchoring a fall-protection system before delivery of goods to a roof, construction projects would face significant increases in material costs and enormous delays. Material suppliers would have to hire their own subcontractors to build the fall-protection system, as well as to supervise the system while it was being used. The sale of stock-on-hand would no longer be just a sale; it would be a construction project in itself.

Pleading and investigation

When representing a plaintiff who worked for a material supplier, avoid pleading any language that concedes or insinuates that the plaintiff’s employer was a contractor or subcontractor. Specify that the plaintiff’s employer supplied materials for use by others (e.g., the workers and companies conducting the repairs or construction on the site).

Get the purchase contract and all correspondence about it from the material supplier and from the contractor. Make sure that the contract is between a vendor and purchaser and that the vendor is not doing anything that could be considered installation of the materials on the site. Examine what the material supplier was obligated to do in order to deliver the materials.

Learn the customs of the industry for delivery of the materials. This might require expert testimony. For roofing-material suppliers, for example, the custom of the industry is to deliver the roofing materials onto the roof. This means bringing specialized equipment to the construction site. Investigate whether the material supplier has any relevant contractor’s license. Establish that the hirer understood the customs of the industry, that it was not expecting the material supplier to do anything other than delivering goods. Defendants might try stretching the language of Privette and assert that the material supplier was “hired” to sell or provide the materials. Do not let such descriptions go unanswered.

Material suppliers might give their employees equipment for their safety, such as harnesses to attach to a fall-restraint system. Defendants will point to this safety equipment and urge that it proves that the material supplier was a contractor and responsible for the safety of its own employees. The harness, however, is useless without a fall-protection system to which to attach it.

During discovery, therefore, establish that the material supplier provided safety harnesses for its employees to use if required by the contractor or owner, but the material supplier was not responsible for installing the fall protection system in the first place. In this example, thus, as part of discovery establish that the material supplier’s price for the goods did not include constructing a fall protection system and, if the material supplier was responsible, the price would have been dramatically greater.

Privette issues are frequently the subjects of, and resolved by, motions for summary judgment. Correct pleading and discovery are imperative to show that there is a triable issue of whether the relationship between the plaintiff’s employer was one of material supplier and purchaser, or independent contractor and hirer.

Be wary of the argument that Privette creates a presumption that an independent contractor’s hirer delegates to that contractor its tort law duty to provide a safe workplace for the contractor’s employees. As Alvarez, supra, explained, the defendant does not get the benefit of that presumption “until the foundational facts are established.” (Id., 13 Cal.App.5th at 644, emphasis added.) In summary judgment – and at trial – the burden is on the defendants to establish the foundational facts.