AAA North Jersey, Inc.: A Case Summary

FACTS: Defendant, AAA North Jersey, Inc. (“AAA”), contracted with Five Star Auto Service (“Five Star”) to perform towing and auto repair services for AAA. Defendant Terence Pershad, a tow-truck driver employed by Five Star, received a call through AAA to assist a crashed car. Upon Pershad’s arrival at the crash site, Pershad and Plaintiff Nicholas Coker (a passenger of the crashed car) began fighting, which ended soon after Pershad assaulted Plaintiff with a knife. Plaintiff filed suit in a New Jersey state court against Pershad, Five Star, and AAA. The trial court determined that AAA held no responsibility for the alleged negligence of Five Star in hiring Pershad, and granted AAA summary judgement. Coker appealed the trial court’s ruling to the New Jersey Appellate Court.

ISSUE: Can a principal be held vicariously liable for negligent acts committed by an agent the company could not exert significant control over?

HOLDING: No. The New Jersey Appellate Court affirmed the lower court’s ruling.

REASONS: A principal cannot be vicariously liable for the negligent acts of an independent contractor the principal has hired. In determining whether an agent qualifies as an independent contractor, the
This duty expands the responsibilities of an employee by requiring that he or she acts only for the benefit of his or her employer. In so acting, employees must refrain from undertaking any measure that results in secret profits for the agent, including engaging in any competition with a current employer. Employees can, however, take action in preparation for competition while still employed, so long as this preparation does not take the form of acts in direct competition with the employer’s business. In determining whether an activity constitutes competition or a mere preparation to compete, courts focus on the nature of an employee’s preparations to guide their