# Petition for Writ of Certiorari — Peterson Brothers Brothers Construction Construction Construction, Inc. v. Lexington Insurance Insurance Insurance Co Co (No. 07-522) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1599%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2007 ## Text Supreme (Cort U.S. (i) 07-522 00T19 2007 IN THE Supreme Court of the United States PETERSON BROTHERS CONSTRUCTION, INC., A CALIFORNIA CORPORATION; PBC PAVERS, INC., A CALIFORNIA CORPORATION; PRECISION LEASING, INC., A CALIFORNIA CORPORATION, PETITIONERS VU. LEXINGTON INSURANCE COMPANY, A DELAWARE CORPORATION PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT PETITION FOR WRIT OF CERTIORARI JEFFREY M. EPSTEIN Counsel of Record RICHARD E. BLASCO Hunt Ortmann Blasco Palffy & Rossell, Inc. 301 N. Lake Avenue, 7" Floor Pasadena, CA 91101-1807 (626) 440-5200 Attorneys for Petitioners 2 nT SS NAS AA tt PAROLE PEE CURRY & TAYLOR @ WASH O.C. @¢ (202) 393-4141 ¢ USBSCINFO.COM i QUESTIONS PRESENTED The questions presented are: 1. Does an employer's compliance with the Americans with Disabilities Act of 1990, and Department of Transportation Regulations, which compliance results in death, bodily injury and property damage, constitute: a. As a matter of public policy, an "independent" cause of an accident for which an employer is entitled to coverage under its commercial general liability policy; and/or b. As a matter of contract interpretation, whether employer conduct which is found to be "independent" under state law, thereby causing the employer to have direct liability (not vicarious liability) to an injured party, is an "independent" cause of an accident for which an employer is entitled to coverage under its commercial general liability policy? 2 Can the Ninth Circuit Court of Appeals ignore state law involving the interpretation of a contract of insurance, when such law has been established by the highest court in the state? u RULE 29.6 The Petitioners, Peterson Brothers Construction, Inc., PBC Pavers, Inc., and Precision Leading, Inc., (collectively "Petitioners"), state that they are California corporations, with a brother/sister or parent/subsidiary relationship, and that they are not publicly held, and that no publicly held company owns any of the stock of any of the Petitioners. vi TABLE OF CONTENTS Page IEE Fr NIE TUNED ei cacinensiccercitsnssssnimisreesibesairidasislinnccitbaibenidivobiine i ks _ROR TERT EE eee PA SERN ICT Ne ae REE Oe ii ee ee iceciciovhiiciisitteioveansiecineibasiilpeniesiobsobiainicapitunoaecian iv Pee ORE AIE siceisinvsctbasiincsinthiuiieaiccseeriiesenosenvi™arinbulitinaniabibsininiitil 1 I ec 1 RELEVANT PROVISIONS INVOLVED ...........ccccccsccscesssssssscsscecees ] yd EERE EESRR Neer cers aN OE Dt OMRON ERED SON ORE IRE. l REASONS FOR GRANTING THE PETITION .uu......cscccceee-ceesseesescees 8 I iiilik isc ste tecnica Accesses dicinccitiadntiahamiinicanieniodademseoaiadan lie 28 APPENDIX Be I sai iiss isrsececderstmip ator la ee ee IE CIN isis piicceccicrsemssinoconihitaveininientadinness 3a UB. EPSP IE COUT FUMGINONE ncceccccceoseiseoerscinesesantiatiensanins 4a Relevant Provisions Involved. .............cccccccccocccsccccccccsvoccese 12a Ww TABLE OF AUTHORITIES Page CASES BANVILLE V. SCHMIDT (1974) 37 CAL.APP. 4TH 92, FUN sbsikechasa sce diahanlalencdiesiicuetollan ttc tice eaica bbe tna adil gs 21 BROWN V. LUCKY STORES (2001) 246 F3D 1182, 1188............ 12 BURNETT V. U.S. AIR, INC. (2000) 228 F3D 1105, 1110- ER BA sissitensnistincinseiceoncennaeanddeieciabnesadalibsiicebaiabntakekabilesintcieesiek 12 EASTERN ASSOCIATED COAL CORPORATION V. UNITED MINE WORKERS OF AMERICA (2000) 531 Te CHIE GUE ids. ssuscsuidassiiiok cinbedvnnaeidatsinsidansbibicdedieiiaadasadiinioaditidecacasiioss 6 FEDERICO V. SUPERIOR COURT (JENRY G.) 59 CAL.APP. 4TH 1207, 1213 (RD DIST. 1997).................... 14, 15 HERNANDEZ V. HUGHES MISSLE SYSTEMS Co. (2004) ee is et icissscdinscnedierevinsoesaniccconicsetninassaaisibininabietiisashis 12 J.C. PENNEY CAS. INS. Co. V. M. K. (1991) 5 CAL. 3RD | RAEN PLE paNERI CITT ON TESTE TBC ET NG MOEN 20 JOHNSON V. FANKELL, 520 U.S. 911, 916 (1997)........... iuabaaens 26 MENDOZA V. CITY OF LOS ANGELES, 66 CAL.APP. 4TH 1333, 1339-1340 (2D. DIST. 1998) ..... cee ceeeeee eens 14, 15 ROMAN CATHOLIC BISHOP V. SUPERIOR COURT, 42 CAL.APP. 4TH 1556, 1564-1565 (4TH DIST. 1996)......14, 16, 17 SAFECO INSURANCE COMPANY V. GILSTRAP (1983) 141 CAL APP SD GO6, GEG noi ccnccsccccesiscssoccncosnsecsosenssstsveases 25 Vv STATUTES BFE FSET Th ics dncsceiiechersitieishtndbonvioneinl ecihesbiesiianadieniacaasianbaniiebiantas 1 Oe TN ie TE ithninnksediennciniietioatcsivienmiennabistontetececnnbatisaia 23 rata ie INTUTE csthicecisesntiicdpsicsnsidiscieicekoupapusindionnnasnsiibienpapeddininaten 1 Nae Oe siccicasiieihvsngennieivssesitniatnnisinecaniteelraebegipabbneenieididiniis 12 A ee BW cases viseincirsdanieomeersiicecdaes iasiialebctbaiehineiadlaninbiaisetiain 12 Oe Res re GE FAT eictiinseeseorviceevtercnetinnietsernnipinionbiininniie 6 ae ee cccipcinecasccicieniccvainoviiciaeeniteticiesinidbaianiiallins 6 Oa 19, 20 CROPS CHVE COG6 GIBBS o.cscccrcecosweseceseseesorsicntonsoveepvovensents 19 OTHER AUTHORITIES nc RA MIO E Pciiecctnitesingncsunicatensctnsdiciedeinitiasneabininiianen 14 l OPINIONS BELOW The Opinion Memorandum of the United States Court of Appeals for the Ninth Circuit affirming the decision of the District Court, Unpublished Opinion, filed June 7, 2007, and is set forth in the Appendix, Exhibit La, 1 pp. la to 2a. The Judgment of the United States District Court, Central District of California, filed April 11, 2005, was not reported and is set forth in Appendix, Exhibit 2a, p. 3a. The Order Granting Lexington Insurance Company's Motion for'Summary Judgment, filed April 11, 2005, was not reported, and is set forth in the Appendix, Exhibit 3a, pp. 4a to 1la. JURISDICTION The Opinion Memorandum of the United States Court of Appeals for the Ninth Circuit was filed on July 23, 2007. This Petition for certiorari was timely filed, and this Court has jurisdiction under 28 U.S.C. §1254(1). RELEVANT PROVISIONS INVOLVED (See appendix) STATEMENT I. Introduction. This case involves an employer's attempts, beginning in the fall of 1999, through March 8, 2001, to comply with the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq. ("ADA"). An employee of the Petitioner, was involved in an accident on a public road while operating a commercial truck and trailer. The 2 accident occurred on March 8, 2001, and resulted in multiple people being injured and damage to multiple vehicles. All claims related to the accident were resolved by various settlements that occurred prior to this commencement of the insurance coverage action which is the subject of this Petition. The amount of the settlement payments exceeded the coverage provided by the auto and umbrella policies maintained by Petitioner, by $400,000. It is undisputed that multiple risks contributed to cause the accident. The issue presented in this Petition, is whether compliance by an employer with the ADA, is an "Independent" cause of the accident which is not “dependent” on the use of an “auto,” thereby giving rise to coverage under the employer's commercial general liability policy (the "CGL Policy"). The Honorable Cormac J. Carney, United States District Judge, found that no coverage existed for PBC under the CGL Policy issued by Lexington Insurance Company ("Lexington").' However, during oral argument, Judge Carney stated that: I don't like the argument if you are trying to comply with the law, that you should be penalized for that. But I also am a big believer in the public policy of freedom of contract. * * *K * It's an interesting issue, but I do think the freedom of contract policy prevails here. ’ Ex. 2a, p. 3a, and Ex. 3a, pp. 4a to Ila. 3 Report's Transcript of Proceedings, Case No. SACV 04- 676-CJC, Monday, March 21, 2005. Subsequently, the Ninth Circuit Court of Appeals ("Ninth Circuit"), affirmed Judge Carney's judgment. The Ninth Circuit concluded that public policy considerations do not justify overriding the unambiguous auto exclusion in the plaintiff-appellant's policy.’ The Petitioner is requesting this Court to find that, either as a matter of public policy, or based upon contract interpretation, that an employer's actual compliance, or even a good faith attempt at compliance, with the ADA, is always an "independent" cause of an accident resulting in damage, when but for compliance with the ADA, the employer would have been required by state law to terminate the employee or assume the risk that an accident might occur resulting in injury to persons or damage to property, or, as tragically occurred in this case, a fatality. Il. Factual Background of Accident. The auto accident occurred on March 8, 2001 (the "Accident"). At the time of the Accident, Petitioner's employee, Anthony Saiz ("Saiz") was operating a dump truck, which was filled with "base" material (i.e., sand), and was towing a trailer which was carrying a tractor. Saiz was operating the vehicle in the course and scope of his employment for the Petitioner at the time of the Accident. As a result of the Accident, multiple individuals were injured, multiple vehicles were damaged, and Dr. Kenneth Larkin was killed. Litigation was commenced by the deceased's wife, the deceased's 2 Ex. la, pp. la to 2a. 4 parents, and the estate of the deceased (collectively the "Larkin Actions"), as well as by the other injured individuals (the "Other Actions"), against multiple defendants, including Saiz and Petitioner. The litigation with the Petitioner and Saiz culminated in the execution of various settlement agreements, requiring payments to all injured parties totaling $4,400,000.00. The amount of the settlement payments exceeded the Petitioner's auto and umbrella policy coverage by $400,000. The pre-printed form of the main policy selected by Lexington was an Insurance Services Office, Inc. form entitled Commercial General Liability Coverage Form; CG 00 01 01 96, Policy No. 0150 899, (the "CGL Policy"). The coverage issue was decided by the District Court, upon the filing of cross-motions for Summary Judgment and Summary Adjudication by Petitioner (also referred to as "PBC")? and Lexington. In their cross- motions the parties primarily relied upon a "Stipulated Statement of Uncontroverted Facts and Disputed Conclusions of Law." The police reports prepared by the California Highway Patrol and the City of Anaheim indicated that Saiz was under the influence of methamphetamine, amphetamine and opiates at the time of the Accident. These facts were based upon blood tests of Saiz that were taken at the hospital where he was being treated for injuries he suffered in the Accident. As a result of these facts, in approximately September, 2002, Saiz pled guilty 3 Though not relevant for purpose of this Petition, PBC is a group of companies with common ownership, all of which were insured's under the CGL Policy. 5 to involuntary manslaughter while intoxicated, and was sentenced to one year in jail. The Larkin Actions alleged that PBC "inadequately drug tested Defendant Saiz despite the requirements of federal regulations." The Larkin Actions further alleged that PBC negligently allowed Saiz to return to his position as a driver, "based upon his background driving record and other qualifications." The Larkin Actions further alleged that the negligent acts of PBC "evidenced a conscious disregard for the safety for the traveling public’, and’ were therefore so egregious that they warranted the imposition of "an award of punitive damages ...". III. Factual Background of ADA Compliance. As acommercial driver, Saiz was randomly tested on a regular basis for drug use, as required by the United States Department of Transportation regulations ("DOT").* In the fall of 1999, Saiz was given random drug tests on two occasions. The results of both of these tests were positive for drug use. Following the first random drug test, when confronted with the results by Petitioner, Saiz indicated that he had only taken illegal drugs once at a party, which is what caused the first positive test result. Saiz indicated to Petitioner, that he had never consumed illegal drugs before the party, and would never again consume illegal drugs. As a result of this explanation, the Petitioner allowed Saiz to continue in his position as a commercial * Prior to the fall of 1999, Saiz had been randomly tested for drug use. The results of such random drug testing were all negative. 6 driver. After allowing the residual affect of any such drugs consumed at the party to be eliminated from his system, within thirty days the Petitioner randomly tested Saiz, which test results were again positive, showing continuing drug use. When Saiz was confronted with the test results, Saiz stated that he was addicted to illegal drugs, that he was going to commence attending a drug rehabilitation program in the evening, and he requested that PBC provide reasonable accommodations to him, since he had a wife and children that needed his support. Based upon these statements by Saiz, and, based upon Petitioner's belief that the ADA imposed a legal duty on it to accommodate Saiz if he admitted his addiction, and would seek rehabilitation, he was not fired.® ° Petitioner believed that the ADA, when read in conjunction with the DOT regulations dealing with first time offenders, required that Saiz be returned to his commercial driver position after a one- year suspension. Pursuant to the ADA, and, in compliance with the Department of Transportation ("DOT") implementing regulations dealing with "the use of illegal drugs, whether on or off duty, by those individuals who are involved in [certain safety-sensitive positions, including] the operation of .. .trucks," PBC returned Saiz to his prior position, which involved driving a truck. Eastern Associated Coal Corporation v. United Mine Workers of America (2000) 531 U.S. 57, 63. The regulations promulgated by the Secretary of Transportation to deal with workers who have tested positive for the use of illegal drugs, requires a suspension of at lease one year for a first offense. 49 U.S.C. § 31310(b)(1)(A). It also requires a suspension of at least ten years for a second offense. 49 U.S.C. § 31310(c)(2). If the Plaintiffs failed to follow the DOT regulations in reinstating Saiz to his driving position after a first offense, then the legal issue would be whether PBC discriminated against Saiz by failing to reinstate him to his driving. If PBC complied with the DOT regulations in reinstating Saiz to his driving position, then the issue is whether its compliance with federal law constitutes a concurrent independent cause of the Accident. 7 Petitioner however removed Saiz from his commercial driver position, and reassigned Saiz to work as an assistant to the mechanics who serviced PBC's equipment at its terminal, which was located at its headquarters.*° This allowed PBC to provide reasonable accommodation to Saiz, while at the same time allowing management to more closely monitor Saiz’s behavior for signs of continued drug use, while Saiz completed his drug rehabilitation program.’ Saiz subsequently completed the drug rehabilitation program, and after numerous random drug tests were administered by a licensed physician, both during his attendance at the drug rehabilitation program, as well as after he had completed the program, after a one-year suspension Saiz was returned to his commercial driver position. On the day of the Accident, it was discovered that Saiz had in his personal knapsack that was being inventoried by a California Highway Patrol officer, with another employee of PBC as an observer, a vial of his son's "clean" urine.’ It was obvious to the officer, who ® It should be noted that the compensation paid to a commercial driver was greater than that paid to Saiz asa mechanic's assistant. 7 It should be noted that Saiz is also the member of a "protected class" under federal and state law, as a result of his Hispanic heritage. However, any protection provided to Saiz as a member of this protected class, did not in any way contribute to, or cause, the Accident. ® It should be noted that Saiz is also the member of a "protected class" under federal and state law, as a result of his Hispanic heritage. However, any protection provided to Saiz as a member of this protected class, did not in any way contribute to, or cause, the Accident. 8 explained to the PBC observer, that when notified of a random drug test, Saiz had been attaching the vial to his leg with a leather strap that was attached, and then proceeding to the testing facility. He would then go to the rest room, fill the test cup with the "clean" sample, which was near body temperature, and then leave. As a result of Saiz successfully implementing this elaborate procedure, he was able to circumvent the random drug tests.’ It is unknown how long Saiz had been using this procedure to circumvent the drug tests. However, since he was caught by his employer, speculation is that he learned the procedure from fellow participants who attended the drug rehabilitation program. REASONS FOR GRANTING THE PETITION I. The ADA The purpose of the adoption of the ADA was to avoid discrimination against individuals with disabilities. The public decided that they wanted to include in the list of disabilities to be protected, addiction to drugs. However, as discussed above, in creating this new duty on the part of employers to actively participate in the rehabilitation process, the public was requiring employers to engage in actions which another body of law has recognized a reasonably prudent employer would not % It should be noted that new “clean” samples had to be obtained by Saiz on almost a daily basis, since the amount of bacteria that would grow in Saiz's vial within a short period of time would indicate that Saiz was either deathly ill, or that he was not the person providing the sample. 9 engage in. In the case of Saiz, a reasonably prudent employer would not continue the employment of a known admitted drug addict. This is particularly true in the situation where the employee, in this case Saiz, is a commercial driver who operates, unsupervised, equipment both on public roads as well as at the work site. The ADA, when viewed in light of the DOT regulations regarding a one-year suspension requirement for commercial drivers who are first-time drug offenders who have allegedly been rehabilitated, establishes a standard to be followed by employers. In this case, having allegedly satisfied the three requirements of rehabilitation, random testing both during the rehabilitation period and throughout the one-year suspension, and having been suspended from driving for one year, the Petitioner was required by law to return Saiz to his commercial driving position, or face a discrimination claim under the ADA. Since the ADA was adopted in 1990, numerous Courts throughout the nation have been dealing with cases of actual or alleged ADA discrimination, involving various disabilities, including drug addiction. These Courts have attempted to implement the ADA, while at the same time balancing the strong public policy to have employers accommodate and not discriminate against the disabled, while realizing that such accommodation can put an employer, as well as co-workers and the public, at greater risk of injury or, as occurred in this case, the tragic death of a productive member of society. This is not an ADA discrimination case, but as far as the Petitioner can tell, is the first case to get to the higher courts that deals with the issue of who, other than the direct victims of an accident caused by the actual disability that qualified the unfit employee to keep his job, 10 bears the cost of the statutory risk that is required to be taken by the employer. Obviously, the direct victims are usually, a occurred in this case, compensated by the employer for the damage caused by the disabled employee. However, how does the public assist the employer, when the public has required the employer to assist the disabled employee, when a catastrophe occurs? No fund has been set up by the public as part of the ADA, to reimburse employer's such as the Petitioner, who incur not just direct monetary losses as a result of the acts of the disabled employee, but also the loss of resources expended by the employer in dealing with all of the aftermath of the catastrophe. In addition, there is the intangible damage to the employer's name and reputation when all the public hears from the injured parties’ counsel and the press, is the question: why would any employer allow an admitted drug addict ‘o operate a commercial vehicle? Businesses assume many risks, including those associated with employees, in making our economy successful, which at the end of the day, is what gives all of us jobs, including the disabled. However, a clear injustice occurs, when the public requires an employer to assume a risk under one body of law (i.e. to protect a segment of the public, i.e. disabled individuals from discrimination) when the public has condemned for years in another body of law the very risk (i.e. employing unfit employee) that was created to protect the entire public, including the disabled. The spreading of the unique risk that has been created by the adoption of the ADA, among all of the public through providing coverage for such risk under all commercial liability policies issued in the United States, is one means of allocating this risk to everyone, and not just 11 the unlucky employer who is required by law to unknowingly continue to employ an unfit employee. Justice requires that the body of law represented by the ADA be completed by this Court to justly address the issue of the imposition of this risk on individual employers, without the public adopting some mechanism that provides some financial assistance to the individual employer. If this does not occur, employers throughout the nation will be put out of business, not because of poor business decisions, but because they were required by law to employ a potentially unfit person. Il. Insurance and Compliance with the ADA. The reason companies maintain insurance is so that they will be indemnified against business risks such as accidents that their employees may cause in the course of their employment. The use of insurance spreads the risk of loss among those companies who maintain insurance, so that a catastrophic accident, such as what occurred in this case, will hopefully not put a company out of business. This is of particular concern to businesses, when the conduct giving rise to a catastrophic event, involves an employee who is going to great lengths to intentionally circumvent his employer's attempts to prevent accidents from occurring. It is particularly troublesome in cases such as this, where the employer is required by law to continue to retain an employee who is a member of a protected class (i.e., a rehabilitating or rehabilitated drug addict). Under the ADA, the employer is required by law to continue to employ a known and admitted drug addict falls into one of three classes. The protected employee who is either (i) in the process of being rehabilitated, (ii) is actually rehabilitated, or, (iii) goes to the great lengths to feign 12 rehabilitation. No matter which of the three classes the employee falls into, the employer is liable to third parties who suffer damages as a result of subsequent drug use following admission to the protected class. In addition, when an accident does occur involving an employee who is under the influence of drugs, the employer faces the allegation, and through the press, public condemnation that the employer "evidenced a conscious disregard for the safety of the traveling public," that was so egregious that punitive damages should be imposed. This is what happened in this case. With the myriad of drug and alcohol statutes intended to safeguard the public from injury or death, as well as the myriad of statutes that have been enacted by both federal and state governments during the past three decades aimed at safeguarding the rights of employees to maintain their jobs, employers can find themselves damned if they do, and damned if they don't, in dealing with the issues associated with an employee's drug addiction.’° This is the "interactive process" that employers must follow in the Ninth Circuit." ” In hindsight, the Petitioner should have elected to take the disability discrimination lawsuit like PacBell did in the Josephs case. '! See 42 USC §12114 (b) (2), (ce) (4), (e) (5) (c) and (e) (2) [addresses removal, not termination, of employee using drugs “from safety-sensitive duties in implementing subsection (c)]; 42 USC §12112 (b) (5) (A) [which defines “qualified individual with a disability"]; Burnett v. U.S. Air, Inc. (2000) 228 F3d 1105, 1110-1111, 1114 [the interactive process is mandatory rather than permissive obligation on the part of employers; if the employer knows of the existence of the employee's disability, the employer must assert in initiating the interactive process]; Hernandez v. Hughes Missle Systems Co. (2004) 362 F3d 564, 568 [dealing with rehiring a drug addict after rehabilitation]; and Brown v. Lucky Stores (2001) 246 F3d 1182, 1188 [participation in a rehabilitation program and reasonable (footnote continued) 13 The complexity of the laws which employers must deal with in making decisions that affect employees generally, as well as those additional laws that affect employees who are members of one or more protected classes, coupled with the intentional acts of employees to circumvent the safeguards which the employer implements in an attempt to protect the employee, the public, his co-workers, and creates situations where accidents, such as the one that occurred in this case, will continue to occur, no matter what steps are taken by a reasonably prudent employer. In this case, based upon the public policy expressed by the legislature in its adoption of the ADA, Saiz was able to use the rights provided to him by the ADA to protect his job, while successfully covering up his continuing disability (i.e., addiction to drugs). He was obviously successful at circumventing the system, until the Accident occurred. After having navigated through the, this left the Petitioner with the next challenge of resolving the catastrophe that occurred on March 8, 2001. In adopting the ADA, Congress created a body of law to accomplish one goal, in this case the laudable goal of preventing unreasonable discrimination against the disabled. However, congress often times fail to take into consideration all of the consequences that the subsystem adopted to solve one problem, may have on other subsystems that are already in place, and in some cases, have been in place for centuries. These older legal system are not removed because the public goals which prompted their adoption continue to benefit the public. The courts are called upon to complete the gaps and deal with the assurances by an employee that no future illegal drugs will occur is sufficient for a first time offender]. 14 conflicts between the subsystems and che existing subsystems. The gaps and/or conflicts which this case presents are (i) the ADA and the required retention of risky employees, (ii) the long established duty of care not to retain risky employees, and finally, (iii) spreading this risk to be shared by all of society. Ill. The Retention of an Employee with a Propensity to Cause Harm to Others is Direct Negligence, Which is Independent of the Employees Wrongful Conduct Under State Law. In California, as well as most other states, an employer can be liable to a third person for negligently hiring, supervising, or retaining an unfit employee, if the employer had reason to know that the employee, because of his or her quality, is likely to harm others in view of the work or instrumentality entrusted to him or her. Federico v. Superior Court (Jenry G.) 59 Cal. App. 4" 1207, 1213 (8 Dist. 1997); Roman Catholic Bishop v. Superior Court, 42 Cal.App. 4" 1556, 1564-1565 (4" Dist. 1996). The underlying theory of these decisions is that such negligence on the part of an employer is a wrong to third persons, entirely independent of the employer's liability under the doctrine of respondia superior. 48 A.L.R. 3d. 359 (2007). Liability for negligent retention and/or supervision is based on the reasoning that if an enterprise hires individuals with characteristics which might pose a danger to customers or other employees, the enterprise should bear the loss caused by the wrongdoing of its unfit employees. Mendoza v. City of Los Angeles, 66 Cal.App. 4" 1333, 1339-1340 (2d. Dist. 1998). If the dangerous quality of the employee causes harm, the employer may 15 be liable under the rule that one initiating conduct” having an undue tendency to cause harm is liable for that harm. Federico, supra. One who employs another to act for him or her is not liable merely because the employee is unfit; if liability results, it is because, under the circumstances, the employer has not taken the care that a prudent person would take in selecting the person for the business at hand. Federico, supra. Anemployer's duty to avoid retaining an employee whois unfit is breached only when the employer knows, or should know, facts which would warn a reasonable person that the employee presents an undue risk of harm to third persons in light of the particular to be performed. /d. With the adoption of the ADA in 1990, is duty imposed on employers by society to "accommodate" the disabled. In the situation where the disability that must be "accommodated" by the employer is drug addiction, which is an area where the recidivism rate is very high, the employer is not only being asked to expend its resources on accommodating the employee, but is also being asked to assume the risk of injury to the public and co-workers. The rule of direct employer liability under the Restatement 2d of Agency, section 213, provides: A person conducting an activity through servants or other agents is subject to liability for harm resulting from his conduct if he is negligent or reckless. ..[P]...{P] (b) in the employment of 2 Isn't the public, in adopting the ADA, the "initiating" party, not the employer? 16 improper persons or instrumentalities in work involving risk or harm to others... ." As explained in comment (d), to section 213 : The principal may be negligent because he has reason to know that the .. . agent, because of his qualities, is likely to harm others in view of the work or instrumentalities entrusted to him. If the dangerous quality of the agent causes harm, the principal may be liable under the rule that one initiating conduct having an undue tendency to cause harm is liable....(P]... If liability results, it is because, under the circumstances, the employer has not taken the care which a prudent man would take in selecting the person for the business in hand.... [P] Liability results ... not because of the relation of the parties but because the employer antecedently had reason to believe that an undue risk of harm would exist because of the employment. .. . [Emphasis added] As reiterated by the Court in Federico, at p. 1214: As the court in Roman Catholic Bishop v. Superior Court, supra 42 Cal.App. 4'" 1556, explained, an employer's duty, as defined by California authority and the Restatement, is breached only when the employer knows, or should know, facts which would warn a reasonable person that the employee presents an undue risk of harm to third persons in light of the particular work to be performed." 17 In this case, each of the requirements under both California authority and the Restatement, have been satisfied. PBC knew of facts (i.e. Saiz's propensity to use illegal drugs), which would warn a reasonable person [PBC] that the employee [Saiz] presents an undue risk of harm to third persons in light of the employee's job involving the operation of a commercial truck. Both the California courts and the Restatement, would support a finding that "the employer has not taken the care which a prudent man would take in selecting the person for the business at hand." Federico, Id.; Restatement, /d. Unfortunately for Dr. Larkin, his family, and the other victims of this catastrophe, including the Petitioner, the public who adopted the ADA does not share the burden but shifts it to the employer without legislating an equitable solution to the no-win risk that it has assigned. This is similar to the dilemma that PacBell faced in the recent Joseph case. In order to protect the public, PacBell believed that a reasonably prudent business would not retain a service technician to perform unsupervised, in-home telephone installation and repairs, who had previously been found guilty of misdemeanor battery on a police officer, and, not guilty of murder by reason of insanity, and, who thereafter spent two and one-half years in a California mental health facility, and an additional six months in a board-and-care mental health facility. After discovering these facts, PacBell refused to reinstate Josephs, and assume the risks associated with allowing Josephs to perform unsupervised, in-home telephone installation and repairs. As a result of its refusal to reinstate Josephs to his prior service technician job, a jury awarded Josephs compensatory damages against PacBell. The only material differences between this case and the Josephs case, is that (i) Petitioner elected to 18 reinstate Saiz to his position to avoid a lawsuit, and (ii) the risk to the public that Saiz posed in being reinstated to his prior position, resulted in a catastrophe for everyone involved. The ADA requires employees to engage in conduct for which they may not just be vicariously liability, but also directly liable. In this case, the Petitioner is not just placed in the position of being required by law to engage in the retention of an employee, which risk a reasonably prudent employer would never assume, but, very few companies, the Petitioner not being one of them, has insurance coverage that protects it against the liability to retain a high-risk employee like Saiz. IV. Public Policy Requires an Exception to the Auto Exclusion When an Employer is Required to Engage in Conduct Prohibited by State Law, that Leads to the Direct Liability of the Employer. PBC believes that the following exception to the Auto Exclusion should be implied by law in all general liability policies of insurance’ issued in the United States: "No exclusion shall apply to liability imposed upon an Insured where the occurrence giving rise to the 'S The Court should note, that this proposed implied exclusion does not, and is not, intended to provide coverage for claims by employees against employers. Its only purpose is to provide general liability coverage of claims by third parties against an employer, by treating an employer's compliance with the ADA, and other similar laws whereon employer is required to assume a risk for which the employer might be directly liable to a third party, and not solely viciously liable. 19 ‘bodily injury' or 'property damage' is caused by an agent of the Insured, when the Insured is required by law, to employ the particular agent”. The rationale supporting this exception, is based upon the Restatement 2d of Agency, § 217(a)(1), which recognizes the immunity of a principal, and California Civil Code §2338, which codifies the specific immunity from vicarious liability for the acts of agents, which is provided for in the common law, when the principal is required by law to employ a particular agent. Section 2338 provides as follows: "Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third parties for the negligence of its agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business, and for his willful omission to fulfill the obligations of the principal. (Enacted 1872) [Emphasis added] This statute sets forth the general rule of vicarious liability, and reflects the California's concerns regarding just this situation. That is, where a principal is required by law to employ a particular agent, which particular agent a prudent principal would not retain in his employ because of the higher risk of harm to others. There are generally two types of implied contractual provisions. Those implied by statute, as in the case of the Cal. Ins. Code § 522, which implies a provision that willful torts are excluded from coverage, whether or not such exclusion is expressly stated in the insurance p« “cy. J.C. Penney Cas. Ins. Co. v. M. K. 20 (1991) 5 Cal. 3™ 1009, 1020-1021. Other provisions are implied by case law, such as the recovery of attorney's fees by the insured when successful in obtaining policy benefits that were wrongfully denied, notwithstanding the fact that generally there are no express "attorneys fee" provisions in insurance policies. Communale, supra at 658. In situations where the law requires an employer to engage in conduct which the law (i.e. public) has recognized as risky enough to impose direct liability on the employer, a reasonable insured would expect to have coverage when it assumes such risk for the benefit of the public. This would include coverage for "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury’ or ‘property damage' ", for an act (i.e., the retention of the employee) required by law, which act the common law has recognized would not be performed by a prudent insured, but for the fact that the insured is obligated by law to perform the act, which act results in harm to others. The Petitioner believes this Court should find, as a matter of national public policy, that there is a judicially implied exception in all commercial general liability policies arising out of the adoption of the ADA, , which would provide coverage to insured employers for their acts in complying, or attempting in good faith to comply, with the ADA". '* Though not an issue based upon the facts presented in this case, the Petitioner believes that the judicially implied exception to the Auto Exclusion, should apply in all situations where the law requires an employer, to employ a particular person. 21 The Rules of Contract Interpretation Require Coverage Where State Law Imposes Direct Liability on an Employer Because of the Employer's "Independent" Acts. 4 Concurrent Proximate Causation. As recognized by the California Court of Appeals in Banville v. Schmidt (1974) 37 Cal.App. 4th 92, 107: It is an established principle that proximate cause, to be actionable, need not be the sole factor contributing to the damages sustained, but need only be a proximate cause of injury. As it is put by eminent authority (‘nothing occurs in a vacuum’, and the event without multiple causes is inconceivable. Existing conditions, the forces of nature, the prior acts and omissions of others, and all other surrounding circumstances invariably play their important part. From time to time, the California courts have gone seeking ‘the sole proximate cause' of an accident. There is, as the same courts have been forced to recognize that often enough, no such thing. Neither is there any such thing as 'the proximate cause' of an event, distinguished as a cause from ail other causes. In particular, the defendant can never be absolved from liability for the mere reason that the negligence of another has contributed to the result. ...'(38 Cal.L.Rev., pp. 379-380, William L. Prosser. As Prosser notes, '[a] considerable part of the law of joint tortfeasors has been built upon the principle. that responsibility may be attached to each of two or more such ‘concurring’ causes. (Id., pp. 380-381.) In the law of joint tortfeasors, it is 22 irrelevant whose negligence was first in time, who was the more negligent, or whether one was ordinarily and the other wantonly negligent. [Citations omitted ]" Proximate Cause in California. [Fns. omitted ].)" This dissertation by the Appellate Court in Banville, which was not an insurance case, regarding multiple causes of injury and joint tortfeasors, is relevant to this case. The California Supreme Court relied upon these "traditional joint tortfeasor principles," in concluding that coverage existed under both on insured's auto policy, as well as his homeowner's policy. II. Specific Acts That Caused the Loss. The following is a list of some of the more relevant acts of both PBC and Saiz, which in hindsight, constituted "simply a concurrent proximate cause of the injuries." The first act that caused the Accident was Saiz's recreational use of drugs. The second act was the failure of PBC to immediately terminate Saiz, after he tested positive for drug use, (notwithstanding the ADA's requirement of reasonable accommodation). The third act of PBC that contributed to cause the Accident, was that following receipt of the positive results of the second test, PBC failed to immediately terminate Saiz. This time not only for being addicted to drugs, but for lying to his employer about his alleged one- time recreational use of drugs. The fourth act that contributed to cause the Accident occurred when PBC , after having been lied to by Saiz about his illegal use of drugs, and in an attempt to comply with the subsystem of privacy laws, failed to 23 inform the testing facility that Saiz had previously lied about his drug use, and therefore, could not be trusted to provide an unobserved urine sample for testing. This failure to invade his right to privacy, allowed Saiz to substitute the "clean" sample for testing. The fifth act that contributed to cause the Accident was Saiz's use of illegal drugs during the non-working hours that preceded the Accident. The consumption of illegal drugs caused Saiz to be under the influence of their residual effects when he came to work on the morning of the Accident. It is the drug addiction (i.e., the disability), and, not the drugs impairment of Saiz on the day of the accident, that was the predominate cause of the Accident. This is not a case where, unbeknownst to his employer, an employee is a drug addict, which employee then has an accident during working hours. This case involves an employee who admitted he was addicted to drugs, who claimed he was rehabilitated, and after rehabilitation, is returned by his employer to his previous position as a commercial driver, in an attempt to comply with the ADA and the DOT regulations. The sixth act that contributed to the Accident, was by Saiz entering the PBC truck terminal on March 8, 2001, the morning of the Accident, under the influence of illegal drugs. Normally, going to work would not constitute a negligent act. However, when an employee goes to work while under the influence of illegal drugs, whether or not the employee is a commercial driver, this constitutes negligence on the part of the employee, as a matter of law. See 41 USC §§ 701-707 and Cal.Gov.C. §8350-8357. This act of negligence occurred before Saiz ever got into the cab of his truck at the terminal. The seventh act that contributed to the Accident, was Saiz's overloading of the truck with "base" material at Hanson Aggregate, which overloading caused the truck to 24 exceed the allowed gross vehicle weight. The failure of Saiz to recognize the overloading of the truck was, as a matter of law, negligence that was caused by his being under the influence of drugs. The eighth act that contributed to the Accident, was Saiz continuing to operate the truck, while under the influence of illegal drugs, in his travel on the day of the Accident from the Hanson Aggregate facility, to the scene of the Accident. During this portion of the trip, Saiz passed the residential street on which the job was located, and proceeded to the scene the Accident. Again, his failure to read and follow the map that he had been given by his employer, which map showed him how to get to the job site, was, as a matter of law, the result of his being under the influence of illegal drugs.'° Of just these eight concurrent causes of the Accident, a number were excluded from coverage under the CGL Policy. However, a number were not expressly excluded from coverage. If you remove the drug related acts that contributed to case the Accident, there is no dispute that operation of an "Auto" caused the Accident. The entrustment, operation, use, loading and unloading of the "Auto," were multiple concurrent acts that contributed to causing the Accident, and would have precluded any coverage under the CGL Policy. In the CGL Policy, the act of entrusting the truc!: to Saiz was expressly excluded from coverage. However, even if the act of entrusting the truck to Saiz had not been expressly excluded in the policy, in California, as in most ' The act that didn't happen, was Saiz arriving safely to the jobsite, unloading the tractor, and in the course of work while operating the tractor, driving over a co-worker, the homeowner, or a neighbor. 25 states, it would be excluded, as a matter of law, because the general act of entrustment of the truck to Saiz was "solely and indivisibly related to" the "use" of the "Auto." Without the drug related causes of the Accident, the act of negligent entrustment is not treated as a separate cause, because such act is not treated as "independent" of the "use" of the truck, but is an act that is "dependent" upon the use of the truck. See Safeco Insurance Company v. Gilstrap (1983) 141 Cal App 3d 524, 530-531. Adding an employee's use of drugs to the analysis, but excluding the acts of the employer's compliance with the ADA, there would still be no coverage under the CGL Policy. This is because an employee's use of drugs was negligent conduct which in this case, would be "dependent" upon the use of the "Auto," to cause this accident. Absent the causes related to the employer's compliance with the ADA or other similar state laws, the addition of the drug related cause would not be an "independent" cause of the Accident, but would be "dependent" upon the "use" of the "Auto." However, even though the use of drugs and the operation of the "Auto," were both excluded causes, either expressly or because they are dependent upon the use an "Auto," PBC's compliance, or attempted compliance, with the ADA and related state statutes, are acts "independent" of the acts of the use, operation, maintenance, entrustment, loading or unloading of the "Auto." This is the same "independent" act, which the courts have found gives rise to "direct" liability on the part of a principal to an injured party, which both the Restatement and California law recognize. How can an act (i.e. the retention of an unfit employee) which is treated as an "independent" cause giving rise to "direct" (not vicarious) liability of an employer to an 26 injured party, at the same time be so related to the use of an "Auto," that for commercial liability insurance purposes, it is "dependent" upon the use of an "Auto," thereby excluding coverage under the CGL Policy." There obviously is a conflict between the ADA, which requires the employer to retain employees with questionable qualities in the hope that the employee will be rehabilitated, while at the same time excluding this risk from coverage under general liability policies of insurance. VI. The Ninth Circuit Ignored California Law When it Held the Auto Exclusion was Unambiguous. In interpreting state law, the Ninth Circuit must follow the decisions of the state's highest court. Johnson v. Fankell, 520 U.S. 911, 916 (1997). As this Court recognized in Fankell: "neither this Court nor any other federal tribunal has any authority to place a construction on a state statute different from the one rendered by the highest court of the state." Jd. In its Memorandum, on page 2, the Ninth Circuit held that: The auto exclusion in this general commercial liability policy is unambiguous and applies in this case." The California Supreme Court in Partridge, at pp. 101-102, held that the "auto exclusion" in Partridge's homeowners policy was ambiguous, as a matter of law. The "auto exclusion" in the CGL Policy, contains almost the exact same language as the "auto exclusion" in 27 Partridge, yet the Ninth Circuit came to the contrary conclusion, that the "auto exclusion" was unambiguous. The California Supreme Court in Partridge at p. 102, concluded that: VII. | T |he fact that an accident has been found to ‘arise out of the use’ of a vehicle for purposes of an automobile policy is not necessarily determinative of the question of whether that same accident falls within a similarly worded exclusionary clause of a homeowner's policy [general liability coverage]. (citations. omitted.} As one commentator has recently observed: ‘It is clear that the expression ‘use of an automobile’ has different meanings under different circumstances and that, whenever possible, the courts will apply an interpretation which give, but never takes away, coverage for the ‘use' of an automobile, hereby causing automobile and non-automobile liability policies to overlap, notwithstanding the exclusion against the 'use' of an automobile in most non-automobile liability policies." The Ninth Circuit Ignored California Law When it Held that Compliance With the ADA was not a Concurrent Cause. In its Memorandum, at page 2, the Ninth Circuit held that: "We find unpersuasive Plaintiff-Appellants' argument that their compliance with the Americans with Disabilities Act ... was an independent concurrent cause of the accident under . . . [Partridge], and its progeny." Again, the Ninth Circuit failed to follow California law in recognizing that in interpreting third party liability policies, where there are multiply concurrent causes of an 28 accident, if just one of the concurrent causes is covered by the policy, then coverage exists." The issue that the Ninth Circuit was presented with was whether or not compliance with the ADA, was "dependent" on the use ofa vehicle, or was "independent." As discussed above, in California the retention of an employee by an employer, when the employee may pose a risk to the health and safety of others, is an "independent" cause of action, whereby "direct" liability, rather than vicarious liability, can be imposed upon an employer who does not act in a reasonably prudent manner. CONCLUSION For reasons discussed above, this Court should issue a Writ of Certiorari granting the Petition, seeking a review of the decision of the Ninth Circuit in Peterson Brothers Construction, Inc., etal. v. Lexington Insurance Company. Respectfully submitted, Jeffrey M. Epstein Counsel of Record Richard E. Blasco HUNT, ORTMANN, BLASCO, PALFFY & ROSSELL, INC. 301 N. Lake Avenue, 7" Floor Pasadena, CA 91101-1807 (626) 440-5200 '® What is also of significance, is that the Partridge decision was filed on September 25, 1973, yet the insurance industry has not taken any steps since then to eliminate the recognized ambiguity in the standard auto exclusion. la No. 05-55719 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT PETERSON BROTHERS CONSTRUCTION, INC., a California corporation; PBC PAVERS, INC., a California corporation; PRECISION LEASING, INC., a California corporation, Plaintiffs - Appellants, ¥ LEXINGTON INSURANCE COMPANY, a Delaware corporation, Defendant - Appellee. June 7, 2007, Argued and Submitted, Pasadena, California July 23, 2007, Filed NOTICE: PLEASE REFER TO FEDERAL RULES OF APPELLATE PROCEDURE RULE 32.1 GOVERNING THE CITATION TO UNPUBLISHED OPINIONS. JUDGES: Before: FISHER and CALLAHAN, Circuit Judges, and STROM, District Judge. ** OPINION MEMORANDUM * Before: FISHER and CALLAHAN, Circuit Judges, and STROM, District Judge.** 2a This matter is on appeal from the district court’s entry of summary judgment in favor of Lexington Insurance Company on an insurance policy coverage dispute. We review a grant of summary judgment de novo, viewing the evidence in the light most favorable to the non- moving parties. Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004). After careful review of the record and consideration of the oral arguments presented, we affirm. The auto exclusion in this general commercial liability policy is unambiguous and applies in this case. The injuries and damages in this case were caused by the use of an auto. We find unpersuasive plaintiffs- appellants’ argument that their compliance with the Americans with Disabilities Act or any negligence associated with an employee’s drug use was an independent concurrent cause of the accident under State Farm Mutual Auto Ins. Co. v. Partridge, 10 Cal. 3d 94, 109 Cal. Rptr. 811, 514 P.2d 123 (Cal. 1973), and its progeny. We further conclude that public policy considerations do not justify overriding the unambiguous auto exclusion in the plaintiffs-appellants’ policy. The district court’s order is, therefore, affirmed. AFFIRMED. Footnotes **The Honorable Lyle E. Strom, Senior United States District Judge for the District of Nebraska, sitting by designation *This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. 3a Filed 4/11/05 CASE NO. SACV 04-676 CJC (MLGx) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION PETERSON BROTHERS CONSTRUCTION, INC., PBC PAVERS INC., and PRECISION LEASING, INC., Plaintiffs, V. LEXINGTON INSURANCE COMPANY and AIG CLAIM SERVICES, INC., Defendants. JUDGMENT This action came on for hearing before the Court on March 21, 2005, on Defendant Lexington Insurance Company's Motion for Summary Judgment, and the evidence presented having been fully considered, the issues having been duly heard and decision having been duly rendered, IT IS ORDERED AND ADJUDGED that Plaintiffs Peterson Brothers Construction, Inc., PBC Pavers, Inc. and Precision Leasing, Inc. take nothing by way of their Complaint herein, that the Complaint herein against Defendant be dismissed with prejudice on the merits, and that judgment shall and hereby is entered in favor of Defendants. 4a CASE NO. SACV 04-676 CJC (MLGx) UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION PETERSON BROTHERS CONSTRUCTION, INC., PBC PAVERS INC., and PRECISION LEASING, INC., Plaintiffs, Vv. LEXINGTON INSURANCE COMPANY and AIG CLAIM SERVICES, INC., Defendants. ORDER GRANTING LEXINGTON INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT :. INTRODUCTION This matter arises out of an insurance coverage dispute following a motor vehicle accident that occurred on March 8, 2001. Lexington Insurance Company (“Lexington”) issued a Commercial General Liability (CGL) policy to Peterson Brothers Construction, PBC Pavers and Precision Leasing (collectively “PBC”) that included an exclusion for liability arising out of the operation of a motor vehicle. Lexington denied coverage for the accident based on that exclusion, and PBC filed the instant lawsuit for breach of contract and breach of the implied covenant of good faith and fair dealing. The parties filed cross motions on the issue of coverage based on a joint ~ 5a statement of stipulated undisputed facts. On March 21, 2005, Lexington’s motion for summary judgment and PBC’s motion for partial summary judgment came on regularly for hearing before the Honorable Cormac J. Carney. Far the following reasons, the Court hereby grants Lexington’s motion for summary judgment and denies PBC’s motion for partial summary judgment. II. FACTS’ Anthony Saiz was an employee of PBC. On March 8, 2001, he was operating a truck and trailer in the course and scope of his employment with PBC when he caused an accident that resulted in substantial injuries and damages, including the death of Dr. Kenneth Michael Larkin. At the time of the accident, Saiz was under the influence of methamphetamine, amphetamine and opiates. At the time of the accident, PBC was insured with a Business Auto policy from Fireman’s Fund with liability limits of $1,000,000 (the “Fireman’s Fund Auto Policy”}. PBC was also insured under an Umbrella Liability Insurance policy from Lexington with liability limits of $3,000,000 (the “Lexington Umbrella Policy”).’ The statement of facts is based on the parties’ joint Stipulated Statement of Uncontroverted Facts submitted with their cross motions. Whether there was coverage under the Fireman’s Fund Auto Policy and the Lexington Umbrella Policy is not at issue in this motion. As discussed in more detail below, Fireman’s Fund paid its policy limits under the 6a Auto Policy and Lexington paid the policy limits of the Lexington Umbrella Policy toward settlement of claims that arose out of the Accident. Additionally, PBC was insured under a Lexington Commercial General Liability policy at the time of the accident with a per occurrence limit of $1,000,000 {the “Lexington CGL Policy”). The “Insuring Agreement” of the Lexington CGL Policy provided coverage for “bodily injury” and “property damage” caused by an “occurrence,” defined in the policy in relevant part as an accident. The Lexington CGL Policy excluded coverage for accidents involving the use of a motor vehicle, which included within its scope the tuck and trailer operated by Saiz at the time of the accident (the “Auto Exclusion”). The Auto Exclusion stated: This insurance does not apply to: G. Aircraft, Auto or Watercraft ‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any ... ‘auto’ .. . owned or operated by or rented or loaned to any... insured. Use includes operation and ‘loading or unloading.’ Fireman’s Fund settled all claims against PBC for bodily injury and property damage arising out of the accident, other than the claims made by the Estate of Larkin, the wife of Larkin, and the parents of Larkin (collectively the “Larkin Actions”), for payments by Fireman’s Fund totaling $660,963.81. In July 2003, the 7a Larkin Actions were settled for payments totaling $3,739,036.19. The settlement of the Larkin Actions was funded in part by payment of the remaining policy limits under the Fireman’s Fund Auto Policy in the amount of $339,036.19, and the policy limits under the Lexington Umbrella Policy in the amount of $3,000,000.40, which payments by the insurance carriers totaled $3,339,036.19. The remainder of the settlement amount was funded by PBC in the total amount of $400,000, for a total settlement of the Larkin Actions of $3,739,036.19. PBC tendered its claim for the Larkin Actions to Lexington, and Lexington denied coverage based on the Auto Exclusion. Il. STANDARD GOVERNING SUMMARY JUDGMENT Summary judgment is appropriate when the moving party has shown that there is “no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); FED. R. Civ. P. 56(c). A dispute as to a material fact is ‘genuine’ if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1976). A defendant moving for summary judgment may defeat a claim either by negating an essential element of the plaintiffs claim or by demonstrating the absence of evidence for an essential element of the plaintiff's claim. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-60 (1970); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (19$6). In ruling on a summary judgment motion, a court must view all facts and draw all inferences in the light most favorable to the nonmoving party. Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 8a 451, 456 (1992). If the moving party meets the initial burden of establishing the nonexistence of a genuine issue, the burden then shifts to the nonmoving party to produce evidence of the existence of a genuine issue for trial. The party opposing summary judgment “may not rest upon the mere allegations or denials of the adverse party’s pleading, but... must set forth specific facts showing that there is a genuine issue for trial.” FED. R. Civ. P. 56(e); see Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). III. DISCUSSION As the parties have stipulated to the undisputed facts in this case, all that remains to be decided is whether under California law the Auto Exclusion bars coverage for Plaintiffs liability arising out of the March 8, 2001 motor vehicle accident. Interpretation of an insurance policy and whether it provides coverage is a question of law to be decided by the court. Waller v. Truck Ins. Exchange, 11 Cal.4th 1, 18 (1995). Although the Auto Exclusion unambiguously bars coverage for “|bJodily injury’ or ‘property damage’ arising our of the ownership, maintenance, use or entrustment to others of any. . . ‘auto’... owned or operated by or rented or loaned to any insured,” PBC argues that the concurrent independent cause principles set forth in State Farm Mutual Auto. Ins. Co. v. Partridge, 10 Cal.3rd 94 (1973), create an exception to the Auto Exclusion in this case. Partridge holds that in the context of third- party claims, an auto exclusion does not preclude 9a coverage when an accident results from the concurrence of an independent non-auto-related cause and an auto-related cause. Partridge, 10 CAM at 97. In Partridge, the California Supreme Court held that Plaintiffs negligent modification of the trigger on a gun and his negligent driving were independent acts that concurrently contributed to the accidental shooting of a passenger in his vehicle. In short, “although the accident occurred in a vehicle, the insured’s negligent modification of the trigger suffices, in itself, to render him fully liable for the resulting injuries.” Id. 103. Both causes of the resulting injury were independent of each other.. “the filing of the trigger did not ‘cause’ the careless driving, nor vice versa.” Id. at 105 fn. 10, The Partridge court determined that the auto exclusion did not bar coverage under a homeowner's policy because the injuries that arose out of the “non-auto related act” (i.e., the filing of the gun trigger - a covered risk) had “nothing to do with the use or operation of a vehicle.” See Safeco Ins. Co. v. Gilstrap, 141 Cal.App.3d 524, 526 (19$3) (emphasis added.). PBC argues that (1) Mr. Saiz’s use of illegal drugs during non-working hours and (2) Plaintiffs retention of Mr. Saiz as a driver after he tested positive for drugs were independent non-excluded concurrent causes of the accident, rendering the Auto Exclusion inapplicable under the CGL policy. PBC’s retention of Mr. Saiz and Mr. Saiz’s drug use, however, were not independent concurrent causes of the accident. In fact, it is clear that neither the retention of Mr. Saiz nor his drug use could have caused the accident independently of Mr. Saiz’s use 10a of the auto. It is fruitless to speculate about other injuries Mr. Saiz might have caused as a result of his drug use, as the occurrence which gave rise to the damages here was an auto accident, not drug use or negligent retention. Mr. Saiz’s drug use and retention cannot be separated from his operation of the vehicle as the cause of the accident. See Hartford Fire Ins. Co. v. Superior Court, 142 Cal. App.3d 406, 415 (1983) (“Any damages caused while operating the aircraft under the influence of alcohol were wholly dependent on the aircraft operation.); Century Transit Systems, Inc. v. Am. Empire Surplus Lines Ins. Co., 42 Cal.App.4th 121, 128 fn. 6 (1996) (a negligent retention theory is not an independent cause of the injury, but rather a theory for imposing liability on a third party). In other words, Mr. Saiz’s drug use alone could not have caused the accident without the operation of the vehicle. Since the accident and resulting damages arose from Mr. Saiz’s operation of the truck, the Auto Exclusion bars coverage. PBC also contends that considerations of public policy require coverage to be extended under the Lexington CGL policy. PBC explains that under applicable state and federal employment law principles, they were required to retain Mr. Saiz as an employee; despite his drug use, Mr. Saiz had completed a mandated rehabilitation program. PBC acknowledges they did not have to return Mr. Saiz to a driving position, but at oral argument PBC asserted that the State of California, Department of Transportation encourages an employer doing so. These considerations of public policy do not warrant the disregard of an unambiguous exclusion in PBC’s Lexington CGL policy, at least in part due to a countervailing public policy favoring freedom of contract. lla PBC also contends the Auto Exclusion should not be applied to preclude coverage because the terms of the Lexington CGL policy show that Lexington (1) contemplated overlapping coverage; (2) contemplated concurrent causes of an accident and (3) contemplated excess coverage. There is no legal basis to exclude coverage on these grounds since the Auto Exclusion unambiguously precluded coverage for the accident. For the reasons discussed above, Lexington’s motion for summary judgment is GRANTED and PBC’s motion for summary adjudication is DENIED. Judgment shall be entered in Defendants’ favor consistent herewith. 12a Cal Gov Code § 8357 (2007) Construction of chapter This chapter shall not be construed to require any contractor or grantee to ensure that other businesses with which it subcontracts also provide drug-free workplaces. Cal Gov Code § 8356 (2007) Effect of false certification, violation of certification, or failure to comply with chapter (a) Each contract or grant awarded by a state agency may be subject to suspension of payments under the contract or grant or termination of the contract or grant, or both, and the contractor or grantee thereunder may be subject to debarment, in accordance with the requirements of this article, if the contracting or granting agency determines that any of the following has occurred: (1) The contractor or grantee has made a false certification under Section 8355. (2) The contractor or grantee violates the certification by failing to carry out the requirements of subdivisions (a) to (c), inclusive, of Section 8355. (b) The Department of General Services shall establish and maintain a list of individuals and organizations whose contracts or grants have been canceled due to failure to comply with this chapter. This list shall be updated monthly and published each month. No state agency shall award a contract or grant to a person or organization on the published list until that person or organization has complied with this chapter. 13a (c) Every state age..°v that directly awards grants without review by the Department of General Services shall immediately notify the department of any individual or organization that has an award canceled on the basis of violation of this chapter. Cal Gov Code § 8355 (2007) Certification as to drug- free workplace (a) Every person or organization awarded a contract or a grant for the procurement of any property or services from any state agency shall certify to the contracting or granting agency that it will provide a drug-free workplace by doing all of the following: (1) Publishing a statement notifying employees that the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited in the person's or organization's workpiace and specifying the actions that will be taken against employees for violations of the prohibition. (2) Establishing a drug-free awareness program to inform employees about all of the following: (A) The dangers of drug abuse in the workplace. (B) The person's or organization's policy of maintaining a drug-free workplace. (C) Any available drug counseling, rehabilitation, and employee assistance programs. (D) The penalties that may be imposed upon employees for drug abuse violations. (3) Requiring that each employee engaged in the performance of the contract or grant be given a copy of l4a the statement required by subdivision (a) and that, as a condition of employment on the contract or grant, the employee agrees to abide by the terms of the statement. (b) (1) The certification requirement set forth in subdivision (a) does not apply to a credit card purchase of goods of two thousand five hundred dollars ($2,500) or less. (2) The total amount of exemption authorized herein shall not exceed seven thousand five hundred dollars ($7,500) per year for each company from which a state agency is purchasing goods by credit card. It shall be the responsibility of each state agency to monitor the use of this exemption and adhere to these restrictions on these purchases. Cal Gov Code § 8351 (2007) Definitions As used in this chapter: (a) "Drug-free workplace" means a site for the performance of work done in connection with a specific grant or contract described in Article 2 (commencing with Section 8355) of an entity at which employees of the entity are prohibited from engaging in the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance in accordance with the requirements of this chapter. (b) "Employee" means the employee of a grantee or contractor directly engaged in the performance of work pursuant to the grant or contract described in Article 2 (commencing with Section 8355) (c) "Controlled substance" means a controlled 15a substance in schedules I through V of Section 202 of the Controlled Substances Act (21 U.S.C. Sec. 812). (d) "Grantee" means the department, division, or other unit of a person or organization responsible for the performance under the grant. (e) "Contractor" means the department, division, or other unit of a person or organization responsible for the performance under the contract. Cal Gov Code § 8350 (2007) Citation of chapter This chapter shall be known, and may be cited, as the Drug-Free Workplace Act of 1990. Cal Ins Cede § 532 (2007) Specially excepted peril If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of the loss was a peril which was not excepted. Cal Civ Code § 2338 (2007) Principal's responsibility for agent's negligence or omission Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business, and for his willful omission to fulfill the obligations of the principal. 41 USC §701 Drug-free workplace requirements for Federal contractors 16a (a) Drug-free workplace requirement (1) Requirement for persons other than individuals No person, other than an individual, shall be considered a responsible source, under the meaning of such term as defined in section 403 (8) of this title, for the purposes of being awarded a contract for the procurement of any property or services of a value greater than the simplified acquisition threshold (as defined in section 403 (11) of this title) by any Federal agency, other than a contract for the procurement of commercial items (as defined in section 403 (12) of this title), unless such person agrees to provide a drug-free workplace by— (A) publishing a statement notifying employees that the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited in the person’s workplace and specifying the actions that will be taken against employees for violations of such prohibition; (B) establishing a drug-free awareness program to inform employees about— (i) the dangers of drug abuse in the workplace; (ii) the person’s policy of maintaining a drug-free workplace; (iii) any available drug counseling, rehabilitation, and employee assistance programs; and (iv) the penalties that may be imposed upon employees for drug abuse violations; (C) making it a requirement that each employee to be engaged in the performance of such contract be given a copy of the statement required by subparagraph (A); (D) notifying the employee in the statement required by subparagraph (A), that as a condition of employment on such contract, the employee will— (i) abide by the terms of the statement; and (ii) notify the employer of any criminal drug statute 17a conviction for a violation occurring in the workplace no later than 5 days after such conviction; (E) notifying the contracting agency within 10 days after receiving notice under subparagraph (D)(ii) from an employee or otherwise receiving actual notice of such conviction; (F) imposing a sanction on, or requiring the satisfactory participation in a drug abuse assistance or rehabilitation program by, any employee who is so convicted, as required by section 703 of this title; and (G) making a good faith effort to continue to maintain a drug-free workplace through implementation of subparagraphs (A), (B), (C), (D), (E), and (F). (2) Requirement for individuals No Federal agency shall enter into a contract with an individual unless such individual agrees that the individual will not engage in the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance in the performance of the contract. (b) Suspension, termination, or debarment of contractor (1) Grounds for suspension, termination, or debarment Each contract awarded by a Federal agency shall be subject to suspension of payments under the contract or termination of the contract, or both, and the contractor thereunder or the individual who entered the contract with the Federal agency, as applicable, shall be subject to suspension or debarment in accordance with the requirements of this section if the head of the agency determines that— (A) the contractor violates the requirements of subparagraph (A), (B), (C), (D), (E), or (F) of subsection (a)(1) of this section; or (B) such a number of employees of such contractor have 18a been convicted of violations of criminal drug statutes for violations occurring in the workplace as to indicate that the contractor has failed to make a good faith effort to provide a drug-free workplace as required by subsection (a) of this section. (2) Conduct of suspension, termination, and debarment proceedings (A) If a contracting officer determines, in writing, that cause for suspension of payments, termination, or suspension or debarment exists, an appropriate action shall be initiated by a contracting officer of the agency, to be conducted by the agency concerned in accordance with the Federal Acquisition Regulation and applicable agency procedures. (B) The Federal Acquisition Regulation shall be revised to include rules for conducting suspension and debarment proceedings under this subsection, including rules providing notice, opportunity to respond in writing or in person, and such other procedures as may be necessary to provide a full and fair proceeding to a contractor or individual in such proceeding. (3) Effect of debarment Upon issuance of any final decision under this subsection requiring debarment of a contractor or individual, such contractor or individual shall be ineligible for award of any contract by any Federal agency, and for participation in any future procurement by any Federal agency, for a period specified in the decision, not to exceed 5 years. 41 USC § 702. Drug-free workplace requirements for Federal grant recipients (a) Drug-free workplace requirement (1) Persons other than individuals 19a No person, other than an individual, shall receive a grant from any Federal agency unless such person agrees to provide a drug-free workplace by— (A) publishing a statement notifying employees that the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited in the grantee’s workplace and specifying the actions that will be taken against employees for violations of such prohibition; (B) establishing a drug-free awareness program to inform employees about— (i) the dangers of drug abuse in the workplace; (ii) the grantee’s policy of maintaining a drug-free workplace; (iii) any available drug counseling, rehabilitation, and employee assistance programs; and (iv) the penalties that may be imposed upon employees for drug abuse violations; (C) making it a requirement that each employee to be engaged in the performance of such grant be given a copy of the statement required by subparagraph (A); (D) notifying the employee in the statement required by subparagraph (A), that as a condition of employment in such grant, the employee will— (i) abide by the terms of the statement; and (ii) notify the employer of any criminal drug statute conviction for a violation occurring in the workplace no later than 5 days after such conviction; (E) notifying the granting agency within 10 days after receiving notice of a conviction under subparagraph (D)(ii) from an employee or otherwise receiving actual notice of such conviction; (F) imposing a sanction on, or requiring the satisfactory participation in a drug abuse assistance or rehabilitation program by, any employee who is so 20a convicted, as required by section 703 of this title; and (G) making a good faith effort to continue to maintain a drug-free workplace through implementation of subparagraphs (A), (B), (C), (D), (E), and (F). (2) Individuals No Federal agency shall make a grant to any individual unless such individual agrees as a condivion of such grant that the individual will not engage in the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance in conducting any activity with such grant. (b) Suspension, termination, or debarment of grantee (1) Grounds for suspension, termination, or debarment Each grant awarded by a Federal agency shall be subject to suspension of payments under the grant or termination of the grant, or both, and the grantee thereunder shall be subject to suspension or debarment, in accordance with the requirements of this section if the agency head of the granting agency or his official designee determines, in writing, that— (A) the grantee violates the requirements of subparagraph (A), (B), (C), (D), (E), (F), or (G) of subsection (a)(1) of this section; or (B) such a number of employees of such grantee have been convicted of violations of criminal drug statutes for violations occurring in the workplace as to indicate that the grantee has failed to make a good faith effort to provide a drug-free workplace as required by subsection (a)(1) of this section. (2) Conduct of suspension, termination, and debarment proceedings A suspension of payments, termination, or suspension or debarment proceeding subject to this subsection 2la shall be conducted in accordance with applicable law, including Executive Order 12549 or any superseding Executive order and any regulations promulgated to implement such law or Executive order. (3) Effect of debarment Upon issuance of any final decision under this subsection requiring debarment of a grantee, such grantee shall be ineligible for award of any grant from any Federal agency and for participation in any future grant from any Federal agency for a period specified in the decision, not to exceed 5 years. 41 USC§ 703. Employee sanctions and remedies A grantee or contractor shall, within 30 days after receiving notice from an employee of a conviction pursuant to section 701 (a)(1)(D)(ii) or 702 (a)(1)(D)Gi) of this title— (1) take appropriate personnei action against such employee up to and including termination; or (2) require such employee to satisfactorily participate in a drug abuse assistance or rehabilitation program approved for such purposes by a Federal, State, or local health, law enforcement, or other appropriate agency. 71 USC§ 704. Waiver (a) In general A termination, suspension of payments, or suspension or debarment under this chapter may be waived by the head of an agency with respect to a particular contract or grant if— (1) in the case of a waiver with respect to a contract, the head of the agency determines under section 701 (b)1) of this title, after the issuance of a final 22a determination under such section, that suspension of payments, or termination of the contract, or suspension or debarment of the contractor, or refusal to permit a person to be treated as a responsible source for a contract, as the case may be, would severely disrupt the operation of such agency to the detriment of the Federal Government or the general public; or (2) in the case of a waiver with respect to a grant, the head of the agency determines that suspension of payments, termination of the grant, or suspension or debarment of the grantee would not be in the public interest. (b) Exclusive authority The authority of the head of an agency under this section to waive a termination, suspension, or debarment shall not be delegated. 41 USC § 705. Regulations Not later than 90 days after November 18, 1988, the governmentwide regulations governing actions under this chapter shall be issued pursuant to the Office of Federal Procurement Policy Act (41 U.S.C. 401 et seq.). 41 USC § 706. Definitions For purposes of this chapter— (1) the term “drug-free workplace” means a site for the performance of work done in connection with a specific grant or contract described in section 701 or 702 of this title of an entity at which employees of such entity are prohibited from engaging in the unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance in accordance’ with the requirements of this Act; 23a (2) the term “employee” means the employee of a grantee or contractor directly engaged in the performance of work pursuant to the provisions of the grant or contract described in section 701 or 702 of this title; (3) the term “controlled substance” means a controlled substance in schedules I through V of section 812 of title 21; (4) the term “conviction” means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the Federal or State criminal drug statutes; (5) the term “criminal drug statute” means a criminal statute involving manufacture, distribution, dispensation, use, or possession of any controlled substance; (6) the term “grantee” means the department, division, or other unit of a person responsible for the performance under the grant; (7) the term “contractor” means the department, division, or other unit of a person responsible for the performance under the contract; and (8) the term “Federal agency” means an agency as that term is defined in section 552 (f) of title 5. 41 USC § 707. Construction of chapter Nothing in this chapter shall be construed to require law enforcement agencies, if the head of the agency determines it would be inappropriate in connection with the agency’s undercover operations, to comply with the provisions of this chapter. 42 USC § 12112. Discrimination 24a (a) General rule No covered entity shall discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment. (b) Construction As used in subsection (a) of this section, the term “discriminate” includes— (1) limiting, segregating, or classifying a job applicant or employee in a way that adversely affects the opportunities or status of such applicant or employee because of the disability of such applicant or employee; (2) participating in a contractual or other arrangement or relationship that has the effect of subjecting a covered entity’s qualified applicant or employee with a disability to the discrimination prohibited by this subchapter (such relationship includes a relationship with an employment or referral agency, labor union, an organization providing fringe benefits to an employee of the covered entity, or an organization providing training and apprenticeship programs); (3) utilizing standards, criteria, or methods of administration— (A) that have the effect of discrimination on the basis of disability; or (B) that perpetuate the discrimination of others who are subject to common administrative control; (4) excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association; (5) 25a (A) not making reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability who is an applicant. or employee, unless such covered entity can demonstrate that the accommodation would impose an undue hardship on the operation of the business of such covered entity; or (B) denying employment opportunities to a job applicant or employee who is an otherwise qualified individual with a disability, if such denial is based on the need of such covered entity to make reasonable accommodation to the physical or mental impairments of the employee or applicant; (6) using qualification standards, employment tests or other selection criteria that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities unless the standard, test or other selection criteria, as used by the covered entity, is shown to be job-reiated for the position in question and is consistent with business necessity; and (7) failing to select and administer tests concerning employment in the most effective manner to ensure that, when such test is administered to a job applicant or employee who has a disability that impairs sensory, manual, or speaking skills, such test results accurately reflect the skills, aptitude, or whatever other factor of such applicant or employee that such test purports to measure, rather than reflecting the impaired sensory, manual, or speaking skills of such employee or applicant (except where such skills are the factors that the test purports to measure). (c) Covered entities in foreign countries (1) In general It shall not be unlawful under this section for a covered entity to take any action that constitutes discrimination 26a under this section with respect to an employee in a workplace in a foreign country if compliance with this section would cause such covered entity to violate the law of the foreign country in which such workplace is located. (2) Control of corporation (A) Presumption If an employer controls a corporation whose place of incorporation is a foreign country, any practice that constitutes discrimination under this section and is engaged in by such corporation shall be presumed to be engaged in by such employer. (B) Exception This section shall not apply with respect to the foreign operations of an employer that is a foreign person not controlled by an American employer. (C) Determination For purposes of this paragraph, the determination of whether an employer controls a corporation shall be based on— (i) the interrelation of operations; (ii) the common management; (iii) the centralized control of labor relations; and (iv) the common ownership or financial control, of the employer and the corporation. (d) Medical examinations and inquiries (1) In general The prohibition against discrimination as referred to in subsection (a) of this section shall include medical examinations and inquiries. (2) Preemployment (A) Prohibited examination or inquiry Except as provided in paragraph (3), a covered entity shall not conduct a medical examination or make inquiries of a job applicant as to whether such applicant 27a is an individual with a disability or as to the nature or severity of such disability. (B) Acceptable inquiry A covered entity may make preemployment inquiries into the ability of an applicant to perform job-related functions. (3) Employment entrance examination A covered entity may require a medical examination after an offer of employment has been made to a job applicant and prior to the commencement of the employment duties of such applicant, and may condition an offer of employment on the results of such examination, if— (A) all entering employees are subjected to such an examination regardless of disability; (B) information obtained regarding the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record, except that— (i) supervisors and managers may be_ informed regarding necessary restrictions on the work or duties of the employee and necessary accommodations; (ii) first aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; and (iii) government officials investigating compliance with this chapter shall be provided relevant information on request; and (C) the results of such examination are used only in accordance with this subchapter. (4) Examination and inquiry (A) Prohibited examinations and inquiries A covered entity shall not require a _ medical examination and shall not make inquiries of an 28a employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity. (B) Acceptable examinations and inquiries A covered entity may conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that work site. A covered entity may make inquiries into the ability of an employee to perform job-related functions. (C) Requirement Information obtained under’ subparagraph (B) regarding the medical condition or history of any employee are subject to the requirements of subparagraphs (B) and (C) of paragraph (8). 42 USC § 12114. Illegal use of drugs and alcohol (a) Qualified individual with a disability For purposes of this subchapter, the term “qualified individual with a disability” shall not include any employee or applicant who is currently engaging in the illegal use of drugs, when the covered entity acts on the basis of such use. (b) Rules of construction Nothing in subsection (a) of this section shall be construed to exclude as a qualified individual with a disability an individual who— (1) has successfully completed a supervised drug rehabilitation program and is no longer engaging in the illegal use of drugs, or has otherwise been rehabilitated successfully and is no longer engaging in such use; (2) is participating in a supervised rehabilitation 29a program and is no longer engaging in such use; or (3) is erroneously regarded as engaging in such use, but is not engaging in such use; except that it shall not be a violation of this chapter for a covered entity to adopt or administer reasonable policies or procedures, including but not limited to drug - testing, designed to ensure that an individual described in paragraph (1) or (2) is no longer engaging in the illegal use of drugs. (c) Authority of covered entity A covered entity— (1) may prohibit the illegal use of drugs and the use of alcohol at the workplace by all employees; (2) may require that employees shall not be under the influence of alcohol or be engaging in the illegal use of drugs at the workplace; (3) may require that employees behave in conformance with the requirements established under the Drug- Free Workplace Act of 1988 (41 U.S.C. 701 et seq.); (4) may hold an employee who engages in the illegal use of drugs or who is an alcoholic to the same qualification standards for employment or job performance and behavior that such entity holds other employees, even if any unsatisfactory performance or behavior is related to the drug use or alcoholism of such employee; and (5) may, with respect to Federal regulations regarding alcohol and the illega! use of drugs, require that— (A) employees comply with the standards established in such regulations of the Department of Defense, if the employees of the covered entity are employed in an industry subject to such regulations, including complying with regulations (if any) that apply to employment in sensitive positions in such an industry, in the case of employees of the covered entity who are employed in such positions (as defined in the 30a regulations of the Department of Defense); (B) employees comply with the standards established in such regulations of the Nuclear Regulatory Commission, if the employees of the covered entity are employed in an industry subject to such regulations, including complying with regulations (if any) that apply to employment in sensitive positions in such an industry, in the case of employees of the covered entity who are employed in such positions (as defined in the regulations of the Nuclear Regulatory Commission); and (C) employees comply with the standards established in such regulations of the Department of Transportation, if the employees of the covered entity are employed in a transportation industry subject to such regulations, including complying with such regulations (if any) that apply to employment in sensitive positions in such an industry, in the case of employees of the covered entity who are employed in such positions (as defined in the regulations of the Department of Transportation). (d) Drug testing (1) In general For purposes of this subchapter, a test to determine the illegal use of drugs shall not be considered a medical examination. (2) Construction Nothing in this subchapter shall be construed to encourage, prohibit, or authorize the conducting of drug testing for the illegal use of drugs by job applicants or employees or making employment decisions based on such test results. (e) Transportation employees Nothing in this subchapter shall be construed to encourage, prohibit, restrict, or authorize the otherwise lawful exercise by entities subject to the jurisdiction of gla the Department of Transportation of authority to— (1) test employees of such entities in, and applicants for, positions involving safety-sensitive duties for the illegal use of drugs and for on-duty impairment by alcohol; and (2) remove such persons who test positive for illegal use of drugs and on-duty impairment by alcohol pursuant to paragraph (1) from_ safety-sensitive duties in implementing subsection (c) of this section. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_1599%3A1. Public record. Not legal advice.