The Indiana Court of Appeals recently ruled in favor of L&B Transport, LLC and its employees in a negligence case brought by Perdue Farms, Inc. The case stemmed from a chemical accident that occurred at Perdue's poultry-processing plant, resulting in significant damage. The court's decision clarifies the legal responsibilities of employees in relation to their employer's contractual obligations.
Perdue Farms filed the lawsuit after a delivery driver mistakenly unloaded a hazardous chemical into a bleach tank at their facility. This error caused a dangerous chemical reaction that damaged equipment and forced the plant to shut down for several days, leading to over $1 million in damages. The court's ruling, which was issued on June 30, 2026, has implications for how negligence claims are handled in similar situations.
Background
Perdue Farms, a major poultry producer, operates a plant in Daviess County, Indiana. In 2015, Perdue entered into a service agreement with U.S. Security Associates, Inc. to provide security services at its plant. The agreement specified that U.S. Security would supply trained security personnel to prevent theft and control access to the facility.
On August 26, 2018, a driver from L&B Transport arrived at the Perdue plant to deliver what he claimed was bleach. However, he was actually transporting aluminum chloride, a hazardous substance. The employees of U.S. Security, who were responsible for monitoring deliveries, failed to inspect the driver’s bill of lading and allowed him to unload the wrong chemical. This mistake led to a chemical reaction that caused significant damage to the plant.
In August 2020, Perdue filed a lawsuit against L&B Transport, the driver, U.S. Security, and its employees, alleging negligence and breach of contract. The case eventually reached the Indiana Supreme Court, which ruled that the forum-selection clause in the service agreement only applied to claims against U.S. Security, allowing the case against the employees to proceed in state court.
The Ruling
The Indiana Court of Appeals, led by Judge Pyle, ruled that the trial court correctly granted the employees' motion for judgment on the pleadings, thereby dismissing Perdue's negligence claims. The court emphasized that the employees could not be held personally liable for the alleged negligence because their actions were tied to their employer's contractual obligations.
The court stated, "the alleged negligence on the part of the Employees consisted solely of their actions within the scope of their authority in negligently carrying out a contractual obligation of their employer."
Judge Pyle further noted that the economic loss doctrine, which limits tort claims for purely economic damages, applied in this case. The court found that Perdue's claims against the employees did not meet the criteria for tort liability because the alleged negligence was directly linked to the performance of their contractual duties.
Impact
This ruling has significant implications for both employers and employees in similar contractual relationships. It reinforces the principle that employees are generally not personally liable for negligence claims arising from their performance of contractual obligations on behalf of their employer. This decision may deter future claims against employees in cases where their actions are closely tied to their employer's contractual duties.
Moreover, the ruling clarifies the application of the economic loss doctrine in Indiana. It establishes that when damages are purely economic and arise from a failure to perform contractual obligations, tort claims may not be viable. This could influence how businesses approach liability and risk management in contractual agreements.
What's Next
Perdue Farms may seek to appeal the decision, but details regarding any potential appeal were not available in the court filing. The outcome of this case may also affect ongoing discussions about employee liability and contractual obligations in Indiana.