The Rise (or Demise) of Negligence Claims Against Employers

R.S. Ghio

THE RISE (OR DEMISE) OF NEGLIGENCE CLAIMS AGAINST EMPLOYERS

I. INTRODUCTION

A. Why are negligence claims brought?

1. Jurisdictional reasons: Keeping claims in state court, or providing claims that can be remanded to state court in the event of summary judgment.

2. Damages: Avoiding statutory caps under Title VII, TCHRA; eluding liquidated damages under ADEA, etc.

3. Summary judgment avoidance: Smaller body of case law, may create more hesitation to dismiss the case.

4. Avenue to join other defendants: Individuals, related companies, co-employers.

II. SCOPE OF DISCUSSION

A. Employment torts encompass much wider group of claims, including the “intentional” torts:

1. Assault and Battery

2. Defamation

3. False imprisonment

4. Fraud

5. Invasion of privacy

6. Intentional infliction of emotional distress

7. Tortious interference

8. Sabine Pilot wrongful termination claims

B. Today’s discussion focuses on torts arising out of negligence or gross negligence:

1. Negligent hiring

2. Negligent supervision

3. Negligent retention

4. Negligent investigation

5. Negligent entrustment

III. NEGLIGENCE: AN OVERVIEW

A. Elements (Mission Petroleum Carrier, Inc. v. Solomon, 106 S.W.3d 705, 710 ( Tex. 2003)).

1. Employer owes a duty to plaintiff;

2. Employer breached its duty;

3. The breach proximately caused injury to the plaintiff; and

4. Damages resulted from the breach.

B. Creating a duty.

1. When considering whether to impose a “new” common law duty, the courts employ a “risk/utility” analysis.

2. Factors include “the risk, foreseeability, and likelihood of injury weighed against the social utility, and the consequences of placing the burden on the defendant.” Id.

3. The most important factor is foreseeability. A plaintiff need only show that the “general danger, not the exact sequence of events that produced the harm, be foreseeable.” Frith v. Fairview Baptist Church, 2002 Tex. App. LEXIS 5064, *7 (Tex.App.— Dallas 2002, pet denied) (unpublished).

IV. DUTIES OF CARE: WHAT DO YOU OWE TO WHOM?

A. Each of these negligence claims involves injury to another person by an employee who is unfit for duty, or otherwise should not have been entrusted with authority by the employer.

B. “ Texas courts hold an employer directly liable only when the employer places its employee in a situation that forseeably creates a peculiar risk of harm to others because of the employee’s particular duties.” Capece v. NaviSite, Inc., 2002 Tex. App. LEXIS 8775, *16 ( Tex. App.— Austin 2002. no pet.) (unpublished ) (emphasis in original). “Others” can include other employees as well as the general public.

C. Special duties may arise where the employee will have “potential contact with particularly vulnerable individuals.” Wise v. Complete Staffing Serv’s, 56 S.W.3d 900, 904 (Tex.App.—Texarkana 2001, no pet.). Examples:

1. Scoutmasters. Golden Spread Council of Boy Scouts v. Akins, 926 S.W.2d 287 ( Tex. 1996).

2. In-home salesmen. Scott Fetzer Co. v. Read, 945 S.W.2d 854, 866 (Tex. App.—Austin 1997) aff’d 990 S.W.2d 732 ( Tex. 1998).

4. Drug counselors. Porter v. Nemir, 900 S.W.2d 376 ( Tex. App.—Austin 1997, no writ).

5. Educators. Doe v. Boys Clubs of Greater Dallas, Inc., 868 S.W.2d 942 (Tex. App.—Amarillo 1994) aff’d 907 S.W.2d 472 ( Tex. 1995).

6. Nursing home employees. Deerings W. Nursing Ctr. v. Scott, 787 S.W. 2d 494, 495 ( Tex. App.—El Paso 1990, writ denied).

D. Also concerned with the nature of the job itself, not just the vulnerability of other parties. “An employer owes a duty to its other employees and to the general public to ascertain the qualifications and competence of the employees it hires, especially when the employees are engaged in occupations that require skill or experience and that could be hazardous to the safety of others.” Wise, 56 S.W.3d at 902.

1. Examples: Heavy machinery, operation of vehicles

E. As discussed below, the law doesn’t require that the employers screen out “bad” employees generally. The duty arises only with respect to incompetence or unfitness that is job-related. In other words, if the employee is going to be a Sunday school teacher, you probably don’t have to check his driving record.

V. NEGLIGENT HIRING

A. Elements (same for negligent hiring, supervision, training, retention). Wal-Mart Stores, Inc. v. Aguilera-Sanchez, 2003 Tex. App. LEXIS 4846, *16 (Tex.App.—San Antonio 2003, no pet.).

1. Employer owed the plaintiff a legal duty to hire, supervise, train, or retain competent employees;

2. The employer breached that duty; and

3. The breach proximately caused the plaintiff’s injury.

B. Requires a showing of an actionable tort committed by the employee. Id. This “tort” may be a statutory violation, such as sex discrimination or sexual harassment. Centennial Ins. Co. v. Bailey, 2000 Tex.App. LEXIS 6854, *17-18 (Tex.App.—Dallas 2000, no pet.).

C. Central issue in these cases is background checks.

1. Jackson v. CT Corporation Sys. d/b/a Albertson’s, 2000 Tex. App. LEXIS 4899 ( Tex. App.—Austin 2000, pet. denied) (unpublished)

a. Off-duty police officer working as a security guard at Albertson’s sprayed plaintiffs with pepper spray when he thought they were shoplifting.

b. Albertson’s claimed that it was not negligent in its hiring because the employee was a DPS trooper and therefore had undergone extensive background checks and interviews with DPS. Albertson’s performed a pre-hire drug screen.

c. “One factor to be examined in determining whether the employer was negligent is whether the employer inquired into the employee’s background before hiring him.” Id. at *17 (citing King v. Associates Commercial Corp., 744 S.W. 2d 209, 213 (Tex.App.—Texarkana 1987, writ denied)).

d. If a background check is performed, then the question is whether the inquiry was sufficient to constitute due care. Id.

2. Frith, 2002 Tex. App. LEXIS 5064.

a. Sunday school teacher accused of assaulting a girl at an all-night movie watching event. He subsequently pled guilty, received 20 year sentence.

b. Church regularly performed background checks on employees and volunteers, but didn’t perform one on this employee.

c. Employee’s criminal history included: three felony convictions (two for burglary, one for possession of a controlled substance); five misdemeanors (public intoxication, possession of marijuana, unlawful carrying of a weapon, and two for evading arrest). Also, a protective order issued against him pursuant to allegations by his ex-wife that he had physically abused their child.

d. The court concluded that by conducting criminal background checks on other employees, “the Church had a self-imposed duty to check Rivard’s criminal background.” Id. at *8. There was little reasoning to support this conclusion, and it seems to short-circuit the risk/utility analysis and instead adopts an “assumption of duty” approach. It is unclear whether other courts will follow this analysis.

e. Court did hold that there was no duty to perform a civil background check on the employee. Id. at *10.

f. Court then turned to foreseeability. The question is whether, if the employer used “reasonable care,” it would have obtained sufficient information to indicate that the employee might be a threat to children.

g. Court determined that it “cannot conclude [the employee’s] background would have put the church on notice that he might sexually assault a child. . . . Here, none of [the employee’s] convictions were for violent or sexual crimes, and nothing in his background indicated that he might sexually assault a child.” Id. at *11.

3. Wise, 56 S.W.3d.

a. Staffing service hired employee who was assigned to work at Mrs. Baird’s bakery. The temporary employee went cuckoo for Cocoa Puffs and assaulted a regular employee, who sued the staffing service for negligent hiring in failing to sufficiently investigate the temp’s criminal background.

b. The temp service had promised Mrs. Baird’s that they had done a thorough background check on the temp, who had lived in Houston . But they only ran the check in one county, when Houston is in two, and as a result they missed some criminal history.

c. Court holds that there was no violation of the employer’s duty because “the incompetency must be job-related,” and “Turner did not injure Wise as a result of his incompetence or unfitness for the job, but by an intervening criminal act. Under this analysis, Mrs. Baird’s had no duty to check the criminal histories of its employees unless it was directly related to the duties of the job at hand.” Id. at 903.

d. However, there was a fact issue of whether, once the staffing company voluntarily undertook the investigation, whether it conducted the investigation negligently. Id. at 904. That probably is bad law now (see below).

e. The Court rejected any notion that there is a requirement that employer’s perform an “unlimited background check of all employees.” Id. at 905.

4. Morris v. JTM Materials, Inc., 78 S.W. 3d 28 ( Tex. App.—Fort Worth 2002, no pet.).

a. Subcontracted company’s driver was intoxicated and became involved in a motor vehicle accident. Victim sued for negligent hiring.

b. Employer claimed that it had complied with statutory and industry safety guidelines by obtaining a criminal background check for the past 3 years, which showed no accidents or convictions. It is unclear from the decision whether this background check actually was performed.

c. The employer did not obtain a driver’s report from the DPS. However, the employee stated on his application that he had been involved in a fatality accident three years earlier, had received a speeding ticket earlier that year, and had had his driving privileges revoked for driving without proof of insurance.

d. DPS report likely would have shown that previous to the three year window the employee had five tickets for driving without insurance, another noninjury accident, a drunk driving conviction, three years as a guest of the state for possession of methamphetamines (12 years earlier), and had plea bargained down another drunk driving charge two years before, getting deferred adjudication.

e. “Compliance with industry and statutory standards is evidence of the use of reasonable care, but it is not dispositive of that issue.” Id. at 50

f. Failure to get criminal background check or DPS report “raises a fact issue concerning whether JTM exercised reasonable care in qualifying him as a driver.” Id. at 53.

VI. NEGLIGENT SUPERVISION/TRAINING/RETENTION

A. Wrenn v. G.A.T.X. Logistics, Inc., 73 S.W.3d 489 ( Tex. App.—Fort Worth 2002)

1. Plaintiff was working as a temporary employee at a distribution facility in Arlington . He alleged that while Plaintiff was sweeping the floor, his supervisor became enraged against him, picked him up by the throat and banged his head against a wall.

2. Plaintiff alleged that this was part of a long-standing pattern of behavior. The employer claimed to know nothing about the supervisor’s violent tendencies, but there was evidence that the supervisor carried a buck knife and had threatened another employee with a hammer. He frequently screamed and yelled at other employees, often employing profanity. He even had purposefully knocked an employee down with a forklift and dropped a steel beam on him.

3. This history of violence was sufficient to overcome the employer’s summary judgment motion on the issue of negligent supervision.

B. Dailey v. Albertson’s, Inc., 83 SW2d 222 (Tex.App.—El Paso 2002)

1. Customer of store and employee had history of problems, because both seeing the same man. Despite this, the customer went to the store “several times a day.” On the day in question, the customer claimed that she believed the employee was working a different shift. She was wrong.

2. The employee allegedly followed the customer around the store. When the customer left, the employee was outside, and the two exchanged ugly words, culminating in the employee accusing the customer of having “fake” hair.

3. The customer left, but allegedly had forgotten to purchase something. She has her friend drive her back to the front of the store. The customer sees someone there walking in small circles and waiving her arms. She apparently doesn’t recognize that it is the employee with whom she had the argument moments ago. As she walks by, the employee attacks her with a box cutter. Sues Albertson’s for negligent supervision.

4. “An employer may be liable for a plaintiff’s injuries that arise as a result of the employment if the negligence in supervising the employee is the proximate cause of the injuries to the plaintiff.” Id. at 227.

5. An employer may be liable for off duty torts of employees if committed on employer’s premises and with employer’s chattels (i.e., tools, instruments). Id.

6. The court in this case held that there was no way employer could foresee that the employee was violent. She had no criminal history. There was no indication of violence in her work performance. In fact, held that the only person who would have known that the employee was violent was the customer herself.

C. Capece, 2002 Tex.App. LEXIS 8775.

1. Female guest of employee attended an employer-sponsored function and was later invited to a party at an employee’s home, where she claimed to have been given date rape drugs and allegedly was raped by the employees. She sued the company for, among other things, failing to properly train and/or supervise its employees. Her complaints focused upon the alleged failure to institute sexual harassment training.

2. The court held that there is a “special relationship” between an employer and employees that “imposes certain duties, including a duty on an employer to adequately train and supervise employees.” Id. at *11 (citing Dieter v. Baker Serv. Tools, 739 S.W.2d 405, 407 (Tex.App.—Corpus Christi 1987, writ denied)).

3. However, the employer only has a duty to a third party “if the third party’s harm is brought about by reason of the employment and is, in some manner, job-related.” Id.

4. Here, there was nothing about the party at the employee’s home that was job-related. It was not sanctioned or sponsored by the employer, nor did the employer have notice that the party was taking place. It was not held on the employer’s premises, nor did it involve the employer’s chattels. Consequently, no duty ran from the employer to the plaintiff.

D. Host Marriott Corporation v. Meadows, 2001 Tex. App. LEXIS 4409 (Tex.App.—Dallas 2001).

1. Family attends a Monster Truck Show at Reunion Arena. A cotton candy vendor trips, falls and back several rows on top of dad, hurting dad’s back. The father sued for a pile of things, including negligent supervision.

2. The court held that since there was no actionable tort committed by the employee, there could be no negligent supervision by the employer.

VII. NEGLIGENT INVESTIGATION

A. Texas Farm Bureau Mutual Ins. Co. v. Sears, 84 S.W. 3d 604 ( Tex. 2002).

1. Independent insurance agent reported over several years’ time that he believed that other agents were participating in kickback schemes. His complaints allegedly fell on deaf ears. Several years later, however, an anonymous letter complains that Sears himself is involved in kickbacks. He is investigated both internally and by law enforcement. The employer discovers no hard evidence against Sears but decides to terminate him anyway. He sued for defamation, negligence, gross negligence, intentional infliction, etc.

2. The Court styled its decision as a defense of the employment-at-will doctrine. It first observed that an employer has “no duty” to investigate “at all” before terminating an at-will employee.” Id. at 607.

3. “If the at-will doctrine allows an employer to discharge an employee for bad reasons without liability, surely an employer should not incur liability when its reasons for discharge are carelessly formed.” Id. at 609.

4. “Nearly every investigation that an employer conducts requires it to resolve factual disputes and make reasonable credibility determinations. Certainly it is hoped that employers will exercise due care in making the potentially devastating decision to terminate an employee for misconduct. But second-guessing an employer’s judgment in such a situation provides a strong disincentive for companies to investigate allegations of employee misconduct in the first instance.” Id. at 610.

B. Mission Petroleum Carriers, Inc. v. Solomon, 106 S.W. 3d 705 ( Tex. 2003)

1. Employee was a truck driver. He was subjected to random drug test per Department of Transportation regulations. There allegedly were several irregularities in the employer’s procedures for conducting the test. Employee tested positive for marijuana both on the first test and on a retest. The employer terminated him as a result of the positive result. The employee sued for defamation and negligence. His negligence claim was based upon improper handling of the drug test. He alleged that because potential employers were able under DOT regulations to obtain past drug test results, it would be impossible for him to obtain a job.

2. The Court noted that most other jurisdictions have rejected efforts to create a cause of action for negligent investigations. For example, the Fifth Circuit, citing the at-will doctrine, previously had declined to create a common law action for negligently conducted polygraph examinations. Id. at 712 (citing Johnson v. Delchamps , Inc., 897 F.2d 808, 811 (5th Cir. 1990)).

3. However, in this case the employee wasn’t complaining about the termination, but rather the effect of the termination on his future employability. Therefore, the Court held that an analysis based upon the employment at will doctrine really wasn’t appropriate. Id. at 712.

4. The Court declined to create a common-law duty based upon something like a preemption argument, holding that the DOT regulations provided “significant avenues of redress when employers fail or refuse to follow DOT protocol in collecting urine samples.” Id. at 713. Therefore, the potential harm to plaintiff was mitigated, and there was no need to impose a common law duty.

5. What happens, then if the employer is not covered by the DOT regulations? Apparently, there still is not a common law duty. The Court employs some tortured reasoning (as noted in one of the concurrences) that is based upon the at-will doctrine, holding that the doctrine encompasses “process[es] used to discover employee misconduct.”

6. The Court then uses some broad dicta in an obvious attempt to slam the door on negligent investigation claims: “Background checks, coworker interviews, electronic surveillance, finger or voice print analysis, expense-report audits, and performance reviews are all ‘investigations,’ conducted by employers, that may result in job termination. It is not difficult to characterize an erroneous performance report, which is often based on hearsay, as the product of a negligent investigation.” Id. at 716. It thus appears that the negligent performance of any of these acts is not going to create a cause of action. However, this cuts against established law with respect to background checks.

7. A skeptic may wonder what is left of negligent hiring and supervision claims after the Mission Petroleum case. That’s difficult to say. It appears that if the cause of action is brought by an injured third party, it likely will survive. If, however, it is brought by the employee whose background is being checked, or who is under investigation, there is no common law duty of care.

VIII. NEGLIGENT ENTRUSTMENT

A. Morris, 78 S.W.3d. 28.

1. Elements: “(1) entrustment of a vehicle by the owner (2) to an unlicensed, incompetent, or reckless driver, (3) whom the owner knew or should have known was unlicensed, incompetent, or reckless, and (4) the driver’s negligence on the occasion in question (5) proximately caused the accident.” Id. at 55.

2. Non-owner of a vehicle “may be held liable for negligent entrustment of the vehicle if the non-owner has the right to control the vehicle.” Id. at 56.

IX. INTERPLAY WITH WORKER’S COMPENSATION

A. The cases discussed above generally do not address the effect of worker’s compensation, which provides the exclusive remedy for most workplace injuries. However, it is an important defense for employers.

B. Worker’s compensation obviously will not affect claims brought by third parties.

C. In the case of injuries suffered by other employees, worker’s compensation is the “?exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.’” Wingfoot Enterprises d/b/a Tandem Staffing v. Alvarado, 111 S.W.3d 134 ( Tex. 2003) (quoting Tex. Labor Code § 408.001(a)).

D. Worker’s compensation has been held to bar claims of negligent hiring, supervision, etc. Uridales v. Concord Technologies Delaware, Inc., 2003 Tex. App. LEXIS 8440 at *10 ( Tex.App .— Houston [14th Dist.] 2003, no pet. h.) (citing Walls Reg’l Hosp. v. Bomar , 9 S.W.3d 805, 806-08 ( Tex. 1999)).

E. However, the exclusivity provision does not protect employers against claims of intentional torts or, in the case of an employee’s death, gross negligence. Tex. Labor Code § 408.001(b).

F. Gross negligence requires that the employee demonstrate that: (1) viewed objectively from the actor’s standpoint, the act or omission complained of involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others; (2) the actor had actual, subjective awareness of the risk involved, but proceeded in conscious indifference to the rights, safety, or welfare of others. Tex. Civ . Prac . & Rem . Code §41.001(11); Lee Lewis Construction, Inc. v. Harrison, 70 S.W.3d 778 (Tex. 2001); see also, Perez v. Williams & Peters Construction Co., Inc., 2001 Tex.App.—LEXIS 7354 (Tex.App.—Amarillo 2001) (unpublished).

G. The intentional tort exception is extremely narrow.

1. In the case of assault, the exception applies only if the “?assailant is, by virtue of control or ownership, in effect the alter ego of the corporation,’ or where the corporate employer specifically authorizes the assault.” Uridales , 2003 Tex. App. LEXIS 8440 at *12.

2. Willful or gross negligence is not enough. A plaintiff must show that “the actor desires to cause [the] consequences of his act, or that he believes that the consequences are substantially certain to result from it.” Id. at *13-14.

3. As a result, an assault victim must show more than that he was assaulted at work by another employee. Id. at *15.

H. Another exception is that injuries arising out of personal animosity are not compensable under the Act, and therefore the Act’s exclusivity provisions do not apply. Uridales , 2003 Tex. App. LEXIS 8440 at *6.

1. Also a narrow exception. Requires a showing that the dispute was “transported into the place of employment from the injured employee’s private or domestic life, at least where the animosity is not exacerbated by the employment.” Id. at *7.

2. Advantage to an employer is that if an employee can make out this claim, then the chance of employer liability through respondeat superior may be attenuated, because the act was personal and not in the course and scope of employment.

X. PRACTICE TIPS

A. Analyze the positions held by your employees to carefully consider whether a criminal background check or driving history should be obtained. Since negligent investigation is, for now, being rejected by the courts, err on the side of performing the tests.

B. When you obtain background checks, make sure you understand how the checks will be performed and what information is going to be reported to you.

C. Fully respond to any complaints of harassment, threats, violence, etc.

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