Sexual Harassment and Negligent Hiring, Can Same Conduct Justify Two Claims: Quirky Question # 152
One of our employees complained of sexual harassment. We investigated, though admittedly not as promptly as we should have. We discovered that the harasser had engaged in some seriously problematic conduct. Our investigation also revealed that the harasser had engaged in similar conduct at a prior employer and previously, at our company, with a different employee who had elected not to report.
The victim of the harassment is now threatening to sue us and demanding settlement compensation. Her lawyer suggests that if we do not settle, he will sue us for multiple claims, including both sexual harassment and negligent hiring. (Apparently, his investigation also revealed the past problems.) Is this legit? Can we be sued for multiple claims based on the same conduct?
Strip Search, Quirky Question # 127
Roy’s Analysis:
A number of years ago, I had the opportunity to hear Tom Wolfe speak shortly after he had written Bonfire of the Vanities. The author commented that one of the challenges he confronted as a fiction writer was to come up with ideas that were stranger than the truthful events reported in the news. As many of you undoubtedly realized, the fact pattern set forth in Quirky Question # 127 was not submitted by a reader. Rather, amazing as it seems, the facts set forth above are derived from an actual case decided this past November, McDonald’s Corporation vs. Louise Ogborn, et al., Kentucky Court of Appeals, No. 2008-CA-000024-MR (November 20, 2009).
As set forth in the Ogborn case, a McDonald’s restaurant in Mt. Washington, Kentucky, received a call from a person who represented himself to be a police officer. The supposed police officer advised the McDonald’s Assistant Manager then on duty that a patron had reported the theft of a wallet. He then described the appearance of the suspected thief, a description that closely matched the appearance of an 18-year old McDonald’s employee then working.
The Assistant Manager, Donna Summers, identified the employee and the supposed police officer requested the opportunity to speak with her on the phone. The Assistant Manager brought the employee (Louise Ogborn) into the office and she spoke with the person who claimed to be a police officer. That individual advised her that she was a suspect in a theft and that she would have to submit to a strip search, either at the police department or at the restaurant.
Ogborn agreed to participate in the strip search at the restaurant. The police officer then asked to speak with Summers and gave her instructions on how to conduct the strip search. All of the employee’s clothes and personal belongings were taken away and placed in another room. The entire incident lasted approximately 3 ½ hours, and involved some truly outrageous conduct, resulting in felony assault charges against the Assistant Manager’s fiancé who was asked to come to restaurant at some point in the ordeal to participate in the search.
As you can tell, the call was a hoax. After subjecting the employee to humiliating treatment for several hours, the Assistant Manager finally figured this out and returned the employee’s clothes and let her leave. The employee sued McDonald’s under several legal theories, including hostile environment sexual harassment, negligent supervision, premises liability, and false imprisonment. Curiously, the Assistant Store Manager, Donna Summers, who had facilitated the entire incident also sued McDonald’s, on an intentional infliction of emotional distress theory.
Unsurprisingly, Ogborn prevailed. Following a four-week jury trial, the jury awarded her $1.1 Million in compensatory damages and $5.0 Million in punitive damages. The jury also awarded the Assistant Manager $100,000 in compensatory damages and $1.0 Million in punitive damages. The Court of Appeals affirmed the entire award as to Ogborn and affirmed the compensatory award as to Summers, but reduced her punitive award to $400,000.
The Court of Appeals pointed to a number of factors that supported the jury’s verdict and damages awards, a few of which bear noting.
First, perhaps most significantly, during the preceding decade McDonald’s had received more than 30 hoax phone calls, including several at its Kentucky restaurants, involving similar allegations and similar demands for strip searches. Many of these calls resulted in situations with similar outcomes, with employees being subjected to strip searches at their places of employment. Despite this fact, and despite the fact that McDonald’s corporate legal department had documented these incidents, the company had not notified its managers about these calls or provided them training on how they should be handled. As the court observed, “The evidence further supports the finding that proper training or warning would have prevented successful repetition of the hoaxes.”
Second, the court took note of the fact that the phony police officer had directed the Assistant Manager, Summers, to summon a male employee to sit in the room with the then-naked employee, Ogborn, during the investigation. Summers did so, requesting a cook to participate in the investigation by sitting with Ogborn. The cook spoke with the hoax caller, and immediately advised Summers “in appropriately strong, colloquial language” that the situation was unacceptable and that he would not participate. He then left the room. Summers then asked another male employee, a janitor, to participate in the investigation. This individual also spoke with the caller, and concluded that he was a fraud. He too refused to participate. Nevertheless, Summers persisted in the “investigation.”
Third, even more bizarrely, at some point in this process, the phony police officer had asked Summers whether she was married. Upon learning that she was engaged, he instructed her to have her fiancé come to the restaurant, which she did. The caller then provided various instructions to Summers’ fiancé, which he carried out. The Assistant Manager had left her naked employee with her fiancé, at the restaurant, during much of this time. As noted above, the fiancé’s actions resulted in several felony charges against him, for which he was later convicted.
McDonald’s raised a variety of defenses to the claims asserted by the two employees, nearly all of which were rejected by the appellate court. For multiple reasons, the court of appeals:
a) rejected McDonald’s’ argument that this situation was exclusively encompassed by the Kentucky Workers’ Compensation Act;
b) rejected McDonald’s’ argument that Ogborn’s common law claims were preempted by the State’s anti-discrimination statute;
c) rejected McDonald’s’ argument that it could not be held liable for a non-employee’s conduct (the caller and the fiancé);
d) rejected McDonald’s’ argument that there was insufficient evidence to support the false imprisonment claim;
e) rejected McDonald’s’ argument that there was insufficient evidence to support the negligence claim;
f) rejected McDonald’s’ argument that the unforeseeable criminal acts of the fiancé were an intervening cause that prevented the imposition of liability on McDonald’s; and
g) rejected McDonald’s’ arguments that the evidence did not support an award of punitive damages and that the amount of punitive damages awarded was excessive (at least as to Ogborn).
It is beyond the scope of this analysis to summarize the nearly 50-page opinion. Let me highlight just a few points that have potentially broad application. First, although preemption arguments involving state anti-discrimination statutes may sometimes have validity, the allegedly preempted claims must parallel very closely the proscriptions of the statute. The appellate court found the none of the three common law claims (premises liability, negligence and false imprisonment) was subsumed by the Kentucky anti-discrimination statute. The court found that these three claims were “not substantially similar” to claims authorized under the statute.
Second, the court found that as to the claim of false imprisonment, the facts that Ogborn was not physically restrained and consented to be searched did not absolve the company of liability. As to the former issue, the court noted that false imprisonment claims do not require physical restraint. The removal of Ogborn’s clothing and personal effects (including her cell phone), which were taken to another room, coupled with the false assertion of police authority and the real authority of her supervisors, sufficed to establish this tort claim. Moreover, although Ogborn initially consented to be searched, unlike another Kentucky case in which the affected individual signed a release, Ogborn: a) did not sign a release; b) repeatedly objected to the search; c) was repeatedly threatened with further police involvement; d) was under the belief that the door to the room had been locked; e) had a constant “guard” between herself and the door; and f) did not have access to her clothes or personal effects. Under these facts, the initial consent did not vitiate the legitimacy of her false imprisonment claim.
Third, the “premises liability” claim was based on the notion that a proprietor of a business has a legal duty to prevent patrons from foreseeable harm. Because McDonald’s knew of the hoax caller (as noted, there had been more than 30 incidents of this type), the company had a legal obligation to protect its employees from harm, even from tortious and criminal conduct committed by third parties.
Fourth, the court found that Kentucky recognized a claim for negligent supervision. The court found that the facts of the case supported liability on this theory because of the company’s “failure to train” its management employees with regard to the risks presented by the hoax caller.
Fifth, the criminal conduct by the caller and the fiancé did not constitute a superseding cause that relieved McDonald’s of liability. “A superseding cause is a factor of such extraordinary, unforeseeable nature as to relieve the original wrongdoer of liability to the ultimate victim.” The appellate court found that McDonald’s “antecedent negligence” (i.e., its failure to inform and train its store managers regarding the hoax police calls) was a foreseeable and substantial factor in causing the later harm to Ogborn.
There are a number of practical takeaways that every employer can learn from this sad factual situation and the resulting litigation.
1) When a company learns of conduct that that exposes its employees to the risk of injury or harm, even from parties over whom it has no control, it needs to take preventative steps to ensure that harm does not occur. The greater the risk of harm, and the greater the potential severity of the injuries, the more important it is for the employer to act. Here, McDonald’s had an obligation to apprise its fast food restaurant managers of the hoax police calls.
2) False imprisonment claims, involving the restraint or confinement of an employee, are not dependent on physical restraint. Like so much of employment law, these cases will be assessed from a totality of the circumstances perspective, taking a number of factors into consideration. But, an employer needs to proceed very cautiously in this area.
3) Any time an employer considers restraining an employee from leaving its premises, it had better be damn sure the restraint is completely justified. If the employer intends to rely on an “employee’s consent” to restrain the employee, the consent should be in writing and should be explicit that the employee may revoke his or her consent at any time and is free to depart at any time for any reason. Moreover, keep the preceding bullet point in mind even when a written consent form is used; it may not provide the employer the defense it hopes.
4) Negligent supervision (a topic I’ve addressed in other Blog analyses) may involve failures to train adequately an employer’s supervisory employees. Particularly where a failure to train exposes other employees to a risk of physical injury, an employer is imprudent to ignore its responsibilities in this area. Appropriate managerial training in numerous facets of an employer’s business is critical.
5) A claim for “premises liability” also may pose some risks to a employers. Just as companies have obligations to non-employee patrons or customers on (or sometimes, off) their premises, that same legal theory may expose the employer to potential liability with respect to its employees. That responsibility should be considered carefully.
The Ogborn case illustrates the substantial risks associated with workplace conduct. The failure of the McDonald’s Assistant Manager, a relatively low-level supervisory position, coupled with the failure of the McDonald’s Law Department to address properly the prior hoax calls, resulted in substantial liability. As a result of an incident covering approximately 4 hours, involving a series of poor decisions, McDonald’s confronted significant litigation and incurred more than $6 Million in liability to Ogborn and another $500,000 in liability to its Assistant Store Manager.
My last takeaway from this case is that companies need to empower their managerial employees to trust their instincts. If a situation does not pass the smell test (as it didn’t for both the cook and janitor asked to participate in the “investigation”), managers need to be empowered to act. At a minimum, they need to be informed that when confronted with any situation that makes them uneasy, uncomfortable or causes them concern, they should seek input and guidance from others in the organization. In the Ogborn case, just a bit of common sense and a phone call or two to corporate headquarters, would have spared an employee a humiliating and potentially life-changing experience, and would have saved the company a difficult and embarrassing lawsuit, substantial attorneys’ fees, and a large adverse judgment.
Disclosing Information Regarding Past Felony, Quirky Question # 38
Quirky Question # 38:
Our company is a food retailer. We hired a convicted sex offender, who, after serving time in prison for his felony conviction, had been released. Given that he had “paid his debt to society,” we felt that we should not refuse to hire him because of his prior conviction. Moreover, because the job for which he was hired involves very limited interaction with the public, we were not concerned about any risks there.
Very few employees in our organization are aware of our employee’s prior conviction and incarceration, but as the Director of Human Resources, I am knowledgeable about the employee’s felonious past. It recently came to my attention that one of our other employees occasionally has allowed the convicted sex offender to baby-sit for her pre-teen daughter. Do I have a legal duty to intervene? What are the risks of intervention? Are there any risks to non-intervention?
Roy’s Analysis:
Several weeks ago, I addressed the fundamental issues involved in the legal theory of “negligent hiring.” (See Quirky Question # 26, or access it by using the “View by Topic” tab at the upper right). As I explained previously, in the seminal Minnesota case on that topic, Ponticas v. K.M.S. Investments, the Minnesota Supreme Court emphasized that “an employer has a duty to exercise reasonable care in view of all the circumstances in hiring individuals who, because of their employment, may pose a threat of injury to members of the public.” As your question demonstrates, you already have given some thought to this issue. You are fully aware of the employee’s past conviction and as you note, given the employee’s limited interaction with the public, you do not feel that you are exposing the public (and, ultimately, your company) to risk on that front.
A decade after the Ponticas decision, another grim case made its way through the Minnesota judicial system that implicated analogous issues. That case, Yunker v. Honeywell, Inc., 496 N.W.2d 419 (Minn. Ct. App. 1993), involved a bizarre fact pattern. A Honeywell employee, Randy Landin, became infatuated with a co-worker. The infatuation was not reciprocated, however, and Landin responded by murdering his co-worker. Landin was convicted of the lesser offense of manslaughter and sent to prison. After serving five years in prison, he was released. (An entirely separate question, beyond the scope of this analysis, is whether five years in prison is a sufficient penalty for taking another person’s life.)
After he was released from prison, he reapplied for a custodial position at Honeywell. Like your company, Honeywell concluded that he had discharged his debt to society, and rehired him. Like your firm, Honeywell took into consideration the fact that the employee, by virtue of the position he would occupy, would have relatively little contact with the public. Honeywell apparently concluded that his past conduct would not pose a risk to other Honeywell employees or members of the public.
Unfortunately, Honeywell was wrong. Not long after he was hired, Landin became interested in another Honeywell employee, a female employee who also worked on Honeywell’s custodial staff. As had happened previously, his amorous sentiments were not reciprocated. Tragically, his response to this second “rejection” was the same as his response to the first – he murdered the co-worker who had rejected him. The co-worker’s estate sued Honeywell on multiple theories, including negligent hiring, negligent retention and negligent supervision.
The Minnesota Court of Appeals rejected the decedent’s estate’s negligent hiring theory, a decision driven largely by a public policy analysis. As the appellate court pointed out, imposing liability on Honeywell under a negligent hiring theory would “essentially hold that ex-felons are inherently dangerous and that any harmful acts they commit against persons encountered through employment will automatically be foreseeable.” The court found that such a result would “offend our civilized concept that society must make a reasonable effort to rehabilitate those who have erred . . ..” Based on this reasoning, the appellate court concluded that “public policy” supports a “limitation on this [negligent hiring] cause of action.” (For reasons not directly relevant to your situation, the Court of Appeals did find that Honeywell had “negligently retained” the employee – he had engaged in other problematic behaviors since he had been rehired – and the case was sent back to the District Court on that theory.)
Applying that precedent to your situation suggests two points, neither of which (I admit) is directly responsive to your specific questions (which I will address below). First, it would appear that your company’s decision to hire this individual should not expose your company to a negligent hiring claim. As the Yunker court emphasized, if employers are precluded from ever hiring anyone with a felonious past, those individuals will be doomed to permanent unemployment. Second, however, you will need to monitor the situation closely. If the employee you hired engaged in any conduct that you found troubling, you will need to address that situation promptly. You do not want to allow a situation to remain unremedied, especially if the context implicated any of the issues relating to his prior conviction. Disregarding this potential problem could expose your company to considerable liability.
The fact pattern you presented, however, is more subtle. You did not suggest that the employee has engaged in any problematic conduct in the workplace. Rather, you simply have learned that the employee occasionally has been asked to baby-sit for a co-worker’s pre-teen daughter. The first question you asked is whether you have a “legal duty” to intervene. In my view, you do not. A company is not obligated to apprise its entire workforce of all of the dark secrets and past problems of which it is aware regarding all of its employees. Indeed, it would be an imprudent precedent to begin doing so for multiple reasons.
The next two inter-related questions you ask (what are the risks of intervention versus non-intervention) are tougher inquiries. As to the former, the risk of intervention would seemingly revolve around a potential defamation claim by the employee who had served time in prison. I will address defamation more thoroughly in other Blog postings, but the key point you need to understand here is that truth is a complete defense to a defamation claim. In short, to the extent you share any information with the employee who has asked the former felon to babysit, you need to be accurate. Do not embellish. Do not exaggerate. Stick to the facts and then stop. Taking this approach should eliminate any potential exposure on a defamation claim.
As to the latter (the risk of non-intervention), from a legal perspective, I see little risk to your firm. Even if your employee engaged in horrific conduct and sexually assaulted your other employee’s daughter, I do not believe that your company would risk legal exposure. (This assumes, of course, that you have not made affirmative representations to your employees regarding what a terrific babysitter this employee would make.)
I have suggested in a few of my other Blog postings, however, that the legal analysis often does not end the inquiry. I suggest that you consider this issue as a parent might consider it. In this context, the greatest risk of “non-intervention” is the risk that the pre-teen daughter might be assaulted. Although the likelihood of this possibility may be miniscule, the consequences if it did occur would be traumatic. Further, if you were asking someone to babysit for your daughter, I have little doubt that you would want to know whether the individual had previously served time in prison for a sex-related offense. When considering the issue in this context, I believe the desired course of conduct is clear – pertinent information should be shared with the employee who is having the ex-felon babysit for her daughter.
You may discover that the employee himself already has shared this information and has provided sufficient reassurance to his co-worker that she has no reticence about hiring him. You may discover that she was unaware of the pertinent facts but that she is willing to use him to provide this assistance despite his prior conduct. But, you also may discover that she was unaware of the employee’s background, is troubled by it, and wants to terminate the baby-sitting activities. At the present time, you do not know which of these scenarios might apply. Once you have shared the data (and done so with the request that it remain confidential), your employee will be able to make an informed decision regarding how she wishes to proceed. And I suspect you will sleep easier at nights if a subsequent problem ever does occur.
Racist Ideas, Quirky Question # 16
I am both disappointed and embarrassed to report that one of our employees is an outspoken White Supremacist. His views are abhorrent to me personally, as well as to nearly all of our company’s employees, both minority and non-minority. The organization to which our employee belongs advocates violent conduct toward minorities. Given that fact, should we take any action? Can we fire this idiot? (That’s my preference but I admit he has never engaged in any violent conduct in the workplace.) If he ever engaged in any violent conduct in the workplace, as espoused by the organization to which he belongs, could the company be held liable?
I would strongly recommend against the “Do Nothing” approach. Although the risks of physical violence to members of your workforce may be extremely low, the potential consequences of violent behavior by this individual are extremely serious, especially since the company is on notice of his racist beliefs. On the other hand, I certainly understand that your company may be reluctant to discharge an employee solely because of the organization to which he belongs, no matter how unpalatable the belief system advanced by the organization.
At a minimum, however, the situation should be monitored very carefully. If the employee articulates his hateful beliefs in the workplace, discharge him. If he brings literature into the workplace advocating violence toward minorities, discharge him. If his conduct toward minorities is antagonistic or belligerent, discharge him. In all of these contexts, the company’s discharge position will be easily defended, inasmuch as the employee undoubtedly would be violating your company’s proscriptions against discriminatory conduct and would be creating a hostile and offensive working environment for your employees.
The tougher call is whether you should fire the employee in the absence of any violent conduct (and you stated that he has not exhibited any to date) and in the absence of specific conduct at the worksite that would warrant a discharge (as described above). [I wonder, however, how you know the employee is a member of the White Supremacist organization? Did he share his beliefs with his co-workers? Did he attempt to interest others in the organization? Did he exhibit behaviors in the workplace that led others to question him? If those questions are answered affirmatively, go back to the preceding paragraph for the solution.]
Even if he is not a manager and has no supervisory or hiring/firing authority, does he have to work with other employees? To the extent that the employee must interact regularly with others, if his perspectives and attitudes are well known to his co-workers, allowing him to continue working may be very disruptive. It would be difficult to establish a collegial, professional and productive working environment for a diverse workforce when one member of the group holds views deeply offensive to others. Given that fact, it may be appropriate to terminate the employee even in the absence of specific threatening conduct or workplace proselytizing.
Another reason to consider discharge is that if the company allows the employee to continue working and a tragedy ensues, the company may be at risk. This is the situation in which Lockheed Martin found itself several years ago. In the case of Tanks v. Lockheed Martin, a former Lockheed Martin employee who belonged to a racist organization that advocated violence toward minorities came to work and murdered and wounded several African American and Caucasian co-workers before killing himself. According to the Complaint, there had been numerous incidents over many years that put the company on notice of the employee’s violent proclivities and his racist beliefs, including specific threats of violence toward minority co-workers. The question presented was whether the company could be held liable for this tragic event under various common law theories. The federal District Court rejected the Lockheed Martin’s summary judgment motion, seeking dismissal of the case based on the exclusivity provisions of the Mississippi Workers’ Compensation Act. Although the District Court rejected the company’s arguments, it did certify an interlocutory appeal to the Fifth Circuit Court of Appeals. Somewhat surprisingly, the appellate court reversed, finding that the actions of the murderer fell within the exclusivity provisions of the Workers’ Compensation statute. See, Tanks v. Lockheed Martin Corp., 417 F.3d 456 (5th Cir. 2005). The resolution of the Tanks case (and other related cases) from that point forward is unclear.
Putting aside the question of whether the applicable workers’ compensation statute may provide the exclusive remedy for violent workplace conduct, the cases involving violence by one employee toward another often turn on the issue of whether the company knew or should have known of the violent propensities of the employee who caused the injuries to a co-worker, or at times, a member of the public. These types of cases implicate issues of negligent hiring, supervision and retention. These issues, however, will be addressed in future Quirky Question analyses.
In a brief, unpublished, per curiam, decision, announced just last week, the Fifth Circuit affirmed the summary judgment dismissal of the claims of all of the other plaintiffs injured by the “deranged employee who went on a violent rampage at work.” The appellate court found that the Tanks case was “factually and legally indistinguishable from the case here.” Therefore, the court held that the claims of all of the other plaintiffs were “exclusively compensable by state workers’ compensation laws.” See, Bailey, et al. vs. Lockheed Martin Corp., et al., No. 07-60399 (5th Cir. January 17, 2008). Barring further appeal, this ruling seemingly has brought the litigation to an end.
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