Employment Law Update: Negligence-Based Lawsuits Against Texas Employers for Wrongful Employee Acts
A growing theory of liability that plaintiffs’ attorneys are pursuing against companies nationwide, including in Texas, is that employers should be held financially responsible for negligently failing to prevent injuries caused by the wrongful acts of employees. These claims are typically brought under the names of negligent supervision, negligent retention, negligent hiring, negligent training, or some similar term. Regardless of the specific name, these actions are basically the same: negligence claims brought directly against the company for its alleged failures as an employer, as opposed to vicarious liability actions that would ordinarily require the plaintiff to prove that the offending employee was acting within the scope of his employment when acting wrongfully.
Within the past year, the Texas Supreme Court reversed a nearly $2,000,000 jury award largely against ExxonMobil that shed some much-needed light on how Texas courts are to handle such negligence-based direct claims against employers. Pagayon v. Exxon Mobil Corp., No. 15-0642 (Tex. June 23, 2017). While the Court ruled that an employer’s duty to prevent harm in these cases is rather narrow, such a duty does exist and liability can still be imposed on employers under the right circumstances.
Because the Texas Supreme Court expressly declined to establish a generally applicable duty rule for employers, instead instructing lower courts to apply a variety of factors and assess claims on a case-by-case basis, Texas employers would be wise to consult with an employment law attorney to review their personnel policies and practices, including those related to hiring, training, and discipline, to best prepare for preventing and defending against such negligence claims. Even though Exxon ultimately won its case, the company had to spend tens (if not hundreds) of thousands of dollars and appeal all the way to the Texas Supreme Court to do so; few companies can afford such a fight. For a brief summary of the Pagayon case and the Texas Supreme Court’s ruling, please see below.
The Case: Pagayon v. Exxon Mobil Corp., No. 15-0642 (Tex. June 23, 2017)
- The underlying wrongful conduct of the employee, Carlos, was engaging in a fistfight with a co-worker, J.R., and the co-worker’s father, Alfredo, inside an Exxon-owned convenience store. The fight stemmed from a heated phone call Alfredo and Carlos had three days earlier about J.R.’s complaints that Carlos was harassing him at work. Sadly, Alfredo died from complications in the treatment of his injuries from the fight.
- While Carlos made verbal threats to J.R. on the day of the fight, telling J.R. that he wanted to “beat up” both J.R. and Alfredo, Carlos previously had not made threatening statements or acted violently toward co-workers or customers. R.’s only complaints to Exxon management about prior harassment from Carlos had not involved anything physical or any threats of violence. Carlos’s background check before hiring also did not reveal any history of violence or any criminal record.
- Roce, Carlos’s and J.R.’s manager, was not present during the fistfight but, upon receiving a call from the supervisor on duty when Carlos began making verbal threats, instructed the supervisor to tell J.R. to stay away from Carlos since Carlos’s shift was scheduled to end within the next half-hour. Carlos ended up working later, which resulted in him still being present when Alfredo arrived to pick up J.R. from work.
- A jury originally awarded the Pagayon family nearly $2,000,000 in damages and apportioned 75% of the fault to ExxonMobil for negligent supervision of Carlos. The 14th Court of Appeals in Houston affirmed the finding of liability against ExxonMobil.
- The Texas Supreme Court reversed the lower courts and rendered judgment in Exxon’s favor, based on its view that the lower courts had held ExxonMobil to a duty standard that was far too broad. The Court refused to announce a generally applicable duty rule for employers, instead providing lower courts with a list of factors they must consider on a case-by-case basis to determine an employer’s duty in such negligence cases.
- The Court rejected the theory of employer duty found in the Second Restatement of Torts and applied by the 14th Court of Appeals, instead preferring the duty theory of the Third Restatement of Torts and the caveats it includes that allow courts to consider a variety of principles and policies to find that no duty exists under certain circumstances.
- The Court identified several factors for lower courts to consider in determining whether an employer owes any duty to prevent harm in such direct negligence cases: (1) the risk of wrongful employee conduct; (2) the foreseeability of harm; (3) the likelihood of harm; (4) the burden on the employer; (5) the severity of harm; and (6) the social utility gained. Upon weighing these factors in the instant case, the Texas Supreme Court held that, as a matter of law, ExxonMobil owed no duty and could not be held liable for negligent supervision.
About the Author: J. Shannon Gatlin is Senior Counsel in the Houston office of Cokinos | Young, P.C (View Bio). Mr. Gatlin has been Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization since 2014, and has practiced labor and employment law on behalf of companies nationwide since 2009. Mr. Gatlin also spent more than two years assisting in the research and drafting of the Third Restatement of Torts, cited by the Texas Supreme Court in the Pagayon opinion, as well as one year as a Briefing Attorney for the Texas 14th Court of Appeals in Houston.