2014 MVP LAW SEMINAR TORTS LIABILITY DALLAS JULY 17TH KANSAS CITY AUGUST 7TH ST. LOUIS SEPTEMBER 25TH KEEP CALM AND CALL MVP.

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1 2014 MVP LAW SEMINAR TORTS LIABILITY KEEP CALM AND CALL MVP DALLAS JULY 17TH KANSAS CITY AUGUST 7TH ST. LOUIS SEPTEMBER 25TH

2 TORT LIABILITY INDEPENDENT LIABILITY FOR EMPLOYEES, JOINT AND SEVERAL LIABILITY, AND DRAM SHOP LIABILITY Independent Tort Liability for Employees Under certain circumstances employees may be held individually liable for torts committed during the course of business. These circumstances include: Torts committed by the employing corporation or entity Torts against fellow employees Torts against customers or clients committed by the employee Torts committed by other employees Several states have addressed the potential independent tort liability of supervisors, managers, and corporate officers. In Illinois, corporate officers can be held individually liable for torts that the corporation commits. People ex rel. Madigan v. Tang, 346 Ill. App. 3d 277, 805 N.E.2d 243 (2004). In Nebraska and Oklahoma, a supervisor may be liable in a civil action for an employee s deprivation of rights under 42 U.S.C Potter v. Bd. of Regents of the Univ. of Nebraska, 287 Neb. 732, 844 N.W.2d 741 (2014); Estate of Crowell ex rel. Boen v. Bd. of Cnty. Comm'rs of Cnty. of Cleveland, 2010 OK 5, 237 P.3d 134. Employees may also be liable for torts committed against co-employees. Workers compensation laws impact whether employees are liable in this context, and states take different approaches in these situations: Arkansas: Employees are generally not liable for torts against co-employees, but an exception applies to intentional torts. Angle v. Alexander, 328 Ark. 714, , 945 S.W.2d 933, (1997). Illinois: Workers compensation is the exclusive remedy for accidental workplace injuries, but an employee can sue a co-employee if the tort was intentional. Garland v. Morgan Stanley & Co., Inc., 2013 IL App (1st) , 996 N.E.2d 188, 197 appeal denied, , 2014 WL (Ill. Jan. 29, 2014). Iowa: Employees can sue co-employees in tort for work-related injuries if the coemployee s conduct constitutes gross negligence. Simmons v. Acromark, Inc., , 2002 WL (Iowa Ct. App. Apr. 24, 2002). Kansas: Negligence claims against co-employees are barred by the exclusive remedy provision of the workers compensation statute. Intentional tort claims, however, are not bared. Stapp v. Overnite Transp. Co., 995 F. Supp. 1207, 1209 (D. Kan. 1998). 1

3 Missouri: Workers compensation is the exclusive remedy for work-related injuries except that an employee shall not be released from liability for injury or death if the employee engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury. RSMo Nebraska: Workers compensation is the exclusive remedy for workplace injuries, and there is no indication that Nebraska recognizes an intentional tort exception. NEB. REV. ST , , ; Bennett v. Saint Elizabeth Health Sys., 273 Neb. 300, 729 N.W.2d 80 (2007). Oklahoma: Workers compensation is the exclusive remedy for workplace injuries resulting from accidents, but an employee can bring suit against a co-employee if the employee shows the actions were substantially certain to cause injury. Parret v. UNICCO Serv. Co., 2005 OK 54, 127 P.3d 572. When an employee commits a tort in the course and scope of their employment, the employer is vicariously liable for the tort under the theory of respondeat superior. Some courts also require that the employee be under the control of the employer for respondeat superior to apply. Mulroy v. Olberding, 29 Kan. App. 2d 757, 30 P.3d 1050 (2001). However, if the employee s conduct falls outside the scope of its employment or the employee is not under the control of the employer, respondeat superior does not apply and the employee may be individually liable. Almost every state recognizes respondeat superior liability. Id.; Dickens v. Associated Anesthesiologists, P.C., 709 N.W.2d 122 (Iowa 2006); Cluck v. Union Pac. R. Co., 367 S.W.3d 25 (Mo. 2012), reh g denied (July 3, 2012); Doe ex rel. Doe v. Lawrence Hall Youth Servs, 2012 IL App (1st) , 966 N.E.2d 52 appeal denied, 968 N.E.2d 81 (Ill. 2012); Kocsis v. Harrison, 249 Neb. 274, 543 N.W.2d 164 (1996); Bosh v. Cherokee Cnty. Bldg. Auth., 2013 OK 9, 305 P.3d 994; Regions Bank & Trust, N.A. v. Stone Cnty. Skilled Nursing Facility, Inc., 73 Ark. App. 17, 20, 38 S.W.3d 916, 919 aff'd sub nom. Regions Bank & Trust v. Stone Cnty. Skilled Nursing Facility, Inc., 345 Ark. 555, 49 S.W.3d 107 (2001). Public employees may be individually liable in certain situations, but these employees are generally immune from suit. States interpret the liability of public employees in different ways: Kansas: Under the Kansas Tort Claims Act a public entity is liable for the negligent acts of its employee if a private sector employee would be liable for the same acts. KAN. STAT. ANN Illinois: Public employees are not liable for acts or omissions in the execution or enforcement of laws unless the act or omission constitutes willful and wanton conduct. 745 ILCS 10/ Nebraska: Recognizes qualified immunity for public employees. Martin v. Curry, 13 Neb. App. 171, 690 N.W.2d 186 (2004). 2

4 Oklahoma: Recognizes sovereign immunity for public employees from tort claims when employees are acting within the scope of their employment. 51 OKL. STAT. ANN Arkansas: Officials and employees of government entities named in Arkansas immunity statute are immune from suit for negligence in their official capacities. Braden v. Mountain Home Sch. Dist., 903 F. Supp. 2d 729, (W.D. Ark. 2012). Joint and Several Liability Under the doctrine of joint and several liability, when two or more negligent actors cause a single injury the actors are each liable for the entire injury. A plaintiff can bring suit against any and all actors, either jointly or severally. The adoption of comparative fault systems of liability in many states has affected the joint and several liability doctrine. Under comparative fault systems, actors are liable only for the share of damages for which they are at fault, rather than the entire injury. See KAN. STAT. ANN a. Some states that have adopted comparative faults systems have abolished joint and several liability, while others have retained it in some form. The states various approaches are summarized below: Kansas Kansas abolished joint and several liability when it adopted a comparative fault system of liability. KAN. STAT. ANN a. Under this system of comparative fault, a tortfeasor pays only for its share of fault. Teepak, Inc. v. Learned, 237 Kan. 320, 699 P.2d 35 (1985). Additionally, if a plaintiff is responsible for 50% or more of the fault causing the injury, the plaintiff is completely barred from recovery. Sandifer Motors, Inc. v. City of Roeland Park, 6 Kan. App. 2d 308, 628 P.2d 239 (1981). Missouri Missouri has adopted a comparative fault system but has retained a form of joint and several liability. MO. STAT. ANN If a defendant is more than 51% at fault, the defendant is joint and severally liable for the entire fault attributable to all defendants. Id. If a defendant is less than 51% at fault, it is liable only for its share of the fault causing the injury. Id.; Burg v. Dampier, 346 S.W.3d 343 (Mo. Ct. App. W. Dist. Div ). Nebraska 3

5 Nebraska retains joint and several liability in certain contexts. If defendants acted pursuant to a common enterprise or plan or act in concert and cause harm, the defendants are joint and severally liable. NEB. REV. ST , In other actions, defendants are jointly and severally liable for economic damages, and severally liable for noneconomic damages. Id. Illinois In Illinois, tortfeasors are jointly and severally liable when they act in concert and cause injury. Woods v. Cole, 181 Ill. 2d 512, , 693 N.E.2d 333, 335 (1998). Additionally, if a defendant is responsible for 25% or more of the total fault causing an injury the defendant is jointly and severally liable for medical and related expenses. However, a defendant is not jointly and severally liable if the defendant is responsible for less than 25% of the total fault or the damages are not for medical expenses. 735 ILCS 5/ Oklahoma In 2011, Oklahoma adopted a rule of several liability and abolished joint and several liability. 23 OKL. ST. ANN. 15. A previous 2009 version of the statute allowed for joint and several liability under certain circumstances, but this version was ruled unconstitutional by the Oklahoma Supreme Court. Douglas v. Cox Retirement Properties, Inc., 302 P.3d 789 (Okla. 2013). Accordingly, 23 Okl. St. Ann. 15 is the law in Oklahoma providing for several liability and joint and several liability has been abolished. Arkansas Arkansas also generally abolished joint and several liability with the adoption of a comparative fault system. A.C.A Arkansas applies joint and several liability to tortfeasors who act in concert. A.C.A Iowa In Iowa, joint and several liability applies but only to defendants who are 50 percent or more at fault and only with respect to the plaintiff s economic damages. IOWA CODE ANN ; Estes v. Progressive Classic Ins., 809 N.W.2d 111 (Iowa 2012). Where liability is joint and several, a defendant paying more than its proportionate share is entitled to contribution from the other defendants. Iowa Code 668.5; Wilson v. Farm Bureau Mut. Ins., 770 N.W.2d 324 (Iowa 2009). 4

6 Dram Shop Liability What is the standard to impose dram shop liability upon a supplier of alcohol? Kansas Kansas does not recognize dram shop liability. There is no cause of action against suppliers of alcohol for persons injured as a result of intoxicated patrons. Noone v. Chalet of Wichita, L.L.C., 96 P.3d 674, (2004). Missouri In Missouri, the legislature has enacted a statutory dram shop liability law under V.A.M.S Under the act, a cause of action may be brought by or on behalf of any person who has suffered personal injury or death against any person licensed to sell intoxicating liquor by the drink for consumption on the premises when it is proven by clear and convincing evidence that the seller knew or should have known that intoxicating liquor was served to a person under the age of twenty-one years or knowingly served intoxicating liquor to a visibly intoxicated person. Mo. Ann. Stat Visibly intoxicated is statutorily defined as a person inebriated to such an extent that the impairment is shown by significantly uncoordinated physical action or significant physical dysfunction. A person s blood alcohol content may be admissible as relevant evidence of the person s visible intoxication, but it does not constitute prima facie evidence to establish that a person is visibly intoxicated. MO. ANN. STAT A cause of action is only permitted against a person selling intoxicating liquor by the drink for on-premises consumption. There is not cause of action under the act against a commercial seller of packaged liquor who sells to a minor or to a visibly intoxicated person. Snodgras v. Martin & Bayley, Inc. 204 S.W.3d 638, (Mo. 2006). There is also no cause of action under the act against a homeowner or social host who furnishes alcoholic beverages to individuals. Social hosts cannot be held liable under the act because social hosts have no common law civil duty to abstain from furnishing alcoholic beverages to an individual. Otte v. Edwards, 370 S.W.3d 898, (Mo. Ct. App. 2012). This is the case even when the social host illegally furnishes alcoholic beverages individuals under the age of twenty one. Id. Oklahoma In Oklahoma, courts have adopted the legal theory of dram shop liability on commercial, on-the-premises vendors furnishing alcoholic beverages. This duty is imposed both by statute and common law principles, which make it illegal to sell alcoholic beverages to 5

7 an intoxicated person. Brigance v. Velvet Dove Rest., Inc., 1986 OK 41, 725 P.2d 300, 304. To establish a claim based on dram shop liability, an injured plaintiff must show (1) the existence of a duty on the part of commercial, on-the-premise alcoholic beverage vendor to protect the plaintiff from injury, (2) a violation of that duty by continuing to serve an already intoxicated patron; and (3) injury proximately resulting from the foreseeable, unreasonable risk of harm to the plaintiff from continually serving the intoxicated patron, impairing the ability of the patron to operate a car. See Copeland v. Tela Corp., 996 P.2d 931, 933 (1999). The question to determine whether a commercial vendor violated their duty is whether the vendor knew or should have known that the patron had become noticeably intoxicated while being served alcoholic beverages on its premises. Id. Dram shop liability is limited to commercial vendors that sell alcohol on-the-premises. Therefore, social hosts that merely furnish or provide alcohol may not be liable under the rule. McGee v. Alexander, 37 P.3d 800 (Okla. 2001). This includes businesses that sponsor events for employees or associates as a social host, provided the business does not sell or intend to make a profit from the sale of alcohol. Id. Arkansas The Arkansas Legislature has enacted a statutory dram shop liability law under A.C.A et seq. The statute says, In cases where it can be proven that an alcoholic beverage retailer knowingly sold alcoholic beverages to a person who was clearly intoxicated at the time of such sale or sold under circumstances where the retailer reasonably should have known the person was clearly intoxicated at the time of the sale, a civil jury may determine whether or not the sale constitutes a proximate cause of any subsequent injury to other persons. ARK. CODE ANN A person is considered clearly intoxicated when the person is so obviously intoxicated to the extent that, at the time of such sale, he presents a clear danger to others. Id. As an affirmative defense, an alcoholic beverage retailer may assert that they reasonably believed at the time of the sale that the person would not be operating a motor vehicle while in the impaired state. Id. Dram shop liability may also be asserted against an alcoholic beverage retailer for sale of alcohol to a minor. The statute says, In cases where it can be proven that an alcoholic beverage retailer knowingly sold alcoholic beverages to a minor or sold under circumstances where such retailer reasonably should have known such purchaser was a minor, a civil jury may determine whether or not such knowing sale constituted the proximate cause of any injury to such minor, or to a third person, caused by such minor

8 Dram shop liability may not be imposed on a social host or any person that does not have an alcoholic beverage vendor s permit who provides alcoholic beverages to a person who can lawfully possess them Therefore, any person or organization that sells alcohol but does not have an alcohol-vendor s permit, such as a fraternity, may not be held liable under the state s dram shop liability law. See Archer v. Sigma Tau Gamma Alpha Epsilon, Inc., 362 S.W.3d 303 (2010). Nebraska Nebraska previously recognized dram shop liability by statute, but this statute was repealed in the 1930s. The Nebraska legislature has not since reinstated dram shop liability. Pelzek v. Am. Legion, 236 Neb. 608, 609, 463 N.W.2d 321, 323 (1990). However, an exception exists for retailers who sell liquor to minors. NEB. REV. ST Illinois Illinois recognizes dram shop liability by statute. 235 ILCS 5/6-21. The statute applies to any person or entity who is licensed to sell alcohol in the state. Id. It also applies to operators of hotels and motels who rent rooms to patrons under the age of 21 when the rooms are used for underage consumption of alcohol and the patrons cause injury or property damage. Id. The statute does not apply to social hosts. Charles v. Seigfried, 165 Ill. 2d 482, 487, 651 N.E.2d 154, 157 (1995). Iowa Iowa also recognizes dram shop liability by statute. Under the relevant statutes, social hosts are not liable for injuries caused by intoxicated guests. IOWA CODE ANN However, liquor license holders are liable for injuries caused by customers or patrons who the license holders served or sold liquor to. IOWA CODE ANN The standard for imposing liability is that the license holder knew or should have known that the patron was intoxicated or would become intoxicated. Id. Disclaimer and warning: This information was published by McAnany, Van Cleave & Phillips, P.A., and is to be used only for general informational purposes and should not be construed as legal advice or legal opinion on any specific facts or circumstances. This is not inclusive of all exceptions and requirements which may apply to any individual claim. It is imperative to promptly obtain legal advice to determine the rights, obligations and options of a specific situation. 7

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