978-1285860381 Chapter 28 Solution Manual Part 3

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Principal’s Liability for Torts

An employer is liable for a tort committed by its employee acting within the scope of employment or

acting with apparent authority.

Respondeat Superior

A master is liable for physical harm caused by the negligent conduct of servants within the scope of

employment.

Question: What is a master?

Question: What is a servant?

Question: Are all agents servants?

Question: What kind of agent is an employee?

Question: Why do we care whether an agent is a servant or an independent contractor?

Question: You said “generally not liable for the torts of an independent contractor.” When is a

principal liable for these torts?

Scope of Employment

An act is within the scope of employment, even if expressly forbidden, if it is of the same general

nature as that authorized or if it is incidental to the conduct authorized.

Additional Case: You Be the Judge: Kashin v. Kent1

Facts: Douglas Kent was the Consul General of the United States in Vladivostok, Russia. One

evening, he drove from his office to a gym and then home. On the way home, he was involved in an

accident that left Aleksandr Kashin severely injured. Kashin sued the United States government,

claiming that Kent was within the scope of his employment at the time of the accident.

You Be The Judge: Was Kent acting within the scope of his employment while driving home from the

gym?

Holding: Kent was not acting within the scope of his employment at the time of the accident.

Question: Why would Kashin care if Kent was acting within his scope of employment?

Question: Was Kent driving to or from work when the accident happened?

Question: Was he involved in any diplomatic activity at the time of the accident?

Question: Why was Kent at the gym?

Question: Was he going to do any more work that day?

1 333 F. Supp. 2d 926; 2004 U.S. Dist. LEXIS 17381 United States District Court for the Southern District of

California, 2004

Question: Who leased his apartment?

Question: Was he acting within the scope of employment?

Abandonment

The principal is liable for the actions of the employee that occur while the employee is at work, but not

for actions that occur after the employee has abandoned the principal’s business. The McDonald’s case

is perhaps the high-water mark for employer liability.

Additional Case: O’Connor v. McDonald’s Restaurants of California,

Inc.2

Facts: From about 8 P.M. until 2 A.M. the next day, Evans and several co-workers scoured the

children’s playground at a McDonald’s restaurant. This special cleaning prepared the restaurant for

inspection as part of McDonald’s “spring-blitz” competition. At McDonald’s request, Evans–who

aspired to a managerial position–worked without pay in the cleanup party. His voluntary contribution

of work and time was the type of extra effort necessary for advancement in the McDonald’s

organization.

After completing the cleanup, Evans and four fellow workers went to Joe Duffer’s house. Duffer

had also participated in the evening’s work. Evans and the others talked shop and socialized into the

early hours of the morning. On his way home at about 6:30 A.M., Evans collided with a motorcycle

driven by Martin O’Connor. The motorcyclist was seriously injured, losing his left leg below the knee.

The trial court found that Evans was acting outside the scope of his employment at the time of the

accident, thus the court granted summary judgment for McDonald’s.

Issue: Was Evans acting within the scope of his employment at the time of the accident?

Holding: The appeals court reversed the summary judgment, holding that a triable issue of fact

remained about whether Evans was acting within the scope of employment. Where the employee is

pursuing a business errand and a personal objective simultaneously, he is acting within the scope of his

employment.

Question: After work, Evans went to someone’s house to socialize. On his way home from the

party, he ran into O’Connor. How could that possibly be within the scope of the McDonald’s

business?

Question: But the accident didn’t happen at Duffer’s house, it happened on the way home from

Duffer’s. Does that mean that any commuter on the way to or from work is acting within the scope

of employment?

Question: Does that mean that a hospital is liable if a resident gets into a car accident while

driving home from an all-night shift?

Question: Why the different result in the Kashin and O’Connor cases?

Answer: Evans may have gotten into the accident because he was so tired from the work that he

2 220 Cal. App. 3d 25, 1990 Cal. App. LEXIS 448 California Court of Appeals, 1990

You Be the Judge: Zankel v. United States of America3

Facts: Staff Sergeant William E. Dreyer was a recruiter for the United States Marine Corps.

Driving to work one morning at 6:40 AM, in a government owned car, he struck and killed 12 year

old Justin Zankel. The child’s parents sued the federal government, claiming that it was liable for

Dreyer’s actions because he had been acting within the scope of his employment at the time of the

accident.

The Marine Corps had provided Dreyer with a car to drive while on government business, but he

was not permitted to use this car while commuting to and from home unless he had specific

authorization from his boss, Major Michael Sherman. However, Sherman was flexible in giving

authorization and even permitted his soldiers simply to leave a message on his voicemail. Indeed,

he had only denied about one dozen such requests over a three-year period.

Each month, Dreyer was expected to meet specific quotas for the number of contracts signed and

recruits shipped to basic training. However, despite working 16 to 18 hours every day of the week,

Dreyer had not met his recruiting quotas for months. Sherman had formally reprimanded him and

increased his target for the following month.

On the day before the accident, Dreyer left home at 6:30 am, driving his own car. At the office, he

switched to a government car and worked until 10:45 p.m. He then discovered that his personal car

would not start. He did not want to call Sherman that late, so he drove his government car home

without permission. He believed that, had he called, Sherman would have said it was ok.

Dreyer arrived home at midnight. He was under orders to attend an early morning training session

the next day. So he awoke early and left home at 6:35 a.m. At 6:40 a.m. his car hit Justin Zankel.

You Be the Judge: Was Dreyer within the scope of employment when he killed Zankel?

Argument for the Zankels: At the time of the accident, Dreyer was driving a government vehicle.

Although he had not requested permission to drive the car, if he had done so, permission would

certainly have been granted.

Moreover, even if Dreyer was not authorized to drive the Marine Corps car, the government is still

liable because his activity was of the same general nature as that authorized and it was incidental

to the conduct authorized. Driving the car was part of Dreyer’s work. Indeed he could not perform

his job without it. In addition, Dreyer was on the road early so that he could attend a required

training session. He was exhausted from trying to reach impossible goals. The Marine Corps must

bear responsibility for this tragic accident.

Argument for United States: The government had a clear policy stating that recruiters were not

authorized to drive a government car without first requesting permission. Dreyer had not done so.

Therefore, he was not authorized to drive the government car at the time of the accident.

Moreover, it is well-established that an employee commuting to and from work is not within

the scope of employment. If Dreyer had been driving from one recruiting effort to another, that

would be a different story. But in this case, he had not yet started work for the Marine Corps and

therefore the government is not liable.

Holding: After considering and weighing all the evidence presented by the parties and applying

the controlling law to the court’s factual findings, this court finds, although it is a close question,

that Dreyer was acting within the scope of his employment with the Marine Corps at the time of

the accident on January 27, 2005. Pursuant to the Westfall Act, 28 U.S.C. § 2679(d)(3), the court

certifies that Dreyer was acting within the scope of his employment and orders that the United

States is hereby substituted as defendant for William E. Dreyer and that William E. Dreyer is

hereby dismissed as a defendant in this case. The court finds that this court has subject-matter

jurisdiction over plaintiffs’ claim under the FTCA, because Dreyer was within the scope of his

employment with the government at the time of the accident underlying plaintiffs’ claim.

3 2008 U.S. Dist. LEXIS 23655, United States District Court for the Western District of Pennsylvania, 2006

Intentional Torts

A principal is not liable for the intentional torts of an employee unless (1) the employee intended to

serve some purpose of the employer; or (2) the employer was negligent in hiring or supervising this

employee.

Case: Doe v. Liberatore4

Facts: – A number of priests wrote to James Timlin, the Bishop of Scranton, warning him that

Father Albert Liberatore was engaging in a sexual relationship with one of his male students.

Bishop Timlin transferred Liberatore from the school to a parish church.

Fourteen year-old John Doe was a member of Liberatore’s parish. Liberatore befriended Doe,

taking him on outings and giving him expensive gifts. Doe routinely slept in Liberatore’s bed. A

number of priests told Bishop Timlin that they feared Liberatore was sexually abusing Doe. One

witness reported that she had seen Doe put his hand down Liberatore’s pants. Eventually, Doe

himself told a priest that he was being sexually abused. The priest instructed Doe to forgive

Liberatore and not to tell other people because it would ruin Doe’s life and the lives of others.

Only after Liberatore pleaded guilty to multiple counts of sexual abuse did the Church dismiss him

from the priesthood. Doe filed suit against the Church and Bishop Timlin, alleging that they were

liable for the torts committed by Liberatore. The defendants filed a motion to dismiss.

Issue: Was Liberatore acting within the scope of his employment? Was the Church negligent in hiring

and supervising him? Was the Church liable for his criminal acts?

Excerpts from Judge Caputo’s Decision: -Under Pennsylvania law, an employer is held liable for

the negligent acts of his employee which cause injuries to a third party, provided that such acts

were committed during the course of and within the scope of the employment.

The conduct of an employee is considered within the scope of employment if:

1. it is of a kind and nature that the employee is employed to perform;

2. it occurs substantially within the authorized time and space limits;

3. it is actuated, at least in part, by a purpose to serve the employer; and

4. if force is intentionally used by the employee against another, the use of force is not unexpected

by the employer.

Here, it is clear that Liberatore’s sexual molestation of Plaintiff was not within the scope or nature

of his employment as a priest. Indeed, the activity of which Plaintiff now complains is wholly

inconsistent with the role of one who is received into the Holy Orders as an ordained priest of the

Roman Catholic Church. Moreover, the acts of sexual abuse perpetrated by Liberatore were both

outrageous and certainly not actuated by any purpose of serving the Diocese, Sacred Heart, or

4 478 F.Supp. 2d 742, 2007 U.S. Dist. LEXIS 19067, United States District Court for the Middle District of

Pennsylvania, 2007.

Bishop Timlin. Therefore, the Court will grant summary judgment in favor of the Diocese, Sacred

Heart, and Bishop Timlin as to [this issue].

Plaintiff next claims that the Diocese, Sacred Heart, and Bishop Timlin are liable for negligence in

their hiring, supervision, and retention of Liberatore as a Diocesan priest. [A]n employer owes a

duty to exercise reasonable care in selecting, supervising and controlling employees. The Supreme

Court of Pennsylvania has held that, to fasten liability on an employer, it must be shown that the

employer knew or, in the exercise of ordinary care, should have known of the necessity for

exercising control of his employee.

In the instant case, the Diocese, Sacred Heart, and Bishop Timlin may be liable if they knew or should

have known that Liberatore had a propensity for committing sexual abuse and his employment as

Pastor at Sacred Heart might create a situation where his propensity would harm a third person, such

as Plaintiff. [A] reasonable jury could conclude that the Diocese, Sacred Heart, and Bishop Timlin were

negligent or reckless in supervising and retaining Liberatore. However, the Court concludes that a

reasonable jury could not find that the Diocese, Sacred Heart, and Bishop Timlin were negligent or

reckless in hiring Liberatore because there is no evidence suggesting that Liberatore was or would

become a child sex predator when he was hired.

Question: Liberatore’s abuse of Doe happened while Liberatore was employed by Sacred Heart, how

then could the court conclude that the abuse did not happen during the scope of Liberatore’s

employment?

Answer: Although the abuse did happen while Liberatore was employed by Sacred Heart, and in fact

Question: What does the Court mean when it says “a reasonable jury could conclude that the Diocese,

Sacred Heart, and Bishop Timlin were negligent or reckless in supervising and retaining Liberatore”

and also “a reasonable jury could not find that the Diocese, Sacred Heart and Bishop Timlin were

negligent or reckless in hiring Liberatore”?

Answer: In order for the Defendants to be liable for negligence in hiring, supervising, and retaining

Liberatore, the Defendants must have known or should have known that Liberatore had a propensity

Question; What evidence was there that the Defendants were negligent or reckless in retaining or

supervising Liberatore?

Answer: Liberatore gave Doe expensive gifts, Doe routinely slept in Liberatore’s bed at the rectory, a

Question: Do we know whether the Diocese, Sacred Heart or Timlin knew that Doe was sleeping in

Liberatore’s bed at the rectory? Does that matter?

Answer: There is no evidence that the Defendants knew of these things. However, the standard is

whether they knew or should have known that Liberatore’s employment at Sacred Heart would create a

Agent’s Liability for Torts

The focus of this section has been on the principal’s liability for the agent’s torts. But it is

important to remember that agents are always liable for their own torts.

Physical or Non-Physical Harm

In the case of physical torts, a principal is liable for the negligent conduct of

a employee that occurs within the scope of employment. The rule for

nonphysical torts (that is, torts that harm only reputation, feelings, or wallet)

is different. Nonphysical torts are treated more like a contract claim, and the

principal is liable if the employee acted with express, implied, or apparent

authority. 18 For example, suppose that Dwayne buys a house insurance

policy from Andy, who is an agent of the Balls of Fire Insurance Company.

Andy throws away Dwayne’s policy and pockets his premiums. When

Dwayne’s house burns down, Balls of Fire is liable because Andy was acting

with apparent authority.

Multiple Choice Questions

1. At Business University, semester enrollment begins at midnight on April 1. Jasper asked his

roommate Alonso as a favor to register him for an important required course. Alonso agreed to do

so but then overslept. As a result, Jasper could not enroll in the required course he needed to

graduate and had to stay in school for an additional semester. Is Alonso liable to Jasper?

(a) No, because an agency agreement is invalid unless the agent receives payment.

(b) No, because Alonso was not grossly negligent.

(d) Yes, because Alonso disobeyed his instructions.

2. Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co.

So he decides to start his own company. During his last month on the Barry payroll, he tells all of

his clients about his new business. He also tells them that Barry is a great company, but his fees

will be lower. After he opens the doors of his new business, most of his former clients move with

him. Is Finn liable to Barry?

(a) No, because he has not been disloyal to Barry — he praised the company.

(b) No, because Barry was underpaying him.

(d) Yes, Finn has violated his duty of loyalty to Barry.

3. Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus

that she has been taking care of its whole life. Quinn was working for the seller. Which of the

following statements is true?

(a) Quinn must pay Kurt the amount of money she received from the Ford’s prior owner.

(b) After buying the car, Kurt discovers it needs $1000 in repairs. He may recover that amount

from Quinn, but only if Quinn knew about the needed repairs before Kurt bought the car.

the car’s seller.

(d) Kurt cannot recover anything because he had not paid Quinn for her help

4. Figgins is the dean of a college. He appointed Sue acting dean while he was out of the country and

posted an announcement on the college web site announcing that she was authorized to act in his

place. He also told Sue privately that she did not have the right to make admissions decisions.

While Figgins was gone, Sue overruled the admissions committee to admit the child of a wealthy

alumnus. Does the child have the right to attend this college?

(a) No, because Sue was not authorized to admit him.

(b) No, because Figgins did not ratify Sue’s decision.

(d) Yes, because Sue had apparent authority.

5. CPA QUESTION A principal will not be liable to a third party for a tort committed by an agent:

(a) unless the principal instructed the agent to commit the tort

(b) unless the tort was committed within the scope of the agency relationship

(d) if the tort is also regarded as a criminal act

6. CPA QUESTION Cox engaged Datz as her agent. It was mutually agreed that Datz would not

disclose that he was acting as Cox’s agent. Instead he was to deal with prospective customers as if

he were a principal acting on his own behalf. This he did and made several contracts for Cox.

Assuming Cox, Datz, or the customer seeks to avoid liability on one of the contracts involved,

which of the following statements is correct?

(a) Cox must ratify the Datz contracts in order to be held liable.

(b) Datz has no liability once he discloses that Cox was the real principal.

(d) The third party may choose to hold either Datz or Cox liable.

Case Questions

1. An elementary school custodian hit a child who wrote graffiti on the wall. Is the school district

liable for this intentional tort by its employee?

2. What if the custodian hit one of the schoolchildren for calling him a name? Is the school district

liable?

3. A soldier was drinking at a training seminar. Although he was told to leave his car at the seminar,

he disobeyed orders and drove to a military club. On the way to the club, he was in an accident. Is

the military liable for the damage he caused?

4. One afternoon while visiting friends, tennis star Vitas Gerulaitis fell asleep in their pool house. A

mechanic had improperly installed the swimming pool heater, which leaked carbon monoxide

fumes into the house where he slept, killing him. His mother filed suit against the owners of the

estate. On what theory would they be liable?

Answer: Principals are liable for the torts of their independent contractors only if they have been

5. You Be the Judge: WRITING PROBLEM Sarah went to an auction at Christie’s

to bid on a tapestry for her employer, Fine Arts Gallery. The good news is that she purchased a

Dufy tapestry for $77,000. The bad news is that it was not the one her employer had told her to

buy. In the excitement of the auction, she forgot her instructions. Fine Art refused to pay, and

Christie’s file suit. Is Fine Arts liable for the unauthorized act of its agent? Argument for

Christie’s: Christie’s cannot possibly ascertain in each case the exact nature of a bidder’s authority.

Whether or not Sarah had actual authority, she certainly had apparent authority and Fine Arts is

liable. Argument for Fine Arts: Sarah was not authorized to purchase the Dufy tapestry, and

therefore Christie’s must recover from her, not Fine Arts.

Discussion Questions

1. ETHICS Mercedes has just begun work at Photobook.com. What a great place to work! Although

the salary is not high, the company has fabulous perks. The dining room provides great food from

7a.m. to midnight, five days a week. There is also a free laundry and dry-cleaning service.

Mercedes’s social life has never been better. She invites her friends over to Photobook for meals,

and has their laundry done for free. And because her job requires her to be online all the time, she

has plenty of opportunity to stay in touch with her friends by g-chatting, tweeting and checking

Facebook updates. She is, however, shocked that one of her colleagues takes paper home from the

office for his children to use at home. Are these employees behaving ethically?

2. Kevin was the manager of a radio station, WABC. A competing station lured him away. In his last

month on the job at WABC, he notified two key on-air personalities that if they were to leave the

station, he would not hold them to their noncompete agreements. What can WABC do?

3. Jesse worked as a buyer for the Vegetable Co. Rachel offered to sell Jesse 10 tons of tomatoes for

the account of Vegetable. Jesse accepted the offer. Later, Jesse discovered that Rachel was an agent

for Sylvester Co. Who is liable on this contract?

Answer: Because Greenery was a fully disclosed principal, Greenery is liable but Jesse is not.

4. The Pharmaceutical Association holds an annual convention. At the convention, Brittany, who was

president of the Association, told Luke that Research Corp. had a promising new cancer vaccine.

Luke was so excited that he chartered a plane to fly to Research’s headquarters. On the way, the

plane crashed and Luke was killed. Is the Pharmaceutical Association liable for Luke’s death?

5. Betsy has a two-year contract as a producer at Jackson Movie Studios. She produces a remake of

the movie Footloose. Unfortunately, it bombs and Jackson is so furious, he fires her on the weekend

the movie opens. Does he have the power to do this?

Answer: Yes, he has the power. He does not, however, have the right, because she has a two-year