Don’t Expose Yourself to Liability for the Actions of a Third Party

From the Desk of Jeff Eberhard:  

It has been a long-held rule that a plaintiff cannot recover damages for negligent infliction of emotional distress without having suffered some physical injury as well. The exception to this general rule is if the defendant violated a legally protected interest. What qualifies as a legally protected interest? In this case, the Oregon Court of Appeals adds another interest to that list.

Claims Pointer:

In this case, the Oregon Court of Appeals continues to broaden what qualifies as a legally protected interest. The Court found that the plaintiffs’ interests in not being secretly filmed in an employee bathroom can warrant damages for negligent infliction of emotional distress and thus the employer of the tortfeasor can be held liable.

 I.K. v. Banana Republic, LLC, 317 Or App 249 (2022).

Facts:

Defendant Johnny Tuck Chee Chan (“defendant Chan”) was a licensed pharmacist who worked at Kaiser Permanente pharmacy when he was fired for secretly video recording other employees in the restroom. While the police commenced an investigation, defendant Banana Republic hired defendant Chan to work as a sales associate. Defendant Chan once again secretly placed a camera in the store’s employee restroom and recorded other employees while using the restroom.

Defendant Chan was arrested after a year-long investigation in connection with his recordings at the Kaiser pharmacy restroom and a few weeks later was charged with recording 27 Banana Republic employees as well. Plaintiffs allege that they suffered serious emotional trauma from having been video recorded while using the restroom. They also allege that defendant Banana Republic should have known defendant Chan would record them had they not been negligent in their hiring practices.

Defendant Banana Republic moved to dismiss the negligent hiring and retention claims. The trial courts dismissed the complaints under ORCP 21 A(8) for failure to state a claim.

Law:

Under Oregon law, there can be no recovery for negligent infliction of emotional distress in the absence of some sort of physical impact. There is an exception to this general rule if the defendant violated a legally protected interest. The Oregon Supreme Court previously set forth that to be protected from emotional distress, a legally protected interest must be of sufficient importance as a matter of public policy. Additionally, the emotional distress must be a foreseeable result of the violation of the legally protected interest.

Analysis:

The Oregon Court of Appeals set out three steps to evaluate whether plaintiffs correctly claim for negligent infliction of emotional distress: the Court must determine

(1) whether the complaint alleges the violation of a legally protected interest;

(2) whether such interest is of sufficient importance as a matter of public policy to merit protection from emotional impact; and

(3) whether the complaint alleges that the emotional distress was the foreseeable result of the violation of the legally protected interest.

Turning to the first step, the Court concluded that as a matter of common law, plaintiffs have a legally protected interest in being free from the emotional distress of being secretly recorded while in the restroom. The Court reached this conclusion by noting that the common law recognizes the existence of a right to privacy as well as the right to recover damages for infliction of emotional distress for violations of that right. The Court, when comparing this case with other cases that create the common law, found that the nature and context of the invasion of privacy in the restroom was compelling. The shock the plaintiffs felt after finding out they were being secretly recorded could be described as the emotional equivalent of a physical injury. (It is important to note that “common law” does not mean existing back in times before statutes, but rather, it means “case law” or judge-made law. It is limited only by how far judges want it to be limited.)

In analyzing step two, the Court compared the interest at issue with interests that courts have found to be of sufficient importance in other cases. The Court held that the interest of avoiding emotional trauma from being secretly recorded in a restroom is at least as societally important as being free from the distress of learning of a spouse’s disinterment or worrying about the damage to property caused by flooding— interests found to be sufficiently important in prior cases. (“Sufficiently important” is a sufficiently vague standard so there are no clear limits on the expanded tort).

Lastly, the Court turned to step three, whether a defendant can be held liable for a failure to foresee the intentional tortious criminal conduct of another. This determination depends on the circumstances, and in this case, the Court held that they could not say that it was unforeseeable that defendant Chan would engage in the same behavior in his new employment. With all three steps analyzed, the Court concluded that the plaintiffs alleged all the necessary elements of a claim for negligent infliction of emotional distress.

The Big Picture:

This case is one of a few recent cases that show Oregon courts leaning towards finding damages for emotional distress, even if the emotional distress is caused by the tortious acts of another defendant. Thus, it is pertinent that if your insureds are employers that their hiring and retention practices are thorough enough to vet out potential employees that may cause harm to their other employees. Additionally, it is important to note that Oregon courts can determine whether an interest is a legally protected interest that may warrant damages for emotional distress despite no physical harm, and it seems that the courts are comfortable broadening the list of exceptions to the general rule.