Opinion ID: 8414582
Heading Depth: 3
Heading Rank: 2

Heading: Supervisory Authority as a Ground for Tort Liability

Text: Principals can often be held liable for the misuse of authority they delegate, whether or not they are negligent. Restatement (Second) of Agency § 219(2)(d) (Am. Law Inst. 1957) (“A master is not subject to liability for the torts of his servants acting outside the scope of their employment, unless ... the servant purported to 'act or to speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation.”). Such vicarious liability rules have traditionally been confined to cases where the employee acts within the scope of his employment or purports to act on the principal’s behalf. See Restatement (Second) of Agency § 219 cmt. a (Am. Law Inst. 1957) (“The conception of the master’s liability to third persons appears to be an outgrowth of the idea that within the time of service, the master can exercise control over the physical activities of the servant.”). But more recently, the law has moved toward holding employers vicariously liable for their supervisory employee’s intentional torts committed outside the scope of their employment but by abusing their supervisory authority, subject to an affirmative defense. The shift can be seen in the Supreme Court’s decision in Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 141 L.Ed.2d 633 (1998). The issue was whether and how an employer can be vicariously liable under Title VII of the Civil Rights Act of 1964 for supervisors’ sexual harassment of their subordinates. Id. at 754, 118 S.Ct. 2257. The Supreme Court answered those questions by applying the last clause of the Restatement (Second) of Agency § 219(2)(d), holding masters liable for their servants’ torts when the servants are “aided in accomplishing the tort by the existence of the agency relation.” Id. at 759-60, 118 S.Ct. 2257. The Court explained that a supervisor is “beyond question” aided by the agency relation when he takes tangible employment action against a subordinate. Id. at 760, 118 S.Ct. 2257. A tangible employment action is “a significant change in employment status,” such as firing or reduced hours and compensation. Id. at 761, 118 S.Ct. 2257, citing Crady v. Liberty Nat’l Bank & Trust Co., 993 F.2d 132, 136 (7th Cir. 1993) (“A materially adverse change might be indicated by a termination of employment, a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices that might be unique to a particular situation.”). If a supervisor takes tangible employment action against an employee, the employer is vicariously liable. Id. at 762-68, 118 S.Ct. 2257. But what if the supervisor only threatens to take tangible employment action but does not actually take it because the threat has worked? Ellerth answered that question by adopting a two-step holding: an employer is subject to vicarious liability to a victimized employee for an actionable hostile environment created by a supervisor with authority over the employee. However, if no tangible employment action is taken, an employer may raise an affirmative defense by proving both that the employer exercised reasonable care to prevent and corrected promptly any sexually harassing behavior, and that the employee unreasonably failed to take advantage of preventive or corrective opportunities provided by the employer or to avoid harm otherwise. 524 U.S. at 765, 118 S.Ct. 2257. Ellerth drew on general principles of agency and tort law to interpret a federal statute, Title VII. That development of the law was then made more general in the Restatement of Employment Law, which applies the Ellerth framework beyond the sexual harassment context to intentional torts committed “by the tortious abuse or threatened abuse of a supervisory or managerial employee’s authority.” Restatement of Employment Law §§ 4.03(c) & 4.06 (Am. Law Inst. 2015). Thus expanded to the more general tort and agency law that was itself the foundation of Ellerth, the Ellerth framework fits the facts alleged in the complaint here. Cooper’s threats to fire Alisha or cut her hours were exactly what the Ellerth court addressed: threats to take tangible employment actions that were not carried out, because the threat worked. Under the principles of the Restatement of Employment Law, Anicich would be able to pursue a claim under §§ 4.03 and 4.06. There is good reason to think that the Illinois Supreme Court would adopt those principles. It has already adopted § 219 of the Restatement (Second) of Agency, which lies at the root of the Ellerth framework. See Wright v. City of Danville, 174 Ill.2d 391, 221 Ill.Dec. 203, 675 N.E.2d 110, 118 (1996) (citing § 219). And that court often looks to the Restatements of the Law for advice and guidance. See Hudson v. City of Chicago, 228 Ill.2d 462, 321 Ill.Dec. 306, 889 N.E.2d 210, 216 (2008) (“This court then adopted the exceptions to claim-splitting set forth in section 26(1) of the Restatement (Second) of Judgments (1982).”); Olson v. Etheridge, 177 Ill.2d 396, 226 Ill.Dec. 780, 686 N.E.2d 563, 569 (1997) (“[W]e hereby adopt the vesting rule set forth in section 311 of the Second Restatement [of Contracts].”); Cult Awareness Network v. Church of Scientology International, 177 Ill.2d 267, 226 Ill.Dec. 604, 685 N.E.2d 1347, 1353 (1997) (“We regard the Restatement [ (Second) of Torts]’s treatment of the favorable termination requirement as more balanced than our appellate court’s interpretation.”). It might find the Restatement of Employment Law persuasive. But we need not and do not hold here that the Illinois Supreme Court would adopt that framework. The Ellerth vicarious liability framework is harder on employers than Illinois’s traditional negligent retention tort. For example, it places the burden on employers to show non-negligence rather than on plaintiffs to show negligence, and it applies whether or not the employer should have known that the supervisor was unfit for his position. We discuss it to show that our holding is (1) part of a broader trend toward recognizing employer liability for supervisors’ intentional torts committed outside the scope of employment; and (2) only an incremental shift, when there are good grounds to go much further. We confine ourselves to predicting that intentional torts committed by the abuse of a supervisory employee’s authority satisfy the requirements of the Restatement (Second) of Torts § 317(a), and thus that Anicich’s complaint states a claim for negligent hiring, supervision, or retention.