Opinion ID: 2604112
Heading Depth: 3
Heading Rank: 3

Heading: Employer's Right of Action for Loss of Service Against Third Person Tortiously Injuring Employees

Text: Apart from his claim for negligently caused economic losses, Mattingly argues that the College's conduct supports a cause of action for negligent interference with his relationships with his employees. The superior court examined Mattingly's first, second, third, and fifth counts, and stated: The duty owed by defendants to plaintiff is the first concern to be analyzed... . Sheldon Jackson College owes a duty, under tort law, to plaintiff, not to intentionally disrupt the relationship between plaintiff and his employees and customers, present, and future. Ellis v. Valdez, 686 P.2d 700, 706 (Alaska 1984). Long v. Newby, 488 P.2d 719 (Alaska 1971). Plaintiff has alleged disruption of expected opportunities, not currently valid contracts. In Ellis, the Alaska Supreme Court recognized the tort of intentional interference with prospective economic advantage... . Turning to the allegation of negligence, there is no authority cited by plaintiff that would establish that this duty owed by Sheldon Jackson College to plaintiff is breached by general negligence... . Thus, no recovery can be had by plaintiff on an allegation of negligence. We agree. Under the rule at common law, an employer was entitled to maintain an action against a third person to recover damages on account of losses sustained by reason of an injury to an employee caused by the third person. The authorities supporting the common law rule are generally dated, however, and the cases have been distinguished or rejected. [1] One writer offers the following criticism of the common law rule: [T]he statement continues to be made in various treatises that a master has a cause of action for negligent harm to his servant. These statements are in large measure based upon the admitted earlier rules. The modern authority, however, is so slight as to be almost non-existent... . . I have found only four square decisions in the United States in the last century and a half which support the rule. Seavey, Liability to Master for Negligent Harm to Servant, 1956 Wash. U.L.Q. 309, 311 (citing Woodward, Coal Land, Darmour, and Jones ( discussed in note 1 supra )); accord Snow v. West, 250 Or. 114, 440 P.2d 864, 865 (1968) (We have examined the American cases cited by the parties and cited in the various texts and the articles upon the subject and we have found no decision of the highest court of any jurisdiction holding that an employer can recover for profits lost because of a negligent injury to an ordinary employee.). Thus, the modern authorities uniformly hold that an employer is not entitled to recover damages against a third person for loss of services or profits resulting from injuries to an employee negligently caused by the third person. Many of these cases do hold, however, that an employer may recover for loss of an employee's services if the employee was intentionally harmed by an act of a third person. [2] Although we have not yet directly addressed the question whether an employer may recover for a third person's negligent injury to an employee, or for negligent interference with the employer's contract with its employees or its prospective economic advantage, several Alaska cases may be read to limit an employer's right of action to intentional interference. In Long v. Newby, 488 P.2d 719 (Alaska 1971), we joined the majority of American jurisdictions in recognizing the tort of intentional interference with contractual relations. In Ellis v. City of Valdez, 686 P.2d 700 (Alaska 1984), the tort of intentional interference with prospective economic advantage was recognized for the first time in Alaska. We explained that the individual's expectation of a fair opportunity to conduct legitimate business affairs free from wrongful intermeddling by others, is also widely protected in American jurisdictions, through the tort of intentional interference with prospective economic advantage. Under this theory, a person who is involved in an economic relationship with another, or who is pursuing reasonable and legitimate prospects of entering such a relationship, is protected from a third person's wrongful conduct which is intended to disrupt the relationship. Id. at 707 (emphasis added). Even assuming that Mattingly's complaint may be liberally construed to make out a claim for interference with his employee relations and prospective economic advantage, nowhere in Long or Ellis did we hint that negligent interference would support a cause of action. We now adopt the modern rule that employers may not recover simply for the loss of their employees' services or for loss of profits arising from the negligent injury of their employees by a third person. Of course, a defendant's negligent injury of an employer's employee may be relevant to the employer's cause of action for negligently caused economic losses. Thus, although an employer may not recover under a theory of loss of profits or employee services due to an employee's negligent injury by a third party, the employer might, as in this case, state a cause of action for negligently caused economic loss as discussed in part II.B of this opinion.
Mattingly next asserts that the superior court erred in dismissing his claim for intentional interference with his contracts with his employees, and for intentional interference with his prospective economic relations. He argues that the superior court erroneously held, in effect, that the level of intent required by Long, 488 P.2d at 722 (intentional interference with contractual relations) and Ellis, 686 P.2d at 706 (intentional interference with prospective economic advantage) is specific intent. Mattingly contends that the appropriate rule is that all persons are subject to a duty not to harm another as a result of outrageous or malicious acts, or acts done with reckless indifference (citing Zeman v. Lufthansa German Airlines, 699 P.2d 1274 (Alaska 1985)), and that an actor is presumed to have intended the harm if it is a natural and probable result of a voluntary act. He argues that because his complaint alleged that the College's conduct was willful and reckless, such conduct rises to outrageous or indifferent behavior and further to a level of neglect equalling intent. The superior court found that the intent alleged in the complaint focuses on the injury to the employees, which in turn would interfere with [Mattingly's] contractual relationships. These allegations are not sufficient to support a tort which requires an intent to harm a business relationship. The Ellis tort does not contemplate business harm inflicted as a collateral effect of a tort against an employee... . There is no hint in the amended complaint that defendants intended to interfere with plaintiff's business opportunities. Mattingly's complaint does not allege facts which indicate any intent on the College's part to interfere with Mattingly's relations with his employees or with his prospective economic advantage. Moreover, Mattingly's allegations do not express or imply any conduct on the part of the College which rises to a level of outrageousness. An employer is required to allege some definite, specific, or knowing intent on the part of a third person to do harm to the employer's contractual relations with its employees, or with its prospective economic advantage, in order to state a cause of action under Long or Ellis. In Knight v. American Guard & Alert, Inc ., we set out as one of the elements of the cause of action for the tort of intentional interference with another's contract proof that defendant ... knew of the contract and intended to induce a breach. 714 P.2d at 793. To the same effect is the Oregon Supreme Court's ruling: To be actionable an interference must be knowing and not an inadvertent or incidental invasion of plaintiff's contractual interests. Snow v. West, 440 P.2d at 865 (citation omitted); see also Steele v. J. & S. Metals, Inc., 335 A.2d at 630 (Connecticut court rejects plaintiff's attempt to distinguish recent decisions requiring intentional invasion of employer's contractual interests on the basis that defendants knew that injured employee was a key employee and that foreseeability of harm to employer was established. The court wrote: We do not feel that mere knowledge by the defendants of such a business relationship between plaintiffs is sufficient to create liability for the alleged losses sustained by the employer). We therefore affirm the superior court's decision that Mattingly's complaint does not state a cause of action for intentional interference with contractual or economic relations.