Opinion ID: 1159049
Heading Depth: 2
Heading Rank: 2

Heading: Direct Liability Claims

Text: Appellants raise an alternative argument that, even if Rellamas was not acting within the scope of his employment, HIRI may be held directly liable for failing to control Rellamas while he was on company premises. The standards for this theory may be found in the Restatement (Second) of Torts § 317 (1965): § 317. Duty of Master to Control Conduct of Servant A master is under a duty to exercise reasonable care so to control his servant while acting outside the scope of his employment as to prevent him from intentionally harming others or from so conducting himself as to create an unreasonable risk of bodily harm to them, if (a) the servant (i) is upon the premises in possession of the master or upon which the servant is privileged to enter only as his servant, or (ii) is using a chattel of the master, and (b) the master (i) knows or has reason to know that he has the ability to control his servant, and (ii) knows or should know of the necessity and opportunity for exercising such control. See Onorato Garages, 50 Haw. at 634, 446 P.2d at 826, and Costa, 3 Haw.App. at 490-91, 653 P.2d at 105 (adopting Restatement (Second) of Torts § 317 in this jurisdiction). Restatement § 317(a) applies under the instant facts, see supra section I, because Rellamas was drinking on HIRI's premises. Restatement § 317(b)(i) also applies because HIRI was aware of its ability to control the employees' conduct in the picnic area. A current HIRI supervisor testified that while the workers were in the picnic area, they were still under the employer's control. In fact, the record indicates that a plant supervisor ordered Rellamas and the other workers to leave the area. The remaining issue is whether Restatement § 317(b)(ii) has been satisfied. In Costa the ICA wrote that: [the employer's] duty in this case would arise only if [it] knew or should have known that [its employee] had a propensity for causing automobile collisions while driving under the influence of alcohol, and thus, should have prevented [its employee] from consuming beer on its premises. The record does not indicate any such knowledge or that [the employee] had any previous collision or drunk driving arrests. Costa, 3 Haw.App. at 491, 653 P.2d at 105 (emphasis added). [15] Although demonstrating an employer's knowledge of its employee's propensity for causing automobile collisions while DUI is one way to meet the requirements of Restatement § 317(b)(ii), that is not the sole method for establishing an employer's awareness of the necessity and opportunity for exercising control over its employees. See Onorato Garages, 50 Haw. at 633-35, 446 P.2d at 826. Onorato Garages involved injuries incurred by the plaintiff as a result of a motor vehicle accident caused by the defendant's employee, who had prior convictions for the hit and run of a parked vehicle and for driving with a suspended license. Onorato Garages, 50 Haw. at 629-30, 446 P.2d at 823-24. The defendant corporation was, however, unaware of  and had no reason to be aware of  the employee's driving record. In any event, the issue of alcohol consumption, much less abuse, was in no way involved in the case, and there was no suggestion that the defendant employed any other persons with dangerous driving records. The plaintiff filed a multi-count complaint against the defendant, including a claim of negligent failure to control under Restatement § 317. The circuit court granted summary judgment in defendant's favor and against the plaintiff on all counts of the complaint. Id. at 630, 446 P.2d at 824. This court affirmed on appeal. Regarding the Restatement § 317 claim, this court noted that [t]here was no evidence that [the defendant employer] was cognizant of any events which would have put it on notice that its [employee] needed supervising, id. at 634, 446 P.2d at 886 (emphasis added), although the defendant employer could be liable under Restatement § 317 if it were found that [it] knew or should have known that [the employee] was a negligent driver. Id. Onorato Garages stands for the proposition that when an employer has no reasonable basis for knowing that its employees are engaging in on-premises conduct or conduct involving the employer's property, all of which is outside the scope of their employment, in such a way as to necessitate the exercise of control by the employer in order to protect others from an unreasonable risk of bodily harm, the employer can have no liability to an injured plaintiff pursuant to Restatement § 317. Onorato Garages does not insulate employers from potential liability to injured third parties under Restatement § 317 where they are on actual notice that, pursuant to traditions or practices that they themselves have instituted or condoned, their employees are systematically and consistently consuming alcohol on company premises after working hours, albeit outside the scope of their employment. Under such circumstances, and given a sufficient record, an employer can or should know of the necessity and opportunity for exercising such reasonable control over its employees as to avoid the foreseeable risk that an inebriated employee will injure a third party in a motor vehicle accident. [16] See State v. Nakata, 76 Hawai`i 360, 878 P.2d 699 (Sup.1994) (discussing the general relationship between alcohol consumption and psychomotor impairment and automobile operation, and impaired automobile operation and the actuarial probability of a motor vehicle accident). Based on the evidence in the record in the instant case, see supra at 548-49, a reasonable trier of fact could find that the requirements of Restatement § 317(b)(ii) were met. Consequently, the trial court should not have granted Appellees motion for summary judgment with respect to this claim.
Finally, HIRI correctly argues that Johnston v. KFC Nat'l Mgmt. Co., 71 Haw. 229, 788 P.2d 159 (1990), precludes social host liability as alleged by Appellants.