A recent ruling by the Illinois First District Appellate Court promises to roil the waters for employers, increasing their responsibility for negligent acts of their employees AND expanding monetary exposure.
Typically, in auto accident litigation involving a driver employed by a commercial defendant, the plaintiff does not expect to actually recover from the driver, but rather, from the “deep-pockets” corporate defendant. Increasingly, however, plaintiffs have been resorting to another form of liability against the employer -- an imputed (aka “derivative”) theory of liability in a direct action against the employer. In many of these cases, they attempt to bolster their theory (e.g., negligent entrustment/supervision/hiring/retention) by bringing in collateral evidence against the employer to prove one of their theories. Often times, the facts presented come in the form of inflammatory evidence regarding the driver’s employment history and prior driving record that is alleged to be connected to this accident. It is not difficult to imagine how such evidence could cause significant prejudice to a defendant and their employer at trial.
The Neuhengen Case – Expanding Defendant’s Exposure
Neuhengen v. Global Experience Specialists, Inc., 2018 IL App (1st) 160322 (June 28, 2018), arose from a 2012 incident at McCormick Place in Chicago. Plaintiff, Thomas Neuhengen, was working at a trade show when he was severely injured when a 58,000-pound forklift ran over his foot. The forklift was driven by defendant, Frederick Neirinckx, an employee of defendant, Global Experience Specialists, Inc., (GES).
Defendants’ Strategy & Trial
At trial, the operative complaint alleged negligence against both Neirinckx and GES based on Neirinckx's actions in count I, alleged willful and wanton conduct against Neirinckx in count II, and alleged willful and wanton conduct against GES in count III. The willful and wanton allegations in count III were against GES based upon Neirinckx's conduct as well as GES's own conduct for failing to have a three person crew, failing to implement a procedure to check certifications of forklift operators, and failing to ensure that Neirinckx was trained in the operation of the Versa Lift.
Prior to the jury trial, Neirinckx admitted his negligence, and GES admitted negligence under the respondeat superior doctrine. GES further admitted that if Neirinckx's conduct was found to be willful and wanton, then it admitted its respondeat superior liability hoping to extinguish those claims based on admission of agency. In other words, GES argued the willful and wanton conduct claims became duplicative and the admission of agency liability thereby eliminates all claims of corporate misconduct. After arguments, the trial court only dismissed those claims based on negligence and the willful and wanton conduct claims were allowed to reach the jury.
Verdict & Appeal
Following the trial, the jury awarded plaintiff a little more than $12 million in compensatory damages on the negligence claims and $3 million in punitive damages after finding GES's conduct to be willful and wanton in a special interrogatory. The jury found that Neirinckx's conduct was not willful and wanton in a special interrogatory. Defendants filed a post-trial motion raising multiple claims, including a motion for a new trial and a request for judgment notwithstanding the verdict (JNOV) on the $3 million punitive damages award against GES. The trial court granted defendants' motion for a JNOV on the punitive damages award, finding that plaintiff failed to prove GES's willful and wanton conduct proximately caused plaintiff's injury.
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See how Johnson & Bell's trial team foiled plaintiff's attempt to expand damages liability in Indiana.
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Defendants appealed, and plaintiff filed a cross-appeal. In their appeal, defendants argue that the trial court abused its discretion in denying their motion for a new trial because they were deprived of a fair trial when the trial court failed to dismiss the count against GES alleging willful and wanton conduct after GES admitted its respondeat superior liability for Neirinckx's conduct. Plaintiff’s argument on appeal was the trial court erred in granting defendants' motion for a JNOV on the jury's verdict that GES's conduct was willful and wanton and striking the punitive damages award.
Ultimately, the Appellate Court found that there was sufficient evidence to support the jury’s award of willful and wanton conduct on behalf of GES, such that it proximately caused Neuhengen’s injuries, thereby reinstating the award of punitive damages. The court also ruled that a stipulation by an employer to its employee’s negligent conduct does not eliminate the employer’s liability for its own willful and wanton conduct, as they are two different causes of action and damages for each serve two different purposes. Compensatory damages serve to make the plaintiff whole, where punitive damages are specifically reserved for punishment for gross misconduct.
The First District's opinion in Neuhengen sends an ominous message to any employer that it best be mindful of its employment procedures. Plaintiffs will undoubtedly rely on this opinion to substantiate a direct willful and wanton claim against an employer simply on allegations which would properly fall under the negligence umbrella. This erosion of the standard will encourage more filings of negligent entrustment allegations strapped to a corresponding willful and wanton count, then coupled with a claim for punitive damages.
Best Practices & Things to Consider in Light of Neuhengen
According to the Neuhengen court, a retrospective view that analyzes a corporation’s conduct only through the lens of an accident that has not yet happened is the sieve through which willfull and wanton conduct should be funneled. In the corporate world, this is not an acceptable way to operate comfortably. Corporations should have reasonable guidance about what to expect when these situations arise. We work with corporations to examine their employment practices and safety protocols. Issues include:
Employee Background Checks and Records
- How much of a background check will be necessary before an employer feels comfortable with its new employee?
- How much of a blemished record will be acceptable?
Prior Incidents and OSHA Violations
- For current employees, how much latitude is an otherwise solid employee going to have if they make a mistake?
- What constitutes an offense that will result in termination?
- If a policy is in writing, ensure it is followed at all costs. If not followed, prepare to have an explanation in the employee personnel file.
- Reasonable case value could be significantly increased based on a prior incident which may not even be reportable offense, but merely a stringent internal company policy.
- In cases of incidents/accidents/infractions, ensure there is documentation of coaching/improvement on the company’s behalf instead of nothing. There needs to be affirmative steps taken by the company to justify retention of employee.
Record Keeping
- How should companies keep and maintain employment files?
- How should companies maintain records of prior OSHA citations and abatement?
- Record retention policy (as long as it is followed and in compliance with any applicable state and federal laws). Once policy implemented, ensure consistent compliance.
How much training/education is necessary?
- Ensure all employee licensures/credentials/certifications are legally proper and up to date;
- Perform federal and state minimum background checks;
- Develop and implement policies for hiring and retention of employees;
- Develop and implement policies to re-educate and take steps to remedy conduct as opposed to remaining stagnant until another incident;
- Develop and implement policies resulting in termination and ensure they are followed;
