Gross Negligence and Punitive Damages Under Texas Law

 

The following information may be somewhat outdated so please review recent decisions and statutes on the subject of gross negligence; however, for an overview read on. Please leave your thoughts and opinions too.

There are two basic elements to a claim of gross negligence under Texas law. First, when "viewed objectively from the actor’s standpoint, the act or omission must involve an extreme degree of risk, considering the probability and magnitude of the potential harm to others."

 

Second, "the actor must have actual, subjective awareness of the risk involved, but nevertheless proceed in conscious indifference to the right, safety or welfare of others." Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998). Either element can be proven by circumstantial evidence, but evidence of simple negligence is not proof of either. Id.

The first elements reference to "an extreme degree of risk" refers only to "the likelihood of serious injury." It does not include the "the remote possibility of injury or even a high probability of minor harm." Id.

Finally, the "actual awareness" necessary to satisfy the second element requires that the actor actually knew of the danger, but subsequent actions or omissions demonstrate disregard. Id.

 

 

Punitive Damages?

In Texas, punitive damages may be assessed against a corporation for gross negligence, but "only if the corporation itself commits gross negligence." The grossly negligent act or omission must be directly attributable to the corporation. Id.

A corporation can be held liable for punitive damages (1) "if it authorizes or ratifies" the gross negligence of an employee or agent or (2) "if it commits gross negligence through the actions or inactions of a vice principal." Id. at 922.

The definition of "vice principal encompasses: (a) corporate officers; (b) those who have authority to employ, ( c) those engaged in the performance of nondelegable or absolute duties of the master; and (d) those to who the master has confided the management of the whole or a department or a division of the business." Id.

In making the determination whether the acts complained of should be attributed to the corporation, the court must take into account all surrounding circumstances and facts and not just review individual elements or facts. Also, the fact finder is allowed make reasonable inferences from the corporations action/inaction or the facts as they were at the relevant time. Id.

 

Illustrative Cases

Checklist to Prevent Employer Liability for Improper Background Checks

The following is fully attributed to +Rick Norman for  the excellent outline of the legal issues of properly conducting background check of prospective employees.

An employer who hires an unacceptable employee may suffer losses because of the employee's inefficiency or because of the damage caused by the employee for which the employer is responsible. A background check may screen out problematical employees and, under R.S. 23:291(D), may afford the employer immunity from liability.

a. Employer Liability for Negligent Hiring or Negligent Retention

An employer is generally not liable for the intentional tort of its employee unless the employee is acting within the ambit of his assigned duties and in furtherance of the employer's objectives. (Baumeister v. Plunkett, 673 So.2d 994 (La.1996) However, even in situations where the employer is not vicariously liable for the torts of its employees, it may be directly liable under the theory of negligent hiring and/or retention. (Roberts v. Benoit, 605 So.2d 1032 (La.1991) on rehearing; Jackson v. Ferrand, 658 So.2d 691 (La.App. 4th Cir.1994); Bohmfalk v. City of New Orleans, 628 So.2d 1143 (La.App. 4th Cir.1993); Williams v. Butler, 577 So.2d 1113 (La.App. 1st Cir.1991).

Louisiana recognizes claims against an employer that hires an employee with dangerous propensities who injures third persons at work. An employer may be liable for negligent hiring if it knew or should have known that the employee posed a threat to others. Similarly, an employer is liable for negligent retention when it continues to employ an employee knowing his dangerous propensities.

When the employer hires an employee who will have a unique opportunity to commit a crime in the performance of his duties, the employer has a duty to exercise reasonable care in hiring the employee, and a continuing duty to exercise reasonable care in retaining the employee. (Smith v. Orkin Exterminating Company, Inc., 540 So.2d 363 (La.App. 1st Cir.1989).

Louisiana courts have found the employer to have breached its duty when it failed to adequately inquire about the employee's criminal history. (Lou–Con, Inc. v. Gulf Building Services, Inc., 287 So.2d 192 (La.App. 4th Cir.1973); Williams v. Butler, 577 So.2d 1113 (La.App. 1st Cir.1991); Smith v. Orkin Exterminating Company, Inc., 540 So.2d 363 (La.App. 1st Cir.1989). However, the employer is not negligent where it conducts a reasonable background investigation and where the wrong committed was not foreseeable based on the nature of any previous criminal conduct by the employee. (Lou–Con, Inc. v. Gulf Building Services, Inc., 287 So.2d 192 (La.App. 4th Cir.1973

To prove negligent hiring, the injured third person must prove:

a duty owed by the employer in selecting or retaining the employee

a breach of the duty


cause in-fact (The duty to properly hire and retain the employee must be the cause-in-fact of the injury)

Smith v. Orkin Exterminating Company, Inc., 540 So.2d 363 (La.App. 1st Cir.1989). In the context of the tort of negligent hiring/retention, Louisiana courts generally have not cited the requirement of C.C. art. 2320 that, to be liable, the employer must have been in a position to prevent the crime, perhaps relying on the later R.S. 9:3921

scope of liability; and

damages