TORTS – Mulitple issues from McDonald’s ‘hoax’ case: McDonald’s Corporation v. Ogborn (COA 11/20/2009)

McDonald's Corporation v. Ogborn
2008-CA-000024 11/20/09 2009 WL 3877533

Opinion by Judge Acree; Judges Taylor and Thompson concurred.

The Court affirmed in part, and reversed in part, a judgment of the circuit court awarding both compensatory and punitive damages. The claims arose when a hoax caller, identifying himself as a police officer, successfully convinced restaurant managers,employees, and third parties to conduct a strip search and sexual assault of an employee the caller said had stolen a wallet or purse at the restaurant. The employee filed claims against the restaurant for sexual harassment, false imprisonment, premises liability, and negligence. The assistant manager on duty the night of the events, who was later fired, filed a cross-claim against the restaurant for intentional infliction of emotional disturbance (IIED).

The Court first held that the Workers’ Compensation Act, KRS 342.590(1), did not preclude the employee’s pursuit of common law causes of action when the employer failed to prove it complied with KRS 342.341(1) by showing prima facie evidence of workers’ compensation coverage. Further, there was no manifest injustice in the trial court’s ruling that the employee was not acting in the scope and course of her employment during the events.

The Court next held that the Kentucky Civil Rights Act (KCRA) did not preempt the employee’s claims. The common law claims, unlike those based on discriminatory practices, stood independently and were not subsumed by the KCRA.

The Court next held that the KCRA claim did not fail as a matter of law. The jury’s finding of no negligence on the part of the assistant managers did not insulate the restaurant from liability for the intentional acts of its employees.

The Court next held that the evidence supported the employee’s claim for false imprisonment when she did not sign a release, was deprived of her clothing, she repeatedly objected to the search and seizure of her body, she was threatened with further police involvement, she was under the impression the door was locked and she had a constant guard between herself and the door.

The Court next held that the employee’s premises liability claim did not fail as a matter of law as the restaurant could be held liable for the foreseeable tortious acts committed against the employee by its own employees, by a third-party and by the caller.

The Court next held that the employee’s negligence claim did not fail as a matter of law. But for the restaurant’s failure to satisfy its duty to supervise or train its employees regarding the risk of which it was aware, the employee would not have been injured.

The Court next held that the criminal actions of the assistant manager’s fiancé did not prevent the imposition of liability on the restaurant when the criminal activity was a foreseeable danger, resulting from the decision not to warn, train or supervise managers and owners that the hoax calls were an ongoing problem.

The Court next held that the evidence supported the award of punitive damages under KRS 411.184(3). The instruction properly limited the jury’s consideration of the evidence to that contemplated by the statute and it was a question of fact for the jury as to whether the restaurant could have anticipated the conduct in response to the hoax.

The Court next held that the assistant manager properly pleaded a cause of action for IIED. After noting that the restaurant failed to preserve the issue, the Court held that although the assistant manager did not specifically enumerate the four elements of the cause of action, she adequately gave notice of her claim with ample reference to each element.

The Court next held that the trial court properly denied a directed verdict on the IIED claim. The jury’s verdict was not so flagrantly against the weight of the evidence so as to indicate passion or prejudice when there was sufficient evidence to support the allegation that the restaurant failed to warn, resulting in severe emotional distress.

The Court next held that the trial court properly apportioned liability to the restaurant. Although the verdict forms did not comply with KRS 411.182(1), by allowing apportionment to a non-settling party, the language in the instructions was proper and the trial court corrected any potential error in its judgment. The Court further held that his reasoning applied equally to the compensatory and punitive damages awarded.

The Court finally held that the punitive damages awarded to the employee were not unconstitutionally excessive but that the punitive damages awarded to the manager were constitutionally excessive and ordered them reduced.