Manage Your Risks Caused by Employee Torts: A Cell Phone Example

In this segment, let’s look at how these principles apply in a case involving a University of Michigan graduate. So this will be a quiz for you. This is what happened. We have a graduate of the University of Michigan by the name of Rudy Tomjanovich, and he is a professional basketball player, he was a professional basketball player. He later became a very successful National Basketball Association coach, he won two consecutive championships while the coach of the Houston team. But while he was playing basketball, he was involved in an assault by a player from an opposing team. The name of the player was Kermit Washington, who played for the Los Angeles Lakers.

Kermit Washington slugged Tomjanovich, Tomjanovich hit the floor hard, and as a result of this intentional tort, he suffered a jaw fracture, a skull fracture, a broken nose, and spinal fluid leakage. In other words, this was a very serious accident, and not an accident, an intentional tort. And so, Tomjanovich sued Washington and the Lakers, and he sued them for $2.7 million. This happened several years ago, and that was a large amount of money in those days. So my question to you is should Washington, and especially should the Lakers, be held liable for this intentional tort committed by one of their players?

Now, let’s assume here that the court decides that this is not within the scope of the business of playing basketball. Assaulting somebody, slugging somebody is not part of the game of basketball. So the question is if it’s not within the scope of the business, can you think of any other reason why the Lakers should be held liable? Please hit pause and write down your answer.

The answer is that a court decided that the Lakers should be held liable because they were directly responsible for their own negligence in hiring Washington to play basketball after they became aware that he had a tendency for violence while playing basketball. So they hired a dangerous agent. That agent committed the intentional tort, which resulted in the Lakers’ liability. Now, an area where liability has become especially important relates to the use of cell phones. In a fact, because of cell phones, all of us have become similar to the traditional truck driver who hits a pedestrian or who crosses an accident. Here’s an example.

We’ve got a stockbroker who works for Smith Barney brokerage firm, his using his cell late one Saturday night for a business purpose while driving kills a motorcyclist and the principle is liable for the acts of this agent, and Smith Barney is held liable for $500,000. This is becoming a very common scenario. Here are some other examples. The state of Hawaii is held liable for $1.5 million after a teacher, an agent, hits a pedestrian. An Arkansas lumber company agrees to pay $16.2 million to a woman who was severely disabled in a car accident caused by a driver using his cell.

The city of Palo Alto settles for $1.5 million after a city worker causes an accident that leaves the victim with serious spinal injuries. The company International Paper settles for $5.2 million after a woman lost an arm in a car accident. And a Virginia law firm settles a $30 million case for an undisclosed amount after an attorney kills a 15-year-old pedestrian. These cases are very sad for a number of reasons. Let’s take this last case for instance, involving the attorney for the Virginia law firm. She’s a young woman due to have a child. And the case is tragic because, first of all it’s tragic for the family of the 15-year-old she killed, but also it’s tragic for her.

She loses her job, the law firm fires her, she loses her license to practice law, she’s held liable for millions of dollar’s and she has to serve a jail sentence, which begins shortly after the birth of her child. So cases are tragic on a number of dimensions. So my question to you is, if you own a business or you’re an entrepreneur starting a business or you work for a large company, how would you respond as a matter of business to this new form of agency liability? Please hit Pause and write down your answer. These are some elements that you should have considered as a company leader.

First of all, develop a cell phone policy that prohibits the use of cells while driving for business purposes or while driving to and from work. Second, have instructions and training on safe cell use. For example, how do you use your cell with hands-free technology? And then finally, monitor and enforce compliance. Now let’s say that you as a company adopt these policies and then one of your employees kills somebody or seriously injures somebody. Will you be held liable in that circumstance? Well, the quick answer is yes. You cannot avoid liability by simply telling your employees, look, be careful and this is how to be careful when using a cell.

That does not protect you from liability or insulate you from liability to third parties. But what it does do is minimize your risk. It’s a method of risk management. So that concludes our look at general business considerations relating to agency law, and in the next segment, we’re going to focus more specifically on product liability.