Legal Report October 2005
U.S. JUDICIAL DECISIONS
NEGLIGENT HIRING. The Illinois Appeals Court for the Third Division has ruled that a transit company is not liable for hiring an employee who later raped a customer. The company acted appropriately in screening the employee and following up on a complaint of inappropriate behavior.
SCR Medical Services (SCR), under a contract with the Chicago Transit Authority, provides transportation via van to disabled people who are unable to use the city’s main rail and bus services. In 1994, SCR hired Robert Britton to drive one of the company’s vans. Prior to hiring Britton, SCR conducted a criminal background check through the Illinois State Police but did not submit his fingerprints for a more thorough search.
The background check showed that Britton had no prior convictions. A complete police record submitted later at trial showed that Britton had a long history of arrests, but no convictions.
In January 1995, Esperanza Banda filed a complaint with SCR, saying that an SCR driver whom she could not identify exposed himself to her and attempted to kiss her. Britton was a suspect because he was the driver of the vehicle transporting Banda on the day the accusation was made. However, Britton denied the allegations, and Banda was unable to pick Britton out of a lineup.
On July 14, 1995, Aisha Browne was riding in a van driven by Britton. Browne, who suffered from cerebral palsy, accused Britton of sexually assaulting her twice—once in the vehicle and once inside her home. (Browne pressed criminal charges against Britton. He was arrested for the crime and later convicted.)
Browne filed a lawsuit against SCR, claiming that the company negligently hired Britton and should have known that he was a danger to customers. SCR requested summary judgment—a hearing based on the facts of a case, without a trial—claiming there was no way it could have known that Britton was dangerous. The Circuit Court of Cook County agreed with SCR and granted the summary judgment. Browne appealed the decision.
The Illinois Court of Appeals upheld the summary judgment, finding that SCR was not negligent in hiring or retaining Britton. The court ruled that there was no way that SCR could have known about Britton’s arrests even if they had submitted his fingerprints because only convictions are reported. Also, the court ruled that SCR did investigate the claim of inappropriate behavior made by Banda but that Britton could not be implicated. (Browne v. SCR Medical Transportation Services, Illinois Court of Appeals for the Third Division, No. 96 L 12925, 2005)
FRAUD. A California appeals court has ruled that a company committed fraud when it promised a prospective employee a salary that it knew the employee could not possibly earn. When the employee complained about the salary, the company fired him.
After being honorably discharged from the U.S. Marine Corps in 1981, Kevin Helmer began working in the automobile parts industry. In 1988, Helmer went to work for Lithia Automotive in the parts department. He was promoted to parts manager in March 1999 and again to parts and service manager in May 1999.
Helmer’s monthly compensation was approximately $5,800. At Lithia, Helmer could make a maximum of $6,500 a month, the salary cap for his job position.
In September 1999, Helmer applied for a job in the parts department at Bingham Toyota Isuzu. In the job interview, Bob Clark, the department director, asked how much Helmer earned at Lithia. Clark then told Helmer that had he been employed at Bingham since January, he would have earned $70,000 that year. Helmer told Clark that he didn’t expect that much but that he had to earn a minimum of $5,700 a month.
Based on Clark’s estimate, Helmer quit his job at Lithia. Ron Kirby, Helmer’s supervisor, said that he was sad to see Helmer leave and that he had been a “good and reliable employee.”
When Helmer received his first paycheck, it was $4,400, significantly less than Helmer thought he would be receiving. Helmer asked Clark about the discrepancy. Clark said that he did not understand what had happened and that he would look into the matter. Clark did not follow up with Helmer about the problem, however.
Helmer’s next paycheck was for $5,100. Helmer again questioned Clark about the amount. Clark said if Helmer worked extra hours in the shop, he could earn additional money.
In January 2000, Helmer received a check for $4,800. Again, Helmer went to Clark. This time, Clark asked for proof that Helmer had earned $5,800 at Lithia. Helmer brought in several pay stubs and met with Bingham’s controller, Linda Gist. At the meeting, Helmer told Gist about Clark’s estimate of $70,000 over a ten-month period.
Gist said that there was no way Helmer could make that amount of money. She also told him that Clark did not even make $70,000 a year. Again, Helmer said that he did not need to make $70,000 but he did need to make at least $5,700 a month. Two days after this meeting, Helmer was fired.
In those two days, Clark had contacted Stan Ingersol, who had applied for Helmer’s job. Clark told Ingersol that Helmer was going to be fired and offered him the job.
Helmer contacted Lithia to ask for his old job back. However, Lithia had a strict no-rehire policy and could not give Helmer his old job. Helmer accepted a job at another company in the parts department for $3,200. However, though he applied for other jobs both within and outside of the parts industry, he was repeatedly turned down because he was fired from Bingham.
In August 2001, Helmer filed a lawsuit against Bingham for fraud. Helmer charged that Bingham fraudulently induced him to leave a job based on false promises.
Clark’s rendition of the events differed significantly from Helmer’s. He claimed that he never promised Helmer a certain amount of money and that Clark had threatened to quit if he did not receive a certain amount in pay.
On May 5, 2003, a jury found in favor of Helmer. It determined that Bingham had made a false promise that he did not intend to honor, that the promise was made with an intent to defraud, and that the promise caused damage to Helmer. The jury awarded Helmer $491,000 in lost pay, $50,000 in noneconomic damages, and $1.5 million in punitive damages. (The amount of punitive damages was later reduced to $675,000 in accordance with California law.) Bingham appealed.
The California Court of Appeal for the Fifth District upheld the ruling for several reasons. First, Clark made specific promises to Helmer. (Vague assertions would not constitute fraud.) Clark made promises about the amount of Helmer’s pay as a fact, and he offered the wage in direct response to Helmer’s current pay.
The court also ruled that Helmer was justified in expecting Clark to fulfill his promise. Clark had the authority to hire and fire employees as well as negotiate salaries. The court also upheld the total damage award of $1.2 million. (Helmer v. Bingham Toyota Isuzu, California Court of Appeal for the Fifth District, No. F043471, 2005)
U.S. CONGRESSIONAL LEGISLATION
POLICE POWERS. Rep. James Sensenbrenner (R-WI), chairman of the House Judiciary Committee, has introduced a bill (H.R. 3199) that would make the controversial provisions of the Patriot Act permanent. (These parts of the bill are set to expire at the end of the year.)
For example, the bill would allow the FBI to obtain, without seeking a warrant, the financial records of individuals. It would also maintain the power of law enforcement to carry out secret warrants and covert surveillance as part of terrorism investigations.
H.R. 3199 has no cosponsors and has been referred to the House Judiciary Committee and the House Select Committee on Intelligence.
However, the bill does not provide law enforcement as much latitude as S. 1266, which was approved by the Senate Intelligence Committee in June. For example, S. 1266 would make it easier for police to issue subpoenas without judicial approval in terrorism cases.
COUNTERFEIT DRUGS. A bill (H.R.2345) introduced by Rep. Steve Israel (DNY) is designed to combat the counterfeiting and adulteration of prescription drugs.
H.R. 2345 would make it a crime to knowingly cause a prescription drug to be adulterated, misbranded, or misrepresented as an approved drug and then sell or trade that drug. The bill would also make it illegal to purchase or trade such drugs if you know, or have reason to know, that the drug was altered, mislabeled, or misrepresented. Under the provision, a drug manufacturer who becomes aware that such a violation has occurred must notify the government within 48 hours.
The bill would also require that the government issue regulations on chain-of-custody security to keep drugs safe from tampering. H.R. 2345 would increase funding for the Food and Drug Administration to conduct inspections of drug manufacturing facilities.
H.R. 2345 has no cosponsors and has been referred to the House Energy and Commerce Committee’s Subcommittee on Health.
TRANSPORTATION SECURITY. A bill (S. 1052) introduced by Sen. Ted Stevens (R-AL) would require that the Homeland Security Department establish a task force that would be charged with conducting a vulnerability and risk assessment of freight and passenger rail transportation systems. Based on that assessment, the department would then be required to develop specific recommendations for improving rail security.
The measure would also set aside grant money for freight railroads, hazardous materials shippers, universities and research centers, and state and local governments to complete security upgrades to freight and passenger rail systems. The bill would require that the government establish guidelines for rail worker security training programs. Rail carriers with hazardous materials would have to develop security threat mitigation plans laying out what they would do to address risks to high-consequence targets.
S. 1052 would prohibit foreign commercial transport companies from transporting hazardous materials within the U.S. until the operator has undergone a background records check similar to those required of U.S. companies.
The measure would also provide grant money to private companies that operate over-the-road bus service. The grants could be used for security improvements.
The bill has 10 cosponsors and has been referred to the Senate Commerce, Science, and Transportation Committee.
RADIATION SOURCES. A Senate bill (S.1150) introduced by Sen. Hillary Clinton (D-NY) would require that the government establish a mandatory tracking system for all radiation sources in the United States. Violators would face civil penalties.
The bill would also create a task force to ensure the security of radiation sources from potential terrorist threats, including acts of sabotage, theft, or use of such radiation sources in weapons.
The Senate measure has a companion bill in the House of Representatives (H.R. 2689) introduced by Rep. Edward Markey (D-MA).
S. 1150 has no cosponsors and has been referred to the Senate Environment and Public Works Committee.
Since the bill was introduced, the Nuclear Regulatory Commission (NRC) has announced that it is considering regulations that would implement a national tracking system. Under the regulations, those licensed to deal in radioactive materials would have to provide to the NRC an inventory of each item that is manufactured, transferred, received, or disposed of. Each item would be marked with a serial number. The inventories provided to the NRC would be annually verified and reconciled against the serial numbers.
STATE LEGISLATION
Michigan
BACKGROUND SCREENING. Michigan lawmakers are considering a bill (S.B. 621) that would require all of the state’s 5,000 nursing homes to conduct criminal background checks on all prospective employees.
Also, the bill would require these facilities to conduct annual criminal background checks on current workers.
Failure to enforce these rules would be a felony punishable by a fine of $50,000 and up to four years in prison. The bill has a good chance of becoming law because it was authored by Michigan Attorney General Mike Cox and was introduced after a state-sponsored study revealed that 25 percent of those residential-care employees who committed crimes against patients had prior convictions for similar acts.
This column should not be construed as legal or legislative advice.
