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Illinois Recognizes Privacy Rights in Case Involving Investigation of Former Employee (Wednesday, March 6, 2013)

Kathleen Lawlor worked for North American Corporation of Illinois as a salesperson. She was to generate business, but management of the accounts was handled by other employees. In August 2005, after quitting, Lawlor began working for Shamrock Companies, Inc., a competitor of North American.

When Lawlor left North American, the company started an investigation to determine if she had violated her noncompetition agreement. North American asked its corporate attorney, Lewis Greenblatt, to conduct the investigation.  Its vice president of operations, Patrick Dolan, was to serve as the company contact person. Greenblatt hired Probe, an investigation firm. Dolan provided Greenblatt and Albert DiLuigi, from Probe, Lawlor’s date of birth, her address, her home and cellular telephone numbers, and her social security number. Probe used this information when it asked another investigative company, Discover, to obtain Lawlor’s personal phone records.

John Miller, North American’s chief executive officer and president, made the decision to investigate Lawlor. He knew Greenblatt hired Probe to conduct the investigation. Miller later testified that Dolan had the authority to provide Lawlor’s personal information to obtain her phone records.

The information Discover uncovered was sent to Probe, which sent it on to North American. North American’s employees tried to determine if any of the numbers belonged to any of its customers.

DiLuigi testified that Dolan wanted him to obtain Lawlor’s phone records.  Significantly, in a pretrial motion, North American agreed that Probe and Discover were agents of Greenblatt.

Roosevelt Boykins, a manager with AT&T, testified that AT&T would not release information on a telephone account without first confirming the customer’s identity. Traci Hart, a subpoena specialist with U.S. Cellular, testified that U.S. Cellular would not release such information if the caller did not provide sufficient information to confirm his or her identity.

Lawlor later filed suit against North American seeking unpaid commissions and a declaration that her noncompetition agreement was unenforceable. When she learned of North American’s investigation, Lawlor amended her complaint to allege an “intrusion upon seclusion” tort based upon a “pretexting scheme” in which someone pretended to be her to obtain her phone records. In a counterclaim, North American alleged that Lawlor breached her fiduciary duty of loyalty by attempting to direct business to a competitor while working for North American and by communicating confidential sales information to a competitor.

The jury gave Lawlor $65,000 in compensatory damages and $1.75 million in punitive damages. North American was awarded $78,781 in compensatory damages and $551,467 in punitive damages. The trial court reduced the jury’s punitive damages award to $650,000. The appellate court affirmed the jury’s verdict for Lawlor, reinstated the punitive damages award, and reversed the trial court’s judgment on North American’s breach of fiduciary duty claim.  The Illinois Supreme Court reduced Lawlor’s punitive damages award to $65,000. 

A first issue for the Illinois Supreme Court was whether to recognize the tort of intrusion upon seclusion.

Section 652B of the Restatement (Second) of Torts provides: “One who intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the intrusion would be highly offensive to a reasonable person.”  The Illinois Supreme Court had never addressed whether the tort of intrusion upon seclusion is a claim which is recognized in Illinois.

North American argued that there was no evidence that it personally obtained any of Lawlor’s phone logs or that there was an agency relationship between North American and Probe or Discover.

A person who is injured must normally seek his remedy from the person who caused the injury. A principal, however, may be held liable for the acts of an agent which cause injury, even if the principal does not engage in any conduct in relation to the plaintiff.  Moreover, an agent may also appoint subagents to perform the tasks or functions the agent has undertaken to perform for the principal.

In this case, the jury could reasonably infer that North American knew that Lawlor’s phone records were not publicly available, and that by requesting such records from Probe, North American recognized that investigators would pose as Lawlor to obtain the records.

The jury could also reasonably conclude that North American exercised control over its agent by directing it to obtain specific information and providing it with the necessary tools to accomplish the task.

The Illinois Supreme Court also evaluated the award of punitive damages.  Here there was no evidence that North American had an intentional, premeditated scheme to harm Lawlor.

Lawlor’s phone records were obtained as part of a legitimate investigation of a violation of a noncompetition agreement.  There was no animus toward Lawlor, and the investigation concerned a private dispute which did not implicate any general public policy.

Lawlor’s phone records were only reviewed by a few of North American’s employees. Her records were not distributed outside of the company, nor were they used for any purpose other than to determine if Lawlor had contact with one of North American’s customers.

The jury’s verdict on compensatory damages showed limited harm to Lawlor.

The evidence showed that she never sought medical or psychological treatment and there was no evidence of any alteration in her normal daily activities or that she missed work.

Based on these facts, the jury’s punitive damage award of $650,000 was not warranted, particularly when the trial court specifically found that the conduct at issue was “de minimus.”

Further supporting the determination to reduce the punitive damages, the jury awarded the damages in a case of vicarious liability.  The justification for punitive damages is sharply diminished in such a case. The highest award the evidence supported was punitive damages equal to the award of compensatory damages of $65,000.

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com