Labor & Employment Law I OCTOBER 2, 2017

Negligent Hiring and Supervision in Illinois

A cab ride gone badly wrong provided an Illinois appellate court the opportunity to expound on legal claims of negligent hiring, supervision, and training.

After Susanna McNerney contacted 303 Taxi, L.L.C. to arrange a ride, a taxicab marked with 303’s logo, telephone number, and distinctive colors arrived at McNerney’s residence. The driver, Muhtar Allamuradov, sexually assaulted McNerney as he drove her to the airport. McNerney sued in the circuit court of Cook County against Allamuradov, 303, and Grand Transportation, Inc., which had leased the taxicab to Allamuradov.

The defendants had entered into two underlying agreements: a dispatch services agreement between Grand and 303; and a lease agreement between Grand and Allamuradov. Under the dispatch services agreement, 303 provided various dispatch services to Grand, and Grand was permitted to use 303’s logo, colors, and contact information on its taxicabs. In turn, pursuant to the taxicab lease agreement, Grand leased a taxicab to Allamuradov. 303 and Allamuradov had no written agreement.

The lease agreement provided that Allamuradov, at his sole discretion, could utilize services provided by Grand, which included dispatch services through 303; redemption of credit card payments through 303; participation in 303’s voucher program; and routine repair and maintenance services from Grand. Grand was required to provide: an operable vehicle equipped with a taxi meter; access to radio/computer dispatching service from 303 and credit card reading equipment; affiliation with 303 and license to use the “303 Taxi” name and service marks for display on the taxicab; and public liability and property damage insurance covering itself and Allamuradov in the amounts prescribed by law. Grand could terminate the agreement without advance notice under specified circumstances, including nonpayment of the lease fee or if Allamuradov’s driving record became an unacceptable insurance risk. Allamuradov’s responsibilities included: reporting any accident to the proper authorities and to Grand’s insurer; prompt payment of parking tickets, traffic citations, and fines; purchase of gasoline and all other operating expenses; and liability for physical damage to the taxicab and equipment beyond the normal wear and tear.

The lease agreement said that nothing in the agreement created or implied the existence of an employer-employee or principal-agent relationship between Grand and Allamuradov. The agreement referred to Allamuradov as a “self-employed businessperson, free from authority and control” of Grand.

As noted, after the assault, McNerney filed an initial complaint against 303, Stellar Transportation, Inc., and Allamuradov, individually and as agent and servant of 303 and/or Stellar. McNerney later filed a nine-count amended complaint, which added Grand as a defendant, alleging assault and battery, negligence, and negligent hiring, supervision, and training. Stellar was dismissed as a defendant because Grand, not Stellar, leased the taxicab to Allamuradov.

Grand and 303 filed motions for summary judgment. Grand argued that there was no agency relationship between Grand and Allamuradov, that his conduct was not within the scope of any agency, that Grand was not a common carrier and thus did not owe any heightened duty of care, and that federal law prohibits vicarious liability for a commercial lessor of a vehicle for the actions of its lessee. Grand further contended that there was no evidence that it negligently hired, supervised, or trained Allamuradov. The attachments to its motion for summary judgment included the deposition testimony of Sergey Rapoport and McNerney.

Rapoport performed work as a manager for Grand and also worked as a driver coordinator for 303. He testified that Allamuradov was referred to Grand by another driver. Other than his driver’s license, Allamuradov did not provide any other form of identification at the time he leased the taxicab. Allamuradov did not provide a social security number, and Rapoport was unaware of any alternative name or alias he may have used. Rapoport did not request references nor did he communicate with Allamuradov’s prior employers.

Grand did not perform a background check on Allamuradov prior to entering into the taxicab lease agreement. Although Allamuradov made payments pursuant to the lease agreement, he was not required to provide a credit card. He paid Grand a fixed weekly fee that was not contingent upon his earnings. Grand did not issue him a 1099 and did not require him to drive the taxicab during any particular hours (or at all), nor did it require that he record or report his fares.

Rapoport further testified that the taxicab driven by Allamuradov was “affiliated with” 303, meaning that Grand had purchased dispatch services and licensed 303’s trademarks. 303 did not lease vehicles. Although Grand did not have a relationship with dispatch service companies other than 303, individual drivers could utilize the services of other companies. If 303 was contacted by a party requesting a taxicab, it relayed the request to all taxicabs affiliated with 303 whose operators had chosen to “book into” the terminal.

Rapoport also testified that Grand leased out between 20 to 30 taxicabs at any given time, some of which were equipped with surveillance systems which were installed by the individual drivers. According to Rapaport, Grand viewed its “customers” as the lessees of the taxicabs, not the passengers in the vehicles. Rapoport also testified that Grand did not market itself as a provider of taxi services to the general public.

303, in its motion for summary judgment, argued that it had no employment or agency relationship with Allamuradov and that his actions were outside the scope of any alleged agency. 303 also asserted that it did not hire Allamuradov and that its orientation for Allamuradov regarding the workings of the dispatch system did not constitute negligent training. The attachments to 303’s motion included the deposition testimony of Rapoport, McNerney, and Baqthiar Khan (Khan).

Khan testified that he was employed by 303 as a driver coordinator. He explained that certain vehicles that utilized 303’s dispatch services were operated by the owners of the vehicles. Other affiliates which utilized 303’s dispatch services owned multiple vehicles. Khan’s responsibilities included introducing drivers to 303’s affiliates, including Grand.

Although not mandated by 303, most municipalities require a background check. Khan testified that the municipalities accepted background checks performed by a company called Accurate Biometrics. 303 initially provided Allamuradov with a form for Accurate Biometrics, and a 303 employee subsequently verified that Allamuradov had completed the background check—which was “clean”—and was fingerprinted, per the municipal requirements. 303 only informs an affiliate, such as Grand, if a background check reveals a red flag.

303 did not require references, an employment history, or verification that he lived at the address listed on his driver’s license. Apart from the municipal requirements, 303 did not require that he disclose any prior criminal convictions.

303 provided training to Allamuradov pertaining to the operation of the taxi meter and the dispatch equipment. 303 also instructs drivers regarding customer service issues, i.e., how to be courteous so as to maximize tips. Although drivers are advised to not discuss religion, politics and sex, 303 provides no training to minimize the likelihood of sexual violence.

In a memorandum opinion and order entered on September 25, 2015, the circuit court granted Grand’s and 303’s motions for summary judgment. The order included an Illinois Supreme Court Rule 304(a) finding that there was no just reason to delay the enforcement or appeal of the order. McNerney appealed.

At common law, an employee’s actions may create liability for his employer in two ways: direct liability for the employer’s own acts or vicarious liability for the acts of the employee. Vancura v. Katris, 238 Ill. 2d 352, 375 (2010). In her amended complaint, McNerney alleged Grand and 303 were directly liable based on their own acts, i.e., negligent hiring, supervision, and training of Allamuradov. McNerney also alleged that Grand and 303 were vicariously liable for the assault and battery committed by Allamuradov and for his negligence, e.g., that he carelessly and negligently attempted to engage in unprovoked and unwarranted sexual behavior with McNerney.

Illinois courts have recognized a cause of action against an employer for negligently hiring, or retaining in its employment, an employee it knew, or should have known, was unfit for the job so as to create a danger of harm to third persons. Van Horne v. Muller, 185 Ill. 2d 299, 310 (1998). An action for negligent hiring or retention of an employee requires the plaintiff to plead and prove that: (1) the employer knew or should have known that the employee had a particular unfitness for the position so as to create a danger of harm to third persons; (2) such particular unfitness was known or should have been known at the time of the employee’s hiring or retention; and (3) this particular unfitness proximately caused the plaintiff’s injury. Under a theory of negligent hiring or retention, the proximate cause of the plaintiff’s injury is the employer’s negligence in hiring or retaining the employee, rather than the employee’s wrongful act.

Although Grand and 303 asserted that they neither hired nor employed Allamuradov, Illinois courts have recognized a cause of action based on the negligent hiring of an independent contractor. Hayward v. C.H. Robinson Co., 2014 IL App (3d) 130530, ¶ 35. As stated in Strickland v. Communications & Cable of Chicago, Inc., 304 Ill. App. 3d 679, 682 (1999), a defendant may be liable for negligent hiring whether the person was retained as an employee or an independent contractor.

The defendants further contended that McNerney failed to point to any evidence in Allamuradov’s background that would have alerted them to his particular unfitness to be a taxicab driver, i.e., a government-required background check performed by Accurate Biometrics did not reveal any red flags. Grand’s counsel represented during oral argument that if an individual cannot obtain a chauffeur’s license, he would not be permitted to drive for Grand.

While the appeals court recognized that the Village of Winnetka and other municipalities impose requirements prior to granting a license to operate a taxicab, it did not consider the existence of such requirements as necessarily absolving companies like Grand or 303 from conducting a more thorough investigation into a prospective driver’s background.

Grand does not require drivers to provide references or an employment history. Allamuradov was required to provide only a minimal amount of information, e.g., his driver’s license and his driving record report, for the “Independent Contractor Information Sheet” completed by 303. Although the court recognized that the background check conducted by Accurate Biometrics did not reveal any red flags, it could not say as a matter of law that such an examination was sufficient, particularly given the high duty of care imposed on common carriers. Przybylski v. Yellow Cab Co., 6 Ill. App. 3d 243, 246 (1972) (noting that the defendant-taxicab company, as a common carrier, owed the plaintiff-passenger “the duty to use the highest degree of care consistent with the mode of conveyance and the practical operation thereof, and was responsible for any departure from that high standard”). The court concluded that summary judgment in favor of the defendants was not proper with respect to McNerney’s negligent hiring claims.

To state a cause of action for negligent supervision, the plaintiff must establish that (1) the employer had a duty to supervise its employee; (2) the employer negligently supervised its employee; and (3) such negligence proximately caused the plaintiff’s injuries. Lansing v. Southwest Airlines Co., 2012 IL App (1st) 101164, ¶ 22. The existence of a duty is a question of law. Whether a defendant has a duty to train its employees is also best analyzed under principles generally applicable to negligence cases. Vancura, 238 Ill. 2d at 383; National R.R. Passenger Corp. v. Terracon Consultants, Inc., 2014 IL App (5th) 130257, ¶ 15. “ ‘The touchstone of the duty analysis is to ask whether the plaintiff and defendant stood in such a relationship to one another that the law imposes on the defendant an obligation of reasonable conduct for the benefit of the plaintiff.’ ” Vancura, 238 Ill. 2d at 383. The inquiry involves four factors: (1) the reasonable foreseeability of the injury; (2) the likelihood of the injury; (3) the magnitude of the burden of guarding against the injury; and (4) the consequences of placing the burden on the defendant.

The appeals court rejected the contention that neither Grand nor 303 owed a duty to supervise or train Allamuradov because neither was his employer. The court was “hard-pressed” to conclude that, because of the business structure crafted by Grand and 303, neither company owed any duty to passengers like McNerney to supervise the conduct of their drivers. Grinyov v. 303 Taxi, L.L.C., 2017 IL App (1st) 160193, ¶ 45 (finding no error where a defendant-taxicab owner introduced testimony regarding the payments it made to its co-defendant 303 to create an “inference that [303] exercised leverage and control over [the owner] to create an agency relationship”). 303 further contends that although it provided training regarding the dispatch system, there is no evidence that its purported failure to properly train or supervise Allamuradov caused his assault on McNerney. Dennis v. Pace Suburban Bus Service, 2014 IL App (1st) 132397, ¶ 26 (stating that the “plaintiff alleged no facts as to how Pace’s failure to employ procedures dictating how its drivers handled incapacitated passengers proximately caused [the driver] to sexually assault plaintiff”). The court was uncertain whether training regarding sexual assault prevention or supervision in the form of cameras, GPS tracking, or other measures could have prevented the assault on McNerney. Evidence regarding the available technology suggested a factual question as to what a taxicab company could or should do to lessen the likelihood of an assault on a passenger. The court reversed the grant of summary judgment in favor of Grand and 303 on McNerney’s claims of negligent hiring, supervision, and training.

The case is Susanna McNerney vs. Muhtar Allamuradov, 303 TAXI, LLC, and Grand Transportation, Inc., 2017 IL App (1st) 153515.

A second case analyzed what is required to seek punitive damages in a case alleging the negligent hiring and retention of a dangerous employee.

John Doe alleged that a former priest, Daniel McCormack, sexually molested him when he was in the third grade at St. Agatha’s school, an institution owned, operated, and maintained by defendant Catholic Bishop of Chicago. Doe also alleged that defendant was negligent in hiring, retaining, and supervising McCormack, and he sought punitive damages arguing that defendant consciously disregarded the known risk McCormack posed to Doe and its parishioners. In support of his motion for punitive damages, Doe cited evidence showing that defendant (1) had knowledge of scandal and sexual misconduct involving their priests and minors; (2) failed to follow record-keeping policies adopted in response to the scandal; (3) knew of McCormack’s misconduct while he was a seminary student, and failed to investigate; and (4) failed to investigate reports of McCormack’s misconduct after he was ordained a priest, and failed to report suspicious incidents involving McCormack and minors to the Department of Children and Family Services (DCFS).

The trial court granted Doe leave to add a claim for punitive damages to his complaint. The court disagreed with defendant’s argument that, to claim punitive damages, Doe had to show that defendant had actual knowledge of McCormack’s “particular unfitness.” Rather, the court determined that the proper standard for submission of a claim for punitive damages in a negligent employment action was whether Doe “presented sufficient facts that would allow a jury to reasonably find that the defendants showed an utter indifference to the rights and safety of others in ordaining Defendant McCormack,” and it found that Doe satisfied that standard. However, the trial court certified a question to the appellate court.

The certified question asked whether Doe had to show evidence that defendant knew of McCormack’s propensity to sexually abuse children in order to claim punitive damages in a negligent employment complaint.

In an action alleging negligent hiring or retention of an employee the plaintiff must plead and prove (1) that the employer knew or should have known that the employee had a particular unfitness for the position so as to create a danger of harm to third persons; (2) that such particular unfitness was known or should have been known at the time of the employee’s hiring or retention; and (3) that this particular unfitness proximately caused the plaintiff’s injury. Defendant argued, however, that to support a claim for punitive damages, Doe had to go beyond the pleadings of a negligent employment tort and demonstrate defendant’s conscious disregard or willful and wanton conduct by alleging that defendant had “actual knowledge” of McCormack’s “propensity to sexually assault children.”

According to the appeals court a trial court may allow a claim for punitive damages if the evidence would reasonably support a finding that defendant acted willfully, or with such gross negligence as to indicate a wanton disregard of the rights of others.

The court answered the certified question in the negative, to the extent that it would require evidence of defendant’s actual knowledge of McCormack’s propensity to sexually abuse children to support Doe’s claim for punitive damages.

The case is John Doe vs. The Catholic Bishop of Chicago, 2017 IL App (1st) 162388.