734 P.2d 580 (Ariz. 1987)

One-Sentence Takeaway: A company can be held liable to its employee for intentional infliction of emotional distress (“IIED”) when that company receives complaints that one employee is sexually harassing another and the company “utterly fails to investigate or remedy the situation.”

Summary: Plaintiff was employed by Defendant.  For over a year, Plaintiff’s supervisor made repeated graphic sexual remarks to her, sometimes in front of coworkers, and once physically accosted her in an aggressively sexual manner.

Plaintiff made numerous complaints to various officials within the Defendant corporation, many of whom had authority to take remedial steps, but they did nothing in response for several months.  Defendant did not censure the supervisor until approximately a year after the assault and did not fire him until several months after that.

Plaintiff sued both the manager and Defendant for assault and battery, and for IIED.  The jury found the manager liable for assault and battery but not liable for intentional infliction of emotional distress.  The jury found Defendant liable for intentional infliction of emotional distress, but not assault and battery.

Only Defendant appealed.  The court of appeals reversed jury’s verdict ruling that if the manager (agent) was not found liable for IIED, then Defendant (principal) could not be held liable for IIED.

The Arizona Supreme Court reversed and vacated the ruling of the court of appeals and reinstated the trial court’s judgment against Defendant.  

The high court disagreed with court of appeals ruling that Defendant could not be held liable for IIED since the manager was not found liable for same.  The court reasoned that when master’s liability is based solely on negligence of his servant, judgment in favor of servant is judgment in favor of master, but when negligence of master is independent of negligence of servant, master may be liable, apart from his derivative liability for servant’s wrongful acts.

The court concluded that Defendant in this case could be held liable liable for IIED, even without the manager’s liability, because its wrongful conduct was independent from that of the manager. 

Next the court determined that the evidence against Defendant was sufficient to establish all three of the following elements of IIED:  (1) The conduct of the defendant must be extreme and outrageous; (2) the defendant must either intended to cause emotional distress or recklessly disregard the near certainty that such distress will result from his conduct; and (3) Severe emotional distress must indeed occur as a result of defendant’s conduct.

The court reasoned that Defendant’s conduct was extreme and outrageous.  Plaintiff made many complaints with her supervisors and they failed to take any proper actions.  Furthermore, even though Defendant didn’t personally intend to cause emotional distress, but they acted recklessly.  They knew of the manager’s conduct and they recklessly failed to take action. Third, it was obvious that emotional distress did occur.  More than enough evidence was presented to support this contention.

Finally, the court ruled that Plaintiff’s claim did not fall under the Worker’s Compensation Law.  Plaintiff’s injury was not unexpected and was essentially nonphysical in nature.  Therefore, her claims were under tort law and not Worker’s Compensation Law.

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