In Lawlor v. North American Corporation of Illinois, the Illinois Supreme Court formally recognized “intrusion upon seclusion,” a form of invasion of privacy, as a valid claim under state common law. The court also ruled that an employer can be subject to liability under this theory for the actions of outside consultants acting as the employer’s agent. The decision raises questions and concerns about employer liability arising from independent investigations of current and former employee conduct and communications, including communications that occur in traditional channels as well as through social media.
Kathleen Lawlor worked as a salesperson for North American, a company that sells customized corporate-branded promotional items, until she left the company to work for a competitor. Shortly after Lawlor resigned, North American arranged an investigation of whether Lawlor violated her noncompetition agreement through outside counsel. The outside attorney hired a private investigation firm, which in turn worked with another investigator. Using personal information provided by North American (including Lawlor’s date of birth, residential address, home and cell phone numbers and social security number), the investigation yielded Lawlor’s personal phone records. The company reviewed the phone records to determine whether Lawlor solicited its customers in violation of her agreement.
Lawlor sued North American claiming, among other things, intrusion upon seclusion, and alleging that one of the private investigators pretended to be her in order to obtain her private phone records from her telephone carriers. North American countersued, alleging that Lawlor breached her fiduciary duty of loyalty by divulging confidential corporate sales information and attempting to direct the company’s customers to a competitor while she was still employed by the company.
The case proceeded to trial, and a jury found in favor of both Lawlor on her intrusion upon seclusion claim and North American on its breach of fiduciary duty counterclaim. The jury awarded Lawlor $65,000 in compensatory damages and $1.75 million in punitive damages. North American was awarded approximately $625,000 in damages. On appeal, the appellate court affirmed the judgment against North American and reversed the judgment against Lawlor on the company’s counterclaim finding insufficient evidence for the verdict.
The Court’s Ruling
The Illinois Supreme Court granted review of the case. Although not raised by the parties, the court used the lawsuit as an opportunity to officially recognize intrusion upon seclusion as an actionable form of invasion of privacy under Illinois law. The cause of action had previously been accepted by all of the state’s appellate districts and a majority of other states. Citing well-recognized legal treatises, the court explained that the tort of inclusion upon seclusion makes it unlawful to “intentionally intrude, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns . . . if the intrusion would be highly offensive to a reasonable person.” A defendant may be liable even if the information reviewed or obtained is not shared with others.
The main issue contested on appeal was whether the company could be liable for the actions of investigators hired by its outside counsel. North American argued that the investigators were independent subcontractors, two steps removed from North American’s control, and that the company could not be responsible for their actions because it did not direct the manner in which the investigation was conducted and no knowledge of how Lawlor’s phone records were obtained. The court disagreed and held that it was reasonable for the jury to find North American vicariously liable for the actions of its investigators because the company specifically requested their attorney to obtain the phone records and that North American could be deemed to have known that the records were not publicly available and would have to be obtained through improper means. Notably, however, the court dramatically reduced the punitive damages award against the company from $1.75 million to $65,000, an amount equal to Lawlor’s compensatory damages, because there was no evidence that North American deliberately attempted to harm Lawlor.
Insights For Employers
Employers have many legitimate reasons for conducting independent investigations of their employees and former employees, particularly if there is reason to suspect an employee is soliciting customers, misappropriating trade secrets, or otherwise engaging in gross misconduct. The Illinois Supreme Court’s recent decision in Lawlor exemplifies, however, why investigations should be restrained enough to respect the privacy interests of the subject individuals. For everyone’s protection, employers should conduct investigations based on publicly available information or obtain the employee’s written authorization to search private information.
Employers should also exercise caution when relying on non-employees to conduct investigations and sharing information with those non-employees. It is prudent to learn how an outside investigator intends to conduct an investigation to ensure that that the employer is comfortable with the approach. At a minimum, employers should set forth clear expectations of what is acceptable and unacceptable conduct in their retention agreements with the investigator. As the Lawlor decision demonstrates, employers may not be able to shield themselves by turning a blind eye to an investigator’s methods, as a court may view the investigator as an agent of the employer.
The long-term impact of the Lawlor decision remains to be seen, but one can expect that lawyers representing employees will seek to expand the application of the intrusion upon seclusion theory as much as possible, including in the area of social media. As previously reported, Illinois recently made it unlawful for an employer to ask an employee to provide login information to their social media accounts or profiles. Courts reviewing claims for intrusion upon seclusion in the context of social media will likely consider expanding privacy rights in this realm.