The Illinois Supreme Court recently joined the majority of other states that recognize the tort of “intrusion upon seclusion.” In Lawlor v. North American Corp. of Illinois, No. 2012 IL 112530 (Oct. 18, 2012), an employee sued her former employer for hiring a private investigator to obtain copies of the employee’s phone records in connection with the employer’s investigation to determine whether the employee had violated a non-competition agreement. The court found the investigator acted as the employer’s agent in violating the employee’s privacy rights and upheld a jury award for both compensatory and punitive damages.

Shortly after Lawlor left her job as a commission-based salesperson at North American and began working for a competitor, North American began an investigation to determine whether Lawlor had violated her non-competition agreement. North American asked its attorney to help conduct the investigation, and assigned its vice president of operations to serve as the company contact person. The attorney retained a private investigation firm, and the vice president of operations provided the private investigation firm with Lawlor’s date of birth, address, home and mobile phone numbers, and social security number. The private investigation firm then hired a subcontractor to obtain Lawlor’s phone records without her permission, using a “pretexting scheme” in which someone pretended to be Lawlor.

Lawlor filed a lawsuit against North American seeking outstanding commissions and a declaration concerning the enforceability of the non-competition agreement. After learning of the pretexting scheme, Lawlor added a claim for intrusion upon seclusion, a cause of action which originates from an individual’s right of privacy, and imposes liability “if the intrusion would be highly offensive to a reasonable person.”

A jury found in Lawlor’s favor, awarding her $65,000 in compensatory damages and $1.75 million in punitive damages. The trial court judge reduced the punitive damages award to $650,000. The Illinois Appellate Court affirmed the judgment on the intrusion upon seclusion claim but reinstated the jury’s $1.75 million punitive damages award.

On appeal to the Illinois Supreme Court, North American did not dispute that there was sufficient evidence for the jury to conclude that the actions of the investigators constituted an intrusion upon seclusion. However, North American argued that it could not be held liable because there was insufficient evidence to support an agency relationship between North American and the investigators.

The Supreme Court upheld the judgment in Lawlor’s favor, finding there was sufficient evidence for the jury to conclude that North American was aware that Lawlor’s phone records were not publicly available, and that by requesting such records from the investigators and providing the investigators with Lawlor’s personal information, North American had set into motion a process by which the investigators eventually posed as Lawlor to obtain the information. Based on this evidence, the court concluded, that North American could be held vicariously liable because the investigators acted as North American’s agent in committing the tort. The Supreme Court also upheld the award of punitive damages, though it reduced the amount to be equal to the compensatory damages, or $65,000, over a strong dissent.

Lawlor establishes that Illinois employers can have liability when hiring “independent” investigators. Employers therefore must instruct investigators as to the parameters of the investigators’ conduct, and ensure that such conduct is legally permissible. Employers should also consider obtaining indemnification from investigators, and make sure that investigators have adequate insurance. Otherwise, an employer’s overzealous investigation could lead to unexpected and potentially significant liability.