Quirky Question # 127 Our company runs fast food restaurants. Recently, we received a call from a local police department, advising us that a patron had just had a wallet stolen during a visit to one of our restaurants. The officer provided a description of the suspected thief, matching very closely the appearance of one of our female employees who was working at the time.

After we explained to the officer that his description appeared to identify one of our female employees, he asked to speak with her. We had her come back to the office to participate in the phone conversation with the policeman. Apparently, he felt that she had concealed the wallet somewhere on her person and advised her that she would have to submit to a strip search, either at the restaurant or at the police station. She agreed to be searched in this manner at the restaurant. The policeman gave our female store manager very explicit instructions about how the search should be conducted.

After this incident had dragged on for some time (several hours), we began getting suspicious about whether this was really legitimate. We gave the employee her clothes back (they had been taken into another room at the restaurant) and let her leave for the day.

She now has sued the company under a number of legal theories. Can we be held liable? After all, we were instructed what to do by a police officer (or at least someone we thought was a police officer). Moreover, our employee agreed to the strip search at the restaurant, rather than going down to the police station. What advice do you have?

Analysis

A number of years ago, I had the opportunity to hear Tom Wolfe speak shortly after he had written Bonfire of the Vanities. The author commented that one of the challenges he confronted as a fiction writer was to come up with ideas that were stranger than the truthful events reported in the news. As many of you undoubtedly realized, the fact pattern set forth in Quirky Question # 127 was not submitted by a reader. Rather, amazing as it seems, the facts set forth above are derived from an actual case decided this past November, McDonald’s Corporation vs. Louise Ogborn, et al., Kentucky Court of Appeals, No. 2008-CA-000024-MR (November 20, 2009).

As set forth in the Ogborn case, a McDonald’s restaurant in Mt. Washington, Kentucky, received a call from a person who represented himself to be a police officer. The supposed police officer advised the McDonald’s Assistant Manager then on duty that a patron had reported the theft of a wallet. He then described the appearance of the suspected thief, a description that closely matched the appearance of an 18-year old McDonald’s employee then working. The Assistant Manager, Donna Summers, identified the employee and the supposed police officer requested the opportunity to speak with her on the phone. The Assistant Manager brought the employee (Louise Ogborn) into the office and she spoke with the person who claimed to be a police officer. That individual advised her that she was a suspect in a theft and that she would have to submit to a strip search, either at the police department or at the restaurant. Ogborn agreed to participate in the strip search at the restaurant. The police officer then asked to speak with Summers and gave her instructions on how to conduct the strip search. All of the employee’s clothes and personal belongings were taken away and placed in another room. The entire incident lasted approximately 3 ½ hours, and involved some truly outrageous conduct, resulting in felony assault charges against the employee’s fiancé who was asked to come to restaurant at some point in the ordeal to participate in the search.

As you can tell, the call was a hoax. After subjecting the employee to humiliating treatment for several hours, the Assistant Manager finally figured this out and returned the employee’s clothes and let her leave. The employee sued McDonald’s under several legal theories, including hostile environment sexual harassment, negligent supervision, premises liability, and false imprisonment. Curiously, the Assistant Store Manager, Donna Summers, who had facilitated the entire incident also sued McDonald’s, on an intentional infliction of emotional distress theory.

Unsurprisingly, Ogborn prevailed. Following a four-week jury trial, the jury awarded her $1.1 Million in compensatory damages and $5.0 Million in punitive damages. The jury also awarded the Assistant Manager $100,000 in compensatory damages and $1.0 Million in punitive damages. The Court of Appeals affirmed the entire award as to Ogborn and affirmed the compensatory award as to Summers, but reduced her punitive award to $400,000.

The Court of Appeals pointed to a number of factors that supported the jury’s verdict and damages awards, a few of which bear noting. First, perhaps most significantly, during the preceding decade McDonald’s had received more than 30 hoax phone calls, including several at its Kentucky restaurants, involving similar allegations and similar demands for strip searches. Many of these calls resulted in situations with similar outcomes, with employees being subjected to strip searches at their places of employment. Despite this fact, and despite the fact that McDonald’s corporate legal department had documented these incidents, the company had not notified its managers about these calls or provided them training on how they should be handled. As the court observed, “The evidence further supports the finding that proper training or warning would have prevented successful repetition of the hoaxes.”

Second, the court took note of the fact that the phony police officer had directed the Assistant Manager, Summers, to summon a male employee to sit in the room with the then naked employee, Ogborn, during the investigation. Summers did so, requesting a cook to participate in the investigation by sitting with Ogborn. The cook spoke with the hoax caller, and immediately advised Summers “in appropriately strong, colloquial language” that the situation was unacceptable and that he would not participate. He then left the room. Summers then asked another male employee, a janitor, to participate in the investigation. This individual also spoke with the caller, and concluded that he was a fraud. He too refused to participate. Nevertheless, Summers persisted in the “investigation.”

Third, even more bizarrely, at some point in this process, the phony police officer had asked Ogborn whether she was married. Upon learning that she was engaged, he instructed her to have her fiancé come to the restaurant, which she did. The caller then provided various instructions to the fiancé, which he carried out. The Assistant Manager had left her naked employee with her fiancé, at the restaurant, during much of this time. As noted above, the fiancé’s actions resulted in several felony charges against him, for which he was later convicted.

McDonald’s raised a variety of defenses to the claims asserted by the two employees, nearly all of which were rejected by the appellate court. For multiple reasons, the court of appeals:

  • rejected McDonald’s’ argument that this situation was exclusively encompassed by the Kentucky Workers’ Compensation Act
  • rejected McDonald’s’ argument that Ogborn’s common law claims were preempted by the State’s anti-discrimination statute;
  • rejected McDonald’s’ argument that it could not be held liable for a non-employee’s conduct (the caller and the fiancé)
  • rejected McDonald’s’ argument that there was insufficient evidence to support the false imprisonment claim rejected McDonald’s’ argument that there was insufficient evidence to support the negligence claim
  • rejected McDonald’s’ argument that the unforeseeable criminal acts of the fiancé were an intervening cause that prevented the imposition of liability on McDonald’s, and
  • rejected McDonald’s’ arguments that the evidence did not support an award of punitive damages and that the amount of punitive damages awarded was excessive (at least as to Ogborn).

It is beyond the scope of this analysis to summarize the nearly 50-page opinion. Let me highlight just a few points that have potentially broad application. First, although preemption arguments involving state anti-discrimination statutes may sometimes have validity, the allegedly preempted claims must parallel very closely the proscriptions of the statute. The appellate court found the none of the three common law claims (premises liability, negligence and false imprisonment) was subsumed by the Kentucky anti-discrimination statute. The court found that these three claims were “not substantially similar” to claims authorized under the statute.

Second, the court found that as to the claim of false imprisonment, the facts that Ogborn was not physically restrained and consented to be searched did not absolve the company of liability. As to the former issue, the court noted that false imprisonment claims do not require physical restraint. The removal of Ogborn’s clothing and personal effects (including her cell phone), which were taken to another room, coupled with the false assertion of police authority and the real authority of her supervisors, sufficed to establish this tort claim. Moreover, although Ogborn initially consented to be searched, unlike another Kentucky case in which the affected individual signed a release, Ogborn: a) did not sign a release; b) repeatedly objected to the search; c) was repeatedly threatened with further police involvement; d) was under the belief that the door to the room had been locked; e) had a constant “guard” between herself and the door; and f) did not have access to her clothes or personal effects. Under these facts, the initial consent did not vitiate the legitimacy of her false imprisonment claim.

Third, the “premises liability” claim was based on the notion that a proprietor of a business has a legal duty to prevent patrons from foreseeable harm. Because McDonald’s knew of the hoax caller (as noted, there had been more than 30 incidents of this type), the company had a legal obligation to protect its employees from harm, even from tortious and criminal conduct committed by third parties.

Fourth, the court found that Kentucky recognized a claim for negligent supervision. The court found that the facts of the case supported liability on this theory because of the company’s “failure to train” its management employees with regard to the risks presented by the hoax caller.

Fifth, the criminal conduct by the caller and the fiancé did not constitute a superseding cause that relieved McDonald’s of liability. “A superseding cause is a factor of such extraordinary, unforeseeable nature as to relieve the original wrongdoer of liability to the ultimate victim.” The appellate court found that McDonald’s “antecedent negligence” (i.e., its failure to inform and train its store managers regarding the hoax police calls) was a foreseeable and substantial factor in causing the later harm to Ogborn.

There are a number of practical takeaways that every employer can learn from this sad factual situation and the resulting litigation.

  • When a company learns of conduct that that exposes its employees to the risk of injury or harm, even from parties over whom it has no control, it needs to take preventative steps to ensure that harm does not occur. The greater the risk of harm, and the greater the potential severity of the injuries, the more important it is for the employer to act. Here, McDonald’s had an obligation to apprise its fast food restaurant managers of the hoax police calls.
  • False imprisonment claims, involving the restraint or confinement of an employee, are not dependent on physical restraint. Like so much of employment law, these cases will be assessed from a totality of the circumstances perspective, taking a number of factors into consideration. But, an employer needs to proceed very cautiously in this area.
  • Any time an employer considers restraining an employee from leaving its premises, it had better be damn sure the restraint is completely justified. If the employer intends to rely on an “employee’s consent” to restrain the employee, the consent should be in writing and should be explicit that the employee may revoke his or her consent at any time and is free to depart at any time for any reason. Moreover, keep the preceding bullet point in mind even when a written consent form is used; it may not provide the employer the defense it hopes.
  • Negligent supervision (a topic I’ve addressed in other Blog analyses) may involve failures to train adequately an employer’s supervisory employees. Particularly where a failure to train exposes other employees to a risk of physical injury, an employer is imprudent to ignore its responsibilities in this area. Appropriate managerial training in numerous facets of an employer’s business is critical.
  • A claim for “premises liability” also may pose some risks to a employers. Just as companies have obligations to non-employee patrons or customers on (or sometimes, off) their premises, that same legal theory may expose the employer to potential liability with respect to its employees. That responsibility should be considered carefully.

The Ogborn case illustrates the substantial risks associated with workplace conduct. The failure of the McDonald’s Assistant Manager, a relatively low-level supervisory position, coupled with the failure of the McDonald’s Law Department to address properly the prior hoax calls, resulted in substantial liability. As a result of an incident covering approximately 4 hours, involving a series of poor decisions, McDonald’s confronted significant litigation and incurred more than $6 Million in liability to Ogborn and another $500,000 in liability to its Assistant Store Manager.

My last takeaway from this case is that companies need to empower their managerial employees to trust their instincts. If a situation does not pass the smell test (as it didn’t for both the cook and janitor asked to participate in the “investigation”), managers need to be empowered to act. At a minimum, they need to be informed that when confronted with any situation that makes them uneasy, uncomfortable or causes them concern, they should seek input and guidance from others in the organization. In the Ogborn case, just a bit of common sense and a phone call or two to corporate headquarters, would have spared an employee a humiliating and potentially life-changing experience, and would have saved the company a difficult and embarrassing lawsuit, substantial attorneys’ fees, and a large adverse judgment.