Vicarious Liability Of A Corporate Employer For Punitive Damages

All too often, a corporate employer is sued for negligence for the actions of its employee on the theory of vicarious liability. The rationale behind such a suit is the employee was acting in the course and scope of his employment when the alleged negligent act occurred and that act is binding on the employer due to its responsibility to supervise and control the actions of its employee.1 Typically, the employee has little or no assets, so the plaintiff brings suit against the employer and its deeper pockets. Thus, the responsibility of the employer becomes the paramount issue.

Vicarious liability suits are commonly seen when an employee is involved in a motor vehicle accident while in the course and scope of employment. On occasion, a plaintiff may argue that the conduct of the employee was so egregious as to warrant additional damages, and thus a punitive damages claim is brought on the theory of vicarious liability even with no evidence of direct liability on the part of the employer.

Punitive damages in civil actions are awarded not to compensate an injured individual, but rather to punish a person or corporation for their outrageous conduct and to deter them, and others like them, from engaging in similar conduct in the future.2 Because of their extreme nature, most states have a stringent standard for even alleging a claim for punitive damages against any defendant. That standard becomes even more stringent when a plaintiff attempts to add a claim for punitive damages against a corporate employer for the actions of its employee. In the event a corporation is faced with such a claim for punitive damages, it should be aware of the answers to the following questions: (1) Are punitive damages even allowed or warranted against them on the theory of vicarious liability; (2) Are punitive damages based on the theory of vicarious liability insurable; and (3) If they are insurable, are punitive damages covered by its insurance policy? Answers to these questions differ from state to state but will enable corporations to prepare for such a suit and to possibly prevent an award of punitive damages against them.

Are punitive damages even allowed or warranted against a corporation on the theory of vicarious liability?

There are two main positions regarding the vicarious liability of an employer leading to punitive damages.3 First, some jurisdictions hold an employer liable under the doctrine of respondeat superior simply as long as the employee was acting within the course and scope of his employment.4 No fault on the part of the employer is required; it is liable for punitive damages merely because of the relationship between the two parties. On the other hand, some jurisdictions will not impose vicarious liability on an employer for punitive damages unless there has been some fault, or an independent finding of negligent conduct, on the part of the employer. Some states take this latter position even further and require a specific type of fault. Florida is one of these states and will be the focus of this examination.

In 1999, Fla. Stat. § 768.72 was amended to provide criteria for the imposition of punitive damages with respect to employers...