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Negligent Supervisions Claims on Horizon?

Summer 1997

Can a third party sue your company claiming that it failed to adequately supervise an employee who, as a result, caused the third party injury? Could an employee sue your company claiming that his/her employment termination was caused by a supervisor who was not adequately trained to supervise? A recent case decided by the Wisconsin Supreme Court raised the spectre of claims brought against employers for negligent supervision.

In L.L.N. v. Clauder, 1997 LEXIS 55, - Wis. 2d - (1997), the Wisconsin Supreme Court considered a claim against a priest and the Roman Catholic Diocese of Madison. The plaintiff alleged that a priest, assigned as a hospital chaplain by the Diocese, had abused his position to engage her in a consensual sexual relationship. She also sued the Diocese claiming that it had negligently supervised the priest and also that it was vicariously liable for the actions of the priest. The trial court rejected both the negligent supervision and vicarious liability claim against the Diocese. The Court of Appeals affirmed the trial court's grant of summary judgment to the Diocese on the vicarious liability claim, but stated that there should be a trial on the issue of negligent supervision.

The Wisconsin Supreme Court rejected the Court of Appeals conclusion and held that the plaintiff had no claim for negligent supervision. The Court's first reason will hold little interest for most employers; the Court concluded that analysis of such a claim would require a court to interpret church law and policies in violation of the First Amendment of the United States Constitution.

The Court's second rationale for rejecting the plaintiff's claim, however, turned on an analysis of the negligent supervision cause of action, which has implications for all employers. Noting that the Wisconsin Supreme Court "has not explicitly recognized the existence of a claim for negligent supervision," the Court implicitly proceeded to do just that, noting that the claim had its roots in tort, rather than in agency law. A negligent supervision claim, therefore, involves potential employer exposure for compensatory and punitive damage claims. The Court noted that an employer would be liable for negligent supervision "only if it knew or should have known that its employee would subject a third party to an unreasonable risk of harm." The Court rejected the particular negligent supervision claim, however, holding that the Diocese did not have knowledge sufficient to put it on notice that the priest was likely to abuse his position.

While the Wisconsin Supreme Court technically did not recognize the cause of action in this case, it is likely that it will do so. Employers can reasonably expect to face negligent supervision claims brought by third parties who are injured by employees. Where the third party is another employee and the injury is physical, the Worker's Compensation Act will likely be the exclusive remedy. The day may not be far off, however, when employers also may face claims from discharged employees who allege that their discharge was due to the employer's negligent supervision of the employee's supervisor.

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