week 4

Individual Paper- Each student will choose three cases, each from a different chapter, from the readings in weeks 1 through 2 (Chapters 1, 2, 3, 4, 5 and 6). each students on a team will choose in consultation with other group members different cases to write up.  A  Reference page should be included. (100 points)

• Your responses should be well-rounded and analytical and should not just provide a conclusion or an opinion without explaining the reason for the choice. For full credit, you need to use the material from the week’s lectures, text and/or discussions when responding to the questions.
• Utilize the case format below:

PLACE YOUR ORDER NOW

1. Read and understand the case. Show your Analysis and Reasoning and make it clear you understand the material. Be sure to incorporate the concepts of the chapter we are studying to show your reasoning. Dedicate at least one sub-heading to each following outline topic:
   • Facts [Summarize only those facts critical to the outcome of the case]
   • Issue [Note the central question or questions on which the case turns]
   • Explain the applicable law(s). Use the textbook here. The law should come from the same chapter as the case. Be sure to use citations from the textbook including page numbers.
   • Holding  [How did the court resolve the issue(s)? Who won?]
   • Reasoning [Explain the logic that supported the court’s decision]
2. Dedicate 1 sub-heading to each of the case questions immediately following the case. First, restate the question and then fully answer.
3. Conclusion. This should summarize the key aspects of the decision and also your recommendations on the court’s ruling
4. Include citations and a reference page with your sources. Use APA style citations and references.

PLACE YOUR ORDER NOW

Read the following cases and follow the instructions provided in the assignment. A reference from the book and chapter to use in your answers is supplied after each case. Be sure to reference this in each case answer

Herawi v. State of Alabama, Department of Forensic Sciences 311 F. Supp. 2d 1335 (M.D. Ala. 2004)

Herawi is an Iranian doctor whose employment was terminated. She filed a complaint against the defendant, the state Department of Forensic Sciences, alleging national origin discrimination and retaliation. The state responded that it had legitimate non-discriminatory reasons for terminating her (insubordination and poor job performance). The district court found that Herawi’s national origin discrimination claim would not be dismissed on summary judgment because her supervisor’s threat that she would report the doctor’s national origin to law enforcement made clear that her supervisor was antagonistic towards her because of her Iranian heritage, and that the timing of the doctor’s termination (three weeks after complaining about the supervisor’s behavior) suggested that the supervisor’s apparent dislike for her national origin may have infected the process of evaluating the doctor. Herawi also prevailed against summary judgment on the retaliatory discharge claim. (Herawi also claimed hostile environment but did not succeed and the discussion of that claim is not included below.)

Notice that Dr. Herwari is a medical doctor. She also has a PhD and is a noted researcher. The actions toward her took place just after 9/11 when feelings were running high against Iranians. As you read the excerpt, see if you see any actions you think may have this as a motivation for how her conduct was viewed and how poorly she was treated. After the case, several of the parties who complained about Dr. Herawi were discredited. In this age of social media and the Internet, think about how having these things (later discredited) said about you might adversely impact your career long after the case is actually over.

OPINION BY: Myron H. Thompson, J.

***

1. Factual Background

During the relevant time period, Herawi’s supervisor in the Montgomery office [of the Alabama Department of Forensic Sciences] was Dr. Emily Ward. Herawi, like all state employees, was a probationary employee for her first six months on the job.

Ward was highly critical of Herawi almost immediately upon her arrival in the Montgomery office. On her first day at work, Ward accused Herawi of being inconsiderate for not offering to help her. Ward looked at Herawi with a “hatred filled stare” and mocked her by repeating her in a high-pitched voice. On or about October 22, 2001, Ward became enraged at Herawi, shouted at her, accused her of wrongdoing, and said she had had enough of Herawi and that Herawi was the rudest person she had ever met. When Herawi tried to explain her actions, Ward yelled louder and said that she did not like Herawi and that no one else liked her either.

On October 24, Herawi expressed to Craig Bailey, the office director, her concerns about the way Ward was treating her. Bailey later told Herawi that, after his conversation with her, he spoke to Ward to find out if she had a problem with people of Middle Eastern descent. Bailey told Herawi that people from the Middle East were perceived as rude and aggressive.

On November 7, Ward “implied” to Herawi that she was getting calls from people asking about Herawi’s background and her accent, and she threatened to expose Herawi’s nationality to law enforcement agencies. Ward also said that she was getting calls from people asking who Herawi was, asking why she was there, and stating that she did not belong there.

Herawi had two more run-ins with Ward in December 2001, after Herawi had taken time off in November to visit her mother in California after the death of her father. On December 6, Ward called Herawi into her office, where Bailey yelled at Herawi, accusing her of neglecting the office after her father died and not performing enough autopsies. Bailey also questioned Herawi about whether she was looking for a job in California. On or about December 25, Herawi confronted Ward about page 96whether Ward had spread a rumor that Herawi was looking for a job in California. [The court outlines additional, subsequent circumstances, which it discusses later in this opinion.]

On January 2, 2002, Herawi received an “employee probationary performance appraisal” and an attached narrative performance appraisal, dated November 15, 2001. The narrative performance appraisal states that Herawi “appears to be a very intelligent and dedicated Forensic Pathologist” and that she “seems to have been well trained.” The narrative appraisal, however, goes on to state that “her performance has been problematic in four inter-related areas: expectations of co-workers, recognition of and subordination to authority, incessant inquisitiveness, and lack of organization.” It also states that Herawi “comes across as very self-centered and projects an ‘entitlement complex’”; that she “has also refused to comply with departmental regulations and/or rules if she doesn’t agree with them”; and that her “work habits leave room for improvement.” The narrative was signed by Ward and Downs, [J.C. Upshaw Downs, the Director of the Alabama Department of Forensic Sciences and the Chief Medical Examiner for Alabama, and others.]

Herawi brought her concerns about Ward to Downs on January 4, 2002. Herawi told Downs that Ward had threatened to expose her nationality; Herawi also told Downs that she felt confused and intimidated. Downs told Herawi that Middle Eastern people were generally facing troubles in the wake of the terrorist attacks on September 11, 2001, and that Herawi should turn the other cheek. However, Downs said he would speak to Ward.

On January 9, 2002, Downs wrote a letter to Thomas Flowers, the state personnel director, requesting that Herawi’s probationary period be extended by three months. Downs wrote that Herawi “requires additional training in autopsy procedures to take a more organized approach to the process” and that she “must also learn to use the chain of command.”

***

Ward alluded to Herawi’s nationality again on March 7, 2002. Ward told Herawi that nobody liked her, that everybody complained about her, that she did not belong there, that should leave, and that her English was bad. After this incident, Herawi complained to Downs again on March 21, about Ward’s hostility. At this meeting, Downs told Herawi that he would start an investigation, and Herawi told Downs that she had contacted a lawyer. Herawi also complained to Samuel Mitchell, the department chief of staff, on March 25.

Events came to a head on March 28, at a meeting attended by Herawi, Ward, Bailey and Steve Christian, the department’s personnel manager. Herawi claims that she was terminated during the meeting and that when she met with Christian shortly after the meeting, he told her it was unofficial policy that terminated employees could submit a letter of resignation. Memoranda written by Ward, Bailey and Christian present slightly different accounts. According to Ward, she informed Herawi that the situation was not working out and that the department had not seen any improvement in the areas identified in Herawi’s performance appraisal. According to Ward, before she could finish, Herawi interrupted her to say she would quit. According to Bailey, Ward requested Herawi’s resignation, and Herawi agreed. According to Christian, Ward told Herawi that an offer of permanent employment would not be forthcoming and then told Herawi to speak with him later that day. When they met, according to Christian, he told her it was the department’s unofficial policy to allow employees to resign to make it easier to look for work in the future.

Herawi submitted a letter of resignation on April 1, 2002. A letter from Downs, dated April 18, confirmed Herawi’s “separation from employment” at the department effective April 19. Downs’s letter states that the reason for Herawi’s separation is that she continued “to require additional training in autopsy procedures and failure to properly use the chain of command.”

III. Analysis

Herawi claims that (1) she was terminated because of her Iranian origin; (2) she was fired in retaliation for her complaints about Ward; and (3) she was harassed because of her national origin [not addressed in this excerpt]. The Forensic Department has moved for summary judgment on the ground that its decision not to offer her a permanent position was based on legitimate, non-discriminatory reasons. The court will consider Herawi’s claims in order.

1. Termination

***

iv.

Applying McDonnell Douglas, this court concludes that Herawi has met her prima-facie burden of producing “evidence adequate to create an inference that [the Forensic Department’s] employment decision was based on an [illegal] discriminatory criterion.” To establish a page 97prima-facie case of discriminatory discharge, she must show the following: (1) she is a member of a protected class; (2) she was qualified for the position at issue; (3) she was discharged despite her qualification; and (4) some additional evidence that would allow an inference of discrimination. [The court evaluates Herawi’s evidence of these elements and finds that Herawi satisfies the first three elements; it then continues in its analysis of the fourth requirement, below.]

In this case, Ward made remarks related to Herawi’s national origin on three occasions. On November 7, 2001, Ward threatened to report Herawi’s national origin to law enforcement agencies. On January 2, 2002, Ward told Herawi that she was getting calls asking who Herawi was and why she was working there; Ward suggested that she was getting these calls because of Herawi’s accent. Finally, on March 7, 2002, Ward told Herawi that no one liked her, that she did not belong at the department, that she should leave, and that her English was bad. It is undisputed that Ward was Herawi’s direct supervisor when she made these remarks and that Ward had substantial input into the ultimate decision to terminate Herawi. In fact, Ward conducted Herawi’s January 2002 performance appraisal, and she wrote the four memoranda in February and March of 2002 documenting incidents involving Herawi. Given this evidence, the court is satisfied that Herawi has raised the inference that her national origin was a motivating factor in the department’s decision to terminate her.

The burden thus shifts to the Forensic Department to articulate a legitimate non-discriminatory reason for its decision to fire Herawi. The department has met this “exceedingly light” burden. It asserts that Herawi was not retained because she “had problems with autopsy procedures and with the chain of command.” Plainly, job performance, failure to follow instructions, and insubordination are all legitimate, non-discriminatory considerations.

Because the department has met its burden, Herawi must show that its asserted reasons are pretextual. The court finds, again, that the evidence of Ward’s comments about Herawi’s national origin is sufficient for Herawi to meet her burden. Comments or remarks that suggest discriminatory animus can be sufficient circumstantial evidence to establish pretext. “Whether comments standing alone show pretext depends on whether their substance, context, and timing could permit a finding that the comments are causally related to the adverse employment action at issue.”

In this case, Ward’s comments “might lead a reasonable jury to disbelieve [the department’s] proffered reason for firing” Herawi. Ward’s threat that she would report Herawi’s nationality to law enforcement makes it clear that she was antagonistic towards Herawi because of Herawi’s Iranian origin. Ward’s later comment that Herawi did not belong in the department, made at the same time she commented on Herawi’s accent, further evinced discriminatory animus. Standing alone, this might not be enough evidence to establish a genuine question of pretext, but Ward was Herawi’s supervisor, conducted her performance appraisal, and wrote four memoranda containing negative evaluations of her. In this context, the evidence suggests that Ward’s evident dislike for Herawi’s national origin may have infected the process of evaluating Herawi. The timing of Ward’s remarks reinforces this conclusion. The first incident in which Ward referred to Herawi’s nationality occurred one week before the narrative performance appraisal of Herawi was written, the second incident occurred on the same day—January 2, 2002—that Ward completed the performance appraisal form, and her final remarks were made three weeks before Herawi was fired. Because of this close temporal proximity, a jury could reasonably conclude that discriminatory attitude evidence in Ward’s remarks motivated the decision to fire Herawi. Accordingly, the court finds that Herawi has met her burden and that summary judgment on her termination claim is not appropriate.

1. Retaliation

Herawi contends that the Forensic Department retaliated against her for complaining to Downs and to Mitchell about Ward’s conduct. The department has moved for summary judgment, again, on the basis that its employment decision was motivated by legitimate, non-discriminatory reasons.

Under Title VII, it is an unlawful employment practice for an employer to discriminate against an employee “because [s]he has opposed any practice made an unlawful employment practice by this subchapter, or because [s]he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter.” The same McDonnell Douglas burden-shifting framework that applies to claims of discriminatory discharge applies to claims for retaliation.

The Eleventh Circuit has established broad standards for a prima-facie case of retaliation. An individual alleging retaliation under Title VII must establish her page 98prima-facie case by demonstrating “(1) that she engaged in statutorily protected activity, (2) that an adverse employment action occurred, and (3) that the adverse action was causally related to [her] protected activities.” “The causal link element is construed broadly so that a plaintiff merely has to prove that the protected activity and the negative employment action are not completely unrelated.”

Herawi has established the elements of a prima-facie case of retaliation. First, she was engaged in protected activity on the two occasions that she spoke with Downs and on the one occasion she spoke to Mitchell. Second, Herawi was terminated. Third, Herawi satisfies the causality requirement because she was terminated only a week after her meeting with Downs and three days after her meeting with Mitchell.

Because Herawi has produced evidence sufficient to meet her prima-facie burden, the burden of production shifts to the Forensic Department to produce a legitimate, non-retaliatory reason for its decision. As discussed above, the department has offered legitimate reasons for its decision. The department contends that it fired Herawi because of her problems with autopsy procedure and her problems following the chain of command. The burden thus shifts to Herawi to come forward with evidence sufficient for a reasonable fact finder to conclude that the department’s asserted reasons were pretext for retaliation.

Herawi has met this burden. As discussed above, Herawi has presented substantial evidence of Ward’s animus towards her and thus raised a very real question about the extent to which the department’s assessment of her might have been influenced by Ward’s attitude. There is also evidence from which a reasonable fact finder could conclude that Ward’s assessment of Herawi was infected by a retaliatory motive. In October 2001, Bailey reported to Ward that Herawi had complained to him about her, and, in January 2002, Downs spoke to Ward about Herawi’s complaints. Thus, at the same time that Ward was evaluating and assessing Herawi’s job performance in the fall of 2001, and the winter of 2002, she was aware that Herawi had gone to various supervisors to complain about her. The court also considers it relevant to determining pretext that Herawi was dismissed so soon after she complained to Downs and Mitchell. While temporal proximity, standing alone, may not be enough to create a genuine issue of pretext, it is a relevant factor. Thus, taking into consideration the evidence of Ward’s discriminatory animus, her possible retaliatory motive, and the extreme closeness in time between Herawi’s complaints and her dismissal, the court concludes that Herawi has evidence sufficient for a reasonable fact finder to conclude that the department’s asserted reasons for her dismissal were pretextual.

***

1. Conclusion

For the reasons given above, it is ORDERED as follows:

(1) The motion for summary judgment, filed by defendant Alabama Department of Forensic Sciences on November 12, 2003 (doc. no. 20), is granted with respect to plaintiff Mehsati Herawi’s hostile-environment claim.

Use Disparate Treatment in answer reference page 70 of book Bennett-Alexander, D. Employment Law for Business. [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781260031805/

Disparate treatment is the theory of discrimination used in cases of individual and overt discrimination and is the one you probably think of when you think of discrimination. The plaintiff employee (or applicant) bringing suit alleges that the employer treated the employee differently from other similarly situated employees based on a prohibited category or categories. Disparate treatment is considered intentional discrimination. However, the employee need not prove that the employer actually said that race, gender, and so on was the reason for the decision. In disparate treatment cases, the employer’s policy is discriminatory on its face, such as a policy of only hiring men to work in a warehouse facility as happened in a Cleveland warehouse in 2016.22 Keep in mind that it is not the employer’s subjective intent that is important. There need not be evil intent to discriminate. Claimant must simply be able to be show that the difference in treatment occurred and had no sustainable justification, leaving a prohibited category as the only remaining conclusion.

Patterson v. McLean Credit Union 491 U.S. 164 (1989)

A black female alleged racial discrimination in violation of section 1981 in that she was treated differently from white employees and not promoted, on the basis of race. The Court held that section 1981 was not available to address this problem since the case did not involve the making of a contract, but rather its performance. Kennedy, J. *** Patterson, a black female, worked for the McLean Credit Union (MCU) as a teller and file coordinator for 10 years. She alleges that when she first interviewed for her job, the supervisor, who later became the president of MCU, told her that she would be working with all white women and that they probably would not like working with her because she was black. According to Patterson, in the subsequent years, it was her supervisor who proved to have the problem with her working at the credit union. Patterson alleges that she was subjected to a pattern of discrimination at MCU which included her supervisor repeatedly staring at her for minutes at a time while she performed her work and not doing so to white employees; not promoting her or giving her the usually perfunctory raises which other employees routinely received; not arranging to have her work reassigned to others when she went on vacation, as was routinely done with other employees, but rather, allowing Patterson’s work to accumulate during her absence; assigning her menial, non-clerical tasks such as sweeping and dusting, while such tasks were not assigned to other similarly situated employees; being openly critical of Patterson’s work in staff meetings, and that of one other black employee, while white employees were told of their shortcomings privately; telling Patterson that it was known that “blacks are known to work slower than whites, by nature” or, saying in one instance, “some animals [are] faster than other animals”; repeatedly suggesting that a white would be able to perform Patterson’s job better than she could; unequal work assignments between Patterson and other similarly situated white employees, with Patterson receiving more work than others; having her work scrutinized more closely and criticized more severely than white employees; despite her desire to “move up and advance,” being offered no training for higher jobs during her 10 years at the credit union, while white employees were offered training, including those at the same level, but with less seniority (such employees were later promoted); not being informed of job openings, nor interviewed for them, while less senior whites were informed of the positions and hired; and when another manager recommended to Patterson’s supervisor a different black to fill a position as a data processor, the supervisor said that he did not “need any more problems around here,” and would “search for additional people who are not black.” When Patterson complained about her workload, she was given no help, and in fact was given more work and told she always had the option of quitting. Patterson was page 143laid off after 10 years with MCU. She brought suit under 42 U.S.C. section 1981, alleging harassment, failure to promote and discharge because of her race. None of the racially harassing conduct which McLean engaged in involved the section 1981 prohibition against refusing to make a contract with Patterson or impairing Patterson’s ability to enforce her existing contract rights with McLean. It is clear that Patterson is attacking conditions of employment which came into existence after she formed the contract to work for McLean. Since section 1981 only prohibits the interference with the making or enforcement of contracts because of race, performance of the contract is not actionable under section 1981. Section 1981’s language is specifically limited to making and enforcing contracts. To permit race discrimination cases involving post-formation actions would also undermine the detailed and well-crafted procedures for conciliation and resolution of Title VII claims. While section 1981 has no administrative procedure for review or conciliation of claims, Title VII has an elaborate system which is designed to investigate claims and work toward resolution of them by conciliation rather than litigation. This includes Title VII’s limiting recovery to back pay, while section 1981 permits plenary compensatory and punitive damages in appropriate cases. Neither party would be likely to conciliate if there is the possibility of the employee recovering the greater damages permitted by section 1981. There is some overlap between Title VII and section 1981, and when conduct is covered by both, the detailed procedures of Title VII are rendered a dead letter, as the plaintiff is free to pursue a claim by bringing suit under section 1981 without resort to those statutory prerequisites. Regarding Patterson’s failure to promote claim, this is somewhat different. Whether a racially discriminatory failure to promote claim is cognizable under section 1981 depends upon whether the nature of the change in positions is such that it involved the opportunity to enter into a new contract with the employer. If so, then the employer’s refusal to enter the new contract is actionable under section 1981. AFFIRMED in part, VACATED in part, and REMANDED. Case Questions

Reference page 132 Bennett-Alexander, D. Employment Law for Business. [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781260031805/

The three post–Civil War statutes are now codified as 42 U.S.C. sections 1981, 1983, and 1985. They prohibit discrimination on the basis of race in making and enforcing contracts; prohibit the denial of civil rights on the basis of race by someone behaving as if they are acting on behalf of the government (called under color of state law); and prohibit concerted activity to deny someone their rights based on race.

Coats v. Dish Network, LLC 2015 CO 44, 350 P.3d 849 (2015)   Brandon Coats, a quadriplegic, has been in a wheelchair since he was a teenager. He has a Colorado state-issued license to use medical marijuana to treat painful muscle spasms caused by his quadriplegia. He consumes the medical marijuana at home, after work, and in accordance with his license and Colorado state law. Coats worked for Dish Network for three years as a telephone customer service representative. After testing positive for THC, as a result of his marijuana use, in a random drug test, he was terminated for violating the company’s drug policy. Coats brought an employment discrimination action against his employer, claiming that his termination was based on his state-licensed use of medical marijuana, in violation of the lawful activities statute, which made it an unfair and discriminatory labor practice to discharge an employee based on the employee’s lawful outside-of-work activities. The Colorado Supreme Court held that an activity (such as medical marijuana use) that is unlawful under federal law is not a “lawful” activity under the lawful activities statute, and the employee could be terminated for his use of medical marijuana in accordance with the Medical Marijuana Amendment of the Colorado state constitution. Eid, J. *** II. We review de novo the question of whether medical marijuana use prohibited by federal law is a “lawful activity” protected under [Colorado’s “lawful activities statute”]. The “lawful activities statute” provides that “[i]t shall be a discriminatory or unfair employment practice for an employer to terminate the employment of any employee due to that employee’s engaging in any lawful activity off the premises of the employer during nonworking hours” unless certain exceptions apply. An employee discharged in violation of this provision may bring a civil action for damages, including lost wages or benefits. By its terms the statute protects only “lawful” activities. However, the statute does not define the term “lawful.” Coats contends that the term should be read as limited to activities lawful under state law. We disagree. In construing undefined statutory terms, we look to the language of the statute itself “with a view toward giving the statutory language its commonly accepted and understood meaning” People v. Schuett. We have construed the term “lawful” once before and found that its “generally understood meaning” is “in accordance with the law or legitimate.” See id. (citing Webster’s Third New International Dictionary (1986)). Similarly, courts in other states have construed “lawful” to mean “authorized by law and not contrary to, nor forbidden by law.” Hougum v. Valley Memorial Homes (defining “lawful” as used in similar lawful activities provisions); In re Adoption of B.C.H. (“Upon our review of the plain and ordinary meaning page 214of ‘lawful custody,’ . . . ‘lawful’ means ‘not contrary to law.’”). We therefore agree with the court of appeals that the commonly accepted meaning of the term “lawful” is “that which is ‘permitted by law’ or, conversely, that which is ‘not contrary to, or forbidden by law.’” We still must determine, however, whether medical marijuana use that is licensed by the State of Colorado but prohibited under federal law is “lawful” for purposes of [Colorado’s “lawful activities statute”]. Coats contends that the General Assembly intended the term “lawful” here to mean “lawful under Colorado state law,” which, he asserts, recognizes medical marijuana use as “lawful.”  We do not read the term “lawful” to be so restrictive. Nothing in the language of the statute limits the term “lawful” to state law. Instead, the term is used in its general, unrestricted sense, indicating that a “lawful” activity is that which complies with applicable “law,” including state and federal law. We therefore decline Coats’s invitation to engraft a state law limitation onto the statutory language. See State Dep’t of Revenue v. Adolph Coors (declining to read a restriction into unrestricted statutory language); Turbyne v. People (stating that “[w]e do not add words to the statute”). Coats does not dispute that the federal Controlled Substances Act prohibits medical marijuana use. The CSA lists marijuana as a Schedule I substance, meaning federal law designates it as having no medical accepted use, a high risk of abuse, and a lack of accepted safety for use under medical supervision. This makes the use, possession, or manufacture of marijuana a federal criminal offense, except where used for federally approved research projects. There is no exception for marijuana use for medicinal purposes, or for marijuana use conducted in accordance with state law. Gonzales (finding that “[t]he Supremacy Clause unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail,” including in the area of marijuana regulation). Echoing Judge Webb’s dissent, Coats argues that because the General Assembly intended [Colorado’s “lawful activities statute”] to broadly protect employees from discharge for outside-of-work activities, we must construe the term “lawful” to mean “lawful under Colorado law.” In this case, however, we find nothing to indicate that the General Assembly intended to extend [Colorado’s “lawful activities statute”]’s protection for “lawful” activities to activities that are unlawful under federal law. In sum, because Coats’s marijuana use was unlawful under federal law, it does not fall within [Colorado’s “lawful activities statute”]’s protection for “lawful” activities. Having decided this case on the basis of the prohibition under federal law, we decline to address the issue of whether Colorado’s Medical Marijuana Amendment deems medical marijuana use “lawful” by conferring a right to such use. III. For the reasons stated above, we affirm the decision of the court of appeals.

Refence page 185 Bennett-Alexander, D. Employment Law for Business. [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781260031805/

Drug Testing and “Legal” Marijuana Use

Attitudes toward marijuana use have become more lenient over the past couple of decades. As of 2016, 25 states, the District of Columbia, Guam, and Puerto Rico have legalized the use of marijuana for medical purposes.⁶² Additionally, as of 2016, Alaska, Colorado, Oregon, Washington, and Washington, D.C., also have legalized marijuana for recreational use. Other states are expected to pass similar laws in the near future. A few cities also permit the use of marijuana.⁶³ Despite the recent legalization, using marijuana is still a criminal act under federal law, listed in the same category as cocaine, heroin, LSD, and ecstasy.

Notwithstanding the above, employers in all 50 states and Washington, D.C., are permitted to regulate the use of marijuana by employees while they are at work.⁶⁴ Courts have upheld employers’ right to discharge employees who have positive drug tests. For example, in 2015 the Colorado Supreme Court held that an “employee could be terminated for his use of medical marijuana.”⁶⁵ In addition, the Americans with Disability Act does not require employers to accommodate the use of marijuana, even for medical purposes.

As laws on marijuana use continue to change, employers should review their substance abuse policies to ensure that their restrictions concerning marijuana use are consistent with the restrictions permitted in their respective jurisdictions. Employers should also review their job descriptions in order to ensure appropriate categorization of safety-sensitive positions or otherwise to ensure that they justify a policy against marijuana use for testing purposes. As with all types of preemployment testing, employers should be sure to treat all similarly situated employees and applicants in the same manner.⁶⁶

Debate 1

• Debate This: Security Interests
• Chapter 25, Page 602

Paul Barton owned a small property-management company, doing business as Brighton Homes. In October, Barton went on a spending spree. First, he bought a Bose surround-sound system for his home from KDM Electronics. The next day, he purchased a Wilderness Systems kayak from Outdoor Outfitters, and the day after that he bought a new Toyota 4-Runner financed through Bridgeport Auto. Two weeks later, Barton purchased six new iMac computers for his office, also from KDM Electronics. Barton bought all of these items under installment sales contracts. Six months later, Barton’s property-management business was failing. He could not make the payments due on any of these purchases and thus defaulted on the loans. Using the information presented in the chapter, answer the following questions.

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1. For which of Barton’s purchases (the surround-sound system, the kayak, the 4-Runner, and the six iMacs) would the creditor need to file a financing statement to perfect its security interest?
2. Suppose that Barton’s contract for the office computers mentioned only the name, Brighton Homes. What would be the consequences if KDM Electronics filed a financing statement that listed only Brighton Homes as the debtor’s name?
3. Which of these purchases would qualify as a PMSI in consumer goods?
4. Suppose that after KDM Electronics repossesses the surround-sound system, it decides to keep the system rather than sell it. Can KDM do this under Article 9? Why or why not?

Debate This:
A financing statement that does not have the debtor’s exact name should still be effective because creditors should always be protected when debtors default

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week 5 2

Overview

In this assignment, you apply contract and product liability law to a business scenario.

Scenario

Mowers, Inc., a fictional company, has a flourishing lawn care business. The business has two full-time employees who have been with the company for five years. All employees are trained on using the lawn equipment and, upon being hired signed a waiver-of-liability contract limiting liability for the company. The owner, Brian, tells his employees “Not to worry – the company will protect you!”

One employee, Lori, was on the job cutting a lawn. Lori was riding a mower, a Ferrari 2000, which was three years old and in good working condition. The step-up on the mower had writing on it with a warning sticker to replace the sandpaper liner for traction every three years due to normal wear and tear. It was replaced every three years as required.

Lori stepped down off the rider, slipped because of moisture from the grass, and severed her pinky toe on the mower blade. When she fell to the ground, the mower continued through the grass and proceeded by itself to cut and mulch a neighbor’s prize roses. Peta, the neighbor, was preparing for a rose competition with a potential grand prize of $10,000.

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Instructions

Consider the above scenario and write 3-4 pages in which you make the following determinations. Make sure to cite and explain the law for each determination.

1. Pursuant to contract law requirements, determine whether the waiver of liability signed by Lori is a valid contract and whether verbal assurances by Brian become part of the contract. Support your response.
2. Determine whether Peta, the plaintiff, has a product liability case against the manufacturer for each of the following defects. Support your response.
   • Design.
   • Manufacturing.
   • Failure-to-warn.
3. Determine whether Lori, the employee, has a claim for injuries and whether the employee can recover pain and suffering damages per tort or worker’s compensation law. Support your response.

Note:

• Remember, you are demonstrating your understanding of the law, so explain the law first and then make your determination. Be informative and show what you know! References should be from credible and reputable legal sources.

Requirements

• 3-4 pages, double-spaced, Times New Roman font (size 12), 1-inch margins on all sides.
• Include at least three quality references. The textbook for this class is a required source for this assignment. Note: Wikipedia and similar websites do not count as quality references.
• Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the Sources list are not included in the required assignment page length.

Resources

• Use the Strayer Library to conduct your research.
• In addition to your textbook, you have access to Nexus Uni through the Strayer Library. You are encouraged to use the Strayer Library to conduct your research. The textbook for this class is a required source for this assignment.

This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is as follows:

• Analyze the legal standing and situation of a specific business to achieve a defined result.

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Discussion Covert Action and Intelligence

Resources
Read/review the following resources for this activity:

• Textbook: Chapters 5, 6
• Lecture 1: Collection
• Lecture 2: Analysis – Part 1
• Lecture 3: Analysis – Part 2
• Link (PDF): U.S. Government. A tradecraft primer
• Link (website): Covert Action: A systems approach Wood

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Introduction
While gathering intelligence is key in the process, the analysis of the data is what provides the players with the answers as to how to use the material.

Initial Post
Using a current issue in intelligence you find in the news or open source material from the library, what training is needed and how would you analyze that issue? Consider what is required to understand the intelligence needed, how to gather the intelligence, and finally, how to analyze the information.

Secondary Posts
Read postings provided by your instructor or fellow students. Read and respond to the conclusions drawn by your classmates. Remember to read the feedback to your own major postings and reply throughout the week.

Writing Requirements

• In addition to one initial post, respond to at least two peers.
• Initial Post Length: minimum of 250 words
• Secondary Post Length: minimum of 200 words per post
• Using APA format, provide at least one citation with corresponding references page and use appropriate in-text citation(s) referring to the academic concept for the initial post.

Grading and Assessment
Meeting the minimum number of posting does not guarantee an A; you must present an in-depth discussion of high quality, integrate sources to support your assertions, and refer to peers’ comments in your secondary posts to build on concepts.

This activity will be graded using the Discussion Forum Grading Rubric.

Learning Outcome(s): 1, 3, 4, 5
1.   Assess the theoretical effectiveness of intelligence and covert action with regard to analyzing governmental structure and national security policy.
3.   Define the U.S. Intelligence Community.
4.   List the different kinds of intelligence and examine how it is gathered.
5.   Examine the history and structure of U.S. intelligence.

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Agency, Employment or Labor Law IRAC Case Brief

Agency, Employment or Labor Law IRAC Case Brief

Assignment Content

Top of Form

PART I

The week’s assignment concerns briefing a case from the readings. You can pick any case from the readings. You must pick an actual court case and give the citation. The brief should concern a legal case that is relevant to the following Week 5 Agency, Employment or Labor Law, objectives.

Brief the case. Use the IRAC methodology. Discuss the:

  I: Issue

  R: Rule

  A: Analysis

  C: Conclusion

The brief is followed by discussion of whether you agrees or disagree with the court opinion and why.

Please put this in a separate paragraph.

PART II 

When the brief is completed and in paragraph or two discuss how the legal concepts in the selected case can be applied within a business managerial setting. In other words, explain how the rule discussed in the case have impacted the industry in past and what you see for the future. In your answer discuss the positive and negative effect the case law has made on the industry.

The paper is a minimum 1,250 words in length.

Plagiarism Free.

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CHAPTER 18 Agency Law

New York City Cabs

Taxis are often owned by one party, and another party—the taxi driver—is hired to drive the taxi. This arrangement creates a principal–agent relationship. The owner is the principal, and the taxi driver is the agent. The owner of the taxicab is liable for the negligent conduct of the driver while the driver is acting within the scope of employment.

Learning Objectives

After studying this chapter, you should be able to:

1. Define agency and the parties to an agency.
2. Describe how express, implied, and apparent agencies are created.
3. Identify and define a principal–independent contractor relationship.
4. Describe the principal’s and agent’s tort and contract liability.
5. Describe how agencies are terminated.

Chapter Outline

1. Introduction to Agency Law
2. Employment and Agency Relationships
3. Formation of an Agency
   1. CONTEMPORARY ENVIRONMENT • Power of Attorney
   2. CASE 18.1 • Eco-Clean, Inc. v Brown
4. Principal’s Duties
5. Agent’s Duties
   1. ETHICS • Agent’s Duty of Loyalty
6. Tort Liability of Principals and Agents
   1. CASE 18.2 • Matthews v. Food Lion, LLC
7. Liability for Intentional Torts
   1. CASE 18.3 • Burlarley v. Wal-Mart Stores, Inc.
8. Contract Liability of Principals and Agents
9. Independent Contractor
   1. CASE 18.4 • Glenn v. Gibbs
10. Termination of an Agency

“Let every eye negotiate for itself, and trust no agent.”

—William Shakespeare Much Ado About Nothing (1598)

The crowning fortune of a man is to be born to some pursuit which finds him employment and happiness, whether it be to make baskets, or broad swords, or canals, or statues, or songs.

Ralph Waldo Emerson (1803–1882)

Introduction to Agency Law

If businesspeople had to conduct all their business personally, the scope of their activities could be severely curtailed. Partnerships would not be able to operate, corporations could not act through managers and employees, and sole proprietorships would not be able to hire employees. The use of agents (or agency), which allows one person to act on behalf of another, solves this problem.

Examples

Examples of agency relationships include a salesperson who sells goods for a store, an executive who works for a corporation, and a partner who acts on behalf of a partnership.

Some agents are independent contractors. That is, they are outside contractors who are employed by a principal to conducted limited activities for the principal.

Examples

Examples of independent contractors would be an attorney who is hired to represent a client and a real estate broker who is employed by an owner to sell the owner’s house.

Agency is governed by a large body of common law known as agency law . The formation of agencies, the duties of principals and agents, contract and tort liability of principals and agents, and termination of agencies are discussed in this chapter.

agency law

The large body of common law that governs agency; a mixture of contract law and tort law.

Employment and Agency Relationships

Agency relationships are formed by the mutual consent of a principal and an agent. Section 1(1) of the Restatement (Second) of Agency defines agency as a fiduciary relationship “which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act.” The Restatement (Second) of Agency is the reference source for the rules of agency law in this chapter.

agency

The principal–agent relationship.

A party who employs another person to act on his or her behalf is called a principal . A party who agrees to act on behalf of another is called an agent . The principal–agent relationship is commonly referred to as an agency. This relationship is depicted in Exhibit 18.1.

principal

A party who employs another person to act on his or her behalf.

agent

A party who agrees to act on behalf of another.

principal–agent relationship

A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.

Exhibit 18.1 Principal–Agent Relationship

Principal–Agent Relationship

A principal–agent relationship is formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. The extent of this authority is governed by any express agreement between the parties and implied from the circumstances of the agency.

Examples

The president of a corporation usually has the authority to enter into major contracts on the corporation’s behalf, and a supervisor on the corporation’s assembly line may have the authority only to purchase the supplies necessary to keep the line running.

Employer–Employee Relationship

An employer–employee relationship exists when an employer hires an employee to perform some form of physical service but does not give that person agency authority to enter into contracts.

employer–employee relationship

A relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of his employer.

Example

A welder on General Motors Corporation’s automobile assembly line is employed to perform a physical task but is not given authority to enter into contracts.

Although the employee in an employer–employee relationship may not have contracting authority, the principal is still liable for tortious conduct of its employees committed while acting within the scope of their employment.

Principal–Independent Contractor Relationship

Principals often employ outsiders—that is, persons and businesses that are not employees—to perform certain tasks on their behalf. These persons and businesses are called independent contractors. Independent contractors operate their own business or profession. The arrangement creates a principal–independent contractor relationship .

principal–independent contractor relationship

The relationship between a principal and an independent contractor who is not an employee of the principal but that has been employed by the principal to perform a certain task on behalf of the principal.

Examples

Doctors, dentists, consultants, stockbrokers, architects, certified public accountants, real estate brokers, and plumbers are examples of those in professions and trades who commonly act as independent contractors.

A principal can authorize an independent contractor to enter into contracts. Principals are bound by the authorized contracts of their independent contractors. For example, if a client authorizes an attorney to settle a case within a certain dollar amount and the attorney does so, the settlement agreement is binding.

Insurance Agent

Individuals and businesses often purchase automobile, homeowner’s, life and health, and other forms of insurance from insurance agents. The insurance agent represents an insurance company or companies. This is the author’s twin brother’s insurance agency.

Formation of an Agency

An agency and the resulting authority of an agent can arise in any of the following four ways: express agency, implied agency, apparent agency, and agency by ratification. These types of agencies are discussed in the paragraphs that follow.

Express Agency

Express agency is the most common form of agency. In an express agency, the agent has the authority to contract or otherwise act on the principal’s behalf, as expressly stated in the agency agreement. Express agency occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written.

express agency

An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other.

Example

In most states, a real estate broker’s contract to sell real estate must be in writing.

If a principal and an agent enter into an exclusive agency contract, the principal cannot employ any agent other than the exclusive agent. If the principal does so, the exclusive agent can recover damages from the principal. If an agency is not an exclusive agency, the principal can employ more than one agent to try to accomplish a stated purpose.

The following feature describes the creation of a special form of express agency.

Contemporary Environment Power of Attorney

A power of attorney is one of the most formal types of express agency agreements. It is often used by a principal to give an agent the power to sign legal documents on behalf of the principal. The agent is called an attorney-in-fact even though he or she does not have to be a lawyer. Powers of attorney must be written. Usually, they must also be notarized. There are two kinds of powers of attorney:

power of attorney

An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal.

general power of attorney

A power of attorney where a principal confers broad powers on the agent to act in any matters on the principal’s behalf.

special power of attorney

A power of attorney where a principal confers powers on an agent to act in specified matters on the principal’s behalf.

1. General power of attorney. A general power of attorney confers broad powers on the agent to act in any matters on the principal’s behalf.

Example

A person who is going on a long trip gives a general power of attorney to his brother to make all decisions on his behalf while he is gone. This general power of attorney includes the power to purchase or sell stocks or real estate, pursue or defend lawsuits, and to make all other relevant decisions.

1. Special power of attorney. A special power of attorney confers limited powers on an agent to act on behalf of a principal. The agent is restricted to perform those powers enumerated by the agreement.

Example

A person who has her house listed for sale but who is going on a trip gives her sister a special power of attorney to make decisions regarding the selling of her house while she is gone, including accepting offers to sell the house and signing documents and deeds necessary to sell the house.

A principal can make a power of attorney a durable power of attorney, which remains effective even though the principal is incapacitated.

Implied Agency

In many situations, a principal and an agent do not expressly create an agency. Instead, the agency is implied from the conduct of the parties. This type of agency is referred to as an implied agency . The extent of the agent’s authority is determined from the facts and circumstances of the particular situation.

Example

A homeowner employs a real estate broker to sell his house. A water pipe breaks and begins to leak water into the house. If the homeowner cannot be contacted, the real estate broker has implied authority to hire a plumber to repair the pipe to stop the water leak. The homeowner is responsible for paying for the repairs.

Agency by Ratification

Agency by ratification occurs when (1) a person misrepresents him- or herself as another’s agent when in fact he or she is not and (2) the purported principal ratifies (accepts) the unauthorized act. In such cases, the principal is bound to perform, and the agent is relieved of any liability for misrepresentation.

implied agency

An agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties.

agency by ratification

An agency that occurs when (1) a person misrepresents him- or herself as another’s agent when in fact he or she is not and (2) the purported principal ratifies the unauthorized act.

Example

Bill Levine sees a house for sale and thinks his friend Sherry Maxwell would want to buy it. Bill enters into a contract to purchase the house from the seller and signs the contract “Bill Levine, agent for Sherry Maxwell.” Because Bill is not Sherry Maxwell’s agent, she is not bound to the contract. If Sherry agrees to purchase the house, however, there is an agency by ratification. On ratification of the contract, Sherry Maxwell is obligated to purchase the house.

In the following case, the court had to decide if an agency had been created.

CASE 18.1 STATE COURT CASE Agency Eco-Clean, Inc. v. Brown

749 S.E.2d 4, 2013 Ga. App. Lexis 913 (2013) Court of Appeals of Georgia

“The board of regents argues that it should not be held responsible for ‘bad decisions made by its students.’ ”

—Barnes, Presiding Judge

Facts

Nicholas Brown was a student at Georgia Tech University and a member of the Ramblin’ Reck spirit club. The board of regents of the University System of Georgia (University) owns a Model A automobile called the Ramblin’ Reck which is the mascot of Georgia Tech University. Members of the club are responsible for driving the car at athletic games, parades and campus-sponsored events and throughout campus to raise school spirit. During its use, several club members drive and sit in the car, while two other members stand on the running boards of the vehicle. When the vehicle needed some repairs, Eco-Clean, Inc. installed new handles on the vehicle’s doors using wood screws one-half to three-quarters of an inch long.

One day when the club members drove the Model T from a fraternity house, Brown stood on the passenger side running board, grasping an interior handle with one hand and the exterior handle with the other. After the car had gone one block, the driver turned left onto Ferst Avenue. When the driver took the turn, the handle Brown was holding onto snapped off, and he fell from the running board. Brown struck his head on the road and blacked out. Eyewitnesses testified that the car accelerated through a red light and that the car was turning at an unusually high rate of speed at the time of the accident. Brown fractured his right temporal bone and was hospitalized for four days. Brown permanently lost his sense of taste and smell, as well as his hearing in one ear.

Brown sued the university and Eco-Clean to recover damages for negligence. Brown asserted that the university negligently promoted the unsafe use of the car by students on public roads and that the university is vicariously liable for the negligence of its agents, including the driver who was driving the Ramblin’ Reck on the university’s behalf at the time of the accident. The jury found that Eco-Clean was negligent for installing the door handles with short wood screws rather than stronger bolts. The jury also found that the student driver was an agent of the university and that the university was vicariously liable for the driver’s negligence. The jury awarded Brown $680,000 against each defendant. The university appealed the decision, alleging that the driver of the Model T was not its agent.

Issue

Was the driver of the car an agent of Georgia Tech University?

Language of the Court

The board of regents argues that it should not be held responsible for “bad decisions made by its students.” The parties deposed an eyewitness to the incident who testified that the driver of the Georgia Tech car sped up and ran a red light before making the turn where Brown fell off. Because some evidence introduced at trial authorized the jury to determine that the board of regents was liable under an agency theory for the negligence of the driver, the trial court did not err in denying the board of regents’ motion for a directed verdict of liability.

Decision

The court of appeals held that the student driver was an agent of Georgia Tech University and upheld the trial court’s award of damages to Brown.

Ethics Questions

1. Did Georgia Tech University act ethically in denying liability? To view the Ramblin’ Reck vehicle, go to www.reckclub.org.

Apparent Agency

Apparent agency (or agency by estoppel) arises when a principal creates the appearance of an agency that in actuality does not exist. Where an apparent agency is established, the principal is estopped (stopped) from denying the agency relationship and is bound to contracts entered into by the apparent agent while acting within the scope of the apparent agency. Note that the principal’s actions—not the agent’s—create an apparent agency.

apparent agency (agency by estoppel)

Agency that arises when a principal creates the appearance of an agency that in actuality does not exist.

Example

Georgia Pacific, Inc., interviews Albert Iorio for a sales representative position. Iorio, accompanied by Jane Franklin, the national sales manager, visits retail stores located in the open sales territory. While visiting one store, Franklin tells the store manager, “I wish I had more sales reps like Albert.” Nevertheless, Iorio is not hired. If Iorio later enters into contracts with the store on behalf of Georgia Pacific and Franklin has not controverted the impression of Iorio that she left with the store manager, the company will be bound to the contract.

CONCEPT SUMMARY Formation of Agency Relationships

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Principal’s Duties

The principal owes certain duties to an agent and independent contractor. These duties include the following:

duty to compensate

A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time.

• Duty to compensate. A principal owes a duty to compensatean agent for services provided. Usually, the agency contract (whether written or oral) specifies the compensation to be paid. The principal must pay this amount either on the completion of the agency or at some other mutually agreeable time. If there is no agreement abouat the amount of compensation, the law implies a promise that a principal will pay the agent the customary fee paid in the industry. If the compensation cannot be established by custom, the principal owes a duty to pay the reasonable value of the agent’s services.
• Duty to reimburse. In carrying out an agency, an agent may spend his or her own money on the principal’s behalf. Unless otherwise agreed, the principal owes a duty to reimbursethe agent for all such expenses if they were (1) authorized by the principal, (2) within the scope of the agency, and (3) necessary to discharge the agent’s duties in carrying out the agency.

Example

A principal must reimburse an agent for authorized business trips taken on the principal’s behalf.

• Duty to indemnify. A principal also owes a duty to indemnifythe agent for any losses the agent suffers because of the principal’s conduct. This duty usually arises when an agent is held liable for the principal’s misconduct.

Example

An agent enters into an authorized contract with a third party on the principal’s behalf, the principal fails to perform on the contract, and the third party recovers a judgment against the agent. The agent can recover indemnification of this amount from the principal.

• Duty to cooperate. Unless otherwise agreed, the principal owes a duty to cooperatewith and assist the agent in the performance of the agent’s duties and the accomplishment of the agency.

Example

Unless otherwise agreed, a principal who employs a real estate agent to sell his or her house owes a duty to allow the agent to show the house to prospective purchasers during reasonable hours.

duty to reimburse

Unless otherwise agreed, the principal owes a duty to reimburse the agent for expenses incurred by the agent on behalf of the principal.

duty to indemnify

A principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal’s conduct.

duty to cooperate

Unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent’s duties and the accomplishment of the agency.

Contingency Fee

Certain types of agents traditionally perform their services on a contingency-fee basis. Under this type of arrangement, the principal owes a duty to pay the agent an agreed-on contingency fee only if the agency is completed. Real estate brokers, finders, lawyers, and salespersons often work on a contingency-fee basis.

Example

Sarah, who is driving her automobile, is injured when another driver negligently causes an automobile accident. Sarah hires a lawyer to represent her on a 35 percent contingency-fee basis. If the lawyer wins the case for Sarah or settles the case with Sarah’s approval, he will earn 35 percent of whatever is collected from the defendant. If the lawyer does not win or settle the lawsuit, he gets paid nothing.

Agent’s Duties

The agent owes certain duties to a principal. These duties are discussed in the following paragraphs.

Duty to Perform

An agent who enters into a contract with a principal has two distinct obligations: (1) to perform the lawful duties expressed in the contract and (2) to meet the standards of reasonable care, skill, and diligence implicit in all contracts. Collectively, these duties are referred to as the agent’s duty to perform . Normally, an agent is required to render the same standard of care, skill, and diligence that a fictitious reasonable agent in the same occupation would render in the same locality and under the same circumstances.

duty to perform

An agent’s duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts.

Examples

A general medical practitioner in a rural area would be held to the standard of a reasonable general practitioner in rural areas. A brain surgeon would be held to the standard of a reasonable brain surgeon.

An agent who does not perform his or her express duties or fails to use the standard degree of care, skill, or diligence is liable to the principal for damages.

Duty to Notify

In the course of an agency, the agent usually learns information that is important to the principal. This information may come from third parties or other sources. An agent owes a duty to notify the principal of important information he or she learns concerning the agency. The agent’s duty to notify the principal of such information is called the duty to notify . The agent is liable to the principal for any injuries resulting from a breach of this duty.

duty to notify

An agent owes a duty to notify the principal of important information concerning the agency.

Information learned by an agent in the course of an agency is imputed to the principal. The legal rule of imputed knowledge means that the principal is assumed to know what the agent knows. This is so even if the agent does not tell the principal certain relevant information.

imputed knowledge

Information that is learned by an agent that is attributed to the principal.

Example

Sonia, who owns a piece of vacant real estate, hires Matthew, a licensed real estate broker, to list the property for sale. Leonard, an adjacent property owner to Sonia’s property, tells Matthew that a chemical plant has polluted his property and probably Sonia’s property. Sonia does not know this fact, and Matthew does not tell Sonia this information. Sonia sells the property to Macy. It is later discovered that the property Macy bought from Sonia is polluted. In this example, the information that Matthew was told about the possible pollution of the property is imputed to Sonia. Sonia will be held liable to Macy.

Duty to Account

Unless otherwise agreed, an agent owes a duty to maintain an accurate accounting of all transactions undertaken on the principal’s behalf. This duty to account (sometimes called the duty of accountability) includes keeping records of all property and money received and expended during the course of the agency. A principal has a right to demand an accounting from the agent at any time, and the agent owes a legal duty to make the accounting. This duty also requires the agent to (1) maintain a separate account for the principal and (2) use the principal’s property in an authorized manner.

duty to account (duty of accountability)

A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal’s behalf.

Any property, money, or other benefit received by the agent in the course of an agency belongs to the principal. If an agent breaches the agency contract, the principal can sue the agent to recover damages caused by breach.

The following ethics feature discusses the duty of loyalty that an agent owes a principal.

Ethics Agent’s Duty of Loyalty

Because the agency relationship is based on trust and confidence, an agent owes the principal a duty of loyalty in all agency-related matters. Thus, an agent owes a fiduciary duty not to act adversely to the interests of the principal. If this duty is breached, the agent is liable to the principal. The most common types of breaches of loyalty by an agent are the following:

duty of loyalty

A fiduciary duty owed by an agent not to act adversely to the interests of the principal.

• Self-dealing. Agents are generally prohibited from undisclosed self-dealingwith the principal.

Example

A real estate agent who is employed to purchase real estate for a principal cannot secretly sell his or her own property to the principal. However, the deal is lawful if the principal agrees to buy the property after the agent discloses his or her ownership of the property.

• Usurping an opportunity. An agent cannot personally usurp an opportunitythat belongs to the principal.

Example

An agent works for a principal that is in the business of real estate development. A landowner who wants to sell his vacant land tells the agent of the property’s availability. The agent, without informing the principal, purchases the land for her own use. This is a violation of the agent’s duty of loyalty.

• Competing with the principal. Agents are prohibited from competing with the principalduring the course of an agency unless the principal agrees.

Example

An agent works as a salesperson for a principal who owns an automotive parts business. While doing so, the agent also works as a salesperson for a competing seller of automotive parts. This example demonstrates a conflict of interest, and the agent has violated his duty of loyalty.

• Misuse of confidential information. In the course of an agency, the agent often acquires confidential informationabout the principal’s affairs (e.g., business plans, technological innovations, customer lists, trade secrets). The agent is under a legal duty not to disclose or misuse confidential information either during or after the course of the agency.
• Dual agency. An agent cannot meet a duty of loyalty to two parties with conflicting interests. Dual agencyoccurs when an agent acts for two or more different principals in the same transaction. This practice is generally prohibited unless all the parties involved in the transaction agree to it.

Where an agent has breached her or his duty of loyalty, the principal may recover damages from the agent, obtain an injunction against the agent from using confidential information, and obtain other remedies.

Ethics Questions

1. Why is a duty of loyalty imposed on agents? Do you think many agents breach this duty?

Tort Liability of Principals and Agents

A principal and an agent are each personally liable for their own tortious conduct. The principal is liable for the tortious conduct of an agent who is acting within the scope of his or her authority. The agent, however, is liable for the tortious conduct of the principal only if he or she directly or indirectly participates in or aids and abets the principal’s conduct.

If we are industrious, we shall never starve; for, at the workingman’s house hunger looks in, but dares not enter. Nor will the bailiff or the constable enter, for industry pays debts, while despair increaseth them.

Benjamin Franklin (1706–1790)

respondeat superior

A rule stating that an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer’s authority.

vicarious liability

Liability without fault. Vicarious liability occurs where a principal is liable for an agent’s tortious conduct because of the employment contract between the principal and agent, not because the principal was personally at fault.

The courts have applied a broad and flexible standard in interpreting scope of authority in the context of employment. Although other factors may also be considered, the courts rely on the following factors to determine whether an agent’s conduct occurred within the scope of his or her employment:

• Was the act specifically requested or authorized by the principal?
• Was it the kind of act that the agent was employed to perform?
• Did the act occur substantially within the time period of employment authorized by the principal?
• Did the act occur substantially within the location of employment authorized by the employer?
• Was the agent advancing the principal’s purpose when the act occurred?

Where liability is found, tort remedies are available to the injured party. These remedies include recovery for medical expenses; lost wages; pain and suffering; emotional distress; and, in some cases, punitive damages. As discussed in the following paragraphs, the three main sources of tort liability for principals and agents are negligence, intentional torts, and misrepresentation.

Negligence

Principals are liable for the negligent conduct of agents acting within the scope of their employment. This liability is based on the common law doctrine of respondeat superior (“let the master answer”), which in turn is based on the legal theory of vicarious liability (liability without fault). In other words, the principal is liable because of his or her employment contract with the negligent agent, not because the principal was personally at fault.

The doctrine of negligence rests on the principle that, if someone (i.e., the principal) expects to derive certain benefits from acting through others (i.e., an agent), that person should also bear the liability for injuries caused to third persons by the negligent conduct of an agent who is acting within his or her scope of employment.

Example

Business Unlimited Corporation employs Harriet as its marketing manager. Harriet is driving her automobile to attend a meeting with a client on behalf of her employer. On her way to the meeting, Harriet is involved in an automobile accident that is caused by her negligence. Several people are seriously injured because of Harriet’s negligence. In this example, Harriet is personally liable to the injured parties. In addition, Business Unlimited Corporation is liable as the principal because Harriet was acting within the scope of her employment when she caused the accident.

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An employee’s scope of employment was at issue in the following case.

CASE 18.2 STATE COURT CASE Scope of Employment Matthews v. Food Lion, LLC

695 S.E.2d 828, 2010 N.C. App. Lexis 1151 (2010) North Carolina Court of Appeals

“In the event that an employee is engaged in some private matter of his own or outside the legitimate scope of his employment the employer is no longer responsible for the negligence of the employee.”

—Beasley, Judge

Facts

Brigitte Hall was a part-time cashier at a grocery store owned and operated by Food Lion, LLC. When Hall’s shift was over, she punched the time clock to end her work shift and headed toward the bathroom before leaving the premises. Hall entered the bathroom at a brisk pace and, on opening the door, the door struck Diamond Matthews, knocking Matthews to the floor. Employees at Food Lion called 911. Rescue assistants accompanied Matthews to the hospital. Matthews sued Hall and Food Lion to recover damages for negligence and respondeat superior. Food Lion filed a motion for summary judgment, alleging that Hall was not acting within the scope of her employment at the time of the incident. The trial court granted summary judgment in favor of Food Lion. Matthews appealed.

Issue

Was Hall acting within the scope of her employment at the time of the accident?

Language of the Court

The evidence establishes that Food Lion has no control over the actions of its employees once they have “clocked out” of work. Hall was not acting within the scope of her employment at the time of the incident and Hall had completely departed from the course of business of her employer. Therefore, Hall was acting outside the scope of her employment at the time she entered the bathroom and Food Lion is not liable under the theory of respondeat superior.

Decision

The court of appeals held that Hall was not acting within the scope of her employment at the time of the accident. The court of appeals affirmed the trial courts’ grant of summary judgment for Food Lion.

Ethics Questions

1. Should Food Lion have denied liability in this case? Was this a close case to decide? Did any party act unethically in this case?

Frolic and Detour

Agents sometimes act during the course of their employment to further their own interests rather than the principal’s interests. An agent might take a detour to run a personal errand while on assignment for the principal. This is commonly referred to as frolic and detour . Negligence actions stemming from frolic and detour are examined on a case-by-case basis. Agents are always personally liable for their tortious conduct in such situations. Principals are generally relieved of liability if the agent’s frolic and detour is substantial. If the deviation is minor, however, the principal is liable for the injuries caused by the agent’s tortious conduct.

Critical Legal Thinking

1. What is the doctrine of respondeat superior? What is the doctrine of vicarious liability? Why does the law recognize these doctrines?

frolic and detour

A situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal’s.

Examples

A salesperson stops at home for lunch while on an assignment for his principal. After lunch and while leaving his home in his car, the agent hits and injures a pedestrian with his automobile. The principal would be liable if the agent’s home were not too far out of the way from the agent’s assignment. The principal would not be liable, however, if an agent who is on an assignment for his employer in Cleveland, Ohio, deviates from his assignment and drives to a nearby city to meet a friend and is involved in an accident. The facts and circumstances of each case determine its outcome.

Coming and Going Rule

Under the common law, a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work. This so-called coming and going rule , which is sometimes referred to as the going and coming rule, applies even if the principal supplies the agent’s automobile or other transportation or pays for gasoline, repairs, and other automobile operating expenses. This rule is quite logical: Because principals do not control where their agents and employees live, they should not be held liable for tortious conduct of agents on their way to and from work.

coming and going rule (going and coming rule)

A rule stating that a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work.

Example

Sarah works as a professor at a university. Her home is 20 miles from the campus. Sarah leaves her home one morning and is driving to work when her negligence causes an automobile accident in which several pedestrians are injured. In this example, Sarah is personally liable for her negligence, but the university is not liable because of the coming and going rule.

Dual-Purpose Mission

Sometimes principals request that agents run errands or conduct other acts on their behalf while the agent or employee is on personal business. In this case, the agent is on a dual-purpose mission . That is, he or she is acting partly for him- or herself and partly for the principal. Most jurisdictions hold both the principal and the agent liable if the agent injures someone while on such a mission.

dual-purpose mission

A situation that occurs when a principal requests an employee or agent to run an errand or do another act for the principal while the agent is on his or her own personal business.

Example

Suppose a principal asks an employee to drop off a package at a client’s office on the employee’s way home. If the employee negligently injures a pedestrian while on this dual-purpose mission, the principal is liable to the pedestrian.

Liability for Intentional Torts

Intentional torts include acts such as assault, battery, false imprisonment, and other intentional conduct that causes injury to another person. A principal is not liable for the intentional torts of agents and employees that are committed outside the principal’s scope of business.

Example

If an employee attends a sporting event after working hours and gets into a fight with another spectator at the event, the employer is not liable. This is because the fight was a personal affair and outside the employee’s business responsibilities.

However, a principal is liable under the doctrine of vicarious liability for intentional torts of agents and employees committed within the agent’s scope of employment. The courts generally apply one of the two following tests in determining whether an agent’s intentional torts were committed within the agent’s scope of employment:

motivation test

A test that determines whether an agent’s motivation in committing an intentional tort is to promote the principal’s business; if so, the principal is liable for any injury caused by the tort.

work-related test

A test that determines whether an agent committed an intentional tort within a work-related time or space; if so, the principal is liable for any injury caused by the agent’s intentional tort.

1. Motivation test. Under the motivation test , if the agent’s motivation for committing an intentional tort is to promote the principal’s business, the principal is liable for any injury caused by the tort. If an agent’s motivation for committing the intentional tort is personal, however, the principal is not liable, even if the tort takes place during business hours or on business premises.

Example

Under the motivation test, an employer—the principal—is not liable if his employee, who is motivated by jealousy, injures someone on the job who dated her boyfriend. In this example, the motivation of the employee was personal and not work-related.

1. Work-related test. Some jurisdictions have rejected the motivation test as being too narrow. These jurisdictions apply the work-related test instead. Under this test, if an agent commits an intentional tort within a work-related time or space—for example, during working hours or on the principal’s premises—the principal is liable for any injuries caused by the agent’s intentional torts. Under this test, the agent’s motivation is immaterial.

Example

Under the work-related test, an employer—the principal—is liable if his employee, who was motivated by jealousy, injures someone on the work premises and during work hours who dated her boyfriend. In this example, the motivation of the employee is not relevant. What is relevant is that the intentional tort was committed on work premises and during the employee’s work hours.

In the following case, the court faced the issue of whether an employer was liable for an employee’s intentional tort.

CASE 18.3 STATE COURT CASE Employee’s Intentional Tort Burlarley v. Wal-Mart Stores, Inc.

904 N.Y.S.2d 826, 2010 N.Y. App. Div. Lexis 6278 (2010) Appellate Division of the Supreme Court of New York

“In our view, the court properly concluded that throwing a full bag of heavy items at an unsuspecting customer’s face as a ‘joke’ is not commonly done by a cashier and, indeed, substantially departs from a cashier’s normal methods of performance.”

—Mercure, Judge

Facts

After an hour of shopping at a Walmart store, which is owned by Wal-Mart Stores, Inc. (Walmart), Michael Burlarley and his wife proceeded to the checkout at the store. The cashier, joking with the couple in an effort to make her work shift “go a little faster,” pretended to ring up items for vastly more than their price and threw various items at Michael. Michael, not amused, told her to stop, and the cashier initially complied. When Michael turned away, however, the cashier threw a bag containing a pair of shoes and shampoo at him. Michael was struck in the face. Michael sued Wal-Mart Stores, Inc., to recover damages. Walmart filed a motion for summary judgment, alleging that the cashier’s actions were personally motivated and that Walmart was not liable under the state’s motivation test. The trial court granted summary judgment to Walmart. Michael appealed.

Issue

Is Walmart vicariously liable for the personally motivated acts of its cashier?

Language of the Court

In our view, the court properly concluded that throwing a full bag of heavy items at an unsuspecting customer’s face as a “joke” is not commonly done by a cashier and, indeed, substantially departs from a cashier’s normal methods of performance. Moreover, the cashier’s actions arose not from any work-related motivation, but rather her desire to pass the time and relieve mounting frustration with her job.

Decision

Applying the motivation test, the appellate court held that Walmart was not vicariously liable for the intentional tort of its cashier. The appellate court affirmed the trial court’s grant of summary judgment in favor of Walmart.

Ethics Questions

1. Was it ethical for Walmart to deny liability for its employee’s actions in this case? If the court applied the work-related test, would the outcome of the case be different?

Misrepresentation

Intentional misrepresentations are also known as fraud or deceit. They occur when an agent makes statements that he or she knows are not true. An innocent misrepresentation occurs when an agent negligently makes a misrepresentation to a third party. A principal is liable for the intentional and innocent misrepresentations made by an agent acting within the scope of employment. The third party can either (1) rescind the contract with the principal and recover any consideration paid or (2) affirm the contract and recover damages.

intentional misrepresentation (fraud or deceit)

A deceit in which an agent makes an untrue statement that he or she knows is not true.

Example

Assume that a car salesperson is employed to sell the principal’s car, and the principal tells the agent that the car was repaired after it was involved in a major accident. If the agent intentionally tells the buyer that the car was never involved in an accident, the agent has made an intentional misrepresentation. Both the principal and the agent are liable for this misrepresentation.

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CONCEPT SUMMARY Tort Liability of Principals and Agents to Third Parties

Bad laws are the worst sort of tyranny.

Edmund Burke (1729–1797)

Contract Liability of Principals and Agents

Agency law imposes contract liability on principals and agents, depending on the circumstances. A principal who authorizes an agent to enter into a contract with a third party is liable on the contract. Thus, the third party can enforce the contract against the principal and recover damages from the principal if the principal fails to perform it.

The agent can also be held liable on the contract in certain circumstances. Imposition of such liability depends on whether the agency is classified as fully disclosed, partially disclosed, or undisclosed.

Fully Disclosed Agency

A fully disclosed agency results if a third party entering into a contract knows (1) that the agent is acting as an agent for a principal and (2) the actual identity of the principal. The third party has the requisite knowledge if the principal’s identity is disclosed to the third party by either the agent or some other source.

fully disclosed agency

An agency in which a contracting third party knows (1) that the agent is acting for a principal and (2) the identity of the principal.

In a fully disclosed agency, the contract is between the principal and the third party. Thus, the principal, who is called a fully disclosed principal, is liable on the contract. The agent is not liable on the contract, however, because the third party relied on the principal’s credit and reputation when the contract was made.

Example

Poran Kawamara decides to sell her house and hires Mark Robbins, a real estate broker, to list and sell the house for a price of $1 million. They agree that Mark will disclose the existence of the agency and the identity of the principal to interested third parties. Mark shows the house to Heather, a prospective buyer, and discloses to Heather that he is acting as an agent for Poran. Heather agrees to buy the house, and Mark signs the contract on behalf of Poran. Poran, the principal, is liable on the contract but Mark, the agent, is not.

The agent’s signature on a contract entered into on the principal’s behalf is important. It can establish the agent’s status and therefore his or her liability. For instance, in a fully disclosed agency, the agent’s signature must clearly indicate that he or she is acting as an agent for a specifically identified principal.

Examples

Proper agent’s signatures include “Catherine Adams, agent for Juan Perez” and “Juan Perez, by Catherine Adams, agent.”

Partially Disclosed Agency

A partially disclosed agency occurs if an agent discloses his or her agency status but does not reveal the principal’s identity and the third party does not know the principal’s identity from another source. The nondisclosure may be because the principal instructs the agent not to disclose his or her identity to the third party or the agent forgets to tell the third party the principal’s identity. In this kind of agency, the principal is called a partially disclosed principal.

partially disclosed agency

An agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal.

undisclosed agency

An agency in which a contracting third party does not know of either the existence of the agency or the principal’s identity.

In a partially disclosed agency, both the principal and the agent are liable to the other contracting party. If the agent is made to pay the contract, the agent can sue the principal for indemnification.

Example

A principal, Nigel Jones, and an agent, Marcia McKee, agree that the agent will represent the principal to purchase a business and that the agent will disclose the existence of the agency and identity of the principal to third parties. The agent finds a suitable business and contracts to purchase the business on behalf of the principal, but the agent mistakenly signs the contract “Marcia McKee, agent.” This is a partially disclosed agency that occurs because of mistake. The principal is liable on the contract with the third party, and the agent is also liable.

Undisclosed Agency

An undisclosed agency occurs when a third party is unaware of the existence of an agency. The principal is called an undisclosed principal. Undisclosed agencies are lawful. In an undisclosed agency, both the principal and the agent are liable on the contract with the third party because the agent, by not divulging that he or she is acting as an agent, becomes a principal to the contract. If the principal fails to perform the contract, the third party can recover against the principal or the agent. If the agent is made to pay the contract, he or she can recover indemnification from the principal.

Example

The Walt Disney Company wants to open a new theme park in Chicago but first needs to acquire land for the park. Disney employs Saul Green as an agent to work on its behalf to acquire the needed property, with an express agreement that the agent will not disclose the existence of the agency to a third-party seller. If a seller agrees to sell the needed land and the agent signs his name “Saul Green,” it is an undisclosed agency. Disney is liable on the contract with the third-party seller, and so is the agent.

CONCEPT SUMMARY Contract Liability of Principals and Agents to Third Parties

Independent Contractor

Principals often employ outsiders—that is, persons and businesses that are not employees—to perform certain tasks on their behalf. These persons and businesses are called independent contractors . For example, lawyers, doctors, dentists, consultants, stockbrokers, architects, certified public accountants, real estate brokers, and plumbers are examples of people who commonly act as independent contractors. The party that employs an independent contractor is called a principal.

independent contractor

“A person who contracts with another to do something for him who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking” [Restatement (Second) of Agency].

Example

Jamie is a lawyer who has her own law firm and specializes in real estate law. Raymond, a real estate developer, hires Jamie to represent him in the purchase of land. Raymond is the principal, and Jamie is the independent contractor.

A principal–independent contractor relationship is depicted in Exhibit 18.2.

Exhibit 18.2 Principal–Independent Contractor Relationship

Factors for Determining Independent Contractor Status

Section 2 of the Restatement (Second) of Agency defines independent contractor as “a person who contracts with another to do something for him who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.” Independent contractors usually work for a number of clients, have their own offices, hire employees, and control the performance of their work.

The way to wealth is as plain as the way to market. It depends chiefly on two words, industry and frugality: that is, waste neither time nor money, but make the best use of both. Without industry and frugality nothing will do, and with them everything.

Benjamin Franklin (1706–1790)

The crucial factor in determining whether someone is an independent contractor or an employee is the degree of control that the principal has over that party. Critical factors in determining independent contractor status include:

Critical Legal Thinking

1. Is it difficult to apply the factors for determining whether a person is an independent contractor or an employee? A plaintiff injured by that person usually wants which to be found?

• Whether the worker is engaged in a distinct occupation or an independently established business
• The length of time the agent has been employed by the principal
• The amount of time that the agent works for the principal
• Whether the principal supplies the tools and equipment used in the work
• The method of payment, whether by time or by the job
• The degree of skill necessary to complete the task
• Whether the worker hires employees to assist him or her
• Whether the employer has the right to controlthe manner and means of accomplishing the desired result

If an examination of these factors shows that the principal asserts little control, the person is an independent contractor. Substantial control indicates an employer–employee relationship. Labeling someone an independent contractor is only one factor in determining whether independent contractor status exists.

Most are engaged in business the greater part of their lives, because the soul abhors a vacuum and they have not discovered any continuous employment for man’s nobler faculties.

Henry David Thoreau (1817–1862)

Liability for an Independent Contractor’s Torts

Generally, a principal is not liable for the torts of its independent contractors. Independent contractors are personally liable for their own torts. The rationale behind this rule is that principals do not control the means by which the results are accomplished.

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Example

Qixia hires Harold, a lawyer and an independent contractor, to represent her in a court case. While driving to the courthouse to represent Qixia at trial, Harold negligently causes an automobile accident in which Mildred is severely injured. Harold is liable to Mildred because he caused the accident. Qixia is not liable to Mildred because Harold was an independent contractor when he caused the accident.

Principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors. For example, the use of explosives, clearing of land by fire, crop dusting, and other inherently dangerous activities involve special risks. In these cases, a principal is liable for the negligence of the independent contractor the principal hired to perform the dangerous task.

In the following case, the court had to decide if a party was an independent contractor.

CASE 18.4 STATE COURT CASE Independent Contractor Glenn v. Gibbsm

746 S.E.2d 658, 2013 Ga. App. Lexis 639 (2013) Court of Appeals of Georgia

“The evidence showed that Glenn decided the manner, method, and means of trimming the limbs.”

—Phipps, Chief Judge

Facts

Frankie and Trena Gibbs and Joel and Madeira Glenn were members of the Creek Baptist Church, which both couples attended. The church held a fundraiser whereby members would help other members with projects, and the member for whom the work was done would make a donation to the church’s youth ministry. As part of the fund-raiser, Frankie Gibbs, who had no experience using a chainsaw, asked Joel Glenn, who was experienced with using a chainsaw, to trim branches on a tree on Gibbs’s property. When Glenn arrived at Gibbs’s property with his own chainsaw and ladder, Gibbs showed Glenn which limbs on the tree he wanted trimmed. Glenn climbed to the very top of an A-type ladder, straddled the ladder—one foot on each side—and began trimming the tree. However, after making a cut on a limb, the limb snapped off and hit the top of the ladder, knocking the ladder backward. Glenn fell forward, head first, and landed on his back. Glenn died from the fall. Madeira Glenn sued the Gibbs to recover damages, alleging that her deceased husband was an agent of the Gibbs and that, as principals, the Gibbs had breached the ordinary duty of care they owed to Glenn as an invitee on their property. Gibbs defended, asserting that Glenn was an independent contractor with a duty of his own to make certain his work area was safe, to take all precautions, and to exercise ordinary care for his own safety. The trial court granted summary judgment to the Gibbs. Madeira Glenn appealed.

Issue

Was Joel Glenn an independent contractor?

Language of the Court

Glenn decided where to place the ladder, and never asked for Gibbs’s assistance in operating the chainsaw. Gibbs had no training or experience in operating a chainsaw and did not direct Glenn in the use of the chainsaw or in positioning the ladder. Gibbs did not tell Glenn how to cut the limbs. Glenn brought his own chainsaw and ladder to trim the limbs. Gibbs merely pointed out to Glenn which limbs he wanted trimmed. The evidence showed that Glenn decided the manner, method, and means of trimming the limbs; there was no evidence that Gibbs retained the right to control these factors. The evidence demanded a finding that Glenn was an independent contractor.

Decision

The court of appeals upheld the trial court’s finding that Glenn was an independent contractor and not an agent of Gibbs, and affirmed the trial court’s judgment in favor of defendant Gibbs.

Ethics Questions

1. Was it ethical for Glenn to sue the Gibbs? Do the Gibbs owe an ethical duty to pay compensation to Mrs. Glenn for Mr. Glenn’s death?

Nature seems to have taken a particular care to disseminate her blessings among the different regions of the world, with an eye to their mutual intercourse and traffic among mankind, that the nations of the several parts of the globe might have a kind of dependence upon one another and be united together by their common interest.

Joseph Addison (1672–1719)

Liability for an Independent Contractor’s Contracts

A principal can authorize an independent contractor to enter into contracts. Principals are bound by the authorized contracts of their independent contractors.

Example

Suppose a client hires a lawyer as an independent contractor to represent her in a civil lawsuit against a defendant to recover monetary damages. If the client authorizes the lawyer to settle a case within a certain dollar amount and the lawyer does so, the settlement agreement is binding.

If an independent contractor enters into a contract with a third party on behalf of the principal without express or implied authority from the principal to do so, the principal is not liable on the contract.

Termination of an Agency

An agency contract can be terminated by an act of the parties, by an unusual change of circumstances, by impossibility of performance, and by operation of law.

Termination of an Agency by an Act of the Parties

An agency contract is similar to other contracts in that it can be terminated by an act of the parties (termination of an agency by an act of the parties ). An agency can be terminated by the following acts:

termination of an agency by an act of the parties

A situation where the parties to an agency contract terminate their contract by mutual agreement or when a previously agreed-on event occurs.

1. The mutual assent of the parties.

Example

A principal hires a lawyer to represent her in a lawsuit until the lawsuit is resolved. If the principal and the lawyer voluntarily agree to terminate the relationship prior to the resolution of the case by trial or settlement, the agency is terminated.

1. If a stated time has lapsed.

Example

If an agency agreement states, “This agency agreement will terminate on August 1, 2025,” the agency terminates when that date arrives.

1. If a specified purpose is achieved.

Example

If a homeowner hires a real estate broker to sell the owner’s house within six months and the house sells after three months, the agency terminates on the sale of the house.

1. The occurrence of a stated event.

Example

If a principal employs an agent to take care of her dog until she returns from a trip, the agency terminates when the principal returns from the trip.

Shortly his fortune shall be lifted higher; True industry doth kindle honour’s fire.

William Shakespeare

The Life and Death of Lord Cromwell (1602)

Notice of Termination

The termination of an agency extinguishes an agent’s actual authority to act on the principal’s behalf. If the principal fails to give the proper notice of termination to a third party, however, the agent still has apparent authority to bind the principal to contracts with these third parties. To avoid this liability, the principal needs to provide the following notices:

• Direct noticeof termination to all persons with whom the agent dealt. The notice may be oral or written unless required to be in writing.
• Constructive noticeof termination to any third party who has knowledge of the agency but with whom the agent has not dealt.

Example

Notice of the termination of an agency that is printed in a newspaper that serves the vicinity of the parties is constructive notice.

Generally, a principal is not obliged to give notice of termination to strangers who have no knowledge of the agency. Constructive notice is valid against strangers who assert claims of apparent agency.

Termination of an Agency by an Unusual Change in Circumstances

An agency terminates when there is an unusual change in circumstances (termination of an agency by an unusual change in circumstances ) that would lead the agent to believe that the principal’s original instructions should no longer be valid.

termination of an agency by an unusual change in circumstances

A situation where an agency terminates because an unusual change in circumstances has occurred that would lead the agent to believe that the principal’s original instructions should no longer be valid.

Example

An owner of a farm employs a real estate agent to sell the farm for $1 million. The agent thereafter learns that oil has been discovered on the property, a discovery that makes the land worth $5 million. The agency terminates because of this change in circumstances.

Termination of an Agency by Impossibility of Performance

An agency relationship terminates if a situation arises that makes its fulfillment impossible. The following circumstances can lead to termination of an agency by impossibility of performance :

termination of an agency by impossibility of performance

A situation where an agency terminates because a situation arises that makes the fulfillment of the agency impossible.

• The loss or destruction of the subject matter of the agency.

Example

A principal employs an agent to sell his horse, but the horse dies before it is sold. The agency relationship terminates at the moment the horse dies.

• The loss of a required qualification.

Example

A principal employs a licensed real estate agent to sell her house, but the real estate agent’s license is revoked before he can sell the principal’s house. The agency relationship terminates at the moment the real estate agent’s license is revoked.

• A change in the law.

Example

A principal employs an agent to trap alligators. If a law is passed that makes trapping alligators illegal, the agency contract terminates when the law becomes effective.

Termination of an Agency by Operation of Law

Agency contracts can be terminated by operation of law (termination of an agency by operation of law ). An agency contract is terminated by operation of law in the following circumstances:

termination of an agency by operation of law

A situation where an agency terminates because of the occurrence of legally specified events.

1. The death of either the principal or the agent
2. The insanity of either the principal or the agent
3. The bankruptcy of the principal
4. The outbreak of a war between the principal’s country and the agent’s country

If an agency terminates by operation of law, there is no duty to notify third parties about the termination.

Wrongful Termination

The termination of an agency extinguishes the power of the agent to act on behalf of the principal. If the principal’s or agent’s termination of an agency contract breaches the contract, the other party can sue to recover damages for wrongful termination .

wrongful termination

The termination of an agency contract in violation of the terms of the agency contract. The nonbreaching party may recover damages from the breaching party.

Example

A principal employs a licensed real estate agent to sell his house. The agency contract gives the agent an exclusive listing for four months. After one month, the principal unilaterally terminates the agency. The agent can no longer act on behalf of the principal. Because the principal did not have the right to terminate the contract, however, the agent can sue him and recover damages (i.e., lost commission) for wrongful termination.

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