Speak No Evil: Negligent Employment Referral and the Employer's Duty to Warn (or, How Employers Can Have Their Cake and Eat it Too)

• Publication year: 1998
• Citation: Vol. 22 No. 04

SEATTLE UNIVERSITY LAW REVIEWVolume 22, No. 1SUMMER 1998

Speak No Evil: Negligent Employment Referral and the Employer's Duty to Warn (Or, How Employers Can Have Their Cake and Eat It Too)

/. Bradley Buckhalter(fn*)

The utility of deductive logic is great, but strictly limited. It will not tell you what to believe, but only that, if you believe A, you must believe B. . . . Deduction tells you what follows from your premises, but does not tell you whether your premises are true.(fn1) [Y]ou cannot have both truth and what you call civilisation.(fn2)

I. Introduction

Anyone who watches the evening news either knows or quickly learns that the law places constraints both on what conduct it considers wrongful and on what a lawyer can do about any given wrongful act.(fn3) One of those constraints appears in the "no duty to act" rule of tort doctrine, a rule which all lawyers learned early in their study of the law.(fn4) Briefly stated, the "no duty to act" rule holds that, with certain exceptions, the law imposes on actors neither a duty to act for another's benefit nor liability for failure to act.(fn5) Although the rule continues in force in modern tort doctrine, it is slowly being eroded, with courts sometimes imposing both a duty to act and liability for failure to do so.(fn6)

Like others in the legal community, employment lawyers function under the presumption that the law recognizes no general duty to act. Those lawyers advise their employer clients that the law does not require them to act affirmatively for the benefit of others except in limited situations. Rather, employment lawyers counsel their clients simply to take care that their conduct harms no one else. The law, they tell their clients, says "you must not harm others"; the law does not say "you must help others."(fn7)

With the recent emergence of defamation actions in the employment context, the "no duty to act" rule became a valuable tool in the employment lawyer's box. Increasingly, discharged employees began to file defamation actions against former employers who allegedly disclosed malicious or unfavorable reference information about them.(fn8) Lawyers relied on the "no duty to act" doctrine as a liability shield in advising their clients that the law imposed no duty to disclose unfavorable reference information about current and former employees,(fn9) even if prospective employers pointedly asked for such information. By refusing to disclose unfavorable reference information, employers could reduce their exposure to defamation liability.(fn10) However, employers soon saw the trade-off for their reduced exposure to liability, as it became increasingly difficult for them to obtain the necessary background information about their own prospective employees.(fn11)

The California Supreme Court's recent decision in Randi W. v. Muroc Joint Unified School District(fn12) called into question the employment lawyer's presumably fail-safe advice that the law imposes no duty to act for another's benefit in the employment reference context. The Muroc court held that, if an employer gives a reference for an employee and if that employee presents a substantial and foreseeable risk of harm to third persons, then a duty exists to disclose all material facts about the employee that created the risk of harm.(fn13) The Muroc decision both generated academic debate(fn14) and triggered dismayed commentary in legal trade journals.(fn15)

While stepping away from traditional tort doctrine in imposing its duty of disclosure, the Muroc court placed considerable limitations on its rule.(fn16) This article builds on the reasoning of the Muroc court by incorporating previous scholarship advocating the novel tort theory of negligent employment referral(fn17) to propose an affirmative duty of disclosure more comprehensive than that imposed in Muroc.

Section II of this article begins by surveying the evolution of tort doctrine and the "no duty to act" rule. It then proceeds to examine current theories of employer liability in the referral and hiring context and moves on to trace the history of the negligent employment referral claim. Next, this section scrutinizes the Muroc decision and ends with a brief discussion of the future of negligent employment referral.

Section III begins by exploring the implications of nondisclosure of reference information for both tort policy and tort doctrine. It then proposes an affirmative duty of disclosure as a solution by amalgamating the reasoning of Muroc with that of Tarasoff v. Regents of the University of California.(fn18) This section concludes by illustrating how such a duty comports with both tort policy and doctrine and by assessing the effect of the proposed affirmative duty of disclosure on current theories of employer liability in the referral and hiring context.

In Section IV, the article concludes that underlying policy considerations and current tort doctrine justify imposing an affirmative duty of disclosure on employers and that such a duty will benefit both employers and potential victims of employee misconduct.

II. Background

A. Evolution of Tort Doctrine and the "No Duty to Act" Rule

The early common law of tort originally operated under a system very similar to modern strict liability.(fn19) Although the law recognized the distinction between misfeasance and nonfeasance, a defendant remained liable for the consequences of his action whether or not he was at fault.(fn20)

The negligence theory emerged in the mid-nineteenth century and coincided with the rise of industrialized production.(fn21) Commentators speculate that this concurrent development was less than coincidental.(fn22) Rather, the commentators reason that the courts consciously, or perhaps unconsciously, sought to limit the liability of infant industry by shifting tort doctrine away from strict liability and toward the negligence theory.(fn23)

The requirement of duty was, and remains, the hallmark of the negligence theory.(fn24) Under the negligence theory, the law requires an existing duty on the defendant's part before he will face liability for his harmful conduct.(fn25) The law and its commentators offer various definitions of duty. However, one useful definition states that duty is "an obligation, to which the law will give recognition and effect, to conform to a particular standard of conduct toward another."(fn26) In negligence cases, the duty remains the same at all times: the defendant must engage in conduct that is reasonable under the circumstances.(fn27) Duty in tort law thus dictates the defendant's conduct; it defines what a defendant must do or refrain from doing to avoid liability.(fn28)

Under the negligence theory, the law faults only those who cause harm.(fn29) The notion of fault flows from duty and is bound up with the idea of foreseeability.(fn30) Tort duty requires an actor to refrain from engaging in conduct with harmful results. When an actor foresees a harmful result, he must choose whether or not to avoid that result.(fn31) If the actor chooses to engage in the harmful conduct, then the law will find fault and, in most cases, impose liability.(fn32)

Although the negligence theory prohibits actors from engaging in harmful conduct, it consistently refuses to impose a general duty to act for another's benefit.(fn33) Commentators explain this distinction by pointing to the concepts of misfeasance and nonfeasance that underlie tort doctrine.(fn34) By misfeasance, the law means active misconduct that causes a positive injury to another.(fn35) Misfeasance creates a risk of injury.(fn36) That risk, which did not exist before the defendant's conduct, justifies holding the defendant liable for that conduct.(fn37) By nonfeasance, the law means passive inaction that may or may not result in injury to another.(fn38) The nonfeasant actor, rather than creating a risk of injury, merely fails to act to protect someone from injury.(fn39) Essentially, nonfeasant conduct is conduct that fails to benefit another.(fn40) With certain exceptions, conduct that fails to work a positive benefit, as opposed to conduct that works a positive injury, does not justify a finding of liability.(fn41) Rather, in most cases, the law applies the "no duty to act" rule to insulate a defendant from liability when his otherwise nonfeasant conduct results in harm to another.(fn42)

Courts occasionally recognize exceptions to the "no duty to act" rule(fn43) when a relationship exists between parties such that social policy justifies imposing a duty to act.(fn44) The courts will often find a duty to act in at least three "relational" situations.

First, a special relation between a defendant and a third person may impose a duty on the defendant to control the third person's tortious conduct.(fn45) Moreover, a special relation between a defendant and a potential victim of a third person's tortious conduct may give the victim a right of protection.(fn46)

Second, the courts may impose a duty to act where the plaintiff occupies a vulnerable position as compared to a defendant who possesses knowledge that the plaintiff does not, and, thus, who holds considerable power over the plaintiffs welfare.(fn47) The courts reason that knowledge constitutes power over another who does not possess the same knowledge or information.(fn48) By imposing a duty in those situations, the courts acknowledge...