Unexpected item in the vicarious liability area

News / / Unexpected item in the vicarious liability area

The case arose from the actions of a disgruntled Morrisons employee who stole payroll information from the company and then leaked it on the internet The employee was motivated by desire to cause harm to Morrisons because of a grudge which he had against the company The theft of the data was a criminal act for which the employee was prosecuted and sentenced to eight years' imprisonment Morrisons was sued by some 5,500 of the 100,000 employees whose data had been stolen and leaked There were two limbs to the employees' claim, an allegation against Morrisons in its own right and a separate allegation against Morrisons as vicariously liable for the acts of the employeeThe claim against Morrisons in its own right was dismissed on the basis that the company itself had not breached its duty to its employees That left open the issue of whether Morrisons was vicariously liable for the acts of the employee Morrisons ran three defences First it argued that the DPA expressly or impliedly excluded an employer's vicarious liability in these circumstances Second, it argued that when committing the wrongful acts, the employee was not acting in the course of his employment In this context, the point was made that the employee leaked the data from his own home, using his own equipment and sometime after the original theft Thirdly, Morrisons argued that since it was the target of the employee's criminal act, it as the intended victim could not be vicariously liable for the employee's behaviour Indeed, it was suggested that to make Morrisons liable in these circumstances would make the Court hellipan accessory in furthering the employee's criminal aims'All three of these defences were dismissed As far as the argument in respect of the DPA was concerned, the Court agreed with the first instance judge that on its proper construction, the Act does not suggest an intention to limit an employer's liability as suggestedIn relation to the issue of whether the employee was acting in the course of his employment, the Court confirmed previous authority holding that there was sufficient connection' between the position in which the wrongdoer was employed and the wrongful act to make it right that the employer should be liable under the principle of social justice The fact that the stolen information was distributed from the employee's home on his own equipment was immaterial since the wrong was complete when the employee improperly downloaded the dataAll of this was in accordance with existing law But in addressing the issue of whether Morrisons could be liable for an act which was intended to cause it harm, the Court has extended the doctrine of vicarious liability and, therefore, insurers' potential exposure The Court of Appeal held that there are no exceptions to the rule that the employee's motives are irrelevant when considering the issues of vicarious liability Accordingly, even though the wrongdoer's intention in this case was to cause financial or reputational damage to Morrisons, Morrisons itself could still be liable for his acts if they caused damage to third parties as they had here Morrisons had also argued that to find it vicariously liable in the circumstances of this case would place an enormous burden on the company, and by analogy, on other potential defendants The Court rejected this concern commenting, in a remark that will give no comfort to insurers, that hellipthe fact of a Defendant being insured is not a reason for imposing liability, but the availability of insurance is a valid answer to the Doomsday or Armageddon arguments brought forwardhellipby MorrisonsIn an environment in which companies routinely hold large amounts of information about their employees and customers, and where reputations can be easily damaged and significant liabilities incurred by the illegal sharing of such information, this decision makes uncomfortable reading for insurers
Simon Cooper

Simon Cooper Consultant

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