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Do Company Policies Create a Duty?

In a case now pending before the Kentucky Supreme Court, a licensed driver took a Chevy truck out for a test drive from the Moore Pontiac dealership on a rainy morning. While he was turning a corner, the truck hydroplaned and struck a car, injuring Candria Scott. Mrs. Scott sued the driver, as would be expected, but also sued the dealership on the grounds that it had acted negligently by failing to follow its internal policy that required a salesman to ride along on test drives. In our brief, Pacific Legal Foundation argues that if internal policies, regardless of their purpose or effect, serve as a hook for tort liability, the impact will extend far beyond car dealerships. Most ominously, a holding that internal policies, procedures, practices, rules or guidelines establish a cause of action will deter companies from establishing such policies, a particularly unfortunate result where such policies promote health and safety.

In Killian v. Caza Drilling, Inc., 131 P.3d 975, 978 (Wyo. 2006), a Wyoming Supreme Court decision turned on these policy considerations. In that case, the owner of a laborer's camp had a "no alcohol" policy that was routinely ignored. Two laborers got drunk after their shift and decided to take a drive. The drunk driver subsequently killed a bicyclist who was riding along the highway. The bicyclist's representatives sued, alleging that the "no alcohol" policy created a duty on behalf of the employer and that violation of that policy caused the accident. The court held that the accident was not a foreseeable result of violation of the policy, in large part because the whole point of the laborers' camp was that the workers should not have to drive at all; their needs were provided for on site. Finally, as a matter of policy, the court explained,

We, however, think it more likely that an imposition of a duty under these circumstances would merely result in an employer forgoing adoption of any safety rules to avoid the risk of liability. If it were even possible, let alone practicable, for an employer to monitor and control the conduct of their employees when they are off duty and off premises, the costs incurred to do so would be significant. An employer would be exposed to liability from an undefined, limitless class of potential plaintiffs. The community would suffer because employers would either abandon efforts to create a safer workplace to avoid liability or they would have to absorb the costs to protect themselves by cutting other expenses.

Imposition of a duty in these circumstances would have significant effects on litigation as plaintiffs seek a "deep pockets" defendant. The dockets of the trial courts would face an increase in the amount and complexity of negligence cases. Any safety benefits derived from enforcing the policy would be lost if the risk of liability is greater than the cost of enforcement and employers simply rescind or refuse to implement safety policies. The burden on the employer does not arise from requiring it to enforce its safety policies but from requiring it do so for the benefit of a limitless class of potential plaintiffs. Compared to the negative consequences of imposing a duty under these circumstances, the benefits of doing so are slight.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.