When a tort claim against an employee is dismissed, can a claim against the employer for respondeat superior be maintained? This is the question the Supreme Court of Arizona recently addressed in Laurence v. Salt River Project Agricultural Improvement & Power District.[1] The answer is, it depends.

In Laurence, the Arizona Supreme Court held dismissing a claim against an employee with prejudice, for reasons unrelated to the merits of that claim, does not require the dismissal of the respondeat superior claim against the employer. This decision overturned a 1945 decision to the contrary.

Background

Jacob Laurence and his minor son were injured in a motor vehicle accident involving a truck owned by Salt River Project (“SRP”) and driven by its employee. Plaintiffs alleged the employee’s negligent driving caused the accident, and the driver was in the course and scope of his employment at the time of the accident. As such, plaintiffs alleged SRP was negligent under the theory of respondeat superior.

Because SRP is a political subdivision of the State of Arizona, a claim against SRP must be filed within one hundred and eight (180) days.[2] Plaintiffs timely filed a claim against SRP but did not file a claim against the employee driver until almost fifteen (15) months post-accident. The superior court granted the employee driver’s motion for summary judgment against Laurence due to failure to timely file the claim.[3]

SRP then filed a motion for summary judgment, arguing since the claim against its employee was dismissed, SRP could not be held vicariously liable for the employee driver’s negligence. In making its arguments, SRP relied on DeGraff[4]. The plaintiffs responded that since summary judgment was granted for reasons unrelated to the merits, SRP could still be found vicariously liable.

In DeGraff, the Court held dismissing a claim against an employee with prejudice for any reason exonerates the employee from negligence and simultaneously adjudicates the claim against the employer.[5] The superior court agreed with SRP and the Court of Appeals affirmed.

Under DeGraff, the claims against SRP were properly dismissed, however, the plaintiffs asked the superior court be reversed and the precedent overturned, urging the Supreme Court to conclude dismissal of a claim against an employee for reasons not related to the case’s merits does not foreclose a respondeat superior claim against the employer.

The Ruling

The Supreme Court of Arizona found several compelling reasons to overturn DeGraff. First, the Supreme Court found the ruling in DeGraff to be “clearly erroneous or manifestly wrong.”[6] The DeGraff majority correctly treated the dismissal of the claim against the employee with prejudice as an “adjudication on the merits”[7] but, according to the majority in Laurence, it failed to explain why that meant the employee had “been adjudged as not guilty of any negligence”[8] so as to preclude a respondeat superior claim against the employer.

In Laurence, the Supreme Court ruled that a dismissal with prejudice does nothing more than bar refiling the same claim in the same court, no matter the basis for the dismissal. The dismissal does not bar a separate claim against another party.

Second, the Court had already previously abrogated DeGraff in part, severely undercutting the efficacy of what remained. In Kopp, the Court “disavow[ed] [their] holding in DeGraff insofar as that case and its progeny conclude that a stipulated dismissal with prejudice operates as an adjudication that the dismissed party was not negligent in the treatment of the plaintiff.”[9] The Court reasoned that “[c]ontinuing to apply DeGraff to respondeat superior claims while carving out a different meaning for issue preclusion purposes would be confusing and unnecessary.”[10]

Third, the Court found that DeGraff conflicts with Arizona statute and case law which provide that, under the doctrine of respondeat superior, an employer is vicariously liable for its employees’ tortious acts, not adjudicated liability.[11]

Fourth, the Court found DeGraff in opposition to the recognition that employers sued under respondeat superior cannot assert defenses that are personal to the employee. The respondeat superior claim, the Court explains, is “freestanding.”[12] When a plaintiff violates an employee’s procedural rights, that defense is personal to the employee and cannot be asserted by the employer.

Fifth, the Court found that public policy does not support upholding DeGraff. Unless the finder of fact finds the employee did not commit a tort, or possibly that plaintiff released the employee from liability, it is fair to allow the respondeat superior claim to proceed.[13]

For these reasons, the Arizona Supreme Court overturned DeGraff and held the superior court incorrectly entered summary judgment in favor of SRP since the claim was dismissed solely because plaintiff failed to timely file the claim.

Takeaway

Acquittal or exoneration of an employee of a tortious act acquits or exonerates the employer from vicarious liability. Dismissing a claim against an employee because it lacks merit requires the dismissal of the claim against the employer. By contrast, when a dismissal is not based on the merits, the respondeat superior claim against the employer may still proceed.

Given the Court in Laurence overturned 78-year-old precedent, it is important for employers to understand how the decision will impact them in cases in which they are being sued under a theory of respondeat superior. Only a dismissal on the merits will automatically result in a dismissal of the claim against the employer.

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Sources

[1] Laurence v. Salt River Project Agricultural Improvement and Power District CV-21-0292-PR (2023), 2023 WL3136641.

[2] A.R.S. §12-821.01.

[3] Id.

[4] DeGraff v. Smith, 62 Ariz. 261 (1945).

[5] Id.

[6] Laurence v. Salt River Project, 2023 WL3136641

[7] Id. at 269.

[8] Id. at 270.

[9] Kopp v. Physician Group of Arizona, Inc., 244 Ariz. 439, 440 (2018).

[10] Laurence v. Salt River Project, 2023 WL3136641

[11] Id.

[12] Id.

[13] Id.