McGanty v. Staudenraus
321 Or. 532, 10 I.E.R. Cas. (BNA) 1793, 901 P.2d 841 (1995)
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Rule of Law:
An employee acting within the scope of employment is not a third party who can tortiously interfere with the employer's contract with another. For claims of intentional infliction of severe emotional distress and constructive discharge, the intent element is satisfied if the actor knew the harmful result was substantially certain to occur, even without a specific purpose to cause it.
Facts:
- Kimberly McGanty was an employee of Metropolitan Agencies, Inc., a collection agency.
- Robert Staudenraus was the president, an owner, and McGanty's immediate supervisor at Metropolitan.
- From January 1989 through August 17, 1990, Staudenraus subjected McGanty to a continuous pattern of sexual harassment.
- The harassment included unwelcome sexual advances, comments, and physical conduct.
- Staudenraus physically harassed McGanty by rubbing his hands and body against her shoulders, back, and buttocks.
Procedural Posture:
- Kimberly McGanty filed a complaint against Metropolitan Agencies, Inc. and Robert Staudenraus in an Oregon state trial court.
- Defendants moved to dismiss the claims for intentional interference with economic relations, intentional infliction of severe emotional distress (IISED), and wrongful discharge for failure to state a claim.
- The trial court granted the motion, dismissing those three claims.
- McGanty, as appellant, appealed the dismissal to the Oregon Court of Appeals.
- The Court of Appeals affirmed the dismissal of the intentional interference claim but reversed the trial court's dismissal of the IISED and wrongful discharge claims.
- McGanty petitioned the Oregon Supreme Court for review of the interference claim, and the defendants cross-petitioned for review of the IISED and wrongful discharge claims. The Supreme Court allowed review.
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Issue:
1. Can a corporate officer acting within the scope of their employment be considered a 'third party' for the purposes of a claim for intentional interference with the economic relations between the corporation and another employee? 2. Is a claim for intentional infliction of severe emotional distress legally sufficient if it alleges the defendant knew their conduct was substantially certain to cause severe emotional distress, but does not allege the defendant acted with the purpose of causing such distress? 3. Does a claim for constructive discharge require an allegation that the employer created intolerable working conditions with the purpose of forcing the employee to resign?
Opinions:
Majority - Graber, J.
1. No. An employee acting within the scope of their employment is legally identified with the employer and is therefore a party to the employer's contracts, not an interfering third party. The court reasoned that the tort of intentional interference with economic relations is designed to protect contracting parties from intermeddling strangers. When an agent acts within the scope of their employment, their actions are legally the actions of the employer. McGanty's claim against Staudenraus was properly dismissed because her own complaint admitted that Staudenraus 'was acting within the course and scope of his employment,' making him legally indistinct from Metropolitan for the purpose of this tort. 2. Yes. A claim for intentional infliction of severe emotional distress is sufficient if it alleges the defendant acted with the knowledge that severe distress was substantially certain to result from the conduct. The court re-examined and overruled its prior case law, which had erroneously required a plaintiff to plead that the defendant acted with the specific purpose of inflicting distress. Adopting the standard from the Restatement (Second) of Torts, the court held that intent can be established either by showing a desire to cause the result or a belief that the result is substantially certain to occur. 3. No. A claim for constructive discharge is sufficient if it alleges the employer intentionally created or maintained intolerable working conditions knowing that the employee's resignation was substantially certain to result. The court overruled the stricter standard from its prior decision in Bratcher v. Sky Chefs, Inc., which required proof that the employer acted with the specific purpose of forcing resignation. The court established a new four-part objective test for constructive discharge, aligning the intent element with the broader Restatement definition used for other intentional torts.
Analysis:
This case significantly altered Oregon tort law by clarifying the intent standard for both intentional infliction of severe emotional distress and constructive discharge. By replacing the strict 'purpose' requirement with the broader Restatement standard of 'knowledge with substantial certainty,' the court lowered the pleading and proof burden for plaintiffs in employment law cases, making these claims more viable. The decision on the interference claim reinforces the legal principle that corporate agents are protected from liability when acting within the scope of their authority, but it also serves as a cautionary tale for plaintiffs about the binding nature of admissions in pleadings, which can be fatal to a claim.
