Wallace v. M, M & R, INC.
165 N.C. App. 827, 2004 N.C. App. LEXIS 1510, 600 S.E.2d 514 (2004)
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Rule of Law:
An employer is vicariously liable for an employee's intentional tort when the act, though improperly executed, occurs within the scope of employment. A corporation is liable for punitive damages when a manager, as defined by their supervisory duties, condones the employee's wrongful conduct by failing to intervene.
Facts:
- On February 5, 2000, Steven Lee Wallace was a patron at The Sports Pad Complex, a nightclub owned by M, M & R, Inc.
- A bartender informed bouncer Jon Ryan Whaley that she heard Wallace discussing a prior assault on Whaley.
- Operations manager Roger Dale Southard, Jr. was notified and sent employees to confirm if Wallace was the prior assailant.
- After employees identified Wallace, Southard organized a group of on-duty bouncers and an off-duty employee, Adam Thomas Redfield, to remove Wallace from the premises.
- As Wallace rose to leave, Redfield and Whaley punched him, and multiple bouncers proceeded to punch, kick, and stomp on him until he was unconscious.
- Southard, the operations manager, was present for the entire beating and made no effort to stop it or restrain the employees.
- Prior to this incident, the nightclub's president was aware that both Whaley and Redfield had a history of violence against patrons, and Whaley had previously been fired for excessive force but was rehired.
Procedural Posture:
- Steven Lee Wallace filed a complaint against M, M & R, Inc. and its employees in a North Carolina trial court.
- A jury returned a verdict for Wallace, awarding him $35,000 in compensatory damages and $210,000 in punitive damages.
- M, M & R, Inc. (defendants) filed a motion for judgment notwithstanding the verdict.
- The trial court denied the defendants' motion.
- Defendants M, M & R, Inc., as appellant, appealed the denial of their motion to the North Carolina Court of Appeals.
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Issue:
Is an employer vicariously liable for its employees' assault on a patron and subject to punitive damages when the assault occurs during the course of removing the patron from the premises, a task which was organized and overseen by a manager who failed to intervene?
Opinions:
Majority - McGEE, Judge.
Yes. An employer is vicariously liable for an employee's intentional tort if the act was committed within the scope of employment, and punitive damages are appropriate if a manager condoned the wrongful act. The court reasoned that removing patrons was a duty of the bouncers. Although the beating was an improper and malicious method of performing this duty, it was still connected to their employment. The act of organizing the bouncers to remove Wallace was a group decision led by manager Southard, bringing the subsequent assault within the scope of employment. Furthermore, the court found that punitive damages were justified under N.C. Gen. Stat. § 1D-15(c) because Southard qualified as a 'manager' due to his supervisory responsibilities, and he 'condoned' the assault by organizing the confrontation and then failing to intervene or stop the beating while it occurred in his presence.
Analysis:
This decision reinforces the principle that an employer's liability for an employee's intentional tort hinges on whether the act was committed within the scope of employment, not on the employee's personal motive. It clarifies that even a violent assault can be considered within the scope of employment if it is an improper method of performing a legitimate job function, such as security or crowd control. The case also provides a clear application of the North Carolina statute on corporate punitive damages, establishing that a manager's passive failure to intervene can constitute 'condoning' the conduct, thus exposing the corporation to significant financial penalties. This holding puts employers on notice that they must not only properly train employees but also ensure that managers actively prevent misconduct.
