Workers' Compensation Commission No Longer Exclusive Remedy for Negligent Retention/Hiring


The Court of Appeals held, in Ruffin Hotel Corp. of Md. v. Gasper, 418 Md. 594 (Md. 2011), that the Maryland Workers' Compensation Act does not preempt an action for negligent hiring and retention and that Md. Rule 5-404, governing the introduction of evidence of "prior bad acts", does not apply in civil cases.

This case arose from allegations of Kathleen Gasper that she had been sexually assaulted by a fellow employee of the Courtyard Marriott Hotel, where she had been the assistant general manager since 2003. Ms. Gasper was terminated from her employment in 2005, allegedly as a result of her complaints of the assault. Her immediate supervisor cited the reason for her termination as a poor attitude and harassing behavior toward subordinate employees. She then brought this action against her supervisor, for alleged failure to address her complaints, and the owner of the hotel, Ruffin Hotel Corporation for their retention of the supervisor as an employee.

The trial court dismissed the claim for negligent retention and hiring as preempted by the Maryland Workers' Compensation Act. Ms. Gasper amended her Complaint, naming only the hotel as a Defendant, and alleged employment discrimination and sexual harassment based on her supervisor's reaction to her complaints, retaliation by the hotel based on her termination and respondeat superior, attributing her supervisor's actions to the hotel.

During the jury trial, Ms. Gasper attempted to introduce evidence that in 2002 her supervisor had been terminated for behavior similar to that at issue in her own case. The evidence was not allowed per Md. Rule 5-404, which excludes evidence of "prior bad acts." The Court opined that this evidence would confuse the issues as it was similar behavior of another employee currently before them. The hotel was successful and Ms. Gasper filed an appeal. The Court of Special Appeals reversed in part, holding that the negligent retention and hiring count should not have been dismissed and that the jury instruction regarding the cause of Ms. Gasper's termination was not in accordance with Maryland law. It affirmed, however, the holding that evidence of "prior bad acts" was inadmissible. Both parties appealed and the Court of Appeals granted certiorari.

The first issue was whether or not the jury had been instructed improperly regarding the burden Ms. Gasper must meet as to the cause of her termination. The Court of Appeals held that Ms. Gasper was entitled to a new trial because the instruction read that her complaints of harassment must have been a "substantial factor" in her dismissal when in fact Maryland caselaw only requires a "motivating factor."

The second issue was whether or not the Maryland Workers' Compensation Act preempts an action for negligent retention or hiring. The discussion of this issue was minimal but the Court did state that they rejected the "proposition that the General Assembly intended the Workers' Compensation Commission is the exclusive forum in which a negligent hiring/retention claim must be litigated whenever such a claim is asserted by an employee against his or her employer as a result of intentional and unlawful misconduct of a fellow employee. A contrary conclusion would be unreasonable in the extreme." The Court did not continue to elaborate on it's reasoning for such a bold statement. Therefore, the question of whether the preemption doesn't apply to cases with only these specific facts or if the implications of over-riding it will be more far-reaching was left open.

The final issue was whether Md. Rule 5-404 applies to civil cases. The Rule states that "Evidence of other crimes, wrongs or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, common scheme or plan, knowledge, identity, or absence of mistake or accident." When a party attempts to offer "prior bad acts" evidence in a civil case, the Court must engage in an balancing test of whether substantial prejudice will result from the evidence's inclusion. This is also, of course, subject to the Court's discretion, creating another open-ended question of just how far the Rule will be allowed to stretch.