It's not often that you see a trial end in verdicts for both plaintiff and defendant, with both sides receiving awards of not only compensatory but punitive damages against the other. The Illinois Supreme Court heard such a case today. A 6-1 majority led by Justice Mary Jane Theis affirmed in part and reversed in part a judgment arising out of a complex employment dispute in Lawlor v. North American Corp. of Illinois.
Plaintiff was a commission-based salesperson for defendant. Just short of seven years after starting work for the defendant, the plaintiff resigned and went to work for a competitor who also sold corporate-branded promotional items. The defendant suspected that the plaintiff had violated her noncompetition agreement with the defendant, so the company instructed its lawyer to investigate. The company lawyer retained a private investigation firm which had worked for the company before.
The president of the investigation firm testified that he had conducted previous noncompetition investigations for the defendant, and that the defendant wanted him to obtain the plaintiff's telephone records. For his part, the defendant company's designated liaison with the private investigators testified that he relied on the lawyer and the investigator to perform the investigation and did not instruct them on what to do or not to do. He received several faxes from the investigator containing hundreds of phone numbers during the investigation, but he never asked how the phone records had been obtained.
Plaintiff was recruited to join her new company by a former employee of the defendant. In the final months before she resigned from the defendant's employ, she spoke several times to an outside consultant hired by a customer to negotiate its business with defendant. The consultant testified by declaration that the plaintiff had encouraged him to delay awarding his business until the plaintiff moved to her new employer, but at trial, the consultant disavowed his own declaration. Only a month into her new job, the plaintiff sent her new boss a letter discussing her sales history while working for the defendant; the letter disclosed the defendant company's typical profit margin.
The plaintiff sued the defendant for outstanding commissions; not long after, upon learning of the defendant's investigation, she added a claim for intrusion upon seclusion. The defendant countersued for breach of the fiduciary duty of loyalty and for excess commission draw payments. At the conclusion of the trial, the jury returned a verdict for plaintiff on the intrusion claim, awarding $65,000 in compensatory damages and $1.75 million in punitive damages. The court subsequently entered judgment for defendant on its breach of fiduciary duty claim, awarding the defendant $78,781 in compensatory damages and $551,467 in punitives. On posttrial motions, the court reduced the plaintiff's punitive damages award to $650,000. The Appellate Court affirmed the plaintiff's judgment on the intrusion claim and reinstated the plaintiff's original $1.75 million award of punitive damages. The Court also reversed the Circuit Court's judgment in defendant's favor on the breach of fiduciary duty claim. The Supreme Court affirmed in part and reversed in part.
Much of the Court's opinion seems fact-specific and unlikely to have a dramatic influence on Illinois law going forward. The Court found that adequate evidence supported the judgment that the private investigators were an agent of the defendant for purposes of vicarious liability. The Court further held that although the defendant had apparently obtained the plaintiff's phone records on multiple occasions, the defendant's conduct nevertheless ranked low on all the common law criteria of gravity. Moreover, the Court held, the justification for a heavy award of punitive damages was "sharply diminished" where liability was vicarious. The court also affirmed the vacatur of the award for the defendant on the counterclaim, finding that there was no evidence that the plaintiff had breached her common law duty of loyalty.
One aspect of the decision, however, carries with it a potential impact for future litigation: in affirming the judgment in plaintiff's favor in connection with the defendant's investigation of her phone records, the Court adopted the tort of intrusion upon seclusion as a valid cause of action in Illinois. The Court endorsed the standard set forth in Section 652B of the Restatement(Second) of Torts for the new cause of action, holding that an intrusion upon the private affairs and concerns of another would be actionable "if the intrusion would be highly offensive to a reasonable person." How dramatic an effect on Illinois law this new cause of action has will have to await subsequent lawsuits by other parties.
Chief Justice Thomas L. Kilbride dissented in part. Although the Chief Justice agreed that the plaintiff's judgment on her intrusion claim should be affirmed and the defendant's judgment for breach of fiduciary duty reversed, the Chief concluded that the majority had been insufficiently deferential to the lower court's findings with respect to the plaintiff's claim for punitive damages. Chief Justice Kilbride wrote that he would have affirmed the Circuit Court's remittitur of the punitive damages award to $650,000.