Negligent Hiring and Retention Claims Continue Against Korean Bank

In Lee v. Woori Bank (decided Aug. 21, 2014), the New York Supreme Court held that plaintiff adequately pleaded a negligent hiring and retention claim.

In this case, plaintiffs asserted claims for retaliation, battery, negligence, and sexual harassment. Specifically, they alleged

that Mr. Yoo, along with five other managers and executives from Korea, consistently used foul language, profanity, talked dirty, and made sexual comments toward the staff in the New York office. Plaintiffs allege other inappropriate sexual behavior against female staff members and that Mr. Yoo made unwelcome homosexual advances and comments to [Mr. Shin], and physically touched him against his will by repeatedly slapp[ing] his buttocks and repeatedly attempt[ing] to kiss [him] on the lips.

The general rule is that “where an employee is acting within the scope of his or her employment, the employer is liable for the employee’s negligence under a theory of respondeat superior and no claim may proceed against the employer for negligent hiring, retention, supervision or training.”

There is, however, an exception to that rule where “the injured plaintiff seeks punitive damages from the employer based on alleged gross negligence in the hiring or retention of the employee.”

That, held the court, is what happened in this case:

[P]laintiffs’ third cause of action properly alleges a claim for negligent hiring and retention as it asserts that [d]efendant Woori failed to properly screen Yoo to protect other employees from his conduct and behavior … failed to properly train Yoo on American employment practices, American laws, and American culture … had knowledge of Yoo’s sexual harassment and improper behavior, but failed to protect other employees. The complaint further alleges that [t]he conduct of Defendant Woori [in its hiring and retention of Mr. Yoo] also constitutes gross negligence and seeks punitive damages based on such gross negligence.