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The Defense Line: A Publication From The Maryland Defense Counsel, Inc.

Court of Appeals Restricts Workers’ Compensation Act Preemption and Limits the “Prior Bad Acts” Rule to Criminal Cases

Matthew SchrollGregory Garrett
In a unanimous decision, the Court of Appeals ordered that a terminated employee be given a new trial, reinstated her negligent hiring and retention claim against the employer, and stated that the provisions of Maryland Rule 5-404(b) do not apply in civil cases. Ruffin Hotel Corp. v. Gasper, Md., 111 Fair Empl. Prac. Cas. (BNA) 1488 (2011). The decision was a loss for the defendant, with some potentially far-reaching implications for Maryland employers and the trial of civil cases in general.

The case arose from the events leading up to the termination of Kathleen Gasper’s employment. Ms. Gasper was the assistant general manager of The Courtyard By Marriott Gaithersburg-Lakeforest Hotel, which was owned by the defendant, Ruffin Hotel Corporation. Ms. Gasper alleged that her supervisor, Mr. Ahmed, was terminated in 2002 for engaging in “abusive behavior including allegations of assault, battery, discrimination, sexual harassment and fear of retaliation.” Ms. Gasper was hired in 2003, and Mr. Ahmed was rehired by the hotel in 2004 as her supervisor. Ms. Gasper alleged that in 2005, a coworker (Mr. Bridges) “grabbed [her], pinned her against the wall and kissed her twice.” Ms. Gasper complained to Mr. Ahmed about the incident, and Mr. Ahmed allegedly retaliated against her in response to her complaints.

In March 2005, Ms. Gasper’s employment was terminated, and she filed suit against Mr. Ahmed and her employer (the hotel). The trial court found that Ms. Gasper’s claim for the negligent hiring and retention of Mr. Ahmed was preempted by, among other things, the Workers’ Compensation Act. Ms. Gasper then amended her complaint, bringing suit only against the hotel. In her amended pleading, Ms. Gasper sought to recover for (1) “employment discrimination and sexual harassment” arising out of Mr. Ahmed’s response to the incident; (2) “retaliation” by the hotel, which culminated in her termination from employment; and (3) “respondeat superior,” in which she attributed Mr. Ahmed’s conduct to the hotel. The case proceeded to a jury trial. During the trial, Ms. Gasper sought to introduce evidence of Mr. Ahmed’s conduct preceding his termination in 2002. The trial court refused to allow the evidence, finding in part that Rule 5-404(b) (which precludes evidence of prior crimes, wrongs and acts) rendered the evidence inadmissible. The jury returned a verdict for the hotel, and the plaintiff appealed. The Court of Special Appeals reversed in part, holding that the jury instruction regarding the cause of Ms. Gasper’s termination was erroneous, and that Ms. Gasper’s count for negligent hiring and retention should not have been dismissed. The Court of Special Appeals affirmed the trial court’s exclusion of the evidence related to Mr. Ahmed’s prior conduct. Gasper v. Ruffin Hotel Corp., 183 Md. App. 211, 960 A.2d 1228 (2008). Both parties appealed, and the Court of Appeals granted certiorari.

The first issue on appeal was whether the trial court had instructed the jury correctly on Ms. Gasper’s burden to prove the cause of her termination. Quoting extensively from the Court of Special Appeals’s opinion, the Court held that a plaintiff must prove “that her opposition to the harassing conduct was the motivating factor in the decision to terminate her employment.” (emphasis in original). Because the trial court’s charge included the phrase “substantial factor” rather than “motivating factor,” the Court held that the plaintiff was entitled to a new trial.

The Court also took up the hotel’s contention that the employee’s claim for the allegedly negligent hiring and retention of Mr. Ahmed was barred by the Workers’ Compensation Act, on the basis of the decision in Newman v. Giant Food, Inc., 187 F. Supp. 2d 524 (D. Md. 2004). Very little analysis was given to the issue: “We reject the proposition that the General Assembly intended that 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.”

Although the Court stated that there was no Maryland authority supporting preemption, it made no mention of its previous decision in Athas v. Hill, 300 Md. 133 (1984). In Athas, the plaintiff was attacked by a coworker wielding a butcher knife, and sued his managers for negligently hiring the coworker. The Court in Athas held that the managers were immune from the plaintiff’s tort suit. And in Suburban Hospital v. Kirson, 362 Md. 140 (2000), the court characterized Athas as a decision in which the managers shared the employer’s immunity under the Workers’ Compensation Act. Given that there was no substantial discussion of preemption in Gasper, it is unclear whether Athas and Kirson have been overruled sub slientio, whether Gasper will be limited to its facts, or indeed, just how far the preemption provided by the Workers’ Compensation Act extends. In any event, employers and their counsel should take note of the Gasper decision and recognize that the plaintiffs’ bar inevitably will seek to push its boundaries. It seems inevitable that more lawsuits will be styled as negligent hiring and retention as a way for employees to plead around the bar imposed by the Workers’ Compensation Act.

In what may be the most far-reaching aspect of its decision, the Court of Appeals addressed the applicability of Rule 5-404(b) in civil cases. The Rule provides: “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.” After a review of the history of the Rule, the authorities interpreting the federal analogue, and the opinion in Lewin Realty v. Brooks, 138 Md. App. 244 (2001), aff’d on other grounds, 378 Md. 70 (2003), the Court stated: “Md. Rule 5-404(b) should continue to be applicable only to evidence offered by the State against the defendant in a criminal case. In civil cases, whether the evidence at issue is offered by a plaintiff or by a defendant, the admissibility of relevant evidence that presents ‘the possibility of unfair prejudice is to be dealt with pursuant to Md. Rule 5-403.’” (emphasis added). For guidance in applying this balancing test, the Court directed the trial courts to its line of case pre-dating the adoption of Rule 5-404(b), including Medical Mutual v. Evans, 330 Md. 1 (1993).

This part of the Gasper decision, which requires that the trial court engage in the Rule 5-403 balancing test when confronted with evidence of “prior bad acts” rather than the near-automatic exclusion under Rule 5-404(b), may open the floodgates to evidence that parties in civil litigation typically have presumed to be inadmissible. While it cannot be predicted how a trial court would exercise its discretion in a given case, plaintiffs can be expected to seek the admission of evidence of prior lawsuits against the defendant and defendants may try to introduce evidence that the plaintiff unsuccessfully has filed civil lawsuits in the past, among the countless other forms of “prior bad acts.” Unless the trial courts carefully screen such evidence, Gasper’s change in the applicability of Rule 5-404(b) raises the potential for confusion of the issues and emotional overreaction by the jury.

Gregory M. Garrett is an Associate in the Litigation Department at Tydings & Rosenberg LLP. He practices primarily in the areas of commercial and business litigation, medical malpractice litigation, and health care.

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