Hall v. United Parcel Service of America, Inc.

• Decision Date: 08 May 1990
• Docket Number: No. 2,No. 1,1,2
• Citation: 555 N.E.2d 273,556 N.Y.S.2d 21,76 N.Y.2d 27
• Parties: , 555 N.E.2d 273, 89 A.L.R.4th 515, 5 IER Cases 616 David S. HALL, Appellant, v. UNITED PARCEL SERVICE OF AMERICA, INC., et al., Defendants, and Doyle Detective Bureau, Inc., et al., Respondents. (Action) David S. HALL, Appellant, v. UNITED PARCEL SERVICE OF AMERICA, INC., et al., Respondents. (Action)
• Court: New York Court of Appeals Court of Appeals

Page 21

556 N.Y.S.2d 21

76 N.Y.2d 27, 555 N.E.2d 273, 89

A.L.R.4th 515, 5 IER Cases 616

David S. HALL, Appellant, v. UNITED PARCEL SERVICE OF AMERICA, INC., et al., Defendants, and Doyle Detective Bureau, Inc., et al., Respondents. (Action No. 1.)

David S. HALL, Appellant, v. UNITED PARCEL SERVICE OF AMERICA, INC., et al., Respondents.

(Action No. 2.)

Court of Appeals of New York.

May 8, 1990.

E. Robert Fussell, LeRoy, for appellant.

Thomas E. Lenweaver, Rochester, for Doyle Detective Bureau, Inc., et al., respondents in action No. 1. Thomas R. Smith, Syracuse, for respondents in action No. 2.

OPINION OF THE COURT

TITONE, Judge.

In this consolidated appeal, the primary issue is whether a person who has been pressured into resigning from employment after "failing" a polygraph test may maintain an action for damages against an examiner who allegedly conducted the test in a negligent manner. Also at issue is whether this plaintiff is entitled to be paid a bonus under the specific terms of his employer's bonus plan. We hold that neither of plaintiff's claims is legally viable and that both were properly dismissed.

Plaintiff had been employed by defendant United Parcel Service (UPS) since 1972. In the fall of 1981, two bags containing money were determined to be missing from the UPS office in Rochester, where plaintiff was the center manager. UPS retained defendant Doyle Detective Bureau, Inc., to assist in the investigation of the missing bags. As part of this investigation, several UPS employees, including plaintiff, were subjected to polygraph lie detector tests administered by the individual defendants Griffin and Mahoney. According to Griffin's and Mahoney's reports, plaintiff, who was tested on two separate occasions, showed considerable stress and deception during both tests. Griffin's report concluded that plaintiff was "directly involved in theft." After having been apprised of the test results, plaintiff was allegedly forced to resign on November 13, 1981.

Before these events took place, plaintiff had been approved for and scheduled to receive a Participation Notice for a bonus, payable in the early spring of 1982, to cover the fiscal period ending on September 30, 1981. The Participation Notices were not distributed, however, until November 15, 1981, two days after plaintiff had left the company. Because its written bonus plan expressly provided that bonus rights accrue upon receipt of a Notice of Participation, UPS took the position that plaintiff, who was not given a Notice, was not entitled to receive a bonus.

In May of 1983, plaintiff commenced an action against UPS, Doyle and Griffin, among others, seeking damages for his lost employment and mental anguish (action No. 1). On defendants' motion for summary judgment, which was made after discovery was had, the trial court dismissed the causes of action based on defamation, intentional infliction of emotional distress and breach of an alleged oral agreement, but left standing the two remaining causes of action, which were asserted against Doyle and Griffin and were based on the alleged negligent administration of the lie detector tests. The court also denied a cross motion by plaintiff to amend his complaint by adding a new cause of action for recovery of the 1980-1981 bonus plaintiff allegedly should have received, concluding that the claim lacked substantive merit. This decision was not fatal to plaintiff's claim, however, since plaintiff had previously commenced a second action against UPS on January 6, 1988, claiming entitlement to a bonus (action No. 2). This second action was disposed of in an order of dismissal dated October 4, 1988, which was predicated in part on the court's earlier conclusion that the claim lacked merit and in part on its determination that the claim was time barred.

On plaintiff's appeal in action No. 2, the Appellate Division affirmed, without opinion. 151 A.D.2d 1057, 544 N.Y.S.2d 264. On appeal by defendants Doyle and Griffin in action No. 1, the Appellate Division modified the trial court's order by dismissing the remaining negligence causes of action against those defendants. 151 A.D.2d 984, 544 N.Y.S.2d 250. The court held that Doyle owed no duty of care to plaintiff because he was not "part of a limited group whom Doyle should have expected to rely upon its report." 151 A.D.2d, at 985, 544 N.Y.S.2d 250. Additionally, the court held, General Business Law § 74(1)(b), which permits civil recovery for "wilful, malicious and wrongful act[s]" of licensed private investigators, does not give rise to a cause of action for negligent investigation. Following the Appellate Division's decisions, this court granted plaintiff leave to take a further appeal in both actions.

Action No. 1

Resolution of the appeal in action No. 1 requires us to decide whether a person who has been made the subject of a polygraph lie detector test may maintain a negligence action against the party who conducted the test. ^* The parties have focused on the question of whether plaintiff may maintain the action even though defendants Doyle and Griffin were retained by UPS, and both sides have made a number of arguments concerning the applicability of the line of cases represented by Ossining Union Free School Dist. v. Anderson LaRocca Anderson, 73 N.Y.2d 417, 541 N.Y.S.2d 335, 539 N.E.2d 91), Credit Alliance Corp. v. Andersen & Co., 65 N.Y.2d 536, 493 N.Y.S.2d 435, 483 N.E.2d 110, White v. Guarente, 43 N.Y.2d 356, 401 N.Y.S.2d 474, 372 N.E.2d 315, Glanzer v. Shepard, 233 N.Y. 236, 233 N.Y. 236, 135 N.E. 275 and Ultramares Corp. v. Touche, 255 N.Y. 170, 174 N.E. 441. This line of cases, however, specifically concerns the extent to which a party who has negligently misrepresented facts may be held liable to those who have relied to their detriment on the misrepresentations. The cited cases are of limited analytical utility in resolving a case such as this, where the injury arose not as a result of the injured's reliance on negligently made statements but rather as a result of the direct impact that those statements had on the injured party's business and personal life. In that regard, this case is more analogous to one in which the test subject suffered physical injury by virtue of a negligently administered test than it is to the fact pattern presented in Ossining and its predecessors (cf., People v. Hamilton, 125 A.D.2d 1000, 511 N.Y.S.2d 190 [civil damage suit on behalf of women victimized by "unnecessary touching" and unnecessary, sexually suggestive questioning by polygraph examiner].

Indeed, if plaintiff had sustained physical injury from the test rather than the less tangible reputational injury he sustained, there would be no question of his right to maintain a cause of action against the examiner, notwithstanding the absence of a relationship of privity. The problematic aspect of this case is not the absence of a contractual relationship between plaintiff and defendants, but rather the nature of the harm for which plaintiff seeks a remedy.

Injuries to an individual's personal and professional reputation such as the injuries alleged here have long been compensated through the traditional remedies for defamation. Of course, this plaintiff cannot avail himself of those remedies, since they are circumscribed by rules of qualified privilege that, in closely analogous circumstances, foreclose recovery in the absence of a showing of malice or other culpable conduct beyond the level of ordinary negligence (see, Kasachkoff v. City of New York, 68 N.Y.2d 654, 505 N.Y.S.2d 67, 496 N.E.2d 226; Sondak v. Dun & Bradstreet, 39 Misc.2d 13, 239 N.Y.S.2d 697 [applying qualified privilege to credit reporting service's activities]; Houston v. TRW Information Servs., 707 F.Supp. 689 [same]; cf., General Business Law § 74[1][b]. Plaintiff's recovery thus depends upon our willingness to recognize a new tort cause of action, or to adopt substantial modifications of the existing defamation remedies. Whether we should do so by recognizing a remedy in tort is a question that is best resolved by reference to the relevant judicial and social policy considerations.

As to the social considerations, there can be little doubt that the use and abuse of lie detector tests in the workplace is a significant matter meriting government attention. On the one hand, there is a substantial practical demand for this technology in the private employment marketplace. The use of the polygraph in private industry has increased dramatically in the past decade (see, Note, Lie Detectors in the Workplace: The Need for Civil Actions Against Employers, 101 Harv.L.Rev. 806, n 1 [hereinafter Note, Lie Detectors in the Workplace ]. By 1987, it was estimated that approximately two million lie detector tests were being administered annually (Senate Report No. 100-284, reprinted in 1988 U.S.Code, Cong. & Admin.News 726, 728 [hereinafter Senate Report].

Reasons have been advanced for curtailment or regulation of these tests. Despite their widespread use, serious questions persist about the accuracy and scientific validity of these tests (see, id., at 728-731; Note, Lie Detectors in the Workplace, op. cit., at 807-813; Scientific Validity of Polygraph Testing: A Research Review and Evaluation--A Technical Memorandum, Washington, D.C.: U.S.Cong., Office of Technology Assessment, OTA-TM-H-15, Nov. 1983, at 102). Indeed, a committee of the American Medical Association recently concluded that the polygraph is capable of providing evidence of honesty or deception by the test subject in a percentage of cases that is statistically only slightly better than pure chance (see, Senate Report, op. cit., at 728-730).

Further, the potential for substantial harm resulting from the misuse of lie detector tests has been recognized. The indiscriminate use of questionable test results can permanently tarnish the reputation of the test subject and lead to unjust loss or denial of employment (see, ...