McConnell v. Dep't of Labor

• Citation: 814 S.E.2d 790
• Decision Date: 11 May 2018
• Docket Number: A16A0655
• Parties: MCCONNELL et al. v. DEPARTMENT OF LABOR.
• Court: United States Court of Appeals (Georgia)

345 Ga.App. 669

814 S.E.2d 790

MCCONNELL et al.

v.DEPARTMENT OF LABOR.

A16A0655

Court of Appeals of Georgia.

May 11, 2018

Jefferson Madden Allen, Scott Alan Schweber, for Appellant.

Christopher Michael Carr, Samuel S. Olens, Kirsten Searle Daughdril, Atlanta, Angela Ellen Cusimano, for Appellee.

Ellington, Presiding Judge.

Thomas McConnell filed this class action against the Georgia Department of Labor, alleging several tort claims in connection with the Department’s disclosure of personal information of McConnell and the proposed class members. After a hearing, the Superior Court of Cobb County granted the Department’s motion to dismiss McConnell’s complaint for failure to state a claim upon which relief can be granted. McConnell appealed, and, in McConnell v. Ga. Dept. of Labor , 337 Ga. App. 457, 787 S.E.2d 794 (2016), we affirmed. The Supreme Court of Georgia granted a writ of certiorari to consider, inter alia, whether this Court erred "in not addressing the trial court’s holding that McConnell’s tort claims were barred by sovereign immunity, which is a jurisdictional issue, before addressing the merits of those claims."¹ The Supreme Court held that we did err in this manner, vacated our decision, and remanded with direction that we "make the threshold determination of whether the trial court erred in its holding that McConnell’s claims are barred by sovereign immunity." McConnell v. Ga. Dept. of Labor , 302 Ga. 18, 805 S.E.2d 79 (2017). For the reasons explained below in Division 1, we conclude that the trial court did err in so holding and reverse the judgment in relevant part. Because the trial court did not err in dismissing McConnell’s complaint on the basis that it fails to state a claim upon which relief can be granted, as explained below in Divisions 2 through 4, we affirm the judgment in part in this regard.

In his complaint, McConnell alleges that a Department employee, while acting within the scope of his official duties or employment, sent an email to approximately 1,000 Georgians who had applied for unemployment benefits or other services administered by the Department. The email included a spreadsheet that listed the name, social security number, home phone number, email address, and age of over 4,000 Georgians who had registered for Department services, including McConnell.² McConnell alleges that the employee’s conduct constituted the torts of negligently disclosing "personal information" as defined under Georgia law, breach of fiduciary duty, and invasion of privacy (public disclosure of private facts). McConnell seeks economic damages, specifically, out-of-pocket costs related to credit monitoring and identity protection services and damages resulting from the adverse impact to his credit score from the closing of accounts. In addition, he seeks damages for the "fear, upset, anxiety and injury to peace and happiness related to the disclosure of [his] personal identifying information, as the disclosure of personal identifying information had provided all the raw material necessary to facilitate the theft of [his identity] and unauthorized charges upon [his] credit or bank accounts." He does not allege that an act of identity theft has yet occurred.

1. McConnell contends that the trial court erred in holding that the state has not waived its sovereign immunity pursuant to the Georgia Tort Claims Act, OCGA §§ 50–21–20 through 50–21–37, for the type of losses that he alleges in his claims.³

With regard to tort claims against the state, the General Assembly adopted the Act for the express purpose of "balanc[ing] strict application of the doctrine of sovereign immunity," which, in its breadth,⁴ "may produce inherently unfair and inequitable results, against the need for limited exposure of the state treasury to tort liability." (Citation and punctuation omitted.) Bd. of Regents of Univ. Sys. of Ga. v. Myers , 295 Ga. 843, 845, 764 S.E.2d 543 (2014).⁵ Under the Act, the state waives its sovereign immunity with respect to actions brought in Georgia courts "for the torts of state officers and employees while acting within the scope of their official duties or employment and shall be liable for such torts in the same manner as a private individual or entity would be liable under like circumstances[,]" subject to exceptions and limitations set forth in the Act. OCGA § 50–21–23 (a). A "claim" under the Act is defined as "any demand against the State of Georgia for money only on account of loss caused by the tort of any state officer or employee committed while acting within the scope of his or her official duties or employment." OCGA § 50–21–22 (1). OCGA § 50–21–22 (3) provides: " ‘Loss’ means personal injury; disease; death; damage to tangible property, including lost wages and economic loss to the person who suffered the injury, disease, or death; pain and suffering; mental anguish; and any other element of actual damages recoverable in actions for negligence."

"Because sovereign immunity is not an affirmative defense, but rather a privilege that is subject to waiver by the State, the party seeking to benefit from that waiver has the burden of establishing the waiver of sovereign immunity." (Citations and footnote omitted.) Williams v. Ga. Dept. of Corrections , 338 Ga. App. 719, 720 (1), 791 S.E.2d 606 (2016). "We review de novo a trial court’s denial of a motion to dismiss based on sovereign immunity grounds, which is a matter of law." (Citation and punctuation omitted.) Ga. Dept. of Transp. v. King , 341 Ga. App. 102, 103, 798 S.E.2d 492 (2017).

(a) Economic damages/financial harm . With regard to McConnell’s alleged economic damages, the Department argues that sovereign immunity is waived under the Act only for a "loss" as that term is defined in the Act and that McConnell has not suffered such a loss. Specifically, the Department argues, based on the definition of "loss" in OCGA § 50–21–22 (3), that the Act "expressly limits the recovery of economic damages to a plaintiff who has also suffered a personal injury, disease, death." Because McConnell alleges that he suffered economic damages as a result of the Department’s email disclosure, but does not allege that the email disclosure "caused him to suffer a disease, death, or injury to his person[,]" the Department contends, McConnell cannot recover economic losses under the Act.

The Department’s strained reading of OCGA § 50–21–22 (3) cannot be supported because the subsection, after giving specific examples of injuries that are actionable, expansively adds "any other element of actual damages recoverable in actions for negligence." In Dept. of Transp. v. Montgomery Tank Lines, Inc. , 276 Ga. 105, 575 S.E.2d 487 (2003), the Supreme Court of Georgia considered the effect of that "broad last clause in § 50–21–22 (3)" and rejected the agency’s proposed narrow reading. Id. at 107–108 (1), 575 S.E.2d 487. The Supreme Court found that, notwithstanding that the losses specifically listed (personal injury; disease; death; damage to tangible property; pain and suffering; and mental anguish) are all so-called "first-party losses," the "term of enlargement" (that is, the phrase "any other element of actual damages recoverable in actions for negligence") is "specific and unambiguous and requires a broader meaning than that attributed to it" by the agency. Id. at 107 (1), 575 S.E.2d 487. The Supreme Court explained: "[c]learly, an action for contribution and indemnification is an action for negligence, and the damages that the contribution plaintiffs seek to recover are unquestionably an element of actual damages[.]" Id. at 107 (1), 575 S.E.2d 487. The Supreme Court found that the concluding phrase of the "loss" definition means that sovereign immunity is not waived only for a person who directly suffers the personal injury, disease, death, or other loss but is broad enough to include claims for contribution and indemnification. Id. at 108 (1), 575 S.E.2d 487. Furthermore, the Supreme Court concluded, the fact that the waiver of sovereign immunity is subject to specific "exceptions" set forth in OCGA § 50–21–24, and that contribution and indemnity actions are not listed as exceptions, "further buttresses the conclusion that such actions against the State are not categorically precluded by the [Act]." Id.

Similarly, we conclude in this case that the catch-all phrase, "any other element of actual damages recoverable in actions for negligence," requires a broader meaning than that attributed to it by the Department. See Dept. of Transp. v. Montgomery Tank Lines, Inc. , 276 Ga. at 107–108 (1), 575 S.E.2d 487. The General Assembly certainly could have modified "any other element of actual damages recoverable in actions for negligence" with "sustained by a person who suffered injury, disease, or death" if it had intended to limit the final phrase in this way.⁶ Based on the express terms of OCGA § 50–21–22 (3) and the cases cited herein, we conclude that losses under the Act may include economic losses suffered by a plaintiff who has not also suffered a personal injury, disease, or death.

In a related vein, the Department contends that any time, effort, and money that McConnell allegedly spent monitoring his credit is not an actual injury that is recoverable in negligence cases. Acknowledging that Georgia courts have not addressed whether obtaining credit monitoring services after the disclosure of confidential information constitutes a cognizable injury, the Department contends that courts in other jurisdictions have rejected such claims. In addition, the Department contends that McConnell cannot recover for an increased risk of future identity theft because such risk does not constitute an element of actual damages that is recoverable under Georgia law.⁷ Because McConnell alleged damages resulting in part from the adverse impact to his credit score from the closing of accounts, we cannot say that he seeks compensation only for credit-monitoring expenses or the risk of ...