Modern day vicarious liability cases often address the liability of enterprises and institutions where agents have committed intentional acts. Increasingly, when corporations or employers are sued, the line is blurred between the principal’s vicarious liability and its own direct liability.
From an economic deterrence perspective, the imposition of strict vicarious liability induces employers to adopt cost-justified preventative measures, including selective hiring and more stringent supervision and discipline, and truncating the scope of their business activities. Negligence-based direct liability likewise induces employers to adopt cost-justified preventative measures (without constraining activity levels to the degree that strict liability does). This raises two questions: why doesn’t direct employer negligence liability suffice, in terms of deterring employees’ intentional torts? And conversely, so long as there is strict vicarious liability is there any need for direct liability at all?
I argue that strict vicarious liability will have an edge over direct employer negligence liability to the extent that there is a significant risk of under-detection of the failures of an employer’s preventative measures. Traces of this under-detection rationale for vicarious liability can be found in the academic literature and court decisions, but it warrants more attention. It has the potential to serve as a coherent framework for some of the modern doctrinal debates, including whether punitive damages should be imposed either vicariously or directly upon employers.
Catherine Sharkey is the Crystal Eastman Professor of Law at New York University. She is a leading authority on the economic loss rule, punitive damages, and federal preemption. She has published dozens of articles in the fields of torts, products liability, and administrative law. Sharkey is co-author with Richard Epstein of Cases and Materials on Torts (11th ed. 2016). She is a founding member of the World Tort Law Society and an elected member of the American Law Institute. Sharkey is also an appointed public member of the Administrative Conference of the United States, an adviser to the Restatement Third, Torts: Liability for Economic Harm, and a 2011-12 Guggenheim Fellow.