RANDI W. v. MUROC JOINT UNIFIED SCHOOL DISTRICT
Supreme Court of California, 1997.
14 Cal.4th 1066, 929 P.2d 582, 60 Cal.Rptr.2d 263.
[Plaintiff, a 13-year-old student at the time, alleged that four school districts, former employers of Robert Gadams, placed unreservedly affirmative references in a placement file for Gadams despite knowing that prior charges or complaints of sexual misconduct and impropriety had been leveled against Gadams during the period he worked in each district; that plaintiff student’s school district (Livingston) relied on defendants’ letters in hiring Gadams as vice-principal, and that Gadams then sexually assaulted plaintiff. Although plaintiff pressed several theories, the only ones before this court are negligent misrepresentation, fraud, and negligence per se brought against the referring districts. The superior court granted demurrers on all three of these claims, but the court of appeal reversed on all three. Further facts are set forth in the course of the opinion.]
CHIN, Associate Justice.
In this case, we must decide under what circumstances courts may impose tort liability on employers who fail to use reasonable care in recommending former employees for employment without disclosing material information bearing on their fitness. . . .
. . . Although policy considerations dictate that ordinarily a recommending employer should not be held accountable to third persons for failing to disclose negative information regarding a former employee, nonetheless liability may be imposed if, as alleged here, the recommendation letter amounts to an affirmative misrepresentation presenting a foreseeable and substantial risk of physical harm to a third person.
We also conclude, contrary to the Court of Appeal judgment in this case, that defendants’ alleged failure to report the charges of Gadams’s improper activities to the appropriate authorities pursuant to state statutory law fails to afford an alternate basis for tort liability in this case, and that the trial court properly sustained defendants’ demurrers to the count in the complaint relying on this theory of liability.
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II. DISCUSSION
A. Fraud and Negligent Misrepresentation
. . .
In finding plaintiff’s complaint stated a cause of action against defendants for fraud and negligent misrepresentation, the Court of Appeal majority relied primarily on sections 310 and 311 of the Restatement Second of Torts. Section 310 involves intentional conduct and provides that
“[a]n actor who makes a misrepresentation is subject to liability to another for physical harm which results from an act done by the other or a third person in reliance upon the truth of the representation, if the actor
(a) intends his statement to induce or should realize that it is likely to induce action by the other, or a third person, which involves an unreasonable risk of physical harm to the other, and
(b) knows
(i) that the statement is false, or
(ii) that he has not the knowledge which he professes.” (Italics added.)
Section 311 of the Restatement Second of Torts, involving negligent conduct, provides that:
“(1) One who negligently gives false information to another is subject to liability for physical harm caused by action taken by the other in reasonable reliance upon such information, where such harm results
(a) to the other, or
(b) to such third persons as the actor should reasonably expect to be put in peril by the action taken.
(2) Such negligence may consist of failure to exercise reasonable care
(a) in ascertaining the accuracy of the information, or
(b) in the manner in which it is communicated.” (Italics added.)
Although ordinarily a duty of care analysis is unnecessary in determining liability for intentional misrepresentation or fraud [ ] here we consider liability to a third person injured as a result of the alleged fraud, an extension of ordinary tort liability based on fraud.[ ] Accordingly, in deciding whether to adopt the two Restatement provisions in the circumstances of this case, we consider whether plaintiff has sufficiently pleaded that defendants owed her a duty of care, that they breached that duty by making misrepresentations or giving false information, and that Livingston’s reasonable reliance on their statements proximately caused plaintiff’s injury.[ ] We examine each element separately.
1. Duty to Plaintiff
Did defendants owe plaintiff a duty of care? In defendants’ view, absent some special relationship between the parties, or some specific and known threat of harm to plaintiff, defendants had no duty of care toward her, and no obligation to disclose in their letters any facts regarding the charges against Gadams. (See Rest.2d Torts, § 315 [generally no duty to warn those threatened by third person’s conduct]; [ ]; Thompson v. County of Alameda (1980) [discussed p. ___, infra] [duty to warn “readily identifiable” victim]; Tarasoff v. Regents of University of California [supra] [“special relationship” creates duty to warn or control another’s conduct]; [ ].
Plaintiff does not argue that a special relationship existed between defendants and her or Gadams. Instead, she relies on [Garcia v. Superior Court, 789 P.2d 960 (Cal. 1990)], where we held that, under section 311 of the Restatement Second of Torts, a parole officer had a duty to exercise reasonable care in giving the victim information regarding the parolee who ultimately killed her. We noted that although the parole officer had no duty to volunteer information regarding the released criminals he supervised, “ . . . the absence of a duty to speak does not entitle one to speak falsely.”[ ] We concluded that the parole officer, “having chosen to communicate information about [the parolee] to [the victim], had a duty to use reasonable care in doing so,” and that the officer either knew or should have known that the victim’s safety might depend on the accuracy of the information imparted. [ ]
Plaintiff acknowledges that Garcia is distinguishable, and that no California case has yet held that one who intentionally or negligently provides false information to another owes a duty of care to a third person who did not receive the information and who has no special relationship with the provider. Accordingly, the issue before us is one of first impression, and we apply the general analytical principles used to determine the existence of duty in particular cases.
In this state, the general rule is that all persons have a duty to use ordinary care to prevent others from being injured as the result of their conduct. . . .
a. Foreseeability and causality
Applying these factors here, we first examine whether plaintiff’s injuries were a foreseeable result of defendants’ representations regarding Gadams’s qualifications and character, coupled with their failure to disclose to the Fresno Pacific College placement office information regarding charges or complaints of Gadams’s sexual misconduct. Could defendants reasonably have foreseen that the representations and omissions in their reference letters would result in physical injury to someone? Although the chain of causation leading from defendants’ statements and omissions to Gadams’s alleged assault on plaintiff is somewhat attenuated, we think the assault was reasonably foreseeable. Based on the facts alleged in the complaint, defendants could foresee that Livingston’s officers would read and rely on defendants’ letters in deciding to hire Gadams. Likewise, defendants could foresee that, had they not unqualifiedly recommended Gadams, Livingston would not have hired him. And, finally, defendants could foresee that Gadams, after being hired by Livingston, might molest or injure a Livingston student such as plaintiff. We must assume, for purposes of demurrer, that plaintiff was indeed injured in the manner she alleges, and that a causal connection exists between defendants’ conduct and the injury suffered. As plaintiff’s complaint alleges, her injury was a “direct and proximate result” of defendants’ fraud and misrepresentations.
b. Moral blame
Whether defendants were guilty of any moral blame would depend on the proof adduced at trial, although it is certainly arguable that their unreserved recommendations of Gadams, together with their failure to disclose facts reasonably necessary to avoid or minimize the risk of further child molestations or abuse, could be characterized as morally blameworthy.
c. Availability of insurance or alternative courses of conduct
Next, we may assume that standard business liability insurance is available to cover instances of negligent misrepresentation or nondisclosure as alleged in count three of the complaint, but is not available for the fraud or intentional misconduct alleged in count four. [ ] Perhaps more significantly, defendants had alternative courses of conduct to avoid tort liability, namely, (1) writing a “full disclosure” letter revealing all relevant facts regarding Gadams’s background, or (2) writing a “no comment” letter omitting any affirmative representations regarding Gadams’s qualifications, or merely verifying basic employment dates and details. The parties cite no case or Restatement provision suggesting that a former employer has an affirmative duty of disclosure that would preclude such a no comment letter. As we have previously indicated, liability may not be imposed for mere nondisclosure or other failure to act, at least in the absence of some special relationship not alleged here. [ ]
d. Public policy considerations
As for public policy, the law certainly recognizes a policy of preventing future harm of the kind alleged here. One of society’s highest priorities is to protect children from sexual or physical abuse. [ ]; Pen.Code, § 11166 [duty to report suspected child abuse].
Defendants urge that competing social or economic policies may disfavor the imposition of liability for misrepresentation or nondisclosure in employment references. They observe that a rule imposing liability in these situations could greatly inhibit the preparation and distribution of reference letters, to the general detriment of employers and employees alike.
We have recently stated that “[w]hen deciding whether to expand a tort duty of care, courts must consider the potential social and economic consequences. [Citations.]” [] Defendants argue that a rule imposing tort liability on writers of recommendation letters could have one very predictable consequence: employers would seldom write such letters, even in praise of exceptionally qualified employees.
In defendants’ view, rather than prepare a recommendation letter stating all “material” facts, positive and negative, an employer would be better advised to decline to write a reference letter or, at most, merely to confirm the former employee’s position, salary, and dates of employment. According to defendants, apart from the former employer’s difficulty in deciding how much “negative” information to divulge, an employer who disclosed more than minimal employment data would risk a defamation, breach of privacy, or wrongful interference suit from a rejected job seeker. (See, e.g., Jensen v. HewlettPackard Co. [18 Cal.Rptr.2d 83 (App. 1993)][libel action may be based on false accusations in employee evaluation form of criminal conduct, dishonesty, incompetence, or reprehensible personal characteristics or behavior]; [ ]).
. . .
In response, plaintiff asserts it is unlikely that employers will decline to write reference letters for fear of tort liability, at least in situations involving no foreseeable risks of physical injury to someone. Plaintiff observes that an employer would be protected from a defamation suit by the statutory qualified privilege for nonmalicious communications regarding a job applicant’s qualifications. [ ] This provision was amended in 1994 to provide that the qualified privilege available for communications to and by “interested” persons “applies to and includes a communication concerning the job performance or qualifications of an applicant for employment, based upon credible evidence, made without malice, by a current or former employer of the applicant to, and upon request of, the prospective employer.” (Civ.Code, § 47, subd. (c).) As plaintiff suggests, the existence of this privilege may encourage more open disclosure of relevant information regarding former employees. [ ] (See also [Jensen v. Hewlett Packard Co., supra] [acknowledging public policy disfavoring libel suits based on comments in employee evaluation forms].)
. . .
In light of these factors and policy considerations, we hold, consistent with Restatement Second of Torts sections 310 and 311, that the writer of a letter of recommendation owes to third persons a duty not to misrepresent the facts in describing the qualifications and character of a former employee, if making these misrepresentations would present a substantial, foreseeable risk of physical injury to the third persons. In the absence, however, of resulting physical injury, or some special relationship between the parties, the writer of a letter of recommendation should have no duty of care extending to third persons for misrepresentations made concerning former employees. In those cases, the policy favoring free and open communication with prospective employers should prevail.
Having concluded that defendants owed plaintiff a duty not to misrepresent Gadams’s qualifications or character in their letters of recommendation, we next must determine whether defendants’ letters indeed contained “misrepresentations” or “false information” within the meaning of Restatement Second of Torts sections 310 or 311. If defendants made no misrepresentations, then as a matter of law they could not be found liable under those provisions.
2. Misleading Misrepresentation or Mere Nondisclosure?
The Court of Appeal majority determined that plaintiff adequately alleged defendants committed actual misrepresentation rather than mere nondisclosure, because their letters of recommendation amounted to “misleading halftruths,” containing incomplete information regarding Gadams’s character and reliability. According to the Court of Appeal, defendants’ unqualified recommendation of Gadams, coupled with their failure to disclose that Gadams had been in “sexual situations” with female students and had made “sexual overtures” to them, or that defendants knew complaints regarding Gadams’s conduct had resulted in his resignation, amounted to affirmative misrepresentations.
Defendants join the Court of Appeal dissent in asserting that their letters of recommendation contained no misrepresentations that would invoke either Restatement Second of Torts section 310 or 311. As defendants observe, their letters neither discussed nor denied prior complaints of sexual misconduct or impropriety against Gadams.
Like the Court of Appeal majority, we view this case as a “misleading halftruths” situation in which defendants, having undertaken to provide some information regarding Gadams’s teaching credentials and character, were obliged to disclose all other facts which “materially qualify” the limited facts disclosed. [ ]; Civ.Code, § 1710, subd. 3 [deceit is the suppression of a material fact by one who gives misleading information of other facts]; [ ].
As the Court of Appeal observed, defendants’ letters offered general and unreserved praise for Gadams’s character and personality (e.g., “dependable [and] reliable,” “pleasant personality,” “high standards,” “relates well to the students”). According to the Court of Appeal, having volunteered this information, defendants were obliged to complete the picture by disclosing material facts regarding charges and complaints of Gadams’s sexual improprieties.
Defendants suggest that a letter noting only a candidate’s favorable qualities cannot reasonably be deemed misleading as to any unfavorable ones, and the recipient of such a letter cannot reasonably rely on any implication that the candidate lacks unfavorable qualities. [ ] As one commentator observes, “... half of the truth may obviously amount to a lie, if it is understood to be the whole.” [ ] (Prosser & Keeton, The Law of Torts (5th ed. 1984) [§106], italics added.) According to defendants, no reasonable person would assume a letter of recommendation purports to state the whole truth about a candidate’s background and character.
In defendants’ view, we should characterize letters of recommendation stating only the favorable aspects of an applicant’s background or character as a permissible variety of “halftruth,” which misleads no one, and which, for that reason alone, should not form the basis for liability on a theory of negligent misrepresentation or fraud. (See [] [failure of church officers to disclose pastor’s history of pedophilia not actionable in absence of affirmative representation denying that history, because “[t]he tort of negligent misrepresentation requires a ‘positive assertion’ and does not apply to implied misrepresentations”]; [ ] [county officers’ failure to notify former district attorney of threats posed by vindictive probationer not actionable despite implied representation to warn]; [ ] [auto club tourbook endorsing motel’s accommodations contained no “positive assertion concerning neighborhood safety,” precluding negligent misrepresentation suit]; [ ] [failure to disclose sexual misconduct charges against former employee/teacher not actionable because “[t]he mere recommendation of a person for potential employment is not a proper basis for asserting a claim of negligence where another party is responsible for the actual hiring”]; [ ]; cf.[ ] [liability of employment agency based on positive misrepresentation that job seeker’s innocent explanation for his rape conviction “had been verified by military officials”].)
But plaintiff argues convincingly that, under the facts pleaded in this case, defendants indeed made “positive assertion[s]” regarding Gadams’s character, assertions deceptively incomplete because defendants knowingly concealed material facts regarding Gadams’s sexual misconduct with students. Thus, defendant Mendota, through its officer Rossette, allegedly extolled Gadams’s “genuine concern” for and “outstanding rapport” with students, knowing that Gadams had engaged in inappropriate physical contact with them. Rossette declared in the letter that he “wouldn’t hesitate to recommend Mr. Gadams for any position!”
Defendant Golden Plains, through its officer Cole, stated it would recommend Gadams for “any administrative position,” despite its knowledge of Gadams’s prior inappropriate conduct while an employee of Golden Plains, conduct that had allegedly led to Gadams’s “resigning under pressure from Golden Plains due to sexual misconduct charges. . . .”
Finally, defendant Muroc, through its officers Rice and Malcolm, allegedly recommended Gadams “for an assistant principalship or equivalent position without reservation,” describing Gadams as “an upbeat, enthusiastic administrator who relates well to the students,” despite its knowledge of disciplinary actions taken against him regarding sexual harassment allegations made during his employment with Muroc, allegations that induced Muroc to force Gadams to resign.
We conclude that these letters, essentially recommending Gadams for any position without reservation or qualification, constituted affirmative representations that strongly implied Gadams was fit to interact appropriately and safely with female students. These representations were false and misleading in light of defendants’ alleged knowledge of charges of Gadams’s repeated sexual improprieties. We also conclude that plaintiff’s complaint adequately alleged misleading halftruths that could invoke an exception to the general rule excluding liability for mere nondisclosure or other failure to act. [ ]
3. Reliance
[The court concluded that the allegations of Livingston’s reliance were sufficient under both § 310 and § 311. The court also concluded that sufficient causal connection was alleged between the misrepresentation and the harm.