AMERICAN GENERAL LIFE & ACCIDENT INSURANCE COMPANY V. SHARON HALL
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RENDERED: MARCH 21,2002
TO BE PUBLISHED
A
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1999-SC-1033-DG
AMERICAN GENERAL LIFE &ACCIDENT
INSURANCE COMPANY
ON REVIEW FROM COURT OF APPEALS
1997-CA-2809
PERRY CIRCUIT COURT NO. 94-Cl-386
V.
APPELLEE
SHARON HALL
OPINION OF THE COURT BY JUSTICE COOPER
REVERSING
Appellee Sharon Hall brought this action in the Perry Circuit Court against her
employer, American General Life & Accident Insurance Company, and her supervisor,
James Robert Lyons, seeking “damages for mental and emotional injuries inflicted by
sexually discriminatory practices, including emotional and psychological distress,
humiliation, and personal indignity, pursuant to KRS 344, et. seq.” The Perry Circuit
Court ultimately entered summary judgments in favor of both defendants, and Hall
appealed. The Court of Appeals affirmed as to Lyons’ and reversed and remanded as
’ No further review has been sought with respect to the dismissal of Hall’s claim
against Lyons.
to American General. We granted American General’s motion for discretionary review
and now reverse the Court of Appeals and reinstate the judgment of the trial court.
Hall was one of five life insurance agents employed in American General’s
Hazard, Kentucky, office. From January 1992 through July 1993, Lyons was the office
manager and Hall’s immediate supervisor. Hall claims that during that period, Lyons
subjected her daily to unwelcome, sexually explicit comments about their respective
body parts, his sex life, and his sexual fantasies about her; that he occasionally
“brushed” against her breasts as he walked past her in the office; and that, in July
1993, he called her into his office and exposed his genitalia to her.* Shortly thereafter,
Hall terminated her employment and sought treatment for psychological injuries,
including sleeping and eating disorders, depression, uncontrollable crying, suicidal
thoughts, auditory hallucinations, and panic attacks.
Hall filed this action on August 24, 1994. Count I of the complaint alleges that
Lyons’s sexual harassment was intentional and constituted sexually discriminatory
conduct that “had a substantial detrimental affect on Plaintiffs employment and
psychological well-being,” specifically causing her “to suffer humiliation, indignity, injury
to her feelings, emotional and psychological distress with physical manifestations, and
past and future lost wages.” Count I also alleges that American General had notice of
Lyons’s actions, both because Hall personally notified American General’s district
manager of such and because Lyons’s harassment was “pervasive and obvious,” and
that American General failed to investigate or take remedial action. Thus, Count I
* Hall also claimed that Lyons stalked her outside the office, but that assertion
was relevant only to her individual claim against Lyons, not to her hostile work
environment claim against American General.
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contained the allegations necessary to state a cause of action for a statutory civil rights
violation under KRS 344.010(5), KRS 344.020(1)(b), KRS 344.040(2) and KRS
344.450. See Meyers v. Chapman Printina Co., Inc., Ky., 840 S.W.2d 814, 820-21
(1992) citing Meritor Savings Bank. FSB v. Vinson, 477 U.S. 57, 65-67, 106 S.Ct.
2399, 2404-06, 91 L.Ed.2d 49 (1986).
Count II of the complaint alleged that American General “ratified, sanctioned and
condoned [Lyons’s] conduct and served to conceal this conduct from proper address.”
Count II also alleged that American General did not have any procedures in place for
reviewing complaints of sexual harassment or alerting employees that sexual
harassment would not be tolerated. Hall subsequently admitted in her deposition that
American General did have such policies and procedures in place and that she was
aware of them even before Lyons became her supervisor. Count III of the complaint
stated a cause of action against both Lyons and American General for intentional
infliction of emotional distress, the so-called “tort of outrage.” Craft v. Rice, Ky., 671
S.W.2d 247, 251 (1984).
On October 14, 1994, Hall filed an application for workers’ compensation
benefits against American General claiming a work-related disability, specifically,
“[plsychological problems resulting from sexual harassment by immediate supervisor.”
Pursuant to an opinion and award rendered April 29, 1996, Hall was awarded 38 weeks
of temporary total disability benefits at $415.94 per week ($15,805.72) and 425 weeks
of permanent partial disability benefits at $155.98 per week ($66,291.50). The
administrative law judge’s opinion clearly shows that Hall’s workers’ compensation claim
was premised upon the same sexual harassment and resultant psychological injuries
that are the gravamen of her statutory civil rights claim.
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She left her employment in August of 1993 claiming that she had been
sexually harassed for one and one-half years by the defendant-employer
and had resultant psychiatric disabilities. The plaintiff has not worked
since.
. . .
Plaintiff has alleged various allegations involving sexual
discrimination against James Robert Lyons, who was primarily her
supervisor for the defendant-employer. The remarks began in the
summer of 1991 [when Lyons and Hall were co-workers in American
General’s Paintsville office] and culminated in July of 1993. Those
remarks and actions are summarized in Exhibit F to plaintiff’s deposition
and the Administrative Law Judge sees no purpose in restating them
herein. The plaintiff described panic attacks beginning in the spring of
1993 and stated that she heard voices. She also suffered from
nightmares, numbness in her face and hands, nausea and crying
spells. . . . The plaintiff stated that she has depression, panic attacks,
suicidal thoughts, and continues to hear voices.
The award was affirmed by the workers’ compensation board on August 23,
1996, and no further review was sought. On October 24, 1996, American General
(which is self-insured) paid Hall $38,686.00,
representing accrued benefits and interest
on the award through October 11, 1996.
KRS 342.690(l) provides that a claim for workers’ compensation benefits is
“exclusive and in place of all other liability of such employer to the employee . . . .‘I KRS
342.610(4) creates an exception to the “exclusive remedy” rule if the employee is
injured through the deliberate intention of the employer.
. . . If injury or death results to an employee through the deliberate
intention of his employer to produce such injury or death, the employee or
his dependents may take under this chapter, or in lieu thereof, have a
cause of action at law against the employer as if this chapter had not
been passed, for such damage so sustained by the employee, his
dependents or personal representatives as is recoverable at law. If a suit
is brought under this subsection, all right to compensation under this
chapter shall thereby be waived as to all persons. If a claim is made for
the payment of compensation or any other benefit provided by this
chapter, all rights to sue the employer for damages on account of such
injury or death shall be waived as to all persons.
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In Zurich American insurance Co. v. Brierly, KY., 936 S.W.2d 561 (1997), we
held that the statute means what it says:
This section of the statute gives the injured employee or the
dependent or personal representative of a deceased employee an
election as to the [forum] in which to proceed. It does not afford an
opportunity to proceed in both [forums] and elect the judgment or award
that is most beneficial.
Id. at 562. Thus, having accepted payment of benefits under KRS Chapter 342, Hall is
now precluded from suing her employer in circuit court for the same injuries and
disabilities. Borman v. Interlake. Inc., Ky. App., 623 S.W.2d
912, 913 (1981); cf.
Preston v. Elm Hill Meats. Inc., Ky., 420 S.W.2d 396 (1967) (interpreting an identical
waiver provision in former KRS 342.170).
The Court of Appeals believed that our decisions in Mevers v. Chapman Printing
Co.. supra, and Hardaway Manaoement Co. v. Southerland, Ky., 977 S.W.2d 910
(1998), hold otherwise. In both of those cases, we held that the “exclusive remedy”
provision of KRS 342.690(l) did not, itself, preclude a civil action for discrimination
brought under the Kentucky Civil Rights Act, KRS 344.450, (Meyers), or the Kentucky
Equal Opportunities Act (KEOC), KRS 207.260, (Hardaway).
[T]he workers’ compensation statute preempts only common law tort
claims and does not preempt a statutory civil rights claim. This Court
must presume that the General Assembly knew of the Workers’
Compensation Law preemption doctrine when it created a private cause
of action for “actual damages” caused by discrimination in the Kentucky
Civil Rights Act, and that it intended to create an independent cause of
action notwithstanding that the two statutes might provide alternative
sources of statutory relief in those cases where the mental emotional
injury inflicted causes work-related occupational disability.
I n
Meyers, supra,e at 819; eseer also Hardaway, supra, at e v
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plaintiff had neither sought nor received workers’ compensation benefits, and Meyers
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specifically noted that rules relating to the election of remedies might require a different
conclusion.
There are general rules relating to the election of remedies which
might preclude an employee from recovering under the Civil Rights Act for
the same injurv if previouslv compensated under the Workers’
Compensation Law, but that is not the case here.
Meyers. supra, at 819 (emphasis added). And although the plaintiff in Hardaway had
sought and received workers’ compensation benefits, those benefits were not awarded
for the same injury that was the subject of the KEOC action. The workers’
compensation claim was for a work-related back injury, whereas the KEOC action was
for wrongful discharge from employment motivated by disability discrimination. Here,
both Hall’s workers’ compensation claim and her civil rights claim are premised upon
the same injury and the same resulting damages.
Hall asserts that KRS 342.610(4) does not apply to her cause of action because
the statutory waiver applies only to intentional injuries and her claim against American
General is premised upon negligence. This assertion is belied not only by the
allegations in the complaint, itself, but also by the very nature of a hostile work
environment sexual harassment claim. We have consistently interpreted KRS 344.040
in consonance with Title VII of the Federal Civil Rights Act of 1964. Bank One,
Kentuckv. N.A. v. Murphy, Ky., 52 S.W.3d 540, 544 (2001); Ammerman v. Bd. of Ed. of
Nicholas Countv, Ky., 30 S.W.3d 793, 797 (2000); Meyers v. Chapman Printing Co.,
supra, at 821. In Burlinaton Industries Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 141
L.Ed.2d 633 (1998) the United States Supreme Court noted that “[slexual harassment
under Title VII presupposes intentional conduct.” Id. at 756, 118 S.Ct. 2266. In Ellerth,
the Supreme Court held that with respect to a “hostile work environment” claim, i.e.,
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sexual harassment where no job action is threatened or taken (as opposed to a “quid
pro quo” claim, where job action is offered, threatened or taken as a quid pro quo for a
response to sexual advances), the vicarious liability of the employer is premised not on
the employer’s negligence but on the fact that the agent was aided in accomplishing the
sexual harassment by the existence of the agency relationship. Id. at 758, 118 S.Ct. at
2267, citing Restatement (Second) of the Law of Agency, § 219(2)(d) (A.L.I. 1957). In
the companion case of Faraaher v. Citv of Boca Raton, 524 U.S. 775, 118 S.Ct. 2275,
141 L.Ed.2d 662 (1998) the Court referred to this same principle as “vicarious liability
for misuse of supervisory authority.” &. at 804-08, 118 S.Ct. at 2291-92. Both Ellerth
and Faraaher held that “[a]n employer is subject to vicarious liability to a victimized
employee for an actionable hostile environment created by a supervisor with immediate
(or successively higher) authority over the employee,” subject to an affirmative defense
that “(a) the employer exercised reasonable care to prevent and correct promptly any
sexually harassing behavior, and (b) the plaintiff employee unreasonably failed to take
advantage of any preventive or corrective opportunities provided by the employer or to
avoid harm otherwise.” Ellerth, supra, at 765, 118 S.Ct. at 2270; Faragher, supra, at
807, 118 S.Ct. at 2293. In Bank One, Kentucky, N.A. v. Murphy, supra, we applied this
same principle to actions brought under KRS 344.450. “[T]he EllerthlFaragher
affirmative defense is available to employers facing vicarious liability for sexual
harassment under KRS 344.040.” 52 S.W.3d
at 544.
However, it is not the Ellerth/Faraaher affirmative defense that is at issue in this
case but whether a hostile work environment claim is an action in intentional tort, and
what Ellerth, Faraaher, and Murphy all hold is that an employer is vicariously liable for
intentional acts of sexual harassment by its supervisor, subject only to proof of the
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affirmative defense. Vicarious liability, sometimes referred to as the doctrine of
respondeat superior, is not predicated upon a tortious act of the employer but upon the
imputation to the employer of a tortious act of the employee “by considerations of public
policy and the necessity for holding a responsible person liable for the acts done by
others in the prosecution of his business, as well as for placing on employers an
incentive to hire only careful employees.” Johnson v. Brewer, 266 Ky. 314,98 S.W.2d
889, 891 (1936). Ordinarily, an employer is not vicariously liable for an intentional tort
of an employee not actuated by a purpose to serve the employer but motivated, as
here, solely by a desire to satisfy the employee’s own sexual proclivities. See Ellerth
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supra, at 756, 118 S.Ct. at 2266. Ellerth, Faraaher and Murphy recognize an exception
to this rule with respect to statutory civil rights actions. Thus, Hall is seeking in this
action to impute to American General liability for Lyons’s intentional tort of sexual
harassment.
Having previously elected to pursue and collect her workers’
compensation remedy, she is deemed by KRS 342.610(4) to have waived her right to
pursue this civil action for damages.
Finally, Hall asserts that, for public policy reasons, the statutory waiver provision
in KRS 342.610(4) should not preclude a statutory civil rights claim, citing Alexander v.
Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). In Alexander,
the employer claimed that a contractual provision in the union’s collective bargaining
agreement mandating arbitration of employment grievances precluded the employee’s
Title VII claim that he was wrongfully discharged from his employment because of racial
discrimination. Noting that the agreement was negotiated and signed, not by the
offended employee, but only by representatives of his labor union, and that the
grievance procedure purported only to resolve disputes with respect to collective
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contractual rights and not individual statutory rights, the Court held that the employee’s
Title VII claim was not waived by the arbitration provision in the collective bargaining
agreement. Id. at 51-52, 94 SCt. at 1021. Alexander, however, did not hold that an
employee, him/herself, cannot waive his/her own individual statutory rights. In Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) it
was held that an arbitration agreement signed by the employee, himself, that
specifically required arbitration of any controversy arising out of the termination of his
employment precluded a wrongful discharge claim brought under the Age
Discrimination in Employment Act of 1967 (ADEA). Federal Courts of Appeals have
subsequently extended Gilmer to Title VII claims, specifically holding that sexual
harassment claims can be precluded by a knowing waiver by the offended employee.
l&, Haskins v. Prudential Ins. Co. of America, 230 F.3d 231, 236 (6th Cir. 2000), cert.
denied, 531 U.S. 1113 (2001); Prudential Ins. Co. of America v. Lai, 42 F.3d 1299 (9th
Cir. 1994), cert. denied, 516 U.S. 812 (1995).
We have repeatedly held that both constitutional and statutory rights inuring to
the benefit of a criminal defendant are subject to a knowing and voluntary waiver. !&,
Myers v. Commonwealth, Ky., 42 S.W.3d 594 (2001) (waiver of KRS 532.1 IO(l)(c)
limitation on a maximum aggregate sentence); Malone v. Commonwealth, Ky., 30
S.W.3d 180 (2000) (waiver of Ky. Const. § 12 right to be prosecuted only by an
indictment); Commonwealth, KY., 942 S.W.2d
289 (1997) (waiver of KRS
533.020(4) limitation on a period of probation). We know of no reason why the same
principle should not apply to the statutory right of an employee to sue his/her employer
for a civil rights violation. As in Zurich American Insurance Co. v. Brierly. supra, “[t]he
present case involves a clear choice on the part of the claimant,” id. at 563, to elect and
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accept the benefits of her workers compensation remedy and thereby waive her right to
pursue a civil action for damages. KRS 342.61 O(4).
Accordingly, we reverse the Court of Appeals and reinstate the judgment of the
Perry Circuit Court.
Graves, Johnstone and Wintersheimer, JJ., concur. Lambert, C.J., dissents by
separate opinion, with Keller, J., joining that dissenting opinion. Stumbo, J., not sitting.
COUNSEL FOR APPELLANT:
George J. Miller
Richard C. Ward
Penny R. Warren
Wyatt, Tarrant & Combs
1700 Lexington Financial Center
250 West Main Street
Lexington, KY 40507
COUNSEL FOR APPELLEE:
James J. Barrett, III
Pillersdorf, DeRossett & Barrett
18 West Court Street
Prestonsburg, KY 41653
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RENDERED: MARCH 21,2002
TO BE PUBLISHED
1999-SC-1033-DG
AMERICAN GENERAL LIFE 81 ACCIDENT
INSURANCE COMPANY
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1997-CA-2809
PERRY CIRCUIT COURT NO. 94-Cl-386
V.
SHARON HALL
APPELLEE
DISSENTING OPINION BY CHIEF JUSTICE LAMBERT
I respectfully disagree with the majority’s conclusion that Appellee waived
her right to sue under the Kentucky Civil Rights Act, KRS 344 et seq. The
compensation that Appellee received under the Workers’ Compensation Act was for the
replacement of her diminished power to earn money. It did not compensate her for
damages sustained under the civil rights statute.
The Court of Appeals concluded that Appellee’s “claims under the civil
rights statute are not barred by her acceptance of a worker’s compensation award.”
This conclusion was based on Meyers v. Chaoman Printina Co.’ and Hardaway
Manaaement Co. v. Southerland* and language in those cases as follows
the workers’ compensation statute preempts only common
law tort claims and does not preempt a statutory civil rights
claim. This Court must presume that the General Assembly
knew of the Workers’ Compensation Law preemption
doctrine when it created a private cause of action for ‘actual
damages’ caused by discrimination in the Kentucky Civil
Rights Act, and that it intended to create an independent
cause of action notwithstanding that the two statutes might
provide alternative sources of statutory relief in those cases
where the mental emotional injury inflicted causes workrelated occupational disabilitys3
In Gardinella v. General Electric CO.,~ the plaintiff sought workers’
compensation benefits. The plaintiff and G.E. settled the claim and a release was given
for injuries arising out of plaintiff’s employment with G.E. The plaintiff then attempted to
sue under the Kentucky Civil Rights Act for discrimination, seeking compensation for
lost wages, humiliation, mental and emotional distress. The U.S. District Court cited
Meyers. supra, for the proposition that KRS 342.690 does not preclude claims under
the Kentucky Civil Rights Act, “which provides a specific and independent cause of
action to remedy employment discrimination.“5 Rejecting the view that workers’
compensation benefits preclude recovery under civil rights law, the Court said “the
settlement agreement compensated Gardinella only for physical injuries to his right
’ Ky., 840 S.W.2d 814 (1992).
* Ky., 977 S.W.2d 910 (1998).
3 Hall v. Lyons, Ky.App., 1997-CA-002809-MR, slip op. at 4 (Oct. 8, 1999)
(quoting Hardaway, 977 S.W.2d at 917).
4 833 F.Supp.
617 (W.D. Ky. 1993).
51d at 619.
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thumb and wrist. He does not seek compensation for those injuries in this action.“’ The
court held that the settlement only prevented claims brought under the Workers
Compensation Act.
The doctrine of election of remedies provides that “when a person has at
his disposal two modes of redress, which are contradictory and inconsistent with each
other, his deliberate and settled choice and pursuit of one will preclude his later choice
and pursuit of the other. ‘I7 In McNeal v. Armour,’ the plaintiff was permitted to sue under
the Kentucky Civil Rights Act and a collective bargaining agreement. The Court of
Appeals of Kentucky reasoned that
The United States Supreme Court has held that notions of
‘election of remedies’ are not applicable in civil rights
litigation when persons choose to enforce their contractual
rights as well as their statutory civil rights. Contractual rights
are not displaced merely because a statutory right against
discrimination has been provided, both rights are
independent in their origin.
In Alexander v. Gardner-Denver CO.,~ the Supreme Court of the United States held that
a party seeking to vindicate contract rights under a collective bargaining agreement was
not precluded from asserting independent statutory rights under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000(e) et seq.
That doctrine [of election of remedies], which refers to
situations where an individual pursues remedies that are
legally or factually inconsistent, has no application in the
present context. In submitting his grievance to arbitration, an
employee seeks to vindicate his contractual right under a
7 Collinas v. Scheen, Ky., 415 S.W.2d 598, 591 (1967).
a Ky.App., 660 S.W.2d 957 (1983).
’ 415 U.S. 36, 94 S.Ct. 1011, 39 L. Ed. 2d 147 (1974).
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collective-bargaining agreement. By contrast, in filing a
lawsuit under Title VII, an employee asserts independent
statutory rights accorded by Congress. The distinctly
separate nature of these contractual and statutory rights is
not vitiated merely because both were violated as a result of
the same factual occurrence. And certainly no inconsistency
results from permitting both rights to be enforced in their
respectively appropriate forums.‘o
In the present case, election of remedies is inapplicable. The remedies
sought are not legally or factually inconsistent. Appellee’s workers compensation award
paid for lost wages and work related injuries. Her civil rights claim was for emotional
illnesses resulting from the sexual harassment inflicted on her. Although the separate
injuries arose from the same conduct, the remedies are not inconsistent.
For the foregoing reasons, I would affirm the Court of Appeals.
Keller, J., joins this dissenting opinion.
lo @. at 49-50 (footnote omitted).
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