Farmers Insurance Group v. County of Santa Clara

In Farmers Insurance Group v. County of Santa Clara (1995) 11 Cal.4th 992, the California Supreme Court considered whether a public entity had a duty under Government Code section 825.2 to indemnify one of its deputy sheriffs who had settled sexual harassment claims brought by other deputy sheriffs. The court began its analysis by reviewing general principles relating to the scope of employment, stating: "An employer is liable for risks arising out of employment. A risk arises out of the employment when in the context of the particular enterprise an employee's conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer's business. In other words, where the question is one of vicarious liability, the inquiry should be whether the risk was one that may fairly be regarded as typical of or broadly incidental to the enterprise undertaken by the employer. Accordingly, the employer's liability extends beyond his actual or possible control of the employee to include risks inherent in or created by the enterprise." (Id. at pp. 1003-1004.) While acknowledging that courts have broadly interpreted the scope of employment under the doctrine of respondeat superior, the Farmers court stressed that an employer is not strictly liable for all of its employees' actions while they are working. (Id. at pp. 1004-1005.) Thus, if an employee "substantially deviates from the employment duties for personal purposes," the employer is not vicariously liable for the employee's tortious conduct. (Id. at p. 1005.) To illustrate this point, the court referred to case law, which established that an employee, who is not an on-duty police officer, is not acting within the scope of his employment for respondeat superior purposes where the employee sexually assaults a third party. (Id. at pp. 1006-1007.) In those cases involving sexual misconduct, the Farmers court explained that the imposition of vicarious liability was rejected, because "the acts had been undertaken solely for the employees' personal gratification and had no purpose connected to the employment. Moreover, the acts had not been engendered by events or conditions relating to any employment duties or tasks; nor had they been necessary to the employees' comfort, convenience, health, or welfare while at work." (Id. at p. 1007.) Thus, the Farmers court held that a deputy sheriff's requests for sexual favors and inappropriate touchings fell outside the scope of his employment, and his employer was not required to indemnify him or his insurer. (Id. at p. 1007-1008.) The Farmers court also considered whether imposition of vicarious liability would facilitate public policy reasons for the doctrine of respondeat superior. The court explained that the first reason, prevention of the tortious conduct, "plays little role in the allocation of responsibility for the sexual misconduct of employees generally." (Id. at pp. 1014.) The court reasoned that since the county was legally required to prevent the sexual harassment of employees, and could be directly liable for such harassment, imposition of vicarious liability would not create a greater incentive for the county to prevent harassment. (Id. at pp. 1014-1015.) Moreover, the court found that "deterrence objectives are better served by denying sexual harassers the right to indemnity than by insulating them from financial responsibility for their own misconduct." (Id. at p. 1015.) Thus, the court concluded that a finding that the deputy's conduct was within the scope of his employment would not have a deterrent effect. Turning to the second reason, to ensure compensation for victims, the Farmers court noted that victims of sexual harassment may secure compensation from public entities in many situations. (Id. at p. 1016.) In those situations where the public entity was not directly liable to the victim, imposition of liability would make it even more difficult for such entities to obtain insurance, and could lead to the diversion of funds from the provision of services to cover claims. (Ibid.) Thus, the court concluded that the second reason was, at best, neutral to its determination. (Ibid.) The Farmers court also rejected the third reason, that is, that "the victim's losses will be equitably borne by those who benefit from the enterprise that gave rise to the injury." (Farmers at p. 1016.) The court found that the connection between the deputy's duties and his harassment of his coworkers was "'simply too attenuated' to be deemed as falling within the range of risks allocable to the community." (Id. at p. 1017.) Thus, the court concluded that the policy reasons for the doctrine of respondeat superior reinforced their finding that the deputy's sexual harassment was not within the scope of his employment.