The South Dakota Supreme Court recently had a case of first impression regarding employer vicarious liability.[1] An employee and the plaintiff were in a car accident while the employee was driving for their employer. The plaintiff alleged that the employee was negligent and was acting within the scope of their employment. However, the plaintiff did not timely serve the employee with the complaint and summons so the claim against the employee was dismissed with prejudice, meaning the lawsuit could not be refiled. The employer then argued that the dismissal determined that the employee was not negligent and thus the employer could not be vicariously liable. The court had already held that a plaintiff cannot proceed against the employer for vicarious liability after coming to a settlement agreement with the employee.[2]
The court determined that the context of the dismissal of the employee should be considered in whether litigation against the employer may be pursued. Because, in this case, the claim against the employee was dismissed for being time barred and was a procedural reason, the court allowed the plaintiff to proceed against the employer.
If your company may have vicarious liability for the actions of an employee, the mere fact that the potential plaintiff cannot proceed against the employee is not sufficient to protect the company. Whether the company has any potential liability depends on the reason that the potential plaintiff cannot proceed against the employee.
[1] Cameron v. Osler, 2019 S.D. 34.
[2] Estate of Williams v. Vandeberg, 2000 S.D. 155.