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Can a company sue the employee of another company on the basis of property right?

Law Asked by MichaelJames on December 24, 2020

To clarify the title:
let’s say company ABC has entered into a contract with company XYZ, where it has ordered, and paid for a server farm. But 2 weeks before delivery an employee of XYZ destroys the server farm.

Can ABC sue the employee on the basis of infringement of a property right?

2 Answers

In most common law jurisdictions, yes

While the principal is vicariously liable for the tortious acts and omissions of its agent; the agent is also liable in their own right. While it doesn’t happen often, it is possible for an aggrieved party to sue the agent (employee) rather than or as well as the principal (employer).

Note that vicarious liability does not apply to non-agents such as independent contractors (and here I mean real, actual independent contractors not employees who are called that so they or their employer or both can fiddle their tax) or employees on a frolic.

It is unusual for a number of reasons:

  • where you have the option, it’s better to bring a case for breach of contract than in tort because you are entitled to more damages if you are successful. Damages for breach of contract restore you to the position you would have been in if the contract had been completed while tortious damages only restore you to the position you would be in if the tortious act had not happened.
  • the employer usually has more financial resources and insurance. If they do have insurance that would usually cover the agent as well.
  • it’s bad PR to pick on a lowly employee .
  • some jurisdictions (e.g. prohibit it by statute.

Answered by Dale M on December 24, 2020

This all depends on what you bought, and the contract you have in place. If "XYZ" is a construction company and is responsible for the physical construction of the facilities, then you may have a contract that identifies specific damages, and the contractor may have (should have, and you as "ABC" should have verified) insurance that covers this type of loss. There may also be other considerations like how much you've paid the contractor, if you own the land/building, and other liquidated damages.

In another scenario, you rent the server farm/compute time just like you would from Amazon or Microsoft. You wouldn't "own" the servers and your contract would be entirely based on the ability to provide a service.

Either way the responsible party is "XYZ", not Milton Waddams the disgruntled employee. Your lawsuit would be entirely with XYZ as some type of contract dispute, possibly with property loss which either your insurance company or XYZ's insurance company would be on the hook for.

A lawyer would not go after Mr. Waddams, since he doesn't have the ability to pay back the type of award you are looking for, even if they are criminally responsible. You would sue XYZ and allege that they didn't take proper precautions to stop Mr. Waddams and were in violation of whatever contract you have. XYZ could then sue Mr. Waddams in a civil suit, but even if they win they would be unlikely to recover anywhere near the loss.

So a lawyer will recognize that the only reasonable recovery would be against XYZ, and wouldn't bother wasting the resources to go after Mr. Waddams.

But, to the actual question, could you sue an employee of XYZ, sure, you can, but the case may be thrown out. Since the employee is a representative of XYZ, and is technically working on behalf of XYZ, the company is ultimately responsible. If Mr. Waddams had gone into your office and stole your petty cash box, you could probably sue them and win. If they entered your facility and stole all your IP, you could also sue them, but whatever you win will be difficult to collect.

Answered by Ron Beyer on December 24, 2020

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