Texas law on intentional infliction of emotional distress claims just changed significantly. On August 27, 2004, the Texas Supreme Court issued its long-awaited decision in Hoffmann-LaRoche Inc. v. Zeltwanger. The case garnered substantial publicity as a result of the eight-figure judgment against the employer (Roche). The original judgment was based on Joan Zeltwanger's claims that she was subjected to sexual harassment and intentional infliction of emotional stress by her supervisor. Roche appealed the judgment to the court of appeals, which affirmed the district court, and then to the Texas Supreme Court, which reversed the appellate court in an 8-0 decision.

The critical issue on appeal was whether the harassing acts of Zeltwanger's supervisor could support the jury's finding that Roche was also liable for the common law tort of intentional infliction of emotional distress (“IIED”) as an additional claim. This question is important for a few reasons. First, under both Texas law and federal law, sexual harassment violates statutes that limit a plaintiff's potential recovery. Depending upon the size of the employer, a plaintiff may receive a maximum of $300,000 in compensatory and punitive damages. In contrast, an IIED claim has fewer limits and permits a much larger potential recovery. As a result, plaintiffs usually pursue both claims at the same time in an effort to get the largest possible recovery. Many of the state's largest employment law verdicts in the last ten years have been predominantly composed of IIED claim that were added on to some other statutory employment claim.

Second, a claim for sexual harassment lies only against the employer, not the harasser. Therefore, if this is the only claim asserted, employers who are incorporated or have their principal place of business outside of Texas can remove a case that is originally filed in Texas state court to federal court (usually a preferable forum). However, if the harasser is a Texas citizen, and is sued personally for IIED, the case must remain in Texas state court. Thus, underlying this case are two issues of both economic and strategic importance---the damages an employee can recover on claims of discrimination and the likelihood that a federal, rather than state, court will decide that issue.

Roche argued that the IIED claim had not been used properly and that it should only be used as a “gap filler” tort. In other words, it is only supposed to be used to remedy wrongs that are not specifically addressed by other laws. This description did not fit Zeltwanger's claim because she alleged principally that her emotional distress was the result of sexual harassment – something that is already prohibited by both federal and state statutes. In addition, Roche contended that although Zeltwanger's evidence might establish a claim of sexual harassment, it was legally insufficient to meet the high threshold of “outrageous” conduct that is required to prove an IIED claim. The Court accepted both of these arguments and reversed the court of appeals on both, alternative grounds. The judgment on the IIED claim was reversed and the claim defeated.

The end result is that employers have a new defense to IIED claims. Although this decision should provide employers a measure of comfort, the Zeltwanger opinion leaves a few significant questions unanswered. For example, it remains an open question whether other common law torts would be judged similarly incompatible with a sexual harassment claim. Thus, if Zeltwanger's harasser had touched her in an unwelcome and offensive way, it is questionable whether the Texas Supreme Court would permit a common law claim of battery to be added to a sexual harassment claim based on the same facts. Further, a question remains whether the Texas Supreme Court would have limited Zeltwanger to statutory damages had the harassment she suffered been more severe. Accordingly, we safely can say that the Zeltwanger decision is a step forward for employers, however, it remains to be seen if this is a baby step or a giant step.

Allan G. King is a shareholder in Littler Mendelson's Dallas, Texas office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, or Mr. King at agking@littler.com.