Missouri Court of Appeals Upholds Jury Verdict Against Hotel Corporation for Sexual Assault of a Guest by Security Guard

This Missouri Court of Appeals for the Eastern District upheld a multi-million dollar verdict for the plaintiff Shannon Dugan against the Hyatt Corporation. The Court of Appeals rejected the hotel chain’s arguments on appeal and upheld the jury’s verdict of $28 million in compensatory damages and $179 million in punitive damages. The case arose out of a 2016 sexual assault by a hotel security guard (referred to as “D.W.”) and included claims of negligent hiring, negligent supervision of D.W., and negligent hiring and training of the respondent’s other staff.

The appellant argued that the trial court erred 1) in admitting evidence of D.W.’s prior arrest and investigations for sex crimes that they argue is hearsay and irrelevant, 2) because the verdict director regarding appellant’s negligent supervision of D.W. did not require the ultimate facts to find the appellant liable, specifically that the D.W. was acting outside of the scope of his employment and the appellant had to ability and should have foreseen the need to supervise him, 3) because the verdict director regarding the appellant’s negligent supervision of employees besides D.W. was defective for the same reasons, and 4) in denying appellant’s motions for a directed verdict and for Judgment Notwithstanding the Verdict (JNOV) on punitive damages due to insufficient evidence to support the submission of punitive damages to the jury.

Admission of Evidence of Security Guard’s Previous Arrests and Investigations

When the appellant hired D.W. as a security guard, their background check did not show his previous arrests and investigations for sexual harassment, abuse, and assault. This is because the appellant’s background check’s scope was limited to “convictions” and not his full criminal history. D.W. admitted in his deposition that he was arrested and investigated for sexual assault and sexual misconduct, but denied doing any of the things he was arrested and investigated for. Plaintiff’s liability expert, a criminologist, testified that based on D.W’s previous criminal history, the sexual assault of respondent was foreseeable. The appellant’s human resources manager and security director were both called as adverse witnesses and admitted key facts regarding the appellant’s policies that were violated. The security director even admitted the assault occurred “due to the many breaches of Hyatt’s policies.” The appellant was granted a continuing objection to the admission of D.W.’s criminal history and investigations during trial, on the basis the evidence was “improper”.

The appellant argued that the trial court erred by admitting D.W.’s criminal history and that the evidence was irrelevant and hearsay. The Court of Appeals rejected this argument for two reasons. First, the only objection made at trial was that this evidence was “improper. The hearsay and relevancy objections were not properly preserved for appeal because objections must be made with “sufficient specificity.” Second, in Missouri negligent hiring cases, dangerous proclivities are shown through prior misconduct. This made D.W.’s criminal background relevant. The testimony of the appellant’s representatives also showed that their policy requiring background checks to check for any criminal history, and not just convictions, made this evidence logically and legally relevant. Additionally, the previous investigations and arrest came in through D.W’s own deposition testimony, which made the facts not hearsay.

Verdict Directors on Negligent Supervision

The appellant’s second and third points on appeal were that the jury was erroneously instructed regarding negligent supervision of D.W. and employees other than D.W. The appellant argues the jury should have been instructed to determine 1) whether D.W. and the other security guards were acting outside the scope of their employment, and 2) whether the appellant knew or should have known of the “necessity and opportunity” to control D.W. acting outside the scope of his employment.

The Court rejected these arguments, agreeing with the trial court that the record established that the appellant owed a duty to the respondent to supervise D.W., even though he acted outside the scope of his employment as a matter of law. The appellant also admitted the facts underlying this conclusion several times. This conclusion and these admissions satisfied the duty element set forth in the Restatement (Second) of Torts Section 317, as adopted in Missouri for negligent supervision claims. The Court further held that the verdict directors sufficiently set forth the remaining elements of a negligent supervision claim: breach, causation, and damages.

Submission of Punitive Damages