At The Durst Law Firm, we have handled cases against banks and loan officers for unethical practices. These cases are sometimes a challenge, because the law tends to be favorable to banks, especially in Ohio.
For instance, the Ohio Consumer Sales Practices Act, which is Ohio’s main consumer protection law, usually does not apply to banks. Also, as evidenced by Groob v. KeyBank, 108 Ohio St.3d 348, 2006-Ohio-1189, 843 N.E.2d 1170 (2006), the doctrine of respondeat superior (which can hold the employer/bank responsible for its employees’ wrongful acts) is harder to establish in Ohio than in other states. This is not just applicable to banks – all businesses in Ohio benefit from this higher standard.
In Groob, the plaintiff won a substantial jury verdict ($556,020.00) against a Key Bank loan officer who, in a nutshell, found out about a business opportunity his clients were trying to get a loan for and usurped the business opportunity for himself. But Key Bank itself was held not to be responsible for the loan officer’s fraud, because, even though the employee was only able to do what he did by virtue of his position at Key Bank. The case reached the Supreme Court of Ohio, which ultimately held that the facts of this case did not support respondeat superior liability, explaining that under Ohio law “an employer is not liable under a theory of respondeat superior unless its employee is acting within the scope of her employment when committing a tort – merely being aided by her employment status is not enough.” Groob v. KeyBank, at ¶ 58. The Court also cited the principle that “where the tort is intentional, * * * the behavior giving rise to the tort must be ‘calculated to facilitate or promote the business for which the [employee] was employed .” Id., at ¶ 42.
Essentially, Key Bank wasn’t responsible because the loan officer stole the investment opportunity for himself, which did not in any way benefit the bank. The fact that he was only able to do that by virtue of his position at the bank did not matter.
By contrast, lets look at Indiana law. The Indiana Court of Appeals laid out the standard for respondeat superior liability in Walgreen Co. v. Hinchy, 21 N.E.3d 99 (Ind.App.2014), on reh’g, 25 N.E.3d 748 (Ind.App.2015), and transfer denied, 29 N.E.3d 1274 (Ind.2015), and transfer denied, 29 N.E.3d 1274 (Ind.2015), as follows:
Vicarious liability will be imposed upon an employer under the doctrine of respondeat superior “where the employee has inflicted harm while acting ‘within the scope of employment.’ ” Barnett v. Clark, 889 N.E.2d 281, 283 (Ind.2008). To fall within the scope of employment, “the injurious act must be incidental to the conduct authorized or it must, to an appreciable extent, further the employer’s business.” Id. An act “is incidental to authorized conduct when it ‘is subordinate to or pertinent to an act which the servant is employed to perform,’ or when it is done ‘to an appreciable extent, to further his employer’s business.’ ” Bushong v. Williamson, 790 N.E.2d 467, 473 (Ind.2003) (quoting Celebration Fireworks, Inc. v. Smith, 727 N.E.2d 450, 453 (Ind.2000)) (internal citations omitted).
In Walgreen Co. v. Hinchy, the Court upheld a jury verdict ($1,800,000.00!!!) finding respondeat superior liability against Walgreen’s for its pharmacist-employee’s disclosure to a third party that the Plaintiff was prescribed medicine for an STD. In Ohio, this result would be highly unlikely – while the pharmacist was “aided by” her position (she only learned the information because she worked at Walgreen’s), she did nothing to further Walgreen’s business by disclosing the Plaintiff’s confidential medical information (what did the store get out of it?). In Ohio, that would likely not be enough, but in Indiana the Plaintiff got away with $1,800,000.00.