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Kathleen Lawlor, Appellee v. North American

October 18, 2012


The opinion of the court was delivered by: Justice Theis

JUSTICE THEIS delivered the judgment of the court, with opinion.

Justices Freeman, Thomas, Garman, Karmeier, and Burke concurred in the judgment and opinion.

Chief Justice Kilbride concurred in part and dissented in part, with opinion.


¶ 1 Plaintiff, Kathleen Lawlor, brought this action in the circuit court of Cook County alleging, inter alia, the tort of invasion of privacy by intrusion upon seclusion against her former employer, defendant North American Corporation of Illinois (North American). In a counterclaim, North American alleged, inter alia, that Lawlor breached her fiduciary duty of loyalty while an employee. Both parties prevailed in the trial court on their respective claims. Lawlor was awarded $65,000 in compensatory damages and $1.75 million in punitive damages after a jury trial. North American was awarded $78,781 in compensatory damages and $551,467 in punitive damages after a contemporaneous bench trial. The trial court remitted the jury's punitive damages award to $650,000. The appellate court affirmed the jury's verdict on Lawlor's intrusion claim, reinstated the $1.75 million punitive damages award, and reversed the trial court's judgment on North American's breach of fiduciary duty claim. 409

Ill. App. 3d 149.

¶ 2 In this appeal, we are asked to consider whether there was sufficient evidence to support the jury's verdict that North American was vicariously liable for the tortious conduct of investigators on the intrusion claim; whether the jury's award of $1.75 million in punitive damages was excessive and in violation of Illinois common law and federal due process principles; and whether there was sufficient evidence to support the trial court's determination that Lawlor breached her fiduciary duty to North American. For the following reasons, we affirm in part and reverse in part the judgment of the appellate court, and affirm in part, reverse in part, and modify in part the judgment of the circuit court.


¶ 4 The following facts are not in dispute. Lawlor was employed by North American as a commission-based salesperson from August 1998 until her separation from the company in June 2005. Lawlor worked in North American's graphic services group and primarily sold customized corporate-branded promotional items. Her role was to generate business, after which the day-to-day management of the account was handled by other employees. In August 2005, Lawlor began working for Shamrock Companies, Inc. (Shamrock), a competitor of North American, which sold similar promotional items. Prior to her departure from North American, Lawlor had interviewed for a sales position with Shamrock and communicated with its management.

¶ 5 Shortly after Lawlor left North American, the company began an investigation to determine if she had violated a non-competition agreement. North American asked its longtime corporate attorney, Lewis Greenblatt, to conduct the investigation, and assigned its vice president of operations, Patrick Dolan, to serve as the company contact person. Greenblatt retained Probe, a private investigation firm which had previously conducted non-competition investigations. Dolan provided Greenblatt and Albert DiLuigi, Probe's principal, with Lawlor's date of birth, her address, her home and cellular telephone numbers, and her social security number. Probe subsequently used this information when it requested that another investigative entity, Discover, obtain Lawlor's personal phone records. These records included information of the date, time, duration, and numbers called on her home and cell phones for certain periods in 2005. The material obtained by Discover was forwarded to Probe, who faxed the information to North American. Thereafter, some of North American's employees attempted to verify if any of the numbers belonged to one of their customers.

¶ 6 In August 2005, Lawlor filed suit against North American seeking outstanding commissions that she alleged were owed and a declaration concerning the enforceability of the non-competition agreement. After learning of North American's investigation, she amended her complaint and alleged an intrusion upon seclusion tort based upon a "pretexting scheme" in which someone pretended to be her in order to obtain private phone records without her permission from her telephone carriers. In a counterclaim, North American alleged that Lawlor breached her fiduciary duty of loyalty by attempting to direct business to a competitor while in North American's employ and by communicating confidential corporate sales information to a competitor. North American also sought reimbursement of excess commission draw payments it had made to Lawlor. A six-day trial ultimately ensued on the parties' various claims in September 2009. The relevant evidence adduced at trial concerning North American's involvement in the investigation which led to investigators obtaining phone records, as well as Lawlor's alleged attempt to steer business and disclose confidential sales information to North American's competitors, is summarized below.

¶ 7 Testimony Relevant to Intrusion Claim

¶ 8 Relevant to Lawlor's intrusion claim, she testified that a few weeks after leaving North American, she suspected that she was being investigated by her former employer. In October 2005, she learned that North American had obtained records concerning her home and cell phones between April and September 2005. Lawlor's home telephone provider at the time was AT&T, and her cell phone service provider was U.S. Cellular. She testified that she did not request call logs from either company in 2005, nor did she consent to their release. She testified that after learning North American had obtained her phone records, she vomited, experienced anxiety for herself and her family, and had periods of sleeplessness. She further testified that she enhanced the security features on her phone, changed the locks on her home, and installed a security system. Lawlor testified that she had incurred $620,000 in legal fees to two law firms who had represented her in this case and that she had paid $335,000 of that amount. No other evidence was presented concerning her legal fees.

¶ 9 John Miller, North American's chief executive officer and president, testified that he made the decision to investigate Lawlor after she left North American. He asked Greenblatt to be in charge of the investigation and assigned Dolan to be North American's contact person. He was aware that Greenblatt had hired Probe to conduct the investigation. Miller testified that Dolan had the authority to provide Lawlor's personal information from her employee file to obtain phone records. Miller further testified that Dolan showed him a list of handwritten phone numbers in relation to the Lawlor investigation. He reviewed the numbers but did not recognize any of them. He further testified that he assumed North American wanted phone records in connection with the investigation.

¶ 10 Greenblatt testified that he retained Probe to investigate a possible violation of Lawlor's non-competition agreement. The investigation was for North American's benefit. He testified that he did not have any role in the investigation and he did not limit what Probe could do.*fn1 Greenblatt testified that he did not have any discussion with Probe concerning investigative techniques and he did not receive any updates or documents to review. He testified that he did not know whether Probe obtained Lawlor's phone records. Greenblatt's law firm paid Probe and was then reimbursed by North American.

¶ 11 DiLuigi testified that he is the president of Probe, a private investigation firm, and that he was hired by Greenblatt to investigate Lawlor. Probe had conducted other non-competition investigations and had obtained phone records. He testified that Dolan wanted him to obtain Lawlor's phone records. In order to do so, Probe would fill out preprinted forms from Discover and include the name, address, telephone number, date of birth, and social security number of the person whose records he sought. After receiving Lawlor's phone records, he would forward them to Dolan. DiLuigi was subsequently asked by Dolan to try to identify the owner of some of the numbers. The investigation ended around August 2005 when Dolan informed DiLuigi that there was no need to order more records. DiLuigi believed Discover was based in Florida, but that it was no longer in business. No witness from Discover testified at trial.

¶ 12 Dolan testified that he relied on Greenblatt and DiLuigi in performing the investigation and he did not instruct them on how it should be conducted. He provided Greenblatt and DiLuigi with Lawlor's address, social security number, date of birth and her cell and home phone numbers. Dolan was unaware of what they would do with this information. He testified that he did not request phone logs in this case, but that DiLuigi informed him that he typically obtains such logs in employment non-competition cases. Dolan received from DiLuigi several faxes which contained hundreds of phone numbers in connection with the Lawlor investigation. He never asked how the phone records were obtained, but he was not surprised to receive them. Dolan conducted Internet searches on some of the phone numbers and consulted with other North American employees to see if they recognized any of the numbers. North American did not pay Probe directly, but Dolan "signed-off" on two separate payments to Greenblatt's law firm for the cost of the investigation.

¶ 13 Todd Van Paris, North American's vice president and general manager, testified that he reviewed faxes with phone numbers from Probe that he assumed were Lawlor's and that he researched some of those numbers on the Internet. Van Paris testified that he was unaware of how Lawlor's phone records were obtained prior to this lawsuit.

¶ 14 Rosemarie Egan, North American's chief financial officer, testified that North American's net worth was approximately $50 million. In April 2006, she approved an invoice to Greenblatt's law firm which included a payment for investigative services provided by Probe.

¶ 15 Roosevelt Boykins, a manager with AT&T, testified that the company would not release any information on a telephone account without first confirming the identity of the customer by asking for the social security number or account number. Similarly, Traci Hart, a subpoena specialist with U.S. Cellular, testified that her company would not release such information on an account if the caller did not provide sufficient information to confirm his or her identity.

¶ 16 Testimony Relevant to Breach of Fiduciary Duty Claim

¶ 17 Relevant to North American's counterclaim, Lawlor testified that Greg Christenson, a former North American colleague, had recruited her to join Shamrock prior to her departure from North American and that she first interviewed with him and other Shamrock executives in November 2004. The following month, she sent Christenson a follow-up letter summarizing her sales history at North American, which provided, in pertinent part:

"Per our discussion, I will highlight where I currently am as far as total volume.

By year-end, I will have billed $2,000,000 in sales with a [gross profit] of 34%. In addition, Komatsu, which is shared with Jennifer Hall, will be an additional [$]1,600,000 with a [gross profit] of 44%. The $2,000,000 is made up of many accounts to include FTD, Mobil Travel Guide, MapQuest, Vista Management and Pilant as the majors."

¶ 18 Lawlor further testified that in December 2004, she was contacted by Kevin Bristow, an outside consultant hired by MapQuest to negotiate its print business. MapQuest had previously placed an order with North American and Lawlor had received the commission. Bristow informed her about a new business opportunity with MapQuest which could be significant for North American. She met with Bristow in January and February 2005, but was informed in March 2005 by Mike Perez, her direct supervisor, that the "pitch" would be handled by another employee. In May 2005, she was told that North American intended to have the MapQuest account handled by a salaried employee. In June 2005, Lawlor was informed that North American wanted to change her compensation agreement. She chose not to sign the new agreement and left North American the same month. Lawlor testified that while employed by North American, she never mentioned Shamrock to MapQuest or any of her other customers. After leaving North American, she decided to take the summer off to spend time with her children and began working at Shamrock in September 2005.

¶ 19 Bristow testified that in June 2005, he met with Perez and Van Paris. Bristow was irritated to learn about Lawlor's departure from North American via a third party and the two invited him to their office to discuss the matter. On October 13, 2005, Bristow signed an affidavit prepared by North American concerning his statements at the June meeting which he disavowed at trial.*fn2 Concerning the execution of the affidavit, Bristow testified that on October 13, 2005, Perez and Van Paris contacted him and related that he needed to sign it immediately. He was on his way to London to see his aunt who was ill, and Perez met him with a notary at an oasis near the airport. Bristow testified that he signed the affidavit despite the fact that the statements contained therein were untrue because he was only concerned about seeing his aunt who died two days later. At trial, he testified that Lawlor did not provide him with any information regarding companies other than North American. Specifically, she never recommended, nor did he consider, involving Shamrock with the MapQuest business.

¶ 20 Perez testified that Bristow had reviewed the affidavit multiple times prior to signing it and that it had been revised based upon his feedback. He responded "yes" to a question of whether the discussion at the June 2005 meeting was consistent with the affidavit. Perez further testified that North American considers its gross profit margin to be confidential information. He claimed that if the company's competitors "knew what our margin was, then they could undercut us and provide those services to our customer." Van Paris also responded "yes" when asked a single question of whether Bristow made statements at the meeting consistent with the affidavit.

¶ 21 Jury Verdict and Trial Court Rulings

¶ 22 At the close of Lawlor's case, North American moved for a directed verdict on the intrusion upon seclusion claim. North American asserted, in pertinent part, that in the absence of an agency relationship it could not be held liable for any improper conduct by either Probe or Discover. The trial court denied the motion. North American renewed its motion on the same grounds at the close of all the evidence and the trial court reserved ruling on the motion. The jury subsequently returned a verdict in Lawlor's favor and awarded her $65,000 in compensatory damages and $1.75 million in punitive damages.*fn3

¶ 23 The jury answered several special interrogatories establishing, inter alia, the following factual findings: (1) Discover obtained information about Lawlor's telephone calls without her authorization through pretexting in that it called her telephone carriers and pretended to be her in order to obtain the information; (2) Probe knew that Discover obtained information about Lawlor's telephone calls without her authorization through pretexting; (3) Probe was acting as North American's agent when it got information about the phone calls from Discover; (4) Discover was acting as Probe's agent when it obtained information about the telephone calls; (5) Probe was acting within the scope of authority granted by North American when information about Lawlor's telephone calls were obtained without her authorization through pretexting; and (6) North American knew that Discover obtained information about Lawlor's phone calls without her authorization through pretexting.

¶ 24 The trial court subsequently entered judgment against Lawlor on North American's breach of fiduciary duty claim. The trial court found that she breached her duty of loyalty by disclosing confidential business information to Shamrock through the Christenson letter and by attempting to steer the MapQuest business from North American to Shamrock. The trial court quoted from portions of the Bristow affidavit in its order. It also found that Bristow's testimony at trial disavowing the affidavit was not credible. The trial court awarded North American $78,781 in compensatory damages and $551,467 in punitive damages.

¶ 25 North American then filed a posttrial motion, requesting that the trial court grant its motion for directed verdict, or enter judgment n.o.v., or order a new trial. North American also asked the trial court to vacate or reduce the amount of the jury's punitive damages award. The trial court denied the posttrial motion, but reduced the punitive damages award from $1.75 million to $650,000. Lawlor also filed a posttrial motion challenging, inter alia, the trial court's reliance on the Bristow affidavit as substantive evidence to support North American's counterclaim because it was admitted solely for purposes of impeachment. In denying the motion, the trial court stated that it did not rely on the Bristow affidavit as substantive evidence when concluding that Lawlor had breached her fiduciary duty to North American.

¶ 26 The trial court provided the following justification, in pertinent part, when reducing the jury's punitive damages award:

"[I]f you believe all of the agency theory, you have to believe that her records were wrongfully obtained on a number of occasions *** so that is repetitive conduct and it's intentional conduct and it's deceitful conduct. *** The amount of punitive damages shocks the judicial conscience. *** I don't think it passes any of the tests that have been put forward in *** Illinois.

Clearly when this case was argued to the jury, plaintiff argued compensatory damages in the amount of $500,000. *** The plaintiff further argued that punitive damages should be *** ten times compensatory damages, and that is what I'm going to reduce these damages to, exactly what you asked for *** ten times that amount, which is $650,000. ***

I even took into account *** that this was done to protect business by North American. I don't believe that there was any motive to enrich themselves at the expense of Kathy Lawlor. I don't find that she was in a vulnerable position. She left their employ. That was her decision to leave their employ. She decided to take off about six weeks during the summer *** and she immediately went to work for *** Shamrock.

She was a highly paid, sophisticated businesswoman. *** I don't think that she was the victim that she portrayed herself to be, particularly in light of the fact that this case involves wrongful, deceitful conduct by both parties as against each other.

*** I think that the imposition of the amount of punitive damages that this jury gave was a direct result of passion, and the reason I say that is because this jury was considering the ...

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