While the statute immunized negligent conduct, until 1995 it was silent on intentional or similar conduct. That year the Legislature amended the statute to deny immunity to “any trustee, director, officer, employee, agent, servant or volunteer causing damage by a willful, wanton or grossly negligent act of commission or omission, including sexual assault and other crimes of a sexual nature. … ” N.J.S.A. 2A:53A-7c. The Legislature did not, however, address a charity’s liability when its employees committed acts of sexual abuse.
In 1984, a divided New Jersey Supreme Court applied the Charitable Immunity Act to insulate a charity from a claim of negligent hiring and supervision in the case of a teacher sexually abusing a student. Schultz v. Roman Catholic Archdiocese of Newark, 95 N.J. 530 (1984). The Court held that even if the teacher acted intentionally when committing the sexual abuse, the claim against the charity is based in negligence, and the CIA provides immunity for acts of negligence.
In his dissent, Justice Alan Handler noted that “many jurisdictions recognized negligent hiring as an exception to the common law immunity afforded charitable entities.” Id. at 555 (Handler, J., dissenting). The dissent observed that the immunity applies when the charity is in “proper pursuit of its charitable ends and stands in a beneficent relationship to the injured claimant.” Since neither was the case when the defendant’s employee sexually abused the student, the dissent concluded that the charity should forfeit its immunity. Id. at 556.
Despite the dissent and the narrow 4-3 margin that led to the conclusion that charities would not be liable for the negligent hiring and supervision of employees who commit intentional acts of misconduct, Schultz has remained the law in New Jersey for two decades. As can be seen in Schultz, plaintiffs have long sought to hold charities responsible for sexual abuse by their employees. They have asserted claims of respondeat superior, and negligent hiring and supervision of wayward employees. Until now these negligence-grounded theories have been unsuccessful, but the door for charity liability, at least for the intentional failure to end sex abuse, has now opened.
The Hardwicke Case
In March 2004, the Appellate Division addressed a not-for-profit school’s liability in a case involving allegations of an employee sexually abusing students. Hardwicke v. American Boychoir, 368 N.J. Super. 71 (App. Div. 2004), leave to appeal granted, 2004 N.J. Lexis 860 (June 30, 2004). In Hardwicke, the plaintiffs, students at the defendant school, alleged that they were victims of sexual abuse by a teacher, and that other school officials were aware of this conduct but did nothing to stop it. The plaintiffs asserted various claims against the school, including claims of intentional tort, vicarious liability, negligent supervision, and a cause of action under New Jersey’s Child Sexual Abuse Act (CSAA), N.J.S.A. 2A:61B-1. The CSAA provides a separate cause of action for child sexual abuse, and establishes secondary liability against persons, including parents, foster parents, guardians, and others standing in loco parentis, who knowingly permit sexual abuse by another. By asserting this claim, the plaintiffs sought to hold the school liable for knowingly permitting the sexual abuse to continue. The school’s liability in this case was particularly important to the plaintiffs, as the teacher had left the country, defaulted, and had few assets. The school, with its deep pockets, understandably was a more attractive target for the plaintiffs.
The trial court granted summary judgment to the school on two grounds: (1) the school was not “a person” to which the CSAA applies, and (2) the common-law claims, including the claim for negligent hiring, were barred by the CIA.
The Appellate Division reversed with both a concurring opinion and a dissent. The prevailing opinion relied on two general public policies. First, a school has a heightened duty “to do no harm to the children in its care.” Id. at 92 (citing Frugis v. Bracigliano, 177 N.J. 250 (2003)). Second, the state must “protect children from sexual abuse and . . . require reporting of suspected sexual abuse.” Id. (citing J.S. v. R.T.H., 155 N.J. 330, 343 (1998)). These policies, and the caretaker role the school is required to play in the lives of the students, led the court to conclude the defendant school stood in loco parentis to the students and, therefore, was “a person” to which the CSAA applied.
The prevailing opinion further concluded the school’s knowing failure to terminate child sex abuse could serve as a basis for liability given the distinction between the CSAA and CIA. The court observed that the CIA provides immunity in the case of damages resulting from negligence, a common-law theory of liability. It does not provide immunity, however, in the case of a statutorily prescribed cause of action, or for “knowing” or intentional conduct, as is required by the CSAA. Id. at 95-96. Since plaintiff alleged the school acted knowingly and intentionally by failing to stop conduct that it was aware of, the prevailing opinion reasoned that the CIA did not insulate the school from liability under the CSAA. Id. at 95-97.
The prevailing opinion, however, concluded, relying upon Schultz, that the CIA did not insulate the school from negligence claims, including the claim for negligent hiring and supervision.
The concurring judge took a different approach. He would establish a “new rule of law” based on Frugis, 177 N.J. 250, that the “CIA can no longer immunize a nonprofit private educational institution from failing to meet its responsibility to protect a minor student from the type of conduct for which a public school board of education is now liable.” Id. at 111. The dissent, however, refused to create “new law,” and concluded that the CIA bars all claims, including the claims under the CSAA. By granting leave to appeal in June, it appears that the Supreme Court will address this issue soon.
The Legislative Response
Some of the discord of Hardwicke, however, soon may be a thing of the past. In May 2004, by a 29-3 margin, the New Jersey Senate approved an amendment to the CIA. In pertinent part, the act would read:
The immunity from civil liability granted to a nonprofit corporation . . . shall not apply to a claim in any civil action which alleges that the negligent hiring or supervision or retention of any employee, agent or servant resulted in a sexual offense being committed against a person under the age of 18 who was a beneficiary of the nonprofit organization. S-540, 211th Legislature (2004).
This amendment would apply “to all civil actions for which the statute of limitations has not expired as of the effective date of the act.” Id.
In that case, claims of negligent hiring and supervision, as asserted in Schultz and Hardwicke, would go forward. The bill has been introduced to the Assembly as A-2512 and currently is before the Assembly Judiciary Committee.
Conclusion
The public outcry concerning the sexual abuse of children by employees of charities may soon overcome some of the immunities charities have enjoyed. Charities complain, and understandably so, that this added liability will make the availability and cost of liability insurance more onerous. In a time when donations to charities remain down, some charities may not be able to endure this burden. As most other jurisdictions have already recognized, however, these legal changes are necessary to safeguard children from sexual predators, and to hold those who negligently employ such people responsible for their hiring decisions. These are policies that few can debate.
Krais, a principal with Porzio, Bromberg & Newman of Morristown, specializes in medical malpractice and personal injury.
