The most significant legislative win for plaintiffs in Colorado's 2021 General Assembly was HB 21-1188, which legislatively overturned the notorious Ferrer v. Okbamicael decision of the Colorado Supreme Court. The bill was signed by Governor Polis on May 17, 2021 but did not go into effect until this month.
The new law means that people injured by the negligence of a company employee who was acting in the course and scope of the employee's duties can now also assert direct negligence claims against the employer for torts such as negligent hiring, negligent training, and negligent entrustment.
Seems like common sense, right? Not in Colorado. When the Supreme Court issued its 2017 opinion in Ferrer, corporate employers and the insurance defense industry had a green light to engage in pleadings strategies that were ripe for mischief. For example, imagine that the driver of a truck owned by a construction company blew through a red light and caused a head-on collision with another driver who was seriously injured. Also assume the at-fault driver had a poor driving history that included a DUI and reckless driving. The injured plaintiff files a lawsuit against the negligent driver and the construction company. Under Ferrer, the company could simply admit vicarious liability - that its employee was negligent and working in the course and scope of his duties at the time of the crash. Once that admission was made, it was understood that the company would be held liable for only the negligence of its employee. The plaintiff was barred from pursuing other direct negligence claims against the company itself such as negligent hiring and negligent training. Consequently, the corporate defendant would quickly admit vicarious liability in its answer to the complaint. Then, the company would move to be dismissed from the litigation entirely. Some district courts in Colorado were willing to grant these motions. Other courts would keep the company in the litigation as a defendant but make them mostly invisible to the jury and mostly immune from discovery. Plaintiffs would have no ability to hold the corporate defendants separately accountable for negligently hiring drivers who had a history of bad driving.
Now, with HB 21-1188, the tables have shifted back in favor of the plaintiff. The language of the bill expressly states:
“When an employer or principal acknowledges vicarious liability for an employee's or agent's negligence, a plaintiff's direct negligence claims against the employer or principal are not barred. A plaintiff may bring such claims, and conduct associated discovery, in addition to claims and discovery based on respondeat superior.”
In the event there was any confusion about what case the legislature was overturning, the language of HB 21-1188 unambiguously explained that “It is the intent of the General Assembly to reverse the holding in Ferrer v. Okbamicael, 390 P.3d 836 (Colo. 2017), that an employer's admission of vicarious liability for any negligence of its employees bars a plaintiff's direct negligence claims against the employer.”
Note: this law does not negate liability waivers signed by people who are injured in Colorado while doing recreational activities when the injury occurs through the negligence of a company or its employees who offer the recreational activity in question.