Insurance Law Alert: Employee Sexual Assault in Massage Parlor Not Within the Scope of Employment

In Baek v. Continental Casualty Co. (No. B251201, filed 10/6/14), a California appeals court held that a massage parlor employee did not qualify as an insured for sexual assault on a client, because sexual assault was not within the scope of employment or committed while performing duties related to the conduct of the employer’s business.

The employee was claimed to have touched, fondled, rubbed, etc., a client of the massage parlor while making sounds and noises of sexual pleasure. The massage parlor’s claim was denied based on a professional services exclusion in the policy, which was upheld in a separate unpublished opinion on the ground that “a sexual assault that occurs during the rendering of a professional service is not injury caused by the rendering of a professional service.”

The employee also sued for bad faith, arguing that allegations that he was a partner in, or employee of, the massage parlor, made him an insured under the policy. The policy covered members or partners of the insured entity, “but only with respect to the conduct of your business.” Employees were covered “but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.”

The court agreed that there was no coverage or potential for coverage. Citing Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, the court noted that although intentional torts can be causally related to employment, sexual assault is not among them, because it is not “engendered by” or an “outgrowth” of employment. Also, under Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992, if an employee’s tort is personal in nature, mere presence at the place of employment and attendance to occupational duties prior or subsequent to the offense will not bring the tort within the scope of employment.

The Baek court found that merely because the assault occurred in a massage parlor did not require a different result:

“Although the alleged sexual assault of Jaime W. occurred during a massage, the particular acts on which liability is premised — i.e., “touch[ing], fondl[ing], rubb[ing], grabb[ing] and squeez[ing] Plaintiff’s breasts, buttocks, inner thighs and genitals, all while making and emitting moans, groans, grunts and other sounds and noises of sexual pleasure” — indisputably were not “duties related to the conduct of [HMWC’s] business” or acts of the kind Baek had been hired to perform. Instead, they represented a “stepping away” from HMWC’s business because they were performed solely for Baek’s own benefit, not for HMWC’s. They thus cannot be said to have occurred “while performing duties related to the conduct of [HMWC’s] business.”

The court went on to state that allegations of negligence did not trigger coverage, because one cannot “accidently” fondle; that allegations of negligent hiring or supervision could not apply to the perpetrator himself; and that any false imprisonment was “inextricably intertwined” with the sexual assault, precluding coverage under Jane D. v. Ordinary Mutual (1995) 32 Cal.App.4th 643.

This document is intended to provide you with general information about insurance law developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.

October 8, 2014