Arizona Court of Appeals Division Two holds that plaintiffs are not barred from suing private employers under vicarious liability theories for acts of employees subject to the notice of claim statute, A.R.S. § 12-821.01. S

Parents of a deceased child brought claims against individual doctors employed by a private hospital and the University of Arizona.  The parents also sued the hospital and related entities under a theory of vicarious liability but failed to serve a notice of claim to any of the defendants under A.R.S. § 12-821.01.  The trial court dismissed with prejudice the claims against individual doctors under § 12-821.01 because they were also State (University) employees but allowed the claims against the hospital, a private entity, to proceed.

In a special action, the Court of Appeals affirmed, holding that A.R.S. § 12-821.01 does not bar claims against private employers for acts of employees, even if claims against the employees are barred.  The Court of Appeals distinguished prior cases in which a court’s finding that an employee was not liable barred vicarious liability for an employer, noting that none of the prior cases involved a defense available only to the employee.  The Court of Appeals went on to hold that claim preclusion did not apply because (1) the hospital did not show the element of privity with the doctors and (2) the policies underlying the Notice of Claim Statute—notice to the government to allow for investigation and settlement—did not apply to a claim against a private employer.

Judge Espinosa authored the opinion in which Judges Eppich joined. Judge Brearcliffe dissented, asserting that lack of liability for the employees should have barred any claim against the hospital employer.