Shaw v. Psychemedics Corporation

THE STATE OF SOUTH CAROLINA
In The Supreme Court

Wilmot Shaw, Plaintiff,

v.

Psychemedics Corporation, Defendant.

Appellate Case No. 2017-002538

CERTIFIED QUESTION

ON CERTIFICATION FROM THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF SOUTH
CAROLINA

Timothy M. Cain, United States District Judge

Opinion No. 27869
Heard December 12, 2018 – Filed March 20, 2019

CERTIFIED QUESTION ANSWERED

Donald Gist and Aaron Wallace, of Gist Law Firm, PA, of
Columbia, for Plaintiff.

S. Michael Nail and Matthew K. Johnson, both of
Greenville, and Michael Clarkson, of Boston, MA, all of
Ogletree, Deakins, Nash, Smoak & Stewart, P.C., for
Defendant.
 CHIEF JUSTICE BEATTY: We certified the following question from the
United States District Court for the District of South Carolina:

Under South Carolina law, does a drug testing laboratory that has a
contract with an employer to conduct and evaluate drug tests owe a duty
of care to the employees who are subject to the testing so as to give rise
to a cause of action for negligence for failure to properly and accurately
perform the test and report the results?

For reasons that will be discussed, we answer this question in the affirmative.

I. FACTS
Plaintiff is a former employee of BMW at its manufacturing facility in
Spartanburg. During his employment with BMW, Plaintiff was subject to random
drug tests. BMW contracted with Defendant to test the hair samples of BMW
employees for the presence of drugs. Plaintiff was selected for a random drug test,
which was administered on-site by a contract nurse from a local hospital. Defendant
received Plaintiff's hair sample on April 12, 2014. On April 21, 2014, BMW
informed Plaintiff that, according to Defendant's analysis, his hair sample tested
positive for cocaine and benzoylecgonine, the primary metabolite of cocaine.
Though Plaintiff asserted that he had not used any illegal substances, BMW
suspended Plaintiff pending an investigation.

On April 22, 2014, Plaintiff submitted a hair sample to an independent drug
testing laboratory whose report determined that Plaintiff's hair tested negative for
any illegal substances. BMW refused to accept the independent laboratory's results
but permitted Plaintiff to submit a second hair sample for analysis by Defendant.
The second hair sample also tested positive for cocaine and benzoylecgonine. BMW
subsequently terminated Plaintiff due to the positive drug test results. Plaintiff
maintains that he is not and has never been a drug user.

Plaintiff filed an action against Defendant, alleging negligence and negligent
supervision. In response, Defendant filed a pre-answer motion to dismiss on the
basis that Defendant did not owe a duty to Plaintiff. In connection with Defendant's
motion to dismiss, the district court entered an order certifying the aforementioned
question to this Court. We certified the question pursuant to Rule 244 of the South
Carolina Appellate Court Rules ("SCACR").
 II. STANDARD OF REVIEW

"In answering a certified question raising a novel question of law, this Court
is free to decide the question based on its assessment of which answer and reasoning
would best comport with the law and public policies of the state as well as the Court's
sense of law, justice, and right." Drury Dev. Corp. v. Found. Ins. Co., 380 S.C. 97,
101, 668 S.E.2d 798, 800 (2008).

III. LAW/ANALYSIS

Defendant argues an independent drug testing laboratory does not owe a duty
of care to employees subject to the testing; therefore, Plaintiff cannot maintain a
negligence action against Defendant. Defendant further asserts that the relationship
between a drug testing laboratory and employee is too attenuated to give rise to a
duty. We disagree.

An essential element in a negligence action is "the existence of a legal duty of
care owed by the defendant to the plaintiff." Oblachinski v. Reynolds, 391 S.C. 557,
561, 706 S.E.2d 844, 845–46 (2011). "The court must determine, as a matter of law,
whether the law recognizes a particular duty." Madison ex rel. Bryant v. Babcock
Ctr., Inc., 371 S.C. 123, 135, 638 S.E.2d 650, 656 (2006). "If there is no duty, then
the defendant in a negligence action is entitled to judgment as a matter of law." Id.
at 135–36, 638 S.E.2d at 656 (citing Steinke v. S.C. Dep't of Labor, Licensing &
Regulation, 336 S.C. 373, 387, 520 S.E.2d 142, 149 (1999); Ellis v. Niles, 324 S.C.
223, 227, 479 S.E.2d 47, 49 (1996)).

Generally, "[t]here is no formula for determining duty; a duty is not sacrosanct
in itself but only an expression of the sum total of those considerations of policy
which lead the law to say that a particular plaintiff is entitled to protection." Araujo
v. S. Bell Tel. & Tel. Co., 291 S.C. 54, 57–58, 351 S.E.2d 908, 910 (Ct. App. 1986)
(citing Prosser & Keaton, On the Law of Torts § 53 (5th ed. 1984)). However, South
Carolina courts "will not extend the concept of a legal duty of care in tort liability
beyond reasonable limits." McCullough v. Goodrich & Pennington Mortg. Fund,
Inc., 373 S.C. 43, 48, 644 S.E.2d 43, 46 (2007) (citing Huggins v. Citibank, N.A.,
355 S.C. 329, 333, 585 S.E.2d 275, 277 (2003)).

This Court has stated that "[a] tort-feasor may be subjected to tort liability for
injury to a third party arising out of the tort-feasor's contractual relationship with
another, despite the absence of privity between the tort-feasor and the third party."
Barker v. Sauls, 289 S.C. 121, 122, 345 S.E.2d 244, 244 (1986) (citing Terlinde v.
Neely, 275 S.C. 395, 271 S.E.2d 768 (1980)). Additionally, "[t]he tort-feasor's
liability exists independently of contract, and rests upon the tort-feasor's duty to
exercise due care." Id. (citing Edward's of Byrnes Downs v. Charleston Sheet Metal
Co., 253 S.C. 537, 172 S.E.2d 120 (1970)). In Barker, we stated the following:

The key inquiry is what duty, if any, is owed by the tort-feasor to the
third party. It is essential to liability for negligence that the parties have
some relationship recognized by law to support the duty owed by the
tort-feasor. 57 Am. Jur. 2d Negligence § 36. This duty may be derived
from the tort-feasor's contractual relationship with another.

Id. (citation omitted). Accordingly, a drug testing laboratory's duty to an employee
subject to the testing may arise from the laboratory's contractual relationship with
the employer. Furthermore, the lack of privity between the employee and laboratory
does not preclude the imposition of a duty.

We also find that there is a sufficient relationship between a drug testing
laboratory and an employee to support the recognition of a duty. The principal
purpose of the contract between the laboratory and the employer is to test a given
employee's biological specimen for the presence of drugs. Moreover, the laboratory
possesses and exercises control over the employee's specimen at some point
during—if not the entire duration of—the testing process. In addition, if the
laboratory is negligent in testing the employee's specimen, it is foreseeable that the
employee will likely suffer a direct economic injury due to the loss of employment.1

We note a host of public policy considerations that favor the recognition of a
duty of care in this context. There is a significant public interest in ensuring accurate
drug tests because countless employees are required to undergo drug testing as a
condition of their employment. Drug testing laboratories have the greatest amount
of control over the accuracy of the testing process.2 See, e.g., Landon v. Kroll Lab.

1
South Carolina courts have made it clear that "foreseeability itself does not give
rise to a duty." S.C. State Ports Auth. v. Booz-Allen & Hamilton, Inc., 289 S.C. 373,
376, 346 S.E.2d 324, 325 (1986) (citing 65 C.J.S. Negligence § 4(2)). Although it
is foreseeable that an employee's positive drug test will adversely affect
employment, the decision to impose a duty in this context does not rest solely on
foreseeability.
2
We recognize that there may be some arrangements, like the facts in this case,
where an actor other than the drug testing laboratory collects the specimen. If there
Specialists, Inc., 999 N.E.2d 1121, 1124 (N.Y. 2013) (finding drug testing laboratory
is in the best position to prevent harm). Conversely, employees have very little
control, if any, over the testing procedures and methods used.

An employee who is terminated for a positive drug test faces immediate
consequences, namely the loss of the employee's income and livelihood. Moreover,
many employment applications inquire about an applicant's prior work history,
including any instance of termination. As a result, the positive drug test and
subsequent termination may hinder the employee as he or she seeks new
employment. See Duncan v. Afton, Inc., 991 P.2d 739, 745 (Wyo. 1999) ("[T]he
likely effect of a false positive result is significant and devastating; employment will
likely be terminated and future prospects of employment adversely impacted.").

Further, without the recognition of a duty, a terminated employee is often left
without a means for redress, while the drug testing laboratory is effectively
immunized from liability. 3 This risk is especially great in at-will states like South
Carolina, in which an employer may terminate an employee at any time without
reason or cause. 4 An employee terminated due to a false positive drug test may not
fall under an exception to the at-will employment doctrine, and thus would have no
recourse against his or her employer. Consequently, a drug testing laboratory is
unlikely to face a contribution or indemnity lawsuit from an employer. Therefore,
absent a duty of care, drug testing laboratories are able to avoid liability for their
negligence.

Finally, the recognition of a duty in this context advances a major policy goal
of tort law: deterrence. In short,

[o]ne reason for making a defendant liable in tort for injuries resulting
from a breach of his duty is to prevent such injuries from occurring.
Underlying this justification is the assumption that potential

are separate entities involved at different stages of the testing process, a drug testing
laboratory is liable only for its own negligence or the negligence of another actor
properly imputed to the laboratory.
3
See Karen Manfield, Comment, Imposing Liability on Drug Testing Laboratories
for "False Positives": Getting Around Privity, 64 U. Chi. L. Rev. 287, 296–98
(1997).
4
Id. at 297–98.
 wrongdoers will avoid wrongful behavior if the benefits of that
behavior are outweighed by the costs imposed by the payment of
damages to victims.

F. Patrick Hubbard & Robert L. Felix, The South Carolina Law of Torts 7 (4th ed.
2011). A drug testing laboratory is more likely to implement measures that ensure
better accuracy in its testing process if the laboratory owes a duty of care to an
employee. See Lewis v. Aluminum Co. of Am., 588 So. 2d 167, 170 (La. Ct. App.
1991) (stating that subjecting a drug testing laboratory to liability "should foster a
greater sense of responsibility within it to perform its drug testing services in a
skillful and competent manner").

Although some courts have declined to recognize a duty in this context, our
decision is consistent with many other jurisdictions that have held a duty exists in
similar circumstances. 5 Notably, courts of last resort in New York, Pennsylvania,
and Wyoming have all determined that a drug testing facility owes a duty to the
person subject to testing. See Landon, 999 N.E.2d at 1124–25 (holding drug testing
laboratory owed duty to test subject to perform drug test "in keeping with relevant
professional standards"); Sharpe v. St. Luke's Hosp., 821 A.2d 1215, 1221 (Pa. 2003)
(finding hospital owed employee a duty of reasonable care in collecting and handling
urine specimen); Duncan, 991 P.2d at 740 (concluding drug testing company owed
employee a duty of care in collecting, handling, and processing urine specimen).

IV. CONCLUSION

Based on the foregoing, we answer the certified question in the affirmative.

5
See, e.g., Cooper v. Lab. Corp. of Am. Holdings, Inc., 150 F.3d 376, 379 (4th Cir.
1998) ("The overall trend is for courts to recognize the existence of a limited duty on
the part of the laboratory to employees who are the subject of the tests."); Quisenberry
v. Compass Vision, Inc., 618 F. Supp. 2d 1223, 1230 (S.D. Cal. 2007)
("[L]aboratories have a duty to individuals whose specimens they test."); Chapman
v. LabOne, 460 F. Supp. 2d 989, 1001 (S.D. Iowa 2006) (finding drug testing
laboratory owed a duty to an employee when testing urine sample); Stinson v.
Physicians Immediate Care, Ltd., 646 N.E.2d 930, 934 (Ill. App. Ct. 1995) (stating
laboratory owed "duty of reasonable care to persons whose specimens it tests for
employers or prospective employers"); Elliott v. Lab. Specialists, Inc., 588 So. 2d
175, 176 (La. Ct. App. 1991) (concluding laboratory acting as independent
contractor owed duty of care to employee irrespective of contractual arrangement).
CERTIFIED QUESTION ANSWERED.

KITTREDGE, HEARN, FEW and JAMES, JJ., concur.