Shaw v. Psychemedics Corp.

Supreme Court of South Carolina · Torts

TortsNegligenceDutyDrug testing laboratory liabilitynegligenceduty of carecertified questiondrug testing

Facts

The plaintiff was a BMW employee subject to random drug testing, and BMW contracted with the defendant laboratory to test employees' hair samples for drugs. After a contract nurse collected the plaintiff's hair sample, the defendant reported that the sample tested positive for cocaine and benzoylecgonine, and BMW suspended him. An independent laboratory then reported that the plaintiff's hair tested negative, but BMW refused to accept that result and instead allowed a second sample to be tested by the defendant, which again reported a positive result. BMW terminated the plaintiff, who alleged he had never used illegal drugs and sued the laboratory for negligence and negligent supervision.

Issue

Whether, under South Carolina law, a drug testing laboratory that contracts with an employer to conduct and evaluate employee drug tests owes a duty of care to the employees subject to the testing, such that the employees may bring a negligence action for failure to properly and accurately perform the test and report the results.

Rule

In South Carolina, a tort duty may arise from a defendant's contractual relationship with another even without privity between the defendant and the injured third party. A drug testing laboratory's contractual relationship with an employer can therefore give rise to a duty of care owed to employees whose specimens are tested, where the laboratory has a sufficient relationship to the employee through the testing process and the duty is supported by policy considerations; the duty is not based on foreseeability alone.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Redwood Transit, a delivery company in Columbia, South Carolina, contracted with Palmetto Analytical Group, a private laboratory, to analyze employees' saliva samples for illegal drugs. After the lab allegedly mixed up Noah Bennett's sample and reported a positive result, Redwood fired him, and Noah sued the lab for negligence even though he never signed any agreement with it.

How should a South Carolina court most likely rule on the laboratory's argument that it owed Noah no duty because there was no privity of contract between them?

Explanation. South Carolina recognizes that a tort duty to a third party may arise out of the defendant's contractual relationship with another, even absent privity. In the drug-testing context, the majority held that a laboratory contracting with an employer owes a duty of care to employees whose specimens it tests to properly and accurately perform the test and report the results. (Derived from Shaw v. Psychemedics Corp. (n.d.).)