Several media outlets have recently run stories¹ about former ING Financial Services trader Anthony Rotondi, who was ejected from a New York Knicks game at Madison Square Gardens (MSG) on January 7, 2014.
The allegations are that he was attending the game with his supervisor and two clients, using his employer’s season tickets. During the fourth quarter, Mr. Rotondi loudly heckled All-Star power forward Carmelo Anthony, allegedly shouting, “Carmelo, you stink!” If true, this would be one of the more banal heckles ever directed at Mr. Anthony. A trier of fact may be able to take notice of the fact that MSG has often hosted some of the more accomplished hecklers in professional sports, including the critically acclaimed director Spike Lee.
Apparently, Mr. Rotondi was upset that the Knicks had blown a 14 point fourth-quarter lead against the struggling Detroit Pistons (although the Knicks would rally in the final minutes and pull out a narrow victory).
What happened next is in dispute, however at some point Mr. Rotondi was removed from MSG, and charged with criminal offences including tampering with a sports contest and criminal trespass.
The lawsuit alleges that MSG was not content to simply eject Mr. Rotondi from the arena, but also called his employer and alleged that Mr. Rotondi had used profane and vulgar language, had been abusive with security, and refused to produce his ticket when asked.
This unusual situation raises some interesting legal issues. In particular, it may invoke the concept of liability for pure economic loss for negligent misstatement, first developed by the British House of Lords in the seminal 1964 case Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.,  AC 465.
Prior to Hedley Byrne, a plaintiff could not recover damages resulting from a negligent misstatement of facts made by a party to whom the plaintiff was not linked by contract. In Hedley Byrne, the Plaintiff corporation was an advertising agency who received a large order from a company called Easipower. Before accepting the order, Hedley Byrne asked the defendant corporation, Heller & Partners Ltd., about Easipower’s creditworthiness. Heller & Partners was in a position to know the correct answer as it was responsible for Easipower’s banking. Heller & Partners confirmed that Easipower was creditworthy, which turned out to be untrue as Easipower became insolvent shortly thereafter, leaving Hedley Byrne with a substantial unpaid bill. The House of Lords found that the relationship between Heller & Partners and Hedley Byrne was sufficiently close in the circumstances that Heller & Partners ought to have known that Hedley Byrne would rely on the information provided, and may suffer a financial loss if that information were inaccurate or misleading.
This principle is infrequently applied in employment law cases, but Mr. Rotondi’s claim may be one example where a claim for pure economic loss might be sustained against a third party. For example, it is at least debatable whether “Carmelo, you stink!” is profane or vulgar language. It’s not difficult to imagine a character on a prime time network sitcom making a similar statement.
If Madison Square Gardens represented to ING that Mr. Rotondi used profane and vulgar language, and if that representation was false, then Mr. Rotondi may advance the argument that MSG misled his employer and that the misleading facts presented to his employer directly resulted in the termination of his employment. Similarly, an argument could be made that if Mr. Rotondi was not in fact abusive with security, and if MSG made an untrue representation to his employer that he had been abusive, then ING might be responsible for his wage losses.
Similar types of liability for negligent misrepresentation can arise in the context of employee references, which is perhaps why many employers will refuse to provide a qualitative recommendation, and will instead simply provide a “confirmation of employment” letter. If a subsequent employer relied on a positive recommendation in hiring an employee, and if that positive reference were later discovered to be misleading, damages or losses suffered by the subsequent employer as a result of the employee’s incompetence could potentially be visited on the party who gave the recommendation.
The message here is that you should seek legal advice before making representations about a person to his or her employer or potential employer. It is possible for third parties to be held liable for employment law damages if their communications are misleading and result in someone losing his or her employment.