Today’s blog contains the contents of Chapter 8 of my handbook, entitled Don’t Get Sued!  A Guide to Help Reduce Your Business’s Exposure to Lawsuits, which deals with assumption of risk, hold-harmless agreements, and general disclaimers, and the chapter reads as follows:

Under the doctrine of assumption of risk, a plaintiff may be precluded from a recovery (or the recovery may be diminished) if he or she knew of a potential risk, then voluntarily assumed it.  The assumption may be expressed or implied.  An example of a situation where someone voluntarily assumes an implied risk is when a fan is struck by a foul ball at a baseball game.  The average person knows that is a possibility.

An example of an express assumption of risk, is if you have located a hazardous situation in your store, such as a spill, and you have put up signs warning of the danger.  If a person walks in that area despite the warnings, it can be argued that they assumed the risk and may be precluded from recovering on any injury claim, or recover a reduced amount.

If your business offers rides (such as at a carnival) or some other potentially risky endeavor, it would be prudent to obtain a signature on a hold-harmless agreement, which expressly confirms that the patron assumes the risk involved and agrees to not pursue a negligence claim.  Such express agreements are generally upheld by courts.

Finally, general disclaimers such as signs posted or preprinted on tickets are often not helpful in limiting liability, but may dissuade would be claimants from pursuing the matter in the first place, i.e., before they speak to an attorney.*

*See BAR/BRI Multistate Bar Review Materials, 1991, Torts, page 48.

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• Related Blogs on Chapter 8: Assumption of Risk, Hold-Harmless Agreements, and General Disclaimers

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Chapter 7 of my journal, Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits, which deals with insurance coverage, begins with the next paragraph.  The Introduction, plus the previous six chapters are covered in older blogs.

Just a word or two on insurance coverage.  It’s very important that your business have coverage that protects itself.  By protect, I really mean to defend and indemnify.  Defense of your business by your insurer is not optional.  If you have coverage for the type of loss which occurs, the carrier has a duty to defend their insured.  Defense means to handle the claim for you from start to finish.  If the carrier deems the claim to have merit and value, the claim may be settled by an insurance adjuster prior to the filing of a lawsuit by the plaintiff.  If a lawsuit is filed, the insurance company will be responsible for providing an attorney to file an answer to the plaintiff’s complaint, and handle all the litigation related matters through final resolution of the case.  The cost for a business to pay for it’s legal defense without insurance coverage would likely put the vast majority of small businesses out of business.  Therefore, be sure to have appropriate coverage.  To keep the cost down, consider a higher deductible (but one you can afford if the need arises).

You may also wish to consider purchasing medical payment coverage (med-pay).  Such coverage will pay the medical expenses of someone injured on your property, usually up to $1,000.00.  The coverage does not typically extend to employees, as in theory they have worker’s compensation coverage available.  The cost of such coverage is typically fairly nominal and it often placates claimants just enough to prevent them from hiring an attorney and pursuing the matter further.  Often, if the claimants get their medical expenses paid by the establishment that they feel was responsible for their injuries, they feel as if justice was served.

Finally, look into buying an umbrella policy.  These types of policies protect the insured from claims of negligence, as well as other claims, usually up to $1,000,000.00, which is likely to exceed other coverage that you have.  The cost of this type of policy is usually only a few hundred dollars annually.  Just be sure the coverage kicks in for claims against your business.  However, even if it doesn’t, you should consider the coverage, as it protects you personally in case a lawsuit against your business pierces the corporate veil.

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Chapter 6, as the title implies, deals with worker’s compensation claims and is borrowed from my guide entitled Don’t Get Sued!  A Guide to Help Reduce Your Business’s Exposure to Lawsuits and reads as follows:

When an employee is injured while in the scope of employment, that employee may file a worker’s compensation claim with your business.  This is typically mandatory insurance coverage that you must offer your employees.  Worker’s compensation benefits only provide payment for what the carrier deems to be reasonable and necessary medical treatment and reimbursement for lost wages.  There is no pain and suffering compensation available.

In general, the legislature and judiciary do not like the idea of employees suing their employers, or fellow employees, for their injuries because such litigation may have an effect on the overall employment picture.  In theory at least, the worker is less likely to pursue a claim if no payment other than medical bills and lost wages is available, and not compensating for pain and suffering saves the employer considerably in terms of premiums for the mandatory coverage.

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• Related Blogs on Chapter 6: Worker’s Compensation

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Chapter 5 of my manual entitled Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits deals with miscellaneous tort claims and reads as follows:

I cannot stress enough how important it is for you to inspect the premises of your business; not just to check off a report, but I mean inspect with a very critical eye.  While looking around your business, keep in mind that almost anything can be a hazard.  Some examples of miscellaneous claims that I have had experience with should help illustrate my point.

When you look around your store, inside or outside, how is the lighting?  Are you able to see the display cases?  Is it reasonably foreseeable that a business invitee might bump into it?  Whether the premises are properly lit is subjective.  But there are things that you can do to help protect yourself.  Make sure the highest wattage bulbs are used and that the light fixtures themselves are spaced close together.  If someone falls because they trip over something they didn’t see, rest assured that an experienced personal injury attorney will get a lighting expert out to your store pronto to check for proper wattage and the location of lights.

Another claim that I have handled which pertains to a lot of businesses is injury due to a puncture by those inventory control devices that you usually see attached to clothing.  When they are removed by the clerk ringing up the sale, be certain that there are solid procedures in place for what should be done with that sharp pin which is left uncapped.  Think about it, that pin is a claim waiting to happen.  If the patron is injured, there’s a negligence claim.  If an employee is injured is injured, there’s a worker’s compensation claim (see Chapter 6).

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As part of my continuing effort to keep my clients and friends informed, I am including Chapter 4, “Company Vehicles” from my handbook entitled Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits, which reads as follows:

There are lots of types of businesses which need to offer their employees use of company owned vehicles.  Often, employees use these vehicles while outside the scope of employment.  Regardless of whether or not the employee is working for you, or is on a personal errand, typically, most contracts of insurance, as will likely cover your work vehicles, provide that your business’s automobile policy is primary.  This means that your coverage is first in line to pay a third party’s claim if your employee negligently injures someone else or causes property damage while driving your company’s vehicle.  With this in mind, in order to attempt to reduce your premiums, I would urge you to speak with your agent about making the coverage which is available on your business vehicle, secondary coverage in situations where your client is not acting within the scope of employment.  Such coverage should offer insulation for your business, and help keep your rates in check.

Also, consider waiving any available medical payment (med-pay) benefits, sometimes referred to as personal injury protection (pip) coverage.  Medical expenses, and sometimes wage loss (under pip only) paid under such claims are secondary to worker’s compensation benefits.  So waiving the coverage on a work vehicle may make sense and reduce your premiums.

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• Related Blogs on Chapter 4: Company Vehicles

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The following excerpt is from Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits, a guide authored by attorney Roger K. Gelb.  Chapter 3 reads as follows:

If one of your employee’s injures one of your invitees, is the business liable?  The answer is sometimes.  In general, if your employee intentionally injures an invitee then, unless there was reason to know that the employee would act that way (history that you, the employer, were aware of or should have been aware of), the store probably is not liable for the employee’s intentional actions.  Beyond that, the store’s insurance coverage probably will not cover the loss.

Whether you actually know of an employee’s violent tendencies is the easy part, but in what cases should you have been aware of the employee’s violent propensities?  Watch out for obvious red flags, such as a bad temper that the employee flashes in front of you and others.  And if that temper combines with violence, and there are witnesses, your business may be on the hook if the employee injures and invitee.

An employee handbook that is provided to every employee may be a good idea.  The handbook should cover many subjects, including:  appropriate dress for the workplace, how to interact with fellow-employees (including supervisors and subordinates) and customers, what type of behavior is appropriate in the workplace, vacation time, sick leave and other topics which may be unique to your business.  Be sure to obtain a signature from the employee confirming that they have received  the handbook and will read it and obey the rules.

The employee handbook is different from a contract of employment, which I would urge that you not provide.  A contract of employment, while it may cement your agreement with your employees as far as pay and benefits go, it will also no doubt cover termination.  In most cases, such agreements only provide unnecessary restrictions on the employer as to when and how an employee may be fired.  Typically, absent such an agreement, an employee is considered an “employee at will” and may be terminated for almost any reason.  Naturally, most jurisdictions have laws in place that ensure that the reasons for the termination are not based on race, religion, sexual orientation, etc.

What if your employee negligently injures one of your customers?  In general, your business is liable under the doctrine of Respondeat Superior, which is a fancy way of saying that an employer is liable for the negligent actions of his or her employee.  Appropriate insurance coverage should cover these types of claims.

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• Related Blogs on Chapter 3: Employee Conduct

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This blog contains the content of Chapter 2 of my book, Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits.  Chapter 2 deals with security personnel and reads as follows:

You may have or plan on opening the type of business that requires security, like a jewelry store.  Or, you may simply feel like your business needs security to make would-be criminals think twice before acting.  Or, maybe there is a disgruntled ex-employee who you believe poses a threat; in which case, not hiring security could create liability.

Whatever the reason for having security guards in place, understand that having such employees creates additional liability exposure.  Keep in mind, with limited exception (shopkeeper’s privilege – where it applies, defense of others, etc.) private security guards have no right to touch anyone.  Therefore, if your needs require more than a show of force, you may want to consider hiring off duty police officers to handle security.  Police officers can make arrests and carry weapons.  A police officer will also typically wear his or her uniform when handling off duty work, and may be able to keep their police vehicle in the lot outside your business.  You may also be able to piggy back onto the municipality’s liability defense if the officer is included in a lawsuit against your business.  By the way, typically the cost of hiring an off duty officer is comparable to hiring a rent-a-cop.

On the other hand, if you do business with private company, be sure to have a written agreement in place in which the company agrees that they are responsible for any alleged misconduct, of any type, by their guards.  You may wish to hire an attorney to prepare such a document, or to review one provided by the security company.

Don’t Get Sued by Roger Gelb is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at www.gelbandgelb.com.

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This blog contains the content of Chapter 1 of my book, Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits.  Chapter 1 deals with Premises Liability and reads as follows:

A business owner has a duty to it’s invitees (again, customers, employees, delivery personnel, etc.) to warn of dangerous conditions that are known to the business plus a duty to make reasonable inspections to discover dangerous conditions and then either make the dangerous conditions safe, or at least warn of the hazard.

In order to better illustrate what I mean, it may be helpful to look at cases that I have handled in which a store was negligent for a dangerous or hazardous condition.  A week doesn’t go by when I don’t get called by someone who fell at a supermarket.  Usually, the potential client was caused to fall by something slippery, like juice, or melted ice, water leaking from a refrigerator or freezer or water from where a mop was used.  The most important things for me to are: (i) whether the store knew or should have known about the hazard, (ii) whether the potential client was injured as a result of the fall and (iii) whether there were any witnesses.

The first (whether the store knew or should have known about the hazard) is the most difficult for my client to know and thus for me to prove.  This is where witnesses and surveillance video come in.  I ask my clients if they had any idea how long the hazard had been present.  If they say they have no idea, unless the injuries are really significant, I usually don’t take the case because I don’t want to waste my time and money and the client’s, on a case that I don’t know if I can prove at least until I file suit and get into the discovery phase of litigation, which may give me access to video and statements from employees.  But here’s the thing, you would probably be surprised to know just how many clients tell me that just after they fell, another shopper, or even an employee, told them that the spill had been there for hours and no one had cleaned it up, or that the freezer had been broken for a week and it’s a miracle no one fell sooner because of the puddle of water.  As the owner or manager, you must advise your employees not to talk to someone that is injured, other than asking if the injured party needs medical attention and to inform the injured party that store would like to complete a report (see below) about the incident.

There are other ways, of course, to estimate how long it has been since a hazard had been created.  I successfully handled a case for a woman who was caused to fall from water which leaked from a bag of melted ice.  The fact that the ice melted created enough of an inference that the hazard had been there long enough for the store to recognize it and clean it up, or warn of the risk.

The key for the store to remember is to inspect the premises at reasonable regular intervals.  How often that is may be impossible to answer.  But the more often the better.  One or more employees should be charged with the duty of inspecting aisles in the store and documenting that everything is clear and safe.  Include the employees initials and the time of the inspection on any forms that you may create for this purpose.

Regarding the second component which I mentioned above (i.e., whether the client was injured), naturally, there is little the store owner/manager can do to control this point.  However, I will pass on a trick that insurance companies use.  As soon as the fall occurs, or any other situation in the store in which an invitee appears to have a potential claim, fill out a report.  Among other details, including the identity of the injured party and witnesses, ask the invitee whether they’re injured.  Often, soft tissue pain doesn’t start for hours, or even until the next day.  So, if the client says they are not injured, or more likely, that they don’t think so, put down their direct quote on the report and have the client sign and date the report on the bottom.  Although this document may be inadmissible at trial, it is nevertheless likely to be helpful.

Beyond injury information, be sure to include on the report the potential claimant’s version of how the incident occurred.  If there was a sign warning of the hazard, ask if they saw it and take photos of the sign which should be attached to the report.  Ask also if they saw the hazard itself, before the incident.  Do not include the store’s version of how the incident occurred on the report and do not discuss the incident with anyone other than your store’s own insurance company representative.

Independent witnesses are great, but not always available.  Install a surveillance camera.  In most instances, the video will help support the store’s version and it will also help dissuade crime.

When an object in the store (that belongs to your business) caused the injury, take it out of circulation.  If the item was for sale, put it in the storage area and make sure employees are instructed not to tamper with it.  The item is evidence and may need to be inspected by an expert in the future.  Your failure to remove the item and preserve it, is known as spoliation of evidence, which may invite a spoliation instruction to a future jury.  Such an instruction may free the plaintiff from otherwise bearing the burden of proving that the item in question was defective or a hazard.

Finally, do not forget that the exterior of your store may be your responsibility.  You must be sure to read your lease and understand what areas your store is responsible for.  For example, if your business is responsible for the parking lot, you must make sure the lot is kept safe, well lit and clear of hazards, just like the inside of the store.  The same goes for the sidewalk.  Use a critical eye when inspecting the outside of the business.  Do not neglect this area.  Look for things that are out of the ordinary, such as “parking stops.”  A parking stop is simply the low to the ground concrete barrier that is placed at the end of the parking space to let the driver know that he is nearing the end of the parking spot.  I do not recommend using the stops.  If they move to a location other than where they were intended and someone falls, your store may be liable.  Also, city, county or state codes may require keeping them painted a certain color.  These codes should also be reviewed to make sure everything on the outside of the store is being done appropriately.  Par particular attention to laws about how long before ice or snow need to be cleared and the painting of curbs.  Also, constantly inspect the sidewalks and parking lanes for hazards and keep a report, as suggested for the inside of the store.  All reports should be filed and saved.

Don’t Get Sued by Roger Gelb is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at www.gelbandgelb.com.

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Each week or so I will provide, in order, the content from my manual entitled Don’t Get Sued! A Guide to Help Reduce Your Business’s Exposure to Lawsuits. The book was originally published in January 2008 and has become a staple for businesses around the country. Now, regular visitors to our firm’s website can read the book at no charge.  The entire text can be purchased at Amazon.com.  This week, we start with the Introduction, which reads as follows:

To the best of my knowledge, this booklet is the first ever written by a seasoned plaintiff’s personal injury attorney, for the benefit of business owners. I have represented thousands of people injured due to someone else’s negligence and I’ve had a lot of success. Many of the cases included claims against businesses, both large and small. My goal is to explain to the reader what is involved in a successful plaintiff’s case against a business, so the business owner can learn what mistakes to avoid, the pitfalls if you will, and also learn what steps may be taken to help reduce the business’s exposure to legitimate lawsuits. Remember, however, that anyone can sue anyone even if all of the elements of a successful outcome aren’t present. But, if those elements aren’t present, and hopefully after reading this booklet you will be able to reduce those elements, it is less likely that any knowledgeable plaintiff’s attorney would take the case. That doesn’t mean that a frivolous lawsuit can’t be filed against your business (remember the case filed in the District of Columbia against owners of a dry cleaner?), but there are remedies for that too, which I will discuss later (see chapter 10). And I obviously, without visiting your business in person, cannot promise that every conceivable risk to your specific business can be addressed in this booklet. But I can promise that if you read this booklet carefully, and act accordingly to the information presented, the likelihood of a successful claim against your business, will be greatly reduced.

By far, the two most common claims against businesses are for (a) negligence (covered in Chapters 1 through 8 ) and (b) breach of warranty and sales related issues (Chapter 9). Lets start with negligence cases, which is my field. Negligence cases are based upon the notion that when a person engages in an activity, that person has an obligation to perform the activity as a reasonably prudent person would under the same or similar circumstances (duty), and if there is a failure (breach) to do that, and a foreseeable plaintiff (almost everyone is foreseeable) is injured (damages) as a direct result (causation) of that failure, then all four elements needed to prove a prima facie negligence case exist.

The negligence concept not only applies to individuals, but also to businesses. By businesses, I really mean the owner, who is responsible for the negligent actions of his or her employees, agents, etc. and is responsible to his or her business invitees (includes customers, employees, people making deliveries, etc.). Different reasons that businesses are most typically sued for negligence, and some ways to avoid those lawsuits, will be covered.

Breach of warranty actions for businesses typically deal with the seller’s obligation of tender and delivery and buyer’s right to inspect. Warranty issues most often deal with promises, both implied and express, that a product or service will be satisfactory. These types of claims against businesses are covered in Chapter 9, as well as disclaimers which may be available to the seller.

When reading this booklet, please keep in mind that the law I’m applying, may or may not be the law where your business is located. It is imperative that you direct any questions regarding the applicability of the law as referenced in this guide, to a qualified attorney admitted to the bar in the state where your business is located. My suggestions should not be construed as legal advice.

Finally, the suggestions that I offer are based on the assumption that your business has been set up appropriately; whether it is a corporation, a litimited liability partnership, or any other type of entity. This is critical in helping to avoid personal liability. The suggestions in this book are designed to help reduce liability for your business, not necessarily you individually.

Please check back shortly to read Chapter 1, which deals with premises liability.

Don’t Get Sued by Roger Gelb is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at www.gelbandgelb.com.

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