Do Your Business Premises Present A Public Hazard?

Juries are handling out larger and larger awards to victims of workplace accidents. And it is not just injured customers who are earning the court's sympathy.

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In Iowa, a 63-year-old man went to a restaurant for breakfast at 1:30 a.m. At another table in the restaurant were some drunken, rowdy members of a motorcycle club -- one of whom broke three plates. Restaurant employees took no action. Later, in the parking lot, the plate-breaking cyclist attacked the elderly diner, fracturing his skull. The victim died. His estate sued the restaurant, alleging that it had failed to provide a reasonably safe environment for patrons. The jury awarded the estate $249,375.

In a Kansas supermarket, a 61-year-old woman was reaching for a bottle of Pepsi when a carton of the bottles fell to the floor and shattered. Flying glass struck the shopper's foot. She sued the market and the bottler, claiming that the bottles should have been stacked differently to prevent them from falling to a hard floor. The jury awarded her $86,000.

In California, a 47-year-old sales manager was laid off by a tire company. He came back to his office a few hours later to return his keys. Suddenly, a box containing ledgers and metal office equipment fell through a water-damaged false ceiling, striking the former employee. The injury worsened his arthritic neck ailment and a prior back problem. He sued the tire company and the building's owner. The jury awarded him $400,000.

These cases illustrate the liability to which a businessperson is exposed when owning or occupying business premises. Three trends have increased the risks of this liability: (1) People are becoming more litigious; they are seeking legal advice and starting lawsuits with increasing frequency. (2) Courts are stretching traditional legal theories so that more injured people have the right to collect damages. (3) Juries are returning larger verdicts. During the 1960s, juries awarded verdicts of $1,000,000 or more at the rate of 3 per year; in 1981, the last year for which such statistics are available, there were 235 verdicts of at least $1,000,000.

The law requires you to keep your business premises in a reasonably safe condition. You must protect against obvious hazards, such as a slippery floor, a stairway without a handrail, or an electric fan with an unguarded blade. In addition, you must eliminate or give warnings about hazards that you can discover through periodic inspections -- for example, a defective smoke detector or a loose light fixture.

The duty to inspect played a part in a recent Washington, D.C., case in which a 51-year-old federal employee fell through the seat of a wrought-iron chair in a department-store restaurant. The fall worsened her degenerative disc disease. She sued the department store and restaurant operator and the chair manufacturer. During the trial, her lawyer established that the chair had never been inspected in 20 years of use. The jury returned a verdict for $175,000.

Businesses are also being sued with increasing frequency these days for failing to protect customers from criminal assault -- particularly in high-crime areas. An Ohio jury awarded $2,000,000 to a 25-year-old clerk who was abducted from a retail store parking lot and shot in the head. And a Virginia jury awarded $1,000,000 to the family of a 32-year-old physician who was shot to death in a motel robbery. Both lawsuits were based on the lack of adequate security measures.

In most cases that go to trial, the jury must decide if the business premises have been kept reasonably safe. You have a legal duty to do whatever a "reasonably prudent" company would do to protect members of the public from injury. This is a vague, open-ended standard that gives the jury a lot of latitude.

However, judges generally instruct juries that the law doesn't require perfection -- the owner or occupant of business premises can't guarantee the absolute safety of visitors. Where there is no evidence of negligence, the court may remove a case from the jury or reverse a verdict for an injured plaintiff.

Consider the case of a woman who, while shopping in a self-service grocery store, slipped on a piece of lettuce and fell. The jury returned a verdict for the injured woman. However, the state supreme court reversed the verdict, saying that there was no evidence that store employees knew about the lettuce on the floor. Also, there was no evidence that the lettuce had been on the floor for such a length of time that the store operators should have discovered it was there.

It is relatively unusual, however, for a court to second-guess a jury's decision about whether someone has met the duty of reasonable care. Be aware that you owe this duty of reasonable care to "business invitees." This term may mislead you. Your legal obligation to others doesn't depend on whether you personally invited them to your premises. It is sufficient that they are there for a business-related purpose.

A business may be liable for injuries received by, among others, customers or clients; browsers; patrons of a restaurant or theater; friends; family members and business associates who are with any of the above; delivery people; independent contractors (painters, computer repairpeople, bookkeepers) who work at your premises; workers employed by an independent contractor; people who use a public phone or restroom on your premises; people paying a bill or getting change; mail carriers: and meter readers or governmental inspectors.

What if the injured person doesn't qualify as a "business invitee"? You are not necessarily home free. Courts often recognize that a reduced duty is owed to others who come on your property. In most states, your legal duty of care depends on whether the injured person is a "business invitee," "licensee," or "trespasser."

A licensee is someone who comes on your property with your consent, but for a purpose that is unrelated to your business. The consent doesn't need to be written -- or even spoken. It can be implied from your conduct. (For example, you knew about prior visits, but made no objections.) Among the people whom the courts have labeled "licensees" are a pedestrian taking a shortcut across a gasstation path frequently used by the public; a minister calling on a corporate president regarding church business; and a man visiting his son at a movie theater to get his signature on a promissory note.

You are not legally obligated to make your premises safe for licensees. However, you must warn licensees of concealed dangers, and you must avoid active negligence (such as driving a car recklessly in a company parking lot where you know a licensee is present).

A trespasser is someone who has no permission to be on your property. But if you are aware of a trespasser on your property, you must avoid actively injuring that person. If you know that trespassers frequently use a portion of your business premises, courts may expect you to take additional precautions.

This last principle of law led to a $600,000 settlement for a 36-year-old Texas housewife. One Sunday, she had entered an unlocked excavation site to dig for old bottles. An overhang fell on her back, leaving her partially paralyzed. Her lawyer had evidence that the construction company knew that trespassers had frequently entered the site to hunt for bottles -- thus, the settlement.

Trespassing children are often given special consideration in court. Last year, an Indiana jury returned a verdict of $2,500,000 for a 6-year-old boy who suffered severe brain injury when a gasoline tank exploded. A construction company had dug up the tank while preparing a site for a new shopping center. The tank, containing gas fumes, was left unattended. The explosion occurred because the boy and his friends were playing with matches near the tank. In permitting awards to children in cases such as this, courts often say that an "attractive nuisance" lured the children to the property.

The legal distinctions between invitees, licensees, and trespassers are often unclear and artificial. Some states have done away with these classifications. Calfornia -- which often blazes new legal rails -- led the way in a 1968 opinion from he state supreme court which stated:

"A man's life or limb does not become less worthy of protection by the law nor a loss less worthy of compensation under the law because he has come upon the land of another without permission or with permission but without a business purpose. Reasonable people do not ordinarily vary their conduct depending upon such matters, and to focus upon the status of the injured party as a trespasser, licensee, or invitee in order to determine the question whether the landowner has a duty of care, is contrary to our modern social mores and humanitarian values. The common law rules obscure rather than illuminate the proper considerations which should govern determination of the question of duty."

The court said that while a person's purpose for coming on someone else's property may have some bearing on liability, the person's status as invitee, licensee, or trespasser does not determine the degree of care required. Several other states have followed California's lead.

Insurance can help protect your company from a devastating verdict. In many areas of the country, you can purchase $1,000,000 worth of premises-liability protection for under $500 a year for a small retail or service business or light manufacturing company. The size of your company will affect the cost of this coverage, as will the overall insurance package that you buy.

Beyond insurance, there are several steps your company can take to avoid liability:

* Conduct regular inspections to discover hazards. Hire outside experts if necessary.

* Be sure your premises meet building and safety laws.

* Solicit ideas from your employees on making your premises safer.

* Schedule maintenance work for nonbusiness hours. If that is not possible, use signs or guards to warn visitors of maintenance hazards.

* Consider physical barriers to prevent access to permanent hazards.

* If outsiders must enter high-hazard areas, see that they are escorted by one of your employees. Where warranted, provide safety equipment, such as hard hats or goggles.

* Install adequate lighting not only within your premises, but also in corridors, entryways, and parking areas.