If crime is a problem, what's a merchant to do? Beef up security, of course: Install more lighting in the customer parking lots, hire more guards, put tougher locks on the hotel room doors. Businesses should be forewarned, however, that taking such precautions could make them vulnerable to huge damages awards to customers for whom the lighting, guards and locks did not provide enough protection.
"The very growth of security itself has created new opportunities for negligence actions," Lawrence W. Sherman and Jody Klein write in a just-released University of Maryland study. "Once businesses undertake to provide better crime prevention by hiring security directors and guards, and by installing more elaborate security hardware, they virtually invite people to claim that the security was either improper or negligently inadequate."
The new receptivity of the courts to suits by crime victims against the owners of the premises where the crime occurred has been spotlighted in both legal journals and the general press (including this column). The whopping award won by singer Connie Francis against a Howard Johnson motel for allowing conditions that led to her motel-room rape was perhaps the most highly publicized of a host of such legal actions.
But not until Sherman, executive editor of Security Law Newsletter, and researcher Klein looked into the data had there been a fix on just how sweeping the trend is.
The duo relied for their data on reports made to the Association of Trial Lawyers of America, which publishes summaries of big awards won by members for their clients, when the members send in details of a case. It is nothing like a complete body of data; what seems to one lawyer a big enough award to report to colleagues may seem run-of-the-mill to another, cases won by lawyers who are not members of ATLA are not included, and looking at large-award victories tells nothing about unsuccessful suits or those settled for nominal amounts. But the trends uncovered by Sherman and Klein are so clear that they wipe out all objections to the weaknesses inherent in the research technique.
Business liability for faulty security provisions is significant and growing. In the early years of the study -- 1958 and 1959 -- ATLA reported only one major plaintiff victory a year for such litigation. In 1982, that number was 31. In all, the reports showed 186 such awards over the 24-year period, more than 10 percent of them for more than $1 million each. That figure takes on added meaning when you consider there have been fewer than 1,200 million-dollar verdicts won by personal-injury plaintiffs.
Although those totals include a few cases for false arrest by overzealous security guards (mostly suits aimed at retail stores), a couple of complaints from employes about being subjected to polygraph examinations, and some injuries from guard dogs, the preponderance of the big awards came in cases where the business was charged with not providing adequate security. Most commonly, this meant a customer collected for a crime committed by some third party that, the victim argued, the business should have been able to prevent. But also included are cases in which the victim was an injured trespasser who successfully reasoned the company should have used better security to keep him out of a dangerous place, such as a construction site. These types of inadequate-security cases were not only the most frequent but also the most expensive for business -- the average award near $600,000.
The largest number of such victories were reported in Florida, with D.C. and New York in second place. Connecticut, Delaware, West Virginia and South Carolina are among the states that do not show up in the lists at all, but Sherman and Klein warn companies against assuming that they are not vulnerable if they are located in a jurisdiction that so far has not been hospitable to such suits:
"The concentration of inadequate security cases in a few states up to 1982 may only show that those states are the trend-setters; other states have already followed suit, and more may be on the way."
The University of Maryland report stops short of giving business any advice on what to do about the problem. It is clear, however, that companies should begin to consider the possible payment of such damages -- or appropriate insurance -- as just another cost of doing business. Dropping security measures and taking steps to warn customers properly about the risk they take when they choose to shop in your store or stay at your inn seems sure to drive away so much business that the game is not worth the candle.