Author Archive

Avoiding Lawsuits

Like the in-laws visiting for the holidays, I don’t want to overstay my welcome at Overlawyered, so Wednesday will be my last day, at least for this stint. Before I go, I wanted to leave you with a few lessons I have learned about avoiding lawsuits in a customer contact business. Please note, I am not an attorney, and this is not legal advice, it’s just what we do. Your mileage may vary.

1. Pay your attorney before a problem arises. My attorneys have been real allies in helping me review our procedures, create releases, craft an employee manual, etc.

2. Treat your employees well. Unhappy employees create internal problems, and are more likely to mistreat customers.

3. We always make an employee’s first 60-90 days a probationary period, as indicated and accepted by them in their job offer letter. We have found it easier to treat the employee truly as at-will in that period. Some argue that using the probationary period makes it harder to fire someone after the period, but since we are a seasonal business and most folks only work for us for 4-6 months, this is not an issue for us. Ask your attorney about it in your situation.

4. Employees who show poor judgement in how they interact with customers will do it again in the future 99% of the time. We are very aggressive about weeding out these employees, terminating them when possible in their 60-90 day probationary period. In a seasonal business, we just don’t have time to train new behaviors.

5. When employees or customers are hurt, we train our employees to provide medical care quickly. There is absolutely no return to being cheap with first aid, no matter what or who the cause. All of our employees know how to get injured people to the emergency room fast, and key phone numbers are posted in many locations.

6. I insist that every “incident”, from injuries to confrontations with customers, be documented immediately by our employees on a company incident report. Even waiting a day will mean that critical details can be forgotten. This information is invaluable when dealing with possible claims later.

7. I always investigate personally any complaint that a customer or employee brings to me. I will document my findings for the file, and always provide a written response to the customer. If I think they are considering a claim, I always write the letter assuming that it will be read by an attorney considering taking on their case on a contingency basis. Remember that attorneys have to decide if a client is worth their time — this is a chance to convince them it is not.

8. Get a good business insurance agent. If your agent says “no, I can’t get your coverage for that” then you probably have the wrong agent. I never knew how mediocre my previous agents were until I had a great one. Also, insurance companies have a lot of good free resources to do safety and risk inspections.

9. Invest the time in a good manual for your supervisors. Don’t think of it as a policy manual, think of it as a giant FAQ. Every time one of our managers faces an odd new situation, we assume it can happen again and publish guidance for them in the manual.

10. Don’t operate in California or Florida. Well, since we are a recreation business, we almost have to be in these states. So we just plan in advance that insurance and other costs will be higher.

Bloggers Challenge Class-Action Settlement

Charles Burck writes about the reaction to the Netflix class-action settlement. (Charles Burck, “Bloggers Challenge a Class-Action Settlement”, Corporate Board Member Magazine, March/April 2006). The opponents of the settlement cite two problems with the settlement: 1) Only the lawyers got cash, and 2) the coupons Netflix is sending to customers are really a low-cost marketing program for them, like locking you into a magazine subscription with a free first month, and doesn’t really punish Netflix or compensate customers at all. So, either there was no harm, and the suit was a big frivolous mess, or there was harm to customers, in which case the settlement utterly failed to redress it.

Apparently, there is a website to protest the settlement which announces a hearing set for tomorrow (Feb 22). Ted and Walter have been all over this on Nov 3, Jan 11, Jan 21

Do Acts of God Still Exist?

No, I don’t mean to start a discussion over the existence of a deity or whether that entity intervenes in the material world. I am sure Walter would permanently disown me for starting such a food fight on his blog. No, what I mean is, does the legal term “act of god” have any meaning nowadays vis a vis liability, or are all damages now necessarily someone’s fault?

The other day I listed some of the litigation and threats of litigation we get in our public contact business (Feb 20). Another common claim we get is from damages our customers suffer to their property due to what I would call natural events or from meeting up with inevitable natural hazards (e.g. hitting a rock while off-roading). Let me give a specific example that is not real but is typical of these claims.

A customer drives into a National Forest campground we operate. During their stay, on a particularly windy day, several trees fall over including a large tree that crushes the roof of their camper. Is this an act of god? Or am I, as I can assure you every such customer and insurance lawyer out there seems to believe, liable for the damage to their car?

Well certainly, one criteria would be whether I exercised due care in maintaining the health of the trees in public areas. And in fact we have a hazard tree process where experts from the US Forest Service, whom a reasonable person would consider the best in their field, assess the health of trees in public areas and mark trees that might pose a danger of falling for us to remove. Lets posit that we had just completed this process, and the tree that fell looked healthy to all the experts. I guess the question is, in today’s legal environment, is there any such thing as being able to prove “all due care”, or in effect does the accident itself serve as prima facia evidence that due care was not exercised, even if no one can think of what else could be done? Comments are open.

My Favorite Lawsuit

As my guestblogging stint winds down here at Overlawyered, I wanted to reflect a moment on lawsuits I see around me every day. My company runs an outdoor recreation business, mainly running campgrounds on public lands. As a public contact business, we get people trying to make all kinds of strange claims against us.

For example, we have had at least two different people who needed an operation that they couldn’t afford come into our facility and fake an injury to try to get us to pay for the operation. Fortunately, in both cases, the individual involved lived locally and had tried the same stunt at several other local businesses, and we were able to get them to move their efforts on to some other business (we used to have the same philosophy about fire ants in Texas — you can’t get rid of them, you can only chase them onto your neighbor’s yard). We have also had several people try the same thing, but as employees, turning down office work and begging us to give them lots of physical labor, only to be hit with a workers comp claim within weeks.

Every year, we have hundreds more job applications than we have positions to fill, so we have to turn down a lot of qualified people for employment. It is often the case that when one of these people we turn down for employment considers themselves in a “protected” group, they call me threatening to sue. Several folks who were over 65 have threatened to sue me for age discrimination, which always makes me laugh, since the vast majority of the 500 people I employ are over 65 — many are over 80 and a few are even over 90! We have also had at least one person who interviewed in a wheelchair threaten to sue for discrimination against the handicapped, right up until we saw him playing football at the beach in our campground (and despite the fact that over 10% of my work force is disabled in some way).

We always have issues with employees who honestly believe that the courts are supposed to act as a grievance and appeals board for job terminations. I can’t even describe the large percentage of employees we terminate for cause who call me and tell me they are going to sue. Even when they don’t sue (and few do, since lawyers working on contingency need to see some hope of winning) they still cost me a ton of time, because I feel the need to personally investigate every one to make sure my managers are treating people the way they should. In many cases, we probably wouldn’t have hired the person involved in the first place because they have a history of poor performance and quick terminations, but it’s hard to find this out anymore since lawsuits have dissuaded many companies from responding honestly to reference checks.

Despite all of these, my favorite suit actually was against the company from who we bought most of our assets. One day, a male visitor was near the campground in bare feet, and claims to have stepped on a nail. The nail caused a small puncture wound on the bottom of his foot. Employees offered to get the man to the emergency room to treat the puncture and to get at tetanus shot, but the customer turned down care. Months passed, and the case was mostly forgotten. Until one day the company was given notice that the man was filing suit for sexual dysfunction. Apparently based on some medical logic I never understood, perhaps some strange acupuncture effect, the man claimed he was unable to perform sexually based on stepping on that nail. In a sane world, this would have been dismissed out of hand. However, years later, the suit lumbers on, continuing to generate legal bills and settlement pressure.

What Goes Around, Comes Around

Apparently Amazon is facing yet another suit over patent infringement involving its website technologies. “The complaint accuses Amazon of using technology on its own Web site and for third parties such as that infringes on two Registrar Systems patents, Amazon said.” (“Amazon named in patent infringement suit”, Puget Sound Business Journal, Feb 17).

Though I am generally sympathetic to companies sued over software patents, particularly since the US Patent Office seems to have completely lost its mind in granting many of these patents, I have little sympathy for Amazon. After all, they were the ones to patent and then sue their rivals over “one-click” ordering.

My college roommate, who was a trade lawyer for quite a while, told me a story of a company trying to get their disposable cigarette lighter to pass the US child safety tests (I promise we will get back on topic in a second). I can’t remember the exact test, but it involved giving a bunch of children the lighter and observing how many in a certain amount of time could figure out how to defeat the childproofing. Apparently a key to success was to (literally) go out and find the slowest and dullest group of kids you could. Which brings me back to the one-click patent, where surely Amazon must have gone through a similar process to find a patent examiner who would declare one-click ordering “non-obvious” and patentable.

Proliferation of Taser Suits

Taser International has experienced tremendous growth over the last few years, but now is facing a growing number of lawsuits. Some of these suits narrowly focus on police departments for their use of the Taser, while others name Taser itself in defective product suits. A quick scan of the news over just the last few days reveals suits in Georgia, Ohio, Tennessee, Canada, Florida, and Minnesota.

Taser claims that many of these suits have been dismissed. Taser faces some of the same problems faced by vaccine makers and even airbag makers – their product clearly saves lives vs. the alternative (i.e. getting shot with a real gun), but this “safer product” value proposition gets confused with “completely safe,” which leads to careless use and mistaken expectations.

Retailers Settle Katrina Gas-Price Suits

Over at Coyote Blog today, I observe that while most of us have shifted our attention away from Katrina, gas price “gouging” lawsuits against gasoline retailers still continue. Sunoco became the latest retailer to settle, paying New Jersey over $300,000 to be left alone. Many other states have also gotten into the act, including Aspiring Governor Eliot Spitzer, who would never miss an opportunity to score some populist points.

So, having spent months trying to explain markets and supply & demand and refute the silliness of the “price-gouging” concept, what are gasoline retailers doing today? Why, they are hauling credit card companies in front of Congress to accuse them of … price gouging (Coyote Blog, Feb 17). Also see Sept 2, Sept 1.