Let's play a game called "Who's Liable?" We'll give you a scenario, and then you guess which party is liable. Ready?
In July 2008, Patricia Thompson went grocery shopping at the Winn-Dixie store in New Iberia, Louisiana, and she slipped on a puddle in front of a meat case. She sued, and according to the details of the Thompson v. Winn-Dixie Montgomery, Inc. suit, parsing out liability was made harder by several facts:
- KAP Cleaning Service, a small cleaning subcontractor, provided cleaning services at the Winn-Dixie store.
- Rubber floor mats were typically placed in front of meat cases to catch any leaks or dripping.
- The day of the incident, the mat had been rolled up and pushed underneath the meat case by a KAP worker intending to mop the floor.
- The KAP employee failed to either place a wet floor sign in the area or remain at the scene, actions required by both the cleaning service and Winn-Dixie.
So who is liable – Winn-Dixie, KAP Cleaning Service, or Thompson? If you're not sure, you aren't alone.
Liability Roulette: Pointing Fingers and Court Decisions Reversed
According to an Insurance Journal report, the trial court ruled in favor of Thompson, assigning…
- 30 percent of liability to Winn-Dixie for the injury.
- 70 percent of liability to KAP Cleaning Service.
- Zero percent of liability to Thompson. (We'll explain why this is relevant later on.)
But matters didn't end there. The report notes the Louisiana Third Circuit Appeals Court overruled the trial court, assigning 100 percent liability to Winn-Dixie. The court of appeals argued because Winn-Dixie ultimately had control over the duties of the KAP subcontractors while they work in the store, the grocer should be held responsible for the accident.
Okay, case closed, right? Nope.
The Louisiana Supreme Court had its say, too. The high court decided "the record shows that Winn-Dixie did not have complete supervisory control over the cleaning crew," the article notes, contradicting the appeals court. The Supreme Court reinstated the original trial court's judgment.
Liability can be fickle, and cases like this are a cautionary tale if you work with subcontractors. Their work can become your problem.
A Slice of the Liability Pie
At first blush, the lawsuit detailed above may seem like a typical slip-and-fall case that General Liability Insurance can easily cover. But whose policy is paying the damages? With accidents, more than one party is often at fault – in legal terms, that's called "shared blame."
To establish which party is negligent, or to what degree multiple parties are negligent, most states follow a variation of contributory negligence or comparative negligence. AllLaw.com offers some clarification:
- Contributory negligence. If you contribute to your own injury, even minutely, you can't hold anyone else responsible.
- Comparative negligence. Responsibility is determined based on the negligence of every party directly involved in an accident.
Louisiana adheres to a "pure" comparative negligence rule, meaning it reduces an injured person's recoverable damages by an amount equal to their share. So if someone was injured in a store but has 10 percent of the blame for the accident, their awarded damages would be cut by 10 percent.
However, in our example case, the injured person and plaintiff – Thompson – wasn't found at fault. Thompson is able to collect full damages awarded to her.
I'm Liable, You're Liable, We're All Liable!
What if your contracts assign liability to a third-party contractor or subcontractor (e.g., as Winn-Dixie did with KAP)? A contract doesn't automatically exempt your small business from liability. In fact, a court might dismiss it altogether. Assigning liability isn't always black and white – even the courts may disagree, as evidenced in this case.
And it isn't just General Liability cases you need to worry about. Shared blame can result in Professional Liability lawsuits. Say your interior decorating firm measures a client's kitchen for new cabinets. The contractor doesn't follow your exact measurements and the cabinetry is too large to fit. The client sues your firm and the contractor. A court could determine you're both to blame, arguing you should have followed up with the contractor and the contractor should have double-checked the measurements.
For another example of shared blame, read about a tragic gas leak explosion in "Business Interruption, General Liability, & Property Insurance: Oh, My."