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Understanding How a Small Business Owner Can Protect Themselves From Negligence Claims

small business attorney Fairfax VA

A company had made a mistake. It’s a big one. And someone was hurt because of it. Is the business responsible for that harm (or as a business attorney likes to call it, those “damages”)? 

Very likely. 

What many business owners don’t realize is even when they don’t have a contract with the person who was harmed, the business still could be held legally responsible for the injured person’s damages based on the company’s “negligence.” As established by State and Federal law, everyone has a duty to act reasonably and take a reasonable amount of care in their dealing with others. Mere carelessness can lead to liability. 

The legal definition of negligence is intentionally broad. What is negligent in a specific situation may not be in another. To prove negligence, a plaintiff has to show three things: (1) a duty owed to them by the defendant: (2) the defendants’ actions or inactions violated that duty; and (3) the defendant’s conduct caused a legally recognizable injury to the plaintiff. 

Duty of Care

Generally, we’re free to act however we want, as long as we’re not impacting someone else’s freedoms or interests. A society and law holds that everyone has a duty to take “reasonable care” to avoid harming others. “Reasonable care” is acting reasonably in the situation or taking the steps a reasonable person would to ensure no harm happens to another. Duties of care are imposed by the law. The pesky things can be found everywhere. In the Occupational Safety and Health Administration (OSHA) guidelines for companies to their employees. In the building codes for construction companies to the occupants, owners and neighbors of the property they are building. In the “common law,” meaning over time the courts have decided that certain duties exist, for the general public. In professional guidelines for the professionals to their clients.  And on and on. These guidelines establish the minimum standard of care for your business to a horde of people. If you have any questions, a small business attorney serving the residents of Fairfax, VA can provide clarity for any ambiguities in the legal concept of “reasonable care.” 

An easier way to look at a duty to care is to ask if the plaintiff is in the group of people likely to be harmed if you don’t take care. If your IT business doesn’t install the virus updates on your client’s server it is likely that the client will be harmed by a computer virus. If you throw cold water on the sidewalk when the temperatures are below freezing, you now owe (and have violated) a duty to anyone walking nearby who might slip on the ice you created.

This duty can also be modified in special circumstances. In the 1997 movie Liar Liar, a character is talking to her boss, the business attorney Fletcher Reed, played by Jim Carey, about justice. She asks him if it is justice that her friend had to pay the potential burglar for falling through her skylight and hurting himself. Fletcher answers that, no, it wasn’t. Before the other character can agree with him, Fletcher adds that if he’d been the burglar’s attorney, he would have gotten him twice that amount. Why? Because property owners must use reasonable care to protect people on their property from foreseeable harm. Even if that person is a trespasser! Professionals (doctors, lawyers, dentists, architects, and others like them) owe a special and heightened duty to act as a reasonable person in their profession. Professional negligence is called “malpractice.” 

Violation of the Duty

Once a duty is established, a plaintiff has to show the business violated it by failing to act reasonably when compared to a reasonable person. This mythical “reasonable person” doesn’t exist. Instead, it’s a social construct of the behaviors society wants its citizens to have. You know, always thoughtful, careful, never in a rush, always seeing all the ways things can go wrong and taking steps to protect against them. Yup. The “reasonable person” never makes a mistake. This is also why we have different levels of negligence.

There are two main degrees of negligence: simple and gross.

Simple negligence is when the company makes a mistake that violates its duties, but the mistake isn’t intentional or happened because the person was reckless. 

The other form of negligence is gross. Literally.  “Gross negligence” is when someone is indifferent to, or knowingly violates, their legal duties regarding someone else’s rights. It’s a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause injury to a person, property or both. 

To make the difference clearer, I’m going to take a quote from LegalDictionary.net since it has one of the best examples of an accident, simple negligence and gross negligence I’ve been able to find. 

Example of a Non-Negligent Accident 

The community soccer league plays soccer every Thursday and Saturday night at the local park, where friends and families gather to cheer the teams on. Brent kicks a ball that strikes a man standing near the sideline, causing a head injury. The players are taking reasonable care by playing at the soccer field, rather than in someone’s yard, and hard-kicked balls going astray are just a part of the game. Because of this, the players are not guilty of negligence.

Example of Negligence​

The soccer league needed more parking space for spectators, and so marks off a small stretch of property that is very close to one end of the field. During the first game after the new parking space is put into use, a player kicks the ball past the goal, into a windshield, breaking it. The league had failed to take reasonable care to ensure cars parked near the event would be out of range of play. Having acted negligently in choosing a spot to park cars, the league may be held responsible for the damages.

Example of Gross Negligence

During one of the soccer games mentioned above, Grant fetched the ball Brent had kicked off the field, and in his exuberance, (Grant) grabbed a metal lawn chair sitting on the sidelines, and spiked it, hitting another bystander. Throwing chairs is not a reasonably anticipated act during a soccer game, and Grant not only failed to look for bystanders, but acted recklessly in throwing the chair, with no regard for the safety of others. Grant has committed gross negligence.

Do you see how in the accident, what happened was unfortunate but one of those things that can happen even when everyone is being careful? How in the simple negligence example, the league made a decision (an intentional act) about where to place the parking but the decision didn’t take into account all the factors and property was damaged because they chose a spot too close to the field? In the last case, Grant took action (throwing the chair) that was outside normal or “reasonable” actions without looking to see if anyone would be hurt? Because of his lack of care for those around him, Grant’s actions were grossly negligent. 

Causation

Causation has two factors. First, but for the actions or inactions of the defendant, would the plaintiff have been injured. This part is usually pretty easy to prove. If your IT company didn’t install the virus protection software and the client’s system was infected by a ransomware program, then yes, the “but for” test is met. But for your failing to update the protection, the client’s system would not have been infected. 

The second factor focuses on the relation between the bad act and the results. While there’s the butterfly effect to most actions, the court limits how far down the chain of occurrences a person is responsible for.  The court asks if the injury was reasonably foreseeable from the violation of the duty. When the connection gets too attenuated the court will cut the link. For example, a driver runs a red light because he was texting and hits another car. The driver in the second car is harmed because: (1) she suffered a broken arm and concussion; (2) her car is wrecked; and (3) she missed a critical business meeting and the contract was awarded to someone else. Only the first two injuries are something the second driver can recover from. The fact that she lost an opportunity wasn’t the reasonably foreseeable result of the first driver’s running the light. 

Damages

If a plaintiff proves negligence, the court will award them money damages in an amount sufficient to make them “whole” (“Compensatory damages”).  I put “whole” in quotes because there are just some injuries that no amount of money can make right, like the loss of a loved one or permanent physical injury. Also, as I noted above, some injuries that result from the bad acts are too far removed from the likely injuries to be recoverable. The amounts and types of these damages will vary widely depending on the situation. The broken windshield in the simple negligence example is a relatively inexpensive fix. If a construction company fails to properly build a deck and it collapses harming five people, those damages could be massive. If the company was “grossly negligent,” a court can award punitive damages, which is a second money judgment designed to prevent the bad actor from engaging in the same conduct in the future. Many states have limits on how much a punitive damages award can be. In some cases of gross negligence, the bad actor can be charged criminally. Yikes! 

Defending Negligence Claims

In addition to arguing a plaintiff didn’t provide evidence to support a negligence claim, a defendant has certain defenses to argue that even though it was negligent, they are not responsible for the resulting damages. 

The first defense a business attorney may argue is that the activity was inherently dangerous and that by participating in it, the plaintiff “assumed the risk” of the reasonable injuries likely to incur from engaging in that action. For example, boxing is an inherently dangerous activity. By boxing, you are agreeing to be punched, often in the face. Your later diagnosis of a concussion and treatment for the cuts and bruises will not support a negligence claim against your opponent, the boxing club, event promoters, etc., because you knew getting hit in the face was part of the sport when you agreed to take part. However, if your opponent hits below the belt, i.e. violates the rules, and you are injured, you have not assumed that risk. You also can only assume known risks.

The second defense has a bunch of different names but boils down to the risk was “open and obvious.”  You may see called the “open and obvious risk,” “contributory negligence,” or the “last clear chance” doctrine. Each state has a different take on these defenses. So, you need to check your local law to see how they apply to you. The heart of these defenses are the plaintiff could have done something to avoid the injury. A small business attorney in Fairfax, VA can help clarify these terms.

The open and obvious defense is used when people are injured on someone else’s property. If the store has put up a “caution-slippery floor” sign and you choose to run through the area anyway, when you slip and fall the store isn’t responsible for your injury. Contributory negligence is similar but applies to more than just property-related claims. For example, a pedestrian steps out into a business street from between two parked cars (rather than at the stop sign) right in front of an oncoming car and is hit. “Last clear chance” and “contributory negligence” may be in play. The pedestrian was also negligent by not using the crosswalk and stepping out from an area the driver couldn’t see and that negligence “contributed” to the accident. If the pedestrian steps out into the street when the driver who was going the speed limit doesn’t have enough time or space to stop, the pedestrian was also the person with the “last clear chance” to avoid the accident. 

Depending on your state, the plaintiff’s contributory negligence can prevent their claim for damages completely or in part. Virginia is a contributory negligence state as of the date of this post. That means in the pedestrian example above, the pedestrian cannot recover from the driver even if the driver was also negligent (as in speeding or texting). Most states that allow this defense, however, compare the relative fault of the parties (“comparative negligence”). So, if the pedestrian was 70% responsible for the accident but the driver was 30% responsible because he could have stopped if he was paying attention, then the plaintiff could receive 30% of her damages from the driver. 

Preventing Negligence Claims

Phew! That was a lot.

So, how do you prevent negligence claims? 

By ensuring your business’s conduct meets the applicable standard of care. First and foremost, this means knowing what they are. Consult the professional or other guidelines that apply to your business. This is likely where the “duty of care” will be found. Consult with a business attorney about these obligations as they do vary from state to state and business to business. 

You’ve identified the standards, now what? Have procedures in place to ensure that each worker is meeting or exceeding the standard of care. Have you ever seen a building inspector do her job? She has a detailed list of the things she’s checking for each inspection. This standard procedure helps ensure she doesn’t forget or overlook items she has a duty to inspect. Establish a corporate culture that strives for excellence and doesn’t tolerate short-cuts or hiding mistakes. 

Mistakes happen but they don’t have to end your business. Taking reasonable care and implementing policies to ensure the standards are maintained goes a long way in reducing negligence claims. Even when a mistake is bad enough to be a negligent act, having procedures in place to maintain the standards will help keep a simple claim from becoming a gross one.  

If you would like to learn more about preventing and responding to negligence claims in business, or would like assistance with any other business matter, please complete the form below. 

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