Litigation, Torts, and Liability: Measuring Risk and Managing It

Traditional Litigation: Encountering Risks and Reducing Exposure

When dealing with traditional litigation, a business or organization will risk scrutiny of the company’s image or brand, and clearly suffers monetary costs, which can affect the entity’s bottom line. Reflecting on the traditional litigation system, dependent on the type of trial, for example, a civil trial, the burden of proof is rested upon the plaintiff. The plaintiff must present truthful evidence or proof to a judge or jury against the defendant. Thus, the strength of the plaintiff’s credible facts and truth must be supportive of the plaintiff’s claim and proven stronger than the defendant’s defense. Considering the requirements to support a case (plaintiff or defendant), research and costs will rise.

The initial course of the discovery process is a difficult factor in itself and has several disadvantages for each party involved. It is expensive, time consuming, and for the most part, a burden in effort to gather relevant evidence to make or strengthen the plaintiff and/or prosecutors case. On the other hand, for the defendant, the discovery process could reveal implicating evidence causing a weak defense or no defense by any means. As an advantage however, both parties, through the discovery process, are given the opportunity to civilly research, view, and gather relevant evidence and information related to the case, which supplies an advantage for each or either party to identify the strengths and weaknesses of the case. Due to “Duty of Disclosure,” there may be instances when the opposing party’s evidence can strengthen the opposing party’s position.

To reduce exposure to risks involved with litigation, top to first-level managers must remain cognizant of its business environment’s current rules, regulations, and laws; or, any laws that may affect its business model. Merging external influences (i.e. regulations and laws) with an ethical code of conduct within an organization’s bylaws, and, educating personnel of proper processes, may help minimize exposure to risks that can lead to costly litigation.

Tort Risk Exposure in the Food Service Industry

Venturing into the food service industry, the partners and I have embarked upon, what I presume to be, one of the most vulnerable industries that risk exposure to torts. For on a daily basis, there will be numerous customers that will be coming in and out of our restaurants. Prior to entertaining a proposal for consideration from the franchiser, we were obligated to acquaint ourselves with numerous laws that govern this industry; and, there are many. Some of the issues that we first became aware of were unintentional-negligence torts that can arise due to foot traffic slip and falls from that of wet floors in our location.

We have all been in a restaurant and have seen the "Wet Floor" signs that are sitting on top of a wet spot on the floor; but, I am certain that we have also seen just as many wet spots that are not flagged appropriately, or, flagged at all. This situation, aside from considering the overall tort possibilities accompanying food service, adds to those risks. One unsuspecting step on a wet spot, followed by a nasty fall, screams lawsuit. With all of the beverages, in addition to oily substances from food, being ordered and potentially spilled by customers and employees, it almost impossible to account for every drop of liquid that may land on the floor.

Therefore, as franchisees, we must educate employees and managers to take proper precautions that can prevent such issues from arising. With reference to legal principles, we have learned that each state functions under its own respective tort laws; and amongst laws of Public liability, we are obligated to follow public health and safety guidelines outlined by the state.

Product Liability Issues in Food Service

When serving foodstuffs to consumers, there are times when foreign matters will find their way into an unsuspecting customer’s food. This would be considered a defect in manufacturing and a type of product liability. If the customer feels emotionally distraught by finding the matter, or consuming the matter, we could be liable for their pain and suffering, or worse, be given a low grade (i.e. a rating for business referencing the establishment's environmental health, which is visible to all consumers). Furthermore, in addition to serving foodstuffs, a major training issue often discussed with franchising owners, are the temperatures of meals, after they are prepared for the customer. The McDonald’s scenario is frequently reflected upon – (the award to an elderly woman for a ridiculously hot cup of joe).

Another potential liability in the hospitality industry is the defect in design of kid's meal toys. According to the doctrine of strict liability in the state of California, if a child’s meal comes with a bonus toy that is not clearly labeled as having small parts, of which could cause a child to choke, a defect in design lawsuit could be imminent for the restaurant, and for the manufacturer that produced the toy.

Based on the situations I have mentioned in my industry, the sad thing is, we only begin to realize an issue’s harmful effects subsequent to an individual or entity reporting the issue forward, either through courtesy or by suit. However, there is goodness in this, in that, through trial and error, the individual mistakes made at various organizations have opened the eyes of not merely the affected organization, but the whole marketplace; which have allowed managers and lawmakers to minimize risks by strengthening 1) standards, 2) measures, and employee training.