Premises Liability During a Pandemic
Many Minnesota businesses reopened on May 18, 2020 as Minnesota relaxed the restrictions designed to slow the spread of the novel coronavirus. Specifically, Executive Order 20-56 rescinded a previous order, which had forced the closure of many businesses, and now allows limited customer interaction for a much wider range of the economy.
At the same time, many businesses may be concerned they could be sued by a customer who contracts COVID-19 while at their place of business. Premises liability lawsuits could, in fact, arise from the transmission of the coronavirus to nearly anyone entering your place of business, including vendors and suppliers, independent contractors, and many others. These lawsuits have already begun. It is only a matter of time before small to medium sized businesses are affected by premises-liability lawsuits based on transmission of the coronavirus.
There is no way to eliminate all legal risk, but careful planning and the assistance of experienced legal counsel can lower the possibility of a lawsuit, while at the same time providing a significant advantage in litigation if that possibility becomes reality.
Premises Liability 101
According to Minnesota law, a landowner must use reasonable care to protect people entering the property, legally referred to as “entrants,” from an unreasonable risk of harm. While it sounds simple, “reasonable care” has been the primary dispute in thousands of premises liability cases. There is no “one size fits all” standard for reasonable care because it is determined by the specific circumstances in which the injury arose.
Except in very limited circumstances, real property owners are not automatically liable for every injury that an entrant may suffer while on the premises. Entrants bear some responsibility for their own safety and are expected to avoid “open and obvious” dangers. Put differently, entrants who suffer injuries solely due to their own reckless behavior are unlikely to recover damages for claims based on premises liability. If both the property owner and the entrant were negligent (i.e. neither exercised reasonable care), the court or jury will likely allocate a percentage of responsibility to each negligent party. In Minnesota, a defendant must be more than 50% at fault before the plaintiff may recover damages.
Businesses that rent space should not ignore the possibility of a premises liability lawsuit merely because they do not own the property where an injury occurs. Many commercial leases require the lessee to indemnify and defend the landlord from lawsuits and may also impose maintenance obligations. The terms of your lease will often determine which party is responsible for maintaining the property, as well as which party must indemnify the other in the event of a lawsuit. Because commercial leases vary significantly in their terms and obligations, you should consult an attorney with experience in commercial real estate when signing a new lease, or if you need assistance understanding the terms of your current lease.
Take Reasonable Precautions (Or Else)
Executive Oder 20-56 contains requirements (such as the requirement to implement a COVID-19 Preparedness Plan) and guidance (such as the recommendation to wear masks) for many businesses that rely on direct customer interaction. The Minnesota Department of Health and the federal Center for Disease Control have also issued recommendations to prevent the spread of the disease. Adhering to these recommendations and requirements can greatly reduce your potential liability from a lawsuit based on the spread of COVID-19.
Some of the steps recommended by the state or federal government may not be practical due to the nature of the business. While it is impossible to predict all risk with 100% accuracy, a good attorney can help a business make informed decisions related to risk analysis and proper precautions. The legal fees to implement sound risk-reduction policies will nearly always be less than the costs of litigation due to uninformed decision-making.
While some measures may be optional, businesses that fail to meet the legal requirements related to the coronavirus pandemic may face serious civil and criminal sanctions. Further, a business that foregoes a required precautionary step designed to slow the spread of the coronavirus is far more likely to be found liable if it is later sued because an entrant contracted the disease at its establishment.
Legal counsel can assist businesses implementing new policies, as well as audit existing policies, to ensure compliance with federal and state requirements related to the coronavirus. Nothing less than the survival of your business may be at stake.
Many businesses are covered by a commercial general liability (“CGL”) policy, but such policies may not provide the business protection from a suit related to the coronavirus. Even before the coronavirus pandemic, many CGL policies specifically exclude claims for losses caused by a pandemic, virus, or bacteria. These exceptions are far more likely to appear in CGL policies written after the coronavirus pandemic took hold. CGL policies may also contain force majeure provisions (discussed here) that may relieve the insurer of coverage obligations.
Most insurance policies require the insured to avoid unreasonable risks. As a result, businesses ignoring federal and state requirements designed to prevent the spread of COVID-19 may not only risk greater liability, as discussed above, they may also lose their insurance coverage when they need it most.
The uncertainty that accompanies a society-defining event such as the current coronavirus pandemic should not dissuade business owners from purchasing appropriate insurance for their business. However, in these uncertain times, owners should not rely on a CGL (or any other) insurance policy to protect their business without taking further steps to reduce liability.
Businesses, some of which have re-opened for the first time in weeks (or months) or that will re-open soon, can reduce their legal exposure to premises liability claims through careful planning and by involving experienced legal counsel to maximize the effectiveness of any risk-reduction strategy.