News for the Hospitality Executive
Recent terrorist attacks on hotels in the Middle East, in Islamabad, Mumbai, Peshawar and Jakarta, and flying major international flags including Marriott, Taj Mahal, Oberoi and Pearl, resulted in many hotel guest deaths and injuries, and substantial property damage. One of these attacks was carried out by guest suicide bombers detonating bombs manufactured in their hotel rooms. Those attacks and this article should be seen as a wake-up call to hotel operators, not only in that region but also in the West since Western hotel brands and Western tourists were targets in some locations. Also, new terrorist methodologies used in these attacks are affecting and changing legal standards for premises liability to guests, invitees, patrons, customers, etc. (“guests”) who might be killed or injured with attendant property damage in any similar attack in the United States or its territories.
The tragedies of September 11, 2001 generated numerous Congressional initiatives designed to prevent the recurrence of such devastating terrorist activity. However, most of these new laws and their attendant regulations have been directed toward better airport and aircraft security through the federalization of airport passenger and baggage screeners and increased aircraft security measures, but there are no new specific federal requirements for hotels.
Congress has also created laws to provide terrorism insurance subsidies for airlines which were in economic jeopardy as a result of these events, and extended government terrorism underwriting to other industries in order to provide the foundation for writing of terrorism insurance for businesses which might otherwise be in economic jeopardy.
As part of this legislative effort the Transportation Security Administration and the Homeland Security Department were established to address the United State Government’s primary duty and responsibility to protect its citizens. But if the government fails to protect as in 9/11, hotels may bear greater responsibilities to their guests.
However, perhaps the most significant development from the events of 9/11 is the awareness of need for greater vigilance and implementation of some forms of protection for hotels which invite guests and others into their facilities. Prior to 9/11, there were few security requirements except those based on protection from potential criminal activity wherein some civil liability for damage to guests and property might surface only after some prior criminal act had occurred. In other words, like the basis of liability for a first time a dog bit a mailman or an invitee to a home, a prior bite by the dog was necessary to show foreseeabilty; so “the dog got the first bite!”
Many cases dealing with liability for hotels included a similar theory that required a prior bad or criminal act on the hotel premises before any liability attached because the act was not “foreseeable.” It was hornbook law that in order for an owner or operator of a facility to be liable to a guest or invitee, there must be a form of harm that is “foreseeable” and damage to the person or property.
In lawsuits filed as a result of the 9/11 attacks against airlines, aircraft manufacturers and others, Judge Halerstein of the Supreme Court of New York held that the attacks were foreseeable in view of the prior history of attacks.1
The prior standard for hotels required the Innkeeper to “create a reasonably safe environment” for guests, but the events of 9/11 and similar attacks, when considered collectively, suggest that such attacks are now foreseeable, which requires the attention and appropriate action on the part of owners and operators in the hospitality industry.
The question that must be asked is whether hotels should institute some additional security measures similar to those now mandated for airlines and airports, and whether the economic trade-off of cost savings of inaction and/or providing minimal security, is worth the risk and cost of liability in the event of a terrorist attack.
Furthermore, such questions should consider whether more stringent anti-terrorism security concepts should be applicable only in “high risk” areas such as New York, Washington, Los Angeles, San Francisco and Chicago, and whether the foreseeable risks are the same in remote, “lower profile” locations.
The new legal concept for assessing such risk is the “Totality of the Circumstances,” an analysis that includes the idea that terrorists might perceive that a target hotel might have lax security. If so, resulting publicity and political value of damage may be significant in the absence of owner or government antiterrorist and anticrime security procedures, thereby providing an invitation for an attack. Whether such decisions by terrorists or criminals are random or strategic, these acts are now foreseeable within the meaning of the law of premises liability using the “totality of circumstances” test. 2
Security Regulations and Case Analysis Confirms Foreseeability
The passage of the Aviation and Transportation Security Act3 (“Security Act”) establishing the
Transportation Security Administration (“TSA”) within the Department of Transportation to perform pre-employment background checks, hiring, training and supervising of all security personnel, purchasing of essential security equipment, and addressing an extensive array of actual or perceived deficiencies that existed in transportation safety protocols, indicates that, as Judge Halerstein opined, attacks were considered to be foreseeable.
Thus, the rules for aviation, including the processing of checked baggage through use of magnetometers,4 other electronic devices for luggage screening for explosives5 and strict control of access to secured areas6 all suggest that review of some of these procedures might be useful for the hospitality industry even though similar government security support may not yet be available.7
The Patriot Act8 for the first time adds domestic as well as international terrorism to criminal statutes, therefore authorizing additional enforcement power for the Department of Justice (“DOJ”). Moreover, provisions of the act further emphasize that government believes further terrorist attacks are possible and therefore foreseeable, not only in the aviation context, but also in criminal and terrorist acts in the United States involving hotels and other public facilities.
If Terrorist Threats are Probable and Foreseeable, Then What Action is Suggested for Hotels?
Prior to 9/11, aircraft hijackers would use the threat of explosives in a baggage compartment, or use firearms, grenades and other conventional weapons in the passenger cabin, to coerce the aircraft crew into landing at a neutral site, and thereafter extract ransom money or the release of other terrorists in Western custody. Flight crews were instructed to comply with the demands of these “traditional” terrorists and to land as instructed in order to avoid personal injury or death to passengers or crew. Indeed, commentators have noted that even if the checked baggage of every passenger on the four flights involved in the September 11 attacks had been processed through explosive detection machines, and even if the carry-on baggage screeners had seen box cutters in the terrorists’ carry-on bags, existing security measures would not have prevented the terrorists from boarding the aircraft with the box cutters, because box cutters did not appear on the list of prohibited items.9
The September 11 scenario was a model of creative thinking by the terrorists, using a mock hijacking which appeared similar to past hijackings and then using the aircraft as a missile to crash into buildings, and thus was a new and unanticipated strategy. Other examples include explosives in baggage checked in remote third world countries reach connecting flights,10 checked guns and hand grenades,11entry to protected areas through unsecured back doors,12 and bombs concealed as a pizza in a briefcase.13 The installation and apparent success of better security procedures by the aviation industry to address these types of patterns for terrorist attacks may suggest a greater current risk for other less secure facilities as noted in recent hotel attacks in the Far East and subways in London and Madrid.
Indeed, hospitality industry risk managers must consider such possible alternative terrorism tactics and scenarios. If there are no magnetometers or explosive detection devices at entry ways of a hotel, how could management prevent entry to the hotel of a terrorist carrying a bomb or plastic components in a large suitcase, or worse, one containing a small nuclear device or dirty bomb? Similarly, could a terrorist driving a car or small delivery truck with a large cargo of explosives be detected before reaching the hotel entrance, lobby or service areas? Could a terrorist who checks in as a guest carrying materials to construct bombs in his room be detected and prevented from duplicating in the United States the scenario preceding the attack which occurred in Jakarta? And could a terrorist gain admittance to a hotel through one of the merchant stores backing up to the lobby or other exits if entry security is not required in the store lease?
Risk managers should consider additional security in addressing these kinds of issues and the balancing of possible negative guest reaction to heightened security in comparison to liability, damage to the hotel’s reputation and future loss of business. A review of existing General Third Party liability insurance coverage, terrorism riders if any, and war risk policies would also be a constructive exercise to determine coverage and whether new security protections might result in lower insurance premiums. If additional security procedures are not adopted, the owner or operator might have difficulty in defending lawsuits initiated by business invitees injured in a terrorist attack. The argument that “the attack was not foreseeable” or that “the government should be responsible for failing to discover the terrorist plot” may no longer be a viable argument. Indeed, that is what Judge Halerstein determined in the 9/11 litigation. New security approaches might be needed to avoid higher exposure to damages, and even possible punitive damage and harmful publicity affecting future guests.
Congress initially enacted legislation providing for underwriting of terrorism insurance reimbursement for existing insurers, and insurance indemnity has been extended to other businesses in the form of the now extended Terrorism Risk Insurance Program Reauthorization Act.14 But “bail-out” funds for future terrorist attacks might not be available if heightened security procedures are absent. In assessing their risks, corporate managers and their experts need to evaluate the impact of developing premises liability law in various jurisdictions.
Premises Liability Was Expanded by September 11 Events
New Definitions of Terrorism Terrorist targets both inside and outside the United States have not been limited to airlines and airports, the Oklahoma City bombing, the 1992 World Trade Center bombing, the 1996 Atlanta Olympics incident, and many less publicized bombing and arson cases which were not designated as “terrorist” incidents, because there were no domestic terrorism statutes. Although the 1992 WTC attack was labeled terrorism, the perpetrators were prosecuted under criminal statue. Indeed most of the other terrorist-like incidents prior to 9/11 were considered criminal acts and were prosecuted under general criminal statutes such as murder, arson, espionage, kidnapping and aircraft piracy.15 Title 18 of the United States Code as it existed prior to September 11 only contained a definition of “international terrorism.”16
The Britannica defines terrorism as “(1) the act of terrorizing, (2) a system of government that seeks to rule by intimidation, and (3) unlawful acts of violence committed in an organized attempt to overthrow a government.”17 This definition suggests a required “intent” to achieve some political gain or to intimidate political adversaries is a necessary element of an act of terrorism. This concept is part of the definition of a terrorist act that would trigger the proposed United States government terrorism insurance program. The definition in the extended insurance provisions now defines an act of terrorism as any act that is certified by the Secretary of the Treasury, in concurrence with the Attorney General of the United States, to: (i) be an act of terrorism; (ii) to be a violent act or act that is dangerous to human life, property or infrastructure; (iii) to have resulted in damage within the United states, or outside the United States in the case of (1) an air carrier or vessel, or (2) the premises of a United State mission; and (iv) to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy of the United States, or to affect the conduct of the United States Government by coercion or to affect government policy.
This definition creates a distinction between a previously defined criminal act such as murder requiring mens rea to kill, and the terrorist type of murder requiring the additional intent for political effect. The Patriot Act amended the prior statutes making domestic terrorism a crime when related to arson, fire, derailment, use of biological or other dangerous weapons, and interference with or conspiracy to attack. Therefore, many of these criminal acts which are not within the terrorism definition will not be covered by the government’s terrorism insurance, since there would not be the required designation of the event as terrorism by the Secretary of the Treasury or the Attorney General. As to those non-terrorism criminal events, general liability insurance (“all risk”) would be the source of coverage.
Obviously in that instance there would by no government terrorism indemnity. If a review of security provided by the hotel was considered inadequate, the insurer might reserve its rights or withhold coverage. In Pan American World Airways, Inc. v. Aetna Casualty & Surety Co.18 the court discussed the distinction between negligent / criminal activity and terrorism in determining the difference between the application of “war risk” and “all risk” insurance coverage for an accident caused by a terrorist bomb on a Pan American flight. The court concluded that unless “war” had been officially “declared” by a sovereign nation, terrorist activity was not covered by war risk insurance (the pre-curser for the U.S. government terrorism risk insurance). Only claims made under “all risk “ (GCL) policies would probably be honored,19 and it would be prudent for a risk manager to carry a terrorism rider on those policies.
Effect on Premises Liability The revised statutes criminalizing “domestic terrorist” activity will be extremely useful in prosecuting terrorists for non-aircraft-related domestic terrorist attacks and might help with discovery efforts in related civil damage cases. Although criminal statutes have some bearing on the exposure of transportation and commercial entities to liability for injury or death of passengers and guests, the questioned criminal activity might be foreseeable or anticipated based on the “totality of the circumstances” doctrine of premises liability. Commercial entity liability may differ significantly from airline liability where international treaties such as the Warsaw Convention provide for strict liability in airline disaster cases and case law makes the treaty-based claim exclusive.20
The events of 9/11 now provide the necessary forseeability of potential harm. Previously, isolated criminal activity in buildings or on property would not generally establish liability unless the owner or operator of the property had a special relationship with the injured party.21 Most business invitees including hotel guests, however, qualify under the special relationship test,22 and courts usually impose a duty of reasonable care on the property owner or operator, treating the resulting criminal activity as a "defect" if information was available and reasonable analysis suggests the need for protective action against possible threats. If a security review suggests possible defects in the process of responding to information about potential threats, liability typically will be established.23 The cases indicate a tendency toward foreseeability.24
Based upon increased terrorist activity throughout the world, major security efforts brought to bear by Congress, and establishment of federal entities such as the Director of Homeland Security and the Transportation Security Administration, there is ample evidence that government officials believe that future attacks are foreseeable. Therefore, information regarding potential or anticipated criminal or terrorist activity, general risk in the particular area of concern, and a failure to exercise reasonable care under these circumstances will typically create liability25 under the “totality of circumstances” approach.
What Standard Will Apply to Premises Liability Issues?
In a claim brought by persons injured or killed by criminals or terrorists in a jurisdiction recognizing either the premises liability doctrine or some other breach of duty / negligence theory of recovery, a court would instruct the jury to determine what standard of care should apply under the relevant law and whether “totality of the circumstances" is the governing concept. As noted above, commercial entities including hotels and restaurants should be aware that they are potential targets, and they should recognize that the threat of criminal activity and terrorism not only exists, but that it might surface anywhere.26 Hospitality owners and operators should review their security to evaluate possible use of some of the referenced procedures even though cost and a possible negative effect on hotel guest might be a problem. There is an argument that for a judge or jury to consider such benchmarks for hospitality entity security would be unfair because of the economic state of the industry, costs and the possible “fear effect” on hotel guests when they are subjected to heavier security.
However, recent studies in the hotel industry suggest that such fear reactions by some guest age groups have been ameliorated by their observation and toleration of travel security at airports, federal buildings and sports complexes which have educated many potential guests to the inevitability and possible security advantages.27
Examples of selective use of aviation-related security procedures currently include: use of magnetometers to screen entrants; multiple security cameras in virtually all areas; screening of all employees; and stationing armed security personnel with or without uniforms in federal buildings, courthouses, some hotel properties in high risk areas, and in select U.S. railway stations. Depending on location and other circumstances hotels might implement many of these procedures and devices to supplement measures including better active coordination with police to cross reference guest check-in with photo ID cards against local law enforcement lists of possible offenders. Other concepts would be useful such as the development and practice of an emergency plan which includes employee assignments in an emergency, observation of guest behavior with an established reporting process, and procedures for security of the air conditioning, heating and electrical back up systems. Consultation with independent security experts at a given location is probably a prudent step. Although protective countermeasures are undoubtedly expensive, their cost may pale in comparison to damages that can result from negligence litigation.
Negative publicity flowing from a terrorist attack or a criminal event and the consequent litigation could create serious damage to a defendant’s “Reputation Equity” thereby affecting sales, and in the case of a public company, its stock value. The existence of enhanced security to emphasizing the security measures taken by the property owner will be useful for future business, for constructing the defense to lawsuits, and for renewal of liability insurance. Many insurance policies contain coverage exclusions for "war” (declared or undeclared), invasion, rebellion, insurrection, war-like operations, civil commotion and criminal acts. In reviewing the existing policies a risk manager or operator should take steps to include riders to cover terrorism and war as well as criminal activity. Arguments have been advanced that terrorist activities might fall within the exclusion clauses of commercial general liability insurance policies.28 Coverage for terrorism claims prior to September 11 was often initially excluded and subsequently provided in many policies through “buy-back” agreements, but until the government’s insurance subsidy program, many insurance companies cancelled coverage for terrorist acts after the September 11 tragedies.29
To cite a famous relevant aphorism on this subject from “Don Quixote de la Mancha” by Miguel Cervantes, “Forewarned, forearmed.”
Dubuc, a member of Cayuga
Hospitality Advisors, is
President of Carroll E. Dubuc & Associates PC, in Falls Church and
Virginia. He is a
1 Palsgraff v. Long Island Railroad Co., 162 N.Y.99 (1928); In Re September 11 Tort Litigation, 280. F. Supp. 2d 279 (S.D.N.Y 2003); Both cases endorsed the concept that forseeability of harm to a claimant is a required element in an action for negligence. In Palsgraff a railroad passenger dropped a package of fireworks while boarding the train and the resulting explosion upended a scale on the other end of the platform, injuring Mrs. Palsgraff. The court held that because the plaintiff was not within the area in which the conductor was providing assistance, her injury was not foreseeable because “[t]he risk reasonably to be perceived defines the duty to be obeyed.” See analysis, Dubuc, Terrorism September 11, 52 Federation of Defense & Corporate Counsel, at 343 et. Seq. (2003)
2 Merchants Nat’l Bank v. Simrell’s Sports Bar & Grill, Inc., 741 N.E.2d 383 (Ind. Ct. App. 2000) (tavern owner had no duty to patron murdered on sidewalk outside tavern); Wright v. St. Louis Produce Market, Inc., 43 S.W.3d 404 (Mo. Ct. App. 2001) (special circumstances include intentional injury, frequent/recent occurrences of violence, misfeasance of owner as to an invitee); Staples v. CBL & Assocs., Inc., 15 S.W.3d 83 (Tenn. 2000) (customer in shopping mall stalked/abducted when other different crucial instances occurred); Pinsonneault v. Merchants Farmers Bank & Trust, ,supra end note 23.; Riedel v. Sheraton Bal Harbor Assoc., 806 So. 2d 530 (Fla. Dist. Ct. App.. 2001) (hotel was liable to diabetic patron who died after receiving treatment from physician retained by hotel that created zone of risk); Kaechele v. Kenyon Oil Co., 747 A.2d 167 (Me. 2000) (store liable for assault on plaintiff by another customer in parking lot after an argument in store for failing to call for police protection in light of prior incidents); but cf. Jackson v. A.M.F. Bowling Centers, Inc., 128 F. Supp. 2d 307 (D. Md. 2001) (applying Maryland law, stabbing of plaintiff outside premises after altercation inside determined there was not sufficient knowledge of wrongdoer’s prior altercation, nor proclivity to violence toward plaintiff).
3 Aviation Transportation Security Act of 2001, Pub. L. No. 107-71, 115 Stat. 597 (2001)
4 49 U.S.C. Sec. 44901 (2001); 49 C.F.R. 154
5 49 C.F.R. 1544, 209, 211 and 213
7 Pub. L. 107-42, 115 Stat. 230 (2001).
8 Pub. L. 107-56, 115 Stat. 272 (2001) [hereafter Pub. L. 107-56]. And amended criminal statutes
9 e.g. Carol Eisenberg et al., “System Failed Miserably” Lessons of Flights 103, 800 Still Aren’t Fixed, Newsday.com (Sept. 16, 2001); Wall Street Journal, October 31, 2001, A 6, “Airline Security Industry Fights For its Life”, 2001 WL-WSJ 29676472
10 In re Air Disaster at Lockerbie, Scotland on December 21, 1988, 928 F.2d 1267 (2d Cir.), cert. denied, 502 U.S. 920 (1991); and see the December 2001 attempt by Richard Reid (a/k/a Tariq Reja) to damage an American Airlines aircraft and injure its passengers by igniting explosives in his shoes suggests that these efforts have not been entirely successful
11 In re Tel Aviv, 405 F. Supp. 154 (D. P.R.), aff’d sub nom.,Hernandez v. Air France, 545 F.2d 279 (1st Cir. 1976).
12 See Karfunkle v. Compagnie Nationale
World Airlines, Inc., 975 F.2d 35 (2d CIR 1992) See also In re
Explosion on Trans World airlines. Aircraft near
14 Terrorism Risk Insurance Act of 2001, s.1748, Sec. 3(1), 107th Cong. et seq, and extended until 2014, Terrorism Risk Insurance Program Reauthorization Act of 2002, Pub. Law 107-297, 15 U.S.C. Sec. 6701 et. Seq.
15 Respectively, 18 U.S.C. §§ 1111, 3295, 794, 1201, 2332b (2001).
16 18 U.S.C. § 2331 (2001). And extensions
17 Britannica World Language New Practical Standard Dictionary, p.1346,Funk Wagnalls1956.
18 Terrorism Risk Insurance Act of 2001, S. 1748, § 3(1) 107th Cong. (1st Sess. 2001).
19 368 F. Supp. 1098 (S.D.N.Y. 1973), 505 F2d 909 (2d Cir.1973)
20 See also Parish v. Truman, 603 P.2d 120 (Ariz. Ct. App. 1979) (Author: not in point here).
21 Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876, 137 L.N.T.S. 11 (1934), reprinted in note following 49 U.S.C. § 40105 (1997), modified by Montreal Protocol No. 4, ratified by U.S. Senate on Sept. 28, 1998, S.P.Exec. Rep. No. 105-20 (1998); and see El Al Israel Airlines Ltd. v. Tseng, 525 U.S. 155 (1999).
22 Osborne v. Stages Music Hall, Inc., 726 N.E.2d 728 (Ill. App. Ct. 2000); American Guar & Liab. Ins. Co. v 1906 Co. 272 F3d 605 (5th Cir. 2001),. (employer/owner liability for failure to check employee and prevent misuse of camera to invade models privacy covered by GCL policy See e.g., A.E. Inv. Corp. v. Link Builders, Inc., 214 N.W.2d 764 (Wis.1974).
23 Pinsonneault v. Merchants & Farmers Bank & Trust Co., 789 So. 2d 762 (La. Ct. App. 2001) (bank responsible for murder of invitee customer making a night deposit because of foreseeability of problem demonstrated by prior robberies); but cf. Dudas v. Glenwood Golf Club, Inc., 540 S.E.2d 129 (Va. 2001) (no liability to warn business invitee of potential danger of criminal assault (shooting) despite three similar incidents in prior month).
24 See Restatement (Second) OF TORTS § 344 (1965).
25 Jenkins v. Elmer, 707 N.Y.S.2d 738 (App. Div. 2000); L.A.C., v. Ward Parkway Shopping Ctr., Co., 2001 WL 376347 (Mo. Ct. App. 2001) (abduction and rape in mall parking lot created liability for mall because of prior similar crimes exception); but cf. Murphy v. Second Street Corp., 48 S.W.3d 571 (Ky. Ct. App. 2001) (security procedures resulted in ejection of wrongdoer from a bar after pushing plaintiff but identification not obtained). See also Restatement (Second) of Torts § 315 (1965); Antrum v. Church's Fried Chicken, Inc., 499 A.2d 807 (Conn. Super Ct. 1985); Maguire v. Hilton's Hotel Corp., 899 P.2d 393 (Haw. 1995); Hernandez v. Rapid Bus Co., 641 N.E.2d 886 (Ill. App. Ct. 1994); Walkoviak v. Hilton Hotels Corp., 580 S.W.2d 623 (Tex. Civ. App. 1979); McKee v. Gilg, 645 N.E.2d 1320 (Ohio Ct. App. 1994); Mitchell v. Pearson Enterprises, 697 P.2d 240 (Utah 1985); Ember v. B.F.D., Inc., 490 N.E.2d 764 (Ind. Ct. App. 1986).
26 See, e.g., Taco Bell, Inc. v. Lannon, 744 P.2d 43
28 Cornell Hotel and Restaurant Administration Quarterly 2006, vol. 47:224, Safeguarding Your Customers: The Guest’s View of Hotel Security, Feikert, Verma, Plaschkaq and Dev; Cornell Center for Hospitality Research, Safeguarding Service: Emergency Preparedness Essentials, No. 3, 2004, Kortnik; The Safety and Security of
29 See Pan Am. World Airways, Inc. v.
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