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SAN FRANCISCO-In a case followed closely by retail industry risk managers, the California Supreme Court has ruled that an employee's refusal to comply with an armed robber's demands does not make shop owners liable for customer safety.
The ruling in Kentucky Fried Chicken of California Inc. vs. The Superior Court of Los Angeles County bars liability to customers injured by the inaction or delay of an employee during a robbery.
However, there is still potential liability in cases where harm is caused to a customer by an employee actively resisting or provoking a robber.
While businesses applauded the decision, some legal observers are surprised by the high court's reversal of an appellate court decision.
They note that it runs counter to a propensity for California courts to place greater liability on retailers and side with consumers.
In fact, the Supreme Court justices were sharply divided in their opinions stemming from a 1993 robbery at a Redondo Beach, Calif., KFC restaurant in which a woman was held at gunpoint. Four justices concurred, while three others issued lengthy dissensions.
Writing for the majority, Justice Marvin Baxter said the public is better served if robbers know their victims do not have a legal duty to comply with a criminal's demands and are not under a duty to surrender their property to protect third persons from possible injury.
"Moreover, we have no basis upon which to conclude that compliance actually prevents injury to robbery victims," he wrote in agreement with KFC and an amicus brief filed by American International Group Inc. AIG declined to comment.
Dissenting Justice Joyce L. Kennard wrote that a general duty of reasonable care exists for the safety of customers. Jurors should decide if reasonable care has been met, she said. Justice Kathryn Mickle Werdegar agreed.
Justice Stanley Mosk called the majority opinion harsh and unjust. He said that under the decision, no matter how insignificant a business owner's property, or how slightly it is jeopardized, the business is never required to subordinate its property regardless of how many customers are involved or how gravely they are threatened.
Retailers say the ruling relieves them of a legal burden in cases where they also are victims of crime.
"That is good news because court rulings have gone against retailers, property owners, motel owners (and others) who have a violent act occur on their property," said Kathryn T. McGuigan, director of risk management and benefits for Los Angeles-based restaurant operator Sizzler International Inc. "We have been trying not to get stuck with that liability.
"There are cases in California where (courts have) gone as far as stating that if you expect someone will be parking in a parking lot across the street from your establishment to come to your establishment, even though you don't own or operate that parking lot, you would still have a duty to provide security and make sure that person got to their car," she said.
In the KFC restaurant robbery, the thief shoved a gun in a customer's back, took her wallet and demanded that an employee empty the cash register.
The worker hesitated and said she had to retrieve a cash register key from the back. The robber grew agitated and shoved the gun harder into the customer's back. The customer, Kathy Brown, screamed for the employee to comply, according to the court. The employee eventually complied, and the robber fled with the loot.
Ms. Brown's attorney, Richard F.G. Thomas, did not return a telephone call for comment.
Ms. Brown sued for emotional distress, medical expenses, loss of wages and earning capacity, according to the court. She claimed KFC failed to provide proper security and properly train its employees in how to respond to crime.
KFC moved for summary judgment, arguing it did not owe Ms. Brown a duty to protect her against the violent acts of unknown third parties on its premises. KFC also argued it did not fail to provide proper security or employee training. The superior court denied the motion and KFC appealed.
The California Court of Appeal, 2nd Appellate District, found against KFC, concluding that a duty to comply would protect patrons from increased risk and harm created by "misguided attempts to resist or overwhelm an armed robber."
The high court disagreed.
"We are pleased with the outcome as we believe we did everything within reason in the particular scenario involving Kathy Brown, including properly training our employees to deal with robbery and holdup situations," said Chris Mandel, director of risk management for KFC Corp. in Louisville, Ky.
Despite the lessening of its potential liability, KFC will continue training employees in emergency response, a company spokes-woman said.
Irvine, Calif.-based Taco Bell and Los Angeles-based Atlantic Richfield Co. filed amicus briefs on behalf of KFC.
"(Retailers) are no longer subject to legal liability if they tell their employees do what they think best," said Roy Weatherup, an attorney with Haight, Brown & Bonesteel in Santa Monica, Calif. He represented Atlantic Richfield and Taco Bell.
"The court of appeals decision was quite alarming to many retailers because it imposed a legal duty to comply with the demands of an armed robber," he said. "If that had stood, then employers would have to tell their employees do whatever the robber says, regardless. That might be good advice in some situations and not in others."
Kentucky Fried Chicken of California Inc. vs. The Superior Court of Los Angeles County, No. S051085.