A Dark Night

Many questions linger. For example, although there has been speculation, we do not yet know how James Holmes succeeded in smuggling an assault rifle, shotgun, pistol, and smoke or tear-gas grenades into the movie theater. Amidst the thoughts and prayers for the Colorado victims and families, some ask if, in the wake of this, movie theaters should bolster their security.

Lawyers, experts, and commentators will undoubtedly explore this issue and others in the months ahead. Since the shooting, some businesses have banned customers wearing masks as they enter the theater. Apparently it is not unusual for patrons to attend the movie dressed up as characters from the Batman saga.

Was it reasonably foreseeable on the theater’s part to envision that a deranged patron could execute mayhem while mimicking a character, such as The Joker? Can we expect movie houses to be that prescient? If someone is determined to carry out a massacre, would the world’s best security procedures thwart his intent? What are reasonable precautions for a commercial establishment such as a movie theater to take?

Nancy Germond, president of Insurance Writer in Phoenix, Ariz., thinks that all establishments with larger crowd access will assess the shooting and re-examine their procedures, if they have effective risk management. A related issue Germond foresees is insurers responding with tighter underwriting guidelines. Regardless of whether that happens, it is beyond dispute that this sad vignette spotlights claims and risk management issues.

Business Interruption and Liability Exposures

In addition to potential liability implications, business interruption exposures pose added risks. The Aurora, Colo., theater where the shooting occurred shut down. Certainly, the theater counted on a financial bump from the summer blockbuster. The studio that produced the movie reportedly spent $250 million in production costs. It must recoup these outlays with a strong opening. Doubtlessly, the studio banked on this blockbuster to fuel its 2012 financial performance. Box office numbers might suffer if patrons are spooked by the shootings or associate the movie with bad vibes.

Predictably, personal injury attorneys will be on the hunt, surveying the terrain for potential litigation targets. Lawsuits from the shooting are not theoretical phenomena; they are already being filed. One of the first was from plaintiff Torrence Brown, who was not even physically injured in the attack. Instead, he has sued the theater, alleging psychological suffering from severe trauma.

Civil lawsuits will seek damages against one or multiple defendants. Attempts to recover damages from alleged shooter James Holmes are probably stillborn, due to collectability challenges. It is doubtful that Holmes had any insurance that would cover this loss. His parents’ homeowners’ policy is not a likely backstop. At the time of this incident, he was not a resident of their household. In addition, whatever homeowners’ form his parents had, exclusions for “expected and intended” harm and/or “willful and malicious” conduct would likely bar coverage.

Potential Deep Pockets and Defendants

More fruitful from the plaintiff standpoint may be other potential deep pockets. First, a disclaimer. I am not an attorney. The following is not legal advice or commentary. By mentioning the following parties, I do not suggest that they did anything wrong, only that personal injury attorneys may sue them in civil actions. Even groundless claims will consume thousands of dollars in legal defense and expert fees. Potential defendants include:

Warner Brothers Movie Studio. Some litigation has alleged that studios and their films have inspired individuals to commit mayhem. For example, lawsuits that followed the 1999 Columbine school shootings spawned claims against 25 different entertainment companies. Movies targeted by lawsuits claiming they inspired mayhem include “Natural Born Killers.”  Similar lawsuits have targeted video games that allegedly inspired violent and murderous conduct. Most of these cases have floundered, as content publishers enjoy First Amendment protections. Still, new suits could lodge against Warner Brothers, perhaps triggering coverage under media liability policies.

The Aurora Century 16 Theater/Cinemark Holdings, Inc. Here, expect allegations of inadequate security. These claims could trigger coverage under general liability insurance policies. For example, this particular theater let patrons dress up as characters from the Batman movies. This may have made it easier for James Holmes, dressed in bulletproof SWAT-like gear, to attend the premier without standing out. After the tragedy, some theaters banned customers from entering the theater in disguise. In a July 23 article in Business Insurance, Kevin Wilkes, a Willis vice president and security practice leader says that, in light of the shootings, movie theaters may be less tolerant about letting costumed customers file into the movies.

Another negligent security theory revolves around the fact that the movie complex where the massacre occurred had no uniformed security guards on duty during the night of the shooting. However, other theaters operated by the same company provided such protection for the premiere of “The Dark Knight Rises.” This raises questions as to why the Aurora Century 16 did not provide uniformed security guards. Of course, one can debate whether a uniformed security guard would have prevented the shootings or reduced the death and injury count. Nevertheless, plaintiff attorneys may argue that having uniformed security guards on premises represented a standard of care that this theater breached.

Yet another angle may be that the theater negligently failed to guard or secure its emergency door. One report is that Holmes entered the theater, propped open the emergency door, slipped out and then later re-entered via a side door, armed to the teeth.

Dr. Lynne Fenton, Holmes’ Psychiatrist. Allegations may arise that Dr. Fenton was or should have been on notice of the fact that the University of Colorado student posed an imminent danger to others and that she failed to report this to authorities. Perhaps because Holmes had withdrawn as a student, university personnel did not feel an ongoing duty to deal with him.

An offshoot theory might be that she failed to properly monitor or calibrate Holmes’ medications. Liability claims may trigger coverage from the doctor’s medical malpractice insurance policy. Doubtlessly, the issue of doctor-patient privilege and confidentiality will enter into this discussion.

Depending upon what kind of medication James Holmes took, product liability lawsuits could surface against the drug manufacturer, with attorneys arguing that the medication either failed to work or that the drug produced homicidal impulses. If this scenario unfolds, product liability insurance coverage will be in the mix.

The University of Colorado. Before the massacre, Holmes reportedly shipped a package to the university that allegedly contained a notebook with drawings and descriptions of a shooting. However, the package lay unopened and undiscovered until after the shooting. If this report turns out to be true, an argument may be made that the university was or should have been on notice of Holmes’ menace to society had it promptly opened the package, seen its contents, and reported it to local police.

Additional defendants may surface in the quest for deep pockets. Movie theater employees injured or traumatized by the event may file workers’ compensation claims. This quick survey neither means to portray these liability theories as farcical, nor does it imply that plaintiffs are wrong in seeking damages. Many of the wounded lacked health insurance. Victims face huge expenses for medical care, future treatment, and ongoing rehabilitation. In the quest to pay for this, particularly without health coverage, plaintiffs will be highly motivated to find defendants with deep pockets, preferably backed by liability insurance.

As the 19th century satirist Ambrose Bierce once wrote, “Death is not the end. There remains…the litigation.” A dark night arrived in Aurora, Colo., spreading its tentacles of risk throughout that community and beyond. While criminal charges against alleged killer James Holmes progress, we can await a separate round of claims and civil litigation by plaintiffs. Such litigation spotlights claims, theories of liability, and risk management implications for commercial establishments.  

Kevin Quinley, CPCU, AIC, ARM, is an advisor at CLM Advisors and is principal of Quinley Risk Associates, LLC. He has been a CLM Fellow since 2007 and can be reached at kevin.quinley@theclm.org, www.claimscoach.com.