BY DON JERRY
Editor’s Note: It was a Christmas party with consequences that still continue. In December 1994, Don Jerry hosted a holiday get‑together for his clients and staff at Sutton Group Incentives Realty Inc. in Barrie, Ont. Linda Hunt, his part‑time receptionist, got drunk there, had more to drink in a local pub, then was in a serious car accident as she drove home in a snowstorm. While court testimony indicated that Jerry had offered to call her husband and that other friends offered her either a ride or a place to stay, Hunt sued Jerry. His company was later found partially liable for the injuries Hunt sustained in the accident.
The judge ruled in February this year that Jerry, as the employer, failed in his duty to keep Hunt from harm, and said that he and the bar Hunt went to after the party were 25 per cent responsible for damages. Since the pub is no longer in business, Jerry’s company is liable for the total of more than $300,000 including legal costs. The case is now under appeal.
The experience, Jerry says, has taught him some valuable lessons, as he recounts exclusively for REM:
Six years and five and a half hours on the witness stand later, I was asked, “If you had to do it all over again, what would you do differently?” My answer then (“Not get out of bed that morning.”) doesn't, of course, reflect all that I've learned.
So what would I have done? What can other small business owners do — or at least be aware of?
First, as cynical as it sounds, I would have created a holding company when I created Sutton Group Incentive Realty, and kept all the assets stripped out of the operating company to protect it.
Second, as an employer, I would have kept far more detailed written records of all employee events, complaints, etc. At the trial, the plaintiff's lawyer argued that Linda's back problems and migraine headaches were caused by the accident. Yet, to my recollection, Linda did in fact have a prior history of back and headache complaints. I was told, long before the accident, that Linda's back problems were severe enough that she could not even do any light vacuuming in the office. She also complained to me of migraines, but I had no proof in court.
I also recommend that any out‑of‑the‑ordinary events be meticulously noted. Looking back, I realize I should have written down everything about the day of the accident as soon as I found out about it. That's because it was some time after the accident, originally put down to road conditions, that Linda was charged, and not until 2 1/2 years later before we were sued.
Trying to remember precise details more than two years later was almost impossible, and trying to remember them at trial six years later was even worse.
Third, insurance is key. To my detriment, I had not paid much attention about with whom I was insured. When I first licensed Sutton Incentive Realty, I went to an insurance office near the licensing office. While I forget the exact circumstance, I do know the company either merged or was sold to another firm. I paid little attention to it all, but when I was originally served in the summer of 1997, I couldn't find my insurance policy from 1994. It took me an extraordinarily stressful six weeks to find out whom I had been insured with and whether I was covered. Part of the difficulty was that the insurance company dealt with several underwriters, so finding our file, then trying to find that year's insurance underwriter and getting a copy of the policy all took time — a very tense amount of time. Now I know to keep all records, especially insurance policies, for a minimum of seven years, and keep them in detail.
An umbrella policy or directors' insurance is also something you may want to consider. In this case, if the awarded amount had been what was sought — $2.5-million, or in excess of my $1 million policy — they could have pursued me personally. Most small business people think, as I did, that if they own a limited company they cannot be held accountable if it goes broke. But in this case, had the award been large enough, I would have been staring financial ruin in the eye.
I have also learned to deal with a local company, one that is easy to reach. As well, I suggest you choose someone you know will look after your interests.
And, insist that your lawyers and insurance company take the claim very seriously. Everyone thought my case would never make it to court. It did, at a defence cost of more than $200,000, a judgment (so far) of more than $300,000, almost four weeks in court and six months of lost business. Beware of the consequences if you get sued.
Finally, if I'm ever involved in events where alcohol is served, I'll make sure to have a special insurance rider in place. Yet, I'm still so confused about the decision that, until the appeal is over, I would strongly suggest that you not buy anyone even one drink. This is based on some of the testimony I heard and believe was accepted by the court. According to my interpretation, the person who buys or gives someone else the first drink is from then on responsible for whatever that person does until there is no longer alcohol in his or her system. Think of the consequences: You buy someone a drink, they later consume more alcohol, get drunk and get into an accident, you could still be found responsible, despite the fact that the tragedy took place hours later. I, of course, am the prime example.
This case has weighed heavily on me, and affected much of my life and business over the past few years. I only hope that the lessons I've learned can help prevent others from going through the same difficulties I have experienced.
Don Jerry is president of Sutton Group Incentives Realty Inc. in Barrie, Ont. (705) 739‑1300 or [email protected]