In the sports and recreation industry, it is common to hire outside consultants to conduct risk management audits. Typically, these audits involve a site visit to inspect the facility, observe some of the activities or programs taking place in the facility, and interview members and employees of the organization. A review of the organization's policies, procedures and insurance coverage is also conducted. At the end of the visit, a written report — which usually includes a series of recommendations on how the organization can reduce its risks and legal exposure — is provided.
Since the main purpose of a risk management audit is to improve an organization's safety practices, it is clear that the organization conducting the audit owes the facility owners a legal duty to identify potential safety hazards. However, what the risk auditor owes the facility is less clear. That was the question before the court in Foster v. Kosseff, 2013 U.S. Dist. LEXIS 40566 (2013).
Stephanie Foster was a student at Whitman College, where she was employed as a student rock-climbing instructor for the college's outdoor program. Foster was asked by her supervisor to remove several climbing ropes that were hanging from the top of the wall. After climbing the wall, Foster climbed atop a platform adjacent to the wall where she removed all but one of the ropes. Having completed her task, Foster lowered herself back onto the climbing wall and began rappelling down the wall using the remaining rope. During her descent, however, the rope became unhooked from its anchors, and Foster fell approximately 35 feet to the ground, suffering permanent injury to her spine.
A year before Foster's fall, Whitman College had hired Adventure Safety International to perform a risk management audit of the outdoor program. Auditor Alex Kosseff met with several students and administrators who were involved with the outdoor program and also observed several activities utilizing the climbing wall. After completing his site visit, Kosseff submitted a written report of his findings and recommendations to Whitman College. The report assigned the outdoor program the highest rating, noting that the quality of the program's equipment was "exceptional" and that those responsible for the program routinely inspected the facility for potential safety hazards.
As a result of her injuries, Foster filed a lawsuit against Kosseff and ASI, claiming that they were negligent for failing to identify the risks posed by the Super Shut anchors during ASI's risk assessment audit. It was determined that Foster's fall occurred because the Super Shut anchors were not designed to accommodate a person climbing above them. The manufacturer warned that a climber who went above the anchor faced a significant risk of the climbing rope becoming disengaged from an anchor. Had Kosseff identified that risk and reported it to Whitman College, Foster claimed, the problem could have been corrected before she was injured. Kosseff and ASI moved for summary judgment, arguing that Foster's negligence claims must fail as a matter of law because neither Kosseff nor ASI owed her a duty of care to identify the dangerous conditions that caused her to fall.
Having concluded that Foster, as an employee and student at Whitman College, was an intended third-party beneficiary of the risk assessment audit, the court moved to examine whether ASI was negligent or whether the danger posed by misuse of the Super Shut anchors was beyond the scope of ASI's risk management audit. Based on the four elements to a common law negligence claim — duty, breach, causation and damages — the court concluded that Foster was unable to establish that ASI owed her a duty of care to discover and report the danger posed by misuse of the Super Shut anchors. In the absence of a duty of a care, the court concluded, Foster could not win her negligence claim.
In support of this conclusion, the court held that while a private party that inspects another's premises for safety hazards may be liable to third parties for injuries caused by the inspecting party's negligence, the simple act of inspecting another's premises for safety hazards does not automatically transform the inspecting party into an insurer against any and all risks. According to the court, the inspecting party is only liable for undiscovered hazards that he or she undertook to discuss in the first place. The court found that ASI did not contract with Whitman College to address dangers caused by misuse of the outdoor program's equipment. The court also ruled that even if ASI had a duty to inspect individual pieces of equipment, it could not reasonably have been expected to identify hazards stemming from potential misuse of the equipment.
Although Kosseff and ASI were not found negligent for Foster's injuries, there are a couple of important points that sports and recreation administrators, as well as risk management auditors, should take away from the court's decision. First, as the court noted, although the duty is limited to only inspecting the risks that they were hired to discover, risk management auditors do have a legal duty of care to those using the facility or program. Second, since the main purpose of a risk management audit is to improve an organization's safety practices rather than to identify and document specific safety hazards, risk management auditors are not insurers against all risks, and their legal duty of care will depend on the risks that were actually targeted by his or her inspection.
This article originally appeared in the January 2014 issue of Athletic Business under the headline, "Risky Business."