Club Death Lawsuits Will Have Many Targets

By Michael Ha

NU Online News Service, Feb. 27, 1:48 p.m.EST?Last week's nightclub disasters that left 108 deadwill likely prompt a slew of lawsuits from victim's families thatcould involve a range of issues including product safety, accordingto a trial lawyer who has handled similar cases in the past.

The two incidents last week saw 97 people die in West Warwick,R.I., after a band's pyrotechnic display set The Station nightclubon fire. At the nightclub E2 in Chicago, 21 people died in astampede for exits after a security guard fired a container ofMace.

In such cases that involve numerous victims, the nightclub orthe band usually does not carry enough liability insurance to payfor lawsuits from victims' families, said Susan Karten.

Ms. Karten was one of five attorneys appointed by the court tohandle litigation for the 1990 Happy Land Social Club fire thatkilled 87 patrons in New York City's Bronx borough.

"Lawyers start with the owners of the premises. They haveliability coverage, but it's not that much money--usually a fewmillion dollars at best. I can tell you right now that there won'tbe enough coverage for the clubs in Rhode Island and Chicago.

"And I don't know what kind of policies the band would have, butit won't have enough coverage," Ms. Karten said. "There would besome funds, but not enough for families for these losses. Creativelawyers will have to go after other deep pockets."

Sometimes these clubs have minimum insurance, or don't have anyinsurance at all, because they are oftentimes not prime properties."Some of these clubs are not even legal--basically they shouldn'tbe operating," she said.

In the Happy Land case, victims and their families also suedmanufacturers of different products in the club, because manypeople died not from fire but from smoke inhalation, and productsthat were used in the club--such as chairs and materials oncurtains--were not fire retardant. "These materials could fuel thefire very quickly and dangerously," Ms. Karten noted.

In addition to product manufacturers, municipalities could alsobecome a target in lawsuits involving last week's nightclub deaths,Ms. Karten said. She noted cities sometimes don't inspectnightclubs as often or as thoroughly as they should, and there mayhave been violations on club premises that haven't been attendedto.

According to Ms. Karten, victims and their families of the 1990New York club fire received $16 million from civil lawsuits--$10million of which came from eight manufacturers of products used atthe club, including chairs, fire extinguishers, fire alarms andcurtains; and $6 million from the subleasee of the club--whichamounts to around $180,000 per victim.

Robert Hartwig, senior vice president and chief economist at theInsurance Information Institute in New York, predicted that lastweek's tragedies will lead to more stringent underwriting ofnightclubs and similar facilities.

The insurers and brokers for this market segment usually putnightclub policies under the broader heading"restaurants/taverns/liquor liability" coverage, and when insurersdecide whether to provide coverage, they first look at what thestructure's capacity is and what it would be used for, he said.

"And of course, they are concerned with fire-related safety: isthere an adequate number of exits, are there fire extinguishers,and what is its proximity to a firehouse?" said Mr. Hartwig.

Insurers also check materials used in the construction and theage of the building. "All of these things contribute to essentiallya fire rating for the building," he said.

Mr. Hartwig also noted that the issue of pushing and tramplinghas been a concern for awhile for insurers because they happen insports stadiums and rock concerts.

"So insurers have been aware that this is an issue. Typically,the solution is better crowd control. Had more exits been known andavailable in the club in Chicago, there would have been far fewerdeaths. But anything like what happened was beyond thecomprehension of any insurance companies involved," said Mr.Hartwig.

In the Rhode Island nightclub's case, what happened was thatmost people were unaware of some of the exits, so everyone headedfor the back door. "So this created a stampede of death and peoplewere overcome by smoke.

"There is an investigation going on now, trying to determine whythe building burned down so quickly. Some acoustic materials seemto have been very flammable. And the club might have been violatingsafety codes," Mr. Hartwig observed.

"Events like these are very rare. They will directly lead tomore stringent underwriting of bars, taverns, small concert halls,nightclubs and other similar facilities," he predicted.

Commenting on the potential liability for nightclub deaths, onesignificant factor that could drive up jury awards in the RhodeIsland case involves victims' demographics, Mr. Hartwig added.

The band Great White, which was popular in the 1980s, attractedmany people in their 30s and 40s, who were married and in theirpeak earnings years, he said. The factor "would drive up theaverage settlement in cases of wrongful deaths or negligencelawsuits," he noted.