Bad luck or about time, however, you look at this decision, you will change the way you work in the Outdoor Recreation Industry

Foster, et al., v. Kosseff, et al., 2013 U.S. Dist. LEXIS 5380

It is an industry, and it is not based on dreams or what your think it should be: Welcome to the real world

Simply, someone went into a climbing wall at a university, was paid to review the risk-management issues, created a report and is now being sued because of it.

The plaintiff was a student and employee of Whitman College of Spokane Washington. The plaintiff worked at the climbing wall as an instructor. She was injured when she fell 32 feet from the climbing wall. (Some of this information I got from a news article Student crushes vertebrae in climbing wall fall.) The court opinion says she was training on the wall. The article says she was cleaning holds when she fell.

She fell because a shut failed to work properly. The decision said the plaintiff failed to use the shut properly. The manufacturer of the Shut was not included in the lawsuit.

Alex Kosseff and Adventure Safety International, LLC, (ASI) were named as defendants. ASI had been hired by the college to perform a “risk management audit.” A document was prepared by ASI, which was titled Whitman College Outdoor Programs Draft Risk Management Audit. One of the major arguments was the report was labeled a draft report.

ASI, according to the article, was also hired by the college after the accident to investigate the complaint.

The plaintiff sued, and ASI filed an answer to the complaint. This motion was then filed moving to have ASI dismissed from the suit.

The court found that the plaintiff could continue her claim against the defendant because she was a third party beneficiary of the agreement between the college and the defendant or because as an employee of the college at the time of the accident, she was part of the agreement. Plaintiff would not have a claim against the defendant if she was an incidental beneficiary of the contract.

The question then “depends upon the extent to which ASI agreed to undertake the risk management audit for the benefit of the college’s employees and students rather than for the benefit the college itself.”

So if she was an employee of college at the time of the accident, is the basis for this claim a worker’s compensation subrogation claim?

Summary of the case

The basis of ASI’s motion was it did not owe a duty to the plaintiff.

The crux of ASI’s argument is that it did not owe Plaintiff a duty of care because the dangerous condition which caused her accident was simply “outside the scope of the risk-management audit” that it agreed to perform. Specifically, ASI argues that the scope of the audit was limited to “gain[ing] a general understanding of [Whitman College’s] risk management practices,” and that it did not “guarantee that future operations will be free of safety incidents.”

ASI is saying that they were working for the college, not the plaintiff. The court did not buy the argument.

The court held the audit report was not the only reason for its decision and was not necessarily required by the plaintiff to prove her case. That issue, whether the defendant owed the plaintiff a duty of care.

The court looked at the plaintiff as the intended recipient, the third party beneficiary, of the work done by ASI. I also think the court could have held that the plaintiff was the intended beneficiary of the report because she was an employee of the College.

If you are hired to work for a college and the work, you are performing is for the benefit of the patrons of the college, you are possibly liable to the students.

This was just a preliminary motion, there is a lot of litigation and trial left in this case, and ASI may eventually be dismissed. However, ASI will have to find better arguments.

So Now What?

1.      If you are performing this type of work, you can be sued. I’ve known it for years, and I’m amazed the number of people who are astounded by this decision.

2.    If you do this type of work, you need insurance to cover your liability.

3.    If you do this type of work, based on this decision, you can’t miss anything.

4.    If you do this type of work you better not be stupid enough to call what you do an audit.

Remember that marketing makes promises that risk management has to pay for. Audit sounded like a cool word to use to describe walking into a program and looking around. However, audit has a much more definitive definition. Wikipedia uses the following words to define “audit:” thoroughly examines and reasonable assurance that the statements are free from material error.

5.     Why are you doing this work? Do you have the credentials and the experience to make these decisions? What is your engineering degree? What ASTM committees that are involved in the creation of the equipment and facilities that you audit are you on? What equipment are you taking with you to perform the appropriate tests?

And this is not the only way that a third party can be brought into a suit like this. They misrepresented their abilities (Which I believe every single one of them is doing) which can lead to liability.

You just can’t say I’ve done it for 10 years. Therefore, I can tell you how to do it. You have to study and inspect and test. You have to take the climbing wall apart and see if the structure is built correctly. Are the bolts the proper size and strength and not just was some pseudo organization says but what the ASTM says it should be? What is the force the climbing wall can sustain? Is all the equipment in the chain where force will be applied, built and maintained to sustain that force?

This is a bad case, but not one that is unexpected just took longer to occur then I would have guessed.

If you do have an accident, you can’t hire the person who did your inspect to do the accident inspection. Besides that, inspection is not protected and is discoverable by the plaintiff.

The three largest payouts in the OR industry occurred after third party investigators were hired to determine what happened. In one, the plaintiffs took the investigators report and turned it into the complaint.

If you have a wall or run a program hire professional. Not people you may meet at a show, but people with real credentials after their name.

If you think, you still want to keep doing this, make sure your agreement with the program defines what you can and cannot do, and that you are not liable for the programs’ failure to follow your recommendations.

 

Plaintiff: Stephanie Foster

 

Defendant: Alex Kosseff, et al.

 

Plaintiff Claims: Defendant was negligent in failing to discover the risk posed by the Super Shut anchor.

 

Defendant Defenses: Defendant did not owe the plaintiff a duty of care.

 

Holding: Defendant’s motion to dismiss was denied.

 

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By Recreation Law          Rec-law@recreation-law.com   James H. Moss                  Jim Moss

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Foster, et al., v. Kosseff, et al., 2013 U.S. Dist. LEXIS 5380

Foster, et al., v. Kosseff, et al., 2013 U.S. Dist. LEXIS 5380

Stephanie Foster, et al., Plaintiffs, v. Alex Kosseff, et al., Defendants.

NO: 11-CV-5069-TOR

United States District Court For The Eastern District Of Washington

2013 U.S. Dist. LEXIS 5380

January 14, 2013, Decided

January 14, 2013, Filed

CORE TERMS: audit report, audit, duty of care, beneficiary–, climbing, owed, failure to state a claim, citation omitted, incorporation, discover, lawsuit, anchor, owe, dangerous condition, negligence claim, authenticity, quotation, summary judgment, recreational, leave to amend, underlying purpose, recommendations, deliberately, cognizable, omitting, coverage, survive, amend, issues of law, discovery

COUNSEL: [*1] For Stephanie Foster, Susan Foster, Gary Foster, Plaintiffs: Allen M Ressler, LEAD ATTORNEY, Ressler and Tesh PLLC, Seattle, WA; William S Finger, LEAD ATTORNEY, Frank & Finger PC, Evergreen, CO.

For Alex Kosseff, Adventure Safety International LLC, Defendants: Heather C Yakely, LEAD ATTORNEY, Evans Craven & Lackie PS – SPO, Spokane, WA.

JUDGES: THOMAS O. RICE, United States District Judge.

OPINION BY: THOMAS O. RICE

OPINION

ORDER DENYING DEFENDANT ADVENTURE SAFETY INTERNATIONAL’S MOTION TO DISMISS

BEFORE THE COURT is Defendants Alex Kosseff’s and Adventure Safety International, LLC’s motion to dismiss for failure to state a claim (ECF No. 33). This motion was heard without oral argument on January 14, 2013. The Court has reviewed the motion, the response, and the reply, and is fully informed.

BACKGROUND

In this diversity case, Plaintiff seeks to recover damages for a back injury which she sustained during a fall from a recreational climbing wall maintained by her employer, Whitman College. Plaintiff alleges that Defendants Alex Kosseff and Adventure Safety International, LLC, were negligent in failing to discover the dangerous condition which caused the accident during a safety audit commissioned by Whitman College [*2] in 2007. Defendants have moved to dismiss the complaint for failure to state a claim on the ground that they did not owe a duty of care to Plaintiff. For the reasons discussed below, the Court will deny the motion.

FACTS

Plaintiff Stephanie Foster (“Plaintiff”) is a student enrolled at Whitman College in Spokane, Washington. In April 2008, Plaintiff was employed as a student instructor in Whitman College’s Outdoor Program. One of her duties in this position was to teach other students how to properly climb and descend a recreational climbing wall located on the Whitman College campus.

On April 28, 2008, Plaintiff fell from the climbing wall during a training exercise and was seriously injured. A subsequent investigation revealed that the accident occurred when a “Super Shut” climbing anchor manufactured by Defendant Fixe Industry1 inadvertently opened while Plaintiff was descending the wall. This investigation further revealed that the anchor opened as a result of Plaintiff using it in a manner for which it was not designed.

1 Defendant Fixe Industry has never been served in this action.

Approximately one year prior to Plaintiff’s accident, Whitman College hired Defendants Alex Kosseff and [*3] Adventure Safety International, LLC (collectively “ASI”) to perform a “risk management audit” of the Outdoor Program’s facilities. The parties sharply disagree about the scope of this audit. Plaintiff asserts that the audit extended to identifying and mitigating all risks posed to users of the climbing wall. ASI maintains that the audit was merely intended to provide Whitman College with a “general understanding” of how to improve its risk management program. In any event, it is undisputed that ASI’s audit did not identify the risk that the Super Shut anchor posed when used improperly.

Plaintiff filed this lawsuit on April 22, 2011. Among other claims, Plaintiff asserts that ASI was negligent in failing to discover the risk posed by the Super Shut anchor. ASI now moves to dismiss the lawsuit for failure to state a claim on the ground that it did not owe Plaintiff a duty of care as a matter of law. Because ASI has previously filed an answer to Plaintiff’s Complaint, (ECF No. 9) the Court will treat the instant motion as a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Elvig v. Calvin Presbyterian Church, 375 F.3d 951, 954 (9th Cir. 2004).

DISCUSSION

A [*4] motion for judgment on the pleadings is reviewed under the same legal standard as a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6). Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). A motion to dismiss “tests the legal sufficiency of a [plaintiff’s] claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To survive such a motion, the plaintiff must allege facts which, when taken as true, “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868, (2009) (quotation and citation omitted). To satisfy this plausibility standard, the allegations in a complaint must be sufficient “to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, are insufficient. Iqbal, 556 U.S. at 678.

In addition, Federal Rule of Civil Procedure 8(a)(2) requires that a plaintiff’s complaint contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This standard “does not require ‘detailed factual allegations,’ [*5] but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). To determine whether Rule 8(a)(2) has been satisfied, a court must first identify the elements of the plaintiff’s claim(s) and then determine whether those elements could be proven on the facts pled. Although the court should generally draw reasonable inferences in the plaintiff’s favor, see Sheppard v. David Evans and Assoc., 694 F.3d 1045, 1051 (9th Cir. 2012), it need not accept “naked assertions devoid of further factual enhancement.” Iqbal, 556 U.S. at 678 (internal quotations and citation omitted).

The Ninth Circuit has repeatedly instructed district courts to “grant leave to amend even if no request to amend the pleading was made, unless … the pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). The standard for granting leave to amend is generous–the court “should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a)(2). In determining whether leave to amend is appropriate, a court must consider the following five factors: bad faith, undue delay, prejudice [*6] to the opposing party, futility of amendment, and whether the plaintiff has previously amended the complaint. United States v. Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011).

A. Consideration of the Draft Audit Report

In support of its motion to dismiss, ASI has submitted a document entitled “Whitman College Outdoor Programs Draft Risk Management Audit” (hereafter “audit report”). ECF No. 36-1. The parties disagree about whether the Court may properly consider the contents of this document without converting the instant motion into a motion for summary judgment. On December 4, 2012, in response to Plaintiff’s concerns that ASI was effectively seeking summary judgment, the Court ruled that it would treat ASI’s motion “as a standard motion to dismiss, considering only (1) facts specifically alleged in the complaint; and (2) documents submitted by Defendants that were referenced in the complaint and whose authenticity has not been questioned.” ECF No. 52 at 3-4. This ruling was based, in large part, upon ASI’s representations that it had submitted the audit report “for background purposes” only and that the contents of the report were “not relevant to the actual issues of law before [*7] the court.” See ECF No. 51 at 5.

It has now become clear that the contents of the audit report are material to the issues of law presented in the instant motion. The crux of ASI’s argument is that it did not owe Plaintiff a duty of care because the dangerous condition which caused her accident was simply “outside the scope of the risk management audit” that it agreed to perform. ECF No. 70 at 7. Specifically, ASI argues that the scope of the audit was limited to “gain[ing] a general understanding of [Whitman College’s] risk management practices,” and that it did not “guarantee that future operations will be free of safety incidents.” ECF No. 70 at 7 (citing ECF No. 71-1 at 9). Because this argument expressly relies upon the contents of the audit report itself, the Court must decide whether the audit report is “fair game” at this early stage of the proceedings.

“Generally, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n. 19 (9th Cir. 1989). One exception to this rule is the so-called “incorporation by reference doctrine,” which permits a court to consider “documents [*8] whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff’s pleading.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). As the Ninth Circuit explained in Knievel, this exception typically applies in “situations in which the plaintiff’s claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document.” Id. The underlying purpose of this exception is “to prevent plaintiffs from surviving a Rule 12(b)(6) motion by deliberately omitting documents upon which their claims are based.” Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) (quotation and citation omitted); see also United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (explaining that that the incorporation by reference doctrine “may apply, for example, when a plaintiff’s claim about insurance coverage is based on the contents of a coverage plan, or when a plaintiff’s claim about stock fraud is based on the contents of SEC filings”) (citations omitted).

The Court will not consider the audit report under the incorporation by reference [*9] doctrine for several reasons. First, the contents of the report are disputed. In responding to the instant motion, Plaintiff indicates that only a portion of the document was prepared by Defendant Kosseff and that another portion may have been prepared by Whitman College prior to ASI’s inspection of its facilities. ECF No. 67 at 2-3. Plaintiff further asserts that the audit report purports to be a draft rather than a finalized document. See ECF No. 36-1. This latter assertion is particularly on-point. Indeed, the document is styled as a “Draft Risk Management Audit,” and has the words “Whitman College Draft Risk Management Audit” reproduced at the top of each page. ECF No. 36-1 (emphasis in original).

Second, considering the audit report at this juncture would not serve the underlying purpose of the incorporation by reference doctrine. Notably, this is not a case in which the plaintiff has attempted to survive a motion to dismiss “by deliberately omitting documents upon which [her] claims are based.” Swartz, 476 F.3d at 763. To the contrary, Plaintiff did not have a copy of the audit report (and therefore lacked knowledge of its precise contents) when this lawsuit was filed. See Pl.’s [*10] Compl., ECF No. 1, at ¶¶ 15, 30-31 (alleging that Plaintiff learned of the audit report’s existence from an investigation performed by the Department of Labor and Industries and that Whitman College and Defendant ASI “failed or refused” to provide her with a copy before the lawsuit was filed).

Third, the contents of the audit report are not particularly “integral” to Plaintiff’s claim. See Ritchie, 342 F.3d at 908. Unlike claims for breach of an insurance contract, for example (see Ritchie, 342 F.3d at 908), Plaintiff’s negligence claim does not necessarily rely upon the contents of a specific document. In fact, Plaintiff could theoretically prove the elements of her negligence claim (i.e., duty, breach, causation and damages) exclusively through witness testimony without introducing the audit report at all. Further, it is worth noting that the audit report is not a contract between ASI and Whitman College; it is simply ASI’s work product. As such, the audit report is not particularly probative of the most crucial issue in this case: whether ASI owed Plaintiff a legal duty. Although the report details specific tasks performed, it does not describe the precise scope of work that that [*11] ASI agreed to perform.

Finally, equitable considerations weigh against considering the audit report at this time. At bottom, Plaintiff’s negligence claim relies on the allegation that ASI agreed to “analyze and point out dangers and suggest remediation of dangers to prevent injury to students and employees utilizing the climbing wall.” Pl.’s Compl., ECF No. 1, at ¶ 28. ASI has attempted to establish that the audit was more limited in scope and that, as a result, it did not owe Plaintiff a duty of care. In so doing, however, ASI has expressly relied upon the contents of the audit report. Based upon ASI’s prior representation that it would not do so, the Court denied Plaintiff an opportunity to conduct additional discovery relevant to this issue. That ruling has now placed Plaintiff at a significant disadvantage. Accordingly, the Court will not consider the contents of the audit report to the exclusion of other evidence which Plaintiff may develop as discovery progresses.

B. Duty Owed to Intended Third-Party Beneficiary

In light of the Court’s ruling above, the only remaining issue is whether Plaintiff has stated a legally cognizable claim on the facts alleged in the complaint. In the Court’s [*12] view, the relevant inquiry is whether Plaintiff was an intended third-party beneficiary of the contract between ASI and Whitman College. To the extent that Plaintiff was an intended beneficiary as an employee and student of Whitman College, ASI may have owed her a duty of care to discover the dangerous condition at issue. See Burg v. Shannon & Wilson, Inc., 110 Wash. App. 798, 807-08, 43 P.3d 526 (2002) (holding that engineering firm had no duty of care to disclose specific safety recommendations to third party who would have benefitted from the recommendations, but who was not an intended third-party beneficiary of the underlying agreement). To the extent that Plaintiff was merely an incidental beneficiary of the contract, however, she lacks a cognizable claim. Id. Stated somewhat differently, the viability of Plaintiff’s claim depends upon the extent to which ASI agreed to undertake the risk management audit for the benefit of the college’s employees and students rather than for the benefit the college itself.

In her complaint, Plaintiff squarely alleges that the risk management audit was performed for the benefit of Whitman College’s employees and students. See Pl.’s Compl., ECF No. 1, at ¶ 28 [*13] (“The risk assessment was done for the benefit of Whitman College and its employees and students because Whitman College understood its duty to provide safe recreational activities and as part of good institutional management.”). This allegation, which the Court must accept as true for purposes of this motion, is sufficient to establish that Plaintiff was an intended third-party beneficiary of the agreement such that ASI may have owed her a duty of care to discover the dangerous condition at issue. Whether Plaintiff was in fact an intended beneficiary–as well as the scope of any duty owed to her by ASI–may be revisited on summary judgment.

ACCORDINGLY, IT IS HEREBY ORDERED:

Defendants’ motion to dismiss for failure to state a claim (ECF No. 33) is DENIED.

The District Court Executive is hereby directed to enter this Order and provide copies to counsel.

DATED this 14th day of January, 2012.

/s/ Thomas O. Rice

THOMAS O. RICE

United States District Judge

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By Recreation Law          Rec-law@recreation-law.com   James H. Moss                  Jim Moss

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