Many Tennessee small business owners are probably aware of some aspects of premises liability law—the idea that the owner of an establishment can be held responsible for any dangerous conditions on his or her property that cause someone to become injured. “The general rule is that though business proprietors are not insurers of their patron’s safety, they are required to use due care under all circumstances,” says personal injury attorney Doug Nichol of Knoxville’s Nichol and Associates. If a business owner is found to have “actual or constructive” knowledge of the dangerous condition, he or she could be deemed negligent, he says.

However, what some business owners may not know is that they can even be held responsible for any injuries caused by criminal acts that occur on their property—even if they have no direct involvement. Since 1975, the law in Tennessee concerning liability of a business owner for criminal acts of a third person has followed the precedent set in Cornpropst v. Sloan. Business owners were not liable for criminal acts “unless they knew or should have known that criminal acts were occurring or about to occur.” Such a heavy burden of proof often protected small businesses from being held responsible for criminal acts, Nichol says.

But a grisly crime in a Memphis Wal-Mart parking lot changed all that.

In the case of McClung v. Delta Square in 1996, the Tennessee Supreme Court ruled in favor of Roger McClung. McClung’s lawyers argued that Wal-Mart was liable for the death of his wife, who was kidnapped from the Wal-Mart parking lot and later raped and killed. McClung’s legal team argued, among other things, that the prevalence of crime in the area should have prompted Wal-Mart officials to take additional steps to secure its parking lot via either additional security or lighting, and that their failure to do so resulted in the death of his wife.

The Court declared that while “a business ordinarily has no duty to protect customers from criminal acts that occur on its premises,” it does have “a duty to take reasonable steps to protect customers if the business knows, or has reason to know, either from what has been or should have been observed or from past experiences, that criminal acts against its customers on its premises are reasonably foreseeable, either generally or at some particular time.”

The Court’s decision reversed the 1975 ruling and set a new precedent in state law; however, some Tennesseans think that it has had some unintended consequences. Not only has the ruling left business owners more vulnerable to premises liability lawsuits, says Dan Haskell, a Nashville attorney at Gullet Sanford Robinson & Martin, it has dissuaded business owners from developing businesses in high crime areas due to the additional expense and liability entailed.

“It’s a disincentive for developers to establish businesses in places where they know they’re going to have to spend extra time and effort on security issues,” says Haskell, who proposed legislation two years ago that would prohibit business owners from being responsible for any third-party criminal acts.

Though Haskell’s bill “didn’t go anywhere,” the issue remained a concern. In February 2005, State Representative Brian Kelsey reintroduced the issue by proposing House Bill 911, which stated that “a business owner shall not be liable for injuries to [a customer] that were proximately caused by a criminal act committed by a third party,” because “such criminal acts shall be considered supervening acts, which the owner has no duty to prevent.”

“When I first heard about that law being changed, it struck me as unfair to business owners,” says Kelsey, who is also an attorney at Memphis’ Martin, Tate, Morrow & Marston. “One of the unfortunate side effects is that it provides a disincentive for businesses to locate to high crime areas, which also happen to be low-income areas, and creates an even worse situation because there are fewer jobs available and higher rates of unemployment.”

Kelsey’s bill was defeated in the civil practice subcommittee of the House judiciary committee last April, but he plans to propose the bill again in the future.

“Until that particular case, we’d always expected the government to protect people from crime. Now, it’s changed so that protection from crime is the responsibility of the private sector,” Kelsey says. According to Kelsey, it’s only a matter of time before his bill becomes a law and that burden of protection falls back onto the government.

Nichol, on the other hand, points out that while premises liability suits are often difficult for injured people to win because “the burdens are strict on what you have to prove,” extreme cases such as the McClung case are hard to ignore. While he was unfamiliar with any of the proposed bills to change the existing legislation, Nichol did note that many premises liability cases are “very case by case” and is hesitant to support any overarching legislation that releases business owners from all liability. For his part, Kelsey hopes that changes in the law will have a direct impact on the economy of high-risk areas. “Businesses will move back into higher crime areas. They’ll be able to hire more people and help improve the overall quality of life in the community.”