• Key point. Churches should refrain from allowing minors to participate in inherently dangerous activities. The risk of an accident may be small, but if one does occur the consequences can be catastrophic. These include death or personal injury, an astronomical jury verdict far in excess of the church’s insurance coverage, and personal liability of church officers and directors.
A federal appeals court addressed the dangers of bungee jumping and personal liability of corporate officers in an important ruling. In 1993 an adolescent boy was killed while “bungee” jumping. The victim’s parents attempted to perform artificial respiration but were unable to revive their battered and bleeding son. Both parents were profoundly shaken by the event. Later investigations revealed that the bungee jumping system was defective and not properly licensed. Former employees of the bungee jumping company testified that they had warned the company’s two officers that the equipment was defective and that a professional engineer should be hired to perform an inspection. The officers complained that hiring a professional engineer would take up to two months, and would cause them to miss the “peak tourist season.” One of the officers hired a shrimp boat repairman to help inspect the equipment because he could “get the job done quickly” at a “bargain price.” This person not only was not a professional engineer, he had no licenses or certifications and had no experience in designing or installing amusement devices.
The victim’s parents sued the bungee jumping company along with its two officers for their grief, shock, sorrow, wounded feelings, and loss of companionship. The officers insisted that they could not be personally liable since their company was a corporation which shielded them from liability. A jury found the officers personally liable, despite the company’s incorporation, because they had participated personally in decisions leading to the victim’s death. The jury awarded $12 million in damages, and the company and its two officers appealed.
A federal appeals court conceded that there is a strong presumption that “an officer or a director of a corporation is not, merely as a result of his standing as such, personally liable” for the obligations of the corporation. However, if a corporate director has “in some way participated in or directed the [wrongful] act,” personal liability may result. The court concluded that the two officers had personally participated in the victim’s death in a number of ways, including (1) use of obviously unsafe equipment, (2) hiring an unqualified person to inspect the equipment, and (3) using the equipment without a valid license. The court concluded:
A corporation is created to limit personal liability. We emphasize that the finding of personal liability for a corporate officer or director is an unusual and extraordinary event. But this case is not … an instance in which corporate directors reasonably relied on the competency of an employee to do a task. The facts tell a far different story. The [officers] personally directed the use of a system they knew to be dangerous, and chose to have the device installed on the cheap by an unqualified shrimp boat mechanic so that they would not lose money during the busy summer tourist season. Their every action flew in the face of warnings that the lives of others would be endangered. This reckless conduct led directly to the death of [the victim]. The jury’s finding of individual liability against the officers, and the further finding of recklessness, were fully justified.
Application. Church leaders can learn a few important lessons from this tragic case:
(1) Do not permit minors to participate in inherently dangerous activities as part of an organized church activity. This is sometimes easier said than done. Minors, especially adolescents, crave excitement-and what provides more excitement than bungee jumping? Some church leaders insist that the risk of death or injury is so small in such cases that the activity should be allowed. The risk of an accident may be small, but consider the consequences if one does occur. In this case, they were catastrophic. And, the amount awarded by the jury was astronomical-far in excess of the typical church insurance policy. Also note that parental consent does not necessarily prevent church liability for injuries occurring during an inherently dangerous activity. Remember that the parents in this case consented to their son’s participation in the bungee jumping, and were even watching him at the time of the accident.
(2) This case illustrates another reason why church leaders should carefully consider whether they want children to participate in inherently dangerous activities-two corporate officers were themselves found personally liable for the minor’s death. Why were the officers sued directly? Probably because the bungee company’s liability insurance was insufficient to cover the parents’ claims. The lesson is clear. Church leaders who allow children to participate in inherently dangerous activities face personal liability in the event of an injury, at least if a jury finds that their actions amounted to gross negligence. Steinke v. Beach Bungee, Inc., 105 F.3d 192 (4th Cir. 1997). [Church Officers, Directors, and Trustees]
© Copyright 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m58 m56 c0398
