Loss Prevention Lawsuits: The Expert’s Role

loss prevention lawsuit

Contemporary loss prevention policies in the retail industry are a consequence of the so-called “litigation explosion” that dates back to the early to mid-1980s. Time was when a headlong pursuit through the parking lot and across heavily trafficked public roadways was a way of life. To many, it was exhilarating, and the resultant capture of a shoplifter was rewarding.

However, I recall with clarity the case of two teenage brothers who were pursued by supermarket employees for the theft of a couple of candy bars and a can of beer. The two were struck and killed by an auto in the middle lanes of a nearby freeway. The subsequent loss prevention lawsuit was punishing. It’s fair to identify that case as the beginning of the end of hot pursuits in the retail industry.

Subsequently, other practices, heretofore invoking mild reprimands, became socially and legally unacceptable. Everyday practices, such as wrestling a suspect to the ground and gaining control with an arm-lock, became suspect, again, magnified by loss prevention lawsuits. Shoplifters died, invariably followed by a lawsuit resulting in the awarding of damages. Awards sent corporate policymakers, guided by their own legal counsel, back to the drawing boards.

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The Litigation Process

Despite the altered face and character of loss prevention policy today, complaints against the retail industry continue—not at the same pace of yesteryear’s, but continue nonetheless. Lawsuits driven by a loss prevention policy act or omission require an “expert” to assess the event and educate the judicial community, which includes a jury, on justification or lack thereof of the act or event.

For example, was the forceful holding of a suspect to the ground, who then died due to positional asphyxia or a heart attack, reasonable or not? Such tragedies have been litigated time after time. Depending on the totality of circumstances, experts have opposing opinions.

In a litigation process involving a loss prevention policy incident, there are typically two experts with opposing opinions. The law firms trying the matter will seek out their own expert for the eventual legal battle. The search starts with a phone call that may precede the formal filing of a complaint, or before the decision is made to file.

In those cases where the decision is yet to be made, the experts are queried based on receipt of a “letter of demand,” which precedes the filing of a formal complaint. More often than not, the experts are located and retained after the filing. The letter of demand seeks to reach a settlement for a nominal sum with the tacit threat of “pay a nominal amount now, or you’ll pay much more later.”

These letters of demand can be frivolous claims or may have limited merit with a nuisance value. If the attorney is unsure, he may seek professional advice. Many times, the pending defendant store will view the demand as a nuisance only and pay it to avoid the substantial costs if the matter goes forward. Costs include retaining an expert whose fees are often comparable to those of an attorney.

Alternatively, the store (and their counsel) will refuse to pay and, in essence, tell the plaintiff’s counsel to go pound sand.

Either the would-be plaintiff goes away, or the complaint is filed, and the war is on. If the demand is refused and the issue isn’t of great or serious substance, the “victim” may decide not to go forward. Lawsuits are expensive to prosecute.

Evaluating a Case Prior to Filing a Complaint

The following reflects an example of legal counsel seeking expert advice in the decision-making process prior to the filing of a civil complaint.

“Mr. Sennewald, my name is Bryan O’Conners, and I’m house counsel for X Markets. We understand you are an expert in loss prevention policies and have authored some books on the subject. We’re in need of professional guidance in response to a letter of demand concerning a shoplifting detention. Would you be available and interested in assisting us?”

Q. “If I can, what is the customer alleging?”

A. “Excessive use of force with injuries.”

Q. “Tell me what happened.”

A. “The loss prevention agent observed the lady remove a pack of cigarettes from display as she neared the check-out terminal and slipped them down the front of her blouse. She paid for other items, but failed to pay for or declare the cigarettes. Upon exiting the store, the agent approached her, identified himself, and asked her to surrender the cigarettes. She complied. He then escorted her to the office as required. To get to the office, the two had to climb a set of stairs. The older lady had some trouble breathing and had to stop to catch her breath before she could reach the upper level. Once in the office, the agent applied handcuffs pending arrival of the police.”

Q. “How old is the lady?”

A. “She’s 79 years old.”

Q. “Why was she handcuffed?”

A. “Company policy mandates all detainees awaiting arrival of the police must be handcuffed. Once they arrive, the police officer will decide if the cuffs should be removed or not.”

Q. “What’s the purpose or logic behind this policy, if you know?”

A. “It’s my understanding the policy is in place for the protection of all parties and to prevent escape.”

Q. “What is the amount of the demand?”

A. “$18,000”

Q. “Give it to her. If you don’t, they will file, and the price will go way up. I, for one, would never testify that the policy was reasonable. That elderly lady wouldn’t be combative or aggressive or harm anyone, nor could she run away. She could barely make it up the stairs. If she’s a nice-looking lady, looks like a gentle, loving grandmother, the jury will be incensed at the store using cuffs, let alone the bruising of her wrists. Do me a favor, sir. Please advise senior management that they should modify the policy to allow for some reasonable flexibility, to exercise some good judgment when it comes to the elderly or children.”

A. “Even though she admitted the theft?”

Q. “Sure. That’s not going to be the issue.”

A. “Well sir, that was quick and you certainly are candid. Thank you. Please send me a bill for your consultation.”

Q. “I’m not going to bill you. Consider it free advice. Just get the policy changed.”

In this case, house counsel may have suspected the policy needed tweaking, but needed an expert to support his suspicion. On what grounds could he question or criticize the policy that may have been in place for some years, but never challenged, until now? If an expert identifies it as a weak or problematic case or policy, the attorney has the ammunition to bring about change.

Seeking an Expert Witness after a Loss Prevention Lawsuit Is Filed

The above scenario reveals how the consultant or expert determines the nature of the problem, what precipitated the complaint, and the bottom line—does he agree with the attorney’s theory of liability or defense? Clearly, the expert’s view and opinions can and often do educate or influence the corporate policy decision makers. This is certainly the case after the filing of a complaint, when the matter builds traction leading to the formation of the expert’s opinions, pre-trial, or testimonial opinions in deposition or during trial.

The expert’s task is to share his or her opinion in an area of expertise outside the normal area of understanding or knowledge of the general public—to educate. It’s that simple.

Time and again, similar scenarios occur, beyond the view of LP executives, unless such executives are privy to the corporation’s role in litigation involving loss prevention policies and practices.

Because law firms under contract manage most lawsuits for the corporation or an insurance carrier, the loss prevention executives who need to know what’s happening and what’s being discovered are often out of the loop.

Frequently, the attorney (or paralegal) will call in a search for an expert after a complaint has been filed. Some do their homework and research the known history and background of experts. Others call cold. Some want an expert who is pliable or amenable to their theory of liability or theory of defense. Some want to know if “the case has bumps in the road” or not. Some want an expert who will be an advocate for their cause. Experts who are advocates are often known as “whores,” because they will do or testify to whatever pleases the client. Some appreciate a candid, off-the-cuff reaction; others don’t. The best and most professional attorneys retain only the best and most respected experts.

Sample Dishonest Employee Lawsuit

It is more common to commence the search after a complaint is filed that might allege some tortious act, such as negligence, excessive use of force, false arrest, failure to provide adequate training or supervision, inadequate guidelines, and others.

Let’s walk through a lawsuit that reflects an action against a retailer for unlawful discharge and false imprisonment of a dishonest associate.

During the early stages of the litigation, a plaintiff attorney called, similarly to the call described above, introducing himself and asking as to my availability to assist in his case. He informed me the matter involved the unlawful termination and jailing of an innocent employee of a national store chain.

Q. “How do you know she was really innocent?”

A. “The evidence they used, and shared with the police, was a video that was patched together to prove their belief that the employee stole merchandise. The prosecutor obtained the original recording, which unequivocally proved her innocence, and the criminal case was dismissed. The store has acknowledged she didn’t commit a crime.”

Following is a summary of the events in this loss prevention lawsuit.

Service Desk Exchange. An employee entered the store on her day off with her new baby and presented a set of bed sheets to the customer service desk for an exchange. It was an uneven exchange, which meant she would receive some cash back. She had no receipt, claiming the sheets were a gift from her mother, who had purchased them at this store. They were for her new apartment.

One of the associates at the service desk knew the employee and suspected she had just picked up the merchandise from its display location and that it was not paid for. The service desk employee closely questioned the off-duty associate, who claimed she had just entered the store carrying the sheets. Time at the service desk was 1:00 p.m.

A supervisor was contacted and alerted. That supervisor checked a program that reflected sales by item and date of sale. The records failed to reflect a recent sale of that SKU number. This information was relayed to the LP employee in the store who checked the video. He quickly searched the tapes and located the employee entering with no merchandise in hand, verifying the service desk employee’s suspicion. This was reported to the floor supervisor. The time generator was blurred on the tape, but it was the day’s tape.

By company policy, the only LP employee authorized to detain or interrogate an associate was the district LP manager, who was too far away to respond, so the request for the “uneven exchange” was granted. The paperwork and goods returned were marked as evidence. The off-duty associate eventually left the store, unaware of the suspicion or investigation.

Associate Arrested. Two days later, the suspected associate was scheduled to work at noon. An hour before she reported, the LP manager arrived at the store, talked to the floor supervisor and service desk employee, gathered the returned goods and documents, and interviewed the store LP agent about his search of the video, who showed her the tape in question depicting the suspect’s empty-handed entry. The time generator on the tape was not clear. A second video from about 1:00 p.m. showed the suspect at the service desk with her baby and the sheets. In this video, she is engaged in discussion with the original, suspicious employee.

When the associate arrived, she was summoned to the store’s offices. There, in the presence of another female associate serving as a witness, the suspect was asked about the transaction. She reiterated her story that her mother purchased them in that store and that she was bringing the sheets back because they were the wrong color. She was then told that she wasn’t telling the truth because the video clearly showed she entered the store with no merchandise. The associate claimed that wasn’t true and asked to see the video. Her request was denied. She then asked the interrogator to phone her mother, who would verify the purchase. This was also rejected.

Eventually, she was given paper and pen and instructed to sit down and honestly explain what happened. While so engaged, the LP manager phoned the police and asked them to respond to the store to transport a prisoner. Before the police arrived, the suspected associate simply wrote, “I’ve done nothing wrong. I stole nothing.” She signed the paper and walked off the job and out of the store. The LP manager didn’t see her leave.

Minutes later, a police officer arrived. He was given a written report about the incident and shown the video. He returned to the police station and filed a police report alleging employee theft. The following evening, the officer went to the associate’s home, arrested her, and transported her to the local station, where she was booked.

Defense Council Retained. The suspect retained a criminal defense attorney, who questioned the women in depth. She recited her version of the events, including entering the store with the baby in her arms and the bag with the sheets, being “hassled” at the service desk, and eventually being given the exchange and a few dollars. She told the attorney she then, quite by accident, came upon her father and sister, who happened to be in the store. They all left the store together. Once outside the store, her sister remembered she had failed to buy an item she needed. The suspect, to accommodate her sister, returned to the store empty handed, leaving her baby with her sister, and made the purchase.

Her attorney and the deputy prosecutor discussed the case, and then the two watched the video. At that point, they realized the tape used as evidence against the employee had to be the wrong tape, or the wrong location on the tape, because the chronological sequence of events as depicted on the tape provided to the police showed the suspect, first, entering the store without a baby and, second, standing at the service desk with the baby. Where did the baby come from?

All recordings generated on the date of the event were obtained. A more careful review revealed the discharged and accused associate did, indeed, enter with package and baby in arms prior to her appearance at the service desk and prior to the entry showing her entering empty handed. Upon this discovery, a second and more careful review of the inventory record of sales by SKUs revealed a sale had, indeed, been made a week prior to the day the plaintiff was seeking an exchange. The service desk employee missed that entry in her hasty search.

The plaintiff’s story was true. She had been wrongly accused and incarcerated based on an inept, careless, and improperly trained loss prevention department and its agents. The young ex-employee was devastated. She had a meritorious cause to claim damages.

Discovery. A lawsuit was filed against the retailer, and the process of discovery was launched. Discovery in a lawsuit is the process wherein both parties—the plaintiff and the defendant—may demand the production of documents that are germane to the lawsuit. Invariably, the expert suggests or requests documents that the attorneys didn’t realize are important.

Below is a partial listing of the reams of documents the store produced in this case:

  • All videos of the day of the incident.
  • The loss prevention department’s official complete investigative report of the incident.
  • Human resource files of the LP manager/investigator, including training records and performance evaluations.
  • Job descriptions for the positions of LP manager and in-store agents.
  • All performance appraisals of the LP manager and in-store agent.
  • HR file of the associate arrested and terminated.
  • HR file of the service desk employee.
  • HR file of the in-store agent.
  • LP training manual.
  • Loss prevention policy and procedure manual.
  • Specific documentation of policy and procedure in the handling of shoplifters.
  • Specific documentation of policy and procedure for handling and disposition of internal investigations.
  • Copies of all internal investigations and dispositions in the district for three years prior to the case in question.
  • The company’s refund and exchange policy.
  • Policy statements regarding the role of store manager and HR manager in employee arrests and termination.
  • Copy of all documents regarding the termination of the plaintiff.
  • Other documents ad infinitum.

All discovered documentation was analyzed and reviewed by the expert to identify the company’s expectations of its employees in handling the affairs of loss prevention. The expert then compared the performance in this case against that standard. For example, HR policy requires the LP manager to present findings of an investigation of an associate and obtain concurrence that the evidence justifies termination from employment for cause. If the manager fails to do so, that is a breach of loss prevention policy. The expert/consultant also compares the incident in question with historical records for evidence of consistency or inconsistencies in internal investigations.

All this back-office review provides the expert with the answers to such questions as: Are the policies and procedures of the company in keeping with custom and practice in the retail industry? Was the retail investigation conducted thoroughly, impartially, and professionally? Was the investigator qualified for that task?

Expert Opinion Shared. Armed with the answers to these and other questions, the expert is ready to render his professional opinions about this case. The opinions are then shared with the counsel who retained the expert and, depending on state law, that opinion is formalized in writing and submitted to the trial court and/or revealed and shared with opposing counsel in deposition testimony under oath.

A word about expert opinions: In the US judicial system, witnesses are not allowed to express opinions. Witnesses may only testify to what they saw, heard, touched, tasted, or smelled. The only exception is expert witnesses.

The attorneys on both sides evaluate the case in light of the opinions of the experts on both sides and negotiate for settlement. If the attorneys cannot agree on a settlement, the matter goes to trial, and the expert shares their opinion and is subject to cross-examination, under oath, with the jury.

In this case, the store did not obtain an expert. Instead, they put forward, as their “expert” a company LP executive. This is a questionable strategy in my view because experts, by the nature of their role in litigation, are considered neutral and not advocates for one side or the other.

Perhaps, even with known “hired guns” in the country, no one would accept the case in defense of the retailer apparently because the flaws in the loss prevention policy were insurmountable.

Testimony at Trial. In my testimony at trial, I was critical of many aspects of the program—its policies, its failure to have or produce certain policies and procedures, and the lack of qualifications, training, and investigative experience of the LP manager involved. I testified that the LP manager was overwhelmed with a wide variety of duties other than loss prevention and should never have been involved in criminal investigations. I testified the “investigation” was fatally flawed, as it was hasty, incomplete, and reckless. I was also critical of the company’s failure to provide its districts with investigators.

Lastly, I informed the jury that the company had failed to produce their policy and procedure regarding the handling of internal investigations, claiming they didn’t have one. I pointed out that they had detailed loss prevention policies and procedures on handling shoplifting matters, but nothing on handling suspected dishonest employees. I told them that I had come to the logical conclusion that the company had detailed rules about accusing the general public of shoplifting because of their fear of the consequences of making mistakes, but that the company wasn’t afraid of making mistakes with employees.

The case never went to the jury. After my testimony, the court took a recess, and during the recess, a settlement was negotiated.

A Challenge to the Reader

Come back to this article sometime and reread the synopsis of this internal investigation. Then list the various mistakes, failures, and problems with the case, just as would any impartial expert in the industry. How many things went wrong? Compare your itemized list with a colleague or others in your own organization, simply as a thought-provoking exercise. The retailer, in this case, learned something and benefited. Could you or your LP organization learn something as well?

This article was originally published in 2013 and was updated February 6, 2018.

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