Many are under the assumption that a retailer does not sustain any damages if the merchandise stolen in a shoplifting incident is recovered in merchantable condition. However, this is not the case. Just because the merchandise is not damaged does not mean there are no legal damages.
Our “Of Counsel” attorneys for each state have advised us that in order to establish an injury giving rise to a right to recovery, the retailer need only show an invasion of a legal right. Upon a showing of theft, the majority of state statutes allow a retailer to request actual damages, if any, and statutory (penalty) damages. These statutory damages help reimburse the retailer for loss of the stolen item for any amount of time and cost of business damages. In any theft incident, the retailer suffers actual and business damages in the form of lost employee time, security costs for equipment and personnel and loss of the item for the period of time that the stolen item was not available for sale to the public. Additionally, general loss control devices such as electronic article surveillance (EAS) and video camera systems can be amortized annually over their respective life expectancy and then divided by the average number of shoplift apprehensions to get an estimated “per stop” cost. These proportional costs could also be argued as additional actual damages.
Even if there is no physical damage to the property and the property is returned to the retailer in merchantable condition, or restitution is paid, the retailer has nonetheless suffered a legally compensable injury in the form of an invasion of a legal right to ownership of and control over the property that was the object of the theft. This invasion of a legal right constitutes an injury and usually provides the owner of the property with a cause of action.
If a statute is clear on its face, you do not need to look further than the statute to understand and enforce the law.1 While many state statutes are clear regarding the retailers’ right to request statutory civil damages when merchandise is recovered in merchantable condition, there is also some particularly good case law that supports this position. For example, in Louisiana, while the statute speaks in terms of requiring an unlawful taking of merchandise from a merchant’s premises, case law suggests that even if a shoplifter does not physically remove merchandise from the store or the merchandise is returned in merchantable condition, statutory penalty damages can still be properly sought provided the individual takes possession of the property without consent and with the intent to permanently deprive the merchant of its full retail value.2 The court stated that “…the legislature obviously understood the cost to merchants to catch shoplifters, prosecute claims, and appear before the criminal courts…the legislature has allowed a civil penalty pursuant to La. R.S. 9:92799.1(A) to defray the costs that merchants incur, which is separate and apart from any cost of damage to the stolen goods and any criminal fines that may be imposed as a result of prosecution.”3
Making statutory civil damages requests also helps deter future theft and shifts the tremendous cost of theft and the resulting security costs from the honest consumer (through higher retail prices) to the offenders who are creating the problem. Typically, the amount demanded by the business establishment under civil penalty statutes is not to compensate for the item, which may or may not have left the store, but for the act committed against the store. Whether the item was or was not damaged, or whether or not it was returned to the store has little, if any, bearing on the demand amount. A court in North Carolina confirmed a widely held theory that civil recovery helps spread the cost of losses while noting that the civil penalty statute “has a remedial effect in that it allows merchants to recover for their losses attributable to others’ misconduct.”4
A court in Wisconsin also supported an award of legal damages when merchandise was not physically harmed when it held that the store owner was entitled to actual damages, even though the merchandise had been recovered undamaged and unused; and that the store owner could seek an award of exemplary damages including wages paid to its employees for time spent in processing retail theft, even though the customer had been subjected to civil forfeiture in the criminal prosecution for the alleged shoplifting incident.5 Similarly, a Connecticut court awarded a retailer punitive damages of $300 along with costs and attorney’s fees under C.G.S.A. § 52-564a in a case where the stolen property was recovered by the retailer.6
In addition to case law interpreting civil statutes, some Attorneys General have provided opinions interpreting various civil theft statutes and given persuasive guidance regarding damage requests when merchandise has been recovered in merchantable condition. In California, one Attorney General Opinion clarified that merchandise does not need to be physically damaged in order for a merchant to recover in a civil action under the civil remedy portion of California Penal Code § 490.5.7 Furthermore, in the state of Washington, which recently amended its civil recovery statute to allow for larger civil penalty awards, the Attorney General went so far as to indicate that the penalties prescribed in both the adult civil penalty provisions and the parental civil penalty provisions clearly apply whether or not actual damages exist.8
Legal Disclaimer: The information contained in this article is for general information purposes and is not legal advice or to be construed as legal advice. In states outside of the author’s licensure, consultations were made with Of Counsel attorneys to help ensure accuracy of the information.
- United States v. James, 478 U.S. 597, 606 (1986)
- Ourso v. Wal-Mart Stores, Inc., 998 So. 2d 295, 301 (La. App. 1st Cir. 2008)
- State v. Beckham, 558 S.E.2d 255, 258 (N.C. Ct. App. 2002)
- Shopko Stores, Inc. v. Kujak, 147 Wis. 2d 589 (Wis. Ct. App. 1998)
- Belli v. Kmart Corporation, 1997 WL 94257(Conn. Super.)
- Op. Atty Gen. Cal. No. 86-805
- 1979 Op. Atty Gen. Wash. No. 11