How MGM’s Lawsuit Could Impact Building Owners

July 19, 2018

How MGM Resort International’s lawsuit could affect building owners and facilities managers.

MGM Resorts International filed a lawsuit against more than 1,000 people impacted by the Oct. 1, 2017 mass shooting at the Route 91 Harvest Festival in Las Vegas. The shooter fired from the 32nd floor of the Mandalay Bay Resort and Casino, killing 58 and injuring hundreds of people.

In its claim, MGM cited the 2002 SAFETY Act as the reason it should be released from liability. Passed in the wake of 9/11, the law incentivizes the use of anti-terrorism technologies and services certified by the Department of Homeland Security. MGM also seeks to move any cases related to the Mandalay Bay shooting to federal court.

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Complicating the issue, MGM hired a third party (Homeland Security-certified Contemporary Services Corporation) to provide security at the festival. In addition, the SAFETY Act specifically recognizes anti-terrorism technology, but the FBI has not labeled this mass shooting an act of terrorism.

BUILDINGS reached out to two legal experts, William Killip, Jr. and Larry Schechtman, to determine how the outcome of MGM’s complaint could affect building owners and facilities managers. 

William Killip, Jr., is a southern Nevada trial attorney with Nettles Law Firm. William is licensed to practice before all Nevada State and Federal Courts, as well as the United States Ninth Circuit Court of Appeals.​

BUILDINGS: The court filing is referred to as a “complaint for declaratory relief. What does that mean?

WILLIAM KILLIP, JR.: Declaratory relief means that MGM is preemptively asking the court to make a ruling that [the SAFETY Act] applies. They’re not asking, for example, for money damages from [the victims] or anything like that.

They’re basically asking the court to declare that any of these cases that have been filed or any of these cases that would be filed are going to be preempted by this federal statute. They want to get some kind of a blanket ruling that says that all of these claims would be governed by that federal statute.

BUILDINGS: In general, what is the responsibility of the building owner or management when a guest commits a crime that injures or kills another guest?

KILLIP: The complaint they filed is based on a federal statute that was passed in the wake of the 9/11 attacks that basically grants some level of immunity to organizations, contractors and so forth who are involved in anti-terrorism activities – for example, someone who’s manufacturing the metal detectors at airports.

My understanding is that MGM is trying to use [the SAFETY Act] affirmatively against the people who were victims of this by saying that the security contractor at the area where this concert was being held, which is also owned by MGM, was a Homeland Security-approved contractor so MGM is somehow the beneficiary of this immunity provision that was passed by Congress. That’s a general understanding on my part of what this is about.

[MGM’s complaint] doesn’t really impact or implicate Nevada premises liability law itself, which essentially says that if the character of the business or the record of prior criminal activity should put the proprietor on notice that they need to take stronger measures, then they can be held liable for the criminal act of a third party. Those are two different concepts.

The basic Nevada premises liability law is what a state lawsuit against MGM would be based on – that they should have known, based on prior incidents of somebody bringing guns up to their room or the conduct of this guy being suspicious somehow, that something was not right.

BUILDINGS: In this particular instance, does it make a difference that the person committing the crime wasn’t attending the event that MGM’s security contractor was covering?

KILLIP: The shooter was across the street at another MGM property. The concert was at a festival ground that was also owned by MGM and that’s where the contractor was doing the work. They’re trying to say “Well, that somehow puts us under the umbrella of protection that is afforded by this federal act.”

Regardless of who owned the property where the victims were, the issue is the potential liability of MGM for what this guy was doing in his room. That all comes out of a case that was argued in Nevada 25 years ago, Doud v. Las Vegas Hilton Corporation.

That’s a case where a guy had been gambling at the Hilton and he went out to his motor home in the parking lot, went into the motor home, and was attacked by someone who had broken in and was waiting for him. He sued the Hilton, and the Hilton said, “We had no idea that this guy was in the parking lot or in your motor home,” and the trial court threw the case out.

The Nevada Supreme Court reinstated it, saying “Look at the nature of this business, the character of the business and the fact that there had been some prior incidents that occurred in the parking lot. That’s enough to allow the case to go forward because that’s enough evidence that maybe the security measures being provided by the Hilton were inadequate.”

That doesn’t mean they win the case, just that the lower court was wrong to toss it out and it should go on to trial so a jury can decide. It’s kind of the foundation, if you will, of the entire theory of liability of a hotel when a third party like this guy commits some kind of a criminal act.

BUILDINGS: If the district court where this complaint was filed ultimately decides that MGM’s argument is valid, how could that affect property owners and managers?

KILLIP: I think certainly there could be long-term implications if the district court here in Nevada says, “Yes, this particular security contractor due to its status as falling under the umbrella of this act [qualifies MGM for protection under the SAFETY Act].”

If the district court here or the a federal court were to decide that’s the case, it would inevitably be appealed to the Ninth Circuit and potentially the U.S. Supreme Court.

That could have implications for property owners in terms of when they contract with a private security contractor to provide security if that contractor falls under the same set of rules as this contractor does. I would think that could have some long-term implications down the road.

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BUILDINGS: Is it too early to know what the long-term implications might be if MGM is successful?

KILLIP: If this flies, what MGM is trying to do, then I think that certainly would provide potentially additional defenses for property owners and certainly might inform their decisions about what type of private security contractor they’re going to hire going forward, but that’s speculative. No one knows how it’s going to come out.

*     *     *     

Defense lawyer Larry Schechtman is the Managing Partner of Smith Amundsens Chicago office. He handles the firms most complex and high-profile litigation, including several cases involving third-party criminal attacks committed in hotels.

BUILDINGS: What is the responsibility of the building owner or management when a guest commits a crime that kills or injures another guest?

LARRY SCHECHTMAN: The liability of a building owner or maintenance company for what’s commonly referred to as third-party criminal attacks are generally covered under state law, but here are some general rules.

Generally, a landowner or property manager does not have a duty to protect people on their property from third-party criminal attacks, but there are some “buts” there. Many states say that’s true absent a special relationship, and a special relationship could includes such things as an innkeeper and a guest. That doesn’t mean there is responsibility, it means there may be responsibility.

So you can be responsible for a third-party criminal attack but there has to be a legal duty to protect under the laws of that state. One of the keys to it is foreseeability in these kinds of cases. Was the criminal conduct foreseeable by the property owner or manager? If there’s never been an attack before and never been a crime in the area, you may say, “Well, what could we have done? We couldn't have expected that.”

One recent case [involving a convicted child predator who was released from jail, stayed at a hotel and ended up attacking a child at the hotel] is similar to the MGM case, there’s also the issue of voluntary undertaking. If the hotel, for instance, decides they’re going to have security, that doesn't guarantee someone’s safety, but you have to do it reasonably and make sure the undertaking isn't done negligently.

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You have to make sure the company you hire has the proper credentials. If you only hire them and have them there for certain hours even though you know the other hours of the day also require security, for example, you’ve negligently undertaken that duty.

BUILDINGS: Does it make a difference from a legal standpoint that the person committing the crime wasn’t attending the event that MGM’s security contractor was covering?

SCHECHTMAN: I would say it does not. This whole area of third-party criminal attacks, the perpetrator would be a third party whether he was a concertgoer in the crowd who started shooting or had nothing to do with the concert. There are separate potential liabilities for MGM because he was in the hotel vs. being a concertgoer.

I’m a defense lawyer, but if I was on the other side in a case like this, I would certainly be looking at MGM’s potential liability separate and apart from any security issues. In other words, were they negligent in allowing such a heavily armed individual up on the 32nd floor? Does that alone constitute negligence on the part of MGM, which actually has very little to do with the concert itself and security for the concert?

BUILDINGS: What is MGM seeking to do with this complaint? Are they actually “​suing” the victims?

SCHECHTMAN: They’re trying to say they would qualify under the protections of the SAFETY Act. A complaint for declaratory relief, which is often referred to as a declaratory judgment, asks the court to make a determination. It's not a court action that seeks an award of damages as you commonly think of “filing a lawsuit.” There’s no jury. A judge decides the issue.

It appears to the general public as if MGM is suing the victims, and that’s not a very good PR move by MGM, but in reality they’re not suing the victims.

They’ve instituted a legal proceeding where they’re asking a judge to determine their rights under a federal law, and when you file a declaratory judgment action, all parties that may be affected by the judge’s decision need to be named as parties, which is why MGM is required in such an action to name any of the victims who may have their rights affected by this decision. 

I’ll give you an example: an insurance company and two people in an accident. Let’s say Party A caused the accident and was drunk. Party A’s insurance company says “Under our policy, we’re not going to cover you,” so they file for a declaratory action against their own insured. They also have to name the other person in the accident because that party will be affected too.

BUILDINGS: What could the long-term implications be if MGM is successful?

SCHECHTMAN: If MGM wins, those people will no longer have a case against MGM, so they’ve got a right to be heard should they decide to hire lawyers because they have interest in the outcome. If I’m a lawyer to a property manager or owner, if the district court decides in MGM’s favor, they should absolutely hire security companies that receive designations under the SAFETY Act because that could protect them from future liability, but only from a terrorist attack.

BUILDINGS: What are some common misconceptions that people have about this legal action?

SCHECHTMAN: In my opinion, I think this is a very novel theory by MGM. I don’t know that it has been tried before. I think it’s a long shot, but I don’t think the public knows much about this post-9/11 SAFETY Act and what it was designed for.

In my opinon, it was designed mostly for cybersecurity-type attacks. This act was to help develop technologies to try to avoid terrorist attacks, so that the companies that were developing these technologies would have some shield from potential liability as they’re developing them. No one would want to develop them if they’re going to get sued if there’s a terrorist attack. That’s just my opinion.

I don’t see that this post-9/11 act was designed to protect a hotel, for instance, when they hire a security company. I don’t think that’s what was intended even if they’re a certified security company, which is why I think it’s a long shot. I think MGM will have a difficult time with this claim.

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About the Author

Janelle Penny | Editor-in-Chief at BUILDINGS

Janelle Penny has more than a decade of experience in journalism, with a special emphasis on covering facilities management. She aims to deliver practical, actionable content for facilities professionals.

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