Newspaper article THE JOURNAL RECORD

Experts See Outsourcing Contributing to More Suits

Newspaper article THE JOURNAL RECORD

Experts See Outsourcing Contributing to More Suits

Article excerpt

ATLANTA -- ValuJet Inc. found a simple approach to cutting maintenance costs: It farmed out work to a company called SabreTech.

Now, the Atlanta-based airline may wish it could just as easily pass off its legal problems to SabreTech.

With a slew of lawsuits already starting from last month's crash of a ValuJet plane near Miami that killed 110 people, the carrier is squabbling with SabreTech over who was responsible for the oxygen generators investigators suspect caused the crash.

Legal experts say ValuJet's finger pointing probably won't get it anywhere: Hiring outside contractors may save money, but it rarely exempts a company from legal liability.

"Nobody really cares if the outside contractor is the problem -- it's still going to be ValuJet's responsibility," said James Rydzel, a partner at Jones, Day, Reavis & Pogue in Cleveland.

Rydzel and other legal experts expect more disputes between companies and their contractors to crop up.

So-called outsourcing has become increasingly popular among companies looking to cut costs, such as benefits paid to workers on the payroll. But because the practice sometimes lessens the control companies have over crucial jobs, things can go awry.

When they do, companies operating in industries known to be perilous better watch out. Courts generally consider jobs in those businesses to be "nondelegable duties" -- ones in which the liability can't be passed on to a contractor.

"If you are a company in the business of laying gas mains or flying planes, the buck pretty much stops at your door," said Doug Abrams, a partner at Twiggs, Abrams, Strickland & Trehy in Raleigh, N.C.

Companies in tamer fields aren't much safer. Take Household Credit Services Inc. The financial-services company was hit with an $11 million verdict in August after a Texas jury found that a contractor, Household's bill collector, made death threats while dunning an El Paso couple. Albert and Marianne Driscol had fallen behind on a $2,400 Household Visa credit card bill.

"The person that hires the hit man is responsible for the murder," said Noel Gage, a partner at Gage, Gage & Kern in El Paso who represented the Driscols. …

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