IEEE Technology and Society Magazine - Winter 2014 - 69

cell phone and suffers injury will
likely seek workers' compensation
benefits. Thus, in addition to the
external lawsuit for liability, an organization is likely to incur a workers'
compensation claim internally from
the injured employee, and that organization may see an increase, in both
its workers' compensation, and also
in liability insurance premiums.
Given the documented risk
posed by cell phone use while driving, as well as the increased litigation, employers need to develop a
comprehensive plan to manage the
risk of cell phone use while driving
by employees. Risk management
prescribes that after a risk is identified and assessed, organizations
should employ one or more of four
classic risk treatments to address
the risk: risk avoidance, risk transfer, risk reduction, and risk retention/acceptance [28].

Risk Avoidance
In terms of risk avoidance, an
employer can make the decision to
avoid the potential risk posed by
cell phone use while driving. Risk
avoidance can be established by
expressly prohibiting its employees from using cell phones while
driving. However, an employer
that forbids cell phone usage while
driving, but either explicitly or
implicitly approves it by failing to
discipline those who violate the
rule, faces the very real possibility of being held vicariously liable.
It is not enough to simply have a
policy that prohibits employees
from using a cell phone while driving. An organization must actively
enforce the policy. Failure to do so
is the legal equivalent of not having
a policy at all.
There is a potential for a single
liability lawsuit to wipe out a smallto medium-size business [8]. This
issue should concern larger companies as well. Exxon Mobil has
forbidden its employees from using
cell phones while driving, and so
has AllState [22]. One of Exxon
Mobil's executives stated that "the

data showed that cell phone use
while driving was a significant risk,
so the corporation's decision was
that there was no business issue
large enough that an employee
should incur this level of risk" [8].

Risk Transfer
In risk transfer, one party attempts
to transfer a "risk" (usually a lawsuit) to another party by way of

An employer with sufficient
liability insurance to address such
a concern may not be facing a serious financial issue, although such
an employer may see an increase in
insurance premiums or, in a worstcase scenario, cancellation of the
insurance policy. If the employer's
insurance policy is insufficient and
incapable of covering the damages, the plaintiff may seek to seize

Risk transfer also may be
accomplished by way of a contract,
rather than with insurance.
contract. An insurance contract
is arguably the most common
method, although not the only one.
An organization that wishes to shift
risk to an insurance company is in
good company. Indeed insurance,
particularly liability insurance, is
a virtual requirement in today's
social and legal environment. However, insurance has distinct limits.
First, an organization that makes
a claim under its insurance policy
faces the possibility that the insurance company will raise the insurance premiums, thus negating the
benefit (if any) of risk transfer.
Secondly, an organization that
makes a significant number of claims
under its insurance policy faces the
distinct possibility that the insurance company will cancel the policy
entirely. This leaves an organization
in the uncomfortable position of
having to obtain limited insurance
coverage (if any) at a very high cost.
The limited insurance coverage may
put the organization's assets at risk
in the event of a significant lawsuit.
While some companies, such as
large auto manufacturers, are "selfinsured" for product liability lawsuits because the cost of insurance is
too high, their reserves are likely to
be on the order of hundreds of millions of dollars. While large companies may be able to handle such an
amount, smaller companies are not.

IEEE TECHNOLOGY AND SOCIETY MAGAZINE

WINTER 2014

organization's assets, such as but
not limited to, the employer's bank
accounts or real estate owned by
the employer.
Thirdly, an organization that has
more than one lawsuit as a result of
cell phone usage faces the possibility that a plaintiff will successfully
argue to a jury that the organization was aware, or should have
known about, the potential risk of
an accident occurring (because of
prior claims).Therefore, because
the organization knew about the
risk and failed to address the dangers (by a method other than insurance), the plaintiff is entitled to
an increased damages award. In a
worst-case scenario, the plaintiff
will seek to recover punitive damages, which are intended to punish a defendant for a willful act.
In California, however, a company
may not insure itself for punitive
damages, since it is considered to
be against public policy. Subsequently, the defendant organization faces the possibility that the
plaintiff will execute on the organization's assets, with the resulting
business disruption.
McDonald's experienced a
costly lawsuit when an eighty yearold customer spilled coffee on her
lap, causing burns. In the resulting lawsuit the jury, for several
reasons, including the number of
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Table of Contents for the Digital Edition of IEEE Technology and Society Magazine - Winter 2014