Sports

Major League Liability

The "baseball rule" shields Major League Baseball from liability should a screaming line drive or a shattered bat injure a fan.
By: | April 4, 2016 • 6 min read

The concept of “safe!” is integral to the distinctively American game of baseball.

But until last winter, fans were pretty much on their own — i.e., unsafe —  when it came to errant, sometimes lethal, but always punishing, foul balls or broken bat shards striking unfortunate spectators.

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Many fans will remain at risk this season, but back in December, Major League Baseball finally decided it was time to act, sort of.

Looking to beef up fan safety, MLB issued recommendations — not hard and fast rules — that the 30 league teams extend the netting from behind home plate farther out, towards the dugouts and along the baselines.

The idea is that netting will practically eliminate line drive foul balls or bat shards reaching the crowd.

VIDEO: Shawn Cunningham saved his eight-year-old son Landon from being hit in the face by a bat during a spring training match in Florida between the Pittsburgh Pirates and Atlanta Braves.

According to MLB’s official statement, clubs are “encouraged to implement or maintain” netting (or another effective protective screen or barrier of their choosing) that shields from line-drive foul balls all field-level seats that are located between the near ends of both dugouts (the ends of the dugouts located closest to home plate, inclusive of any adjacent camera wells) and within 70 feet of home plate.

“Major League Baseball prides itself on providing fans in our ballparks with unparalleled proximity and access to our players and the game taking place on the field,” MLB Commissioner Rob Manfred said in December.

“At the same time, it is important that fans have the option to sit behind protective netting or in other areas of the ballpark where foul balls and bats are less likely to enter.”

As of early March, four MLB teams — The Phillies, Dodgers, Red Sox and Nationals — heeded the recommendation and agreed to extend the nets during the 2016 season (though some reports say all 30 teams will extend the netting by the season openers).

A high profile fan injury occurred last June 5 when Boston Red Sox fan Tonya Carpenter was seriously injured by a piece from a broken bat at Fenway Park.

Early on, Carpenter’s injuries were life threatening. She underwent extensive rehab but then faced a custody battle when her husband alleged she was too impaired to care for their 7-year-old son.

“I continue to believe the best way to incentivize the proper level of care is to impose strict liability on MLB clubs on the injuries to fans that result from game play.” — Ken Greenfield, a law professor and dean’s research scholar at Boston College.

So far, there have been no financial repercussions for the Red Sox.

The Role of Insurance

Baseball teams are protected by the century-old “baseball rule,” which puts the assumption of risk on fans (they know the risks when they sit in certain seats).

In 1998, yet another Red Sox fan, Jane Costa, was hit by a foul ball traveling at nearly 90 miles an hour while she sat behind the dugout. She suffered disfiguring injuries and amassed medical bills in the range of $500,000. Her lawsuit against the team was tossed out of court via summary judgment.

Dan Burns, president,  Pro Financial Services LLC

Dan Burns, president, Pro Financial Services LLC

Dan Burns, president of PFS Specialty Risk Underwriters in Chicago, said Major League Baseball has consistently taken action on cases contributing to fan safety, such as raising the height of railings in upper decks of stadiums, cutting off alcohol sales across the league in the 7th inning of all games, and increasing security both in and outside the stadiums.

He is confident MLB will act as swiftly as possible regarding investigating the installation of protective netting.

“There are many things the MLB had to consider before taking action, including insurance,” Burns said.

For example, he said, while many people are concerned with safety around the home plate area (the “hot zone”), there are many others who want an unobstructed view to feel as close to and part of the game as possible.

Also, Burns said, if the league implements a new policy or procedure that is deemed to improve fan safety, the impact to various developmental leagues has to be considered since they may be obligated to implement the change as well.

“The sports industry is unique and has, since its inception, been on the cutting-edge of insurance design and innovation to protect their players and employees,” he said.

For example, a number of insurance products have been created to cover players’ guaranteed salaries while they are injured, as well as potential future earnings lost to career-ending injuries, he said.

In Burns’ view, the solution to addressing the risk of foul balls and broken bats in the “hot zone” may not be to mandate the installation of more netting across major league ballparks.

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It could be to create a specialty insurance product to cover the exposure (medical costs, lost wages, etc.) of people in seats located in areas where they could potentially be injured.

Currently, because teams have been protected from liability on foul balls and broken bats, the demand for such an insurance product has been nonexistent.

Ken Greenfield, a law professor and dean’s research scholar at Boston College and the author of “The Myth of Choice: Personal Responsibility in a World of Limits,” called the idea of added insurance coverage a “no brainer.”

Until that happens, however, he likes the idea of added netting. It means the MLB is heading in the right direction by finally recognizing the real problem of fan safety brought about by the nature and speed of the game; i.e., the proximity of the fans, and the inability of fans to protect themselves by way of constant vigilance during games, he said.

“Even the most vigilant fan will occasionally succumb to the myriad distractions, like buying a beer, that are part of the baseball experience.” — Ken Greenfield, a law professor at Boston College.

It’s a good start, but not enough in his view.

“I continue to believe the best way to incentivize the proper level of care is to impose strict liability on MLB clubs on the injuries to fans that result from game play,” said Greenfield.

He added that with such a rule, clubs can determine the efficient level of risk/care on their own, without intervention from the league.

Ken Greenfield Law Professor Boston College

Ken Greenfield
Law Professor
Boston College

Different clubs will have the freedom to make different choices as to the level of risk they feel comfortable with, and the mechanisms to deal with them.

“That flexibility makes sense, since each ballpark is different and the risks inherent in the fan experience are different in different parks,” he said.

To Greenfield, the existing legal rule protecting the MLB teams as it stands today has two main problems.

For one, fans, through no real fault of their own, have to pay their own medical expenses even though they are technically innocent bystanders and have no real idea of how bad the risks will be if they get unlucky.

Two, with teams off the hook financially, they don’t need to make hard judgments that balance the fans’ experience with their safety.

In fact, they can generate more revenue by making the game seem more intimate, including building seats closer to the action and minimizing protective netting that obscures views — without suffering a downside.

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Just because smartphones and tablets are now part of the game day atmosphere and experience doesn’t mean it’s a fan’s fault for being hit by a ball or bat fragment, Greenfield said.

“It’s difficult to stay on alert for the entire duration of a game no matter what,” he said.

“Even the most vigilant fan will occasionally succumb to the myriad distractions, like buying a beer, that are part of the baseball experience.” &

Tom Starner is a freelance business writer and editor. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]