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Outback still fighting lawsuit

An Indiana appeals court upholds a ruling that forces the restaurant to pay $39-million after an alcohol-impaired patron caused a traffic accident.

By SCOTT BARANCIK
Published August 2, 2005

Like at many restaurants, the most profitable item on Outback Steakhouse's menu is alcohol.

But as a long-running court battle in Indiana shows, alcohol can be an albatross.

In summer 1997, the owners of a new Outback restaurant in Muncie threw a grand-opening party. One of the guests allegedly became drunk. Later that evening, his car collided with a motorcycle, seriously injuring the couple riding it.

David and Lisa Markley sued. In 2003, a jury awarded the couple $60-million and assigned 65 percent of the fault, or $39-million worth, to Outback. The company appealed. Among other issues, Outback argued that the couple's attorneys acted improperly by not warning that a key Outback witness had changed her story.

At trial, the former waiter surprised Outback's attorneys by testifying that she served alcohol to the already-drunk patron, something she had denied. She had revealed this earlier to the Markleys' attorneys.

Last week, a three-judge appeals court panel rejected Outback's petition unanimously. Although it called the Markley attorneys' handling of the waiter's testimony an "egregious breach" of legal duty, the panel found none of Outback's seven arguments sufficiently compelling to overturn.

Outback is not giving up. A document filed in a related lawsuit last week said Outback either will ask the appeals court to rehear the case or will petition the state supreme court to overturn it. General counsel Joe Kadow did not respond to e-mails requesting comment Monday.

Michael Alexander, an attorney for the Markleys, said Monday that he believes Outback's chances of success are low. But he concurs with Outback's statement, made in a May regulatory filing, that the company's insurers are likely to pay the bill, which with interest has grown to $45-million. The company has been litigating with several of its insurers over that issue since 2003.

Separately Monday, Outback said chief operating officer Paul Avery and Benjamin Novello, president of its flagship steakhouse chain, had sold their personal investments in certain Bonefish Grill and Carrabba's restaurants to the company.

And Outback said Joseph Hartnett, vice president of corporate accounting, will serve as interim principal financial and accounting officer until a replacement for former chief financial officer Bob Merritt is found.

--Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.

[Last modified August 2, 2005, 02:45:17]