Hard Rock Hotel Collapse: Economic Impact on Local Businesses and the City of New Orleans

Hard Rock Lawsuits |February 28th, 2020

The developers of the Hard Rock Café and their construction firms are facing increased scrutiny after we joined with a group of other law firms to file a class action lawsuit. When the building collapsed, three people lost their lives and 20 additional victims were injured. The economic damages to the city of New Orleans and local businesses has been devastating. Since the collapse occurred on October 12, through December, the city has expended more than $11,000,000 comprised of repair costs, payments to work crews on the site, and the expenses associated with rerouting the Regional Transit Authority (RTA) central transit hub traffic. Currently, the residents of New Orleans have footed the bill for the mess.

Economic Damages for Business Owners

For those who own a business along the Canal and near the Hard Rock collapse site, business has come to a standstill for many. While some have been able to keep their doors open, several businesses have been forced to close their doors either for safety reasons, or because they are inaccessible around the collapse site. Some of these businesses remain closed in February of 2020 because the demolition of the site has been postponed until March. While some business owners have stated they have business interruption insurance, some face challenges because of the delays, waiting periods, and high deductibles. The true losses in terms of revenue today, and in the future may not be known for several months.

In addition to the impact on business owners, their employees are also faced with economic hardships. Many of the employees of businesses who have been forced to close their doors had to file claims for unemployment insurance which only pays a portion of the wages they would be making had they been working full-time. While there are no hard and fast statistics available, some may have taken other jobs because they were ineligible to collect unemployment.

Accident Causes Under Dispute

Kailas Companies, and the general contractor, Citadel Builders LLC have had issues with other developments in which they have been involved. An investigation by WWL-TV shows that Kailas has had previous brushes with Unions and with New Orleans prior to the start of the Hard Rock Café project. In fact, in 2013, Praveen Kailas, son of one of the company’s principals, was sent to federal prison after a finding of guilt for theft of public funds and conspiracy. This company has a history of using non-union labor and to save money has often resorted to using substandard materials. There has been some speculation during the OSHA investigation the cause of the collapse may have been related to poor quality of the materials used.

Recently, a news story submitted by John Simerman, NOLA.COM stated there was reason to believe materials which were approved by New Orleans permitting office were substituted for other materials. It is unclear whether the change was reported accurately. There is also some speculation that supervisors on site reported what they believed were signs of issues but their warnings were ignored.

Potential Liability and Who is Responsible

1031 Canal Development LLC is the developer of the project while Kailas Company and Citadel Builders LLC have also had a hand in the project. In addition, the engineer of the project, James Heaslip will also likely be faced with increased scrutiny, particularly if the investigation reveals material changes to the blueprints and materials listings which were submitted to obtain the necessary permits. Until all investigations are complete, it may not be possible to determine who is at fault for the financial losses associated with this disaster.

Speculation Regarding Fissured Workplace

Another rumor which has taken hold during the investigation into this collapse is that a fissured workplace contributed to the problems which led up to the collapse. A fissured workplace is one in which it is unclear who is responsible for direct supervision over operations. This is of primary concern when dealing with construction sites because there are often several sub-contractors who may be working on a site.

Construction sites are unique insofar as they often involve numerous parties handling specific tasks. For example, one contractor may be used for electrical improvements, one for concrete pouring, one for construction of support beams, and still others for other aspects of the building. This often complicates investigations, and further complicates determining where the fault lies when a tragedy like this occurs.

Class Action Lawsuit Pursued

Because of the potential number of victims including the city of New Orleans, individual victims who suffered injuries, the families of the deceased workers, businesses who are suffering financially due to the collapse and the employees of those businesses, Alvendia, Kelly & Demarest Law Firm have joined with other law firms to request they be allowed to file a class action lawsuit on behalf of all victims of this catastrophe. This is being done to ensure that residents, property owners, business owners, employees and other parties who suffered economic damages have someone representing their interests.

Unfortunately, for some of the business owners and operators the financial losses are still not complete. Since it will be another month before the final demolition of this site occurs their losses, as well as the losses to their employees will continue. Assuming the demolition does not cause structural damage to their facilities, they may be able to reopen after completion, but they will have a difficult road to walk since they will have to reestablish their clientele.

For families who suffered the loss a loved one, no amount of time, or money will make up for their losses. In addition to their loss, they may also be facing financial issues, particularly if their loved one was the sole breadwinner. Employees who suffered injuries may still be traumatized by the collapse and the resulting injuries they suffered.

If you were impacted by the collapse of the Hard Rock Café and suffered a financial loss, contact AKD Law for a consultation to explore different options. We can be reached at (504) 200-0000 to discuss your options and to learn more about your rights. Whether you worked at or around the work site, you may be able to claim economic damages as a result of this collapse.