Could Your Business Face a Ladies’ Night Lawsuit?Ladies’ Night was a staple of nightclubs and bars in the past, but does it work in modern society? With a slew of Ladies’ Night lawsuits hitting establishments, businesses may want to think twice about running this type of promotion.
Small Businesses Are Particularly Vulnerable to Ladies’ Night Lawsuits
A family-run restaurant in the San Francisco Bay Area permanently shuttered because it couldn’t afford to operate after having to settle a discrimination lawsuit over its Ladies’ Night promotion, according to CNN.
Ladies’ Nights promotions typically give discounted drinks to women. Proprietors use this type of promotion to bring in female customers, which, in turn, helps increase male customers. However, this goes against modern principles of gender equality and may lead to discrimination lawsuits. According to CNN, the lawsuit against the San Francisco restaurant was not the first of its kind. Many of these lawsuits target small businesses because the owners lack the legal resources of large chain restaurants and may not realize that such promotions break state anti-discrimination laws.
Is Ladies’ Night Illegal?
Ladies’ Night promotions have been common for decades – are they really illegal?
According to FindLaw, a federal court ruled that Ladies’ Night promotions are legal. The case in question involved a men’s rights activist who filed a lawsuit claiming that the half off drink specials for women at some New York nightclubs violated the equal protection clause of the Constitution. The court ruled that private bars and nightclubs were not state actors by the mere fact of being licensed by the state and ruled against the plaintiff.
However, this is only one court ruling and pertains to whether Ladies’ Nights specifically are unconstitutional. This type of promotion may still be illegal under various other laws.
For example, the Unruh Civil Rights Act (California Civil Code Section 51) prohibits business establishments in California (including housing and public accommodations) from discriminating on the basis of age, ancestry, color, disability, national origin, race, religion, sex, or sexual orientation. Since restaurants, bars, and nightclubs are classified as public accommodations, this law could be used as the basis for a Ladies’ Night lawsuit.
Your Insurance May Not Cover You
A Ladies’ Night lawsuit may be particularly devastating for a small business because insurance may not cover it. This is because most general liability insurance policies have an intentional acts exclusion. If the business committed the alleged discrimination on purpose, insurance won’t cover it. When a restaurant, bar, or nightclub hosts a Ladies’ Night promotion, it’s an intentional decision, and that could cause this exclusion to apply.
Some EPLI policies offer public accommodations endorsements that explicitly cover customer-based discrimination claims. However, they may also exclude intentional acts, meaning they may not provide coverage for a lawsuit over Ladies’ Night.
If businesses face lawsuits without the benefit of coverage, they have to pay defense costs as well as any jury awards or settlements. Many small businesses do not have sufficient funds to cover such these expenses, which could result in them going out of business.
To avoid this eventuality, business owners need to ensure their promotions are compliant with discrimination laws – and a Ladies’ Night promotion probably is not.
Could Other Promotions Lead to Lawsuits?
If you’ve been running a Ladies’ Night promotion and haven’t been sued yet, consider yourself lucky. Take this as a wakeup call to assess your promotions and determine whether any could lead to a business-ruining lawsuit.
It’s not just Ladies’ Nights that could land you in trouble. Ladies’ Nights lawsuits are common but other similar practices could also lead to problems.
Do you have any promotions that treat individuals differently based on a protected class, such as their race, gender, sexual orientation, age, or religion? Any discount that favors one protected class over another could be the basis for a lawsuit. Even something that seems fun – for example, a discount for the Irish on St. Patrick’s Day – could get a restaurant in trouble.
Running a small business is challenging. Heffernan Insurance Brokers can help restaurants, bars and nightclubs manage their risks. Learn more.
