new York
CNN
—
Historically, Ladies’ Nights have been great for business.
Discounted drinks or meals tend to attract a large crowd of women, which in turn tends to attract more men, which then leads to crowded bars and increased sales for the business.
But a family-owned restaurant in the San Francisco Bay Area is closing this week because it can’t afford to operate after settling a “Ladies’ Night” discrimination lawsuit, CNN affiliate KGO reported . reported last week. John Marquez, chef and owner of Lima Restaurant in Concord, told the outlet he hasn’t been able to bounce back after settling a lawsuit over a promotion offering discounted drinks for women.
This isn’t the first small business to be sued over a Ladies’ Night promotion due to technicalities in discrimination laws in some states. The Unruh Civil Rights Act, a 1959 California law, states that businesses cannot discriminate based on religion, race or gender. A slew of lawsuits have since followed, leading to a sharp decline in promotion.
“Honestly, a lot of these small mom-and-pop bars may not be aware of this law,” said Rebecca Nieman, a professor of business law and ethics at the University of San Diego. “That’s why we still see lawsuits against these very small landlords. »
Most sex discrimination lawsuits against small businesses are settled outside of court, Nieman said. Restaurants and bars, with their razor-thin margins, simply cannot financially handle a lawsuit from start to finish and fight it in court.
Even though most businesses don’t host Ladies’ Night with malicious intent, “if we’re talking about California law and they’re violating it, unfortunately, they would probably lose in court,” Nieman said.
Earlier this year in California, the Fresno Grizzlies minor league baseball team was sued over a promotional event aimed at women.
But even though the law was created to combat discrimination, the intentions of those filing such lawsuits have come under scrutiny, with some calling them opportunistic and exploitative. San Diego attorney Alfred Rava has filed hundreds of lawsuits across California against women’s organizations and women-only events, from Grizzlies promotion to women-led startups to charity giveaways. Mother’s Day, saying they were unfair to men.
Rava did not respond to CNN’s request for comment. But in comments to Bloomberg in 2018he said he was “an advocate for diversity and equal treatment” and that “each of the defendant companies ended its sex discrimination against millions of California consumers after I filed my lawsuits” .
At least 22 states and the District of Columbia have explicit laws against sex discrimination in public places, according to the political think tank Movement Advancement Project.
America is becoming more litigious, Alexandros Platon Alexandrakis, a business law professor at the University of Miami, told CNN, and the number of lawsuits and judgments involving small businesses is on the rise.
It is still difficult for small businesses to fight off lawsuits, even if they have liability insurance. Lawsuits can exceed policy limits and legal costs accumulate in cases that go to trial. There are also policy exclusions that do not cover certain lawsuits.
“At the same time, when would a bar think about having advertising coverage on its general liability insurance policy? » said Alexandrakis.
In the South Florida area, Alexandrakis recommends businesses increase their policies to cover issues ranging from $1 million to $2 million.
But often, small business lawsuits involve an alleged breach of contract or a person slipping and falling inside the store. Liability insurance covers things like negligence claims, not discrimination protection, Nieman said.
Alexandrakis recommends that all small businesses purchase some sort of insurance and make sure they know exactly what is covered. It is also important for an owner to open an entity when running a small business to avoid exposing their personal assets in a lawsuit.