A lawsuit related to a 'Ladies' Night' event led to the closure of a long-established, family-operated eatery. Such incidents in establishments are surprisingly prevalent.
Inexpensive alcohol offers or meals attract a significant number of females, consequently drawing in more males, which ends up in crowded bars and enhanced revenues for the establishment. However, a family-operated culinary establishment situated in the San Francisco Bay Area is closing down this week because it's struggling financially following its settlement of a "Ladies' Night" discrimination lawsuit, as reported by CNN affiliate KGO recently. John Marquez, the chef and proprietor of Lima Restaurant in Concord, shared that the business hasn't been able to recover after settling a lawsuit concerning a promotion offering discounted drinks for women.
This isn't an isolated occurrence as small businesses have been brought to court over "Ladies' Night" promotions due to complexities in discrimination laws in some states. The Unruh Civil Rights Act, a California law established in 1959, prohibits discrimination against religion, race, and gender. As a result, a multitude of lawsuits have ensued, resulting in a decrease in the promotion.
"Many of these small, family-owned bars and pubs may not be aware of this law," commented Rebecca Nieman, a professor of business law and ethics at the University of San Diego. "Which is likely why such lawsuits are still prevalent among these small entrepreneurs."
Most gender discrimination lawsuits against small businesses are settled outside of court, Nieman explained. Restaurants and bars with thin profit margins simply can't financially support a lawsuit from the initiation to its conclusion, let alone challenge it in court.
"Even if most businesses don't hold a Ladies' Night with malicious intentions," Nieman continued, "if we're discussing California law and they were breaching it, unfortunately, they would probably lose in court."
Earlier this year in California, the minor-league baseball team Fresno Grizzlies were sued for a promotional event for women.
However, the intentions of those initiating such lawsuits have come under scrutiny, with some claiming they're opportunistic and exploitative. Across California, San Diego lawyer Alfred Rava filed numerous lawsuits against women's organizations and women-only events, ranging from the Grizzlies' promotion to female-led startups to Mother's Day freebies, alleging they're biased against males.
Rava declined to comment on CNN's request. But in remarks to Bloomberg in 2018, he declared that he's an "advocate for diversity and equal treatment" and that "every one of the defendant businesses ceased their discrimination against millions of California consumers after I filed my lawsuits."
At least 22 states and the District of Columbia have explicit laws against gender discrimination in public accommodations, according to the policy thinktank Movement Advancement Project.
How businesses can shield themselves
America is becoming increasingly litigious, University of Miami business law professor Alexandros Platon Alexandrakis informed CNN, and the number of lawsuits and judgments involving small businesses are on the rise.
It's still challenging for small businesses to defend against lawsuits, even with liability insurance. Lawsuits may exceed policy limits, and legal fees mount in cases that make it to trial. There are also policy exclusions that won't cover certain lawsuits.
"At the same time, it's hard to anticipate that a bar would consider purchasing advertising insurance coverage as part of its general liability policy," Alexandrakis explained.
In the South Florida area, Alexandrakis suggests businesses raise their policies to cover issues from up to $1 million to up to $2 million.
Regrettably, lawsuits against small businesses often involve an alleged breach of contract or someone slipping and falling inside the establishment. Liability insurance protects against claims of negligence, but not against discrimination, Nieman pointed out.
Alexandrakis advises all small businesses to acquire some form of insurance and ensure they fully comprehend what it covers. Similarly, it's essential for an owner to establish an entity when operating a small business to avoid exposing personal assets in a lawsuit.
The Unruh Civil Rights Act in California has led to numerous lawsuits against small businesses offering "Ladies' Night" promotions due to its prohibition on discrimination based on gender. These lawsuits can be financially draining for small businesses with thin profit margins, often resulting in settlements outside of court to avoid lengthy legal battles.
Businesses, especially in states with strict discrimination laws, should be aware of the potential legal consequences of offering gender-specific promotions and consider acquiring comprehensive insurance policies to protect against such lawsuits.