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Ladies’ Nights Illegal in California

Having a Ladies’ Night at your winery or restaurant may sound like a great way to generate business and give your customers a nice break on price.  But if you have one, you open yourself up to a lawsuit, because Ladies’ Nights are illegal in California.

As ridiculous as that may sound, the California Supreme Court has twice held that ladies’ night-type promotions are an illegal form of gender discrimination.  The practice was first outlawed in 1985 in Koire v. Metro Car Wash, and affirmed in 2007 in the Angelucci v. Century Supper Club case, where four men successfully sued Century Supper Club, a nightclub, for charging men a higher cover-charge than women.

The damages for selling discounted drinks to women but not men can be substantial.  California’s anti-discrimination statute provides for a minimum of $4,000 damages per violation (per drink), plus attorney’s fees!  Due to this financial incentive, Plaintiffs’ attorneys or their agents actually scour the newspapers and Internet looking for advertised Ladies’ Night specials, and send men in to purchase drinks, with the sole purpose of gathering facts that will support filing a discrimination law suit.  Because there is no defense to these shake-down lawsuits (ignorance of the law is not a defense), businesses usually have no choice but to settle.

Are these claims covered by insurance?  Maybe.  While they are not covered under a standard Commercial General Liability Policy (CGL), they may trigger a duty to defend under your Liquor Liability policy, depending on the specific policy language.  Liquor Liability policies often provide broad coverage for “all damages” imposed by reason of “the selling, serving or furnishing of any alcoholic beverages.”  A ladies’ night claim seeking damages arising out of the insured’s sale of alcoholic beverages to men at a higher price than females were required to pay, may fall within the scope of the insuring agreement.  If so, there could be a potential for coverage sufficient to trigger the insurer’s duty to defend.  And while it is less likely that the insurer would be liable for any settlement costs, its payment of defense costs could be a substantial benefit.

If you’ve received a Ladies’ Night claim or inquiry or if you have any questions about this topic, please call us. We can review your insurance policies to determine whether there is a potential for coverage.  If you’ve already received a denial from your insurer, we can review the denial letter to determine if it is appropriate based on the coverage you purchased, or whether it should be challenged.  Importantly, do not settle a Ladies’ Night claim before your insurers have been notified, as doing so would violate the “no voluntary settlements” provision contained in virtually every insurance policy, and result in a forfeiture of any potential coverage.

Ziyad Naccasha znaccasha@carnaclaw.com

http://carnaclaw.com/naccasha/

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