Legal Corner
by Jim Linnan, ESRTA Counsel

Several years ago I authored a series of articles for the association’s monthly newsletter in an attempt to keep licensees abreast of legal developments which may effect the operation of their establishments. In collaboration with your Executive Director, Scott Wexler, we are reviving that column. We look forward to comments and suggestions from you on topics which you would like to see addressed.

When Is Liability Insurance Not Insurance?

You have no insurance if the claim for injury is based upon someone hitting or throwing something at another person. This is especially true if your employee is involved in the altercation. Your bouncers may not lay a hand upon, strike, grab or otherwise assault a patron who is becoming unruly. The old adage "the other guy swung first" does not apply as a fist fight is still a fist fight. If your bouncer swings back and breaks the patron's jaw, you will have no insurance coverage to provide for the legal expense of hiring an attorney to defend the claim, and you have no insurance to pay for the claim if the injured party is successful. Liability insurance is not any insurance if the underlying claim is an assault and battery.

Most liability insurance policies issued to establishments that are licensed to sell alcoholic beverage contain a "assault and battery" exclusion. In brief, this means that your insurance policy will cover you for claims for injuries which occur in your establishments or parking lots unless those injuries are sustained as a result of an assault and battery. Most recently this topic was again addressed by the courts. In the most recent case a gentleman named Haynes was struck with an object just outside of a bar owned by Beer Garden. He sued Beer Garden alleging that they owed a duty to the public and especially to Mr. Haynes to maintain the premises in a safe condition. Beer Garden's insurance company, New York Mutual Underwriters, disclaimed coverage under the assault and battery exclusion in its policy. The courts held that the insurance company had no duty to indemnify or defend Beer Garden in the lawsuit as the language of the exclusion for suits "based on assault and battery", is unambiguous. If no lawsuit would exist but for the assault, the claim is based on assault and the exclusion applies. In this case, no lawsuit did exist but for the assault on the plaintiff. Therefore, the insurance company properly disclaimed its coverage.

Some Good News

On a lighter note, courts did hold that a licensee was not responsible for its employees' actions once she left the job. In a case recently decided, an injured party was working on a highway construction job when he was struck by a car driven by a bartender on her way home from a local pub where she was employed. The injured party sued the bartender and the pub claiming that the pub encouraged the employees to drink alcohol with its customers to promote business and was therefore responsible for the employee being on the highway impaired by alcohol.

The court dismissed the case against the pub stating that even if the pub did encourage its employees to drink while on the job, it was not responsible for the employee while she was driving home from work, as the drive home from work was not within the scope of her job. The accident did not take place on the pub's premises, did not involve the pub's property, and the employee was not acting within her employment at the time of the accident.

These are just a couple of the many issues that you must consider in the day to day operation of your business.

Article prepared by James D. Linnan, Esq., Linnan & Fallon, LLP, 61 Columbia Street, Suite 300, Albany, New York 12210, (518) 449-5400. Attorneys for the Empire State Restaurant & Tavern Aassociation, Inc.