Ladies’ Nights have long been a popular promotion strategy for businesses like clubs and restaurants to draw crowds. This practice involves offering drinks or meals to women at discounted rates to attract larger crowds of women, which in turn attracts more men to the venue, leading to increased sales. However, the strategy took an unexpected turn for a business in the San Francisco Bay Area, forcing it to close its doors permanently.
For a family-owned restaurant in the San Francisco Bay Area, a “Ladies’ Night” promotion became a legal minefield. It is now the latest recorded casualty of a lawsuit. Lima Restaurant in Concord, a Peruvian eatery owned by chef John Marquez, has shut down this week after settling a lawsuit that alleged discrimination over its Ladies’ Night promotion.
According to a report by CNN affiliate KGO, the financial burden of the settlement and the restaurant’s inability to recover the expenses afterward were the primary reasons for its closure.
Backdrop of the Gender Discrimination Lawsuit
The Unruh Civil Rights Act is at the center of this issue. It is a California law enacted in 1959 that prohibits discrimination based on religion, race, and gender in public accommodations. The law is intended to promote equality, but its interpretation has now led to several lawsuits targeting promotions like Ladies’ Night.
“A lot of these small mom-and-pop-type bars honestly might not know about this law,” explained Rebecca Nieman, a professor of business law and ethics at the University of San Diego. She added, “Which is why you see these lawsuits still happening with these extremely small proprietors.”
While most of these lawsuits are settled outside of court, the financial burden can severely affect small businesses. Only a few small businesses can afford the legal fees required to fight these lawsuits in court. “If we’re talking about California law and they were breaking it, unfortunately, they probably would lose in court,” Nieman remarked.
A Pattern of Lawsuits
The case of Lima Restaurant is not unique among small ventures. Earlier in 2024, California’s minor-league baseball team, the Fresno Grizzlies, faced a similar lawsuit regarding a promotional event geared toward women.
San Diego attorney Alfred Rava has emerged as one of the most prominent figures in these legal battles. Rava has filed hundreds of lawsuits against businesses hosting women-focused events. His targets range from Mother’s Day promotions to women-led startup gatherings, all under the premise that such events discriminate against men.
While Rava has defended his actions as an advocacy for diversity and equality, critics have accused him of exploiting the legal system for financial gain. Rava recently declined to comment on these allegations but has previously stated that his lawsuits have prompted businesses to end discriminatory practices.
National Perception of Gender Discrimination Laws
California is one of many states in the U.S. that enforce such laws. According to the Movement Advancement Project, at least 22 states and the District of Columbia have enforced laws against gender discrimination in public accommodations. While these laws are well-intentioned, they have put many small businesses in precarious positions, often leading them to costly litigation.
What Small Businesses Can Do To Mitigate Risk
As the legal environment grows increasingly challenging for small businesses, experts suggest small business owners take proactive steps to protect their ventures. Alexandros Platon Alexandrakis, a business law professor at the University of Miami, highlighted the importance of liability insurance. However, he cautioned that many policies exclude coverage for discrimination lawsuits.
According to Alexandrakis, liability insurance typically covers negligence claims, like slip-and-fall accidents, but it’s not designed to protect against discrimination claims. He advised small businesses to review their policies carefully before increasing their coverage limits. This preparation can help them manage unexpected legal challenges.
Forming a legal entity, such as a limited liability company (LLC), can also act as a shield for personal assets against such lawsuits. These measures are especially critical for small family-run establishments that may lack the resources of larger corporations.
A Legal System Under Scrutiny
While the intentions behind anti-discrimination laws are noble, the rise in lawsuits has sparked debate about their real-world implications. For small businesses like Lima Restaurant, the consequences have led to closure and financial ruin.
As the Marquez family closes their restaurant, they join a growing list of proprietors caught in the crosshairs of a legal system that, while designed to protect equality, has become a significant challenge for those trying to make ends meet.
For many small businesses, the question is no longer whether promotions like Ladies’ Night are worth the risk, but whether they can survive in an increasingly litigious climate at all.
