Duff on Hospitality Law

The future has arrived, and it has a strange sense of humor. Pokémon Go — an “augmented reality” game that requires players to travel to real world locations to capture imaginary monsters through apps on their mobile devices — is changing how millennials choose their travel destinations and hotels. These games have inspired a new generation of travelers, and present novel opportunities to businesses in the hospitality sector.

Despite lawsuits and persistent legal uncertainties, the “sharing economy” is booming, and the companies at its forefront continue to grow. Some of these businesses are a natural complement to the hotel industry, while others directly compete with it. Whatever may become of these companies as they are reined in by regulation, one thing is certain: the rise or fall of the “sharing economy” will define the landscape of the hospitality sector in the decades ahead.

Ridesharing giant Uber raised $2.1 billion in its most recent round of funding, buoyed by a valuation of more than $65 billion – a remarkable ascendance for the five-year-old company. Its success has attracted a wave of new entrants seeking to gain a foothold in this burgeoning market. But the road to a share of the sharing economy is fraught with legal peril.

In today’s post, Malcolm Seymour, a member of our New York office who specializes in commercial litigation and regulatory enforcement actions, discusses the benefits and legal considerations for those who provide free WiFi to their hospitality customers.

New York State Attorney General, Eric Schneiderman, has made waves in recent months by subpoenaing the popular “apartment-sharing” website AirBNB for information on more than 15,000 of the website’s hosts in New York City. The subpoenas were issued as part of Schneiderman’s campaign to enforce a 2010 New York law that took effect last year, clamping down on “illegal hotels” across the state. With the backing of tech trade groups and civil liberties organizations, AirBNB has now mounted a high-profile defense against these subpoenas. Meanwhile, other destination cities around the globe are taking steps to follow New York’s lead.

Our latest post comes from Malcolm Seymour, a member of our New York office who specializes in commercial litigation and regulatory enforcement actions. His post discusses the ins and outs of Dram shop laws, and how they vary from state to state. -Greg

"A guy walks into a bar and orders a drink”: these words usually foreshadow some benign if tasteless joke. But these same words are increasingly found prefacing legal complaints based on laws known as dram shop statutes. And for businesses that sell or serve alcohol, these lawsuits are no laughing matter.

Under dram shop laws, businesses that sell alcohol can face civil liability for injuries that their intoxicated patrons inflict on third parties – even after those patrons have left their premises, and (in some states) even when the injury caused is intentional. Despite the anachronistic name, more states enact dram shop laws every decade, under political pressure from groups like M.A.D.D. These laws vary significantly from state to state, and their severity in certain jurisdictions can come as an unwelcome surprise. Any hotel, restaurant or bar that sells or serves alcohol, especially one with operations in multiple states, would do well to familiarize itself with these laws and their jurisdictional differences.

Take New York City – a nightlife capital and global destination for travelers – which happens to fall under the reach of one of the nation’s harshest dram shop laws. New York State’s Dram Shop Act allows private plaintiffs injured by intoxicated individuals to sue anyone who may have “unlawfully” sold those individuals alcohol. This would not be so vexing if New York used a clear standard to define what sales are considered unlawful. Legally prohibited sales include sales to minors, habitual drunkards and – most problematically for those on the receiving end of a dram shop complaint – anyone who is “visibly intoxicated.”