By James H. Whalen & John J. Miceli
Lipe Lyons Murphy Nahrstadt & Pontikis Ltd.
Posted 2/26/21
Restaurants, taverns, bars and other hospitality businesses throughout the country have adapted their operations to meet the unprecedented challenges of the COVID-19 pandemic. In order to continue offering an in-person experience, many establishments have expanded their operations outdoors. While far from ideal, these expanded outdoor operations have provided a much-needed lifeline to businesses.
By expanding operations into new physical spaces, businesses expose themselves to new risks that they did not have to consider when operating within their usual premises. Streets, sidewalks, parking lots and other common areas were not designed with drinking and dining in mind. As businesses expand into these spaces, they now need to pay attention to lighting, surface conditions, and maintenance which may not be consistent with the standards of their traditional premises.
In many states, the common law imposes a duty on a business occupier of any premises to provide to exercise reasonable care to maintain its premises in a reasonably safe condition for use by its invitees. Often, the physical “boundaries” of this legal duty are established in a written contract, like square footage in a lease. These boundaries can also be defined in practice, and could include those areas where a restaurant or bar sets up tables or serves customers.
Ordinarily a business occupier will not be held liable for any injuries incurred on a public sidewalk under the control of a municipality, even though the sidewalk may also be used for ingress or egress to the premises. However, as businesses begin operating outside their previously defined and understood boundaries, there may be new consequences to consider.
By expanding operations into new physical spaces, restaurants have arguably extended the physical area for which they are responsible. For example, if a restaurant begins operating on an adjacent sidewalk or street, then it could have duty to ensure that the condition of the street or sidewalk is appropriate for its customers. A business might find itself serving customer in a pot-hole filled street or an uneven sidewalk. Arguably, the physical boundaries of the “premises” for which the operator-occupier is responsible now includes sidewalks, streets, or even parking lots.
If an operator’s responsibilities for a “premises” expand with this new use, then it stands to reason that an operator’s duty for safe ingress and egress could likewise be expanded. The common law in many states recognizes a duty of an inviter to provide an invitee with a reasonably safe means of ingress and egress. If a patron can now access a restaurant’s table directly from the street, then the duty for ingress and egress has arguably expanded beyond the front door to wherever the patron enters the new service area.
In addition to expanding its “premises” or the extent of ingress and egress, a hospitality business could assume new maintenance responsibilities for the public way or common area. By formalizing the boundaries for this expanded use, an operator can readily understand the area for which it is responsible, and act accordingly. In addition to defining new physical boundaries, businesses should consider taking steps to define operational responsibilities in the new space. If a business begins serving food and drink to patrons in a street, it should determine who is responsible for lighting conditions, surface issues, and clean-up of any potentially hazardous conditions. For example, if a street light provides illumination, a pothole needs filling, or snow needs removing, who is responsible for correcting these conditions on public property or common area-private property? Businesses would be well-served to establish an understanding of the responsibilities for security, maintenance, repairs, and lighting, and where use of the public space/common area begins and ends for each establishment.
These issues can become more complicated – and necessitating more clarity – if multiple businesses are operating adjacent to each other in new space. In some markets, multiple hospitality establishments set up outdoor operations in the same physical area, often taking over an entire street, with tables and tents serving different establishments are immediately adjacent to each other. If a server from one restaurant spills food on a sidewalk used by another adjacent restaurant, who is responsible for cleaning it up? If there is an incident in a shared space, who is responsible for investigating it?
Communication about these issues with local government officials, landlords and with fellow, adjacent operators is critical. Businesses should consider whether a new written agreement or other written documentation is appropriate to formalize boundaries, rights and responsibilities.
Even if the new space has already been used for some time without formal documentation outlining rights and responsibilities, business should gather and preserve correspondence regarding the use of the new space. Operators should also consider memorializing their own understanding of their rights and responsibilities for the use of this property.
New agreements can also be used to address risk-shifting, providing for additional insured status or indemnity. On the other side of that coin, businesses that expand operations onto other property may themselves be required to name landlords or municipalities as additional insureds to their policy. For example, a restaurant might have to add a municipality as an additional insured and agree to indemnify the municipality from any loss that results directly or indirectly from the businesses use of the public way.
Businesses should also consider whether their use of this property is covered under their existing insurance policy. Operators should check with insurance providers to determine whether their current insurance policies provide coverage for the use of public and shared-private space.
When working with contractors to prepare or maintain outdoor operations or vendors who serve these new areas, hospitability businesses should ask to be added as an additional insured on contractor/vendor policies and consider securing a written agreement to be indemnified by the contractor/vendor.
Besides private agreements and understandings, statutes, ordinances and other regulations should also be considered. Some municipalities have provided clear guidance for bars and restaurants, defining boundaries and responsibilities. In the absence of new, COVID-specific regulations for this activity, existing regulations might establish “best-practices” – and perhaps the legal duty – for the operator.
It has been said that the pandemic will change many things forever. Expanded outdoor operations might become a permanent feature. If expanded outdoor operations continue into the post-pandemic world, businesses now have the opportunity make decisions which will allow them to stay ahead of the curve and reduce exposure to future liabilit