The Safe Harbor We Actually Need: Pandemic Liability

There’s finally a real head of steam behind getting rid of safe harbors for Big Tech (being Section 230 and the DMCA). I’d welcome that major course correction as much as anyone. But I’d also like to see some attention paid to the more complex and desperately needed safe harbor reform that is not designed to create an income transfer. The liability reform the country desperately needs is a fix for the uninsurable risk that keeps restaurants, movie theaters, sports of all kinds and of course our venues from opening their doors–limitless pandemic risk.

It’s important to remember that the first small business casualty of the pandemic was the failure of insurance. I cannot tell you how many small business owners have told me that they were given all kinds of reasons why the business interruption insurance or other risk coverage they’d paid premiums on for many years–decades in some cases–wasn’t going to help them in 2020. (I did some early posts about insurance and the pandemic focused on force majeure clauses.)

This is particularly true of live events operators of all kinds from major festivals to wedding planners. These entrepreneurs are asked to take on an abyss of risk with no insurance–essentially a 100% deductible. The reality is this–we need to focus on how to get them open safely. But when there’s a lawyer behind every cough, that’s not going to happen.

On the other hand. artists are being asked to tour across a state-by-state and city-by-city patchwork quilt of public health regulations, recommendations, executive actions, and sanctions–with no insurance. The assumption is that the fans will come back, which survey data suggests is a dubious proposition. But what we definitely know is that if there are no venues, there will be no shows. If there are to be shows, then venues must find a way to operate in a high risk environment. I suggest that involves more than money.

Congress likely has the power to create a liability safe harbor for venues (as well as other live events) under its power to regulate under the Commerce Clause for activities that substantially affect interstate commerce. (There’s a line of Supreme Court cases on this issue: National Federation of Independent Business v. Sebelius (2012), New York v. Beretta (2008), Gonzales v. Raich (2005), and, of course, Wickard v. Filburn (1942), but see U.S. v. Lopez (1995) and U.S. v. Morrison (2000).) You couldn’t find an issue that’s a better example of an activity that affects interstate commerce than touring artists.

This won’t be a one-way street, of course. Venue workers, artists, and of course fans must feel that they will be at least as safe going to a venue as they would any other public place. The liability safe harbor could be conditioned on criteria developed by the appropriate agency, such as the CDC or the NIH, even by OSHA, in consultation with artists and venue workers across many jurisdictions. Insurance carriers could then be required to offer coverage or confirm they will cover venues and artists under existing policies.

We have enough experience now to at least get started with liability limitations that would allow venues to reopen in a way that protects artists and fans. If the government, insurance carriers and the live music industry don’t address both safety and liability limitations, we may find that we’ve lost our fans to livestreams on Facebook.