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Tuesday, October 28, 2014

Ebola Virus: Guidance for Commercial Landlords

With the  number of individuals positively diagnosed with the Ebola virus disease on the rise in the United States, commercial landlords are understandably concerned about their responsibilities and their potential liability to tenants, invitees and employees.  Common questions include the following: Could a person that contracts the disease at the landlord’s property sue the landlord for damages?  Could the landlord be forced to tear down its property if the disease is spread on site, as was the case for the Reston facility described in The Hot Zone: A Terrifying True Story (the best-selling 1994 non-fiction thriller by Richard Preston)?

This article attempts to provide commercial landlords with some basic guidance for Ebola-related matters.  Past crisis situations such as the 9/11 attacks and outbreaks of legionnaire’s disease are instructive to landlords.

What action should a landlord take now to reduce potential liability to tenants?

First, contact your insurance carrier. Determine if your existing policy provides coverage for the decontamination, loss of income and potential liability to tenants in the event property is closed for a period of time as a result of a possible Ebola contamination. Some policies exempt claims caused by or related to Ebola.  Here is a link to an article that discusses concerns a landlord may want to raise with its own insurance carrier:
 
Second, you should review your general emergency preparedness plan with your property manager.  If you do not have an emergency preparedness plan, you should consider adopting one.  The plan need not (and should not) specifically address Ebola disease; but rather, should generally address how the property manager should respond in the event of an emergency with respect to notification of tenants and evacuation of the property.

Unlike mold, radon or pest controls, there is no reasonable method by which the landlord can prevent a person infected with Ebola from entering the Premises.  There are no laws or regulations requiring landlords to take action with respect to Ebola disease. Accordingly, the landlord should not assume any responsibility in that regard, as it could only increase the landlord’s potential liability should Ebola disease be transmitted on the landlord’s property.  

The New Jersey case of Vellucci v. Allstate Insurance Company, New Jersey, Appellate Division, May 23, 2013, is instructive for how a court would probably treat a landlord in an Ebola case.  In that case, the plaintiff contracted Legionnaire’s disease from the water in the men’s bathroom and later died.  In the suit against the landlord, the court found that the landlord “did not test the water for contaminants” until after the plaintiff contracted the disease.  The plaintiff argued that the landlord had an affirmative duty to test the water at the premises.  The trial court disagreed and dismissed the plaintiff’s claim, which dismissal was confirmed on appeal. The N.J. Court of Appeals stated in its ruling that “Plaintiff did not present any rational basis to impose a duty on [the landlord] to foresee the advent of the Legionella bacteria in the building’s water system. There is no statutory or regulatory scheme imposing a duty on owners and managers of commercial office building to take affirmative action to detect the presence of Legionella.”  And, it further stated that “[t]here are no industry standards that require [the landlord] to have done anything more than what it did in response to the salient facts of this case. Once relevant information concerning decedent’s illness was brought to its attention, [the landlord] took appropriate measures to investigate the matter and ascertain what needed to be done to prevent a recurrence.”  (Also see Flaherty v. Legum & Norman Realty, 2007 U.S. District Court for the Eastern District of Virginia – wrongful death suit by occupant who died of legionnaire’s disease was dismissed by the court for plaintiff’s inability to prove standard of care required by property management company)


We can expect that, if an individual is diagnosed with Ebola disease and exposes the property and the tenants to potential risk, the government authorities will inform the landlord of the situation. Only then will the landlord have a duty to take effective action as discussed below.

Here is a link to an Ebola Crisis Communication Plan: http://www.aon.com/ebola-response/attachments/Ebola-Communication_Checklist.pdf
 
Are there actions that a landlord should take to lessen potential liability to its own employees?

A landlord, like any employer, should avoid providing medical advice to an employee.  Landlords should encourage but not demand that its employees speak with their own doctors about their questions and concerns.  Landlord can also refer employees to the Center for Disease Control (CDC) information page on Ebola (http://www.cdc.gov/vhf/ebola/).

In most cases, if an employee is infected with Ebola disease, the employee will be covered by health insurance and worker’s compensation insurance.  The landlord’s principal concern may actually be protecting the confidentiality of the employee’s medical records, which duty may conflict with the landlord’s obligation to protect other employees and the occupants of the property.  The medical facility that diagnoses the disease will undoubtedly report the finding to the CDC, and the government may determine what should be done with respect to the employee and the property. 

If a person with Ebola disease did enter the property, what should the landlord do?

If someone diagnosed with Ebola enters a building, the landlord should immediately contact the Centers for Disease Control, the local Department of Public Health, its lawyer and its insurance carrier.  We know that in Texas the local government disinfected the residential premises of the infected individual and paid for the operation. In New York, the bowling alley visited by an infected doctor was shut down for a period of time. 

Closing the building raises some tricky legal issues.  On the one hand, keeping the building open leaves the landlord vulnerable to a lawsuit if someone who enters the property does in fact contract Ebola disease. On the other hand, closing the building could render the landlord responsible for the loss of business incurred by tenants who are forced to close. Although decisions will have to be made on a case-by-case basis depending on the particular circumstances in consultation with the landlord’s lawyers, the landlord should probably not close the building absent instructions from the federal, state or local authorities that the building must be closed.  Landlords should review their standard leases to determine if there is a waiver of liability under these circumstances. 

Conclusion


Although it is counterintuitive and contrary to the “must do something” nature of most property owners and managers, from a liability perspective, it is probably best to take no preemptive action with respect to Ebola.  Historically, courts have been reluctant to hold property owners responsible for third-party activities on their properties unless the landlord has clear notice of imminent danger.  In the event that the property is visited by an individual with the Ebola disease, the landlord should notify the governmental authorities and follow their instructions in consultation with their lawyers.

Tuesday, October 7, 2014

Can you scalp your Washington Nationals playoff tickets?

Can you scalp your Washington Nationals playoff tickets?

The good news is that once again, the Washington Nationals have made it to the MLB Playoffs!  The bad news is that they have their backs against the wall down 2-1 in the Division Series against the Giants.  However, if they manage to fight back and win the next game, they return to Washington with the home field advantage and tickets to the remaining games will be hot!  Whenever one of the local professional sports teams reaches the post-season, tickets to the home playoff games are all but certain to be a hot commodity on the resale market. This raises the question: is it illegal to resell tickets purchased from the team online for profit? 

The answer to this question is unclear to many, for good reason. If you have ever walked the streets surrounding Nationals Park before a game, then you may recall the police proclaiming through their bullhorns that it is illegal to resell tickets and that violators will be arrested. You may have also looked at the fine print on your ticket, which reads as follows:

“NO RESALE OF A TICKET IS PERMITTED VIA THE INTERNET OR ANY OTHER INTERACTIVE MEDIA, EXCEPT THROUGH THE OFFICIAL WEBSITE OF THE WASHINGTON NATIONALS OR SITES AUTHORIZED BY THE WASHINGTON NATIONALS.  THIS TICKET MUST NOT BE RESOLD OR OFFERED FOR RESALE IN A MANNER PROHIBITED BY ANY FEDERAL, STATE OR LOCAL LAW OR REGULATIONS. UNLAWFUL RESALE OR ATTEMPTED RESALE IS GROUNDS FOR REVOCATION AND CANCELLATION WITHOUT COMPENSATION”.

This is certainly enough to deter a cautious person from attempting to resell tickets on the Internet.  At the same time, if you have ever tried to buy a ticket online for a Nationals game, then you know there is a thriving online resale market through websites such as StubHub, where thousands of tickets are bought and sold for each game.  Could thousands of people be breaking the law? The short answer is that for individuals residing in Virginia, Maryland or Washington, D.C., no, the act of reselling tickets online is not illegal.

There is no federal law that directly regulates the act of online ticket reselling, although federal laws do generally regulate the manner in which electronic devices can be used to engage in online commerce (mainly, to prevent fraud).  Ticket reselling is regulated at the state level, and in some cases, at the local government level. The penalties for reselling tickets in violation of the applicable regulations differ from jurisdiction to jurisdiction, and range from small civil fines to possible jail time. In the majority of states, the laws applicable to ticket reselling are out-of-date and were enacted prior to the proliferation of online reselling.

In Virginia, ticket reselling is weakly regulated by the Commonwealth. The Commonwealth defers regulatory authority to local government per Virginia Code § 15.2-969, which provides as follows:

Any locality may provide, by ordinance, that it is unlawful for any person, firm or corporation to resell for profit any ticket for admission to any sporting event, theatrical production, lecture, motion picture or any other event open to the public for which tickets are ordinarily sold, except in the case of religious, charitable, or educational organizations where all or a portion of the admission price reverts to the sponsoring group and the resale for profit of such ticket is authorized by the sponsor of the event and the manager or owner of the facility in which the event is being held. Such ordinance may provide that violators thereof are guilty of a Class 3 misdemeanor. This section shall not apply to any resale of a ticket that occurs on the Internet.

Some localities, including the City of Richmond, have incorporated this language into their local ordinances (See Richmond Code of Ordinance, § 66-2, Scalping of Tickets to Public Events).  Note, however, that the Virginia Code statute expressly excludes ticket resale on the Internet from the statute.  Accordingly, in effect, the local ordinances are only applicable to hand-to-hand cash deals (i.e. traditional ticket “scalping”).       

The State of Maryland does not regulate ticket reselling, other than boxing tickets. Local government does have the ability to regulate ticket scalping, as was the case for many years in the City of Baltimore.  However, the Baltimore City ordinance prohibiting the sale of tickets for more than face value was repealed in 2013 in the wake of a lawsuit filed by a consumer against Ticketmaster for charging excess service charges (See Bourgeois v. Live Nation Entertainment, Inc., et al.).  What the future holds for ticket scalpers in Baltimore remains to be seen, but there is little doubt that Orioles playoff tickets will be “scalped” during postseason play.

In Washington, D.C., the legality of ticket scalping is also in flux. A long-standing statute prohibited the sale of tickets on sidewalks, streets and public spaces, thereby explaining the police and their bullhorns.  However, the statute was (perhaps, inadvertently) omitted from the D.C. Municipal Code in October of 2013.  Emergency legislation was submitted to the D.C. Council in 2014 to reinstate the statute.  All signs indicate that the sale of tickets in public spaces will remain prohibited in the District, but the author of this article was unable to confirm the status of that legislation. Regardless, the online resale of tickets in Washington D.C. is not addressed by the prior statute. 

Accordingly, in Virginia, Maryland and Washington D.C., the act of selling event tickets through online retailers is not, in and of itself, an illegal act. This is not the case in states like New Jersey where ticket resellers are required to obtain a broker’s license or face criminal liability.     

That said, reselling tickets online also presents the question of civil liability. Like the Washington Nationals (see above), most teams and venues write on the face of the ticket that the ticket cannot be resold.  While the primary goal of the team/venue is to deter online fraud and to keep ticket prices reasonable for “true fans” that want to attend the games, arguably, the team/venue is also creating a contract with the original buyer. If the original buyer breaches that contract by reselling the ticket, the team/venue can theoretically cancel the ticket and seek additional damages.  

While such cancellation seems unlikely for major professional sporting events, many artistic performers and small venues actively oppose ticket reselling and do make efforts to enforce the “contract” created by the ticket.  For example, some venues condition entry into the event upon the production of either photo identification that matches the name on the ticket, or the credit card that was used to purchase tickets.    

To summarize, in Virginia, Maryland and Washington, D.C., there is nothing illegal about reselling your tickets online, provided that you do not engage in any fraudulent activity prohibited by other laws.  Furthermore, while the team is very unlikely to take any civil action against you for violating the “contract” created by the ticket, in theory, it could. The reality is that no major professional sports team in the United States wants to roll back the clock and reignite the fight against online ticket sales.  Rather, the teams, including the Nationals, are finding ways to participate in the secondary market by partnering with ticket brokers and adopting dynamic pricing models that track consumer demand.


This article is not intended to replace the advice of legal counsel.