Coffee, Conversation and Strict Liability of Dangerous Activity(s) In the Music Business

Today I had the opportunity to discuss legal liability issues with a friend, whom just so happens to be an entertainment attorney. Normally, when a person asks me “what are you doing, as a project manager, to avoid liability on tour?” I cringe and feel as if they’re trying to sell me something or get me to invest into a “new business idea”, but in this case I truly got to learn about how a group can be affected by both chance and tragedy.

Many people dream of becoming successful in the music and entertainment industries; either by managing a band, booking nightclub projects, touring with a group, or just simply being part of a well known theatre production. The majority of these individuals have very little formal training in business, entertainment business, or music composition; only the passion for helping artists realize their dreams through hard work and dedication. One of the most important parts of being successful in an industry based around aweing crowds, upstaging competition in the marketplace and constantly trying to innovate artistically without becoming unmarketable, is to understand which liability issues could directly affect their careers and witch aspect(s) of their groups’ performances could cause the beloved professionals to find themselves in a serious legal battle.

One significant liability for any type of public production, regardless of the size, is called Strict Liability of Abnormally Dangerous Activities. The basis for this liability is founded on creating an undue element of risk or harm to others in a community, regardless of how much care was exercised in the undertaking of that risk.

A specific example of such a risk is the case of nightclub owners Jeffery A. and Michael Derderian, as well as, road manager Daniel M. Biechele. This is a strict liability case where the tour manager of a group set off pyrotechnics during a performance, without proper licensing or permits, and a flammable material intended for insulating the walls and celling on and around the stage caught fire engulfing the entire venue in less than 5 minutes, injuring over two hundred people and killing one hundred individuals.

During the investigation, the two owners of the nightclub and the band’s tour manager were charged with two hundred counts of involuntary manslaughter and earning themselves prison-time, probation, and restitution fines for the victims’ families. Because of this type of liability, not only were the owners of the venue and group’s road manager held criminally responsible, there was a huge backlash of civil cases filed and nearly one-hundred-seventy-five million dollars has been offered to the families of the fire victims.

Lawsuits were filed against anyone and everyone thought to be responsible for any part of this tragic incident. Among the companies and state representatives that were included in the law suite are: JBL Speakers, Anheuser-Busch, Clear Channel Broadcasting, Home Depot, Polar Industries, Sealed Air Corporation, Great White Band and the American Foam Corporation.

Some of the insurance policies that are available for a nightclub and/or touring artist(s) are:

Band/ Touring Group

1) Touring Artist General Liability Insurance. This type of insurance is the industry standard for a touring group and is similar to the general liability insurance that a promoter or venue would have. 2) Workers’ Compensation Insurance. Many states require a company to carry this type of insurance, it provides for injury and death benefits to employees that are injured on the job. The band lost a member during the fire and this type of insurance would have helped his family with burial, lost wages, etc. 3) Musical Equipment Property Policy Insurance. This insurance covers certain types of damage to sound, lights, and related musical gear. There is an additional policy that can be included in this type of insurance that would have covered the pyrotechnical gear if it had proved that it malfunctioned. 4) Touring Artist Cancellation/ Non-Appearance Insurance. If the group would have had this type of insurance, even though they had to cancel the rest of that particular tour, their revenue stream would have continued for what would have been considered the remainder of that set of show dates.

Club/ Venue/ Promoter

1) Spectator/ Premises General Liability Insurance. This type of policy is very beneficial in releasing many of the liability issues of the promoter, club owner, or venue. If this particular policy had the option for a pyrotechnic policy it would have probably prevented the club from having any of the cover for the claim. 2) Workers’ Compensation Insurance. This policy is the same as the band’s policy but would have been beneficial to the employees’ families of the venue that had been injured or perished. 3) Property Policy Insurance. Depending on the terms of the lease with the owners of the building this insurance would have covered the liability issue pertaining to the building and the business’s equipment that was destroyed in the fire. 4) Business Interruption Insurance. This is a policy that provides loss of income coverage due to the destruction of the venue. Typically, this insurance will pay for the loss of income for up to twelve months.

Many lessons can be learned from a management standpoint regarding this incident. Though many of the circumstances that led up to actual fire could have been avoided, what a perceptive road manager or business owner will take away from researching this case is the ability to hope for the best but plan for the worst. Having proper licenses to utilize pyrotechnics, proper planning for a mid-level tour should be considered rather than trying to bring such a large scale show to the small event, making sure all of the proper disclosures are signed with the venue before playing the event, working with local fire and ems services for any event that will draw a large crowd, having an emergency exit strategy in place if an issue were to occur, and making sure that all applicable policies have been purchased before the group embarks on the tour and/or the venue is open for business.

Applying these painful lessons to future business is quite simple, and following five simple rules can do this.

1) Make certain all policies are in full force. Policies include: general liability insurance, workers’ compensation insurance, automobile liability insurance, property insurance, and business interruption/ event cancellation insurance.

2) Check the limits. Know how much liability insurance is needed per venue, especially if the club doesn’t hold more than a few hundred people.

3) Make sure the policies cover the activities in the show and what is done onstage. If there is no pyrotechnic clause in the policy it is a great idea not to have pyrotechnics or explosions in the show.

4) Know and understand the financial strength of the insurance carriers. Make sure the insurance carrier is well known with a fair track record and does business honorably, a B rating or better.

5) Make sure the insurance broker knows the type of business the group is in. It makes a great deal of sense to have an agent that actually understands the project and its individual needs, especially if the show has any element of danger.

In conclusion, there are no foolproof ways to completely eliminate the potential for someone or something being injured at a live event. Regardless of the situation, a professional entity has a moral and ethical duty to its followers, patrons and/or fanatics to spend as much time as necessary planning for their safety and the safety of the overall company and/or event itself. Being aware of the changing laws and regulations, as well as being reasonable when pertaining to the design and parameters of what the performance has to offer any given venue. Paying attention to the mistakes of other companies and applying the best business practices available will help eliminate as much liability as possible and better provide for a successful, entertaining platform and medium for all to enjoy.