Risk Management

Calculating the Cost of Canceling

The recently passed HB2 law in North Carolina raises the question: What legal recourse do groups have when objectionable legislation gets passed in the state where they've already booked their event?

Since HB2 — the new law prohibiting local LGBT anti-discrimination ordinances and banning transgender people from using the bathroom that reflects their gender — went into effect in North Carolina late last month, 29 groups that were considering Charlotte have expressed concern and hesitation about bringing their meetings there, according the Charlotte Regional Visitors Authority (CRVA). Laura White, CRVA’s director of communications, told Convene that those groups include associations, corporations, and sporting events, and represent both hotel and Charlotte Convention Center business.

Four groups that had booked meetings in Charlotte hotels have canceled their contracts, including the Virginia-based Southern Sociological Society, which planned to meet in Charlotte every four years. According to The Charlotte Observer, in a letter to The Westin Charlotte — where the society was booked to hold its annual meeting in 2019 — Southern Sociological President Barbara Risman, wrote: “I represent our entire executive council in expressing our distress that North Carolina has passed a law that discriminates against people based on sexual orientation and gender expression.”

What legal recourse do groups with existing contracts with hotels and venues have if they decide to cancel after a objectionable law is passed in their host destination? Little to none.

What legal recourse do groups with existing contracts with hotels and venues have if they decide to cancel after a objectionable law is passed in their host destination? Little to none, according to Lisa Sommer Devlin, Devlin Law Firm P.C., who has specialized in hospitality law for 25 years. “Groups always have the option to cancel if they don’t like a law passed,” she told Convene, “but they are not legally excused from their contract due to the law and would have to pay cancellation damages. The only exception would be if they had a term in their contract that expressly allowed them to cancel without payment in the event a law was passed that they found objectionable.”

However, Sommer Devlin added, “most hotels would not agree to such a term since they have no control over what their state may pass and they do not want to bear the financial loss.” Sommer Devlin, who is based in Arizona, said she has represented hotels that collected cancellation damages from groups that elected to cancel events in that state “because they disagreed with what many saw as Arizona’s ‘anti-illegal immigration law.'”

Lisa Sommer Devlin
Lisa Sommer Devlin

So, short of their breaking their contract, what can groups do? Sommer Devlin said they can use the event as an opportunity to voice their objections to the law. “I saw a suggestion recently that attendees could be given postcards during the meeting pre-addressed to the governor to write out their objections,” she said. (We’ve written before about how meetings can effect social change.)

When it comes to crafting contracts, groups need to keep in mind that “the political pendulum swings back and forth,” Sommer Devlin said, and “things like this may happen. Attendance may be impacted by many different things and that is a risk inherent in all event contracts. That is what the performance/attrition clause is designed to cover.”

Meanwhile, White said the CRVA is in “preserving client relationship mode.” CRVA President Tom Murray said in a statement that the CRVA continues “to hear negative feedback and potential event cancellations from our customers. This issue is in danger of setting us back from the progress we’ve made in positioning Charlotte as an attractive, inclusive destination. Our city has long had a track record of creating an environment that not only values diversity, but strongly embraces it. On behalf of the visitor economy that represents one in nine jobs across the Charlotte region, we strongly urge that state and local leaders find a resolution that represents the best interests of our city and state.”

Read how two other North Carolina DMOs are reacting to the controversial law here

Michelle Russell

Michelle Russell is editor in chief of Convene.

  • http://joaneisenstodt.com joaneisenstodt

    This article – and its title in particular – on the heels of Convene’s cover article (“Are you doing GOOD WORK” with “*Ethics is a big part of it But not the only part”) – made me smile at the irony of it all. (Disclaimers: I was featured in the section about ethics; I have testified for Ms. Sommer Devlin’s previous law firm as an expert witness.) To do good work, to be ethical, involves human beings and the treatment thereof. I’ve served on the diversity (and inclusion) committees of MPI, ASAE, and PCMA, and the Unity Team that, years ago, was formed by the foundations of those and other CIC organizations to support D&I.

    First, ASAE was the only CIC Member organization to sign on to the HRC letter objecting to the North Carolina bill. (A similar bill was vetoed in Georgia; MS passed one; TN,after a law similar to the one in NC didn’t make it out of committee, instead passed a law that allows counselors to discriminate against LGBT people. There have been numerous discussions in social media about those as well and about the expected proliferation of similar bills.) (Some of us were disappointed that MPI, PCMA, IAEE and other CIC member organizations did not sign. In conversations with CIC, I understand that CIC’s Executive Committee is supporting repeal of the NC law.)

    Second, it was nice of Lisa to use my example of signing postcards .. which others roundly said “no” to! They said it’s only money that talks and the only way to impact the North Carolina law and others in place or to come, is to pull business. Sheesh, even Bruce Springsteen (and today, I learned, Ringo Starr) pulled their concerts from NC; Bryan Adams pulled his concert from MS.

    Thirdly, I’ve been able to negotiate clauses into some contracts for clients whose bylaws/policies and purpose support LGBT and other rights and have done so, with lawyer-provided language, since the ’80s. Then it was farm workers; later it was pro- and anti-choice reproductive laws; and certainly it was LGBT laws and practices, esp. during the initial AIDS epidemic. Lisa’s right – it’s not easy because it is not force majeure and it can be harmful to all parties.

    However, there are groups whose meetings will be decimated by the states and cities who have prohibited their workers from traveling to North Carolina. Those groups are grappling with whether to suffer massive attrition or to live by their written anti-discrimination policies and “do good work” by pulling the meetings. Their decisions are agonizing to make.

    Best: NOW, if you’ve not done it and too many haven’t, have these conversations in your organizations. Look at your D&I policies, your bylaws, your framework. Discuss what matters to your organization and its members, constituents, customers. If you are going to “do good work”, then factor this in before the RFPs are sent and, for heaven’s sake, follow the news! These laws didn’t spring from nowhere! There was plenty of warning. And in today’s world, staying on top of the news makes all of us smarter and better at what we do. And know who owns the hotels in which you’re booking – working with the owner, as one association that posted on ASAE’s Collaborate did, may mean an easier move to another city/state/property without the same very difficult legal issues.

    If we are to be ethical in our work, that means being aware of how others are treated. This issue goes far beyond legal and financial.

  • Jeff Silva

    The hospitality industry is neutral. The CVRA or the hotels didn’t suggest that law to the State politicians. They weren’t even in the room. Yet they are the ones being punished the hardest :( Stay strong my brothers and sisters.