CACM Regional Forums – Spring 2017
How associations can have entertainment for their members without getting into trouble!
I. How associations can show movies and play music without incurring liability.
A. Associations need a “public performance” license in order to show movies without incurring copyright liability. (17 U.S. Code §§ 101, et seq.)
In the case of Hinton v. Mainlands of Tamarac, 611 F. Supp. 494 (1985), the court ruled that there was an infringing public performance where, although “the clubhouse in a condominium association is an ‘extension of the owner’s living room,’” orchestral music was performed in the clubhouse where there were “no security gates or entrances to pass through so the public can drive directly to defendant’s “clubhouse” and where there was a $3.00 “suggested contribution.”
In a similar case (Fermata International Melodies v. Champions Golf Club, 712 F. Supp. 1257 (1989)), the court ruled that there was an infringing public performance of musical compositions because a private golf club is considered a semipublic place and that “twenty-one members plus guests [is] a ‘substantial number of persons outside of a normal circle of a family.’” In this case, the court did not consider whether a charge was imposed for admission.
B. An exception to the law that requires an association to need a public performance license to play music is when the association is playing the music in a facility that is less than 2,000 square feet or there are less than six loudspeakers (no more than four per room) and no more than four video screens (no more than one per room) and the video screens are no larger than 55 inches.
In particular, 17 U.S.C. Section 110 provides:
Notwithstanding the provisions of section 106, the following are not infringements of copyright:
(5)(B) Communication by an establishment of a transmission or retransmission embodying a performance or display of a nondramatic musical work intended to be received by the general public, originated by a radio or television broadcast station licensed as such by the Federal Communications Commission, or, if an audiovisual transmission, by a cable system or satellite carrier, if–
(i) in the case of an establishment other than a food service or drinking establishment, either the establishment in which the communication occurs has less than 2,000 gross square feet of space (excluding space used for customer parking and for no other purpose), or the establishment in which the communication occurs has 2,000 or more gross square feet of space (excluding space used for customer parking and for no other purpose) and–
(I) if the performance is by audio means only, the performance is communicated by means of a total of not more than 6 loudspeakers, of which not more than 4 loudspeakers are located in any 1 room or adjoining outdoor space; or
(II) if the performance or display is by audiovisual means, any visual portion of the performance or display is communicated by means of a total of not more than 4 audiovisual devices, of which not more than 1 audiovisual device is located in any 1 room, and no such audiovisual device has a diagonal screen size greater than 55 inches, and any audio portion of the performance or display is communicated by means of a total of not more than 6 loudspeakers, of which not more than 4 loudspeakers are located in any 1 room or adjoining outdoor space;
C. Another exception to the law that requires an association to need a public performance license is 17 U.S.C. Section 110, which provides:
Notwithstanding the provisions of section 106, the following are not infringements of copyright:
(1) performance or display of a work by instructors or pupils in the course of face-to-face teaching activities of a nonprofit educational institution, in a classroom or similar place devoted to instruction, unless, in the case of a motion picture or other audiovisual work, the performance, or the display of individual images, is given by means of a copy that was not lawfully made under this title, and that the person responsible for the performance knew or had reason to believe was not lawfully made;
D. Associations may obtain a license from a performance rights organization.
1. Movie Licensing Performance Rights Organizations
Motion Picture Licensing Corporation (MPLC)
5455 Centinela Avenue
Los Angeles, CA 90066
Up to 325 homes: $6.50 per homes (Base Price of $2,112.50 for 12-month period)
326-500 homes: Base Price plus $3.00 per home over 325 up to 500 homes More than 500 homes: Prices as above plus $1.00 per home over 500 homes.
Multi-Facility Discount: For a common billing address (e.g., a management company’s address) of 3 or more common interest developments, a 5% discount is available.
Swank Motion Pictures, Inc.
10795 Watson Road
St. Louis, MO 63127-1012
Estimated Costs (based on movie title):
Up to 200 people: $285 – $425 per title 201 – 500 people: $465 – $650 per title 501 – 1000 people: $775 – $1,025 per title
Criterion Pictures USA, Inc.
Morton Grove, IL 60053-2615
$150/movie title (Package discount $120/title if 1 movie per month for 12 months.)
Kino International Corp.
333 W. 39th Street, Ste. 503
New York, NY 10018
$349 for the life of the DVD for groups of 100 or fewer where admission is not charged.
A lesser cost is available for a single use viewing.
Milestone Film & Video
P.O. Box 128
Harrington Park, NJ 07640-0128
Must make a specific request for a particular movie in order to get a cost. This company has not licensed an association in the last 27 years.
A movie license generally does not provide a license for the music performance in a movie; therefore, music licenses should also be obtained.
2. Music Licensing Performance Rights Organizations
The American Society of Composers, Authors and Publishers (ASCAP)
7920 W. Sunset Blvd., 3rd Floor
Los Angeles, CA 90046
Up to 150 homes: $357/year 151-500 homes: $428/year
More than 500 homes: $489/year
12 or less events per year: $306 per community
13 – 25 events per year: $611 per community
26 or more events per year: $1,018 per community
Discounts are available for more than 10 communities.
Broadcast Music, Inc. (BMI)
8730 Sunset Blvd., 3rd Floor
West West Hollywood, CA 90069-2211
Blanket Music License: $155/year (up to 5,000 people)
Society of European Stage Authors and Composers (SESAC)
2150 Colorado Ave, Ste. 150
Santa Monica, CA 90404
1-300 homes: $251/year
301-600 homes: $506/year 601-999 homes: $757/year 1,000-1,499 homes: $1,093/year 1,500-2,999 homes: $1,345/year 3,000 or more homes: $1,681/year
Each music licensing performance rights organization holds the rights to the song writers, not necessarily the artist/performer. An artist’s repertoire may include music for which each of the music licensing performance rights organizations holds the licensing rights. Therefore, it may be necessary to obtain a license from each music licensing performance rights organization.
II. How associations can serve and/or sell alcohol without incurring liability.
A. Remember this advice for your association’s party:
More food, less alcohol, no charge, and never give alcohol to a minor.
B. Associations can sell alcohol without incurring liability by taking the following steps.
1. The boards adopt, publish, and comply with, a protocol for selling alcohol, which includes (i) ensuring that the premises are safe, (ii) not serving minors, and (iii) not serving visibly intoxicated persons.
2. The associations obtain any additional available liability coverage, including through its general liability insurance policy.
3. The boards obtain any additional available liability coverage, including through its directors’ & officers’ errors & omissions insurance policy.
(Also, the owners may obtain any additional available liability coverage, including an umbrella policy, and a “loss assessment” endorsement on their unit insurance policy. A loss assessment endorsement provides coverage to owners for assessments that associations impose in order to pay judgments against the associations for personal liability and property damage suffered by third parties. Most unit insurance policies typically include loss assessment endorsements with coverage of about $20,000.)
4. The associations do not serve alcohol to intoxicated persons or to minors. Again, remember:
More food, less alcohol, no charge, and never give alcohol to a minor.
C. State law provides as follows.
1. No one who sells or serves alcoholic beverages to a person is civilly liable to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of the alcoholic beverage. However, it is a misdemeanor to sell an alcohol beverage to an obviously intoxicated person or a habitual drunkard.
2. A lawsuit may be brought by or on behalf of any person who has suffered injury or death against any person who sells or serves any alcoholic beverages to any minor, where the furnishing, sale, or giving of that beverage to the minor is the proximate cause of the personal injury or death sustained by that person.
Civil Code Section 1714 provides:
(a) Everyone is responsible, not only for the result of his or her willful acts, but also for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person, except so far as the latter has, willfully or by want of ordinary care, brought the injury upon himself or herself. The design, distribution, or marketing of firearms and ammunition is not exempt from the duty to use ordinary care and skill that is required by this section. The extent of liability in these cases is defined by the Title on Compensatory Relief.
(b) It is the intent of the Legislature to abrogate the holdings in cases such as Vesely v. Sager (1971) 5 Cal.3d 153, Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313, and Coulter v. Superior Court (1978) 21 Cal.3d 144 and to reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person, namely that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person.
(c) Except as provided in subdivision (d), no social host who furnishes alcoholic beverages to any person may be held legally accountable for damages suffered by that person, or for injury to the person or property of, or death of, any third person, resulting from the consumption of those beverages.
(d)(1) Nothing in subdivision (c) shall preclude a claim against a parent, guardian, or another adult who knowingly furnishes alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age, in which case, notwithstanding subdivision (b), the furnishing of the alcoholic beverage may be found to be the proximate cause of resulting injuries or death.
(2) A claim under this subdivision may be brought by, or on behalf of, the person under 21 years of age or by a person who was harmed by the person under 21 years of age.
Bus. & Prof. Code Section 25602 provides:
(a) Every person who sells, furnishes, gives, or causes to be sold, furnished, or given away, any alcoholic beverage to any habitual or common drunkard or to any obviously intoxicated person is guilty of a misdemeanor.
(b) No person who sells, furnishes, gives, or causes to be sold, furnished, or given away, any alcoholic beverage pursuant to subdivision (a) of this section shall be civilly liable to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of such alcoholic beverage.
(c) The Legislature hereby declares that this section shall be interpreted so that the holdings in cases such as Vesely v. Sager (5 Cal.3d 153), Bernhard v. Harrah’s Club (16 Cal.3d 313) and Coulter v. Superior Court [21 Cal.3rd 144] be abrogated in favor of prior judicial interpretation finding the consumption of alcoholic beverages rather than the serving of alcoholic beverages as the proximate cause of injuries inflicted upon another by an intoxicated person.
Bus. & Prof. Code Section 25602.1 provides:
Notwithstanding subdivision (b) of Section 25602, a cause of action may be brought by or on behalf of any person who has suffered injury or death against any person licensed, or required to be licensed, pursuant to Section 23300, or any person authorized by the federal government to sell alcoholic beverages on a military base or other federal enclave, who sells, furnishes, gives or causes to be sold, furnished or given away any alcoholic beverage, and any other person who sells, or causes to be sold, any alcoholic beverage, to any obviously intoxicated minor where the furnishing, sale or giving of that beverage to the minor is the proximate cause of the personal injury or death sustained by that person.
D. Alcoholic Beverage Control (ABC) required licenses and permits for events where the Association does not have an ABC liquor license for its facility.
1. License/Permit from ABC is not required if ALL of the following are true:
a. The event is private (the event is not open to the public and there is a bona fide guest list that restricts access to members and invited guests only);
b. The association is providing all of the alcohol;
c. All drinks are complimentary: hosted bar with no sales of drinks;
d. There is no admission cost for the event (no ticket price, donations or door charge); and
e. The event venue (facility where the event is being held) does not require an ABC permit to be in place for the event.
The association must adopt and enforce a policy where the association confirms that the person being served is either a member or a member’s guest. Typically, the serving facility will have a membership list and inquire as to the name of the member and make sure the person is on the list. A guest should be identified as guest of, and be in the presence of, a confirmed member to be served. The issue comes up when an undercover ABC agent comes into the association’s facility to be served and is not properly identified as a member or member’s guest.
The prohibition on serving alcoholic beverages after 2:00 a.m. and before 6:00 a.m. does not apply to private events where a license/permit from ABC is not required.
Associations should confirm with their insurance agent if the association is covered for “host liquor liability” on its commercial general liability policy. The coverage provides protection for the association against claims for injury or damage caused by an intoxicated person to whom the association served liquor. Often, there is no cost to include the coverage. If the association will be selling alcohol at an event, it may be able to purchase additional coverage for the specific event at a reasonable cost.
2. License/Permit from ABC is required if ANY of the following are true:
a. The event is open to the public (there is no private guest list or someone can walk in uninvited);
b. There is any admission cost for the event (ticket price, donations or door charge);
c. Any other fundraising activities are being held at the event (ex. silent auction);
d. Drinks are being sold (e.g., no-host or cash bar or purchased drink tickets);
e. A licensed caterer is providing the alcoholic beverage; or
f. The event venue requires an ABC permit to be in place for the event.
3. If the association is hiring a caterer or event staffing company to serve alcohol, most do not have their own ABC liquor license. If they do not have their own liquor license, then:
(a) the caterer or event staffing company cannot provide the liquor, as purchasing alcohol at a retail store and re-selling it to the association or being reimbursed by the association is illegal and strictly prohibited by the ABC; and
(b) have them provide you a copy of their Liquor Liability insurance policy (not General Liability), and name the association as an additional insured for the event, so the association has protection from liability arising from the alcohol service at the event.
If the caterer has a liquor license, then the caterer can apply for the daily license for the event.
E. Daily License Application to serve alcohol at association events:
Associations that are non-profit corporations (exempt from payment of income taxes under Section 23701d or 23701e of the State of California’s Revenue and Taxation Code and Section 501(c)(3) or 501(c)(6) of the Internal Revenue Code) may apply to the ABC for a daily license to serve alcohol at association events.
1. ABC Requirements:
a. Complete Form ABC-221: Daily License Application/Authorization.
b. The owner of the event location must sign the form, or submit a signed authorization letter showing the date, time, place and type of alcoholic beverages to be served.
c. If the event is outdoors, the ABC may require Form ABC-253, which is a detailed diagram of the event location.
d. Form ABC-221 must be submitted to the local ABC District Office with jurisdiction over the event location. A listing of ABC District Offices may be found at: http://www.abc.ca.gov/distmap.html.
e. If the submission of Form ABC-221 is by mail, and not in person, ABC wants a self-addressed, postage paid, envelope to be included.
f. Form ABC-221 must be received no later than 10 days prior to the date of the event, but should not be submitted more than 30 days prior to the date of the event. ABC says the turn-around time for approval depends on how many applications are already in line for review. The application will usually be processed within a few days to one week but may be longer, especially if a holiday is upcoming that commonly generates application requests (e.g., Cinco de Mayo). ABC recommends a follow up call if approval is not received within one week of the event, and typically an answer will be received at least a few days before the event. So we recommend submitting Form ABC-221 as close to 30 days before the event as possible.
g. Payment of the fee may be by cashier’s check, money order, or business check. Cash or credit card payments are not accepted.
2. Additional Requirements:
a. If the application is the first by the association, the ABC may pre-qualify the association and require IRS and/or State Franchise Tax Board documents showing the association’s tax exempt status with the association’s tax I.D. number.
b. The association must have a valid seller’s permit from the State Board of Equalization to sell alcoholic beverages. Obtaining this permit is separate from the ABC event application, and the ABC does not require documentation of the permit. In addition, the association is required by the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) to display warning signs at points of service.
c. Local police department approval may be required if any of the following apply:
i. a large number of people are attending;
ii. the event is being held on a public street or in a public area (e.g., parking lot);
iii. this is the first time that an event is being held at the location. iv. the event is a casino night (see f. below); or
v. certain other circumstances at the department’s discretion.
d. The association is responsible to obtain any required law enforcement approval, with the local department either signing off on Form ABC-221 or providing a letter of approval.
e. Business license: Before engaging in the sale of alcoholic beverages, appropriate county or city officials should be contacted to determine if a local business license is required. If the event location is a new location or one not previously used for this type of event, local officials should be contacted concerning any zoning regulations and the need for a conditional use permit.
f. Beer Gardens: Beer Garden restrictions may be imposed on a daily license at the discretion of the ABC or at the request of local law enforcement.
g. Casino nights: Associations are not legally eligible to have casino nights as fundraising events. (Business and Professions Code Section 19985(h) and Revenue and Taxation Code Section 2370t) If an organization (other than an association) has a casino night or is using controlled games as part of a fundraising event, then the organization must comply with Business and Professions Code Section 19985, which includes pre-approval from the Bureau of Gambling Control of the Department of Justice. More information may be found at: http://www.ag.ca.gov/gambling.
h. Additional conditions on the sales, service and consumption of alcoholic beverages may be imposed by the ABC, with the association’s representative required to sign off on the same.
3. Additional Information:
a. The license is limited to sale on the designated premises, and only on the day or days shown on the license.
b. The license certificate must be conspicuously posted at the event location.
c. The alcoholic beverages may be ordered or received only after the license is issued and within 3 days of the date of the operative date of your license, which is the date of the event.
d. Alcoholic beverages are not to be served after 2:00 a.m. and before 6:00 a.m. As the beverages need to be out of the hands of guests by 2:00 a.m., it is recommended to stop alcohol service no later than 1:30 a.m.
4. ABC Recommendations for instructions to your staff selling alcoholic beverages:
a. Supervision of sales should, at all times, be under the control of the association. No other person should have any authority to sell alcoholic beverages.
b. Only the alcoholic beverage specified on the license is permitted on the premises during the time when the license is operative. A beer license permits only beer; a wine license, only wine; etc
c. You may not sell, furnish or give alcoholic beverages to any person under the age of 21. Refuse to sell to anyone who is obviously a minor regardless of identification and require bona fide identification from any person who appears 30 years of age or younger. Bona fide forms of identification are those that are currently valid, reflecting date of birth, physical description and photograph. Identification must be issued by a federal, state or municipal government.
d. You may not sell, furnish or give alcoholic beverages to persons who are obviously intoxicated.
e. You may sell on the day specified on the license at any time between 6 a.m. and 2 a.m. of the following day, unless your license otherwise restricts the hours during which alcoholic beverages may be sold. No sales may be made between the hours of 2:00 a.m. and 6:00 a.m. on any day.
f. Beverage suppliers may deliver to your licensed premises between the hours of 6 a.m. and 8 p.m. on any day Monday through Saturday, but NOT on Sunday. Upon display of your license to the supplier you may purchase from a warehouse platform on any day.
g. A supplier may lend, sell or rent to you draft pumps, ice boxes, and other tapping accessories.
h. Unsold and unopened alcoholic beverages may be returned to the supplier.
i. Under the daily license, you may purchase for resale beer and wine at a retail or wholesale outlet, and distilled spirits only from a retail outlet.
j. Limit the sale or service of alcoholic beverages to one drink per person at any one time.
k. Drinks should be served in containers no larger than 16 ounces.
l. Sellers and servers should be trained in I.D. checking and recognizing signs of intoxication.
m. If public attendance is permitted, you should provide adequate security to monitor your event.
n. Do not allow the consumption of alcoholic beverages in parking lots. o. Alternative non-alcoholic beverages should be available.
p. Have food available.
q. Do not allow anyone to bring their own alcoholic beverages to your event.
In addition, the ABC strongly encourages every association who obtains a daily license, to provide training for their personnel in serving alcoholic beverages responsibly. For more information regarding server training, contact your local Alcoholic Beverage Control District Office or the office of your county Alcohol Programs Administrator.
The source of most of the Daily License Application information is from Form ABC 221- Instructions for Obtaining a Daily License and Form ABC 532- Information for Special Daily Licenses. Copies of these publications, and Form ABC 221- Daily License Application/Authorization, may be obtained from the ABC website: www.abc.ca.gov, under the heading: Special Event Permit Application Forms. As ABC policies and procedures are always subject to change, you should confirm the current forms and policies on the website before submitting an application.
III. How associations can host parties without incurring liability.
A. Associations can do as follows in order to host parties without worrying about noise and violence.
1. Give repeated and advance notice to the owners and residents of the party.
2. Hire security.
3. End the party at a reasonable time.
4. Invite all owners and residents.
B. Most CC&Rs contain the following provision. It is notable that the following provision at the last sentence provides that the association is not subject to the provision.
No noxious, harmful or offensive activities shall be conducted upon or within any part of the Development, nor shall anything be done thereon which may be or become a nuisance, or cause unreasonable embarrassment, disturbance, or annoyance to any Residents of the Development, or which shall in any way interfere with their use of the Common Area and facilities thereon or the use and enjoyment of their Lots or Residences. Without limiting any of the foregoing, no Owner shall permit noise, including without limitation the barking of dogs or loud music, to emanate from the Owner’s Lot, which would unreasonably disturb another Resident’s enjoyment of his or her Lot or of the Common Area. Nothing in this section shall be construed to limit the Association’s ability to discharge its duties in accordance with the Governing Documents or otherwise manage the Development.
￼C. Associations can prohibit marijuana use, since it is illegal under Federal law. (21 U.S.C. Sections 801, et seq.)
For example, on January 20, 2011, the United States Department of Housing and Urban Development (HUD) issued a memorandum addressing the medical use of marijuana and reasonable accommodation in Federal Public and Assisted Housing. One issue addressed in the opinion is whether a Public Housing Agency (PHA) is required to grant a reasonable accommodation to a disabled person to use medical marijuana. HUD opined that PHAs are not required to grant such an accommodation because marijuana is characterized as a Schedule I substance under the Controlled Substance Act. (21 U.S.C., §§801, et seq.)
IV. How associations can host interactive websites without incurring liability.
A. The Telecommunications Act (Communications Decency Act) of 1996) (47 U.S.C. Section 230) immunizes website owners (internet publishers) for defamation contained in any third party postings. (Hupp v. Freedom Communications, Inc. (2013) 221 Cal.App.4th 398, 405; Barret v. Rosenthal (2006) 40 Cal.4th 33, 40)
47 U.S.C. Section 230(c) provides:
“Protection for “Good Samaritan” blocking and screening of offensive material
(1) Treatment of publisher or speaker
No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
(2) Civil liability
No provider or user of an interactive computer service shall be held liable on account of-
(A) any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected; or
(B) any action taken to enable or make available to information content providers or others the technical means to restrict access to material described in paragraph (1). [Footnote 1: So in original. Probably should be “subparagraph (A)”.]”
B. Under California law, a statement on an Internet website is not republished unless the statement itself is substantively altered or added to, or the website is directed to a new audience. (Yeager v. Bowlin, 693 F.3d 1076 (9th Cir. 2012))
C. A great example of an interactive website attempting to avoid disputes is Nextdoor.
Nextdoor provides as follows.
Our mission is to provide a trusted platform where neighbors work together to build stronger, safer, happier communities, all over the world.
We want all neighbors to feel welcome, safe, and respected when using Nextdoor. For that reason, we’ve developed a set of Community Guidelines describing what behaviors are – and are not – allowed on Nextdoor. The crux of our Guidelines can be boiled down to one simple statement: Everyone here is your neighbor. Please treat each other with respect.
We rely on you, the neighbors who make up the Nextdoor community, to report content that violates these Guidelines. Violating the Guidelines has consequences, which may include removal of content, suspension of posting privileges, or even a permanent ban from Nextdoor. Because of the diversity of people in any neighborhood, please keep in mind that while something may be disagreeable to you, it may not violate our Community Guidelines.
Everyone here is your neighbor.
Treat each other with respect.
Be helpful, not hurtful.
The heart and soul of Nextdoor are the helpful conversations that happen between neighbors. When conversations turn disagreeable, everyone on Nextdoor suffers. Our Guidelines prohibit posts and replies that discriminate against, attack, insult, shame, bully, or belittle others.
Nextdoor states that the following uses of its website are prohibited:
Disagreements and conflict
Personal disputes and grievances Discrimination and hate speech Crime and suspicious activity Using Nextdoor as a soapbox Ranting
Dominating or hijacking conversations Controversial issues
Politics and campaigning
Illegal and regulated goods and services Violations of privacy
Threats to the safety of others
Fraud and spam
Marketing or advertising of your business
Posts that better suited to a private message or a group Non-neighborhood related content
Nextdoor requires users to do as follows.
Keep it clean and legal
Keep all content and activity family-friendly and legal, and adhere to our rules about regulated goods and services
Angius & Terry LLP