The facts
A Pennsylvania day camp for inner city youth was invited to use a private suburban swim club during a hot summer. The day camp accepted the offer and paid just under $2,000 for a weekly membership at the pool. However, after attending the pool for the first day, the camp was immediately refunded its full membership payment.
The camp claimed that the swim club was being discriminatory against the campers due to their multiethnic background. However, the board member who initially refunded the dues told the camp that his decision to invite the camp had been overturned by the board. Another board member claimed a decision was made by the board to change the times the camp would be allowed to attend to only during non-peak hours.
The swim club also claimed it had no idea how many campers would be attending, and that their facilities were unable to accommodate the number of campers who arrived. However, a member of the swim club spoke with the press and stated that despite the club advertising itself as a multi-ethnic club, she hasn’t seen a minority member all year.
The result
The swim club’s reputation was negatively affected due to media and community attention. A discrimination lawsuit was filed in federal court against the club, on behalf of several children and parents seeking damages. Over 60 children and 120 parents have been brought into this class action suit. The case cost $200,000 in legal fees and was settled for $75,000.
Risk factors
Risk factor #1
Membership guidelines and procedures should be well defined in company documentation. All marketing, membership promotions, and group rates should be discussed and examined before offering. All prospective members and groups should be directed to complete an application for membership. This will help to prevent unforeseen complications.
Risk factor #2
Decisions made by the board should be made in writing and drafted for formal release. There should be one point of contact for dispersal of board decisions and information to the public, membership, and third parties. Disaster control procedures should be in place for handling situations as they arise and every employee and board member should know and follow.
*The claim scenario is strictly documented for illustrative purposes only and provides an example of what a policy could cover. It is intended to provide a general overview of the program described. Please remember only the insurance policy can give actual terms, coverage, amounts, conditions and exclusions. Program availability and coverage are subject to individual underwriting criteria.
