As Defined By Paul L. and Ryan S. (Definitely not Coop)
Based On Actual Events
The act of failing that effects multiple persons in a chain effect, whereas the fail is directed at one person but is applicable to surrounding bystanders
Ryan: "Hey guys, do you wanna go to the bar tonight? *pause* oh! thats right you guys aren't 21 wow! chain fail!!"
Group: "wow you're an ass"