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Reducing Liability From Dram Shop Laws and DUI Update. American Beverage Licensees 10 th Annual Convention June 12, 2012. Common Law.

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Reducing liability from dram shop laws and dui update

Reducing Liability FromDram Shop Laws and DUI Update

American Beverage Licensees

10th Annual Convention

June 12, 2012

Common law
Common Law

  • At common law, establishments were not liable for selling or providing alcoholic beverages to individuals who became intoxicated and injured themselves or others

  • Courts recognized that the problem wasn’t the drink, but the drinker

Dram shop laws1
Dram Shop Laws

  • Impose liability on commercial establishments that provide alcoholic beverages to certain adults or underage customers for on-premise consumption

  • In some jurisdictions, may also apply to retailors under certain circumstances

Ds laws service to adults
DS Laws: Service to Adults

  • 35 states and DC hold licensees accountable for serving a visibly intoxicated person or knowingly serving a habitual drunkard

  • Other states are likely to join them

Ds laws service to adults1
DS Laws: Service to Adults

  • The burden of proof varies

    • Some states require plaintiffs to prove proximate cause by clear and convincing evidence

  • Some states provide for special defenses

    • Engaging in responsible business practices

  • Ds laws service to minors
    DS Laws: Service to “Minors”

    • 42 states and DC hold licensees accountable for serving “minors”

    • Most states use 21 as a cutoff; remember, it is illegal to serve those under 21 under Federal law

      • A small minority of states limit liability to patrons under 19 or 18

    Ds laws service to minors1
    DS Laws: Service to “Minors”

    • Some states hold vendors responsible for “serving” a minor if they sell alcohol to a person who provides alcohol to a minor if they knew or should have known the person would do so

    Ds laws in the real world
    DS Laws in the Real World

    • Researchers from Washington State University examined 167 cases tried to verdict between 1992 and 1998 where licensees were sued for improper service

    • Most involved car crashes

    • Verdicts routinely exceeded $100,000 and many were well above $1,000,000

    Additional risks1
    Additional Risks

    • Proprietors may have a duty to safeguard customers from “extreme danger” while on the premises

    • Some states may recognize a cause of action for negligence per se when hosts violate criminal statutes

    Additional risks improper supervision
    Additional Risks: Improper Supervision

    • Do licensees have an obligation to monitor patrons?

      • Bauer v. Nesbitt (NJ Ct App 2008)

        • Held that an establishment had a duty to ensure that a visibly intoxicated patron was driven home by a sober companion and/or to protect the person from hurting himself or others!

        • Reversed by NJ Supreme Court

    Additional risks improper eviction
    Additional Risks: Improper Eviction

    • Licensees typically evict patrons who are underage, become belligerent or endanger others

    • Is there risk?

      • Not in most jurisdictions

      • Exceptions:

        • Facilitation of tortious conduct

        • Outrageous conduct

    Additional risks improper refusal
    Additional Risks: “Improper” Refusal

    • Improper refusal of service

      • Example: What happens when a server refuses to serve a patron who has a speech impediment because the server thinks he or she is drunk?

      • Licensees can minimize the risk by training staff to ask questions about prior drinking and watching for changes in behavior

    Because you can t prevent someone from suing you
    Because you can’t prevent someone from suing you

    • In December 2011, a Texas woman sued a bar when she was raped by a pair of police officers after leaving a local club

      • She claimed that employees served her until she became drunk

      • Continued to sell to her after she became drunk

      • Allowed her to leave when she was obviously intoxicated and posed a clear danger to herself and others

    Insurance and indemnification1
    Insurance and Indemnification

    • General liability policies

      • Generally exclude coverage for negligent service

      • Generally apply to on-premises harms only

    • Liquor liability policies should be sought that cover

      • Assaults and batteries

      • Suits brought be third parties injured off-premises by a patron served at the establishment

      • All types of damages (ie. mental)

      • Employee drinking

      • Defense costs

    Insurance and indemnification2
    Insurance and Indemnification

    • Some states provide licensees and hosts with a right of indemnification

      • In the real world, this often is of little value

    • Hotels and other venues that allow patrons to host parties should consider requiring the hosts to obtain insurance and indemnify them if someone is hurt

    Reducing risk1
    Reducing Risk

    • Develop relationships with state and local regulators

    • Obtain state certification as a responsible vendor where available

    • Draft written policies and follow them

    • Provide training to staff by certified trainers from third party vendors

    • Audit/monitor staff

    • Prohibit employees from drinking on duty

    • Require anyone who appears to be under 30 to produce identification

    Reducing risk2
    Reducing Risk

    • Maintain appropriate staffing

    • Publicize responsible business practices

    • Remove customers in appropriate cases

    • Avoid engaging in behaviors that encourage overconsumption or overservice

    • Encourage designated drivers

    • Document and track incidents

    • Obtain and maintain insurance

    • Refuse service to habitual drunkards or visibly intoxicated patrons

    Attacks on the industry
    Attacks on the Industry

    • Responsibility

      • Is the problem the product or the drinker?

        • Some advocates suggest that “You caused the problem”

        • The truth is that the vast majority of Americans use alcohol responsibly and that the industry is part of the solution

    Dui update industry contributions
    DUI Update: Industry Contributions

    • Several national organizations are working hard to reduce drunk driving and underage drinking

      • Supporting change

        • STOP Act

        • Legislation addressing hardcore drunk drivers (Federal and state)

        • Resources for judges, prosecutors and probation officers

        • Funding for national non-profits organizations and working groups (Beam Global, Anheuser-Busch and others)

    Dui update industry contributions1
    DUI Update: Industry Contributions

    • Providing resources

      • ABL toolkits

      • TCC guides

      • Funding conferences

      • Funding publications

    Underage drinking
    Underage Drinking

    • Marketing and youth

      • Criticism remains high despite industry efforts

      • Many seem to be ignoring the realities

        • The government’s ability to regulate advertising is limited by the First Amendment

        • Most in the industry follow voluntary standards

        • Underage drinking has dropped significantly during the past 10 years

    • Among underage drinkers, less than 10% purchase the alcohol themselves

    Dui update
    DUI Update

    • Federal legislation

      • SAFETEA-LU expired two years ago

      • The current bill is unlikely to be passed this year

    • NTSB Forum

      • “Friends don’t let friends drive drunk” versus “Don’t drink and drive”

      • Interlock

      • First offender interlock is becoming a reality

      • 15 states already have legislation and the number is growing quickly

    Bonus discussion drugged driving
    Bonus Discussion: Drugged Driving

    • Drugged driving

      • Drugged driving appears to be as significant as alcohol impaired driving

        • About 1/3 of drivers killed in motor vehicle crashes have a drug or drugs in their systems

        • Over 16% of weekend nighttime drivers have a drug or drugs in their systems

      • One of the key components of the President’s drug control strategy


    Stephen K. Talpins

    (305) 995-5432