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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 FromDram Shop Laws and DUI Update American Beverage Licensees 10th Annual Convention June 12, 2012
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 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 • 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 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” • 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 “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 • 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 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 • 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 • 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 • 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 • 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 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 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 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 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 • 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 • 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 Contributions • Providing resources • ABL toolkits • TCC guides • Funding conferences • Funding publications
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 • 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 • 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
Contact Stephen K. Talpins stalpins@rumberger.com (305) 995-5432