Chapter 2: How and When Can You Be Liable for Liquor-Fueled Accidents?
Part 2: How Do Dram Shop Laws Hold Commercial Liquor Sellers Liable?
Recall from The Legal Scoop Behind Liquor Liability section of Chapter 1 that dram shop liability laws allow a third party injured by a drunk person to sue a commercial entity – that's you – for contributing to that person's intoxication. A "third party" is someone not involved in the transaction or drinking of alcohol. For example, a bicyclist hit by a drunk driver is considered a third party.
Small businesses can be held liable for alcohol-related crimes or accidents if they…
- Sell alcohol in a commercial capacity (e.g., bars and liquor retailers).
- Furnish or serve alcohol in a commercial capacity (e.g., catering operations).
- Allow patrons to bring their own alcohol and imbibe at their establishments (e.g., restaurants or banquet halls).
While the laws vary from state to state, common dram shop statutes outlaw…
- Selling or serving alcohol to minors (illegal in all 50 states).
- Selling or serving alcohol to visibly intoxicated individuals.
- Selling or serving alcohol to the "habitually intoxicated" (i.e., someone known in the community for their addiction to alcohol).
In some states (such as Texas and New Jersey), minors can sue establishments that served them for the injuries they suffered while intoxicated. Though 10 states do allow intoxicated patrons to sue establishments for selling the alcohol that led to their injuries, most dram shop laws are designed to protect innocent third parties.
How Do Dram Shop Laws Affect Small Businesses?
The only unifying law across all 50 states is that serving alcohol to minors is illegal. But aside from this consensus, things start to get murky. Each state seems to have its own stipulations as to what even qualifies as "obviously intoxicated."
Most states allow a plaintiff to sue for damages when the liquor-licensed establishment's employees knew or should have reasonably known that they were serving an intoxicated person. But because this is a common-sense-based notion, it can be incredibly difficult to prove one way or the other in court.
To shed some light on the matter, some states have attempted to create more specific criteria for intoxicated behavior. For example:
- Missouri deems "significantly uncoordinated physical action or significant physical dysfunction" to be proof of intoxication.
- Massachusetts holds that "drunk, loud, and vulgar" behavior counts as "visibly intoxicated."
- New York allows toxicologists who never saw the "visibly intoxicated" patron to give their expert opinions based on the patron's blood alcohol levels.
Other states are much broader in their approach. For instance, Illinois's dram shop laws allow innocent third parties to recover damages after demonstrating…
- Proof that alcohol was sold to the patron.
- The plaintiff (third party) sustained injuries.
- The sale of alcohol was the proximate cause of the patron's intoxication.
- The patron's intoxication was at least one cause of the plaintiff's damages.
This law kicks the door wide open for liability suits. Gone are the prerequisites that the seller knew or should have known that the patron was intoxicated. That means that everyone who sold the patron alcohol could be sued, regardless of whether or not that person was intoxicated at the time.
Remember that many people can be named in a single liquor liability suit. In the hands of a skilled lawyer, the plaintiff could sue the restaurant where the patron had their first couple of drinks, the casino where they stopped for beer and a round of poker, and the bar where they drank themselves to a pulp before putting their keys in the ignition and hurting the third party.
In Texas, "The Safe Harbor" clause can grant your establishment immunity from dram shop liability. If you can prove that your employees have completed a *** TABC Seller / Server Training Program, a plaintiff can only successfully sue your business if they can prove that you encouraged your TABC-approved employee to violate the Texas Dram Shop Act.
Does Your State Have Dram Shop Laws?
While most states have some kind of dram shop law, not all of them do. Take a look at the map below to see if you live in a state with no formal dram shop laws on the books:
- South Dakota
If you live elsewhere, you must consider your state's dram shop laws – which can vary a great deal from place to place. To learn more about your state's legislation, check out the National Conference of State Legislatures article "Dram Shop Civil Liability and Criminal Penalty State Statutes."
It's also important to keep in mind that even if your state doesn't have a formal dram shop law, your business can still be held liable for an alcohol-related incident.
Earlier, we mentioned that states without dram shop laws likely enforce commonplace negligence laws, which can hold you responsible if your actions don't align with what most people would have done in a similar situation.
For example, if you sold beer to an already visibly intoxicated person, saw them get into their car, and found out later they crashed and hurt a pedestrian, there's a good chance your business could be sued by the pedestrian and held liable for the damages.
The injured party could argue that most people would have refused the drunkard service and perhaps even alerted the police to a drunk driver.
Next: Part 3: How Do Social Host Ordinances Hold Event Hosts Liable?
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