LIQUOR LIABILITY INSURANCE? I'LL DRINK TO THAT
A Complete Guide to Serving and Hosting Responsibly

Chapter 3: Liquor Liability Lawsuits: Everything You Need to Know
Part 3: Why Are Liquor Liability Lawsuits So Expensive?

As you've read, the cost of liquor liability lawsuits can easily creep into the millions of dollars. But why are these lawsuits so expensive? There are a few factors at play here.

First, there is the time-consuming, complicated nature of the beast itself. Second, some states enforce something called "joint and several liability," which can end up making one defendant pay more than their fair share. Read on to learn more about both of these issues.

Liquor Liability Lawsuits: Complicated and Costly

By nature, liquor liability lawsuits can be complicated to defend. The trickier the lawsuit, the more time it takes your defense attorney to build a case, and the more money it costs.

Let's say your bar serves a guy one drink at three in the afternoon. He appears completely sober when he enters your establishment and after he leaves – and you have done nothing to break the law. But he spends the rest of the afternoon hopping from bar to bar. By evening, he is drunk, gets behind the wheel of his car, and ends up hitting two pedestrians on his way home. One of them is fatally injured.

The victims' families decide to sue, but because of how slow the legal process works, the actual lawsuit comes about two years after the incident. Your bar is named as a liable party along with every other bar where the man drank that day.

Once you are charged with liquor liability, you and your lawyers must start gathering evidence to show you have no liability. In other words, they must prove your serving of the defendant was not the primary cause of the injuries.

That's your defense. But how are you going to prove it?

You'll essentially need to build a verifiable timeline of the defendant's movements and his levels of intoxication. Lawyers have to do all that legwork – and they usually get paid by the hour. Let's take a closer look at some of the issues lawyers must deal with when building a liquor liability defense:

  • Witnesses. Gathering witnesses for an incident that happened years ago can be difficult. If you're lucky, one of your regular patrons will remember that night. If you're really lucky, you'll be able to find the defendant's drinking companion, who will attest to the defendant's sobriety. Obviously, as the bar owner, you will also be interviewed. But juries tend to be skeptical of what business owners have to say.
  • Evidence. The two best ways to prove your establishment is without liability are video footage and receipt records. Unfortunately, most establishments don't keep these records very long, and they can be difficult to track down years after an incident.
  • The old BAC argument. After drunk-driving accidents, drivers are usually tested for their blood alcohol content (BAC). If the test reveals that the defendant's BAC is over the legal limit of .08, the plaintiff's lawyers will try to tie that number to your liability. Fortunately, that's not how it works. In order for someone to prove your liability, they must show that the defendant was visibly intoxicated. Not everyone has the same alcohol tolerance. Which leads us to…
  • Expert testimony. Because the BAC argument is so common (and so sympathetic to jury members), many insurance providers have their own BAC expert that they keep around to testify on behalf of their clients. The expert can explain that while two drinks might make one person visibly intoxicated, it may not affect a seasoned drinker in the same way. They might also explain that BAC blood tests can be faulty. The test might give different results depending on the type of blood used.

If your legal team can't prove that you have absolutely no liability in the drunk-driving incident, they can at least try to prove that your establishment is liable for only a small percentage of the damages. That way, the defendants who are primarily at fault take on the bulk of the financial burden. You might only be responsible for five percent of the damages. The other bars might account for 20 percent of the damages. And the drunk driver might take on the other 75 percent.

Unfortunately, that's not how it works in all states. If your state enforces "joint and several liability," your establishment could be responsible for paying a whole lot more.

What Is Joint and Several Liability?

Some states have dram shop statutes that allow for something called "joint and several liability." This, dear readers, is the stuff of nightmares. It means that all defendants named in a case (for example, your establishment and the drunk driver) are responsible for paying all the damages (the "verdict") to the plaintiff – even if the court decided one defendant had more liability than the other. If one defendant can't afford to pay, the other defendants must make up the difference.

Let's take a look at an example: a defendant leaves your establishment, runs a red light, and hits a car that was lawfully passing through the intersection. The driver is killed and the driver's spouse files a $2 million wrongful death suit against your business and the drunk driver.

In a standard case with no aggravating circumstances (i.e., something that drastically increases one party's liability), a jury might determine that the drunk driver has 75 percent (or $1,500,000) of the liability and your bar has 25 percent (or $500,000) of the liability.

But the drunk driver only carries the minimum amount of insurance, which is a paltry $25,000. In a state that doesn't enforce joint and several liability, you would only be legally responsible for paying $500,000 to the plaintiff. But in a state that does enforce joint and several liability, you could be responsible for making up the difference. If that's the case, you would pay $1,975,000 in damages alone.

Like we said, this is scary stuff. But here are a few things to keep in mind:

  • Not every state has laws that enforce joint and several liability. Most states (46 of 50) have some kind of joint and several liability rule for tort cases, but in recent years, many states have limited the scope of the rule. In some cases, the rule has been abolished altogether.
  • Different states have different triggers. For example, one state's law might say that joint and several liability kicks in when a defendant is more than 50 percent liable. Another state might say it kicks is as soon as a defendant is 1 percent liable.

What to Remember about Liquor Liability Risk

When considering your risk of facing a lawsuit, it's important to remember that a restaurateur or caterer has the same potential for liquor liability as a bar owner. The only difference is how much exposure you have.

 

For example, a restaurant that serves alcohol every night has more risk exposures than a caterer who only occasionally serves alcohol. Similarly, a bar that employs a staff trained in serving procedure may have fewer risks than a bar with an untrained staff.

And if you run a BYOB establishment? The bad news is that most state laws don't distinguish between establishments that actually sell alcohol and those that allow patrons to bring their own.

Here's the takeaway: you need to manage and reduce your liquor liability risk. Obviously, no one wants to end up on the wrong side of a lawsuit. In the next chapter, we'll explore some ways you can offset the chance of facing such a tort.

Next: Chapter 4: How to Mitigate Your Liquor Liability Risks & Avoid Lawsuits

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