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

Chapter 2: How and When Can You Be Liable for Liquor-Fueled Accidents?
Part 1: What Is Liquor Liability Risk?

A "risk" is the potential for a negative outcome. So a liquor liability risk is the potential for an imbibing guest to cause someone a loss at your personal or professional expense. There are ways to decrease the probability of these threats, a process we insurance types call "risk management."

We will discuss these risk-reducing techniques in Chapter 4: How to Mitigate Your Liquor Liability Risks and Avoid Lawsuits. But first, you must be able to recognize the liquor-related situations that threaten your business. Read on to learn more.

 

What Can Go Wrong?

When it comes to alcohol, many things can go wrong. Below we take a look at the drunken incidents that most often trigger dram shop / social host liability suits:

Driving

According to the Centers for Disease Control's article "Impaired Driving: Get the Facts," nearly 30 people die each day in car crashes that involve a drunk driver. That's roughly one death every 48 minutes. The NHTSA also found in its National Survey of Drinking and Driving Attitudes and Behaviors: 2008 report that 20 percent of the public (16 and older) drove drunk within the past 30 days. They estimate that to be about 85.5 million drinking-driving trips per month.

 

If you take one thing away from these statistics, let it be that alcohol-related accidents are a real and present risk. People who drive drunk not only risk their own lives, they also endanger those around them. In turn, your bar or organization could be held responsible for the damages caused by your guests' alcohol-impaired driving.

Take the landmark lawsuit in Texas: Poole v. El Chico. Mr. and Mrs. A. Bryan Poole sued the El Chico Corporation under the Texas Wrongful Death Act. The Pooles alleged that El Chico restaurant employees negligently sold drinks to an intoxicated person, and as a result, their son was killed in a car accident.

The Texas Supreme Court ruled in their favor, forever changing the legal landscape surrounding liquor liability and Texas's tort laws. Before the case, Texas didn't have any dram shop liability laws, but its Dram Shop Act was passed shortly after its ruling was handed down.

Fighting

An OregonLive.com story reports a recent case of dram shop liability caused by a brutal bar fight. Shaun Hartley, a patron at Wichita Pub, stabbed Michael Ray Gaston multiple times in the chest and left Timothy G. Reed with a permanent brain injury. The row was on the heels of a disagreement over Hartley's brother harassing Gaston's wife.

 

Because the pub continued to serve Hartley even though he was visibly intoxicated, Gaston and Reed are each seeking $1.75 million in damages.

Unfortunately, these claims aren't rare. Bar fights and assaults are among the most common causes for liquor liability claims. Plus, if others witness a violent event, they could sue you, your establishment, or your organization for mental damages.

Sexual Assault and Sexual Harassment

According to an article in the Madison-St. Clair Record, a woman is suing Joe Man's Bar and Grill in East St. Louis over a sexual attack perpetrated by the establishment's intoxicated patron. She is seeking a judgment of more than $100,000, plus costs.

In addition to sexual assault lawsuits, you can be held accountable for sexual harassment complaints if someone who became intoxicated at your establishment or event commits them.

Tripping, Falling, and Other Accidents

The National Safety Council states that falls are the second-leading cause of unintentional death in homes and communities. In 2009, these accidents resulted in more than 25,000 deaths. And when alcohol is added to the equation, the likelihood of trips, slips, and falls only increases.

If you are a business owner, these incidents can lead to premises liability claims. And if you operate in one of the 10 states that allow intoxicated patrons to sue bars and liquor-license holders for their alcohol-related injuries, you could face a liquor liability suit as well. (Find out if you live in one of these states by jumping to Does Your State Have Dram Shop Laws?)

Alcohol Poisoning

Alcohol poisoning events are usually the trigger for social host liability claims. For example, let's say the family of a student who died of alcohol poisoning filed a lawsuit against the student's fraternity chapter, its national association, and several fraternity members.

 

If the incident happened in a state with social host liability laws, every named defendant could be successfully sued, especially if the fraternity members didn't seek medical help for the student. And if an autopsy finds the student's blood-alcohol content was 0.36 percent the night he died, the family has further proof that the hosts were negligent.

If you furnish someone with alcohol and one of the above situations happens, you could be sued for damages.

Criminal Charges or Punitive Damages?

Dram shop liability and social host liability cases usually fall under the realm of civil suits. These are lawsuits that seek punitive damages rather than criminal charges.

"Punitive damages" refers to the amount of money a judge orders a defendant to pay to deter him from repeating his behavior. Generally speaking, state laws determine the amount of punitive damages awarded for liquor liability (and other) cases.

However, when these lawsuits are filed over an innocent party's death due to the action of an intoxicated person, both civil and criminal charges may be brought against the person or organization that furnished the booze. The cases are decided independently as far as culpability and punishment are concerned.

In criminal liability cases, the state may bring a suit against…

  • The licensee or owner of a licensed establishment.
  • Individuals employed by that establishment.
  • Social hosts.
  • Employers.

Unlike civil suits, these address the criminal aspect of serving alcohol to visibly intoxicated people or minors. And while a civil suit is predicated on monetary awards or judgments, the result of a criminal suit can be a jail or prison sentence.

In the next section, we take a closer look at dram shop laws and how they affect small-business owners like you.

Next: Part 2: How Do Dram Shop Laws Hold Commercial Liquor Sellers Liable?

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