By: Martin Salcedo, Esq.
Setnor Byer Insurance & Risk
In addition to serving meals, many food service establishments have become their community’s local watering hole. This can be welcome news because offering wine with dinner or serving a few cocktails during the ‘big game’ may serve to boost the bottom line. And, during these difficult economic times, the additional revenue often created by the sale of alcoholic beverages has helped keep many food service establishments financially afloat.
However, while a food service establishment’s decision to provide alcoholic beverages to its patrons may bring with it much needed revenue, the cost of doing such business is often measured in terms of increased liability exposure. Consider that according to the National Highway Traffic Safety Administration, in 2007, an estimated 13,000 people died in traffic crashes involving a driver with an illegal blood alcohol concentration. These deaths made up approximately one-third of all traffic fatalities in 2007. Needless to say, the number of traffic crashes that did not result in a fatality is significantly higher.
It is possible, if not probable, that many of those intoxicated individuals involved in traffic crashes had ‘a few drinks’ at a restaurant or bar shortly before the incident. Thus, when it comes time for the injured party’s attorney to make a list of potential defendants in the inevitable lawsuit, the establishment that served the drinks often makes the cut. And, since the establishment typically has the biggest pockets, their cut is the deepest. Court files across the country contain evidence of multi-million dollar verdicts and settlements involving establishments that served alcohol to an intoxicated individual who thereafter injured a third-party.
To understand, and ultimately reduce, the liability associated with selling alcoholic beverages to patrons, it is necessary to understand its source. Many states have enacted laws that impose liability upon the person or establishment that sells or furnishes alcoholic beverages. These statutes are commonly known as dram shop laws, and they come in many different forms.
For example, in Florida, a person “who knowingly serves a person habitually addicted to the use of any or all alcoholic beverages may become liable for injury or damaged caused by or resulting from the intoxication of such…person.” In Georgia, a person “who knowingly sells, furnishes, or serves alcoholic beverages to a person who is in a state of noticeable intoxication, knowing that such person will be driving a motor vehicle, may become liable for injury or damage caused by or resulting from the intoxication of such…person when the sale, furnishing, or serving is the proximate cause of such injury or damage.”
It is important to note that states’ dram shop laws may vary significantly, and that some states have not enacted dram shop laws. However, this does not necessarily mean that an establishment cannot be held liable for serving alcoholic beverages. Regardless of whether a state has a dram shop law, those persons injured by an intoxicated individual may be able to sue the establishment under a traditional, common-law negligence theory, which requires an establishment to use reasonable care in the provision of alcohol to patrons.
Establishments must also understand that an injury to a third-party does not necessarily have to be suffered in an automobile crash to create liability. For example, although Georgia’s statute references the likelihood of the intoxicated individual driving a motor vehicle, Florida’s does not. Thus, a third-party assaulted by an intoxicated individual may also be entitled to seek damages from the establishment that sold the alcohol to such individual.
Although an establishment’s liability in this context may come from various sources, the risk often remains the same: financial liability for damage or injury to a third-party caused by an intoxicated individual who was served alcohol within the establishment. Understanding the risk is the most effective way to reduce the risk, and, as is most often the case, understanding comes from training.
All individuals working for the establishment, from managers to employees, must be made aware of their jurisdiction’s legal requirements and must be required to abide by them at all times. It is generally advised that employees be trained how to identify the signs of intoxication in patrons and how to implement effective procedures for cutting off alcohol service when necessary; the effects of alcohol on individual behavior as well as on the ability to operate a motor vehicle safely; the methods for recognizing and dealing with underage individuals and checking ID; and the procedures for maintaining records of incidents involving underage individuals and intoxicated patrons. Employees should also be familiar with local ordinances that regulate hospitality establishments as they relate to hours of operation, alcohol service, etc.
Although the consumption of alcohol by adults is a legal activity that, when done responsibly, does not invariably lead to societal degradation, statistics do show that alcohol routinely plays a role in unfortunate, sometime tragic, instances. In today’s society, physical damage or injury suffered by one person is often converted into financial damage suffered by another. In the context of food service establishments selling alcoholic beverages to their patrons, this may mean liability for the acts committed by an intoxicated patron.
Regardless of one’s perspective on the breadth of such liability, there are ways to limit the exposure. By implementing a policy of training and vigilance, a food service establishment may go a long way toward ensuring the continued arrival of many ‘Happy Hours’ to come.
For more information about reducing the risk of liability associated with the sale of alcohol, check out our online course entitled Alcoholic Beverage Liability: Serving Alcohol Responsibly.
