Kirk Willis PartnerPRESENTS Dram Shop Liability for Adjusters From A to Z Kirk Willis Partner PRESENTS Dram Shop Liability for Adjusters From A to Z April 28, 2005 April 28, 2005 When it’s all on the line

TEXAS PROPERTY CASUALTYINSURANCEGUARANTYASSOCIATION FOR THE PLEASURE OF

EL CHICO – Landmark Decision  Slows reaction TEXAS DRAM SHOP ACT  Alcohol distorts perception  Impairs motor skills

TEXAS DRAM SHOP ACT “An alcoholic beverage licensee owes a duty to the general public not to serve alcoholic beverages to a person when the licensee KNOWS OR SHOULD KNOW the patron is intoxicated.”

TEXAS’ MODERN DRAM SHOP ACT  Created June 11, 1987 under emergency provision  “Legislative purpose of DRAM shop – Protection, welfare, health, peace, and safety of the people in the state

 Providing, selling, or serving an alcoholic beverage may be the basis for statutory cause of action under section TEXAS MODERN DRAM SHOP

 At the time of service of alcohol, it was obvious that the patron was intoxicated  The intoxication of the beverage proximately caused the damages suffered TEXAS DRAM SHOP ACT

“Provider” means a person who sells or serves an alcoholic beverage under authority or license or permit issued under the terms of this code or who otherwise sells an alcoholic beverage to an individual. Providers

Does compensation always have to be in dollars$$? TEXAS DRAM SHOP ACT

 Server providing alcohol should have known the person was a clear danger to himself or others; and  The intoxication of recipient was the cause of damage. TEXAS DRAM SHOP ACT

Corporate concealment (wink, wink)  Single business enterprise and alter ego TEXAS DRAM SHOP ACT

Single Business Enterprise “Test”  Common employees;  Common officers;  Centralized accounting;  Payment of wages by one corporation for other employees;  Common business;  Employees rendering services for both corporations;  Document;  Transfer of funds;  Unclear allocation of profits between corporations. TEXAS DRAM SHOP ACT

Social Host Protected: TEXAS DRAM SHOP ACT  Know how much consumer had prior  Too many people  Not skilled – may not be apparent

Social Host – Relative to minors??  Ability to marry;  Ability to vote;  Ability to contract;  Penal violations;  Capital punishment; and  Service in military TEXAS DRAM SHOP ACT

Lessor of real property was as a matter of law Not a provider of alcoholic beverages TEXAS DRAM SHOP ACT Landlord/Lessors

 HYPOTHETICAL QUESTION  KISS 106  Leases Place  Requires club activity  Lessor has to approve live entertainment TEXAS DRAM SHOP ACT

Can a distributor be held liable under the Texas Dram Shop Act? TEXAS DRAM SHOP ACT

 Objective Standard of liability  The standard under the Texas Dram Shop Act requires proof that it was APPARENT TO THE PROVIDER that the individual being sold, served, or provided with an alcoholic beverage was OBVIOUSLY INTOXICATED to the extent that he presented a CLEAR DANGER. TEXAS DRAM SHOP ACT  B1: Apparent to the provider  B2: Obviously intoxicate  B3: Clear Danger

 Know how much consumed prior  Too Many People  Not Skilled TEXAS DRAM SHOP ACT Social Host

 Apparent  Obvious  Clear Danger TEXAS DRAM SHOP ACT Liability Under Texas Dram Shop Act

 Police Testimony at Scene  Expert Link  Credit Card Recipient TEXAS DRAM SHOP ACT Evidence at Trial

 Amount Woman Drank  Woman Tried to Start Car with Coin  Accident 20 minutes Later  Expert Link-up TEXAS DRAM SHOP ACT Bruce v. KKB

 If the intoxication of the recipient was the cause  Rather than the conduct of the Provider TEXAS DRAM SHOP ACT Proximate Cause Jury must be asked

 Skipper Case  Bottomless Pit Case  South Dallas Club Case TEXAS DRAM SHOP ACT Foreseeability

 Protection of Minors  Treatment by the Court  Club Corp of America TEXAS DRAM SHOP ACT Sales to Minor

 False Representation by Minor  Fake Identification  Apparent Valid Texas Drivers License  Physical Appearance TEXAS DRAM SHOP ACT Defenses to Claims by Minors

 Employer requires its employees to attend a commission approved seller training program.  The employer has actually attended.  Employer has not directly or indirectly encouraged violation. TEXAS DRAM SHOP ACT Defenses to Dram Shop Texas Servers Training Act – “Safe Harbor” Provision

 Install Cameras  Employee Report Repeaters  Address the failure of non- report. TEXAS DRAM SHOP ACT EncourageDiscouragev  Knowing employees are not looking for good identification.  Waitress check the identification.  Make sure person ordering, indeed, drinks them.  Have written guidelines.  Meetings on guidelines.  Owner not addressing problem.

 No Punitive Damages  No Criminal Acts TEXAS DRAM SHOP ACT Defenses Against Punitives

 Otis  Love v. Houston, Inc. TEXAS DRAM SHOP ACT Special Relationships Employer/Employee

THANK YOU!