1. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Hotel, Restaurant, and Travel Law: A Preventive Approach, Seventh Edition Chapter 12 Liability and the Sale of Alcohol

2. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Introduction  254,000 injuries occur annually as a result of alcohol-related accidents  Each state highly regulates the sale of liquor  Who can sell, who can buy, days and times liquor can be sold

3. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcoholic Beverages and the Hospitality Industry  Restaurants and bars have various goals concerning the sale of alcohol, some of which are conflicting Liquor is a moneymaker Restaurants and bars have significant motivation to moderate their promotion of alcohol

4. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcoholic Beverages and the Hospitality Industry (continued)  Government shows no leniency enforcing liquor laws  Violation can result in substantial liability  Intoxicated persons are frequently belligerent and cause disturbances that interfere with other patrons

5. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcoholic Beverages and the Hospitality Industry (continued)  Potential consequences: Revocation of liquor license  May result in closure of business Jail time Legal fees Payment for injuries and property damage in a civil suit  Liquor establishment is well-advised to strictly follow the law

6. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. License to Sell Liquor  No business can sell alcohol without first obtaining a liquor license from the state  Once granted, a license may be revoked or suspended by the state if the licensee violates the liquor laws

7. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. License to Sell Liquor (continued)  To qualify for a license, the applicant must prove that he or she: Has not abused liquor in the past  As a consumer, seller, driver, or otherwise Has not been convicted of a felony Is otherwise of good character

8. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Illegal Sales  In most states, sales are prohibited to people who are: Under the age of 21 Visibly intoxicated Known habitual drunkards

9. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Illegal Sales (continued)  Effects of alcohol are potentially dangerous  Law strives to motivate both consumer and server to comply strictly with laws

10. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Illegal Sales (continued)  A restaurant that illegally provides alcohol risks harsh penalties Suspension or revocation of a liquor license Civil liability for injuries caused by the patron who was wrongfully served Criminal liability for serving underage patrons Jail and fines

11. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Sales to Underage Patrons  It is the responsibility of the restaurant or bar to ask for acceptable identification  Management must determine what qualifies as acceptable State-issued driver’s license State-issued non-driver identification card Military identification card Passport

12. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Fake Identification Cards  Frequently reinforce to employees the importance of confirming age  In many states it is illegal for people under 21 to misrepresent their age or present false identification

13. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Purchase for Underage Drinkers  If the licensee has no reason to know that the underage person would gain access to the alcohol, there is no liability  A seller will incur liability if he or she should have known that the adult purchased the alcohol for a minor

14. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Academic Exception  Academic courses in which tasting alcohol is required for instructional purposes

15. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Sales to People Who Are Visibly Intoxicated  A person’s appearance or actions must indicate they are intoxicated Slurred speech Bloodshot, glassy, or watery eyes Flushed face Poor coordination  Can be difficult to detect  Servers should be trained to recognize

16. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Proving Visible Intoxication  Various people may have observed the customer  Use of a device (breathalyzer) that measures BAC—blood alcohol content (level of alcohol in a person’s blood)  If BAC is.08 or higher, person is legally intoxicated

17. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Proving Visible Intoxication (continued)  Other factors to aid in proving that a bar served a patron illegally Failure by the facility to train its employees about alcohol consumption and intoxication indicators Absence of a policy identifying how much liquor can be served to a customer Rotation of wait staff in the course of an evening so that no one server keeps track of the amount a particular patron drinks

18. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Sales to Known Habitual Drunkards  Someone who regularly imbibes alcohol and frequently becomes intoxicated

19. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendors’ Liability under Common Law  Licensees face potential liability for injuries caused by a customer who is served alcohol illegally  Under common law, licensee was not liable for damages caused when it served alcohol illegally and that patron was injured or caused injury to another

20. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendors’ Liability under Common Law (continued)  As the number of alcohol-related accidents grew, most states found the common law rule unsatisfactory  Common law rule did nothing to encourage the server to prevent patrons from abusing alcohol

21. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendors’ Liability under Common Law (continued)  Another weakness was that many intoxicated persons who cause injury have little money with which to compensate those they injure  Owner of a restaurant or bar is more likely to have insurance and assets

22. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Dram Shop Acts  More responsibility on the dispenser of alcohol  Dram shop acts impose liability on restaurants and bars for certain injuries resulting from illegal sales

23. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Dram Shop Acts (continued)  Discourage proprietors from selling alcohol illegally  Afford compensation to victims whose injuries emanate from the unlawful sale of alcohol  Potential liability is very significant

24. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Dram Shop Acts (continued)  Verdicts have financially ruined the bar or restaurant involved  In a few states, damages are capped at a specific amount on the theory that the major share of responsibility should fall on the intoxicated driver

25. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Dram Shop Acts (continued)  Not restricted to car accidents  Can include injuries resulting from fights

26. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendor’s Liability to the Patron  Dram shop acts do not impose liabilities for injuries to wrongfully served customers (as distinct from a third person)

27. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Minority Rule  A minority of states allow the wrongfully served patron to sue the licensee for resulting injuries Some based on state’s dram shop law Some based on negligence

28. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendor’s Liability to Third Parties  The bar may be held liable to others who are injured from the patron’s intoxication  Potential liability under dram shop acts is very significant

29. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Vendor’s Liability to Passengers in Patron’s Car  If passenger purchased alcohol or encouraged driver to drink, most states will not impose dram shop liability  If passenger did not contribute to driver’s intoxication, the bar or restaurant may be liable for passenger’s injuries

30. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Two Licensees Serving One Patron  More than one establishment may be held liable  If a visibly intoxicated person is served first at one bar then at a second one, both will be held liable  Injured person cannot recover twice for the same injuries

31. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Two Licensees Serving One Patron (continued)  Liability will be allocated between the two bars  If drinker was not visibly intoxicated until he arrived at the second bar, the first bar will not be liable

32. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Apportionment of Liability among Defendants  In some states, comparative negligence applies  A restaurant or bar can reduce its liability by the percentage of liability attributed to the driver

33. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Apportionment of Liability Where Plaintiff Is Negligent  If the person injured contributed to the cause of the accident, the injured person’s recovery will be reduced accordingly

34. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. States without Dram Shop Acts  Some states have created a negligence cause of action for holding the licensee liable when an illegally served patron causes injury to a third party

35. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Liquor Liability Insurance  Insurance to cover dram shop liability  Cost is based on numerous factors: Volume of alcohol sold by licensee Prior incidents of illegal sales Nature of establishment Hours it is open

36. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Dram Shop Liability on Some Employers for Office Parties  Potential liability for employers  Supplying alcohol at company events held at a location other than the premises of a liquor license  Some states hold the company liable to someone who is injured by an illegally served attendee

37. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Strategies to Avoid Liability  Adopt internal written policies  Encourage selection of designated drivers  Educate employees  Post signs to inform customers of their responsibilities

38. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Strategies to Avoid Liability (continued)  Post signs of the bar’s willingness to drive patrons home  Encourage responsible drinking in marketing and advertising  Offer minidrinks (drinks that contain less alcohol)

39. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Alcohol Sales in Hotel Guest Rooms  By means of a key or magnetic card  Prohibition against illegal sales applies to these devices  The innkeeper must not provide the key to anyone under 21, visibly intoxicated, or a habitual drunkard

40. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Miscellaneous Liquor Regulations  Age of alcohol servers  Restrictions on alcohol sales on Sunday  Warnings to pregnant women  Prohibition of illegal gambling

41. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Miscellaneous Liquor Regulations (continued)  Prohibition of disorderly conduct  Maintenance of prescribed records  Restrictions on the type of alcohol sold  Limitations on sales promotions

42. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Miscellaneous Liquor Regulations (continued)  Prohibition on celebrity endorsements  Proximity to school or church  Alcohol-free teen events  Alcohol inhaling devices

43. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Sexually Explicit Entertainment  Some bars provide nude or sexually explicit dancers  Entitled to some protection by the constitutional right to free speech  Restrictions must further an important government interest unrelated to suppression of free speech

44. COPYRIGHT © 2008 by Delmar Learning. ALL RIGHTS RESERVED. Sexually Explicit Entertainment (continued)  Restrictions must not be broader than is necessary to achieve the stated government interest