Dram Shop Liability

A lot of bar owners are familiar with the ‘Dram Shop laws’, but might not have a full understanding of how these laws impact a liquor liability situation.

Fortunately, the Insurance Journal wrote an article breaking-down some practical aspects of these statutes, and below provides a concise summary.

 

Dram Shop Laws (in a nutshell)

Dram shop liability claims stem from allegations of bars / restaurants over-serving alcohol.

Dram shop laws are based on state statutory provisions. 43 states have some form of dram shop law in place.

The states that don’t recognize dram shop liability include Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota and Virginia.

Dram shop claims usually involve drinking and driving accidents, or intoxicated individuals who end up hurting others and sometimes even themselves.

 

2 Common Misconceptions

There are two common misconceptions relating to dram shop liability:

Misconception #1 

An intoxicated individual may recover damages.

In reality, only 10 states allow an intoxicated person to recover damages he or she sustained as a result of an alcohol-related injury. The point of the dram shop law is to cover others injured by an intoxicated person.

Misconception #2

‘Liability for Illegally Furnishing Alcohol’ is the same as ‘Civil Liability for Over-serving’.

State standards for what constitutes ‘an illegal sale of alcohol’ (ie – selling to minors) are different from ‘a sale that could give rise to dram shop liability’. Legal precedent applies differently in either scenario.

 

Dram Shop Laws in Texas

In Texas, Dram Shop Laws apply to serving patron where there is is “obvious intoxication”…slurred speech, droopy or red eyes, cloudy judgment, lack of inhibitions, aggressiveness and poor balance….all point to the fact that a person is obviously intoxicated.

The number of drinks served to a customer can also be an indicator of whether or not the individual is obviously drunk.

 

Safe Harbor defense

In Texas, there’s a clause within the Dram Shop Act which specifically protects drinking establishments from civil claims….known as the ‘Safe Harbor Defense’, or ‘Trained Server Defense’.

If an establishment can prove that they followed guidelines set forth by the state, they may be exempt from a lawsuit. These requirements include:

  1. Having the employees attend a TABC-approved seller training program
  2. Ensuring the employee actually attended such a program,
  3. Proof establishing that the employer hasn’t directly or indirectly encouraged his employee to violate the law.

It’s important for a bar owner to evidence they’re following these guidelines with 1) detailed, official documentation, and 2) written policies about over-serving patrons.

 

Denied Safe Harbor Defense

Some establishments try to use the Safe Harbor Defense, but are denied by the court because there’s clear evidence pointing to the fact that employees were encouraged to break these liquor liability rules.

 

Moral of the story…

Maintain strong standards for TABC training and over-serving procedures, and the Safe Harbor Defense should help with Dram Shop liability claims.

 

 

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