session 41912 liquor liability and the law: what you … · liquor liability and the law: ... and...

SAVE THIS HANDOUT - REQUIRED STUDY MATERIAL FOR THE CTSM EXAM

C T S M R E Q U I R E D S E M I N A R

SESSION 41912

eTrak Online Seminar | SEPTEMBER 11, 2012 | 2PM ET, 1PM CT, Noon MT, 11AM PT

Liquor Liability and the Law:What You Need to Know

STEVE STROMBERG, J.D.

All Materials Copyrighted by EXHIBITOR Magazine / Steve Stromberg, J.D.© 2012 Rochester, MN

PRODUCED BY EXHIBITOR MEDIA GROUP

PREFACE

The course concept, manual and the instruction offered were created by the instructor and have been designed to coincide with and support a multi-media lecture presentation.

It provides the participant with a basic working knowledge of [insert the specifics or your session here].

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CEUs are available upon successful completion of this session program. Visit the CTSM service desk for additional information and details.

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ABOUT THE INSTRUCTOR

Steven Scott Stromberg, J.D. Account Executive

Global Experience Specialists (GES)

7624 Boone Avenue North Minneapolis, Minnesota 55428-1002

763.488.5326 (direct) 651.253.7138 (cell)

[email protected]

Mr. Stromberg is a graduate of Concordia College, Moorhead, Minnesota and Hamline University School of Law, St. Paul. At Hamline, Steven was a member of the Hamline Law Review and one of four students selected to compete in the Jessup International Law Moot Court competition. He also clerked for the labor division of the state’s largest law firm, Dorsey and Whitney.

In the late 80’s, Steve clerked in general practice and corporate law before joining legal information provider West Publishing Company in 1988. At West, he worked as a writer and editor in the on-line and CD-ROM content divisions, then moved into the Legal Education Division as an acquisitions editor, account manager, and marketer. Steve took over many functions of the Legal Education exhibit program before leaving West while Manager of a new custom publishing initiative.

Steve recently published an article titled Best Practices in Governing Social Media Use in the Workplace in the Public Relations News Employee Communications Guidebook. He is also an occasional contributor for Exhibitor Magazine, an editorial page columnist for a Twin Cities newspaper, and served as on several non-profit boards including as Secretary on the Board of Directors for the non-profit CCPL (Council for Civic Parent Leadership), a Minnesota non profit organization that helps disadvantaged parents become more active in the political and social structure of their community.

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TABLE OF CONTENTS

Preface ..................................................................................................................................2

About the Instructor ..............................................................................................................3

Essential Learning Components............................................................................................6

Introduction...........................................................................................................................8

1.0 Summary of the topic of Liquor Liability................................................................ 9

2.0 Dram Shop ....................................................................................................... 15

3.0 Dram Shop – state treatment.................................................................................... 17

4.0 Other State Laws to consider ................................................................................... 24

5.0 Social Host ...................................................................................................... 26

6.0 Liability of Business Party Hosts............................................................................. 28

7.0 The Intoxicated Guest/Attendee .............................................................................. 32

8.0 Strategies to keep your liability low ........................................................................ 34

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9.0 Insurance concerns................................................................................................... 38

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ESSENTIAL LEARNING COMPONENTS

Liquor Liability and the Law: What you need to Know

The Essential Learning Components listed below represent the main learning objectives of this session. These core concepts are the basis of the knowledge transfer objectives of Liquor Liability and

the Law.

ELC #1 – Summary of Liquor Liability. What areas of law control the serving and consumption of alcohol in the settings we are concerned about? How can that knowledge prepare us to better protect our companies?

ELC #2 – Dram Shop. General discussion of the history and basics of Dram Shop laws.

ELC #3 – Dram Shop – State treatment. A look at how dram shop laws are treated in various states – and how they will impact you and your events.

ELC #4 – Other State Laws. A look at several other important laws that are treated differently from state to state and that could affect your event.

ELC #5 – Social Host Liability. Additional rules apply in those situations where alcoholic beverages are being served by an individual or organization that is not in the “business” of serving beverages. These rules and guidelines will be examined and discussed.

ELC #6 – Liability of Business Party Hosts. Issues specific to hosting a business party/event where alcohol is served will be examined. An extension of the Social Host rules.

ELC #7 – The Intoxicated Guest/Attendee. What responsibilities arise in a situation where an intoxicated guest is continued to be served alcohol? We will look at specific strategies for diffusing potentially volitile situations.

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ELC #8 – Strategies to Keeping Your Liability as Low as Possible. In many industries and organizations, serving liquor is a part of the business. We will look at what steps you can take to best protect your clients, your company, and yourself.

ELC #9 – Liquor Liability Insurance. Do your vendors carry appropriate insurance for the service of alcohol? Do you need additional insurance? Does insurance take care of all your concerns?

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Liquor Liability and the Law

Introduction

For better or worse, alcohol is an important part of our business. Travel and entertainment lend themselves to situations where employees and clients may consume alcohol, and awareness of some of the nuances of the law could be the difference between a successful event, and a disaster.

We will avoid in-depth discussions of legal terms that are not directly related to this issue. The intent is to lay out the pertinent laws, several case studies, and then to discuss how these concerns affect our industry.

It is my hope that the information in this course helps you manage your upcoming events that include the availability of alcohol to your guests.

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What you need to know

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Slide 2

A summary of the topic of liquor liability

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Lady walks into a bar, and gets her hair done….

Service of alcohol in non‐traditional settings.

Companies/businesses that serve alcohol as a side or as something “special.”

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Slide 4 Liquor Liability

• Dram Shop

• Dram Shop ‐ State specific

• Other important laws and policies

• Social Host

• The Intoxicated Guest

• Liability of business party hosts

• Keeping your liability as low as possible

• Insurance concerns

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Slide 5 What laws affect this issue?

• The practice of serving alcohol, during a corporate sponsored event, for example, will expose you to a wide variety of legal disciplines ‐including contracts, torts, insurance, and criminal law.

• There are also a wide array of local and state regulations which address the liability of alcohol consumption and its consequences.

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The Friction Between...

“The furnishing of” ‐ alcohol

“The consumption of” ‐ alcohol

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Slide 7 Common law interpretation

• The furnishing of alcohol should not be considered the “proximate cause” of injuries inflicted by intoxicated persons

• Rather, it is the consumption of alcoholic beverages that is the “proximate cause” of injuries inflicted by an intoxicated person

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Slide 8 Modern, more liberalized view

• Dram shop laws and social host liability laws ‐which vary state to state, impose liability on those who manufacture, distribute, sell and serve alcohol.

• Liability to what extent? Liability for the damage(s) caused by intoxicated persons to themselves and third parties.

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Better defined ‐ Liquor Liability

• Companies that are engaged in manufacturing, distributing, selling or servingalcoholic beverages may be liable for damages resulting from actions because of intoxication (this will usually be bodily injury).

• Actions may be brought under state statutes (e.g., dram shop laws) or under common law principles of tort.

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Slide 10 Recovery under dram shop or

common law • Dram shop liability refers to the local laws that govern the consequences of serving alcohol.

• Common law tort principles ‐ for example, even without violating specific laws, you could recover damages under a tort claim of the negligence of the server of alcohol.

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Slide 11 The liquor element

• Corporate events, meetings, and receptions often incorporate food and alcoholic beverages. It has become an expected and very common practice in business for many years.

• The availability of alcohol to your clients and guests increases your liability for dangerous situations that can arise due to the consumption of alcohol.

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Liquor LiabilityWhat situations?

• Intoxicated guests operating automobile

• Intoxicated guests getting lost

• Intoxicated guests injuring themselves (falling, etc.)

• Intoxicated guests getting into fights

• Make one up ‐ truth is stranger than fiction

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Slide 13

What changes when alcohol is involved?

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Slide 14 You become MORE responsible for the safety and “actions” of your

guests!

A client who is clumsy and walks into traffic after your party? Their fault.

If you served alcohol at that party? Could be your fault.

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Exposure

• The legal term is “exposure.” Adding alcohol to the mix opens you‐your company‐to additional exposure.

• Exposure additional to other safety and negligence (for instance) issues at any event you are hosting.

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Slide 16 New laws and regulations come into

play

• States, counties and municipalities may all have specific requirements for the service of alcohol whether in or outside of a traditional bar/restaurant/liquor store.

• Licensing from any number of government agencies and a liability insurance policy is required by those who are serving alcohol.

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Slide 17 Could you be personally liable?

• In most cases ‐ no. Only if you acted with a high level of negligence and/or recklessness (depending on which state you are in).

• If you acted outside the scope of your authority with your company.

• Agency Law ‐ you are an agent of your employer ‐ not acting for yourself.

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Dram Shop

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Slide 19 Dram Shop Laws

• “Dram shop” is a legal term used in the United States to describe laws covering the liability of taverns, liquor stores, or other commercial establishments that serve liquor.

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Slide 20 What’s a dram anyway?

• 1/8 th of fluid ounce

• A dram of Scotch Whiskey.

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Dram Shop ‐ definitions

• Dram shop laws hold alcohol “servers” responsible for harm that intoxicated or underage patrons cause to other people ‐or themselves.

• These laws are established by states through common law principles, or legislation.

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Slide 22 Dram Shop ‐ definitions

• The majority of states allow for recovery when the “serving institution” (bar or liquor store, for example) knew or should have known that the customer was intoxicated.

• Servers of alcohol should be trained in spotting intoxicated patrons and refuse service to those individuals.

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Slide 23 There is no national

dram shop law

• It is illegal in all states to serve alcohol to a minor.

• However, there are differences from state to state concerning how to determine if a patron is over‐served, and how liability is determined.

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Dram Shop A look at some of the states...

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Slide 25 What about your jurisdiction/state?

• ALL states but nine have dram shop laws that impose some level of liability on servers of alcohol.

• Most states allow for recovery when the defendant knew or should have known the customer was intoxicated.

• The variation in these laws make it very important that you hire established catering vendors for any event you are planning.

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Slide 26 What do the states say about who

qualifies as intoxicated?

• One says that the party must “demonstrate significantly uncoordinated physical action or significant physical dysfunction.”

• One says that a person must present a clear danger to him/herself and others.

• In Massachusetts, someone exhibiting loud and vulgar behavior was determined to visibly intoxicated.

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Illinois

• There is no requirement that a defendant alcohol “server” knew or should have known the patron was intoxicated. All that is required is

• 1. Proof of sale of alcohol to the patron.

• 2. Proof of injury.

• 3. Proximate cause between alcohol and damages.

• 4. That intoxication was at least one cause of the third party damages.

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Slide 28 Illinois, cont.

• In Illinois, the courts have stated that the dram shop act is intended to place responsibility for damages caused by the intoxicants on those who profit from the sale of alcohol, and protect the health, safety, and welfare of the people from the dangers of traffic (commerce) in liquor.

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Slide 29 Case Study

• You are hosting a corporate event after the exhibit hall closed at a large show ‐ alcohol is served

• A group of clients are telling jokes and getting increasingly louder over by one of the bars

• They may be having a good time ‐ alcohol could be playing a large role

• What should you do?

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Some other states ‐ Alabama, Alaska, Michigan

• Dram shop laws limit liability to illegalalcohol sales ‐ serving to minors or known alcoholics. These states have decided that it is the consumption of the alcohol that is at issue, not the furnishing of alcohol (the common law interpretation).

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Slide 31 Nevada!

• Nevada imposes no dram shop liability ‐ for obvious reasons ‐ to the benefit of companies operating in the tourist and convention industry.

• What does this say about what elected officials understand about the nature of the Nevada economy?

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Slide 32 Case Study ‐

Nightclub and Bar Show• Vendors of alcohol and services to the liquor industry set up and serve everything from wine, beer, shots, etc.

• Crowd is too large for each exhibitor to monitor‐almost unlimited free alcohol.

• Easy to get drinks for friends who may be visibly intoxicated.

• Is this a problem?

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Nightclub and Bar

• No Dram Shop in Nevada

• Does the show have a policy (policies) that cover injuries to claims from attendees or injured 3rd parties?

• Show handles badges (minors), security (obviously intoxicated guests), etc.

• Did staff take reasonable precautions while serving?

• Does anyone drive back to their hotel?

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Slide 34 New York’s Dram Shop Act

• “Any person who shall be injured in person, property, means of support, or otherwise by any intoxicated person…shall have a right of action against any person who shall, by unlawfully assisting in procuring liquor for such intoxicated person, have caused or contributed to such intoxication: that person shall have a right to recover actual and exemplary damages.”

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Slide 35 So what can they recover?

• Damages suffered as a result of injury by an intoxicated person ‐ physical pain, medical bills, loss of support, and mental distress.

• Punitive damages if it can be proved that there was recklessness, malice (intentionalconduct), open defiance of the law, or wanton disregard of duty by the bartender or bar owner.

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Why did the states enact the dram

shop laws?

• It is in the bar’s best interest to serve morealcohol ‐ profit $$$

• It is in the state’s best interest to protect the citizens

• Bars must bear some of that responsibility

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Slide 37 Dram Shop Laws ‐ effect

• Assist state Alcohol Beverage Control departments. These are state administrative agencies that administer licensing and other alcohol related regulations.

• Dram shop laws “force” bars/restaurants to monitor alcohol consumption through fear of expensive litigation.

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Slide 38 How does this affect you?

• When you are holding an event in a venue that serves alcohol, or hiring a caterer that has experience serving alcohol, they should be:

• (1) licensed by the local authority

• (2) insured

• (3) have trained servers with the ability to identify intoxicated persons and the authorityto refuse them service

• (4) be aware of local liquor liability laws.

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Your responsibility...

• Most reputable organizations will have complied with local regulations, but it may be incumbent upon you to prove that you asked for the proper compliance documents to ensure that your company is protected.

• If your server organization has no insurance, your company may be responsible for monetary damages.

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Slide 40 Other concerns…

• Alcohol can cause erratic behavior. For example:

– Comments by management or employees that are actionable ‐ for example, sexist comments

– Fighting, assault, threatening behavior

– Career threatening comments, due to excessive alcohol consumption

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Slide 41 Dram shop breakdown (madd)

• 43 states have some type of dram shop law on the books. The seven that do not are

• Kansas

• Maryland • Nebraska

• Nevada • South Dakota

• Virginia • Delaware

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Parties at your trade shows

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Slide 43 What about people who come already intoxicated?

• Drank at the bar after the show closed

• Has access to hospitality suites with alcohol

• Has wine and beer in her room

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Slide 44 Alcohol in your booth?

• How is this governed?

• Do you need extra insurance?

• Any other concerns?

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Other state liquor liability related law differences

Additional laws that may apply at one location and increase your

liability,

but not at another...

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Slide 46 Mandatory Server Training

• “Beverage service training” and related practices establish requirements or incentives for commercial alcohol servers to participate in programs called RBS (Responsible Beverage Service) to help prevent sales of alcohol to minors and intoxicated persons.

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Slide 47 Mandatory Server Training ‐

who requires?• 18 Require…

– Alaska

– Delaware

– Nevada

– Utah

– Michigan

• 33 do not…

– California

– Florida

– Illinois

– New York

– Pennsylvania

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Happy Hour Laws

• Happy Hour Laws refers to reduced price or multiple drink alcohol sales practices and promotions that have been shown to encourage excessive alcohol consumption.

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Slide 49 Happy Hour Laws

• 22 states enforce

– Illinois

– Michigan

– New York

– Ohio

– Utah

• 29 states ‐ none

– California

– Colorado

– Florida

– Georgia

– Washington D.C.

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Slide 50 Anti‐Plea Bargaining

• A statute, case law or state policy guideline the prohibits prosecuting officials from plea bargaining or reducing an alcohol related offense to a non‐alcohol related offense.

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Anti‐Plea Bargaining

• 18 states with…

– Arizona

– California

– Florida

– Kansas

– Michigan

– Nevada

– Wyoming

• 33 states without

– Connecticut

– Illinois

– Iowa

– Minnesota

– Ohio

– Texas

– Washington

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Slide 52 More info...

• www.madd.org

• Search “dram shop” and your state, e.g., “dram shop” and wyoming ‐

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Slide 53

Social Host Liability

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• You are a social host if you furnish alcohol to individuals (in a non commercial manner). In doing so you may be liable for injuries or damages caused by those individuals.

• Social Host liability catches those situations where alcohol is served outside the typical venue of bar/restaurant/liquor store/hotel ‐e.g., commercial establishment. In other words, not for profit.

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Slide 55 The “economic” difference between social host and dram

shop

• No commercial element with social host. Society has decided that they do not want to punish individuals for the reckless actions of their guests, unless they played a role.

• In the case of commercial vendors, they have a higher level of responsibility and liability ‐ it is their business.

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Slide 56 How the States stack up ‐

• 32 States and Territories have Social Host laws which lay potential liability on social hosts that serve or provide alcohol.

• 19 States and Territories do not have Social Host laws ‐ which means that individuals who serve alcohol may not be responsible for injuries and damages to guest or third parties.

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• In 1977, the Minnesota Legislature amended the State’s Civil Damages Act to ensure that the act applied only to commercial vendors of intoxicating beverages, thus insulating social hosts from any liability out of an intoxicated individual.

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Slide 58 Social Host Liability

Minnesota’s big change in 1990The evolution begins…

• Common law claims. Nothing in this chapter precludes common law tort claims against any person 21 years or older who knowinglyprovides or furnishes alcoholic beverages to a person under the age of 21.

– Civil Damages Act

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Slide 59

Liability of Business Party Hosts

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Business Party Hosts

• The courts in many places have broadened the scope of employer responsibility for monitoring employee behavior in the workplace where alcohol consumption is involved.

• This can be a situation where BOTH customers and employees are attending.

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Slide 61 You be the judge

Linda Hunt v. Sutton Group

• Linda Hunt suffered permanent physical injuries while driving home drunk from an office party at her employer, Sutton Group.

• The Sutton Group had an open bar at their party

• Ms. Hunt left the company party, drove to a local bar and continued drinking for another 90 minutes.

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Slide 62 Hunt v. Sutton Group

• Her employer did offer to call her husband to drive her home, recognizing that she was intoxicated, but she left for the bar on her own.

• HOW DO YOU RULE?

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$300,000.00 for Ms. Hunt

• The judge ruled that the company should have taken more proactive measures ‐ such as taking her car keys or sending her home in a taxi at company expense.

• What if she had taken the taxi home, then taken her husband’s car out to the bar, and still become injured?

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Slide 64 Your hotel event?

• You are one of eleven vendors who host suites at the event hotel with snacks and open bar.

• A group of potential clients come in for the meet and greet. They have been drinking heavily at other suites post show.

• What do you?

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Slide 65 Your hotel event part II

• The room is often not staffed by your company, but rather, the door is open and clients and potential clients are encouraged to drop by for a drink and to relax for a bit.

• Some guests take advantage of alcohol in that situation.

• Any issues?

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Your event part III

• Does anything change if this is a one or two day event in your city, and nearly all of your clients and employees drove to the hotel?

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Slide 67 Tips for the business party host

• You must supervise your guests

• You must have transportation ready

• Host event at a licensed bar

• Serve plenty of food

• Don’t allow guests to pour their own drinks

• Stop serving alcohol an hour or more prior to the end of the event (I have used this!)

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Slide 68 Case study ‐ post work marketing

meeting at local tavern...• What do you need to consider?

– Is the meeting mandatory

– Is the meeting suggested (to get ahead in this dept., you go to the after work functions)

– Who pays for the alcohol, appetizers?

– How long do people stay?

– What is the history of these gatherings?

– What is the role of the tavern/servers?

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Don’t make these mistakes

• Corporate events with a designated driver ‐this will not relieve you of liability if the group consuming alcohol gets into trouble, fighting, sexual harassment, etc.

• Don’t have employees give other employees a ride home ‐ unless there is no alternative. It opens up the door for charges of abuse and assault.

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Slide 70

The Intoxicated Guest/Attendee

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Slide 71 The Intoxicated Guest/Attendee

• One of the most difficult situations of any event/meeting planner.

• Safety of the guest (and potential third party plaintiffs) and corporate liability are your biggest liability concerns.

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Some Scenarios

• Any event sponsored, co‐sponsored or affiliated with you, where alcohol is served.

• Golf tournament ‐ what could go wrong? Beverage cart!

• Company kegger. Who is serving?

• After work happy hour. Just because you are off‐site...

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Slide 73 The intoxicated client

The reality ‐ what is different?

• Can you really tell a client they have had too much to drink?

• Can you “cut them off?” Take their keys?

• Potential harm in the relationship?

• What if you are simply overreacting?

• What will your supervisor say?

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Slide 74 Solve the problem

• Give the authority over the event to an independent third party

• Manager of the catering/serving company

• Employees/bartenders of the caterer

• Security personnel

• Make sure someone from your organization is watching guests and can tip off third party supervisor

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What to watch for…How to handle...

• Verbal arguments. Loud speech. ‐ Get the person away from the area and other guests.

• Use tact. Ask a friend of the intoxicated guest to talk to them.

• Convince the guest not to drive. Show your honest concern for the guest’s safety.

• If a guest is going to drive anyway, you may have to contact the authorities.

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Slide 76 Who is Responsible?

• In a lawsuit over injuries/damages caused by an intoxicated guest, typically all parties “connected” to the situation will be named in the lawsuit.

• If the guest was clearly overserved by your catering vendor, they should bear the legal and financial responsibility.

• Joint and several liability?

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Slide 77 How about a company dinnerhosted by management?

• Management selects restaurant and orders drinks/wine for everyone.

• Continues to purchase bottles of wine during the dinner.

• More wine and after dinner drinks. Everyone heads to the bar after dinner.

• Liability under Social Host?

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Strategies to keep your liability as low as possible

In situations where alcohol is being served to your employees or guests/customer/prospects

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Slide 79 Why not quit?

• Eliminate alcohol availability at all company sponsored events.

• Is it possible?

• Is it the right thing to do?

• Breaking traditions with clients who have “partied with you for years?”

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Slide 80 Lower Your Liability

• First and foremost, determine the comfortlevel of your organization for continuing to include alcohol as a part of your business model at meetings and events.

• If there is uneasiness, at least consider increasing your diligence during the events to watch for high consumption, and consider limits on service times.

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Turn your cocktail party into

a “mocktail” party

• Google or Yahoo “mocktail recipes”

– Unfuzzy navel

– Safe sex on the beach

– Screwless driver

– Bikini breezer

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Slide 82 Simple Solutions to lower your liability

• Never have your company employees/management serving the alcohol.

• Make sure your servers have been trained to assess the intoxication level of attendees.

• Give them the power to refuse service.

• Do not give yourself the power to veto the server’s decisions.

• Hold your event earlier in the day, which can discourage excessive drinking.

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Slide 83 Additional steps to lower liability

• Limit the hours alcohol is served

(5 p.m. to 7 ‐ for example)

• Limit or eliminate the “open bar.”

• Have a cash bar. (This will not exempt you from liability‐however)

• Always serve good food ‐ and plenty of it ‐with alcohol. No salty foods.

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Lower Your Liability

• Provide plenty of non‐alcoholic alternatives. If you are charging for alcohol, serve non‐alcoholic drinks for free.

• Have your caterer/hotel/servers place responsible drinking flyers discreetly in the venue.

• Ask your staff to watch clients/guest closely and report unusual/rowdy behavior to you or catering/hotel/convention manager.

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• Review your contract with your facility and vendors. Include an indemnification clause that excludes you from liability IF the negligence concerning alcohol service was committed by other staff or a vendor.

• Consider hiring security staff. Let them work together with the servers to prevent over consumption.

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• Station the bar away from the door ‐ where people are not passing by it

• Provide plenty of seating

• Don’t provide servers refilling glasses throughout the room

• Don’t plan on physical activities (swimming, skiing, biking) when alcohol is being served

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How are the parties held here at the Exhibitor Show?

We’re in Vegas. Is it even an issue?

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Slide 88

Liquor Liability Insurance Policies

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Slide 89 Dram Shop Liquor Liability Policies

• Provides coverage for companies that are engaged in the manufacture, distribution, selling or serving alcohol from damages or injury from actions due to the intoxication of any other person by reason of the sale, or consumption of alcoholic beverages.

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Host Liquor Liability Policies

• Covers businesses that are not in the business of selling alcohol.

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Slide 91 Why special insurance?

• Companies like yours that occasionally serve alcohol at corporate functions are exposed, in varying degrees of severity depending on conditions in the state. This exposure is not usually contemplated by standard provisions of general liability insurance. Special insurance is required for the exposure.

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Slide 92 Vendor responsibilities

• When you hire a vendor to coordinate and serve at a company function, ensure that they are compliant with state licensing and insurance regulations. This will significantly lower your exposure, but does not mean you can eliminate your diligence.

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Isn’t insurance enough?

• A judge will look at a wide array circumstances to determine your liability ‐

– Did you check the servers licensure?

– Did you make suggestions to keep alcohol consumption in check?

– Did your company ignore sensible conduct and act irresponsibly?

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Slide 94 It still requires your diligence

• Don’t rely completely on your vendor’s assurances. Check paperwork, references, and stay involved in the proceedings.

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Slide 95


What You Need to Know

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