Drug Abuse

8. Dram Shop and Host Liability

States should enact statutes to establish civil liability of persons who personally and negligently sell or serve alcoholic beverages to a customer or guest whom the server knows or should know to be under the legal age when that customer or guest, as the result thereof, becomes intoxicated and injures himself, a third person, or such third person's property.

A coherent, uniform dram shop liability policy would help to prevent not only alcohol-related accidents, but also the problem of excessive drinking. Dram shop laws would encourage server intervention as a tool to avoid excessive drinking and the accidents which inevitably follow. A dram shop liability policy built around prevention goals would induce alcohol beverage servers to take the reasonable precautions necessary to avoid legal liability, such as instituting alcohol education programs for the server's employees, or offering alternative transportation to those who have consumed alcohol.' 9°

The current state of dram shop liability policy varies from state to state.191 Each of the fifty states possesses and applies its own view of dram shop law. While one state moves judicially to expand the reach of dram shop liability to include social and business hosts,192 another passes legislation severely limiting the scope of possible liability;193 as one state hands out record monetary damage awards against alcohol beverage servers,194 another legislatively limits the damages recoverable by any allegedly injured plaintiff.195

The results of this legislative and judicial non-conformity are an uneven system of victim compensation, an unreliable system of deterrence, and an unpredictable system by which alcohol servers may be held liable. The Advisory Commission received repeated testimony from its field hearings which criticized the current state of dram shop law, and recommended a uniform policy of alcoholic beverage server liability for serving minors.I96

With this in mind, this recommendation urges all states to enact dram shop and social host liability legislation which would establish civil liability against a negligent server of alcoholic beverages to an individual whom that server knew or should have known to be a minor, and where that minor subsequently becomes intoxicated and as a result injures himself, a third person, or such third person's property.

A. Background

Dram shop liability first appeared in American law in the 1880's as an attempt by the temperance movement to close saloons.I97 These early statutes typically provided that financial support be paid by tavern owners to the families of patrons who had become habitual drunkards.

In their current application, modern dram shop statutes refer to the potential liability of the furnisher of alcoholic beverages for the negligent, reckless or intentional conduct of the drinking patron which causes harm to either the drinker or a third party. Most courts, before finding server liability, require the plaintiff to demonstrate that the patron's intoxicated condition contributed to the injury.

Currently, several states fail to recognize any form of dram shop liability. These states prefer to retain the traditional common law doctrine which recognizes no relation to proximate cause between the sale of liquor and a tort committed by a buyer who has consuirted the liquor.198

B. The Elements of Dram Shop Liability

In establishing dram shop liability policy three key issues must be resolved: who may be found liable; what constitutes actionable negligence; and who may sue.

Who May Be Found Liable

All the states which recognize dram shop liability make state licensed retail establishments (both on-sale and off-sale) potentially liable for harms caused their patrons.199 In reaching this result many courts and legislatures have relied on statistical evidence linking automobile accidents to consumption of alcohol in bars and restaurants. For example, a 1978-79 Los Angeles study found that approximately 50 percent of those arrested for driving while intoxicated, identified a licensed establishment as the location of their last drink prior to the arrest.2°° Another study, a 1973 report on a national roadside breathalizer test survey, found that 44 percent of those tested with a blood alcohol content level of 0.10 Percent or greater were driving to, from, or between public drinking places.101

The general rule among courts has been to limit the application of dram shop laws to provide a cause of action only against those in the business of selling liquor and not against one who provides another an intoxicating beverage as a mere act of hospitality.202 It is interesting that those courts which distinguish social hosts from commercial servers, in this way, do so though most dram shop acts explicitly prohibit "any person" from serving intoxicated persons or minors. Courts which accept this approach do so on the basis that commercial enterprises are better equipped than social hosts to pay damages for the injuries caused by intoxicated patrons.

A number of courts, however, "have been willing to impose a duty on social hosts similar to that imposed on commercial vendors" where the guest is a minor.2°3 In 1972, the Minnesota Supreme Court became the first modern court to impose social host liability in the case of Ross v.  Ross.2°4 Following the Ross decision, a number of other state courts followed suit in establishing social host liability.2°5 In reaching this conclusion these courts have relied on one of the three theories of liability: 1) a strict statutory approach -- that the dram shop act does not preclude social host liability20b; 2) notions of per se negligence207 -- that the serving of alcoholic beverages to a minor is a criminal violation and automatically subjects the offender to civil liability; or 3) on a traditional negligence theory208 that a reasonable person could foresee that an intoxicated minor would become involved in some type of accident, thereby establishing a duty to refrain from providing alcohol to minors.

To this point, no cases have been found holding parents liable under a dram shop theory for injuries caused by their children or their children's guests, who have consumed the parent's alcoholic beverages. Two New York Supreme Court Appellate Division cases,209 however, have held that parents may be subject to negligence actions for injuries caused by intoxicated minors who had been served alcoholic beverages by the parent's child. In both of these cases the court relied on traditional common law principles of negligence and not on New York's dram shop act.

What Constitutes Actionable Negligence

The negligent furnishing of alcoholic beverages consists of two elements: that the defendant affirmatively offered the liquor to the consumer; and that the defendant possessed the capacity to control the service of the alcoholic beverages.I10 Inherent in this definition of the negligent furnishing of liquor are traditional notions of reasonable standards of care which form the basis of all tort law. Dram shop liability may result either from serving alcoholic beverages to those under the minimum drinking age, or from serving obviously or apparently intoxicated adults: All fifty states make either practice criminally punishable.

Those states which recognize dram shop liability can find one who serves liquor to a minor negligent in one of three ways: 1) expressly imposing liability for serving minors who subsequently become involved in an injury producing accident; 2) finding liability by using traditional negligence concepts -- minors are presumptively unable to responsibly consume alcohol, thus a reasonably prudent person would not provide alcohol to a minor in order to avoid a foreseeable injury to that minor or others and; 3) finding servers per se negligent, where the serving of alcoholic beverages to minors is a criminal offense, the offender is pa. se subject to civil liability for subsequent injury.

With regard to serving adults rather than minors, dram shop liability currently depends on whether the consumer was "obviously intoxicated" when he was served. The "obviously intoxicated" standard is criticized by many commentators as too subjective and imprecise to fairly judge the relative reasonableness or unreasonableness of an alcohol server's conduct.211 Though courts are almost unanimous in espousing the notion that obvious intoxication is readily apparent to any reasonable person, many critics maintain that the standard fails to prevent the very harm which dram shop liability seeks to curtail: injuries caused by inebriated people. In most cases, once the point of obvious intoxication is reached, a person is well beyond the level of legal intoxication.212 For example, in Paula v. Gagnon,2I3 the defendants blood alcohol content level was twice that of legal intoxication (0.19 percent), and yet, the court would not consider that figure conclusive evidence of obvious intoxication.

Some critics contend that the obviously intoxicated standard is so vague it precludes alcohol servers from conforming with the law.214 This measure of liability fails to provide a simple, objective standard against which servers may gauge their conduct, or have their conduct judged. Therefore, recent reforms in this area have supported replacing the anachronistic obviously intoxicated standard with the common law torts standards of reasonable care and negligence: Has the alcoholic beverage provider taken the necessary and reasonable precautions to avoid foreseeable harm to his drinking patrons, social guests, or unknown third parties. This type of tort analysis more properly frames dram shop liability as a preventative device.

Who May Sue?

All courts which recognize dram shop liability include third party victims (neither the server nor consumer) as potential plaintiffs.2I5 In the case where patron A leaves tavern B and causes crash with victim C, who does not contribute to his own injury, courts in dram shop liability jurisdictions are unanimous: C has a valid cause of action against tavern B.

The courts, however, are split as to cases where the factual setting varies from that above. For example, where victim C is a drinking partner of patron A, and C actually encourages A to become intoxicated, the courts differ as to whether victim C is contributory negligent in fostering A's intoxication, and if so, whether C is barred from recovery against B. The court decisions are similarly confused where patron A sues tavern B for injuries he sustained as a result of an alcohol-related incident.

C. The Current Status of Dram Shop Liability Among the States
Twenty-three states currently possess some form of dram shop liability legislation.216 Fourteen of these statutes are at least thirty-five years old, with a majority dating back to the turn of the century. As products of the temperance movement, these laws primarily seek to abolish habitual drunkeness by awarding financial support to the drunkard's family.217 Six of these fourteen statutes are so archaic that their limited scope effectively precludes most, if not all, modern dram shop suits. For example, Colorado, by law, permits dram shop suits only where a licensee serves a habitual drunkard.218 Georgia, on the other hand, permits server liability if a licensee serves a minor, but such suits may only be brought by the minor's parents, thus barring third party claims.119 The remaining eight pre-1950 statutes contain language broad enough to permit recovery in most modern third party dram shop suits.

Nine states have enacted new dram shop legislation since 1971. Seven of these statutes permit broad recovery by third party plaintiffs. Two states, Florida and California, have recently passed laws strictly limiting dram shop liability. Florida's statute allows liability only in those cases where the licensee "willfully" serves a minor22° and California's statute requires liability only where a licensee serves an "obviously intoxicated minor."22I In each case, the state legislators sought to stem the growth of potential dram shop liability by narrowly defining who may be sued, and what constitutes culpable conduct.

Seventeen jurisdictions currently enforce dram shop liability as a matter of common law. The supreme courts of 10 jurisdictions (9 states and the District of Columbia) have imposed dram shop liability soley as a matter of common law. In 1959, New Jersey in Rapporport v. Nichols,222 became the first state to assign civil liability to an alcohol retailer even though New Jersey lacked a statute providing for such liability. Seven states possess both statutory and common law liability. Thus states like Ohio and Wyoming, which have restrictive dram shop statutes, have broadened possible recovery through common law.223

The current trend amon the states is toward a substantial expansion of dram shop liability. 4 For example, five of the seven state legislatures which have enacted dram shop legislation in the last twenty-five years have passed laws which created new liability. In addition, six state supreme courts have created dram shop liability by case decision in the past twenty-five years.225

In the twenty-five states which possess either restrictive statutes or no official statewide liability policy, only seven supreme courts have explicitly deferred to their respective state legislatures, and refused to accept a new common law rule.226 The remaining seventeen states have yet to have the issue reviewed by their respective highest courts. Yet, in each of these states, the trial and appellate court decisions have generally favored imposing dram shop liability.427

Large settlements and unappealed plaintiff verdicts are occurring with regularity even in states where there is no statutory dram shop liability, and where appellate courts have not accepted the modern common law theory of dram shop liability.228 One California settlement, for example, awarded $2.5 million to a young girl who was injured when the car in which she was a passenger struck a tree.229 The driver, a minor, had purchased (or was given) beer from a friend who worked at defendant convenience store. This settlement is significant not only for its record size, but that it occurred in California, a state with an extremely restrictive dram shop law.

The federal government has come to view dram shop liability as a viable weapon in the battle against drunk driving. Both the Presidential Commission on Drunk Drivingz5° and the National Highway Traffic Safety Administration (NHTSA) have endorsed dram shop liability as a legitimate strategy for reducing drunk dri-ving. NHTSA has stated:

The potential threat of a substantial jury award resulting from a dram shop suit...can effectively motivate people to stop serving drivers who are obviously becoming intoxicated.z31

The trend among the various legislatures, courts and agencies around the country is to adopt dram shop liability as a tool with which to confront alcohol related problems. The difficulty these various bodies face is to modernize and revitalize the 19th century concept of dram shop liability to do the work of contemporary social policy.

Conclusion

Across the nation courts are being asked to judge the civil liability of those who provide alcoholic beverages to minors, where those intoxicated minors injure the property or person of another. The decisions from district to district often conflict in result, as well as in rationale.

This recommendation calls upon the states to harmonize their various dram shop laws and adopt a unified policy establishing civil liability against those who negligently provide alcohol beverages to a minor. In addition, it would be helpful to the states if the National Conference of Commissioners on Uniform State Laws would draft a model dram shop law statute addressing the concerns of this recommendation.

 

187 Harwood, Napolitano, Kristiansen, Collins, Economic Costs to Society of Alcohol & Drug Abuse & Mental Illness, Report developed by the Research Triangle Institute for the Alcohol Drug Abuse & Mental Health Administration, June 1984.

188 Id. See also supra_ note 57 at 182. ("Because drivers under the influence are responsible for this problem with its great resulting human cost, it is appropriate that offenders should defray the costs of enforcement, prosecution, adjudication, treatment and education.")

189 0ne Georgia witness estimated the total spending for alcohol and drugs for that state alone to be $1 billion annually. See testimony of Martha Morrison, M.D., Atlanta.

190 Organizations in various states are investigating different ways of using dram shop policy to encourage prevention techniques among alcohol beverage servers. For example, the Prevention Research Center of California is drafting a model dram shop act with the explicit purpose of trying to "prevent intoxicated related traumatic injuries, death, and other damages." See also the work of James M. Schaefer, Director, University of Minnesota's Office of Alcohol and Other Drug Abuse. Mr. Schaefer's organization is researching a program which would require liquor establishments to hire only specially trained and certified bartenders, waiters and waitresses. Such training programs for alcohol servers would be encouraged by offering discounts to bar owners who hire trained and licensed servers. Similar work is being done by Intermission Unlimited. Intermission is working to establish alcohol training programs for Massachusetts bar employees. To aid in its efforts, Intermission also publishes a newsletter, Responsible Beverage Service, to educate the public with regard to serving alcoholic beverages. See also, testimony of James F. Mosher, Los Angeles.

191 See attached chart, Appendix B.

192 See Kelly v. Gwinnell, 96 N.J. 538, 476 A.2d 1219 (1984).

193 In 1978 the California Legislature, in response to a California case finding social host dram shop liability, passed two related statutes severely curtailing the court's ability to find dram shop liability. Cal. Bus. & Prof. Code Sec.25602, 25602.1 (West Supp. 1983).

194 E,..g., in Cabrian v. Booe, #78-05432 127th Judicial District of Harris County (Tex. 1983), the court awarded a dram shop plaintiff a record $2.5 million in damages, despite the fact that Texas possessed no dram shop law. See also Pattison v. Brooks, #80CV0876 District Court, County of Denver (Colo. 1983), the parties settled on a $10 million award for plaintiff, even though Colorado possessed neither a statutory nor a common law rule providing for dram shop recovery.

195 N.C. Gen. Stat. Sec. 183-123 (1984) limits total dram shop recovery to a maximum of $500,000.

196 See generally testimony of James F. Mosher, Los Angeles: "It is critical that dram shop laws provide a clear set of guidelines to licensees that will promote the responsible service of alcoholic beverages"; Judge Leon Emerson, Los Angeles: "Shielding Laws that prevent judges and courts from applying civil, criminal and economic responsibility to licensees and negligent, careless hosts are dead wrong in my opinion"; Lawrence Wallack, Los Angeles: "Because the laws concerning dram shop liability vary from state to state there is no consistent view of the legal responsibility of the server or the establishment. The lack of clear policy in this area results in 'business as usual' which can mean inappropriate serving techniques resulting in preventable traffic crashes and related problems." See also Alan Stoudemire, Atlanta, "Epidemiologic, Economic and Clinical Perspectives in the Prevention of Alcohol Dependence and Abuse" (paper presented).

197 Mosher, Dram Shop Liability and the Prevention of Alcohol Related Problems, 40 J. Stud. Alcohol 773, (1979).

198 See, stg., State for Use of Joyce v. Hatfield, 197 Md. 249, 249-255, 78 A.2d 754, 756 (1953).

199 Mosher, supra note 216 at 4.

200 Mosher and Wallack, The DUI Project: Description of an Experimental Program to Address Drunk Driving Problems Conducted by the California Department of Alcoholic Beverage Control (1979).

201 Mosher, Server Intervention: A New Approach for Preventing Drinking and Driving, 15 Accident Analysis Prevention 483, 487 (1983).

202 53 ALR 3d 1285, 1286 (1973) (fundamental difference between serving alcohol in social and commercial settings).

203 Id. at 1268.

204 294 Minn. 115, 200 N.W.2d. 149 (1972).

205 See Brattain v. Herron, 155 Ind. 663, 309 N.E.2d 150 (1975); Wener v. Gamma Phi Chapter of Alpha Tau Omega Fraternity, 258 Or. 632, 485 P.2d 18 (1971); Linn v. Rand, 356 A.2d 15 (N.J. 1976)(holding a social host liable to a third person injured by a minor who previous to the accident was served alcoholic beverages by the social host.)

206 see, e.-. Brattain v. Herron, 155 Ind. 663, 309 N.E.2d 150 (1975).

207 See, stg., Adamian v. Three Sons, Inc., 353 Mass. 498, 233 N.E.2d 18 (1968).

208 See eg Weiner v. Gamma Phi Chapter of Alpha Tau Omega Fraternity, 258 Or. 632, 485 P.2d 18 (1971).

209 Hugler v. Rose, 88 A. D.2d 755, 451 NYS2d 478 (1982) and Comeau v. Lucas 90 A. D.2d 674, 455 NYS2d 871 (1982).

210 Bedard, One More for the Road: Civil Liability of Licensees and Social Hosts for Furnishing Alcoholic Beverages to Minors. 59 B.U. L. Rev. 725, 741 (1979).

211 see, Server Intervention, supra note 201 at 483.

2I2 See Bedard, supra note 210 at 736.

213 81 Cal. App.3d 680, 146 Cal. Rptr. 701 (Ct. App. 1978).

2I4 See supra note 209. See also Bedard, supra note 210 at 735-742.

2I5 Mosher, supra note 217 at 7.

216 See appendix B.

217 See, eta., Act of May 1, 1954, Ohio Stat. Sec. 5, Ohio Rev. Code Ann. Sec. 4399.01 (Page 1954).

2I8 Colo. Rev. Stat. Sec. 13-21-103 (1983).

2I9 Ga. Code Ann. Sec. 3-3-22 (1984).

220 Fla. Stat. Ann. Sec. 51-1-18 (West 1983).

22I Cal. Bus. & Prof. Code Sec. 25602.1 (West 1983).

222 31 N,J, Bs, 156 A.2d. 1 (1959).

223 see, sta. , Mason v. Roberts, 33 Ohio St.2d 29, 294 N.E.2d 884 (1973), and McClellan v. Totten, 666 P.2d 408 (1983).

224 A recent article in the Philadelphia Inquirer highlights this trend in the growth of alcohol server liability, Risky Business, Philadelphia Inquirer, March 24, 1985, at B-1. The article, recognizes the rapid expansion of alcohol server litigation, and the threat tavern owners experience as a result of this explosion in litigation.

225 For a recent example of a State Supreme Court creating common law dram shop liability see Sorensen v. Jarvis, 119 Wis.2d 627, 350 N.W.2d 108 (1984).

226 See Mosher, supra note 199, at 12.

227 Id. at 13.

228 Harrington, Illustrative Dram Shop Settlements and Jury Verdict Cases: Further Evidence that Server Liability is Expanding?, at 1-15, reprinted in, National Association of State Alcohol & Drug Abuse Directors, Special Report -- Alcohol Server Liability and the Law: Examples of Lawsuits, Major Financial Settlements and State Laws (December, 1984).

229 Cunningham v. Shorttop, Inc., ll108600 Sup. Ct. of Marin County, Ca. (May, 1983).

230 Presidential Commission on Drunk Driving, supra note 74, at 11. The Commission's Dram Shop Recommendation states: States should enact "dram shop" laws establishing liability against any person who sells or serves alcoholic beverages to an individual who is visibly intoxicated.

231 48 Fed. Reg. 5545 (1985).

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