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Thousands of lawsuits are filed every year involving the
sale, serving or distribution of
alcohol. Every year some of those lawsuits are successful
and someone pays the price – big time.
The lawsuits are usually not brought by the person drinking
the alcohol, but usually by someone who wasn’t even in the room when
the cork
was pulled...sometimes by someone who wasn’t even directly involved!
What’s this
all about and how is this allowed to go on?!
SURGEON
GENERAL’S WARNING: “. . . (2) CONSUMPTION OF ALCHOHOLIC BEVERAGES
IMPAIRS YOUR
ABILITY TO DRIVE A CAR OR OPERATE MACHINERY, AND MAY CAUSE HEALTH
PROBLEMS.”
Heres the distilled version - the laws in
most (if not all) states impose
special responsibility on those who “are in the business of
manufacturing,
distributing, selling, serving or furnishing alcoholic beverages.” Alcohol has been used by human beings for
over 4,000 years and regulated for over 2,000 years. Here’s a quick
look at the
(long) history. From here on in, the term “alcohol” will mean beer,
wine, hard
spirits and any of its many forms.
Alcohol has been a major source of
income (private & public) and problems for thousands of years.
- 2300 B.C. The code
of “Hammaurabi” refers to the dispensing controls for alcoholic
beverages.
- 1700
- 1774 The
Whiskey Rebellion in
- 1779
- 1918 The U.S.
Congress adopts the
18th Amendment prohibiting the sale of alcohol in the
- 1933 The U.S.
Congress adopts the
21st Amendment, repeals the 18th amendment and states start passing
“dram shop”
liability laws (referring to the unit of liquid measure used in the US
during
the colonial period).
The
connection between the effects
of alcohol on people and those who would profit from the sale of
alcohol is
clear and memorialized in law. In states where “dram shop acts” are on
the
books, the common scenario is that you, as the one who sells,
distributes,
serves or provides alcohol, are responsible not only to the person you
directly
serve, but also to:
- 3rd Parties
directly injured as a
result of the
“service.”
- 3rd Parties
indirectly injured as
a result.
Example: John
drinks at XYZ restaurant. John leaves and
has an auto accident injuring
Sam. Sam can (and will) sue XYZ restaurant. Sam’s family can (and will)
sue XYZ
as well for the injury to Sam.
Hey,
as a group, human beings like
to have a drink now and again. And, as a
group, human beings like to have that drink while they eat. So, the
path leads
right to the door of you and your pizzeria if you are “in the business
of
manufacturing, distributing, selling, serving or furnishing alcoholic
beverages.” This is not necessarily a bad thing. This is a business
risk that
we need to explore, understand and deal with. Oddly enough, the wording
above
is from an insurance policy exclusion commonly found in pizzeria
owners’
insurance policies. That wording makes it clear that ‘Liquor Liability”
is not
covered by the policy.
Whoa...you
mean that as a pizzeria
owner, if I sell, serve, distribute etc. alcohol, the law says I’m
responsible
and then the insurance companies say I’m not covered? Yes, that’s
right, but
there’s a reason. The law imposes special responsibility on you in this
case. A
general rule of thumb is that anytime the law places a special
responsibility
on you, there is a special insurance coverage to address it. Some examples are: hairdressers, architects,
lawyers, veterinarians, doctors and massage therapists.
Standard
off the shelf polices won’t
cover special responsibility, but specific policies do.
You must buy the specific policy that
contemplates the special responsibility involved, in this case Liquor
Law
Liability.
These
policies will provide
liability insurance, but as part of the application and qualification
process,
you must have in place systems and methods that deal with the risk. A
typical
application question is: “Are servers trained in recognizing drunk
patrons?
What program do you use? TIPS, Barcode™ etc.” Part of the requirement
to get
the insurance is being prepared to deal with the risk.
You
can be responsible for serving
an already intoxicated person, serving an underage person, serving an
impaired
person and more. You’re responsible both
for injury to the person you serve and for damage to others done by the
person
you serve. The reasonable thing to do is
have your servers trained by a recognized program and stick to the
guidelines
for safe handling of alcohol service.
- Some of the
points covered in these programs are:
- General
application of the law in your state.
- How to
recognize an intoxicated
patron.
- How to say ‘no
more’ to a patron.
- How to
properly verify
age/identification.
Once
you’ve got the procedures
nailed down, getting the insurance is a matter of shopping around. The insurance is readily available, but
pricing varies widely from company to company and forms are not
standard.
BYOP: Bring
Your Own Problems!
The
more troublesome area is the
“bring-your-own-bottle” issue. This is a twilight zone of
interpretation and
circumstance. Usually, you can’t buy Liquor Law Liability Insurance
unless you
have a liquor license. Yet, most business owner’s policies issued to
pizzerias
contain the wording that excludes this coverage if you are: “in the
business of
manufacturing, distributing, selling, serving or furnishing alcoholic
beverages.”
Question:
- If you
allow patrons to bring their own bottle and you provide glasses, are
you
engaged in the serving or furnishing of alcohol?
- If you
charge a corking fee for chilling and pouring wine, are you engaged in
the
serving or furnishing of alcohol?
- If you
have a deal with the local liquor store to bring in wine ordered by
patrons,
are you involved in the serving or furnishing of alcohol?
Answer: It
depends. It depends on things like:
- Case law in
your state.
- The
circumstances of a claim.
- The
inventiveness of the
plaintiff’s
attorney.
And,
sorry to say, the size of the
claim. My personal maxim:
The size of a claim is directly proportional
to the level of scrutiny of policy language at the time of a loss. I
would not
bet my business and my family assets on this proposition.
Either get the license and the insurance or
steer clear of the issue. The sober truth is that the sale, service or
furnishing of alcohol is neither a good nor bad thing. Like any
business
activity, done well and ethically, it can bring a good return to your
business. Done any other way, it can be
more trouble than it’s worth.
– PMQ –