Bars’ liquor liability a sobering issue

A couple walks in, the woman a bit blurry-eyed, her head swaying slightly.
She wants just one more drink, a glass of chardonnay. The bartender serves her.

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Two college students sit at the bar and start ordering drinks. The bartender
knows one of them is only 20, but serves him anyway. The two play drinking games
all night and down so many tequila shots that one of them gets sick in the men’s
room. When they head back to their dorm, a few blocks away, they can barely
walk.

If any of these patrons gets hurt or dies, or causes an accident that hurts
or kills someone else, the bar – and the bartender – could find themselves being
sued.

Under the Rhode Island Liquor Liability Act, anyone who “negligently” sells
liquor to a “visibly intoxicated” or underage person is liable for damages to
a third party “proximately caused” by that person’s intoxication.

When a server acts “recklessly” – knowingly serving a minor, encouraging a
drinker to go too far, serving someone so continuously and excessively that
the person could suffer alcohol poisoning – even the drinker or his family may
have a case.

The bar’s exposure, at least in theory, is so severe that standard liability
policies have long excluded liquor-related damages. Instead, businesses buy
separate coverage, generally through surplus-line carriers that specialize in
“high-risk” policies.

The actual cost can vary drastically, said Kate Kelley, of E.A. Kelley Insurance:
It depends on the ratio of food and liquor sales, the location, the age of the
establishment, the existence of a dance floor and/or live music, and other factors.
But it’s never cheap, and for many businesses, it can be as expensive, or more,
than their regular coverage.

“I think in some cases, it does become prohibitively expensive, particularly
in a venue where the product is predominantly alcohol – nightclubs, for instance,”
Kelley said. And for some businesses, she added, liquor coverage is simply “not
available at all.”

Rhode Island law requires the commissioner of insurance, Joseph Torti III,
at the Department of Business Regulation, to keep records of who’s writing liquor
liability policies in the state, how many policies and premium dollars are written,
and how many claims are paid out. Torti did not return repeated calls, however,
and efforts to get the data from others at the DBR were unsuccessful.

Nationally, the Insurance Journal reported in 2001, more than half of liquor
establishments go without the coverage. But Kelley said that’s changing.

“One trend I have noticed in the last five years is that very often, if there
are any liquor sales at all, the general liability insurer may insist that you
buy liquor liability,” she said, adding that without it, some carriers simply
decline the risk. “It’s increasingly becoming mandatory. … A lot of restaurants
and taverns don’t have a choice.”

Liquor liability coverage is not required by law, but across the United States,
court rulings and new laws have made it increasingly clear that insured or not
insured, bars can be made to pay. Forty-two states and the District of Columbia
have so-called “dram shop” laws (named for the old measure for liquor) or case
law. The concept goes back to the 19th century, though most of the current laws,
including Rhode Island’s, are based on model legislation advocated by groups
such as Mothers Against Drunk Driving.

But how often do bars actually get sued?

Kelley said she couldn’t think of a single Rhode Island case, though she has
studied claims in Vermont, Massachusetts and other states. Richard Humphrey,
a Tiverton lawyer with an expertise in drunk-driving cases, said he does know
of a handful of Rhode Island cases, including one in which he was involved in
the early 1980s. None, however, was actually successful.

“It’s really a losing venture,” he said. “Very often, people look into it
as a possible recovery, but it’s a challenge, because the burden of proof is
enormous.”

The most common scenario for a bar to get sued, Humphrey said, is in connection
with a drunk-driving accident. But the bar is, at worst, third in line for a
plaintiff, after the driver’s liability insurance and the plaintiff’s own auto
insurance policy.

The two auto policies will usually cover the full damages, Humphrey said.
If they don’t, the plaintiff may look at the bar, but then, he and Kelley agreed,
the chase is on:

Which bartender actually served the driver? Was the driver visibly intoxicated?
Are there witnesses who can attest to the bartender’s negligence? What if the
driver was barhopping – how do you prove who served the drink that put that
person over the line?

“It’s difficult,” Humphrey said. “Bartenders come and go, and there’s often
not a lot of proof.” Many people pay cash for their drinks, or buy drinks for
one another. Even a credit-card slip won’t necessarily show what each person
consumed. Sometimes the driver will volunteer the information, Humphrey added,
but in some cases, such as one he is handling right now, the driver is dead.

Liquor establishments’ awareness of their potential liability, however, may
be the main reason why “dram shop” lawsuits are relatively rare, Kelley and
Humphrey said. Most businesses enroll their staff in courses such as TIPS and
BarCode, or at least direct them to serve alcohol responsibly.

“I think the industry has responded well,” said Humphrey. “It’s not unusual
for a bartender or waitress to shut off a guy.”

Such courses, which a state law passed this year will make mandatory as of
April 1, encourage servers to look beyond the obvious signs so they can recognize
intoxication – or know it must be happening – well before they’re dealing with
a staggering drunk.

Heather Singleton, vice president of operations at the Rhode Island Hospitality
and Tourism Association, teaches the BarCode course, a four-hour, nationally
recognized program, to about 200 people each year.

Singleton said she explains how alcohol affects the body, how it gets into
the bloodstream, and how it can affect people under different circumstances
– even, for example, how stress can make someone more vulnerable.

She also explains the issue of liability, civil and criminal, and she offers
a range of tips, from how to spot early signs of intoxication, to how to count
the drinks a patron has consumed – a 16-ounce beer counts as more than a single
drink, for example, and so does a martini or a Long Island iced tea.

In addition, Singleton said, she covers strategies for cutting patrons off
and defusing difficult situations, and encourages bars and individual servers
to carefully document any incident, from a disturbance, to a minor who presents
fake ID.

Singleton also couldn’t cite any local stories of bars being sued, but she
said businesses are keenly aware of their potential liability, and some have
policies limiting how many martinis, for example, they’ll serve a single patron.
Servers themselves, she said, are also changing their behavior.

“What’s happening more and more,” she said, “is that servers and bartenders
are saying, ‘It’s not just the business that can be held liable, I can be held
liable if I make a mistake, or if I don’t do what I’ve been taught.’”