Jeffrey V. Hill Bodyfelt Mount LLP 707 Southwest Washington St. Suite 1100 Portland, Oregon 97205 (503) 243-1022 hill@bodyfeltmount.com LIQUOR LIABILITY I. Introduction Liquor Liability the notion of holding someone other than the drinker himself liable for injuries is no longer new. It did not exist as common law and it developed as an expansion of concepts of forseeability holding that it is foreseeable that a drinker will operate a car after drinking. The landmark case, Rappaport v. Nichols, 31 N.J. 188, 156 A2d 1 (1959), was decided in New Jersey in 1959. The Rappaport decision held that a party could be held liable in tort for selling alcohol to a minor or intoxicated person where the person subsequently caused injuries. The Rappaport decision was followed by others, in virtually every state, adopting or rejecting the rule that a party other than the drinker himself can be held responsible. The development of each state s law of liquor liability followed several overlapping courses. The courts of some states simply rejected Rappaport and adhered to the common-law rule that the drinker and not the server is the proximate cause of damage. Many other states followed, and in many cases expanded, Rappaport. Ultimately most, if not all, state legislatures adopted statutes affirming, denying, creating or eliminating liquor liability. The precise development of liquor liability of each state is unique. Most states have case law as well as statutory law setting forth the rules. Ultimately, a state either recognizes a cause of action for injuries to third parties based on service of alcohol to another, or it does not. If a state recognizes a cause of action for liquor liability, the questions then involve which drinkers can give rise to a claim to who and what are the standards of proof. Once liquor liability is established, it is typical that it include claims based on service to minors and intoxicated persons. Who exactly is an intoxicated person is usually determined with reference to a modifying adjective such as apparently, obviously, or visibly. Finally, states differ on whether liquor liability extends to social hosts or is confined to commercial sellers of alcohol. This paper will first briefly discuss the history of and decision in Rappaport. It will then present the law of Oregon as fairly typical of a state that recognizes a cause of action for liquor liability and as a vehicle to discuss some of the significant legal issues that PAGE 1
arise where liquor liability is recognized. Finally, it will present the rules applicable in the states of Florida, North Carolina, Texas, Virginia and Wisconsin. The fact patterns raising questions of liquor liability typically fall into one of three categories: (1) Off premises claims involving automobiles; (2) Off premises claims not involving automobiles, most typically violence after a patron leaves the premises; and, (3) On premises injuries. The rules vary, of course, by jurisdiction, but also by the type of case under consideration. Accordingly, to determine if the patron s conduct can subject the server to liability, it is necessary to consider the rules of the jurisdiction as well as those specifically applicable to the facts of the case. II. Common Rule: Generally No Liability Until 1959 Civil liquor liability did not exist as common law that is, neither the drinker nor his victims could bring a claim against the server for injuries caused by the consumption or overconsumption of alcohol. The usual rationale was that it was the drinking of alcohol, and not the providing of it, that was the proximate cause of intoxication and injuries to innocent third parties. A few states, with variations, allowed recovery to the spouse of a habitual drunkard who was willfully provided with alcohol. With that limited exception, prior to Rappaport v. Nichols, 156 A.2d 1 (N.J. 1959), sellers and providers of alcohol enjoyed virtual immunity for injuries to persons served alcohol or third parties injured by the conduct of intoxicated patrons. Rappaport v. Nichols is the first, extensively reasoned, case in the world of liquor liability. In Rappaport, the plaintiff alleged that a minor was served by a succession of taverns when he was apparently intoxicated. Following service of the alcohol, the minor caused a fatal accident. The trial court granted summary judgment for the taverns holding that it would stretch the intent of the [foreseeability] doctrine too far to hold taverns liable for the service of alcohol to others. The New Jersey Supreme Court extensively reviewed foreseeability cases from other jurisdictions, noted expanding notions of foreseeability as well as penal statutes prohibiting the sale of alcohol to habitual drunkards and intoxicated persons. The court effectively adopted a new common-law tort and determined that plaintiff could state a negligence cause of action based on injuries caused by third parties where the third parties served are minors or intoxicated persons. The court recognized the increased societal use of automobiles and the potential for patrons driving after consumption of alcohol. The court summarized the issue and its holding as follows: When alcoholic beverages are sold by a tavern keeper to a minor or to an intoxicated person, the unreasonable risk of harm not only to the minor or the intoxicated person but also to members of the traveling public may readily be recognized and foreseen; this is particularly evident in current times when traveling by car to and from the tavern is so PAGE 2
commonplace and accidents resulting from drinking are so frequent. [citations omitted] If the patron is a minor or is intoxicated when served, the tavern keeper's sale to him is unlawful; and if the circumstances are such that the tavern keeper knows or should know that the patron is a minor or is intoxicated, his service to him may also constitute common law negligence. In view of the standard of conduct prescribed by the statute and the regulations, a tavern keeper's sale of alcoholic beverages when he knows or should know that the patron is a minor or intoxicated may readily be found by the jury to be imprudent conduct. While the plaintiff here may introduce evidence that the defendants knew or should have known that Nichols was a minor, or intoxicated when served, and may avail herself of the violations of the statute and the regulations as evidence of the defendants' negligence, each of the defendants is at liberty to assert that it did not know or have reason to believe that its patron was a minor, or intoxicated when served, and that it acted as a reasonably prudent person would have acted at the time and under the circumstances. Rappaport, 156 A.2d at 8-9. This analysis and holding has been considered, and adopted or rejected, in virtually every jurisdiction in the United States. III. Oregon Rules of Liquor Liability The first Oregon decision on liquor liability is Wiener v. Gamma Phi, ATO Frat., 258 Or. 632, 485 P.2d 18 (1971). It involves the question of social host liability and the court held that a social host may be liable for injuries to third persons based on providing alcohol to minors and intoxicated persons whose behavior the host knows to be unusually affected by alcohol. Wiener, 258 Or. at 639. The Wiener court was influenced by the Rappaport holding but it was not until Campbell v. Carpenter, 279 Or. 237, 566 P.2d 893 (1977), that the Oregon Supreme Court expressly adopted the Rappaport rule. The Oregon Supreme Court stated: Under the rule of Rappaport, however, which we now adopt for application in such cases, a tavern keeper is negligent if, at the time of serving drinks to a customer, that customer is visibly intoxicated because at that time it is reasonably forseeable that when such a customer leaves the tavern he or she will drive an automobile. PAGE 3
Id. at 243-4. In 1979, the Oregon legislature created a statutory tort, in addition to the Campbell v. Carpenter adoption of Rappaport, based on the sale or furnishing of alcohol to minors and visibly intoxicated people. While Oregon liquor liability is now recognized by statute, Chartrand v. Coos Bay Tavern, Inc., 298 Or. 689, 696 P.2d 513 (1985), it s important for explanation of the theories available to a plaintiff for a claim based on liquor liability. Chartrand is a typical off-premises injury to a third-person following service to a visibly intoxicated patron. Plaintiff alleged three theories of liability: (A) Common-law negligence based on Rappaport, alleging service to a visibly intoxicated person under circumstances in which it was likely the patron would operate an automobile; (B) Negligence as a matter of law based on a violation of the civil liability statute prohibiting sale to visibly intoxicated persons; and, (C) Statutory tort based on a violation of the penal statute prohibiting sale of alcohol to minors and intoxicated persons. All three theories of liability remain available in Oregon. However, in the author s experience, the highest exposure and most prevalent cases are those with off-premise injuries involving automobiles, and plaintiff s easiest claim is the statutory tort claim. The elements of all three claims follow. A. Common-Law Negligence Claim This is simply a claim of common-law negligence. The plaintiff must plead and prove that the commercial or social host served alcohol to a minor or visibly intoxicated person and that the service caused foreseeable harm. If the harm was caused by operation of an automobile, plaintiff must prove that operation of the automobile was foreseeable at the time of service. Foreseeability is not presumed. If the injury does not involve an automobile, plaintiff must prove that it was foreseeable that the person would become violent or do whatever he did that caused the injury. Because Oregon now recognizes a statutory tort for off-premises injuries involving automobiles, the importance of the common-law negligence claim is, as a practical matter, limited to non-automobile cases. B. Negligence Claim Based on Violation of Penal Statutes Oregon criminal statutes prohibit the sale of alcohol to minors and visibly intoxicated persons. A tort claim is available for injuries based on a violation of the criminal statutes. This theory requires proof of foreseeability of the patron s driving or whatever caused the ultimate harm. C. Statutory Tort ORS 471.565 and 471.567 recognize a statutory tort for service of alcohol to visibly intoxicated persons and minors. The Oregon Supreme Court in Chartrand made clear that for claims based on the statutory tort, the rules of liability are relaxed and liability is effectively strict once prohibited service is established. The court stated in part: PAGE 4
[T]he risk and the potential harm to the plaintiff have already been foreseen by the lawmaker. The legislature by stating that a tavern owner will be held liable for the acts of a person who has been served alcoholic liquor while visibly intoxicated, resolved the foreseeability issue as a matter of law. Thus, a plaintiff protected by such a statute need not resort to any concepts of negligence. Negligence is irrelevant. The sole question is whether the defendant engaged in adcts prohibited by the statute and whether the violation of the statute resulted in injury. Chartrand, 298 Or. at 696. The Oregon Supreme Court in Chartrand specifically approved the following law review summary of proof and foreseeability issues in liquor case. Id. (citations omitted). The effect of dram shop legislation is to impose a degree of strict liability on the bar owner. The common law rule of proximate cause is statutorily altered to focus upon the vendor s sale, rather than the consumer s act of drinking the liquor. Such legislation, therefore, frees the injured party from the requirement of establishing negligence or fault on the part of the tavern owner. Similarly, the victim is not faced with overcoming the common law presumption of lack of foreseeability by the bar owner before civil liability can be imposed. IV. Specific Oregon Civil Liquor Liability Rules Found in Many States A. Notice of Suit Oregon s Civil Liquor Liability statute requires that plaintiffs give notice of suit well before the expiration of the statute of limitations. Death claims are subject to a requirement of notice within one year from the date the plaintiff discovers or reasonably should have discovered the existence of a claim. Notice is required within 180 days for non-death claims. The notice periods are tolled by minority and certain other disabilities. The statute provides various rules for the actual giving of notice. PAGE 5
B. Proof by Clear and Convincing Evidence The Oregon statute requires proof of certain elements by clear and convincing evidence. Plaintiff must prove by clear and convincing evidence both: (1) Service to a visibly intoxicated person or minor; and (2) That plaintiff did not contribute to the intoxication. V. Liquor Liability in Florida The general rule in Florida is very limited civil liability for serving alcohol. There are two exceptions: (1) For willfully and unlawfully providing alcohol to a minor; and, (2) For knowingly serving a person habitually addicted to the use of any or all alcoholic beverages. Fla. Stat. Ann. 768.125. Habitual drunkard liability applies only to bars, taverns, and other vendors who sell alcohol for consumption on premises, but does not apply to vendors who sell alcohol in closed containers for off-premises consumption. Additionally, while there is generally no social host liability in Florida, there are two exceptions to that rule: (1) The criminal Open House Party statute, Fla. Stat. 562.11, has been interpreted to create a cause of action in negligence per se against a private social host who provides alcohol to a minor for on-premises consumption when that minor injures a third party; and, (2) One court has concluded that an employer can be held negligent for failing to prevent an intoxicated employee from driving after consuming alcohol at a work meeting (although the employer cannot be held liable for serving alcohol). Carroll Aire Systems, Inc. v. Greenbaum, 629 So. 2d 914 (Fla. Dist. Ct. App. 1993). A person cannot recover for his own injuries in a civil action if, at the time plaintiff was injured, he was under the influence of drugs or alcohol to the extent that plaintiff s normal faculties were impaired or plaintiff had a blood or breath level of 0.08 percent or higher, and plaintiff was more than 50% at fault in causing his own harm. Fla. Stat. Ann. 768.36. VI. Liquor Liability in North Carolina In North Carolina, statutory civil liability exists for negligent service to a minor who drives while subject to an intoxicating substance. N.C. Gen. Stat. 18B-121. Plaintiff must prove that the sale or furnishing of alcohol was negligent under the circumstances, and there are a two special proof rules: (1) Sale or furnishing without requesting identification is deemed negligent as a matter of law; and, (2) Proof of good practices (such as employee training), evidence that the minor misrepresented his age, or that the sale or furnishing of alcohol was made under duress are evidence the sale was not negligent. Id. at 18B-122. Additionally, there are limits on who may recover, and against whom: A minor who consumes alcohol and is injured is not an aggrieved party who can recover for his own injuries under the North Carolina Dram Shop Act, Id. at 18B-120, and a plaintiff can recover from only certain permittees or local Alcohol Beverage Control (ABC) Boards. Id. at 18B-121 and 125. Civil liability to all aggrieved parties is capped at $500,000 per occurrence. Id. at 18B-123. Additionally, PAGE 6
under common-law negligence, a social host or a commercial may be liable for injuries to a third-party. Hart v. Ivey, 420 S.E.2d 174 (N.C. 1992); Estate of Mullis v. Dixon Monroe Oil, Co., 505 S.E.2d 131 (N.C. 1998). VII. Liquor Liability in Texas In Texas, a person may be liable for providing or selling alcoholic beverages to a person obviously intoxicated to the extent that he presented a clear danger to himself or others. Tex. Alco. Bev. Code Ann. 2.02. Although there is no general social host liability, an adult over 21 is liable for injuries caused by a minor under the age of 18 if (1) The adult is not the minor s parent, guardian or spouse; and, (2) The adult knowingly provided alcohol that contributed to the minor s intoxication. Id. Additionally, an intoxicated person can recover under the Dram Shop Act for his own injuries resulting from his own intoxication, Fay-Ray Corp. v. Texas Alcoholic Beverage Comm n, 959 S.W.2d 362 (Tex. App. Austin 1998), but comparative fault greater than 50% will bar his recovery, Smith v. Sewell, 858 S.W.2d 350 (Tex. 1993). VIII. Liquor Liability in Virginia Virginia does not recognize any form of dram shop liability. Williamson v. Old Brogue, Inc., 232 Va. 350 (1986). IX. Liquor Liability in Wisconsin In Wisconsin, the general rule is that there is no civil liability for sellers of alcoholic beverages. There are two exceptions that impose liability on commercial vendors and social hosts. First, a person may be liable for causing consumption by force or representing that the beverage contains no alcohol. Wis. Stat. 125.035. Second, a person may be liable for supplying alcohol to a minor if supplying alcohol was a substantial factor in causing injury to the third person. It is a defense to liability for supplying alcohol to a minor that: (1) The minor represented they were legal age; (2) The minor showed documentation of his/her age; (3) The alcohol provider relied on that representation; and, (4) The appearance of the minor was such that an ordinary and prudent person would believe he/she was of legal age. Id. An intoxicated person cannot recover for his/her own injuries. Anderson v. American Family Mut. Ins. Co., 655 N.W.2d 531 (Wis. App. 2002). PAGE 7