Kirk Willis Kirk Willis

PartnerPartnerPRESENTSPRESENTS

Dram Shop Dram Shop Liability for Liability for AdjustersAdjusters

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Kirk Willis Kirk Willis

PartnerPartnerPRESENTSPRESENTS

Dram Shop Dram Shop Liability for Liability for AdjustersAdjusters

From From

A to ZA to ZApril 28, 2005April 28, 2005

When it’s all on the lineWhen it’s all on the line

TEXAS PROPERTYTEXAS PROPERTYCASUALTY CASUALTY INSURANCE INSURANCE GUARANTY GUARANTY

ASSOCIATIONASSOCIATION

FOR THE PLEASURE OF

EL CHICO – Landmark Decision

Slows reaction

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Alcohol distorts perceptionImpairs motor skills

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

“An alcoholic beverage licensee owes a duty to the general public not to serve alcoholic beverages to a person when the licensee KNOWS OR SHOULD KNOW the patron is intoxicated.”

TEXAS’ MODERN DRAM TEXAS’ MODERN DRAM SHOP ACTSHOP ACT

Created June 11, 1987 under emergency provision

“Legislative purpose of DRAM shop – Protection, welfare, health, peace, and safety of the people in the state

Providing, selling, or serving an alcoholic beverage may be the basis for statutory cause of action under section 5.01.

TEXAS MODERN DRAM TEXAS MODERN DRAM SHOPSHOP

At the time of service of alcohol, it was obvious that the patron was intoxicated

The intoxication of the beverage

proximately caused the damages suffered

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

“Provider” means a person who sells or serves an alcoholic beverage under authority or license or permit issued under the terms of this code or who otherwise sells an alcoholic beverage to an individual.

Providers

Does compensation always have to be

in dollars$$?

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Server providing alcohol should have known the person was a clear danger to himself or others; and

The intoxication of recipient was the cause of damage.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Corporate concealment (wink, wink)

Single business enterprise and alter ego

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Single Business Enterprise “Test”

Common employees;Common officers; Centralized accounting;Payment of wages by one corporation for other employees; Common business;Employees rendering services for both corporations;Document;Transfer of funds; Unclear allocation of profits between corporations.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Social Host Protected:

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Know how much consumer had prior

Too many people

Not skilled – may not be apparent

Social Host – Relative to minors??

Ability to marry; Ability to vote;Ability to contract; Penal violations; Capital punishment; and Service in military

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Lessor of real property was as a matter of lawNot a provider of alcoholic beverages

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Landlord/Lessors

HYPOTHETICAL QUESTIONKISS 106Leases PlaceRequires club activityLessor has to approve live entertainment

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Can a distributor be held liable under the Texas Dram Shop Act?

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Objective Standard of liability The standard under the Texas Dram Shop Act

requires proof that it was APPARENT TO THE PROVIDER that the individual being sold, served, or provided with an alcoholic beverage was OBVIOUSLY INTOXICATED to the extent that he presented a CLEAR DANGER.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

B1: Apparent to the provider

B2: Obviously intoxicate

B3: Clear Danger

Know how much consumed priorToo Many PeopleNot Skilled

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Social Host

ApparentObviousClear Danger

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Liability Under Texas Dram Shop Act

Police Testimony at SceneExpert LinkCredit Card Recipient

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Evidence at Trial

Amount Woman DrankWoman Tried to Start Car with CoinAccident 20 minutes LaterExpert Link-up

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Bruce v. KKB

If the intoxication of the recipient was the cause

Rather than the conduct of the Provider

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Proximate Cause

Jury must be asked

Skipper CaseBottomless Pit CaseSouth Dallas Club Case

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Foreseeability

Protection of MinorsTreatment by the CourtClub Corp of America

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Sales to Minor

False Representation by MinorFake IdentificationApparent Valid Texas Drivers LicensePhysical Appearance

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Defenses to Claims by Minors

Employer requires its employees to attend a commission approved seller training program.

The employer has actually attended. Employer has not directly or indirectly

encouraged violation.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Defenses to Dram Shop

Texas Servers Training Act – “Safe Harbor” Provision

Install Cameras Employee Report Repeaters Address the failure of non-

report.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Encourage Discouragev Knowing employees are not

looking for good identification. Waitress check the

identification. Make sure person ordering,

indeed, drinks them. Have written guidelines. Meetings on guidelines. Owner not addressing problem.

No Punitive DamagesNo Criminal Acts

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Defenses Against Punitives

OtisLove v. Houston, Inc.

TEXAS DRAM SHOP ACTTEXAS DRAM SHOP ACT

Special Relationships

Employer/Employee

THANK YOU!