Liquor Liability Cases FAQ
Against whom may a claim be brought?
A: Essentially, any entity licensed to sell intoxicating beverages at retail is subject to claims under the Civil Damages Act. It does not matter whether the entity is licensed for on-sale, off-sale or is operating under a temporary permit. Bars, liquor stores, clubs, bowling alleys and restaurants all fall within the purview of the CDA. If the lawsuit is commenced under the CDA, it needs to be commenced against the liquor licensee. The name of the bar does not necessarily correspond to the name under which the license was issued. The license might have been issued to an individual who then is “doing business as” whatever the name of the bar happens to be. It might also be that the licensee is a corporation with a name that is different than the name under which it operates the associated bar. Much of the information that is necessary to determine who is the actual licensee is available online. It is always best, however, to request this information directly from the authority that issued the license. This could be a city, county or another entity. The CDA has been held inapplicable to an employer who furnished alcohol to employees at an office party as well as to private individuals who charge to get into a party but who are not commercial liquor vendors. This does not, however, mean that in all instances a private party will have no civil liability for the furnishing or sale of alcohol. The liability of a private party for selling or furnishing alcohol is commonly referred to as “social host” liability. Below you will find a chapter on social host liability that discusses this issue in more detail.
Does there have to be an actual “sale” of alcohol?
A: The Civil Damages Act as first enacted in 1911 was interpreted to provide a cause of action by one injured by an intoxicated person against any person, whether or not a liquor vendor, who illegally sold or gave intoxicating liquors to the intoxicated person. However, in 1977, the legislature amended the statute by removing the word “giving” from the statute, so a violation of the act now had to be based on the illegal “selling” or “bartering” of alcohol. In 1985, the act was repealed and replaced, and the term “bartering” was removed, so the only remaining viable cause of action had to arise from the illegal “sale” of alcohol. In one case, the appellate courts did hold that a firefighter’s relief association had “sold” alcohol to an obviously intoxicated person within the meaning of the CDA when it charged the person an admission fee to its dance, sold beer tickets to him and later furnished alcoholic beverages to him when he was obviously intoxicated. Technically, the sale was made at the time the tickets were purchased, but the court was not going to allow this kind of argument to circumvent the purpose of the law. The Minnesota Supreme Court has also held that the sale must be made by a commercial liquor vendor and not a private entity. The court reasoned that commercial liquor vendors are in the business of selling liquor for profit whereas private parties generally are not.
Is the liquor establishment required to have insurance?
A: Good news, well sort of. The good news is that liquor liability insurance (or an equivalent bond) is required. The reason I say that the good news is “sort of” good news is because in my opinion the minimum limits required are insufficient because most liquor liability claims involve either very serious injury or death. In any event, as a condition to receiving or renewing a liquor license, a liquor establishment must provide to the authority issuing the license proof that it has in place a policy of liquor liability insurance that provides at least the following types and minimum limits of coverage:
- $50,000 of coverage because of bodily injury to any one person in any one occurrence, $100,000 because of bodily injury to two or more persons in any one occurrence
- $10,000 because of injury to or destruction of property of others in any one occurrence
- $50,000 for loss of means of support of any one person in any one occurrence, and $100,000 for loss of means of support of two or more persons in any one occurrence
Unfortunately, the law also allows a liquor liability insurer to limit its entire exposure for a one-year period to $300,000. That means that if there are multiple occurrences within a given year, the $300,000 aggregate limit could be reached and paid out and no insurance funds would remain available for payment of the other claims that arose during the one-year policy period. Smaller bars typically carry only the required statutory minimum coverage. In my experience, larger bars typically carry per occurrence limits of $300,000 to $500,000. Understand that the bar’s liability is not limited to the amount set forth in the statute. The bar is responsible for all damages regardless of the amount. The law only specifies the minimum limits of insurance coverage that must be carried and does not specify the maximum liability of the bar itself. The law requires a liquor liability insurer to give notice to the authority that issued the liquor license of its intent to cancel the insurance policy. If the reason for cancellation is something other than the failure of the bar to pay the insurance premium, 30 days’ notice of cancellation is required. If the reason for cancellation is nonpayment of the insurance premium, only 10 days’ notice is required. Your author was recently successful in forcing a liquor liability insurer to reinstate the policy of insurance and pay a liquor liability claim involving a death because the insurer had canceled the policy without giving the requisite notice to the county auditor, who had issued the liquor license. The purpose of the notice requirement is to allow the licensing authority reasonable opportunity to pull the liquor license of the offending bar for failure to comply with the statutory insurance requirement. The issuing authority and law enforcement will then be able to monitor whether the bar tries to sell alcohol before it gets an insurance policy reinstated.
What are the legal elements of a liquor liability claim?
A: To be successful in proving a claim in a civil action under the Dram Shop Act in Minnesota, a plaintiff must prove:
- That there was a sale of alcohol in violation of a provision of Minnesota Statute Chapter 340A (the so-called “illegal sale” requirement)
- That the violation was substantially related to the purposes sought to be achieved by the CDA
- That the “illegal sale” was a cause of the intoxication of the person to whom alcohol was illegally sold
- That the intoxication caused by the illegal sale or sales was a cause of the incident that injured the plaintiff
The foregoing are the four criteria that have been set forth by the appellate courts in Minnesota. It is a little bit deceiving because some of the criteria actually contain more than one element of legal significance. For example, the “illegal sale” requirement actually requires that the dram shop does something in violation of the law, such as providing alcohol to a minor, and that the alcohol provided is provided via a “sale.”
What constitutes an “illegal” sale?
A: The sale of alcohol to a minor or to an obviously intoxicated person are the types of sales that usually immediately come to mind as being “illegal.” While these are no doubt the most common forms of illegal sales, they are by no means the exclusive ways in which a sale can be illegal. Selling alcohol after hours, to someone who is not a bona fide guest of a club, or on days the bar is not licensed to sell alcohol (Sundays) are also considered illegal sales. Each form of illegal sale will be addressed individually.
Sale for the use of an obviously intoxicated person
Minnesota law provides: No person may sell, give, furnish or in any way procure alcoholic beverages for the use of an obviously intoxicated person. Juries are instructed that a person is “intoxicated” when, as a result of drinking alcohol, they have lost control to any extent of their mental or physical faculties and that a person is “obviously intoxicated,” if the intoxication is or should be reasonably evident to another person using the usual powers of observation. Thus, “obviously intoxicated” does not mean extremely intoxicated. It simply means that signs that the person’s mental or physical faculties have been affected are present. Whether a person was obviously intoxicated at the time of service is a question of fact that is to be decided by the jury. As you can imagine, one person might believe that an individual is obviously intoxicated while another does not. A seasoned drinker could have a very high blood alcohol content, because of the tolerance that has been built up, but not be showing obvious signs of intoxication. The Minnesota appellate courts on more than one occasion have held that blood alcohol content in and of itself is insufficient to prove obvious intoxication. It is necessary, therefore, to find witnesses who can testify about the signs of intoxication that were being shown at or before the time the alleged illegal sale was made or prove the obviousness of the intoxication in other ways.
Sales after hours or on prohibited days
The hours during which and the days on which intoxicating liquor can be sold is regulated by statute but is also subject to further sales to minors. Sales of alcohol to minors (persons under the age of 21 years) is an illegal sale in and of itself and does not require that the minor be obviously intoxicated at the time of the sale. Thus, a sale to a minor will result in civil liability if the minor consumes the alcohol and the effects of the alcohol are a substantial contributing factor to the cause of an ensuing collision or another event. The law provides that the following forms of identification may be accepted by a liquor establishment as proof that a person is 21 years of age or older: (1) A valid driver’s license or identification card issued by Minnesota, another state, or a province of Canada, and including the photograph and date of birth of the licensed person; (2) A valid military identification card issued by the United States Department of Defense;(3) A valid passport issued by the United States; or (4) In the case of a foreign national, by a valid passport. That a liquor establishment relied in good faith on one of these forms of identification is a defense to an illegal sale allegation based on age. Relying on an obviously forged identification document would not, of course, constitute “good faith.” Note: This section did not address the instance when someone other than a liquor establishment sells alcohol to a minor. This issue is discussed below in the Social Host chapter. Generally, on-sale sales of liquor are limited to Monday through Saturday 8 AM until 2 AM. Off-sale sales of intoxicating liquor are generally limited to Monday through Saturday 8 AM until 10 PM and may not be made on Thanksgiving Day, Christmas Day or after 8 PM on Christmas Eve. There are many exceptions, such as for restaurants, hotels etc., but these are the general parameters. The sale of alcohol outside the hours or days that a liquor licensee is licensed to sell is considered an illegal sale. It is not necessary that the sale be made to an obviously intoxicated person. It is the sale outside the hours of operation for which the establishment is licensed that makes the sale illegal. Again, the consumption of the illegally sold alcohol must lead to a state of intoxication sufficient that the intoxication can be said to be a substantial contributing factor to the subsequent conduct that causes harm – typically a car accident.
Late Happy Hours
A potentially additional basis to declare a sale “illegal” may be emerging. Some bars have decided that it is a good idea to have a late “Happy Hour” as well as an early one. They are running drink specials between the hours of 11 PM and closing. Some municipalities have gotten wind of these practices and enacted ordinances prohibiting these late-night drink specials. Whether the courts will interpret a violation of such ordinances to constitute an illegal sale remains to be seen.
Sales to nonclub members
The legislature has provided for the licensing of certain clubs that meet the following criteria to sell intoxicating liquor: Clubs or congressionally chartered veterans organizations with the approval of the commissioner, provided that the organization has been in existence for at least three years and liquor sales will only be to members and bona fide guests, except that a club may permit the general public to participate in a wine tasting conducted at the club under section 340A.419; The sale of alcohol by a club to a patron who is neither a member of the club nor a bona fide guest of the club or a club member is an illegal sale. Again, it is not necessary that the person be obviously intoxicated at the time this sale is made. Rather, it is only necessary that the effect of the consumption of the alcohol be a substantial contributing factor in an ensuing accident that causes harm. The legislature has not provided guidance with regard to what constitutes a “bona fide guest.” In one case where the club patron came into the club alone, sat alone, did not sign the club guestbook and was known by the bartender not to be a member of the club, it was held as a matter of law that the patron was not a bona fide guest.
What damages may be recovered?
A: Property damage is one of the types of damage for which a liquor establishment can be held responsible. The law typically breaks property down into “personal property” and “real property.” Personal property would consist of movable items such as your car, household and personal belongings. Real property consists of real estate and those things (such as houses and buildings) that are considered permanently affixed to the real estate. The liquor establishment can be held responsible for damage to either type of property. In my career, I have handled several cases where substantial damage (including a total loss) has been caused to residential dwellings when an intoxicated driver ran off the road after leaving a bar.
Bodily injury damages are damages that compensate for injuries suffered to a person’s body and the consequences of those injuries. They consist of the following:
- Medical expenses – These are expenses that are incurred for treatment rendered to cure and relieve from the effects of an injury. “Medical” is construed broadly to include care rendered by a medical physician, dentist or another dental-related professional, physical therapist, chiropractor, massage therapist and a host of others using various treatment modalities. The cost of prescription medication and even over-the-counter medication can be included. Medical expense damages include medical expenses that have been actually incurred as well as those that are recently certain to be incurred in the future.
- Waged loss – This would include lost earnings from a job, lost earnings from self-employment, lost benefits, and loss of income from secondary vocations, hobbies, etc. When a person is self-employed, the analysis becomes much more complicated. If the self-employed person simply hires somebody to do the work he or she would have done during the period of disability, then the calculation is fairly simple. Assume, however, that the injured person cannot be replaced in the business, and so the business is either reduced or does not continue to operate until the injured person is able to return. How should losses be measured in this instance? Should it be by comparing actual pre-injury net profit to post-injury net profit? How about pre-injury gross income to post-injury gross income? The answer is really somewhere in between. Most self-employed businesses have what are known as “fixed costs.” These are costs that continue whether or not the business operates. Rent, liability insurance, etc. are examples. Most businesses also have what are known as “variable costs.” These are costs that vary with the amount of business that is being done. For example, the amount of fuel purchased by an over-the-road trucker is directly related to the truck being on the road. If the truck is parked during a period of disability, the trucker is no longer incurring the fuel expense and it would, therefore, be improper to include this as an item of loss.
Matters can even get more complicated with other types of employment. A commissioned salesperson may continue to receive residuals and commissions based on sales made before injured. When the salesperson returns to work, however, income might be substantially reduced because new commissions and residuals were not being produced during the period of disability.
- Pain and suffering, and disability – Although these three items of damages appear together on the verdict form and the jury puts in one sum of money to represent all of these damages, they are in reality very separate concepts. Pain is the physical pain that a person endures as a result of an injury, part of which might be from undergoing various medical procedures. Suffering is the emotional component to pain and disability. Emotional suffering that occurs because of the anticipation of pain is one example. Emotional suffering that occurs because one is not able to do what they normally did is another form. Take for example a quadriplegic who might not actually be suffering pain but is confined to a wheelchair and forced to watch his friends do such things as run, play volleyball or engage in any other normal activity. You can imagine the emotionally crushing feeling of not being able to do the things you formally did. That is suffering. Disability is the inability to engage in normal activities. The law recognizes that this is a loss. Although not specifically mentioned, the loss of the quality of one’s life that was enjoyed, pre-injury is considered part of these concepts, and I find it easier to think in those terms.
- Loss of future earning capacity – This is the twin brother to lost earnings, but they are not identical twins. Loss of future earning capacity is a concept that recognizes that when a person suffers a permanent injury that permanently reduces their physical capabilities or mental capabilities, the person’s ability to find and maintain employment in the future has been compromised. This is true even if the injured person has returned to the same pre-injury employment. The law recognizes that should this person ever lose their job, it will be much more difficult to find another job because of the reduced physical or mental capabilities. Take for example somebody who works at a desk in a very sedentary job but has the physical capability to do very heavy physical labor. If this person were to lose his job, they could go to work as a logger, as a construction worker or in any number of heavy-duty occupations. If this person has, however, suffered a permanent injury to the lower back and is no longer capable of doing jobs that fall into the heavy-duty category, the number of jobs available for this individual will have been reduced quite substantially. It might even be that the individual would need to be retrained through either a course of vocational education or formal college education in order to be employable at an earnings level comparable to that enjoyed before injury. The law recognizes this as an element of damages. Determining what is fair compensation in this regard is difficult to say the least. It is one of the tasks that falls on the shoulders of the jurors.
- Disfigurement – Disfigurement is anything that impairs the normal physical appearance of a person. Scarring is the most obvious example. Like pain and suffering, it is very difficult to quantify but obviously very significant to the person who has the disfigurement. Juries are called upon to determine what is fair value for the fact that a person must go through life with the disfigurement.
Loss of means of support: Juries are instructed that “loss of means of support” means that “a person’s means of support has been damaged when the usual source of support has been lost or reduced.” And they are instructed to consider the following factors with respect to the injured person:
- Health, age, habits, talents and success
- Life expectancy
- Past earnings
- Likely future earnings
- Prospects of the person bettering themselves had the person not been injured
- Contributions in the past
- Likely future contributions
Appellate decisions interpreting the concept of “loss of means of support” have held that to recover loss of means of support, a plaintiff must demonstrate that as a result of the wrongful acts complained of the plaintiff’s standard of living or accustomed means of maintenance has been lost or diminished such that they have been reduced to a state of dependence by being deprived of the support which was previously enjoyed. In the development of a claim for loss of means of support, considerable work must be done to measure the contributions made by the injured person before injury and compare those contributions to those that are being made, if any, after injury. Of course, in the event of death, it is obvious that no ongoing contributions are being made. In the event of death, however, it is necessary to determine the value of the decedent’s “consumption.”
Since the decedent consumed some of what they earned and that consumption is no longer an ongoing expense, it needs to be deducted from the future contributions that were expected from the decedent.
Other “pecuniary” loss: In non-liquor liability personal injury claims, a spouse may recover for the “loss of consortium” resulting from injury to the other spouse. Consortium is considered the services and companionship a spouse would have received in the usual course of married life from the other spouse. Children, parents, grandparents, etc. have no claim for loss of consortium. (Although the Minnesota Legislature is currently considering allowing claims on behalf of children with respect to their injured parents and parents with respect to their injured children). In the context of a wrongful death claim, the heirs and next of kin of the decedent are entitled to recover for “pecuniary” losses. Pecuniary losses are considered to include counsel, guidance, advice, comfort, assistance, companionship and protection the decedent would have provided had they lived. The CDA specifically allows recovery for pecuniary losses suffered even if a death is not involved.
This is unique. In dram shop actions, pecuniary loss is defined the same as it is in a wrongful death action and includes the elements listed above. Measuring the value of pecuniary loss is, as you might guess, extremely difficult. That is because we are measuring things that have no readily ascertainable market value like real and personal property, medical expenses, wage loss and other forms of losses. Pecuniary losses are the real stuff of life, and jurors are as well equipped to determine their value as anybody. Note: When the occurrence giving rise to liability under the CDA is a motor vehicle accident, additional benefits will most likely be available to the injured person and, in the event of death, to the injured person’s family. These benefits are available under any motor vehicle insurance policy that is applicable to the crash. Generally the benefits will include $20,000 in medical expense benefits; $20,000 in wage and other economic loss benefits; $20,000 in the survivor’s economic loss benefits payable to or for the benefit of those who were dependent upon the decedent; the survivor’s replacement services benefits totaling $20,000; and a $2000 funeral benefit.
What is liquor liability, and why does it exist?
A: Minnesota has enacted what is known as the Civil Damages Act (CDA). In essence, for the privilege of receiving a license to sell alcohol for profit in the state of Minnesota, a corollary responsibility is placed upon the liquor licensee to either not sell or stop selling alcohol to a person when that person is showing obvious signs of intoxication. If the liquor establishment sells alcohol to a person who is in an obviously intoxicated condition and the consumption of that alcohol increases the level of intoxication, and the level of intoxication is then a cause of harm (usually via a motor vehicle crash), the liquor establishment can be held responsible to certain individuals who suffer harm as a result.
Who is entitled to bring a claim?
A: This area of the dram shop laws is very interesting. It is interesting because it deviates quite substantially from general personal injury and wrongful death law. The differences relate primarily to who may bring a claim and the types of damages that can be claimed by the persons entitled to bring a claim. We will look at each category of claimants separately. What damages each category of claimant may recover is addressed in the chapter on damages.
Persons injured by the intoxicated person: Anybody who is injured by the intoxicated person to whom alcohol was illegally sold has a claim against the liquor establishments that made the illegal sales. There is, of course, always a claim against the intoxicated person for their own negligence. The claim against the intoxicated person and responsible liquor establishment is for damage to property you own and for injury to yourself physically, commonly referred to as “bodily injury” or “personal injury.”
Family members of the person injured by the intoxicated person: Family members of a person injured by the intoxicated person also are entitled to bring a claim against the responsible liquor establishments. This claim will be for loss of the means of support that had been provided by the injured person and for any pecuniary loss. The concepts of loss of means of support and pecuniary loss are discussed in more detail in the chapter on damages.
Not the intoxicated person! It is commonly believed by the public that the intoxicated person is entitled to bring a claim against the responsible liquor establishments. In fact, several years ago, a letter to the editor appeared in our local newspaper railing against such and calling on people to take personal responsibility. I immediately wrote a reply that informed the public that what the writer thought was the law was not the law and in fact never had been the law in the state of Minnesota and further indicating that this was a common misunderstanding of the lay public that needed to be corrected. Unfortunately, the newspaper never published my letter, leaving the misperception firmly planted in the minds of those who had read the initial letter. The intoxicated person simply does not have a claim against a dram shop for injuries suffered as a result of their own intoxication.
Family members of the intoxicated person: Although the intoxicated person does not have a claim against a liquor establishment for injuries suffered as a result of their own intoxication, the family members of the intoxicated person do have a claim for the losses they suffer because of the injuries suffered by or the resulting death of the intoxicated person. When you think about it, it makes some sense. The legislature is seeking not only to protect other motorists using the highway in common with the intoxicated driver but also to protect the spouse and family waiting at home and those who depend on the intoxicated person for support.
Others: This is where the dram shop laws get really interesting. The state of Minnesota does not recognize common-law marriage. In the personal injury context, it also affords no rights to the significant others, grandparents, siblings or others of an injured person to recover for losses they might have suffered as a result of the injury. Likewise, the significant other has no claim that arises from the death of the companion.
The dram shop law, however, provides that: A spouse, child, parent, guardian, employer, or another person injured in person, property, or means of support, or who incurs other pecuniary loss by an intoxicated person or by the intoxication of another person, has a right of action in the person’s own name for all damages sustained against a person who caused the intoxication of that person by illegally selling alcoholic beverages. This represents a dramatic statutory expansion of rights in the dram shop context that simply do not exist with common law personal injury claims.
A fiancée and the daughter of the fiancée have been held to qualify as “other persons” under the dram shop law and, therefore, entitled to bring a claim for their losses. An ex-wife of many years who lived and worked with the ex-husband was found to be entitled to recovery under the CDA. Claims on behalf of guardians and employers will not be addressed.
Simply be aware that such claims do exist. Note: In Minnesota, wrongful death claims must be brought by a “trustee” who is appointed to act on behalf of all of the heirs and next of kin of the decedent. The heirs and next of kin who are not entitled to each bring a claim in their own name. This is not the case in the event that a death results from an illegal sale of alcohol by a liquor establishment. Claims under the CDA must be brought in the name of the individual who has suffered loss. This is true even if the individual who has suffered loss is a minor.
Often it is the case that a claim exists against the drunk driver whose driving conduct caused the death and the bar that served the drunk driver. In that instance, a trustee will bring the claim against the drunk driver on behalf of the heirs and next of kin of the decedent while the dependents of the decedent will individually bring their claims against the liquor establishment. These lawsuits are often combined, but it is necessary that each claim be brought by the proper party.