Dram Shop Law Primer
Once, during Prohibition, I was forced to live for days on nothing but food and water.
~ W.C. Fields
Prohibition may be a thing of the past, but the government’s reign over the control of “spirituous liquors” is far from over. Title 4 of the Arizona Revised Statutes, Alcoholic Beverages, addresses Arizona laws regarding the sale, distribution, and furnishing of alcohol. Those who furnish alcohol to others fall into two major categories: licensees and social hosts. If you want to sell alcohol at an event or as a bar or restaurant owner, you must obtain a license to do so, and must abide by certain rules and regulations that the State has prescribed for licensees. Most of us are social hosts, providing alcohol to our guests when we entertain. Social hosts are far less encumbered by the laws governing alcohol, but they should still act responsibly and using good judgment.
Licensees: With Privilege Comes Responsibility
In 1956, our Supreme Court stated: “A license to sell spirituous liquors is in the nature of a privilege granted pursuant to the police power of the state; no one has an absolute right to the issuance of such a license, but on the contrary must conform to the standards prescribed by statute in order to qualify for one.”
Arizona statutes make it illegal for a licensee to sell alcohol to a minor or to serve alcohol to an intoxicated person. The consequences of either could be severe: the licensee will be liable for any property damage and personal injuries—including injuries the intoxicated person may cause to himself– as a result of being overserved. Moreover, if an overserved patron causes a death, whether of another or his own, the decedent’s family may bring a wrongful death suit against the licensee who overserved him. Liability is limited to those who have control over the sales, service, furnishing or supplying of alcohol, so a landlord or owner of property that exercises no control over operations cannot be held liable. Similarly, an individual or organization who hires a licensee to cater and serve alcohol will not be held liable for any resulting injury or damage, so long as the hiring party is merely associated with the licensee but not controlling the sales, service, furnishing or supplying of alcohol by the licensee.
The Arizona Court of Appeals has observed that only those who actually dispense liquor are in a position to gauge the age or state of intoxication of a customer. Generally, this would mean the employee of the licensee. Licensees must ensure servers and service staff have adequate training to recognize and address age and intoxication issues. Licensees must be sure to train staff to check IDs, save copies of the IDs of those who appear to be minors, know the signs of intoxication, and monitor the amount a patron is drinking.
Because the entity that holds the liability for overserving is the licensee, organizations that host fundraising events can escape liability by hiring a licensed caterer or bartending service to provide and serve alcohol. If an organization chooses to obtain a license to sell alcohol for its events, it should be extremely mindful of the rules and responsibilities of doing so and should ensure any staff serving alcohol is well-trained in survelling and serving. Moreover, any licensed entity that sells alcohol should be sure to acquire the appropriate insurance to protect the entity should liability occur.
While Arizona law forbids serving alcohol to an “obviously intoxicated” patron, such an assessment is subjective. Courts have interpreted this law to extend liability to licensees who have served a patron a sufficient number of alcoholic drinks that the licensee knows or should know the patron is intoxicated, even if the patron is not outwardly showing signs of drunkenness. Monitoring the number of drinks consumed by a patron is thus essential to avoid overserving. The enactment of the Smoke-Free Arizona Act adds another wrinkle. Patrons who wish to smoke on a licensee’s premises are often seated in an outdoor area. The outdoor area may be away from the bar and with less surveillance by the service staff. Licensees should be careful not to overlook the age, behavior, and consumption of all their patrons, including those sitting in outdoor seating where monitoring may be more difficult.
Social Hosts: Use Your Best Judgment
In contrast to licensees, social hosts–including employers–are not liable for injuries caused by a guest to whom they served or furnished alcoholic beverages. Arizona law clearly states that a person other than a licensee, or an employee of a licensee acting during the employee’s working hours or in connection with such employment, is not liable in damages to any person who is injured, or to the survivors of any person killed, or for damage to property, which is alleged to have been caused in whole or in part by reason of the furnishing or serving alcohol to a person of the legal drinking age. The social host’s immunity from liability ends, however, where the social host serves to a minor. The social host must be careful to not serve to underage drinkers.
Employers who host an employee function are not liable for injuries caused by an intoxicated employee to others or to the employee himself if the employee drinks too much at the company picnic or Christmas party…UNLESS the employee is under 21 years of age. On the other hand, if an employee consumes alcohol and is injured on the job due to an inherently dangerous condition of employment, the employee will be eligible for workers’ compensation benefits.
While Arizona law previously denied eligibility for workers’ compensation claims where alcohol may have played a role, this was deemed unconstitutional in 2006 in Grammatico v. Industrial Com’n. In Grammatico, our Supreme Court approved the Arizona Court of Appeals ruling stating:
We cannot ignore that our constitutional system for workers’ compensation requires the payment of benefits if a necessary risk or danger of employment partially caused or contributed to an industrial accident, without consideration of any fault by the injured employee. Thus, unless and until the constitution is changed, the legislature cannot abrogate claims for workers’ compensation for injuries wholly or partially caused or contributed to by necessary employment risks or dangers solely because an employee fails to pass … a drug or alcohol test.
If an employee is injured on the job after having consumed alcohol at an employer-sponsor event, it could be argued that the employer contributed, caused, or exacerbated a dangerous condition by contributing to the employee’s intoxication. The best practice is to ensure that employees do not return to work after having attended an employee-hosted event where alcohol is served.
Although Arizona law does not require social hosts to monitor drinking or stop serving those visibly intoxicated, we should be driven by our common sense and courtesy to those in our community when acting as a social host to ensure that alcohol is not abused and that we use designated drivers for social events involving alcohol.