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![Wisconsin Lawyer: August 2000](/SiteCollectionImages/WisconsinLawyer/wlogo.jpg) |
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Vol. 73, No. 8, August 2000 |
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Another Look at
Dram Shop Liability
Dram Shop Liability in Other States
The majority of other states also have enacted some form of
dram shop liability (see accompanying chart).
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There are varying degrees to which these states hold liquor vendors
and social hosts liable, depending upon the specific state statute.
For example, Minnesota's dram shop law is broader than Wisconsin's
in that it allows victims to initiate claims against vendors
for injuries resulting from the service of intoxicating beverages
to either an adult or underage patron.21 An
unrestricted approach such as this affords victims the best opportunity
to fully recover their losses. However, critics of this approach
claim that it places too great a financial burden upon vendors,
which ultimately could result in the closure of many businesses
that either cannot afford expensive insurance premiums or that
are found liable for large judgments.22 An
additional concern raised by critics is that this approach unnecessarily
relieves adult drinking drivers of taking full responsibility
for their actions.23
Other
states, such as Michigan, have taken a more limited approach to dram
shop liability and allow claims against a vendor only when the party
who caused the injury was either obviously intoxicated or underage.24
The underlying basis for this restriction is that when a vendor serves
an underage or obviously intoxicated patron, the resulting danger is
foreseeable and, therefore, as a matter of social policy, vendors who
serve such persons should be held responsible for injuries those patrons
cause to others. This approach has slightly more coverage than Wisconsin's
because it allows claims against at least some vendors who have served
intoxicated adult patrons.
The Illinois dram shop statute demonstrates another more restricted
form of dram shop liability. Under the Illinois statute, the
amount of damages vendors are required to pay is limited to a
specific dollar amount.25 The strongest rationale
for caps on damages in dram shop cases is likely to revolve around
issues of the availability and affordability of liability insurance.
An additional justification is based on the issue of fault; that
is, while the vendor is at least partially responsible for the
victim's injury, the major share of the blame should be
placed upon the drinking driver. Accordingly, the vendor liability
is capped to reflect the reduced significance of that defendant's
fault. Although the Illinois statute is more expansive than Wisconsin's
because vendors can be held liable for serving either minor or
adult patrons, the cap placed on damages clearly reduces the
significance of recovery in either situation.
Similar to Wisconsin, both Minnesota and Michigan limit social
host liability to persons who serve alcoholic beverages to underage
drinkers.26 In contrast, Illinois does not
allow claims against social hosts at all.27
As previously mentioned, social host liability often is more
limited than vendor liability due to the overriding concerns
that social hosts have neither the expertise to monitor the alcohol
consumption of their guests nor the insurance to adequately cover
potential liability.
Although there are legitimate justifications for the restrictions
each state chooses to place upon dram shop recovery, it is important
to remember that it is the victim who must absorb the cost of
these limitations. From a victim's perspective, the most
significant weakness in Wisconsin's dram shop statute is
that it does not allow the victim to obtain damages from either
vendors or social hosts when an intoxicated adult has caused
the injury. Although the victim still has a claim against the
drunk driver, as previously mentioned, drunk drivers often have
difficulty fully compensating crash victims' losses. The
potential for under-compensation becomes even more significant
when the victim is seriously or permanently injured. The more
seriously injured victim is more likely to have substantial hospital
costs and significant lost wages, as well as ongoing medical
expenses. Further, if a victim dies and is the primary wage earner,
the victim's family may be left with insufficient funds
to care for themselves in the future.
An Innovative Alternative Approach
Paul LeBel, professor of law at the College of William and
Mary, has fashioned an innovative alternative approach to traditional
dram shop liability.28 LeBel proposes that
state governments set up a supplemental compensation fund to
aid the most seriously injured victims of drinking drivers, financed
by a dedicated tax on alcohol manufacturers and distributors.
This tax increase would be imposed at the state level and would
supplement the existing tort liability system.
According to LeBel, raising the price of alcohol to account
for some of the costs of drinking-driver crash injuries would
achieve two important goals:
- The compensatory aspects of the proposal respond to some
of the more compelling rationales for reforming the way the legal
system currently treats victims of alcohol-related crashes by
reducing the extent to which more seriously injured victims are
forced to bear their own losses; and
- Increasing the tax will force the alcohol industry to internalize
crash-related costs to a much greater extent than is currently
the case.
LeBel's primary concern in furthering these goals is
protecting innocent victims from having to cope with the financial
consequences of a catastrophic crash while also coping with the
trauma of their own or a family member's injury.
LeBel acknowledges that critics of his plan are likely to
argue that a more appropriate redistribution of costs would be
from drinking drivers to victims, not simply from drinkers to
victims. LeBel claims that this argument ignores the fact that
the likelihood of drinking drivers providing full compensation
to the victims of more serious crashes is very low - so
low that a significant proportion of the losses will be left
to the victims themselves. Thus, according to LeBel, the appropriate
question is not whether it is better to impose losses on drinking
drivers or on victims, but whether it is better to impose losses
on victims or on other people to whom the losses can be shifted,
more specifically, to the drinkers.
In addition to the broader criticisms that LeBel acknowledges,
if his proposal were introduced in Wisconsin, at least two major
obstacles would have to be overcome:
- Most Wisconsin citizens are strongly opposed to any additional
tax increases. Thus, despite the ultimate benefits of LeBel's
tax plan, it is unlikely that such a proposal would gain sufficient
public support; and
- Wisconsin's liquor industry historically has been treated
as a sacred cow, consistently protected from significant state
tax increases. In fact, Wisconsin's beer tax has not been
raised since it was created in 1969.29 Consequently,
it may be difficult to convince legislators to place any increased
demands, no matter how slight, upon the industry.
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Nina J. Emerson, U.W. 1992, has been the director
of the U.W. Law School's Resource Center on Impaired Driving
since its inception in August 1992.
Sarah Stroebel is a third-year law student
at the U.W. Law School and a project assistant at the Resource
Center on Impaired Driving.
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Although LeBel's alcohol tax increase may not be well-suited
for Wisconsin, his proposal demonstrates two important points:
that many seriously injured drunk driving victims are inadequately
compensated for their losses under existing dram shop laws, and
that there are alternative approaches that can better compensate
victims and more equitably spread the costs of liability.
Conclusion
It is necessarily the state's duty to develop a system
for allocating the costs of alcohol-related crashes. State legislators,
however, are afforded a significant amount of discretion in determining
how these costs should be distributed. Under the current approach
to dram shop liability, a substantial portion of the crash-related
costs fall upon innocent victims. This result is unfortunate
and ironic considering that the purpose of dram shop liability
has been to protect and compensate victims. To avoid this dilemma,
state legislators must acknowledge the high price of alcohol-related
crashes and be willing to consider alternatives that more fairly
distribute the resulting costs.
Endnotes
1 A "dram" refers to
a unit of liquid measure used during the colonial times in the
United States. "Dram shops" refers to the establishments
that served alcohol by the dram. See Holder, Harold, et
al., Alcoholic Beverage Server Liability and the Reduction
of Alcohol-Involved Problems, 54 J. Stud. Alcohol 23, 34
n. 2 (Jan. 1993).
2 The Resource Center on Impaired Driving
prefers the term "crash" over the term "accident"
in this context. "Crash" specifically refers to avoidable
events caused by a single variable or chain of variables and
more accurately describes what happens in drunk driving incidents.
See also, Wisconsin Department of Transportation, 1998
Wisconsin Traffic Crash Facts, Book I (1999).
3 See Wisconsin Department of Transportation,
1998 Wisconsin Alcohol Traffic Facts, Book 2 (1999).
4 LeBel, Paul A., John Barleycorn Must
Pay, Compensating the Victims of Drinking Drivers, 53-56
(University of Illinois Press, 1992).
5 Recognizing the predominant financial side
of alcohol-related crashes, for example, medical treatment, physical
rehabilitation, lost wages, and property damage, Mothers Against
Drunk Driving (MADD) has developed a three-part series of booklets
entitled Picking Up the Financial Pieces to assist victims.
See National Endowment for Financial Education, Picking
Up the Financial Pieces, Part 1-3 (1998). See also
National Highway Traffic Safety Administration, Illinois Department
of Transportation Division of Traffic Safety, The Faces of
Tragedy (1998).
6 See Kane, Diane Schmauder, Annotation,
Social Host's Liability for Death or Injuries Incurred
by Person to Whom Alcohol Was Served, 54 A.L.R. 5th 313 (1999);
see also, Holder supra note 1, at 23-36.
7 See Holder, supra note 5,
at 23.
8 See LeBel, supra note 4, at
131.
9 Here, the anecdotal information is compelling.
For example, Paul Proulx of New Hampshire lost his wife and unborn
child, who were struck by a drunk driver. Mr. Proulx's attorney
informed him that he was unlikely to receive any compensation
from the driver because he was "grossly underinsured,"
and the club where he had been drinking had no liquor liability
insurance. Pat Grossmith, "Attorney Wages Liquor Liability
Insurance War: DWI Death Case Left Family Little Chance of Compensation,"
The Union Leader, Sec. A, pg. 1, Jan. 13, 1997.
10 McKnight, James B., Server Intervention:
Accomplishments and Needs, 117 Alcohol Health & Research
World (Jan. 1993).
11 This is according to reports of drivers
in roadside surveys, drivers arrested for operating their vehicles
under the influence of alcohol, and drivers injured in automobile
crashes. See id. See also, Toomey, Traci L., et
al., Alcohol Sales to Pseudo-Intoxicated Bar Patrons,
114 Public Health Reports, No. 4 (July 1, 1999).
12 Florida, Nevada, and Vermont have no state
statute making it a crime to serve or furnish alcoholic beverages
to an adult who is visibly intoxicated. Wyoming's law is
limited. However, all states statutorily prohibit the sale of
alcoholic beverages to anyone under the minimum drinking age.
U.S. Department of Transportation, National Highway Traffic Safety
Administration, Digest of State Alcohol-Highway Safety Related
Legislation, 18th ed. (1999).
13 Sorenson v. Jarvis, 119 Wis. 2d
627, 350 N.W.2d 108 (1984).
14 See id. at 645, 350 N.W.2d at 117.
15 Koback v. Crook, 123 Wis. 2d 259,
350 N.W.2d 108 (1984).
16 See Chapin, W. Barton, Liquor
Vendors and Social Hosts: Are They Still Immune from Serving
Adults?, 68 Wis. Law. 18 (Dec. 1995).
17 See Wis. Stat. §
125.035(4)(b). However, the statute maintains the traditional
common law immunity for providers of alcoholic beverages to adults.
See Wis. Stat. §
125.035(2). Under subsection (4)(a), commercial vendors,
tavern owners, and social hosts all fall within the meaning of
"provider."
18 Plaintiff sought relief for injuries incurred
in an off-premises bar fight with an underage patron of a bar.
Because the bar's insurance policy specifically excluded
coverage for bodily injury for which the bar owner could be held
liable for furnishing alcoholic beverages to an underage patron,
the plaintiff brought a cause of action for the owner's
negligence in allowing the underage patron to "enter and
be on" the licensed premises. The court of appeals affirmed
the trial court's determination that "no reasonable
juror could find that Kelsey's mere presence in the bar
was a substantial factor contributing to Symes' injuries."
Symes v. Milwaukee Mut. Ins. Co., 178 Wis. 2d 564, 566-67
(Ct. App. 1993).
19 See Wis. Stat. §
125.035(4)(b).
20 U.S. Department of Transportation, National
Highway Traffic Safety Administration, Digest of State Alcohol-Highway
Safety Related Legislation, 18th Ed. (1999).
21 See Minn. Stat. § 340A.801.
22 See generally, Brist, Steven C.,
Supreme Court to Hear Dram Shop Case, On Premise (July/Aug.
1994).
23 See generally, Garcia v. Hargrove,
52 Wis. 2d 289, 190 N.W.2d 181 (1970).
24 See Mich. Stats. §§ 436.1801(3)
& (10).
25 See § 235 ILLCS 5/6-21. Damages
for personal injuries or to property are limited to $30,000.
Loss of means of support is limited to $40,000. See id.
26 Via Minnesota common law negligence principles,
a host 21 years or older may be held liable for the injuries
caused by or to a guest younger than 21 years. See Minn.
Stat. § 340A.801, subd. 6. Under Longstreth v. Gensel,
377 N.W.2d 804 (Mich. 1985), dram shop claims against social
hosts in Michigan are limited to minors' actions.
27 See Charles v. Seigfried,
651 N.E.2d 154 (Ill. 1995).
28 For a more comprehensive explanation of
the information contained below, see Lebel, supra
note 4, at 211-84.
29 Wisconsin's alcohol tax is only 6¢
per gallon or $2 per barrel. Compare this to Hawaii, which has
the highest beer tax, at 92¢ per gallon, and Wyoming, with
the lowest, at 2¢ per gallon. See 65 Wis. Taxpayer
(Oct. 1997).
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