First, a true story to set the tone.
A young man went to a well-known bar in Arizona. He had already been drinking before he got there, but it wasn’t necessarily clear how intoxicated he was when he chose to buy more drinks.
“It was one of these things where the bar was so crowded it was very hard to really notice signs of intoxication,” said David Delorenzo, owner of BarAndRestaurantInsurance.com.
In the course of a couple hours, the man had been served about two beers. As time passed, however, it became clear he was too drunk to continue his night. Attempts were made by his friends and employees of the bar to get him into some form of taxi service vehicle, but he resisted and instead meandered off on his own.
“He ended up getting in his car, high speeding it down the road somewhere and killed an 11-year-old,” Delorenzo said.
The child was in a car he crashed into. Another child and their father were both seriously injured as well.
The drunk driver didn’t have much money to his name, so the subsequent lawsuit took a turn toward the bar.
Though the bar had only knowledge of the man drinking about two beers purchased from them, they ended up paying the bereaved family a $1.5 million settlement.
“Because he was at this bar and they should have done more and this and that, they just settled, because the last thing they want to do is go in front of a jury,” Delorenzo said.
Unlike some states, there is no limit in Arizona as to how much financial obligation a party can be held liable for in liquor license cases.
This tragic story is indicative of how Arizona’s liquor license law is written.
According to the law, owners of liquor licenses in the state can be held at least partially responsible for property damage, personal injuries, or wrongful deaths that are incurred or caused by those who purchased and consumed alcohol from the licensees while already “obviously intoxicated.”
“Obviously intoxicated” is defined by the statute as “inebriated to such an extent that a person’s physical faculties are substantially impaired and impairment is shown by significantly uncoordinated physical action or significant physical dysfunction that would have been obvious to a reasonable person.”
INCENTIVE TO TREAD CAREFULLY
Given how broad-reaching the law is, it behooves dram shops — bars, restaurants or similar commercial establishments where alcoholic beverages are sold — to be as careful as possible not to expose themselves to potential liability, Delorenzo said.
Dram shops in Arizona typically carry $1 million to $2 million insurance policies.
This is accomplished by checking customer identification, having staff trained to recognize signs of intoxication and maintaining records, such as video camera footage, for extended periods of time in case a suit is levied within the two-year statute of limitations for liquor license liability claims.
“Especially for a busy night like New Year’s Eve, save that footage,” Delorenzo said. “A lot of times these lawsuits will not come to fruition until one day before the two-year statute is up.”
Having spent the large majority of his professional life in the Arizona bar industry, Mark Walters, owner of Prescott Public House, a bar located along Gurley Street in downtown Prescott, is well aware of the law.
In order to limit liability, either he or his wife is at the bar almost every hour of operation.
“I’m there because it’s really just risk management,” Walters said. “The dram shop law can be so nasty that I basically just want to coat my bed as best I can by having a really trained set of eyes in the building watching it.”
He also makes sure to go above and beyond to ensure someone is safe when they’ve been drinking and clearly need some help.
“I’ve paid for a cab ride out to Chino Valley for a customer who couldn’t find their wallet; I’ve paid for hotel rooms — if that’s what it came to — because they couldn’t find their keys to get back into their house,” he said. “At the end of the day, you just have to take care of people, because that’s what it really is. That’s going to work out a hell of a lot better for you than if you just look at it like ‘my job is to get people drunk.’”