Don’t Let Your Lodging Facility Waste Away in Margaritaville: Minimizing the Risks of Serving Alcohol
Don’t Let Your Lodging Facility Waste Away in Margaritaville:
Minimizing the Risks of Serving Alcohol
Oregon Lodging Association’s "Lodging News"
June 2003
The summer season is now well under way. Have you reviewed your lodging facility’s practices and policies relating to alcohol service and consumption? This article will discuss so-called "dram shop" liability and some simple steps that can, and should, be taken to minimize your lodging facility’s exposure to a lawsuit.
As a commercial establishment that serves alcohol to the public, your lodging facility is a "dram shop," although you will not find this term in the Oregon statutes on this subject. Oregon’s dram shop law is primarily concerned with the service of alcohol to persons who are visibly intoxicated and the resulting liability of the person or business who serves the visibly intoxicated person. The following example illustrates how the dram shop law may be used against you.
Margarita Max’s Mexican Fiesta Resort ("Max’s") is a resort hotel located on the Oregon coast. Like most hotels, the summer is its busiest season and Margarita Max’s has wedding receptions booked for every Friday, Saturday and Sunday throughout the summer. On one Saturday night in July, after the wedding guests have broken open the wedding pi–ata and toasted the newly married couple with shots of Cuervo Gold tequila, Peter, the best man, goes up to the bar to order another drink. Peter is 20 years old, "looks" about twenty-five, and is noticeably drunk. The bartender at the reception, an 18-year-old named Wendy, comments to Peter that he looks "totally wasted" but produces another tequila shot for Peter to throw down with a Pi–a Colada chaser. A few minutes later, Peter jumps in his car to drive home. On the way home, Peter crosses the median on the highway and slams head-on into the Smith family’s car, killing Peter and three of the four members of the Smith family.
Hopefully, everyone reading this article recognizes that this incident threatens to put Max’s out of business. Why? Oregon law clearly states that "no person shall sell, give or otherwise make available any alcoholic liquor to any person who is visibly intoxicated." While Oregon law limits the intoxicated person’s cause of action against the person or entity serving the alcohol, the third party who was injured by the intoxicated person (the Smith family in the above example) is not so limited. Max’s will be facing a lawsuit from the surviving member of the Smith family in amounts likely to exceed any comprehensive general liability insurance policy Max’s may have, as well as Max’s umbrella policy. To prevail in the lawsuit, the Plaintiff will need to prove by "clear and convincing evidence" that Max’s served Peter alcohol when Peter was visibly intoxicated and that the Smith family did not substantially contribute to Peter’s intoxication. Leaving aside for the moment the issue of Peter’s age, Max’s will in all likelihood lose this case.
The good news is that if Peter were 21 years old or older, Peter’s family would likely not have a cause of action against Max’s. The bad news is that he was not! The worse news is that under the facts presented above, bartender Wendy failed to check Peter’s identification, she knew he was drunk, and, under Oregon law relating to alcohol service permits, Wendy was too young to be mixing drinks even if she had a valid service permit and the appropriate server training. Together, these facts would appear to spell muerte ("death") for Margarita Max’s Mexican Fiesta Resort.
Of course, all of this was easily preventable. The key to prevention is to know the law, have up-to-date and easily understandable policies in place regarding the service of alcohol, and make sure your staff is well-trained. Regarding this latter recommendation, the Oregon Liquor Control Commission ("OLCC") is likely your best resource. All persons serving alcohol in Oregon are required to have a service permit prior to beginning work. Then, they must complete an Alcohol Server Education class and pass an examination within 45 days after their service permit application has been submitted to the OLCC. Additionally, persons who are 18, 19 or 20 years old will only be eligible to obtain a minor service permit. A minor service permit limits the alcohol-related service that the server can provide. The server is not allowed to work as a bartender or cocktail server and may not mix drinks of any kind.
Under the example above, both bartender Wendy and Max’s face considerable liability aside from the alcohol-related deaths that occurred. The serving of alcohol to a visibly intoxicated person and the serving of alcohol to a minor both carry criminal penalties and are considered to be Class A misdemeanors. The first conviction results in a $350 fine, the second in a $1,000 fine, and the third or subsequent conviction carries a fine of $1,000 and a mandatory penalty of not less than 30 days in jail! While the law indicates that the owner of Max’s, assuming he or she holds the liquor license, may not have to face the jail time set forth in the statute, Wendy will. Also, the argument could easily be made that any supervisor or manager who may have sold, given or otherwise made available the alcohol to a visibly intoxicated person or a minor would be in violation of the law and face the criminal penalties set forth above.
Once again, this is all easily preventable with adequate training and the strict enforcement of appropriate policies. For example, you should establish and enforce a policy requiring servers to verify a guest’s age. Ideally, this would be done not only by the bartender, but also by other trained staff working the event as necessary. While it may not be practical to check identification at the door prior to entering a wedding reception, it can, and should, be checked prior to serving alcohol to any individual who possibly might be underage, and at other times during the event if a staff person observes someone who may be underage consuming alcohol. Fortunately, Oregon law provides that the lodging facility and servers will not be held liable for accepting fake identification, assuming that the fake was not obviously a fake. Additionally, a minor who presents fake age identification will be liable for any damages sustained by the lodging facility arising from the service of alcohol to that person, including attorney fees.
To be sure, complying with Oregon’s liquor laws may be quite challenging during wedding receptions and other parties held at your lodging facility. However, that is no defense to a wrongful death lawsuit or an OLCC inquiry. As always, the best defense is to minimize your facility’s exposure in the first instance by having well-trained staff, establishing and enforcing appropriate alcohol service policies, and simply having a good understanding of the law. Having taken these steps, you can kick back in the sun, sip a margarita or two and enjoy the summer…until you are called in to handle the next problem.