Can Bars Be Sued for Overserving Alcohol?

As patrons gather in bars to unwind and socialize, responsible alcohol service becomes a crucial aspect for both establishments and customers. Overserving alcohol not only poses risks to public safety but also carries significant legal implications for bars and their staff. In this blog, we’ll discuss the legal consequences of overserving alcohol and discuss strategies for bars and restaurants to prevent guests from getting intoxicated.

Dram Shop Laws & Legal Consequences of Overserving Alcohol

Overserving laws and liabilities will vary based on where you do business. They vary by state, county, and even municipality.

Liquor license holders and their businesses are responsible for making sure that all applicable liquor laws are followed. The most common legal consequences of overserving alcohol (among other violations) are fines and loss of a liquor license, but under some jurisdictions and circumstances, business owners can face jail time.

Most states also have some form of dram shop law that allows a third party to sue a business for overserving if they go on to cause damages against that person or their family. In fact, there are only seven states without dram shop liability, including Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota, and Virginia.

In the 42 other states, as well as DC, civil liability for a third-party suit is on the table. In some states, criminal penalties may also be imposed. First-party dram shop liability is rarer. Most local lawmakers and juries have a hard time letting an adult blame a business for their own decisions. When first-party liability is allowed, it’s more likely to be limited to the case of serving alcohol to minors. That said, there are a few states that allow people charged with a DUI/DWI to bring a first-party liability case against the business that served them. These cases are just rarely successful.

Real-World Examples of Dram Shop Lawsuits

In 2021, a Corpus Christi bar shared dram shop liability in a drunk driving accident where the victim was awarded $301 billion (with a b) in damages. It’s by far the largest dram shop verdict in history, and both the business and its owner will likely have to pay a formidable amount.

This verdict is the most eye-popping case in recent memory, but smaller dram shop damages happen every year. In many states, it’s easier to prove the liability of the individual server, but a business’s pockets are deeper, and plenty of cases demonstrate that juries are willing to recognize the responsibility of bars in alcohol service.

For example, in 2019, a bench verdict awarded $37.5 million in damages in a third-party dram shop case against a strip club in St. Louis. In 2015, a Florida jury awarded a $95 million third-party dram shop verdict against several defendants, including a Miami bar. That same year, the Alabama Supreme Court affirmed a $15 million dram shop award from a liquor store that sold to underage customers.

Even when the courts don’t find a business liable, bars that have been sued for overserving face legal fees and higher insurance premiums. That’s why some businesses choose to pay out a settlement instead.

Strategies for Bars to Prevent Overserving

There are many reasons, aside from overserving laws and liabilities, why it’s smart to prevent overserving in bars. Drunk patrons drive away good business, and sometimes, things can escalate into a situation that results in injury and property damage.

According to one insurance company, the cost of a bar fight claim averages over $100,000, and it’s not unheard of for a claim to amount to several million dollars over a single incident. What you save out-of-pocket, you’ll pay in increased insurance premiums.

To prevent overserving, you need staff adept at spotting intoxicated patrons and using conflict resolution. Proper training plays a big part in this, but you also need to empower them to take the steps they deem necessary to prevent overservice.

A few systemic practices can help prevent overserving in your bar, including:

• Put staff on the door for peak hours and empower them to turn away anyone who is already visibly intoxicated. You won’t be able to responsibly serve them alcohol, and they can cause a lot of trouble.
• Develop monitoring methods for service staff, like drink counting methods and observing for signs of intoxication.
• Hold staff responsible for enforcing a conservative ID-checking policy and train them to distinguish between valid and fake IDs. Additionally, they should keep an eye out for signs of third-party sales to minors. In some states, even parents can’t legally share alcoholic beverages with minors in a public venue.
• Adequately staff during peak hours so that there is a large enough staff to pay attention to the state of patrons (and their IDs) before they serve them. Training and vigilance don’t matter if staff don’t have time to make a judgment call.
• Have a clearly defined cutoff policy so that all employees know the stage of intoxication that is “too much” for another drink. Don’t leave it up to individual judgment that will vary from person to person and day to day.
• Enforce pour discipline so that drinks have a predictable and reasonable amount of alcohol. Having a policy of measuring alcohol for drinks allows you to confidently say that no one was served an especially strong drink.

Finally, institute a policy of offering cab service to intoxicated patrons. Sometimes attempts at prevention fail for one reason or another, but offering drunk patrons an alternate way home can be used as a valid defense in a dram shop lawsuit.

Protect Your Business with TIPS Training

Training your bartenders and servers in responsible alcohol service is a key step to preventing overserving in bars and avoiding a dram shop lawsuit. Not only do you arm your employees with the skills and knowledge they need to avoid illegal service or overserving, but in some states, such training can be used as a defense by the business.

For example, Texas bars and restaurants are protected from lawsuits if they’ve given their staff TABC-approved training. It’s called the Safe Harbor Defense.

TIPS courses are proven effective and count as approved responsible alcohol server training in many states. Your employees can even complete the training online – it’s cost-effective, and your employees can complete the courses on their schedule, at their own pace, which aids understanding and retention.

Check out our state-by-state guide to learn about your state’s dram shop laws and training requirements. You can also register your bartenders for online TIPS training or locate trainers for in-person classes. Head to our website to enroll today!