Practical and Historical Considerations

Do commercial host liability laws encourage unwarranted lawsuits?

As with other types of civil liability claims, unwarranted commercial host liability lawsuits can occur. However, no data exist on the frequency of this practice or its consequences in terms of costs and damage to retailers who are unfairly targeted.

In general, the burden and costs of pursuing a commercial host liability lawsuit fall primarily on the injured party and his/her attorneys. Establishing the basic facts — where the person who caused the injury was served, whether the service was illegal, whether the service contributed to the injury — can be difficult and expensive.11 Attorneys typically represent plaintiffs on a contingency basis: they receive a relatively high percentage of the damages awarded to the injured party (often 40 percent) if they succeed, but nothing, including compensation for costs of bringing the lawsuit, if they lose. It is thus a high-stakes endeavor. As a result, most lawsuits that go beyond the preliminary stages of litigation involve both relatively strong evidence of wrongdoing on the part of the retailer and relatively large potential damage claims.

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What are the historical trends in commercial host liability laws?

Over the last three decades, states have been imposing an increasing number of major limitations on commercial host liability, which has weakened the positive effect of the policies in those states. According to one study, in 1989, 26 states and the District of Columbia (53 percent of the 51 jurisdictions) recognized adult liability without any of the 4 types of limitations included in the PSRs.3 Ten states recognized liability with only 1 restriction; 1 state recognized it with 2 restrictions. In 2011, by contrast, only 21 states and the District of Columbia (43 percent) recognized liability without major restrictions, 13 states imposed only one restriction, and 3 states imposed two restrictions. Similarly, in 1989, 29 states and the District of Columbia (59 percent) recognized underage liability without any of the restrictions, 11 states imposed only 1 restriction, and 1 state imposed 2 restrictions. In 2011, 28 states and the District of Columbia (57 percent) recognized underage liability without major restrictions, 10 states imposed 1 restriction, and 6 states imposed 2 restrictions. Only 1 state, Nebraska, expanded commercial host liability between 1989 and 2011, now recognizing underage liability.3,19

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