Legal Aspects of Commercial Host Liability

What is “common law”? In the context of commercial host liability, what is the “old common law rule” and the “new common law rule”?

State courts have the authority and responsibility to settle disputes between parties and determine whether an injured party can recover damages from another party. Typically, legislatures provide at least some guidance to courts regarding how disputes are to be settled.

In the absence of specific legislative guidance, however, courts act using their “common law” authority, which includes a body of rules to be applied in settling disputes — such as evidentiary requirements, defenses, causation, etc. — that dates back centuries. These rules are constantly being updated and revised through court opinions and legislative action.11

Under the “old common law” commercial host liability rule, a commercial alcohol seller/server cannot be sued by those injured by the server’s patrons, no matter what the circumstances or actions of the seller/server. The patron is solely responsible for the injury as a matter of law, and the seller/server has no duty to the injured third party. In other words, the commercial host is not liable. This reflects a pre-Prohibition paradigm that holds excessive drinking to be a moral failing on the part of the drinker, who is considered the primary cause of any resulting damage or injuries. Until the 1970s, courts applied the old common law rule in nearly all states.11

Some states still adhere to the old common law rule. However, beginning in the 1970s, many courts rejected it in favor of the “new common law” rule. Under the new rule, the patron is no longer the only person responsible for the injuries he/she causes; the seller/server also has a duty to protect the injured third party from harm, and may be held liable for damages. This new paradigm recognizes that when retailers illegally sell alcohol to visibly intoxicated or underage persons, there is a clear, foreseeable causal connection between the illegal service and the potential resulting injury. Typically, courts impose a duty of reasonable care on individuals or businesses that engage in illegal behavior that results in foreseeable injuries to innocent third parties. Thus, the new common law rule in effect adopts ordinary rules applied to other types of businesses and activities.11,18

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What are the key elements of a commercial host liability lawsuit?

In states that recognize common law liability, the plaintiff (the injured person who is suing the retailer) must prove the following for the retailer to be held liable:

  1. The retailer illegally served or sold alcohol to an underage person (“underage liability”) or an intoxicated person (“adult liability” — typically, for service to an adult to have been illegal, the person must have been visibly or obviously intoxicated);
  2. The retailer acted negligently (i.e., without the care expected of a reasonable person under similar circumstances) at the time of the service or sale; and
  3. The illegal service substantially contributed to the plaintiff’s injury.3

The plaintiff must establish these facts by the “preponderance of the evidence” – that is, the evidence must show that the plaintiff’s contentions are more likely to be correct than the contentions of the defendant (the retailer).11,3

State courts vary in how they apply these key elements under the common law, and when legislatures adopt statutory liability, they typically modify the elements. In nearly all cases, statutory liability imposes limitations that make it more difficult for the injured party to successfully sue the retailer.11

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What potential defenses may a retailer use against a commercial host liability lawsuit?

If the retailer can establish one or more defenses, he/she may still prevail (or at least reduce the amount owed), even if the plaintiff establishes the key elements of a commercial host liability lawsuit. Potential common law defenses include:

  • Plaintiff contributed to his/her own injury (contributory/comparative negligence);
  • Plaintiff accepted the risk of injury;
  • Plaintiff participated in a drinking event (complicity); and
  • Lawsuit was filed too late (statute of limitations).11

State courts vary in how they apply common law defenses, and when legislatures adopt statutory liability, they may broaden or add to the defenses available to the retailer, making it more difficult for the injured party to successfully sue the retailer.11

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What if the person injured by the retailer’s patron contributed to his/her own injury (contributory/comparative negligence), such as by driving recklessly?

In states with common law liability, the courts may apply the doctrine of “contributory negligence,” which prohibits recovery when the injured party contributed in any way to his/her injuries, unless the retailer acted intentionally or recklessly (i.e., more egregiously) when the patron was illegally served. Some courts have replaced the contributory negligence doctrine with the “comparative negligence” doctrine, which allows the fact finder (i.e., judge or jury) to weigh the relative responsibilities of the two parties — the patron and the injured third party — and reduce the damage award accordingly. In most states, the injured party must be less than 50 percent responsible for his/her own injuries for recovery to be allowed.

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What if the injured person drank with, and or/provided alcohol to the patron/individual who later caused the injury?

In underage cases, injuries often occur in traffic crashes. In these cases, an underage passenger may be injured, but he/she may have been drinking with the underage driver, and may also have been involved in the illegal purchase of alcohol. Adult cases often result from groups drinking at a bar, where the person injured drank with the person causing the injury and may have purchased some of the drinks that contributed to the intoxication. The contributory/comparative negligence doctrines may apply here to prohibit or limit recovery of damages.

Some states may apply another legal doctrine, called “assumption of risk,” that can prohibit or limit recovery of damages by the injured party if he/she voluntarily participated in the event knowing injury was possible. The assumption of risk doctrine may be enacted through a state statute or applied by courts as part of their common law powers. States vary in their application of the assumption of risk doctrine.

The legal doctrine of “complicity” may also apply. According to this doctrine, an injured party may be complicit and not able to recover damages from a retailer if he/she actively encouraged the patron to consume alcohol while the patron was intoxicated.11

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Does commercial host liability absolve the patron who caused the injury from being held liable? What about other people who may have been partly responsible for the harm?

No, commercial host liability does not absolve the patron who caused the injury from being held liable, but this is a common misconception. The patron who caused the injuries remains the primary party responsible for the injuries and damages he/she inflicted on others.11 Alcohol retailers are typically not sued unless the patron is unable to pay for all the damages incurred, which is likely if the injury is severe and/or the patron has inadequate insurance. In justifying the adoption of the new common law rule, courts have reasoned that it is unfair for an innocent injured party to be uncompensated if an alcohol retailer contributed to the person’s injuries by illegally serving the patron who caused the injuries.18 All parties who contributed to the injured parties’ damages can potentially be held liable.

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Can underage patrons or intoxicated adults sue alcohol retailers for damages they inflict on themselves?

Many states have adopted laws that explicitly prohibit a patron from recovering damages from the retailer who served him/her.11 States without these provisions may apply either the contributory or comparative negligence doctrine to limit or prohibit recovery by those who contribute to their own injury. In general, underage patrons are more likely to be allowed to recover damages because they are viewed as less mature, and therefore less culpable, than adult patrons.11

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