YOU'VE HEARD THE HORROR STORY.
A company hosts an event at which alcohol is served. An attendee overindulges, gets in his car, and drives straight into oncoming traffic on the highway, killing a family of four. Surviving relatives sue for damages, naming everyone connected to the event in the suit, including the host facility, the caterer, and the host organization. How do you avoid a tragedy like this?
The only way to eliminate liquor liability is to eliminate alcohol from your event. But if that's not an option — and often it's not — here are steps you can take to keep your attendees from overindulging and to reduce liquor-liability risk.
- MAKE SURE THAT YOUR VENDORS ARE LICENSED AND INSURED.
If you hire a vendor, such as a hotel or caterer, to sell or serve alcohol for your event, make sure that the vendor is compliant with state and local licensing and insurance regulations. “Most reputable organizations will have complied with local regulations, but you may need to prove that you asked for the proper compliance documents to ensure that your company is protected,” warns Steve Stromberg, J.D., an account manager with a law degree for exhibit and event company CenterPoint Marketing in St. Paul, Minn. “If your server organization has no insurance, your company may be responsible for monetary damages.”
Under no circumstances should your staff purchase and serve alcohol themselves. “Let the facility or caterer provide and serve the alcohol,” says Tyra Hilliard, Esq., associate professor in the Tourism and Convention Administration Department at the University of Nevada, Las Vegas. “Some planners try to cut costs by purchasing alcohol themselves, but this increases the liability.”
- SPECIFY THAT SERVERS SHOULD BE TRAINED IN SAFE ALCOHOL SERVICE.
In addition to bartenders and wait staff, Smart Serve recommends that all event staff receive alcohol-awareness training — including coat-check staff, car valets, and security staff. Everyone working the event should know how to recognize the signs of intoxication and how to handle the situation.
- DEVELOP AN OFFICIAL POLICY FOR SAFE ALCOHOL CONSUMPTION.
Smart Serve's Special Events newsletter recommends that companies follow certain steps, such as advising attendees not to overindulge and placing tent cards at each bar urging attendees to exercise good judgment in their consumption of alcohol. “It's fairly easy to ask people ahead of time to have a great time at the event — but also to remember to drink responsibly,” says Diane Stefaniak, executive director for Toronto-based Smart Serve Ontario.
- CREATE GUIDELINES FOR HANDLING INTOXICATED GUESTS.
Stromberg recommends giving an independent third party, such as hotel security, authority over removing a guest if it becomes obvious that the person has overindulged. If you're dealing with a VIP, such as an important client or executive, this method can alleviate embarrassment. Just be sure to encourage tact. If the intoxicated guest resists, get him away from other guests so he can be spoken to privately.
Joan Eisenstodt, chief strategist for Eisenstodt & Associates in Washington, D.C., suggests providing transportation and/or designated drivers — even designated walkers — for those who are staying in the hotel but may not be able to get to their rooms without injuring themselves or abusing others (verbally or physically). “If it's an event that is in a hotel and people are staying elsewhere (such as at home), negotiate room rates that entice people to stay versus driving away,” she adds.
- PURCHASE A LIQUOR-LIABILITY INSURANCE POLICY.
If your company's insurance does not cover events at which alcohol is served, Hilliard recommends obtaining an additional rider from your insurance company. Typically, Stromberg says, liquor liability “is not covered by standard provisions of general liability insurance.”
“A liquor-liability insurance policy protects insureds or the companies they designate (indemnities) engaged in the manufacture, distribution, selling, or serving of alcohol for injury or damage resulting from actions because of intoxication of any other person by reason of the sale or distribution of alcoholic beverages,” Stromberg says.
It does not, however, eliminate your liability. According to Stromberg, coverage does not include situations in which alcohol service is in violation of a statute, ordinance, or regulation; a minor is served; or an already intoxicated person is served.
- PUT AN INDEMNIFICATION CLAUSE IN YOUR CONTRACT.
“Make sure that the contract with the facility or caterer providing and serving the alcohol makes it clear that the facility or caterer will indemnify, defend, and hold harmless the company from and against all liability arising from alcohol-related incidents,” Hilliard says. Here's an example of how such a clause might read in a hotel contract:
“Hotel will indemnify, defend, and hold harmless Group, its officers, directors, partners, agents, members, and employees from and against any and all demands, claims, damages to persons or property, losses and liabilities, including reasonable attorneys' fees arising out of or caused by the Hotel's negligence in connection with the provision of services of the Hotel (including but not limited to the sale and service of alcohol) or caused by any defect in the Hotel's premises or equipment.”
Jim Harmon, an account executive with independent meeting planner Conferon Inc., Twinsburg, Ohio, also includes the following wording in his hotel:
“At all functions catered by Hotel where alcohol is served, there will be no less than one (1) bartender for every seventy-five (75) people for hosted bars and one (1) bartender for every one hundred (100) people for cash bars, and there will be no bartender or server fees. Hotel shall adhere to all federal and state laws regulating the sale and service of alcoholic beverages. Bartenders/Servers are not to serve any individuals that appear inebriated or under the influence of too much alcohol.”
- PREVENT YOUR GUESTS FROM BECOMING INTOXICATED.
Perhaps the best way to reduce your liability is to create an environment that discourages overconsumption. For example, limit the number of bartenders, so it's harder to get a drink. Hold functions earlier in the evening — from 5 to 6 p.m — when people are less inclined to drink heavily. Or limit receptions to one hour.
“For a large event, where there are more than three bars, I equip the bartenders with walkie-talkies and have them communicate when they turn someone down who has been overdrinking so that person won't go to another bar and ask again,” says Eisenstodt.
Smart Serve's brochure, “Special Events Require Special Care,” offers a number of tips, including:
Serve drinks to guests rather than offering a self-serve bar.
If you have a cash bar, use tickets. Don't price alcohol too low because this encourages heavy drinking.
Provide a range of low- and alcohol-free drinks to your guests.
Provide a variety of food items. The consumption of food slows down the absorption of alcohol. But limit salty foods, as they make people thirstier.
Close your bar well before the scheduled end of the party.
Station the bar in a spot where people aren't always passing it.
Insist that your server use a jigger to measure spirits.
Ensure that only authorized persons have access to the bar or area where drinks are being served.
Don't have servers circulate around the reception area refilling attendees' glasses.
Never raffle alcohol or hold contests that involve buying, drinking, or winning alcoholic drinks.
Understanding the Law
Most states have statutes that hold servers of alcohol responsible for the actions of those whom they serve. These include dram-shop laws and social-host laws. According to Steve Stromberg, J.D., an account manager for exhibit and event company CenterPoint Marketing, St. Paul, Minn., all but four states have dram-shop laws that impose liability on commercial servers of alcohol for the damages caused by intoxicated persons to themselves or to third parties.
“The variation in these state laws makes it very important that you hire established catering vendors for any event you are planning,” Stromberg says.
Patti J. Shock and John M. Stefanelli comment on dram-shop laws in their book On-Premise Catering: Hotels, Convention & Conference Centers, and Clubs (John Wiley & Sons Inc.; December 2000). “Under dram-shop legislation, if it is proved that you served a minor or legally intoxicated person who causes damage to a third party, you usually will be held at least partially responsible,” they state.
Social-host laws hold private-event hosts liable for the actions of guests who become intoxicated at their events. “You are a social host if you furnish alcohol to individuals in a noncommercial manner, and thus you may be liable for injuries or damages caused by those individuals,” Stromberg says. “Social-host liability catches those situations where alcohol is served outside the typical venue of bar/restaurant/liquor store/hotel.” Thirty-two states and territories have social-host laws, Stromberg says. But as with dram-shop law, legislation varies widely.
Some states have neither dram-shop nor social-host laws, but an injured third party can still sue for damages under common law. “Unlike dram-shop or social-host laws, under common law, the burden of proof shifts to the plaintiff,” Shock and Stefanelli say.
That doesn't mean the risk is lessened, says Tyra Hilliard, Esq., associate professor in the Tourism and Convention Administration Department at the University of Nevada, Las Vegas. “The person or entity providing alcohol and the person pouring or selling the drinks owes a duty of care to see that a patron is not intoxicated and is of legal age to consume alcohol in that state or country.”
Bottom line: “It doesn't matter if you give the alcohol away or sell it,” says Diane Stefaniak, executive director for Smart Serve Ontario, a nonprofit organization based in Toronto that provides responsible-server training. “Anyone who has control over the facility or the event is liable.” And, say Shock and Stefanelli, “hosts with deep pockets can rest assured that one way or another, they will be defendants.”
Is the Planner Personally Liable?
“Provided the meeting planner isn't pouring the drinks, the meeting planner normally would not be at much risk of being held personally liable,” says Tyra Hilliard, Esq., associate professor in the Tourism and Convention Administration Department at the University of Nevada, Las Vegas. “When an employee is acting in the scope of their employment, liability usually rests with the employer, not the individual.”
Independent meeting planners or third-party meeting planners who are independent contractors and not employees are the exception. “In that case, the meeting planner could certainly be held liable along with the company, depending on the circumstances,” Hilliard says. “Whether this would amount to personal liability would depend on the business entity type under which the independent meeting planner operates — sole proprietor, corporation, LLC, etc.”