By: Damian Conforti and Bryan Cavallaro
When a venue both hosts an event and serves alcohol, exposure to liability under several states’ “Dram Shop” laws is relatively straightforward. The situation becomes more opaque when the venue merely provides the space while a third party, such as an individual customer or an external company, is responsible for supplying and serving the alcohol. While a party who serves alcohol is typically the one exposed to liability, a venue owner or host may still be at risk if it has any level of involvement with, or oversight of, a third-party server.
Understanding Dram Shop and Social Host Liability
When a property or venue holds a liquor license, the licensee may be held liable under Dram Shop laws in the event of a negligent alcohol service claim regardless of who served the alcohol. On the other hand, “Social Host” liability laws make clear that a host who “invites another person onto an unlicensed premises for purposes of hospitality” where alcohol will be served, is exposed to civil liability. Although Social Host liability laws conjure images of private house parties or other private gatherings in non-commercial settings, hosting events at unlicensed BYOB establishments, hotels, social clubs, banquet halls, or other similar venues can also implicate Social Host liability laws.
When Can a Venue or Host Be Held Liable?
The question remains: is the owner of the premises or the person or entity hosting the event liable for damages caused by an overserved guest? Generally, a passive property owner has no duty to control the guest’s activity, unless the property owner is present, reasonably aware of the misconduct, and has the opportunity and ability to control the guest’s conduct. Also, liability may extend to the property owner if they collected an entrance fee, were shown to have knowingly permitted or facilitated the consumption of alcohol by an underage or visibly intoxicated guest, or failed to take reasonable steps to prevent foreseeable harm.
How Venue Owners Can Reduce Risk
Given the potential risks associated with an overserved guest, such as the guest causing a car accident or other harmful incident, property owners may find themselves entangled in litigation, even if they were not directly responsible. To mitigate this risk, it is crucial to take proactive measures that either prevent such legal exposure altogether or facilitate swift removal from any resulting legal proceedings. Venues should carefully review their vendor and customer contracts for explicit indemnification and hold harmless clauses, as well as liability waivers. Also, owners should be sure to confirm the licensee has an active certificate of liability. Securing adequate insurance coverage either directly from one’s own liability insurer, or by being named as an additional insured on the licensee’s insurance policy, is equally important. Other operational procedures, such as interviewing a licensee about its staff oversight and security protocols prior to engaging with them can make a world of difference. Additionally, venues should verify and adhere to all relevant state and local municipal ordinances to ensure full compliance.
For more information on this topic or other issues impacting the hospitality community, schedule a consultation with Damian P. Conforti of Mandelbaum Barrett PC’s Hospitality Practice Group.