Alcohol Liability: Why you may think twice before giving your buddy a beer...

WHAT IS DRAM SHOP LIABILITY?

 
Did you know that giving a beer to a friend could bankrupt your family?  No, this was not a new super-expensive micro-brew you just gave to your friend; this is your potential liability under the Indiana Dram Shop Act.  Losing everything your family has is an extreme example for sure, but it highlights the potential risk one has when they give or sell alcohol to another person.

In its simplest terms, the Dram Shop Act imposes liability on a provider of alcohol for over-serving a drunk person.  More specifically, the provider may be civilly liable for injuries or damages caused by knowingly serving alcohol to a "visibly intoxicated" person.  The most common example of this is a bar or restaurant that serves multiple drinks to a patron and that patron injures someone while they are driving home.  The bar or restaurant will likely be sued and could be liable to the injured person.

However, the Dram Shop Act can also impose liability on individuals.  If an individual gives alcohol to a visibly intoxicated  friend at a party or social gathering, they may be liable for any damages or injuries caused by the intoxicated person.  This is called social host liability.  If the intoxicated person gets into a car accident on the way home, or falls down the stairs hitting someone in front of him, the social host could have to pay.

The Dram Shop Act was originally passed in 1986 to protect providers of alcohol.  It required that the provider must have "actual knowledge" of the person's "visible intoxication" before liability can be imposed.  However, these protections have been whittled down through the years by the Indiana courts and there are now several ways to establish intoxication.  First, are the obvious signs such as stumbling, slurring of speech, passing out, or overly aggressive behavior (to name a few).  A bartender, server, or social host that observes these signs should not serve.

Second, visible intoxication can also be supported by the provider's knowledge that the person has already consumed an excessive number of drinks.  This is why bars and restaurants will cut-off someone that starts acting intoxicated and/or has had several drinks.  Finally, visible intoxication can even be supported by the person's behavior before, during, or after being served, even if outside the view of the provider.  Expert testimony from a toxicologist can also be used to support visible intoxication.

HOW TO REDUCE THE RISK

There is no bright line test and all of these factors can be used by a plaintiff to potentially prove dram shop liability in court.  But there are things individuals can do to protect themselves:

1) Don't host parties at your home.  Go to a bar, restaurant, or another location where the alcohol is provided or purchased by someone else.  This not only protects you from dram shop liability, but it also saves you from having to clean up the mess your party guests left.
2) BYOB.  If you do host a party or gathering, have your guests bring their own alcohol and don't provide it to them.  The Dram Shop Act prohibits the providing of alcohol to an intoxicated person.  However, there is no dram shop liability for merely watching someone get drunk on their own booze, even if they do so at your home.  
3) Have enough insurance.  Most people have $100,000 or $300,000 in liability insurance through their auto or home policies.  However, a $1,000,000 umbrella policy should be considered as they are relatively affordable. Medical bills and damages from a serious accident (whether caused by alcohol or not) can often exceed the $100,000 or $300,000 policy limits.  That could leave you personally exposed for the excess.

DRAM SHOP LIABILITY FOR COLLEGE KIDS

 Even if you don't host parties, your college-aged children likely do.  Think back to all of the house and apartment parties you attended in college.  Keggers, handles of vodka, shots, drinking games, etc.  Now think about what you just read about dram shop liability.  Pretty scary, right? 

The good news is that a parent is not directly liable for the actions of the 18+ year old child (unless the parent is providing the alcohol to minors - in which case, the parent should know better).  The adult child is typically responsible, but the parents may still end up paying in the end through increased insurance premiums.  Most often, full-time college students are covered under their parents homeowners insurance for liability and property loss.  

If the child hosts a kegger at college, and just one party guest has too much and injures someone while driving home, the child will likely be sued.  The parent's homeowners carrier will then typically step in to defend the the child and may ultimately pay any settlement or judgment.  This may be reassuring to the parent, but the claim will likely increase the parent's insurance rates dramatically.

College kids should know the potential risks of hosting a party.  Parents should talk to their children about these risks so they at least know what could happen  Hopefully, the parent's advice is not lost on their teenager (as is often the case). 

Knowledge is power.  Knowing your risk is half the battle.

Christopher A. Pearcy

Senior Associate Attorney

Hume Smith Geddes Green & Simmons LLP
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595

www.humesmith.com

Loan Your Car and You May Pay The Price! Insurance Follows The Car, Not The Driver.

"If you broke it, you bought it."  This is not exactly true in insurance law.  There is a common misconception that when you loan a car to friends or family the driver's insurance will cover any accidents.  FALSE.

By Indiana statute, the vehicle owner's insurance is primary.  What does that mean?  It means that if you loan your car to someone who gets into an accident, your insurance company is on the hook for all damages and injuries up to your policy limits.  Only once those limits are exhausted does the driver's insurance comes into play.

Why should you care who's insurance pays?  Because it will most likely increase your insurance rates!  Insurance companies typically don't care who was driving the insured vehicle.  Rather, they care about the claims made under you policy and the amount they are required to pay out under those claims.  Thus, the more accurate saying in this context is: "If your friend broke it, your insurance company bought it (up to policy limits)."  Increasing your rates is the most common response.

NOTE: Ownership of a vehicle alone does not make you personally liable for all accidents involving that vehicle.  Rather, liability typically follows the driver.  Driver liability derives from the fact that all drivers have duties to others on the road.  These include duties to keep a proper look-out, to stop at stop signs, and to generally follow the traffic laws.  Breach of those duties can cause the driver to be found negligent or at fault.  A mere owner does not have the same duties as a driver on the road.

However, there can be ownership liability for a driver's accident under certain circumstances.  Owners have a duty not entrust their car to someone that will pose a danger to others on the road.  It's called "negligent entrustment."  You can be personally liable for an accident if you give you keys to someone that is 1) grossly inexperienced, 2) not old enough to drive, 3) impaired (by alcohol or other drugs), or 4) has been involved in multiple prior accidents, traffic citations, and/or does not have a valid license.  There is no bright line rule here.  Rather, this is more a common sense rule that you should not hand over your keys to a bad driver. 

In summary: 1) Be careful who you loan your car to, 2) know that any accident might effect your insurance rates, and 3) never loan your car to a bad driver.

Christopher A. Pearcy

Senior Associate Attorney

Hume Smith Geddes Green & Simmons LLP
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595

www.humesmith.com

Texting and Driving is Unsafe and Illegal... But You Probably Won't Get A Ticket Anytime Soon..

Below is an article I originally wrote and published in the Indiana Lawyer in 2011.  Unfortunately, the predictions made in the article turned out to be true and remain relevant today.  As of June 2012, one year after going into effect, only five (5) tickets had been written in Indianapolis for texting while driving.  There were only 125 tickets issued state-wide during that time.  That's less than 2 per county in a year.  It's unknown how many of those were later dismissed for lack of evidence. 

As predicted in 2011, law enforcement cites difficulties determining whether the driver is using the device for a prohibited activity (text or email), or a permitted activity (such as anything else, including GPS, internet, or even Angry Birds).

Indiana’s Texting Ban: Flawed and Unenforceable (June 2011)

Indiana’s ban on texting while driving went into effect on July 1, 2011.  The ban provides that a person of any age commits a class C infraction if they use a telecommunications device, such as a cell phone, iPad or laptop to type, transmit or read text messages or email while driving.  A single violation is punishable by up to a $500 fine.  The ban was enacted by House Bill 1129 passed this spring and expands on Indiana’s existing texting ban, previously applicable only to drivers 18 and under.  

The texting ban may be a good idea from a public policy standpoint and few disagree that distracted driving can equate to dangerous driving.  But the texting ban is flawed and essentially unenforceable as passed.  

First, the scope of the ban is limited only to texting and email.  It does not cover a broad range of other activities these devices are often used for.  For example, the ban does not prohibit dialing a phone number, surfing the internet or using the thousands of apps now available on most smartphones and similar devices.  These countless other uses serve as plausible defenses for any driver stopped for a suspected violation.  Second, the ban expressly prohibits police from confiscating the device to confirm a violation or for use as evidence.  Even if an officer witnessed a driver typing on their device, proving that the driver was composing a text or email is nearly impossible absent a confession.  

The texting ban was originally part of more comprehensive distracted driver legislation which included a ban on placing or receiving phone calls.  However, the Senate Conference Committee stripped the bill of the provisions banning the making or receiving phone calls leaving only the texting ban in place.  This was an apparent compromise as many in the Indiana General Assembly were concerned that there was not enough support for a more comprehensive ban on cell phone use while driving.   The end result was weaker legislation against distracted driving that gives potential offenders the plausible defense that they were typing on their phone to dial a phone number rather than to transmit a text message or email.  

Indiana is the 32^nd state to ban texting while driving for all ages.  Another eight states have texting bans for novice drivers, typically those under 18.  With some kind of texting ban in 80% of states, there is strong nationwide support for this legislation.  Conversely, only eight states have broader bans on handheld cell phone use for drivers of all ages (with exceptions for use with hands free technology).  The slow acceptance of more comprehensive cell phone bans by other states may explain why our General Assembly was reluctant to pass a broader ban in the last session.

Indiana’s texting ban includes an exception that allows drivers to use their device in “conjunction with hands free or voice operated technology.”  This exception is often found in distracted driver legislation from other states, but it only makes sense as an exception to a ban on making or receiving phone calls while driving.  Many devices now include technology that easily allows a user to make or receive a phone call with only their voice.  However, this technology is not as simple to use for composing text messages or emails.  

Voice transcription technology, such as the Dragon Dictation app for the iPhone and Android devices, allows a user to compose a text or email with their voice.  (Update: This obviously now includes Siri as well.)  But any dictation app also requires the user to review their message for accuracy before sending it.  Correcting transcription errors requires the driver to use their hands.  Therefore, the use of such “hands free or voice operated technology” in this context still requires the driver to take their eyes off the road to ensure their message was composed correctly, thus defeating the underlying purpose of the ban and its exception.  

The ban on texting while driving remains a step in the right direction despite its flaws and enforcement problems.   It stands as a statement that our General Assembly recognizes the dangers of distracted driving and believes Indiana should have a public policy against it.  As the popularity of these devices grows, so does the potential for driver distraction and harm.  Hopefully, this ban is just the first step towards more comprehensive and enforceable legislation to protect our citizens from the ever increasing dangers posed by distracted driving.

Chris Pearcy is the Senior Associate at Hume Smith Geddes Green & Simmons LLP in Indianapolis, IN.  His practice focuses on civil litigation, including first and third party insurance litigation, complex insurance coverage, dram shop defense, premises liability, auto liability, construction accidents, contract disputes and business litigation.  He lives in Fishers, IN with his wife, Jennifer, and their two little boys, Noah and Eli.

Why I started the "Legal for Life" blog.

Whether you realize it or not, legal issues exist in nearly all aspects of your everyday life.  Whether it be your business, job, marriage, home, vehicle, health, children, pets, finances, insurance, purchases or recreation; legal pitfalls are never too far from the surface. This blog is a guide to help you avoid those pitfalls, and provide ways deal with legal problems if they arise.

I am a lawyer, but better descriptions are "counselor" and "problem solver."  I proactively counsel clients on the law and how to minimize their risk.  However, many new clients come to me after something bad has happened and they have been sued.  Resolving a lawsuit is a special kind of legal problem.  Client's need a litigator that knows how to use all of the legal tools available to bring the case to a quick resolution.  These tools are too numerous to get into here, but the most common ones include discovery, depositions, negotiation, mediation, summary judgment, and trial.  I deal with these issues everyday, but hopefully you will never have to.

We have all heard the saying that "an ounce of prevention is worth a pound of cure." This is more true in law as in any medical context, and it is my motivation for creating this blog. I hope that topics discussed here will help you better recognize and avoid life's legal pitfalls.

I welcome your feedback, including your suggestions and ideas for new topics for this blog.  Please feel free to contact me anytime through the contact information on my webpage: www.humesmith.com.

Christopher A. Pearcy

Senior Associate Attorney

Hume Smith Geddes Green & Simmons LLP
54 Monument Circle, 4th Fl.
Indianapolis, IN 46204
Phone: (317) 632-4402
Fax: (317) 632-5595

www.humesmith.com