California Dram Shop Laws Relieve Pressure on Bar Owners

By one estimate, 36% to 53% of small businesses are involved in litigation in any given year. California bar owners, especially, have plenty of reasons to lose sleep. Some think they’ve discovered why it’s called the “bar exam.” If you’re starting a business where alcohol is served, consider a relationship with a law firm experienced in licensing, employment requirements, real estate, mediation, contracts and more.

But know this. Getting sued every time a customer drives away isn’t your biggest worry in California.

A drinking problem, not a serving problem

In many states, any lawsuit over one person being injured by a second person who is drunk-driving has a good chance of involving a “third party.” The bar that served the drunk driver can get hit with a third-party lawsuit.

In such states, the “dram shop” laws leave the door open, to one degree or another, for the bar to be held liable for over-serving customer who hurts an innocent bystander. Owners of bar in those states may be especially cautious about “shift drinks” where a server has a few during or after their shift.

In California, the law is explicit in stating that drunk-driving crashes are caused by drinking, driving and crashing, not by serving. In most cases, bars aren’t responsible for the injuries their customers cause once they leave the premises.

Becoming the proximate cause of an injury

There can be cases to lose sleep over. Primarily, knowingly serving someone under the age of 21 when that person is clearly intoxicated can leave you open to liability for injuries that young person causes. But your serving the drinks must be the “proximate” cause of the injuries, meaning that your serving can’t be one in a long and winding sequence of events leading up to the injury, but instead, a clear and foreseeable cause of the injury.

In fact, looking over the text of the relevant laws, you’ll often find them hinging on what can and cannot be treated as a “proximate” cause. Proximate cause is a sticky concept that, in these contexts, the legislation aims to set the question aside. The laws specify that serving drinks cannot be a proximate cause of a drunk driving accident, except serving drinks to a clearly intoxicated minor, which might be.