Dram shop liability refers to the body of law governing the liability of taverns, liquor stores and other commercial establishments that serve alcoholic beverages. Generally, dram shop laws establish the liability of establishments arising out of the sale of alcohol to visibly intoxicated persons or minors who subsequently cause death or injury to third-parties—those not having a relationship to the bar, as a result of alcohol-related car crashes and other accidents.
The laws are intended to protect the general public from the hazards of irresponsibly serving alcohol to minors and intoxicated patrons. Groups such as Mothers Against Drunk Driving (MADD) have advocated for the enforcement and enactment of dram shop laws across the United States as well as in the United Kingdom, Canada, New Zealand and Australia. The earliest dram shop laws date from the 19th century temperance movement.
The laws have drawn criticism from some who claim they may downplay the role of personal responsibility.
Serving alcohol to minors is illegal in all 50 states. Many states impose liability on bars for serving minors who subsequently injure themselves or others in order to deter the illegal practice of serving minors alcohol. Thus in Texas, minors can sue a drinking establishment for their own injuries sustained while intoxicated. In other states, dram shop liability extends to serving the "habitually intoxicated."
The majority of states allow for recovery when the defendant knew (or should have known) the customer was intoxicated. Some states have attempted to address this problem through more exacting tests. Missouri's recently revised dram shop law requires proof that the party demonstrates "significantly uncoordinated physical action or significant physical dysfunction." In Texas, a patron must be so obviously intoxicated that he presents a clear danger to himself and others.
On the other hand, in Massachusetts, the highest court in the state held that a bar could be sued where a patron exhibiting "drunk, loud and vulgar" behavior was determined to be "visibly intoxicated," Cimino v. The Milford Keg, Inc., 385 Mass. 323 (1981). In Cimino, evidence showed that the intoxicated patron had been served six or more White Russians by the Milford Keg bar. The patron left the bar, arriving at another bar about fifteen minutes later "totally drunk," holding a White Russian. The next bar that he went to refused to serve him. Shortly thereafter, the intoxicated patron lost control of his car, drove up on a sidewalk and killed a pedestrian.
Under Illinois' dram shop law, plaintiffs can recover after demonstrating:
Proximate cause includes the legal requirement the dram shop must have been able to foresee that its actions could cause injuries to third parties, but this is true for any establishment that serves (sells) alcohol. One Illinois court allowed a lawsuit against a company that dropped off self-serve barrels of beer at a union picnic.
Michigan and Alaska, whose dram shop laws are considerably more narrow than MADD proposes, have drunk-driving fatality rates below the national average, while Illinois is above the national average, despite having one of the broadest dram shop laws, according to a 2004 comparison by YAERD, a U.S. organization that studies alcohol use among youth. Comparisons between a rural state like Alaska, with the lowest population density in the United States, with that of Illinois, which includes the Chicago metropolitan area and other major cities, may not be scientifically valid because of the existence of confounding variables. A 1993 study from the National Bureau of Economic Research found some reduction in alcohol-related fatalities from the implementation of dram shop laws, though it did not control for the special cases of Utah and Nevada, which may have distorted the results.