Mounain Law: Dillon’s controversial bar ordinance and Colorado dram shop acts
March 15, 2014
One reason that the town of Dillon encountered such resistance to its now-repealed ordinance requiring bar owners to report disturbances at their establishments may have been the conflict such reporting would pose with Colorado liquor liability laws commonly known as "dram shop acts."
A "dram" is a small measure of alcohol (as in the old song that goes "the whole world is a bottle and my life is but a dram"), and a "dram shop" used to refer to an establishment that served alcohol by the dram. The term dram shop now refers more generally to any place that serves alcohol, such as a bar. Dram shop acts are laws that address the liability of dram shops for the acts of their patrons after serving them alcohol. For instance, if a bar serves a patron who then drives drunk and kills someone, a dram shop act might address whether the deceased's family is able to sue the bar owner for wrongful death.
Until the late 1950s, all courts held that dram shops were not responsible for the acts of their patrons with certain exceptions. Colorado's original dram shop act was enacted in 1879 and remains on the books today. It makes a dram shop liable for providing alcohol to a habitual drunkard, but only after the drunkard's husband, wife, child, parent, guardian or employer has first given the dram shop a written notice not to serve the habitual drunkard. The statute has the illuminating title "Damages for selling liquor to drunkard."
Starting in the early 1960s and culminating in Colorado in 1986 there was a sea change in the law during which the question of dram shop liability was allowed to be decided under normal negligence principles. That meant a dram shop could be liable for failing to exercise reasonable care to protect others from injury at the hands of intoxicated patrons. Under these principles, Colorado courts issued a series of decisions imposing greater and greater liability on dram shops.
Overall, the 1986 law encourages dram shops — now know generally as bars — not to closely scrutinize IDs or pay attention to whether their customers are visibly intoxicated because liability is predicated on their knowledge surrounding these circumstances.
However, even under these decisions, injured individuals were not absolved of their own responsibility (such as choosing to ride in a car with a visibly intoxicated driver). Ironically, just as Colorado adopted new dram shop legislation in 1986, creating special protection for dram shops against civil liability, the Colorado Supreme Court decided a high-water case in which it rejected the idea that dram shops should be entitled to special protection from civil liability. (The legislation, of course, superseded the court decision for all future cases.)
The 1986 law provides the liquor industry with the most favorable protections against liability enjoyed by any special interest group in Colorado. Under the law, a patron himself or herself, including the patron's estate, legal guardian or dependent, cannot sue a dram shop for injuries caused by consumption of alcohol. The law allows an injured third party to sue a dram shop, but only if the third party can show that the dram shop "willfully and knowingly" served alcohol to a person under age 21 or who was visibly intoxicated. Even in that case, recovery is limited to $150,000 (increased from time to time by inflation) and the statute of limitations for bringing the claim is a relatively short one year.
Overall, the 1986 law encourages dram shops not to closely scrutinize IDs or pay attention to whether their customers are visibly intoxicated because liability is predicated on their knowledge surrounding these circumstances. While there may have been other reasons it was objectionable, one can see that Dillon's ordinance requiring bars to report certain activities of their patrons ran against the legal protections these bars enjoy under state law that discourage their close attention to patrons' activities.
Noah Klug is owner of The Klug Law Firm LLC in Summit County. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com.
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