Ounce Of Prevention No Cure For Liquor Risk
With litigation possible despite prevention, post-incident investigations needed

In an effort to help protect their businesses from liquor liability litigation, many hospitality establishments have implemented loss prevention measures to reduce the likelihood of overserving intoxicated patrons and to keep from serving minors. Clearly, the focus of these efforts is geared toward prevention.

However, liquor liability litigation is a risk to establishments that serve liquor in spite of the best prevention measures. How closely the responsible serving practices were adhered to can be challenged in any given occurrence. The risk of a lawsuit exists even if an establishment did not serve a patron.

Establishments that have easily identifiable names and publicly traded establishment are sometimes targeted for liquor liability lawsuits.

Keep in mind that the patron who alleges that he or she was overserved was, by nature, intoxicated with diminished mental capacity. It could be that this patron only named the last place he or she could most easily remember. Or it could be that the last two drinking establishments of the night were without many assets and do not carry liquor liability insurance. The patrons chances of recovery are greater by naming the larger, more recognizable establishment.

Post-Allegation Management:

There is a distinction between prevention and post-allegation management. One of the most useful post-allegation management measures an establishment can perform is the post-incident investigation. The goal of the post-incident investigation is to assist in the defense of a civil liability allegation against the establishment.

Many liquor liability lawsuits are served right before the statute of limitations is set to expire; in most states, this is two years. Two years is a long time to go back to recreate the events and circumstances of one evening. Many times, the first notice of an incident is when the lawsuit papers are served.

Establishments should strive to create a culture where any suspected incident is investigated. All of this leads to the importance of gathering the right information to assist in mitigating the outcome of liquor liability litigation.

For some hospitality operators with multiple venues located in multiple states, the risk management person may have a need to oversee the investigation from afar. Regardless of who conducts the investigation, the establishment itself, claims adjuster, or defense counsel, there are some key components and tips to keep in mind in conducting the investigation.

Conducting the Investigation:

Obtain articles from local newspapers. For risk managers who may not have ready access, the Internet can be a valuable resource. Try www.newslink.org or any similar site to gain access to local newspapers.

No Talking.

Instruct all employees of the establishment not to talk to anyone regarding events surrounding the incident, especially in casual conversation.

Private investigators for the plaintiff will visit an establishment and begin to ask questions without identifying who they are or their purpose. They will also, in an effort to get pictures of the bar area as seen on a busy night with low lighting and an understaffed bar, act as if they are taking pictures of friends, when they are really documenting the premises.

Direct inquiries to one place.

Instruct all inquiries to be directed to the appropriate risk management or public relations person in the company.

Pull all register receipts for that evening.

Try to pin down the number and types of alcohol the patron was drinking. If a patron makes an allegation of having four Jagermeister shots before leaving and the named establishment does not sell Jagermeister, the patron provides evidence that he or she may have been overserved at another establishment.

Take statements from managers and employees.

Better yet, take statements from managers and employees at the direction of your defense counsel so as to protect the documents from discovery. Remind the employees of the proper use of the word alleged when giving statements. Inquire about what types of conversation the patron was having. Who was the patron with while in the establishment?

Go to the videotape.

Visit surrounding stores and commercial buildings to see if any of them have external security cameras.

If the location is in a strip-mall shopping area, ask the building manager if there are any security cameras in the parking lot. If there is videotape suggesting that the patron was not acting out of the ordinary, this could be helpful. Of course, the opposite is damagingly true. Regardless, it is important information to know so that an informed decision on defense strategy can be made.

Hire a private investigator.

Ideally, have your defense counsel contract with a professional to investigate the case.

Get photos.

Obtain photographs taken at the scene of the accident.

Get statements from tow truck operators.

Tow truck operators may get to the scene before police investigators.

Interview emergency medical personnel.

Such personnel will certainly have first-hand knowledge of signs of the drinking condition of injured parties. It is possible that the patron who alleges overserving injured a third party who also may have been intoxicated.

Attend related cases.

Depending on the establishments philosophies, have defense counsel attend criminal trials and be a support for the employees who may be called to testify.

A Word About Discovery Issues:

During the discovery phase, many plaintiffs attorneys will request copies of all documents related to an alleged occurrence, including those involving any internal investigations.

When an establishment first becomes aware of a potential incident (even a whisper or a rumor), notice to the insurance carrier and/or defense counsel should be given right away. A condition of many liability policies is to provide notice to the carrier on any incident that may give rise to a claim.

If reporting to an insurance carrier, request that the claims adjuster assign legal counsel right away. Discuss with the defense counsel ways to make the investigation a work product at the attorneys direction and ways the work product would fall under the protection of the attorney-client privilege.

There is no better authority than your defense counsel. Working closely with your defense counsel in the post-incident investigation process and analyzing the information is important. Your defense counsel knows the law. The establishment knows its business and community.

By conducting a thorough investigation as close to the time of the alleged incident as possible, a hospitality establishment will be in a good position to make informed decisions on how to handle any potential liability action. If done timely and before a lawsuit is presented, the investigation will go a long way in assisting defense counsel to mitigate financial damages. If not done prior to a lawsuit, the information will still be valuable in deciding the best course of defense action.

Michael Campo is a senior vice president and team leader at the Lockton Companies Inc.- Kansas City Division, specializing in the marketing and servicing of food service clients. Janis Reilly is the risk manager for O'Charley's Inc. in Nashville, Tenn., operating over 300 dining establishments across the country.

Flag: Checklist

Head: Tips On How To Get The Facts

When taking statements, make sure employees provide additional information about themselves to increase the likelihood that they can be located two-to-three years later when a trial might take place. If they are young, ask them for their parents names and home phone numbers. Record their Social Security number on the form. Ask them for their cell phone numbers.

To capture detail and depth, ask employees to write their statements as if they were writing in their own diaries. Something that may seem unimportant to the employee may be very important to the investigation.

If possible, find a private investigator that is local and was at one time a police officer in that community. Being a past police officer may yield insights into working knowledge of current police officers, tow truck operators, troublemakers, reputation of drinking establishments in the area, etc.

Keep a keen eye out for proof that the patron possibly visited other establishments, including liquor stores. Check to see if there is a beer bottle in the car and it is not a brand that the alleged establishment serves.

Talk with tow truck operators, who can often provide information as to what the police seemed to be saying or keying in on in their investigation.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 11, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.