DUI AccidentsPersonal InjuryPremises Liability

Third Party Liability for Providing Alcohol

Can a business or "social host" be liable for serving alcohol?

Prior to 1978, the California Supreme Court determined, through a string of cases between 1971 through 1978, that a business or person who serves alcohol to a customer who, as a result of being intoxicated, injures a third party can be liable to the third party for his or her damages.

In 1978, the California legislature took issue with the California Supreme Court’s rulings and amended a statute that had been on the books since Ulysses S. Grant had been president of the US (1872), so that it would now give businesses and people, including “social hosts” (i.e., you, me, and everyone else who has ever thrown a party at home in which alcohol was served), immunity for furnishing alcohol.

California Civil Code § 1714(b) specifically states the California legislature’s intent when it comes to businesses and people who provide alcohol to someone who ends up injuring a third party due to being intoxicated. In their infinite wisdom, the California legislature decided that consuming alcohol, rather than furnishing it, is the only cause of any resulting injuries to a third party, with some exceptions explained further below.

“(b) It is the intent of the Legislature to abrogate the holdings in cases such as Vesely v. Sager (1971) 5 Cal.3d 153, Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313, and Coulter v. Superior Court (1978) 21 Cal.3d 144 and to reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person, namely that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person.

(c) Except as provided in subdivision (d), no social host who furnishes alcoholic beverages to any person may be held legally accountable for damages suffered by that person, or for injury to the person or property of, or death of, any third person, resulting from the consumption of those beverages.”

That same year, the California legislature also amended California Business and Professions Code § 25602 to include the following:

“(b) No person who sells, furnishes, gives, or causes to be sold, furnished, or given away, any alcoholic beverage pursuant to subdivision (a) of this section shall be civilly liable to any injured person or the estate of such person for injuries inflicted on that person as a result of intoxication by the consumer of such alcoholic beverage.

(c) The Legislature hereby declares that this section shall be interpreted so that the holdings in cases such as Vesely v. Sager (5 Cal.3d 153), Bernhard v. Harrah’s Club (16 Cal.3d 313) and Coulter v. Superior Court (21 Cal.3d 144) be abrogated in favor of prior judicial interpretation finding the consumption of alcoholic beverages rather than the serving of alcoholic beverages as the proximate cause of injuries inflicted upon another by an intoxicated person.”

But is this the end of the story? Do businesses and people always get a free pass (immunity) from liability for injuries resulting from serving alcohol?

No. There are important exceptions to be aware of.

What is the dramshop exception for intoxicated minors?

The first use of the word “dramshop” occurred in England in 1725 and been with us ever since. Back then, a “dram” was a way of measuring alcohol (i.e., it measured out at about ¾ of a teaspoon.)

In the law of most states today (38 of them), excluding California, the word ‘dramshop” in the legal sense has come to mean that a business or person is strictly liable for selling alcohol to someone who is obviously intoxicated or close to it, and whom subsequently injures a third party.

While California does not follow this strict liability rule, the California legislature did enact a narrow exception: The statutory immunity does not necessarily apply to defendants who serve alcohol to an obviously intoxicated minor.

California Business and Professions Code § 25602.1 provides as follows:

“Notwithstanding subdivision (b) of Section 25602, a cause of action may be brought by or on behalf of any person who has suffered injury or death against any person licensed, or required to be licensed, pursuant to Section 23300, or any person authorized by the federal government to sell alcoholic beverages on a military base or other federal enclave, who sells, furnishes, gives or causes to be sold, furnished or given away any alcoholic beverage, and any other person who sells, or causes to be sold, any alcoholic beverage, to any obviously intoxicated minor where the furnishing, sale or giving of that beverage to the minor is the proximate cause of the personal injury or death sustained by that person.”

While the exception provided by California Business and Professions Code § 25602.1 has been narrowly applied by courts in California, if you or a loved one have been injured by someone under the age of 21, who was intoxicated at the time of the incident, it is worth investigating whether the exception may apply. If it did, a suit against the business or social host who provided the alcohol may have merit.

The 1995 case of Guadalupe Hernandez v. Modesto Portuguese Pentecost Association, one of the first in the state addressing potential liability under California Business and Professions Code § 25602.1, is an example of how the exception may be construed in a lawsuit. Hector Estrada, a minor at the time, was served seven beers during a dance organized by the Comite Patriotico Mexicano, despite already being visibly intoxicated. He attended the dance with friends. When Estrella and his friends left the dance, Estrella insisted on driving, even though his friends urged him not to. He lost control of the van he was driving and struck a utility pole. Estrella and two of his three passengers died, and the third passenger suffered serious injuries.

Plaintiffs included Guadalupe Hernandez and relatives of the people who died in the collision, and they sued Modesto Portuguese Pentecost Association–but not Comite Patriotico Mexicano–in the Superior Court of San Joaquin County. Comite Patriotico Mexicano had rented a two-story ballroom known as the California Ballroom, which was owned and operated by the Modesto Portuguese Pentecost Association, and then applied for a one-day liquor license. But no representatives from Modesto Portuguese Pentecost Association were present at the dance organized and put on by Comite Patriotico Mexicano, a fact that would be difficult for the plaintiffs to overcome in their suit. Stated differently, the plaintiffs sued the wrong party; they should have sued Comite Patriotico Mexicano, where the narrow exception imposed by California Business and Professions Code § 25602.1 would have found liability.

The Court of Appeal, Third District, however, in siding with Modesto Portuguese Pentecost Association, in Guadalupe Hernandez v. Modesto Portuguese Pentecost Association, still gave us good guidelines to consider when prosecuting claims California Business and Professions Code § 25602.1, including the following analysis:

“For example, one who, having control over the alcohol, directs or explicitly authorizes another to sell it to a minor who is clearly drunk falls within the statutory language. On the other hand, merely providing a room where alcoholic beverages will be sold by others is not sufficient to satisfy section 25602.1’s phrase, “causes [alcohol] to be sold.”
And also:

“Simply put, a supplier of alcohol must use reasonable care to ensure the person receiving the alcoholic beverage is not an obviously intoxicated minor…. ‘[A] duty is placed upon the seller, before serving the intended purchaser, to use his powers of observation to such extent as to see that which is easily seen and to hear that which is easily heard….”

The law is clear: Any business subject to licensing in the sale of alcohol can be liable to a third party injured by an intoxicated minor, whether the alcohol is sold, furnished or given away to the minor. In addition, the immunity generally afforded by California Civil Code §§ 1714(b) and (c) to businesses and social hosts does not cover parents, guardians or other adults who knowingly serve alcohol at their home to persons they know or should know to be under age 21.

California Civil Code § 1714(d) explicit states this important limitation:

“(d)(1) Nothing in subdivision (c) shall preclude a claim against a parent, guardian, or another adult who knowingly furnishes alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age, in which case, notwithstanding subdivision (b), the furnishing of the alcoholic beverage may be found to be the proximate cause of resulting injuries or death.”

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