Dram Shop Liability in Albuquerque, New Mexico

Liability for Alcohol Sales/Service in Drunk Driving Accidents

You have probably seen on TV or in a movie a bartender telling an intoxicated customer that they are "cut off" followed by slurred protests by the customer. It may have struck you as common sense for the bartender to have cut off the customer and that it was the right thing to do in the situation. While those are important reasons, there is also a legal duty to cut off the flow of alcohol.

Imagine that the bartender does not tell the inebriated customer that he is cut off. Instead, the customer, who has already had nearly half a dozen beers, asks for one more. The bartender serves him the beer. After finishing his drink, the customer gets in his car and leaves. On the way home, he swerves into an oncoming car and seriously injures the driver of the other car. Under New Mexico law, the establishment that served the drunk driver after he was already intoxicated may be liable for the damages sustained by the injured driver in that accident. This is called "Dram Shop Liability."

In a 1982 case, Lopez v. Maez, the New Mexico Supreme Court held that there is a duty imposed upon persons selling or serving intoxicating liquor to the public.

The duty on tavern-owners flowed from the New Mexico statute prohibiting the sale of alcohol to an obviously intoxicated person. Breaching that duty may result in the imposition on the tavern-owner of liability and damages for injury caused by the person to whom the tavern-owner served alcohol. The Court went on to state that the tavern-owner will only be responsible for foreseeable injuries. According to the Court, the consequences of serving alcohol to an inebriated person are foreseeable if the server knew or could have known that the person would be driving a car.

The New Mexico Legislature codified and limited dram shop liability in the Liquor Liability Act. The statute states that liability may be imposed on a licensee (person licensed under the provisions of the Liquor Control Act) or agent of the licensee:

• Who sells or serves alcohol to a person who was intoxicated;
• It was reasonably apparent to the licensee that the person buying or apparently receiving service of alcoholic beverages was intoxicated; and
• The licensee knew from the circumstances that the person buying or receiving service of alcoholic beverages was intoxicated.

The Act also requires that if the injured plaintiff is the one that was served the alcohol, rather than an injured third-party, then that plaintiff can only recover if the licensee acted with gross negligence and reckless disregard for the safety of the person who purchased or was served the alcoholic beverages. Think back to our earlier hypothetical. If the bartender acted only with negligence, then the bar is only liable for the injuries of the other driver - the injured third-party. If the bartender acted recklessly in giving the customer another beer, then the bar would also be liable for injuries sustained by the customer.

Social Host Liability

Under the Liquor Liability Act, liability may also be imposed on a social host. If a person gratuitously provides alcoholic beverages in a social setting with reckless disregard of the rights of others, including the social guest, then that social host may be held liable for damages to any person for bodily injury, death or property damage arising from the intoxication of the social guest.

For example, someone hosting a party provides alcohol to an obviously intoxicated guest of the party who the host knows will be driving home. The guest leaves and gets into a drunk driving accident, injuring another driver. If the other driver can prove that the host acted recklessly, then the host would be liable for the damages resulting from the accident.

Here is another example: pharmaceutical representatives host an out-of-office business luncheon for employees of a doctor's office. At the lunch, a staff member of the doctor's office consumes multiple alcoholic beverages purchased by the pharmaceutical reps. She drives to another restaurant with the pharmaceutical reps and consumes more alcohol they purchase and then again to another restaurant. After consuming multiple alcoholic beverages over the course of several hours, the staff person, who is obviously intoxicated, drives away. About fifteen minutes later, she hits another car, seriously injuring the driver and passengers of the other car and killing one of the passengers. These are the facts of Delfino v. Griffo.

In Delfino, the New Mexico Supreme Court held that social hosting does not need to occur at home to fall under the social host provision of the Liquor Liability Act. In Delfino, a licensed server served the alcoholic beverages in a restaurant. The Court, however, found that this situation was different from a situation where friends are having drinks together at a restaurant regardless of who pays. The Court stated that a guest/host relationship differs because a guest/host relationship implies some kind of control by the host over the guest and the provision of alcohol.

The Court stated:

"When one is put in a position of being another's guest, it is implied that the host will be in the position of some responsibility, albeit only a responsibility not to be reckless in providing gratuitous alcohol."

In this instance, the Court found that there was a guest/host relationship between the staff member and the pharmaceutical reps. The pharmaceutical reps organized the luncheon for the purpose of "wining and dining" the office personnel, paid for the alcohol, accompanied the staff person to the different restaurants, and even escorted her to her car when she left.

Social host liability, especially after the decision in Delfino v. Griffo, has an important impact in protecting New Mexicans from drunk drivers by encouraging social hosts to act responsibly and providing victims of drunk drivers another avenue to obtain justice from those who have not acted responsibly.

Dram Shop Damages

The Liquor Liability Act includes a provision that limits the amount of damages recoverable to $50,000 for bodily injury to death of one person in each transaction or occurrence, $100,000 for bodily injury or death to two or more persons (subject to the $50,000 per person limit), and $20,000 for property damage in each transaction or occurrence. However, the New Mexico Supreme Court ruled in Richardson v. Carnegie Library Restaurant, Inc. in 1988 that the damages cap of the statute was unconstitutional. The plaintiff argued that the damages cap violated the equal protection right guaranteed by Article II, Section 18 of the New Mexico Constitution.

The constitutional right to equal protection basically means just that: the government has to treat people the same unless it is has a good enough reason for not doing so. When the government creates a classification (for example, a law is enacted that only allows people over the age of thirty to vote, creating a class of people under the age of thirty as distinguished from those over thirty), the government must have a sufficient reason for both creating the class and for treating people in the class differently. The burden that the government has to overcome to show that its purpose for the classification is constitutionally permissible depends on the characteristic of the classification. For example, the government has a much higher burden is the classification is based on race than if it is based on age. This means that a restriction on voting rights is more likely to be unconstitutional if it restricts voting based on race than if it is based on age.

In Richardson, the Court noted that the Liquor Liability Act made three classifications:

• victims injured as the result of the negligence of a tavern-owner as distinguished from other victims of negligent conduct;
• victims suffering from the negligence of a tavern-owner whose injuries amount to less than $50,000 as opposed to those with damages exceeding the cap; and
• negligent tavern-owners benefiting from only having to pay up to $50,000 as distinguished from other negligent defendants whom are liable for the full amount of damages caused by their negligent conduct.

The Court determined that the government would have to meet a high burden, called intermediate scrutiny, in order for the damages cap to be constitutional. Under intermediate scrutiny, the law is unconstitutional unless it has a substantial relationship to a legitimate or important governmental purpose. The Court held that it did not meet this standard.

The Supreme Court stated that the damages cap:

"works a manifest injustice on innocent tort victims and lacks any of the redeeming features entitling it to constitutional validity."

Ten years later, the New Mexico Supreme Court examined a similar damages limitation in the New Mexico Tort Claims Act in Trujillo v. City of Albuquerque. The Court determined that intermediate scrutiny no longer applies to equal protection challenges to damage cap provisions and that they are subject to a lower standard, called rational basis. Rational basis is a much easier burden for the government to overcome to prove the law at issue is constitutional. However, this did not overrule Richardson in its entirety.

The Court stated in Trujillo that the damage cap provision of the Liquor Liability Act would be unconstitutional even under rational basis. This means that the ruling of Richardson is still in effect and damages under the Liquor Liability Act are not limited. This is important because drunk drivers can cause severe injuries and damages may be well above $50,000.

Furthermore, limiting the amount of damages available to an injured plaintiff would lessen the impact of the statute on deterring irresponsible conduct by those serving alcohol. It sends a message that someone that is hit by a drunk driver who was negligently served alcohol is less deserving of justice than someone who was injured by someone running a red light.

Our Albuquerque at James Wood Law has extensive experience representing those injured in drunk driving accidents. Call today to learn more about seeking compensation.