Beer & Wine Permit Holders Take Note! South Carolina Supreme Court Issues Important Decision Concerning Service of Alcohol to Intoxicated Persons

Writing for the majority, South Carolina Supreme Court Chief Justice Toal has penned an important opinion that affects how every beer & wine permit holder should do business in South Carolina.

In Hartfield v. The Getaway Lounge & Grill, Inc., Op. No. 26836 (July 26, 2010), the Supreme Court upheld a $10 million verdict awarded to a passenger seriously injured after the vehicle he was riding in collided with a car driven by a Getaway Lounge patron in July 2003. The Court additionally affirmed the trial court’s decision to permit the plaintiffs in this case to “pierce the corporate veil” and pursue the personal assets of The Getaway Lounge ownership.

In South Carolina, there is no “Dram Shop” Act. Nevertheless, our courts recognize an injured third party’s right to pursue the seller of alcohol for damages caused by the acts of an intoxicated adult patron. Specifically, to pursue such an action, the injured party must apply the criminal statutes governing alcohol control (S.C. Code Ann. § 61-4-580) and demonstrate the permit holder knowingly sold beer or wine to an intoxicated person.

At trial, the plaintiffs established Hoyt Helton, 54, had visited a number of bars on the night of the crash, including The Getaway Lounge. The Getaway Lounge was Helton’s second stop. Testimony revealed Helton had at least three beers at The Getaway Lounge. Additional testimony elicited that at least created the inference Helton had consumed some beer prior to his visit to The Getaway Lounge.

Shortly after leaving his third and final stop, Carolina Drive-In, wherein there was no evidence of any additional alcohol consumption while there, Helton collided with the car occupied by the plaintiff, Jon E. Hartfield, then 18. Helton died at the scene and Hartfield was seriously injured. Hartfield spent approximately 10 months in the hospital following the accident, six months of which he was in a coma. Today, Hartfield still requires care, wears a leg brace, is unable to drive, and has problems with short-term memory.

The Highway Patrol investigated the accident. Fluid samples revealed Helton’s blood alcohol level (“BAC”) to be .212 at the time of the collision. At trial, using a technique called retrograde extrapolation,” a chemistry instructor at the University of South Carolina estimated Helton’s approximate BAC during the time he was at The Getaway Lounge to have been between .18 and .20, and that Helton would have been grossly intoxicated and exhibiting symptoms of intoxication while at that bar. The inference from the expert’s testimony was that The Getaway Lounge either knew or should have known Helton was intoxicated at the time the bar served him beer.

The jury returned a verdict for Hartfield for $8 million and $2 million for Hartfield’s father. The court then issued an order piercing the corporate veil, which made Shou Mei Morris, The Getaway Lounge’s owner, liable for the verdict amount.

On appeal, The Getaway Lounge argued the toxicology testimony from the chemistry professor was speculative. The Supreme Court disagreed, holding the expert testimony was – at the very least – based on circumstantial evidence that was sufficient enough to support the chemistry professor’s opinions concerning Hoyt’s estimated level of intoxication while at The Getaway Lounge. The Court was satisfied the expert’s testimony was reliable and thus admissible by his establishing a general timeline of Helton’s activities leading up to the accident and Helton’s BAC at the time of accident.

Additionally, the bar attacked the trial court’s use of the criminal statutory inference concerning intoxication, which is used in DUI prosecutions. At trial, the judge directed the jury to determine if it was established at the time alcohol was served to Helton that he was intoxicated. The trial court further advised the jury the law creates a permissive inference that a person is under the influence of alcohol when that person has a blood alcohol level of .10 (now .08) percent or greater. Again, as established through plaintff’s expert testimony, Helton was alleged to have had a BAC between .18 and .20 while at The Getaway Lounge.

The Supreme Court concluded the jury could consider whether Helton was “under the influence of alcohol” at the time of the accident to determine the existence of his intoxication while at The Getaway Lounge. Reasoning that since South Carolina’s civil alcohol liability remedy is predicated on criminal statutes, the Court determined it’s permissible for a trial judge to charge a jury on the permissible inference of intoxication under those criminal statutes. Thus, a plaintiff in a similar future case is able to establish intoxication by demonstrating the allegedly intoxicated person possessed a BAC of .08 or greater, which is the current standard for showing a person to be “under the influence” in the criminal context.

Additionally, the Supreme Court disregarded the bar’s argument the plaintiffs were required to demonstrate Helton was “visibly intoxicated” at the time of the bar’s service of alcohol to him. The Court held that § 61-4-580 requires no such showing at trial. The statute only states that a permit holder shall not “knowingly” sell beer or wine to an intoxicated person. Thus, if a permit holder knows a patron has consumed alcohol prior to entering the permit holder’s establishment, that knowledge can be ultimately used to demonstrate the permit holder “knowingly” sold alcohol to an intoxicated patron. The fact the patron didn’t look intoxicated at the time of sale is not a safety net for the permit holder.

Finally, the Supreme Court upheld the language within the jury charge, which stated the defendants could be liable if they knew or should have known Helton was intoxicated at the time of their service of alcohol to him. The Court held that “knew or should have known” is an articulation of the objective “reasonable person” standard that is the underpinning of every negligence action prosecuted in South Carolina. Thus, if a permit holder possesses information or makes observations that would lead a jury to think the permit holder should have known a patron was intoxicated at the time of service, such evidence is likely admissible and can be used to establish liability.

The Supreme Court’s new decision in Hartfield raises the stakes for beer and wine permit holders. Mistakes and misjudgments about a patron’s sobriety can result in adverse outcomes for the permit holder in the form of sizeable judgments. Being careful about whom your serve and how much is more crucial than ever. One accident can lead not only to death and serious injury, but also the loss of your business – and perhaps your personal assets.

Bottom line pointers:

– This case and its holding applies to every beer and wine permit holder in South Carolina, whether the permit holder be a hotel, restaurant, bar, club, grocery store, or convenience store;

– Permit holders need an established safe alcohol service protocol in place at your establishment, which is actually taught to new hires. Have periodic refresher courses as well. Contact knowledgeable trade groups like the Hospitality Association of South Carolina or the South Carolina Convenience Store Association for direction concerning these protocols and training;

– If you know or should know a patron is intoxicated when he or she enters your establishment, do not serve or sell alcohol the patron;

– If a patron becomes intoxicated at your establishment and you know it or should know it, do not continue to serve that patron;

– If you know or should know a patron is intoxicated, take sensible steps to get that patron home safely;

– The courts recognize that demonstrating intoxication can be shown via a BAC test of .08 or greater – not a difficult level for an adult to reach while consuming alcohol;

– For purposes of protecting your business, ensure that you have the proper alcohol/liquor liability insurance coverage placed for your establishment – deal with a broker/agent who knows your business and understands its insurance needs. Make sure your coverage insures the proper entities and has the appropriate levels of coverage; and

– Ensure your business observes all the necessary corporate formalities to ensure your personal assets are not at stake in the event of an adverse. If you don’t know or aren’t sure about what to do, consult a capable lawyer to provide you with this advice.

Christian Stegmaier is chair of Collins & Lacy’s Retail/Hospitality/Entertainment Liability Group. His representation includes national and regional leaders in department store and specialty retailing; hotels; food service establishments; bars; private clubs; and live music presenters and promoters. He can be contacted at 803-255-0454 or email at cstegmaier@collinsandlacy.com.