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By Christian Stegmaier, Esq.
Collins and Lacy, P.C.
Columbia, South Carolina

The “Knew or Should Have Known” Standard Created by Case Law Necessitates Extra Vigilance by Permit Holders

Understanding the parameters of what constitutes the safe service of alcohol in South Carolina bars, restaurants, and clubs can be a tricky thing. That’s because South Carolina does not have Dram Shop laws. Instead, alcohol liability in the Palmetto State is a case law-created beast that intertwines criminal statues found in Title 61 with a negligence-based theory. Understanding the amalgamation created by the case law and developing training to account for it can be challenging for permit holders to say the least.

The Law in South Carolina: “Knew or Should Have Known”

To sum up, third party commercial alcohol liability in South Carolina is established if the plaintiff can demonstrate a permit holder’s service to an intoxicated guest. Our case law holds a jury may infer intoxication at the time of service if a toxicologist retained by the plaintiff can show through either retrograde extrapolation or by counting drinks that the tortfeasor driver who allegedly caused injury to a third party possessed a BAC of .08 or above at the time of service.

Moreover, visible intoxication is not the standard (or an absolute defense) in this state; instead, our standard for permit holders is whether a server “knew or should have known” that he or she was serving an intoxicated guest. This is a key factor for permit holders to understand and embrace.

Hartfield v. Getaway Lounge is the case establishing the standard for alcohol liability in South Carolina.

In Hartfield, the South Carolina 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.

At trial, the plaintiffs established Hoyt Helton had visited several 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 from The Getaway Lounge bartender that served Helton 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. 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 retrograde extrapolation,” Plaintiff’s toxicology expert 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 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 plaintiff’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.

Furthermore, 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 difference between the “Visible Intoxication” standard and “Knew or Should Have Known” standard is important to understand. That’s because the threshold for recovery against a permit holder is so much lower under the “Knew or Should Have Known” standard.

As noted above, unlike most states, South Carolina does not have Dram Shop statutes. Dram Shop statutes are civil statutes, which create a private right of action for injured third parties against the person who caused the injury, as well as the establishment that sold him or her the liquor. Most states in the United States that have Dram Shop statutes observe the “Visible Intoxication” standard. This means the key to suing under Dram Shop laws is establishing that the server sold alcohol to someone who was already “visibly intoxicated.” For instance, New Jersey law defines visible intoxication as “a state of intoxication accompanied by a perceptible act or series of acts which present clear signs of intoxication.”

What makes the “Knew or Should Have Known” standard so difficult for permit holders in South Carolina is that someone at .08 BAC isn’t always perceptible, especially in instances where a guest has just come into an establishment and has ordered only a drink or two (i.e., the guest hasn’t been in that one establishment all evening, ordering drink after drink – in that instance, the server should be counting drinks and measuring that service against time the guest has been at the establishment). Absent some sort of investigation by the server regarding prior activities of the guest that has just come in, many people don’t demonstrate any signs of intoxication at .08 BAC and arguably at any point less than .15 BAC due to gender, height, weight, experience with alcohol. Hence, the challenge for South Carolina permit holders that are trying to serve alcohol safely at their respective establishments.

The Absolute Necessity for Training of Servers by Permit Holders on the “Knew or Should Have Known” Standard

So, how does a permit holder account for the “Knew or Should Have Known” standard in its safe alcohol service operations. It all goes back to training, oversight, and reinforcement.

No matter how big or small the operation, a bar, restaurant, or club in South Carolina should have a documented safe alcohol training program led by competent trainers. This is Safe Alcohol Service 101. Such a program should be taught in an understandable and meaningful manner while onboarding new employees, as well as used to refresh seasoned employees on a periodic basis.

When it comes to training, a permit holder doesn’t have to reinvent the wheel. There are myriad programs in existence, which are readily available to be deployed at your establishment. These programs include ones that are considered the standard in the hospitality industry:

These programs are formatted as online course addressing concerns specific to restaurants, hotels, bars, nightclubs, and other on-premise liquor license holders where alcohol is served by the drink. These courses are designed to teach participants to prevent intoxication, drunk driving, and underage drinking among the people to whom they sell or serve alcohol.

Putting the Pieces Together: Integrating the “Knew or Should Have Known” Standard Into Your Operations

At the heart of an initial encounter with a patron, the training teaches servers to size up patrons to determine if they may be already under the influence. Being under the influence generally means from alcohol, but it can also mean from drugs too. To say the least, a server’s job sizing up the patron can be challenging,

We defend many alcohol cases in this state for both insurers and self-insured permit holders. As we have defended these cases, we have identified several trends in the matters where ultimately sizeable indemnity payments have ultimately been paid. Basically, there are two sets of cases we defend:

  • The way overserved patron who was at the defendant’s establishment for way too long; and
  • The patron who comes in, often late at night, has 1-3 drinks, leaves, and then gets into an accident. Often, when we investigate the accident, we hear the patron was seemingly okay and not visibly intoxicated at the time of service.

The stakes for permit holders are too high to be just hoping for the best when it comes to safe alcohol service. In Getaway Lounge, the plaintiff pursued the bar’s owner personally for judgment. Even assuming there is sufficient insurance, payment of the $1 Million limits of a liquor liability policy or even a claim with a demand for limits can make a permit holder uninsurable in future years. Instead, in the interest of prudence and reducing the prospect for claims, the permit holder must be proactive when interacting with each guest coming through the doors. This doesn’t mean hostile interrogation of a guest’s activities prior to arriving at the establishment, but it does mean a thoughtful and intentional interaction with the guest to best gauge that guest’s physical and mental status. It can include jocular and gentle questions like ““What have y’all been up tonight?” The response can provide a server with great cues regarding whether service is appropriate:

  • “I just got off of work and figured I’d stop by here on the way home” is going to be generally a green light for service. Most folks aren’t drinking during their work day.
  • Conversely, “We’ve been on the boat at the sandbar all day relaxing and drinking” is going to be either a yellow or red light for service. Applying common sense, what do you think those boaters have been doing all day? And while they may be having a seemingly cogent conversation with the server, how far are they really from a .08 BAC or above?

The same caution should be exercised by a permit holder that is adjacent to other permit holders or in a town’s entertainment district where there are many other nearby permit holders. There is a solid chance that guest or guests have been at other permit holders before coming into yours, especially on a weekend or at late in the evening. Selling $25-50 worth of drinks to potentially questionable guests is not worth the $100,000 or more in premium your establishment will be paying following a claim (assuming you can find coverage in an ever-diminishing insurance market here in South Carolina).

Conclusion

Unless and until there are Dram Shop statutes that establish “visible intoxication” as the standard (which is the standard in most states), permit holders in the commercial setting here in South Carolina need to recognize and understand the significance of the “Knew or Should Have Known” standard, as created by the Supreme Court in Hartfield v. Getaway Lounge on their operations. Accordingly, permit holders must adopt an ever-vigilant mentality when it comes to training servers and continuously maintaining appropriate protocols for the safe service of alcohol to account for this standard.

 

Christian Stegmaier is a senior shareholder and firm president of Collins & Lacy, PC, a Columbia, South Carolina-based defense firm that serves all of the Palmetto State. Christian is also chair of the firm’s Retail & Hospitality Group and represents the nation’s and region’s largest retail and hospitality operators doing business in South Carolina. He has a national reputation in the retail and hospitality law space and routinely speaks nationwide on the issues of alcohol liability, premises liability, third party tort, food claims, and diversity/inclusion in law. Christian chairs the DRI Retail & Hospitality Committee. He is also active in the International Amusement & Leisure Defense Association, Academy of Hospitality Industry Attorneys, and Primerus. He is a member of ABOTA. He is recognized by his peers in Super Lawyers and Best Lawyers. Christian is also Staff Judge Advocate of the South Carolina State Guard and commands the SCSG’s JAG Detachment. Christian can be reached for your questions at cstegmaier@collinsandlacy.com or (803)-255-0454.