This article was originally published in The Pennsylvania Observer / Pennsylvania Beverage Media in February 2024. A pdf version can be found here.
Licensees often become involved in civil lawsuits for allegedly serving a patron too much alcohol, and injuries or deaths occur as a result to third parties or the overserved patron. These are generally referred to as “dram shop” claims. There are steps that licensees should take once they have received a notice of such a claim.
These steps apply to all lawsuits. Put your insurance company on notice and hire an attorney as soon as you become aware of a potential claim (immediately after you learn of an incident; or after receiving a letter from the plaintiff’s attorney; or service of a complaint filed in a Pennsylvania court).
Talk to your staff as soon as you learn of an incident and preserve all evidence, such as any incident reports, video surveillance, or sales receipts. Destroying evidence could negatively impact you if a lawsuit is filed against you.
If you have been served with a complaint, the Pennsylvania Rules of Civil Procedure provide that you have 20 days to file a response to the complaint (which is usually an answer to the complaint where the allegations are admitted and/or denied, or preliminary objections that raise legal defenses to the claims set forth in the complaint). In the event that you do not file an answer to the complaint within the 20-day period, the plaintiff may send via regular mail what is called a 10-day default notice. Once the default notice is mailed, you have 10 days from the date of the notice to file a response to the complaint or the plaintiff may be entitled to seek a default judgment against you. If a default is entered for failure to file an answer to the complaint, you can no longer dispute liability in the case. In this instance, seek an attorney to represent you to determine if you are able to open the default, meaning that the default is no longer in effect. If the default is opened, you can then file a response to the complaint.
Generally, your insurance company will assign an attorney to defend you and issue a reservation of rights letter—this is a letter from the insurer advising that it will provide you a defense in the action unless it receives information indicating that the claims are not covered under your policy. While not required, many licensees also wisely choose to hire their own personal attorney to represent their interests in liquor liability or dram shop cases.
Taking action before an incident occurs is critical as well. You should always make sure via your insurance broker that you have coverage for liquor liability and general negligence issues, and that your liability limits are high enough to protect your business.
Talk with your staff in advance regularly to immediately document any incident that involves an intoxicated patron. This documentation will also help defend any Liquor Code citations brought by the Pennsylvania State Police BLCE for sales to visibly intoxicated patrons.
Licensees should immediately contact your attorney in these matters.
