When it comes to a claims investigation, the best defense is often a great offense. This can be especially true in dram shop litigation when a bartender is accused of serving an alcoholic beverage to a patron he knows (or should know) is intoxicated who then injures a third party.
Dram shop claims typically involve claimants who have sustained catastrophic injuries. Any shift in the liability analysis caused by newly discovered information can change the exposure by millions of dollars. By being proactive in the pre-suit investigation, claims departments and defense counsel can help avoid a scenario where, mid-litigation, a surprise witness or evidence surfaces.
Know the Rules and Act Fast
Statutes, laws, and case precedents in different jurisdictions can dramatically impact an exposure and the evidence needed to produce a solid defense. Claims professionals should be continually trained in the locations they manage. It’s OK to utilize counsel to help navigate these waters, but claims professionals still need to be up to date on the various notice provisions, statutes of limitations, and caps that a given jurisdiction may have. A cheat sheet might be a good idea for departments managing multiple jurisdictions.
Being proactive in the pre-suit investigation means following up on any potential lead as soon as possible. In today’s technological age, there is an enormous amount of information available, and a prudent investigation aims to be aggressive and organized about accessing it. Simply relying on the words of the insured’s staff denying any responsibility can result in new evidence, revealed mid-litigation, that negatively changes the trajectory of the case. Rarely will a bartender or employee admit that she over-served someone who was already intoxicated. Collecting corroborating evidence is crucial to providing a solid foundation for the defense counsel’s trial strategy.
In our work defending a claim, we prefer to gather the relevant information upfront, even if it results in the discovery of something potentially detrimental to our insured business. As long as we have the correct information, claims professionals and defense counsel can arrive at the best possible result without being surprised. Late-notice claims, high employee turnover rates at bars and restaurants, and taped-over video footage are all challenges that the defense may face when managing these claims, so speed matters.
Juries love visuals, and photos rarely lie. The prevalence of digital video (instead of tapes) has helped in the area of preserving evidence, but many restaurants have not yet made the leap to digital. Consider exterior footage as well—neighboring homes and businesses, taxis, ride-sharing applications, and even ATMs could all provide insights. Video footage not only aids in the understanding of what patrons and bartenders were up to, but it may also identify witnesses, and independent witness testimony can prove very useful.
Unfortunately, the notice of claim may not arrive until months after the occurrence—after surveillance footage has been overwritten. But one set of documents that should still exist is the establishment’s sales receipts on the date of loss. If the patron has a tab, then today’s Point of Sale technology should be able to tell you the number of drinks ordered, the increment of the order history, the time of each order, and the identity of the server. It’s important to also obtain a drink menu to show what was being offered at the time and the price/contents of each drink. Should a toxicologist be retained in the future, this data will be helpful. The establishment’s sales receipts from the date of loss can also be used to identify any other patrons who were in the bar.
Social media profiles belonging to the bartender, waitstaff, patron, and/or witnesses may show photos of the evening in question or contain other photos that can be used to discredit testimony. When completing a social media search, do not forget to check the sites of “friends of friends” of the aforementioned entities. A patron might not post much, but maybe his spouse does. The jury will also get to review photographs of the establishment and any operations manuals or other written policies. While reviewing such policies and procedures, double-check any document-retention provisions to guard against a potential claim for spoliation of evidence.
You cannot hear what someone has to say if you cannot find that person. This is where high turnover rates of restaurant staff come into play. Insuring venues that properly document present and past staff is important. With respect to bartenders, it’s helpful to investigate their employment and training history. What is the bartender’s experience? Is the bartender TIPS certified? Has the bartender been previously accused of over-serving patrons? The defense needs to carefully vet the bartender for any potential impeachment of credibility. At trial, the jury will be cautious when listening to a bartender’s testimony, but will eagerly review any discrediting information.
After considering the employee’s background, the examiner must also investigate the establishment’s history and reputation. Has the establishment ever been sued or accused of over-serving its patrons in the past? Were all of the employees on the payroll? Although certain information can be kept out of evidence at trial, the jury is still going to learn about how many employees are on staff for any given shift and how that compares to the number of patrons in the bar. In addition, consider how crowded the bar was during the period of sale in order to establish how much time and ability the server had to size up the patron and confirm that he could be served another drink. Do not forget to speak to bouncers, hosts, and servers. Anyone working during the relevant time period may have useful information.
Identify any regulars who frequent the establishment. Ask if they have any photographs or videos on their cellphones taken during the relevant time period. Finally, it may be worthwhile to submit a Freedom of Information Act request for any police reports and investigative reports from a local district attorney’s office. Those reports may contain the names of witnesses whose identities were unknown. Also, obtain any court records pertaining to criminal or civil action concerning the patron. Again, it is always best to know all publicly available information upfront, even if some of it is going to be harmful to the defense.
Spread the Wealth
Any prudent claims investigation should consider the ability to involve other defendants. If the subject establishment is leased, what does the lease say? Does the landowner have any culpability or contractual obligations to your insured business? What about other establishments that the patron may have visited before or after your insured’s business on the evening in question? Do they have any responsibility? Whether the case is ripe for settlement or on its way to trial, having other entities involved is always helpful.
The only thing better than a proactive investigation that uncovers evidence leading to a defense verdict is to avoid the claim altogether. Claims departments should consistently deliver information associated with the positive and negative outcomes that arose in past cases to their underwriting departments. Underwriters should be fully aware of jurisdictional statutes, changing trends, and common issues associated with various risk types that will help them to decide who and who not to write policies for, and how to price them. Knowledge is power, and having knowledge within an organization without putting it in the hands of those selecting the risks could be foolish.
Dram shop claims can involve millions of dollars in liability, and reliance upon witnesses with hazy memories, made worse because they were drinking alcohol on the date in question. But by being aggressive, proactive, and thorough in a pre-suit investigation, a claims examiner will have all of the available facts to set an accurate reserve and navigate an effective defense (or timely settlement). At the very least, you will know what you are up against upfront, and you will be less likely to experience the “surprise” moment that changes everything.