Florida High Court Ruling Could Cut Damages for Bars Serving Booze to Minors

March 20, 2024 by William Rabb

Insurers in Florida can can contemplate potentially lower loss costs on liquor liability policies after a recent state Supreme Court ruling that clarified when bars and restaurants can be held partially versus completely liable for some alcohol-related injuries.

The court, considering a highly publicized 2014 incident, found that the popular Tallahassee bar known as Potbelly’s had “willfully” served an underage patron, who later that night struck a pedestrian with his pickup truck. But serving the minor did not mean the bistro had meant to intentionally harm the young woman who was permanently injured in the crash, the justices said.

That means that Potbelly’s liability is governed by Florida’s comparative fault statute, which apportions liability between parties involved, the court said in answering a certified question from the state’s 1^st District Court of Appeal. Instead of facing a $29 million judgment, the bar owners’ damages will now likely be reduced by half, if a lower court finds that another bar, which served the young woman, was also at fault.

“Our answer to the certified question is yes: The action permitted by the underage drinker exception in section 768.125 is a negligence action for purposes of the comparative fault statute, section 768.81,” Chief Justice Carlos Muniz wrote in the March 7 opinion. “We approve the district court’s decision to the extent it is consistent with our decision today.”

Attorneys for the injured Jacquelyn Faircloth had argued that Potbelly’s had committed an intentional tort, not just negligence. That argument was seen as a way to avoid the comparative fault apportionment, which could lower the bar’s liability, the court suggested. The other Tallahassee bistro, Cantina 101, had served alcohol to Faircloth, who was also underage at the time. She was reportedly inebriated and darted in front of the truck when she was hit, the court explained.

But Cantina 101 defaulted in the lawsuit and is now out of business, according to news reports. That meant that, under Faircloth’s argument, Potbelly’s was left holding the bag on the whole $29 million awarded by a jury in 2019.

The years of appeals were necessitated by questions over the intent of Florida law.

The Legislature in 1980 effectively absolved eating and drinking establishments of liability for injuries caused by drunk patrons (the dram shop statute, section 768.125). The exception was for bartenders who “willfully and unlawfully” sell beverages to underage people.

Another section of the law (section 768.81) provides that in tort actions, juries must divide up damages between parties that were at fault. People found to be more than 50% at fault for their own injuries may not recover any damages.

But the statutes did not specify if nightclubs that serve minors would be covered by the comparative fault provision. Now, the Supreme Court has clarified things, explaining that establishments can be somewhat protected by sharing negligence with others involved in an accident.

Potbelly’s, owned by Main Street Entertainment, was represented at the high court by former Florida Supreme Court Justice Raoul Cantero and other lawyers with the White & Case and the Kubicki Draper law firms. Cantero could not be reached for comment by Insurance Journal. But in a White & Case blog about the case, he explained why it should not have been considered an intentional tort.

“Selling alcohol ‘willfully and unlawfully’ does not convert a negligence claim into an intentional tort,” Cantero wrote. “Just as one can intentionally run a red light without intending injury to another, an establishment can willfully serve alcohol to a minor without intending injury to that minor or to anyone else.”

Potbelly’s lawyers had argued that the driver had said he consumed no more than two drinks, and that Faircloth ran out in front of his vehicle, making it impossible to avoid her.

The case has been closely watched around the state, and it drew attention to the widespread problem of underage drinking in college towns like Tallahassee, which has two universities and a community college. In a scathing editorial in 2022, the South Florida Sun Sentinel blasted the 1^st District Court of Appeals’ decision that held that the case was a negligence matter, governed by the comparative fault law.

The driver, Devon Dwyer, had fled the scene and went to prison, the editorial noted. Faircloth, though, cannot talk or walk. “She breathes and eats through a tube and has seizures, and she will need skilled care the rest of her life.”

The $29 million verdict “is not too much money for such a catastrophic injury. Nor is it too much to put Florida’s many student drinking hangouts on notice that they are at fault for what happens when they illegally serve alcohol to kids.”

Florida State University, situated just a few blocks from Potbelly’s, and the University of Florida weighed in with amicus briefs to the Supreme Court, arguing that the bar should be held fully responsible and that comparative fault does not apply.

The Florida Defense Lawyers Association penned an amicus brief for the opposing side, contending that nothing in the law bars the application of comparative fault in serving alcohol to minors.

“This Court should conclude that any cause of action related to Florida’s dram shop Law sounds in negligence, such that there is no prohibition in applying the comparative fault statute to such claims,” FDLA’s Kansas Gooden and Elaine Walter wrote in the brief.

They noted that most U.S. states consider dram shop law actions to be negligence actions, not intentional torts.

Justice Jorge Labarga dissented from the majority opinion, pointing out that Potbelly’s management had admitted that it willfully served the underage driver. The establishment proprietors knew Dwyer’s age, since they had hired him as a security guard. The bar’s misconduct “was intentional, and Potbelly’s should not be allowed to benefit from the comparative fault statute to lessen its liability,” Labarga wrote.

Labarga also argued that the Florida dram shop act was not intended to reduce the liability of bars that knowingly serve booze to minors, but was enacted only to protect young drivers from liability after unscrupulous vendors intentionally sell them intoxicants.

The case now goes back to the trial court in Leon County to determine how much Potbelly’s must now owe. It’s unlikely that the establishment’s insurance carriers will have to pay more than the policy limits allow. Most liquor liability policies carry a limit of no more than $2 million per occurrence, attorneys have said. In future lawsuits brought over serving minors, comparative fault verdicts would apportion damages, though, perhaps lowering some bars’ liability below policy limits or even below deductible levels.

It’s also unlikely that the victim and the driver will be assigned any level of negligence in the case. The high court declined to address one point in the appeals court’s 2022 decision. In that, the 1^st DCA opined that if comparative fault were allowed, damages should be apportioned between the two bars, not between the bars and the underage drinkers involved in the accident.

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