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Is Your Holiday Party A Liability Cocktail?

Is Your Holiday Party A Liability Cocktail?

Is Your Holiday Party A Liability Cocktail? – Who is liable when an employee or guest drinks too much?

For many employees, the holiday season begins with the annual company party. The employer often provides or pays for food and alcoholic beverages. Parties may be held on or off company premises. The employer is considered to be a “social host” of these events.

Who is liable when an employee or guest drinks too much alcohol at a holiday party and injures an innocent third party in an alcohol-related automobile accident?

1. Intoxicated Employee

The intoxicated person generally bears the responsibility for injuries caused in alcohol-related automobile accidents.

2. Retail Licensee

If the alcohol is furnished by a retail licensee (i.e. a bar or restaurant), that establishment may also bear some responsibility. The dramshop provision of the Michigan Liquor Control Act prohibits a retail licensee from selling, giving away, or furnishing alcohol to a minor or a person who is visibly intoxicated. This dramshop provision provides the exclusive remedy for recovery of money damages for injuries arising out of the unlawful sale, giving away, or furnishing of alcohol by retail licensees to a minor or a visibly intoxicated person.

3. Social Hosts Including Employers

A common question is whether the employer may be found liable for a third party’s injuries from an alcohol-related automobile accident caused by an impaired or intoxicated employee or guest. Some state courts have imposed liability upon a social host due to increased societal pressures to reduce drunk driving. However, most states have declined to subject social hosts, including employers, to liability for the gratuitous furnishing of alcohol. Some states have even passed laws that expressly exempt social hosts from liability. Except as noted below, under current Michigan law a social host owes no duty of care to protect a third party against risks of injury caused by an intoxicated employee or guest.

Regarding minors, a social host’s liability arises from the host’s control over, or active participation in, supplying minors with alcohol. Relevant to this inquiry is whether the employer was more than merely present when minors were consuming alcohol at the party. Even if an employer does not physically provide the alcohol consumed at a party, merely paying for it creates at least some duty to ensure that alcohol is not served to minors.

Under the appropriate circumstances, courts have permitted common law actions against a social host under the following theories:

Respondeat Superior. Generally, the acts of an employee committed during the course of his employment are legally the acts of the employer. The pertinent inquiry is whether an employee is acting within the scope of his employment when the injury occurs. General examples are discussed below.

In one Michigan case, Romeo v. Van Otterloo, the employer authorized some of its employees, including the defendant Van Otterloo, to host a party for one of its corporate clients.

Van Otterloo drank too much alcohol, and while driving home from the party caused an automobile accident, killing an occupant in the other car. The employer argued that since Van Otterloo was on his way home from the party he was not acting in the scope of his employment.

The court stated that if an employee’s trip involves a service of benefit to the employer, the employer is liable for the torts of the employee while going to or coming from work. Plaintiff’s complaint alleged that the employer’s client function, although a party, was held for the furtherance of its business, and thus that Van Otterloo was acting on its behalf as host of the affair.

The party was conducted outside of normal business hours and at a separate location from defendant’s normal place of business. The court stated that “the natural inference to be drawn from these facts is that defendant created the necessity for Van Otterloo’s travel and derived a benefit from his trip.”

In Rowe v. Colwell, the defendant, Donald Colwell, a loan officer of defendant Manufacturers National Bank of Detroit, was invited by a client to an open house where he was served alcohol. The party moved to a nearby restaurant where he was served dinner and drank more alcohol. Following the dinner, Colwell was invited to the home of his boss, where Colwell and other employees played pool and drank more alcohol. Colwell then drove home and struck a pedestrian with his automobile.

Plaintiff Rowe argued that the employer was liable because of Colwell’s attendance at a social function at the home of his boss. The court said that Colwell’s employer was not liable because Colwell’s attendance at a purely social party held during non-work hours at the boss’s home was not within the scope of his employment.

The court noted, however, that “we can conceptualize instances where a jury question would be presented, as for example, a social occasion where some business was transacted.”

In Whittaker v. Jet-Way, Inc., the defendant held a Christmas party open to customers, friends, employees and employees spouses on its premises at Willow Run Airport, at which alcohol was served. Employee attendance was not required. One of Jet-Way’s employees consumed too much alcohol and left the party intoxicated. His car collided with another vehicle, seriously injuring the occupants.

The plaintiff brought claims against Jet-Way. The court dismissed the claims stating that under Michigan common law, it is not a tort to furnish intoxicating beverages to a person over twenty-one years of age. The theory behind this rule is that it is the drinking rather than the furnishing of the alcohol that is the legal cause of any injury to a third party. The court said that the circumstances of this case did not support a possible finding of employer liability because the employee attended his employer’s party voluntarily and as a social invitee rather than in the course of fulfilling any employment duties.

Negligence. In Romeo v. Van Otterloo, the plaintiff claimed that the employer was negligent in failing to supervise its employees at a party and by failing to provide its employees with an alternative means of transportation. The court remanded the case to the trial court, stating:

“In order to further its business, defendant required Van Otterloo to play the role of party host in circumstances where the possibility of alcohol consumption could be presumed. In doing so, defendant created the risk that Van Otterloo would become intoxicated and endanger others, including those in his path as he traveled home.”

Ratification of Employee Conduct. Other jurisdictions have allowed cases of action against employers under the theory that the employer approved of the wrongful conduct.

Misdemeanor. Under the Liquor Control Act, a person is guilty of a misdemeanor if he/she knowingly sells or furnishes alcohol to a person who is less than twenty-one years of age, or who fails to make a diligent inquiry as to whether a person is less than twenty-one years of age. This prohibition is not limited to persons who are licensed to sell alcohol, but is applied to all persons, including social hosts. Violation of this section of the Act is prima facie evidence of negligence.

Recommendations to Avoid Liability:

  • Limit the amount of alcohol served to all guests.
  • If underage employees or guests attend the party, take steps to ensure that no alcoholic beverages are served to those individuals.
  • Hold the holiday party off premises during non-working hours.
  • Issue a written statement that attendance at the holiday party is voluntary.
  • Provide transportation should an employee become visibly intoxicated.
  • Do not encourage employees to drink.
  • If the party is not held at a bar or restaurant, hire a professional bartender.