Drink, Drank or Drunk? The New Era of Dram Shop Liability in Iowa

The Iowa Supreme Court’s pronouncement in Banwart v. 50th Street Sports, L.L.C (16-1218) filed on March 30, 2018, gave new life to Iowa’s Dram Shop law.  Dram Shop is the fancy word for the law that makes businesses who sell and serve alcohol to patrons who are intoxicated, legally liable for injuries caused to other people as a result of the intoxicated person’s actions. Iowa’s Dram Shop law is found in Iowa Code Section 123.92(1)(a), and essentially provides that any establishment who “sold and served” alcohol to an individual to the point of intoxication is liable for any damages caused to an innocent third person by the “drunk” person’s actions.

While it seems relatively straight forward, there is a lingering twist coming from the fact that liability will only be found if “the establishment knew or should have known the person was intoxicated, or who sold to and served the person to a point where the licensee or permittee knew or should have know the person would become intoxicated.”

At first blush, this statute seems to make it relatively easy to establish legal liability against the establishments and that recovering damages on behalf of the injured party would be quite simple.  Unfortunately, this has not historically been the case because of procedural hoops that must be jumped through making it difficult to gather the facts necessary to get the establishment on the hook.  Often, in these cases, there are uncooperative witnesses such as the servers who were afraid of losing their jobs, the regular patrons who were afraid of losing their statured seat at the bar, or even the drunk patron who was fearing criminal or civil liability of his own.  Not to mention the disappearing videos!  Even when it could be established that the intoxicated person was at the establishment and had been drinking, it was still often difficult to establish that the server “knew or should have known” the person was intoxicated or would become intoxicated given the varying degrees of how and when individuals show intoxication.  In other words, courts evaluated the knowledge requirement of the establishment primarily focused on the facts known prior to the patron leaving the establishment.

After the Iowa Supreme Court’s pronouncement in Banwart, claims by innocent third parties against an establishment who “sold and served” alcohol to a drunk now may be much easier to prove.  This is due to a shift by the Court to a more dedicated focus on after-the-fact evidence that may be used to substantiate the knowledge requirements necessary to prove liability on the part of the establishment.  For instance, in Banwart, the court strongly emphasized the fact that the patron was involved in a rear-end collision “within minutes” of leaving the establishment, and the police officer’s investigation including failed field sobriety tests and a .143 breath test (even though it was conducted almost two hours after the patron left the bar) to help establish a “sufficient factual issue as to whether [the establishment] had the requisite [knowledge] at the time it served alcohol to [the patron].” 

Now, even in the absence of direct intoxication evidence at the time the patron is served, a Dram Shop action will still be viable where subsequent evidence of intoxication arising shortly after the patron leaves the establishment is presented.  This pronounced shift by the Iowa Supreme Court should present an easier road for innocent third parties to hold establishments responsible for the acts of drunken patrons.