Editor's note: Just in time for pre-Interbike reading, BRAIN's longtime legal analyst, Steve Hansen, takes a look at the implications of recent employer liability cases involving hosting parties where alcohol was served or was present.
One of the appellate courts in California has clarified the very murky laws regarding employers liability for intoxicated employees. I know that many companies tend to overlook the alcohol issue when it comes to trade events and alcohol is one of the ways to take the edge off and get business done “informally." However the risk of doing so needs to be weighed with the potential upside of landing new business.
The recent case of Purton v. Marriott International, Inc. (decided July 31, 2013) may give employers even more pause about allowing any alcohol at events they sponsor, formally or informally.
In the Purton case, there were some particularly troubling facts. (as we like to say in the legal biz, bad facts make bad law) Obviously the Marriott Hotel Corp was a “deep pocket” and the 3rd party who was killed in the accident was a physician. The Marriott employee received a 6 year criminal sentence in the case with a 0.16 blood alcohol content. He was supposedly driving over 100 mph at the time of the accident. So starting with those facts things just got worse.
The Marriott (employer) held its annual holiday party as a "thank you" for its employees and management. Marriott did not require that its employees attend the party. Each party attendee would receive two drink tickets. They planned to serve only beer and wine at the party. Unfortunately the two drink rule was not followed. The offending employee (Landri) was not only bartender at the hotel (who knew better) but he also drank at home that day before attending the party. (how do you prevent that?) He also took a flask to work which he of course refilled with Jack Daniel’s courtesy of the Hotel’s supply. (much worse than stealing pens). No alcohol was consumed after leaving the hotel party. Landri drove home and arrived home ok. But 20 minutes later he decided to drive back to the hotel and take home another intoxicated employee. That is when the accident with the third party occurred.
What was most interesting was Marriott’s reliance on pre-existing case law as it respects the “Doctrine of Respondeat Superior”. Essentially that doctrine broadens the scope of employment and holds that the employer's liability extends beyond its actual or possible control of the employee to include risks inherent in or created by the enterprise. The fact that an employee is not engaged in the ultimate object of his employment at the time of his wrongful act does not preclude attribution of liability to an employer. Thus, an employer's vicarious liability may extend to the employee's negligence, willful and malicious torts, or acts that contravene an express company rule and confer no benefit to the employer.
This has been interpreted in two ways in the context of employee negligence. Under the first view, followed by some states the accident itself must occur at a time that the employee is acting within the scope of his or her employment. Under the second view, followed by other states, like California, it is sufficient that the alcohol consumption alone occurred within the scope of employment. The accident does not need to occur within the scope of employment. So in California and a number of other states liability attaches if the activities that caused the employee to become an instrumentality of danger to others were undertaken with the employer's permission and were of some benefit to the employer or, in the absence of proof of benefit, the activities constituted a customary incident of employment.
The evidence showed in the Marriott case that the party and drinking of alcoholic beverages were not only of a conceivable benefit to Marriott, but were also a customary incident to the employment relationship. Marriott held the party as a "thank you" for its employees. The purpose of the party was "celebration, employee appreciation, holiday spirit, team building." Thus, a jury could conclude that the party and drinking of alcoholic beverages benefited Marriott by improving employee morale and furthering employer-employee relations. The same could be true for parties where non employees are invited and employees and non employees are involved in “tradeshow related” “marketing” and “client development” for example.
So in this case there was not much of a question whether the intoxication occurred within the scope employment. Marriott then tried to argue essentially that once the employee was home safely liability of the employer was cut off. Wrong again. The court focused on the act on which vicarious liability is based and not on when the act results in injury. Marriott complained that imposing liability under the facts of this case would not prevent a recurrence of the negligent conduct because it had no right to control the purely personal conduct of the employee after he safely reached home. The court argued that Marriott simply could have chosen not to have a party with alcohol or actually enforced some of its own rules. The court felt that if a commercial enterprise chooses to allow its employees to consume alcoholic beverages for the benefit of the enterprise, fairness requires that the enterprise should bear the burden of injuries proximately caused by the employees' consumption.
If you are going to host a party involving alcohol, you better have strict rules and better make sure they get enforced. Quite frankly if a liberal states laws like California’s gets applied to the case (and which states laws are applied can be a very murky area) the mere fact that you hosted a party with alcohol may be the deciding factor. Obviously cases where serious injury occurs are rare but one must factor those huge potential costs into the plusses and minuses associated with events where alcohol is served.
In another upcoming article we plan to discuss insurance coverage (or non-coverage as the case may be) for such alcohol and drug related claims.
Steven W. Hansen an attorney who defends product manufacturers, distributors and retailers in product liability lawsuits and provides consultation on all matters related to the manufacture and distribution of consumer products. For further questions visit www.swhlaw.com or send an e mail to firstname.lastname@example.org
The information in this column is subject to change and may not be applicable in your state. It is intended as a thought-provoking discussion of general legal principles and does not constitute legal advice. Any opinions expressed herein are solely those of the author.