Maryland Bar Bulletin
Publications : Bar Bulletin : December 2013

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The 2014 legislative session promises to be one of the most important in recent memory for anyone who sells alcoholic beverages, either in bars and restaurants or in retail stores. Two major issues – one impacting alcoholic beverage liability and the other impacting licensing – are sure to garner major public attention, and perhaps immense lobbying investments. Both bear close watching.

Dram Shop Liability for Bars and Restaurants

Perhaps the most prominent alcohol-related matter that will be before the legislature in 2014 is Maryland’s potential adoption of dram shop liability. Dram shop liability is a theory of liability that holds a restaurant or tavern owner accountable if a patron kills or harms another person after becoming intoxicated at the owner’s establishment. The typical case involves an automobile accident and a drunk driver.

Maryland has been one of only a handful of states that do not recognize at least some form of dram shop liability. Beginning with the case of State v. Hatfield in 1951, and again in 1981 and 2000, the Maryland Court of Appeals has been presented with the question of dram shop liability, and each time it has steadfastly held that the issue is within the exclusive province of the legislature. Efforts to impose such liability legislatively, however, have stalled in the recent past, including a 2011 bill sponsored by Delegate Kathleen Dumais of Montgomery County.

In a closely watched case, the Maryland Court of Appeals recently took up the matter again in the case of Warr v. JMGM Group, LLC. That case was brought by the grandparents of a young girl who was killed in an automobile collision involving a man who had become severely intoxicated at a local brewpub. In July 2013, the Court of Appeals issued a 4-3 decision reiterating that the common law of Maryland recognizes no cause of action against a restaurant or tavern owner for the actions of a drunk driver and upheld the lower court’s dismissal of the case against the brewpub.

Delegate Dumais introduced her 2011 bill largely in response to the Warr case. The bill would have created, by statute, a cause of action founded on dram shop liability. As the matter was already pending before the courts, however, the bill failed to proceed out of committee. The legislative sessions in 2012 and 2013 saw no further action, as all awaited the outcome of the court case. Now that the Court of Appeals has had its chance to review the issue, however, and again declined to introduce dram shop liability to Maryland, it is a near certainty that it will be before the legislature again in 2014.

Liquor Licenses for Supermarkets

On the alcoholic beverage licensing front, among the closely watched issues in the 2014 legislative session will be whether supermarkets and other large chain retailers will be permitted to obtain liquor licenses for sales of beer and wine. A state-wide ban on new liquor licenses for such stores has been in place since 1996. Except for those residents living near one of the stores permitted to keep their license on a “grandfather” basis following the ban, Marylanders have since been required to make an extra stop for a bottle of wine or six-pack of beer to serve at dinner.

In the past few years, however, a movement to repeal this ban has been gaining steam.  Most recently, in the 2013 session, various such bills were introduced but each was turned back in committee. While these potential 2013 battles on the issue were short-circuited, 2014 may be the year the fight is fully joined. Maryland is one of a minority of states where owners of small beer and wine stores, unlike other small retailers, are insulated from the competitive pressure of large chain stores. They have no intention of relinquishing this protection without a fight. And a fight they will likely have.

It has certainly not escaped the attention of supermarkets and other chain retailers that a significant percentage of people enjoy alcoholic beverages, and that they are a great driver of traffic and revenue. Wal-Mart, the largest retailer in the world, has stated its intention to aggressively pursue beer sales, which approach $50 billion annually in the U.S. alone. Wal-Mart wants a greater share of that pot, aiming to double its sales of beer by 2016. Small beer and wine stores in other states already find themselves in the competitive cross-hairs. If companies like Wal-Mart and Costco decide to spend some of their massive lobbying budgets in Annapolis, Maryland may be next.

As should be evident, if you sell beer, wine, or liquor, 2014 could be a big year in the Maryland General Assembly. It may well be remembered as the year that long-enjoyed protections from liability and from competition began to fade away.

Sean T. Morris is the founder and principal of The Morris Law Firm, LLC, in Bethesda, Maryland, where he practices in to alcoholic beverage licensing and liability issues.

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Publications : Bar Bulletin : December 2013

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