We have often discussed dram shop actions and liability for “over-serving” patrons at bars and other businesses. Royal Caribbean appears willing to go where few other businesses are now willing to venture. The cruise line has introduced a new one-price, all-you-can-drink cruise package. I wonder how much legal analysis occurred before this floating dram shop case was launched.

Of course, the cruise line lawyers could argue that alcohol is lighter than water and helps people float when they fall over the side.

Want to drink yourself silly while moving across deep ocean in the dark? It will cost $29 per person per day for all beers, house wine by the glass and a 25% discount on all other wines and liquors. However, for just $39 per person per day, the package includes all beers, house wine by the glass, all liquor (except premium and speciality brands), cocktails and 25% discount on all other wines and premium and speciality liquors. Then there is the Premium Package at $49 per person per day offers all of the above plus glasses of wine that normally sell for up to $10, cocktails, premium liquor brands and a 25% discount on all bottles of wine, glasses of wine over $10 and speciality liquors.

There is obviously little danger of drunk driving on a cruise so long as the bar is closed hours before docking. The question is whether the cruise line is risking liability on the host of injuries that can occur on a cruise ship in the middle of the ocean. It is unlikely that many of these all-you-can-drink patrons are going to take kindly to being told you can drink no more. When they fall off the ship or down a flight of stars, the question of liability could prove significant for the cruise line.

Notably, in Godfrey v. Boston Old Colony, a Louisiana dram shop case, the court heard an expert who testified against such packages:

Fred Del Marva, a qualified expert specializing in Premises Liability, Premises Security, and Dram Shop Litigation in the food service and lodging industries submitted an affidavit. In it he attested to the following: Price was not intoxicated at the time he was admitted to Waldo’s; “reasonably prudent bar operators do not adopt a pay one price for all you can drink policy”; due to the blood alcohol level of Richard Price at 12:45 a.m. on the morning of the accident, an adequately trained staff should have recognized that Price had become intoxicated and the staff should have refused to serve Price any more alcohol; he concluded that Napoli and other members of Waldo’s staff committed the following affirmative acts which breached the standard of care of reasonably prudent bar operators and which could foreseeably result in serious injury to its patrons

The question is whether a maritime dram shop rule applies. This has long been a controversy and some cruise lines have succeeded in playing the gap in coverage when their bars take to sea. In Voillat v. Red and White Fleet, 2004 U.S. Dist. LEXIS 4359, the court noted that there still remains no general maritime dram shop law. Due to the absence of such a general law, the Court applied California’s law which exempts liability if the injury is caused by other intoxicated customer. The court held:

Since Meyer, the Ninth Circuit has not adopted a general maritime dram shop rule. The court declines to fashion its own rule because doing so would require the court to engage in the difficult task of choosing among various competing state regulatory approaches. Such regulatory power is more appropriately left to the states. . . . Under California law, plaintiffs fail to state a claim for relief under their sixth claim for improper service of alcohol.

Other states have found the issue more uncertain, indicating that a maritime dram shop law has been recognized. One such good discussion is found in Kludt v. Majestic Star Casino,, 200 F. Supp. 2d 973 (N.D. Ind. 2001). Here is the full pertinent analysis:

The Defendant argues that there is no existing maritime rule regarding what is essentially dram shop liability, that application of maritime law is inappropriate here, and that, under Wilburn, this Court must apply state law. In support of its argument, the Defendant cites a decision of a United States District Court in California in which that court held that, although the court had admiralty jurisdiction over the passenger’s tort action pursuant to general maritime law, no federal maritime dram shop rule existed and that, as a consequence, California’s dram shop statute provided the substantive law governing the plaintiff’s admiralty claim. See Meyer v. Carnival Cruise Lines, Inc., . 1994 U.S. Dist. LEXIS 21431, 1994 WL 832006, at *4 (N.D. Cal. Dec. 29, 1994) (citing Wilburn, 348 U.S. at 313). That court, thus, declined to fashion a federal maritime dram shop rule that would impose tort liability on sellers of alcohol for injuries resulting from their sales. Id. The Plaintiff, [**15] however, cites a decision of a United States District Court in Texas in which that court held that admiralty jurisdiction existed over a casino riverboat owner when a passenger who became intoxicated while drinking alcoholic beverage at the casino riverboat killed three persons while operating his automobile after departing the riverboat. Young v. Players Lake Charles, L.L.C., 47 F. Supp.2d 832 (S.D. Tex. 1999). The Players court determined that a defendant can be held liable under general maritime law for providing alcohol without adequate supervision, stating that because “there is an existing maritime rule governing the issue of dram shop liability,” “there is no need to perform a Wilburn analysis to determine whether the Court must apply state dram shop law.” Id. at 837. Thus, the briefs and arguments submitted by the parties demonstrate the unsettled nature of this area of federal law. Furthermore, in presenting this issue to the Court, the parties were not able to identify authority in the Seventh Circuit that would resolve this dispute, and the Court has been unable to find such.

In resolving this dispute, the Court finds the decision of the United States Supreme Court in Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 3 L. Ed. 2d 550, 79 S. Ct. 406 (1959), to be instructive. In Kermarec, a plaintiff was injured while visiting a seaman on board a vessel berthed at a pier, and the Supreme Court held that the district court erred in applying New York substantive law HN7Go to the description of this Headnote.where the petitioner was injured aboard a ship upon navigable waters. Id. at 628. The Court noted that even though jurisdiction was originally premised on diversity grounds, the cause was to be governed by standards of maritime law, stating “if this action had been brought in state court, reference to admiralty law would have been necessary to determine the rights and liabilities of the parties.” Kermarec, 358 U.S. at 628. See also Branch v. Schumann, 445 F.2d 175 (5th Cir. 1971); King v. Alaska Steamship Co., 431 F.2d 994 (9th Cir. 1970). See also Pope & Talbot v. Hawn, 346 U.S. 406, 98 L. Ed. 143, 74 S. Ct. 202 (1953). Although the Court in the present case declines to fashion a federal maritime dram shop rule, the Court finds it appropriate to apply fundamental principles of negligence law that have been adopted as general maritime law. Nevertheless, because state law may supplement maritime law, the Court will also consider the alternative theory of liability under the Indiana Dram Shop Act.

The new policy could prove to be a costly mistake for the cruise line. Over-indulgence of food and drink are well-known facts on these cruise trips. Royal Caribbean better hope that this does not become an “all-you-can-sue” packet for tort litigators.

Source: USA Today

Jonathan Turley