On April 19, 2023, Alabama Governor Kay Ivey signed Act No. 2023-25, which contained the new standard for liquor liability, into law. The new law, which dramatically changed the landscape of Alabama dram shop laws, took effect immediately. The law now contains a provision requiring knowledge of visible intoxication, i.e., any person “who knowingly sells, furnishes, or serves alcoholic beverages to an individual … who was visibly intoxicated …” Knowledge of visible intoxication must be present at the time of service.  Notably, the new law also requires proof of legal causation, with an explicit prohibition against speculative evidence of causation. Thus, in order to impose liability against an establishment, the injured party must be able to establish that the sale, furnishing, or serving was the proximate cause of the injury or damage alleged.

Previously, if a person became intoxicated at a bar, nightclub, or restaurant that serves alcohol and then was involved in an accident afterward, Alabama law imposed strict liability where the owner of the establishment that served the alcohol could be held civilly liable for that accident by the persons harmed or killed by the intoxicated person. The new law replaces strict liability with a new standard that lessens the liability on owners of bars, nightclubs, and restaurants. This new “common-sense” standard aligns with the requirements of other states.

For years, less than a handful of insurers have written policies for dram shop coverage in Alabama, and it remains to be seen how this legislation will affect the market.  While the new law somewhat eases the comfort level for bar owners and their insurers, future rulings applying the new law to individualized cases should be closely monitored for their interpretation of a seemingly subjective “visibly intoxicated” test.

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