What is a nuclear power verdict?
Nuclear verdicts refer to exceptionally high jury awards – generally those exceeding $10 million. Such judgments, such as the nuclear judgment – liquor liability loss, have become increasingly common over the past decade. In fact, the National Law Journal reported that the average jury award among the top 100 US judges more than tripled between 2015 and 2019, soaring from $64 million to $214 million. Additionally, 30% more judgments exceeded the $100 million threshold in 2019 compared to 2015.
A variety of factors have contributed to this trend, including increasing funding for litigation, eroding tort reform, and most notably, deteriorating public sentiment toward corporations. Amid growing corporate mistrust, companies have not only been expected to meet higher standards in their operations, but have also been held more accountable for their misconduct. After being sued and taken to court, companies have often encountered juries sympathetic to plaintiffs. Exacerbating this problem, there is a growing perception that companies (especially large ones) can always afford the cost of damages. This means that juries are likely to have fewer reservations when awarding substantial damages to plaintiffs, resulting in nuclear verdicts.
Nuclear judgments can have significant consequences for companies of all sizes and sectors, causing lasting reputational damage, causing underinsurance concerns and causing large-scale financial devastation. That̵7;s why it’s important for businesses to better understand these judgments and how to prevent them. This case study summarizes a recent nuclear ruling – loss of liquor liability, and describes factors that led to the ruling, highlights associated compliance considerations and provides related risk mitigation measures.
$301 Billion Nuclear Verdict – Loss of Liquor Liability
In November 2017, a 59-year-old grandmother and her 16-year-old grandson were killed in a car accident after a drunk driver crashed into the victims’ vehicle in the middle of an intersection in Corpus Christi, Texas. After a brief trial in December 2021, a Nueces County jury determined that the victims’ families were entitled to $1.04 billion in actual damages and $300 billion in exemplary damages, and therefore ordered Beer Belly’s Sports Bar to pay just over $301 billion in total damages.
In November 2017, a 59-year-old grandmother and her 16-year-old grandson were killed in a car accident after a drunk driver crashed into the victims’ vehicle in the middle of an intersection in Corpus Christi, Texas. The 29-year-old perpetrator also lost his life in the crash.
Shortly before the incident, the perpetrator was served alcoholic beverages at a local establishment called Beer Belly’s Sports Bar. He then got behind the wheel while under the influence and ran a red light at 91 mph, significantly exceeding the speed limit. When the drunk driver ran a red light at such a high speed, it crashed into the victims’ car at an intersection, ultimately resulting in the deaths of all three.
After the crash, the victims’ family sued Beer Belly’s Sports Bar and its owner, claiming the establishment’s negligence contributed to the perpetrator being overserved. According to the victims’ family’s legal team, the drunk driver consumed at least 11 alcoholic beverages at the facility and hit the road with a blood alcohol concentration (BAC) of 0.263. Such a BAC is more than triple the Texas legal limit of 0.08. A written complaint filed with the lawsuit alleged that “Beer Belly’s either knew or should have known that [the perpetrator] was a danger to himself and others due to his intoxication and lack of control over his mental and physical faculties.”
After a brief trial in December 2021, a Nueces County jury determined that the victims’ families were entitled to $1.04 billion in actual damages and $300 billion in exemplary damages, and therefore ordered Beer Belly’s Sports Bar to pay just over $301 billion in total damages. This nuclear verdict – loss of liquor liability, represents the largest personal injury award in US history, significantly surpassing the previous record of $150 billion in 2011.
The Texas Alcoholic Beverage Commission confirmed that the establishment closed its doors long before the ruling due to its liquor license expiring and subsequently being suspended in 2019. Additionally, the victims’ family’s legal team said they do not expect much of the restitution to be paid, given that the establishment is out of business and its former owner lacks the capital required to provide such a large payment. Still, John Flood, a lawyer for the victims’ families, argued that the sentence remains symbolic and sets a precedent for similar incidents to come.
“The purpose of the civil lawsuit is to remind the community, the state and the nation of the terrible costs of drunk driving,” Flood said. “The jury sent a very loud message that if alcohol suppliers are exchanging money for the safety of their customers and the public, there must be accountability.”
Factors that led to the verdict
Looking closer at this case, the main factor contributing to the nuclear verdict was that the offender was overserved to the point of intoxication and got behind the wheel afterwards. When individuals are overserved at establishments that sell alcohol, the related liquor liability exposures can be severe. Specifically, such facilities can be held liable for injuries caused by intoxicated individuals – including those resulting from drunk driving.
The National Highway Traffic Safety Administration (NHTSA) reported that nearly one-third (30%) of all traffic fatalities involve drunk drivers. Worse, such deaths are increasing. NHTSA data found that more than 11,600 people died from drunk driving in 2020, a 14% increase from 2019 and the equivalent of one person every 45 minutes. Yet these incidents (and their associated injuries) are entirely preventable.
This nuclear ruling also raises some considerations about compliance, especially regarding dram shop laws. Such laws essentially place liability for injuries caused by an intoxicated individual on the establishment that served them (regardless of where the injuries occurred), formalizing liquor liability exposures. For example, a facility may be ordered to pay for damages that result from an overserved individual getting into a physical altercation with another person, destroying someone else’s property, or causing a car accident.
While the majority of states have dram shop laws in place, specific requirements vary and may change over time. However, most states hold establishments liable for damages arising from individuals who were served even after they became visibly intoxicated. Given that this particular nuclear verdict occurred in Texas, it is important to note that the state’s current dram shop laws hold any establishment licensed or otherwise permitted to serve or sell alcohol liable for injuries resulting from an intoxicated individual if the following is true:
- The individual was served even after it turned out that they were clearly under the influence to the extent that they constituted a “clear danger” to themselves and others.
- The individual’s intoxication was a “proximate cause” of the injuries that occurred.
For example, if an individual began slurring his speech and had trouble walking, but an establishment continued to serve alcohol, the establishment could then be held liable for the associated injuries if the individual later swerved onto the sidewalk and hit a pedestrian while driving under the influence on the way home.
Risk mitigation measures
To avoid nuclear verdicts similar to the one arising from this case, companies should follow these risk mitigation tactics:
- Minimize liquor liability exposures. Take various steps to ensure that alcohol is sold, served and consumed responsibly. These steps may include:
- Conduct a liquor liability risk assessment to determine specific exposures (eg, how often alcohol is served and in what manner).
- Adopt workplace policies that describe how to identify signs of intoxication (eg, difficulty walking, loud or slurred speech, excessive friendliness or aggressiveness, red or glassy eyes, and impaired hand-eye coordination), methods for safely measuring and serving alcoholic beverages beverages, ways to refuse service and processes for documenting potential incidents.
- Improve employment protocols to ensure applicants are prepared to take alcohol service seriously.
- Conduct routine training to educate employees about applicable liquor responsibility laws, related workplace policies and consequences of not taking these policies seriously;
- Ensure. Regularly evaluate workplace policies to maintain compliance with dram shop laws as well as all other applicable federal, state and local regulations (especially related to liquor liability). Consult legal counsel for additional compliance assistance.
- Ensure proper coverage. In this increasingly litigious environment, purchasing adequate insurance policies, such as liquor liability coverage, is critical. Contact a trusted insurance specialist to discuss specific coverage needs.
Contact one of our trusted insurance advisors to discuss specific coverage needs, so you can avoid a nuclear strike – liquor liability loss.