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How to Lose Your Business in ONE Sale

We thank John Hinman, General Counsel to CMAC for the following post.  Once you read it, pass it along to your other beverage friends and encourage them to all join CMAC so we can defeat this legislation.  John's article was first published in "Booze Rules Blog" on May 20, 2013.

Welcome to your worst nightmare: You serve a customer at a bar, restaurant, nightclub, and winery tasting room (or at a party at a winery) who turns out to be younger than 21, and who later gets into an accident or commits a crime like assault where alcohol is a factor and you end up with a felony, which bars you from the alcohol industry for the foreseeable future. AB 1128 (currently on a fast track to pass through the California legislature) amends Business & Professions (“B&P”) Code Sec. 25658 and ups the potential penalty for sales to a minor (from a misdemeanor to a felony) when the minor causes an injury, death or damage to others.

Civil damages for selling or furnishing alcohol to a minor who gets into an accident or causes harm is already part of the law and the potential consequences of a current incident include license revocation for a licensee (Sections 25602 and 25602.1).

The hidden cost of this statute will be paid by business owners (restaurants, convenience stores and, yes, wineries) who (knowingly or otherwise) serve or sell wine to customers who present false ID or who appear to be over the age of 21. Once an individual has a felony on their record they are pretty much forever after barred from being an alcoholic beverage licensee, or an officer, director or shareholder of a corporate licensee.  Proving rehabilitation is possible, but typically not for at least a decade or more afterwards (if then). AB 1128 is more than license suspension or revocation; it’s a death penalty for individual and corporate alcoholic beverage licensees.

And yes, corporations can commit crimes (to quote Mitt Romney “corporations are people, my friend” and the AB 1128 statute applies to “every person”). See also Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).  The application of this penalty statute to corporate entities is easy to imagine (does anyone remember Arthur Anderson LLP or Enron Corporation?); especially in a situation where the damage caused by the minor is extraordinary (for example, a few months ago at a Temecula winery, there were reports of a drunken brawl involving a group of young people that resulted in numerous injuries – what if one of the young people had been under 21 and one of them was seriously hurt?).

What really happens today is that the under 21 crowd have really good false identification available and use those fake IDs to drink or buy alcohol at a tasting room or restaurant or to buy alcohol from a liquor store.  Then, when they get caught drunk driving or are involved in an accident or another crime, they show their real identification and ditch the fake ID (because using false identification is a crime also). It becomes their word against the word of the server, clerk, winery employee or winery owner serving wine as to whether or not B&P Code Section 25660 (reliance upon bona fide proof of ID) was satisfied.  Usually it isn’t satisfied because of a lack of proof, lack of availability of the fake ID or minor differences between the ID and the person presenting it (ID defense cases have been lost over eye and hair color, and minor weight or height differences).

We tried a case like this in 2005 involving a girl who was four months shy of 21 and using her sister’s ID at a well-known establishment in wine country.  It was a tragic case.  She crashed into a guardrail at 2:30 AM on a foggy night and died.  She had had two drinks (the last one at 10 pm); the accident was the result of speed and fog, not alcohol (which we had to prove).  We prevailed on behalf of the venue after a very contentious and extended trial but we had to face testimony from the older sister and her parents that the victim couldn’t have been using the false ID: it was a swearing contest against the venue owners and everyone in the establishment on the night in question.  If the AB 1128 felony penalty rule had been in place in that case, the matter would have escalated to the Superior Court and the owners could have faced jail time and could have permanently lost their business.  It is cases like this that make us shudder at the implications of AB 1128.

Now consider the retailer exception to AB 1128 that requires a retailer to KNOW that the minor is under the age of 21 in order to face a felony penalty.  This predicate defense, by the way, is NOT available to wineries, who are not retailers.

Has anyone out there ever given a glass of wine to a 20-year-old, married to someone older? Imagine an accident or an incident later in the day or evening.   If AB 1128 passes, conduct that occurs every day in wine country, but on one unlucky day is followed by an accident or an injury, could result in the potential loss of the winery or the business.

And consider further the young person over 21 dating and sharing a bottle of wine with an 18, 19 or 20-year-old; whether in a tasting room, at a restaurant or at home. That young person over 21 would also be liable for a felony in the event of an accident, crime or similar tragedy involving alcohol. The lives that would be ruined would be those caught up in tragic situations; without regard to intent or actual causation.  Suddenly we are exposing young people to jail and potentially marking them for life as felons for drinking with their friends anywhere (because this doesn’t just involve venues). These incidents are tragic enough and carry enough consequences without convicting everyone involved in the party of a felony for “furnishing alcohol”.

Is this going to stop those younger than 21 from drinking?  No way. This is a really bad bill that should be vigorously opposed by every thinking parent and by every licensee in the state.

by John Hinman 05.20.13

BOOZE RULES BLOG

This blog is dedicated to occasional (and hopefully interesting) reports of state and national alcoholic beverage regulatory developments that we encounter in our practice. Booze Rules (and any comments below) are intended for informational use only and are not to be construed as legal advice. If you need legal advice please consult with your counsel.

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