Limits on drunken driving lawsuits stir controversy at Iowa Capitol

Legislation to limit lawsuits against businesses serving alcoholic beverages to drunken drivers advanced Thursday in the Iowa House and Senate despite arguments it could lead to more traffic crashes and deaths.

House Study Bill 594 and Senate Study Bill 1179 say that damages awarded to an innocent third party would be capped at $75,000 for claims involving injury to a person or property. They would set a limit of $100,000 for claims involving loss of means of support or loss of services, companionship, society or consortium resulting from the death or injury of a person.

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The Iowa Restaurant Association is leading a lobbying initiative for the bills, saying so-called "Dram Shop" insurance is more costly for Iowa restaurants and bars than neighboring states. That's happening despite comprehensive training for servers to avoid serving intoxicated patrons and other efforts to keep impaired drivers off the roads, such as calling ride-hailing services for patrons when necessary.

"At the end of the day, who is the person responsible? It is the person behind the wheel," said Jessica Dunker, president and chief executive officer of the Iowa Restaurant Association. "We are trying to do everything that we can to stop them in a responsible way.”

Jim Carney, a lobbyist for the for Iowa State Bar Association, suggested Iowa court data doesn't support higher insurance rates. He questioned the public policy implications of placing caps on lawsuits involving intoxicated motorists.

“That is a big step when everything else that you are doing at the Legislature is stop drunken driving," Carney said.

The legislation was advanced Thursday by a House subcommittee, sending it to the full House Commerce Committee. Meanwhile, the Senate Commerce Committee also approved the bill, sending it to the Senate floor. Both measures are moving ahead with strong support from Republicans and are generally opposed by Democrats.

The House and Senate bills say an establishment would be liable only if it sold and served any beer, wine, or liquor directly to the intoxicated person, and provided that the person was visibly intoxicated at the time of the sale or service.

Under current Iowa law, a business selling alcoholic beverages can be liable to a person for all damages resulting from an intoxicated person if the licensee or permittee sold or served the alcohol to the intoxicated person. This applies when the establishment knew or should have known the person was intoxicated, or when the person was served alcohol to a point where the business knew or should have known the person would become drunk.

Chance McElhaney, legislative liaison for the Iowa Insurance Division, said an examination of insurance data from Midwest states shows that state laws can have an impact on insurance rates for bars and restaurants serving alcoholic beverages.

The insurance rates for Iowa tend to be higher than neighboring states and "sometimes significantly higher," McElhaney said.

Mike St. Clair, a lobbyist for Property Casualty Insurers Association of America, said the legislation was drafted with the goal of providing a more favorable insurance environment for Iowa establishments serving alcoholic beverages. Supporters of the proposals emphasized that the bills would retain unlimited caps on lawsuit damages for other types of defendants in drunken driving cases.

Joe McConville, a co-owner of Gusto Pizza restaurants, spoke in support of the House bill. He said he feels a personal responsibility for getting his customers home safely. But it's not always easy to determine if someone is intoxicated, and the language in the existing Dram Shop law is vague and should be revised, he added.

Kellie Paschke, a lobbyist for the Iowa Association of Justice, spoke against the House bill. She said there are very limited steps that can be taken to prevent drunken driving, although many measures are taken after a person is charged with operating under the influence.

"One of those things is to ensure that they are not over served; that they are not served to the point that they become a danger," Paschke said. "If you have these low caps in place, it is not heading in the right direction. We would be very concerned about that."

During Senate Commerce Committee debate, Sen. Nate Boulton, D-Des Moines, spoke against the legislation, saying drunken driving crashes have severe impacts on the lives and victims and they should be compensated.

“Dram Shop is there for a reason. It is there to ensure that our roads are safe and it fixes responsibility on those establishments," Boulton said.

Sen. Michael Breitbach, R-Strawberry Point, who supported the bill, said he also wants to protect Iowans from drunken drivers. But he added that businesses have difficulty addressing the problem, describing instances where employees have even tried to physically restrain intoxicated patrons from getting into their vehicles.

“I think we have safeguards in place. I like this bill and I am hoping we can move it forward," Breitbach said.