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by DIANE HARDY
Perhaps you have heard about the pressing problem we have in South Carolina due to our liability laws. These unfair statutes put all types of businesses (large and small) at risk of whopping lawsuit payouts even if they don’t bear the responsibility for the offense. This is true for all businesses but it is especially true for those that serve liquor because of additional quirks in South Carolina law.
This is why over a half a million GOP primary voters – 87.7 percent of those who cast ballots in the Palmetto State’s presidential primary last month – voted YES to make lawsuit liability reform an immediate legislative priority. Without necessary tort reform, our small businesses are at risk of being unable to find or afford liability insurance, leading ultimately to them being put out of business.
It is imperative the legislature act swiftly to remedy these unfair oddities in Palmetto State law that benefit wealthy trial attorneys. If you enjoy going out to your local brewery, music venue, or locally owned restaurant – this issue is already impacting you in the form of higher menu pricing and decreased options for dining and entertainment. It is also getting worse by the day as insurance carriers continue to pull out of our state.
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Behind each of these small businesses struggling with South Carolina’s unfair liquor liability laws is a family who has put their heart and soul into their business. They live with the daily stress of knowing that a single claim – or even no claims at all – can put them at risk of having to close their doors permanently due to surging insurance premiums.
The Mom and Pop Alliance of SC believes these stories are important, and below, we present a summary of the proposed bills to help remedy the injustices. While every owner’s story is unique, our organization offers the following from a couple of actual owners who are suffering the consequences of South Carolina’s out-of-balance liability laws.
If you have ever enjoyed a meal at Sue’s Wings and Things in Anderson, S.C. you know it is a very casual, friendly staple in the community – always filled with regulars and offering great wings and a wide menu of satisfying food that pairs well with a draft beer. What you don’t see when you walk through its doors are the trials and tribulations (many of them government-imposed) that have sadly become part of owning a mom-and-pop restaurant today.
(Click to View)
With resilience in her bones, a strong work ethic, and a can-do attitude, Sue Medlin of Sue’s Wings and Things has overcome much to build her successful restaurant. She had no idea sixteen years ago when she started plans for her business that one of the largest economic downturns was about to happen. Opening in 2008 was a huge challenge, but her perseverance – and the quality of the hearty food she serves – overcame the economic obstacles.
Then, just a few years ago, Covid-19 policies were activated across South Carolina. For many of us that time has become a blur we would rather not revisit – but it’s important to remember that while the Palmetto State’s Covid restrictions were lighter than in many other states, restaurants bore the brunt of the overreach. Governor Henry McMaster‘s executive order in March for only take-out dining – then later limiting restaurants to only 50 percent capacity – was not fully lifted until October of 2020.
Sue adapted and survived during those six months while at the same time taking care of her husband – who at the time was requiring dialysis three times a day (and later required a kidney transplant). Today, her business has 25 employees – many of whom have been with her since the day she opened.
Now, Sue and her business face their newest challenge – obtaining liquor liability insurance after a single claim from an auto accident caused her premiums to skyrocket to $200,000 annually. This increase was imposed despite her shop being with the same carrier for fifteen years, and despite 80 percent of her sales coming from food and only 20 percent from alcohol.
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“I didn’t know I would be responsible for the whole thing.”
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It goes back to a day in April of 2022 when a patron came in and ordered two drinks and chicken wings (what he consumed prior to coming to Sue’s is unclear).
Driving home, he crossed the center line of a local road and slammed into a car resulting in multiple severe injuries and high medical bills for the occupants of the car he hit. Sue recognized it was a serious accident, but she said she didn’t even go to court because “I didn’t know I would be responsible for the whole thing.”
Her insurer paid out $1 million dollars. According to Medlin, the patron had no insurance, no license, had recently been charged with sex with a minor. Two years after the accident, he was charged with driving under the influence (DUI).
(Click to View)
Sue says she is grateful the Bureau of Alcohol, Beer, and Liquor (ABL) has granted her an extension until the end of November 2024, but so far she has been unable to find another option – and fears that despite all her many years of hard work she may soon have to close her doors.
The community has been supportive of Sue’s Wings. It’s a popular spot with workers for lunch and truly has that local pub feel. Sue said she is not alone; she sees smaller venues closing – especially those offering music. She said she can’t believe after working so hard since she was fifteen years old – and after all these years of running a successful business – it could all be wiped out by one liability claim.
Unbelievably, even venues that have never faced a claim are suffering from South Carolina’s unfair liquor liability laws. The Mom and Pop Alliance spoke with Yana Kosic-Allen, former owner of Rotties 221 Biergarten in Woodruff. With her formal training from Johnson and Wales and her past catering experience, Kosic-Allen and her husband were excited to open their Biergarten featuring 24 taps of beer, inside/ outside seating and friendly service. Yana and John say they never dreamed when they decided to renovate a 100-year-old building with dirt floors for their dream business in 2019 that within months of opening, executive orders during Covid would severely limit their business for months on end.
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“We are so disgusted we may just leave South Carolina …”
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The couple did not qualify for the first round of PPP because they did not have a long enough history of operations – yet they hung on. Like every restaurant, they had to struggle through labor shortages and inflation, only to be blindsided again – this time by an unexpected 800 percent increase in liquor liability premiums despite never having had a claim.
According to Yana, this “last straw” caused them to close their doors for good on July 31, 2023. She said they believed Woodruff was an up-and-coming area and a great place to live and build a business, but now they have their building up for sale and are unsure of their next steps.
“Right now, we are so disgusted we may just leave South Carolina after living here for 25 years,” she said.
To be clear, venue owners are not saying they shouldn’t be held accountable when accidents happen. They agree that knowingly serving alcohol to someone who is intoxicated should not happen and that they should accept responsibility if and when it does. However, they also believe the current system is neither fair nor equitable and potentially puts all the liability on them regardless of the circumstances. As a result, they worry (rightfully) that they could be held liable for intoxicants people ingest outside of what was served at their venue.
(Click to View)
These are just two of the many stories throughout our state highlighting South Carolina’s unfair liquor liability laws. Why is this happening specifically in our state? The answer is multifaceted, but one of the main reasons is because when it comes to liquor liability specifically, South Carolina follows what is called “pure joint and several liability.” This means each defendant can be held responsible for the entire amount of damages – regardless of their share of responsibility. This practice – along with a bill passed in 2017 requiring venues to carry at least one million dollars’ worth of liability coverage – has put venues at risk of high-dollar lawsuits, causing most insurance carriers to pull out of our state.
Not surprisingly, it doesn’t have to be this way. In 1986 Florida’s Tort Reform and Insurance Act abolished joint and several liability and made Florida a “pure comparative negligence jurisdiction,” meaning businesses are only held liable for their percentage of fault for the offense, which in our opinion is a much fairer system.
Clearly, liability should be assigned based on one’s percentage of fault. And while it may benefit some trial attorneys to maintain the status quo, it is neither right nor fair to allow the defendant with the “deepest pockets” to be singularly targeted.
Obviously, time is of the essence on this issue as more and more venues are coming up for renewal of their insurance policies only to discover they can’t afford the shrinking number of options available to them. The hope is these venues will be exempted from the pure “joint and several liability” laws that are unique to alcohol sales – and that our S.C. General Assembly will also pass the bills discussed below as soon as possible.
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One bill probably won’t be enough, but here is a summary of the proposed legislation currently under consideration:
First, H. 5066 creates a public option and reduces the mandated $1 million liquor liability insurance for businesses that agree to close early, limit drink specials and meet other conditions. This bill will likely pass, but we need much more to fix the problem. Next is H. 4529, the “Save our Venues Act,” which is based on a bill from Alabama. This proposed legislation would require that for a business to be held liable, a server would have to KNOWINGLY serve someone who is intoxicated.
Also under consideration is the “Justice Act,” S. 533 (along with companion bill, H. 3933), which would help protect ALL businesses from unfair frivolous lawsuits, thus ensuring that our state remains competitive in recruiting and retaining job creators. Under its provisions, if a defendant’s fault is found to be less than 50 percent of the total – they would only be liable for their percentage of damages. This bill has support from citizens throughout the state – and from Senate majority leader Shane Massey – but it continues to be held up by the judiciary committee chaired by state senator Luke Rankin.
It would be helpful if the following Senators were encouraged by their constituents to sponsor S. 533:
Sen. Brian Adams – Berkley
Sen. Billy Garrett – Greenwood
Sen. Stephen Goldfinch – Georgetown
Sen. Michael Johnson – Lancaster/York
Sen. Scott Talley – Spartanburg
Sen. Tom Young – Aiken
South Carolina’s tort costs hurt all of us by eating up 2.5 percent of the state’s GDP – or $3,383 per household. We simply cannot continue to claim to be a pro-business state if we are don’t fix our unfair liquor liability laws. We can’t expect entrepreneurs to take risks and open exciting new venues when they can’t obtain affordable insurance. We shouldn’t tolerate a system that unfairly hurts small businesses, where a lifetime of work can be wiped out by one hefty (potentially unfair) lawsuit. The Mom and Pop Alliance will continue to speak out for South Carolina’s small business and advocate for fairer liability laws which would be to the benefit of all Palmetto State citizens.
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ABOUT THE AUTHOR …
Diane Hardy is a former nurse anesthetist turned entrepreneur, who opened a franchise at Verdae in Greenville over seven years ago. She is executive director of the Mom and Pop Alliance of SC, which she founded during Covid upon discovering South Carolina’s almost 400,000 small businesses had little representation in our State House. The Alliance provides education, communication, and advocacy for SC’s family-owned businesses. Her passion for South Carolina’s small business is strong, and as such she donates her time to the organization, accepting no salary or government funding. Her love for our state isn’t new. Before launching the Mom and Pop Alliance she was the founder and host of The Palmetto Panel (2014-2019), an annual statewide conference highlighting issues impacting South Carolina. Diane has a bachelor’s degree in nursing and psychology from Michigan State as well as a master’s degree from MUSC.
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8 comments
Its pretty screwed up that trial lawyers, who stand to benefit from a lack of tort reform, and obscene liquor liability laws, are allowed to sit on the committees that draft the bills related to those issues.
No different than those same trial lawyers selecting and approving the judges in the state. The whole system doesn’t even look right and it stinks.
That H5066 is troubling. Encouraging restaurants to close early? WTF? In and around the Greater Columbia Area, it has gotten ridiculous, trying to find anywhere open past 9PM through the week. In the 70’s and 80’s, with a much lower population density than today, chain restaurants could be found open till 11:00PM or midnight, even later. Those are scarce if they exist at all, anymore. It is as though nobody gets hungry after 9PM, actually 8PM if you are hitting a restaurant that closes at 9PM. At least that is what the restaurants seem to think.
The idea of restaurant, bar, or store liability needs to be vacated, or at least diminished. Bar, restaurant, and store, employees are not police officers. They are not trained as cops, equipped as cops, or have the power of cops. When a drunk leaves their establishment or property, whatever limited control they might have had over this person is gone. If the drunk goes out and injures or kills someone, guess what? That drunk is the one 100% responsible for the injury or death.
I am unaware of a Constitutional right to a deep pocket to pick, if I or one of my family should be injured or killed by a DUI driver. Yes, if the drunk did not have adequate insurance, it sucks. It really does, but making a secondary victim of a bar, restaurant, or store, is not the answer.
That Luke Rankin is an obstructionist to reform is no surprise. He has tried to block restoration of stolen gun rights for years, using his position in The Senate. Why do the people in Horry County keep sending this POS back, term after term?
Of each $1 million in liability insurance that bars are required to maintain, $333,333 or more will go to ambulance chasing injury lawyers. This is the sole reason for the law, to enrich the injury lawyers in the state legislature.
This editorial fails to present a fair statement of the facts and issues in contention. First, because SC does not require insurers to make “Rate Filings” no one understands how insurance companies are setting their rates. It is certainly not beyond the pale of reason to be wary of how insurance companies manage and assign risk through premiums. It would be beyond foolish to mess with a statutory scheme having absolutely no understanding of how or whether this legislation would have the desired effect on premiums. Second, insurance premiums have risen across all lines of insurance over the past two years, liquor liability is by no means an outlier (see inflation). Third, the wording of the polling questions posed by the SCGOP was extremely poor. Biased questions lead to biased polling results. If we ever want government to provide an intelligent and reasonable legislative response, we must evaluate the data and have a discussion about legitimate ways to address unfair premium increases. The testimony from the former insurance commissioner for Missouri and New Jersey provided good insight on how we can intelligently discuss and address this issue (2/13/24 Senate Judiciary Committee Hearing). Gutting protections for DUI victims based on a wink and a nod from the insurance lobby is like wagering your kid’s 529 in Vegas. Maybe you get lucky, but you’re more likely find out how hotel corporations can afford such extravagant casinos.
Unless you would agree to limit lawyers’ contingency fees, your arguments are hollow. One-third of all liability insurance payouts go to lawyers, not their clients.
How does that have anything to do with making sensible regulations that are fair to victims and businesses. Contingency fees are set by contracts which victim family’s can choose to enter into or not. Lawyers aren’t the problem here. Potentially unscrupulous insurers, irresponsible bars, and thoughtless criminals/tortfeasors are root causes.
If someone walks out of a bar with a .17 and kills/maims someone, no one should lose sleep when the bar gets hit with a huge verdict and has to close because they can no longer afford insurance. That’s our system working to protect us! If, on the other hand, insurance companies are “socializing” risk instead of adequately vetting training and management practices, that’s unfair. Requiring rate filings for liquor liability insurers is the only way we will ever resolve whether something untoward is happening.
Anecdotal claims of rate spikes from a bar that contributed to a death(s) is not a sufficient basis to upend a scheme that has many years of precedent behind it.
An excerpt from this Diane Hardy article:
“Covid-19 policies were activated across South Carolina. For many of us that time has become a blur we would rather not revisit – but it’s important to remember that while the Palmetto State’s Covid restrictions were lighter than in many other states, restaurants bore the brunt of the overreach. Governor Henry McMaster’s executive order in March for only take-out dining – then later limiting restaurants to only 50 percent capacity – was not fully lifted until October of 2020.”
When COVID-19 first hit the shores of America, we and the world did not know anything about this disease; other than people were dying from this. Coroners were having to rent refrigerator trailers to hold the bodies.
Using data from the CDC and state reporting agencies for the year 2021 (the first full year), over 285,000 Americans died. It sounds pretty callous for Mrs. Hardy to want COVID-19 to rampantly spread and kill hundreds, thousands more, so small businesses would remain open to the public.
What if small business owners died from COVID-19, and the business closed. That’s a loss for Mrs. Hardy’s Mom and Pop Alliance.