Fay-Ray Corp. v. Texas Alcoholic Beverage Commission
1998 WL 3233, 959 S.W.2d 362 (1998)
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Rule of Law:
Liability under the Texas Dram Shop Act for serving an obviously intoxicated person is based on an objective negligence standard. The state does not need to prove the server had a specific intent to violate the statute to revoke a liquor permit.
Facts:
- In June 1995, Jack Jordan was a patron at Che-quers, a bar owned by Fay-Ray Corporation.
- Between approximately 7:00 p.m. and 10:15 p.m., Jordan consumed a minimum of four beers and six shots of liquor.
- Witnesses at the bar observed that Jordan had slurred speech, stumbled, and smelled of alcohol.
- Jordan left the bar alone, driving his one-ton truck.
- Shortly after leaving, Jordan crossed the center line of the road and caused a multi-vehicle collision.
- The collision resulted in the death of one driver and severe injury to a passenger in another vehicle.
- A subsequent blood test revealed Jordan's blood alcohol content was .32, more than three times the legal limit.
Procedural Posture:
- The Texas Alcoholic Beverage Commission (the Commission) initiated an administrative proceeding against Fay-Ray Corporation to revoke its liquor permits.
- Following a hearing, an Administrative Law Judge issued a Proposal for Decision recommending the cancellation of Fay-Ray's permits.
- The Commission adopted the proposal and issued a final order canceling Fay-Ray's mixed beverage permit and mixed beverage late hours permit.
- Fay-Ray sought judicial review of the Commission's order by filing a lawsuit in a state district court (trial court).
- The district court affirmed the Commission's order.
- Fay-Ray (appellant) appealed the district court's judgment to the Court of Appeals, with the Commission as the appellee.
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Issue:
Does the Texas Alcoholic Beverage Code require proof that a server had a specific intent to serve an obviously intoxicated person before the Texas Alcoholic Beverage Commission can revoke the server's liquor permits for a violation of the Dram Shop Act?
Opinions:
Majority - Bea Ann Smith, Justice
No. Revocation of a liquor permit for serving an obviously intoxicated person under the Dram Shop Act does not require proof of specific intent, but is instead based on an objective negligence standard. The court reasoned that the Dram Shop Act was intended to provide a statutory remedy for negligence, holding servers to an objective standard of what a 'reasonably prudent person' would observe as 'obviously intoxicated.' The court rejected Fay-Ray's argument that a 'knowing' standard from the Code's criminal provisions should be imputed to this civil sanction, emphasizing that the Commission revoked the permits under civil statutes that do not require specific intent or scienter. The fact that other sections of the Code require intent for different violations does not compel the court to impose such a requirement here.
Analysis:
This decision solidifies that liquor permit revocation proceedings under the Texas Dram Shop Act are governed by an objective negligence standard, not a subjective intent standard. By distinguishing the civil administrative penalties from criminal offenses within the same code, the court lowered the evidentiary burden for the Texas Alcoholic Beverage Commission in such cases. The ruling reinforces the public policy of holding establishments strictly accountable for the visible signs of intoxication, making it clear that a defense of ignorance or lack of intent is insufficient if a reasonable server should have known the patron was intoxicated.
