ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FINAL AMENDED
FACT SHEET FOR H.B. 2621
illegal liquor sales; liability
Purpose
Limits the type of knowledge an Arizona Department of Liquor Licenses and Control (ADLLC) licensee may be charged with and what the trier of fact may consider in a dram shop liability case and modifies requirements for ADLLC restaurant licenses.
Background
All businesses that produce, distribute or sell spirituous liquor throughout the state are required to be licensed by ADLLC. As of July 2004, 10,050 liquor licenses existed in Arizona. There are many different types of liquor licenses. The most common of these is the restaurant license (Series 12) and, as of July 2004, ADLLC had issued 2,334 restaurant licenses.
A restaurant license allows a licensee to sell and serve spirituous liquor only for consumption on the premises. In order to qualify for a restaurant license, an establishment must derive at least 40 percent of its gross revenue from the sale of food. Included with the application filed with the ADLLC, an applicant must file a copy of its Restaurant Operation Plan that includes information regarding:
a) the make, model and capacity of the kitchen appliances.
b) the menu, including prices.
c) the seating capacity of the restaurant area and bar area with additional questions asking if the restaurant has a bar area distinct and separate from the restaurant seating and the percentage of the public premises used for restaurant dining.
d) type of dinner and utensils utilized (reusable or disposable).
e) how many games or televisions are at the premises and information about live entertainment and dancing.
f) a list of employee positions and their duties to staff the restaurant.
The Director of ADLLC (Director) may require a restaurant to submit to an audit of its records to ensure compliance of the 40 percent gross revenue from the sale of food requirement. If the licensee does not meet the requirements, ADLLC is required to revoke the license. According to ADLLC, it does allow a licensee that has failed an audit six months to find either a bar license or beer and wine bar license.
Statute provides that if any liquor licensee sold alcohol to a person who was obviously intoxicated or to a person who was under the age of 21 without asking for proof of the person’s age, the person consumed the alcohol and the consumption of the alcohol was the proximate cause (primary cause) of an injury, death or property damage, then the licensee is liable for the property damage, personal injuries or is liable to a person who may bring an action for wrongful death. These types of laws are often referred to as “dram shop liability laws.”
H.B. 2621 appropriates $450,000 from the state General Fund in FY 2006-2007 to ADLLC for the purpose of hiring three additional investigators and two additional auditors. The measure allows ADLLC to determine a fee for modified restaurant licenses, which are deposited into the state General Fund.
Provisions
Dram Shop Liability
1. Prohibits an ADLLC licensee from being charged with knowing that a person has become intoxicated at other locations unless the person was obviously intoxicated.
2. Prohibits the trier of fact from considering any information obtained as a result of a restaurant audit in a dram shop liability case, unless the court finds it relevant.
Modified Restaurant License Requirements
3. Allows a restaurant licensee whose audit or consent agreement resulted in a determination that at least 30 percent but less than 37 percent of the gross proceeds were derived from the sale of food, within six months, to either:
a) replace the license with a bar or beer and wine bar license. At the end of six months, the restaurant license is revoked or surrendered.
b) obtain permission from ADLLC to continue to operate with a modified restaurant license if it meets the qualifications.
4. Allows a restaurant licensee whose audit or consent agreement resulted in a determination that at least 37 percent but less than 40 percent of the gross proceeds were derived from the sale of food, to be granted a period of one year to increase the food percentage to at least 40 percent. If the licensee does not increase the percentage of food sales to 40 percent, the licensee has six months to either:
a) replace the license with a bar or beer and wine bar license. At the end of six months, the restaurant license is revoked or surrendered.
b) obtain permission from ADLLC to continue to operate with a modified restaurant license if it meets the qualifications.
5. Requires ADLLC to revoke a restaurant license if an audit conducted by ADLLC determines less than 30 percent of gross proceeds are from the sale of food.
6. Allows ADLLC to permit a restaurant licensee to operate with a modified restaurant license if an ADLLC audit determined at least 30 percent but less than 40 percent of the restaurant’s gross proceeds were derived from the sale of food and all of the following apply:
a) the restaurant has sufficient number of cooks, food preparation personnel and wait staff to prepare and provide restaurant services.
b) the restaurant’s equipment is a sufficient grade.
c) the size of the restaurant’s kitchen is appropriate to the menu offered and the kitchen is not less than 20 percent of the total floor space.
d) the menu is consistent with the restaurant operation.
e) no more than 30 percent of the public interior area floor space can consist of pool tables, dart or arcade games, barstools, cocktail tables and similar seating and dance floors, and the aggregate area of all dance floors is not greater than 10 percent of the total floor space of the public area of the premises.
f) the restaurant name does not include terms such as bar, tavern, pub, spirits, club, lounge, cabaret, cantina or saloon.
g) does not allow disposable dinnerware, expect for outdoor areas.
Modified Restaurant License Notification Requirements
7. Requires ADLLC to notify a city, town or county of its intent to approve of the restaurant license continuation.
8. Requires all requests for a modified restaurant license to have a notice posted by the local jurisdiction for 20 days at the restaurant’s premises that invites citizens within a one-mile radius to provide written comments to ADLLC regarding the request.
9. Allows the restaurant licensee to continue operating with a modified restaurant license, if the local jurisdiction does not object within 90 days.
10. Requires ADLLC to set a hearing before the Arizona State Liquor Board (Board) if ADLLC or the local jurisdiction intends to disapprove of or object to a restaurant’s continuation and requires the Board to determine whether the restaurant may continue its operation with a modified license.
11. Requires, if there is a timely objection of a modified restaurant license, the local jurisdiction to post a notice of the hearing for a period of at least 20 days at the licensed premises and allows the local jurisdiction and bona fide residents to testify before the Board at the hearing.
Additional Modified Restaurant License Provisions
12. Allows ADLLC to require a modified restaurant licensee to specifically acknowledge the representations made by the licensee regarding its restaurant operations if the licensee is allowed to continue its restaurant operations with a modified license.
13. Allows ADLLC to audit or revoke a license if a modified restaurant licensee changes its operation in any way that materially and detrimentally affects the representations made by the licensee.
14. Limits the number of modified restaurant licenses that can be issued in FYs 2006-2007 and 2007-2008 to 15 in each year and specifies after FY 2007-2008 ADLLC cannot approve any more modified restaurant licenses.
15. Allows the Director to determine the fee for a modified restaurant license.
16. Requires the fees received by ADLLC from the modified restaurant license to be transferred to the state General Fund.
17. Appropriates $450,000 from the state General Fund in FY 2006-2007 to ADLLC for the purpose of hiring three additional investigators and two additional auditors.
18. Requires ADLLC to issue a report to the Governor and the Legislature on the effect of the modified restaurant license by November 1, 2007. Requires ADLLC to solicit input from neighborhood groups and local jurisdictions for the report.
19. Specifies this legislation does not apply to audits, disciplinary action completed or any consent agreement signed before January 1, 2006.
Miscellaneous
20. Extends for one year the ability to transfer bar, beer and wine bar and liquor store licenses from counties with a population of 500,000 or more to counties with a population of less than 500,000.
21. Allows members of a recognized veterans’ organization of the United States to be bona fide guests in specified clubs composed of veterans.
22. Makes technical and conforming changes.
23. Becomes effective on the general effective date.
Amendments Adopted by Committee
· Removes the provisions regarding negligence per se and the requirement that the finder of fact consider all circumstances in determining negligence.
Amendments Adopted by Committee of the Whole
· Prohibits the trier of fact from considering certain information in a dram shop liability case unless the court finds it relevant.
Amendments Adopted by Conference Committee
· Adopted the modified restaurant license provisions and provisions related to the transfer of bar, beer and wine bar and liquor store licenses and to clubs.
House Action Senate Action
COM 2/1/06 DP 6-1-0-2 JUD 3/20/06 DPA 7-0-1-0
3rd Read 3/2/06 41-15-4-0 3rd Read 5/3/06 27-2-1-0
Final Read 6/20/06 39-18-3-0 Final Read 6/20/06 16-12-2-0
Signed by the Governor 6/28/06
Chapter 383
Prepared by Senate Research
June 29, 2006
BP/HG/jas