By Peter Berdon, Esq.

Peter A. Berdon, Esq.

One of the first questions that I often ask clients who are applying for liquor licenses is: Who is going to be the permittee? The client often rhetorically replies: “What is a ‘permittee’?” The answer is neither clear, nor straight forward.

Strangely enough, Connecticut’s Liquor Control Act does not define “permittee.” One is left to peruse the 115 state statues and nearly an equal number of regulations to determine the responsibilities and duties of a permittee to the Department of Consumer Protection. Even more difficult, however, is to assess the legal liability the permittee may face under Connecticut’s Dram Shop Act when there is a sale to an intoxicated person.

Generally speaking, the permittee is a person who is vested with the responsibility for overseeing the sale and distribution of beverage alcohol on a permitted premise. The permittee need not be the owner of the business, as the “backer” is the “proprietor” of the business that holds the license.

The Liquor Control Act, however, saddles the permittee with the responsibility to ensure the proper and lawful distribution of beverage alcohol.  Several examples include:

• Sales to Minors: Permittees incur direct and primary liability if they “or any servant or agent of a permittee … sells or delivers liquor to any minor or intoxicated person…” CGS § 30-86.
• Unauthorized Sales: “[A]ny … permittee who keeps or operates any bar or establishment which is a place where alcoholic liquor is kept for sale or exchange contrary to law shall be liable to the penalties provided in section 30-113.”
• Sales below cost: CGS provides: “No retail permittee shall sell at a price below his cost.”
• Strict Liability for Actions of employees or agent. Connecticut Regulations Section 30-6-A9 provides in relevant part: “A permittee and backer shall be held strictly liable for any violation of the statues, regulations, policies and stipulations of the department when such violation concerns their permit premises or their applications regarding their proposed permit premises.”

Yet despite these weighty obligations, the permittee has no pecuniary interest in the permit, as it is the backer who owns the licensed business. In fact, a review of the sections of the Liquor Control Act which establish the various license types reveals that the authorization to sell alcohol refers to the permit type, not the permittee. By example, the section relevant to package stores provides: “A package store permit shall allow the retail sale of alcoholic liquor…”

Furthermore, a permittee can be replaced at-will by the backer. When discharged, the permittee is prevented from removing “his permit” from the permit premises (Conn reg. § 30-6-A6a). Rather, the permittee (and the backer) are to notify the Department of the permittee’s removal and within 60 days the backer must make application to the department for a substitute permittee.

While the Liquor Control Act imposes clear liability on the permittee for regulatory violations of the Act, violations of the Dram Shop Act are not as clear. The Dram Shop Act  CGS §30-102, imposes liability on “any person … [who] sells any alcoholic liquor to an intoxicated person …” This imposition of liability is different from all that under the Liquor Control Act in that liability is imposed on the seller and does not refer to the permittee at all.

The Courts, however, often take a remedial view of this statute. In one case Connecticut’s Appellate Court allowed a case to proceed against a permittee where the plaintiff provided the statutorily required notice only to the corporate backer and not the permittee.

Current law is unclear as to whether or not a permittee will be held liable for violations of the Dram Shop Act by mere virtue of holding the title of permittee. The Connecticut Superior Court in Shafer v. Sullivan (41 Conn. L. Rptr. 403, 404), declined to find “that a permittee, sued only in the capacity of permittee, is personally liable for the establishment’s reckless behavior [in serving alcohol to the decedent].”

On the other hand, in Swift v. My Brother’s Place, (14 Conn. L. Rptr 317, 320) the Superior Court found that a permittee was liable for the reckless actions of his employees.

In short, holding the position of “permittee” on a liquor license carries with it certain liability for violations of the Liquor Control Act in the sale of beverage alcohol. It also may result in the imposition of personal liability under the Dram Shop Act. While financial exposure under the Dram Shop Act can be limited through the use of insurance, the selection of the permittee is a significant decision requiring careful consideration.

The foregoing is intended as general information only and not as legal advice. Contact an attorney to get advice about your particular circumstances.

Peter A. Berdon: Attorney Berdon, a partner with Berdon, Young & Margolis, PC, has represented wholesalers, manufacturers, package stores, restaurants and bars before the State of Connecticut DCP and the Federal TTB as well as in litigation matters in court since being admitted to practice in 1991. He can be reached at peter.berdon@bymlaw.com or www.bymlaw.com