Liquor liability for imported products

[Don_DSP]

Hi,

I'm considering exporting my company's alcoholic beverages from Europe to the US, and wanted to know how the various DRAM laws and liquor liability applies for my business.

According to DRAM laws, would I be liable in any way for individuals in the US consuming my products if:

• The products are produced and canned in Europe...
• They are imported by a 3rd party US-based company...
• They are sold into distribution by a 3rd party US-based company...
• They are sold B2B by 3rd party US distributors...
• They are sold B2C by 3rd party US retailers, caterers, etc...
• They are sold B2C by 3rd party US distributors, who operate a webshop under my European company's name...

Would I also be liable in states that do not possess DRAM laws, and how could I insure my company against such liability?

If any further clarification is required, please let me know!

Thanks!

 

[flyingron]

Dram shop laws generally apply to places that serve liquor but in some places extend to other retailers. Since you are not legally allowed to sell directly to US customers, I do not see how you will be liable (you'd be incurring bigger CRIMINAL issues if you did).

Liquor manufacture and importation is not something I can educate you about over the internet. You need to employ a lawyer specializing in these things. You need to also find an independent (from you)US importer to bring the liquor into the US. That importer is also going to have to work with you and your attorney to make sure all the labeling and other regulations and approvals are met. They you're going to have to have the importer work with distributors in each state you expect your stuff to be sold in.

 

[adjusterjack]

Last but not least, buy the appropriate products liability insurance. It's not just drunks that you might be concerned about, your products could cause damage or injury to the end user for other reasons that could result in a lawsuit that can be costly to defend without the insurance.

 

[Don_DSP]

Thanks for your reply flyingron!

Indeed, we've been sourcing independent importers and distributors, and they've already been having legal discussions with us pertaining to proper labeling, Surgeon General's warning, excise, etc.

Because we cannot sell to US customers directly, we're looking into a distributor who would be able to manage our webshop from the US, which means he would be working with his own importer to bring our drinks in, and then sell them B2C locally.

As you said, in general it doesn't seem like we would be liable, but I'm unsure regarding the webshop - customers would normally be redirected to the US webshop from our website based on IP location, and the webshop would be aesthetically identical to our European one (probably with a legal disclaimer at the bottom saying that it's operated by said distributor).

Although this webshop would be wholly managed by an independent distributor, could a legal case be made to transfer liability to us due to people believing they were purchasing the drinks directly from us?

 

[Don_DSP]

Noted, ajusterjack.

As an example, you'd be referring to people cutting themselves while opening the cans or other such cases? We have a general 3rd party liability insurance in place that covers the US, and I believe it covers these post-purchase claims as well, but I'll check!

I was more worried about liquor liability, because I know it's a separate matter in the US, and I want to avoid any surprises there.

 

[army judge]

If you desire to import distilled spirits, wine, or malt beverages into the U.S.A.; YOU must apply for a Federal Basic Importer's Permit.

To be eligible for that permit, you must maintain and staff a business office in the United States or contract with an existing U.S. licensed importer.

You need to contact an agency of the US Treasury Department:

Alcohol and Tobacco Tax and Trade Bureau

TTBGov - Importing Bottled Alcohol Beverages into the United States

TTBGov - Home

TTBGov - About Us | What We Do

Importing Bottled Alcohol Beverages Into the United States

Certain requirements apply to imported alcohol beverages imported in packages (i.e., bottles or other non-bulk containers) and persons engaged in the business of importing them. Those requirements are summarized below. For information about importation of alcohol beverages for personal use, please visit the Personal Importation of Beverage Alcohol Products webpage: TTBGov - Personal Importation of Alcohol Beverage Products .

Persons seeking to engage in the business of importing distilled spirits, wine, or malt beverages as defined in the Federal Alcohol Administration Act (FAA Act) into the United States must apply for a Federal Basic Importer's Permit ("Importer's Permit"). To obtain an Importer's Permit, the importer must file an "Application for Basic Permit under the Federal Alcohol Administration Act" on TTB F 5100.24 (PDF) with TTB's National Revenue Center (NRC). The process may be done electronically, through Permits Online, or by submitting a paper copy of the form. TTB does not charge fees for issuing these permits. Please visit Permits Online for additional information including tutorials, tips for navigating the system, and current permit processing times.

To obtain an Importer's Permit, the importer must maintain and staff a business office in the United States. If you are unable to conduct business in the United States, you must contract with an existing licensed importer in the United States. Making a commercial arrangement with an existing licensed importer eliminates the need to obtain an importer's permit.

If you plan to sell at wholesale alcohol beverages other than those beverages that you directly import with your Importer's Permit, you must also apply for a Wholesaler's Basic Permit, unless those beverages are not subject to the FAA Act. You may apply for both permits at the same time through Permits Online: TTBGov - Permits Online Help .

If you need assistance completing your permit application, or have questions about the process, please contact the NRC toll-free at 877-882-3277 or use the online form TTBGov - Contact NRC .

 

[zddoodah]

According to DRAM laws, would I be liable in any way for individuals in the US consuming my products if

A dram shop law (not a "DRAM law") is a law that holds a business liable if it serves or sells alcohol to a minor or already intoxicated person who later causes injury, death or property damage. None of the circumstances you mentioned are particularly relevant, but neither are dram shop laws to a foreign seller who does not sell direct to consumers. Additionally, even if your company could be held liable for something, it would be extremely difficult, if not impossible, to hold you personally liable.

Would I also be liable in states that do not possess DRAM laws

Liable for what?

how could I insure my company against such liability?

Ummm...insurance.

Obviously, your plan to export your company's alcoholic beverages from Europe to the US should only be done in consultation and with advice from competent legal counsel.

 

[Don_DSP]

Thanks armyjudge. We wouldn't be importing them directly - too much uncharted ground to cover for a small startup in Europe. We'll be working with independent importers from the US, like flyingron mentioned.

If there comes a time when we've outgrown our production capability and can no longer meet our export demands, then we might even consider opening a subsidiary in the US and manufacturing and canning our drinks there directly, but that's a looooong way off still, and we'll only do so after thorough legal and financial due diligence.

 

[PayrollHRGuy]

While there have been some significant loosening of liquor laws in many US states the liquor laws are on a state-by-state basis.

This seems to be a list of states where a US company can sell directly to individuals.
AZ, CA, CO, CT, DC, FL, IL, IN, KS, KY, LA, ME, MD, MI, MN, MO, NE, NV, NH, NJ, NM, NY, NC, ND, PA, RI, SC, TX, WA.

That still leaves 22 states that don't allow direct online or mail-order sales to individuals.

Even in the states that allow it will each have different tax laws on liquor.

 

[Don_DSP]

Pardon me for being unclear there zddoodah, by "I" I was referring to my company in all cases, not me personally. I also assumed that dram shop laws and liquor liability laws are one and the same, was I mistaken there?

I'm also well aware that I would need insurance to insure my company, however I don't know if my European insurance providers would need to, or can in fact account for dram shop laws or liquor liability in addition to normal 3rd party liability, or if we would need to take out an additional policy with a US provider.

This all being mainly related to wether we could be held liable for our US webshop B2C sales, which would be managed entirely by an independent 3rd party distributor, who would import our drinks via another independent 3rd party importer, and sell them in the US using a webshop designed to look almost identical to our local European webshop, and accessible via our own website.

 

[zddoodah]

I also assumed that dram shop laws and liquor liability laws are one and the same, was I mistaken there?

Dram shop laws are very specific (and I defined what they are previously). There may be many other "liquor liability laws" that aren't dram shop laws.

 

[flyingron]

This seems to be a list of states where a US company can sell directly to individuals.
AZ, CA, CO, CT, DC, FL, IL, IN, KS, KY, LA, ME, MD, MI, MN, MO, NE, NV, NH, NJ, NM, NY, NC, ND, PA, RI, SC, TX, WA.

A US retailer can sell directly. I don't believe that a US producer can bypass the triple tier ssytem.