In South Dakota, I'm not legally allowed to sell alcohol to an already intoxicated customer. Was there a lawsuit that forced it to become law?

In many states, there is an a body of law that is known as the Dram Shop Act.  This act arose out of a case or several cases whereby taverns would server intoxicated patrons and the patrons would then drive and kill people from DUI.  The law is holding the taverns responsible for serving customers to protect the people that are on the roads.  You should be very careful if you work at a bar and are serving people as the state can come in and shut the bar down and/or take the tavern's license to serve alcohol away or issue fines to the tavers for thousands of dollars.  Plus, the tavern's insurance rates will go up, especially if sued by a victim of DUI.