Indiana Dram Shop Law
A Primer On The
Past, Present, And Future of Alcohol Liability In Indiana
Written By:
Christopher A.
Pearcy
Hume Smith
Geddes Green & Simmons LLP
I.
Introduction
When can a bar,
restaurant, social host or other furnisher of alcohol be liable for subsequent
intoxicated actions of the persons they serve?
Indiana, like other states, has historically struggled to define the
parameters of when dram shop liability can attach in Indiana. The article addresses this complex question by
discussing where the law has been, where it is now, and where it may be going.
II.
History:
Immunity, Negligence Standard, Statute, Immunity again…?
a.
Common
Law
Once upon a time
providers of alcohol had no dram shop liability at common law. Early on, it was universally held that “to
either sell or give intoxicating liquor to ordinary able-bodied men” is not a
tort at common law.[1]
The reason usually given for this immunity to providers of liquor was that
"the drinking of the liquor, not the furnishing of it, was the proximate
cause of the injury.”[2]
This rule sustained a
number of legal challenges over the years.
In 1966, Indiana’s Supreme Court held in Elder v. Fisher that “the general principles of common-law
negligence should be applied to cases involving intoxicating liquor."[3] However, this holding has been interpreted to
apply common law liability only in situations where a “special statutory
provision” did not already control.[4]
This
was obviously followed by much debate over when statute would control the claim
vs. when common law negligence would apply.
In 1988, the Indiana Supreme Court handed down the landmark decisions of
Gariup Construction Co. v. Foster[5]
and Picadilly, Inc. v. Colvin.[6] In
essence, these cases held that a common law negligence/reasonable care standard
existed independent of Indiana’s current statutory scheme. The only statute applicable, and construed by
those cases at the time was the criminal dram shop statute, which stated:
“It
is unlawful for a person to sell, barter, deliver, or give away an alcoholic
beverage to another person who is in a state of intoxication if the person
knows that the other person is intoxicated.”[7]
Gariup
and
Picadilly definitively held this
criminal statute was not a “special statutory provision” as pursuant to Elder, and a common law negligence/reasonable
care standard applied to dram shop claims.
Per these holdings,
providers of alcohol had a duty to third-party Plaintiff’s when the provider “knew
or should have known” the allegedly intoxicated person (“AIP”) served was
intoxicated. Harm to third parties was
be foreseeable if that provider knew or should have known of the intoxication
and served the AIP anyway. Gariup and Picadilly were landmark decisions in favor of Plaintiffs, and
prompted serious concerns for bars, restaurants, social hosts, and other
providers of alcohol.
However, Gariup and Picadilly were decided about two (2) years too late. While these cases were pending on appeal, the
Indiana Legislature passed our modern Dram Shop Act in 1986.[8] That Statute applied only to actions accruing
after April 1, 1986. Thus, it expressly
did not apply to Gariup and Picadilly because those actions accrued
in the early 1980’s.
Gariup
and
Picadilly expressly acknowledge they
don’t deal with or construe the new Dram Shop Statute. However, the overlap continues to cause
confusion, and still prompts arguments by Plaintiff’s attorneys that an
independent common law negligence cause of action still exists. As discussed below, the Dram Shop Act (not
common law) is what now controls civil liability for furnishing alcohol in
Indiana.
III.
Indiana’s
Dram Shop Act: Immunity To Furnishers of Alcohol
a.
Introduction
It has been held that the Indiana Dram Shop Act, I.C. § 7.1-5-10-15.5, “shields a
person who furnishes an alcoholic beverage from liability in a civil action for
damages caused by the impairment or intoxication of the person who was
furnished the alcoholic beverage.”[9] This is purportedly true as long as person
served was not visibly intoxicated.
Specifically, the Dram Shop Act states in relevant part:
“Liability of person furnishing alcoholic
beverage to intoxicated person.
Sec. 15.5.
(a) As used in this section, "furnish" includes barter, deliver, sell,
exchange, provide, or give away.
(b) A person who furnishes an alcoholic beverage to a
person is not liable in a civil action for damages caused by the impairment
or intoxication of the person who was furnished the alcoholic beverage unless:
(1)
the person furnishing the alcoholic beverage had actual knowledge that
the person to whom the alcoholic beverage was furnished was visibly
intoxicated at the time the alcoholic beverage was furnished; and
(2)
the intoxication of the person to whom the alcoholic beverage was furnished was
a proximate cause of the death, injury, or damage alleged in the complaint.”[10]
This Statute “…adds to and codifies the basic elements necessary to establish
liability on the part of an alcohol provider” and “states the fundamental
elements of any claim against an alcohol provider relating to
damages caused by the intoxication of the person to whom the alcohol was
furnished.”[11]
b.
Foreseeability
of Harm and Duty To Third Parties Under the Dram Shop Act
“The prescribed duty is one of omission; a furnisher is to
refrain from serving alcohol to a person he or she knows to be visibly
intoxicated.”[12] It has been held:
"The Dram Shop Act represents a legislative judgment
and the declared public policy of this state that providers of alcoholic
beverages should be liable for the reasonably foreseeable consequences of
knowingly serving visibly intoxicated persons."[13]
Contrary
to the common law, that legislative judgment now controls the elements of
foreseeability and duty. That is, harm
to third parties is only foreseeable when the defendant knows the person served
is visibly intoxicated, and breach occurs when they continue to serve despite
that knowledge. Only upon visible
intoxication can a third-party Plaintiff’s injuries be foreseeable to the
defendant furnisher, and only then would the Defendant have a duty to the
third-party Plaintiff.
The
immunity provided in the Dram Shop Act was a departure from the common law’s
duty of reasonable care in such cases.
Now:
“[Civil] liability for negligence in
the provision of alcoholic beverages … is restricted to cases involving the
breach of a statutory duty. Here, the applicable statutes are Indiana Code
sections 7.1-5-10-15 and 7.1-5-10-15.5.”[14]
“The duty to conduct oneself to avoid harm
from another person's intoxication is embodied in Indiana's Dram Shop Act.”[15] “[W]hether a legal duty is owed by one party
to another is generally a question of law for the court to determine.”[16]
Thus, duty under the Dram Shop act is ripe for resolution on summary judgment
under the proper facts.
c.
Chances of Success on Summary Judgment in Dram Shop Cases
Absent
evidence to infer that the AIP was visibly intoxicated when served, such
matters can be resolved as a matter of law on summary judgment. That was the holding of the Indiana Supreme Court in Delta
Tau Delta v. Johnson.[17] Delta
held that:
“Where … there is
insufficient evidence to support actual knowledge [of visible intoxication],
the issue may be resolved as a matter of law.”[18]
In Delta, the Indiana Supreme Court explained the process for
determining when summary judgment is appropriate on the issue of actual
knowledge of visible intoxication pursuant to the Dram Shop Act:
“The first step … is to determine whether the person furnishing
the alcohol had actual knowledge that they were furnishing alcohol to an
intoxicated individual. The furnisher's knowledge must be judged by a
subjective standard. Absent an admission that the person furnishing alcohol had
actual knowledge of the other's intoxication, the trier of fact must look to
reasonable inferences based upon an examination of the surrounding
circumstances. Actual knowledge of intoxication can be inferred from indirect
or circumstantial evidence such as ‘what and how much the person was known to
have consumed, the time involved, the person's behavior at the time, and the
person's condition shortly after leaving.’
Where, however, there is insufficient evidence to support actual
knowledge, the issue may be resolved as a matter of law.”[19]
In
Delta, the AIP had 4 or 5 beers and
hard alcohol, admitted he was intoxicated and the needed to “sober up,” and
witnesses testified “he may have been more talkative than usual…”[20] The Supreme Court held such evidence
insufficient to infer visible intoxication: “…even if one assumes that a member
of DTD furnished [him] with alcohol, there is no evidence [he] exhibited
visible signs of intoxication for a pledge to notice.”[21]
Since there was no visible intoxication, there was no duty to the third party,
and summary judgment was appropriate.
Similarly, in Muex v. Hindel Bowling Lanes, the court
affirmed summary judgment for a bowling alley where a patron who was injured by
another patron brought suit against the establishment under the Dram Shop Act.[22] Although all patrons had to obtain beverages
at a single window station, the only evidence concerning the amount of beer
served was that the pitchers were empty and then full during the evening, there
were no complaints regarding patrons' behavior, and there was no evidence that
any patron was intoxicated.
IV.
The Dram Shop Act: Under Attack
Unfortunately
for furnishers of alcohol, Indiana’s courts regularly find ways to narrow the legislative
immunity provided by the Dram Shop Act.
Although the “actual knowledge” of visible intoxication standard is a
subjective one, case law repeatedly holds that the fact finder may infer the
server had actual knowledge of the AIP’s visible intoxication from the
surrounding facts and circumstances. This
is true even if the intoxicated behavior occurred outside of the presence of
the server or even hours later off the premises.
This
seems to run counter to legislature’s intent “that providers of alcoholic
beverages should be liable for the reasonably foreseeable consequences of
knowingly serving visibly intoxicated persons."[23] Rather, the current status of the law appears
to be that servers can potentially be held liable for unforeseeable
consequences of unknowingly serving a person that is later discovered to be
intoxicated.
Motions
for summary judgment have been repeatedly denied if there is any factual
support that the patron exhibited any sign of visible intoxication in the time
frame surrounding service. It often
doesn’t matter if this behavior occurred outside the view of the server, or
even several hours after being served.
Factual inferences of visible intoxication have been found based upon
patron behavior in the surrounding timeframe, witness testimony, amount
consumed, toxicological evidence, expert opinion, later police observations,
and similar evidence, even when there is no evidence the server actually knew
the patron to be visibly intoxicated.
a.
Actual Knowledge Inferred by Amount Consumed and Other
Witness Observations
In Elsperman v. Plump (a case decided before the Dram Shop Act), it
was held the fact finder may consider the patron's alcohol consumption prior to
his visit to the tavern (even if unknown to the server), his behavior in the
tavern, the amount of alcohol he consumed while there, the time period
involved, and the state of intoxication he exhibited after leaving the tavern.[24]
The “totality of the
evidence” can include “the amount of alcoholic beverages consumed, the loud and
boisterous conduct, the coughing spell and staggering to the bathroom, the
offer of [a friend] to drive [the patron] home, the admission of [the
bartender] that [the patron] was a ‘little intoxicated’, the fact that [the
bartender] followed [the patron] out and observed him drive away, and [the
bartender's] admonition to [the friend] to keep his mouth shut.”[25]
b.
Toxicologist/Expert
Opinion
Expert opinion may also
be used to support or oppose visible intoxication. Most toxicologist agree that a BAC of .15%
will give rise to an factual inference of visible intoxication in most
adults. In Booker, Inc. v. Morrill, the bartender and witnesses testified that
the patron did not appear intoxicated.
However, evidence that he drank eight to ten beers and three shots over
a four-hour period and the expert’s opinion that the AIP’s .21% BAC would give
rise to an inference of visible intoxication, was sufficient to give rise to an
inference that the bartender had actual knowledge of visible intoxication.[26]
V.
The
Future? Can Odor of Alcohol on the
Breath Be Visible Intoxication?
In 2015, Buchanan v. Brad’s Gold Club held for
the first time that the odor of alcohol on one’s breath can constitute
“visible” intoxication.[27] One can quickly see the problems such a
holding could cause.
By definition, an odor
is not visible. One cannot see an
odor. If upheld, the this ruling
potentially eviscerates the Dram Shop Act’s immunity and could arguably be seen
as automatically imposing a duty to third parties upon furnishing the first
drink. Put simply, every person that
takes a sip of alcohol will have some odor of that alcohol on their breath, and
as that alcohol is metabolized, it is excreted through the breath. Odor has nothing to do with a person’s level
of impairment or visible signs of intoxication.
The BAC of the AIP in
that case was undisputedly well below the .15% standard for inferring visible
intoxication, and experts found the AIP’s BAC to be .063% at the time of
service. There was no evidence of
visible intoxication before, during, or after being served. The evidence revealed that the AIP was later
found to have alcohol on her breath. Regardless,
the Appellate Court held:
“Although [the AIP] did
not fail any sobriety tests or exhibit any other indicia of visible
intoxication, we find that whether it may be inferred from the BAC and the odor
of alcohol that BGC had actual knowledge that [the AIP] was visibly intoxicated
at the time she was furnished alcoholic beverages is a matter best left for the
trier of fact.”[28]
This
holding is currently pending petition to transfer to the Indiana Supreme Court,
and the story is likely not over for this case.
VI.
Conclusion
and Tips
Liability in these
cases often depends on witness observations, police evidence (in the related
criminal matter), and toxicological evidence.
Anyone defending or prosecuting a dram shop claim should always analyze
the following issues, and obtain the following evidence as soon as possible:
1. Take
recorded witness statement from anyone that observed the AIP in the timeframe
surrounding the accident or service.
2. Obtain
a complete copy of the criminal file, including all reports, photos, videos,
interviews, affidavits, police observations, and pleadings.
3. A
blood draw was likely taken, and the complete toxicological file should be
obtained (if not already in the police file).
4. Obtain
copies of all receipts and server tickets from all dram shops visited.
5. Obtain
credit card records for the AIP and anyone that bought alcohol for the AIP.
6. Alcohol
treatment records for the AIP. Did the
AIP have a good deal of experience with alcohol?
7. Nonparties
and comparative fault: Fault can be
apportioned to the Plaintiff, the AIP, and anyone that bought a drink for the
AIP. Most juries will put the majority
of fault on the drunk driver.
8. Retaining
a toxicologist early should be considered in most cases.
[1] Elder v. Fisher, 247 Ind. 598, 604, 217 N.E.2d 847, 851 (1966).
[2] Annotation, Common-Law Right of Action for Damage
Sustained By Plaintiff in Consequence of Sale or Gift of Intoxicating Liquor or
Habit-Forming Drug to Another, 97 A.L.R.3d 528, 533 (1980). See also 45 Am.
Jur. 2d Intoxicating Liquors § 553 (1969).
[3] 247 Ind. 598, 607; 217 N.E.2d 847, 853 (1966).
[4] Whisman v. Fawcett, 470 N.E.2d 73, 80 (Ind. 1984).
[5] 519 N.E.2d 1224 (Ind. 1988).
[6] 519 N.E.2d 1217 (Ind. 1988).
[7] Burns Ind. Code Ann. §
7.1-5-10-15.
[19] 712 N.E.2d 968, 974, 1999 (Ind. 1999), abrogated in part on
other grounds, internal citations omitted.
[24] Elsperman v. Plump, 446 N.E.2d 1027, 1031 (Ind. Ct. App. 1983).
[25] Id.
[26] Booker, Inc. v. Morrill, 639 N.E.2d 358 (Ind. Ct. App. 1994).
[27] BGC Entm't, Inc. v. Buchanan, 2015 Ind. App. LEXIS 549 (Ind. Ct.
App. Aug. 5, 2015).
