Ohio’s “Dram Shop Act” limits the legal responsibility of liquor permit holders not only for acts of an intoxicated customer who causes an accident after leaving the establishment where drinks are sold, but also for acts of any intoxicated worker or person after they leave, the Ohio Supreme Court ruled today.

The Supreme Court’s 6-1 decision found the Dram Shop Act applied in a case where Mary Montgomery, a dancer at a Dayton strip club, was provided drinks by patrons and on her drive home hit a vehicle in which Nichole Johnson was a passenger. Johnson suffered multiple injuries and incurred more than $1 million in medical expenses.

The Court affirmed a Second District Court of Appeals decision that found Johnson could only pursue a claim against the club and its owner under the Dram Shop Act, which is R.C. 4399.18. Writing for the Court majority, Justice R. Patrick DeWine concluded that law holds the club responsible in limited circumstances including if the owner or an employee knowingly sold drinks to a “noticeably intoxicated person.” He wrote the trial court concluded that Montgomery was not noticeably intoxicated when she left and found the club was not liable for the damage.

The Court also ruled the only way to legally pursue a claim for injuries caused off premises against a liquor permit holder is by using the Dram Shop Act. The trial court had allowed Johnson to pursue a separate common law negligence claim against Michael C. Ferraro and his business, Thirty-Eight Thirty, Inc., which operated The Living Room strip club in Dayton.

A jury awarded Johnson $2.85 million from Thirty-Eight Thirty, but the Second District Court of Appeals reversed the decision, finding that Johnson could only sue using the Dram Shop Act. The trial court did not allow the jury to consider her Dram Shop Act claim.

In a dissenting opinion, Justice William M. O’Neill wrote he finds it hard to believe the Court would allow the outcome to stand, taking away the verdict to Johnson and not sending the case back where the jury, not the magistrate, could consider whether under the Dram Shop Act, the club was responsible for her injuries.

Club Encouraged Patron to Buy Dancers Drinks
Montgomery and The Living Room dancers were independent contractors. She paid the club $30 a night to lease space to dance, and in return she kept all the tips from customers. The club paid no wages or compensation. Although not required to drink, dancers did consume alcohol and the practice was encouraged by the club’s waitresses, who urged customers to buy drinks for the dancers. The club owner benefited because the club charged higher prices for drinks purchased for the dancers than for drinks the customers bought for themselves.

Ferraro testified that 95 percent of the club’s profit came from alcohol sales and 30 to 40 percent of the alcohol purchased was by customers for dancers. There was no limit on how many drinks could be purchased for dancers, and Ferraro allowed other employees including bartenders and bouncers to drink while working too.

In July 2010, Montgomery ingested cocaine on a day she went to dance at The Living Room. While working she consumed “a few” beers purchased for her by customers. Late that evening she drove home on Interstate 70 and struck a car in which Johnson was the passenger. Johnson was severely injured.

Injured Woman Sues Stripper and Club
Johnson filed a lawsuit against Montgomery, Ferraro, and Thirty-Eight Thirty, making two claims. She claimed the club and owner violated the Dram Shop Act, and she claimed that the dancer, club, and owner were negligent.

A Montgomery County Common Pleas Court magistrate presided over a jury trial in the case against Ferraro and the club. After the parties presented their cases to the jury, the magistrate issued a directed verdict in favor of Ferraro and the club. The magistrate allowed the jury to consider just the negligence claim, and the jury ruled the club owed Johnson $2.85 million. The trial court judge adopted the magistrate’s decision and the jury verdict.

Johnson appealed the trial court’s decision to the Second District, claiming Ferraro was also personally responsible and she should be awarded damages from him. He and the club cross appealed, arguing that claims against liquor permit holders for accidents involving intoxicated persons can only be made using the Dram Shop Act, and that the trial court should have never allowed the jury to consider the common law negligence claim. The Second District agreed, and reversed the judgment against the club.

Johnson appealed to the Supreme Court, which agreed to hear the case, and conducted oral arguments at an off-site court session in Morgan County in April.

Act Applies to Workers, Not Just Customers
Justice DeWine explained that Johnson did not appeal the directed verdict against her and the issue of whether the jury should have heard claim by evaluating the Dram Shop Act is not an issue Johnson asked the Court to consider. Instead, Johnson argued the Dram Shop Act only applies to liquor permit holders and their patrons, not to workers or independent contractors like Montgomery. Because of the act’s limits, Johnson argued she is allowed to pursue the negligence claim, and maintained the jury verdict should stand.

The opinion noted the act’s language that a permit holder is liable only if the establishment knowingly sold drinks to “a noticeably intoxicated person,” and that person’s intoxication resulted in injury, death, or property damage.

The definition of “sale” is defined broadly and includes “exchange, barter, gift, offer for sale, sale, distribution and delivery of any kind, and the transfer of title or possession of beer and intoxicating liquor either by constructive or actual delivery by any means or devices whatever,” the Court noted. The Court concluded that the act applies whether the drinks were purchased directly by the intoxicated person or by someone else who gives it to the intoxicated person. Montgomery testified she consumed drinks given to her by customers.

Johnson claimed the law actually means drinks sold to an “intoxicated patron,” and pointed to other cases before the Supreme Court involving Dram Shop Act claims.

“But the decisions cited by Johnson do not squarely address the issue whether ‘intoxicated person’ should be interpreted to include only intoxicated patrons. The word ‘patron’ was used in those cases because the allegedly intoxicated person was in fact a patron; the word was not intended as a limitation on the class of persons covered by the statute,” the opinion stated.

The Court explained that the law’s plain, everyday meaning of the word “person” is not limited to patrons.

“A patron or a customer is a person, as is a dancer or a worker or an independent contractor. The statute does not limit the definition of ‘person’ based on the individual’s relationship to the permit holder. We conclude ‘intoxicated person’ includes an ‘intoxicated worker,’” the Court stated.

The Court noted it was “not indifferent to the steep toll exacted by drunken driving,” but arguments for narrowing the statute to apply only to patrons are “more properly addressed” by the state legislature.

Chief Justice Maureen O’Connor and Justices Sharon L. Kennedy and Patrick F. Fischer joined Justice DeWine’s opinion. Justices Terrence O’Donnell and Judith L. French concurred in judgment only.

Magistrate Ignored Evidence, Dissent Asserted
In his dissent, Justice O’Neill wrote the magistrate’s finding was directly contrary to the evidence, including Montgomery’s testimony that she was drunk the night of the accident and became drunk while dancing. Justice O’Neill also found it hard to ignore why Montgomery was driving drunk that night, and how it was possible that the club owners and employees could not be held responsible.

“It is beyond comprehension that the majority does not address the fact that this entire sordid fact pattern was predictable, planned, intentionally created, and designed into a business plan. Tragically that business plan is now ratified by the Supreme Court of Ohio,” he wrote.

He noted that no arrangements were made to ensure dancers did not drive drunk after drinking on the job at the encouragement of the owner, and he said the strip club operated on a “business model that is as unbelievable as it is unconscionable.”

He also wrote that while Johnson’s appeal might not have addressed the directed verdict, the Court has its own authority to address an issue in a case if it might have an effect on the “character of, and the public confidence in, judicial proceedings.”
“This court should not take away a negligence verdict and look the other way regarding a Dram Shop Act claim that we can see was wrongfully taken away early in the lawsuit. To do so is to absolve the club entirely of responsibility,” he wrote.

He added that if only the Dram Shop Act applies, the jury should consider Johnson’s claim that the club violated that law.

2016-0790. Johnson v. Montgomery, Slip Opinion No. 2017-Ohio-7445.

View oral argument video of this case.

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