On September 6, 2017, the Ohio Supreme Court decided in the case of Johnson v. Montgomery (Case No. 2017-Ohio-7445), that under Ohio’s Dram Shop Act (O.R.C. 4399.18), someone injured by an “intoxicated person” may sue a liquor permit-holder for an off premises injury – but only will prevail when the permit-holder or its employee knows the person they serve to be intoxicated or under age.

The Johnson case involved a dancer at a Dayton-area strip club who left the club intoxicated and caused an accident on her way home, injuring the plaintiff, a vehicle passenger.

One of the important legal questions at issue was whether the dancer qualified as an “intoxicated person” under the statute or whether that term encompassed only the permit holder’s patrons. The distinction is important because a narrow interpretation of an intoxicated employee or independent contractor would subject the permit holder to greater liability under a common law negligence analysis outside the exclusivity of the Dram Shop Act.

Here are three take-aways from the Johnson case.

1. It will be more difficult for parties to pursue claims under a common law negligence analysis based on the Johnson decision.

The injured plaintiff in Johnson argued that a common law cause of action existed for negligently furnishing an individual with intoxicating beverages because the Dram Shop Act — limited to acts by the permit holder’s patrons, rather than by its workers or independent contractors — did not apply.

The trial court agreed with the plaintiff and a large verdict was awarded but the Second District Court of Appeals reversed, holding that the Dram Shop Act did provide the exclusive cause of action against the permit-holder — provided the permit-holder knowingly sold intoxicating beverages to a noticeably intoxicated person and the person’s intoxication proximately caused the injury.

The Ohio Supreme Court agreed with the Appellate Court by holding that the only cause of action against a permit holder for such injuries arises when the permit holder (or an employee) knowingly “sells” or provides alcoholic drinks to a person who is noticeably intoxicated person or under age.

However, the Ohio Supreme Court then examined the definition of “intoxicated person” and determined that the statute went beyond applying to “intoxicated patrons” but also to “intoxicated workers.” such as the dancer who was an employee and/or independent contractor.

Therefore, Johnson, though supporting the exclusive remedy of the Dram Shop Act, did expand potential targets within the law to create expanded liability for liquor permit-holders.

2. Liquor permit-holders must nevertheless be careful as to knowledge of their independent contractors and/or employees’ consumption of alcohol.

While the Plaintiff in Johnson was able to pursue a cause of action under the Dram Shop Act, the Ohio Supreme Court, in its 6 to 1 decision, still determined that there was no liability under the act because the liquor permit-holder (in this case the strip club) was not aware that the club or any of its employees knowingly sold an intoxicated beverage to the dancer when she was noticeably intoxicated.

The dissenting justice, Judge William O’Neill, contended this was an outcome beyond comprehension because by nature of the strip club’s business, patrons purchased alcoholic beverages for dancers so they would interact with the patrons.  The dancer also admitted that she was drunk on the night of the accident.

Liquor permit holders should not rely on the results of Johnson because of its harsh result.  Instead, they should be most aware that in today’s world of cell phone recordings and similar social media presence that proof of knowingly selling and/or perhaps knowingly providing alcohol to a noticeably intoxicated employee can readily be presented, thus broadening the scope of liability for liquor permit-holders.

3. Legislative changes and public policy influence may be expected based upon the results of the Johnson case.

Mothers’ Against Drunk Driving, Ohio Association for Justice and similar advocacy groups will likely push the Ohio legislature to create a law that would overturn the seemingly harsh conclusion of the Johnson case –that an innocent passenger struck by an intoxicated employee and/or independent contractor of a business whose job duties include and/or are related to the consumption of alcohol cannot readily collect damages from the business.

While the Ohio Supreme Court indicated it does not condone the strip club’s “distasteful business practices,” the Court received criticism from the public and even the Ohio Attorney General’s Office.

Expect the Ohio Legislature to look for ways to strike the correct balance between the right of the public to be free from the substantial risk created by drunk drivers and the rights of permit holders and their employees to work within the law.

_________

Neil D. Schor practices public sector law with Harrington, Hoppe & Mitchell, Ltd. He can be reached at nschor@hhmlaw.com or at (330) 744-1111.