Ohio’s Dram Shop Act Not the Exclusive Remedy

Tom MazanecMary Beth KlemencicBy Tom Mazanec and Mary Beth Klemencic

Ohio’s Dram Shop Act was found not to be the exclusive remedy for a third party to hold liquor permit holders liable for the actions of an intoxicated patron in a recent ruling in Sharon Snyder, et al. v. Julio Vargas, et al., Case No. CV-15-839575 in the Court of Common Pleas, Cuyahoga County, Ohio. The judge ordered Secrets Gentlemen’s Club to pay $8 million to the family of a woman killed in a motor vehicle accident when an intoxicated patron of the club drove the wrong way on the highway. The court held in a notable decision that the Plaintiffs’ common law negligence claims were sufficiently distinct, separate, and independent from the statutory cause of action premised on the sale of alcohol. The court did clarify that its decision was based on case specific facts and attendant circumstances, particularly that the liquor permit holder admitted that it had an obligation or duty to prevent known intoxicated patrons from driving and an obligation or duty to call or involve police to prevent known intoxicated patrons from driving or, at the minimum, provide them with alternate transportation.

In Ohio, there is no common law duty to prevent a known intoxicated patron from driving a motor vehicle, no duty to call the police on a known intoxicated patron who is going to drive, and no duty to find alternate transportation for a known intoxicated patron.

In Snyder, the intoxicated patron pled “no contest” to aggravated vehicular homicide and assault charges, was found guilty, and sentenced to 15 years in prison. The driver’s insurance agreed to settle with the family paying $37,000 and Gigi’s lounge, a strip club he had been to earlier in the evening, also agreed to settle with the family for $1 million.

Julio Vargas starting drinking at home around 5:00-5:30 p.m. He then bought beer and a pint of Hennessy at the liquor store and drank and snorted cocaine in the store’s parking lot, after which he drove to an adult entertainment bar known as Fox’s Den, where he drank more. Vargas next drove to Gigi’s Lounge around 7:20 p.m., where he admits to being impaired and noticeably intoxicated by the time he got there. He drank more and admittedly was so intoxicated he blacked out and has no memory of the rest of the night.

Gigi’s owner, staff, and a customer testified at depositions that Vargas was acting weird, non-responsive, aggressive, hard to understand, and irrational. Gigi’s bartender testified she was so concerned about his behavior she armed herself with a gun. According to Gigi’s owner, Vargas inappropriately shoved her, leaving a bruise, and was behaving aggressively. She threw him out around 8:30 p.m. and followed him into the parking lot to make sure he got in his vehicle and left.

After his ejection from Gigi’s, Vargas drove to Secrets Gentlemen’s Club where it is disputed as to how many drinks Vargas consumed while at Secrets. Secrets claims they only served him one beer in the two hours and forty-five minutes he was there. Credit card receipts show he purchased two drinks. Evidence shows he withdrew $200 in cash from an on premises ATM. The club took no steps to preserve any other receipts or documents to reflect other sales and Cleveland police testified Secrets was not cooperative with their investigation.

At deposition, Secrets’ general manager/minority owner (“GM”) acknowledged Vargas inappropriately touched one of the dancers, assaulting her, thus violating Ohio law and committing a crime. The GM further stated that around 11:30 p.m., he spent 15-20 minutes having direct face-to-face contact with Vargas. Three separate experts opined that Vargas would have been noticeably intoxicated throughout his time at Secrets.

Vargas was escorted out twice and video depicts him confused and initially unable to locate his vehicle before finding it and driving away. Minutes later he entered the highway going the wrong way and the fatal crash occurred around 11:45 p.m.

In deposition the GM acknowledged that Secrets has an obligation or duty to prevent known intoxicated patrons from driving and a duty to call police to make sure extremely intoxicated patrons do not drive, or else arrange for transportation to take them home. However, he did not call the police to intervene with Vargas, “because they take forever.”  But, Secrets’ bouncer testified that there was a uniformed, off-duty officer on site, yet no one asked the officer for assistance handling Vargas.

The court awarded total damages in an amount in excess of $24 million, apportioning liability as one-third to Vargas, one-third to Gigi’s Lounge, and one-third to Secrets. Each liable for a little more than $8 million.

The trial court found that plaintiffs’ common law negligence claims, (1) failing to prevent a known intoxicated patron from driving and, (2) failing to inform the on-site police officer of Vargas’ extremely intoxicated condition, along with his assault of a club dancer and his unauthorized use of a credit card, were sufficiently distinct, separate, and independent from Ohio’s dram shop statute and that plaintiffs’ common law negligence claims were based on  case-specific facts and attendant circumstances relating to Secrets’ negligence in failing to fulfill its admitted duties of preventing a known intoxicated patron from driving, or notifying police, or providing alternate transportation.

To establish actionable negligence one must show the existence of a duty, a breach of that duty, and injury resulting proximately from that breach. In general, the existence of a duty depends largely on the foreseeability of the injury. The test for foreseeability is whether a reasonably prudent person would have anticipated that an injury would likely result from the performance or nonperformance of an act.

The court concluded that Secrets admitted it had an obligation or duty to prevent known intoxicated patrons from driving, a duty to call or involve police when a known intoxicated patron is driving or provide the intoxicated person with other transportation. Based on these unique and case specific facts and attendant circumstances, the trial court held that Secrets breached its admitted duty to prevent a known intoxicated patron from driving, as well as breaching its duty to use reasonable care to prevent foreseeable harm to others under the “attendant circumstances as those involved in this unique case.”  Secrets not only did nothing to fulfill its duties, it ensured that Vargas would drive away in his intoxicated state. Thus, it was foreseeable to Secrets, or anyone under these circumstances, that serious injury was likely to occur. Secrets actions and omissions had nothing to do with selling or serving alcohol, but were based on the unique and case-specific facts and circumstances involved, i.e. the admission to a duty not legally imposed by law.

The court took notice of the few other Ohio courts that have permitted common law negligence actions to be maintained against liquor permit holders for the actions of intoxicated patrons and noted that the facts and circumstance in this matter were even more egregious than those involved in the other cases. However, in the other cases the injured party was a patron/business invitee of the liquor permit holder and the liability was found to arise essentially under a premises liability claim. In the matter herein, the injured party was not a business invitee, but an innocent third party whose remedies against a liquor permit holder are laid out under Ohio’s dram shop statute.

In closing, the trial court remarked that Secrets’ negligence was separate, distinct, and independent from any statutory claims involving or arising from its sale or service of alcohol. Unlike a situation where a drunk patron slips out undetected, Secrets’ management failed not only to take any action to fulfill its admitted duty to prevent a known intoxicated patron from driving so as to prevent foreseeable injuries to other motorists, but its actions ensured that Vargas would drive away.

Coverage Ramifications – General Liability Carriers Beware

To the extent that the duties admitted to are outside of the dram shop law, then the argument will be made that the general liability carrier will have a duty to defend and indemnify on these allegations. Thus, rather than simply denying coverage, a reasonably prudent general liability carrier will first make sure that the dram shop carrier is defending the entire case. Defense counsel has an obligation to defend all counts of the complaint and not just those allegations that may be covered by the carrier that hired him. However, a finding by a court or jury that the common law negligence duties have been violated might well trigger coverage and payment by the general liability carrier. Thus, general liability carriers must closely examine claims and lawsuits that may have common law negligence components to them as opposed to simply assuming the dram shop carrier will take care of everything.

Experience Counts

We are experienced dram shop attorneys and are well prepared for these types of allegations. Our witness and client preparation includes educating them regarding Ohio law, explaining exactly what their duties are under the dram shop law, and making sure that they do not admit to any duties they are not legally obligated to perform. In over 30 years of handling these types of cases, a plaintiff attorney has never been successful in getting these admissions from our properly prepared clients and witnesses.

Thomas S. Mazanec and the firm of Mazanec, Raskin & Ryder Co., L.P.A. (MRR) have handled liquor liability cases for more than 30 years and have tried numerous matters to verdict. MRR attorneys have defended more businesses and event organizers in liquor liability cases than any other firm in Ohio. Our representation of the liquor permit holder before the Ohio Supreme Court in Smith v. The 100th Inning, Inc., radically changed the course of the dram shop statute in Ohio by denying an intoxicated patron the right to sue the permit holder based on the commonsense argument that responsibility for one’s voluntary liquor consumption should be one’s own.

Our attorneys work across the state with bars, restaurants, taverns, individuals, and temporary liquor permit holders as well as the insurance carriers providing coverage for those clients. When litigation is pursued, we engage in tenacious investigations and put on an aggressive defense for our clients.

For additional information or questions about the ruling in Snyder, please contact Thomas S. Mazanec at
440.287.8297 / tmazanec@mrrlaw.com or Mary Beth Klemencic at 440.424.0018 / mbk@mrrlaw.com.