A Dayton Jury Gave a Crash Victim $2.85 Million. The Dram Shop Act Took It Away.

Published May 5, 2016 · Verdicts & Settlements · Ohio Appeals Courts

In the early hours of July 4, 2010, a dancer left her shift at The Living Room, a strip club on North Dixie Drive in Dayton, and drove toward Springfield. She had been drinking on the job, as the club's dancers routinely did, from drinks customers bought for them at marked-up prices. On I-70 she lost control and slammed into a car, forcing it into a brick wall. The front-seat passenger, Nichole Johnson, suffered a brain injury, multiple skull fractures, broken teeth and ribs, and broken bones in her arm, elbow, pelvis, femur and ankle, along with a lacerated liver and a collapsed lung. She needed eleven surgeries and left the hospital with nine plates in her face and rods in her neck, arms and legs.

A Montgomery County jury heard that evidence and awarded her $2,854,645.55. The Second District Court of Appeals, in Johnson v. Montgomery, 2016-Ohio-1472, decided April 8, 2016, has now vacated the half of that verdict assessed against the club. The reason is a statute every drunk-driving victim needs to understand.

What the jury found

According to the court's opinion, the jury's verdict included $819,525.55 in past medical expenses, $15,120 in past lost wages, $120,000 for past pain and suffering, $220,000 for future medical expenses and $1,680,000 for future pain and suffering. The jury also found that Ms. Johnson had suffered a permanent and substantial physical deformity, the finding that lifts Ohio's cap on noneconomic damages. It split fault evenly between the dancer and the club, so each was responsible for $1,427,323, and it added $50,000 in punitive damages against the dancer.

The evidence against the club was damning. Its owner admitted that 95 percent of profits came from alcohol, that 30 to 40 percent of drinks were bought for dancers, that most dancers drank on the job and many became intoxicated, and that the club had no policy to get intoxicated dancers home safely. The security guard, bartenders and waitresses were all allowed to drink while working. The trial court let the case go to the jury on a common-law negligence theory and, after the verdict, wrote that letting the club profit from alcohol and then hide behind the Dram Shop Act would "fly in the face of decency and fairness."

Why the court of appeals reversed

The Second District agreed with the trial court about the facts and disagreed about the law. Ohio's Dram Shop Act, R.C. 4399.18, says that a person injured by an intoxicated person has no claim against the liquor-permit holder that served the drinks unless specific conditions are met. For an injury off the premises, like a highway crash, the victim must prove that the permit holder or its employee knowingly sold alcohol to a noticeably intoxicated person (or to a minor), and that the intoxication proximately caused the injury.

The trial court had directed a verdict against Ms. Johnson on her Dram Shop Act claim earlier in the trial, and she did not appeal that ruling. The only question on appeal was whether a separate common-law negligence claim could exist alongside the statute. The court held it could not. Following its own 1993 decision and at least six other appellate districts, it held that R.C. 4399.18 is "an exclusive remedy" that excludes all other negligence claims against a permit holder for harm caused by someone it served alcohol. The statute, the court explained, codified the old common-law rule that bars are not liable for their patrons' conduct and carved out only a narrow exception. Expanding that exception is for the legislature.

The court was careful to say what it was not deciding. The Dram Shop Act does not insulate a bar from ordinary premises-liability claims, negligent-security claims or other negligence unrelated to serving alcohol. And an employer can in some circumstances be liable for failing to supervise or control employees. But no such claim was pleaded here; the case was tried on the theory that the club was negligent in furnishing alcohol, and the statute controls that theory.

The result is that the $1,427,323 judgment against the club is gone, and the judgment against the dancer, a part-time dancer with no apparent means, is what remains.

The lesson: "noticeably intoxicated" must be proven, and proven fast

I wrote in 2013 about how dram shop claims work under R.C. 4399.18. Johnson shows what happens when the statute's elements cannot be met. The dancer testified that she had three beers during her shift (and had used cocaine earlier in the day), that neither she nor anyone at the club realized she was impaired when she left, and that she had never seen staff stop a dancer from drinking. The court does not tell us exactly why the Dram Shop Act claim failed at trial, but the "noticeably intoxicated" element is where these cases are won or lost.

What proves it:

• Witnesses who saw the driver stumbling, slurring or being cut off (or not cut off) in the hour before leaving. Names and phone numbers of other patrons disappear within days.
• Receipts and tab records showing how many drinks were served, when, and to whom.
• Surveillance video from the bar and the parking lot. Most systems overwrite within two to four weeks. A preservation letter must go out immediately.
• The driver's blood-alcohol level from the police investigation or hospital, and an expert who can work backward from it to the driver's condition at the bar.
• The driver's own testimony, obtained early, before the bar's lawyers have shaped it.

In a serious case we start that investigation the week we are retained, because the bar's insurance is often the only coverage large enough to matter.

Coverage: the second lesson

The opinion mentions in passing that the club's own insurer had been dismissed before trial because its policy contained a liquor-liability exclusion. That is common. Bars and clubs frequently carry general liability policies that exclude exactly the claim a drunk-driving victim brings, unless they have purchased separate liquor-liability coverage. Identifying what coverage exists, including the victim's own underinsured motorist coverage and the setoff rules I explained in January, is part of evaluating any crash caused by an intoxicated driver.

What this means for you

If you were hurt by a drunk driver who had been drinking at a Dayton-area bar, club or restaurant, you may have a claim against that business, but only if the Dram Shop Act's elements can be proven. The window for gathering that evidence is short. The injuries in these cases, like the facial fractures and spinal and orthopedic injuries Ms. Johnson suffered, are often catastrophic, and the at-fault driver's own policy is rarely enough. Our car accident and car and truck crash practices handle these cases from the first preservation letter forward.