Dram Shop Actions—Introduction
In 1986 (1986 PA 176), the legislature made substantial modifications to the Dram Shop Act. The act was renumbered in 1998 as part of the repeal and recodification of the Michigan Liquor Control Code. Subsection (2) of MCL 436.1801, sets forth the cause of action as follows:
(2) Except as otherwise provided in this section, an individual who suffers damage or who is personally injured by a minor or visibly intoxicated person by reason of the unlawful selling, giving, or furnishing of alcoholic liquor to the minor or visibly intoxicated person, if the unlawful sale is proven to be a proximate cause of the damage, injury, or death, or the spouse, child, parent, or guardian of that individual, shall have a right of action in his or her name against the person who by selling, giving, or furnishing the alcoholic liquor has caused or contributed to the intoxication of the person or who has caused or contributed to the damage, injury, or death. In an action pursuant to this section, the plaintiff shall have the right to recover actual damages in a sum of not less than $50.00 in each case in which the court or jury determines that intoxication was a proximate cause of the damage, injury, or death.
I. Elements of a Cause of Action
A. Unlawful Selling, Giving, or Furnishing of Alcoholic Liquor
The transaction giving rise to liability under the Dram Shop Act is an “unlawful selling, giving, or furnishing of alcoholic liquor to the minor or visibly intoxicated person.”
Although most of the cases have involved an actual “sale,” the statute makes clear that “giving, or furnishing” will also suffice. In King v Partridge, 9 Mich App 540; 157 NW2d 417 (1968), the court of appeals decided that a bar employee’s serving herself intoxicating liquor constitutes an unlawful “giving or furnishing” where there was no indication that the taking of the liquor was in violation of the employer’s orders.
A sale of liquor that is illegal due to its time or day (i.e., a Sunday sale) is not the type of illegal sale that gives rise to liability under the Dram Shop Act. Pesola v Pawlowski, 45 Mich App 516; 206 NW2d 780 (1973).
The requirements of the statute vary depending on which of the two types of unlawful sales is involved: an unlawful sale to a minor, or an unlawful sale to a visibly intoxicated person. (The term “minor” is defined in the act to mean a person under 21 years of age. MCL 436.1109(6).)
Direct and Indirect Sales
“Unlawful” sale to a minor may be interpreted with reference to subsection (1) of MCL 436.1801, which says that a retail licensee shall not directly sell (give or furnish) to a minor. (The pre-1986 statute prohibited indirect as well as direct sales to minors.) If indirect sale means a situation where a licensee sells to a buyer who then furnishes the liquor to a minor, the licensee may not be liable under the present statute if the minor became intoxicated and injured someone. This may represent a departure from case law that recognizes the potential liability of a licensee who knew or had reason to know that the purchase of liquor was being made for the minor who ultimately caused the injury. Maldonado v Claud’s, Inc, 347 Mich 395; 79 NW2d 847 (1956); Meyer v State Line Super Mart, Inc, 1 Mich App 562; 137 NW2d 299 (1965); Verdusco v Miller, 138 Mich App 702; 360 NW2d 281 (1984).
Where a dram shop action is based on an unlawful sale to a visibly intoxicated person, if “unlawful” is to be construed with reference to subsection (1) of MCL 436.1801, that subsection prohibits both indirect and direct sales, giving, or furnishing to visibly intoxicated persons.
State of Intoxication at the Time of Sale
In an action based on a sale to a minor, it is not necessary to show that the minor was intoxicated at the time of the sale. Maldonado.
Where the cause of action is based on a sale to one other than a minor, it is necessary to show that the person is “visibly intoxicated” at the time of the sale. MCL 436.1801(2). See also MCL 436.1801(1). The requirement of “visibly” intoxicated dates back to a 1972 amendment to the act. See Hollis v Abraham, 67 Mich App 426; 241 NW2d 231 (1975); McKnight v Carter, 144 Mich App 623; 376 NW2d 170 (1985).
B. Causal Relationship Issues
Two issues of causal relationship may arise under the act: (1) whether the injury or damage was caused by the minor or visibly intoxicated person, and (2) whether the unlawful sale was a proximate cause of the plaintiff’s injury or damages.
(1) Injury Caused by a Minor or Visibly Intoxicated Person
The statute requires that the plaintiff “suffers damage or … is personally injured by a minor or visibly intoxicated person.” The issue suggested by this language is whether the visibly intoxicated person or minor caused the injury or damage. In some cases, it is contended that the injury was caused by someone or something else. Duma v Janni, 26 Mich App 445; 182 NW2d 596 (1970). Where the injury was not caused by the intoxicated person, the conclusion must also be that the sale was not a proximate cause of the injury. See discussion under 1(B)(2) Sale as a Proximate Cause of the Injury, infra.
(2) Sale as a Proximate Cause of the Injury
Before the 1972 amendment to the Dram Shop Act, which added the proximate cause requirement, the statute provided for an action against a licensee who “caused or contributed to the intoxication of said person or persons or who shall have caused or contributed to any such injury.”
Although this language remains a part of the statute, the question of the sale’s contributing to the intoxication is seldom an issue and is obscured by the current express requirement of a proximate cause relationship between the unlawful sale and the injury or damage.
Before the 1972 amendment, it apparently was not necessary to show that the unlawful sale was a proximate cause of the injury or damages. In Heikkala v Isaacson, 178 Mich 176, 182; 144 NW 508, 510 (1913), the court said: “[ T]here was no question before the jury whether the intoxication of Lund was or was not the natural cause of the act which caused the injury. The act itself by a person intoxicated, to whom liquor has been sold unlawfully, fixes the liability for the damage upon the person furnishing the liquor which caused or contributed to the intoxication.” See also Brockway v Patterson, 72 Mich 122, 128; 40 NW 192, 195 (1888). (It should be noted, however, that several Michigan cases construed the pre-1972 version of the Dram Shop Act to require a causal connection between the unlawful sale and the injury. Rizzo v Kretschmer, 389 Mich 363, 370 n 4; 207 NW2d 316, 319 n 4 (1973); Durbin v K-K-M Corp, 54 Mich App 38, 58; 220 NW2d 110, 121 (1974).
The present version of the statute continues the express requirement that “the unlawful sale is proven to be a proximate cause of the damage, injury, or death.” The effect of the proximate cause requirement is that in addition to proving that the intoxicated person caused the injuries or damages, the plaintiff must prove that the conduct, act, or omission that caused the injury or damages was the natural and probable result of the selling, giving, or furnishing of alcoholic liquor. Since the probable effect of the alcoholic liquor on the person’s behavior may be difficult to establish by objective evidence, this element of the case will have to be supplied by an inference to be drawn by the trier of fact from the circumstances as shown by the evidence. Cases have considered the proximate cause requirement where there is no indication that the person continued to be intoxicated or sobered up before the injury occurred. Bryant v Athans, 362 Mich 17; 106 NW2d 389 (1960).
This added requirement of proximate cause has potential for denying recovery in some of the factual situations described in early cases. See Dice v Sherberneau, 152 Mich 601; 116 NW 416 (1908), where the court said it was not necessary for the plaintiff widow to show that the intoxication was the cause of her husband’s suicide.
C. What Types of Injuries Are Covered by the Act?
See discussion under III Who Has a Cause of Action Under the Act?, infra.
D. “Visibly Intoxicated”
See Comment to M Civ JI 75.02 Dram Shop—Definitions
II. Who Can Be Held Liable Under the Act?
Only retail licensees can be held liable under the Dram Shop Act. Tennille v Action Distributing Company, Inc, 225 Mich App 66; 570 NW2d 130 (1997) (act not applicable to wholesale licensees). MCL 436.1801(1), (2). This class also includes those who fail to obtain or maintain the required licensing. Guitar v Bieniek, 402 Mich 152; 262 NW2d 9 (1978).
Suit may be maintained against each of several bars that sold liquor to an intoxicated person. Rizzo v Kretschmer, 389 Mich 363; 207 NW2d 316 (1973). However, the statute provides that: “There is a rebuttable presumption that a retail licensee, other than the retail licensee who last sold, gave, or furnished alcoholic liquor to the minor or the visibly intoxicated person, has not committed any act giving rise to a cause of action under subsection (2).” MCL 436.1801(7).
An owner of an establishment is liable for unlawful sales made by employees even if the sale was not authorized or was contrary to instructions. Dice v Sherberneau, 152 Mich 601; 116 NW 416 (1908).
Under prior law, a surety could be sued under the Dram Shop Act. Browder v International Fidelity Insurance Co, 413 Mich 603; 321 NW2d 668 (1982). While the 1986 amendments (MCL 436.22a(6)) prohibit naming a surety or insurer as a defendant, a new section was added permitting suit, including recovery of punitive damages, where an insurer fails to pay a judgment against the insured within 90 days. MCL 436.22e. (See now MCL 436.1809.)
One with only a security interest in assets of a bar who becomes a co-receiver after an unlawful sale cannot be sued under the Dram Shop Act. Ray v Taft, 125 Mich App 314; 336 NW2d 469 (1983).
A plaintiff must name and retain in the action the alleged intoxicated person or minor who caused the injury. MCL 436.1801(4). (The name-and-retain provision is excused under certain circumstances. Green v Martin, 455 Mich 342; 565 NW2d 813 (1997).) Settlements or agreements to limit recovery preclude a suit against the dram shop defendant. Putney v Haskins, 414 Mich 181; 324 NW2d 729 (1982), reh denied, 414 Mich 1111 (1982); Riley v Richards, 428 Mich 198; 404 NW2d 618 (1987).
Private individuals who supply alcoholic liquor to social guests are not liable under the Dram Shop Act, but are subject to common-law negligence liability based on violation of section 33 (now section 701, MCL 436.1701) of the Michigan Liquor Control Act, MCL 436.1101 et seq., if they serve liquor to a minor. Longstreth v Gensel, 423 Mich 675; 377 NW2d 804 (1985). However, a common-law negligence action based on violation of section 26c(2) of the Michigan Liquor Control Act (now section 913(2) of the Michigan Liquor Control Code of 1998) may not be maintained against an unlicensed banquet facility operator who allows liquor consumption on the premises. Gardner v Wood, 429 Mich 290; 414 NW2d 706 (1987).
III. Who Has a Cause of Action Under the Act?
An individual (or the spouse, child, parent, or guardian of an individual) who sustains injury or damage as a result of the conduct of a minor or visibly intoxicated person to whom liquor has been unlawfully sold has a cause of action under the act. However, 1986 PA 176 made a substantial departure from prior law regarding claims for damages by relatives of a visibly intoxicated person who has injured himself or herself.
Prior law allowed a suit by a relative of an adult intoxicated person for damages such as loss of support, loss of society and companionship, etc. caused by the intoxicated person injuring himself or herself. O’Dowd v General Motors Corp, 419 Mich 597; 358 NW2d 553 (1984); Eddy v Courtright, 91 Mich 264, 51 NW 887 (1892). The amended Dram Shop Act expressly excludes actions by relatives for these kinds of damages:
… and a person does not have a cause of action under this section for the loss of financial support, services, gifts, parental training, guidance, love, society, or companionship of the alleged visibly intoxicated person.
MCL 436.1801(8). (The constitutionality of this limitation on the types of damages that relatives may recover has been upheld. Roy v Rau Tavern, Inc, 167 Mich App 664; 423 NW2d 54 (1988).) The amendment, however, does not preclude an action by a relative of the alleged visibly intoxicated person for other kinds of damages, or for personal injury to the relative that was caused by the intoxicated person. See Podbielski v Argyle Bowl, Inc, 392 Mich 380; 220 NW2d 397 (1974).
Cases construing the prior statute permitted actions by relatives of minors for damages, including loss of support, caused by the minor injuring himself or herself. La Blue v Specker, 358 Mich 558; 100 NW2d 445 (1960). However, the present statute has been construed to preclude such actions by relatives of an intoxicated minor. LaGuire v Kain, 440 Mich 367; 487 NW2d 389 (1992).
Visibly Intoxicated Person and Minor
The 1986 amendments to the Dram Shop Act (recodified in 1998) explicitly exclude the alleged visibly intoxicated person from those who have a cause of action against a licensee. MCL 436.1801(8). This codifies prior case law. Malone v Lambrecht, 305 Mich 58; 8 NW2d 910 (1943) (intoxicated person injured himself falling down flight of stairs in bar); Brooks v Cook, 44 Mich 617; 7 NW 216 (1880) (opinion by Justice Cooley; plaintiff who had pockets picked while drunk was denied recovery under dram shop statute). But see Heikkala v Isaacson, 178 Mich 176, 144 NW 508 (1913) (recovery possible where innocent intoxicated person injured by another intoxicated person).
Subsection (2) of MCL 436.1801, which provides a cause of action to “an individual who suffers damage or who is personally injured by a minor,” has been construed to preclude an action by the imbibing minor or the minor’s estate. LaGuire. However, the minor does have a common-law negligence action against a social host. Longstreth v Gensel, 423 Mich 675, 696; 377 NW2d 804 (1985).
IV. Defenses to a Cause of Action Under the Act
All Defenses of the Visibly Intoxicated Person or Minor Available to Licensee
A 1972 amendment to the Dram Shop Act, 1972 PA 196, allowed the licensee to raise “all factual defenses open to the alleged intoxicated person or minor.” Comparative negligence is a factual defense based on causation; where plaintiff sues a licensee in a dram shop action and sues an intoxicated person on a negligence theory, the intoxicated person’s defense that plaintiff was contributorily negligent is equally available to the licensee. Lyman v Bavar Co, 136 Mich App 407; 356 NW2d 28 (1984). (Thus, the licensee is entitled to have the judgment against it reduced by the percentage of plaintiff’s negligence.) A licensee is also entitled to have a judgment against it reduced by the percentage of the plaintiff’s fault in an altercation with the defendant to whom the illegal sale was made. Brown v Swartz Creek Memorial Post 3720—Veterans of Foreign Wars, Inc, 214 Mich App 15; 542 NW2d 588 (1995).
1986 PA 176 (recodified in 1998) broadened defenses available to licensees by deleting the word “factual”: “All defenses of the alleged visibly intoxicated person or the minor are available to the licensee.” MCL 436.1801(6). The most probable and significant impact of this change is to allow the licensee to assert the no-fault threshold defenses.
The 1986 amendment giving the licensee “all” defenses available to the alleged visibly intoxicated person or minor also eliminates the potential, which existed under prior law, for the licensee to be liable to a plaintiff injured in an affray even though the intoxicated person would escape liability because he or she acted in self-defense. See Archer v Burton, 91 Mich App 57, 61; 282 NW2d 833 (1979); see also Doty v Postal, 87 Mich 143; 49 NW 534 (1891); Morgan v Backseat Saloon Country Cousin, Inc, 114 Mich App 89; 318 NW2d 617 (1982). Under the statute, a successful defense of self-defense by an alleged intoxicated person will eliminate any liability of the licensee.
Noninnocent Person—Actively Contributing to Intoxication
One who actively contributes to the intoxication of a person and is subsequently injured by that person is precluded from recovery. Kangas v Suchorski, 372 Mich 396; 126 NW2d 803 (1964); Morton v Roth, 189 Mich 198; 155 NW 459 (1915). These noninnocent person cases have usually involved purchasing liquor for or supplying liquor to the intoxicated person, but in Larrow v Miller, 216 Mich App 317; 548 NW2d 704 (1996), the court determined that plaintiff’s decedent who supplied defendant with an illegal drug (marijuana cigarettes) actively contributed to defendant’s intoxication. The mere act of buying drinks for an adult before he or she becomes visibly intoxicated does not as a matter of law make that person a noninnocent party. Arciero v Wicks, 150 Mich App 522; 389 NW2d 116 (1986). (The court distinguished the case of minors for whom supplying alcohol at any time is illegal.) Where the plaintiff merely drinks liquor with the intoxicated person, that is not the active participation in the actor’s intoxication that would preclude recovery. Dahn v Sheets, 104 Mich App 584; 305 NW2d 547 (1981), lv denied, 412 Mich 928 (1982).
The Michigan Supreme Court has rejected the argument that in light of the adoption of comparative negligence, contributing to the intoxication should no longer be a bar but rather should be a partial defense to a dram shop action. Craig v Larson, 432 Mich 346; 439 NW2d 899 (1989). This noninnocent party rule applies equally to minors as to adults who actively participate in the intoxication of the tortfeasor. Id.
Identification Card As Defense to Sale to Minor
Under subsection (6) of the statute (MCL 436.1801(7)), it is a defense to an action based on unlawful sale to a minor that the defendant retail licensee (agent or employee) demanded and was shown a Michigan driver’s license or official state personal identification card, appearing to be genuine and showing that the minor was at least 21 years of age. In a case where this defense is proved but where the minor also happened to be visibly intoxicated at the time of the sale, the plaintiff would presumably have the option of showing an unlawful sale based on the fact of visible intoxication (as well as the other elements of the action) and succeed despite the defense.
V. Damages and Allocation of Fault
Dramshop actions against retail licensees are subject to the provisions of the Revised Judicature Act. MCL 436.1801(10). The sections of the Revised Judicature Act that require specific findings of past and future damages and types of damages (MCL 600.6305) and postverdict adjustments by the trial judge (MCL 600.6306) apply to dramshop actions. Weiss v Hodge, 223 Mich App 620; 567 NW2d 468 (1997), lv den, 457 Mich 886; 586 NW2d 231 (1998). If there are multiple defendants, including a dramshop defendant, the allocation of fault provisions of MCL 600.6304 apply. Brown; see also Weiss, in which the court of appeals upheld the jury’s allocation of a greater percentage of fault to the licensee and lesser fault to the intoxicated defendant.
Prior to 1972, the Dram Shop Act allowed for recovery of “damages actual and exemplary.” The word “exemplary” was deleted and the current version of the statute provides for “actual damages in a sum of not less than $50.00.” MCL 436.1801(2). For a discussion of actual and exemplary damages as they pertain to mental distress and other injury to feelings, see Hink v Sherman, 164 Mich 352; 129 NW 732 (1911); Veselenak v Smith, 414 Mich 567; 327 NW2d 261 (1982).
VI. Dram Shop Action As Exclusive Remedy for Unlawful Sale
The 1986 amendments to the Dram Shop Act (recodified in 1998) expressly provide that it is the “exclusive remedy for money damages against a licensee arising out of the selling, giving, or furnishing of alcoholic liquor.” MCL 436.1801(9). This was previously well recognized in case law but not embodied in the statute. See, e.g., Brownier v International Fidelity Insurance Co, 413 Mich 603; 321 NW2d 668 (1982); Verdusco v Miller, 138 Mich App 702; 360 NW2d 281 (1984); Rowan v Southland Corp, 90 Mich App 61; 282 NW2d 243 (1979).
The exclusive remedy provision precludes an injured intoxicated person from bringing a common-law action for gross negligence, willful and wanton, or intentional misconduct against a liquor licensee, notwithstanding the fact that the licensee knew that the person was an alcoholic or intoxicated to the point of helplessness. Jackson v PKM Corp, 430 Mich 262; 422 NW2d 657 (1988).
The Dram Shop Act is also the exclusive remedy where a licensee furnishes alcoholic beverages to an employee and the common law does not recognize a separate claim for negligent supervision of the employee to whom alcohol has been served. Millross v Plum Hollow Golf Club, 429 Mich 178; 413 NW2d 17 (1987).
But the exclusive remedy provision does not preclude common-law actions against the dram shop defendant for unlawful or negligent conduct other than the selling, giving, or furnishing of alcoholic liquor. Manuel v Weitzman, 386 Mich 157; 191 NW2d 474 (1971) (count in negligence against bar owner for failure to keep premises safe for business invitee may be maintained in addition to dram shop count).