Dram Shop: New Tennessee Case Interpreting Dram Shop Act And Whether “Sale” Occurred.

There is a new case in Tennessee interpreting the language if Tennessee’s Dram Shop Act, Tenn. Code Ann. §§ 57-10-101102.  The case is Widner v. Chattanooga Entertainment, Inc. d/b/a Electric Cowboy, (Tenn. Ct. App., Nov. 4, 2014)(“Electric Cowboy”).  This was an appeal by the plaintiff following the trial court’s decision to grant summary judgment in favor of Electric Cowboy on the grounds that a “sale” had not occurred pursuant to the Tenn. Code Ann. § 57-10-102.  This case is significant because it addresses a difficult area of liability for commercial sellers of alcohol, i.e. under what circumstances can a restaurant or bar be responsible for the actions of a patron who never orders directly from an employee, but instead given drinks from a third party?

This new case needs to be considered together with Temlock v. McGinnis, 2006 WL 2032518 (Tenn. Ct. App., May 23, 2006)(“Temlock”), which was the first time the Court of Appeals provided guidance on how lower courts should analyze whether a “sale” had occurred pursuant to the Dram Shop Act.  In Temlock, the patron in question did not pay for the alcoholic beverages but ordered the beverages at a table directly from the wait staff.  In evaluating this case, the Temlock court established the following standard:

It was the clear intent and purpose of our legislature that a fact situation such as the one now before us constitutes a sale under the provisions of Tenn. Code Ann. § 57-10-102.  We hold that when a customer enters an establishment that sells alcoholic beverages such as beer, places his own order, has the alcohol he ordered delivered directly to him by the seller with the seller’s expectation of payment in return, and the customer who ordered the alcohol consumes that alcohol on seller’s premises, there is a sale to the customer under Tenn. Code Ann. § 57-10-102.  To hold otherwise would mean that a business could adopt a policy that in serving any group of more than one individual, only the one person in the group is to be allowed to “pay” for the alcohol ordered and consumed by all of the members in that party even though those other individuals directly ordered the alcohol from the seller’s wait staff, had the alcohol delivered by the seller’s wait staff directly to them, and they consumed the alcohol on the seller’s premises, and, the seller then would have no potential liability under Tenn. Code Ann. § 57-10-102 except as to the one person who paid.  Such a decision would be directly contrary to the clear intent and purposes of the legislature to hold such seller liable if it sells “alcohol to a minor or if the seller sold alcohol to an obviously intoxicated person and the sale was the proximate cause of the injury suffered by the third party.”

Id. at *5 (citing Biscan v. Brown, 160 S.W.3d 462, 472 (Tenn. 2004)).

In the Electric Cowboy, the Court of Appeals picked up where the Temlock case left off and clarified that merely furnishing alcohol does not give the commercial seller of alcohol sufficient opportunity to evaluate whether the patron is visibly intoxicated.  In Electric Cowboy, the facts showed the patron in question did not purchase or order alcoholic beverages from the wait staff.  Instead, she was provided shots of Tequila by several friends, and she was not with her friends when the Tequila shots were purchased.  Applying the standard in Temlock, the Court of Appeals granted summary judgment to the Electric Cowboy on the grounds that there was insufficient proof that a “sale” had occurred to the offending patron under Tenn. Code Ann. § 57-10-102.

Again, the significance of this case is that it provides a legal foundation for summary judgment motions in cases where there is no evidence that a direct sale to a patron who later causes injury to a third party.  If you represent bars and restaurants, or if you have been involved in crafting policies and procedures in Tennessee, this case needs to be considered closely.  If you have any questions regarding how this may affect your policies and practices, please do not hesitate to contact me.

Duty to Provide Security: General and Specific Threat of Third Party Criminal Conduct

The Tennessee Court of Appeals has penned a new decision addressing the duty of a bar to protect its patrons from the foreseeable criminal acts of third parties.  The case name is Nicole Goeser, et al., v. Live Holdings Corporation, et al., (No. M2012-01241-COA-R3-CV; September 4, 2013).  This appeal came out of Judge Hamilton Gayden’s court in Nashville after granting summary judgment to the defendants.

The facts are simple according to the opinion.  Ben and Nicole Goeser started a karaoke business in Nashville.  Hank Wise was a big fan of Nicole and, over time, developed an unhealthy crush.  At some point, he asked an “inappropriate” question about the status of Nicole’s marriage, which got him deleted from Nicole’s Myspace page.  At a subsequent event, Ben confronted Hank and asked him to kindly stay away from his wife.  Hank attended two additional events without issue.  Then, on a fateful Thursday night in 2009, Hank found Ben and Nicole at Johnny’s Bar and Grill located on the corner of Nolensville Road and Old Hickory Boulevard in Nashville.  Nicole told the manager of Johnny’s Bar and Grill that Hank was making her “uncomfortable” and she wanted him to leave.  When Hank was asked to leave, he stood up, unzipped his jacket, and shot Ben in the head several times.  Ben died instantly.

As is often the case, this criminal act turned into a civil lawsuit against the owners of the bar under a theory that the premise owner had a duty to protect Ben from the foreseeable criminal act of Hank.  Prior to trial, Judge Gayden dismissed the case on the grounds that the plaintiffs failed to demonstrate that the incident was foreseeable.  The plaintiffs appealed arguing that the bar breached its duty by failing to have a trained security guard working on the night of the murder or to give their employees adequate training to protect their guests.  The Court of Appeal affirmed Judge Gayden’s summary dismissal of the case.  In doing so, the court summarized several important cases in Tennessee and made an important distinction between cases involving “general threats” and “specific threats” of criminal acts that could, in turn, give rise to a duty to protect patrons from the criminal acts of third parties.

The court categorized McClung v. Delta Square Ltd. as a “general threat” case.  In McClung, a woman was abducted at gunpoint by a stranger in the parking lot of a Memphis shopping mall, and later raped and murdered.  There was no evidence the mall owners knew the incident was about to occur.  Still, the court in McClung found that there could be a duty owed if there was a general threat posed to patrons based on a variety of factors.  The court adopted a “balancing approach” which seeks to balance the degree of foreseeability of harm to the plaintiff against the burden that would be imposed on the defendant if it were required to engage in an alternative course of conduct that could have prevented the harm.  Here, the court articulated the following standard:

As a practical matter, the requisite degree of foreseeability essential to establish a duty to protect against criminal acts will almost always require that prior instances of crime have occurred on or in the immediate vicinity of defendant’s premises.  Courts must consider the location, nature, and extent of previous criminal activities and their similarity, proximity, or other relationship to the crime giving rise to the cause of action.  To hold otherwise would impose an undue burden upon merchants.

Id. at 902.

Following its discussion of McClung, the court of appeals then turned to cases involving “specific threats” of criminal conduct.  Here, the court states “[f]oreseeability may also arise from more specific knowledge, such as when an identifiable individual acts in such a way as to suggest criminal intentions or proclivities.”  Here, the court cited the well-known case of Giggers v. Memphis Housing Authority, which involved a public housing tenant shooting and killing another tenant.  The Giggers court found that that when an injury is not foreseeable, a criminal act by a third party constitutes “a superseding, intervening cause of harm, relieving the [defendant] of liability.”  Id. at 367.  However, because the shooter in Giggers had previously stabbed another tenant in his building, the court in Giggers found that the danger was foreseeable and that the defendant housing authority had a duty to take reasonable measures to protect its tenants from him.  The court also cited Staples v. CBL & Associates, Inc. as an additional example of a case involving a specific threat.

Turning to the facts of the case, the court of appeals found that there was no evidence Johnny’s Bar and Grill was located in a high-crime area.  The proof showed there had only been two prior fights at the bar before the incident in question.  So, the “general threat” theory did not trigger a duty to provide more security.  The court also found that there was no evidence Hank posed a “specific threat” that would have required Johnny’s Bar and Grill to act differently.  There was no knowledge Hank was a criminal or prone to violence.  None of Hank’s conduct leading up to the incident gave warning that he might act in a violent way.  Even though Nicole asked an employee to have Hank removed, the court did not see this fact alone as sufficient to trigger a duty to protect other patrons from Hank.

I like this decision for a number of reasons.  First, I appreciated the court making the distinction between “general threats” and “specific threats” that may give rise to a duty to act.  Not every bar or restaurant is required to or needs to have security.  This is a point often lost in this area of the law.  In Tennessee, businesses are not to be regarded as the insurers of their patrons’ safety.  So, unless you can point to prior criminal acts, the “general threat” theory should fail as a matter of law.  Second, just because you ask a patron to leave the premises does not mean the business is on notice of a “specific threat” of a criminal action.  This presupposes that individuals will act in violent and criminal ways when asked to leave the premise for whatever reason.  Frankly, this is just not the case in most settings and holding otherwise would put too great a burden on business owners to hire and train additional staff to protect against random acts of violence.