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In matter of first impression, Indiana Supreme Court holds common law claims against Dram Shops can stand

2/15/24

By: Donald Patrick Eckler and Joshua W. Zhao

In WEOC, Inc. v. Niebauer ex rel Estate of Blount, No. 23S-CT-184 (2024), as an issue of first impression, the Indiana Supreme Court considered whether common-law liability still applies to claims made under Indiana’s Dram Shop Act. 

In Indiana, the Dram Shop Act limits the liability of alcohol-serving entities to actual knowledge of a tortfeasor’s visible intoxication. Nathan Blount suffered fatal injuries when an intoxicated driver, Eric Adair, crashed into Blount’s vehicle. Prior to the accident, Adair had been served alcohol at two restaurants. Leah Niebauer, as special representative of Blount’s estate, filed suit against the restaurants under Indiana’s Dram Shop Act and for negligence. The negligence claims arose out of “failing ‘to exercise reasonable care under the circumstances when [the restaurants] furnished alcoholic beverages’ to Adair, (2) allowing [Adair] to drive away from their premises when they ‘knew or should have known’ that he was intoxicated, (3) failing ‘to notify law enforcement’ that [Adair] drove away intoxicated, and (4) failing to obtain ‘alternative transportation’ for [Adair].” 

The restaurants moved to dismiss the negligence claims under Indiana Trial Rule 12(B)(6) arguing that common-law theories of liability are not recognized under Indiana law for Dram Shop Act claims. The trial court denied the motion and certified its denial for interlocutory appeal. The appellate court affirmed the trial court and the restaurants successfully petitioned for transfer to the Indiana Supreme Court. 

The Indiana Supreme Court held that the Dram Shop Act modified the common-law liability but did not eliminate it and affirmed the trial court’s denial of the motion to dismiss. The Indiana Supreme Court stated that traditionally, entities that served alcohol in Indiana could be held liable for negligence. However, since the passage of the Dram Shop Act in 1986, appellate courts in Indiana have been split as to the existence of common-law liability. The Indiana Supreme Court stated that the Dram Shop Act did not expressly preempt the common law or identify elements of in independent statutory cause of action. Moreover, the Dram Shop Act does not state that it is an exclusive remedy or means of recovery. Rather, the Dram Shop Act only limits liability. The Dram Shop Act limits liability by requiring “actual knowledge” and visible intoxication. Since Blount’s estate has pled “actual knowledge” and visible intoxication, it has survived a motion to dismiss and the motion to dismiss is properly denied. 

Indiana stands in contrast to states like Illinois (Charles v. Seigfried, 165 Ill. 2d 482, 486 (1995)), Iowa (Slager v. HWA Corp., 435 N.W.2d 349, 354 (Iowa 1989)), Michigan (Jackson v. PKM Corp., 430 Mich. 262, 267 (1988)), Nebraska (Pelzek v. American Legion, 236 Neb. 608, 610 (1990)), and Utah (Miller v. United States, 104 P.3d 1202 (Utah 2004)) which do not permit common law liability for dram shops.  

For more information, please contact Donald Patrick Eckler at patrick.eckler@fmglaw.com, Josh Zhao at josh.zhao@fmglaw.com or your local FMG attorney.