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Johnson v. Montgomery, Thirty-Eight Thirty, Inc.

Supreme Court of Ohio

September 6, 2017

Johnson, Appellant, et al.
Montgomery; Thirty-Eight Thirty, Inc., et al., Appellees.

          Submitted April 6, 2017

         Appeal from the Court of Appeals for Montgomery County, Nos. 26319 and 26322, 2016-Ohio-1472.

          Organ Cole, L.L.P., Douglas R. Cole, Erik J. Clark, and Sean M. Stiff; Dennis Mulvihill; and Wright & Schulte, L.L.C., and Stephen D. Behnke, for appellant.

          Altick & Corwin Co., L.P.A., Jonathan B. Freeman, and Steven E. Bacon; and Jeffrey D. Slyman, for appellees, Thirty-Eight Thirty, Inc., d.b.a. The Living Room, and Michael C. Ferraro.

          Michael DeWine, Attorney General, Eric E. Murphy, State Solicitor, and Michael J. Hendershot, Chief Deputy Solicitor, urging reversal for amicus curiae state of Ohio.

          Paul W. Flowers Co., L.P.A., and Paul W. Flowers, urging reversal for amicus curiae Ohio Association for Justice.

          Traska Law Firm, L.L.C., Peter D. Traska, Bernadette Matheson, and Michelle Molzan Traska, urging reversal for amicus curiae Mothers Against Drunk Driving of Ohio.

          DeWine, J.

         {¶ 1} Under Ohio's Dram Shop Act, R.C. 4399.18, someone injured by an "intoxicated person" may sue a liquor-permit holder for an off-premises injury only when the permit holder or its employee served the person knowing her to be intoxicated or underage. This case, which has reached us by way of a discretionary appeal, involves a dancer at a strip club who left the club intoxicated and caused an accident on her way home. The question is whether the dancer qualifies as an "intoxicated person" under the statute or whether the term encompasses only the permit holder's patrons. The plain language of the statute provides the answer: the ordinary meaning of "person" includes not only patrons but also dancers, workers, independent contractors, and others served by the permit holder. Thus, the accident victim may pursue a claim against the club only under the Dram Shop Act.

         I. An Intoxicated Strip-Club Dancer Causes an Accident

         {¶ 2} Nichole Johnson was severely injured when the car in which she was a passenger was struck by another car. The other car was driven by Mary Montgomery, who had just finished her shift as a dancer at a strip club known as The Living Room. Montgomery admitted that she was intoxicated when she left the club: she had ingested cocaine that day, and while working, she had drunk "a few" beers that had been purchased for her by customers.

         {¶ 3} Drinking while working was not unusual at The Living Room. Although not required to drink, the dancers did so as a matter of course, often to embolden themselves to perform. The practice was encouraged by the club's waitresses, who urged customers to buy drinks for the dancers. Thirty-Eight Thirty, Inc., which operated The Living Room, benefited from the dancers' drinking: the club charged a higher price for drinks purchased for dancers. According to Michael C. Ferraro, the sole officer and shareholder of Thirty-Eight Thirty, 95 percent of the club's profits came from alcohol sales, and 30 to 40 percent of the alcohol sold was purchased by customers for the dancers. Virtually no limits were placed on how much a dancer could drink while working. And while Ferraro claimed that a dancer's husband or boyfriend would be called in the event the dancer became too intoxicated to drive, Montgomery testified that no one had ever arranged a ride home for her.

         {¶ 4} Under a contract with Thirty-Eight Thirty, Montgomery paid $30 a night to lease space for her dancing. In return, she kept all the tips from customers. She received no wages or compensation from Thirty-Eight Thirty or Ferraro.

         II. The Proceedings Below

         {¶ 5} Johnson filed a complaint asserting common-law-negligence claims against Montgomery, Ferraro, and Thirty-Eight Thirty and a claim for violation of the Dram Shop Act against Thirty-Eight Thirty and Ferraro. A default judgment was rendered against Montgomery. The claims against Thirty-Eight Thirty and Ferraro were tried to a jury. At the conclusion of Johnson's case, a magistrate directed a verdict in favor of Ferraro as to his personal liability and in favor of Thirty-Eight Thirty as to its liability under the Dram Shop Act. Thirty-Eight Thirty's motion for a directed verdict on the issue of common-law negligence was denied. The jury returned a verdict in favor of Johnson for $2, 854, 645.55 on the negligence claim. The trial court adopted the magistrate's decision and entered judgment in accordance with the jury's verdict.

         {¶ 6} Johnson appealed the trial court's judgment directing a verdict for Ferraro on the issue of personal liability. Thirty-Eight Thirty and Ferraro cross-appealed. They argued that outside the Dram Shop Act, Ohio did not recognize a cause of action based on negligently furnishing a tortfeasor with intoxicating beverages and that the trial court should not have instructed the jury on common-law negligence. The Second District agreed and concluded that because the Dram Shop Act provided the exclusive cause of action against Thirty-Eight Thirty, the trial court had erred when it allowed the issue of common-law negligence to go to the jury. Thus, the judgment against Thirty-Eight Thirty on the common-law-negligence claim was reversed. The reversal of that verdict rendered moot the question of Ferraro's personal liability. We accepted Johnson's discretionary appeal. 146 Ohio St.3d 1502, 2016-Ohio-5792, 58 N.E.3d 1173.

         III. Ohio's Dram Shop Act

         {¶ 7} "The Ohio Dramshop Act, R.C. 4399.18, embodies [the] general, common-law rule that a person (or his representative) may not maintain a cause of action against a liquor permit holder for injury resulting from the acts of an intoxicated person." (Emphasis sic.) Klever v. Canton Sachsenheim, Inc., 86 Ohio St.3d 419, 421, 715 N.E.2d 536 (1999). Liability attaches only under the limited circumstances prescribed by the statute. Johnson maintains that the Dram Shop Act does not apply under the facts of this case and that Thirty-Eight Thirty's liability for her injuries should be determined under common-law-negligence principles. The gist of Johnson's argument is that the statute determines a permit holder's liability only with respect to acts by its patrons, not by its workers or independent contractors.[1]

         {¶ 8} Our starting point is the ...

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