.

Defense Digest

Who May Be Liable Under the Dram Shop Act?

Defense Digest, Vol. 29, No. 4, December 2023

December 1, 2023

by Sarah E. Argo

Key Points: 

  • Pennsylvania’s Dram Shop Act does not merely apply to “any person” but, rather, imposes an obligation on particular persons and entities. 
  • To establish a basis for Dram Shop liability, it must be shown that the defendant “is either a licensee, or stepped into the shoes of a licensee.” 
  • The absence of “profit or other indicia of commercial sale of liquor” renders the Dram Shop Act inapplicable.

Under your argument, you’re saying if I have a party and I overserve people, you’re OK with me not being liable. But if I say, ‘Folks, try to contribute 5 to 10 bucks because I spent a lot of money to put this party on,’ under your theory, I’m liable?” - Justice David Wecht

 

In Klar v. Dairy Farmers of America, 300 A.3d 361 (Pa. 2023), the Pennsylvania Supreme Court revisited the extent to which an event host may be held liable for the actions of an intoxicated guest. 

Klar involved a golf outing sponsored by Dairy Farmers of America for its employees that required employees to provide a monetary contribution to help defray the costs of green fees, food, and alcohol associated with the event. During the event, Roger Williams, an employee of Dairy Farmers, became intoxicated and was subsequently involved in a motor vehicle accident with David Klar. While Klar sought to impose liability under theories of common law negligence and violation of Pennsylvania’s Dram Shop Act, the Pennsylvania Supreme Court refused to extend the scope of the Dram Shop Act to include an organization, such as Dairy Farmers of America, that hosts an event at which alcohol is provided but is not a liquor licensee.

With regards to his Dram Shop claim, Klar argued that Dairy Farmers of America fell into the “any other person” category of the Dram Shop Act, and by collecting money from its employees to purchase alcohol for the event, Dairy Farmers received consideration and then sold alcohol to a visibly intoxicated person. The Supreme Court, however, declined to extend the scope of the Dram Shop Act to this scenario, explaining that the Act’s applicability to “any other person” does not mean that every individual in this Commonwealth is exposed to Dram Shop liability. Rather, the meaning of “any other person” is cabined by its context and simply refers to persons whose actions place them into the same category as the preceding entities, i.e., those who engage in the commercial or quasi-commercial sale of alcohol for profit. In other words, in the context of the Dram Shop Act, “any other person” is one who, notwithstanding their lack of a license, engages in the business of selling alcohol.

While the court explained that an individual or organization could potentially assume “licensee status,” thus triggering liability pursuant to the Act, such was not the case here, where the factual averments in Klar’s complaint were insufficient to establish that Dairy Farmers received any sort of “remuneration” to implicate liability. The court noted that Klar did not allege that Dairy Farmers collected funds from its employees to profit from the sale of alcohol; rather, the allegations that Dairy Farmers asked for a monetary contribution to offset event costs dispelled any suggestion that it organized the event to sell alcohol for financial gain. 

As explained by the court, the mere pooling of money for a collective purchase of alcohol for shared consumption, absent any indicia of commercial sale or profit-seeking, does not implicate the Dram Shop Act. The court reasoned that, under Klar’s interpretation of “any other person” in the context of the Dram Shop Act, liability could be imposed upon a group of friends who pitch in money to (legally) purchase a bottle of liquor or a case of beer for their shared consumption. This interpretation is inconsistent with the long line of Pennsylvania cases which have held that only licensees are civilly liable for violations of the Dram Shop Act. 

While Klar also raised a common law negligence theory of liability, the Supreme Court held that the plaintiff’s argument was foreclosed by well-established precedent refusing to extend common law liability to social hosts, which it found no reason to disturb. Pennsylvania courts continue to uphold the longstanding precedent that there is no social host liability at common law since competent adults are responsible for their own actions. In other words, it is the consumption of alcohol, not the furnishing of it by a social host, which is the proximate cause of any subsequent occurrence. Indeed, the very reason for the enactment of dram shop laws is the fact that, under the common law of torts, liability could not be imposed upon one who provided another with alcohol. Such statutes were an effort to supersede the common law; to provide an avenue for imposing liability upon the purveyors of alcohol where the common law did not. 

It is worth noting that Klar’s claims against Dairy Farmers were dismissed at the pleadings stage. While the Supreme Court declined to extend the scope of the Dram Shop Act in this case, it has provided plaintiffs with a roadmap for drafting complaints in such a way as to set forth sufficient factual averments, which, at the very least, may permit a Dram Shop Act violation in a similar scenario to proceed beyond the pleadings stage. 

*Sarah is a shareholder in our Scranton, Pennsylvania, office. She can be reached at 570.496.4654 or SEArgo@mdwcg.com.


 

Defense Digest, Vol. 29, No. 4, December 2023, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2023 Marshall Dennehey. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

Ohio Supreme Court Holds That a Binding Appraisal Award May Not Be Set Aside Absent Specific Evidence of Manifest Mistake or Fraud

On July 23, 2026, the Ohio Supreme Court issued a rare opinion on the binding effect of an appraisal award in a property insurance policy.  The Court in One Church held: A binding appraisal award will not be set aside unless an error is so palpably wrong that it undermines the intent of the agreement, such as corruption or gross mistake, not a mere error of judgment—To plead a claim of mistake with particularity as required by Civ.R. 9(B), facts alleged in a complaint must constitute the elements of mistake—Allegation that additional, hidden damage was discovered after appraisal award failed to state a claim of mistake that could justify setting aside binding appraisal.  The case arose out of a claim brought by One Church against its insurer, Brotherhood Mutual Insurance Company for roof damage from a storm. Pursuant to the terms of the insurance policy, the parties agreed to submit the matter to appraisal. The two appraisers inspected the building, and both appraisers agreed that the damages were $313,271.98. The insurer paid the agreed appraised amount.  Thereafter, the insured submitted a claim for an additional $206,663.09 in damages. The insured argued that these additional damages were not discovered until after the repairs began, and that they should be permitted to submit an additional claim, even though there had already been a binding appraisal of damages. The insurer refused to pay the additional damages, and the insured sued for breach of contract and bad faith.  In the trial court, the insurer moved to dismiss for failure to state a claim, arguing that the binding appraisal award barred any further claims. The insured took the position that additional hidden damages could not be discovered until after the repairs began, and therefore there was a mutual mistake. The trial court dismissed the case on the insurer’s motion, because there was no “evidence of fraud, misfeasance, or mistake”. The Court of Appeals agreed that appraisal awards are generally binding, but noted that an appraisal award can be set aside for fraud or manifest mistake. The Court of Appeals reversed and remanded the case to the trial court, finding that the insured had pled mistake with sufficient particularity. The insurer appealed to the Ohio Supreme Court. On appeal, the Ohio Supreme Court reversed the Court of Appeals, and reinstated the trial court decision dismissing the case for failure to state a claim upon which relief can be granted. The Supreme Court found that since the insured had already demanded appraisal, and the appraisal award was binding, “something more than error of judgement, such as corruption in the arbitrator, or gross mistake” must be pled with particularity, and proven for the insured to override the appraisal award. Since the complaint did not allege fraud or manifest mistake with sufficient particularity, something more than a mere error of judgment, the complaint was insufficient to state a claim.  The complaint in this case did not challenge the appraisal award. It pled that additional damages were discovered that were not apparent when the appraisal was done. It did not specify “who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of a manifest mistake that the “appraiser would have corrected...had it been called to his attention”. Id at ¶22 citing Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970). Cases deciding the effect of appraisal awards are unusual. The Ohio Supreme Court’s decision in One Church relies primarily on 19th century case law for its conclusion. This emphasizes the fact that there is minimal case law deciding the effect of binding appraisal clauses in property insurance policies, and makes this case all the more significant. A lengthy dissent was written by Justice Fisher, who would have affirmed the Court of Appeals decision reversing and remanding the case for a decision on the merits. Of course, the decision works both ways, and an insurer dissatisfied with a binding appraisal award will likewise be without further recourse absent evidence of corruption, fraud, misfeasance, or manifest mistake, which must be pled with particularity. To constitute manifest mistake, “the mistake must be of such character that the arbitrator or appraiser would have corrected it had it been called to his attention.”  Lakewood Mfg. Co. v. Home Ins. Co. of New York, 422 F.2d 796, 798 (6th Cir. 1970).  The majority opinion does not specifically identify what would have been sufficient to plead mistake with particularity, or if the insured could have amended the complaint to overcome the deficiencies. The dissent argues that this was not really a case alleging mistake, but rather a question of contract interpretation. The insured did not challenge the appraisal, but argued that the hidden damage was not part of the appraisal, and the appraisal only covered the known damages.  However, this argument did not carry the day with the majority.  *Thomas F. Glassman, a shareholder in Marshall Dennehey’s Cincinnati office, filed a brief in the Ohio Supreme Court on behalf of the Ohio Association of Civil Trial Attorneys, in support of the insurer’s position.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict.