June 17, 2009 

Written By Attorneys: William Dirk Pastorick and Ashley Lauren Farnschlader

Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.

In a decision issued on May 7, 2009, the Supreme Court of New Jersey overturned an earlier appellate court decision that imposed additional duties on alcoholic beverage servers to monitor patrons to whom alcohol was not served for signs of intoxication in order to avoid liability under the New Jersey Licensed Alcoholic Beverage Server Fair Liability Act ("Dram Shop Act"). In Bauer v. Nesbitt, et al., A-16-08, the Supreme Court addressed the issue of whether or not to impose liability under the New Jersey Dram Shop Act upon an alcoholic beverage server that did not serve alcohol to a patron who was later injured in a motor vehicle accident. Under the Dram Shop Act, a commercial establishment can be liable for negligence if one of its employees "served a visibly intoxicated person, or served a minor, under circumstances where the employee knew, or reasonably should have known, that the person served was a minor." (N.J.S.A. 2A:22A-5).

On the night in question, Hamby, who was over twenty-one, and Nesbitt, who was underage, had been drinking beer together in Nesbitt's vehicle prior to traveling to the C View Inn to meet friends. The pair left six unconsumed bottles of beer in Nesbitt's vehicle and Hamby brought a bottle of rum into the C View Inn undetected by the establishment's staff. Although Nesbitt was not served alcohol at the C View Inn, Hamby slipped rum into Mr. Nesbitt's soda under the table throughout the evening. According to witnesses, about sixty people were present at the C View Inn that night, none of whom observed Nesbitt behaving in a manner that would indicate he was intoxicated.

In the early evening, Hamby and Nesbitt left the C View Inn. During the drive home, Nesbitt lost control of his vehicle and crashed into a guardrail, killing Hamby. Shortly after the accident, Nesbitt's blood alcohol level was 0.199%, well over the legal limit to operate a vehicle in New Jersey. It is unknown whether Nesbitt or Hamby consumed any additional alcohol following their departure from the C View Inn.

Hamby's mother filed suit against Nesbitt, the C View Inn and its service staff. The complaint alleged that the C View Inn negligently caused Hamby's death and violated the Dram Shop Act by allowing Nesbitt, who was underage, to consume alcohol when he was visibly intoxicated.

The lower court granted a motion for summary judgment filed by the C View Inn finding no violation of the Dram Shop Act because the Inn did not serve alcohol to Nesbitt. However, on March 20, 2009, the appellate court reversed the lower court's decision, holding that the establishment could be found liable under either the New Jersey Dram Shop Act or under common law negligence principles. In so holding, the appellate court noted that the C View Inn had a duty to monitor Nesbitt, even if he was not served alcohol, to protect him from causing harm to himself or to others.

Following the appellate court's reinstatement of the Plaintiff's Complaint, the C View Inn argued that it could not be held liable for the negligent supervision of Mr. Nesbitt under the Dram Shop Act, because no employee of the C View Inn served Mr. Nesbitt alcohol. In such circumstances, the Dram Shop Act bars a cause of action for negligent supervision under common law principles.

In response, Plaintiff argued that the C View Inn was held not only to the standards of the Dram Shop Act, but also to the common law principles of premises liability. Namely, the C View Inn had a duty to monitor a visibly intoxicated patron, even though they did not serve him alcohol, in order to ensure his safety and the safety of others. Additionally, Plaintiff argued that the Dram Shop Act did not preclude a cause of action sounding in negligent supervision under common law principles.

Upon review, the Supreme Court of New Jersey reversed the ruling of the appellate court since there was no evidence in the record that the C View Inn served alcohol to Mr. Nesbitt or that he appeared visibly intoxicated while patronizing the establishment. As such, no claim could be made against the C View Inn under the Dram Shop Act. In so holding, the court found it significant that no one present at the C View Inn during the night in question observed Nesbitt behaving in a matter that would indicate he was visibly intoxicated. The court noted that while a commercial establishment such as the C View Inn did have a duty "to ensure the safety of its guests from foreseeable danger," the C View Inn owed no duty with regards to Nesbitt in this particular situation.

With this opinion of first impression, the court held that there can be no liability to alcoholic beverage servers under the Dram Shop Act when a patron is not served alcohol or does not appear visibly intoxicated. The court concluded that the C View Inn could not be held liable for another patron's decision to secretly serve alcohol purchased outside of the establishment to an underage patron. The court reasoned that to permit such liability would contradict the protections given to alcoholic beverage servers under the Dram Shop Act. The intention of the Dram Shop Act is to shield alcoholic beverage servers from liability for negligence except as explicitly defined in the Act; this limitation exists to stabilize the cost of insurance coverage to alcoholic beverage servers by restricting the potential for the imposition of civil liability on such establishments.

The Supreme Court's holding in Bauer preserves the shield of immunity provided to alcoholic beverage servers under the Dram Shop Act and closes what could have been an opening for Plaintiffs to assert liability against alcoholic beverage servers without service of alcohol or failure to detect visibly intoxicated persons.