Summerhays v. Clark
509 N.W.2d 748, 1993 WL 527308 (1994)
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Rule of Law:
A liquor licensee does not "sell and serve" alcohol under Iowa's dramshop statute when it provides free alcoholic beverages to employees at a private company party, as the intangible benefit of employee goodwill does not constitute consideration for a sale. An individual owner of the licensed corporation is also immune from liability as a social host for furnishing alcohol in such a setting.
Facts:
- Steven R. Kayser, Inc., an Iowa liquor licensee, operated a restaurant and bar named 4th Street Station, owned by Steven R. Kayser.
- On January 8, 1990, Kayser hosted a private, voluntary holiday party at the restaurant for employees and their guests, during which the establishment was closed to the public.
- The corporation supplied and paid for all food and beverages, which were served for free from an open bar.
- James Clark, an employee, attended the party and served himself six or seven beers, becoming legally intoxicated.
- Clark also served his wife, Kathleen, approximately ten drinks, and she became visibly intoxicated.
- After the party, Clark decided to drive because his wife was too intoxicated, even though he was also impaired.
- While driving home with his wife and her son, Thomas, Clark lost control of the vehicle and drove into a ditch.
- Thomas was thrown from the vehicle in the crash and died from his injuries.
Procedural Posture:
- Paul Summerhays, as administrator of his son's estate, filed a wrongful death lawsuit in an Iowa district court (trial court) against Steven R. Kayser, Inc. and Steven R. Kayser, individually.
- The defendants moved for summary judgment, arguing they were not liable as a matter of law.
- The district court granted summary judgment in favor of both defendants.
- Summerhays (as plaintiff-appellant) filed an interlocutory appeal of the district court's summary judgment order to the Supreme Court of Iowa.
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Issue:
Does a liquor licensee 'sell and serve' alcohol, thereby triggering liability under Iowa's dramshop statute, Iowa Code § 123.92, when it provides free alcoholic beverages to its employees at a private company party held on its premises?
Opinions:
Majority - Neuman, J.
No, providing free alcoholic beverages to employees at a private company party does not constitute a 'sale' under Iowa's dramshop statute. The court held that Iowa Code § 123.92 provides the exclusive remedy against liquor licensees and requires a 'sale,' which is not satisfied by the gratuitous furnishing of alcohol. The plaintiff's argument that employee goodwill constitutes sufficient consideration for a 'sale' is rejected, as there was no bargained-for exchange; wages were not reduced, nor was attendance conditioned on the provision of alcohol. The court found this reasoning consistent with decisions from other jurisdictions and with the Iowa legislature's intent to narrow liability when it amended the statute from 'sell or give' to 'sold and served.' Furthermore, Steven Kayser as an individual cannot be held liable under the dramshop act because he is not the licensee, and he is shielded from social host liability by Iowa Code § 123.49(l)(a), which immunizes individuals who give away alcohol.
Dissenting - Lavorato, J.
Yes, a reasonable fact-finder could conclude that the furnishing of alcohol in this context was a 'sale' for the purposes of the dramshop statute. The majority misapplied precedent that dealt with non-commercial social hosts, whereas the defendant here is a commercial liquor vendor using its business premises for a business purpose. The dissent argued that a licensee does not simply become a social host by closing its doors; it still expects a business benefit from its 'generosity' in the form of employee goodwill, which is sufficient consideration. The fact that the corporation treated the party costs as business expenses and reported the dispensed liquor for sales tax purposes further supports the conclusion that this was a commercial, not a purely social, event. The majority's restrictive interpretation of 'sale' contravenes the statute's public policy mandate for liberal construction to protect public safety.
Analysis:
This decision significantly narrows the scope of dramshop liability for liquor licensees in Iowa by creating a bright-line rule that requires a commercial transaction for liability to attach. It solidifies the distinction between selling alcohol to patrons and providing it gratuitously in a business-related social setting, such as an employee party. The ruling reinforces the legislature's intent to limit liability by focusing on the plain meaning of 'sold and served,' thereby protecting businesses from liability for injuries arising from company functions where alcohol is provided free of charge. This precedent makes it substantially more difficult for plaintiffs to hold commercial establishments liable for alcohol-related incidents that do not stem from a direct, bargained-for sale.
