Indiana Dram Shop Act: Indiana Supreme Court Weighs in on Common Law Liability

Many clients who I represent in personal injury cases where they've been seriously injured in a motor vehicle crash in Indiana due to a drunk driver ask me "what's a dram shop?" They typically ask me that question because I've advised them they have a couple of potential claims: negligence claim against the drunk driver, underinsured or uninsured claim against their own auto insurance company, and/or a dram shop claim against the bar that allegedly overserved the drunk driver. In response to the question, "what's a dram shop?" my responses is usually something along the lines of, it's a bar (or the like) that sells alcohol. A "dram" is an old British unit measuring three fourths of a teaspoon. So, "dram shop" simply referred to a tavern, or the like, that served alcohol to thirsty patrons. 

In Indiana bars (and the like) have been subject to criminal liability for various conduct. At the same time, Indiana bars (and the like) have been subject to civil liability under principles of common-law negligence for overseeing drunk patrons who caused injury to others (or themselves) after they left the bar. 

In 1986, the Indiana legislature enacted the Indiana Dram Shop Act, Ind. Code § 7.1-5-10-15, which limited civil liability to those with actual knowledge of the drunk patron's visible intoxication. In other words, the Indiana Dram Shop Act, imposed an additional obstacle on injured parties by requiring them to show that the bar keeper had actual knowledge that the bar patron they served was visible intoxicated at the time they served them alcohol. 

In WEOC, Inc. v. Niebauer, 226 N.E.3d 771 (Ind. 2024), the Indiana Supreme Court was pressed to address the issue of Indiana's Dram Shop Act's impact on common-law liability against bars (and the like). 

In WEOC, Inc., a drunk driver crashed his car into another vehicle, killing its driver. The killed driver's estate sued two restaurants that had served the drunk driver and included a negligence claim. Very early on in the lawsuit, the restaurants moved to dismiss only that claim, arguing that the Dram Shop Act eliminated any independent common-law liability, and thus the claim failed as a matter of law. The trial court denied the motion and allowed the case to move forward, however, the restaurants appealed the trial court's finding and the issue ultimately ended up with the Indiana Supreme Court. The Indiana Supreme Court upheld the lower courts and noted that the Dram Shop Act modified but did not eliminate common-law liability against entities that furnish alcohol. 

As a Fort Wayne personal injury attorney, the frustrating aspect of the WEOC, Inc. case is that it caused significant delay of the personal injury lawsuit and is an example of how challenging Indiana Dram Shop Act claims can be for injured people and their families.

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