Vol. 75, No. 9, September 2002

Good Samaritans Gone Bad: Derelict Designated Drivers are Exempt from Liability

by Paul D. Curtis

roviders of alcohol in Wisconsin have long been shielded from civil liability arising out of accidents caused by intoxicated adults. Historically, Wisconsin law has favored holding the intoxicated adult liable for damages proximately caused by his or her own negligence while favoring immunity for the liquor provider. A recent challenge to the longstanding rule was thwarted by the Wisconsin Supreme Court's broad interpretation of the alcohol provider immunity statute, Wis. Stat. section 125.035. On March 28, 2002, the supreme court decided that under the alcohol provider immunity statute a designated driver who promised, but failed, to transport an intoxicated adult home from a party is immune from liability arising out of the intoxicated adult's tortious acts.¹

Historical Development of the Common Law Rule

Since the early twentieth century, providers of alcohol to adults have enjoyed a high degree of immunity from civil liability in Wisconsin.² In Demge v. Feierstein,³ Mrs. Demge found her intoxicated husband at the defendants' tavern on Sept. 9, 1934. She requested that the bartender cease serving Mr. Demge alcohol. Despite her request, the bartender continued to serve alcohol to Mr. Demge. Annoyed, Mrs. Demge left her husband at the tavern. Later in the evening, Mr. Demge left the tavern for home, lost control of his automobile, and was killed. Mrs. Demge sued the tavern owners and their insurer. Citing the law of other states, the Wisconsin Supreme Court affirmed the trial court's finding in favor of the defendants, because the plaintiff had failed to state a cause of action. "The cases are overwhelmingly to the effect that there is no cause of action at common law against a vendor of liquor in favor of those injured by the intoxication of the vendee."⁴ The court later rationalized that the intoxicated adult who consumed the alcohol and caused the injury should be held liable rather than the provider of alcohol, who is too remote from the cause of the damages.⁵ The common law rule established in Demge in 1936 was virtually unchanged until the 1980s.

In the mid-1980s the Wisconsin Supreme Court overruled the Demge rule and permitted causes of action against alcohol providers when intoxicated minors injure third parties. In Sorensen v. Jarvis⁶ the supreme court permitted an action by an injured third party against a vendor who sold alcohol to a minor. While limiting its decision to third party actions involving intoxicated minors, the Sorensen court hinted that it might be inclined to follow a national trend abrogating the common law rule of nonliability for alcohol vendors.⁷ Less than a year later, the court expanded on its decision in Sorensen and permitted an action by an injured third party against a social host who provided alcohol to a minor.⁸ The legislature soon responded to the judicial encroachment upon the nonliability rule.

Enactment of Wisconsin Statute Section 125.035

The legislature restored some order to liquor liability law when it enacted Wis. Stat. section 125.035 in the fall of 1985. The new statute immunized from civil liability, with limited exceptions, providers of alcohol to adults who subsequently injured third parties: "A person is immune from civil liability arising out of the act of procuring alcohol beverages for or selling, dispensing or giving away alcohol beverages to another person."⁹ A "person" is broadly defined to include not only individuals but also "partnerships, associations and bodies politic or corporate."¹⁰ The only statutory exceptions to the adult rule are when the provider forces the consumption of alcohol on another or misrepresents to the consumer that the beverage provided is alcohol-free.¹¹ These obviously are rare exceptions, and to date there have been no published cases discussing them. The new statute also permitted, again with limited exceptions, a cause of action against a person who provided alcohol to a minor when the minor injured a third party.¹²

The practical effect of Wis. Stat. section 125.035 is that those who suffer injuries at the hands of an intoxicated minor may sue the alcohol provider, while those who are injured by an intoxicated adult may not. The alcohol provider immunity statute, as it relates to intoxicated adults, has been interpreted very broadly and has provided immunity even in extreme cases. For example, in Greene v. Farnsworth¹³ a little girl who was playing in front of her home was hit and severely injured by a drunk driver who had been drinking with friends over the course of the day. The plaintiff alleged that the defendants bought the driver drinks and "encouraged, advised and assisted [him to] consume alcoholic beverages over [a] nine-hour period" and that the defendants knew or should have known that the driver "would operate a motor vehicle with a prohibited blood-alcohol concentration, creating a high risk of bodily harm to others."¹⁴ Regardless of the allegations, the court said the defendants were immune from civil liability under Wis. Stat. section 125.035(2). The plaintiff's remedy was with the intoxicated driver.

Stephenson v. Universal Metrics Inc. Cases

On March 28, 2002, the Wisconsin Supreme Court again directed plaintiffs to seek redress from the intoxicated tortfeasor rather than those thought to be too remote from the harm alleged.¹⁵

In Stephenson, coworkers John Kreuser and Michael Devine attended a holiday party sponsored by their employer, Universal Metrics Inc., at the Silver Springs Country Club in Menomonee Falls, Wis. Kreuser, one of the defendants, was a manager with Universal Metrics. Universal Metrics provided two drink vouchers per employee, which could be exchanged for alcoholic or nonalcoholic drinks. Once the vouchers were expended, the employee would have to pay for his or her own drinks. Over the course of the evening, Devine became very intoxicated. When Devine approached the bartender for another drink, she refused to serve him any more alcohol unless he had a ride home. Kreuser, who overheard the conversation between Devine and the bartender, agreed to drive Devine home.

There was a factual dispute as to how the agreement was formed; Kreuser testified that he simply nodded his head affirmatively, while the bartender testified that Kreuser verbally promised her that he would drive Devine home. Regardless, Kreuser did not dispute that he agreed to drive Devine home. Because Kreuser agreed to drive Devine home, the bartender served Devine several more drinks. Kreuser did not, however, drive Devine home after the party. There was no evidence indicating who left the party first, but it was undisputed that Kreuser and Devine left the party in separate vehicles. While Devine was attempting to drive himself home, his vehicle crossed the center line and collided with another vehicle. Both Devine and the other driver, Kathy Stephenson, died from the collision.¹⁶

Kathy Stephenson's husband brought suit, individually and as the personal representative of his wife's estate, against Kreuser and his insurer, Sentry Insurance, and Universal Metrics Inc. and its insurers, West American Insurance Company and American Family Mutual Insurance Company. Among Stephenson's allegations was that Kreuser "'voluntarily assumed a duty' to render services to Devine under circumstances in which he knew or should have known that any failure to perform those services would create 'an unreasonable risk of harm' to Devine and others."¹⁷ Stephenson also alleged that Universal Metrics and West American Insurance Company were liable for Kreuser's alleged breach of duty to drive Devine home and that they were liable for the damages caused by Devine's drunk driving.¹⁸

The defendants moved for summary judgment at trial. The trial court granted summary judgment to Universal Metrics and West American, concluding that under Wis. Stat. section 125.035(2) they were completely immune from liability.¹⁹ The trial court also denied Kreuser's and his insurer's motions for summary judgment because, it said, Kreuser's failure to drive Devine home as promised was not immunized by Wis. Stat. section 125.035(2).²⁰ Both sides appealed, and the court of appeals bifurcated the issues.

Court of Appeals I: Designated Driver Liability

In the first of the two appellate cases, the issue was whether Kreuser was immune from liability under Wis. Stat. section 125.035(2).²¹ Kreuser argued that he "procured" alcohol for Devine and, therefore, should be immune from liability under the statute. The court of appeals said, however, that Kreuser was not alleged to have provided Devine with alcohol; the claim against Kreuser was that he agreed, and failed, to drive Devine home, which resulted in the death of Stephenson's wife.

The court of appeals agreed with the trial court that Kreuser's alleged conduct fell outside the bounds of section 125.035(2) and within the confines of a negligence action. Specifically, the appellate court agreed with the trial court that Stephenson had a claim against Kreuser under the Restatement (Second) of Torts section 324A (1965), "Liability to a Third Person for Negligent Performance of Undertaking," which provides that a person may be held liable to a third person for voluntarily, but negligently, undertaking the performance of an act.²² "[T]his standard of conduct applies to anyone 'who, having no duty to act, gratuitously undertakes to act and does so negligently.'"²³

The court of appeals affirmed the trial court, although it acknowledged the potentially ironic results of its decision. As Kreuser pointed out to the court, "bartenders and even drinking companions who encourage a person to get drunk and drive could be immune, [citation omitted], but a designated driver who fails to fulfill his responsibility could be liable."²⁴ The appellate court nevertheless said that it was not willing to expand the scope of the statute beyond what the legislature intended, nor was it willing to relieve designated drivers of their voluntarily assumed duties.²⁵

Court of Appeals II: Employer Liability

In the second of the two appellate cases, the court addressed the additional issues: 1) whether Kreuser's employer, Universal Metrics, and its insurer could be held liable for Kreuser's alleged negligent failure to drive Devine home; and 2) whether Universal Metrics could be held liable for Devine's drunk driving.²⁶ The appeals court reversed the trial court on the first of these issues, holding that Universal Metrics, and in turn its insurer,²⁷ could be held vicariously liable for Kreuser's alleged negligence in certain fact situations. An employer may be held vicariously liable for torts committed by an employee acting within the scope of the employee's employment.²⁸ Whether an employee is working within the scope of his or her employment requires a consideration of the employee's intent - whether the employee was at least partially actuated by a purpose to serve his or her employer.²⁹ The court said the issue of whether an employee is acting within the scope of his or her employment is a question of fact to be determined by a jury or fact finder.

In reversing the trial court, the court rationalized that a jury could reasonably find that Kreuser, a manager with Universal Metrics, could have been acting within the scope of his employment - that he may have been at least partially actuated by a purpose to serve his employer - when he agreed to drive Devine home from the party. The court also recognized that the party was not strictly a social event. "[T]he party had business as well as social purposes; the business of an enterprise extends beyond the bare money-making activities of taking, processing, and selling goods or services."³⁰ The court reversed and remanded this issue to the trial court for the fact finder to determine Kreuser's motivations in this instance.

The appeals court affirmed the trial court's grant of summary judgment in favor of Universal Metrics on the second issue relating to its alleged liability for Devine's drunk driving. The court held that Universal Metrics was not liable, under the doctrine of respondeat superior, for the damages caused by Devine's drinking and driving. Nor was Universal Metrics liable for failing to prevent Devine from driving while intoxicated. In both cases, Wis. Stat. section 125.035(2) immunized Universal Metrics from liability arising out of furnishing Devine with alcohol.³¹

Supreme Court Review

The parties petitioned the Wisconsin Supreme Court for review of both appellate court decisions. The court accepted review of the first case, regarding Kreuser's alleged liability for failing to drive Devine home as promised.³² The court, however, denied review of the second case, regarding the liability of Universal Metrics and its insurers for Kreuser's alleged negligence and Devine's drunk driving.³³

The supreme court reversed the appellate court's decision that Kreuser could be held liable for those damages arising from his failure to drive Devine home as promised.³⁴ The supreme court agreed with the lower courts that Kreuser could be held liable according to the theories espoused in the Restatement (Second) of Torts section 324A. "Kreuser's agreement to drive Devine home, coupled with Kreuser's later decision not to drive Devine home, could be viewed as a failure to exercise reasonable care under the circumstances. Thus, we hold that the circumstances of this case do comport with the section 324A structure."³⁵

The supreme court disagreed, however, with the lower courts' determination that Kreuser was not immune from suit under Wis. Stat. section 125.0135(2).³⁶ The majority reasoned that Kreuser's purposeful action of promising to drive Devine home allowed the bartender to serve Devine more alcohol. The question then was whether Kreuser's purposeful action amounted to "procuring" alcohol for Devine under the immunity statute. Because the term "procure" is not defined in the statute, the court reverted to the rules of statutory construction and also looked for guidance from other sources such as the dictionary, jury instructions, and past decisions from Wisconsin and other jurisdictions. Upon consideration of these sources, it was evident to the court that the definition of "procure" was fairly broad; it "is not limited to merely 'giving,' but is more akin to 'bringing about' or 'causing to happen.'"³⁷ The court concluded, therefore, that Kreuser was entitled to the protection of the immunity statute, Wis. Stat. section 125.0135(2), because he brought about Devine's acquisition of more alcohol, or, in other words, procured alcohol for Devine. The court also noted that its decision that Kreuser was immune from liability under Wis. Stat. section 125.035(2) is consistent with the legislative intent of the immunity statute, which is to hold the consumer, and not the provider, of the alcohol responsible for the damages arising from the consumption.³⁸

The supreme court also addressed, and agreed with, Kreuser's argument that the court should relieve him of liability on public policy grounds.³⁹ The court considered the six-factor test precluding recovery against negligent tortfeasors on public policy grounds when: 1) the injury is too remote from the negligence; 2) the injury is out of proportion to the tortfeasor's culpability; 3) in retrospect it appears too highly extraordinary that the negligence should have brought about the harm; 4) allowing recovery would place too unreasonable a burden on the tortfeasor; 5) allowing recovery would be too likely to open the way to fraudulent claims; or 6) allowing recovery would have no sensible or just stopping point.⁴⁰

The court found ample reason to preclude recovery against Kreuser based upon policy factors two, four, and six, although it did not concede the imposition of liability on Kreuser based on the other factors. Addressing the second factor, the court said the injury at issue was wholly out of proportion to Kreuser's culpability because regardless of Kreuser's broken promise, Devine still was responsible for his own actions. Also, the court reasoned that it defied common sense to hold Kreuser liable while immunizing those who serve alcohol or encourage its consumption.

As for the fourth factor, allowing recovery would put too unreasonable a burden on the tortfeasor in this situation because Kreuser could not have been expected to control or monitor Devine in an effort to prevent him from leaving the party. In fact, in the present case, Devine may have left the party before Kreuser.

And, regarding the sixth factor, the court said to allow recovery in the present case potentially allowed the law of negligence to enter a field with no sensible or just stopping point. Kreuser argued that he agreed to drive Devine home with a simple affirmative nod of his head. If the court permitted recovery in the present case, it asked, would the wink of an eye be sufficient to impose liability in the next case?

Based on these and other factors, the court said it was unwilling to impose liability on Kreuser absent some legislative intent to support such a result.⁴¹ The court, therefore, reversed the court of appeals and held that Kreuser's motion for summary judgment should have been granted.⁴²

Chief Justice Shirley Abrahamson strongly disagreed with the majority opinion to the extent it released Kreuser from liability for breaking his promise to Devine. Chief Justice Abrahamson said the alcohol provider immunity statute was inapplicable to the present case; the issue before the court was not whether Kreuser procured alcohol for Devine, and was therefore immune from liability, but whether Kreuser - the "good Samaritan gone bad" - could be held liable for the damages arising from his broken promise to drive Devine home.⁴³ According to the chief justice, Kreuser could have reasonably foreseen that his failure to keep his promise to Devine could result in death or injury, and such a failure was not immunized by statute or public policy.⁴⁴

Conclusion

Despite the legal disunity, both sides of the argument recognize the tragedy of the Stephenson case and cases similar to it. Although the circumstances were somewhat unique, Stephenson is in accord with Wisconsin law, which has long protected alcohol providers from liability arising from damages caused by adult alcohol consumers. The legislature and courts alike have consistently directed the damaged party to seek redress from the party who directly caused the damage - the adult consumer - rather than the more remote provider. With few exceptions, taverns, employers, social hosts, and friends are immune from liability for injuries to third persons arising from the provision of alcohol to adults. Stephenson extended that immunity to designated drivers. Now, even individuals who are only peripherally involved in procuring alcohol for an adult are protected from liability arising from damages caused by the intoxicated adult's tortious acts. Clients often ask their attorneys whether they can be held liable for serving alcohol to their adult friends, employees, or customers who subsequently damage others; according to Wisconsin law, the answer is generally "no."

Endnotes

¹ Stephenson v. Universal Metrics Inc., 2002 WI 30, 251 Wis. 2d 171, 641 N.W.2d 158 (Abrahamson, C.J., dissenting).

² See, e.g., Demge v. Feierstein, 222 Wis. 199, 268 N.W. 210 (1936).

³ Id.

⁴ Id. at 203, 268 N.W. at 212 (citations omitted).

⁵ See Seibel v. Leach, 233 Wis. 66, 68, 288 N.W. 774, 775 (1939).

⁶ 119 Wis. 2d 627, 350 N.W.2d 108 (1984).

⁷ See id. at 648-49, 350 N.W.2d at 119-20.

⁸ See Koback v. Crook, 123 Wis. 2d 259, 366 N.W.2d 857 (1985).

⁹ Wis. Stat. § 125.035(2).

¹⁰ Wis. Stat. § 990.01(26).

¹¹ See Wis. Stat. § 125.035(3).

¹² See Wis. Stat. § 125.035(4).

¹³ 188 Wis. 2d 365, 525 N.W.2d 107 (Ct. App. 1994).

¹⁴ Id. at 369, 525 N.W.2d at 108-09.

¹⁵ See Stephenson v. Universal Metrics Inc., 2002 WI 30, 251 Wis. 2d 171, 641 N.W.2d 158.

¹⁶ Id. at ¶¶ 4-9.

¹⁷ Stephenson v. Universal Metrics Inc., 2001 WI App 128, ¶ 8, 246 Wis. 2d 450, 630 N.W.2d 767, rev'd, 2002 WI 30, 251 Wis. 2d 171, 641 N.W.2d 158.

¹⁸ See Stephenson v. Universal Metrics Inc., 2001 WI App 173, ¶ 2, 247 Wis. 2d 349, 633 N.W.2d 707, review denied, 2002 WI 48.

¹⁹ Id.

²⁰ See Stephenson, 2001 WI App 128, 246 Wis. 2d 450, 630 N.W.2d 767.

²¹ Id.

²² Restatement (Second) of Torts § 324A (1965) states as follows:

"One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking if

"(a) his failure to exercise reasonable care increases the risk of such harm, or

"(b) he has undertaken to perform a duty owed by the other to the third person, or

"(c) the harm is suffered because of reliance of the other or the third person upon the undertaking."

The Wisconsin Supreme Court applied the Restatement (Second) of Torts § 324A (1965) in American Mutual Liability Insurance Co. v. St. Paul Fire & Marine Insurance Co., 48 Wis. 2d 305, 313, 179 N.W.2d 864, 868 (1970), and again in Gritzner v. Michael R., 2000 WI 68, ¶¶ 56-57, 235 Wis. 2d 781, 611 N.W.2d 906.

²³ Stephenson, 2001 WI App 128, ¶ 9, 246 Wis. 2d 450, 630 N.W.2d 767 (quoting Gritzner, 2000 WI 68, ¶ 56, 235 Wis. 2d 781, 611 N.W.2d 906).

²⁴ Stephenson, 2001 WI App 128, ¶ 12, 246 Wis. 2d 450, 630 N.W.2d 767.

²⁵ See id. at ¶¶ 13-14.

²⁶ See Stephenson, 2001 WI App 173, 247 Wis. 2d 349, 633 N.W.2d 707.

²⁷ Most employers' insurance liability policies provide coverage for the unintentional torts of their employees committed within the scope of employment. Generally, these policies promise to pay sums the insured is obligated to pay as damages for bodily injury or property damage. Insureds generally include employees acting within the scope of employment.

²⁸ See Scott v. Min-Aqua Bats Water Ski Club Inc., 79 Wis. 2d 316, 320, 255 N.W.2d 536, 538 (1977).

²⁹ See Olson v. Connerly, 156 Wis. 2d 488, 499-500, 457 N.W.2d 479, 483-84 (1990).

³⁰ Stephenson, 2001 WI App 173, ¶ 15, 247 Wis. 2d 349, 633 N.W.2d 707.

³¹ See id. at ¶¶ 20-23.

³² See Stephenson, 2002 WI 30, 251 Wis. 2d 171, 641 N.W.2d 158.

³³ On April 22, 2002, the Wisconsin Supreme Court denied both parties' petition for review of Stephenson, 2001 WI App 173, 247 Wis. 2d 349, 633 N.W.2d 707, review denied, 2002 WI 48.

³⁴ See Stephenson, 2002 WI 30, 251 Wis. 2d 171, 641 N.W.2d 158.

³⁵ Id. at ¶ 24.

³⁶ Id. at ¶ 40.

³⁷ Id. at ¶ 36.

³⁸ Id. at ¶¶ 38-40.

³⁹ Id. at ¶ 41.

⁴⁰ Id. at ¶ 43 (citing Rockweit v. Senecal, 197 Wis. 2d 409, 426, 541 N.W.2d 742, 750 (1995) and Colla v. Mandella, 1 Wis. 2d 594, 598-99, 85 N.W.2d 345, 348 (1957)).

⁴¹ Id. at ¶ 51.

⁴² Id. at ¶ 52.

⁴³ Id. at ¶ 60 (Abrahamson, C.J., dissenting).

⁴⁴ Id. at ¶ 59, et seq (Abrahamson, C.J., dissenting).

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