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OLR Research Report


May 8, 2009

 

2009-R-0182

DRAM SHOP ACT AND CASINO LIABILITY

By: Meghan Reilly, Legislative Analyst

George Coppolo, Chief Attorney

You asked if tribal sovereignties, particularly casinos, may be held liable under the Dram Shop Act for alcohol-related automobile accidents caused by casino patrons.

This office is not authorized to give legal opinions nor should this be construed as such.

SUMMARY

Connecticut courts have not definitively settled the question of whether a tribe may be held liable under the Dram Shop Act.

Neither the Connecticut Supreme Court nor Appellate Court has ruled on whether a Connecticut tribe can be sued in state court under the state dram shop act for injuries sustained outside of tribal land and allegedly caused by the consumption of alcohol provided on tribal land. Nor has any Federal Court ruled on this precise issue.

Connecticut trial courts have ruled on this issue. But lower court rulings are binding only on the parties to the lawsuit with respect to the issues raised in the case, not in other cases that may be filed. Until the state Supreme Court or Appellate Court rules on this issue, it is not possible for us to provide a definitive answer. At least two superior court judges have ruled that tribes can be sued under the Dram Shop Act in state court. At least three have ruled that tribes and related tribal entities cannot be sued. The key issue in these cases was whether (1) the tribe had waived its immunity or (2) federal law had waived it by authorizing such lawsuits.

Generally, an Indian tribe may be sued in state court only if Congress has authorized the suit or the tribe has waived its immunity, and the tribe has consented to be sued in state court. Without a clear and unequivocal waiver by the tribe or a federal law or laws authorizing lawsuits against the tribe, the doctrine of sovereign immunity bars law suits for damages against a tribe, including lawsuits based on a state's dram shop law. The waiver of immunity may not be implied, but must be expressed unequivocally. Tribal immunity extends to individual tribal officials and employees acting in their representative capacity and within the scope of their authority.

A history and overview of tribal sovereignty in Connecticut can be found in OLR Report 94-R-0170.

DRAM SHOP ACT

In 1918, the U.S. Supreme Court held that dram shop statutes are passed under the legitimate police power of the state to regulate traffic in liquor (Eigner v. Garrity, 246 U.S. 97, 102-3 (1918)). Connecticut's Dram Shop Act (1) makes sellers liable if they sell alcoholic beverages to an intoxicated person who injures a person or property because of the intoxication and (2) sets deadlines for giving notice and filing suit (CGS § 30-102 as amended by PA 07-165).  The Connecticut Supreme Court established a common law (judge made) right for a person to file a negligence suit against a seller.  The decision is described in OLR Report 2003-R-0151.  But legislation later prohibited such suits if the drinker is at least 21, the minimum age for legally buying alcoholic beverages.

STATE REGULATION OF ALCOHOL WITHIN GAMING FACILITY

Service of alcoholic beverages within a gaming facility is subject to the laws and regulations of the state in which the facility is located.  A tribal gaming operation is entitled to hold (1) a hotel permit, (2) a café permit, or (3) equivalent permits as may be available to similar enterprises operated pursuant to the laws of the State (State-Tribal Compact § 14(b), http://www.ct.gov/dosr/lib/dosr/tribal_state_compact_foxwoods.pdf).

A state may control alcohol sale by a tribal entity through exercise of police power. The U.S. Supreme Court upheld a state law requiring a tribal entity selling alcohol for off-premises consumption to obtain a state liquor license. The court held that a federal statute confers concurrent jurisdiction on states and tribes over liquor transactions in Indian country, a grant of authority which has been held to include regulatory as well as substantive law (18 U.S.C. § 1161; Rice v. Rehner, 463 U.S. 713, 103 (1983)).

APPELLATE COURT CASES

Legal Action Against Tribal Entities

The U.S. Supreme Court held that tribes are immune from suit unless “Congress has authorized the suit or the Tribe has waived its immunity” (Kiowa Tribe v. Mfg. Technologies, Inc., 523 U.S. 751, 754 (1998), cited in LaPlante v. Mohegan Tribal Gaming Authority, Gaming Disputes Trial Court, Docket No. GDTC-T-5-121-TBW (March 17, 2006)).

The Connecticut Appellate Court held that “absent a clear and unequivocal waiver by the tribe or congressional abrogation, the doctrine of sovereign immunity bars suits for damages against a tribe… such waiver may not be implied, but must be expressed unequivocally.” In that case, a former employee brought action against employees of an Indian casino, alleging wrongful termination in violation of the Family Medical Leave Act (FMLA) (Chayoon v. Sherlock , 89 Conn. App. 821, 826 (2005)).

Legal Action Against Non-Members

The Connecticut Court of Appeals stated that “tribes generally lack civil authority over the tortious conduct of nonmembers of the tribe unless the underlying activity directly affects the tribe's political integrity, economic security, health, or welfare.” In that case, a nonmember bus driver fell in a tribally-owned parking lot. Claims against the nonmember snow removal contractor for the injuries were not precluded from adjudication in superior court unless the action would have an adverse effect on the tribe's economic interest in safe maintenance of tribal land. This exception from the rule that tribes lack authority over

tortuous conduct granted exclusive jurisdiction to the tribal court to adjudicate in this case, because the tribe's agreement with contractor limited the tribe's economic exposure by hiring the contractor to assume responsibility exceeded the remote possibility that the tribe would be unfairly burdened if driver chose to pursue an action against tribe in tribal court (Ellis v. Allied Snow Plowing, Removal and Sanding Services Corp., 81 Conn.App. 110 (2004)).

The language of the exception comes from a case in which the United States sought to resolve questions of ownership of land claimed by both Montana and the Crow Indian Tribe. The U.S. Supreme Court held that: (1) title passed to Montana upon its admission to the Union, and (2) the Crow Indian Tribe had no power to regulate non-Indian fishing and hunting on reservation land owned in fee by nonmembers of the Tribe, as a tribe may retain inherent power to exercise civil authority over conduct of non-Indians on fee lands within its reservation only when that conduct threatens or has some direct effect on the political integrity, economic security, health, or welfare of the tribe (Montana v. US, 450 U.S. 544 (1981)).

The U.S. Supreme Court narrowed this exception to state jurisdiction by holding that “[t]he impact [of the non-tribal activity] must be demonstrably serious and must imperil the political integrity, economic security, or the health and welfare of the tribe.” The Court was considering a suit in which an Indian tribe sought a declaratory judgment and injunction upholding its right to impose its zoning and land use laws on fee land owned by non-Indians within reservation (Brendale v. Confederated Tribes and Bands of Yakima Indian Nation, 492 U.S. 408, 431 (1989)).

In 1997, the court further held that the exception applies to both regulatory and adjudicatory authority; exclusive tribal jurisdiction applies only when the outcome is “crucial” to the political integrity, economic security, or the health and welfare of the tribe (Strate v. A-1 Contractors, 520 U.S. 438 (1997)). The court held that absent Congressional direction, Indian tribes lack civil authority over conduct of nonmembers on non-Indian land within a reservation, but that the Montana exception exists for conduct that threatens or has some direct effect on political integrity, economic security, or health or welfare of tribe. In Strate, a truck driver, his employer, his employer's insurer, and tribal court filed action seeking a declaratory judgment that the tribal court lacked jurisdiction to adjudicate claims of the other driver, who was a widow of tribal member and mother of tribal members, for injuries arising out of automobile accident on a state highway that ran through reservation land.

TRIAL COURT CASES

Cases Allowing Dram Shop Suits in State Court

We found two cases allowing a private party to sue a tribe. The first case was originally decided and then reargued within a few months. In each instance the court concluded that a tribe could be sued under the dram shop in state court and that certain tribal related people and entities could also be sued but only after going to the tribal court first. The initial and subsequent decisions are summarized below.

Schram v. Ohar (I). The plaintiff, Bernard Schram, was involved in an automobile accident with the defendant, Holley Ohar, who, the plaintiff claims, (1) was under the influence of liquor and (2) had been served alcoholic beverages by employees of the defendant, Mashantucket Gaming Enterprise. The plaintiff brought action against the driver, and also the Mashantucket tribe, the tribal gaming enterprise, and a tribal official (1) under the Dram Shop Act; (2) for wanton or reckless misconduct in serving Ohar alcoholic beverages while intoxicated; and (3) for negligent supervision of employees who served Ohar while she was intoxicated.

The defendants, permittee Robert Zitto, the Mashantucket Pequot Tribe, and the Mashantucket Gaming Enterprise asked the court to dismiss the suit. They claim that (1) the court lacks subject matter jurisdiction because an exercise of state jurisdiction would infringe on tribal self-government; (2) the doctrine of tribal immunity from suit prohibits the exercise of jurisdiction over these defendants; and (3) the plaintiff has failed to exhaust tribal remedies.

The plaintiff claimed that the state has jurisdiction because (1) of the federal Settlement Act of 1983 and (2) Indian tribes have never enjoyed sovereign immunity from state law in the area of liquor distribution.

Before filing suit in state court, the plaintiffs had sued the defendants in the tribal court on the same legal theories. The superior court ruled that it would stay the proceedings until the matter was resolved in tribal court except for the dram shop claim. Because the defendants had successfully claimed that the tribal court lacked jurisdiction to handle dram shop claims, the court allowed the dram shop claim to proceed. The court did not specify its reasons (Schram v. Ohar, 1998 Conn. Super. LEXIS 2702 (Conn. Super. Ct. Sept. 22, 1998)).

Schram v. Ohar (II). Both the plaintiff and defendants sought to reargue the court's decision on the defendants' motion to dismiss. The defendants again asked the court to grant their motion to dismiss the lawsuit including the dram shop claim. The plaintiff asked that the court continue to deny the motion but to change its ruling regarding a stay of the action until the resolution of the case in the tribal court.

The court again denied the motion to dismiss the lawsuit against Zitto, the permittee and backer, and the Mashantucket Gaming Enterprise because in the court's view neither defendant was a tribe and thus not entitled to the defense of tribal immunity.

With respect to the defendant Mashantucket Pequot Tribe, the court focused upon the issue of tribal immunity from suit as a jurisdictional bar as to the tribe itself with respect to lawsuits based on state dram shop act and other violations of Connecticut's liquor laws.

After reviewing court rulings from other jurisdictions, the court ruled that a private citizen may sue a tribe itself in the area of liquor distribution, and that tribal immunity is not a bar to lawsuit arising from the sale of alcohol at the casino.

The court upheld its prior ruling that the lawsuit against Zito and the Mashantucket Gaming Enterprise must be stayed until there is a resolution of the case in the tribal court (Schram v. Ohar, 1998 Conn. Super. LEXIS 3263 (Conn. Super. Ct. Nov. 13, 1998)).

Cappola v. Plan B, LLC. The court has allowed a lawsuit to be brought in Superior Court alleging, among other things, a violation of the dram shop act against a non-tribal entity that had a contract with the Mohegan tribe to operate a lounge on tribal land.

The plaintiff was a customer at the Ultra 88 Lounge, located in the Mohegan Sun Casino complex in Uncasville, when he was injured by another customer who allegedly had been served alcohol by lounge employees. The plaintiff sued the lessee of a lounge premises, and the permittees for the lounge (lounge defendants), alleging direct liability under the Connecticut Dram Shop Act, vicarious liability, and negligence.

The defendants filed a motion to dismiss or, in the alternative, a motion to transfer the lawsuit to the tribal court, claiming that the Superior Court lacked jurisdiction over them based on tribal immunity. They claimed that (1) Mohegan tribal courts, specifically the Gaming Disputes Court, has exclusive jurisdiction over any and all tort claims that may be brought against the Mohegan Tribal Gaming Authority (MTGA) and its employees under the Mohegan Torts Code, and (2) they are in privity with Ultra 88 with respect to gaming matters and thus the Gaming Disputes Court has exclusive jurisdiction over this matter. (The doctrine of privity in contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it. The defendant's “privity” argument apparently asserted that since they had entered into contracts with the tribal authority to provide activities on tribal land they should be protected by the tribe's immunity from being sued.)

The court noted that under controlling case law (1) tribal jurisdiction over the conduct of nonmembers exists only in limited circumstances absent express authorization by federal statute or treaty (Strate v. A-1 Contractors, 117 S. Ct. 1404,(1997)), and (2) tribes generally lack civil authority over the tortious conduct of nonmembers of the tribe unless the underlying activity directly affects the tribe's political integrity, economic security, health, or welfare (Ellis v. Allied Snow Plowing, Removal and Sanding Services Corp., 81 Conn. App. 110, cert. denied, 268 Conn. 910, (2004)).

The plaintiff maintained that the Superior Court has jurisdiction because (1) the lawsuit does not involves the MTGA or its employees, moreover, (2) federal law does not pre-empt state court jurisdiction, and (3) the inherent sovereignty of the Mohegan Tribe will be undisturbed by the Superior Court's exercise of jurisdiction.

The court pointed out that since the defendants were neither the MTGA nor its employees, they do not fall under the exclusive jurisdiction of the Mohegan Torts Code. It concluded that the defendants' claim that they fall under the exclusive jurisdiction of the Mohegan Torts Code by virtue of privity is unsupported by either law or statute. Thus it allowed the lawsuit to be filed in Superior Court.

Cases Not Allowing Lawsuits in State Court

We found three cases where trial courts ruled that dram shop and other alcohol related lawsuits could not be brought against tribes and related tribal entities and individuals because of the doctrine of tribal sovereign immunity.

Vanstaen-Holland PPA, et al. v. LaVigne. The plaintiffs sued the defendants, LaVigne, Nelson, Crowder, Bozsum, Etess, Maloney, and the MGTA, seeking damages for personal injuries allegedly sustained by a minor child, when she was struck by a motor vehicle operated by either LaVigne or Nelson.

The plaintiffs' lawsuit alleged that (1) before the accident, LaVigne or Nelson was a patron of Sachem's Lounge, an establishment in the Mohegan Sun Casino Resorts, where he or she was recklessly served alcohol by the defendants, (2) Crowder is the "duly licensed permittee" of Sachem's Lounge, (3) Bozsum, Etess, and the MGTA are the licensed backers of Sachem's Lounge and (4) Maloney is their employee.

The plaintiffs sought recovery pursuant to the Dram Shop Act and common-law liability for the reckless service of alcohol. The defendants argued that the court lacks subject matter jurisdiction over both the plaintiffs' statutory and common-law claims for reckless service of alcohol because of the doctrine of tribal sovereign immunity.

The plaintiffs presented several arguments. First, they asserted that the tribe's immunity from both the dram shop and common-law claims is waived because of the state's authority to regulate the reservation's alcohol sales. The defendants argued that the state's ability to govern the alcohol sales by the tribe does not constitute a waiver of tribe's immunity for this type of lawsuits brought by private individuals. The court agreed with the tribe and concluded that the state's police power to regulate the sale and distribution of alcohol is not a congressional waiver of immunity.

Next the plaintiffs argued that the tribes' immunity should not extend to their claims against the defendants because the state has a strong interest in keeping its roadways safe for travel. The court rejected this argument noting that the U.S. Supreme Court had indicated that the decision to abrogate tribal sovereign immunity is properly left to Congress. Thus, it concluded that while Congress could waive immunity for this reason it had not done so.

The plaintiffs also argued that the tribe explicitly waived its immunity to alcohol-related lawsuits in the Mohegan Tribe-State of Connecticut Gaming Compact in Section 14(b). The section provides in relevant part: "Service of alcoholic beverages within any gaming facility shall be subject to the laws and regulations of the State applicable to sale or distribution of alcoholic beverages." The defendants responded that this provision does not constitute an explicit waiver and contrasted it with Section 13(c), which provides in relevant part: "The Tribe hereby waives any defense which it may have by virtue of its sovereign immunity from suit with respect to any such action in the United States District Courts to enforce the provisions of this Compact, and consents to the exercise of jurisdiction over such action and over the Tribe by the United States District Courts with respect to such actions to enforce the provisions of this Compact."

The court agreed with the tribe and concluded section 14(b) does not constitute an unequivocal waiver. To support its conclusion, it also pointed out that section 14(b) does not provide where the tribe may be sued for such actions.

The plaintiffs additionally argued that even if the MGTA is immune from liability for their claims, tribal immunity does not extend to the individual defendants. The court noted that the doctrine of tribal immunity extends to individual tribal officials acting in their representative capacity and within the scope of their authority and that the plaintiffs identified Crowder as the licensed permittee of Sachem's Lounge, and Bozsum and Etess as the licensed owners of the establishment. In their complaint, the plaintiffs made no allegations that these individual defendants were not acting in their representative capacities. Thus, the court concluded that the immunity extends to the individual defendants (Vanstaen-Holland PPA, et al. v. LaVigne, (CV085007659), 2009 Conn. Super. LEXIS 559, (2009)).

Greenidge v. Volvo Car Finance. Plaintiff Greenidge filed a lawsuit against Volvo Car Finance, Inc. and Kaseem Colebut for injuries alleged to have been sustained in a motor vehicle accident caused by operating a vehicle while impaired by the driver's consumption of alcohol. Greenidge was a passenger in the automobile leased to her by Volvo and operated by Colebut when it struck a tree.

Volvo impleaded the Mashantucket Pequot Tribe, the Mashantucket Pequot Gaming Enterprise, and permittees Zitto and Morehead as third-party defendants. The third-party complaint alleges that Colebut was served an excessive amount of alcoholic beverages at Foxwoods Resort and Casino and Foxwoods Resort Pequot Towers. Claiming that the actions of the third-party defendants constitute reckless and wanton misconduct, Volvo sought indemnification for any judgment that may be rendered against it in favor of the plaintiff.

The third-party defendants claimed tribal immunity and filed a motion to dismiss the third-party complaint. Volvo challenged the assertion of the third-party defendants that the Gaming Enterprise is an arm of the Tribal government and claimed the Tribe had already consented to Connecticut's jurisdiction under the Settlement Act. The court rejected the claim pointing out that in Settlement Act cases, tribal consent is not required to confer state jurisdiction in criminal or civil matters involving individual members of the Tribe. Since the Settlement Act cases did not address the issue of state jurisdiction over civil causes of action against the Tribe, or against the agents of the Tribe acting in their representative capacity, they did not establish that the tribe had waived its immunity to suit.

Volvo also claimed that the tribe's immunity does not apply in cases involving the service or sale of alcoholic beverages (Rice v. Rehner, 463 U.S. 713, (1983), (discussed above). The court pointed out that Congress had not explicitly waived a tribe's immunity in connection to such lawsuits and the Supreme Court in Rice and subsequent cases had never ruled that giving states the right to regulate sales on tribal land also waived the tribe's immunity from lawsuits connected with those sales. Thus the court rejected the claim that Rice authorized such lawsuits.

Concluding that the tribe had not waived its immunity, the court dismissed the third party complaint against the tribe.

Regarding the third party complaint against the Gaming Enterprise, the court held that the enterprise is an arm of Tribal government and entitled to the same tribal immunity from suit as the Tribe for the following reasons:

1. the Mashantucket Pequot Tribal Council ("Tribal Council") is the duly authorized governing body of the Tribe;

2. the Gaming Enterprise was created and established by the Tribal Council to conduct the Tribe's gaming operations;

3. the Tribe conducts its gaming operations through the Gaming Enterprise;

4. the day-to-day operations and business of the Gaming Enterprise have been directed, and are directed, by officers who report directly to the Tribal Council; and

5. the Tribal Council maintains full oversight and control over the Gaming Enterprise.

The court also held that the claims against permittees Zitto and Morehead were not asserted against them in their individual capacities but rather in their official capacities as permittees of the Foxwoods Resort and Casino and Foxwoods Resort Pequot Towers. Accordingly, the court noted that under the controlling case law, “the doctrine of tribal immunity extends to individual tribal officials acting in their representative capacity and within the scope of their authority” (citing Romanella v. Hayward, 933 F. Supp. 163, 167 (D.Conn. 1996), aff'd, 114 F.3d 15 (2d Cir. 1997)).

The court pointed out that there were no claims in the third-party complaint that Zitto or Morehead were acting outside the scope of their authority as tribal officers. Under these circumstances, the court ruled that they are to be accorded the same tribal sovereign immunity from suit as the Tribe and Gaming Enterprise. Thus the court also dismissed the third-party plaintiff's claims against Zitto and Morehead (Greenridge v. Volvo Car Finance, Superior Court, complex litigation docket of New London at Norwich, Docket no. X04 CV 96 0119475 (August 25, 2000, Kolestsky, J.) (28 Conn. L. Rptr. 2, 3)).

Richards v. Champion In a third case, plaintiffs sought recovery from the tribal gaming authority for injuries sustained in automobile accident caused by a driver who had allegedly been served alcohol at the Mohegan Sun Resorts Casino before the accident. After acknowledging a split in authority, the court aligned with the court in Greenidge, finding that, “the relationship between state regulation of the sale and distribution of alcohol on tribal lands and dram shop actions brought by private parties is simply too attenuated to support a finding that §1161 serves as a Congressional declaration of the waiver of tribal sovereign immunity as it relates to dram shop actions” (Richards v. Champion, Superior Court, judicial district of New London, Docket No. CV 07 5004614 (July 11, 2008, Abrams, J.)).

MR:ak