20801, Inc. v. Parker

• Decision Date: 28 March 2008
• Docket Number: No. 06-0574.,06-0574.
• Citation: 249 S.W.3d 392
• Parties: 20801, INC., Petitioner, v. John L. PARKER, Respondent.
• Court: Texas Supreme Court

249 S.W.3d 392

20801, INC., Petitioner, v. John L. PARKER, Respondent.

No. 06-0574.

Supreme Court of Texas.

Argued October 26, 2007.

Decided March 28, 2008.

David P. Andis, Gauntt & Kruppstadt, L.L.P., Woodlands, TX, for Petitioner.

Philip F. Klosowsky, Law Offices of Philip F. Klosowsky, Sugar Land, Barney L. McCoy, Houston, TX, for Respondent.

David E. Lueders, Lueders & Boanerges, Houston, Michael J. Reviere, Benckenstein, Norvell, Bernsen & Nathan, Beaumont, TX, for Persons In Interest.

Glen Garey, Austin, TX, for Amicus Curiae.

Chief Justice JEFFERSON delivered the opinion of the Court.

The Texas Dram Shop Act, which imposes liability on alcoholic beverage providers for damages resulting from the provision of alcohol to obviously drunk persons ("over-service"), also contains a section eliminating this liability under certain circumstances. TEX. ALCO. BEV.CODE §§ 2.02(b), 106.14(a); see F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 683-85 (Tex.2007). Under this "safe harbor" provision, the actions of an employee in over-serving a patron "shall not be attributable to the employer" if the employer requires its employees to attend certain training classes, the employee in question actually attended these classes, and the provider did not directly or indirectly encourage that employee to violate the law. TEX. ALCO. BEV.CODE § 106.14(a). We interpret this provision for the first time today. We hold that: 1) the provider bears the burden of establishing the first two elements; 2) the plaintiff bears the burden of establishing direct or indirect encouragement;¹ and 3) encouragement may be shown, at the minimum, by evidence of the provider's negligence. We reverse in part the court of appeals' judgment and remand the case to the trial court for further proceedings.

I Background

In November 1999, Respondent John L. Parker attended the grand opening of a Slick Willie's Family Pool Hall, located in Harris County and operated by petitioner 20801, Inc. (Slick Willie's). Parker contends that over the course of the evening the bar's employees served him between ten and fifteen free alcoholic beverages, including two given to him by the manager, Craig Watson. Parker became involved in an argument with another patron, Anthony Griffin, at which point Watson asked Parker to leave. Outside, in the parking lot, Griffin punched Parker, causing him to fall and strike his head on the pavement. Parker alleges that he suffered a fractured skull and serious, disabling brain injuries as a result of this incident.

Parker sued Slick Willie's under both a premises liability theory and the Texas Dram Shop Act ("the Act"),² alleging under the latter that Slick Willie's and its "agents, servants and/or employees were negligent in that they provided . . . intoxicating alcoholic beverages and liquor to [Parker] and Griffin when [Slick Willie's] knew or should have known that [they] had become obviously intoxicated to such a degree as to present a clear and present danger to themselves and others . . . [and that] such intoxication was a proximate cause of the damages suffered by [Parker]." Slick Willie's moved for summary judgment on the grounds that Parker's premises liability claim was precluded by section 2.03 and that Slick Willie's had satisfied section 106.14's safe harbor provision. See TEX. ALCO. BEV.CODE §§ 2.03(a), 106.14(a). The trial court granted the motion, and Parker appealed.

The court of appeals reversed in part, holding that while Parker's premises liability claim was precluded by the Act, Slick Willie's did not establish section 106.14's third element: that it had not directly or indirectly encouraged its employees to violate the law. 194 S.W.3d 556, 568. We granted Slick Willie's petition for review to explore the contours of the safe harbor provision.³ 50 Tex. Sup.Ct. J. 532 (Mar. 9, 2007).

II Discussion

The Dram Shop Act imposes liability on alcoholic beverage providers (providers) for damages proximately caused by the intoxication of individuals who were served despite being obviously drunk. TEX. ALCO. BEV.CODE § 2.02(b);⁴ see Duenez, 237 S.W.3d at 683-84 (tracing the history of dram shop liability in Texas). The Act, however, also contains a section—the provisions of which are apparently unique to Texas⁵ — eliminating this liability under certain conditions:

(a) For purposes of this chapter and any other provision of this code relating to the sales, service, dispensing, or delivery of alcoholic beverages to a person who is not a member of a private club on the club premises, a minor, or an intoxicated person or the consumption of alcoholic beverages by a person who is not a member of a private club on the club premises, a minor, or an intoxicated person, the actions of an employee shall not be attributable to the employer if:

(1) the employer requires its employees to attend a commission-approved seller training program;

(2) the employee has actually attended such a training program; and

(3) the employer has not directly or indirectly encouraged the employee to violate such law.

TEX. ALCO. BEV.CODE § 106.14(a).

Both parties agree that Slick Willie's established the first two elements of this safe harbor provision. Slick Willie's argues that, contrary to the court of appeals holding, it also satisfied the third element. More specifically, Slick Willie's maintains that, with respect to the final element of section 106.14(a): 1) plaintiffs bear the burden of proof; 2) direct or indirect encouragement requires a showing that the employer acted at least knowingly or, where a failure to act is alleged, with conscious indifference; and 3) employers are not required to show enforcement at the time of the incident giving rise to the cause of action. We have not previously had occasion to address in any detail this unique statutory provision.

In construing a statute, our objective is to determine and give effect to the Legislature's intent. State v. Gonzalez, 82 S.W.3d 322, 327 (Tex.2002); see also TEX. GOV'T CODE § 312.005. We determine legislative intent from the entire act and not just isolated portions. Gonzalez, 82 S.W.3d at 327 (citing Jones v. Fowler, 969 S.W.2d 429, 432 (Tex.1998)). Thus, we "`read the statute as a whole and interpret it to give effect to every part.'" Id. (quoting Jones, 969 S.W.2d at 432). Therefore, when interpreting 106.14(a), we must consider its role in the broader statutory scheme.

The Legislature chose to subject alcoholic beverage providers to liability for damages caused by persons served after they were already obviously intoxicated; it also decided, though, to allow providers to avoid liability by having their employees attend certain training programs. TEX. ALCO. BEV.CODE §§ 2.02(b), 106.14(a). This provision is a "carrot" that gives providers an incentive to ensure that their employees complete the training the Legislature has determined to be beneficial. The third prong of this provision, however, restricts its protection and reflects the Legislature's concern that an employer might exploit this protection from liability by encouraging its employees to violate the law, increasing its profits while defeating the statute's purpose. With this background in mind, we will address each of Slick Willie's issues before turning to whether summary judgment was appropriate.

In its first issue, Slick Willie's argues that once employers establish the first two elements of 106.14(a), the burden of proof should shift to the plaintiff to either raise a fact question as to those elements or show that the employer directly or indirectly encouraged the employee to violate the law. Parker, on the other hand, argues that the employer must carry the burden of proof on this "affirmative defense." The Act itself is silent on this issue. We have previously noted that "[t]he comparative likelihood that a certain situation may occur in a reasonable percentage of cases should be considered when determining whether a fact should be allocated as an element of the plaintiff's case or to the defendant as an affirmative defense." Eckman v. Centennial Sav. Bank, 784 S.W.2d 672, 675 (Tex.1990). Here, while there may be encouragement in some form in a reasonable percentage of cases, the variety of acts and omissions that could constitute encouragement is potentially limitless, and the likelihood of any particular form of encouragement being present in a given case is extremely small. Thus, requiring every provider to prove that it did not in any way encourage its employees to over-serve "would be an inefficient and uneconomical use of judicial resources." Id. Further, as a practical matter, "proving a negative is always difficult and frequently impossible." State Farm Mut. Auto. Ins. Co. v. Matlock, 462 S.W.2d 277, 278 (Tex.1970) (internal citations omitted). It would indeed be extremely difficult for a provider to establish that it in no way directly or indirectly encouraged its employee to violate the law: while a provider could disclaim consciously encouraging its employees to violate the law, in some cases—as discussed below—a provider may do so inadvertently. Requiring such evidence could effectively deprive providers of a protection the Legislature clearly intended. Therefore, we conclude that while the burden to establish the first two elements of 106.14(a) lies with providers, plaintiffs must show that the employer has directly or indirectly encouraged the employee in question to over-serve.⁶

Slick Willie's argues in its second issue that an employer cannot be liable unless it knowingly encouraged its employee to violate the law, or was consciously indifferent to its employee's violation. Because "encourage" implies an overt act, Slick Willie's maintains, imposing any lower mental-state requirement would impose liability based on mere inadvertence. Parker, in contrast, argues that the Legislature could have chosen to include a knowing standard in section 106.14 if it had so...