Zygmuntowicz v. Hospitality Investments, Inc.

Citation828 F. Supp. 346
Decision Date26 July 1993
Docket NumberCiv. A. No. 92-CV-1613.
PartiesRachmil and Itka ZYGMUNTOWICZ, Co-Administrators of the Estate of Michael Zygmuntowicz, Deceased v. HOSPITALITY INVESTMENTS, INC., Individually and Trading as Polo Bay and Touche and Hospitality Investments of Margate, Inc., Trading as Polo Bay and L.B.O.W. Corporation.
CourtU.S. District Court — Eastern District of Pennsylvania

COPYRIGHT MATERIAL OMITTED

Aaron D. Blumberg, Robin Locke Nagele, Litvin, Blumberg, Matusow & Young, Philadelphia, PA, for plaintiffs.

Jerome Gamburg, Philadelphia, PA, for Hospitality Investments.

Norman E. Greenspan, Blank, Rome, Comisky & McCauley, Philadelphia, PA, for L.B.O.W. Corp.

MEMORANDUM AND ORDER

JOYNER, District Judge.

I. INTRODUCTION

The Plaintiffs, Rachmil and Itka Zygmuntowicz, Co-Administrators of Michael Zygmuntowicz' estate, initiated this wrongful death action against Hospitality Investments of Margate, Inc., and its parent company, Hospitality Investments, Inc., under 42 Pa. C.S.A. § 8301. The Plaintiffs allege that pursuant to Pennsylvania Dram Shop laws, 47 Pa.S. § 4-493, the Defendants served alcoholic beverages to Michael while he was visibly intoxicated and that it was this conduct that proximately caused his death.

Before the Court is the Defendant's motion for summary judgment. The Defendant contends that New Jersey Dram Shop laws, rather than Pennsylvania's Dram Shop laws, should govern and that the present facts warrant the entry of summary judgment in favor of the defendant.

II. BACKGROUND

When viewing the evidence in the light most favorable to the plaintiff, the facts appear to be as follows. Michael and three friends, all Pennsylvania residents, drove down to the New Jersey shore for an evening on May 25, 1990. Once there, the four attended a "free drink" promotion offered at the Polo Bay Margate Nightclub, a club they had frequented often in the past. Within an hour and a half of arriving at the club, Michael drank approximately four beers, four shots of an unknown liquor and 6-7 mixed vodka drinks. Predictably, Michael became increasingly clumsy and raucous. At one point, he slammed a drink on the bar, spilling it and drawing the bartender's attention. The bartender asked an accompanying friend if he could control Michael. The friend replied that Michael was drunk. Nevertheless, that same bartender later served Michael one or two more alcoholic drinks. Later on that evening, Michael vomited on the beach and required assistance to walk. Shortly after midnight, the four left to return to Philadelphia. Michael slept for a majority of the trip waking only to vomit a second time. Upon arriving at Philadelphia, Michael's friends questioned his ability to drive and unsuccessfully attempted to prevent him from driving home. Approximately ten miles later, Michael wrecked his car doing 111 miles per hour. His blood alcohol level at the time of death was .11%.

III. DISCUSSION

Before we can broach the Defendant's motion for summary judgment, we must first decide whether Pennsylvania or New Jersey law shall govern.

A. Choice of Law

In a diversity action, this Court applies Pennsylvania's choice of law rules. Tiernan v. Devoe, 923 F.2d 1024, 1033 (3d Cir.1991) citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. Therefore, we must first examine the policies and governmental interests underlying the competing laws in order to determine whether a "false conflict" exists. Lacey v. Cessna Aircraft Co., 932 F.2d 170, 187 (3d Cir.1991). A false conflict exists where only one jurisdiction's interests would be impaired by applying the competing jurisdiction's law. Id.1 In such a case, we must apply the state's law whose interests would be hampered if its law were not applied. Id.

We find that after comparing the competing dram shop laws, Pennsylvania's law favors finding liability and is better able to achieve both states' policies and interests. Additionally, the Defendant specifically targeted the Pennsylvania market and should, therefore, have expected and planned for possible suits under Pennsylvania law. Therefore, we must conclude that Pennsylvania's law governs in this case.

Both Pennsylvania and New Jersey dram shop laws are similar in that both would find liability for the negligent service of alcohol. Pennsylvania's law is based upon the common-law principle that any violation of the statute constitutes negligence per se. Majors v. Broadhead Hotel, 416 Pa. 265, 268, 205 A.2d 873 (1965). The pertinent statute provides:

It shall be unlawful ... (1) for any licensee or the board, or any employee, servant or agent of such licensee or of the board, or any other person, to sell, furnish or give any liquor or malt or brewed beverages, or to permit any liquor or malt or brewed beverages to be sold, furnished or given to any person visibly intoxicated....

47 Pa.S. § 4-493. Thus, if the plaintiff establishes that the defendant sold or permitted to be sold alcoholic beverages to a visibly intoxicated person, the conduct is negligent per se. Majors, 416 Pa. at 268, 205 A.2d 873. If that conduct proximately caused the plaintiff's injury, then the defendant is liable. Id.

Similarly, a licensed alcoholic beverage server in New Jersey may be held liable for a patron's injuries if 1) the licensee served alcohol to a visibly intoxicated person; 2) the negligently service of alcohol proximately caused the patron's injuries; and 3) the injuries were foreseeable. NJSA 2A:22A-5.

Additionally, the primary purpose behind both laws is identical: to protect an individual's rights from the harm caused by the negligent service of alcohol. see infra. Specifically, Pennsylvania purports to protect society in general and the intoxicated persons themselves from their inability to exercise due care. Schelin v. Goldberg, 188 Pa.Super. 341, 146 A.2d 648, 652 (1958); see also Majors, 416 Pa. at 268, 205 A.2d 873 (finding in part that the statute was designed to protect the interests of another). In comparison, New Jersey law proposes to "protect the rights of persons who suffer loss as a result of the negligent service of alcoholic beverages ..." NJSA 2A:22A-2. The New Jersey legislature's secondary purpose was to improve the state's "alcoholic beverage liability insurance market by providing a balanced and reasonable procedure for allocating responsibility for such losses." Id.

A false conflict arises, however, because New Jersey's law is more restrictive in finding liability. First, New Jersey law requires that the plaintiff prove that the defendant licensee negligently served alcohol to a visibly intoxicated person. NJSA 2A:22A-5(b). Pennsylvania has found servers to be negligent per se if they merely served alcohol to a visibly intoxicated person. Majors, 416 Pa. at 268, 205 A.2d 873. Secondly, New Jersey's law applies only to licensed alcoholic beverage servers. NJSA 2A:22A-5(b). Pennsylvania's law, in contrast, applies to anyone capable of selling or furnishing alcoholic beverages. 47 Pa.S. § 4-493(1). Lastly, New Jersey allows contributory negligence as a defense whereas Pennsylvania does not. NJSA 2A:22A-6.

Because of the very nature of a false conflict, courts select the law that favors finding liability. see e.g. Lacey, 932 F.2d 170. In Reyno v. Piper Aircraft Co., 630 F.2d 149, 154 (3d Cir.1980) (reversed on other grounds), representatives of several Scottish citizens who were killed in an airplane crash in Scotland sued two American manufacturers in a products liability case. After examining the competing policies and interests, the court found that a false conflict existed between Pennsylvania's strict liability standard and Scotland's negligence laws. Id. at 170. It found that Scotland favored the negligence standard in order to encourage industry within its borders. Id. at 167. In contrast, Pennsylvania adopted the strict liability standard to protect its citizens and to induce manufacturers to be more careful. Id. The 3rd Circuit held that Pennsylvania law governed, reasoning that Pennsylvania's law favored finding liability, achieved both states' purpose in protecting its citizens and would not impair Scotland's promotion of industrial growth. Id. at 168-69.

Similarly, Pennsylvania's strict liability dram shop law inherently favors finding liability more readily than New Jersey's negligence standard. Additionally, under Pennsylvania's strict liability standard, a violation of any of the relevant drams shop laws warrants the finding of liability. see Majors, 416 Pa. at 268, 205 A.2d 873. Here, the Plaintiffs allege two grounds for finding liability: in addition to the negligent service of alcohol to Michael, the Plaintiffs assert that the Defendants violated a New Jersey statute prohibiting the unlimited service of alcohol for one fixed price. NJAC 13:2-23.16 and Plaintiff's Exhibit C. Pennsylvania law allows consideration of both allegations in determining liability. New Jersey law, in contrast, limits the liability determination only to the inquiry surrounding the negligent service of alcohol. NJSA 2A:22A-5(b).

Secondly, Pennsylvania law allows the Plaintiffs to include Hospitality Investments, Inc. in the suit. 47 Pa.S. § 4-493(1). The Plaintiffs allege that since neither Hospitality Investments, Inc., nor Hospitality Investments of Margate own liability insurance, the Plaintiffs must recover from the assets of both corporations in order to satisfy a potential judgment. New Jersey law, on the other hand, would limit the recovery by excluding Hospitality Investments from the suit since Hospitality Investments is not a licensed alcoholic beverage server. See NJSA 2A:22A-5.

Additionally, Pennsylvania law does not detract from the New Jersey legislature's secondary purpose of improving its liability insurance market. The legislature sought to avoid an environment where the lack of insurance would adversely effect...

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