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Written By:  David P. Burke, Esq. and M. Todd Ratay, Esq.

Neil, Dymott, Frank, McFall & Trexler APLC

San Diego, California

INTRODUCTION

Ignoring cautionary tales from friends, family, television, blogs, and other assorted media, employees around the world inevitably overindulge in holiday spirits at the annual company holiday party. The fortunate among them limit their misbehavior to an Electric Slide or wearing a tie, not necessarily their own, as a bandana. The less fortunate hijack the band’s microphone to give the boss blunt management tips and transform “Frosty the Snowman” into a limerick.

Although potentially entertaining, these overly enthusiastic celebrations can cause human resources issues and put third parties at risk, particularly if the intoxicated employee lands behind the wheel. Employers have long addressed the latter concern by providing cabs or other transportation to get the employees, and anyone they may encounter on the road, home safely. However, is this enough?

Purton v. Marriott International, Inc. (2013) 218 Cal. App. 4th 499, is the most recent example of an appellate court examining potential limitations on an employer’s liability for the intoxicated acts of an employee following a company-sponsored party. This article analyzes that decision and other trends throughout the country to evaluate the extent to which courts are encouraging employers to revive a “prohibition” for office holiday parties.

MARRIOTT CASE

In December 2009, the Marriott Del Mar Hotel held its annual holiday party to “thank” its employees and management for their loyalty and service. Dennis Fraher was the hotel’s general manager, Joseph Emma was the assistant general manager, and Sarah Hanson was the general manager of the hotel’s restaurant. Emma was also Hanson’s immediate supervisor. Prior to the party, Emma and Hanson decided each attendee would receive two drink tickets, and they planned to serve only beer and wine.

Michael Landri, a hotel bartender, was among the hotel employees at the party. Before leaving for the party, Landri drank a beer and a shot of whiskey at his home. He also brought a five-ounce flask filled to some degree with Jack Daniel’s Whiskey. Page Savicki drove Landri and three others to the party, and they arrived around 6:15 p.m.

Hanson was the only working bartender at the party. At some point in the evening, she had a bottle of Jack Daniel’s brought to the bar from the hotel’s liquor supply which Landri used to refill his flask at least once. At about 9:00 p.m., Landri, Savicki, and several others left the hotel. Landri did not consume any alcohol after leaving the party.

There was no consensus as to who drove. Although Landri, Savicki, and one other person recalled Savicki drove home, a fourth person indicated Landri drove. Nevertheless, the group arrived safely at Landri’s house.

Twenty minutes later, Landri decided to drive an intoxicated coworker home. Landri then rear-ended Dr. Jared Purton’s vehicle while driving over 100 miles per hour and killed Dr. Purton. Following the accident, Landri was determined to have a blood-alcohol level of 0.16, twice the legal limit in California. He pleaded guilty to gross vehicular manslaughter while under the influence of alcohol and received a six-year prison sentence.

Thereafter, Dr. Purton’s next-of-kin filed a wrongful death action against numerous defendants, including Landri and Marriott International, Inc. They alleged Marriott held the party to improve relations between its employees and as a fringe benefit to promote continuity of employment. As for Landri, Dr. Purton’s family claimed he possessed an above-average education regarding the effects of drinking alcohol in light of his occupation as a bartender. Despite this specialized knowledge, Landri became extremely intoxicated at the party. He was then allowed to leave the hotel and drive thereby leading to the collision with Dr. Purton’s vehicle.

Marriott moved for summary judgment arguing any potential liability under the doctrine of respondeat superior ended when Landri arrived home because he was not acting within the scope of his employment. The trial court agreed with Marriott, and the plaintiffs appealed.

DIRECT LIABILITY

A. Common Law

At common law, employers generally are not directly liable to a third party for injuries an intoxicated employee causes when the employer furnished the alcohol. See Stephenson v. Universal Metrics, Inc., 633 N.W.2d 707 (Wis. Ct. App. 2001); Bruce v Chas Roberts Air Conditioning, Inc., 801 P.2d 456 (Ariz. Ct. App. 1990) ; Stottle v Brown Group, Inc.,801 S.W.2d 479. (Mo. Ct. App. 1990)..

In Thompson v Trickle, 449 N.E.2d 910 (Ill. App. Ct. 1983), an employee was a part of a group that won an employer-sponsored contest. The prize consisted of a beer and pizza party, during which the employee became intoxicated. While driving home, he crossed over the center line of the road and caused an accident which injured a third party. The court of appeal affirmed the dismissal of the case because there was no common law claim against a provider of alcohol. It reasoned employers are viewed as social hosts who provide alcohol for hospitable reasons as opposed to pecuniary ones, and able-bodied adults are responsible for their own actions when accepting such hospitality.

Michigan has reached a similar result. Under Michigan common law, it is not a tort to furnish alcoholic beverages to a person over twenty-one years of age. Thus, in Whittaker v. Jet-Way, Inc., 394 N.W.2d 111, (Mich. Ct. App. 1986), the appellate court refused to extend liability to the employer reasoning the consumption of alcohol, as opposed to the furnishing of alcohol, was the proximate cause of injury to a third party.

B. Dram Shop Acts

A number of states have enacted legislation that gives victims of drunk driving accidents a right of action against the person who sold or furnished the alcohol to the intoxicated driver. However, this right of action has certain limitations. In Meany v Newell, 367 N.W.2d 472 (Minn. 1985), an employee became intoxicated at a Christmas party held at the defendant employer’s factory and caused an accident on the drive home. The court held the plaintiff did not have a cause of action against the employer because the state’s Dram Shop Act applied only to commercial vendors of alcohol. Although the plaintiff argued the employer was more akin to a commercial vendor than a social host because the party resulted in business related benefits to the employer, the court, was not swayed. This contention has been uniformly rejected in other states as well on the grounds Dram Shop Acts are not intended to apply to the social furnishing of intoxicating liquors. See e.g., Rojas v. Engineered Plastic Designs, Inc., 68 P.3d 591 (Colo. Ct. App. 2003); Summerhays v Clark, 509 N.W.2d 748 (Iowa 1993); and Edgar v Kajet, 375 N.Y.S.2d 548 (1975).

C. Exceptions Recognizing Direct Liability

Some jurisdictions have on occasion found exceptions to the limitations of an employer’s direct liability in these situations. In Ohio, an employer who provides alcohol to employees is typically not liable to a third person who is subsequently injured by an intoxicated employee leaving the event. However, in Baird v Roach, Inc., 462 N.E.2d 1229 (Ohio Ct. App. 1983), the appellate court recognized an employer could be subject to liability when the employer knew the employee would consume alcohol, either was or would become intoxicated, and would probably act in such a manner while intoxicated as to create an unreasonable risk of harm to third persons.
In Gariup Construction Co. v Foster, 519 N.E.2d 1224 (Ind. 1988), an employer, Gariup, hosted its traditional Christmas party where it provided food and alcoholic beverages to its guests. Office manager, Paul Orner, attended the party and drank three or four beers between approximately 4:30 and 10:00 p.m. Orner subsequently consumed between six and eight shots of eighty-proof whiskey while participating in a drinking game. He left the party shortly thereafter to pick up his wife from work.

At about 11:40 p.m., Orner was observed driving eastbound on a six-lane interstate highway, weaving through the eastbound lanes and median strip. He eventually drove across the median into the oncoming lanes and struck another vehicle head-on, resulting in serious spinal injury to the other driver.

The court found it was readily apparent Gariup, as Orner's employer, had significantly greater influence and control over Orner than Gariup would have had over a non-employee social guest. Gariup conducted the party on company premises, it furnished the alcoholic beverages, Gariup's president was present during the party, the drinking game took place at the party, and the intoxicated person, Orner, was a Gariup employee. The court concluded a relationship existed between Gariup, Orner, and the third-person motorists potentially exposed to significant danger because of Orner's drunk driving which as a matter of law gave rise to a duty on the part of Gariup. Therefore, it was left to the jury to determine whether Gariup exercised reasonable care in supervising the party and enabling Orner to participate in the drinking game and become inebriated.

In Chastain v Litton Systems, Inc., 694 F.2d 957 (4th Cir. 1983), George Beck attended a Christmas party that Litton sponsored for 861 of its employees. The affair, held on Litton's premises, began at approximately 8:00 a.m. and continued during normal working hours. All the employees were required to check in by 8:00 a.m. to be paid for that day, but they could leave at any time. Beck and other employees drank alcoholic beverages Litton furnished, and a number of them, including Beck, became intoxicated. Litton’s employees then knowingly permitted Beck to leave in his van in an intoxicated state.

Within ninety minutes, Beck ran a red light, collided with a motor vehicle, and killed the other driver. Applying North Carolina law, the Fourth Circuit concluded Litton was negligent if it failed to exercise ordinary care in furnishing, or permitting its employees to furnish, alcoholic beverages to Beck knowing he had become intoxicated. This negligence would be a proximate cause of Beck's collision if Litton could have reasonably foreseen Beck, while intoxicated, would probably drive on a public street and cause a collision.

VICARIOUS LIABILITY

Many states have also considered whether an employer could be held vicariously liable for its complicity in the negligent acts of its employees. Under the doctrine of respondeat superior, an employer may be held vicariously liable for torts an employee commits within the scope of his employment. The modern justification for respondeat superior is a deliberate policy allocating risk.

The analysis of negligence under the theory of respondeat superior focuses completely on the actions of the employee, without any consideration of the acts of the employer. Thus, to recover under this theory, a plaintiff must establish the following two elements:

1) a negligent act of the employee, or in other words, a breach of a duty that is the legal cause of plaintiff’s injury; and

2) the negligent act was within the employee’s scope of employment.

Some states have sought to impose liability based upon the doctrine of respondeat superior under facts similar to the Marriott case, while others have found the doctrine simply does not apply because the negligent “act” as defined is not considered within the “scope of employment.”

Some jurisdictions focus on the “act” upon which the vicarious liability is based rather than the “act” that caused injury. For example, in Chesterman v. Barmon, 753 P.2d 404 (Or. 1988), the Oregon Supreme Court was faced with an extraordinary fact pattern wherein the employee was also the president of the employer corporation. After meeting with potential customers at their house to formulate plans and obtain information for a remodeling project, the employee, Barmon, took a pill described as “chocolate mescaline” while still on the potential customers’ property to counteract feelings of depression and give him enough energy to drive to his boat where he would continue working to prepare a bid for a remodeling project. While driving to the boat, Barmon began to hallucinate and stopped near a house where he believed a former friend lived. Barmon entered the house, broke into the plaintiff’s locked bedroom, and sexually assaulted her.

The court reasoned a jury might find the defendant corporation liable if it found the assault was the result of the employee ingesting the drug and the act of taking the drug was within the scope of employment. Thus, based on this analysis, the Oregon Supreme Court believes the employee’s negligent “act” is the intoxication itself for purposes of finding an employer liable.

In Chastain, supra, the Fourth Circuit also discussed the respondeat superior analysis in two parts: (1) the negligent act; and (2) whether that act was within the scope of employment. Like the Oregon Supreme Court, the Fourth Circuit found the act of becoming intoxicated is the critical event for determining whether respondeat superior should be applied. The Fourth Circuit focused on the characterization of the employer as a threshold issue. Specifically, the court held whether the employer was simply entertaining its employees at a social gathering, or whether it was furthering a business purpose by improving working relationships, was a question for the jury. If the latter were true, the employer could be vicariously liable for the employee’s negligence (i.e., excessive drinking at a company party). In other words, the jury could find the employer was negligent in allowing its employee to get drunk and leave the party, and that negligence was a proximate cause of the collision. Chastain v Litton Systems, Inc.,supra, 694 F. 2d @ 962; see also, Slade v. Smith’s Management Corp. (1991) 808 P. 2d 401, 414, {Idaho Supreme Court held it was for the jury to decide whether the party was held to further the employer’s interest where evidence showed the party was held to improve employee morale.]

In Dickinson v. Edwards, 716 P.2d 814 (Wash. 1986), the Washington Supreme Court’s analysis of the respondeat superior issue also centered on the point in time the alcoholic drinks were consumed, and liability attached to all injuries and damages proximately caused from that moment on. In that case, the employer hosted a banquet to honor its long-term employees. In addition to providing food and alcohol, the employer also paid for the banquet facilities and deducted everything as a business expense. After consuming a large amount of alcohol, an employee left the banquet and drove to work the night shift at the employer’s plant. On the way, however, the employee struck and severely injured a motorcyclist.

One element of the court’s analysis was whether the employee negligently consumed alcohol to the point of intoxication when he knew or should have known he would have to leave the banquet and drive to work. The court reasoned the plaintiff could maintain a valid cause of action by asserting the proximate cause of the accident occurred at the banquet. In other words, the proximate cause of the accident (the intoxication) occurred at the time the employee negligently consumed the alcohol.

In analyzing the scope of employment, courts focus on whether the employee’s conduct was related to the employment or if the enterprise derived any benefit from the activity. Thus, in Dickinson, the court cited to evidence indicating the party enhanced employee relations and evidence the employee’s presence was requested or impliedly or expressly required by the employer. It was a question of fact for the jury whether the banquet, although it took place after hours and off the company’s premises, sufficiently benefitted the employer so as to bring the activity within the scope of employment. Id. @ 468. Other jurisdictions have also held an employer liable under the theory of respondeat superior, where the facts are sufficient to raise a jury question of whether the employee was “within the scope of employment.” See, e.g., Romeo v. Van Otterloo, 117 Mich. App. 333 (1982) [employee within scope of employment while on the way home from business party which furthered employer’s interest].

Hawaii takes Dickinson a step further. In Wong-Leong v. Hawaiian Independent Refinery, Inc., 879 P.2d 538 (Haw. 1994), the Hawaii Supreme Court undertook a similar analysis to find potential employer liability where the employer organized a company party where it was known there would be drinking. The testimony demonstrated the party was organized for the benefit of the employer and the participation of the employees could be considered within the scope of employment.

The court opined it was reasonably foreseeable an employee may drive home intoxicated. However, whereas Dickinson required a claimant to show the employee’s presence was “requested or impliedly or expressly required” by the employer to establish a prima facie case of respondeat superior liability, the Hawaii Supreme Court expressly rejected this limitation.

Conversely, some jurisdictions have limited an employer’s potential liability by defining the negligent act as driving a motor vehicle while intoxicated. For instance, in Bruce v. Chas Roberts Air Conditioning, Inc., 801 P.2d 456, 458 (Ariz. Ct. App. 1990), the Court of Appeals of Arizona had to decide whether an employer could be held for a car accident caused by an inebriated employee after the employee left a spur-of-the-moment picnic at the company’s yard. The employees drank beer, cooked hamburgers, and played volleyball on the company’s premises after they finished their work for the day. The employees supplied their own beer, most of which was consumed in a parking lot outside the yard. While driving home from the picnic, an employee collided head-on with another vehicle thereby injuring the plaintiffs.

The Arizona Court of Appeals defined the negligent “act” as driving a motor vehicle while drunk rather than becoming intoxicated. As such, the company could not be held liable under respondeat superior. The court reasoned drunk driving was not the kind of conduct for which the employee was employed. Further, the employee was not subject to his employer’s control or right of control, and the activity (drunk driving) was not actuated even in part by a purpose to serve the employer.

In reaching this decision, the Arizona appellate court specifically criticized the reasoning in Dickinson, arguing Washington wrongly holds employers liable for the negligent acts of the employee, even though no employment relationship existed when the act upon which liability is predicated occurred. Yet, this line of reasoning assumes the negligent “act” is the drunk driving rather than the “act” of becoming intoxicated at work or at a work-sanctioned event. The Arizona court did not address whether the employee was negligent by becoming intoxicated in the first place, nor does it hypothesize under what circumstances a sufficient nexus may exist to hold an employer liable.

Some states have simply refused to extend employer liability by creating a common law remedy against suppliers of alcohol, choosing to leave the issue to the legislature. In Holtz v. Amax Zinc Company, Inc., 519 N.E.2d 54 (Ill. App. Court 1988), a passenger and his spouse were injured when their car was struck by a vehicle driven by a man who had just left a company picnic at which alcohol was provided. The trial court entered summary judgment in favor of the employer, and the Illinois Court of Appeal affirmed. The appellate court explained the employer, a noncommercial supplier of liquor, could not be held liable under Illinois common law negligence for supplying intoxicants to its employees, and therefore could not be held vicariously liable for the negligence of the employee becoming intoxicated. It concluded if the common law in this area is to be changed, it should come from the legislature rather than the courts.

And still other states have undertaken considerable efforts to reconcile their prior holdings to limit employer exposure. For example, in Kansas, the Supreme Court held an employer is liable for the tortuous acts of his employee under very specific circumstances: when the employee is on the employer’s premises, performing work for the employer, or using the employer’s chattel; when the employer voluntarily assumes a duty to control the employee; or negligently retains a known incompetent and unfit employee. Thus, summary judgment was appropriate even for a beer wholesaler distributing company which provided alcohol to its employees in a hospitality lounge when an employee was involved in an automobile accident resulting in the death of one of the victims when the employee left work after drinking a number of alcoholic beverages. Thies v. Cooper (1988) 753 P.2d 1280, 1285.

THE MARRIOTT HOLDING

In Marriott, the California Court of Appeal did not address the viability of a cause of action based on the direct negligence of the employer because the plaintiffs abandoned this theory on summary judgment. However, the court reversed the granting of summary judgment, finding the trier of fact should determine whether Marriott was liable based upon respondeat superior.

The court held it was reasonable a trier of fact could find Landri acted negligently by becoming intoxicated at the party, and this act was within the scope of his employment and proximately caused the car accident. Assuming the trier of fact found Landri acted negligently, it could also conclude his negligent act occurred within the scope of employment “because the party and drinking of alcoholic beverages were a conceivable benefit to the employer or were a customary incident to the employment relationship so as to render the employee’s act off drinking to be within the scope of employment.”

The court reviewed case law which clearly establishes an employer may be found liable for its employee’s torts as long as the proximate cause of the injury occurred within the scope of employment. The court felt it was irrelevant that the foreseeable effects of Landri’s negligent conduct occurred when he was no longer acting within the scope of his employment. Thus, unlike Arizona and Illinois, California does not believe the accident itself must occur at the time the employee is acting within the scope of his employment.

Under California law, respondeat superior liability attaches if the “act” that caused the employee to become a danger was undertaken with the employer’s permission and provides some benefit to the employer or constitutes a customary incident of employment. Because there was evidence the party was a “thank you” for Marriott employees for “employee appreciation” and “team building,” the court reasoned a trier of fact could reasonably conclude the party and drinking “benefitted Marriott by improving employee morale and furthering employer-employee relations.”

Although the court acknowledged the “coming and going rule” would generally deem an employee to not be acting within the scope of employment while traveling to and from work, the rule did not apply in this case because the court focused on the act on which vicarious liability is based (the intoxication), rather than when the act resulted in injury. Perhaps more surprising though, the court did not halt potential liability when the employee arrived home safely from the Christmas party. The court stated there was no reason to cut off the employer’s liability as a matter of law simply because the employee made it home since the employer created the risk of harm at its party by allowing the employee to consume alcohol to the point of intoxication.

The court’s ruling raises interesting questions about the concept of personal responsibility and reflects a growing intolerance of drunk drivers and those perceived to enable drinking and driving. Marriott logically questioned how the company was supposed to control an employee’s actions when the employee was in his own home. The court, however, was not convinced and instead focused on Marriott’s missed opportunities to control Landri’s consumption of alcohol, thus leaving Marriott potentially exposed to liability for as long as Landri remained intoxicated.

RECOMMENDATIONS TO MINIMIZE EXPOSURE

For employers who cherish certainty, banning alcohol from the holiday party is the best way to eliminate potential liability in this area. People can certainly have fun without drinking adult beverages, particularly if the party is held at a unique venue or includes interactive entertainment such as mock awards, creative gift exchanges, or satirical videos.

If alcohol is incorporated in the celebration, several steps can be taken to minimize risk. Every employer should have a clear and coherent policy on conduct in the workplace which includes examples of unacceptable behavior, such as getting smashed at a work event. Before the party, staff should be reminded of these standards of behavior and told intoxication will not be condoned and could be grounds for discipline.

The party should never include activities that encourage the excessive consumption of alcohol. Drinking games should be absolutely prohibited. Use a professional bartender/server who is trained to serve alcohol responsibly and is directed not to serve anyone who appears intoxicated. Ban BYOB and other outside alcohol, avoid open bars, and limit the availability of stronger mixed drinks and shots. Stick to beer, wine, and other drinks with lower alcohol content and make sure water and non-alcoholic beverages are easily available. Including a substantive meal also helps mitigate the effects of alcohol.

Limiting the number of alcoholic drinks per person is a difficult system to enforce. As an alternative, designate staff with some measure of authority to monitor the consumption of alcohol to ensure people are not served to or beyond the point of intoxication. Including families in the party can also be beneficial as most people tend to consume less alcohol at family-oriented events.

CONCLUSION

The Marriott decision puts employers who serve alcohol at company functions on notice that it may not be sufficient to simply send intoxicated employees home with a designated driver or in a cab. These traditional precautions against drunk driving although well-intended, still may not limit the employer’s liability which can continue for the duration of the employee’s intoxication. As such, employers must proactively moderate the consumption of alcohol at holiday parties and other employer-sponsored functions to limit their potential exposure to litigation.

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