Punitive Damages In Texas Dram Shop Cases

• Published date: 19 January 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Professional Negligence
• Law Firm: Kane Russell Coleman Logan
• Author: Mr Michael Logan and Johnathan Jordan

In this installment of our continuing Dram Shop series, we address the recovery of exemplary/punitive damages¹ in Texas dram shop cases.

Trial courts in Texas often deny motions for summary judgment challenging the propriety of punitive damages in Dram Shop cases, and permit exemplary damages to be awarded by juries upon a finding of gross negligence. But is this proper? No. A claim for gross negligence is expressly not allowed under the Act.

Based on the plain language of the Texas Dram Shop Act (the "Act")² and case law addressing the question, exemplary damages are not recoverable. Courts should refuse to charge the jury on such damages, and should grant Motions for Summary Judgment challenging them. Failure to do so results in prejudice and harm to the Defendants in such cases.

The Dram Shop Act:

The Act was passed on June 1, 1987, as part of a broad tort reform package. Before the enactment of the Act, no cause of action existed against a provider of alcoholic beverages for injuries resulting from a patron's intoxication.³ However, by enacting the Act, the Legislature struck a balance, and created a limited duty on alcohol providers, not recognized at common law, as a means of deterring providers from serving obviously intoxicated individuals, while at the same time, providing a statutory defense for such providers to encourage training.⁴

The Act provides, in relevant part:

(a) The liability of providers under this chapter for the actions of their employees, customers, members, or guests who are or become intoxicated is in lieu of common law or other statutory law warranties and duties of providers of alcoholic beverages.

(b) This chapter does not impose obligations on a provider of alcoholic beverages other than those expressly stated in this chapter.

(c) This chapter provides the exclusive cause of action for providing an alcoholic beverage to a person 18 years of age or older.⁵

Courts have consistently held that common law negligence, negligence per se and gross negligence claims against commercial sellers of alcohol for claims that arise from the sellers' provision of alcohol were abrogated by the Act.⁶ Because gross negligence claims have been abrogated by the Act, it stands to reason that claims for exemplary damages based on gross negligence would also necessarily be abrogated.

Exemplary Damages Not Permitted by the Act Based on Legislative History:

Only one Texas court of appeals has addressed the specific question of whether the Act itself...