Urban v. American Legion Department of Minnesota

723 N.W.2d 1, 2006 Minn. LEXIS 712, 2006 WL 2975186

• Court: Supreme Court of Minnesota
• Decided: October 19, 2006
• Docket: A04-1409
• Status: Published

Opinions

OPINION

ANDERSON, G. BARRY, Justice.

The tragedy that gives rise to this litigation occurred on August 10, 2000, when a drunk driver struck the Urban family car, leaving wife and mother Barbara Urban dead and children Marcus and Brett Urban with serious and lifelong injuries. The Urbans sued American Legion Post 184 under the Civil Damages Act, Minn.Stat. §§ 340A.801-.802 (2004) (“CDA”), alleging that Post 184 illegally served the drunk driver alcohol on the night he struck the Urbans. Later, the Urbans additionally sued the American Legion Department of Minnesota (the Department) and the American Legion National (National) under several theories, including alter ego, joint venture, and respondeat superior. The district court granted summary judgment for the Department and National on all grounds, and the court of appeals affirmed. We granted the Urbans’ petition for review on only the question of whether the Department and National can be held liable under the CDA via respondeat superior. We now affirm the court of appeals, but on other grounds.

On August 10, 2000, appellant Todd Urban, his wife, Barbara Urban, and their three sons, appellants Marcus, Michael, and Brett Urban, were driving south on Highway 52 in Goodhue County. Orvin Rolland was driving north in the southbound lane and hit the Urban vehicle head-on. As a result of the collision, Barbara Urban died, Marcus Urban was rendered a paraplegic, and Brett Urban suffered serious brain damage.

The Urbans brought an action against Post 184 and the Pine Island Municipal Liquor Store under the CDA for the illegal sale of alcohol to Rolland. The Urbans additionally brought suit under the CDA against National and the Department, alleging vicarious liability under several theories, including respondeat superior. Both National and the Department moved for summary judgment, the district court granted both motions for summary judgment, and the Urbans appealed. The court of appeals affirmed the summary judgment. Urban v. American Legion Post 184, 695 N.W.2d 153 (Minn.App.2005). We granted review on the issue of whether the Department and National could be held vicariously liable on a respondeat superior theory for Post 184’s allegedly torti-us liquor sale.

In order to understand the arguments of the parties, it is first necessary to understand the organizational structure of the American Legion. The American Legion is a mutual aid and community service organization for veterans, and was created by the federal government in 1919. 36 U.S.C. §§ 21701-21708 (2002) (initially enacted as Act of Sept. 16, 1919, ch. 59, 41 Stat. 284). Membership eligibility is defined by the statute. 36 U.S.C. § 21703 (2002). Additionally, the statute grants certain powers to National, including the authority to:

(1) adopt a constitution, bylaws, and regulations to carry out the purposes of the corporation;

(2) adopt and alter a corporate seal;

(3) establish and maintain offices to conduct its activities;

(4) establish state and territorial organizations and local chapter or post organizations;

(5) acquire, own, lease, encumber, and transfer property as necessary to carry out the purposes of the corporation;

(6) publish a magazine and other publications;

(7) sue and be sued; and

(8) do any other act necessary and proper to carry out the purposes of the corporation.

36 U.S.C. § 21704 (2002). Pursuant to this grant of power, National has adopted its own constitution and bylaws and has created state chapters (the departments) in each state and in various other locations (55 departments altogether). Within each state, groups of Legion members may create “posts,” which are local chapters of the American Legion. Currently, there are approximately 15,000 Legion posts, and about 2.8 million Legion members.

Posts are volunteer-created and usually volunteer-run. Groups wishing to create a post apply to the department that controls their state or territory for approval of a temporary charter. If the local department approves the prospective post’s application for a temporary charter, National issues the temporary charter. After a probation period lasting a minimum of 90 days, the post organizers may apply to the local department for a permanent charter. The local department makes the final decision as to whether the permanent charter shall be granted.

Posts and departments are separately incorporated, as is National. National, each department, and each post all have their own leaders (commanders). National and each department have their own executive committees, and posts are encouraged (although not required) to also form such committees to help in running the post. Additionally, National, the local departments, and the posts all have their own constitutions and by-laws. Post officers are generally elected from among the members of the post.

The “Officer’s Guide and Manual of Ceremonies,” a guidebook distributed to Legion officials by National, states that “[t]he post is a separate and distinct unit which can, and often does, function independently.” The posts elect a “District Commander” who serves as a link between the posts in his or her district and the local department.¹ The Officer’s Guide describes the role of the department vis-a-vis the post:

The department headquarters constitutes the link between the community post of the American legion and the National organization. * * * Routine business should be transacted through department headquarters. Department headquarters is familiar with the issues and conditions of state affairs. Questions of policy and organization should be referred by the post to department headquarters. Through department headquarters any information may be secured that is desired by the post, or the ways of securing it may be found.

The Officer’s Guide also sets out the very limited relationship between the posts and national headquarters: “Practically all of your contacts with National Headquarters are rightfully carried through your department headquarters.” Post commanders are also urged to attend National and department conventions.

Neither National nor the departments finance the local posts. Each post is expected to collect dues from all its members and deliver a portion thereof to the appropriate department, which in turn transmits a portion to National. The post owes the requisite portion of each member’s dues to the department and National regardless of whether the member pays the dues. The post makes up any missing dues with money raised through post activities including, at some posts, operation of a bar or restaurant. Neither National nor the departments directly receive revenue from post bars or other post fundraising activities.

The issue presented by this appeal concerns the application of responde-at superior, a common law doctrine under which an employer may be vicariously liable for the torts of an employee committed within the course and scope of employment. Fahrendorff v. N. Homes, Inc., 597 N.W.2d 905, 910 (Minn.1999). “Such liability stems not from- any fault of the employer, but from a public policy determination that liability for acts committed within the scope of employment should be allocated to the employer as a cost of engaging in that business.” Id. Urban urges that this doctrine be extended to allow a claim against either or both the Department or National on the grounds that the departments or National exercise sufficient control over the local posts to justify imposition of liability on the Department or National or both.

We turn first to the language of the statute. The Department and National argue that the CDA was only intended to apply to direct vendors of alcoholic beverages, which they are not. They claim that by specifying licensees, and by narrowing the previous scope of the law to “licensees” from “employers,” the legislature specifically limited vicarious liability under the CDA. Compare Minn.Stat. § 340.941 (1984) with Minn.Stat. § 340A.501 (2004). We agree.

The CDA reads as follows:

A sponse, child, parent, guardian, employer, or other person injured in person, property, or means of support, or who incurs other pecuniary loss by an intoxicated person or by the intoxication of another person, has a right of action in the person’s own name for all damages sustained against a person who caused the intoxication of that person by illegally selling alcoholic beverages. All damages recovered by a minor under this section must be paid either to the minor or to the minor’s parent, guardian, or next friend as the court directs.²

Minn.Stat. § 340A.801, subd. 1 (2004) (footnote added). Additionally, the legislature has specifically extended liability to licensees for the sales made by their employees:

Every licensee is responsible for the conduct in the licensed establishment and any sale of alcoholic beverage by any employee authorized to sell alcoholic beverages in the establishment is the act of the licensee for the purposes of all provisions of this chapter except sections 340A.701, 340A.702, and 340A.703.

Minn.Stat. § 340A.501 (2004).

The CDA created a cause of action that did not exist at common law. Beck v. Groe, 245 Minn. 28, 34, 70 N.W.2d 886, 891 (1955). Litigation under the CDA is entirely a creation of the legislature. Id. We presume, as the dissent notes, that statutes creating new causes of action do not abrogate the common law unless they do so “by express wording or necessary implication.” Shaw Acquisition Co. v. Bank of Elk River, 639 N.W.2d 873, 877 (Minn.2002). The Urbans correctly point out that Minn.Stat. § 340A.801 does not expressly prohibit the application of re-spondeat superior common law. But Minn.Stat. § 340A.501, which makes licensees responsible for the sale of alcohol by their employees, necessarily implies that the legislature did not expect respondeat superior to apply to CDA liability.

We must presume that every statute has a purpose and that no statutory language should be deemed superfluous or insignificant. Mayo Collaborative Servs., Inc. v. Commissioner, 698 N.W.2d 408, 423 (Minn.2005); Vlahos v. R & I Const. of Bloomington, Inc., 676 N.W.2d 672, 679 (Minn.2004). Respondeat superior would clearly impose liability on a licensee for the sale of alcohol by its employees. So if respondeat superior applies to actions under the CDA, section 340A.501 does nothing. That section can only have meaning and effect if the legislature did not intend respondeat superior to impose CDA liability on masters, including licensees, not directly at fault. Because we must assume that the legislature intended section 340A.501 to have a purpose, we must conclude that licensee liability, and thus re-spondeat superior, does not automatically attach to the CDA.

The principle expressio unius est exclusion alterius (the expression of one thing indicates the exclusion of another) further suggests that, in specifying that licensees are liable for the alcohol distribution of their own employees, the legislature meant that only licensees are vicariously liable for the alcohol distribution. The legislature has had ample opportunity in the nearly 100 years since enacting the CDA to recognize vicarious liability as it has in other statutes. See, e.g., Minn.Stat. § 169.09, subd. 5(a) (Supp. 2005). In the unique context of dram shop litigation the failure of the legislature to act is significant; we decline to act where the legislature has chosen not to.

Our case law supports this outcome. The CDA may be “liberally construed” where its “provisions are clear as to intent and purpose,” but must be “strictly construed in the sense that it cannot be enlarged beyond its definite scope.” Beck, 245 Minn. at 34, 70 N.W.2d at 891; see Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 857 (Minn.1998); Herrly v. Muzik, 374 N.W.2d 275, 278 (Minn.1985). The dissent argues that this dichotomy is confusing. The dissent’s argument is not without merit, but the dichotomy is nonetheless a longstanding part of our CDA jurisprudence. The class of persons subject to CDA liability defines the Act’s scope, and we must construe it strictly in this regard.

Furthermore, the legislature has dealt with issues arising out of the CDA and has not hesitated to amend the CDA when it has perceived a need to do so. In 1972, we concluded that the CDA as then worded permitted social-host liability because liability could be incurred by “giving” alcohol to tortfeasors. Koehnen v. Dufuor, 590 N.W.2d 107, 109 (Minn.1999) (citing Ross v. Ross, 294 Minn. 115, 117, 200 N.W.2d 149, 150 (1972)). But soon thereafter the legislature amended the CDA to remove the word “giving,” and we held that the amendment makes clear that the legislature was specifically closing off social host liability. Cole v. City of Spring Lake Park, 314 N.W.2d 836, 840 (Minn.1982).

The legislature’s elimination of social-host liability led us to conclude that the policy underlying the CDA is to apply liability for alcohol-related harms to commercial vendors who profit from the sale of alcohol. Cady v. Coleman, 315 N.W.2d 593, 595-96 (Minn.1982). But even were we to apply the CDA to the owners of licensees where owners receive alcohol sales profits, the Department and National do not receive revenue, let alone profits, from post alcohol sales except in the most attenuated circumstances (where a post needs to make up a delinquent member’s dues).³ While the Department and National do receive some indirect benefit from alcohol sales in that those sales help support Legion posts, social hosts also receive some indirect benefits that do not properly qualify as “profits” and the legislature, in its 1977 revision of Minn.Stat. § 340.95, eliminated social-host liability under the CDA.

The Urbans argue that our decision in Hahn v. City of OHonville supports an extension of respondeat superior because, among other reasons, Hahn states that masters may be held liable for the actions of their servants under the CDA. 238 Minn. 428, 57 N.W.2d 254 (1953). In Hahn, the City of Ortonville, which owned and operated a municipal liquor store, was a defendant in an action for damages allegedly caused by illegal sales of liquor conducted by its servant, the bartender. Id. The municipality argued that it was not hable under the CDA because it was protected by governmental immunity. Id. at 433, 57 N.W.2d at 259. We concluded that the municipality was subject to liability for illegal alcohol sales because those sales were not “governmental” functions and because the legislature could — and did- — impose liability on a municipality in derogation of traditional immunity. Id. at 433-34, 57 N.W.2d at 259-60. We noted that the CDA stated that:

[Persons injured by the intoxication of another person have] a right of action * * * against any person who, by illegally selling, bartering or giving intoxicating liquors, caused the intoxication of such person, for all damages, sustained;

Id. at 436, 57 N.W.2d at 260-61. We concluded, based on other statutory sources, that “person” in this context included “municipal corporations engaged in selling liquor.” Id. at 437, 57 N.W.2d at 261. In Hahn, we specifically noted that the municipality in question owned the liquor store, operated it, and in doing so was involved in a “profit-making business.” We noted that “a municipal liquor dispensary is normally a source of financial profit for the municipality.” Id. at 435, 57 N.W.2d at 260.

Hahn is not at odds with our conclusion here. In Hahn, the municipality was liable for the illegal sales of alcohol made by its bartenders. Similarly, here, Post 184 is hable for any illegal alcohol sales made by its employees. While Hahn did use a master-servant argument in holding the municipality liable for its bartenders’ actions, Hahn was decided before the legislature adopted Minn.Stat. § 340A.501, amending the CDA. See Hahn, 238 Minn. at 428, 57 N.W.2d at 254; Act of June 5, 1985, ch. 305, Art. 7, § 1, 1985 Minn. Laws 1454, 1491 (codified at Minn.Stat. § 340A.501 (1986)). Section 340A.501, as noted earlier, makes it clear that licensees are automatically liable for the illegal alcohol sales of their employees. In altering the law, the legislature also necessarily altered our analysis. Given that the legislature in section 340A.501 specified that licensees are vicariously liable — implying, along with our case law, that others are not — we decline to apply a master-servant or respondeat superior analysis here, and we affirm the court of appeals

Because we conclude that the CDA did not intend nonlicensees to be held vicariously liable for violations of the CDA, an in-depth examination of respondeat superi- or law is unnecessary.

Affirmed.

ANDERSON, RUSSELL A., C.J., and PAGE, J., took no part in the consideration or decision of this case.

1 . The District Commander and his committee are also supposed to monitor and help their district's posts, work to attain membership goals, encourage the development of new posts and revitalization of defunct or dormant posts, and encourage the posts to create new and innovative programs and activities.

2 . Post 184 conceded that the sale of alcohol to Rolland was illegal because he was not a post member; however, they did not concede causation or that he was intoxicated when they sold him the liquor.

3 . The dissent acknowledges that the application of respondeat superior here is unusual, but argues that it is not unprecedented. But the majority cites no Minnesota authority sanctioning the use of respondeat superior under anything remotely resembling these facts, and we have found none. The authority relied on by the dissent includes fact patterns with acknowledged control of the subsidiary by the parent corporation. See, e.g., A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 291-92 (Minn.1981) (holding that a corporate creditor assuming significant control over the internal affairs of a corporate debtor was properly held liable under a jury verdict for that debtor’s obligations). Indeed, on these facts it is improbable that the Department and National could be held liable on a respondeat superior theory even if we were to apply it. Both are incorporated separately from the post and have separate constitutions and executive committees, and there are 15,-000 posts in the country and 584 in Minnesota, rendering day-to-day oversight or meaningful control by National or the Department impossible.