Banks v. Ribco, Inc. ( 2010 )

No. 3--09--0718
_________________________________________________________________
Filed August 4, 2010
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2010
HEATHER D. BANKS, ) Appeal from the Circuit Court
) of the 14th Judicial Circuit,
Plaintiff-Appellee, ) Rock Island County, Illinois,
)
)
v. ) No. 08--L--081
)
RIBCO, INC., d/b/a Rock Island )
Brewing Company and 2nd Avenue, ) Honorable
) Mark A. VandeWiele,
Defendant-Appellant. ) Judge, Presiding.
_________________________________________________________________
PRESIDING JUSTICE HOLDRIDGE delivered the opinion of the
court:
_________________________________________________________________
The plaintiff, Heather D. Banks, brought an action against
the defendant, RIBCO, Inc., d/b/a Rock Island Brewing Company and
2nd Avenue, under the Iowa Dramshop Act (Iowa Code §123.92 et
seq. (2005)), in Rock Island County, Illinois. The plaintiff
asserted that Iowa substantive law applied to the action, and the
defendant filed a motion to dismiss, asserting that Illinois law
applied. The circuit court denied the defendant's motion to
dismiss. The defendant filed an interlocutory appeal, which was
allowed. We reverse.
FACTS
The action was ruled upon the pleadings, so the facts are
drawn from the allegations in those instruments. The plaintiff
was a resident of Iowa. During the early morning hours of June
17, 2007, the defendant's agents, representatives, or employees
sold intoxicating liquors or beer to Brett Housley at a tavern
known as Rock Island Brewing Company, located in Rock Island,
Illinois. The defendant was the operator of the Rock Island
Brewing Company1 and an Illinois corporation doing business in
Rock Island, Illinois. The defendant was also licensed by the
Illinois Liquor Control Commission. Shortly after Housley's exit
from the tavern, while still in Illinois, he and his
acquaintances got into a disagreement with the group that was
accompanying the plaintiff. The altercation continued into Iowa
and culminated in the parking lot of the Davenport Ground
Transportation Center in Davenport, Iowa. Housley exited his
vehicle with a golf club and approached the vehicle in which the
plaintiff was a passenger. Housley hit the vehicle's rear
windshield and injured the plaintiff.
The defendant filed a motion to dismiss pursuant to sections
2--619 and 2--615 of the Code of Civil Procedure (735 ILCS 5/2--
619, 2--615 (West 2006)), arguing that Iowa substantive law did
not apply to the action and the petition was insufficient in law.
1
A portion of the leased premises may have been referred to
as 2nd Avenue.
2
The defendant's motion to dismiss and its motion to reconsider
were denied. This court allowed the defendant's application for
leave to appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d
R. 308).
ANALYSIS
The defendant raises two challenges on interlocutory appeal.
First, the defendant argues that the trial court erred in denying
its motions to dismiss and for reconsideration because Iowa law
should not apply under conflict-of-law principles. Second, the
defendant argues that applying Iowa law violated the commerce
clause of the United States Constitution. Since we find the
first issue dispositive, it is not necessary to reach the
commerce clause issue.
Review of the trial court's choice-of-law determination,
which is based upon the parties' pleadings, is de novo. Townsend
v. Sears, Roebuck & Co., 227 Ill. 2d 147, 879 N.E.2d 893 (2007).
When a conflict of law is identified, the forum court applies the
choice-of-law rules of its own state. Townsend, 227 Ill. 2d 147,
879 N.E.2d 893. However, a choice-of-law determination is only
necessary when "a difference in law will make a difference in the
outcome." Townsend, 227 Ill. 2d at 155, 879 N.E.2d at 898.
Since the case at bar involves an Iowa resident injured in
Iowa by an intoxicated patron, and an Illinois tavern keeper,
which served alcoholic beverages in Illinois under its Illinois
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liquor license, it is clear that both Illinois and Iowa have an
interest in the application of their respective laws. We note
that these interests conflict.
The parties have identified a few critical differences
between the Illinois and the Iowa dramshop laws. First, the
Illinois statute only confers a right of action on persons
injured in Illinois (235 ILCS 5/6--21 (West 2006)), while the
Iowa dramshop statute does not appear to have such a limitation.
See Iowa Code §123.92 (2005); Bankord v. DeRock, 423 F. Supp. 602
(N.D. Iowa 1976). Both, however, apply to injuries in their
respective states even when an out-of-state liquor licensee is
involved. See Dunaway v. Fellous, 155 Ill. 2d 93, 610 N.E.2d
1245 (1993); Iowa Code §123.92 (2005). Second, the Illinois
statute expressly caps damages, while the Iowa statute does not.
Third, the Iowa statute imposes liability upon a liquor licensee
only when he "knew or should have known" that the patron was or
would become intoxicated. Iowa Code §123.92 (2005). The
Illinois statute does not require that element of proof. Charles
v. Seigfried, 165 Ill. 2d 482, 651 N.E.2d 154 (1995). Thus, the
plaintiff has no cause of action in the Illinois courts if
Illinois law is applied and her injury is found to have occurred
in Iowa. If Iowa law is applied, the plaintiff has a cause of
action under the statute, if she can prove the knowledge element.
Since a real conflict has been identified, it is necessary
4
to apply Illinois choice-of-law rules to determine whether
Illinois or Iowa law applies to this action. Traditionally, the
rule was simple--the law of the place of the wrong (lex loci
delicti) was the law to be applied to tort actions. Townsend,
227 Ill. 2d 147, 879 N.E.2d 893. Many courts, however, including
Illinois, have abandoned that approach because it ignores the
interest that other jurisdictions may have in the resolution of
an issue. Ingersoll v. Klein, 46 Ill. 2d 42, 262 N.E.2d 593
(1970). Thus, Illinois courts have adopted the approach of the
Second Restatement of Conflict of Laws (Restatement (Second) of
Conflict of Laws §146 (1971)) (hereinafter Second Restatement) in
making a choice-of-law determination. Under the Second
Restatement approach, the objective is to apply the law of the
state with the most significant relationship to the dispute and
the parties, as defined by the issues raised. Barbara's Sales,
Inc. v. Intel Corp., 227 Ill. 2d 45, 879 N.E.2d 910 (2007). In
determining the state with the most significant relationship, the
Second Restatement identifies a two-step process whereby the
court first chooses the presumptively applicable law and then
tests that presumption against general choice-of-law principles.
Townsend, 227 Ill. 2d 147, 879 N.E.2d 893.
I. Presumptively Applicable Law
A determination of the presumptively applicable law begins
with an examination of the type of action, in this case, a
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dramshop action. Dramshop actions in Illinois are sui generis
and exclusive. Seigfried, 165 Ill. 2d 482, 651 N.E.2d 154.
Under the common law, there was no liability for injuries arising
out of the sale or gift of alcoholic beverages. Seigfried, 165
Ill. 2d 482, 651 N.E.2d 154. Under section 6--21 of the Illinois
Liquor Control Act of 1934, commonly known as the Dramshop Act,
though, liability can be established by an injured party against
a seller or giver of alcoholic beverages. 235 ILCS 5/6--21 (West
2006). Similarly, the Iowa Dramshop Act created liability where
none existed at common law. Horak v. Argosy Gaming Co., 648
N.W.2d 137 (Iowa 2002); Iowa Code §123.92 (2005). While a
dramshop action is not a tort action (see Hopkins v. Powers, 113
Ill. 2d 206, 497 N.E.2d 757 (1986)), a personal injury is
involved and the tort provisions of the Second Restatement are
the most analogous. Thus, the presumption is that the place of
the injury has the more significant relationship to the
occurrence and the parties. Townsend, 227 Ill. 2d 147, 879
N.E.2d 893; Restatement (Second) of Conflict of Laws §146
(1971)2.
2
Section 146 of the Second Restatement provides:
"In an action for a personal injury, the local law of
the state where the injury occurred determines the rights
and liabilities of the parties, unless, with respect to the
particular issue, some other state has a more significant
6
The parties disagree as to the place of the injury. The
plaintiff contends that the injury occurred when she was hit with
the golf club in Iowa. The defendant contends that the injury
occurred when it served the alcoholic beverages to Housley in
Illinois. We find that the personal injury occurred in Iowa, and
Iowa law presumptively applies. That said, due to the unique
character of the dramshop action, we also find that the
presumption is rather weak. The defendant's conduct occurred
where it is located, in Illinois. Housley and the plaintiff were
the mobile parties, and Housley's intentional act that injured
the plaintiff easily could have occurred closer to the
defendant's immobile tavern in Illinois.
II. Testing the Presumption
We test the presumption in favor of Iowa law against the
guiding principles of section 6 of the Second Restatement
(Restatement (Second) of Conflict of Laws §6 (1971)) to determine
if Illinois has a more significant relationship to the occurrence
or the parties. The principles of section 6(2) of the Second
Restatement are:
relationship under the principles stated in §6 [(Restatement
(Second) of Conflict of Laws §6 (1971))] to the occurrence
and the parties, in which event the local law of the other
state will be applied." Restatement (Second) of Conflict of
Laws §146, at 430 (1971).
7
"(a) the needs of the interstate and international
systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested
states and the relative interests of those states in
the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular
field of law,
(f) certainty, predictability and uniformity of
result, and
(g) ease in the determination and application of
the law to be applied." Restatement (Second) of
Conflict of Laws §6(2) (1971).
These principles identify the various concerns that courts
should consider and are not listed in any order of priority.
Townsend, 227 Ill. 2d 147, 879 N.E.2d 893. When determining the
state with the most significant relationship, courts consider
these principles in light of the specific factual contacts or
connecting factors as suggested in the general provision of
section 145(2) of the Second Restatement:
"(a) the place where the injury occurred,
(b) the place where the conduct causing the injury
occurred,
8
(c) the domicil, residence, nationality, place of
incorporation and place of business of the parties, and
(d) the place where the relationship, if any,
between the parties is centered." Restatement (Second)
of Conflict of Laws §145(2), at 414 (1971).
A. Factual Contacts
The first contact is the place where the injury occurred,
and we have already found that the personal injury occurred in
Iowa. However, we give little weight to this contact because it
seems to be little more than happenstance that the injury
occurred in the parking lot in Iowa rather than a parking lot in
Illinois. See Schulze v. Illinois Highway Transportation Co., 97
Ill. App. 3d 508, 423 N.E.2d 278 (1981).
The second contact is where the conduct causing the injury
occurred. "A court's consideration of injury-causing conduct in
a section 145 [(Restatement (Second) of Conflict of Laws §145
(1971))] analysis includes all conduct from any source
contributing to the injury." Townsend, 227 Ill. 2d at 169, 879
N.E.2d at 906. Housley swung the golf club that injured the
plaintiff in Iowa. However, the alleged conduct by the defendant
occurred in Illinois. The defendant's tavern was located in
Illinois, and Housley was served and drank alcohol in Illinois.
Also, the attorneys for both parties were in agreement at oral
argument that the altercation started while Housley and the
9
plaintiff were still in Illinois. We find that this contact
favors Illinois.
The third contact is the domicile, residence, place of
incorporation or place of business of the parties. Here, the
plaintiff was a resident of Iowa, and the defendant was
incorporated in Illinois. The defendant also had its principal
place of business in Illinois. We find this contact to be fairly
well balanced between the two states.
The fourth contact is the place where the relationship, if
any, between the parties was centered. It is not clear whether
there was any relationship between the plaintiff and the
defendant. To the extent there was one, it would have been
centered in the defendant's tavern in Illinois.
In sum, the contacts in section 145 (Restatement (Second) of
Conflict of Laws §145 (1971)) appear to slightly favor Illinois.
However, they are not to be tallied and considered in a vacuum.
The overriding purpose of the choice-of-law process is to apply
the law of the state with the most significant relationship to
the issue. To that end, we must consider the contacts in light
of the policy considerations delineated by section 6 of the
Second Restatement (Restatement (Second) of Conflict of Laws §6
(1971)). Townsend, 227 Ill. 2d 147, 879 N.E.2d 893.
B. Policy Considerations
10
The first relevant policy consideration is the needs of the
interstate system. In determining those, it is important to note
that this principle is concerned with commercial interactions and
making interstate and international systems work together.
Barbara's Sales, Inc., 227 Ill. 2d 45, 879 N.E.2d 910. This
factor "is only minimally implicated in personal injury actions."
Townsend, 227 Ill. 2d at 170, 879 N.E.2d at 906. Although this
action also involves the sale of alcohol that preceded the
personal injury, we fail to see how it has any impact on
commercial interactions between Illinois and Iowa.
The second consideration is the relevant policies of the
forums. As for these policies, both legislatures have created
dramshop laws. Both have legislated that their respective acts
apply to out-of-state sellers. The Illinois statute is more
penal in nature; it places a limited responsibility for damages
caused by intoxication on those who profit from the sale of
alcohol. Walter v. Carriage House Hotels, Ltd., 164 Ill. 2d 80,
646 N.E.2d 599 (1995). The Iowa statute, on the other hand, is
remedial and compensatory. Slager v. HWA Corp., 435 N.W.2d 349
(Iowa 1989). Both states, obviously, have an interest in
providing compensation for its citizens for personal injuries.
However, "'tort rules which limit liability are entitled to the
same consideration when determining choice-of-law issues as rules
that impose liability.'" Townsend, 227 Ill. 2d at 171, 879
11
N.E.2d at 907, quoting Malena v. Marriott International, Inc.,
264 Neb. 759, 769, 651 N.W.2d 850, 858 (2002). Thus, Illinois
has a strong policy interest in the application of Illinois law,
with its liability limitations and territorial application, to
its own licensed liquor sellers.
At common law in Illinois and Iowa, there was no cause of
action against a provider of alcoholic beverages for injuries
arising from the sale of those beverages. Seigfried, 165 Ill. 2d
482, 651 N.E.2d 154; Horak, 648 N.W.2d 137. So, when considering
the basic policies underlying this field of law, it must be
remembered that both states' dramshop statutes are in derogation
of common law. Each legislature crafted a cause of action that
balanced the evils of alcohol consumption against the liability
of those who provide the alcohol.
The next relevant consideration is the protection of
justified expectations. Keeping the two statutory schemes in
mind, the defendant is an Illinois corporation, licensed to sell
liquor under Illinois law. It is justified in relying on the
Illinois Dramshop Act, which limits its liability and specifies
that it only applies to injuries that occur in Illinois.
Applying the Iowa Dramshop Act to the defendant would expose it
to unexpected liability, both in terms of monetary liability and
potential injured parties. To allow the application of the Iowa
Dramshop Act in this case to the sale of alcohol by an Illinois
12
corporation in its Illinois tavern would contravene the purpose
of the Illinois Dramshop Act and allow extraterritorial dramshop
liability.
The last relevant consideration is the ease of application
of the law to be applied. In this regard, it is axiomatic that
the use by a forum of its own laws would not be more difficult
than applying another forum's laws.
The critical element in this case is the sale of alcohol,
which is the defendant's alleged wrongful conduct potentially
leading to liability. Considering all of the above, we have come
to the conclusion that the state where the conduct occurred,
rather than the state where the injury occurred, is the state
with the most significant relationship. Although the plaintiff's
personal injury occurred in Iowa, the wrongdoing upon which
liability is premised against the defendant took place in
Illinois. Due to the unique nature of dramshop actions, and the
Illinois legislature's specific instructions in the area, we
conclude that the presumption in favor of Iowa law has been
rebutted and that, under choice-of-law rules, Illinois law is
applicable to this action. Thus, we reverse the trial court's
denial of the defendant's motion to dismiss and dismiss the
complaint.
CONCLUSION
13
The decision of the circuit court of Rock Island County is
reversed. The complaint is dismissed.
Reversed.
SCHMIDT and O’BRIEN, JJ., concur.
14