Court Opinion

ID: 9697563
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:21:18.950135+00
Date Added: 2024-06-11T12:27:41.453104
License: Public Domain

HANSON, J.
(dissenting).
I respectfully dissent. On the question of the scope of the Civil Damages Act (CDA), I conclude that the CDA does not abrogate, but instead incorporates, common law principles of vicarious liability. Accordingly, I would hold that the Urbans’ CDA claims may be brought against the Department and National, who are not the named licensee but who are alleged to be vicariously liable for the acts of the named licensee. On the question of whether the Department and National are vicariously liable for the acts of Post 184, I conclude that there are genuine issues of material fact sufficient to preclude the grant of *8summary judgment dismissing the Urbans’ complaint. Accordingly, I would reverse the grant of summary judgment and remand for trial.
1. The Scope of the CDA.
Vicarious liability, as recognized in the common law, does not describe an independent cause of action, but describes a relationship that makes one party liable for the acts of another where an underlying cause of action exists against the other. In Lange v. National Biscuit Co., we said:
Respondeat superior or vicarious liability is a principle whereby responsibility is imposed on the master who is not directly at fault. Its derivation lies in the public policy to satisfy an instinctive sense of justice.
297 Minn. 399, 403, 211 N.W.2d 783, 785 (1973). Accordingly, ■ it is necessary to view the underlying cause of action and vicarious liability separately because these are two separate theories of liability and the analysis is different for each. Here, for example, the underlying cause of action alleged against Post 184 is for direct liability under the CDA, but the claim alleged against the Department and National is for vicarious liability under common law principles of respondeat superior.
The majority opinion commingles these two separate theories of liability, often applying the elements of one to the analysis of the other. It is largely for this reason that the conclusion of the majority — that only licensees are to be held vicariously liable for the illegal alcohol distribution — is incorrect.
a. The CDA does not make the licensee “vicariously” liable.
The direct statutory liability of a licensee was added to the CDA in 1985. Act of June 5, 1985, ch. 305, art. 7, sec. 1, 1985 Minn. Laws 1454, 1491 (codified as Minn. Stat. § 340A.501 (1986)). Prior to that time a licensee who was an employer already faced common law vicarious liability for the acts of its employees. We made this clear in Hahn v. City of Ortonville when we held that a municipality that operates a municipal liquor store may be vicariously liable as a principal for the direct statutory liability of its employees who made illegal sales while acting within the scope of their employment. 238 Minn. 428, 438-39, 57 N.W.2d 254, 262 (1953). We based that holding both on the common law of respondeat superior and on the then current version of the CDA, which provided that any sale by an employee “is the act of the employer as well as the person actually making the sale.” Id. (quoting Minn.Stat. § 340.941 (1946)). The point to be remembered from Hahn is that common law vicarious liability applies to the CDA, and a principal may be held liable under the common law of respondeat superior where its agent is statutorily liable under the CDA.
With this context in mind, it can be seen that section 340A.501 both enlarges on the common law vicarious liability of a licensee who is an employer or principal and creates a new liability for a licensee who is not an employer or principal. That section provides that “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 [the CDA].” (Emphasis added.) I read this language to add to a licensee’s common law vicarious liability as an employer by creating a direct statutory liability.
b. The CDA incorporates the common law of respondeat superior.
The majority uses the wrong rule of statutory construction because it focuses on the wrong question. If the critical question was, as the majority assumes, *9whether section 340A.501 imposes direct statutory liability on the Department and National, a rule of strict construction might be appropriate because that section creates a statutory cause of action and is, in one sense, penal in nature. But that is not the critical question before us. The Department and National do not have direct statutory liability, only Post 184, as licensee, and its employee who made the sale, have direct statutory liability. The critical question before us is whether, under Hahn, the Department and National have common law vicarious liability, as principals of Post 184, for the direct statutory liability of Post 184. In other words, the legal issue is whether section 340A.501 abrogated the common law vicarious liability that Hahn recognized for principals whose agents were directly liable under the CDA.
On that question, the rule of construction is clear, and it is the opposite of the one applied by the majority. Our well-settled case law on the rule of construction for statutes that create new causes of action is to presume that such statutes are consistent with the common law and to construe them not to have abrogated 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) (quoting Ly v. Nystrom, 615 N.W.2d 302, 314 (Minn.2000)). See also Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 327-28 (2004); Bloom v. Am. Express Co., 222 Minn. 249, 253, 23 N.W.2d 570, 573 (1946). Although we have said that we construe such statutes “strictly,” we have meant that we construe them strictly against the notion that they abrogate the common law. Shaw Acquisition Co., 639 N.W.2d at 877; Bloom, 222 Minn. at 253, 23 N.W.2d at 573. Or, to state it positively, we construe such statutes liberally in favor of the continued existence of the common law.
The majority acknowledges that section 340A.801 “does not expressly prohibit the application of respondeat superior common law.” And the majority does not set forth any rationale as to why such a prohibition must be necessarily implied. Instead, the majority appears to employ the reverse presumption, that the failure to expressly mention common law principles of vicarious liability means that the legislature intended to abrogate them.
c. The CDA should be construed liberally.
The premise for the majority’s use of this reverse presumption is that the CDA is to be strictly construed for one purpose, but liberally construed for another. The majority suggests that we construe the CDA narrowly as to its “scope,” but liberally apart from its scope. That suggestion is confusing because each construction that we are asked to give to a statute that creates a cause of action involves, in some sense, the statute’s “scope.” And if, as the majority perhaps would acknowledge, we are to construe the CDA liberally to give effect to its remedial purposes,1 we cannot do so and still construe the act narrowly as to its scope because the scope of the CDA is central to its remedial purpose.
For example, in deciding who are proper plaintiffs to bring a CDA claim, we have construed the CDA “liberally.” See, e.g., Hannah v. Chmielewski, Inc., 323 N.W.2d 781, 784 (Minn.1982); Hempstead v. Minneapolis Sheraton Corp., 283 Minn. 1, 4, 166 N.W.2d 95, 97 (1969). We should use the same liberal rule of construction in *10deciding who are proper defendants to a CDA claim. And even if we were to construe section 340A.501 strictly in determining who is subject to direct statutory liability as a licensee, this would not require us to construe the section strictly in determining whether it abrogates common law vicarious liability for those who are principals of a licensee. As noted above, the latter question requires that the section be liberally construed in favor of the survival of common law because we presume that the legislature does not abrogate the common law unless it does so expressly or by necessary implication.
In this context, the Latin phrase expres-sio unius est exclusio alterius (the expression of one thing indicates the exclusion of another) is not useful as a standard of construction. This Latin phrase may describe a logical conclusion where the “one thing” is inconsistent with “another.” But it makes no logical sense where the two things are consistent. Here, the two things, direct statutory liability of a licensee under the CDA and vicarious liability of the licensee’s principal under common law, are not only consistent, they are complementary. In different ways, each serves the same purpose of strengthening the regulation of the sale of alcohol.
As noted earlier, section 340A.501 actually expanded common law vicarious liability of a licensee by converting it to direct statutory liability. There is no principle of statutory construction that would support the suggestion that a statute that expands liability in one fashion implies an intent to simultaneously restrict liability in another fashion. The expression of the intent to make the liability of licensees no longer dependent on common law vicarious liability does not indicate any intent to restrict common law vicarious liability for those who are not affected by the statute, such as principals of a licensee.
Further, I agree with the commentators who have questioned the usefulness of this Latin phrase as a rule of statutory construction. As stated by Professor Dickerson:
Several Latin maxims masquerade as rules of interpretation while doing nothing more than describing results reached by other means. The best example is probably expressio unius est exclusio alterius, which is a rather elaborate, mysterious sounding, and anachronistic way of describing the negative implication. Far from being a rule, it is not even lexicographically accurate, because it is simply not true, generally, that the mere express conferral of a right or privilege in one kind of situation implies the denial of the equivalent right or privilege in other kinds. Sometimes it does and sometimes it does not, and whether it does or does not depends on the particular circumstances of context. Without contextual support, therefore, there is not even a mild presumption here. Accordingly, this maxim is at best a description, after the fact, of what the court has discovered from context.
Reed Dickerson, The Interpretation and Application of Statutes 234-35 (1975) (citations omitted).
The majority suggests that section 340A.501 replaced rather than enlarged the common law respondeat superior liability of a licensee. The majority states that the application of respondeat superior would have held licensees liable for the actions of their employees without need for the statute to specify such liability. Although the premise is true (that responde-at superior may have held licensees liable for the actions of their “employees”), that liability would only exist for licensees who were also “employers” or principals of the *11person making the illegal sale of alcohol. The common law liability was based not on one’s status as a licensee but as an employer or principal. Section 340A.501 did enlarge the common law respondeat superior liability of a licensee because it eliminated at least two defenses that might have been available to a licensee under the common law: (1) the defense that the licensee was not the principal or employer of the person making the sale, and (2) the defense that the person making the sale was not acting within the scope of his or her employment or agency with the licensee.
d. The issue of “profit” and the analogy to social hosts are irrelevant.
The majority points out that only Post 184 receives the “profits” from the sale of alcohol. The majority further points out that even if the Department and National receive indirect benefits, this would not be enough for direct statutory liability because “social hosts” have no statutory liability even if they receive indirect benefits. But these facts are only relevant to direct liability under the CDA. And the critical issue to be decided here is not whether the Department and National are directly liable under the CDA, but whether they are vicariously liable under Hahn as principals of Post 184, which is directly liable under the CDA. That vicarious liability is determined by applying the common law elements of the principal-agent relationship, not by applying the statutory elements for direct liability under the CDA.
e. The failure of the legislature to specifically address vicarious liability does not evidence an intent to eliminate it.
The majority suggests that if the legislature had intended to permit vicarious liability under the CDA, it would have amended the CDA to provide it and, in the nearly 100-year history of the CDA, it has not done so. This suggestion fails for at least two reasons.
First, in 1953 we declared that common law vicarious liability applies under the CDA for the employer of the person making the illegal sale. Hahn, 238 Minn. at 438-39, 57 N.W.2d at 262. If the legislature intended to eliminate the common law of vicarious liability of employers under the CDA, it could easily have said so. But, in the over 40 years since Hahn, the legislature took no action to eliminate common law vicarious liability under the CDA. To the contrary, it extended direct statutory liability to licensees who otherwise would only have been subject to common law vicarious liability.
Second, the portion of the CDA that the majority relies on as having abrogated common law vicarious liability, section 340A.501, was enacted in 1985, only slightly over 20 years ago. And, until the court of appeals’ decision in this case, in April of 2005, the legislature had no reason to consider that a court might interpret section 340A.501 as abrogating common law vicarious liability. Thus, there is no basis to give any meaning to the legislature’s failure to further amend the CDA.
For all of these reasons, I would hold that section 340A.501 did not abrogate common law vicarious liability under the CDA and such liability exists for one who can be shown to be an employer or principal of the licensee.
2. The Sufficiency of the Vicarious Liability Claim.
The more difficult question is the one that was dispositive for the court of ap*12peals — whether the Urbans have raised genuine issues of material fact on the elements necessary to establish vicarious liability. The court of appeals rightly focused that question on whether the Department and National were in a principal-agent relationship with Post 184, as defined by the Restatement (Second) of Agency § 2 (2004): “A master in a master-servant relationship is one who “employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.” ” Urban v. Am. Legion Post 184, 695 N.W.2d 153, 160 (Minn.App.2005).2 But I disagree with the court of appeals’ answer to that question: “The record does not show that National has a right to control the physical undertakings of Post 184’s daily activities. At most, the record shows that National has some power over what Post 184 does, but not over how it does it.” Id. at 161. Although I acknowledge that the application of respondeat superior law to the relationship between the Department and National and Post 184 is unusual, I conclude that it is not unprecedented. I further conclude that the Urbans have presented enough evidence of actual control and the right of control to create genuine issues of material fact.
Even though the Department and National, on the one hand, and Post 184, on the other, are separately incorporated, this does not preclude proof of the control that is necessary to create a principal-agent relationship. Unlike an alter ego theory of liability, where a parent corporation is held liable for the acts of its subsidiary because the two are viewed as the same legal person, Victoria Elevator Co. v. Meriden Grain Co., 283 N.W.2d 509 (Minn.1979), the existence of a principal-agent relationship assumes that each party to the relationship is a separate legal person. Restatement (Second) of Agency § 1(1) (“Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act,”), § 14M cmt. a (“However a corporation may become an agent of an individual or of another corporation, as it does when it makes a contract on the other’s account. Thus a subsidiary may become an agent for the corporation which controls it, or the corporation may become the agent of the subsidiary.”). See also A. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285, 291-92 (Minn.1981) (holding that a corporate creditor who assumes significant control over the internal affairs of its corporate debtor created a principal-agent relationship that supported the jury verdict imposing liability on the creditor for debts of the corporate debtor).
Although we have not addressed the precise situation, courts in other jurisdictions have considered whether a parent corporation or a national organization can be vicariously liable as principal for the acts of a subsidiary corporation or local branch organization. Thus, in Golden Spread Council, Inc. # 562 of the Boy Scouts of America v. Akins, the Texas Supreme Court considered whether the National Boy Scouts of America (BSA) *13could be held vicariously liable for the tortious acts of an employee of the local, BSA chartered, troop organization. 926 S.W.2d 287 (Tex.1996). The court applied the standard master-servant relationship test, but ultimately concluded that BSA had insufficient control to warrant vicarious liability. Id. at 290.
In an analogous situation, the Wisconsin Supreme Court addressed the question whether a corporate franchisor could be vicariously liable for the tortious acts of an employee of a corporate franchisee. Kerl v. Dennis Rasmussen, Inc., 273 Wis.2d 106, 682 N.W.2d 328 (2004). The court stated that a “franchisor may be held vicariously liable for the tortious conduct of its franchisee only if the franchisor has control or a right of control over the daily operations of the specific aspect of the franchisee’s business that is alleged to have caused the harm.” Id. at 341. Although the court found that the franchisor had a “plethora of general controls on [the franchisee’s] restaurant,” the court rejected vicarious liability because the franchisor did not control or have the right to control the specific aspect of the business that was alleged to have caused the harm — the supervision of employees. Id. at 341-42. Kerl is valuable because it surfaces the notion that vicarious liability can be based either on the quantity of control or the quality of control.
Applying the reasoning of these cases to the present facts, the quantity of control by the Department and National over the daily operations of Post 184 may not be sufficient to create a principal-agent relationship for all purposes. But I am persuaded by the reasoning in Kerl that the Urbans have presented sufficient evidence that the Department and National have the right to control “the specific aspect of [Post 184’s] business that is alleged to have caused the plaintiffs’ harm.” Kerl, 682 N.W.2d at 341.
The specific aspect of Post 184’s business that is alleged to have caused the harm is the sale of alcohol to one who was not a member of the American Legion. The drunk driver who was served alcohol at Post 184, allegedly in violation of Minn. Stat. § 340A.502 (2004) because he was obviously intoxicated, was not a member of the American Legion. The Department and National have a specific rule that prohibits posts from serving alcohol to nonmembers, and have mandated specific procedures that a post must follow to assure compliance with this rule — “police the doors,” “check the [membership] cards” and “get rid of’ nonmembers who get in the post bar. This rule is important to the Department and National because they have obtained from the Internal Revenue Service a group tax exemption that is based on the tax exempt purposes of the Department and National. The exemption requires bar operations of qualified posts to provide service only to members of National and not to the general public. To maintain that exemption, the Department and National must annually represent to the Internal Revenue Service that the qualified posts are under their supervision and control. According to evidence presented by the Urbans, National acknowledges that the group exemption is placed in jeopardy if any post violates this rule and serves alcohol to persons who are not members of National.
I conclude that the Urbans have presented sufficient evidence to raise genuine issues of material fact on the claim that the Department and National are vicariously liable at common law for the statutory liability of Post 184 under the CDA. *14Accordingly, I would reverse the summary judgment and remand for trial.

. Hahn, 238 Minn. at 436, 57 N.W.2d at 261 (stating that the CDA "although penal in nature, [is] also remedial in character and, according to the prevailing view, [is] to be liberally construed so as to suppress the mischief and advance the remedy").

. See, e.g., Frankie v. Twedt, 234 Minn. 42, 47-48, 47 N.W.2d 482, 487 (1951) (emphasizing “the right of control, and not necessarily the exercise of that right" as the “test of the relationship of master and servant”); Boily v. Comm'r of Econ, Sec., 544 N.W.2d 295, 296 (Minn.1996) (“The right to control the means and manner of performance generally carries the greatest weight in a determination of the worker's status.”).