Alcohol Ruling Bolsters Gambling Litigation Defense

In a recent decision that may prove useful for defendants in compulsive gambling lawsuits, the Los Angeles County Superior Court rejected an attempt by California teenagers and their parents to challenge the advertising practices of major alcoholic beverage manufacturers. See Goodwin v. Anheuser-Busch Cos., Inc., Los Angeles County Superior Court, Case No. BC310105 (January 28, 2005).

The class-action plaintiffs alleged the alcohol companies placed advertising in print, television and radio venues that reach a high percentage of teenage consumers, inducing them to buy and consume alcoholic beverages. 

The named plaintiffs include parents whose children were killed by drunk drivers as well as parents of teenagers who claim they were influenced to buy alcohol by the defendants’ advertising.

Shortly after the plaintiffs filed their complaint, the defendants moved for judgment on the pleadings, arguing the court had no jurisdiction over the case. According to the defendant’s motion, since the California Department of Alcoholic Beverage Control (CDABC) has exclusive authority to regulate the advertising and sale of alcoholic beverages in California, trial courts cannot review CDABC policy decisions. The defendants further claimed that existing statutes and CDABC regulations afforded them a “safe harbor” from the claimed liability.  One such statute, according to the defendants, immunizes manufacturers of alcoholic beverages from product liability lawsuits.

The plaintiffs responded that there is no evidence that the California legislature intended the state statutes and regulations to be the exclusive means of regulating alcohol advertising to minors. They also claimed that the trial court did have jurisdiction to review CDABC policy as long as the court did not review an ongoing agency investigation or final agency order (both of which are subject only to appellate review).

In a Jan. 28 opinion, the court agreed with the defendants that it could not hear the case. Because “the [C]DABC is vested with the authority to oversee all aspects of alcohol sales, including advertising,” the court ruled that allowing the plaintiffs to proceed with the suit would interfere with that authority. Finally, the court agreed that the defendants were protected from liability by state statutes and regulations that immunize manufacturers in regulated industries from product liability lawsuits.

The legal principles behind the Goodwin ruling may assist defendants in compulsive gambling cases in two important respects: 

• Casinos in states with self-exclusion programs can argue that they should not be subject to lawsuits based on those self-exclusion programs because the state gaming commission has sole authority to regulate and enforce its regulations in that area, and  
• To the extent that state self-exclusion regulations limit casino liability for failing to identify and evict excluded patrons or restrict the right of excluded patrons to sue casinos, such regulations would provide another basis for dismissal.