How Did They Do That?

2. How Did They Do That? Advertising Class Action Litigation Summary Anne G. Kimball, Esq.

3. What Has Happened? • In the last year • Four appellate courts affirmed dismissals of five cases • Plaintiffs have withdrawn appeals in the 4th Circuit and U.S. Supreme Court • All decided cases have been dismissed with prejudice • And the last case in a trial court was voluntarily dismissed

4. Lawsuit History

5. November, 2003: December, 2003: January, 2004: February, 2004: April, 2004: June, 2004: February, 2005: March, 2005: April, 2005: Hakki, District of Columbia Kreft, Colorado Wilson, North Carolina Goodwin, California Eisenberg, Ohio Tully, Ohio Tomberlin, Wisconsin Alston, Michigan Bertovich, West Virginia Nine Complaints Filed

6. Plaintiffs • Individuals • Parents of someone “who consumed alcohol while under 21 without their knowledge or consent” • Parents of children “subjected to defendants’. . . marketing campaigns” • Parents “whose children have consumed one or more of defendants’ products”

7. Defendants • Between 19 and 117 brewers, distillers and importers of beer and spirits • One trade association: the Beer Institute • No one who actually provided alcohol to underage persons • No underage persons who stole money from their parents

8. Plaintiffs’ Factual Premises • Defendants allegedly solicit underage persons to consume alcohol products by: • Using ad and marketing content that “targets” underage persons, • Placing ads in media primarily read by underage persons, and • Designing products that appeal primarily to underage persons

9. Plaintiffs’ Legal Premises • Defendants’ conduct allegedly gives rise to liability in • Consumer Protection Statutes • Negligence • Unjust enrichment • Public nuisance • Private rights of action for statutory violations • Conspiracy

10. The Alleged Injuries • Plaintiffs claimed that parents are “injured” economically when their children illegally spent “family assets” on alcohol • Plaintiffs claimed that parents were “injured” in their right to raise their children free of negative commercial influences

11. Defendants’ Response • Motions filed under Rule 12(b)(6) and state equivalents • Seeking dismissal of complaints as a matter of law • Plaintiffs do not allege facts showing: • A compensable injury • A causal connection between any defendants’ ads or products and any such an injury • Any legal claim recognized by state law

12. December 2004 and January 2005 September 2005 February 2006 February 2006 March 2006 May 2006 August 2006 Goodwin (CA) Kreft (CO) Eisenberg (OH) Tomberlin (WI) Hakki (DC) Alston (MI) Bertovich (WV) Result: Complaints Dismissed

13. Appellate Results • Dismissals affirmed in Colorado, Ohio, Michigan, D.C. and Wisconsin • Plaintiffs voluntarily dismissed or did not pursue appeals elsewhere • This litigation has been concluded

14. Common Judicial Themes

15. No Injury “There is nothing in the pleadings to allege the Plaintiffs have suffered actual injury from the challenged actions of the Defendants.” Kreft

16. No Casual Link “The Bertoviches’ Amended Complaint contains no allegation that directly links the Defendants’ acts or omissions to the Bertoviches’ alleged injury.” Bertovich

17. State Regulatory System Where state law vests exclusive authority to oversee all aspects of alcohol sales, including advertising, courts may not have jurisdiction over this kind of case. Goodwin

18. State Regulatory System “There are laws in place to protect against underage consumption of alcohol…. Enforcement of such laws is out of the hands of the manufacturers. Retail sellers, law enforcement and parents all have equal roles in the advancement and enforcement of such laws, and in otherwise preventing underage drinking.” Eisenberg

19. Violations of State Alcohol Laws “In order for defendants’ alleged marketing tactics to result in any injury to the plaintiffs, at least two levels of third parties must intervene in violating the law.” Bertovich

20. Violations of State Alcohol Laws “Defendants are virtually powerless to prevent [underage drinking] and legally owe no duty to the parents of the underage drinker to protect against harm . . . caused by the criminal acts of both the child and at least one other adult.” Hakki

21. Common Sense and Common Knowledge “To suggest that minors, because of their age, cannot understand that alcohol does not, in fact, make everyone more attractive, transport them to a tropical paradise, or other similar scenarios . . . is ridiculous at best.” Eisenberg

22. First Amendment Impact “Any attempt to regulate commercial speech associated with the marketing of a lawful product to those who are legally entitled to use it based on the presmise that such speech may also make the product attractive to those who are not legally entitlted to use it, might well run afoul of the First Amendment….” Hakki

23. First Amendment Impact “If these plaintiffs are convinced that alcohol advertising (i.e., First Amendment commercial speech) should be outlawed, then the means must be by legislation or constitutional amendment, not judicial fiat.” Alston

24. Industry Responsibility Campaigns

25. Preventing Access • Respect 21: Preventing Underage Access • B(eing) A R(esponsible) S(erver) • Shoulder-tap and other programs aimed at adults • Annual Drivers’ License Booklets • “We ID” signage and point-of-sale materials

26. Bolstering Parents • Parents’ guides to talking with teens about alcohol • Critical thinking, self-esteem building and consumer literacy training for children • Speakers bureaus

27. What Does the Future Hold? • The STOP Act • Cooperation with state and federal efforts • FTC’s ‘We Don’t Serve Teens’ program • Continued industry responsibility campaigns • Continued self-regulation of advertising • Joint efforts to combat underage drinking