Fiorini v. City Brewing Co.

City Brewing moved for judgment on the pleadings, contending that the proximate cause of an alcohol-related injury was the consumption of the intoxicating beverage, not the manufacture and sale of the beverage. The trial court granted the motion, concluding City Brewing was protected by the civil immunity in California’s dram shop statutes^[1] because (1) Four Loko was fit for beverage purposes, and (2) City Brewing furnished the beverage to Fiorini.

We must determine whether the civil immunity provided by California’s dram shop statutes protects the manufacturer of Four Loko from liability for injuries to consumers. The immunity applies to persons who furnish alcoholic beverages to the individuals who drink them. Prior cases have interpreted “furnish” to require the defendant to have some control of the alcohol and to take an affirmative step to supply it to the consumer. Here, the complaint does not allege City Brewing (1) exercised any control over the cans of Four Loko after they were delivered to a regional distributor or (2) took an affirmative step to supply the Four Loko to Fiorini. Therefore, we conclude City Brewing did not “furnish” the beverage to Fiorini and, therefore, the civil immunity in California’s dram shop statutes do not extend to City Brewing.

In addition, judgment on the pleadings cannot be upheld based on the statutory immunity that bars product liability claims for certain inherently unsafe common consumer products. (Civ. Code, § 1714.45, subd. (a).) That statute lists alcohol as such a product, but plaintiff has alleged Four Loko was unreasonably dangerous due to the combination of high levels of alcohol and stimulants and the risk posed by stimulants that mask the intoxicating effect of the alcohol. The allegations about the interactive effect of Four Loko’s ingredients preclude us from finding, as a matter of law, that Four Loko’s combination of alcohol and stimulants constitutes a “common consumer product” within the meaning of Civil Code section 1714.45, subdivision (a)(2).

Therefore, the judgment must be reversed and the matter remanded to the trial court for further proceedings.

FACTUAL SUMMARY

The Defendants

Defendant Phusion Projects, LLC (Phusion), is a limited liability company with its principal office in Chicago, Illinois. It is an alcoholic beverage

company founded in 2005 by Jaisen Freeman, Chris Hunter and Jeff Wright, who currently act as Phusion’s managing directors. Phusion invented and owned the caffeinated, alcoholic beverage line known as Four Loko and was in the business of formulating, marketing, labeling, distributing and selling Four Loko.

Defendant City Brewing is a Wisconsin limited liability company with its principal office in La Crosse, Wisconsin. It brewed, bottled, and labeled Four Loko for Phusion and its business also included distributing and selling Four Loko.

Defendant Donaghy Sales, LLC (Donaghy Sales), is a California limited liability company with its principal office in Fresno, California. As part of its business, Donaghy Sales sold and distributed Four Loko.

Defendant Sukhjit S. Sangha is an individual doing business as SSS Chevron and owns and operates a convenience store located on Butler Avenue in Fresno, California. The SSS Chevron convenience store is where Fiorini purchased two cans of Four Loko, beer, and sandwiches on the day he died.

City Brewing is the only defendant remaining in this appeal. The other defendants have been dismissed, either voluntarily or involuntarily.^[2]

The Beverage

Plaintiff’s complaint alleged the following concerning Four Loko.

Four Loko was sold in the United States in 23.5-ounce nonresealable cans, which was approximately twice the size of the standard 12-ounce can of soda or beer. It contained 12 percent alcohol by volume in the version sold in California; this amount of alcohol was equivalent to five or six 12-ounce cans of beer.^[3] One can also contained as much caffeine as two cups of coffee or

three to four cans of Coca-Cola. It also contained the stimulants guaraña, taurine, and wormwood. Wormwood is the active ingredient in absinthe. Four Loko also contained sugar, natural and artificial flavors, and carbonation. As formulated in October 2010, consumption of a single can of Four Loko would cause a 225-pound man to achieve unlawful intoxication as defined by California’s traffic laws.

The marketing and sales efforts for Four Loko targeted underage and college-aged consumers and promoted overconsumption by (1) using colorful, flashy labels that mimicked those of popular nonalcoholic energy beverages, (2) using flavors, such as watermelon, grape, blue raspberry, and fruit punch, and (3) pricing it at under $3 per can. Also, Four Loko was sold primarily in convenience stores where clerks were less likely to verify a customer’s age or might fail to recognize it as containing alcohol.

Four Loko acquired nicknames because of its potency and disorienting effects, including “liquid cocaine,” “liquid crack,” and “blackout in a can.”

Plaintiff described Four Loko as the quintessential alcoholic energy drink and alleged such drinks posed health risks by masking intoxication.

Combining Alcohol, Caffeine, and Other Stimulants

Plaintiff’s complaint referred to studies and articles that addressed the effects of ingesting alcohol, caffeine, and other stimulants together.

One study found that when the ingestion of alcohol alone was compared to the ingestion of alcohol and an energy drink, the subject’s perception of impaired motor coordination was reduced significantly without an objective reduction in the deficits caused by alcohol on objective motor coordination and visual reaction time. (Ferreira et al., Effects of Energy Drink Ingestion on Alcohol Intoxication (Apr. 2006) vol. 30, No. 4, Alcoholism: Clinical and Experimental Research, p. 598 (hereafter Ferreira).) Ferreira stated (1) there was little scientific evidence on the interaction of alcohol and the substances in energy drinks; (2) “researchers have some knowledge about the interactions between caffeine and alcohol”; and (3) “there are no studies discussing the interactions of alcohol and taurine on the cognitive performance in humans.”^[4] (Ferreira, at pp. 598, 599.)

When a superior court grants a motion for judgment on the pleadings, the appellate court accepts as true the factual allegations made by the plaintiff’s complaint, gives those allegations a liberal construction, and determines whether the facts alleged are sufficient to constitute a cause of action under any legal theory. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468 , 516 [ 101 Cal.Rptr.2d 470 , 12 P.3d 720 ]; Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226 , 1232 [ 44 Cal.Rptr.2d 352 , 900 P.2d 601 ].) The appellate court’s determination is based on an independent examination of the pleadings. (Gerawan Farming, at p. 516; Hoffman v. State Farm Fire & Casualty Co. (1993) 16 Cal.App.4th 184 , 189 [ 19 Cal.Rptr.2d 809 ] [appellate court renders an independent judgment on whether a cause of action has been stated].)^[5]

In this appeal, the ability of plaintiff to allege a cause of action turns on whether City Brewing is immune under California’s dram shop statutes. (§ 25602; Civ. Code, §§ 1714, subd. (b), 1714.45, subd. (a).)

When interpreting a statutory provision, appellate courts conduct a de nova review. (Community Development Com. v. County of Ventura (2007) 152 Cal.App.4th 1470 , 1482 [ 62 Cal.Rptr.3d 383 ].) Our primary task in interpreting a statute is to ascertain the intent of the Legislature so as to give effect to the purpose of the law. (Landeros v. Torres (2012) 206 Cal.App.4th 398 , 415 [ 141 Cal.Rptr.3d 744 ].) “We are guided primarily by the words of the statute, giving them their ordinary meaning, and look to outside sources only if the statute is ambiguous.” (Ibid.)

A

. Background

“Prior to 1971, California courts uniformly held that the consumption of alcoholic beverages, rather than the serving of alcoholic beverages, was the proximate cause of injuries resulting from the intoxication of the imbiber.” (Comment, Social Host Liability for Furnishing Alcohol: A Legal Hangover? (1979) 10 Pacific L.J. 95, 96; see Cole v. Rush (1955) 45 Cal.2d 345 [ 289 P.2d 450 ].)

In Vesely v. Sager (1971) 5 Cal.3d 153 [ 95 Cal.Rptr. 623 , 486 P.2d 151 ], a unanimous California Supreme Court rejected the traditional approach to

proximate cause, stating that “this rule is patently unsound and totally inconsistent with the principles of proximate cause established in other areas of negligence law.” (Id. at p. 166.) The court concluded that a tavern keeper owed a duty of care to the public based on the version of section 25602 then in effect, which stated that every person who sold any alcoholic beverage to any obviously intoxicated person was guilty of a misdemeanor. (Vesely, at p. 165.)

About five years later, the California Supreme Court extended this duty of care to out-of-state businesses that sold alcoholic beverages to intoxicated persons. (Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313 [ 128 Cal.Rptr. 215 , 546 P.2d 719 ] [judgment reversed and trial court directed to overrule demurrer].) This duty protected California residents who were injured when the intoxicated patron subsequently caused an automobile accident in California. (Ibid.)

The next extension of the duty of care occurred in Coulter v. Superior Court (1978) 21 Cal.3d 144 [ 145 Cal.Rptr. 534 , 577 P.2d 669 ] when the court considered “whether the noncommercial suppliers of alcoholic beverages may be liable to third persons injured by reason of the intoxication of the consumer of those beverages.” (Id. at p. 147.) The court extended the duty of care to social hosts, stating that the “danger of ultimate harm is as equally foreseeable to the reasonably perceptive host as to the bartender. The danger and risk to the potential victim on the highway is equally as great, regardless of the source of the liquor.” (Id. at p. 153.)

Less than five months after Coulter was decided, the Legislature adopted Senate Bills Nos. 1645 and 1175 (1977-1978 Reg. Sess.) (hereafter Senate Bills 1645 and 1175),^[6] which were chaptered by the Secretary of State on September 20, 1978. (Stats. 1978, ch. 929, §§ 1, 2, pp. 2903-2904; id., ch. 930, §§ 1-3, pp. 2904-2905.) This legislation reversed the judicial extension of civil liability for the furnishing of alcohol.

B. Text of Senate Bill 1645

Senate Bill 1645 amended section 25602 by designating its existing provision as subdivision (a) and adding subdivisions (b) and (c). The new subdivisions stated persons who committed the misdemeanor defined in

subdivision (b) of Civil Code section 1714, establishes that subdivision (c) of Business and Professions Code section 25602 does not set forth an independent rule of law, but serves as a guide for how courts should interpret the substantive provisions in subdivisions (a) and (b) of section 25602. Because the misdemeanor and immunity provisions in section 25602 do not apply to the allegations against City Brewing, the declaration about how section 25602 must be interpreted has no direct application in this appeal.^[7]

City Brewing — apparently recognizing that the claims against it do not fit within the terms of section 25602 — contends the trial court’s decision is supported by Civil Code section 1714 and we may affirm that decision on any basis presented by the record, whether or not relied upon by the trial court. City Brewing argues that Civil Code section 1714 was presented below because its motion for judgment on the pleading explicitly referred to that statute.

We agree with City Brewing that the potential application of Civil Code section 1714 to this case presents a theory of law that might be a basis for sustaining the trial court’s decision. (See Davey v. Southern Pacific Co. (1897) 116 Cal. 325 , 329 [ 48 P. 117 ] [a decision, correct in law, will not be disturbed on appeal merely because given for the wrong reason].) Consequently, we turn to the broader language contained in subdivision (b) of Civil Code section 1714 and examine whether that provision operates as a bar to plaintiff’s claims.

The version of Civil Code section 1714, subdivision (b) currently in effect reinstates the common law rule that immunized from civil liability those who furnish alcoholic beverages to a person who then injured himself or herself or a third party as a result of intoxication. (Rybicki v. Carlson (2013) 216 Cal.App.4th 758 , 762 [ 157 Cal.Rptr.3d 660 ].)

The parties have raised many issues regarding the applicability of this immunity to City Brewing.^[8] We will limit our discussion to the meaning of

the statutory term “furnishing” and whether City Brewing furnished the cans of Four Loko to Fiorini. We conclude a beverage’s manufacturer, separated from the ultimate consumer by a regional distributor and a local retail outlet, does not “furnish” the beverage to the consumer. Applying this interpretation to the allegations of the complaint, we conclude that City Brewing did not furnish the Four Loko to Fiorini and, therefore, City Brewing is not protected from plaintiff’s product liability claims by the civil immunity contained in Civil Code section 1714, subdivision (b).

A. Contentions of the Parties

The trial court concluded the term “furnish” logically applies to any entity in the chain of distribution that sells or otherwise transfers the beverage to the next link. City Brewing contends this interpretation is correct and, therefore, it is protected by the civil immunity in California’s dram shop laws.

Plaintiff contends there are no federal or state cases that apply the civil immunity in California’s dram shop laws to a products liability claim brought against the beverage’s manufacturer. In plaintiff’s view, the dram shop laws were not intended to protect manufacturers of defective and dangerous beverages from civil liability.

B. Meaning of “Furnishing”

Civil Code section 1714, subdivision (b) contains the Legislature’s statement of its intent “to abrogate the holdings in cases such as Vesely . . . , Bernhard . . . , and Coulter . . . and to reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person, namely that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person.” (Italics added.)

The edition of Black’s Law Dictionary current at the time Civil Code section 1714, subdivision (b) was adopted^[9] contains the following definition of “furnish”: “To deliver, whether gratuitously or otherwise. [Citations.] As used in liquor laws, ‘furnish’ means to provide in any way, and includes giving as well as selling. [Citations.]” (Black’s Law Dict. (4th rev. ed. 1968) p. 804.)

California courts have interpreted the terms “furnish” and “furnished” as requiring an affirmative act by the purported furnisher to supply the alcoholic beverage to the drinker. (Ruiz v. Safeway, Inc. (2012) 209 Cal.App.4th 1455 , 1460 [ 147 Cal.Rptr.3d 809 ] (Ruiz); Sagadin v. Ripper (1985) 175 Cal.App.3d 1141 , 1158 [ 221 Cal.Rptr. 675 ] [“it is sufficient if, having control of the alcohol, the defendant takes some affirmative step to supply it to the drinker”].)^[10]

The decision in Ruiz demonstrates that the term “furnishing” does not encompass the entire chain of supply. In Ruiz, the parents of a child killed in an automobile accident brought an action against a supermarket under California’s dram shop liability law. The parents alleged the supermarket furnished beer, or caused beer to be furnished, to the driver who caused the accident when its checker sold beer to the driver’s companion. (Ruiz, supra, 209 Cal.App.4th at p. 1457.) The supermarket moved for summary judgment, which the trial court granted. (Id. at p. 1458.) The appellate court affirmed, concluding as a matter of law that the supermarket did not furnish beer to the driver. (Id. at pp. 1461, 1464.)

In Ruiz, the driver and his companion, Spitzer, had been drinking beer and rum at a fraternity party at Sonoma State University. (Ruiz, supra, 209 Cal.App.4th at p. 1457.) After the party was broken up by police around midnight, the driver and Spitzer decided to buy beer at a nearby Safeway store. (Ibid.) They both went into the store and stood in the checkout line. The checker asked for identification and Spitzer provided a forged driver’s license and paid for the 12-pack of beer. (Id. at pp. 1457-1458.) Spitzer carried the beer from the store and put it in the back of the driver’s car. At some point on the drive back to campus, Spitzer took a bottle from the box and gave it to the driver, who drank about half of it before the car accident that caused the death of the plaintiffs’ son. (Id. at p. 1458.) The appellate court concluded the supermarket did not furnish the driver with beer because (1) the checker sold the beer to Spitzer and not the driver, and (2) “nothing about that sale constitutes an affirmative act directly related to [the driver], or an act that necessarily would have resulted in Spitzer furnishing or giving that beer to [the driver].” (Id. at p. 1461.)

Therefore, Ruiz is an example of a case where the term “furnished” was applied to exclude entities further up the chain of supply from the person who handed the beverage to the consumer.

In addition, the view that the term “furnishing” includes only transfers at the end of the chain of supply is supported by statutory text setting forth the Legislature’s intent to “reinstate the prior judicial interpretation of this section as it relates to proximate cause for injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person . . . .” (Civ. Code, § 1714, subd. (b).) The phrase “to an intoxicated person” suggests the furnisher would have some way of knowing whether or not the person was intoxicated, which further suggests that a furnisher would have some control over who received the beverage. This type of awareness and control is possible for social hosts, taverns, bars, and restaurants, but not for manufacturers who are far removed from the ultimate consumer.^[11]

We thus conclude that the term “furnishing” as it appears in Civil Code section 1714, subdivision (b) requires the purported furnisher to perform an affirmative act in supplying the alcoholic beverage to the person who drank it.

C. Application of “Furnishing” to City Brewing

The application of the definition of “furnish” to the facts of this case is relatively simple.

Plaintiff’s complaint alleged (1) City Brewing brewed, bottled, and labeled the Four Loko purchased by Fiorini, (2) Donaghy Sales distributed the cans to SSS Chevron, and (3) SSS Chevron sold the Four Loko to Fiorini. Nothing in the complaint states, or provides a reasonable basis for inferring, that (1) City Brewing had any control over the cans of Four Loko after they were delivered to Donaghy Sales or (2) City Brewing performed any affirmative act that caused the cans of Four Loko to be transferred into Fiorini’s possession.^[12]

Based on the facts alleged, City Brewing did not “furnish” the Four Loko to Fiorini. Thus, City Brewing’s motion for judgment on the pleadings cannot be granted on the ground City Brewing was immune from civil liability pursuant to Civil Code section 1714, subdivision (b).

V. Products Liability Claims and Civil Code Section 1714.45

City Brewing also contends that the trial court’s decision should be affirmed because manufacturers of alcohol are provided with a specific statutory immunity from product liability claims. City Brewing argues it is protected by subdivision (a) of Civil Code section 1714.45, which provides:

“(a) In a product liability action, a manufacturer or seller shall not be liable if both of the following apply:

“(1) The product is inherently unsafe and the product is known to be unsafe by the ordinary consumer who consumes the product with the ordinary knowledge common to the community.

“(2) The product is a common consumer product intended for personal consumption, such as sugar, castor oil, alcohol, and butter, as identified in comment i to Section 402A of the Restatement (Second) of Torts.”

City Brewing contends alcohol is a “common consumer product” and, because Four Loko contains alcohol, it too is a common consumer product. In addition, City Brewing asserts that adding caffeine to Four Loko did not take it outside the scope of the statute because caffeine is “the most widely used stimulant in the world, and a component of many common beverages, alcoholic or not.”

A. How to Analyze a Multi-ingredient Product

Implicit in the parties’ arguments is a dispute about the proper method for analyzing a multi-ingredient product and determining whether it qualifies as a common consumer product for purposes of Civil Code section 1714.45.

City Brewing deconstructs^[13] Four Loko into the products of alcohol and caffeine and asserts they both unquestionably are consumer products whose

dangers are common knowledge. From this foundation, City Brewing concludes that Four Loko is a common consumer product.

First, City Brewing has cited no case or secondary authority that (1) expressly adopts the deconstructionist approach for a multi-ingredient product or (2) states the multi-ingredient product is a common consumer product if some or all of the ingredients, standing alone, qualify as a common consumer product.

Second, City Brewing’s deconstruction of Four Loko is incomplete because it does not address all of the stimulants the complaint alleged were contained in Four Loko, such as guaraña, taurine, and wormwood.^[14] As a result, City Brewing has not demonstrated the risks inherent in those stimulants are matters of common knowledge.

Third, when a plaintiff alleges the manufacturer of a common consumer product has adulterated or contaminated that product, courts will not apply the immunity if the adulteration or contamination made the product unreasonably dangerous. (See Naegele v. R.J. Reynolds Tobacco Co. (2002) 28 Cal.4th 856 , 864 [ 123 Cal.Rptr.2d 61 , 50 P.3d 769 ] (Naegele); Rest.2d Torts, § 402A, com. i, p. 352.) For instance, in Naegele, a smoker who developed lung cancer sued tobacco companies, alleging the companies manipulated the addictive properties of cigarettes by using additives and, more specifically, controlled nicotine delivery to the smoker by adding ammonia. (Naegele, at p. 865.) The conduct complained of occurred when tobacco was still listed in Civil Code section 1714.45 as an inherently unsafe common consumer product known to the ordinary consumer as unsafe. The California Supreme Court concluded the statutory immunity did not bar claims alleging that “tobacco companies, in the manufacture of cigarettes, used additives that exposed smokers to dangers beyond those commonly known to be associated with cigarette smoking.” (Naegele, at p. 861.) The court stated the immunity statute was intended to protect tobacco companies that made and sold products containing tobacco that is pure and unadulterated. (Id. at p. 862.)

compared to the product life of the consumer products of “sugar, castor oil, alcohol, and butter” that are listed in subdivision (a)(2) of Civil Code section 1714.45. This short product life supports the inference that Four Loko was not a common consumer product.

The community’s understanding of alcoholic energy drinks is a topic addressed in the articles attached to plaintiff’s complaint. The 2008 article stated that the effects of combining caffeine and the other ingredients of energy drinks (such as guaraña, yerba mate, taurine, carnitine, creatine, ginkgo, biloba, ginseng and vitamins) are incompletely understood. The 2006 article addressing the ingestion of alcohol and energy drinks stated there was “little scientific evidence on the interaction of these substances.” (Ferreira, supra, at p. 598.) These statements indicate the combination of stimulants and alcohol in Four Loko was not a common consumer product.

The foregoing inferences preclude us from finding, as a matter of law, that Four Loko was a common consumer product for purposes of Civil Code section 1714.45, subdivision (a).^[15] As a result, that factual question should be presented to the trier of fact. BAJI No. 9.00.6 provides an example of how a jury can be instructed on both elements of the immunity provided by Civil Code section 1714.45, subdivision (a).

Lastly, we note the regulatory action by the FDA and the Federal Trade Commission does not establish (retroactively and as a matter of law) that premixed caffeinated alcoholic beverages, such as Four Loko, are not common consumer products for purposes of Civil Code section 1714.45, subdivision (a). The regulatory action was not a final adjudication of the application of federal law, such as the Federal Food, Drug, and Cosmetic Act, to Four Loko. Also, the legal standards discussed by the FDA and Federal Trade Commission are not identical to those used to determine if a beverage is a common consumer product under California law. Hence, the regulatory action does not resolve the issues relevant to the application of Civil Code section 1714.45, subdivision (a).

DISPOSITION

The February 5, 2013, judgment in favor of City Brewing is reversed. The trial court is directed to vacate its ordering granting City Brewing’s motion