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Nevada casinos that advertise to their neighbor to the west may soon find themselves playing high-stakes poker on California’s terms. The California Supreme Court, hearing oral arguments Tuesday in San Francisco, seemed inclined to rule that in-state advertisements — via billboards, newspapers, toll-free numbers and even the Internet — are sufficient contacts to subject out-of-state companies to California laws. Such a ruling would have implications far beyond Nevada, what with thousands of companies of all kinds routinely using advertising, especially Web sites, to attract and solicit customers across the nation and beyond. Given all the advertising outlets currently used by Nevada casino hotels, Justice Joyce Kennard told Los Angeles attorney Robert Fischer Jr. on Tuesday that it could be construed that his client, Harrah’s Entertainment Inc., “did, indeed, avail itself of the benefits in the state of California.” “Here, your client specifically reached out to California residents,” she said. “I still don’t see how you can get around that.” Nevada’s gaming industry was stunned last year when Los Angeles’ 2nd District Court of Appeal ruled that Southern Californian Frank Snowney could pursue a class action against Harrah’s and several other Nevada-based casinos. Snowney had sued under California’s unfair competition law, claiming he and others hadn’t been told about Nevada’s $3 energy surcharge when he booked a reservation through the casino-hotel’s Web site. The appeal court held that the casinos had established a “substantial connection” with California by purposely directing their advertising at the state’s residents and, therefore, were subject to personal jurisdiction under California law. In doing so, the court rejected Circus Circus Hotels v. Superior Court, 120 Cal.App.3d 546, in which the 4th District ruled in 1981 that advertising and toll-free numbers do not confer personal jurisdiction. Attorneys for the Chamber of Commerce of the United States argued in an amicus curiae brief that the 2nd District’s ruling could expose businesses to suits in “far-flung jurisdictions.” They also warned that if other states reciprocate, California could come to rue its decision. On Tuesday, Fischer, a partner in the Los Angeles office of Fulbright & Jaworski, did his best to convince the justices that there is “a difference between doing business in a state and with a state.” At one point, he compared Harrah’s Web site with that of L.L. Bean’s. The Maine-based clothing manufacturer’s Web site, he said, is active, allowing California residents to purchase products that are then delivered to their homes. “Ours is not like that,” he said. “You can’t gamble in our casino in California because it’s not there.” The justices, however, kept coming back to the fact that Nevada casinos appeared to specifically target California’s millions — and have done so physically through billboards, newspaper ads and other mediums. “There’s more than just a Web site,” Justice Carlos Moreno noted. “You’re not suggesting your client didn’t target California residents in order to be profitable, are you?” Justice Marvin Baxter asked. Baxter, who frequently poses hypothetical situations, also asked Fischer what Nevada would do if a “high roller” from California left the state after gambling, still owing the casino a lot of money. Couldn’t the casino pursue justice in either state’s courts? Fischer’s answer produced a lot of laughter, even getting Baxter to grin. “With a high roller, they just wait ’til he comes back to Nevada,” Fischer said. “The high rollers always come back.” Snowney’s position was argued by Edwin and Eric Schreiber, partners in Encino’s Schreiber & Schreiber. A ruling in Snowney v. Harrah’s Entertainment, S124286, is due within 90 days.

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