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Nevada casinos came up snake eyes on Monday after rolling the dice on the hope that they wouldn’t be subject to California laws for misleading advertising. In a unanimous ruling, the California Supreme Court held that casinos and other out-of-state businesses that advertise in California — by any method including billboards, newspapers and the Internet — can be sued in the state’s courts. Business groups such as the U.S. Chamber of Commerce had warned that a decision against the casinos could subject California to a flood of litigation and expose in-state companies to suits in “far-flung jurisdictions” if other states reciprocated. Justice Janice Rogers Brown ignored those threats, writing that by “purposely and successfully soliciting the business of California residents, [the casinos] could reasonably anticipate being subject to litigation” in the state. “By touting the proximity of their hotels to California and providing driving directions from California to their hotels, defendants’ [advertising] specifically targeted residents of California,” Brown wrote. “As such,” she continued, “defendants have purposely derived a benefit from their [advertising] activities in California and have established a substantial connection with California.” Frank Snowney, a resident of Los Angeles County, sued Harrah’s Entertainment Inc. and other casinos in a class action in 2002, claiming that neither he nor other out-of-state customers had been told about Nevada’s $3 energy surcharge when they booked reservations. He claimed breach of contract, unjust enrichment and violation of California’s unfair competition law. Los Angeles County Superior Court Judge Peter Lichtman granted the casinos’ motion to quash for lack of personal jurisdiction. But last year, L.A.’s 2nd District Court of Appeal ruled that the casinos had subjected themselves to California’s jurisdiction by establishing a “substantial connection” with the state through their direct advertisements. The Supreme Court agreed. “Because the harm alleged by plaintiff relates directly to the content of defendants’ promotional activities in California, an inherent relationship between plaintiff’s claims and defendants’ contacts with California exists,” Brown wrote. “Given ‘the intensity’ of defendants’ activities in California, we therefore have little difficulty in finding a substantial connection between the two.” At oral arguments last month, the casinos’ attorney, Robert Fischer Jr., a partner in Fulbright & Jaworski’s L.A. office, maintained that the casinos couldn’t be held accountable under California law because — no matter where the advertisements took place — the customer still had to travel to Nevada to stay at the hotels and gamble. Brown dismissed that argument. “Where, as here, ‘the actions taken by’ defendants ‘to solicit business within’ California ‘were clearly purposefully directed toward residents of’ California,” she wrote, “‘it is irrelevant where’ their hotels are located.” Fischer, calling from Chicago’s O’Hare International Airport, said he hadn’t seen the ruling and couldn’t comment. Encino, Calif., attorney Eric Schreiber, who along with his father, Edwin, argued Snowney’s case, said the opinion would have the greatest effect on the travel industry and advised companies to be prepared to be sued for false advertising. “If you are going to reach into California and you do something you shouldn’t,” the Schreiber & Schreiber partner said, “you should face the consequences here.” He also shrugged off his opponents’ claims that the ruling could open Pandora’s box. “It doesn’t mean,” he said, “that hundreds of thousands of class action lawsuits are going to be filed in California.” The ruling is Snowney v. Harrah’s Entertainment, 05 C.D.O.S. 4765.

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