• Sixth Circuit dismisses class action cases that challenged alcohol advertising as targeted toward minors
  • July 20, 2007 | Author: Michael L. Cornell
  • Law Firm: Nixon Peabody LLP - Boston Office
  • This Alert is a follow-up to a February 10, 2006 Alert that reported an Ohio federal district court’s dismissal of Eisenberg v. Anheuser-Busch, Inc. et al.  As that Alert indicated, the past several years have seen a spate of class actions, filed in eight states and the District of Columbia, alleging that beer and distilled spirits manufacturers improperly target minors in advertisements that are funny, sexy, or feature themes that may be attractive to youth as adults.  Because it is illegal for persons under the age of 21 to buy or consume beverages containing alcohol in most states, plaintiffs in these cases claim that such advertisements violate various consumer protection statutes and state tort laws.  Although such claims may seem far-fetched to the average consumer, they come on the heels of massive legal judgments against cigarette manufacturers and are often brought by plaintiffs’ attorneys seeking similar paydays.

    With virtually identical cases still pending in several jurisdictions, it remains too early to proclaim an across-the-board victory for wine, spirits and beer manufacturers.  Nonetheless, the U.S. Court of Appeals for the Sixth Circuit’s decision dismissing both the Eisenberg case and a companion case from the Eastern District of Michigan, Alston v. Advanced Brands and Importing Co., et al., may well serve as an important precedent for other appeals courts presently considering this issue.  It may also give other businesses facing similar attacks (such as soft drink, snack food industries) additional ammunition to defend their advertising and products.

    Overview of the Eisenberg and Alston class action complaints

    The amended complaint in Eisenberg named 36 defendant companies that manufacture beverages containing alcohol or are affiliated with such manufacturers. Originally filed in Ohio state court, the case was removed to federal court on grounds of diversity of citizenship.  The plaintiffs are not underage drinkers, and did not claim to have been personally injured, or even to have consumed beverages containing alcohol.  Instead, they are parents who asserted that family funds were used by their underage children to purchase beverages containing alcohol without the parents knowledge.  The plaintiff-parents did not seek any recovery on behalf of their children, or even any recovery for harm to their children.  Rather, the parents sought to recoup money either given to their children, or taken from them by their children, which in turn was spent on illegal purchases of beverages containing alcohol. 

    The parents alleged in their complaint that the beverage manufacturers have engaged in deliberate and reckless targeting of underage consumers in their advertising and marketing.  Bringing the case as a class action challenging advertising as far back as 1982, they sought disgorgement of billions of dollars of what the complaint called “illegal” profits, as well as an injunction against future unspecified advertising and marketing.

    The complaint in Alston alleged essentially the same claims against the same defendants as those alleged in the Eisenberg complaint, except that the Alston plaintiffs relied on Michigan (rather than Ohio) state consumer protection statutes.  In both cases, the respective Ohio and Michigan federal district courts granted the defendants’ motions to dismiss for failure to state a claim pursuant to Federal Code of Civil Procedure 12(b)(6).

    The Sixth Circuit’s decision

    On appeal, the Sixth Circuit heard both cases in a consolidated appeal captioned, Alston, et al., v. Anheuser-Busch, Inc. et al, Nos. 06-1836/3367.  On July 17, 2007, based on the briefs submitted by the parties and without hearing oral argument, the Sixth Circuit held that the plaintiffs in both actions lacked standing because they did not sufficiently plead or allege that their own minor children – or for that matter, any specific minor children – purchased any beverages containing alcohol while underage.  Because of this lack of standing, the Sixth Circuit reversed the trial courts’ dismissals for failure to state a claim pursuant to Rule 12(b)(6) and remanded both cases with instructions that both complaints be dismissed for lack of jurisdiction.

    The Court of Appeals also held that even if the plaintiffs could amend their complaints to sufficiently allege jurisdiction, those plaintiffs could not state claims under their respective state laws because they could not demonstrate causation.  The court reasoned that, because purchasing beverages containing alcohol while underage is a criminal act, any causal chain between the impermissible advertising alleged in the complaints and the ultimate consumption of such beverages by minors would be broken by the intervening criminal acts of the individuals selling the beverages or the criminal acts of the underage purchasers themselves, or both.  The court also held that, in addition to this lack of causation, the complaints fail because the injunctive remedies sought by the plaintiffs could not be awarded consistent with the First Amendment rights associated with commercial free speech.

    Nixon Peabody LLP represents one of the defendant manufacturers in both the Eisenberg  and Alston cases.