Appellate Court Holds That Dram Shop Statutes Do Not Protect Four Loko Producer from Lawsuit
Reversing a lower-court decision, a California appeals court has ruled that state dram shop statutes—meant to protect some sellers of alcohol beverages from liability for injuries related to the beverages’ consumption—do not provide immunity for City Brewing Co. in a lawsuit alleging that the company was negligent in producing Four Loko. Fiorini v. City Brewing Co., No. F067046 (Cal. Ct. App., 5th Dist., order entered November 6, 2014).
After drinking two 23.5-ounce cans of Four Loko, the plaintiff’s son was shot to death by police in October 2010. The plaintiff alleged that City Brewing, which brewed, bottled and labeled Four Loko, was liable for negligence for producing an alcohol beverage in a nonresealable can apparently containing alcohol “equivalent to five or six 12-ounce cans of beer” and “as much caffeine as two cups of coffee” because “combining alcohol, a depressant, with caffeine and other stimulants created a product that had unreasonably dangerous propensities because it masked the intoxicating effect of the alcohol and increased the risk of violent and other high-risk behavior.”
After providing a history of California’s dram shop statutes, the court assessed each statute to determine if any immunities therein could apply to City Brewing. The first, Section 25602 of the Business and Professions Code, creates civil and criminal liability for anyone selling alcohol beverages directly to a “habitual or common drunkard” or an “obviously intoxicated person,” and do not apply to City Brewing because the plaintiff’s son bought Four Loko at a convenience store.
The court then turned to Civil Code Section 1714, which codified a 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.” The trial court had defined “furnish” to include any entity in the chain of distribution and deemed City Brewing to be a furnisher under the law, and thus immune to the allegations. The appeals court disagreed, finding that for the purposes of determining who was a furnisher of the alcohol beverage, previous cases had distinguished the entire chain of distribution from “the person who handed the beverage to the consumer.” Further, the language of the statute—”injuries incurred as a result of furnishing alcoholic beverages to an intoxicated person” (emphasis in opinion)—suggested that the intent was to include those who actually had some control over who received the beverage, which is not possible for “manufacturers who are far removed from the ultimate consumer.” Accordingly, City Brewing did not furnish the plaintiff’s son with Four Loko and thus could not be immune under the statute.
City Brewing also claimed protection under Civil Code Section 1714.45, which excludes manufacturers of a common consumer product from product liability claims if the product is “inherently unsafe” and “known to be unsafe by the ordinary consumer who consumes the product” with “ordinary knowledge.” The brewer argued that alcohol and caffeine are individually known to be inherently unsafe, so Four Loko qualifies as a common consumer product. The court disagreed, finding that (i) City Brewing could not find support for its deconstructionist approach for its multi-ingredient product, especially when the plaintiff accused the brewer of manufacturing an unsafe product based on the combination of ingredients; (ii) the approach was incomplete because it did not address the added guarana, taurine and wormwood; and (iii) courts will not apply immunity if adulteration or contamination of a product made it unreasonably dangerous. The court found that Four Loko was not a common consumer good, in part because the risks associated with the combination of caffeine and alcohol were not well understood. Accordingly, the court directed the trial court to vacate its order granting City Brewing’s motion for judgment on the pleadings and file a new order denying that motion.