16 Cal. 3d 313, 128 Cal. Rptr. 215, 546 P.2d 719 (1976)
Defendant Harrah's Club is a Nevada corporation that owns and operates gambling establishments in the State of Nevada in which it sells, furnishes, and gives away intoxicating liquors for consumption on the premises.1
Defendant advertises for and solicits in California the business of California residents at its establishments, knowing and expecting that many California residents will use the public highways in going to and from its drinking and gambling establishments.2
On July 24, 1971, Fern and Philip Myers, in response to defendant's advertisements and solicitations, drove from their California residence to defendant's gambling and drinking club in Nevada.3 They stayed until the early morning hours of July 25, 1971.4 During their stay, defendant's employees served the Myers numerous alcoholic beverages, progressively reaching a point of obvious intoxication rendering them incapable of safely driving a car.5 Nonetheless defendant continued to serve and furnish the Myers alcoholic beverages.6
While still in this intoxicated state, the Myers drove their car back to California.7 Proceeding in a northeasterly direction on Highway 49 near Nevada City, California, the Myers' car, driven negligently by a still intoxicated Fern Myers, drifted across the center line into the lane of oncoming traffic and collided head-on with plaintiff Richard A. Bernhard, a resident of California, who was then driving his motorcycle along said highway.8 As a result of the collision plaintiff suffered severe injuries.9
Bernhard filed a complaint against Harrah's Club alleging that defendant's sale and furnishing of alcoholic beverages to the Myers was negligent and the proximate cause of his injuries, for which he prayed $100,000 in damages.10 Defendant filed a general demurrer to the first amended complaint.11 The trial court sustained the demurrer without leave to amend and entered a judgment of dismissal.12 Bernhard appealed from that judgment to the Supreme Court of California.13
Whether California law or Nevada law governs the civil liability of a Nevada tavern keeper for injuries sustained by a California resident in California after the tavern keeper served alcoholic beverages to intoxicated patrons in Nevada?14
In choice of law for tort actions, California courts apply governmental interest analysis.15 This determines which state's law most appropriately applies to the issue involved.16 When a true conflict exists between the policies of the involved states, the court resolves it by applying the law of the state whose interest would be more impaired if its policy were subordinated to the policy of the other state.17 The focus is on the appropriate scope of the conflicting policies rather than their relative wisdom.18
Yes. Defendant Harrah's Club, a Nevada corporation, owns and operates gambling establishments in Nevada where it sells and furnishes intoxicating liquors.19 The defendant advertises and solicits business from California residents, knowing that they will use California highways to travel to and from its establishments.20
On July 24, 1971, Fern and Philip Myers responded to the defendant's solicitations by driving from California to the defendant's club in Nevada.21 Defendant's employees served the Myers numerous alcoholic beverages until they became obviously intoxicated and incapable of safely driving.22 The defendant continued to serve them despite this condition.23 Subsequently, the Myers drove back to California while still intoxicated.24
On Highway 49 near Nevada City, Fern Myers negligently drove across the center line and collided with plaintiff Richard A. Bernhard's motorcycle, causing him severe injuries.25 Bernhard filed a complaint against the defendant alleging negligence in serving the Myers and seeking $100,000 in damages.26 The trial court sustained the defendant's general demurrer without leave to amend and dismissed the action.27 Bernhard appealed the judgment of dismissal to the Supreme Court of California.28
California has an important and abiding interest in applying its rule of decision to the case at bench.29 The plaintiff is a California resident injured in California by intoxicated drivers.30 The defendant actively solicited California business with the expectation that patrons would return to California while intoxicated.31 Nevada's interest in protecting its tavern keepers from civil liability of a boundless nature will not be significantly impaired when liability is imposed only on those who actively solicit California business.32 The application of California's rule of civil liability would not impose an entirely new duty requiring the ability to distinguish between California residents and other patrons.33 The act of selling to obviously intoxicated persons is already proscribed in Nevada.34
California's interest would be very significantly impaired if its policy were not applied to the defendant.35
California law governs the civil liability of the Nevada tavern keeper in this case.36
Whether both California and Nevada have legitimate interests in the application of their respective rules of decision to this controversy?37
Yes. California imposes liability on tavern keepers for the purpose of protecting members of the general public from injuries resulting from the excessive use of intoxicating liquor.40 California has a special interest in affording this protection to all California residents injured in California.41 Nevada refuses to impose such liability on its tavern keepers.42
Nevada prefers that any extension of liability be accomplished by legislative act after surveys and investigations.43 This avoids subjecting tavern owners to ruinous exposure and endless litigation.44 Since the case involves a California resident injured in California by intoxicated drivers and a Nevada resident tavern keeper that served alcoholic beverages in Nevada, each state has an interest in the application of its respective law of liability and nonliability.45 These interests conflict.46
Both California and Nevada have legitimate interests in the application of their respective rules of decision, creating a true conflict.47
Whether civil liability may be imposed on the Nevada defendant apart from any violation of the California criminal statute?48
The traditional common law rule denying recovery against tavern keepers on the ground that the furnishing of alcoholic beverages is not the proximate cause of injuries inflicted by an intoxicated person is patently unsound.49 This rule has been abrogated.50 Civil liability may rest on ordinary negligence principles apart from any statute.51
Yes. Although Business and Professions Code section 25602 has no extraterritorial effect, it cannot support civil liability on the basis of its violation by an out-of-state defendant.52 The decision in Vesely struck down the old common law rule of nonliability.53 It made clear that there is no bar to civil liability under modern negligence law.54
The furnishing of an alcoholic beverage to an intoxicated person may be a proximate cause of injuries inflicted by that individual upon a third person.55 The consumption, resulting intoxication, and injury-producing conduct are foreseeable intervening causes.56 The basic policy of the state is that everyone is responsible for an injury caused to another by his want of ordinary care or skill in the management of his property.57
Civil liability may be imposed on the Nevada defendant apart from any violation of the California criminal statute.58