Court Allows Private Suits Against Tobacco Sales to Minors

The California Supreme Court ruled Monday that private individuals and companies may sue stores for selling cigarettes to minors.

The court, in a 6-1 decision, found that a 1930s unfair competition law allows consumers to act as prosecutors and bring lawsuits to enforce criminal and civil laws.

The decision came in a case over the illegal sale of tobacco to minors, and anti-smoking advocates praised it as a useful tool in combating teenage smoking.

The case, however, could have impact beyond tobacco by keeping alive a body of lawsuits in which citizens or private commercial corporations have been filing consumer suits over alleged legal violations by businesses. Such suits have rapidly multiplied during the past decade, and business lawyers until now had been able to persuade some trial judges to limit them.

Public interest groups had urged the court to uphold the right of citizens to file such suits, arguing that they are needed to fight unfair business practices. But business organizations complained Monday that the ruling will lead to more costly litigation against retailers and other businesses.

“You can wind up subject to one of these suits for pretty modest mistakes,” said Fred Main, general counsel for the state Chamber of Commerce.

The decision will spark more lawsuits against stores for selling tobacco to minors, he predicted, saying that “it has potentially a large impact.”

Stanton Glantz, a professor of medicine at the UC San Francisco, called the decision “an important development.”

“The governor isn’t particularly being very aggressive in allowing the health department to enforce the state laws restricting sales to kids,” said Glantz, a member of an oversight committee for the state’s tobacco control program. “So this will mean you can have citizen enforcement, which is good.”

Under the law, a plaintiff can seek restitution, which could be paid to the state or to some other third party. In a tobacco case, the restitution would probably be limited to the amount of money a store made selling tobacco to minors.

The real incentive for a lawyer to bring such a case, however, is that the business which is sued could be forced to pay the lawyer’s fees and expenses.

That prospect drew the attention of the one justice who dissented.

Justice Janice Rogers Brown called the smoking case a “poster child . . . for abusive litigation” and expressed hope that the Legislature will change the law to prohibit such lawsuits.

“Selling cigarettes to minors is against the law, and those guilty of it should be punished,” she said. “The creation of a standardless, limitless, attorney fees machine is not, however, the best way to accomplish that goal.”

The court ruled in favor of Bay Area lawyer Donald P. Driscoll, who has filed several lawsuits seeking more than $40 billion from hundreds of Northern California retailers, primarily small, independent stores, that he said sold minors tobacco.

Many of the retailers have paid Driscoll small settlements, but Lucky Stores decided to fight in court. The 1994 suit against Lucky charges that its stores and about 400 other small markets committed unfair business practices by selling tobacco to youths under the age of 18--a misdemeanor.

The suit seeks $10 billion, but Driscoll said he meant to ask for $1 billion and made a “typo” in the filing of the court papers.

“Let a court decide how much restitution,” he said. “I am convinced retailers are doing a whole lot of damage to kids in this state, and I think a court will agree with us.”

Driscoll represents a commercial group called “Stop Youth Addiction,” which is headed by his mother and was incorporated by his law office.

The Supreme Court appeared to try to distance itself from Driscoll’s case even while giving him a victory. The majority opinion noted that Lucky had complained that Driscoll used unlawful methods to gather evidence--sending minors into stores to buy cigarettes--and brought the lawsuit for his own financial gain.

“These are important concerns,” wrote Justice Kathryn Mickle Werdegar for the court. She added, however, that the court was ruling only on whether such a lawsuit was valid under the law, “not the seemliness of [the] litigation strategy or [the] counsel’s motives.”

The court has no power to rewrite the law, Werdegar said, adding that the Legislature “remains free” to change it.

During past decades, state prosecutors have primarily used the unfair practices law to fight consumer fraud. Nonprofit public interest groups began deploying the law in the 1970s and 1980s to challenge business practices that hurt consumers.

But the use of the law exploded during the past 10 years with plaintiff’s lawyers alleging violations “for everything, virtually everything,” from consumer cases to contract disputes, said Gail E. Lees, a Los Angeles lawyer who represented Lucky in the case.

“This permits claims to go forward where you don’t actually have a victim,” Lees said. All a private party has to allege is that a business acted deceptively, unlawfully or unfairly, and the plaintiffs’ lawyers potentially can force the defendant to pay their fees and court costs, she said.

Lees said the law leaves businesses vulnerable when they agree to settlements with prosecutors. A private party can then take the business to court seeking civil judgments over the same violations, she said.

“If a defendant settles and makes real restitution and agrees to changes in its practices, it doesn’t want to pay tens or hundreds of thousands of dollars defending new suits,” Lees said.

Driscoll denied that he is attempting to make money with the litigation, contending that he simply wants to protect the lives of the state’s youths. He said he lost his stepfather to lung cancer and now regards the suits against retailers “as the most important thing I have done as a lawyer.”

“Now we have a decision from the Supreme Court, and now we feel ready to go and do more” checking up on retailers, he said.

“The case is an important step in the direction away from relying on government officials to deal with these kinds of problems,” Driscoll added. “I think things work better when we rely on private initiative, rather than government bureaucrats.”

In dissent, Brown took issue with that argument.

“Until today,” she wrote, “California has followed the unanimous American rule that the enforcement of penal statutes is the exclusive province of public prosecutors. The reason is obvious: Their activities are governed by rules designed to ensure the public virtue of a disinterested fairness and an impersonal neutrality.”