Court Says L.A. Man Can Sue Vegas Hotel

The 275 miles that separate Los Angeles from Las Vegas amount to only a short reach for the California judicial system.

The state Supreme Court said Monday that a Los Angeles man could proceed with a lawsuit against Harrah’s Entertainment Inc. over a $3 energy surcharge levied by its Harrah’s Las Vegas hotel-casino. The tourist claimed that the lack of disclosure of the fee when he made his $50-a-night room reservation over the telephone constituted a fraudulent and deceptive business practice.

The case expands and clarifies the circumstances under which residents can file lawsuits against out-of-state companies soliciting business from Californians, attorneys said.

“This is a sea change for all of the casino properties here,” said Mark Tratos, a gaming industry attorney with the Las Vegas office of Greenberg Traurig. “All of Nevada’s casinos are going to have to be aware of California consumer law now because even an inadvertent misstatement of fact could be used to bring class-action lawsuits.”

Moreover, the ruling demonstrates that a company can be sued for allegedly violating the state’s Business and Professions Code even if it doesn’t have an office, a bank account or even employees in California, said Ellis Horvitz, an Encino lawyer who represents businesses in appeals cases.

“It could give people pause as to how they do business in California even when they are not physically here, but California is such a gigantic market they will continue to do it,” Horvitz said.

The 7-0 decision by the state Supreme Court turned on Harrah’s marketing in California.

Although the casino levying the fee was in Las Vegas, its advertising and mail solicitations and a website that provided driving directions to its hotels from Los Angeles and San Francisco gave the state jurisdiction in the dispute, justices ruled.

The court ruled correctly, said Fred Hiestand, general counsel for the Civil Justice Assn. of California, a business lobby for tort reform. “Harrah’s was obviously targeting California residents,” he said, “and it is pretty simple for them to disclose an energy surcharge.”

The dispute dates to February 2002, when Frank Snowney of Los Angeles filed the lawsuit, which seeks to block Harrah’s from the practice and gain restitution. Attorneys sought class-action status for the case.

Los Angeles County Superior Court Judge Peter D. Lichtman dismissed the suit, ruling that the state had no jurisdiction. Snowney appealed, and the 2nd District Court of Appeal reinstated his suit in March 2004. Harrah’s then sought an opinion from the state Supreme Court.

Harrah’s spokesman David Strow declined to comment on the ruling, noting that the company was still in litigation.

Although the Supreme Court ruling affects only seven Harrah’s Nevada properties in Las Vegas, Laughlin, Reno and Lake Tahoe, it comes at a pivotal time.

On June 13, Harrah’s is expected to complete its $9.5-billion purchase, including debt, of Caesars Entertainment Inc. The transaction would make Harrah’s the world’s largest casino company and put it in control of six major Las Vegas properties.

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Times staff writer Lisa Girion contributed to this report.