Consumer Advertising Law Blog

Is Lawsuit Over Beer Sponsored Football Sweepstakes All Wet?

A class action lawsuit was recently filed in the United States District Court in Chicago against the makers of Coors Light for allegedly printing invalid official entry codes in connection with its “Coors Light Silver Ticket Sweepstakes.”

The “Coors Light Silver Ticket Sweepstakes” promotes the opportunity for 256 grand prize winners to receive two tickets to a 2009 NFL regular season game and 125 first place winners to receive a $100 NFLShop.com gift certificate. According to the contest rules, a contestant must obtain an official entry code — either from purchasing a Coors Light product or by receiving a code by mail free of charge from Coors — and enter the code via text message or on the Internet to see if he or she is a winner.

According to the Complaint, plaintiff purchased a Coors Light product “for the sole purpose of entering into the sweepstakes.” When plaintiff attempted to enter his official code, however, he was informed that the code was invalid. The Complaint alleges this was not an isolated problem but instead claims that defendants received several hundred complaints of invalid codes but continued operating the contest without disclosing the fact that invalid entry codes had been printed.

The official rules for the “Coors Light Silver Ticket Sweepstakes” contain a limitation of liability clause that covers printing errors. It could be an interesting question as to whether this would cover the fact pattern alleged by plaintiff — that up to 5 million official entry codes were invalid. More interesting questions in the case will likely include whether there was any injury, as the defendants provided a means of obtaining entry codes free of charge. Are there any other putative class members like plaintiff who allegedly only bought beer for the chance to enter the sweepstakes (sounds like something we might have said to our parents when we were 18) and if so, how do you identify those consumers as distinct from those who enjoy the Silver Bullet with or without a valid contest entry code? 

- Alan Veronick and Amy Mudge 

Federal Court Refuses To Redeem Gift Card Complaint

In an important win for companies that issue gift cards in California, a United States District Court recently threw out a class action complaint alleging that it was a violation of California law to refuse to redeem a gift card for cash. The plaintiff had sued under California’s notorious Unfair Competition Law, which allows a plaintiff to sue for any “unlawful” business practice by “borrowing” violations of other laws, even if the underlying law does not provide for a private right of action. The law that plaintiff “borrowed” to try to support his claim was California Civil Code section 1749.5(b)(1), which provides that “any gift certificate…is redeemable in cash for its cash value, or subject to replacement with a new gift certificate at no cost to the purchaser or holder.”

 

The Defendant, a consumer product company that issues gift cards, filed a motion to dismiss, and the court granted it for two reasons. First, the court rejected plaintiff’s argument that the consumer had the option of either getting cash back or a replacement card, and instead held that the issuer had this option. Second, the court held that even if plaintiff could establish a violation of the statute, he lacked the injury necessary to maintain a claim under the UCL. The court held that plaintiff did not lose any money or property due to the claimed violation, because he still had a gift card with which he could buy merchandise in an amount equal to the full value of his gift card.

 

The court’s ruling, while not binding on other courts, should nevertheless be helpful to other consumer companies. It resolves in defendants’ favor the previously unresolved question of whether section 1749.5(b)(1) requires companies to essentially act as ATM machines for anyone holding a gift card. And it provides a federal court’s view on an important UCL issue: Whether a person suffers a loss of money or property sufficient to bring a claim under the UCL whenever he parts with money due to a UCL violation, or whether he must also establish what plaintiff could not prove here, which is that he did not receive a product of equal value in return for his money. This issue is currently before the California Supreme Court in Kwikset.

- James Speyer