THE CHICO STATE LAWSUIT: IS ILLEGALLY SERVING ALCOHOL UNFAIR COMPETITION?

Timothy M. Burke, Manley & Burke

The lawsuit filed by Michael and Edith Heideman, the parents of Adrian Heideman, who died in the Pi Kappa Phi House at Cal State-Chico, contains claims against the national fraternity, its chapter, officers of the chapter and specific individuals who purchased the alcohol and encouraged Adrian to consume it. The Complaint includes a claim based on violations of California’s anti-hazing law, seven separate negligence claims and a unique claim based on California’s Unfair Business Practices Statute. A slightly edited version of the Ninth Cause of Action of the Complaint filed on behalf of the Heidemans by the San Francisco law firm of Kerr & Wagstaffe is reprinted below.

NINTH CAUSE OF ACTION

Business & Professions Code sections 17200 et seq. (Against defendants PKP-Chico and PKP)

122. This cause of action is brought pursuant to California Business & Professions Code sections 17200 et seq. The conduct of defendants constitutes unfair, unlawful and fraudulent business practices within the meaning of Code section I 7200.

123. It is the law and public policy of the State of California that alcoholic beverages shall not be provided to persons under the age of 21. The same public policy necessarily prohibits encouraging or requiring minors to consume alcoholic beverages.  The  recruitment,  initiation, and social activities of PKP and PKP-Chico complained of herein constitute unfair business practices [in violation of the law] because they include and consist in substantial part of providing alcoholic beverages to persons under the age of 21 as well as  permitting,  encouraging, and requiring those persons to consume such alcoholic beverages.

124. It is the law and public policy of the State of California that students at universities such as CSU-Chico shall not be subjected to hazing. Educ. Code§§ 32050-51. The recruitment, initiation, and social activities of PKP and PKP­ Chico complained of herein constitute unfair business practices because they include and consist in substantial part of prohibited hazing.

125. Business and Professions Code section 17203 provides that a court “may make such orders or judgments … as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition … or as may be necessary to restore to any person  in interest any money or property, real or personal, which may have been acquired by means of such unfair competition.”

126. The Heidemans are informed and believe that the acts of defendants are ongoing throughout local chapters under the control of PKP and that defendants will continue to engage in these unfair and unlawful business practices unless restrained. Accordingly, the Heidemans, on their own behalf and on behalf of the public, seek an injunction preventing defendants from continuing to engage in the illegal practices alleged above. The Heidemans seek an order of this Court enjoining PKP and PKP-Chico,  and each of them, from providing alcoholic beverages to persons under 21 at any  fraternity  function  or on any fraternity premises; allowing persons under 21 to consume alcoholic beverages at any fraternity function or on any fraternity premises; encouraging, requiring, or coercing persons under 21 to consume alcoholic beverages; and any other hazing prohibited by California law.

127. In committing unfair business practices, defendants have been unjustly enriched  and  should be disgorged of their unjustly acquired gains, in an amount to be determined at trial. Additionally, the Heidemans seek restitution of the amounts that defendants have improperly collected by virtue of their conduct in violation of that section…

While the Complaint seeks unspecified money damages to be determined by a jury, the first unique twist in the Ninth Cause of Action is the demand for injunctive relief — a court order prohibiting the fraternity and its chapter from providing alcoholic beverages to persons under 21 at any fraternity function or on any fraternity premises or allowing persons under the age of 21 to consume alcohol at fraternity functions or on fraternity premises. A violation of such a court order, if granted, would put the fraternity or the chapter that engaged in it,  in contempt  of court, subjecting the violators to additional judicial sanction, including the possibility of jail.

The second twist is the demand for “the disgorgement of all earnings, profits, compensation and benefits” resulting from the fraternity’s alleged unfair business practices. In making that claim, the Heidemans have identified yet another legal theory which may be used to attack those fraternal organizations and their officers and members who fail to heed laws regulating the consumption of alcohol, particularly where those organizations, their officers or members, provide alcohol to or encourage drinking by those who,  under the law, may not yet legally consume alcohol at all.