## Facts

- A California motorcyclist was severely injured in California when a car driven by an intoxicated California resident crossed the center line and struck him head-on.
- The driver and a companion had traveled from California to a Nevada casino that served alcohol and solicited California patrons through advertising.
- The complaint alleged the casino’s employees continued serving alcoholic beverages after the patrons became obviously intoxicated and unable to drive safely.
- The patrons then drove back into California while still intoxicated, resulting in the collision.
- The injured motorcyclist sued the Nevada casino in California, alleging negligent service of alcohol proximately caused his injuries.

## Issues

1. Whether a California court must apply the law of the place of the allegedly wrongful conduct (Nevada) or instead apply California’s governmental interest analysis in a tort choice-of-law dispute.
2. Under governmental interest analysis, whether California or Nevada law governs a tavern’s potential civil liability to a third party injured in California after alcohol service in Nevada.

## Decision

- The California Supreme Court held California is not bound by a mechanical “place of the wrong” rule and instead applies governmental interest analysis.
- The court found a true conflict: California law recognized potential liability for continuing to serve an obviously intoxicated patron, while Nevada law generally did not impose such liability to third parties.
- The court determined California’s interests in highway safety, deterrence, and compensation for injuries occurring in California would be more seriously impaired if Nevada’s nonliability rule controlled.
- The court held California law governed the liability issue.
- The court reversed the dismissal entered after the demurrer was sustained without leave to amend and directed that the demurrer be overruled.

## Legal Principles

- California resolves tort choice-of-law disputes using governmental interest analysis rather than an automatic rule applying the law of the place of the wrong.
- A “true conflict” exists when each involved state has a legitimate interest in applying its law and the substantive rules differ.
- In a true conflict, the court selects the law of the state whose policy would suffer the greater impairment if its law were not applied to the issue.
- When injuries occur on California highways and involve California residents, California’s compensatory and deterrent interests may justify applying California law even if the alcohol service occurred out of state.
- A complaint alleging continued service to an obviously intoxicated patron, foreseeably leading to injury to a third person in California, can state a negligence claim under California law.

## Conclusion

The court applied governmental interest analysis and chose California law for a cross-border dram-shop claim, reinstating the plaintiff’s negligence action against the Nevada casino because California’s policies favoring deterrence and compensation for injuries on California highways would be more impaired by applying Nevada’s nonliability rule.


Bernhard v. Harrah's Club, 16 Cal. 3d 313 (Cal. 1976)