regular dues in order to use the cation timeshare properties at whistler instead of using the dues to maintain the time shares the directors use the money to fund unsecured loans to one of their own director sol and when found out the company failed to repay the loans the directors misrepresented their own role in the loan transaction and required the time share members to pay additional fees in order to continue using their time shares the district court should not have dismissed the timeshare owners complain at the pleading stage we pledged facts supporting both the public interest impact and trader commerce omens of our washington consumer protection act claims and i'd like to start with public interest and packed the court's analysis should begin with the plain language of the statute and the revived code of washington section nineteen point eight six point zero nine three says that public interest impact is satisfied when the unfair or deceptive conduct injured other person we allege that two thousand other people were injured because they had to pay money to continue using a timeshare they'd already paid for and that should be the end of the analysis particularly at the pleading stage the allegation of the two thousand additional people has to be accepted as true and the statute really is unambiguous were other people injured the answer is ye s the district court disagreed with that analysis finding that members of a private club like these timeshares could not be sort of counted as members of the public and i disagree we disagree with that for a couple of reasons first such a rule would carve a huge hole in washington's consumer protection act there are numerous businesses that organize themselves as private clubs cost zero is a great example is it the case that when someone buys a costco membership they can no longer challenge cosco for any of its billing practices directed towards them because they are members of a private club under the consumer protection act it clearly isn't and the district court found that it was necessary to turn to the multi factor tasks first announced in the washington court fish and hang man ridge those those tests were first of all announced before the statutory provision we rely on thousand point eight six point zero nine three was adopted and second you know the ultimate purpose of those tasks has always been to tell the court when presented with an individual plaintiff making a claim against an individual defendant whether there was a likelihood that other people might have been injured to the washington court tells you that that's exactly the purpose that stops and so when the ultimate question the tests aren't intended to answer is answered by the fact that there are two thousand other people injured there's really no need to resort to them so i guess i'll go back to the old washington case hang with ridge which everyone's familiar with him has briefed quite well here but simply because there's a a lot of people involved doesn't really answer whether you have a consumer problem or whether you have some internal governance problem and it would help me if you would point where in your complaint you think you i would point to in our complaint is paragraph one point two which alleges the additional people who are injured because they do think that that is sort of the key fact for determining whether public interest impact  here looking at hangman ridge in the consumer tat in the test for consumer transaction the fifth factor is in in the course of a single transaction or other people injured and that's exactly what we have here in the course of a single transaction other people were injured there is i don't i'm aware of no authority for the notion that because that because there is a private club struck business structure at  issue the members of those private clubs can no longer be considered members of the public who are impacted and i would also suggest that the court the the washington legislatures decision to make the business of time a concern in the legislature with the ways in which these businesses are operated and you know it's i would say always going to be the case that when someone is injured by the practices of a timeshare business they probably are members of the property intentional misconduct i think we are at an knowing violation of the law and knowing violation of law i don't think we have an allegation of knowing violation of the law we do have an allegation that the  loans themselves were violations of the bylaws of one of the two entities and of the the defendants receive benefits they were not legally and we'll let that defendant sell diet is responsible for at least fifty thousand dollars that is missing from the accounts of these entities we don't have factual information about exactly the process by which that occurred  i'd like to turn to the trader commerce requirements unless the court has further questions related to public interest and did you ask for an opportunity to we did ask for an opportunity to mend and i think the governing pleading is our first amended complaint which  begins we are thirty one and the original complaint begins at u r one fifty nine the main difference i would say is there are more allegations about the unreasonable defendant's conduct in making these loans and misrepresenting their roles in making them when they demanded the potential owners pay additional fees in order to continue using the properties they'd already paid for the trade or commerce element again should i think the courts now if they should begin with the plain language of the statute traitor commerce is defined to include as including the sale of assets or services and any commerce directly or indirectly affecting the people of the fate of washington and what we have here is an ongoing business relationship between the members of this timeshare who paid their regular dues for  in exchange for the ability to essentially use a service which was the time shares themselves the directors were acting in the course that that business when they took the money paid for maintenance of the time shares and administration of the of the business  and used it to make a loan to that to an insider over a million dollars in loans and were also acting in trade or commerce when they sent misleading communications to the timeshare members about their roles failure to disclose example four point two four one fail to disclose that they had authorized approved or ratified the lines four point two four to fail to disclose that when they are theorized then they knew it was the owner of the west coast time shares the other business failed to disclose that they knew he had a time conflict of interest when they authorize the loans is four point two three four point two four point three excuse me but i think all of the allegations under four point two fo district court's rejection of our trade or commerce arguments was focused heavily on a rule that has always been used or almost exclusively by the washington courts to determine essentially whether or not a learned professionals can be sued under the c p a for what looks like a malpractise action and that is just not the rule that should be applied to corporate directors if for numerous reasons first they're not lawyers they're not doctors they're not accountants there is no authority suggesting that this r goes beyond them and in fact in the admin's versus john l scott case the washing court of appeals specifically addressed an argument that a realty company could be protected by this rule and rejected that argument saying you know what that realty company was doing when it took the plainest earnest money and dispersed it to itself and fowler after the plaintiff backed out of a deal she where she was going to buy some property was not the type of judgment that we think of lawyers using when they represent their clients and so how do you determine what entrepreneurial and what sort of the professional judgment of a of the director of a board is just a question that really is not helpful in answering whether trade or commerce was going on here at lax reserve the rest of my time for a must the court has additional questions are alleged to have made some loans to another company and that company is one in which my clients have no ownership or interest when those loans were not repaid in full so usually my clients exercise their rights as directors of these clubs to impose pressure the sesson and on the private club members the members voted on the special assessments and then several years later the lawsuit followed the c p i is not as broad as the appellant's interpret it for the facts of this case as noted by judge zoe it's a square peg in a round hole just because a c p a has been brought in recently in certain respects does not mean that it invades the private transactions of a corporation particularly in the set of facts and allegations in the american point we are not aware of any authority your honour's that the c p a applies to a volunteer board member making decisions for a private club in which it affects only those members of the club and not the public at large the c p a is an outward looking statute so what's your what's your answer to what's your response to opposing counsel's argument or analogy to cosco your honor respectfully i don't think that is an apples to apples comparison just to say that just because costco has members that we are arguing that they can never bring a claim that is not what we're saying we're saying that if the alleged conduct is one that isn't trade or commerce and affects the public interest as those promises have been analyzed by case law then it is possible that costs go orde could be in violation of the c p a but if you look at the specific allegations here it's not the fact that you are members of a club or a corporation that prevents a c p s action it's the alleged conduct and that is really what the analysis is what is the alleged conduct of in my case my clients the former and current board members of these corporations if cosco management perhaps tried to buy part of sam's club or assets of sam's club and it didn't work out is that a c p a violation without anything more no  there the none of the problems have been met here and the there has been no deceptive active practice these were in position of a special assessment that was voted on by the membership this is not in trade or commerce the fact that my clients aren't doctors or lawyers and that they exercise or management decision does not prevent them from carving doubt that exception to entrepreneurial conduct they're not entrepreneurs what palance are essentially arguing as to that prong is that doctors and lawyers and and accountants viewpoint fails because my clients involved were involved in judgment business judgment decisions and not entrepreneurial conduct no allegations of false advertising no allegations of inducing the public to buy into the timeshares it was an investment opportunity that went bad they issued a special assessment and based on those damages of pain the special susman the only claim that opponents had left was the consumer protection  i'm interested in in your view on the washington that the nonprofit i guess i call a nonprofit community is this way to phrase it under twenty six zero six zero three five and what your position is on that statute and where these transactions your honor my client's transactions fit squarely with in twenty four point zero six point zero three five that as you c w twenty four is part of the nonprofit act these are nonprofit corporations these standards for nonprofit board members and legislature did this for a particular reason because they are non profits and you have a lot of regular people like my clients joining these boards the standard for liability requires intentional misconduct or knowing violations of the law those are not alleged here and that was flushed out in district court as well as judge hawkins just asking those questions a few minutes ago it requires liability when that when there is the personal receipt of benefits that is also not alleged here my clients did exactly what would be considered immunity under our c w twenty four point zero six point zero three five that we have a washington cases which intersect that statute with the  this goes back to the judge my general statement in my opening is that we are not aware of any cases which have ruled that nonprofit board members of a corporation are liable under the c there are even actionable under the c p a that doesn't mean that some exception or some circumstance does not exist ever we certainly are not saying that but we are not aware of any case law but quite frankly the absence of case law against nonprofit board members is very telling thank you didn't pan out such as in this case where only ninety percent of money was repaid and the board decided to raise dues as a result of that to cover that shortfall with that incurs c p a liability the answer to that question is no i a for profit public company think we are but it's all status in terms of securities regulation as well it does and there's a reason i'd like to touch on the reason why there is a specific business judgment rule exception for nonprofit board members six nine twenty which is often myside for the the proposition liberal construction it does say liberal construction it says liberal construction to enunciate and to propagate the goals of this statute to mirror federal antitrust and a competitive laws the difference being the state of washington has found fit to give a private cause of action to people to enforce antitrust provisions but is the next  hundred eighty six one thousand and that is completely ignored by the appellants it says in following this liberal construction you shall not that's the language instead you shall not interfere with normal business activities enterprises operations you shall not that is a strong legislative intent that the normal day in day out business decisions shall not be impacted by the c p a and historically they have not been this this the loans that formed the basis for the complaint that are being mourned about is no different than if the board had acquired another property for its members to  visit from time to time and that into t he went bankrupt when into a chapter proceeding there would be business judgment involved in that and this would be perfectly normal  correct your honor we don't have a sale here and i want all the entrepreneurial factors but the other prong of the business studies longs involve didn't some of the directors have an interest in the into teaser relationship to the  the question you seem to to indicate that that is a disputed fact it's not for purposes today's argument of the now they've alleged it in the complaint there's no question about it well if if if you have a self dealing director albeit in a non profit status would you agree that would you would look at it differently it could take you outside the protections of the statute but they also allege in their complaint that the other directors affirmed that conflict and knew about that knew about it in advance notice and there's a statutory exception for that when it is out in the open like that and affirmed by the other directors it's not a conflict the third prong that at the time of the initial loan as opposed to at the time that they went back to the membership right correct and just one last two points your honor i know i'm going to be running out of time the third prong that is that the takes away their arguments on the big business judgment rule is a case law that was been developed which is real simple when you're not exercising you entrepreneurial aspects of a business and here we have a nonprofit director making a judgment call plaintiffs on complaint a numerous paragraph four point ten four point eleven four point twelve everything they talk about is about negligence even in their opening brief in this case on page one again what are they talking about a risky loan it was a risky loan the cases we've cited both parties have cited that apply to realtors appraisers doctors dentists when you're when you're exercising your skill and that's the word they use in their complaint and they use it in their brief when you're exercising your judgment and your skill and you make a decision that turns out to not pan out you're not liable ask yourselves this if the loan had been repaid one hundred percent versus about eighty percent if the loan had been repaid with there be a c p a cause of action here answer no why because there would be no damages now appellants have tried to say it's really not about the loan it's not about where the loan was repaid it's about that they weren't very careful in making the loan and then when it came time to ask the members to make up the deficit because of the poor loan they didn't tell me every detail about the making of the loan they just said we have a shortfall and they asked the members to do you choose to assess yourself they chose to assess themselves mr donkey put it well just silly put it well this is square peg doesn't fit around hole there's no federal antitrust an competitive laws that anywhere near this claim judge really sided to the case of believe it was lightfoot versus mcdonald which says if you're going to come to the court you're going to ask us to create a new c p a claim that in fifty years and hundreds a report decisions has never once seen the light of day if you're going to ask us to do that you show me how it mirrors a federal claim that the federal trade commission has identified it doesn't and look at the language in that case and language in and nine twenty is there any fact any fact in the entire complaint that talks about anti competitive talks about collusion talks about a monopoly we're so far afield from that we're never going to get there this claim they had cause of action they could have brit brot they're trying to morph a complaint into bringing a c p a claim it's not there there's no trade in commerce there's no public interest and even you have some rebuttal time thanks began by addressing the general notion that something that doesn't look like a c p a claim can't be a c p a claim the washington supreme court does not follow that type of reasoning in the pentagon case the court forcefully rejected the notion that there has to be some sort of specialized relationship between the parties in order to have a c p a claim what the courts that is look at the five elements and tell us whether they're satisfied and we have alleged facts that meet each of the five elements which is why dismissal at the pleading stage was improper with respect to our seated one thousand point eight six point nine two zero the language of the statute is that the actual not be construed to prohibit acts or practices which are reasonable in the relation to the development and preservation of business or which are not injurious to the public interest the defendants may disagree with us about the reasonableness of their conduct but our allegations as that are that they acted unreasonably when they took people's money that people paid in order to use a timeshare and invested it in risky unsecured loans to one of you know primarily to one of their own essentially and then misrepresented their role in doing that when they came back to the client to the members of the timeshare and said pay us more money if you want to keep using your time shares the nonprofit status of the entity does not matter washington actually makes it a per se violation of the c p a to violate the law governing charitable solicitations for example the holiday resort case that we've cited involved a defendant that was a nonprofit it was an entity that was a conglomeration of mobile home park owners but there was a knowing violation of the law which prompted the exemption what's the knowing violation of the is what is the knowing violation of the law that is alleged in the complaint where one and where there isn't and knowing violation of the law alleged but i think that whether there was a knowing violation of the law only matters if  r c w two four point zero six point zero three five applied and it doesn't for a couple of reasons that there isn't a case saying that the the business judgment role is the defense to the to washington c p a action and in fact the c p a has its own standard that tells you whether an individual can be liable under the statute the washington court just reaffirmed that standard in state versus arlene's flours the standard is did the person participate in unfair deceptive act with knowledge of the unfair deceptive act approve of it and that's you know it is not consistent with the business judgment immunity that the defendants rely on here i see my time is up must the