Opinion ID: 1119218
Heading Depth: 3
Heading Rank: 2

Heading: Restitution Under ULSPA in a Public Action.

Text: Unlike the Consumer Protection Act, ULSPA does not expressly authorize the court to award restitutory relief in a suit instituted by the State. Although restitution is expressly available in a private action under ULSPA, AS 34.55.030(b), with respect to public enforcement, the Act merely provides that the State may bring an action in the superior court ... to enforce compliance with this chapter or a regulation or order under this chapter. AS 34.55.020(c). According to Brown, the absence of a provision authorizing restitution in a public action impliedly circumscribes the court's power to award such relief unless the State proceeds under Civil Rule 23, and the case is properly certified as a class action. While we agree that in a case of this nature the State must proceed in a representative capacity, we conclude that certification as a class action is not a prerequisite to an award of restitutory relief. In People v. Superior Court, 9 Cal.3d 282, 107 Cal. Rptr. 192, 507 P.2d 1400 (Cal. 1973), the California Supreme Court was confronted with substantially the same issue involved here. In that case, the California Attorney General brought suit under a statute that authorized the Attorney General to sue to enjoin misleading advertising, but was silent as to the power of the trial court to order restitution in such a proceeding. Id. 107 Cal. Rptr. at 194, 507 P.2d at 1402. Noting that the statute involved did not restrict the court's general equity jurisdiction `in so many words, or by a necessary and inescapable inference,' id., quoting Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332, 1337 (1946), the court held that a trial court has the inherent power to order, as a form of ancillary relief, that the defendants make or offer to make restitution to the consumers found to have been defrauded. 507 P.2d at 1402. In support of its holding the court relied on a number of analogous federal cases that had reached the same conclusion. See Mitchell v. DeMario Jewelry, Inc., 361 U.S. 288, 291-92, 80 S.Ct. 332, 334, 4 L.Ed.2d 323, 326 (1960); Porter v. Warner Holding Co., 328 U.S. 395, 398-99, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332, 1336-38 (1946); Securities and Exchange Comm'n v. Texas Gulf Sulphur Co., 446 F.2d 1301, 1307-08 (2d Cir.1971); McComb v. Frank Scerbo & Sons, 177 F.2d 137, 138-39 (2d Cir.1949). See also Interstate Commerce Comm'n v. B & T Transportation Co., 613 F.2d 1182, 1184-85 (1st Cir.1980). But see United States v. Parkinson, 240 F.2d 918 (9th Cir.1956). We find the California Supreme Court's reasoning persuasive and therefore hold that the trial court has the inherent power to order restitution in an action brought by the State under ULSPA. Nothing in that Act or in its legislative history suggests that the legislature intended to restrict the court's traditional equity powers when properly invoked. That the legislature saw fit to provide a private right of action for restitution under ULSPA does not, in our judgment, operate to curtail the court's power to award such relief at the instance of the State. See Pierce v. Superior Court, 1 Cal.2d 759, 37 P.2d 460, 461 (Cal. 1934). There remains, however, the question of how the State must proceed in a case of this nature; an issue that has received scant attention from the courts. As we perceive it, the principal difference between this case and one brought as a private class action is that the State is not a member of the class of persons whom it seeks to represent. [20] While the State here denies that it is representing anyone other than itself, asserting that its action is predominatly founded in law enforcement, it is clear that as to the restitution claim the State is attempting to enforce the rights of a class of private individuals. Thus, we believe that the State must be regarded as acting in a representative capacity. This conclusion finds support in the case of Kugler v. Romain, 58 N.J. 522, 279 A.2d 640 (N.J. 1971), in which the court sustained the Attorney General's authority to maintain an action for restitution on behalf of defrauded consumers as a suit in the nature of a class action. Id. 279 A.2d at 649. Although the court did not discuss at length the procedural aspects of such a suit, it did note in passing that guidance may be found in [New Jersey statutes] which relate generally to class actions. Id. We likewise conclude that guidance as to the procedural aspects of a case such as this may be found in our own rule governing the maintenance of representative actions, Civil Rule 23. Of particular importance is that part of the Rule relating to notice to members of the class being represented. Subsection (c)(2) of the Rule in relevant part provides: [T]he court shall direct to the members of the class the best notice practicable under the circumstances, including notice to all members who can be identified through reasonable effort. The notice shall advise each member that (A) the court will exclude him from the class if he so requests by a specified date; (B) the judgment, whether favorable or not, will include all members who do not request exclusion; and (C) any member who does not request exclusion may, if he desires, enter an appearance through his counsel. Alaska R.Civ.P. 23(c)(2). Following this procedure will assure that those individuals who elect to be represented by the State will be bound by the judgment, like any other persons whose claims are prosecuted by an authorized representative. McComb v. Frank Scerbo & Sons, 177 F.2d 137, 140 (2d Cir.1949) (Hand, C.J., concurring). And ensuring that the judgment has this res judicata effect will promote judicial economy by lending finality to litigation and protect the defendant from the unfair risk of being subjected to multiple lawsuits arising from the same claim. See Note, New York City's Alternative to The Consumer Class Action: The Government As Robin Hood, 9 Harv.J.Legis. 301, 345-47 (1972); California Corporations Code Section 25530(b): Government Agency Suit Versus The Private Class Action, 27 Hastings L.J. 265, 279-80 (1975). In the instant case, the trial court instructed the State to notify all Windsong lot purchasers of the State's action against Brown. The purpose of such notice was to determine which purchasers wished to participate in any order of restitution ultimately decreed by the court. This notice, however, did not comport with the requirement discussed above that the notice state that those electing to participate will be bound by the final judgment, whether favorable or not. Consequently, whether the lower court's judgment in this case would be binding on each Windsong lot purchaser remains open to question. However we do not believe that this defect requires that the case be remanded for further proceedings. Before an individual lot purchaser receives money under a judgment ordering restitution, he should first consent in writing to be bound by that judgment. That will, under the circumstances of this case, in large part accomplish the goals of the notice requirement of Rule 23(c)(2).