Opinion ID: 1962755
Heading Depth: 2
Heading Rank: 1

Heading: Violation of the Consumer Protection Procedures Act

Text: The trial court concluded that DCLP's unilateral imposition on consumers of a $5.00 late fee was actionable under the CPPA either as a trade practice that violated common law and U.C.C. requirements for a valid liquidated damages provision [6] or, alternatively, as an implicit misrepresentation to consumers in violation of the CPPA itself [7] that the fee reflected a good faith attempt to estimate in advance the damages that DCLP would sustain from late payment of its bills. Challenging both rationales, DCLP argues that the Sales Article of the U.C.C. does not apply to the sale of cable television services [8] and that any question of an implicit misrepresentation should have been submitted to the jury and not decided as a matter of law by the court. [9] We do not reach DCLP's specific arguments, and we express no opinion on their merits. It is immaterial whether the late fee violated the U.C.C.'s liquidated damage provision or the CPPA's prohibition against misrepresentations. The late fee violated the rules of the District's common law. That violation was a sufficient predicate by itself for DCLP's unilateral imposition of the late fee on its subscribers to be actionable under the CPPA. The Consumer Protection Procedures Act is a comprehensive statute designed to provide procedures and remedies for a broad spectrum of practices which injure consumers. Atwater v. District of Columbia Dep't of Consumer & Reg. Affairs, 566 A.2d 462, 465 (D.C.1989). While the CPPA enumerates a number of specific unlawful trade practices, see D.C.Code § 28-3904, the enumeration is not exclusive. See Atwater, 566 A.2d at 465. A main purpose of the CPPA is to assure that a just mechanism exists to remedy all improper trade practices. D.C.Code § 28-3901(b)(1) (emphasis added). Trade practices that violate other laws, including the common law, also fall within the purview of the CPPA. See Atwater, 566 A.2d at 465-66 (citing D.C.Code § 28-3905(b)); accord, Osbourne v. Capital City Mortg. Corp., 727 A.2d 322, 325-26 (D.C.1999) ([T]he CPPA's extensive enforcement mechanisms apply not only to the unlawful trade practices proscribed by § 28-3904, but to all other statutory and common law prohibitions.). The CPPA provision pursuant to which the plaintiffs sued DCLP was former D.C.Code § 28-3905(k)(1) (1996). That section read as follows: (k)(1) Any consumer who suffers any damage as a result of the use or employment by any person of a trade practice [10] in violation of a law of the District of Columbia within the jurisdiction of the Department [of Consumer and Regulatory Affairs] may bring an action in the Superior Court of the District of Columbia to recover or obtain any of the following: (A) treble damages; (B) reasonable attorneys' fees; (C) punitive damages; (D) any other relief which the court deems proper.[ [11] ] Inasmuch as the Department's jurisdiction extended to trade practices that violated any statute, regulation, rule of common law, or other law, of the District of Columbia, D.C.Code § 28-3905(b)(2) (emphasis added), the plaintiffs could predicate their CPPA action on DCLP's violation of the common law. The common law views liquidated damages clauses with a gimlet eye. Such clauses may serve valuable purposes, as where actual damages are likely to be difficult to quantify in the event that the contract is breached. [12] When a liquidated damages provision is the product of fair arm's length bargaining, particularly between sophisticated parties, common law suspicions may be eased and more latitude may be afforded the contracting parties to agree as they wish on the remedies for breach. See, e.g., Wilmington Trust Co. v. Aerovias de Mexico, S.A. de C.V., 893 F.Supp. 215, 218 (S.D.N.Y.1995) (Relevant to this inquiry is the sophistication of the parties and whether both sides were represented by able counsel who negotiated the contract at arms length without the ability to overreach the other side.). But where there is a disparity of bargaining power and one party unilaterally imposes a liquidated damages provision in an adhesive contract, the skepticism (bordering, it has been suggested, on outright hostility) shown by the common law to liquidated damages is at its height. And when this set of circumstances occurs in a consumer context, it is a natural subject for consumer protection legislation such as the CPPA. Cf. Weber, Lipshie & Co. v. Christian, 52 Cal.App.4th 645, 60 Cal.Rptr.2d 677, 681 (1997) (noting that California law imposes stricter requirements for liquidated damages clauses in consumer transactions). For a liquidated damages clause to be valid and enforceable, and not void as a penalty, the common law insists that the liquidated damages must not be disproportionate to the level of damages reasonably foreseeable at the time of the making of the contract. Council v. Hogan, 566 A.2d 1070, 1072 (D.C.1989). [A]greements to pay fixed sums plainly without reasonable relation to any probable damage which may follow a breach will not be enforced. Order of AHEPA v. Travel Consultants, Inc., 367 A.2d 119, 126 (D.C.1976) (citation omitted). Where the liquidated damages provision is designed to make the default of the party against whom it runs more profitable to the other party than performance would be, it will be void as a penalty. Id. And [w]hen a contract specifies a single sum in damages for any and all breaches even though it is apparent that all are not of the same gravity, the specification is not a reasonable effort to estimate damages; and when in addition the fixed sum greatly exceeds the actual damages likely to be inflicted by a minor breach, its character as a penalty becomes unmistakable. Lake River Corp. v. Carborundum Co., 769 F.2d 1284, 1290 (7th Cir.1985). [13] The jury found that the $5.00 late fee in this case fell within the gravitational field of these principles. Id. DCLP does not contest that finding, and like the trial court, we accept it as both binding and supported by the evidence. The $5.00 charge was not shockingly disproportionate to the average loss of $2.43 that DCLP incurred from a delayed payment, but the jury reasonably could find that the charge was arbitrary, excessive, and designed in such a way that it took advantage of many thousands of individual consumers and made their cumulative defaults millions of dollars more profitable to DCLP than their timely performance would have been. Accepting the full $5.00 late fee as an imposition on consumers that was void and unenforceable under the common law of the District of Columbia, we hold that consumers could invoke the CPPA to challenge that imposition as an unlawful trade practice. DCLP contends, however, that the plaintiff class did not suffer any damage as a result of DCLP's employment of the invalid late fee as required by former D.C.Code § 28-3905(k)(1). Such consequential damage was a condition precedent to bringing suit under the CPPA. Beard v. Goodyear Tire & Rubber Co., 587 A.2d 195, 204 (D.C.1991). DCLP's position is that the plaintiffs cannot prove actual injury caused by DCLP's conduct, because they could have avoided any injury by paying their bills on time. This is not persuasive; whether the plaintiffs could have avoided injury by paying on time is a different question from whether the illegitimate late fee injured them after they failed to pay on time. The fact that the members of the plaintiff class were delinquent in paying their bills did not make them fair game for overreaching trade practices. Once they were delinquent, class members were obligated to pay the late fee to retain their cable television service, and DCLP caused them actual injury by overcharging them. [14]