Opinion ID: 2192361
Heading Depth: 1
Heading Rank: 9

Heading: The Monetary Relief

Text: We also direct that those portions of the Agency's final order awarding certain monetary relief be vacated and that a modified order, based on principles of restitution, be entered. The final order deals with all customers who made qualifying purchases from Luskin's during the promotion period. Luskin's is ordered to provide two round trip airline tickets to the destination for which the purchaser qualified, and [t]he terms of the tickets must be such that the consumer may use them without any charge and on any date of the customer's choice for one year after the date of issue, with departure from Baltimore or Washington. Alternatively, Luskin's is ordered to pay each eligible consumer the cash value of the tickets ranging from $479 for Florida to $1,454 to Hawaii. In addition, Luskin's is ordered to reimburse all eligible customers for money paid by the customer to VVI, except for payments for accommodations actually used. The final order established a claims procedure for the administration of the relief ordered. It could not be more plain that the power of the Agency to award monetary relief in an administrative action brought by the Agency is limited to restitution. See § 13-204 ([T]he [Agency] has the powers and duties to ... (10) [a]ssess against any violator ... damages which flow from the improper, incomplete or untimely restitution by the violator....); § 13-402(b)(1) (Any cease and desist order may include a condition for (ii) [t]he restitution by the violator ... to the consumer of money, property, or any other thing received from the consumer in connection with a violation ....); § 13-403(b)(1) ([T]he [Agency] shall ... issue an order requiring the violator ... to take affirmative action, including the restitution of money or property.). If the Agency brings an injunction action, the court under § 13-406(c) may enter any order of judgment necessary to... (2) [r]estore to any person any money or real or personal property acquired from him by means of any prohibited practice.... Compare § 13-408 (dealing with an action for injury or loss brought by the consumer). This comparison between public and private actions has been drawn in consumer initiated actions. See CitaraManis v. Hallowell, 328 Md. 142, 151-53, 613 A.2d 964, 968-69 (1992); Golt, 308 Md. at 12, 517 A.2d at 333. In Consumer Protection Div. v. Consumer Pub. Co., 304 Md. 731, 501 A.2d 48 (1985), we contrasted restitution, which was the relief in that proceeding, with a damage action, saying: `The damages recovery is to compensate the plaintiff and it pays him, theoretically, his losses. The restitution claim, on the other hand, is not aimed at compensating the plaintiff but at forcing the defendant to disgorge benefits it would be unjust for him to keep.... `Restitutionary recoveries often amount to about the same as the plaintiff's losses, and thus serve many of the compensatory purposes served by a damages recovery. The justification lies, however, in the avoidance of unjust enrichment on the part of the defendant.' Id. at 776, 501 A.2d at 71-72 (quoting Dobbs, Law of Remedies § 4.1, at 224 (1973)). See also Bennett Heating & Air Conditioning, Inc. v. NationsBank of Maryland, 342 Md. 169, 180 n. 4, 674 A.2d 534, 539 n. 4 (1996) (`[R]estitution is not damages; restitution is a restoration required to prevent unjust enrichment.') (citing 1 D. Dobbs, Law of Remedies § 4.1(1), at 557 (2d ed.1993)); Magan v. Medical Mut. Liab. Ins. Soc'y, 331 Md. 535, 542, 629 A.2d 626, 629 (1993) (`[I]n enforcing restitution, the purpose is to require the wrongdoer to restore what he has received and thus tend to put the injured party in as good a position as that occupied by him before the contract was made.') (citing 5 A. Corbin, Corbin on Contracts § 1107, at 574 (1964) (footnote omitted)). The Agency explains in its brief the rationale underlying its order that Luskin's pay what is apparently the retail value of two airline tickets, saying, [B]y representing the airfare tickets as `free' and by not disclosing the material costs, terms and conditions, Luskin's did promise to deliver to consumers more than the VVI travel package was actually worth. Brief of Respondent at 34. The Agency says that it is providing relief to consumers by requiring Luskin's to give them what it promised.... Id. This approach treats the Luskin's-eligible consumer relationship as if there were an enforceable contract that had been breached. As a remedy the Agency ordered loss of the benefit of the bargain, or expectation interest, damages, i.e., the difference between the value of that which was promised less the value of that which was received. The Agency's approach can also be analyzed as if there had been a tort of deceit. As a remedy the Agency ordered tort damages, which, in appropriate circumstances in a deceit action, may be measured by loss of the benefit of the bargain. See Hinkle v. Rockville Motor Co., 262 Md. 502, 278 A.2d 42 (1971). [15] In the matter now before us the relief ordered by the Agency is not rooted in restitution. The relief ordered is not limited to preventing unjust enrichment. In this free airfare promotion, Luskin's paid VVI for the travel certificates. Those consumers who presented the certificates to VVI paid an additional sum to VVI to participate in the process, and, if they pursued the vacation, they paid VVI for hotel and other accommodations. VVI likely booked hotel rooms and airline seats for the off season and at discounted rates. VVI's gross profit would be the total of the amounts paid to it by Luskin's and by the consumers less the amounts paid by it to the hotels and airlines. Further, the greater the attrition in the actual use of certificates issued by VVI, the greater is the VVI profit. In this somewhat myopic view of the transaction, Luskin's is out of pocket. The enrichment to Luskin's, however, lies in the additional net profit that Luskin's may have made on an increase in sales of items of $200 or more during the period of the promotion over the sales in that price range that Luskin's otherwise would have made. [16] The appropriate remedy under the circumstances of this case is to require Luskin's to disgorge the net profit it realized from the deceptive practice. Accordingly, we shall vacate the monetary relief portion of the Agency's final order and remand to the Agency for the calculation of monetary relief focused on unjust enrichment. It is, of course, the function of the Agency to fashion the final order. We note, however, that, inasmuch as the remedy seeks to have Luskin's disgorge net profits derived from the deceptive promotion, the base that the Agency decides to use for determining any increase in net profits may be derived using periods of time when lawful promotions were being conducted by Luskin's. Further, mathematical precision is not required; reasonable approximations suffice. See M & R Contractors & Builders, Inc. v. Michael, 215 Md. 340, 349, 138 A.2d 350, 355 (1958). Luskin's argues that, in order to effect restitution, the goods purchased by the eligible consumers must be returned to Luskin's. That is not an appropriate or practical application of restitution in the instant matter. We recognized in Consumer Publishing that the plaintiff is generally required to disaffirm the contract and restore what he received under the bargain, or at least offer in good faith to restore it, before the defendant is required to restore what he received. 304 Md. at 777, 501 A.2d at 72. We also recognized that [t]his requirement has been relaxed when the thing received by plaintiff is expected to be consumed, or from its very nature cannot be returned, or is worthless. Id. [17] In the instant matter the deceptive practice does not involve the goods themselves. Further, tender-back restoration is not practical, inasmuch as it would involve issues concerning the continued existence of the goods, the extent of the depreciation, whether the consumer would be required to pay the value of the use of the goods, and whether the consumer or Luskin's had the burden to deliver or to pick up. More important, the fallacy in this argument is that it does not consider the unjust enrichment of Luskin's. There is a reliance element in restitution, Consumer Publishing, 304 Md. at 779, 501 A.2d at 73, and the parties here are at odds over the treatment of that element in the Agency's claim procedure. That procedure contemplates mailing a questionnaire to customers who, as identified from the records of Luskin's, made qualifying purchases during the promotion period. All questions are to be answered under affirmation. One question on that form asks if one of the reasons for the purchase was to get free airfare tickets. Luskin's contends that the question should be phrased as but for causation, but we have already rejected that argument in Part IV.C, supra. Luskin's also points out that it has many long term customers who always buy their appliances at Luskin's and whose purchases during the promotion period would have been purely coincidental. The Agency's response is that the claim form follows the procedure approved in Consumer Publishing, 304 Md. at 781, 501 A.2d at 74. There is, however, a significant difference between the advertising scheme in Consumer Publishing and that in the matter at hand. There the diet pills were available only through mail order so that reliance on the seller's advertising was inherent to a great degree in customer purchases. Here, purchases by those who did not rely on the ad at all should, in effect, be excluded from the award by determining the extent of unjust enrichment derived from increased sales of $200 or more. On remand, the agency should delete from its order the provision alternatively requiring Luskin's to furnish airline tickets. Like the requirement that Luskin's pay 100% of the retail value of airline tickets, the provision exceeds any unjust enrichment to Luskin's. Indeed, both the monetary and the specific performance relief in the Agency's order could be viewed as punitive, but, if the Agency seeks a punitive assessment, it is to be accomplished by invoking the civil penalty provisions under § 13-410 or criminal penalties under § 13-411. See Golt, 308 Md. at 12, 517 A.2d at 333. A further deficiency in the specific performance alternative is that accommodating customer convenience makes administration of the cease and desist order so complex that court imposed sanctions for contempt based on alleged violations of the order are not realistic. Further, on remand, the Agency will strike the provision that Luskin's pay to customers the amount paid by customers to VVI for other than accommodations. These monies were not received by Luskin's. Any benefit to Luskin's is embodied in net profits that are to be disgorged as unjust enrichment. The Agency argues that this provision in its order is like the direction to refund redemption fees charged to obtain prizes that was approved in Consumer Protection Div. v. Outdoor World Corp., 91 Md.App. at 293, 603 A.2d at 1385. That was a directive, however, issued to an advertiser-seller who had received the redemption fee. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED IN PART AND REVERSED IN PART. CASE REMANDED TO THE COURT OF SPECIAL APPEALS FOR THE ENTRY OF A JUDGMENT VACATING THE JUDGMENT OF THE CIRCUIT COURT FOR HARFORD COUNTY AND REMANDING THIS ACTION TO THE CIRCUIT COURT FOR HARFORD COUNTY WITH DIRECTIONS TO VACATE THE ORDER OF THE CONSUMER PROTECTION DIVISION AND TO REMAND THIS ACTION TO THE CONSUMER PROTECTION DIVISION FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID ONE-HALF BY LUSKIN'S, INC. AND ONE-HALF BY THE CONSUMER PROTECTION DIVISION. Judge CHASANOW joins only in Parts I through VIII of this opinion.