Opinion ID: 1329761
Heading Depth: 1
Heading Rank: 3

Heading: The Civil Penalty

Text: W.Va.Code, 46A-7-111(2) [1974] [3] authorizes the Attorney General to bring a civil action against any person for each and every willful violation by that person of the Consumer Credit and Protection Act. If the circuit court finds the person has engaged in a course of repeated and willful violations of the Act, the court can assess a penalty of up to $5,000.00. The meaning of this statute is clear: for every individual violation of the Act, the Attorney General can bring a lawsuit and collect a civil penalty up to $5,000.00. In this case, the Attorney General compiled a list of at least 17,563 violations [4] of the Act by Suarez. Rather than file 17,563 individual lawsuits, the Attorney General filed one. Applying the plain language of the statute, the court could have required Suarez to pay a civil penalty of up to $87,815,000.00. Suarez therefore got off light by only being assessed a $500,000.00 performance-bond penalty, a penalty that is suspended so long as Suarez follows the law in the future. The problem with the circuit court's order in this case was not the amount of the penalty, but the lack of explanation as to how the penalty was determined. As we made clear in Syllabus Point 3 of Fayette Co. National Bank v. Lilly, 199 W.Va. 349, 484 S.E.2d 232 (1997) [5] a trial court must explain the factual and legal reasoning behind an order granting summary judgment. Because the circuit court failed to explain the basis for the suspended civil penalty against Suarez, we have reversed that portion of the summary judgment order and remanded the case for reconsideration and an explanation of the penalty. When a trial court issues a summary judgment order imposing a civil penalty under W.Va.Code, 46A-7-111(2), the order becomes a public record defining the seriousness of the defendant's offense under the Consumer Credit and Protection Act and the Prizes and Gifts Act. The order must, of course, give the defendant notice of why it is being punished and how the punishment was determined. When a circuit court states specifically how and why a penalty is being imposed, then a defendant such as Suarez can understand how to correct its behavior in the future. More important, by reading the order other sweepstakes solicitors will fully understand the level of penalties they may face if they imitate such reprehensible conduct in the future. Suarez's argument before this Court is that W.Va.Code, 46A-7-111(2) only authorizes one, total civil penalty of $5,000.00 upon a finding that a sweepstakes solicitor has engaged in a course of repeated violations. Therefore, even though Suarez bilked West Virginia consumers out of $975,389.02 through repeated, willful conduct, it argues it should only have to pay one $5,000.00 fine. As the majority opinion suggests, there is a facial appeal to this argument because the statute says a circuit court may impose a civil penalty of no more than five thousand dollars, and does not clearly say the court can assess a civil penalty of no more than five thousand dollars for each violation of this chapter.  The Legislature should act to clarify W.Va.Code, 46A-7-111(2) with the addition of the italicized text, so that this insulting argument does not rear its ugly head in the future. [6] Suarez also contends on appeal that there was insufficient evidence to show willful violations of the Consumer Credit and Protection Act. The term `willful' ordinarily imports a knowing and intentional act, as distinguished from a negligent act. Board of Education v. Chaddock, 183 W.Va. 638, 640, 398 S.E.2d 120, 122 (1990) ( per curiam ). It seems self-evident that 17,563 violations of a statute alone could constitute willful conductespecially when those violations did not occur at one point in time, but were spread out and repeated over the course of at least a year, and occurred through the use of dozens of different solicitation letters. Moreover, there is a substantial amount of other evidence in the record to establish that Suarez's conduct was anything but accidental or negligent, and this evidence of intent can be summarized into three categories. First, the founder and president of Suarez Corporation Industries is Benjamin D. Suarez. In State by and through McGraw v. Imperial Marketing, supra , we discussed Mr. Suarez's penchant for intentionally using deceptive marketing methods: In his book, 7 Steps to Freedom II: How to Escape the American Rat Race, Mr. Suarez expresses a recurrent theme of assuring the sale of a product through a mail solicitation by baiting the sale with promises of prizes and rewards and warning the consumers that if they do not purchase a product and respond within a prescribed time period, they risk forfeiture of these prizes and rewards. In a self-fulfilling prophecy, Mr. Suarez, through his company, SCI, has made fear and confusion the catalysts to assure a completed sale of whatever product is being peddled. 196 W.Va. at 358-59, 472 S.E.2d at 804-805. Mr. Suarez's book [7] demonstrates that the misleading statements contained in the multiple solicitations by his company to West Virginia consumers were no accident. Second, a host of different state and federal agencies have prosecuted actions against the Suarez Corporation for its deceptive direct mailing practices. The record contains numerous court orders, administrative cease and desist orders, and consent judgments finding Suarez violated statutes prohibiting unfair or deceptive acts or practices, false advertising, or violated statutes similar to the West Virginia Consumer Credit and Protection Act. [8] All of the enforcement actions predate the entry of summary judgment by the circuit court, and create an indisputable inference that each of the solicitations in the record was sent to 17,563 West Virginia consumers with a willful disregard for West Virginia law. Lastly, the circuit court was, to a limited extent, justified in finding Suarez acted willfully because of the evidence in the record of Suarez's ad hominem attacks against the individuals who have investigated consumer complaints against Suarez. Suarez Corporation Industries and any other sweepstakes solicitor has every right to dispute a charge that it has violated a consumer protection statute. But when the litigation repeatedly expands beyond the bounds of the courtroom and into other courtrooms, and when witness and attorney intimidation becomes an element of litigation strategy, a circuit court must take careful measures to insure the integrity of the judicial system. [9] For example, the record in the instant case indicates that in December 1991 and again in August 1992, the Attorney General for the State of Washington filed consumer protection lawsuits against Suarez for mailing fraudulent solicitations to Washington consumers. During the course of that litigation, Suarez followed, harassed and threatened attorneys and investigators on the case. [10] At the conclusion of the Washington litigation in 1994, Suarez funded expensive election campaign ads attacking the Washington Attorney General. It appears from the record that Suarez has followed a similar course of conduct in this case. Shortly after the West Virginia Attorney General's Office filed this action in August 1994, an investigator hired by Suarez appeared at a court hearing to follow and videotape the State's witnesses and several deputy attorneys general. The Attorney General subsequently filed a motion to prevent Suarez from harassing and intimidating State witnesses. Suarez also paid for numerous campaign ads attacking Attorney General McGraw in the 1996 election, and supporting his opponent. [11] Furthermore, in the course of this consumer protection lawsuit, Suarez has filed a number of lawsuits against the Attorney General, mostly in federal court, relating to the prosecution of the instant case. [12] The willful nature of Suarez's conduct is patently obvious from these three categories of actions, and the circuit court should consider this information in determining the need for or extent of a civil penalty under W.Va.Code, 46A-7-111(2). Whether the company should be punished, and the future deterrent effect of such punishment on Suarez and other sweepstakes solicitors is an issue to be considered by the circuit court on remand. [13] III.