Opinion ID: 1241804
Heading Depth: 1
Heading Rank: 1

Heading: The proper standard or degree of proof.

Text: ORS 17.250(5) provides:    that in civil cases the affirmation of the issue shall be proved, and when the evidence is contradictory, the finding shall be according to the preponderance of evidence; that in criminal cases guilt shall be established beyond a reasonable doubt;   . (Emphasis added) Oregon's Unlawful Trade Practices Act (UTPA) is a comprehensive statute for the protection of consumers and provides for both public and private enforcement of its provisions. [6] In both instances it is clear that the legislature intended that such enforcement be obtained through the use of civil remedies rather than criminal sanctions. [7] The act is silent, however, with respect to the degree of proof required in such proceedings. Thus, the question is presented whether the preponderance of evidence standard as provided in ORS 17.250(5) should apply in such proceedings, particularly in deciding the question whether defendant's conduct was wilful, or whether a higher standard or degree of proof should be required in deciding that question in such cases. In Cook v. Michael, 214 Or. 513, 330 P.2d 1026 (1958), this court held (at 525, 330 P.2d at 1032) that: Our treatment of ORS 17.250(5) should not be taken to mean that in civil cases an instruction in terms of a preponderance of the evidence is the only permissible charge. When an issue must be proved by clear and convincing evidence an instruction so stating does not run counter to ORS 17.250(5). Thus where the issue is fraud, a higher degree of proof is necessary. (Emphasis added) And, further, (at 527, 330 P.2d at 1032): In ordinary civil cases the degree of proof required is a preponderance of the evidence; in some types of cases, such as those involving the issue of fraud, many courts require `clear and convincing' evidence;   . (Emphasis added) Thus, while the preponderance of evidence standard is the rule in most civil cases, an exception to that standard has been required in civil cases based upon common law fraud. See, e.g., Barkins v. The Stuyvesant Ins. Co., 255 Or. 222, 224, 465 P.2d 696 (1970). Defendant contends that when, in proceedings under the UTPA, the remedy sought requires proof of wilfulness, the degree of proof required must be clear and convincing because had these same allegations been made by a purchaser of goods without reference to the Oregon statute, the case would have been one for fraud and deceit under the common law. Thus, according to defendant, when the legislature codifies common law fraud, but is silent as to the degree of proof required, the assumption should be that the legislature intended that the common law rule requiring a clear and convincing degree of proof should apply. We disagree. In Wolverton v. Stanwood, 278 Or. 341, 563 P.2d 1203, reh. den. 278 Or. 709, 565 P.2d 755 (1977), this court said (at 713, 565 P.2d at 757): The elements of common law fraud are distinct and separate from the elements of a cause of action under the Unlawful Trade Practices Act, and a violation of the Act is more easily shown. The elements of common law fraud, as stated by this court in Rice v. McAlister, 268 Or. 125, 128, 519 P.2d 1263 (1974), are:    (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the bearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; and (9) his consequent and proximate injury. A review of the UTPA reveals that not all of these elements are required in order to recover under the act. For example, the element of reliance is notably different. In Sanders v. Francis, 277 Or. 593, 598-99, 561 P.2d 1003 (1977), this court considered whether reliance was a necessary element to a private action under ORS 646.638(1). That section requires that a private party has suffered an ascertainable loss as a result of wilful use or employment by another person of a method or practice declared unlawful by ORS 646.608   , before such party may bring a UTPA suit. This court determined that whether reliance was a necessary element depended upon the type of violation alleged and that reliance was not required in nondisclosure cases. Thus, reliance may not be an element of a private cause of suit under ORS 646.638(1) because of the requirement that the loss be the result of wilful conduct. In any event, no such requirement that a loss be the result of wilful conduct exists when, as in this case, suit is brought by the state under ORS 646.632 and when a civil penalty is sought under ORS 646.642(3). In addition, the element of scienter as required in an action for common law fraud is not required by the UTPA. In Horner v. Wagy, 173 Or. 441, 146 P.2d 92 (1944), this court considered whether it was error to instruct a jury that representations could constitute fraud even though the defendant did not know whether such representations were true or false. This court stated (at 459, 146 P.2d at 99): This court is committed to the doctrine that scienter, as an element of actionable fraud, is imputable only when a statement is attended by conscious ignorance of, or reckless indifference to, its truth or falsity on the part of the one making it; (citation omitted). The language of the instruction which we have quoted could have been taken by the jury to mean that a finding of fraud was authorized even though the misrepresentations were made negligently, without knowing whether they were true or false. This requirement that the statement be attended by conscious ignorance of, or reckless indifference to, its truth or falsity was further explained in Amort v. Tupper, 204 Or. 279, 282 P.2d 660 (1955) at 287, 282 P.2d at 664: In other words, a definite statement of a material fact made by a party who does not know the statement to be true, and has `no reasonable grounds for believing it to be true, will, if false, have the same legal effect as a statement of what the party positively knows to be untrue.' 3 Pomeroy's Equity Jurisprudence, 5 ed., 479, § 884a. See also Bausch v. Myers, 273 Or. 376, 379, 541 P.2d 817 (1975). By contrast, ORS 646.642(3) permits the imposition of a civil penalty if defendant knew or should have known that his conduct was a violation. ORS 646.605(9). Thus, under the terms of that statute a defendant is liable for misrepresentations made negligently, without evidence that it was attended by either conscious ignorance or reckless indifference to its truth or falsity, whereas evidence that a misrepresentation was made negligently is insufficient in an action for common law fraud. In other words, the term wilful, as defined by ORS 646.605(9), requires no more than proof of ordinary negligence by a defendant in not knowing, when it should have known, that a representation made by him was not true. In a cause of action for ordinary negligence the degree or standard of proof required is a preponderance of the evidence. In our opinion, the same degree or standard of proof is required in a proceeding under the UTPA in view of the provisions of ORS 646.605(9), and we decline to extend to such proceedings the more rigorous degree or standard of proof required in an action for common law fraud. [8] Defendant also contends that because the statute authorizes the state to seek a severe civil penalty ($25,000 per violation per ORS 646.642(3)), this suit cannot be characterized as a civil suit, but rather is in the nature of a criminal prosecution, requiring that the state prove its case beyond a reasonable doubt. In support of this contention defendant relies on Brown v. Multnomah County Dist. Ct., 280 Or. 95, 570 P.2d 52 (1977), in which this court held that even though the legislature sought to decriminalize the first offense of driving a motor vehicle under the influence of intoxicants (DUII), that offense and the means of enforcement and punishment retained too many penal characteristics not to be classified as a criminal prosecution. Defendant's reliance on Brown is misplaced. In Brown this court considered several factors other than the severity of the fine, including    the secondary sanctions in case of nonpayment, the relationship of DUII to other major traffic offenses, the evident legislative desire to emphasize the seriousness of this offense while facilitating its punishment, and the retention of criminal law enforcement procedures   . 280 Or. at 110, 570 P.2d at 61. Most of these factors are not present in actions brought under the UTPA. This court also noted in Brown that the legislature retained the criminal classification for a second and subsequent charge of DUII within five years. In addition, the court in Brown specifically noted (at 104, 570 P.2d at 58) that: It proves little about a $1,000 fine for driving under the influence of intoxicants that much larger civil penalties are levied against business enterprises for violations of various regulations in the course of business. We deal here with fines payable by ordinary individuals for misconduct unrelated to the pursuit of a profitable activity   . The civil penalty applicable in UTPA cases, on the other hand, only applies to activities committed in the course of the person's business, vocation or occupation   . ORS 646.607 and 646.608. [9] For these reasons, we hold that the trial court erred when it instructed the jury that because the second count of the complaint in this suit alleged wilful conduct on behalf of the defendant    the evidence on that (count) must be clear and convincing, as distinguished from a mere preponderance of the evidence. [10]