Opinion ID: 2633615
Heading Depth: 1
Heading Rank: 5

Heading: The elements of a deceptive trade practice claim for rescission of a contract

Text: To render the waiver void, the Courbats must establish that it is an unseverable part of a contract or agreement in violation of [HRS ch. 480]. See HRS § 480-12, supra note 1. Furthermore, any unfair or deceptive act[ ] or practice[ ] in the conduct of any trade or commerce violates HRS § 480-2. Deceptive acts or practices violate HRS § 480-2, but HRS ch. 480 contains no statutory definition of deceptive. This court has described a deceptive practice as having the capacity or tendency to mislead or deceive, United States Steel Corp., 82 Hawai`i at 50, 919 P.2d at 312, 313, but, beyond noting that federal cases have also defined deception as an act causing, as a natural and probable result, a person to do that which he [or she] would not do otherwise, Keka, 94 Hawai`i at 228, 11 P.3d at 16 (brackets in original) (quoting United States Steel Corp., 82 Hawai`i at 51, 919 P.2d at 313 (citing Bockenstette v. Federal Trade Comm'n, 134 F.2d 369 (10th Cir.1943))), we have not articulated a more refined test. HRS § 480-3, see supra note 1, provides that HRS ch. 480 shall be construed in accordance with judicial interpretations of similar federal antitrust statutes, and HRS § 480-2(b) provides that [i]n construing this section, the courts ... shall give due consideration to the ... decisions of ... the federal courts interpreting ... 15 U.S.C. [§] 45(a)(1)[(2000)], [5] in recognition of the fact that HRS § 480-2 is a virtual counterpart. [6] Keka, 94 Hawai`i at 228, 11 P.3d at 16. The Federal Trade Commission (FTC), in In re Cliffdale Assocs., Inc., 1984 WL 565319, 103 F.T.C. 110 (1984), developed a three-part analytical test for deception, [7] which the federal courts have thereafter extensively adopted, see FTC v. Verity Int'l, Ltd., 443 F.3d 48, 63 (2d. Cir.2006); FTC v. Tashman, 318 F.3d 1273, 1277 (11th Cir. 2003); FTC v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir.1994); FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1029 (7th Cir.1988). Under the Cliffdale Assocs. test, a deceptive act or practice is (1) a representation, omission, or practice[] that (2) is likely to mislead consumers acting reasonably under the circumstances [where] (3)[] the representation, omission, or practice is material. Verity Int'l, 443 F.3d at 63. A representation, omission, or practice is considered material if it involves `information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.' Novartis Corp. v. FTC, 223 F.3d 783, 786 (D.C.Cir.2000) (quoting Cliffdale Assocs., 103 F.T.C. at 165); see also Kraft, Inc. v. FTC, 970 F.2d 311, 322 (7th Cir.1992); FTC v. Crescent Publ'g Group, Inc., 129 F.Supp.2d 311, 321 (S.D.N.Y.2001); FTC v. Five-Star Auto Club, Inc., 97 F.Supp.2d 502, 529 (S.D.N.Y. 2000); FTC v. Sabal, 32 F.Supp.2d 1004, 1007 (N.D.Ill.1998). Moreover, the Cliffdale Assocs. test is an objective one, turning on whether the act or omission is likely to mislead consumers, Verity Int'l, 443 F.3d at 63, as to information important to consumers, Novartis Corp., 223 F.3d at 786, in making a decision regarding the product or service. [8] Given our obligation under HRS §§ 480-3 and 480-2(b) to apply federal authority as a guide in interpreting HRS ch. 480, we hereby adopt the three-prong Cliffdale Assocs. test in determining when a trade practice is deceptive. [9]