Opinion ID: 6491398
Heading Depth: 5
Heading Rank: 1

Heading: whether the plaintiffs must be competitors of, or in competition with, IIMSA to bring claims of un ■ fair methods of competition

Text: In Cieri v. Leticia Query Realty Inc., 80 Hawai'i 54, 905 P.2d 29 (1995), this court stated that: Hawai'i antitrust and consumer protection law is an amalgam of the various prohibitions contained in the federal law; however, our consumer protection provisions bear the most resemblance to the, 1938 amendments to Section 5 of the [FTCA]. Originally, the 1914 version of the FTCA limited the power of the [FTC] to prevent “unfair methods of competition.” Act of Sept. 26, 1914, ch. 311, § 5, 38 Stat. 719. In 1938, however, Congress amended section 5 of the FTCA to give the FTC express authority over “unfair or deceptive act or practices.” Act of March 21, 1938, ch. 49, § 3, 53 Stat. Ill, amending Act of Sept. 26, 1914, ch. 311, § 5, 38 Stat. 719, codified at 15 U.S.C. § 45(a)(1) (1982). The 1938 amendment “created direct protection of consumer interests on a par with market competitors, heralded increased activity of the FTC in all aspects of commercial advertising with an interstate effect, and spurred parallel efforts by the states.” VII E. Kintner, Federal Antitrust Law, § 49.1, 124 (1988). ... HRS § 480-2 is virtually identical to section 5 of the FTCAC[ 25 ] and provided, very simply, that “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” Id. at 60, 905 P.2d at 35 (citations omitted). We further recognized that, [fjrom the outset, it was clear that the focus of what would eventually be the spearhead of Hawai'i consumer protection law was on trade, commerce, and business: Your committee recognizes, as did the Congress of the United States in 1914 when it enacted the [FTCA], that it is impractical to enact a law prohibiting each unfair method of competition or unfair or deceptive act or practice in the conduct of trade and commerce after the need therefor comes to light. In explaining the need for the broad language of the [FTCA], Congress said: It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task. It is also practically impossible to define unfair practices so that the definition will fit business of every sort in every part of this country. Whether competition is unfair or not generally depends upon the surrounding circumstances of the particular case. What is harmful under certain circumstances may be beneficial.under different circumstances. Id. at 60-61, 905 P.2d at 35-36 (quoting Hse. Stand. Comm. Rep. No. 55, in 1965 House Journal, at 538) (citation and emphasis omitted). Section 480-2, however, differs from section 5 of the FTCA in one essential aspect— enforcement. See Robert’s Hawai'i 91 Hawai'i at 249, 982 P.2d at 878 (“FTCA does not afford a private cause of action.”). “Section 5 of the. FTCA contains no private remedy, rather enforcement of its provisions is vested in the [FTC].” Star Markets, Ltd. v. Texaco, Inc., 945 F.Supp. 1344, 1346 (D.Haw.1996) (citation omitted). Hawaii’s version ... contains a blanket authorization for private actions for damages sustained under any provision of ch. 480. HRS § 480-13(a). Two distinct catises of action have emerged under § 4.80-2(a): 1) claims alleging unfair methods of competition; and 2) claims alleging unfair or deceptive acts or practices. In 1987, the Hawai'i legislature amended both §§ 480-2 and 480-13 to eliminate a prior requirement that a plaintiff show that the suit would be in the public interest. [ 26 ] Sen. Conf. Comm. Rep. No. 105, in [1987] Senate Journal, at 872. These amendments allow for even broader enforcement of ch. 480. In conjunction with this expansion, however, the legislature also amended § 480-2 by adding subsection (d) which limits enforcement of the unfair or deceptive acts or practices clause to consumers, the attorney general or the director of the officer of consumer protection; HRS § 480—2(d)[; see also Sen. Stand. Comm. Rep. No. 1056, in 1987 Senate Journal, at 1345 (“Your Committee also believes that private enforcement of antitrust laws is beneficial to the judicial process as it discourages violations and eases the burden on the attorney general’s limited resources.”) ]. The amendment denies businesses standing to sue 'under the “deceptive acts or practices” clause of § 1/80-2(a). However, no such limiting language was included for “unfair methods of competition” claims. Id. (citations omitted) (emphasis added). Moreover, even after this court’s declaration in Robert’s Hawai'i of no private right of action for unfair methods of competition, the legislature specifically retained the broad enforcement language for unfair methods of competition claims by adding subsection (e) to HRS § 480-2, which, as previously quoted, provides that “[a]ny person may bring an action based on unfair methods of competition declared unlawful by this section.” (Emphasis added.) The legislative history explicitly indicates that “[t]his bill amended the law to clearly give businesses and consumers the right to enforce the law if the Attorney General declines to commence the action based on the claim.” Hse. Stand. Comm. Rep. No. 1118, in 2002 House Journal, at 1665 (emphasis added). By its plain terms, HRS § 480-2(e) authorizes any person, i.e., businesses and individual consumers, to bring an action grounded upon unfair methods of competition. To require that the plaintiffs in this ease be competitors of HMSA would contravene the plain language of subsection (e) and the intent of the legislature in amending the subject statute. Accordingly, to the extent the circuit court premised its dismissal of the plaintiffs’ unfair methods of competition claims on its conclusion that they “are not competitors [of] HMSA,” we hold that the circuit court erred. (Internal quotation marks omitted.) Moreover, as previously stated, HMSA essentially maintains that, in order to sustain their claims of unfair methods of competition, the plaintiffs must also be in competition unth HMSA, which they are not because [the plaintiffs] provide medical services that HMSA reimburses in accordance with PAR Agreements, and [the plaintiffs] want more money for themselves at the expense of HMSA and its patient members. Accordingly, there can be no violation here of the prohibition against “unfair competition” in Chapter 480. In response to HMSA’s contention, the plaintiffs merely retort that HRS § 480-2 does not require a showing of “harm to competition,” but only that the unfair practice has caused injury to “a person.” 27 However, having held that the plaintiffs need not be competitors of HMSA, it follows that they need not be “in competition” with HMSA. See Fed. Trade Comm’n v. Raladam Co., 283 U.S. 643, 649, 51 S.Ct. 587, 75 L.Ed. 1324 (1931) (“[i]t is obvious that the word ‘competition’ imports the existence of present or potential competitors”), superseded by statute on other grounds, Fed. Trade Comm’n v. Sperry & Hutchinson Co., 405 U.S. 233, 244, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972). Thus, to the extent that the circuit court’s dismissal is premised upon its conclusion that the plaintiffs “are not in competition with HMSA,” we hold that the circuit court erred.