Opinion ID: 447586
Heading Depth: 1
Heading Rank: 4

Heading: metropolitan's unfair practices claim

Text: 32 In finding defendants liable for treble damages under Mass.Gen.Laws ch. 93A, the district court found their acts and practices were unfair and deceptive. The court stated: 33 Having been warned by the previous Coca-Cola litigation, Checkers, through Randolph White, nonetheless withheld money which it had and was able to pay for goods it had received and sold. This constituted unethical, oppressive and unscrupulous conduct, which caused substantial injury to Pepsi.... 34 Appellants deny that their conduct violated Mass.Gen.Laws ch. 93A, which provides in part as follows: 35 Sec. 2. Unfair practices; legislative intent; rules and regulations 36 (a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful. 37 (b) It is the intent of the legislature that in construing paragraph (a) of this section in actions brought under section[ ] ... eleven, the courts will be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)), as from time to time amended. 38 Sec. 11. Persons engaged in business; action for unfair trade practices; class actions; damages; injunctions; costs 39 .... 40 If the court finds for the petitioner, recovery shall be in the amount of the actual damages; or up to three, but not less than two, times such amount if the court finds that the use or employment of the method of competition or the act or practice was a willful or knowing violation of said section two.... 41 If the court finds in any action commenced hereunder, that there has been a violation of section two, the petitioner shall, in addition to other relief provided for by this section and irrespective of the amount in controversy, be awarded reasonable attorneys' fees and costs incurred in said action. 42 Despite the fact that section 2 incorporates by reference both the opinions of the federal courts and the regulations and opinions of the Federal Trade Commission in construing section 5 of the Federal Trade Commission Act, precedent bearing on the unfairness of Checkers's withholding of payment on the debt is scant. The Federal Trade Commission has described the factors it considers in determining whether a practice that is neither in violation of the antitrust laws nor deceptive is unfair as follows: 43 (1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise--whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen). 44 Statement of Basis and Purpose of Trade Regulation Rule 408, Unfair or Deceptive Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking, 29 Fed.Reg. 8355 (1964), cited in FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n. 5, 92 S.Ct. 898, 905, 31 L.Ed.2d 170 (1972), and Levings v. Forbes & Wallace, Inc., 8 Mass.App. 498, 396 N.E.2d 149, 153 (1979). The Massachusetts Attorney General has promulgated similarly broad regulations prohibiting trade practices that are oppressive or unconscionable in any respect. 940 C.M.R. Sec. 3.16(2). 45 Perhaps the closest Massachusetts case is Frank J. Linhares Co. v. Reliance Insurance Co., 4 Mass.App. 617, 357 N.E.2d 313 (1976). There, plaintiff Linhares hired defendant Blanchard to install a hoist on one of his trucks. Blanchard subcontracted to defendant Jannell. After installing the hoist, Jannell instructed J & S, a subsidiary, to return the truck to Blanchard, in the course of which the truck was extensively damaged. Linhares alleged that Jannell, after having the truck repaired, refused to return it to Linhares unless Linhares would agree to release Jannell from warranties on the repairs. The Massachusetts Appeals Court stated that this allegation fell within the definition of 'unfair or deceptive trade practices,' adopted by the Federal Trade Commission and applicable to suits under [Mass.] G.L. c. 93A. Linhares, 357 N.E.2d at 318. 46 On the other hand, it has been held that mere breaches of contract, without more, do not violate chapter 93A. Whitinsville Plaza, Inc. v. Kotseas, 378 Mass. 85, 390 N.E.2d 243, 251 (1979). 47 In the present case, Checkers did not withhold the $61,000 owed to Metropolitan because it disputed owing that sum. Nor did defendants contend an inability to pay. The court concluded that Randolph had simply withheld payment as a wedge against Pepsi to enhance Checkers' bargaining power for more product. While Randolph asserted that Metropolitan reneged on a promise to meet Checkers's full requirements, the court discredited Randolph's testimony. 48 The court was not clearly erroneous in this view of the facts, and while the case is close we think the evidence is sufficient to support its determination that Randolph and Checkers were guilty of a willful violation of Mass.Gen.Laws ch. 93A. The court was entitled to believe that Randolph and Checkers had withheld monies which they legally owed as a form of extortion--to force Pepsi to do what otherwise it could not be legally required to do. See Linhares, 357 N.E.2d at 318. There was no relation between Pepsi's fully liquidated claim for product it had delivered in the past, and Randolph's desire to persuade Pepsi to sell more product to Checkers. 49 To be sure, Randolph asserts in mitigation of his conduct that Pepsi and Metropolitan were themselves guilty of unfair and wrongful conduct in refusing to sell to his company all the product it desired. Defendants contend that since appellee engaged in questionable practices with respect to defendants, defendants' retaliatory refusal to pay a preexisting debt was not immoral, unethical, oppressive or unscrupulous. However, to the extent there was any question whether Pepsi-Cola, Inc. and Metropolitan were entitled to limit sales so as to maintain Pepsi's system of exclusive territorial dealerships, their right to do so was bolstered by the Soft Drink Interbrand Competition Act, 15 U.S.C. Sec. 3501, which became effective July 9, 1980, less than three weeks after Randolph first refused to pay. See Coca-Cola v. FTC, 642 F.2d 1387 (D.C.Cir.1981). By the time Randolph deliberately withheld payment, the handwriting was on the wall in this regard. The jury, moreover, found against Randolph and Checkers on their antitrust claim; that judgment has not been appealed from. Taking into account the court's finding that White's own version of events was totally self-serving, incomplete, uncorroborated, and inconsistent and that he was unworthy of belief as to any of the critical events in issue, we cannot say, as we would be required to if we were to reverse, see Pavlidis v. New England Patriots Football Club, Inc., 737 F.2d 1227, 1231 (1st Cir.1984) (clear error standard for mixed questions of law and fact), that the court committed clear error in finding that under all the circumstances of this case Randolph's calculated refusal to pay a clearly owed indebtedness violated sections two and eleven of Mass.Gen.Laws ch. 93A. 50 In upholding the finding of a willful violation of Mass.Gen.Laws ch. 93A, we are faced with the further problem whether, consistent with the teaching of International Fidelity Co. v. Wilson, 387 Mass. 841, 443 N.E.2d 1308 (1983), it was proper for the district court to assess a single award of treble damages against all defendants, jointly and severally. The Massachusetts Supreme Judicial Court has held that when there is more than one wrongdoer, each must be assessed a penalty in accordance with his degree of culpability, and that collection of the penalty from any one defendant does not absolve the others. 443 N.E.2d at 1315, et seq. 51 We do not think, however, that the present defendants can be analogized to those in International Fidelity. The party that committed the underlying wrong was Checkers. It received the soda, thereby incurring a legal duty to pay for it. Later, acting through Randolph, Checkers refused to pay, attempting to leverage Metropolitan into acquiescence with certain demands. By so doing it violated Mass.Gen.Laws ch. 93A, and the district court was entitled under section 11 to levy treble damages. Randolph was the chief actor in all the wrongdoing, but since he acted in Checkers's name, we cannot see levying separate penalties against both Randolph and his alter ego, Checkers. By the same token, the other defendants are liable because they are chargeable for Checkers's debts, not because of their role as independent wrongdoers vis-a-vis Metropolitan. Accordingly it made sense for the court to grant a single award for treble damages for which all defendants are jointly and severally liable, rather than separate awards which each defendant must pay in full regardless of whether the same or a greater amount is collected from the others. Given the rationale on which the various defendants were liable here, we believe the district court's approach was not inconsistent with International Fidelity nor with controlling Massachusetts law.