Opinion ID: 2600418
Heading Depth: 2
Heading Rank: 2

Heading: Did the trial court err in granting summary judgment in Integra's favor on Indoor Billboard's CPA claim?

Text: ¶ 30 The CPA was enacted in 1961, in part, to protect the public from unfair or deceptive acts or practices in the conduct of any trade or commerce. RCW 19.86.020. The purpose was to protect the public and foster fair and honest competition. RCW 19.86.920. The CPA is to be liberally construed that its beneficial purposes may be served. Id. ¶ 31 At the time the CPA was enacted, only the Washington State attorney general (AG) was authorized to bring suit to enforce it. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 784, 719 P.2d 531 (1986). In 1971, the legislature instituted a private right of action to enlist the aid of private individuals in enforcing the CPA. Lightfoot v. MacDonald, 86 Wash.2d 331, 335-36, 544 P.2d 88 (1976). However, this court has construed the CPA to require that a private plaintiff show not only that a defendant's practices affect the private plaintiff but that they also have the potential to affect the public interest. Hangman Ridge, 105 Wash.2d at 788, 719 P.2d 531; Lightfoot, 86 Wash.2d at 335-36, 544 P.2d 88. Amici curiae the Washington State Trial Lawyers Association Foundation (WSTLA) and the AG urge this court, in deciding this case, to consider the legislature's purpose of protecting the public and the legislature's desire that the CPA be liberally construed. ¶ 32 To prevail on a private CPA claim, a private plaintiff must show (1) an unfair or deceptive act or practice, (2) that occurs in trade or commerce, (3) a public interest, (4) injury to the plaintiff in his or her business or property, and (5) a causal link between the unfair or deceptive act and the injury suffered. Hangman Ridge, 105 Wash.2d at 784-85, 719 P.2d 531. A plaintiff must satisfy all five elements to prevail. Id. at 793, 719 P.2d 531. ¶ 33 Indoor Billboard appeals the trial court's grant of summary judgment in favor of Integra on only the first and fifth elements, unfair or deceptive act or practice and causation.
¶ 34 When the issue is whether a party committed a particular act, the court reviews any contested facts under the substantial evidence test. Leingang v. Pierce County Med. Bureau, Inc., 131 Wash.2d 133, 150, 930 P.2d 288 (1997). [T]he determination of whether a particular statute applies to a factual situation is a conclusion of law. Id. Where there is no dispute about what the parties did, whether the conduct constitutes an unfair or deceptive act can be decided by this court as a question of law. Id. The parties here agree that whether Integra's actions constituted an unfair or deceptive act or practice is a question of law. Br. of Appellant at 27-28; Br. of Resp't/Cross Appellant at 18. ¶ 35 An unfair or deceptive act or practice need not be intended to deceive  it need only have the capacity to deceive a substantial portion of the public. Hangman Ridge, 105 Wash.2d at 785, 719 P.2d 531. The purpose of the capacity-to-deceive test is to deter deceptive conduct before injury occurs. Id. (citing Jeffrey M. Koontz, Washington Lawyers Under the Purview of the State Consumer Protection ActThe `Entrepreneurial Aspects' Solution  Short v. Demopolis, 103 Wash.2d 52, 691 P.2d 163 (1984)., 60 Wash. L.Rev. 925, 944 (1985)). [K]nowing failure to reveal something of material importance is `deceptive' within the CPA. Robinson v. Avis Rent A Car Sys., Inc., 106 Wash.App. 104, 116, 22 P.3d 818 (2001). ¶ 36 Indoor Billboard claims that Integra's practice had the capacity to deceive a substantial portion of the public, and actually did deceive Indoor Billboard, about the nature of Integra's PICC. Indoor Billboard also argues that the nature of Integra's PICC was of material importance to customers. Integra responds that the use of the term PICC does not suggest it is regulated by the FCC, nor does listing it under Taxes and Surcharges suggest it is a governmentally imposed tax. Br. of Resp't/Cross Appellant at 24. Integra also rejects Indoor Billboard's claim that the nature of its PICC was of material importance, stating, [t]here is no such thing as a `true PICC.' Id. at 22. ¶ 37 Indoor Billboard relies on two cases from Division One of the Court of Appeals for its arguments: Dwyer v. J.I. Kislak Mortgage Corp., 103 Wash.App. 542, 13 P.3d 240 (2000); Pickett v. Holland America Line-Westours, Inc., 101 Wash.App. 901, 6 P.3d 63 (2000) ( Pickett I ), rev'd, 145 Wash.2d 178, 35 P.3d 351 (2001) ( Pickett II ). ¶ 38 In Dwyer, the court ruled that a mortgage company's practice of including a fax charge on its mortgage payoff statements, without further explanation, deceived customers into thinking they had to pay the fee before their mortgages would be released. 103 Wash.App. at 547, 13 P.3d 240. Indoor Billboard argues Integra's actions were comparable to those of the mortgage company because Integra listed its PICC on its invoices in a deceptive manner. Indeed, Indoor Billboard argues, if Integra had properly disclosed the true nature of its PICC, there would be no deception. Br. of Appellant at 39. Integra tries to distinguish its actions from those of the mortgage company in Dwyer, arguing it fully disclosed that its PICC was not regulated by the FCC in discussions with Shulevitz, whereas the mortgage company failed to disclose the fact that the facsimile fee was not part of the mortgage payoff. We agree with Indoor Billboard that Integra's act of listing its PICC under the heading of Taxes and Surcharges on its invoices was analogous to the actions of the mortgage company in Dwyer. The surcharge was called a PICC and listed on a portion of the invoice that included state and federal tax charges and had the capacity to deceive a substantial portion of the public into believing it was regulated by the FCC. Hangman Ridge, 105 Wash.2d at 785, 719 P.2d 531. ¶ 39 Pickett I involved a class action suit against a cruise ship line for a variety of claims, including a CPA violation. 101 Wash. App. at 906, 6 P.3d 63. The plaintiffs had alleged that the cruise ship line misrepresented certain charges as mandatory taxes and fees when the charges were actually retained by the cruise line for corporate purposes. Id. A class was certified for settlement purposes and a member of the class intervened, challenging the fairness of the settlement. Id. at 905, 6 P.3d 63. Although the only issue presented to the Court of Appeals was the fairness of the settlement, the court reached issues related to the merits of the CPA claim, noting the cruise ship line could not represent the charges as something they were not. Id. at 920, 6 P.3d 63. Indoor Billboard argues Pickett I is analogous because Integra called its surcharge by the same name as a charge regulated by the FCC when it actually was something else. But this court subsequently reversed Picket I, casting doubt on its precedential value for this case. See Pickett II, 145 Wash.2d at 191, 35 P.3d 351. ¶ 40 Integra relies on a different case from Division One, Robinson, 106 Wash.App. at 109, 22 P.3d 818. Robinson involved allegations by rental car lessees who claimed that rental car companies violated the CPA by unbundling and separately charging airport concession fees that were previously quoted to customers as part of the total rental rate. Id. The court held that the lessees did not make the required showing that the car rental companies failed to disclose the separate fees. Id. at 117, 22 P.3d 818. Integra contends that Robinson stands for the proposition that the only relevant time period for determining whether it acted unfairly or deceptively was when it signed the agreement with Shulevitz, not when it invoiced Indoor Billboard for its services. Integra argues that because Indoor Billboard did not see the invoice until after it signed the agreement, Integra could not have deceived Indoor Billboard into paying the PICC. However, Indoor Billboard raised claims that Integra made an affirmative misrepresentation about its PICC before Shulevitz signed the agreement as well as on the invoices. It alleged that the information McCune provided to Shulevitz misled him into signing the service agreement. Therefore, Robinson does not support Integra's arguments. ¶ 41 Integra's PICC need only have had the capacity to deceive. FCC regulated PICCs can be charged only by ILECs, but Integra charged a surcharge that it called a PICC even though it is not an ILEC. The purpose of the FCC regulated PICC is to allow ILECs to recover from their customers the costs of providing interexchange carriers access to the local loop, but Integra's PICC was not associated with the costs of providing interexchange carriers access to the local loop. Integra acknowledged that it used the term PICC even though it knew the term had a specific meaning under the FCC because the marketplace was already familiar with the term and use of the term provided Integra with a competitive advantage. Integra listed its PICC under Taxes and Surcharges on its invoices. Integra's website described its PICC using language almost identical to the language the FCC used in describing its PICC. Even though Indoor Billboard acknowledged that it did not see Integra's website prior to purchasing Integra's services, Indoor Billboard and many other customers called Integra to inquire about the PICC and express concern or confusion. ¶ 42 We conclude that Integra engaged in an unfair or deceptive act or practice as a matter of law when it labeled the surcharge it imposed on local business service customers a PICC. The use of the term PICC had the capacity to deceive a substantial portion of the public into thinking the surcharge was FCC regulated and required. Whether the surcharge was FCC regulated and required could be of material importance to a customer's decision to purchase the company's services. The trial court erred in granting summary judgment to Integra on the first element of Indoor Billboard's CPA claim.
¶ 43 With regard to the causation element of its CPA claim, Indoor Billboard argues it need only show that it paid Integra's invoices to establish a causal link between Integra's unfair or deceptive act or practice and its injury. It further argues that, even if reliance is required, the evidence here is sufficient to preclude granting summary judgment to Integra. Integra responds that a plaintiff must establish that the plaintiff relied on the defendant's unfair or deceptive act or practice to establish a causal link with the plaintiff's injury and that Indoor Billboard did not do so. Amici curiae urge this court to liberally construe the CPA and hold that the plaintiff need only establish a causal link between the unfair or deceptive act or practice and the injury.
¶ 44 This court has yet to clearly define the proof required to establish causation in a CPA claim. Pickett II, 145 Wash.2d at 196-97, 35 P.3d 351. ¶ 45 After the legislature authorized a private right of action under chapter 19.86 RCW, this court initially required a plaintiff to establish only three elements. [T]he conduct complained of must: (1) be unfair or deceptive; (2) be within the sphere of trade or commerce; and (3) impact the public interest. Anhold v. Daniels, 94 Wash.2d 40, 45, 614 P.2d 184 (1980). A plaintiff could establish the public interest element per se by showing that the defendant violated a statute containing a specific legislative declaration of public interest impact. Id. at 43, 614 P.2d 184. Alternatively, a plaintiff could show that: (1) [T]he defendant by unfair or deceptive acts or practices in the conduct of trade or commerce has induced the plaintiff to act or refrain from acting; (2) the plaintiff suffers damage brought about by such action or failure to act; and (3) the defendant's deceptive acts or practices have the potential for repetition. Id. at 46, 614 P.2d 184 (emphasis added). ¶ 46 In a subsequent case involving a private dispute, Division Two of the Court of Appeals held that the Anhold public interest test required the plaintiff to establish a causal link between the defendant's unfair or deceptive act or practice and the plaintiff's injury. Nuttall v. Dowell, 31 Wash.App. 98, 111, 639 P.2d 832 (1982). Nuttall described the Anhold test as an inducement offered by the defendant, which has the effect of either producing action or inaction on the part of plaintiff resulting in injury and damage. Id. In Nuttall, a purchaser of real estate brought a private CPA action against a real estate broker for misrepresenting the property boundary. Id. at 103-04, 639 P.2d 832. The court concluded that the purchaser did not rely on the broker's word that the boundary was correct because the purchaser conducted his own independent investigation of the boundary. Id. at 111, 639 P.2d 832. It held that a plaintiff does not establish a causal relationship between the plaintiff's injury and a misrepresentation of fact where the plaintiff does not convince the trier of fact that he or she relied upon that misrepresentation. Id. ¶ 47 Hangman Ridge sought to clarify the Anhold public interest element of a CPA claim. 105 Wash.2d at 789-90, 719 P.2d 581. It noted, [w]here the transaction [is] essentially a private dispute, it may be more difficult to show that the public has an interest in the subject matter. Id. at 790, 719 P.2d 531 (citations omitted). It concluded Anhold's `inducement-damage-repetition' test is not the best vehicle for showing that the public was or will be affected by the act in question. Id. at 789, 719 P.2d 531. It stated, it is the likelihood that additional plaintiffs have been or will be injured in exactly the same fashion that changes a factual pattern from a private dispute to one that affects the public interest. Id. at 790, 719 P.2d 531 (citing McRae v. Bolstad, 101 Wash.2d 161, 166, 676 P.2d 496 (1984)). Instead of the three pronged public interest test set out in Anhold, Hangman Ridge established a five factor test for private CPA claims. Id. ¶ 48 In clarifying the public interest element, Hangman Ridge announced two new elements of a CPA claim. Id. at 792-93, 719 P.2d 531. The fourth element required a showing that plaintiff was injured in his or her `business or property'. Id. at 792, 719 P.2d 531 (quoting former RCW 19.86.090 (1987)). The fifth element required the plaintiff to show causation. Id. at 792-93, 719 P.2d 531. With regard to causation, the court noted: A causal link is required between the unfair or deceptive acts and the injury suffered by plaintiff. This causation element, like the injury element, has been foreshadowed by our previous opinions. The Anhold inducement prong hints at a causation requirement. Moreover, the need to find a causal link between the alleged acts and the plaintiff's injury has been the focus of a number of prior decisions of both this court and the Court of Appeals. Id. at 793, 719 P.2d 531 (emphasis added). In announcing the new causation element, Hangman Ridge did not expressly disavow the inducement or reliance requirements applied in Anhold and Nuttall. However, Hangman Ridge did not apply the new causation element because it held that there had been no unfair or deceptive act or practice. Id. at 794-95, 719 P.2d 531. It left open the question of what is required to establish a causal link. ¶ 49 Indoor Billboard argues that Hangman Ridge established that a plaintiff need only show that it lost money to show causation, relying again on Pickett I. However, as we have already noted, this court subsequently reversed Pickett I on other grounds, finding Pickett I 's analysis of causation suspect. See Pickett II, 145 Wash.2d at 191, 35 P.3d 351. Pickett I held that [c]ausation inheres in the fact that the plaintiffs purchased cruise tickets. Pickett I, 101 Wash.App. at 920, 6 P.3d 63. It reasoned that because the CPA was to be liberally construed and the cruise ship line had imposed fees that were clearly not what it said they were, [a]ny other interpretation would effectively undermine class actions based on the Washington CPA. Id. Pickett II called Pickett I's conclusion that causation is established if the plaintiff shows that he or she loses money debatable and commented that the cases Pickett I cited did not support the appellate court's conclusion. Pickett II, 145 Wash.2d at 197, 35 P.3d 351. It concluded that [u]nder the posture of [the] case, . . . this is a debatable question without clear answer under Washington law at the time of the parties' settlement and presented a risk to the Plaintiffs class favoring settlement.  Id. (emphasis added). Although we agree the CPA is to be liberally construed, Pickett I carries this construction too far. Therefore, we reject Indoor Billboard's argument that causation may be established merely by a showing that money was lost. ¶ 50 Integra argues that proof that the reliance requirement survives Hangman Ridge is found in Robinson. However, Robinson involved a failure to disclose, not an affirmative misrepresentation, so it does not support Integra's argument. 106 Wash.App. at 119, 22 P.3d 818. ¶ 51 WSTLA and the AG suggest that Hangman Ridge replaced the reliance/inducement requirement with a proximate cause standard. Br. of Amicus Curiae WSTLA at 8-9 (citing 6A Washington Practice: Washington Pattern Jury Instructions: Civil 310.07, at 274 (5th ed. 2005) (WPI); Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wash.2d 299, 314, 858 P.2d 1054 (1993); Schmidt v. Cornerstone Invs., Inc., 115 Wash.2d 148, 167-68, 795 P.2d 1143 (1990)); Br. of Amicus Curiae AG at 12-13 (citing Fisons, 122 Wash.2d at 314, 858 P.2d 1054; WPI 310.07, at 274-75). ¶ 52 `Proximate cause' is defined in WPI 310.07 as a cause which in direct sequence [unbroken by any new independent cause] produces the injury complained of and without which such injury would not have happened. [There may be one or more proximate causes of an injury.]. In the comments, WPI 310.07 cites this court's holding in Pickett II in which we stated, [w]hether individual reliance is required for causation under the CPA is a `debatable question without a clear answer under Washington law.' WPI 310.07, at 274 cmt. (quoting Pickett II, 145 Wash.2d at 197, 35 P.3d 351). The comments also cite to WPI 15.01 for the traditional definition of `proximate cause.' WPI 310.07, at 274 cmt. The comments under WPI 15.01 indicate that this court favors the `direct sequence' and `but for' definitions of `proximate cause.' 6 WPI 15.01, at 182 cmt. (5th ed.2005) (citing Alger v. Mukilteo, 107 Wash.2d 541, 730 P.2d 1333 (1987)) (`direct sequence'); Tyner v. Dep't of Soc. & Health Servs., 141 Wash.2d 68, 82, 1 P.3d 1148 (2000) (`but for') (internal quotation marks omitted) (quoting Schooley v. Pinch's Deli Mkt., Inc., 134 Wash.2d 468, 478, 951 P.2d 749 (1998)). Applying WPI 15.01 to the causation analysis for a CPA claim, a plaintiff would have to establish that but for the defendant's unfair or deceptive act or practice the plaintiff's injury would not have occurred. ¶ 53 Two cases, Schmidt and Fisons, that postdate Hangman Ridge applied the proximate cause standard articulated in WPI 15.01. ¶ 54 Schmidt involved a defendant who attempted to sell property that was in disrepair based on an inflated appraisal. 115 Wash.2d at 167, 795 P.2d 1143. We held that causation was established because the [p]laintiffs testified at various stages throughout the litigation that had they not been shown the inflated appraisal, they never would have made the investment which led to the injury now complained of. Id. at 168, 795 P.2d 1143. Integra argues Schmidt did not eliminate the reliance test because the concept of reliance was implicit in the court's ruling. But Schmidt's description is compatible with the definition of `proximate cause' in WPI 15.01 because it effectively concluded that, but for the defendant's inflated appraisal, the plaintiffs would not have made the investment. ¶ 55 Fisons involved a physician who brought a claim against a drug company alleging that the drug company had engaged in unfair or deceptive act or practices by failing to warn the physician of the dangers related to a drug he prescribed to his patients. 122 Wash.2d at 311, 858 P.2d 1054. The issue was whether the jury was properly instructed that it had to find that the defendant's unfair or deceptive act or practice was a proximate cause of the injury to the plaintiff, not whether reliance on the unfair or deceptive act or practice was part of the causation element of a CPA claim. Id. at 314, 858 P.2d 1054. Integra argues Fisons is not analogous because it involved a failure to warn rather than a claim of affirmative misrepresentation and a failure to warn does not implicate the reliance standard because a party cannot rely on something it was never aware of in the first place. However, Fisons clearly acknowledged that a proximate cause jury instruction was appropriate with respect to the causation element of a CPA claim. Id. ¶ 56 We conclude where a defendant has engaged in an unfair or deceptive act or practice, and there has been an affirmative misrepresentation of fact, our case law establishes that there must be some demonstration of a causal link between the misrepresentation and the plaintiff's injury. Indoor Billboard urges us to adopt a per se rule and hold that payment of Integra's invoice is per se sufficient to establish the proximate cause of plaintiff's damages. We reject Indoor Billboard's per se rule because mere payment of an invoice may not establish a causal connection between the unfair or deceptive act or practice and plaintiff's damages. Proximate cause is a factual question to be decided by the trier of fact. Payment of an invoice may or may not be sufficient to establish a causal connection between the misrepresentation of fact and damages, but payment of the invoice may be considered with all other relevant evidence on the issue of proximate cause. ¶ 57 We hold that the proximate cause standard embodied in WPI 15.01 is required to establish the causation element in a CPA claim. A plaintiff must establish that, but for the defendant's unfair or deceptive practice, the plaintiff would not have suffered an injury.
¶ 58 Although its primary argument is that it need only show that it paid Integra's invoice to demonstrate causation, Indoor Billboard alternatively argues that the evidence of record is sufficient to establish genuine issues of material fact regarding causation to submit the question to a jury. Indoor Billboard points primarily to Shulevitz's deposition testimony that he relied on and was confused by information provided by Integra in deciding to purchase Integra's services. Indoor Billboard argues that Shulevitz paid the invoice only because he was reluctant to contest a charge on his very first bill at the start of a multi-year contractual relationship. Br. of Appellant at 45. It further argues that Shulevitz's actions did not break the causal link between Integra's unfair or deceptive act or practice and Indoor Billboard's injury because the research was only necessary to dispel Shulevitz's confusion and the question should more properly be decided by a jury. ¶ 59 Integra maintains that Shulevitz knew that Integra's PICC was unrelated to the FCC before it signed the agreement for Integra's services. Integra asserts Shulevitz knew the PICC was charged to all customers regardless of whether they received interexchange services from Integra and that the PICC was set by the company rather than the FCC. Further, Integra argues that Indoor Billboard did not challenge Integra's PICC until after it had received the first invoice, even though it could have chosen not to purchase Integra's services in the first place. Lastly, Integra argues that Indoor Billboard based its decision to challenge Integra's PICC on information it obtained primarily from external sourcesnot from Integra. ¶ 60 We conclude it is not clear whether Integra's actions caused Indoor Billboard's injuries or whether Indoor Billboard's injuries were the result of its reliance on information it obtained from Shulevitz's investigation, as in Nuttall. The evidence in the record is sufficient to demonstrate that genuine issues of material fact exist regarding a causal link between Integra's unfair or deceptive acts or practices and Indoor Billboard's injuries. We hold that summary judgment was inappropriate and remand the matter for trial.
¶ 61 As an affirmative defense to Indoor Billboard's CPA claim, Integra relies on the voluntary payment doctrine set out in a 1940 case that stated, `money voluntarily paid under a claim of right to the payment, and with full knowledge of the facts by the person making the payment, cannot be recovered back on the ground that the claim was illegal, or that there was no liability to pay in the first instance.' Speckert v. Bunker Hill Ariz. Mining Co., 6 Wash.2d 39, 52, 106 P.2d 602 (1940) (quoting 21 Ruling Case Law 141-42 (1918)). But there is an exception. The general rule that a voluntary payment cannot be recovered back has no application where the payment was induced by fraud on the part of the payee, for, subject to the general rules as to what constitutes fraud, it is a well settled rule that, where a payment of money which the payee ought not to retain is induced by fraud and deceit, it may be recovered back by the payor, and if the fraud is the inducement for the payment, the rule applies although it is not the sole producing cause. Id. at 53, 106 P.2d 602 (quoting 48 C.J. Payment § 311, at 753-54 (1929)). ¶ 62 Integra argues that Indoor Billboard paid Integra's invoice knowing that Integra's PICC was charged to all customers, regardless of whether they purchased interexchange service from Integra and knowing that the FCC did not set the amount of Integra's PICC. Integra further notes that Shulevitz conducted his own independent investigation into Integra's surcharge before agreeing to purchase Integra's services or pay Integra's invoices. Integra argues that because Indoor Billboard purchased Integra's services and paid the invoice knowingly, Indoor Billboard is barred under the voluntary payment doctrine from asserting a CPA claim. ¶ 63 Indoor Billboard questions whether an affirmative defense that is ordinarily asserted only in a contract context can be applied to a CPA claim at all. Nevertheless, it claims that even if we could apply the doctrine in the context of a CPA claim, it cannot be applied here because there is a genuine issue of material fact as to whether Shulevitz had ` full knowledge of all the facts, ' as required by the doctrine. Br. of Appellant at 48 (quoting Speckert, 6 Wash.2d at 52, 106 P.2d 602). It argues adjudication of the voluntary payment doctrine is inappropriate on summary judgment. ¶ 64 Indoor Billboard is correct that Washington courts have generally applied the voluntary payment doctrine only in the contract context. See, e.g., Hawkinson v. Conniff, 53 Wash.2d 454, 459-60, 334 P.2d 540 (1959); Shields v. Schorno, 51 Wash.2d 737, 739, 321 P.2d 905 (1958); Speckert, 6 Wash.2d at 40, 106 P.2d 602; Maxwell v. Provident Mut. Life Ins. Co. of Phila., 180 Wash. 560, 575-76, 41 P.2d 147 (1935); Mut. Sales Agency, Inc. v. Hari, 145 Wash. 236, 240-41, 259 P. 712 (1927). One Washington case from the Court of Appeals considered applying the doctrine in a CPA context, although it did not reach the issue because it decided the defendant did not engage in an unfair or deceptive practice. Robinson, 106 Wash.App. at 122, 22 P.3d 818. ¶ 65 We agree with Indoor Billboard that the voluntary payment doctrine is inappropriate as an affirmative defense in the CPA context, as a matter of law, because we construe the CPA liberally in favor of plaintiffs.