No. 14-CV-618
In the
District of Columbia Court of Appeals
DONALD ROTUNDA
Plaintiff-Appellant,
v.
MARRIOTT INTERNATIONAL, INC.
Defendant-Appellee.
Appeal from the Superior Court of D.C.
Civil Division
Case No. 2011CA006829 B
The Honorable Frederick H. Weisberg
BRIEF OF APPELLANT
Paul D. Cullen, Sr.
Joyce E. Mayers
The Cullen Law Firm, PLLC
1101 30th Street, N.W., Suite 300
Washington, D.C. 20007
(202) 944-8600
Counsel for Plaintiff-Appellant
Donald Rotunda
TABLE OF CONTENTS
STATEMENT OF THE CASE ........................................... .......................................................... ... 1
I.
Nature of the Proceedings ...... .... .............................................................................. l
II.
Procedural History .............................................................................................. .... .2
III.
Orders of the Superior Court for Which Review is Sought ........................ ..... ....... .4
STATEMENT OF FACTS ......... ........ ...................................... ...... .. .. ............. ... ... .......................... 6
ISSUES PRESENTED ..... .............................. ................... ........... .................................................. 12
STANDARD OF REVIEW .............................................................. ... ............................ .............. 13
SUMMARY OF THE ARGUMENT ..................................................... ....................................... 13
ARGUMENT ............................................ ..................... ................................. ...... ............ ............. 17
I.
THE CPPA AUTHORIZES SUITS FOR DAMAGES PAYABLE TO
MEMBERS OF THE GENERAL PUBLIC INDEPENDENT OF
PROCEDURES REQUIRED UNDER RULE 23 ................................................. 17
A.
Individual Members of the General Public Are Entitled
to Monetary Damages in a Representative Action .................................... 17
B.
The Superior Court Erred in Endorsing Margolis .................................... .24
C.
The Court Is Empowered to Ensure Due Process Rights
Outside of Rule 23 Procedural Requirements ........................................... .28
II.
BUSINESS TRAVELERS MAY ENGAGE IN CONSUMER
TRANSACTIONS PROTECTED BY THE CPPA ............................................... 31
III.
THE DISTRICT OF COLUMBIA HAS A COMPELLING
INTEREST IN APPLYING ITS LAWS TO MARRIOT'S CONDUCT .............. 37
A.
Marriott's Representations that it is Headquartered in
Washington D. C. provide the District of Columbia with
a Compelling Interest in applying Its Laws to Marriott's Conduct ........... 37
B.
Controlling Case Law Supports Application ofD.C. Law
to Marriott's Conduct. ................... ........................................................... ..38
I
C.
IV.
Application ofD.C. Law is Neither Arbitrary nor
Fundamentally Unfair ................................................................................ 41
MEMBERS OF THE GENERAL PUBLIC ARE ENTITLED
TO SUMMARY JUDGMENT AS A MATTER OF LAW
ON THE MERITS OF THE CLAIMS RAISED BY ROTUNDA ....................... .43
A.
Marriott's Price Representations to Rotunda and Others
Were Objectively False and Omitted Material Facts ................................ .44
B.
Neither the Intent of the Merchant Nor Reliance By the
Consumer Are Elements of Proof Under the CPP A ................................. .45
C.
Price is Material as a Matter of Law .................. ... ... .... .. ..... ... .... ... ..... ... .. .. .4 7
CONCLUSION ............... ....... ...... ...... ................... ... .. ... .... .......... .. ..... .. ...... .... .. .... ... ..... .. .. ......... ...... 48
ADDENDUM
II
TABLE OF AUTHORITIES
Cases
Act Now to Stop War & End Racism Coalition v. District of Columbia,
905 F. Supp. 2d 317 (D.D.C. 2012) ........................ ...... ..... ......................... ..................... ....... .. 25
All State Insurance Co. v. Hague,
449 U.S. 302 (1981) ......................................... .. ........................... ............... ....... ................ 41, 42
Alicke v. MCI Communications,
111F.3d909 (D.C. Cir. 1997) .... .......................... ................ ............................. ....................... 48
Aspinall v. Phillip Morris Companies,
813 N.E.2d 476 (Mass. 2004) ................................................................................................... 46
Bledsoe v. Crowley,
849 F.2d 639 (D.C. Cir. 1988) .................................................................................... .. ............ 38
Blodgett v. Univ. Club,
930 A.2d 210 (D.C. 2007) ........................... .. ...... ..... ....................... ........ ....... ........................... 25
Boyle v. Gira!,
820 A.2d 561 (D.D. 2003) .......................................................................... ......... .. .. .......... .. 28, 29
Breakman v. AOL LLC,
545 F.Supp.2d 96 (D.D.C. 2008) .................................................................................. 14, 22, 26
Calvetti v. Antclifl,
346 F. Supp. 2d 92 (D.D.C. 2004) .......... ....................... ........................................................... 45
Choharis v. State Farm Fire and Cas. Co.,
961 A.2d 1080 (D.C. 2008) ................ ....................................................................................... 13
Clifton Terrace Assoc. v. United Techs Corp.,
728 F.Supp. 24 (D.D.C. 1990) ................................................................................. :................ 36
Davis v. Powertel, Inc.,
776 So. 2d 971 (Fla. App. 2001) ......................................................................................... 46, 48
111
District Cablevision Limited Partnership v. Bassin,
828 A.2d 714 (D.C. 2003) .. ................. ...... ..... ........... ..... ............... ....... .. .. ......... ... .. ... ... ......... .. .. 46
District of Columbia v. Coleman,
667 A.2d 811 (D.C. 1995) ........... .. ... ........ .. .......... ................. .. .......... ..... ...... .......... ........ .. .. ... .... 38
Dorn v. McTigue,
157 F. Supp. 2d 37 (D.D.C. 2001) ..................... .... ... ...... .. .... .... ......... ... ....... ... ................ ..... .. ... 40
Eli Lilly & Co. v. Home Ins. Co.,
764 F.2d 876 (D.C. Cir. 1985) .... ...... .. ............. ............... ........... ..... .... ........... ...... .. .. ... ........... ... 41
F. TC. v. Crescent Pub. Group, Inc.,
129 F. Supp. 2d 31l(S.D.N.Y.2000) ..... ... ... .. .. ... ... ...... ...... ....... ..... .. ....... .. ..... ....... .. .... .. ...... 47, 48
F. TC. v. Five Star Auto Club, Inc.,
97 F. Supp. 2d 502 (S.D.N.Y. 2000) ............. ... ... .. .. ..... ........... ...... .. ...... .. ... ......... .. ... .......... ....... 47
F. TC. v. Wilcox,
926 F. Supp. 1091 (S.D. Fla. 1995) ........ .. ..... .............. ... .... ...... ... ............... ...... .... .... ............ ... .. 47
Flemming v. United States,
546 A.2d 1001 (D.C. 1988) ........ ............ .... .. .... .. .... ... ... ... .... ... ... ... ....... ..... ... ..... ... .... ...... ..... ....... 25
Ford v. ChartOne,
908 A.2d 72 (D.C. 2006) ...... ... ..... .................... .... ........ ... ... .. ... .......... ... .... ..... .... 31, 32, 33, 34, 35
Fort Lincoln Civic Ass 'n, Inc. v. Fort Lincoln New Town Corp.,
944 A.2d 1055 (D.C. 2008) ..................... ....... ..... ........ .. .. .. .. .... .................. .. ... ... .......... ........ ... ... 46
Gillis v. Clark Equip. Co.,
579 S.W.2d 869 (Tenn. Ct. App. 1978) ..... ....... ..... ... ... .................... ....... .... ................... ...... ..... 26
Gomez v. Indep. Mgmt. ofDelaware, Inc.,
967 A.2d 1276 (D.C. 2009) ............................ .. .... ....... .. .... ................. ... ............... ......... ...... .. ... . 19
Grayson v. AT&T Corp.,
15 A.3d 219 (D.C. 2011) ............ ....... .... ... ..... ....... .... .......... .. ..... ...... ...... 19, 20, 22, 26, 29, 46, 47
lV
Green v. H&R Block,
355 Md. 488 (Md. 1999) ........................................................................................................... 48
Haynes v. District of Columbia,
503 A.2d 1219 (D.C. 1986) ............................................. ........................ ......... .............. ........... 26
Howard v. Riggs Nat'l Bank,
432A.2d 701 (D.C.1981) ......................... :..................... .......................................................... 31
In re C.A.P.,
356 A.2d 335 (D.C. 1976) ............................................................ ............................................. 26
In re Cliffdale Assoc.,
103 F.T.C. 110, 165 (1984) ....................................................... .................................. ... 46, 47, 48
In re Thompson Medical Company, Inc.,
104 F.T.C. 648 (1984) ............................................................................................................... 47
Independent Communications Network v. MCI Telecommunications Corp.,
657 F. Supp. 785 (D.D.C. 1987) .................................. .... ........... .............................................. 36
Jackson v. Culinary School of Washington,
788 F. Supp. 1233 (D.D.C. 1992) ...... ....................................................................................... 40
Kaiser Georgetown Community Health Plan,
491 A.2d 502 (D.C. 1985) ............................ .............................. .. ............................................. 42
Kopf! v. World Research Group LLC,
298 F. Supp. 2d 50 (D.D.C. 2003) ........................... ....... ................. ..... ................ .................... 40
Kraus v. Trinity Management Services, Inc.,
999 P.2d 718 (Cal. 2000) .................................................................................................... 28, 30
Kraft v. FTC,
970 F.2d 311 (7th Cir. 1992) ................................................. ................................ .......... .......... 47
Logan v. Providence Hospital, Inc.,
778 A.2d 275 (D.C. 2001) .......................... ..... ............................................................ ... ............ 39
Malone v. Saxony Co-op Apartments, Inc.,
763 A.2d 725 (D.C. 2000) ......................................................................................................... 13
v
Margolis v. U-HA UL International, Inc.,
2007 CA 5245, 2009 D.C. Super. Lexis 8 (Dec. 17, 2009) ..... ... ........................... .. ....... ..... . 4, 13
Margolis v. U-Haul,
2009 WL 5788369 (D.C. Super. Ct. December 17, 2009) .............. ........................ 24, 25, 26, 27
Mazanderan v. Independent Taxi Owners Association,
700 F. Supp. 588 (D.D.C. 1988) ................................ ... ............ ... .. ... ........................................ 36
National Consumer League v. Bimbo Bakeries USA,
_ F. Supp. 2d _ , 2014 WL 2536795 (D.D.C. June 4, 2014) .. .................. ......... ........... 23, 27
National Consumer League v. General Mills, Inc.,
680 F. Supp.2d 132 (D.D.C. 2010) .................................... .... ........ ..... .. ...... 14, 19, 22, 26, 27, 28
National Consumers League v. Doctor's Assoc., Inc.,
2013 CA 006549 B (D.C. Super. Ct. September 12, 2014) ......... .......... ... .............. 14, 19, 24, 27
National Consumers League v. Flowers,
_F. Supp. 2d__, 2014 WL 1391246 (D.D.C. April 8, 2014) ............................................... 23
National Consumers League v. Kellogg Co.,
No. 2009 CA005211 B (D.C. Super. Ct.) ....... ...... ............ ............... ........... ............. ..... ...... ...... 29
Novartis v. Federal Trade Commission,
223 F.3d 783 (D.C. Cir. 2000) ..................................... .... ... ........ .......... .. .... .... ... .... ............. 47, 48
Odems v. District of Columbia,
930 A.2d 137 (D.C. 2007) ........ ......... ..... .... ...... .......... ..... ........................ ...... ....................... .... . 13
Pearson v. Chung,
961A.2d1067 (D.C. 2008) .......................... .............. .. ................... .. ..... ... ................................ 47
Phillips Petroleum v. Shutts,
472 U.S. 797 (1985) .......................... ..... ..... ........................................ ............. ......... ................ 41
Saucier v. Counrywide Home Loans,
64 A.3d 428 (D.C. 2013) ................................................................................ .... ..... 13, 46, 47, 48
vi
Shaw v. Hyatt Int'! Corp.,
461 F.3d 899 (7th Cir. 2006) ...... ...... ... ....... ....... ............ .... .... ........... ........ ..... ......... ...... ..... .... ...... 5
Shaw v. Marriott Int'!,
570 F. Supp. 2d 78 (D.D.C. 2008) .... .. ........ ..... ....... .. ..... .. .... ............. .. ..... ...... ......... .. ...... ...... ...... 2
Shaw v. Marriott Int'!,
605 F.3d 1039 (D.C. Cir. 2010) .. ........................ .......... ..... ..... ....... .......... ........... 2, 12, 15, 31, 44
Shaw v. Marriott Int'!, Inc.,
62 A.3d 1283 (D.C. 2013) ............... ... .. .. .... ... .......... .......... .. .... ... ........ ........ ... ............ .. .......... 3, 15
Thompson Medical Co. v. FTC,
791 F.2d 189 (D.C. Cir. 1986) ... ... ..... ........ ... .......... .... ... .... ........ .......... ............. ...... ... ... .. .... ...... 47
Tyco Industries Inc. v. Lego Systems, Inc.,
1987 WL 44363 (D.N.J.1987) ............................. ....... ......... ..... ... ...... ... ..... .. .... ........ .................. 47
Washkoviak v. Student Loan Marketing Ass 'n,
900 A.2d 168 (D.C. 2006) .................... ........ .................................... .... .... .............. . 16, 38, 39, 41
Wells v. Allstate Insurance,
210 F.R.D. 1(D.D.C.2002) ................ ....... ..... ... .. .. ............ .. ... .............. ........... ... .. .............. 46, 48
Wesch/er v. Klank,
561A.2d1003 (D.C. 1989) .. .... .... .. .. ............. ...... ....... ... ........ .. ... .... ... .... 15, 16, 31, 32, 33, 34, 35
Wiggins v. Avco Financial Services,
62 F.Supp. 2d 90 (D.D.C. 1999) ... ... ......................... ........ ....... ............ .. ............ .. .... ..... ............ 38
Williams v. Cent. Money Co.,
974 F.Supp. 22 (D.D.C. 1997) ........................ ........ .. .. .. .... ............. .... .. .. .................. .......... ....... 39
Williams v. First Government Mortgage and Investors Corp.,
176 F.3d 497 (D.C. Cir. 1999) .................................... .. ..... ... ....... ................... .... .... .................. 38
Zuckman v. Monster Beverage Corp.,
958 F. Supp. 2d 293 (D.D.C. 2013) ............................ .................................. ......... ................ .. ......... 23
Vll
Statutes
28 U .. C. § 1332 (d) ... ............................ ...... ... ............... .. .......... .... ... ................... .. ..... ............... .. ... 2
28 u.s.c. § 2072 ............................ .. .. .... .... ..... ........ .............................. ......................... ............ ... 25
D.C. Code § 28-3901 et seq. (2000) .. .. .. ..... .... ... ........ .. ...... ...... .. .. ..................................................... 1
D.C. Code § 28-390l(a)(l) (2000) ............. ..... .. ...... ..................... .... .................... ............. .... ... .. ... 21
D.C. Code § 28-3901(a)(2) (2000) ........... ... ..... .................... ... ............. ........ ........ ... .... .......... ..32, 34
D.C. Code § 28-3901(a)(3) (2000) .... ... .............. .................... ....................................................... 32
D .C. Code § 28-390l(b)(l) (2000) ..... ... ...... .. .......................................................................... 16, 21
D.C. Code§ 28-3901(c) (2000) ..................... .. .. .... ................ ........................................................ 20
D.C. Code§ 28-3904(e) (2000) .. .......... ........................ ... ..... ........ ............... ..... ...................... .45, 46
D .C. Code § 28-3904(f) (2000) ................... ..... ... ... ...................... ............ .... ........ .......... .. .. .... .45, 46
D.C. Code§ 28-3905(k) (2000) ..... ... ........... ..... ... .... ............. ... ..... .. ... ... .......... .......... ..... .... 14, 22 25
D.C. Code§ 28-3905(k)(l) (2000) ........ ...................... .. ........................ 2 12, 13, 17, 18 21, 28 48
D.C. Code , 28-3905(k)(l)(A) (2000) .................................................................. 13, 18 19, 21, 26
D.C. Code§ 28-3905(k)(l )(E) (2000) ....................... ...... ... .... ... .. .. ...... ... ... ....... ...... .... ..... ........ 18, 21
D.C. Code§ 28-3905(k)(l)(F) (2000) ..... .......... ............. .... ............. ....... ....... .................. .. ....... ..... 14
D.C. Code § 28-3909 ........... ....... .......... ... ....... ........................ ......................... ......... ................. .... 20
D.C. Code§ 28-3909 (a) ....................... ....... ...... ....... .... ......................................... ....... ................ 29
viii
STATEMENT OF THE CASE
I. Nature of the Proceeding
Marriott International, Inc. operates a worldwide network of hotels linked through a central
reservation system used by all of its affiliated properties. Plaintiff Donald Rotunda claims that
Marriott violated the D.C. Consumer Procedure and Protection Act (CPP A) by making false
representations and by omitting material facts as to the price to be charged to guests making
reservations through its worldwide system for rooms in hotels owned, managed or franchised by
it in Russia. D.C. Code§ 28-3901 et seq. (2000). Marriott quoted rates for these rooms in U.S.
Dollars (USDs). Room charges were only payable in Russian Rubles (RUR) calculated at an
internal hotel rate. As a result, the actual cost of the room was always more in USD than the
amount originally quoted when the room was booked.
This appeal involves three fundamental questions. First, is Marriott accountable for its
improper trade practices under the laws of the District of Columbia? Marriott is incorporated in
Delaware, and, many years ago, moved its headquarters over the District line into Bethesda.
Nevertheless, it is undisputed that Marriott engaged in a longstanding, widespread and persistent
practice of publishing to the whole world (including to its potential guests) the fact that it is
headquartered in the District of Columbia. These representations have given Marriott significant
commercial advantages. Do Marriott's representations that it is headquartered in the District of
Columbia create circumstances where it may be held accountable under the laws of this
jurisdiction?
Second, the CPP A authorizes an individual to file claims for damages for himself as well
as on behalf of the general public. Statutory damages are payable to individual consumers. The
statute imposes no requirement on the person seeking to represent the general public to file such
1
claims under the class action provisions of SCR Civil Rule 23. This Court is being asked to decide
the fundamental nature of representative actions under the CPP A. Its decision will have profound
impact on the role of the courts of the District of Columbia in consumer protection proceedings.
If, as the court below found, all representative actions for damages are "essentially class actions,"
the courts of the District of Columbia will likely surrender jurisdiction over such cases to federal
courts under the removal provisions of the Class Action Fairness Act, 28 U.S.C. § 1332 (d).
Third, which members of the general public should be included within Rotunda's claims.
If Marriott may be held accountable for its unfair trade practices under the laws of the District of
Columbia, do the protections of DC law extend to both residents and non-residents?
Are
individuals who stayed in Marriott hotel rooms to satisfy their personal needs to bathe and rest
while traveling on business protected by the CPPA?
II. Procedural History
Plaintiff, Donald Rotunda, brings claims on behalf of himself and the general public
pursuant to D.C. Code § 28-3905(k)(l).
This case grows out of Britt A. Shaw v. Marriott
International, Case No. 2005 CA 3679 B. The Shaw case was originally filed in the Superior
Court as a class action and was removed to the U.S. District Court for the District of Columbia
pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). The U.S. District Court, without
citing to the controlling case law by this Court, found that because Shaw had travelled to Russia
for business, he was not a "consumer" entitled to protection under the CPPA. Shaw v. Marriott
lnt'l, 570 F. Supp. 2d 78, 89 (D.D.C. 2008). The D.C. Circuit reversed the district court's merits
holding finding that, because in its view Shaw did not have rights under the CPP A, he lacked
standing to bring a claim in the federal courts. Shaw v. Marriott lnt'l, 605 F.3d 1039, 1046 (D.C.
Cir. 2010).
2
Because Shaw lacked Article III standing, the federal courts had no subject matter
jurisdiction. Shaw's claims were remanded to the Superior Court. Id. On remand, the Superior
Court found, under the doctrine of collateral estoppel, that the D.C. Circuit's ruling that Shaw
lacked standing to bring his claims in federal court was binding on the Superior Court with respect
to its jurisdiction over Shaw's claims. The Superior Court dismissed Shaw's claims for lack of
standing. (Order dated July 13, 2011). The Superior Court refused to consider the D.C. Circuit's
reasoning on Shaw's qualification as a "consumer" under the CPPA, stating that it made no
difference whether the D.C. Circuit was right or wrong in its analysis. (Shaw v. Marriott, Case No.
2005 CA 3679, Hearing 7/13/2011). This Court affirmed that ruling in an unpublished opinion.
Shaw v. Marriott International, Inc., 62 A.3d 1283 (D.C. 2013) without venturing beyond the
Superior Court's ruling.
Rotunda, an absent member of the putative class in the Shaw case, sought to join as a party
plaintiff in the Shaw case in January 2011. Before ruling on the motion to amend, the Superior
Court dismissed Shaw's claim. Rotunda then filed his CPP A claims as a separate case in August
2011. Recognizing that the facts proving Marriott' s violation of the CPP A introduced in the Shaw
case were identical to those applicable to Rotunda's claim, the Superior Court allowed all
discovery completed in the Shaw case to be available in the Rotunda matter. Order, December 21,
2011. The parties filed cross motions for summary judgment in September 2011.
For reasons not pertinent here, the parties resubmitted their cross motions for summary
judgment in March 2013. On May 1, 2013, the Superior Court denied Marriott's motion for legal
insufficiency.
Joint Public Appendix ("JPA") 1.
It denied Rotunda's motion for summary
judgment on the grounds that there were genuine issues of fact to resolve. Id. Prior to setting this
matter for trial, the Court determined that there were threshold issues related to Rotunda's claim
3
on behalf of the general public that required resolution before trial. It set a briefing schedule to
address those issues.
On October 31, 2013, the Superior Court entered an order dismissing Rotunda's claim on
behalf of the general public, leaving only his individual claim against Marriott for violation of the
CPPA. On May 9, 2014, a Consent Judgment was entered in favor of Rotunda on his individual
claim. JPA 15. The Judgment specifically preserved Rotunda's right to appeal the issues decided
in the October 31 Order. On May 29, 2014, Rotunda timely filed his Notice of Appeal.
III. Orders of the Superior Court For Which Review is Sought
The Superior Court's order dated October 31, 2013 dismissed Rotunda's claim for money
damages on behalf of the general public. JP A 5. That order addressed three principal issues. First,
the Court held that a case filed by an individual under the CPP A seeking money damages for
himself and members of the general public "is in essence a class action, whether pled as such or
not and must satisfy the requirements of Rule 23." Id. The Court, citing Margolis v. U-Haul
International, Inc., 2007 CA 5245, 2009 D.C. Super. Lexis 8 (Dec. 17, 2009), held that because
Rotunda "is attempting to maintain his CPP A claim for money damages on behalf of the "general
public" without even attempting to satisfy the requirements of Rule 23, his representative claim
must be dismissed as a matter oflaw." Id.
Second, the Court held that, even if Rotunda could represent members of the general public
for money damages under the CPP A, individuals procuring hotel services to meet their personal
needs to sleep and bathe while traveling on business were not consumers protected under the CPP A
and are not members of the general public that could recover in such a representative action. Id.
Third, the Court held that, because Marriott was incorporated in Delaware and maintained
its headquarters in Maryland, non-residents of the District of Columbia could not seek redress
4
against Marriott under the CPP A. The specific holding stated that "it makes no difference that as
a matter of constitutional law the District could apply its law to Marriott's conduct, the question is
whether it would; and under the District's well established choice oflaw principles, it would not."
Id.
The Superior Court's Consent Order and Final Judgment dated May 9, 2014 constituted a
final judgment in favor of Plaintiff Rotunda on his individual claim against Marriott. Rotunda was
awarded statutory damages of $1,500. The right to appeal the Court's October 31, 2013 order
respecting Rotunda's right to sue for damages on behalf of the general public was preserved and
the question of Rotunda's entitlement to attorney's fees was deferred until after disposition of this
appeal. JP A 15. The terms of the consent order do not constitute an admission of liability or
wrongdoing by Marriott (JP A 15 at if 1) or a finding of such liability by the Court. Id.
The question of Marriott's liability to both Rotunda individually and members of the
general public was presented to the Superior Court in Rotunda's Resubmitted Motion for Partial
Summary Judgment on the Issue of Liability. (March 19, 2013). Marriott did not move for
summary judgment on the merits. Its pre-trial motion for summary judgment was limited to: a)
the defense of judicial estoppel; b) whether claims against Marriott were barred by decision of the
Seventh Circuit in Shaw v. Hyatt Int'! Corp., 461 F.3d 899 (7th Cir. 2006), a case brought under
the Illinois consumer protection statute; and c) plaintiffs right to recover damages on behalf of
the general public. Except for questions related to Rotunda's ability to bring claims for damages
on behalf of the general public (which the Court addressed in its October 31, 2013 order), the
Superior Court denied the issues raised by Marriott's summary judgment motion as legally
insufficient. JPA 5.
5
The Superior Court denied Rotunda's Resubmitted Motion for Summary Judgment on the
ground that there were genuine issues of material fact in dispute. JP A 5. Prior to the entry of the
Consent Order and Judgment, Rotunda was preparing to go to trial on the so-called genuine issues
of fact related to the merits of his claims, the only issues unresolved by prior orders of the Court.
The October 31, 2013 order of the Superior Court denying Rotunda's partial motion for summary
judgment on the issue ofliability is properly before this Court on appeal.
STATEMENT OF FACTS
Marriott's Trade Practices
Marriott International, Inc. controls a system of hotel properties throughout the world
which operate under various Marriott Propriety Marks. (PSMF
~if
1,2,3; JP A 110, Joint Seal
Appendix ("JSA") 1-89; MSUF ~ 1; JPA 206). 1 Marriott misrepresented the price for rooms at
its Russian Hotels. (PSMF ifif 4-8; IPA 111-112, 374, 321; JSA 251, 273). Marriott offered rooms
for specific amounts of U.S. Dollars ("USD") knowing that guests at its Russian Hotels would
never pay the represented price. (PSMF
~~
170-179; JPA 141-143, 702, 599; JSA 273, 140, 136,
233). Guests were charged at checkout in Russian Rubles ("RUR") calculated at an internal hotel
exchange rate that always resulted in an actual cost to the guest in USD in excess of the price
originally represented by Marriott. (PSMFifif 4-8; JPA 111-112; MSUF
ifil
11-15; JPA 208,
Marriott Memorandum in Opposition to Motion for Class Certification (U.S. D. Ct. ECF # 75-2)
at 5-6 (emphasis added).
Marriott operates and controls a centralized, worldwide Reservation System in which all
of the Marriott Russian Hotels, including the franchised hotels, participate. (PSMF
1
~if
9-1 O; JPA
Rotunda refers to his Statement of Material Facts in Support of Motion for Partial Summary
Judgment as "PSMF." Reference to Marriott's Statement of Undisputed Facts Filed in Support
of its Amended Motion for Summary Judgment is identified as "MSUF."
6
113, 517-518, 541-558; JSA 14, 22, 33; MSUF i! 9; JPA207). The Reservation System employs a
database of current and stored information regarding accommodations for its Marriott branded
hotels known by the acronym "MARSHA." (PSMF
ifil 11-20; JPA 113-115, 544, 517-518, 541-
558 583; JSP 287, 90, 112, 137, 193, 321, 726; MSUF
i! 9; JPA 207). MARSHA maintains
information related to daily room prices and the currency governing the transaction. Id. The
management of each Marriott branded hotel is required to notify the Marriott Reservation System
of the most recent room rates applicable in that hotel property, and of any changes in the room
rates. (PSMF i! 20; JPA 115; JSA 28, 32; MSUF
i! 9; JPA 207). Marriott franchised hotels may
be free to establish their own room rates, but, once those rates are established, franchised hotels
are forbidden by their license agreements to charge a "rate higher than the rate specified to the
guest by the Reservations System office at the time the guest's reservation was made." (PSMF i!
20; JPA 115; JSA 28). The D.C. Circuit found that Marriott was responsible for the charges to
guests at the franchised hotels in Russia "because it exercises some control over the franchised
hotels, including capping the rates they charge for rooms." Shaw, 605 F.3d at 1042, citing PSMF
irir 9-11, 20, 28-32.
It is Marriott's practice to provide room reservation confirmations to hotel guests reserving
rooms through its Reservation System. (PSMF
iril 28-29; JPA 116, 329, 289, 286, 283). A
confirmation is generated by the MARSHA database, assigned a confirmation number, and issued
to the hotel guest. (PSMF iii! 30-31; JP A 117, 517-518, 553-559, 329, 289, 286, 283, 618; MSUF
if 22; JPA 209). Each reservation confirmation states the per night room price only in USD.
Marriott's USD denominated price confirmations are objectively false. (PSMF
Id.
ifil 33-36;
JPA 117-118, 329, 289, 286, 283; JSP 273). The hotel bill is payable at check-out only in RUR,
never USD. Marriott Memorandum in Opposition to Motion for Class Certification (U.S. D. Ct.
7
ECF # 75-2) at 5-6 (emphasis added). At check-out, guests are presented with a hotel bill showing
a charge for the room in "Units." Id. The quantity of Units has the same numeric value as the
quantity of USD quoted as the price for the room on Marriott's reservation confirmation. Id. Hotel
charges are converted from Units to RUR at a rate of Units to RUR that is always less favorable
to the guest than the rate set by the Central Bank of Russia for conversion of USD to RUR. Id.
Marriott does not dispute the mechanics used to implement its business practice:
Marriott Russia Hotels would convert the quoted U.S. dollar amount into rubles
using a hotel exchange rate and a pre-arranged monetary unit called a "currency
unit" or simply "unit" when a guest checked out and paid for his or her room. The
currency unit always equaled the amount quoted in U.S. dollars .... In Russia, this
practice was followed not just by Marriott Russia Hotels, but by most other
hotels and businesses that quoted prices for goods or services in U.S. dollars to
protect against the ruble's fluctuations in value.... Internal or "house" exchange
rates were used by businesses in Russia for similar reasons. By setting an internal
exchange rate above the Central Bank Rate, businesses could better protect
themselves from fluctuations in the value of the ruble. ...
Marriott Memorandum in Opposition to Motion for Class Certification (U.S. D. Ct. ECF # 75-2)
at 5-6 (emphasis added). Marriott understood that its pricing practices created discrepancies
between quoted and paid rates. (PSMF iii! 170-172; JPA 141, 702, 599; JSA 273, 140, 136, 233).
Marriott documented that mark-ups of the hotel exchange rates over the Central Bank rates ranged
from 2.6 to 15.5 percent during the period covered by this litigation. (PSMF if 172; JPA 141; JSA
130, 133 (Bates 9M-00821 and 9M-00816)).
At the time the room was booked, Marriott provided no information to its guests at its
Russian Hotels that would have enabled the guest to understand the actual per night charge for the
hotel room. (PSMF
iii! 37-50; JPA
119-123; MSUF 22; JPA 209, 274). Marriott did not disclose
to hotel guests reserving rooms at Marriott Russian Hotels that their hotel bill at checkout could
be paid only in RUR, not USD, or that the amount of RUR would be calculated using a conversion
8
of "Units" to RUR at the "hotel exchange rate." Id. Marriott did not disclose to hotel guests
reserving rooms at Marriott Russian Hotels that the "hotel exchange rate" is different from the
Central Bank rate for the conversion ofUSD to RUR. Id. Nor did Marriott disclose that translation
of Units to RUR at the hotel rate would result in a charge in USD for the room greater than the
amount in USD stated in the hotel guest's reservation confirmation. Id. Marriott's standard room
confirmation is secured by the guests credit card and locks the guest into its terms unless the guest
cancels the reservation at least 24 hours prior to the schedule check-in time. (MSUF 22; JP A 209,
274). Representations of further price disclosures purportedly made to guests upon arrival at the
hotel in Russia would have been made only after the guest was locked in to Marriott's original rate
confirmation.
The D.C. Circuit described the "scheme by Marriott International to overcharge guests at
its Russia hotels" this way:
Plaintiff Britt Shaw's experience shows how Marriott's system worked. In April
2005, Shaw made a one-night reservation at the Marriott Renaissance Moscow
during a business trip for his law firm. He was quoted a price of $425. When Shaw
checked out of the hotel, he learned that he could only pay in rubles, not in dollars.
Marriott used its own exchange rate of $1 to 32 rubles and charged Shaw 13,600
rubles for what he had been told would be a $425 room. At that day's official
exchange rate of $1to27.7543 rubles, 13,600 rubles equaled $490. Shaw paid $65
more than the price quoted to him when he reserved his room. The remaining
plaintiffs were treated similarly.
Shaw, 605 F.3d at 1041. Mr. Rotunda's experience precisely mirrors the D.C. Circuit's description
of Marriott's deceptive scheme. At all times material to this action, Mr. Rotunda was a resident
of the District of Columbia. (Marriott Answer Rotunda case,
if 17, JPA
89). In February 2003,
Mr. Rotunda made a reservation for a room at the Marriott Moscow Grand Hotel by calling the
Marriott central reservation phone number and was issued a written reservation confirmation from
Marriott's reservation system. (PSMF ifif 206-208, JPA 150, 691-699, 725, 274; MSUF if 22; JPA
9
209). Mr. Rotunda's reservation confirmation quoted a room rate of $299.00 USD per night.
(PSMF~
208; JPA 150, 274; MSUF
was quoted in USD. (MSUF
~
~
22; JPA 209). The confirmation specifically stated the rate
22; JPA 209, 274). Mr. Rotunda's reservation confirmation does
not disclose that payment would be required to be made in RUR at the time of check-out, nor
makes any reference to "Units," "UNT," "Currency Units" or "exchange rate." (PSMF
~~
209-
210; JPA 151; MSUF ~ 22; JPA 209, 274). Mr. Rotunda, who traveled as a tourist checked out of
the Marriott Moscow Grand Hotel on March 31, 2003 at which time he received a hotel bill listing
the charges for his guest stay which exceeded what he had been quoted when he made his
reservation. (MSUF
~~
23-24; JPA 209-210). In March 2003, the Marriott Moscow Grand Hotel
utilized a translation rate of 33.5 or 33 RUR per unit of charge in preparing its bills. (PSMF ~ 215;
JPA 151, JSA 129-133). On March 29, 2003, the Central Bank currency exchange rate was
31.3805 RUR/USD. The translation rate utilized by Marriott in preparing Mr. Rotunda's final
hotel bill was thus at least 5.2% greater than the Central Bank RUR/USD exchange rate
(33/31.3805 = 1.0516). (PSMF
~~
216-217; JPA 152, 308). Mr. Rotunda was charged at least
$313 .95 for his room; or $15 more than the $299 per night Marriott originally represented as the
per night price of the room.
Marriott's Relationship to the District of Columbia
Marriott International, Inc. is a Delaware corporation with corporate offices located in
Bethesda, Maryland. (MSUF
~~
2-3; JPA 206). At all times material to this action, Marriott had
engaged in longstanding, widespread and persistent representations to the public that it was
headquartered in the District of Columbia, and had other substantial contacts with the District of
Columbia. Marriott regularly conducts business in the District of Columbia. (Marriott's Answer
to First Amended Class Action Complaint in Shaw ("Answer") ~ 17, JP A 50). Marriott's website
10
contained numerous representations that its corporate headquarters was at One Marriott Drive in
Washington, D.C. 20058. (Answer if if 23-26, JPA 51-52). The "Corporate Information" section
of Marriott's website states the corporation's "Contact Information" is "Corporate Headquarters,
Marriott International, One Marriott Drive, Washington, D.C. 20058". (Answer if 23, JPA 51).
The "Careers" and "Investor Relations" sections of Marriott's website state, "The company is
headquartered in Washington, D.C." and provides the address: Marriott International, Marriott
Drive, Washington, D.C. 20058. (Answer
if if 24,
25, JPA 51). The "Our Brands" section of
Marriott's website contains a "Marriott International Factoid," which states, "Did you know
Marriott International: Is headquartered in Washington DC." (Answerif 26, JPA 51-52). Marriott's
annual report to its shareholders for the years 2000 - 2006 all contain similar representations.
(Answer if 27, JPA 52; Declaration of Kelly Taylor {"Taylor Dec.") at 2, JPA 702). From 2002 to
2007, Marriott's annual meeting of shareholders was held at the J.W. Marriott Hotel, 1331
Pennsylvania Ave., N.W., Washington, D.C. 20008. (Id) Marriott's Form 8-K Report dated
February 8, 2005, filed with the Securities and Exchange Commission, shows Corporate
Headquarters address as Marriott Drive, Washington, D.C., 20058. (Answer if 28, JP A 52). All of
Marriott's formal press releases prior to August 8, 2007 (found on its website) recite that it is
headquartered in Washington, D.C. {Taylor Dec. at if 7, JPA 703). Marriott's General Counsel is
identified in Martindale Hubbell as being located at One Marriott Way, Washington, D.C. 20058.
(Answer if 29, JPA 52).
Marriott has admitted that it promotes the identification of its brand with the District of
Columbia for its own commercial advantage. Marriott states:
Marriott admits that it has stated on its website that "the perpetuation of the
company's culture has proven a positive financial impact." Marriott states that its
historic roots to the District of Columbia date back to 1927 when the Company's
11
founders began their business operations in the District of Columbia. (Answer if 22.
JPA51).
Marriott explains its claim of residence in Washington, D.C.: "to honor Marriott's historical roots
and connections to Washington, D.C., the company at times represents that it is headquartered
there". (Answer
if if 32,
33, IPA 52-53). Marriott acknowledges that it purposefully identifies
itself with Washington, D.C., stating:
When Marriott moved its headquarters location to Bethesda, Maryland in 1979, it
was decided that a Washington, D.C. address would be easier for guests, investors,
and other interested parties to identify and recognize than a Bethesda, Maryland
address. (Marriott International Inc. 's Response to Plaintiffs' First Set of
Interrogatories and Requests for the Production of Documents, Nos. 8 and 9, JP A
317).
Marriott's Russia Hotels are both company-owned and franchised. (MSUF
ifif 9,
10, IPA
207). Marriott is responsible for its deceptive conduct for both its company-owned and franchised
properties. Shaw v. Marriott International, 605 F.3d 1039 at 1042.
ISSUES PRESENTED
1. Does the representative action authorized under D.C. Code § 28-3905(k)(l) provide
recovery of damages payable to individual consumers independent of the class action
procedures of Rule 23?
2. Do individuals traveling on business qualify as consumers when they purchase goods or
services to serve their personal needs?
3. Marriott has made widespread representations to members of the general public that it is
headquartered in the District of Columbia. Do such representations give the District an
interest in applying its laws to Marriott's conduct that is at least as great as the interest of
any other jurisdiction?
4. Did the Superior Court err in denying Rotunda's motion for summary judgment:
a. By erroneously injecting a requirement that a plaintiff prove intent to deceive?
12
b. By questioning the materiality of Marriott's false price representations and holding
that there is a factual issue as to whether the combination of false price
representations and the failure to disclose material facts has a tendency to deceive an
ordinary consumer?
c. By finding that there were material issues of fact respecting the nature of Marriott's
price representations and its failure to disclose material facts.
STAND ARD OF REVIEW
The question of statutory interpretation regarding the application of the D.C. Consumer
Protection and Procedures Act is subject to de nova review. Odems v. District of Columbia, 930
A.2d 137, 140 (D.C. 2007).
This Court reviews the grant or denial of a motion for summary
judgment de nova. Saucier v. Counrywide Home Loans, 64 A.3d 428, 437 (D.C. 2013); Choharis
v. State Farm Fire and Cas. Co., 961 A.2d 1080, 1088 (D.C. 2008); Malone v. Saxony Co-op
Apartments, Inc., 763 A.2d 725, 728 (D.C. 2000).
SUMMARY OF THE ARGUMENT
Compliance With Rule 23 -The Superior Court's October 31, 2013 order (relying exclusively on
Margolis v. U-Haul Int 'l Inc., 2007 CA 5245, 2009 D.C. Super Lexis 8 (Dec. 17, 2009)), held that
an individual may not bring an action for money damages on behalf of himself and the general
public without meeting all of the "procedural and constitutionally-based" requirements of Rule 23.
APP AT 2. The clear weight of authority holds otherwise. The remedial terms of the CPPA
unambiguously provide for any person acting for himself or "for the interests of the general
public ... to recover or obtain ... treble damages or $1,500 per violation."
D.C. Code 28-
3905(k)(l )(A). Nothing in the statute conditions recovery of monetary relief on behalf of the
general public on satisfaction of the procedural requirements for certification of a class action.
The Council's intent reflected in the plain language of section 28-3905(k)(l) has now been
expressly affirmed in the legislative reports accompanying the 2012 amendments to the CPPA.
13
The Alexander Report notes that the amendments clarify what the law has provided since the year
2000. The amendments clarify the definition of "consumer" protected by the CPPA to include
separate and distinct representative capacities -- both "a private attorney general on behalf of the
general public" and "the representative of a class of consumers." The amendments emphasize that
"any claim" including a private attorney general suit "may recover or obtain" enumerated remedies
including "treble damages or $1,500 per violation." Judge Nash in National Consumer's League
v. Doctor's Associates, Inc., Case No. 2013 CA 0065498, 2014 D.C. Super. Lexis 15 (D.C.
Superior Court Sept. 12, 2014), recently held, in direct contravention of Margolis, that "[t]he
phrase 'any claim . . . may recover or obtain the following remedies' at the beginning of §
3905(k)(2) indicates that the remedies listed are available to all litigants." Slip Op. at 16 (emphasis
added). Further, the due process fears expressed by the Superior Court were found baseless in
Doctor's Associates. Damages are expressly "payable to the consumer"; not the representative.
Slip Op. at 16. Addendum ("Add.") 12. Section 28-3905(k)(l)(F) additionally "grants courts
broad discretion to impose remedial measures as they deem fit." Id.
Every private attorney general action for money damages filed on behalf of the general
public under CPPA section 28-3905(k), that had been remoyed to the U.S. District Court for the
District of Columbia under the Class Action Fairness Act, has been remanded back to Superior
Court. In each case the federal court, citing Breakman v. AOL, LLC, 545 F.Supp.2d 96, 101 (D.D.
C. 2008) found that such representative actions are procedural vehicles distinct from class actions
removable under the Class Action Fairness Act. In Nat'! Consumer's League v. Gen. Mills, Inc.,
680 F.Supp.2d 132, 139 (D.D.C. 2010), the court found that requiring compliance with Rule 23
would not be a construction that would lead to a liberal construction of the CPP A.
14
Business Travelers - The use of a hotel room to meet the personal needs of a guest for a place to
sleep and bathe does not lose its status as a consumer transaction merely because the guest travels
on business. The controlling case on this issue, Weschler v. Klank, 561A.2d1003 (D.C. 1989),
holds that "it is the ultimate retail transaction between the final distributor and the individual
member of the general public that the act covers." 561 A.2d at 1005. Where the purchaser is not
in the regular business of reselling goods or services, the purchaser is not a merchant and the sale
to him is a consumer transaction.
The U.S. District Court in Shaw ignored Weschler. On appeal the D.C. Circuit misread it,
believing incorrectly that this Court found Klank was not a consumer. Shaw, 605 F.3d at 1043.
When the issue came before the Superior Court on remand of the Shaw case from federal court,
Judge Burgess believed that his hands were tied under the principles of collateral estoppel. He
concluded that it did not make any difference whether the D.C. Circuit got this issue right or wrong.
When Rotunda placed the issue before the Superior Court in this case, Judge Weisberg concluded
that this Court must have agreed with the federal courts views in Shaw because if it didn't "one
would have expected our Court of Appeals to have said something about it." JPA 10 at note 6.
But the history of the Shaw case in the courts of the District of Columbia shows a completeI y hands
off position on the merits of the business traveler issue. This Court affirmed Judge Burgess'
holding that Shaw was precluded from relitigating his status as a consumer and that it didn't matter
whether the D.C. Circuit was right or wrong on that issue. Shaw v. Marriott Int'l, Inc., 62 A.3d
1283 (D.C. 2013) (Unpublished). The business traveler issue is now squarely before this Court.
Rotunda is not collaterally estopped by the Shaw decision. Here, it does make a difference whether
the D.C. Circuit got it right or wrong. The use of the hotel room for the personal needs of a guest
who is not in the business of reselling hotel accommodations is a consumer transaction falling
15
squarely within the holding of this court in Weschler. In Wesch/er the article sold had a mixed
purpose - the use of an antique chest in either the purchaser's home or office. 561 F.2d at 1004.
That fact made no difference to this Court's analysis. So too, here, where there is also a potential
mixed use, the incidental business purpose does not take away from the essentially personal use
of the hotel room. A decision attempting to narrow the holding in Wesch fer would run counter to
the statute's directive that the CPPA be liberally construed to remedy unfair trade practices. D.C.
Code§ 28-3901 (b)(l) and (c)(3).
Choice of Law - The Superior Court did not contest the proposition that a non-resident defendant
may be held accountable to District residents under the CPP A. JPA 5. The question remains as
to whether Marriott's representations that it is headquartered in the District of Columbia justifies
regulation of its conduct under D.C. law. JPA 12-13 at 8-9. The controlling principle on this
choice of law issue is whether the interest of the District of Columbia in enforcing its law is at
least as great as the interest of any other jurisdiction. Washkoviak v. Student Loan Mktg. Ass 'n,
900 A.2d 168, 180 (D.C. 2006).
The record is clear that Marriott engaged in a longstanding, widespread and persistent
effort to represent to the whole world (including potential guests) that it was headquartered in the
District of Columbia. These representations were false and were intended to secure commercial
benefits for Marriott. In effect, Marriott was informing all potential guests that it could be found
in, and, by implication, could be held accountable in the District of Columbia.
These
representations give the District of Columbia an interest in holding Marriott accountable under the
CPPA that is at least as great as the interest of Maryland, Delaware or any other state to apply their
laws. Judge Weisberg's statement that Marriott was merely pretending that its business was
located in the District (JP A 13 at 9) turns a blind eye to the reality of what was going on with
16
respect to the District of Columbia. Marriott's representations were part of a systematic, highly
focused effort to promote its commercial interests. The opinion offers no reasons why Maryland
or any other state would have a greater interest under these circumstances than the District of
Columbia.
Summary Judgment - The Superior Court erred in denying Rotunda's Motion for Partial
Summary Judgment on the issue of liability. There can be no factual issue on the question of
intent. Proof of intent is not required under the CPP A. Further, price is always material and a
false representation as to price necessarily has a tendency to mislead an ordinary consumer as to a
material fact. Likewise the failure to disclose material facts has a tendency to mislead. Finally,
there is no dispute that Marriott's price representations in USD were objectively false and that the
prices actually charged in RUR were calculated at undisclosed "units to RUR" exchange rates.
Summary Judgment on the issue ofliability should have been granted to Rotunda on behalf of the
general public.
ARGUMENT
I. THE CPPA AUTHORIZES SUITS FOR DAMAGES PAYABLE TO MEMBERS OF
THE GENERAL PUBLIC INDEPENDENT OF PROCEDURES REQUIRED UNDER
RULE23
A. Individual Members of the General Public Are
Entitled to Monetary Damages In a Representative Action
Rotunda seeks statutory damages under D.C. Code § 28-3905(k)(l) (2000) for himself and
individual members of the general public. As discussed below, the Superior Court has ample
authority to fashion a remedy that protects the due process rights of all interested parties without
making this a Rule 23 class action. The legislature was well aware of Rule 23 but chose to create
a remedy independent of class action procedures. The Superior Court erred in holding that
damages are not available to members of the general public in a representative suit absent
17
compliance with the requirements for certification of a class under Superior Court Rule 23. The
Superior Court relied on one case, and ignored broader authority which demonstrates the clear
intention of the D.C. Council to allow for monetary recovery to all consumers injured by unlawful
trade practices proscribed by the CPP A. Most significantly, the Superior Court wholly ignored
the actual words of the statute.
The starting point for the interpretation of any statute is the language of the statute itself
Section 28-3905(k)(l) (2000) could not be more clear.
The statute provides expressly for
representative actions on behalf of the general public and for specific monetary relief payable to
each consumer injured by an unlawful trade practice. The statute states:
A person, whether acting for the interests of itself, its members, or the general
public, may bring an action under this chapter in the Superior Court of the District
of Columbia seeking relief from the use by any person of a trade practice in
violation of a law of the District of Columbia and may recover or obtain the
following remedies:
(A) treble damages, or $1,500 per violation, whichever is greater, payable to the
consumer; * * * *
(E) in representative actions, additional relief as may be necessary to restore to
the consumer money or property, real or personal, which may have been
acquired by means of the unlawful trade practice; or
(F) any other relief which the court deems proper.
D.C. Code § 28-3905(k)(l) (2000) (emphasis added). These plain words can only be read to grant
a right of action to a person acting on behalf of the general public to recover money to be paid to
consumer victims of an unlawful trade practice. Section 28-3905(k)(l )(A) provides for treble
damages or statutory damages expressly for any claim, including a claim by a person on behalf of
the general public, to remedy a violation of the Act. Section 28-3 905(k)(l )(E) underscores the
availability of such damages in representative suits by authorizing "additional relief' in the form
of restitution in representative actions. For that term to have meaning, section (k)(l)(E) must
18
provide relief in addition to something else -- in addition to the treble damages and statutory
damages authorized in section (k)(l)(A). See, National Consumers League v. Doctor's Assoc.,
Inc., 2013 CA 006549 B (D.C. Superior Court Sept. 12, 2014) Slip Op. at 16. Add. 12.
Nothing in these sections limits recovery by consumers on compliance with any additional
conditions precedent or procedure of any kind. Nothing in these sections limits recovery of
monetary relief on behalf of the general public to satisfaction of the procedural requirements
associated with certification of a class action. National Consumer League v. General Mills, Inc.,
680 F. Supp. 2d 132, 137 (D.D.C. 2010).
The legislative history of these provisions supports this conclusion. In 2000, the Council
amended the CPP A to provide for representative suits and the particularized remedies related to
representative actions.
In 1995, due to severe financial problems, the Council suspended
enforcement of the CPPA by the Department of Consumer and Regulatory Affairs ("DCRA") for
budgetary reasons. Grayson v. AT&T, 15 A.3d 219, 239-241(D.C.2011); Gomez v. Indep. Mgmt.
of Delaware, Inc., 967 A.2d 1276, 1287 & n.13 (D.C. 2009) (citing history of suspensions of
DCRA enforcement authority). In the 2000 amendments, the Council extended that suspension
until October 1, 2002, again for budgetary reasons. Grayson, 15 A.3d at 242.
Interested parties reacted to the suspension of DCRA's enforcement authority by
recommending changes to the pre-2000 version of the CPPA to enable public interest organizations
and individuals to halt and seek remedies for illegal trade practices. See D.C. Bar, Section on
Antitrust, Trade Regulation & Consumer Affairs, Consumer Protection in the District ofColumbia
Following the Suspension ofDCRA Enforcement ofthe Consumer Protection Procedures Act (Apr.
1999), appended to Letter from Mara Verheyden-Hilliard, Section Co-Chair, to the Council (Mar.
29, 2000). JP A 217. Among the new means of enforcement afforded consumers, the 2000
19
amendments "allow representative organizations as well as individuals to maintain actions to
redress unfair trade practices." Id. at 10. The rationale for the expansion of the private right of
action was to "provide public interest organizations and individuals additional abilities to take
consumer protection actions in the public interest to stop fraudulent conduct when an unlawful
trade practice comes to their attention" because, prior to the amendment, it was "not possible to
bring a consumer action to stop illegal conduct until after a victim suffers injury." D.C. Council,
Comm. on Consumer & Regulatory Affairs, Report on Bill 13-679, Fiscal Year 2001 Budget
Support Act of 2000 (Apr. 26, 2000) (Section 3: Consumer Protection, Rationale). JPA 230. The
committee recognized that expansion of the private right of action will "also allow the government
to coordinate with the non-profit and private sectors more efficiently, allowing the government to
leverage the impact of existing public resources and target its activities in areas where enforcement
by private parties will not be sufficient. As a consequence, consumer protection can be increased
without any additional, or substantial, cost to the government." Id.; Grayson, 15 A.3d at 240-41.
The "key CPP A amendments" in the 2000 legislation included a strong statement of
legislative intent: "D.C. Code§ 28-390l(c): 'This chapter shall be construed and applied liberally
to promote its purpose."' Grayson, 15 A.3d at 242.
The amended legislation left in place the
existing legal remedy of statutory damages, now made applicable to representative suits, and
enhanced the remedies available in representative suits by providing for the equitable remedy of
disgorgement. Id. Amendments to D.C. Code § 28-3909 authorizing the consumer protection
enforcement authority of the Corporation Counsel retained the power to seek restitution and
damages suffered by consumers and added the authority to cooperate with private interests and
various government agencies to protect the interests of consumers. Id. and n. 68.
20
In sum, in amending the CPPA in 2000, the Council intended the liberal application of the
statute to "assure that a just mechanism exists to remedy all improper trade practices." D.C. Code
§ 28-3901(b)(l). The Council compensated for budget constraints on DCRA by supplementing
the enforcement capability of the government and by empowering representative suits to protect
the interests of the general public. The Council specifically included individuals and other private
interests in its definition of the "persons" authorized to bring representative suits under the CPP A.
D.C. Code § 28-3901(a)(l) and 3905 (k)(l). The Council left in place the statutory damages
remedy of $1,500 per violation payable to the consumer; and added expressly for representative
suits - "additional relief' - in the form of the restoration of money to the consumer (restitution).
D.C. Code§ 28-3905(k)(l)(A) and (E). Nothing in the language of the statute or in the legislative
history suggests any procedural burden on the reach or remedy of representative actions. To the
contrary, the statute mandates its "liberal" application.
Recent amendments to the CPP A reinforce the legislative intent established above. The
Council explained the background for the amendments:
In 2000, the Council amended the Consumer Protection and Procedures Act
(CPPA) to allow non-profit public interest organizations and the private bar to bring
litigation in the public interest. In an effort to provide a more robust consumer
protection enforcement structure, the 2000 amendments permitted persons
(including non-profit organizations and other entities) to sue "on behalf of
themselves or the general public" when the act had been violated. See D.C. Code §
28-3905 et seq.
Report on the Consumer Protection Amendment Act of 2012, Councilmember Yvette M.
Alexander, Chairperson, Committee on Public Services and Consumer Affairs, November 28,
2012 ("Alexander Report") at JPA 759-760 (emphasis added).
The Alexander Report emphasizes the intent of the Council to clarify the private right of
action authorized by section 28-3905 "in the wake of the D.C. Court of Appeals' decision in
21
Grayson." Alexander Report at JP A 762. The amendments are intended to reinforce an expansive
reach of the CPP A "by being more explicit about what kind of suits the Council intends to
authorize." Id. The amendments authorize "four separate, independent standing provisions." Id.
"Each illuminates the differing situations in which consumers or organizations acting on behalf of
consumer interests might have standing to sue under the act." Id. With respect to consumers, the
Report explains:
New subsection (k)(l )(A) provides a right of action for consumers. It is not
intended to alter a right a consumer currently has to bring an action, whether
individually, jointly with other consumers, as a private attorney general on behalf
of the general public, as the representative of a class of consumers, or otherwise.
Alexander Report at JP A 7 62 (emphasis added). The legislative history affirms the right existing
from the enactment of the 2000 amendments for an individual to act as a private attorney general
on behalf of the general public.
Moreover, the Alexander Report clarifies what the law has authorized since 2000 -- that
representative suits and class action suits are distinct. The Report defines a consumer's rights of
action under the CPP A, including his right to sue not only as an individual, but in two separate and
distinct capacities -- "as a private attorney general on behalf of the general public,[or] as the
representative of a class of consumers .... "
Courts addressing this issue have uniformly found that representative suits and class
actions are separate and distinct procedural vehicles under the CPP A. National Consumer League
v. General Mills, Inc., 680 F. Supp.2d 132, 137 ("the plain language of the CPPA expressly
authorizes suits like NCL's that are brought on behalf of the general public without imposing any
requirement that the suit meet the strictures of Rule 23"); Breakman v. AOL LLC, 545 F. Supp.2d
96, 101 (D.D.C. 2008)("The CPPA specifically authorizes a private attorney general suit without
any reference to class action requirements. See D.C.Code § 28-3905(k). Breakman has not
22
attempted to comply with Rule 23 of the D.C. Superior Court Rules of Civil Procedure, and he has
not sought class certification .... Hence, this representative action is authorized by District of
Columbia statute and is a separate and distinct procedural vehicle from a class action."); Zuckman
v. Monster Beverage Corp., 958 F. Supp. 2d 293, 304-05 (D.D.C. 2013)("Because the plaintiff in
[Breakman] did not attempt to comply with Rule 23 of the D.C. Superior Court Rules of Civil
Procedure, did not seek class action certification, and specifically stated that he was bringing his
case as a representative action under the CPPA, the Court concluded that the action was a "separate
and distinct procedural vehicle from a class action." A similar analysis applies here. National
Consumers League v. Flowers, 2014 WL 1391246 at *6 ("Absent the 'hallmarks of Rule 23 class
actions; namely, adequacy of representation, numerosity, commonality, typicality, or the
requirement of class certification,' courts have held that private attorney general statutes 'lack the
equivalency to Rule 23 that CAFA demands.' ... The Court therefore sees no reason to depart from
the well-reasoned conclusion of Judge Bates in Breakman and Zuckman that removal is not
permitted under CAFA's class action provision for actions brought by a private attorney general
under D.C. Code § 28-3905(k)(l) where plaintiff has not brought a "class action" under D.C.
Superior Court Rule 23."); National Consumer League v. Bimbo Bakeries USA, 2014 WL
2536795 at *8 (D.D.C. June 4, 2014)(Court holds that representative suits and class actions are
distinct because of the "conspicuous lack of class certification requirements in the [CPPA]" and
based upon "precedent holding that private attorney general actions are not class actions").
Finally the provision governing remedies in the 2011 amendments has been moved to
section 28-3905(k)(2) and removes any question as to the availability of damages in suits on behalf
of the general public:
(2) Any claim under this chapter shall be brought in the Superior Court of the District of
Columbia and may recover or obtain the following remedies:
23
(A) Treble damages or $1,500 per violation, whichever is greater, payable to the
consumer.
Doctor's Associates Inc., 2013 CA 006549B (Sept. 12, 2014). ("The phrase 'any claim may
recover or obtain the following remedies' at the beginning of§ 3905 (k)(2) indicates that the
remedies listed are available to all litigants.") (emphasis in original).
The law since 2000 has afforded a consumer such as Rotunda a right of action to bring
suit as a private attorney general on behalf of the general public. Rotunda's private attorney
general action is part of the reference to "any claim" for which the enumerated remedies are
available. That right of action is a claim for which recovery of monetary damages -- treble
damages or $1,500 per violation -- is available. The Superior Court erred in holding to the
contrary.
B. The Superior Court Erred in Endorsing Margolis
The Superior Court here endorsed the opinion in Margolis v. U-Haul, 2009 WL 5788369
(D.C. Superior Court Dec. 17, 2009), to find that damages are not available in representative suits
outside the procedural requirements for class certification under Rule 23. But the Margolis Court
made no substantive finding for reading class action procedures into the CPP A. Rather, the Court
simply concludes that "[n]othing in the statute indicates any intention by the legislative branch to
abrogate the requirements of Rule 23." 2009 WL 5788369, III, if20. Beyond that conclusion, the
obverse of which is refuted by the discussion above, the Margolis Court voices a vague concern
that "some measure of due process plainly is necessary to prevent harm to absent third parties."
Id. at 4. Neither the Superior Court in the instant action, nor the Margolis Court makes any
substantive findings specifying what due process rights it contends would be endangered by
24
allowing an award of damages to un-named members of the general public. Further it does not
identify any potential due process risks to a defendant.
Margolis reads out the clear language of the CPPA in favor SCR-Civil 1, which would
apply all civil rules to all civil cases-including SCR-Civil 23 to the case before it. Margolis,
2009 WL 5788369 at 3-4. With that extra-textual foundation, the court held that "[n]othing in the
CPP A itself indicates that the provision permitting representative actions should be interpreted so
as to eliminate Rule 23 in cases where a plaintiff is seeking money damages on behalf of otherwise
unrepresented third parties." Id.
However, nothing in the CPPA mandates SCR-Civil 23 be
grafted whole-cloth onto portions of §28-3905(k) either.
Margolis violates basic principles of statutory construction which hold that, "[w ]hen
engaging in statutory construction, courts are limited to interpreting the language before them;
they may not drastically re-write the statute .... " Act Now to Stop War & End Racism Coalition v.
District of Columbia, 905 F. Supp. 2d 317, 349 (D.D.C. 2012). Moreover, Margolis reads out the
plain language of the CPP A, that representative actions can have additional relief than those
itemized, because it "ignore[s] the plain language of the statute and the 'basic principle of statutory
construction ... that each provision of the statute should be construed so as to give effect to all of
the statute's provisions, not rendering any provision superfluous." Blodgett v. Univ. Club, 930
A.2d 210, 220 (D.C. 2007).
As this Court has noted, when courts review rules of procedure viz-a-viz statutes, they
should attempt to reconcile one with the other so as to not deprive either of its "essential meaning."
Flemming v. United States, 546 A.2d 1001, 1004 (D.C. 1988). In fact, the enabling acts under
which the state rules of civil procedure were promulgated, like 28 U.S.C. § 2072, which authorizes
the Supreme Court to craft rules of procedure for federal courts, caution that such rules should not
25
"abridge, enlarge or modify any substantive right." See e.g., In re C.A.P., 356 A.2d 335, 343 (D.C.
1976)("Congress in enacting§ 11-946 did not intend to grant a power to the Superior Court which
it withheld from the Supreme Court."); Haynes v. District ofColumbia, 503 A.2d 1219, 1223 (D.C.
1986); Gillis v. Clark Equip. Co., 579 S.W.2d 869, 872 (Tenn. Ct. App. 1978). While neither SCRCivil 1 nor SCR-Civil 23 directly "conflict" with the CPPA, Margolis' grafting of SCR-Civil 23
onto representative plaintiffs seeking damages not only ignores the plain reading of the CPP A but
deprives the statute of its "essential meaning" as highlighted by the Alexander Report. Moreover,
Margolis used state rules of procedure, SCR-Civil 1 and 23, to impermissibly abridge the plain
wording of the statute and otherwise modify it.
The basis for the Margolis ruling has been rejected by other courts. The court in General
Mills, found first that representative suits are expressly authorized by the CPPA "without imposing
any requirement that the suit meet the strictures of Rule 23." 680 F. Supp. at 137. The General
Mills Court further noted that "this representative action is authorized by District of Columbia
statute and is a separate and distinct procedural vehicle from a class action." Id., citing Breakman
v. AOL LLC, 545 F.Supp.2d 96, 101 (D.D.C. 2008). Further the Court reasoned that one of the
principle procedural due process concerns on which Margolis rested was unfounded. General
Mills, 680 F. Supp.2d at 138. The Margolis Court stated that unless a representative plaintiff
seeking money damages was required to comply with Rule 23 there was a danger that the
representative would realize a windfall by claiming money intended for absent third parties. 2009
WL 5 7 8 83 69, *8. The General Mills Court rejected that reasoning, stating that " [u]nder the CPP A,
however, damages are payable to the consumer, not to the 'person' who brings the claim, including
a 'person' acting as a private attorney general." 680 F. Supp.2d at 138, citing Grayson v. AT&T
Corp., 980 A.2d 1137, 1155 (D.C. 2009), rev'd on other grounds, 15 A.3d 219 (D.C. 2011) (The
26
Council intended under D.C. Code § 28-3905(k)(l )(A), that any monetary remedy obtained by Mr.
Grayson would be '"payable to the consumer'"). See also, National Consumer League v. Bimbo
Bakeries USA,_ F. Supp. 2d _ , 2014 WL 253 6795 *4 (rejecting argument that public interest
organization suing on behalf of the public would be entitled to statutory damages for itselftotaling
$1,500 per violation, finding that statutory damages are "payable to the consumer" and so the
organization itself would be entitled only to the damages suffered by it personally); Doctor's
Associates Inc., 2013 CA 006549B (Sept. 12, 2014) Slip Op. at 16 (statutory language specifying
"treble damage must be payable to the consumer does not preclude a public interest organization
from recovering them in a suit under the CPPA.
This language simply specifies that such
organizations may not recover treble damages on behalf of consumers and then retain those
damages for their own benefit - they must pass them onto those who have suffered them harm.")
The General Mills Court concluded:
To require a CPP A plaintiff to comply with Rule 23 would not be a construction
that would lead to liberal application of the CPP A to promote its purpose. Rather,
contrary to the goals of 2000 Amendment, requiring compliance with Rule 23
would further limit the universe of plaintiffs permitted to bring claims and make it
more difficult for those plaintiffs to bring them. Consequently, the Court finds that,
at least for CPPA claims brought on behalf of the general public as here, plaintiffs
need not comply with Rule 23.
680 F. Supp.2d at 139.
The Superior Court here attempted to distinguish the circumstances in General Mills from
those in the instant action. (October 31 Order at 4 n. 4). But the "standing" distinction rendered
moot by Grayson II is simply irrelevant to the findings in General Mills regarding satisfaction of
class certification requirements to qualify for an award of money damages. The General Mills
Court was addressing the due process concerns expressed in Margolis, and it was the concern that
a representative plaintiff might realize a windfall that the General Mills Court rejected. 680 F.
27
Supp.2d at 139. Nor does the General Mills Court limit its findings on damages to associational
plaintiffs. The Court refers to "CPPA plaintiffs." Id. A CPPA plaintiff is a "person" who may
act for himself and on behalf of the general public.§ 28-3905(k)(l). Thus the General Mills Court
found generally that to require satisfaction of the requirements of Rule 23 to sue for monetary
damages would constrict rather than expand the application of the CPP A contrary to the intent of
the Council in amending the Act in 2000. 680 F. Supp.2d at 139.
C. The Court Is Empowered to Ensure Due Process
Rights Outside of Rule 23 Procedural Requirements
Rotunda recognizes that the due process rights of absent third parties must be protected in
representative suits. Based on room prices of several hundred dollars and an undisclosed markup
of 5-15%, the actual damages of the vast majority of guests implicated will not exceed statutory
damages of$1,500, even after trebling. Thus, few, if any, "third parties" need to be protected. In
any event, class action procedure is not the only method available to accomplish that end.
There is abundant support for the authority of District of Columbia courts to craft
appropriate practical solutions to the administration of remedial issues which may arise. Judge
Nash noted that "the 'catch all' language provided in§ 3905 (k)(?)(F) [formerly §3905(k)(l)(F)],
which grants courts broad discretion to impose remedial measures as they deem fit, lends further
support to this conclusion." Doctor's Associates Inc., supra. Slip Op. at 16; Add. 27. D.C. Courts
have ample authority to manage the cases before them and to provide for the proper distribution
of funds awarded for violation of the law of the District of Columbia. See, e.g., Boyle v. Gira!, 820
A.2d 561, "570 n. 11 (D.C. 2003); Kraus v. Trinity Management Services, Inc., 999 P.2d 718, 73233 (Cal. 2000).
Remedial issues may include whether and how to provide notice and opportunity to
participate to members of the public, whether and how to distribute a monetary recovery to affected
28
consumers, whether and how to employ a cy pres distribution, and whether and under what
circumstances a judgment would bind members of the public. D.C. Courts have ample authority
to craft appropriate practical solutions that are consistent with due process. Indeed, D.C. courts
have already devised ways of disbursing damages awards in representative actions without running
afoul of due process. See, e.g., Boyle v. Gira/, 820 A.2d 561, 570 n.11 (D.C. 2003) (concluding
that § 28-3911 (a) of the CPPA permits cy pres distributions into the Consumer Protection Fund).
§28-3911 was repealed by "Fiscal Year 2012 Transfer of Special Purpose Funds Act of2011," and
all funds maintained by the Consumer Protection Fund were transferred to the General Fund. 2
However, actions brought on behalf of the general public are similar to those brought by the
Attorney General under D.C. Code §28-3909(a) ("recover restitution for property lost or damages
suffered by consumers as a consequence of the unlawful act or practice.") and (b)( the Council
empowered the OAG to "recover a civil penalty" for "each [CPPA] violation"). To avoid the due
process concerns voiced by Margolis, the Attorney General noted that it may distribute monies
received in private suits. See Brief for the District of Columbia as Amicus Curiae in Support of
Appellees, Grayson v. AT&T, D.C. Court of Appeals No. 07-CV-001264 at 16-17 (May 5, 2010).
Those consumers receiving monetary recovery here would be subject to the affirmative defense of
set-off in any future dispute to avoid double recovery. Id. Alternatively, the payment of monies
as cy pres awards can be made to appropriate consumer protection organizations under the
supervision of the courts. As noted by the Alexander Report, the National Consumers League
brought suit on behalf of the general public against Kellogg Company for making false health
claims on its cereal boxes. National Consumers League v. Kellogg Co. , No. 2009 CA00521 l B
2
http://app.cfo.dc.gov/services/fiscal_impact/pdf/spring09/FINAL-FIS-Fiscal-Y ear-2012Budget-Support-Act-of-2011.pdf at 92; http://www.openlims.org/public/L19-21.pdf at 117.
29
(D.C. Super. Ct.). As a result of that litigation, Kellogg agreed to donate $200,000 to food based
charities and programs and 8,000 cases of cereal to local D.C. food banks and charities. Alexander
Report at 2 n. 1.
The D.C. Courts may use their equitable discretion to draw upon the wealth of judicial
experience in administering class actions-to assess the adequacy of a representative plaintiff,
afford adequate notice to affected consumers, and ensure that the due process rights of absent
consumers and defendants alike are adequately protected. In Kraus v. Trinity Management
Services, Inc., 999 P.2d 718, 733 (Cal. 2000), for example, a case brought under the pre-2004
version of California's UCL, the California Supreme Court rejected "defendants' due processbased argument that UCL defendants must be accorded the protections against multiple suits and
duplicative liability" that are "available only in a class action." To the contrary, the court explained
that "[i]f defendants have already made restitution to any claimant, defendants may introduce
evidence of prior payment and need not pay any tenant twice, thus alleviating the due process
concerns." Id. at 732-33. The court also noted that in cases that present the possibility of future
suits, "it may be appropriate for the court to condition payment of restitution to beneficiaries of a
representative UCL action on execution of acknowledgment that the payment is in full settlement
of claims against the defendant, thereby avoiding any potential for repetitive suits on behalf of the
same persons or dual liability to them." Id. at 733.
The availability of these and other case-management solutions demonstrates that the D.C.
courts are not only empowered to entertain representative actions such as the instant case, but may
award damages as the Council intended and the statute clearly states. Further, D.C. courts are fully
capable of managing these suits consistent with the requirements of due process.
30
II. BUSINESS TRAVELERS MAY ENGAGE IN CONSUMER TRANSACTIONS
PROTECTED BY THE CPPA
Rotunda seeks to represent a general public including persons who travelled for business,
but who purchased a room in a Marriott Russia Hotel primarily to meet personal needs such as
bathing and sleeping. This Court has definitively addressed the question of what constitutes a
consumer transaction entitled to the protections of the CPPA first in Wesch/er v. Klank, 561 A.2d
1003 (D.C. 1989); and then, confirming the analysis of Wesch/er, in Ford v. ChartOne, 908 A.2d
72 (D.C. 2006). The Superior Court erred by ignoring the analysis carefully set out in those
controlling cases, and, instead it endorsed the patently incorrect ruling of the federal court in Shaw
v. Marriott International, 605 F.3d 1039 (D.C. Cir. 2010). In Shaw, the D.C. Circuit was so
confused that it did not even understand that Klank, the purchaser in Wesch/er, was found by this
Court to be a consumer protected by the CPPA. 605 F.3d at 1043. Further, the Superior Court
acknowledged that no District of Columbia Court had addressed the issue of whether a business
traveler engaging in a transaction to meet his personal needs qualified as a "consumer" protected
by the CPPA. Rather than analyzing the issue, the Superior Court just assumed that, had this Court
disagreed with the rulings of the federal court in Shaw, it would have said something. October 31
Order at 6 n. 6. But this Court in Shaw did say something implicitly when it affirmed Judge
Burgess' view that collateral estoppel precluded Shaw from relitigating his status as a consumer
and that it didn't matter whether the D.C. Circuit was right or wrong. Here, Rotunda is not barred
by the principle of collateral estoppel. Here, it is important to examine whether the D.C. Circuit
got the issue right or wrong. In fact, it got the issue wrong.
This Court has stated that the concern of the CPP A is the regulation of unlawful trade
practices arising from a consumer-merchant relationship. The Act does not regulate merchantmerchant transactions. ChartOne, 908 A.2d at 81, citing Howard v. Riggs Nat'! Bank, 432 A.2d
31
701, 709 (D.C. 1981 ). In that context, this Court has focused its analysis on the distinction between
consumer transactions and commercial transactions. Wesch/er, 561 A.2d at 1004-05; ChartOne,
Inc., 908 A.2d at 83-84.
Under the CPP A, a "merchant" is a person who sells or supplies consumer goods or
services which are the subject of a trade practice, §28-3901(a)(3); and a "consumer" is a person
who purchases or provides the economic demand for a trade practice, §28-3901(a)(2). To
distinguish between "consumer" and "commercial" transactions, this Court looks primarily to the
supplier (merchant) versus purchaser (consumer) relationship.
Howard, 432 A.2d at 708;
Wesch/er, 561 A.2d at 1004-05.
The CPPA does not protect commercial dealings between merchants and other merchants
or their suppliers; it protects transactions between the ultimate purchaser (consumer) and the
merchant. ChartOne, 908 A.2d at 83. This Court in Wesch/er explained that "[t]ransactions along
the distribution chain that do not involve the ultimate retail customer are not consumer transactions
that the Act seeks to reach. Rather, it is the ultimate retail transaction between the final distributor
and the individual member of the consuming public that the Act covers." 561 A.2d at 1005. Per
the definition of "merchant," those who "sell or supply" the consumer product, including those
who purchase to resell that product in the chain of distribution, may not sue other merchants under
the CPPA for their unlawful trade practices. Purchasers who do not "sell or supply" in the chain
of distribution, e.g., the ultimate retail customer, have engaged in a "consumer transaction."
In ChartOne, this Court stated that it had "settled the question of how to determine whether
a transaction is a consumer transaction for purposes of the CPPA in Wesch/er." ChartOne, 908
A.2d at 83. In both Wesch/er and ChartOne, this Court analyzed "the nature of the purchaser to
determine the nature of the transaction." Wesch/er, 561 A.2d at1005; ChartOne, 908 A.2d at 84.
32
In both cases, the Court determined that the plaintiff had a right of action under the CPP A because
the plaintiff was not a "merchant." This Court explained the application of its analysis in both
Weschler and ChartOne:
[I]t is not the use to which the purchaser ultimately puts the goods or services, but
rather the nature of the purchaser that determines the nature of the transaction. If
the purchaser is regularly engaged in the business of buying the goods or service in
question for later resale to another in the distribution chain, or at retail to the general
public, then a transaction in the course of that business is not within the Act. If, on
the other hand, the purchaser is not engaged in the regular business of purchasing
this type of goods or service and reselling it, then the transaction will usually fall
within the Act.
Weschler, 561 A.2d at 1005; ChartOne, 908 A.2d at 84.
The D.C. Circuit based its conclusions on an erroneous reading of Weschler. The D.C.
Circuit states that the Weschler Court "held that an individual who purchased an antique chest for
resale was not a consumer under the CPP A." Shaw, 605 F.3d at 1043. In fact, the Weschler Court
found that the individual before it (Klank) was a consumer. Klank may have purchased the antique
chest for possible resale, nevertheless:
Since Klank is not in the regular business of the retail sale of antiques, it follows
that the transaction is one within the [CPPA] and its protections.
561 A.2d at 1005. The D.C. Circuit not only got the holding wrong -- this Court actually found
that Klank was a consumer -- but more significantly missed the broader point of the analysis. The
CPPA is intended to protect merchant/consumer transactions, not merchant/merchant or business
on business transactions. Thus, where the purchaser is not in the distribution chain -- is not in the
"regular business of resale" -- the transaction is a consumer transaction protected by the CPP A.
Further, the D.C. Circuit not only misread Wesch/er, but erroneously dismissed this Court's
rationale for its holding as dicta. To the contrary, this Court intended its analysis distinguishing
commercial transactions from consumer transactions to be controlling on the issue. In ChartOne,
33
this Court quite purposefully reaffirmed its findings as to the distinction between commercial and
consumer transactions stating "[w]e essentially settled the question of how to determine whether
a transaction is a consumer transaction for purposes of the CPPA in Adam A. Wesch/er & Son, Inc.
v. Klank. " ChartOne, 908 A.2d at 83 (emphasis added). The ChartOne Court then proceeded to
quote its analysis as set forth above. Id. at 84. The D.C. Circuit instead relies on a comment in a
footnote which is clearly dicta. Shaw, 605 F.3d at 1043, citing ChartOne, 908 A.2d at 84 n.12. But
the ChartOne footnote amplifies the distinction explained previously, noting again that the key to
distinguishing these transactions is whether the purchaser is in the chain of distribution. The
example given is the purchase of "supplies or equipment for a business operation", citing the
taxi/gasoline case for context. Id.
The D.C. Council has now codified the analysis defining what constitutes a "consumer"
and a "consumer transaction" reflecting the exact same analysis as set forth by this Court in
Wesch/er. The 2011 amendments to the CPPA clarify the definition of "consumer." Alexander
Report at 3. "Section 3901 (a)(2) is revised to make a number of clarifications to the definition of
'consumer."' Id.
The term "primarily" is now replaced with the term "normally" and the
definition now specifies that "the good or service cannot be for the purposes of resale." Id.
Using "normally" in the adjective definition will remove any necessity to prove
what portion of a consumer's use of the good or service is devoted to personal,
household, or family purposes, so long as one of those purposes can be shown to
be among a consumer's normal uses of the good or service. Adding "other than
for purposes of resale" to the noun definition ensures that the other changes to the
definition do not inadvertently open up the CPP A to suits regarding business-tobusiness disputes or to suits against consumers by sellers, lessors, and other
suppliers.... It is the intention of the Committee that private actions under the
CPPA remain confined to those brought by consumers as that term is generally
understood, and as refined and expanded here by these amendments.
Id.
34
This clarification as to the reach of CPPA protections is precisely the point this Court made
in its analysis in Wesch/er. The word "primarily" was never intended to mean "exclusively."
Indeed, this Court in Wesch/er illustrated the kind of tangential business connection that can exist
in a consumer transaction:
It is entirely conceivable that Klank intended to make personal use of this antique
chest in his home or office. Many persons display valuable antiques in their homes
or offices and such use falls squarely within the broad "personal, household or
family use" definition given by the Act.
561 A.2d at 1004 (emphasis added). So too, most business travelers need sleep and a bath which
fall squarely within the broad "personal use" definition under the CPP A. The fact that there may
also be some business connection to a guest's personal use of a hotel room does not change the
ultimate conclusion.
Nothing in the record in the Shaw case supported a finding that Shaw's purchase of a hotel
room in Russia was the kind of commercial dealings the D.C. Court of Appeals has determined to
be excluded from protection. The record supports only the fact that Shaw traveled to Russia for
business. Not one fact supports a finding that the rooms were purchased or used for anything other
than Shaw's personal needs - to bathe and sleep. Applying the analysis set out in Wesch/er and
ChartOne, nothing in the record even suggests that the rooms were integral to the conduct of any
commercial activity. A simple paper clip may have a direct relationship to the conduct of a
business. Bathing and sleeping do not. Nothing in the Shaw record shows that the rooms were
used to conduct seminars or business meetings. Nor does the record imply that, but for the use of
Marriott's hotel room, Shaw could not have successfully pursued the business that necessitated his
"travel" to Russia.
Nothing in the record demonstrates that Shaw purchased the room in
connection with a "chain of distribution" for the product or service he provided - legal services.
Rather, the record demonstrates that Shaw was the ultimate retail customer using the room for his
35
personal needs.
More precisely, in light of the amendments clarifying the definition of
"consumer," to the extent that business travelers need a hotel room to serve their personal needs
and are not in the business of booking rooms to re-sell to others, the "one purpose" rationale of the
amendments and the analysis of Wesch/er are satisfied.
Cases finding commercial activity excluded from the reach of the CPP A are not analogous
to Shaw's purchase of a hotel room in Russia. In Clifton Terrace Assoc. v. United Techs Corp.,
728 F.Supp. 24, 34 (D.D.C. 1990), plaintiff owned an apartment complex, so purchase of elevator
repair services was commercial since the elevators were purchased to make such elevator services
available to the tenants as part of their rent. Id. In Mazanderan v. Independent Taxi Owners
Association, 700 F. Supp. 588, 591 (D.D.C. 1988), the taxi driver did not have a right of action
against a gasoline supplier because he was not providing the economic demand for the
transportation services requiring the gasoline, "he was providing the service itself." Id. at 591. The
Mazandaran Court found that the taxi driver was on the supply side of the gasoline/transportation
transaction. In Independent Communications Network v. MCI Telecommunications Corp., 657
F.Supp. 785 (D.D.C. 1987), plaintiff was a reseller of interstate long distance telephone services
purchased from the defendant. Thus the case involved a "relationship between two entities which
are both on the supply side of a consumer-merchant transaction." Id. at 787-88.
The federal courts misapplied D.C. law, and the Superior Court erred in agreeing with those
conclusions. Business travelers who purchase hotel rooms for personal use are consumers entitled
to the protections of the CPPA. Business travelers who purchase a hotel room for a "normal"
consumer use -- indistinguishable from a hotel room purchase by a tourist -- are consumers whose
hotel room transaction is protected by the CPP A just as the identical transaction completed by a
tourist would be protected. The fact that there may be an incidental business connection with a
36
transaction (as there was in Weschler) does not remove the transaction from the protections of the
CPPA.
III. THE DISTRICT OF COLUMBIA HAS A COMPELLING INTEREST IN
APPLYING ITS LAWS TO MARRIOTT'S CONDUCT
A. Marriott's Representations that it is Headquartered
in Washington D.C. provide the District of Columbia with a
Compelling Interest in Applying Its Laws to Marriott's Conduct
Rotunda seeks to represent a general public which includes all Marriott Russia Hotel guests
who received (directly or indirectly) a price representation from Marriott through MARSHA for a
sum certain in USD. Marriott's widespread representations that it is headquartered in the District
of Columbia justify application ofD.C. Law to these transactions.
Marriott has engaged in longstanding, widespread and persistent representations to the
public that it was headquartered in the District of Columbia, and has other substantial contacts
with the District of Columbia. Marriott regularly conducts business in the District of Columbia.
Marriott's representations are set forth in considerable detail above in the statement of facts. The
Superior Court trivializes these facts by referring to Marriott's deceptive representations as
"pretending to be located" in D.C. October 31 Order at 8-9. But Marriott was doing more than
merely "pretending."
Its actions showed a systematic and highly focused effort to promote its
own commercial interests. The District of Columbia has an important interest in applying its law
to merchants who, like Marriott, publically claim the District as home.
There has been no
demonstration that any other jurisdiction has an interest greater than that of the District of
Columbia. Curiously, the October 31 Order posits the question not as whether the District may
apply its laws to Marriott, but whether it would. Id. Those who were victimized by Marriott's
unfair trade practices have a right to demand accountability in the jurisdiction that Marriott calls
home.
37
B. Controlling Case Law Supports Application of D.C. Law to Marriott's Conduct
Marriott's representations of its close association with the District of Columbia to all
potential guests of its worldwide hotel properties gives the District at least as strong an interest in
policing Marriott's business conduct as any other jurisdiction in the country. That close relation
supports the application of the CPPA to Marriott's conduct. Where there is a choice oflaw issue,
the District of Columbia courts employ a modified governmental interests analysis which seeks to
identify the jurisdiction with the most significant relationship to the dispute.
Student Loan Marketing Ass 'n, 900 A.2d 168, 180 (D.C. 2006).
Washkoviak v.
In Williams v. First Government
Mortgage and Investors Corp., 176 F.3d 497 (D.C. Cir. 1999) the D.C. Circuit set forth the
standard to be applied with respect to choice of law in a diversity action involving the CPPA:
Under D.C. law, courts must 'evaluate the governmental policies underlying the
applicable laws and determine which jurisdiction's policy would be more advanced
by the application of its law to the facts of the case under review.' District of
Columbia v. Coleman, 667 A.2d 811, 816 (D.C. 1995). 'Where each state would
have an interest in the application of its own law to the facts ...the law of the
jurisdiction with the stronger interest will apply.' Bledsoe v. Crowley, 849 F.2d
639, 641 (D.C. Cir. 1988). 'If the interests of the two jurisdictions in the application
of their law are equally weighty, the law of the forum will be applied.' Id. at 641
n. 1 (citation omitted).
Id. at 499. In Wiggins v. Avco Financial Services, the Court noted that the same principles apply
in a CPPA case removed on federal question grounds. 62 F.Supp. 2d 90, 98 (D.D.C. 1999)
(Finding that the CPP A applied to a loan transaction secured by the borrower's residence in the
District, even though the transaction was consummated in Maryland).
resident sued a Maryland mortgage corporation.
In Williams, a District
The mortgage transaction had occurred in
Maryland. The district court found that, even though Maryland had an interest in the case, the
District of Columbia's interest in protecting its citizens from predatory loan practices was greater
than the interest of Maryland. The D.C. Circuit quoted the District Court's conclusion, that
38
[B]y issuing a loan to a D.C. resident and taking his D.C. home as collateral, First
Government availed itselfofand subjected itself to, the consumer protection laws
of the District of Columbia.
176 F.3d at 499, quoting Williams v. Cent. Money Co. , 974 F. Supp. 22, 27 (D.D.C. 1997)
(emphasis added).
Here, there are even stronger considerations mandating that the law of the District be
applied. The CPP A is a regulatory statute and Marriott is engaging in the types of practices that
the CPP A is directed toward stopping. Marriott, by its longstanding, widespread and persistent
representations that its corporate headquarters are located in the District, has "availed itselfofand
subjected itself to" the consumer protection laws of the District of Columbia. Marriott's repeated
representations that its headquarters are in the District, on the same website where reservations are
made, provides a nexus between the transactions and this jurisdiction. The fact that Marriott makes
these representations to obtain a business advantage provides a compelling reason for the District
to enforce its law in this case. Marriott cannot have it both ways by using the District to gain an
advantage for its international hospitality business while trying to avoid accountability under its
laws. Moreover, the District of Columbia has a compelling interest in regulating the conduct of
any corporation that professes such a close connection with the District, particularly when the
representation itself is false and misleading. The fact that Marriott makes a false and misleading
representation about its location in the District provides the District with an interest that is a least
as great as that of any other jurisdiction in enforcing its law and policy with respect to such a
consumer protection. Even if the District of Columbia had only an equivalent interest as compared
with other state jurisdictions, D.C. law would still apply. In that circumstance, the law of the
forum will be applied unless the foreign jurisdiction has a greater interest in the controversy.
Washkoviak, 900 A.2d at 182; Logan v. Providence Hospital, Inc., 778 A.2d 275, 278 (D.C. 2001).
39
Marriott has never made a demonstration that any other jurisdiction has a greater interest
in this matter than the District of Columbia. The courts in the District of Columbia have concluded
that the policies of the CPPA are advanced by its application to non-District of Columbia
consumers, merchants and transactions. Perhaps the simplest proof that the CPP A is not limited
to D.C. resident plaintiffs can be found in the reported decisions of CPPA cases that have been
brought by nonresident plaintiffs. See, e.g. Kopffv. World Research Group LLC, 298 F. Supp. 2d
50 (D.D.C. 2003)(diversity jurisdiction); Dorn v. McTigue, 157 F. Supp. 2d 37 (D.D.C.
200l)(same); Jackson v. Culinary School of Washington, 788 F. Supp. 1233 (D.D.C.
1992)(putative class action). The Superior Court's interpretation of the statute to exclude nonresident plaintiffs flies in the face of not only the statutory language itself, but the judicial
application of the law.
Applying the protections of the CPP A to nonresident plaintiffs is also consistent with the
approach taken by numerous courts in other states, which have certified classes consisting of
nonresidents in consumer protection cases, including cases in New York, 3 California4 and
Illinois.5 For example, recently in 0 'Neill v. St. Jude Med., Inc., No. C8-04-126 2005 WL
1114469 (Minn. Dist. Ct. Apr. 28, 2005), the court denied a motion to dismiss a class action with
international plaintiffs brought under Minnesota's consumer protection laws.
3
Weinberg v. Hertz Corp., 116 N.Y. App. Div. 2d 1 (1986)(Class certification granted in case
brought against Hertz for overcharges under New York consumer protections statute).
4
Wershba v. Apple Computer, 91 Cal. App. 4th 224 (6th Dist. 2001)(Certifying nationwide class
under California consumer protection law for all consumers affected by Apple's breach of
promise to provide technical support).
5
Bunting v. Progressive Corp., 809 N.E.2d 225, (2004)(Applying Illinois consumer protection
statute to non-residents but noting some Illinois caselaw refusing to do so); see also Tykla v.
Gerber Products, 182 F.R.D. 573 (N.D.Ill.1998)(Certifying class and refusing to limit to state
residents).
40
C. Application of D.C. Law Is Neither Arbitrary Nm· Fundamentallv Unfair
The District of Columbia has interests in this controversy such that the imposition of D. C.
law is neither arbitrary nor fundamentally unfair. In Allstate Insurance Company v. Hague, 449
U.S. 302 (1981 ), the Court recognized what it termed a long-established principle that an issue or
a set of facts in a lawsuit "may justify, in constitutional terms, application of the law of more
than one jurisdiction." Id at 638.
Where the laws of more than one jurisdiction may reasonably be applied, the Court held
that" ... for a State's substantive law to be selected in a constitutionally permissible manner, that
State must have a significant contact or significant aggregation of contacts, creating state
interests, such that choice of its law is neither arbitrary nor fundamentally unfair." Id. at 312313. The conflicts between various state consumer protection laws do not preclude the
application of the law of one of those states where it can be shown that the state has a significant
relationship to the controversy. Washkoviak, 900 A.2d at 180; Eli Lilly & Co. v. Home Ins. Co.,
764 F.2d 876, 882 (D.C. Cir. 1985).
The facts set forth above demonstrate, and Marriott admitted, the pervasive and continuous
representations that it was headquartered in the District of Columbia, and other substantial contacts
with the District of Columbia. Given this background, the District of Columbia has a legitimate
governmental interest of regulating the activities of those who claim D.C. as their home, and the
exercise of its authority in connection with that interest cannot be considered arbitrary or unfair.
Imposition of D.C. law will not disrupt the reasonable expectations of any party. In
evaluating the due process requirements for the application of state law to controversies not wholly
contained within the jurisdiction, the Supreme Court has examined the expectations of the parties
in determining the fairness of the choice of law. Phillips Petroleum v. Shutts, 472 U.S. 797, 822
41
(1985), citing Allstate, 449 U.S. at 333 (opinion of Powell, J.). Thus, where an insured moved to
Florida with knowledge of the insurer, Florida's application of its own law to permit recovery on
the policy was not unfair; the "insurer must have known that it might be sued there." Allstate,
449 U.S. at 333 (opinion of Powell, J.). "A contact or pattern of contacts satisfies the Constitution
when it protects the litigants from being unfairly surprised if the forum state applies its own law."
Id. at 336.
In terms of "expectations," Marriott's hospitality customers knew only what Marriott told
them -Marriott is headquartered in the District of Columbia and is physically located at its address,
One Marriott Drive, Washington, D.C. 20058. More significantly, Marriott's representations were
part of a systematic and highly focused public relations agenda intended to create a positive public
image and economic benefit from its close association with the District of Columbia.
Marriott wrapped itself in the flag of the District of Columbia for years for its own
commercial advantage and encouraged the whole world to believe that its headquarters and
principal place of business are in D.C. As the D.C. Court of Appeals has held in applying D.C.
law in a case in which defendants were headquartered in the District of Columbia, but the Plaintiff
lived and the offending conduct occurred in neighboring Virginia:
Neither [defendant] can claim unfamiliarity with the laws of this jurisdiction [DC]
or surprise that the state courts might apply forum law to litigation in which they
are involved. . . . There can be no unfair surprise to these defendants nor any
frustration of legitimate expectations in our application of the District's law of
negligence, for the defendants were aware that the plaintiff was both a resident of
the metropolitan area and a District employee. 6
6
Kaiser Georgetown Community Health Plan, 491A.2d502 at 508-09 (D.C. 1985) (quotation
marks omitted), citing Allstate, 449 U.S. at 317-18 (Opinion of Brennan, J.) In this regard, the
Court in Kaiser noted with approval remarks by the D.C. Circuit:
To confine the benefits of the District's rule to the territory ceded by the states of
Maryland and Virginia to form the Nation's Capital would be to shun the present
reality of the economically and socially integrated greater metropolitan area. It is
42
Marriott told the world that it resided in the District of Columbia, and provided that information
in all the most likely avenues for inquiry, Marriott's website and public disclosures. A person
wronged by Marriott seeking information regarding where suit might be filed, would have been
informed by Marriott itself, that it could be found in the District of Columbia. Even Marriott's
General Counsel, a person with presumed authority to accept service of process on behalf of the
corporation, states in Martindale-Hubbell that he is located in D.C. Marriott should be held
accountable for its conduct under the laws of the jurisdiction where it has established such deep
roots.
IV. MEMBERS OF THE GENERAL PUBLIC ARE ENTITLED TO JUDGMENT AS A
MATTER OF LAW ON THE MERITS OF THE CLAIMS RAISED BY ROTUNDA
The Superior Court erred in denying Rotunda's Resubmitted Motion for Summary
Judgment. Order dated May 1, 2013. JP A 1. The Court ruled that issues of fact remained with
respect to: (1) the nature of Marriott's misrepresentations; (2) Marriott's intent to deceive; (3) the
materiality of Marriott's price representations; and (4) whether Marriott's price representations
had a tendency to deceive. Id. at 3. The Superior Court was wrong in these conclusions. First, there
is no dispute that Marriott's price representations identifying a sum certain in USD were
objectively false and that Marriott failed to disclose material facts showing how the price would
actually be calculated. Neither Rotunda nor other members of the general public paid the price
quoted at the time the reservation was booked. Marriott has admitted that it charged its Russia
hotel guests in RUR at the time of check-out at an internal Marriott hotel rate which always resulted
in a price greater in USD than that originally represented. Second, the CPP A expressly provides
commonplace that residents of Maryland and Virginia are part of the Washington
metropolitan trading area.
491 A.2d at 508-09 n. 9, citing Gaither v. Myers, 404 F.2d 216, 223 (D.C. Cir. 1968).
43
that proof of intent to deceive is not required for violation of the statute; it is only necessary to
show a misrepresentation that has the tendency to mislead. Third, it is a matter of well settled case
law that price is always material to a consumer transaction.
Fourth, presenting an objectively
false price quotation has a tendency to mislead an ordinary consumer as to how much he will be
expected to pay. The Superior Court erred in denying summary judgment to Rotunda and members
of the general public on the merits ofhis CPPA claims.
A. Marriott's Price Representations to Rotunda and Others
Were Objectively False and Omitted Material Facts
Marriott has admitted that its practice during the time that Rotunda booked his stay at the
Marriott Moscow Grand was to quote room rates in USD while guests could only pay for their
rooms in RUR. (MSUF iii! 11, 14; JP A 208). It is uncontroverted that Rotunda and other Russia
Hotel guests paid their final hotel bills in RUR calculated using a Units to RUR conversion at the
hotel's exchange rate. Marriott has conceded that the internal hotel exchange rates provided a
markup of2.6 to 15.5 percent for actual cost to the guest in USD over what would have been paid
in RUR/USD at the Central Bank exchange rate. Marriott describes its own practice of consistently
marking up the checkout price in RUR over the quoted reservation price to protect itself from
currency volatility. (MSUF iii! 11-15; JPA 208-209; Marriott Memorandum in Opposition to
Motion for Class Certification (U.S. D. Ct. ECF # 75-2) at 5-6; PSMF if 215; JPA 151; JSA 130,
133 (Bates 9M-00821 and 9M-00816)). Merchants may protect themselves from the risk of
currency fluctuations, but they may not do so by secretly shifting that risk to consumers through
false price representations and undisclosed exchange rates.
The D.C. Circuit described the "scheme by Marriott International to overcharge guests at
its Russia hotels." Shaw, 605 F.3d at 1041. The D.C. Circuit stated that Shaw was quoted a price
of $425 when he made his reservation but that when Shaw checked out of the Marriott Renaissance
44
Moscow, the price of his room was calculated using Marriott's own exchange rate which was less
favorable to Shaw than the official exchange rate. Id. The D.C. Circuit concluded that as a result
of this system, Shaw was charged $490 for the room he was told would cost him $425. Id. The
D.C. Circuit thus found: "Shaw paid $65 more than the price quoted to him when he reserved his
room." Id.
Rotunda's experience exactly tracks Marriott's pricing system as described by the D.C.
Circuit. See Statement of Facts, supra at 9-10. Rotunda's final charge was approximately 5.2
percent greater in USD that the price represented at the time Rotunda was issued his reservation
confirmation. (MSUF
iii! 24, 25; JPA 210; PSMF if 217; JPA
152). The price of the room at the
Marriott Moscow Grand was significant to Rotunda, and he complained to Marriott about the
overcharge for his room at the time that he checked out on March 31, 2003. (MSUF iii! 24; JPA
210). Rotunda was surprised that the price he was charged was so different from the price
represented when he made his reservation, and he believed that Marriott's pricing practices were
wrong at that time. (MSUF iii! 24, 25; JP A 210). The Superior Court erred in ruling that issues of
fact as to the nature of Marriott's representations and its failure to disclose material facts defeat
summary judgment.
B. Neither the Intent of the Merchant Nor Reliance By
the Consumer Are Elements of Proof Under the CPPA
Section 28-3904 of the CPP A provides that the conduct enumerated violates the CPP A
"whether or not any consumer is in fact misled, deceived or damaged thereby .... " Id. To prove a
claim under D.C. Code§§ 28-3904 (e) and (f), the plaintiff must establish: the misrepresentation
of a material fact or the failure to disclose a material fact which would tend to mislead. Saucier,
64 A.3d at 441-42; Calvetti v. Antcliff, 346 F. Supp. 2d 92, 105 (D.D.C. 2004). The standard
applied is whether a material representation or omission has a tendency or capacity to deceive.
45
Grayson, 15 A.3d at 251; Fort Lincoln Civic Ass'n, Inc. v. Fort Lincoln New Town Corp., 944
A.2d 1055, 1073 (D.C. 2008); District Cablevision Ltd. v. Bassin, 828 A.2d 714, 725 (D.C. 2003);
Wells v. Allstate Insurance, 210 F.R.D. 1, 9 (D.D.C. 2002); accord, Aspinall v. Phillip Morris, 813
N.E.2d 476, 487-88 (Mass. 2004); Davis v. Powertel, Inc., 776 So. 2d 971, 974-75 (Fla. App.
2001). This Court has said "with respect to§§ 28-3904(e) and (t) that a person bringing suit under
these sections 'need not allege or prove intentional misrepresentation or failure to disclose to
prevail on a claimed violation .... '" Saucier, 64 A.3d at 442; Grayson, 15 A.3d at 251, citing, Fort
Lincoln Civic Ass'n, Inc., 944 A.2d at 1073. All that is required under these sections is a simple
misrepresentation as to a material fact which has a tendency to mislead and failure to state a
material fact if such failure tends to mislead. Grayson, 15 A.3d at 251, citing Restatement (Second)
Torts § 552C. This standard was modeled after the standard originally adopted by the Federal
Trade Commission interpreting the more general language used in Section 5 of the Federal Trade
Commission Act. Matter ofCliffdale Assoc., 103 F.T.C. 110, 165 (1984); Aspinall, 813 N.E.2d at
487. This Court has explained that this provision of the CPP A "like many other state consumer
protection statutes was intended to overcome the pleading problem associated with common law
fraud claims by eliminating the requirement of proving certain elements such as intent to deceive
and sci enter." Fort Lincoln Civic Ass 'n, Inc., 944 A.2d at 1073 n. 20; Saucier, 64 A.3d at 444 ("In
enacting § 28-3904(t), the Council intended to circumvent some of the hurdles in holding
merchants accountable for unfair trade practices, by avoiding a close link between the elements or
a common law fraud claim, such as intentional misrepresentation or willful failure to disclose, and
elements of a claim under the CPPA."). The Superior Court erred in ruling that issues of fact
related to intent to deceive precluded summary judgment.
46
C. Price is Material as a Matter of Law
Under the CPP A, a matter is material where a reasonable person "would attach importance
to its existence or nonexistence in determining his [or her] choice of action in the transaction in
question." Grayson, 15 A.3d at 952 n. 105, citing Restatement (Second) Torts § 538(2); Saucier,
64 A.3d at 442. "A claim of an unfair trade practice is properly considered in terms of how the
practice would be viewed and understood by a reasonable consumer." Grayson, 15 A.3d at 952 n.
104, citing Pearson v. Chung, 961A.2d1067, 1075 (D.C. 2008); Saucier, 64 A.3d at 442; Novartis
v. Federal Trade Commission, 223 F.3d 783, 786 (D.C. Cir. 2000), citing, In re Cliffdale Assoc.,
Inc., 103 F.T.C. 110, 165 (1984); Kraft, Inc. v. FTC, 970 F.2d 311, 322-24 (7th Cir. 1992)(A
statement is "material" where it "involves information that is important to consumers, and hence,
is likely to affect their choice of, or conduct regarding, a product."). Price or cost of a product or
service is presumed to be material, as are express statements. F. TC. v. Crescent Pub. Group, Inc.,
129 F. Supp. 2d 311 at 321; In re Thompson Medical Co., 104 F.T.C. 648, 788, 818-19 (1984),
affd, Thompson Medical Co. v. FTC, 791 F.2d 189 (D.C. Cir. 1986); FTC. v. Wilcox, 926 F.
Supp. 1091, 1098 (S.D. Fla. 1995); Kraft, 970 F.2d at 322.
"Information concerning prices or
charges for goods or services is material, as it is 'likely to affect a consumer's choice of conduct
regarding a product."' Crescent Publishing Group, 129 F. Supp. 2d at 321. Where, as here, a
material representation is "literally and unambiguously false," no further proof regarding
deception is necessary. Tyco Industries, Inc. v. Lego Systems, Inc., 1987 WL 44363, 9 (D.N.J.
1987). Consumer reliance on express claims regarding price is presumptively reasonable. Id.,
citing F. TC. v. Five Star Auto Club, Inc., 97 F. Supp. 2d 502, 528 (S.D.N.Y. 2000).
Courts have consistently held that the standard of proof under the CPP A is a "reasonable
person standard." Grayson, 15 A.3d at 952 n. 104, citing Pearson v. Chung, 961 A.2d 1067 at
47
1075; Saucier, 64 A.3d at 442; Wells v. Allstate Insurance, 210 F.R.D. 1, 9 (D.D.C. 2002); Alicke
v. MCI Communications, 111 F.3d 909 (D.C. Cir. 1997). The proof necessary is that the facts
represented or withheld "be material in the sense that a reasonable [person] might have considered
them important in making this decision." Id.; Wells, 210 F.R.D at 9; Novartis, 223 F.3d at 786,
(citing In re Cliffdale Associates, 103 F. T. C. at 165). "Reasonable" is measured by the expectation
or understanding of the intended consumer audience. Alicke, supra. "Reasonable" is determined
by an objective standard. Davis v. Powertel, Inc., 776 S.2d 971, 974 and n.1 (Fla. App. 2001) and
cases cited. Moreover, in considering "a tendency or capacity to deceive, it is appropriate to look
not at the most sophisticated, but the least sophisticated consumer." Crescent Publishing Group,
129 F. Supp. 2d at 321. This Court explained:
We look to Maryland law as instructive in our jurisdiction. Under Maryland's
Consumer Protection Act," [a]n omission is material if a significant number of
unsophisticated consumers would find that information important in determining a
course of action."
Saucier, 64 A.3d at 442 citing Green v. H&R Block, 355 Md. 488, 735 A.2d 1039, 1059 (Md.
1999). All that need be proven is a tendency to deceive an ordinary consumer, not actual deception
of individual consumers.
The Superior Court erred in ruling that issues of fact related to materiality defeat summary
judgment where price is always material.
CONCLUSION
For the foregoing reasons, this Court should reverse the Superior Court's rulings of October
31, 2013 and rule:
1. D.C. Code 28-3905 (k)(l) authorizes statutory damages in representative actions
payable to individual consumers independent of procedures under Rule 23;
48
2. Hotel accommodations acquired to meet the personal needs of business travelers
are protected under the CPP A so long as the purchaser is not in the regular business
of reselling the product; and
3. Marriott's representations that it is headquartered in the District of Columbia gives
the District an interest in applying its law for the benefit of all consumers that is at
least as great as the interest of any other jurisdiction.
Further, the Court should reverse the Superior Court's Order of May 1, 2013, denying Rotunda's
motion for summary judgment on the issue ofliability, on the grounds that: (1) there are no genuine
issues of fact related to Marriott's false price representations or its failure to disclose material facts;
and (2) the remaining issues of fact identified by the court relate to standards for liability not
imposed under the CPP A.
This matter should be remanded to the Superior Court for further proceedings consistent
with the rulings of this Court.
Date: September 26, 2014
Q;?~
Paul D. Cullen, Sr., D.C. Bar No. 100230
Joyce E. Mayers, D.C. Bar No. 268227
THE CULLEN LAW FIRM, PLLC
1101 30th Street, N.W., Suite 300
Washington, D.C. 20007
(202) 944-8600 (Telephone)
(202) 944-8611 (Telecopier)
Counsel for Appellant
49
ADDENDUM
Westlaw.
Page I
DC ST§ 28-390 I
c
District of Columbia Official Code 200 I Edition Currentness
Division V. Local Business Affairs
Title 28. Commercial Jnstniments and Transactions. rncfs__&_ _&_r:mos)
"!!I Subtitle 11. Other Commercial Trnnsacrions.
"11:1 Chapter 39. Consumer Protection Procedures.
-+ § 28-3901. Deflniti_ons and pnrpost's.
(a) As used in this chapter, the term ·
( J) ''person" means an individual, firm, corporation, partnership, coopcrarive, association, or any other orgoniza·
tion, legal entity, or group of individuals however orgimized;
(2) "consumer" means a person who does or would purchase, lease (from), or receive consumer goods or services,
including a co·obligor or surety, or a person who docs or would pro.,idc the economic demand for a trade prncticc;
as on adjective, "consumer" describes anything, without exception, which is primarily for personal , household, or
family use;
(3) "merchant" means a person, whether organized or operating for profit or for a nonprofit purpose, who in the
ordinary course of business does or would sell , lease (to), or transfer, either directly or indirectly, consumer goods
or services, or a person who in t11e ordinary course of business does or would supply the goods or services which
are or would be the subject mailer of 11 trade pmclice;
( 4) "complainant" means one or more consumers who took part in a trade practice, or one or more persons acting
on behalf of (not the legal representative or olher counsel of) such consumers, or the successors or assigns of such
consumers or persons, once such consumers 1>r persons complain to the Department about the trade practice;
(5) "respondent" means one or more merchnnts alleged by a complainant to have taken part in or carried out a
trade practice, or the successors or assigns of such merchants, and includes other persons who may be deemed legally responsible for the trade practice;
(6) "trade practice" means any act which does or woulrl create, alter, repair, furnish, make available, provide information about, or, directly or indirectly, solicit or offer for or effectuate, a sale, lease or transfer, of consumer
goods or services;
(7) "goods and services'' means any and all parts oft he economic output of society, at any stage or related or necessary point in the economic process, and includes consumer credit, franchises, business opportunities, real estate
transactions, and consumer services of all types;
(8) "Department" meanc; the Department of Consumer and Regulatory Affairs;
(9) "Director" means the Director oft.he Department of Consumer and Regulatory Affairs;
(JO) "Chief oft.he Office of Compliance" means the senior administrative officer of the Department's Office of
Compliance who is delegated the responsibility of carrying out certain duties specified under section 28-3905;
© 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.
ADD 1
DC ST§ 28-3901
Page 2
(J I) "Office of Adjudicalion" means the Department's Office of Adjudication which is responsible for canying
oul certain duties specified under seclion 28-3905;
(12) "Office of Consumer Protection" means the Department's Office of Consumer Prolection which is responsible for carrying out the statutory requirements set fonh in§ 28-3906; and
(13) KCommillee" meaus the Advisory Comrni11ee on Consumer Protection which is responsible for carrying out
the slatutory requirements set forth in section 28-3907.
(b) The purposes of this chapter are to:
(I) assure that a just mechanism exists to remedy all improper trade practices and deter the continuing use of such
practices;
(2) promote, through effective enforcement, fair business practices throughout the conuuunity; and
(3) educate consumers to demand high standards and seek proper redress of grievances.
(c) This chapter shall be construed and applied liberally to promote its purpose.
CREDIT(S)
(July 22, 1976, D.C. Low 1-76, § 2, 23 DCR I 185; enacted, Sept. 6, 1980, D.C. Law 3-85, § 3(a), (d), 27 DCR 2900;
1991. D.C. Law 8-234. § 2(b). 38 DCR 296; Feb. 5. l 994. DC. I.aw J 0-68. § 27(b), 40 DCR 6311; Apr. 9,
1997,D C. Law 11-255, § 27(u). 44OCR1271; Oct.19, 2000,D,C. I.aw 13-172 § 1402Cbl.47DCR 6308;~
2005 D,C. Law 16-33. § 2032(bl. 52 DCR 7503; lune 12. 2007.D~C,J.aw-17-4. § 2Ca). 54 DCRiQ~~.)
M~r. ~.
Current through March 9, 2009
Copyright (C) 2009 By The District of Columbia, All Rights Reserved.
END OF DOCUMENT
<O 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.
ADD2
Westlaw.
DC ST § 28-3905
Pagel
c
District of Columbia Official Code 200 I Edition Currentness
Division V. Local Business Affairs
Title 28. Commercial lnstrnments and Transactions. L8..ds &
"llil Subtitle II. Other Commercial Transactions.
~Ii Chapter 39. Consumer Protection Procedures.
-+ § 28-3905. Complainl prorednres.
~Ml
(a) A case is begun by filing with the Department a complaint plainly describing a trade practice and stating the
complainant's (and, if different, the consumer's) name and address, the name and address (if known) of the respon·
dent, ~nd such other information as the Director may require. The complaint must be in or reduced by the Director to
writing. The filing of a complaint with the Department shall toll the periods for limitation of time for bringing an
action 11s set out in s.~c;!i.on 12~30 .l until the complaint has been resolved through an 11dmini:;trntivc order, consent
decree, or dismissal in accordance with this section or until an opportunity to arbitrate has been provided in Chapter
5 of Title 50.
(b)(I) Except as provided in paragraph (2) of this subsection, the Director shall investigale each such complaint and
dctennine:
(A) What trade practice actually occu11ed; and
(B) Whether the trade practice which occwrcd violates any statute, regula1ion, rule of common law, or 01hc:r law
of the Districl of Columbia.
(2) The Director may, in his or her discretion, dL-clinc to prosecute certain cases as necessary to manage 1he Dcpartrncnl's caseload and control program costs.
(b-1) Jn carrying oul an investigation and detcm1ina1io11 pursuant lo subsection (b) oflhis section, 1hc Director shall
consult the responden1 ru1d such other available sources of infom1ation, and make such other efforts, as are appropriate nnd necessary to CllIT)' out such duties.
(c) If HI any rime the Director finds tha1 the I.Jade practice complained of may, in whole or in pan, be a violation of
law other than a Jaw of the District of Columbin or a law within the jurisdiction of the Department, 1hc Director may
in writing so inform the complninant, respondent and officials of the District, the United States, or other jurisdictjon,
who would properly enforce such law.
(d) The director shall determine that there nre, or are not, reasonable grounds to believe that a trade practice, in violntion of a law of the District of Columbia within the jurisdiction of lhe Depar1men1, has occurred in any part or all
of the case. The Director may find that there are not such rcnsonable grounds for any of the following reasons:
(I) any violatio11 of law which may have occurred is of a Jaw not of the Dislricl of Columbia or not within the jurisdiction of the Department, or occurred more than three years prior to the filing of the complaint;
(2) in case paragraph (1) of this subsection does not apply, no trade practice occurred in violation of any law of
the District;
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ADD3
DC ST § 28-3905
Page 2
(3) the respondenl cannol be idenlilied or localed, or would not be subject lo the personal jurisdiction ofa Distiict
ofC:olumbia court;
(4) the complainan1, to the Direc1or's knowledge, no longer seeks redress in the case;
(5) the complainant and respondent, to the Director's knowledge, have themselves reached an agreement which
settles the case; or
(6) the complainant can no longer be located.
(d-1) The Director may dismiss any part or all .o f a case 10 which one or more oflhe reasons stated in subsection (d)
of this section apply. The Director shall infonn all parties in writing of the detennination, and, if any part or all of
the case is dismissed, shall specify which of the reasons in this subsection applies to which part of the case, and such
01her detail as is necessary to explain the dismissal.
(c) The Director may attempt to sen le, in accordance with subsection (h) of this section, each case for which reason-
able grounds are found in accordance with subsection (d-1) of this section. After the Director's determination as to
whether the complaint is within the Department's jurisdiction, in accordance with subseclion (d-1) of this section,
the Director shall:
( 1) eflect a consent decree;
(2) dismiss the case in accordance with subsection (h)(2) of this section;
(3) through the Chief of the Office of Compliance present to the Office of Adjudicotion, with copies to all parties,
a brief and plain statement of each trade practice that occurred in violation of District law, the law the trade practice violates, and the relief sought from the Office of Adjudication for violation; or
(4) notify all parties of another action taken, with 1he reasons therefor staled in detail and supported by fact. Reasons may include:
(A) any reason listed in subsections (d)(J) through (d)(6) of this section; and
(B} that the presentation of a charge to the Office of Adjudicution would not serve the purposes of this chapter.
(5) Repealed.
(f) When the case is transmitted to the Office of Adjudication, the Chief of the Office of Compliance shall sign, and
serve the respondent, the Department's summons to answer or ap~llT before the Office of Adjudication. Nol Jess
than I 5 nor more than 90 days after such trnnsmittal, the c11se shall be heard. The case shall proceed under section I 0
of the District of Columbia Administrative Procedure Act (section 2-509). The Office of Adjudication may, without
delaying ils hearing or decision, ollempt to settle the case pursunnl 10 subsection (h) of this section, and has discretion to pennit any stipulation or consent decree the parties agree lo, The Director shall be a party on beha If of the
complainant. App.lications to imervene shall be decided as may be proper or required by law or rule. Reasonable
discovery shaU he freely allowed. Any finding or d ci:ion may be modiflccl or set aside, in whole or part, before a
notice of appeal is filed in tJ1e cnse, or the time to so file hns run out.
(g) If, after hearing the evidence, the Office of Adjudication decides a trade practice occurred in which the respon-
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ADD4
Page 3
DC ST§ 28-3905
ckJJt violated a law of the District of Columbia wilhin 1he jurisdiction of the Department, such Office of Adjudica·
tion shall issue an order which :
(I) shall require 1he n:spondt:nt to ct:ast: and t.lesist from such conduct;
(2) shall, if such Office of Adjudication also decides that the consumer has been injured by the trnde practice, order redress through contract damages, restitution for money, time, property or other value received from lhe consumer by the respondent, or through rescission, reformation, n:pair, replacement, or other just method;
(3) shall slate the number of trade practices the respondent performed in viola1ion oflaw;
(4) shall, absent good cause found by lhc Office of Adjudicalion, require the respondent to pay the Departmenl its
costs for investigation, negoliation, and hearing;
(5) may include such other findings, stipulations, conditions, directives, and remedies including punilive damages,
treble damages, or reasonable allomcy's fee$, as are reasom1ble and necessary to identify, correct, or prevent the
conduct which violated District law; and
(6) may be based, in whole or part, upon a violalion of a law establishing or regulating a type of business, occupational or professional license or pennit, and mny refer the case for further pror.eedings to an appropriate board or
commission, but may not su.~pend or revoke a license or pennit if there is a board or commission which oversees
the specific type of license or permit.
(h)( 1) At any time after reasonable grounds arc found in accordance with subsection (d) of this section, the respondent, the Department (represented by (i) the Director prior to transmi1tal to the Office of Adjudication and after an
order issued pursuant to subsection (t) of this section has been appealed, and (ii) the Office of Adjudication after
lraru;millal to the Office of Adjudication and prior to such appeal), and the complainant, may agree to settle all or
part of the case by a wrillen consent decree which may:
(A) include any provision Jescribcd in subsection (g)(2) through (6) of lhis section;
(B) not contain an assertion !hat lhe respondent has violated a law;
(C) con1ain an assurance that the respondent will refrnin from a trade practice;
(D) bar the Department from further action in the case, or a part lhereof; or
(E) contain such other provisions or considerations as the parties agree to.
(2) The representative of the Department shall o<lminislcr the selllcmeut proceedings, and may utilize the good offices of the Advisory Commillee on Consumer Protection. All settlement proceedings shall be informal and include all interested parties and sucl1 representatives as the parties may choose to represent them. Such proceedings
shall be private, and nothing said or done, except a consent decree, shall be made public by the Department, any
party, or the Advisory Committee, unless the parties agree thereto in writing. The representative of the Department may call settlement conferences. For persistent and unreasonable failure by the complainant to attend such
conferences or to take part in other seulement proceedings, the Director, prior to transmitlal to the Office of Adjudication, may dismiss the case.
(3) A consent decree described in paragraph (I) of this subsection may be modified by agreement of the Depart·
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ADDS
Page 4
DC ST§ 28-3905
ment, complainanl and respondent.
(i)(l) An aggrieved party may appeal to the District of Columbia Court of Appeals aflcr:
(A) the Office of Adju<licalion decides a case pursuant lo subscclion (f) of 1his section;
(B) all parts of a case have been dismissed by opcralion of subsection (d) or (e) of this section; or
(C} the Director dismisses an entire case in accordance with subsection (h)(2) of this section.
(I A) Such appeals shall be conducted in accordance with the procedures and standards of section 11 of the District of Columtiia Administrative Procedure Act (~c;~!i2!12::.~J Q), and take into account the procedural duties
placed upon the Depanment in this section and all actions taken by the Department in the case.
(2) An aggrieved party may appeal any ruling of the Office of Adjudication under subsection U) of this section to
the Superior Court of the District of Columbia.
(3)(A) Any person found In have executed a trade practice in viola lion of a law of the District of Columbia within
lhe jurisdiction of the Department:
(i) shall be liable to the Department for a civil penalty of not C)(ceeding $I 000.00 for each violation enumerated in an order pursuant to subsection (g)(3) of this section; and
(ii) may be assessed and made liable to the Departmenl for a civil penally of not exceeding $1000.00 for each
violation or failure to adhere to a provision, of an order described in subsection (f), {g), or (j) of this section or
a con.c;ent decree described in subsection (h) of this section.
(B) The Department, lhe complainant, or the respondent may sue in the Superior Court of the District of Columbia for a remedy, enforcement, or assessment or collection of a civil penalty, when any violation, or failure
to adhere to a provision of a consent decree described in subsection (h) of this section, or an order described in
subsection (0, (g), or (j) of this section, has occurred. The Departme11t shall sue in that Court for assessment of
u civil penally when an order des ribed in subsec1ion (g) of this section has been issued and become final. A
failure by th Dcpanmcnt or any person 10 file suit or prosecute under this subparagraph in regard to any provi ..
ion or violntion of a provision of any consent decree or order, shall not conslitute a waiver of such provision or
any right under such provision. The Court shall levy the appropriate civil pcnoltic:s, and may order, if supported
by evidence, temporary, preliminary, or pe.rmanenl injunc rions, clamag s, 1reble cfamages, reasonable nttomcy's
fees, consumer redress, or other remedy. 'Ibe Court !may set aside t.hc final order Jfthe Court detennine that the
Department of Consumer and Regulatory Affairs Jacked jurisdiction over the respondent or that the complaint
was frivolous. If, afier considering an application lo set aside an order of the Department of Consumer and
Regulatory Affairs, the Court detennines that the application was frivolous or that the Department of Consumer
and Regulatory Affairs lacked jurisdiction, the Court shall award reasonable attorney's fees.
(C) Application to the Court lo enforce an order shall be made at no cost to the Distrfot of Columbia or 1I1c
complainanL
(4) lbe Corporation Counsel shall represent the Department in ull proceedings described in this subsection.
(j) If, at any time before notice of appeal from a decision made according to subsection (1) of this section is filed or
lhe time to so file has nm out, the Director believes that legal action is necessary to preserve the subject matter of the
© 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.
ADD&
Pogc 5
DC ST§ 28-3905
case, to prevent further injury to any party, or to enable the Depanmcnt ultimately to order a full and fair remedy in
the case, the Chief of the Oflicc of Compliance shall present the matter to the Office of Adjudication, which m11y
issue a cease and desist order 10 take effect immediately, or grant such other relief as will assure a just adjudication
of the case, in accordance with such beliefs of the Director which an: substantiated by evidence . The Office of Adjudication's ruling may be appealed 10 court within 7 days of notice thereof on the Director, respondent, and complainant.
.
(k)(l) A person, whetht'r acting for the interests of itself, its members, or the general public, may bring an action
under this chapter in the Superior Coun of the District of Columbia set king relief from the use by any person of a
trade practice in violation of a law of the District of Columbia and may recover or obtain the following remedies;
(A) treble damages, or $1,SIX1 per violation, whichever is grc:ater, payable to the consumer;
(B) reasonable allomcy's fees;
(C) punitive damages;
(D) an injunction against tl1e use of the unlawful trade practice;
(E) in representative actions, additional relief as may be necessary 10 restore tu lhc rnnsumer money or propeny, real or peisonal, which may have been acquired by means of the unlawful trade practice; or
(F) any other relief which the court deems proper.
(2) The remedies or pcnallies provided by !his chapter are cumulative and in addition 10 other remedies or penalties provided by Jaw. Nolhing in this chapter shall prevent any person who is injured by a trade practice in violation of a law of the District of Columbia witl1in the jurisdiction of the Department from exercising any right or
seeking any 1emcdy lo whic!t the person might be entitled or from filing any complaint with any other agency.
(3) Any written decision made pursuant lo subsection (f) of this section is udmissiblc as prim a facic ev idencc of
tbe facts stated thc:rein.
(4) If a merchant files in any court a suit seeking to collect a debt arising out of a trade practice from which has
also arisen a complaint filed with the Dt:partment by 1J1e dcfondunt in U1c suit eitl1er before or after the suit was
filed, tl1e court shall dismiss the suit without prejudice, or remand it lo the Department.
(5) An action brought by a person under this subsection against 11 nonprofit organization shall not be based on
in such organizalion, membt:rship services, training or credentialing activities, sale of publications of
the nunprolil organization, medical or legal malpractice, or any other transaction, interaction, or dispule not Arising from the purchase or snlc of consumer goods or services in the ordinary course ofbusiness.
m~mbersbip
(I) The Director will Office of Adjudication may use any power granted to t11c Department in ·c · ?..8, o.s
each reasonably deems will aid in carrying out the functions assigned to eoch in this section. ·acb, while holding the
primary respon ibility of 1he Department for decision in a certain case, may join such case with others then before
the Department. No case may be dispo cd of in a manner not expressly authorized in this section. Every complaint
case filed witJ1 the Dcpnrrmcnt and within i1sjurisdie1ion shall be de ided in accordance with the procedures and
sanctions of this section, notwithstanding that a given trade rrnclice, at issue in the case, may be governed in whole
or in part by another law which has different enforcement procedures and sanctions.
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ADD7
DC ST§ 28-3905
Page 6
(m)(I) Whenever requested, the Deportment will make available to the complainant and respondent an explanation,
and any olhcr information helpful in understanding, the provisions of any consent decree lo which the Department
agrees, and any order or decision which the l.lcpartment makes_
(2) The Director shall maintain a public index for all the cases on which the Department has mad" a final action or
a consent decree, organized by:
(A) name of complainant;
(D) name of respondent;
(C} industry of the merchant involved;
(D) nature of the violalion ofDistrit:t luw alleged or found to exist (for example, subsection of section 28-3904
involved, or section of a licensing law involved);
(F.) final disposition.
(n) There shall be established a Consumer Protection Educiltion fund ("Fund"). All monies awa1ded to or paid to the
Department by operation of this section, including final judgements, consent decrees, or seltlements reduced to final
_judgements, shall be paid into the Fund in order to further the purpose of this chapter as enumcra1ed in § 28-390 I.
(u) Every complaint case that is bdim: the Department in accordance with this section shall proceed in confidence,
except for hearings and meetings before the Office of Adjudication, until the Department makes a final action or a
consent decree.
(p) The Director may file a complaint in accordance with subsection (a) of this section, on behalf of one or more
consumers or as complainant, based on evidence and information gathered by the Department in carrying out this
chapter. Persons not parties to but directly or indirectly intended as beneficiaries of an order described in subsection
(l), (g), or (j) of this section, or a consent decree described in subsection (h) of this section, arising out of a complain! filed by the Director, may enforce such order or decree in the manJJer provided in subsection (i)(3)(B) oflhis
section.
(q) At any hearing pursuant to subsection (f) or (j) of this section, a witness has the right 10 be advised by counsel
present 111 such hearing. Jn any process under this section, the complainant and respondent may have legal or other
cowisel for represe.ntation and advice.
(r) All cases for which complaints were filed before March 5, 1981, may be presented to and heard by the Office of
Adjudication notwithstanding the time limits previously provided in section 28-3905(d), 28-3905(e), 1111d 28-3905(f)
for the investigation and transmittal of cases to the Office of Adjudication, and for the hearing of cases by the Office
of Adjudication.
CREDIT(S)
(July 22, 1976, D.C. Law 1-76, § 6, 23 DCR 1185; Jlllle I 1, 1977, D.C. Law 2-8, § 4(b), 24 DCR 726; enacted, Sept.
6, 1980, D.C. Law 3-85, § 3(a), (d), 27 OCR 2900; Mar. 5, 1981, D.C . law 3-159, §§ 2(b), (c), 3, 27 DCR 5147;
Mar. 8, 1991, D.C. Law 8-234. § 2m. 38 DCR 296; Btl!. ), 1994. n .c . Law 10-68. § 27Ul. 40 DCR 6311; fil!L2._
1997. D.C. Law 11-255. § 27(y). ~CR 127l;hpr. 29, 1998~D.C. l11w 12-86, § J;3Q)(_;;_), :l_
lPCR.JU4; Oct. 19,
2000, DJ:. L.<1.w J3~ In.§ 14_o_2@. 47 D_CB-__Q.~~; Q~ _Z{)_,JQQ5.__11k Low 16-33, § 2032(d),22 D_CR_Z~.!n; Jym:_
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ADDS
DC ST § 28-3905
Page 7
12. 2007. D.C. Law 17-4. § 2(b). 54 DCR 4085.)
Current through March 9, 2009
Copyright {C) 2009 By The District of Columbia. All Rights Reserved.
END OF DOCUMENT
<O 2009 Thomson Reuters/West. No Claim to Orig. US Gov. Works.
ADD9
§ 28-3909. Restraining prohibited acts., DC CODE§ 28-3909
IWest's District of Columbia Code Annotated 2001 Edition
IDivision V. Local Business Affairs
ITitle 28. Commercial Instruments and Transactions. (Refa & Annos)
ISubtitle IL Other Commercial Transactions.
IChaoter ~<}.Consumer Protection Procedures.
DC ST § 28-3909
Formerly cited as DC ST 1981 § 28-3909
§ 28-3909. Restraining prohibited acts.
Currentness
(a) Notwithstanding any provision oflaw to the contrary, ifthe Corporation Counsel has reason to believe that any person is
using or intends to use any method, act, or practice in violation of section 28-3803, 28-3805, 28-3807, 28-3810, 28-3811,
28-3812, 28-3814, 28-3817, 28-3818, 28-3819, or 28-3904, and ifit is in the public interest, the Corporation Counsel, in the
name of the District of Columbia, may petition the Superior Court of the District of Columbia to issue a temporary or
permanent injunction against the use of the method, act, or practice. In any action under this section, the Corporation Counsel
shall not be required to prove damages and the injunction shall be issued without bond. The Corporation Counsel may
recover restitution for property lost or damages suffered by consumers as a consequence of the unlawful act or practice.
(b) In addition, in an action under this section, the Corporation Counsel may recover a civil penalty of not more than $1,000
for each violation, the costs of the action, and reasonable attorney's fees .
(c) The Corporation Counsel may also:
( 1) represent the interests of consumers before administrative and regulatory agencies and legislative bodies;
(2) assist, advise, and cooperate with private, local, and federal agencies and officials to protect and promote the interests
of consumers;
(3) assist, develop, and conduct programs of consumer education and information through public hearings, meetings,
publications, or other materials prepared for distribution to consumers;
(4) undertake activities to encourage local business and industry to maintain high standards of honesty, fair business
practices, and public responsibility in the production, promotion, and sale of consumer goods and services and in the
extension of consumer credit;
·:· 1••.
;l.c:··;Next (_[:;
;;011~
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ADD 10
§ 28-3909. Restraining prohibited acts., DC CODE § 28-3909
--
-------
(5) perform other functions and duties which are consistent with the purposes or provisions of this chapter, and with the
Corporation's Counsel's role as parens patriae, which may be necessary or appropriate to protect and promote the welfare
of consumers;
(6) negotiate and enter into agreements for compliance by merchants with the provisions of this chapter; or
(7) publicize its own actions taken in the interests of consumers.
red it
(Mar. 8, 1991, D.C. Law 8-234, § 2(h), 38 DCR 296; Oct. 19, 2000, D.C. Law 13-172, § 1402(e), 47 DCR 6308.)
Copyrig ht ( c) 20 L2 By the District of Columbia. Content previously published in the District of Columbia Official Code,
2001 Edition is used with permission. Copyright (c) 2014 Thomson Reuters
DC CODE § 28-3909
Current tltrou h Se !ember I 2014 .
I· nrl uf Ou ·u1111•11C
t~ 1
11 " Nex
1.Q
2014 Thom ...01, I ~eutors . No cl.nm to original I J.C •.
CroVE!l nme:nt W1Jrk~
2
ADD 11
SUPERIOR COURT OF THE DISTRICT OF COLUMBIA
CIVIL DIVISION
THE NATIONAL CONSUMER'S
LEAGUE,
Plaintiff
Docket No.
2013 CA 006549 B
Civil 2 Calendar # 11
Judge Stuart G. Nash
v.
DOCTOR'S ASSOCIATES, INC.,
Defendant
ORDER
Before the Court is defendant's motion to dismiss or stay. For reasons discussed more
fully below, the Court grants the motion in part and denies the motion in part.
I.
Background
This case has been brought by plaintiff The National Consumer's League ("NCL"), a
public interest group, which alleges that the advertising and marketing of certain breads sold by
Subway restaurants, of which defendant Doctor's Associates, Inc. ("DAI") is the franchisor,
violates the D.C. Consumer Protection and Procedure Act ("CPPA"), D.C. Code §§ 28-3901, et
seq. NCL alleges that Subway misrepresents the qualities of its 9-Grain Wheat and Honey Oat
breads. Specifically, NCL claims that the "name and fake color combination" used to identify
these particular breads is meant to deceive whole-grain-conscious consumers into thinking that
these breads are more healthful than the other breads offered by Subway, when in fact they are
virtually identical.
On December 18, 2013, DAI filed a motion to dismiss or stay the case. As a basis for its
motion, DAI relies on five principal arguments: (1) federal law expressly preempts NCL's state
law claim under the CPPA; (2) this Court should defer to the primary jurisdiction of the Food
ADD 12
and Drug Administration ("FDA") to act in this arena; (3) NCL's complaint fails to satisfy the
Rule 9(b) pleading standard for fraud claims; (4) even applying the more lenient Rule 8(a)
pleading standard, NCL has failed to state a claim upon which relief could be granted; and (5) if
this case is allowed to proceed to trial, as a public interest group NCL cannot seek statutory
damages.
Pursuant to a briefing schedule set by the Honorable Anthony Epstein, NCL filed an
opposition to the motion on January 21, 2014. DAI filed a reply on February 7, 2014, and NCL
filed a sur-reply on February 28, 2014. A hearing was scheduled for oral argument on the
motion on April 17, 2014, but the parties jointly requested a continuance of that hearing, in the
hope that ongoing settlement negotiations would avoid the necessity the Court issuing a ruling on
this motion. On June 1, 2014, the parties advised the Court that their optimism had proven
unwarranted, and a hearing would still be necessary. Oral argument on the motion was held on
July 31, 2014, and the motion is now ripe for disposition.
II.
Legal Standard
A complaint should be dismissed under Rule 12(b)(6) if it does not satisfy the
requirement of Rule 8(a) that a pleading contain a "short and plain statement of the claim
showing that the pleader is entitled to relief." "The pleading standard Rule 8 announces does not
require 'detailed factual allegations."' Potomac Development Corp. v. District of Columbia, 28
A.3d 531, 544 (D.C. 2011) (quotingAshcroftv. Iqbal, 556 U.S. 662, 678 (2009)). "To survive a
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face." Id. (internal quotation and citation omitted). "A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
2
ADD 13
"When there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief." Id. (quotation omitted).
"To survive a motion to dismiss, a complaint must set forth sufficient information to
outline the legal elements of a viable claim for relief or to permit inferences to be drawn from the
complaint that indicate that these elements exist." Williams v. District of Columbia, 9 A.3d 484,
488 (D.C. 2010) (citation and quotation omitted). The facts alleged in the complaint "must be
enough to raise a right to relief above the speculative level," but a plaintiff may survive a Rule
12(b)(6) motion even if "recovery is very remote and unlikely." Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 555-56 (2007) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
ID.
Discussion
A. Preemption
DAI moves to dismiss NCL's CPPA claim on the ground that it is federally preempted by
the Nutritional Labeling and Education Act, 21 U.S.C. §§ 341, et seq. ("NLEA"), which
amended the Federal Food, Drug, and Cosmetic Act in 1990, establishing a uniform scheme
under which claims may be made about nutrients in foods. DAI claims, in essence, that the
labeling of its 9-Grain Wheat and Honey Oat breads complies with NLEA, and because NLEA
preempts state law regarding food labeling, this Court does not have the authority to afford any
relief under the CPPA. 1 In response, NCL argues that NLEA contains an express preemption
provision, 2 the preemption provision does not apply to the claims alleged in this case, and
1
DAI argues that NLEA governs the instant dispute because NCL has sought, among other remedies, an order
requiring Subway to revise its labeling and signage regarding the two breads at issue. In response, NCL argues that
while DAI's alleged misrepresentations could be remedied by an explicit statement regarding the actual whole grain
content of these breads, it would prefer for Subway to cease the alleged misrepresentation -presumably by changing
the names of the breads and/or dispensing with the practice of adding coloring to them.
2
21 U.S.C. § 343-l(a).
3
ADD 14
therefore NLEA does not preempt the CPPA in this context. The Court is persuaded that NCL is
correct.
"A fundamental principle of the Constitution is that Congress has the power to preempt
state laws." Crosby v. National Foreign Trade Council, 530 U.S. 363, 372 (2000). Preemption
can occur in one of three ways. First, a federal statute may, by its express terms, provide that
certain state laws are preempted ("express preemption"). Second, Congress may manifest an
intent "to occupy the field" in a particular area, leaving no room for state and local regulation
("field preemption"). Finally, if the terms of a federal statute actually conflict with state law,
making it impossible for a party to comply with both federal and state law, then the state law will
be found to be preempted ("conflict preemption"). See id, at 372-73.
In this case, NLEA contains an express preemption provision, and the difficult
preemption question is whether that provision applies in this case. Before proceeding to that
analysis, the Court will summarily address the other forms of preemption. The Court need not
seek to infer whether Congress intended to "occupy the field" of food labeling and nutritional
claims because the NLEA specifically provides that Congress did not intend to do so. 3
Therefore, as numerous prior courts have held, field preemption is inapplicable. See, e.g., Holk
v. Snapple Beverage Corp., 575 F.3d 329, 338-39 (3d Cir. 2009). As to conflict preemption,
neither party to this litigation contends that NLEA (or any other federal statute or regulation)
limits DAi's ability to engage in the conduct set forth in NCL's complaint. Accordingly, conflict
preemption would not apply, because there is no provision of federal law with which the CPPA
would potentially conflict.
Accordingly, preemption, if it exists, would need to be express
preemption under the terms of 21 U.S.C. § 343-l(a).
3
"[NLEA] shall not be construed to preempt any provision of State law, unless such provision is expressly
preempted under (21U.S.C.§343-l(a)]." Pub. L. No. 101-535, § 6(c)(l), 104 Stat. 2353, 2364.
4
ADD 15
Before analyzing the preemption provision itself, it is necessary to briefly discuss the
structure of the NLEA as it pertains to food labeling and nutritional content claims. Section
343(q) sets forth certain nutritional information that must appear on the labeling of food intended
for human consumption.
Required information includes items such as the number of total
calories, total fat, sodium, carbohydrates, and protein for each serving size, as well as any other
vitamin, mineral, or other nutrient required by regulation promulgated by the Secretary of Health
and Human Services.
See 21 US.C. § 343(q)(l).
However, food served in restaurants is
expressly exempted from the applicability of this provision. See 21 U.S.C. § 343(q)(5). Food
served in chain restaurants, such as Subway, are subject to alternative requirements regarding
mandatory nutritional disclosures. See 21 U .S.C. § 343((q)(5)(H).
In contrast to § 343(q), which sets forth information that must be disclosed to consumers,
§ 343(r) limits what food sellers can and cannot say in connection with nutritional claims they
voluntarily make in connection with their food products. This provision applies equally to both
restaurant and non-restaurant foods.
Section 343(r)(l) sets forth certain restrictions on
nutritional claims that may be made regarding those nutrients listed in § 343(q)(l). Thus, while
§ 343(q)(l) is inapplicable directly to restaurants, which are exempt from the § 343(q)
mandatory labeling requirements, the provision becomes indirectly applicable to restaurants with
respect to voluntary nutritional claims as a result of
incorporation of the provision by §
343(r)(l).
The "whole grain" content of food is not one of the nutrients listed in 21 U.S.C. §
343(q)(l), nor, the parties agr('.e, has the Secretary of Health and Human Services acted by
regulation to add "whole grain" content to the list of nutrients covered by 21 U.S.C. § 343(q)(l ).
5
ADD 16
Having outlined the overall structure of the NLEA, the Court is now in a position to
address the express preemption provision. That provision reads, in pertinent part, "no State or
political subdivision of a State may directly or indirectly establish under any authority or
continue in effect as to any food in interstate commerce . . . any requirement respecting any
claim of the type described in [21 USC§ 343(r)(l)] made in the label or labeling of food that is
not identical to the requirement of[21 USC§ 343(r)]." 21 U.S.C. § 343-l(a)(5).
Upon careful review of the statutory scheme, it becomes apparent that express
preemption is not applicable to the claims at issue in this case. Only state laws that purport to
regulate nutritional claims governed by § 343(r)(l) are preempted by this provision. Section
343(r)(l), in turn, only covers claims made relative to nutrients covered by§ 343(q)(l). Because
"whole grain" content is not covered by § 343(q)(l), states remain free to regulate nutritional
claims regarding "whole grain" content. Plaintitrs CPPA claim is thus not preempted. 4
B. Primary Jurisdiction
Even ifthe Court concludes that NLEA does not preempt NCL's claims, DAI argues that
it should nevertheless exercise its discretion to dismiss or stay the case under the doctrine of
primary jurisdiction. The doctrine of primary jurisdiction
applies where a claim is originally cognizable in the courts, and comes into play
whenever enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an administrative
4
Defendant makes two other express preemption arguments that are easily disposed of. Defendant contends that
plaintiffs claims implicate the mandatory nutritional information provisions in§ 343(q)(l), and are therefore
preempted through the operation of§ 343- l(a)( 4). However, as discussed above, restaurants such as Subway are
exempt from the requirements of§ 343(q)(l). Preemption cannot exist on the basis of these inapplicable provisions.
Also, defendant contends that plaintiff's claims implicate the provisions ofNLEA that require a food labels to use
"the common or usual name of the food,"§ 343(i)(l), which would preempt the action through the operation of§
343-1 (a)(3). These provisions are not applicable in this context because Subway's products do not include "labels"
within the meaning of the NLEA. See, e.g., New York State Restaurant Ass 'n v. NYC Bd. of Health, 556 FJd 114,
129 (2d Cir. 2009). Somewhat confusingly, while the sandwiches at issue in this case do not bear what the NLEA
would recognize as "labels," the printed and graphic materials involved in marketing those sandwiches do meet a
separate NLEA definition for "labeling." See 21 U.S.C. § 321 (m). That distinction explains why the§ 343(r)(l)
"labeling" provisions are at least potentially applicable, while the§ 343(i)(l) "label" provisions are not.
6
ADD 17
body; in such a case the judicial process is suspended pending referral of such issues to
the administrative body for its views.
Lawlor v. District of Columbia, 758 A.2d 964, 973 (D.C. 2000) (quoting Drayton v.
Poretsky Mgmt., Inc., 462 A.2d 1115, 1118 (D.C. 1983)). DAI argues that the Court should
decline to exercise jurisdiction over the case pending further action by the FDA as to what food
labels and labeling must state about whole grain content.
While "[n ]o fixed formula exists for applying the doctrine of primary jurisdiction," the
United States Supreme Court has explained that "[i]n every case the question is whether the
reasons for the existence of the doctrine are present and whether the purposes it serves will be
aided by its application in the particular litigation." United States v. W. Pac. R.R. Co., 352 U.S.
59, 64 (1956). The D.C. Court of Appeals has stated that the doctrine serves "two important
policy objectives: greater uniformity of result and utilization of the specialized and expert
knowledge of the agency." Mullin v. N St. Follies L.P., 712 A.2d 487, 492 (D.C. 1998).
The Court declines to exercise its discretion to defer to the FDA on these matters. While
the FDA undoubtedly has special expertise in food labeling, the allegations in NCL's complaint
are not confined to the labeling of Subway's breads. The gravamen ofNCL's complaint is that
the entire manner in which Subway represents its 9-Grain Wheat and Honey Oat breads to
consumers - including the name, appearance, marketing and advertising - is fraudulent and
deceptive, in violation of the CPPA. Courts are well-suited to resolve such claims, which do not
require the type of scientific or specialized expertise possessed by the FDA. See, e.g., Rikos v.
Procter & Gamble Co., 782 F. Supp. 2d 522, 529-30 (S.D. Ohio 2011) ("Plaintiffs claims rest on
the determination of whether [defendant's] advertisements are likely to deceive a reasonable
consumer -
and 'this is not a technical area in which the FDA has greater technical expertise
than the courts -
[as] every day courts decide whether conduct is misleading'") (internal
7
ADD 18
citations omitted); Gustavson v. Wrigley Sales Co., 2013 U.S. Dist. LEXIS 132934, *64, (N.D.
Cal. Sept. 16, 2013) ("As with so many of the other food misbranding cases ... [plaintiffs] case
is 'far less about science than it is about whether a label is misleading."') (internal citations
omitted). Moreover, because NCL's claim involves application of District of Columbia law, the
FDA is unlikely to issue guidance which would resolve this dispute, and there is little concern
about uniformity in administration across different jurisdictions.
The Court is mindful that NCL's claims raise issues related to the disclosure of whole
grain content in foods, an open area of food labeling regulation, and that the FDA could issue
guidance as to appropriate whole grain labeling statements that would resolve NCL's concerns.
The fact that revised labeling is one possible remedy for the alleged misrepresentation does not
justify removing this suit from the sphere of the judiciary and placing it exclusively within the
jurisdiction of the FDA. This case simply does not, as DAI suggests, require resolution of an
issue of first impression or of a particularly complicated regulatory issue. Indeed, as the Court's
analysis in Section III.A infra suggests, the particular issues raised by NCL do not implicate
current FDA regulations at all. NCL's primary contention is that the marketing of Subway's 9Grain Wheat and Honey Oat breads, through a combination of their name and appearance,
misrepresents the products' whole grain content. Resolution of this claim requires a fact-based
analysis, not technical guidance.
Thus, whether or not the FDA has contemplated issuing
guidance or regulations as to whole grain labeling is simply irrelevant to the issue presented here.
In sum, this Court is not of the opinion that the special competence of the FDA is required for
resolution of this dispute.
C. Rule 9 (b)
DAI also moves to dismiss based on its allegation that NCL's complaint fails to satisfy
8
ADD 19
the requirements of Rule 9(b) of the Superior Court Rules of Civil Procedure, which it argues is
applicable to CPPA claims. Rule 9(b) provides, in relevant part: "[i]n all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be stated with particularity." NCL
argues that Rule 9(a) does not apply to CPPA claims.
Although there is no controlling authority on the question of whether complaints brought
under the CPPA must satisfy Rule 9(b) or the more lenient Rule 8(a), several courts in this
jurisdiction have addressed the issue. The Court is persuaded that the position reached by the
Honorable A. Franklin Burgess, Jr. in Dahlgren v. Audiovox Commc 'ns Corp., 20 I 0 WL
2710128 (D.C. Super. July 8, 2010) is correct, and it adopts its reasoning. Specifically, Judge
Burgess found that Rule 9(b) does not apply to CPPA claims because they are not fraud claims
and the elements of fraud need not be satisfied in order to prevail. Id at *8. 5 This is consistent
with the purpose of the CPPA, which is to be "construed and applied liberally" and which was
enacted "to overcome the pleadings problem associated with common law fraud claims."
Saucier v. Countrywide Home Loans, 64 A.3d 428, 442 (D.C. 2013) (citing Fort Lincoln Civic
Ass 'n. v. Fort Lincoln New Town Corp., 944 A.2d 1055, 1073 n.20 (D.C. 2008)).
Because the Court has determined that Rule 9(b) does not apply to CPPA claims, it need
not determine whether NCL's complaint has satisfied the Rule 9 pleading requirements.
D. Rule 8(a)
Rule 8(a) of the Superior Court Rules of Civil Procedure requires a "short and plain
5
DAI urges this Court not to adopt Dahlgren's conclusion, arguing that it was based on New York's consumer
protection law. This is simply not true. Judge Burgess' decision is based on an analysis of the elements ofa fraud
claim in the District of Columbia. That he cites the reasoning of a Second Circuit case in which the court found, for
similar reasons, that Rule 9(b) does not apply to New York's consumer protection statute does not change this result.
9
ADD20
statement of the claim showing that the pleader is entitled to relief:'' DAI argues that even if the
Court finds that the more lenient Rule 8(a) applies, NCL has nevertheless failed to state a
cognizable claim under the CPP A.
The CPP A governs unlawful trade practices in the District of Columbia. The pertinent
alleged unlawful trade practices in this case are set forth in D.C. Code §§ 28-3904(a), (d), (e), (f),
(f-1), and (u). 6
DAI identifies specific deficiencies regarding NCL's claim under each
subsection. The Court will address each argument in turn.
a. Sections 28-3904 (a) and (d)
DAI argues that because the names given to Subway's breads are literally true, in that its
9-Grain Wheat bread in fact contains nine distinct grains and its Honey Oat bread in fact contains
honey and oats (albeit in the topping), NCL's complaint fails to state a claim that it has
represented that its breads have characteristics or ingredients (§ 28-3904(a)) or a quality or grade
(§ 28-3904(d)) that they do not have.
The issue regarding whether the marketing strategy
6
It shall be a violation of this chapter, whether or not any consumer is in fact misled, deceived or damaged thereby,
for any person to:
(a) represent that goods or services have a source, sponsorship, approval, certification,
accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have;
(d) represent that goods or services are of pruticular standard, quality, grade, style, or model, if in
fact they are of another;
(e) misrepresent as to a material fact which has a tendency to mislead;
(f) fail to state a material fact if such failure tends to mislead;
(f-1) [u]se innuendo or ambiguity as to a material fact, which has a tendency to mislead;
(u) represent that the subject of a transaction has been supplied in accordance with a previous
representation when it has not
10
ADD21
employed by Subway does, in fact, make representations about the "characteristics" or
"ingredients" of their breads is an issue of fact, which is appropriately resolved at trial, rather
than at the motion to dismiss stage. Ultimately, a fact-finder at trial may find that Subway's
marketing strategy makes no specific averments, or only makes averments that are not
misleading as to the characteristics and ingredients of the bread. But the Court cannot, as a
matter of law, find that such an interpretation is the only interpretation that could be reached by a
reasonable fact-finder. Accordingly, dismissal on this ground is not appropriate.
The Court recognizes that the "representations" that NCL accuses DAI of making are
considerably more vague than would be an explicit statement by DAI that the breads in question
contain "X% whole grains." The Court further recognizes that the Court of Appeals has affirmed
dismissal of CPPA cases where no affirmative or implied "representation" as to the
characteristics of goods or services had been identified. See Grayson v. AT&T Corp., 15 A.3d
219, 251 (D.C. 2011). However, this case is distinguishable from Grayson because NCL does
identify a representation. NCL alleges that Subway represents, through the names, coloring and
advertising used to market these two breads, that the breads are substantially different and more
healthy than the rest of the breads Subway offers, when in fact that is not the case, because they
have virtually identical ingredient profiles. Those allegations are sufficient to move this case
outside the ambit of Grayson, and to align this case with those fact patterns in which the Court of
Appeals has found sufficient representations to support claims under § 28-3904 (a). See, e.g.,
Banks v. District of Columbia Dep't of Consumer & Regulatory Affairs, 634 A.2d 433, 438 (D.C.
1993) (CPPA was violated where an individual represented his status as the functional equivalent
of a lawyer, despite never having referred to himself as such). Accordingly, the Court declines
to dismiss plaintiff's claims under§§ 28-3904(a) and (d).
11
ADD22
b. Sections 28-3904 (e), (f) and (f-1)
DAI further argues that the literal truth attached to the breads' names precludes any
finding that it has misrepresented, omitted, or used innuendo or ambiguity as to a material fact
which has a tendency to mislead(§§ 28-3904(e), (f), (f-1)). As support for its argument, DAI
cites the Court of Appeals' decision in Saucier, which states that "a reasonable consumer
generally would not deem an accurate statement to be misleading, and hence, such statement
generally would not be actionable under § 28-3904(e) and (f)." 64 A.3d at 442. This language
does not, however, support a per se bar to suit under the CPPA where the alleged
misrepresentation pertains to a statement that is literally true.
As the courts in this jurisdiction have frequently explained, CPPA claims are analyzed in
terms of "how the practice would be understood by a reasonable consumer." Id The operative
word in the Saucier Court's statement is "generally." While an accurate statement generally
would not be misleading, the question in every CPPA case is not whether a particular practice is
accurate, but whether it would cause a reasonable consumer to be deceived or misled. Thus, this
Court finds that even truthful statements may be actionable under § 28-3904(e) and (f), provided
that the "reasonable consumer" standard is met.
As for § 28-3904(f-l), there can be no argument that literal truth bars suit for the simple
reason that innuendo and ambiguity are not capable of being proven true or false.
Viewing the facts in the light most favorable to NCL, the Court finds that a fact-finder
could determine that the manner in which Subway markets its 9-Grain Wheat and Honey Oat
breads could have a tendency to mislead a reasonable consumer, despite the fact that the names
attached to the breads may technically be accurate. NCL provides sufficient evidence in its
complaint in support of its argument that the combination of brown coloring and words like
12
ADD23
"wheat," "9-grain," and "honey oat" create false impressions as to the health content of foods
such as the breads at issue. In light of Subway's extensive marketing of its healthy offerings, it
is plausible that consumers would infer that those options have different ingredients and
characteristics than others which are not so distinguished.
Whether a reasonable consumer
would in fact infer from DAi's practices that its 9-Grain Wheat and Honey Oat breads contain a
substantially higher quantity of whole grains than they actually have is a question of fact that
need not be resolved at this stage of the litigation.
In addition to arguing that no reasonable consumer could be misled as to the whole-grain
content of Subway's 9-Grain Wheat and Honey Oat breads, DAI disputes that these facts are
material to a consumer's decision to purchase a Subway sandwich. A matter is "material" if:
(a) a reasonable man [or woman] would attach importance to its existence or
nonexistence in determining his [or her] choice of action in the transaction in
question; or
(b) the maker of the representation knows or has reason to know that its recipient regards
or is likely to regard the matter as important in determining his [or her] choice of
action, although a reasonable man [or woman] would not so regard it.
Saucier, 64 A.3d at 442 (quoting RESTATEMENT OF THE LAW (SECOND) OF TORTS § 538).
NCL argues that the whole grain content of Subway's breads is material to a consumer's
decision to purchase a Subway sandwich because DAI "seeks to capture consumer preferences
for whole grain offerings without actually offering whole grain breads." (Opp. at 21). In its
complaint, NCL cites evidence in support of its conclusion that consumers prefer and actively
seek out whole grain offerings.
From these facts, it is not unreasonable to infer that a
misrepresentation as to the whole grain content of the bread may impact a consumer's decision
to purchase a Subway sandwich.
13
ADD24
The Court specifically rejects DAI's argument that, in this context, materiality requires a
finding that consumers "perceive Subway sandwiches as healthful solely because they are served
on breads called Honey Oat and 9-Grain Wheat Bread, and presume that such breads contain
large percentages of whole grains." (Brief at 22). In order to find the alleged misrepresentations
or omissions material, a fact-finder need only determine that a reasonable consumer would
"attach importance" to these facts in determining whether to buy a Subway sandwich. Thus, the
whole grain content of the breads must influence consumers' decisions - it need not determine
them. Whether NCL can prevail in making this argument is ultimately a question of fact for a
jury.
Accordingly, NCL has alleged sufficient facts to make out a claim under §§ 28-3904(e),
(f), and (f-1).
c. Section 28-3904 (u)
Finally, DAI argues that NCL's complaint fails to set forth a claim under§ 28-3904 (u),
which makes it unlawful to "represent that the subject of a transaction has been supplied in
accordance with a previous representation when it has not." This section "calls for a backward
look: did a party make a present misrepresentation that he or she has done something pursuant to
a previous representation?" Banks, 634 A.2d at 439. DAI argues that NCL's complaint fails to
specify that DAI's representations are now different than they were at some unidentified point in
the past. (Brief at 23). The Court agrees. NCL's complaint alleges that DAI has consistently
misrepresented the whole grain content of its 9-Grain Wheat and Honey Oat breads, given their
name, appearance, and various Subway marketing campaigns and point-of-sale advertisements.
NCL does not allege, as it must, that at some specific point in the past, Subway made different
representations about the whole grain content of these breads than it did at the time of purchase.
14
ADD 25
Contrary to NCL's contention, it is not enough to simply argue that consumers who bought these
breads were actually given a different product than what was advertised. The Court therefore
dismisses NCL's complaint as to § 28-3904(u).
E. Damages
Finally, DAI argues that even if the Court does not dismiss NCL's case, it must dismiss
NCL 's claim for statutory and treble damages because public interest organizations may not
recover these under the CPPA. The remedies available under the CPPA are set forth in D.C.
Code § 28-3905(k)(2), which provides as follows:
(2) Any claim under this chapter shall be brought in the Superior Court of the District of
Columbia and may recover or obtain the following remedies:
(A) Treble damages, or $1,500 per violation, whichever is greater, payable to the
consumer;
(B) Reasonable attorney's fees;
(C) Punitive damages;
(D) An injunction against the use of the unlawful trade practice;
(E) In representative actions, additional relief as may be necessary to restore to
the consumer money or property, real or personal, which may have been acquired
by means of the unlawfu 1 trade practice; or
(F) Any other relief which the court determines proper.
DAI argues that the phrase "payable to the consumer" in § 3905 (k)(2)(A) indicates that
treble damages are unavailable to public interest organizations like NCL which seek relief on
behalf of consumers in a representative capacity. DAI further argues the limiting language "in
representative actions" used in § 3905(k)(2)(E) indicates that restitution is the only remedy
available to public interest organizations under the CPP A.
This Court disagrees with DAi's interpretation of§ 3905(k)(2) for several reasons. First,
as NCL argues, the mere fact that treble damages must be payable to the consumer does not
preclude a public interest organization from recovering them in a suit under the CPP A. This
language simply specifies that such organizations may not recover treble damages on behalf of
15
ADD 26
consumers and then retain those damages for their own benefit - they must pass them on to those
who have suffered the harm. This is consistent with the purpose of the "private attorney general"
provision of§ 3905(k)(l)(D), added by the 2012 Amendments to the CPPA.
Second, the fact that § 3905(k)(2)(E) specifically references "representative actions" does
not indicate that this subsection provides the only relief available to public interest organizations.
Rather, the most logical interpretation of this subsection is that it provides a type ofrelief that is
only necessary for, and hence available to, public interest organizations bringing suit in a
representative capacity. The phrase "additional relief' supports this conclusion.
Finally, several factors demonstrate the implausibility of DAI' s position that §
3905(k)(2)(E) provides the only remedy available to public interest organizations bringing suit
under the CPPA. The Court agrees with NCL that the phrase "any claim ... may recover or
obtain the following remedies" at the beginning of §3905(k)(2) indicates that the remedies listed
are available to all litigants, subject only to the limitations previously discussed. In addition, the
"catch-all" language provided in § 3905(k)(2)(F), which grants courts broad discretion to impose
remedial measures as they deem fit, lends further support to this conclusion. Had the D.C.
Council meant to circumscribe the remedies available to certain litigants in the manner in which
DAI advocates, subsection (F) would conflict with that intention.
IV.
Conclusion
For the foregoing reasons, the Court grants defendant's motion in part, and hereby
dismisses plaintiffs claims under D.C. Code § 3904(u). Defendant's motion is denied in other
respects.
Judge Stuart G. Nash
Signed in chambers
16
ADD27
Dated and docketed on September 12, 2014
Copies provided via Case F ile Xprcss:
T racy Rezvani
Jonathan Tycko
Jeffrey Kalie!
Counsel for Plaintiff
Scott Godes
Bethany Appleby
John D oroghazi
Counsel.for Defendant
17
ADD28
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on the 26th day of September, 2014 one (1) copy of
the foregoing Appellant's Brief was sent via Federal Express to the individuals listed below:
Holly Drumheller Butler
Jennifer Skaggs Beckers
DLA Piper LLP (US)
6225 Smith A venue
Baltimore, MD 21209
(410) 580~3000
Brnce V. Spiva
The Spiva Law Firm PLLC
1776 Massachusetts Avenue, N.W., Suite 601
-Washington, D.C. 20036
(202) 785-0601
C4/~
Pa,ul D. Cullen, Sr.
Counsel for Plaintiff-Appellant