The Ins and Outs of the Consumer Protection Act

By Karen Sutherland

The Consumer Protection Act, RCW 19.86.020, a/k/a the CPA, is one of those statutes that looks simple but has a heavy dose of judicial interpretation that you should review before deciding to raise or oppose a CPA claim. The statute itself states as follows:

Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

The statute of limitations on the CPA is four years, RCW 19.86.120, which means that it is occasionally asserted by the creative (or desperate) practitioner where other, shorter statutes of limitation (such as negligence, breach of an oral contract, negligent misrepresentation or fraud) have already passed.

The CPA is also appealing to plaintiffs because it has an attorney’s fees provision and allows for trebling of damages up to $10,000.00 per violation. RCW 19.86.090.

Judicial Interpretation of CPA Adds Complexity

The judicially-established criteria for proving a CPA violation in the consumer context are set forth in detail in Hangman Ridge Training Stables, Inc., v. Safeco Title Insurance Company, 105 Wn. 2d 778, 784-785, 719 P.2d 531 (1986). Under Hangman Ridge, the plaintiff must prove five distinct elements:

• (1) unfair or deceptive act or practice;
• (2) occurring in trade or commerce;
• (3) public interest impact;
• (4) injury to plaintiff in his or her business or property;
• (5) causation.

105 Wn.2d at 780.

The Hangman Ridge court noted that it may be difficult for private transactions to meet the third element, public interest impact:

When the transaction was essentially a private dispute.it may be more difficult to show that the public has an interest in the subject matter. Ordinarily, a breach of a private contract affecting no one but the parties to the contract is not an act or practice affecting the public interest.

Id. at 790. To prove an impact on the public interest in an essentially private dispute, a plaintiff must prove that “it is likely that additional plaintiffs have been or will be injured in exactly the same fashion.” Life Insurance Company v. Turnbull, 51 Wn. App. at 702. By way of example, real estate transactions are essentially private disputes. Hangman Ridge, 105 Wn. 2d at 790; see also McRae v. Bolstead, 101 Wn. 2d 161, 676 P.2d 496 (1984); Life Insurance Company v. Turnbull, 51 Wn. App. 692, 702, 754 P.2d 1262 (1988). The Turnbull and Hangman Ridge courts set forth the following factors for public interest in a private dispute:

• (1) Were the alleged acts committed in the course of defendant’s business?
• (2) Did defendant advertise to the public in general?
• (3) Did defendant actively solicit this particular plaintiff, indicating potential solicitation of others?
• (4) Did plaintiff and defendant occupy unequal bargaining positions?

Turnbull, 51 Wn. App. at 702-703;
Hangman Ridge, 105 Wn.2d at 790-791.

Per Se Violations of the CPA

The first two elements of the Hangman Ridge test can sometimes be satisfied by a finding of a per se unfair trade practice. A per se unfair trade practice exists when a statute that has been declared by the Legislature to constitute an unfair or deceptive act in trade or commerce has been violated. v. Valley Quality Homes, 84 Wn. App. 511, 928 P.2d 1143 (1997).

Examples of such statutes include RCW 19.09.340 (charitable solicitations), RCW 19.105.500 (camping clubs), RCW 19.102.020 (chain distribution schemes), RCW 19.110.170 (business opportunities), RCW 18.28.185 (debt adjustment), RCW 18.39.350 (embalming), RCW 58.19.270 (land development), RCW 63.10.050 (consumer leases), and RCW 64.36.170 (time-share offerings). Hangman Ridge, 105 Wn. 2d at 786-87; Anderson, 84 Wn. App. at 516.

The Legislature, not the court, is the appropriate body to establish the interaction between other statutes and the CPA by declaring a statutory violation to be a per se unfair trade practice. Thus, “[when] the Legislature specifically defines the exact relationship between a statute and the CPA, this court will acknowledge that relationship.” Hangman Ridge at 787, as quoted in Anderson, at 516.

Post-Hangman Ridge, several statutes include such specific language. For example, RCW 46.70.310 regarding Motor Vehicles, Dealers and Manufacturers provides: “Any violation of this chapter is deemed to affect the public interest and constitutes a violation of chapter 19.86 RCW.” RCW 48.96.060, regarding Motor Vehicle Service Contracts, provides: “Failure to comply with the provisions of this chapter is an unfair method of competition and an unfair or deceptive act or practice in the conduct of a trade or commerce, as specifically contemplated by RCW 19.86.020, and is a violation of the Consumer Protection Act, chapter 19.86 RCW.”

A plaintiff may also satisfy per se the third element (public interest) of Hangman Ridge by proving the defendant violated a statute containing a specific legislative declaration of public interest impact. Examples of such statutes include RCW 46.70.005 (“The legislature . . . declares that the distribution and sale of vehicles . . . vitally affects ... the public interest ...”), RCW 46.80.005 (public interest in sales of motor vehicle parts), and RCW 48.01.030 (public interest in the business of insurance). When a statute containing a legislative public interest pronouncement can be shown to have been violated, only the public interest requirement is satisfied per se. The other four elements of a private CPA action must be separately established. E.g., Anderson, 84 Wn. App. at 516.

Both the Hangman Ridge and Anderson cases have noted the confusion caused by the use of the term “per se violation” in various contexts:

Indeed, there have been three different per se uses. First, there has been and continues to be a per se public interest impact, as outlined above, which establishes only the element of public interest. Second, as discussed earlier in this opinion, there is a legislatively declared per se unfair trade practice which establishes only the first two elements of a CPA action. Finally, the term “per se violation” has been broadly used to refer to actions in which either the public interest element or the “unfair or deceptive act” and “in trade or commerce” elements are met per se. The term “per se violation” is thus imprecise. It should be replaced by “per se public interest” or “per se unfair trade practice”, depending upon which element or elements are satisfied per se.
Anderson, 84 Wn. App. at 816-817.

CPA Does Not Apply to Negligence or Mere Mistakes

As noted earlier in this article, occasionally attorneys will assert a CPA violation because the statute of limitations on other claims has run. One thing to keep in mind is that the CPA is not a substitute for a garden-variety negligence claim. Simple negligence does not support a Consumer Protection Act violation. Harris v. Whitt, 40 Wn. App. 175, 180, 698 P.2d 87 (1985) (“Here the first element has not been satisfied. There was no showing Mr. Buddraus did anything unfair or deceptive. He was simply negligent”).

The Washington State Supreme Court has held that a mere mistake does not rise to the level of a Consumer Protection Act violation. In Sato v. Century 21, 101 Wn. 2d 599, 681 P.2d 242 (1984), the supreme court held that the trial court was correct in concluding that a mistake by a real estate salesman is not an intentional misrepresentation or the type of thing that would affect the public interest. Id. at 603. Similarly, in Jackson v. Harkey, 41 Wn. App. 472, 477, 704 P.2d 687, review denied, 104 Wn. 2d 1023 (1985), the court of appeals held that there is no impact on the public interest when the defendant’s act is simply an inadvertent isolated mistake. In the Jackson case, the court held that there was a capacity to misrepresent the public, but it would be speculative to find that there was “real and substantial potential” for the defendant to repeat the conduct. Id. at 478.

CPA Practice Tips

• Do your research. This article only scratches the surface. The types of CPA cases that are covered by Hangman Ridge, the issue of what is and what is not a per se violation, the meaning of potential for repetition, and virtually every other aspect of the CPA are subject to interpretation, and the are a great number of cases out there. Whichever side you are on, be sure to dig into the case law for similar fact patterns.
• Do not assume that a profession is exempt from the CPA. For example, certain entrepreneurial aspects of the practice of law are covered by the CPA even though most aspects of the practice are regulated by the WSBA instead of by the Legislature. Short v. Demopolis, 103 Wn. 2d 52, 691 P.2d 163 (1984).
• Check for insurance coverage for CPA claims. Some policies have exclusions for intentional acts, but provide coverage for things such as advertising injuries that might include certain types of CPA claims. Read the whole policy and the exclusions carefully to see if a CPA claim might be covered.
• Talk to your legislator. If a fact pattern you run up against a lot in your practice is not a per se violation but you honestly believe it should be, let your senator and/or representative know. That’s what they’re there for.