- Damages Under FDUTPA
- June 24, 2010
- Law Firm: David J. Federbush Esq. - Bethesda Office
Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA), F.S. §§501.201 et seq., provides for recovery of “actual damages” by those suffering losses as the result of violations. In unfair methods of competition cases, where FDUTPA essentially adopts federal antitrust precedent, it is relatively clear that damages are measured by the amount of unlawful overcharge extracted from the consumer.1 However, in deception cases district court of appeal precedent has developed so as to restrict the categories and measure of damages available. The thrust of this article is that, in so doing, the case law, without analysis or justification, has departed from general principles of compensatory damages as well as FDUTPA’s purpose.
The Statutory Provisions
Section 501.202 (“Purposes; rules of construction”) provides:
The provisions of this part shall be construed liberally to promote the following policies:* * *(2) To protect the consuming public and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce.
Section 501.211(2) (“Other individual remedies”) provides: “(2) In any action brought by a person who has suffered a loss as a result of a violation of this part, such person may recover actual damages, plus attorneys’ fees . . . .”
Section 501.212(3) (“Application”) provides: “This part does not apply to: A claim for personal injury or death or a claim for damage to property other than the property that is the subject of the consumer transaction.”
FDUTPA Case Law
Early decisions appeared to accept implicitly that common law measures and categories of compensatory damages were available, as appropriate to the given case, under FDUTPA. In Deltona Corp. v. Jannotti, 392 So. 2d 976, 978 (Fla. 1st DCA 1981), plaintiffs had been sold a home that had inferior grades of items compared to those of a model the purchasers had been shown. The court held that the replacement cost of carpeting and sodding sought by plaintiff, rather than the diminution in value amount advocated by defendant, was the proper measure of damages. The court cited to common law misrepresentation and breach of contract cases in approving such damages under FDUTPA.2 In Douglas v. G.E.E.N. Corp., 415 So. 2d 130, 131 (Fla. 5th DCA 1982), the court, reviewing a damage award on a FDUTPA deception claim (brought together with a truth in lending claim and) entered pursuant to a default judgment, approved “actual consequential damages” under the act without explaining what they comprised. In several other reported pre-1984 appellate decisions, courts approved or noted FDUTPA damages awards without commenting on their derivations or types.3
The first and only appellate opinion that attempted to analyze the issue of damages available under FDUTPA, however, was Rollins, Inc. v. Heller, 454 So. 2d 580 (Fla. 3d DCA 1984), rev. den., 461 So. 2d 114 (Fla. 1985). As explained below, numerous reported decisions outside the Third DCA which purported to follow it have not, in actuality, been faithful to it.
The Hellers had sued for deceptive practices (unspecified in the decision)4 in the sale of a home alarm system and sought to recover the purchase price and service fees. They additionally sought the value of items stolen from their home when the system proved defective. Citing the exemption in §501.212(3), the court observed that “The Act, however, only allows recovery of damages related to the property which was the subject of the consumer transaction.” 454 So. 2d at 584. It found that the installation of the system and the services performed thereon, but not the household items stolen, were the subject of the consumer transaction. It held the household items were therefore not the proper subject of a damage award. The court went on to address the measure of (remaining) actual damages:
While the FDUTPA does not define “actual damages,” courts of other jurisdictions have had occasion to define the term within similar statutes. In interpreting Texas’ Deceptive Trade Practices Act, Tex. Bus. & Com. Code Ann. §17.41, et seq. (Vernon 1979), the Texas supreme court held that actual damages are those recoverable at common law. Brown v. American Transfer and Storage Co., 601 S.W.2d 931 (Tex.), cert. denied, 449 U.S. 1015 . . . (1980). See also Lubbock Mortgage & Investment Co. v. Thomas, 626 S.W.2d 611 (Tex. App. 1981), United Postage Corp. v. Kammeyer, 581 S.W.2d 716 (Tex. App. 1979). In determining the measure of actual damages, the court in Raye v. Fred Oakley Motors, Inc., 646 S.W.2d 288, 290 (Tex. App. 1983) held: “Generally, the measure of actual damages is the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties. [citations omitted] A notable exception to the rule may exist when the product is rendered valueless as a result of the defect—then the purchase price is the appropriate measure of actual damages.” [citation omitted]
We hold that Florida’s statutes should be interpreted, and actual damages measured, in a similar manner. Therefore, the actual damages awardable to the Hellers pursuant to the FDUTPA violation should be measured in accordance with the formula set out in Raye.* * *Further, any attempt to limit one’s liability for deceptive or unfair trade practices would be contrary to public policy . . . John’s Pass Seafood Co. v. Weber, 369 So. 2d 616 (Fla. 2d DCA 1979) (it would be contrary to public policy to enforce an exculpatory clause that attempts to immunize one from liability for breach of a positive statutory duty); Mankap [410 So. 2d 342] (exculpatory clauses relating to fraud or intentional misrepresentation are contrary to public policy and unenforceable.) Therefore, actual damages are recoverable in full for the FDUTPA violation notwithstanding Rollins’ attempt to limit its liability in the contract. (emphasis added) [454 So. 2d at 585] [The limitation referred to was to the effect that if loss or damage should result from defective performance or operation of the system, Rollins’ liability would be limited to 10 percent of one year’s service charge or $250, whichever is greater. 454 So. 2d at 583.]5
Three years later, the Third DCA cited its Rollins decision and §501.211(2) in Himes v. Brown & Company Securities Corp., 518 So. 2d 937 (Fla. 3d DCA 1987). The court, affirming a judgment for defendant in a case in which FDUTPA as well as fraudulent misrepresentation and other common law claims had been brought, opined that plaintiff had not presented adequate evidence that defendant’s actions had caused him lost profits. 501 So. 2d at 939. The opinion stated generally, “Suffice it to say that all of Himes’ claims suffer from the same major defect . . . [t]he trial court could justifiably find that Himes did not suffer any damages proximately caused by Brown’s alleged [statutory or common law] violations . . . .” 518 So. 2d at 938¿39.6 There was no indication in the opinion that consequential damages in the form of lost profits, or other common law compensatory damages, were disallowed under FDUTPA.
Numerous subsequent decisions by other district courts of appeal (and federal courts), however, have construed Rollins as limiting allowable damages under FDUTPA to the “difference in market value” measure, and on the basis of Rollins have denied other compensatory damages sought. They have applied that measure without further analysis of the damages issue or reference to FDUTPA’s consumer protection purpose. In Urling v. Helms Exterminators, Inc., 468 So. 2d 435, 454 (Fla. 1st DCA 1985), plaintiffs brought a FDUTPA claim based on a fabricated (favorable) termite inspection report, when in fact no inspection had been performed. They relied on that report in purchasing a house that in fact had extensive termite damage, and later sued for the cost of repair of that damage. The exterminator did not challenge the measure of damages sought by the Urlings. In remanding, the court nevertheless, on considering Rollins’ citation of Raye and disallowance of damages for the items stolen in the burglary, stated, “It seems, therefore that the statute . . . does not authorize recovery of consequential damages to other property attributable to the consumer’s use of such [received] goods or services.” The court then held the termite damage repair costs to be disallowed consequential damages. Accord, National Alcoholism Programs/Cooper City, Florida, Inc. v. Palm Springs Hospital Employee Benefit Plan, 825 F. Supp. 299, 304 (S.D. Fla. 1993) (“consequential damages . . . are not allowable under FDUTPA”). The Himes decision had also cited Urling, but for proximate causation rather than any measure of damages. 518 So. 2d at 938.
Fort Lauderdale Lincoln Mercury v. Corgnati, 715 So. 2d 311, 314¿15 (Fla. 5th DCA 1998), involved a sale, with two trade-ins, of a used auto deceptively claimed to be undamaged, to have its original paint job, and to be in “showroom condition.” The court cited Rollins and its Raye quotation as to difference in market value, as well as Urling’s characterization of Rollins’ description of disallowed consequential damages, in conclusory fashion. It then held that loan payments made to the lending institution, and (portions of) the resale value of the trade-ins, were not recoverable under FDUTPA as they did not fit into the difference in market value measure. It treated that measure as the only type of damages allowed under the act. See also Eclipse Medical, Inc. v. Hydro-Surgical Instruments, Inc., 262 F. Supp.2d 1334, 1357 (S.D. Fla. 1999), aff’d without opinion, 235 F.3d 1344 (11th Cir. 2000) (FDUTPA damages do not include lost profits as “Florida courts specifically reject the recovery of consequential damages under FDUTPA,” citing Rollins and Urling); Orkin Exterminating Co. v. Delguidice, 790 So. 2d 1158, 1162 (Fla. 5th DCA 2001) (disallowing “stigma” damages from termite infestation, citing Urling for the difference in market value measure as well as the purported holding that “Actual damages [under FDUTPA] . . . does not include ‘actual consequential’ damages”); Orkin Exterminating Co. v. Petsch, 2004 Fla. App. LEXIS 1162 at *7 (Fla. 2d DCA Feb. 6, 2004) (in determining whether class FDUTPA claim for inadequate termite services was covered by a contractual limitation of damages provision, for purpose of deciding whether it was subject to arbitration, court held that requested remedies of special, consequential, and incidental damages were not available under FDUTPA and that plaintiff’s damages “would be recovery of the amount paid under [the] contract with Orkin,” citing Corgnati and the difference in market value standard as stated in Urling). Petsch confirms, however, that at its outer limit the difference in market value measure effectively yields restitution of the purchase price (i.e., when market value of what is actually received is determined to be zero).
While in some reported FDUTPA cases difference in market value may seem to be the amount of damages most appropriately recoverable on the facts, even such cases have cited that measure as if it were the exclusive rule in all FDUTPA cases. In GMAC v. Laesser, 718 So. 2d 276, 278 (Fla. 4th DCA 1998), an auto dealer misrepresented the cost of auto financing, through an arrangement that was in actuality lease with subsequent purchase, as being below the cost for an outright cash purchase which the consumer was prepared to make. The consumer was also deceived as to the nature of the arrangement. In explicit dicta citing Urling for the difference in market value rule, the court opined that damages were the overall cost under the lease and subsequent purchase, including all lease payments, minus the cash price for outright purchase, minus savings realized due to stretched-out payments. Note that when the cost or price itself is the subject of the deception, as in Laesser, out-of-pocket financing payments can fall within the rubric of difference in value of the item in the condition it should have been delivered and as it was delivered. See also Cannon v. Metro Ford, Inc., 242 F. Supp.2d 1322, 1332 (S.D. Fla. 2002) (deception in financing terms, followed by repossession; court in explicit dicta, without explanation or citation, found “the loss of a down payment qualifies as ‘actual damages’ under the FDUTPA”). In Stires v. Carnival Corporation, 243 F. Supp.2d 1313, 1322 (M.D. Fla. 2002), where plaintiff was allegedly raped by a cruise crew member, the court in denying a motion to dismiss held the proper measure of damages under FDUTPA was value of the cruise promised and advertised less value of the cruise received.7 It cited Rollins and Corgnati for the measure of damages “as a general rule” with the possible exception noted in Raye.
The Third DCA itself, however, has not portrayed the difference in market value measure as exclusively as have the other district courts of appeal (and some federal courts) noted above. In addition to Rollins and Himes is its recent decision in H&J Paving of Florida, Inc. v. Nextel, Inc., 849 So. 2d 1099 (Fla. 3d DCA 2003). That case involved an alleged sale of an analog radio communication system and add-on radio and service without disclosure that the service in the area would be discontinued in the immediate future. The discontinuance rendered the equipment useless. The court reversed summary judgment for defendant that had been granted on erroneous grounds, including the purported lack of dispute as to whether plaintiff had suffered damages. In remanding, the Third DCA directed the trial court to “apply the correct measure of damages . . . the difference in market value’’ measure, again citing Raye as quoted in Rollins. 849 So. 2d at 1102. While the opinion also cited Urling and Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 453 (5th Cir. 2001) for that measure (id.), it did not allude to any other aspects of Urling. Coghlan merely cited Rollins and its quote from Raye. The opinion continued that under the alleged scenario the measure “would be the value of the products at the time of sale based on a useful life of approximately eight years [the period plaintiff had been told the product would be functional] and the value of the product which would become obsolete within a few years.”
There is no indication in the opinion, though, that plaintiff had sought or that the court generally disallowed any other measures or types of damages.8 Nor did the Third DCA disavow its reference in Rollins to damages “recoverable at common law.”
Because an inaccurate characterization of Rollins has assumed the status of black letter law, a closer examination of Rollins’ roots is a proper starting point for analysis.
Rollins expressly derived its holding from precedent under Texas’ deceptive trade practices statute looking to damages available at common law. In fact, Raye referred to repair cost as an alternative measure of damages when the first measure does not provide sufficient compensation. It also referred to full refund of the purchase price as the appropriate measure in a case for deceptive sale of a new business, when lack of operational history precludes ascertainment of market value. See also Lubbock, cited in Rollins and referring to other Texas appellate decisions to the effect that “the Act was intended to permit the adversely affected plaintiff to recover the greatest amount of ‘actual damages’ he has alleged and established by proof was factually caused by defendant’s conduct.” 626 S.W.2d at 615. Furthermore, subsequent Texas DTPA9 decisions have permitted recovery of whichever is greater of the out-of-pocket or benefit of the bargain measures of damages, plus consequential damages, in order “to ensure that a plaintiff is made whole.” Metro Ford Truck Sales, Inc. v. Davis, 709 S.W.2d 785, 792 (Tex. App. 1986) (lost earnings); Henry S. Miller Co. v. Bynum, 836 S.W.2d 160, 162 (Tex. 1992) (consequential damages include lost profits, lost credit, and interest on indebtedness); accord, Norwest Mortgage Inc. v. Salinas, 999 S.W.2d 846, 863 (Tex. App. 1999) (“actual damages” encompass “the total loss sustained as a result of the deceptive practice,” including related and reasonably necessary expenses; “at common law, actual damages can be either ‘direct’ or ‘consequential.’”). Such make-whole purpose is consistent with FDUTPA’s express purpose of protecting consumers from deceptive and unfair acts and practices.
It is also telling that the statutory deceptive trade practices precedent of other states, whose decisions have been found persuasive by Florida appellate courts, have allowed additional measures and types of compensatory damages available at common law. See, e.g., Sign-O-Lite Signs, Inc. v. DeLaurenti Florists, Inc., 825 P.2d 714, 720 (Wash. App. 2 Dist. 1992) (lost potential earnings); Washington State Physicians Ins. Exchange & Ass’n. v. Fisons Corp., 858 P.2d 1054, 1063 (Wash. 1993) (damage to professional reputation); M&W Gear Co. v. AW Dynamometer, 424 N.E.2d 356, 362 (Ill. App. 4 Dist. 1981) (lost profits); Grove v. Huffman, 634 N.E.2d 1184, 1189 (Ill. App. 4 Dist. 1994) (cost of designing and installing adequate drainage system for home).10 See also Haddad v. Gonzalez, 576 N.E.2d 658, 665 (Mass. 1991) (actual damages consist of all damages foreseeably flowing from an unfair or deceptive act or practice, including consequential damages; relying in part on Rollins and citing it for the proposition that “actual damages as used in unfair and deceptive trade practices act include those recoverable at common law”); Zanakis-Pico v. Cutter Dodge, Inc., 47 P.3d 1222, 1232 (Haw. 2002) (recoverable damages under little FTC act include out-of-pocket expenses even when purchase not made, citing additional cases from other states).11
The fact that Rollins expressly relied on common law damages authority suggests that the Third DCA did not (aside from the need to address §501.212(3)) intend to depart from common law principles, but rather applied the common law measure it found appropriate to the facts of the case. Because many of the types of damages litigants seek are consequential damages, however, and because Rollins cited the §501.212(3) exemption, it is useful at this point to address the scope of that exemption and whether it excludes consequential damages.
The Exemption for Damage to Other Property
The exemption covers, in addition to claims for personal injury or death, “damage to property other than the property that is the subject of the consumer transaction.” As discussed above, Rollins stated that only “damages related to the property which was the subject of the consumer transaction” can be recovered, and cited the exemption for that point. It found that the alarm system purchased and the services performed thereon, but not the home items stolen, were the subject of the transaction in question.
However, in explaining that result the court did not parse the language of the exemption. It rather alluded to a specific contractual provision to the effect that “Rollins is not an insurer of the Customer’s property,” and an Arizona case, Central Alarm of Tucson v. Ganem, 567 P.2d 1203 (Az. App. 1977), for the principle of burglar alarm company immunity from damages to items intended to be protected by such a system. 454 So. 2d at 585. Ganem, however, was a breach of contract action, and the decision was based on an explicit contractual limitation of damages provision. 567 P.2d at 1206. The Rollins court thus was able to rely on a specific contractual clause that it in effect deemed adequate to establish that household items were not “related” to the alarm system for liability purposes. (The court apparently viewed such a contractual exclusion as to other property to be distinguishable from the overall monetary damages limitation which it found unenforceable under FDUTPA.)
In a footnote, the decision also observed, “Any such holding [of liability] would in effect convert burglar alarm companies into insurance companies . . . such a[n alarm] system . . . should not be used as an alternative to insurance . . . It is apparent . . . that the Hellers had underinsured the unrecovered stolen property . . . .” 454 So. 2d at 585 n.4. The court apparently felt that, even without addressing the underlying contract, policy considerations weighed against damages claims against burglar alarm companies for stolen items. It is not clear whether the court was addressing the scope of the exemption or simply observing that policy considerations were consistent with its application of the exemption. Although Urling and the Orkin cases involved another type of loss prevention service, those decisions contained no further discussion of whether such services should be accorded special treatment under FDUTPA.
In any event, in light of the contractual exclusion the Third DCA in Rollins did not have to reach the general issue of the availability under the exemption of consequential damages. The decision does not even contain the phrase “consequential damages.” The search for the scope of the exemption must therefore continue.
The language of the exemption is less than crystal-clear. In ordinary English usage, however, one may “damage” tangible, physical property12 but not intangibles such as earnings, interest, or credit. Interest charges, lost credit, or lost earnings or profits are not damaged property and thus do not appear subsumed by the exemption’s language. However, they do fall under the broader category of “loss,” and thus should be recoverable under §501.211(2), which provides for recovery to a person “who has suffered a loss as a result of a violation . . . .” Note also that the exemption’s language, concerning “property other than the property that is the subject of the consumer transaction” (emphasis added), does not appear to cover services.13
The legislative history of the exemption supports and fleshes out the above interpretation in reflecting that the intent of the exemption was to cover product liability fact situations. The exemption was taken word-for-word from §14 (“Application”) of the 1973 Uniform Consumer Sales Practices Act (UCSPA),14 the first of two model statutes on which FDUTPA was originally based (the second was the Model Little FTC Act).15 The UCSPA’s provisions were accompanied by the explanatory commentary of the National Conference of Commissioners on Uniform State Laws. The comment to §14 states: “This subsection has primary application to product liability claims. To the extent that joinder is appropriate, it does not bar the joinder of a product liability claim with a related claim for violation of this Act, §15.”
The comment thus indicates that the exemption was designed to exclude only statutory claims for personal injury or physical damage to other physical property as caused by a defective16 tangible product or good purchased.17 In that way, the exemption accomplishes the sensible purpose that traditional product liability law still governs adjudication of damages arising from a product liability fact situation, e.g., damage to the wall of a factory caused by a (purchased) piece of machinery that explodes. The comment further suggests that other types of losses deriving from that defective product could still form the basis for a deceptive trade practice claim. An example would be a claim for lost business profits caused by inability to use the now-destroyed machinery itself, based on a misrepresentation that the machine was appropriate to the (inappropriate) use to which the factory owner put it.
The one case located explicitly construing the exemption contains reasoning consistent with the above discussion. Pomianowski v. Merle Norman Cosmetics, Inc., 507 F. Supp. 435, 437¿38 (S.D. Ohio 1980), was a consumer action against a cosmetics manufacturer asserting product liability and Ohio CSPA claims. (Only three states—Utah, Kansas, and Ohio—originally adopted the USCPA as the sole foundation of their deceptive trade practices statutes;18 the Ohio statute provided for treble damages but adopted only the personal injury part of the exemption.) In ruling on a motion to dismiss the CSPA claim, the court looked to the comment’s product liability interpretation. It then held that the CSPA claim could be brought, but only to recover for nonpersonal injury caused by misrepresentation as to the product’s qualities. It held plaintiff’s personal injuries could only be pursued through her common law (product liability) claim. In observing that any nonpersonal injury covered by the statute was “most likely, but not exclusively, loss on the bargain induced by a deception” (emphasis added), the court recognized the recoverability of other consequential economic losses beyond diminished market value.
The comment’s language as to “primary application” (emphasis added) to product liability claims arguably raises the possibility of other, nonprimary applications. None is identified, though, leaving the above interpretation of the exemption’s scope as the best-grounded one.
Of course, even if a given fact situation does not sound in product liability and thereby falls without the exemption, the traditional issue of legal and proximate causation of consequential damages remains. Himes, 518 So. 2d 937. In the machinery example above, the factory owner would still have to prove that the misrepresentation as to appropriate use(s) of the machinery was the legal and proximate cause of the factory’s lost profits.
Additional Confirming Principles
Florida precedent as a general matter presumes the availability of common-law-type compensatory damages under statutory damages provisions. Florida’s Supreme Court has recognized, in a decision interpreting F.S. §624.15519 (damages recoverable in insurance company bad faith actions), that
the fundamental principle of the law of damages is that the person injured by breach of contract or by wrongful or negligent act or omission shall have fair and just compensation commensurate with the loss sustained in consequence of the defendant’s act which [gave] rise to the action . . . . the objective [is] to make the injured party whole . . . . The plaintiff is entitled to damages which are the “natural, probable or direct consequence of the act.” [citations 20]
McLeod v. Continental Insurance Co., 591 So. 2d 621, 624¿25 (Fla. 1992).
In McLeod the court recognized that the legislature has the right to modify the common law definition of damages, but there must be evidence of a legislative intent to do so. 591 So. 2d at 625. See also Thornber v. City of Fort Walton Beach, 568 So. 2d 914, 918 (Fla. 1990) (statutes do not change the common law except as they clearly and plainly specify, and when there is such a change the common law is displaced no more than is necessary); accord, State v. Ashley, 701 So. 2d 338, 431 (Fla. 1997). If the legislature had intended to exclude consequential or other elements of common law damages, it could easily have modified the phrase “actual damages,” or written the exemption to so state clearly and plainly. It did not do so. Compare, e.g., F.S. §675.111(1) (dishonoring letter of credit; expressly disallowing “consequential damages”); F.S. §§627.731 (one of the purposes of the Florida Motor Vehicle No-Fault Act is to impose “a limitation on the right to claim damages for pain, suffering, mental anguish, and inconvenience,” concurrent with the allowance of enumerated PIP benefits). Note also that Florida precedent has permitted consequential damages at common law (negligent misrepresentation) when, as under FDUTPA,21 intent to deceive is not an element of the cause of action. See Nationsbank, N.A. v. KPMG Peat Marwick LLP, 813 So. 2d 964, 968 (Fla. 4th DCA 2002) (bank relied on accounting firm’s audit of borrower in extending $19 million line of credit, borrower defaulted and filed bankruptcy; firm’s negligent misrepresentation made it liable to bank for its comparative negligence share of $19 million loss); accord, Kitchens of the Oceans, Inc. v. McGladery & Pullen, LLP, 832 So. 2d 270, 273 (Fla. 1st DCA 2002).
But perhaps the most important confirming factor is the legislature’s express direction that all of FDUTPA’s provisions be construed liberally to achieve its consumer protection purpose. That instruction militates in favor of a common law construction of the provision for “actual damages” and the narrow but reasonable construction of the exemption discussed above. It is significant that the legislature was not even content to rely implicitly on the judicial principle that statutory provisions be construed to further the statutory purpose. The Golf Channel v. Jenkins, 752 So. 2d 561, 565¿66 (Fla. 2000), citing Farley v. Collins, 146 So. 2d 366 (Fla. 1962). Rather, it in fact went so far as to make FDUTPA’s consumer protection purpose a “rule of construction” in interpreting it. F.S. §501.202(2). Florida courts have properly looked to FDUTPA’s “obvious purpose . . . to make consumers whole for losses caused” by violations in construing §501.211(2)’s provision for recovery of attorneys’ fees. LaFerney v. Scott Smith Oldsmobile, Inc., 410 So. 2d 534 (Fla. 5th DCA 1982) (approving attorneys’ fee in excess of compensatory damages, quoting Marshall v. W&L Enterprise Corp., 560 So. 2d 1147, 1148 (Fla. 1st DCA 1978)); accord, Standard Guaranty Insurance Co. v. Quanstrom, 555 So. 2d 828, 834 (Fla. 1990) (FDUTPA actions are public policy enforcement cases).22 They should look to that same remedial purpose in construing that same subsection’s provision for “actual damages,” as well as the breadth of the exemption.
A corollary principle of interpretation directly supporting the above construction of the exemption is that limitations on remedial statutes should be narrowly construed. The Golf Channel v. Jenkins, 752 So. 2d 561. See also Sutherland, Statutes and Statutory Construction (6th ed.), 2000 Rev. vol. 2A §47:11 at pp. 250¿51 (where a general statutory provision has certain limited exceptions, doubts should be resolved in favor of the general provision rather than the exception); Commissioner v. Clark, 489 U.S. 726, 739 (1989) (when statute has general statement of policy and exception, exception usually read narrowly in order to preserve the statute’s primary operation).
The legislature has left the phrase “actual damages” unchanged through a number of statutory amendments since Rollins. However, any arguable inference as to legislative acquiescence23 in the post-Rollins intermediate appellate court pronouncements discussed above is greatly outweighed by the teachings of Florida’s highest court as to compensatory damages. It is further countervailed by the confirmation (in broader form)24 by the legislature itself, in its 1993 amendments to FDUTPA, of the statute’s express purpose and liberal “rule of construction.” Those provisions have been maintained through all subsequent amendments.
Unfair25 and unconscionable26 acts or practices under FDUTPA need not be deceptive. The difference in market value measure of damages, i.e., of the product as it should have been delivered and as it was delivered, is essentially tied to misrepresentation. It thus cannot provide the measure of damages for FDUTPA violations not subsuming misrepresentations. For example, the FTC’s Cooling-Off Trade Regulation Rule for sales made at homes, 16 CFR §429, was promulgated to remedy unfair coercive, high pressure sales tactics. It requires that the consumer be given written notice of his or her right to cancel the transaction within three business days. That rule is not grounded in deception, but violation of it (and any other FTC trade regulation rules promulgated prior to July 1, 2001) is a violation of FDUTPA. F.S. §501.203(3)(a). A consumer who was pressured into making a purchase he or she otherwise would not have made, and who was not provided the required notice, might subsequently bring suit under FDUTPA. The appropriate remedy would at least be to enforce the right to cancel (rescission) and obtain full refund of the purchase price, a restitutionary measure of damages. In that situation there may have been no misrepresentation whatsoever as to the product’s qualities, and thus there would be no difference in value between the product in the condition in which it should have been delivered and as it was delivered. See also Smith v. 2001 South Dixie Highway, Inc., 2004 Fla. App. LEXIS 2709 (Fla. 4th DCA March 3, 2004) (alleged dismissal of employee for purchasing auto from competing dealership stated cause of action for violation of F.S. §448.03 and hence FDUTPA), potentially giving rise to wrongful termination type damages.
The fact that FDUTPA covers such claims further demonstrates that the difference in market value measure cannot be the exclusive measure of damages under FDUTPA for deceptive, unfair, or unconscionable acts or practices.
FDUTPA’s express purpose and relevant teachings of Florida’s Supreme Court require that its damages provisions be construed to allow types and measures available at common law.
Florida district court of appeal (and federal court) precedent subsequent to Rollins has interpreted it unduly narrowly in limiting damages under FDUTPA deception claims to difference in value of the product as it should have been and was delivered. Rollins itself, consistent with prior First and Fifth DCA precedent, referred to actual damages as “those recoverable at common law” and pronounced no general exclusion of other measures of damages or consequential damages. The §501.212(3) exemption, as clarified by its legislative derivation and relevant principles of statutory interpretation, is aimed at physical damage to other physical property, caused by the product or good purchased, in product liability-type situations. It does not generally preclude recovery of consequential damages.
It would be helpful for the Third DCA or Florida’s Supreme Court to clarify, at an appropriate opportunity, that to achieve FDUTPA’s purpose fully the various common law types and measures of compensatory damages must be available under appropriate fact situations.27 q
1 See David J. Federbush, FDUTPA for Civil Antitrust: Additional Conduct, Party, and Geographic Coverage; State Actions for Consumer Restitution, 76 Fla. B.J. 57 (Dec. 2002).
2 Keyes v. Shea, 372 So. 2d 943 (Fla. 4th D.C.A. 1979); Gory Associated Industries, Inc. v. Jupiter Roofing & Sheet Metal, Inc., 358 So. 2d 93 (Fla. 4th D.C.A. 1978).
3 See Bert Smith Oldsmobile, Inc. v. Franklin, 400 So. 2d 1235, 1237 (Fla. 2d D.C.A. 1981); LaFerney v. Scott Smith Oldsmobile, Inc., 410 So. 2d 534, 536 n.4 (Fla. 5th D.C.A. 1982).
4 The opinion mentioned that the Hellers were under the mistaken belief that the company they dealt with was the defendant, when their contract was actually with a subsidiary. The opinion also refers to claims of misleading advertising, but the trial court held those claims not established.
5 The decision also stated the alternative ground, for not enforcing the limitation of damages provision as to a damages award under FDUTPA, that the provision was not written to cover a claim grounded in deception. 454 So. 2d at 585. The Second DCA recently followed Rollins’ holding that an attempt to limit damages for deceptive or unfair trade practices under FDUTPA is contrary to public policy. Holt v. O’Brien Imports of Fort Myers, Inc., 2003 Fla. App. LEXIS (Fla. 2d D.C.A. Nov. 14, 2003).
6 A subsequent federal court decision held that FDUTPA does not apply to securities transactions. Crowell et al. v. Morgan Stanley Dean Witter Services Co., Inc., 87 F. Supp.2d 1287 (S.D. Fla. 2000).
7 Section 501.212(3) specifically excludes claims for personal injury or death. See T.W.M. v. American Medical Systems, Inc., 886 F. Supp. 842, 844 (N.D. Fla. 1995) (personal injury).
8 The opinion also noted that in light of the difference in value measure it was irrelevant that defendant might have disconnected plaintiff’s service for nonpayment. 849 So. 2d at 1101. The court noted in fn. 1 that plaintiff could nevertheless have attempted to resell the system. The issue of whether charges for service actually provided are deductible from an ultimate damage award would seem properly determined through application of common law principles of damages, including causation. For example, if the evidence showed that but for the deceptive nondisclosure, plaintiff never would have purchased any amount or period of the service, it presumably would not be liable for payment for any service provided under such deceptive circumstances.
9 See Texas Bus. & Com. Code §17.50(b)(1) (Vernon 1987).
10 Decisions by Washington, Illinois, and Michigan courts were relied on in Dept. of Legal Affairs v. Rogers, 329 So. 2d 257 (Fla. 1976) (Washington); Davis and Eddy v. Powertel, 776 So. 2d 971 (Fla. 1st D.C.A. 2000) (Washington, Illinois, Michigan); and Renaissance Cruises, Inc. v. Glassman, 738 So. 2d 436 (Fla. 4th D.C.A. 1999) (Illinois).
11 Haddad, 576 N.E.2d 658, and Avery v. Industry Mortgage Co., 135 F. Supp.2d 840 (W.D. Mich. 2001), both also allowed mental distress damages, although this article does not take a position on whether recovery of damages for such noneconomic injury should be allowed under FDUTPA. Cf. Norwest Mortgage, 999 S.W.2d at 862 (mental anguish damages recoverable when deceptive or unconscionable actions committed knowingly). But see Zanakis-Pico, 47 P.3d 1222 (no recovery for emotional pain and suffering).
12 While FDUTPA’s definition of “trade or commerce” includes the offering or distribution of “any property, whether tangible or intangible” (§501.203(8)), there is no separate definition of “property” in the statute. There is no reason why the “property” referred to in the exclusion must necessarily be as broad as the “property” whose offering or distribution could form the basis for a violation. The purpose of the exclusion, as described in the text, informs the meaning and breadth of the term as used therein. See Sutherland, Statutes and Statutory Construction (6th ed.), 2000 Rev. vol. 2A §46:05 at p. 176 (“The fact that two statutory provisions contain similar or identical language does not mean that they are necessarily subject to the same interpretation, as there are other factors such as the purpose and context of the legislation . . . .”) Florida courts have cited Sutherland as recognized authority in matters of statutory interpretation. See, e.g., State v. Town of Davie, 127 So. 2d 671, 673 (Fla. 1961); Joshua v. City of Gainesville, 768 So. 2d 432, 436 n.5 (Fla. 2000).
13 Consistent with note 12, supra, the fact that the offering or distribution of services can constitute “trade or commerce” (§501.203(8)), for the purpose of forming the basis of a violation, does not necessarily mean that the exemption must include the offering of services.
14 Selected Commercial Statutes 1973 (West), at pp. 960¿61. FDUTPA’s exemption for publishers, broadcasters, etc. (subsec. (2)) is also taken word-for-word from the UCSPA, and the exemption for acts required by state or federal law (subsec. (1)) is taken almost word-for-word from that uniform act.
15 As the House Committee Analysis on FDUTPA’s 1993 amendments recognized, “Current Florida law is somewhat of a hybrid of these two model acts, which has caused confusion and produced differing court opinions concerning the scope of the act.” The House Analysis actually refers to the “Model Uniform Commercial Sales Practices Act,” but that appears to be a mistake. See R. Tennyson, The Deceptive and Unfair Trade Practices Act: A New Approach to Trade Regulation in Florida, 2 Fla. St. U. L. Rev. 224 (Spring 1974), confirming the relevant act was the Uniform Consumer Sales Practices Act, with “little FTC act” language added later.
16 A product liability claim, whether based on strict liability, negligence, or breach of warranty, requires proof that the product is defective. Diversified Products Corp. v. Faxon, 514 So. 2d 1161, 1162 (Fla. 1st D.C.A. 1981).
17 See Casa Clara Condominium Association v. Charley Toppino and Sons, Inc., 620 So. 2d 1244, 1246 (Fla. 1993) (product liability case in which defective concrete caused structural damage to house; held, plaintiffs could not recover for other economic losses because they did not suffer any other losses for which recovery for product liability could be had; i.e., “no one has sustained physical injuries and no property, other than the structures [condominiums and houses] built with Toppino’s concrete, has sustained any damage”); accord, Moransais v. Heathman, 744 So. 2d 973, 981 (Fla. 1999).
18 See Wade v. Jobe, 818 P.2d 1006, 1014 (Utah 1991). Only Utah and Florida currently have the entire exemption (3), derived from the Model Act, in their deceptive trade practices statutes. Utah Code Ann. §13-11-22(1)(c). Kansas formerly had the entire exemption, but amended it to leave only the personal injury part. See Burton v. R.J. Reynolds Tobacco Co., 884 F. Supp. 1515, 1524 (D. Kan. 1995); former Kans. Stat. §50-635(a)(2).
19 “Any person may bring a civil action against an insurer when such person is damaged: (a) By violations of [designated statutory provisions]. . . (b) By the commission of any of the following acts by the insurer: . . . .” Fla. Stat. (1985) §624.155(1)(b)(1).
20 Hanna v. Martin, 49 So. 2d 583, 587 (Fla. 1950); Fisher v. City of Miami, 172 So. 2d 455, 457 (Fla. 1965); Douglass Fertilizers and Chemicals, Inc. v. McClung Landscaping, Inc., 459 So. 2d 335, 336 (Fla. 3d D.C.A. 1984).
21 See David J. Federbush, Obtaining Relief for Deceptive Practices Under FDUTPA, 75 Fla. B.J. 22 (Nov. 2001).
22 Although Hubbell v. Aetna Casualty & Ins. Co., 758 So. 2d 94, 96 (Fla. 2000), disapproved Marshall’s holding that FDUTPA’s attorney fee provision is incorporated into the particular statute(s) governing surety bonds for motor vehicle dealers, it quoted Marshall as to FDUTPA’s obvious purpose without qualification or reservation.
23 The principle as to legislative acquiescence in court interpretations of a statute has been expressed most strongly in those cases where a statute was reenacted following a relevant decision by the Florida Supreme Court. See Bidon v. Dept. of Professional Regulation, 591 So. 2d 450, 453 (Fla. 1992); Jones v. ETS of New Orleans, Inc., 793 So. 2d 912, 917 (Fla. 2001). A recent district court of appeal decision, in which the relevant judicial construction was another district court of appeal decision, referred to the principle as one that must be considered together with other principles of statutory interpretation. Sam’s Club v. Bair, 678 So. 2d 902, 903 (Fla. 1st D.C.A. 1996). None of the FDUTPA damages decisions discussed above in the text were Florida Supreme Court decisions.
24 Prior to those amendments, §501.202(2) read “To protect consumers from suppliers who commit deceptive and unfair trade practices.” See Fla. Stat. Ann. at §501.202.
25 See David J. Federbush, The Unexplored Territory of Unfairness in Florida’s Deceptive and Unfair Trade Practices Act, 73 Fla. B.J. 26 (May 1999).
26 See David J. Federbush, The Unclear Scope of Unconscionability in FDUTPA, 74 Fla. B.J. 49 (July/Aug. 2000).
27 It would also be helpful for the Florida Supreme Court, at an appropriate opportunity, to clarify that an act or practice is “unfair” under FDUTPA if it 1) causes or is likely to cause substantial injury to consumers 2) that is not outweighed by countervailing benefits to consumers or competition, and 3) that consumers could not reasonably have avoided. In its 2001 amendments to FDUTPA, the legislature expressly provided that a violation of FDUTPA may be based on the standards of unfairness and deception set forth and interpreted by the Federal Trade Commission or the federal courts “as of July 1, 2001.” Fla. Stat. §501.203(b) (emphasis added). The above standard has been in effect since 1980. See International Harvester Co., 104 F.T.C. 949, 1061 (1984), American Financial Services v. FTC, 767 F.2d 957, 969¿78 (D.C. Cir. 1985), cert. denied, 475 U.S. 1011 (1986), and Orkin Exterminating Co., 108 F.T.C. 263, 362 (1986), aff’d sub. nom. Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1363 (11th Cir. 1988), cert. denied, 488 U.S. 1041 (1989). Moreover, in 1994 this standard was codified in the Federal Trade Commission Act itself, at 15 U.S.C. §45(n). (That subsection also specifies that while established public policies may be considered as evidence of unfairness, “[s]uch public policy considerations may not serve as a primary basis for such determination” [that a practice is unfair]). The FTC’s December 17, 1980 policy statement submitted to Congress, where the standard was first expressed and explained, is at www.ftc.gov/bcp/policystmt/ad-unfair.htm.
In the Florida Supreme Court’s recent decision in PNR v. Beacon Property Management, 842 So. 2d 773 (2003), it stated in dictum, citing a 1976 Seventh Circuit decision, that “an unfair practice [under FDUTPA] is one that ‘offends established public policy’ and one that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.’” The FTC abandoned and replaced that standard 24 years ago, but Florida courts continue to cite it without recognition of that change. That the legislature intended that the FTC’s current standard apply is further evident in FDUTPA’s express purpose “[t]o make state consumer protection and enforcement consistent with established policies of federal law relating to consumer protection.” Fla. Stat. §501.202(3).
The issue appears never to have been addressed squarely by the Florida courts. Other state courts have addressed it in construing their little FTC acts, and recognize that the current FTC standard is as set forth in the FTC’s 1980 policy statement. See Suminski v. Maine Appliance Warehouse, 602 A.2d 1173, 1174 n.1. (Me. 1992); Legg v. Castruccio, 642 A.2d 906 (Md. App. 1994).