Davis v. Powertel, Inc.

• Decision Date: 29 December 2000
• Docket Number: No. 1D00-792.,1D00-792.
• Citation: 776 So.2d 971
• Court: Florida District Court of Appeals
• Parties: Raymond T. DAVIS, and William R. Eddy, on behalf of themselves and all others similarly situated, Appellants, v. POWERTEL, INC. and Powertel/Jacksonville, Inc., Appellees.

776 So.2d 971

Raymond T. DAVIS, and William R. Eddy, on behalf of themselves and all others similarly situated, Appellants, v. POWERTEL, INC. and Powertel/Jacksonville, Inc., Appellees.

No. 1D00-792.

District Court of Appeal of Florida, First District.

December 29, 2000.

Rehearing Denied February 8, 2001.

Kenneth A. Tomchin and Christopher J. Iseley of Tomchin & Odom, P.A., Jacksonville; Barbara Slott Pegg of Barbara Slott Pegg, P.A., Ponte Vedra Beach, for Appellants.

John A. Tucker and John S. Mills of Foley & Lardner, Jacksonville, for Appellees.

PADOVANO, J.

This appeal presents two issues relating to the requirements for maintaining a class action under the Florida Deceptive and Unfair Trade Practices Act. The first of these is whether a class action for damages requires an allegation that individual members of the class relied on the act or omission that is alleged to be unlawful. The second is whether a class action for declaratory and injunctive relief requires an allegation that the unlawful act will cause continuing harm to consumers who are presently included within the class. For the reasons expressed in this opinion, we answer both questions in the negative.

The essence of the complaint is that Powertel was engaged in the practice of selling name brand cellular telephones to its subscribers without informing them that the phones had been programmed to work only with Powertel's wireless communication service. Powertel offered cellular telephones manufactured by Nokia and Motorola. The plaintiffs alleged that these phones appeared to be the same as Nokia and Motorola models sold in retail outlets, but in fact they contained an embedded chip that rendered them inoperable when used with any other wireless phone service.

Raymond Davis and William Eddy, the named plaintiffs, sought damages under section 501.211(2), Florida Statutes, on their own behalf and on behalf of those who had purchased the modified phones. They argued that the class certification was proper under rule 1.220(b)(3) of the Florida Rules of Civil Procedure, because the claims asserted on behalf of the class predominate over issues affecting individual members of the class. The common feature of the class claims, according to the plaintiffs, was that Powertel's alleged nondisclosure had reduced the value of the phone in each case. This, the plaintiffs argue, was a loss sustained by everyone who purchased the phones, even those who wish to continue to subscribe to Powertel's wireless service.

The complaint also sought declaratory and injunctive relief on behalf of a class. These claims were based on the provisions of section 501.211(1), Florida Statutes. The plaintiffs argued that the court should certify the claims for declaratory and injunctive relief for class litigation under rule 1.220(b)(2), because the effect of Powertel's failure to disclose the modifications of the phones was generally applicable to all members of the class.

Powertel moved to dismiss the complaint, and the trial court granted its motion. The court determined that the plaintiffs were not entitled to class certification on the damages claims, because they could not show that all of the purchasers had relied on Powertel's alleged failure to disclose that the phones had been modified. Some of Powertel's customers may have purchased the modified phones at the same price even if they had known that they would not work with another provider. The trial court drew an analogy to the line of cases holding that claims of fraud cannot be asserted in a class action. The court reasoned that, like a claim for fraud, a claim under the Deceptive and Unfair Trade Practices Act requires proof that the injured party relied on the deceptive misrepresentation or omission.

Additionally, the trial court determined that the plaintiffs had failed to state a valid ground for declaratory or injunctive relief. The court determined that the alleged harm to the named plaintiffs had already been done. Because there is no continuing harm to the plaintiffs or any of the consumers presently included in the proposed class, the court concluded that it would be inappropriate to grant declaratory or injunctive relief.

The amount of the loss sustained by the named plaintiffs was not sufficient to meet the minimum jurisdictional threshold of the circuit court and, evidently, the plaintiffs did not seek to have the case transferred to county court. Consequently, the denial of the request for class certification ultimately resolved the case in the circuit court. On January 25, 2000, the trial court entered a final order dismissing the complaint with prejudice. The plaintiffs filed a timely notice of appeal to seek review by this court.

We begin with the damages issue. If the plaintiffs' claims for damages under the Deceptive and Unfair Trade Practices Act were like claims for fraud, as the trial court reasoned, we would agree that they could not be asserted on behalf of a class. Multiple claims of intrinsic fraud cannot meet the test of commonality under rule 1.220(a)(2), because the issue of reliance is unique to each person who is alleged to have been defrauded. See Osceola Groves, Inc. v. Wiley, 78 So.2d 700 (Fla.1955)

; Lance v. Wade, 457 So.2d 1008 (Fla.1984). However, we conclude that there is a critical difference between a deceptive trade practice claim and a claim of fraud. A party asserting a deceptive trade practice claim need not show actual reliance on the representation or omission at issue. Hence, the impediment to class litigation that exists for multiple intrinsic fraud claims does not exist in the present case.

The Florida Deceptive and Unfair Trade Practices Act provides that an aggrieved party may initiate a civil action against a party who has engaged in "unfair or deceptive acts or practices in the conduct of any trade or commerce," but it does not define the elements of such an action. See § 501.204(1), Fla. Stat. (1999). Instead, the statute provides that the Florida courts must give "due consideration and great weight" to Federal Trade Commission and federal court interpretations of section 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C § 45(a)(1). See § 501.204(2), Fla. Stat. (1999). According to the federal decisions, a deceptive practice is one that is "likely to mislead" consumers. See In re International Harvester Co., 104 F.T.C. 949 (1984); In the Matter of Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984); Southwest Sunsites, Inc. v. Federal Trade Comm'n, 785 F.2d 1431 (9th Cir.1986). This standard does not require subjective evidence of reliance, as would be the case with a common law action for fraud.

The objective test adopted by the Federal Trade Commission and the federal courts applies, as well, in a suit in state court under the Florida Deceptive and Unfair Trade Practices Act. See Millennium Communications & Fulfillment, Inc. v. Office of the Attorney General, 761 So.2d 1256 (Fla. 3d DCA 2000)

.¹ The plaintiff need not prove the elements of fraud to sustain an action under the statute. See W.S. Badcock Corp. v. Myers, 696 So.2d 776 (Fla. 1st DCA 1996); Urling v. Helms Exterminators, Inc., 468 So.2d 451 (Fla. 1st DCA 1985). That is so because the question is not whether the plaintiff actually relied on the alleged deceptive trade practice, but whether the practice was likely to deceive a consumer acting reasonably in the same circumstances.

The standard of proving that an act is deceptive and therefore a violation of the statute is the same in a class action as it is in an action initiated by an individual consumer. As the court explained in Latman v. Costa Cruise Lines, N.V., 758 So.2d 699 (Fla. 3d DCA 2000), members of a class proceeding under the Deceptive and Unfair Trade Practices Act need not prove individual reliance on the alleged representation. The Latman decision has been adopted in the State of Washington, see Pickett v. Holland America Line Westours, Inc., 101 Wash.App. 901, 6 P.3d 63 (2000),

and other states have also held that individual proof of reliance is not required in class actions under comparable consumer statutes. See Oliveira v. Amoco Oil Co., 311 Ill.App.3d 886, 244 Ill.Dec. 455, 726 N.E.2d 51 (2000); Dix v....