H.D. Oliver Funeral Apts. v. Dignity Funeral Serv.

• Decision Date: 14 May 1997
• Docket Number: Civil Action No. 2:97cv218.
• Citation: 964 F.Supp. 1033
• Parties: H.D. OLIVER FUNERAL APARTMENTS, INC., Plaintiff, v. DIGNITY FUNERAL SERVICES, INC., t/a Altmeyer Funeral Homes, a Virginia corporation, and Altmeyer Funeral Homes, Inc., a West Virginia corporation, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

Page 1033

964 F.Supp. 1033

H.D. OLIVER FUNERAL APARTMENTS, INC., Plaintiff, v. DIGNITY FUNERAL SERVICES, INC., t/a Altmeyer Funeral Homes, a Virginia corporation and Altmeyer Funeral Homes, Inc., a West Virginia corporation, Defendants.

Civil Action No. 2:97cv218.

United States District Court, E.D. Virginia, Norfolk Division.

May 14, 1997.

Walter D. Kelley, Jr., Thomas Scott McGraw, Willcox & Savage, Norfolk, VA, for Plaintiff.

Patrick D. Allen, Calvin Wooding Fowler, Jr., Dana Duane McDaniel, Williams, Mullen, Christian & Dobbins, Richmond, VA, for Defendants.

OPINION AND ORDER

PRINCE, United States Magistrate Judge.

This is an action by a funeral business against another funeral business alleging causes of action under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count I), the Virginia Consumer Protection Act (VCPA), Va. Code § 59.1-196 et seq. (Count II), and for common law defamation (Count III), all growing out of a newspaper advertisement placed by the defendants. Defendants have moved to dismiss Counts II and III, pursuant to Federal Rule of Civil Procedure 12(b)(6).¹

Facts

H.D. Oliver Funeral Apartments, Inc. ("Oliver") is in the business of providing a full range of funeral-related services to customers in Virginia and other states.² Dignity Funeral Services, Inc., t/a Altmeyer Funeral Homes, offers discounted funeral-related services in Virginia and other states; Altmeyer Funeral Homes, Inc. (together the defendants will be referred to as "Altmeyer") offers full service funerals in West Virginia and other states. Oliver and Altmeyer are competitors.

On January 21, 1997, The Virginian-Pilot, a newspaper of general circulation in Virginia and North Carolina, published an advertisement placed by Altmeyer comparing its prices with those of thirteen other funeral homes in the South Hampton Roads area, including Oliver. The comparison included the prices for traditional services, an identified stainless steel casket, and an identified vault. The total prices were also compared. The prices listed for Oliver and ten of the other compared funeral homes were knowingly false and misleading.³

Discussion

In 1992, Virginia adopted the Comparison Price Advertisement Act, Va.Code §§ 59.1-207.40 et seq. The Act provides in § 59.1-207.42 that "[n]o supplier⁴ shall in any manner knowingly advertise a comparison price which is based on another supplier's price unless: 1. The supplier can substantiate that the comparison price is the price offered for sale by another supplier ..." Sec. 59.1-207.44 provides that "[a]ny violation of this chapter shall constitute a prohibited practice under the provisions of § 59.1-200 [of the Virginia Consumer Protection Act] ..."

The Virginia Consumer Protection Act (VCPA), Va.Code §§ 59.1-196, et seq, was enacted in 1977. Its pertinent sections provide as follows:

§ 59.1-197. Intent. It is the intent of the General Assembly that this chapter shall be applied as remedial legislation to promote fair and ethical standards of dealings between suppliers and the consuming public.

§ 59.1-198. Definitions. As used in this chapter:.... "Consumer transaction" means: 1. The advertisement ... of goods or services to be used primarily for personal, family or household purposes[.]

§ 59.1-200. Prohibited practices. A. The following fraudulent acts or practices committed by a supplier in connection with a consumer transaction [are] hereby declared unlawful:.... 14. Using any [] deception, fraud, false pretense, false promise, or misrepresentation in connection with a consumer transaction;.... 30. Violating any provision of the Comparison Price Advertising Act....

§ 59.1-204. Individual action for damages or penalty. A. Any person⁵ who suffers loss as the result of a violation of this chapter shall be entitled to initiate an action to recover actual damages, or $500, whichever is greater. If the trier of fact finds that the violation was willful, it may increase damages to an amount not exceeding three times the actual damages sustained, or $1,000, whichever is greater.⁶

In Count II of the complaint, Oliver alleges that Altmeyer's advertisement is a prohibited practice under § 59.1-200(14) and (30). It prays to permanently enjoin Altmeyer from publishing the advertisement, and it seeks compensatory, consequential and treble damages, and attorney's fees. Altmeyer has moved to dismiss Count II under Fed. R.Civ.P. 12(b)(6) for failing to state a claim for which relief can be granted.⁷ More specifically, Altmeyer has moved to dismiss the count on the ground that Oliver has no standing to sue under the VCPA, because it creates a cause of action for consumers only and not competitors.

Altmeyer's argument may be summarized as follows:

1) the name of the Act indicates its purpose, that is, consumer protection;

2) its intent is to "promote fair and ethical standards between suppliers and the consuming public" (§ 59.1-197);

3) Oliver and Altmeyer are competitors; in the statute they are defined as suppliers; and there is nothing in the Act addressing competitors 4) the Act regulates only consumer transactions, which in pertinent part is defined as the advertisement or sale of goods or services "to be used primarily for personal, family or household purposes" (§ 59.1-198);

5) the Act declares unlawful only certain acts "committed by a supplier in connection with a consumer transaction." (§ 59.1-200);

6) only persons who suffer loss as a result of a consumer transaction may recover damages (§ 59.1-204 A), while Oliver seeks damages for loss of business suffered as a competitor.

Oliver's opposition to Altmeyer's motion to dismiss may be similarly summarized as follows:

1) the Act has no limitation on who may recover damages, because "[a]ny person who suffers loss as a result of a violation" may recover damages (§ 59.1-204 A);

2) "person" under the Act includes a corporation (§ 59.1-198);

3) if a right of action was intended to be limited to consumers, the General Assembly would have explicitly supplied the limitation as it did in the Motor Vehicle Warranty Enforcement Act (§ 59.1-207.14);

4) the legislative intent (§ 59.1-197) is furthered by permitting non-consumers to sue; and,

5) the Act is remedial legislation (§ 59.1-197) and should be liberally construed.

Neither the parties nor the Court have found any Virginia appellate or federal case specifically considering the issue raised by this motion to dismiss. In Liberty Mutual Insurance Co. v. Triangle Industries, 957 F.2d 1153 (4th Cir.1992), the court listed a number of authorities that may be considered when the highest court of a state has not addressed an issue of state law. It concluded that, "Decisions of the state's trial courts may also be considered to provide some light upon the subject." Citing 19 Charles A. Wright, Arthur R. Miller, Edward H. Cooper, Federal Practice & Procedure, § 4507, at 96. In cases involving private litigants raising unsettled questions of state law which involve — apart from normal precedential effect — only the rights of these private parties, abstention is deemed to be inappropriate, even if it is felt that the federal decision may conflict with later state decisions on the same issue. See Wohl v. Keene, 476 F.2d 171, 174 (4th Cir.1973). Unsettled questions of state law are frequently decided by federal courts. E.g., Martin v. State Farm Mut. Auto. Ins. Co., 375 F.2d 720, 722 (4th Cir.1967); Stephens v. State Farm Mut. Auto. Ins. Co., 508 F.2d 1363 (5th Cir.1975).

Altmeyer has urged the Court to consider as instructive the case of Winchester Homes Inc. v. Hoover Universal, Inc., 27 Va. Cir. 62, a case decided by Judge Plummer of the Circuit Court of Fairfax County in 1992. In that case, materials were sold by a manufacturer to a building contractor for incorporation into new homes. The contractor sued the manufacturer alleging fraud, breach of implied contract, breach of express warranty, and violation of the VCPA. The court sustained a demurrer to the VCPA claim on the ground that the materials were not purchased "primarily for personal, family or household purposes" as a consumer transaction is defined in Va.Code § 59.1-198.⁸ Altmeyer argues that this holding "confirms that a claim under the VCPA belongs exclusively to the consumer." Defendant Altmeyer Funeral Homes, Inc.'s Memorandum of Law in Support of Motion to Dismiss Counts II and III of Plaintiff's Complaint, 6. The Court believes that Altmeyer has misconstrued the holding in Winchester Homes. There, the court held that there was no "consumer transaction," because the materials were not purchased for the defined purposes. The court did not hold, as Altmeyer argues, that only a consumer could sue, because, in fact, Winchester Homes, Inc. was a consumer; it just was not a consumer which was involved in a "consumer transaction" as defined by the Act. In the case at bar, unlike the Winchester Homes purchase and sale, the advertisement placed in The Virginian-Pilot by Altmeyer was a consumer transaction as defined by the statute.

Altmeyer also relies upon a number of cases from other jurisdictions. In Colyer v. Trew, 1982 WL 4419 (Tenn.App. Feb.12, 1982), the court held that plaintiff had no right of action under the Tennessee Consumer Protection Act for the false advertising of a competing tow truck operator, because the purpose and intent of the TCPA was to benefit consumers in the field of buying and selling goods and services, and it was not designed as a tool to enforce unfair competition between competitors. While the case appears to be on all fours with the one at bar, there is a significant difference. The language of the Act made it abundantly clear that only consumers could recover. Interpreting the Act to reach that conclusion was a simple matter.

Quality Auto Parts Co., Inc. v. Bluff City Buick Company, Inc., 1992 WL 379077 (Tenn.App. Dec. 21, 1992), added little to the law in Tennessee. Quoting at length from Colyer,...